14415000 County of Sacramento

NEW ISSUE (Book-Entry Only) NO RATING In the opinion of Orrick, Herrington & Sutcliffe LLP, Bond Counsel to the County, based on an analysis of existing laws, regulations, rulings and court decisions, and assuming, among other matters, the accuracy of certain representations and compliance with certain covenants, interest on the 2007A Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986, as amended, and is exempt from State of California personal income taxes. In the further opinion of Bond Counsel, interest on the 2007A Bonds is not a specific preference item for purposes of federal individual or corporate alternate minimum taxes, although Bond Counsel observes that such interest is included in adjusted current earnings in calculating corporate alternative minimum taxable income. Bond Counsel expresses no opinion regarding any other tax consequences relating to the ownership or disposition of, or the accrual or receipt of interest on, the 2007A Bonds. See “CONCLUDING INFORMATION—Tax Matters” herein. $14,415,000 COUNTY OF SACRAMENTO COMMUNITY FACILITIES DISTRICT NO. 2005-2 (NORTH VINEYARD STATION NO. 1) SPECIAL TAX BONDS, SERIES 2007A Dated: Date of Initial Issuance Due: September 1, inside cover The County of Sacramento Community Facilities District No. 2005-2 (North Vineyard Station No. 1) Special Tax Bonds, Series 2007A (the “2007A Bonds”) are being issued by the County of Sacramento (the “County”) on behalf of its Community Facilities District No. 2005-2 (North Vineyard Station No. 1) (the “District”) to provide funds to (i) pay costs of the acquisition and construction of certain public facilities required in connection with the development of land within the District, (ii) fund a Bond Reserve Fund in the amount described herein, and (iii) pay certain costs of issuing the 2007A Bonds. The 2007A Bonds are authorized to be issued pursuant to the Mello-Roos Community Facilities Act of 1982, as amended (Section 53111 et seq. of the Government Code of the State of California), and pursuant to Resolution No. 2007-0997 adopted by the Board of Supervisors of the County on August 7, 2007 (the “Bond Resolution”). The District has been formed by and is located in the County. The 2007A Bonds are being issued in fully registered book-entry form only in the denomination of $5,000 or any integral multiple thereof and, when executed and 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 2007A Bonds, and purchasers will not receive certificates representing their interests in the 2007A Bonds. See “THE 2007A BONDS—Book-Entry Only System.” Interest on the 2007A Bonds is payable semiannually on each March 1 and September 1, commencing March 1, 2008. Such interest on and the principal of the 2007A Bonds is payable by the County’s Director of Finance to Cede & Co., and such payments are expected to be disbursed to the beneficial owners of the 2007A Bonds through the participants of DTC. The 2007A Bonds and any additional bonds payable on a parity with them (collectively, the “Bonds”) are payable from the proceeds of an annual special tax (the “Special Tax”) to be levied on and collected from Parcels of Taxable Property (as defined herein) in the District. The Special Tax is to be levied according to the amended rate and method of apportionment approved by the County Board of Supervisors, as the legislative body of the District, and by the vote of the qualified landowner-electors in the District. See APPENDIX B—“AMENDED RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX.” The Special Tax will be collected in the same manner and at the same time as ad valorem property taxes applicable to the Parcels of Taxable Property. See “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS—The Special Tax.” The 2007A Bonds are subject to optional, mandatory and extraordinary redemption as described herein. See “THE 2007A BONDS—Redemption.” NEITHER THE FULL FAITH AND CREDIT NOR THE GENERAL TAXING POWER OF THE COUNTY, THE DISTRICT, THE STATE OF CALIFORNIA OR ANY POLITICAL SUBDIVISION THEREOF IS PLEDGED TO THE PAYMENT OF THE BONDS. THE BONDS ARE NOT GENERAL OBLIGATIONS OF THE COUNTY BUT ARE LIMITED OBLIGATIONS OF THE COUNTY PAYABLE SOLELY FROM THE PROCEEDS OF THE SPECIAL TAX AND CERTAIN FUNDS AND ACCOUNTS AS PROVIDED IN THE BOND RESOLUTION. This cover page contains certain information for general reference only. It is not a summary of the 2007A Bonds. Prospective investors must read the entire Official Statement to obtain information essential to the making of an informed investment decision. See “SPECIAL RISK FACTORS” for a discussion of special risk factors that should be considered, in addition to the other matters set forth herein, in evaluating the investment quality of the 2007A Bonds.

MATURITY SCHEDULE (See Inside Cover)

The 2007A Bonds are offered when, as and if issued and accepted by the Underwriter, subject to the approval as to their legality by Orrick, Herrington & Sutcliffe LLP, Bond Counsel to the County, and certain other conditions. Certain legal matters will be passed on for the County by the County Counsel, and other legal matters will be passed upon for the County by its Disclosure Counsel, Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California. It is anticipated that the 2007A Bonds in book-entry form will be available for delivery to DTC in New York, New York on or about September 6, 2007.

The date of this Official Statement is August 24, 2007. $14,415,000 COUNTY OF SACRAMENTO COMMUNITY FACILITIES DISTRICT NO. 2005-2 (NORTH VINEYARD STATION NO. 1) SPECIAL TAX BONDS, SERIES 2007A

MATURITY SCHEDULE

Maturity Principal Interest September 1 Amount Rate Yield CUSIP No. † 2009 $ 5,000 4.400% 4.400% 786153 HZ2 2010 25,000 4.600 4.600 786153 JA5 2011 40,000 4.750 4.750 786153 JB3 2012 60,000 4.875 4.900 786153 JC1 2013 85,000 5.000 5.000 786153 JD9 2014 105,000 5.000 5.100 786153 JE7 2015 130,000 5.125 5.200 786153 JF4 2016 155,000 5.250 5.250 786153 JG2 2017 185,000 5.250 5.300 786153 JH0 2018 215,000 5.250 5.400 786153 JJ6 2019 245,000 5.375 5.500 786153 JK3 2020 280,000 5.500 5.600 786153 JL1 2021 315,000 5.500 5.650 786153 JM9

$12,570,000 6.000% Term Bond due September 1, 2037 Yield 6.050% CUSIP No.†: 786153 JQ0

† CUSIP® is a registered trademark of the American Bankers Association. Copyright© 1999-2007 Standard & Poor’s, a Division of the McGraw Hill Companies, Inc. All rights reserved. CUSIP® data herein is provided by Standard & Poor’s CUSIP Service Bureau. This data is not intended to create a database and does not serve in any way as a substitute for the CUSIP Service Bureau. CUSIP® numbers are provided for convenience of reference only. Neither the County nor the Underwriter takes any responsibility for the accuracy of such numbers. COUNTY OF SACRAMENTO, CALIFORNIA

BOARD OF SUPERVISORS

Don Nottoli, Supervisor, District 5, Chair Jimmie R. Yee, Supervisor, District 2, Vice Chair Roger Dickinson, Supervisor, District 1 Susan Peters, Supervisor, District 3 Roberta MacGlashan, Supervisor, District 4

COUNTY STAFF

Terry Schutten, County Executive Geoffrey B. Davey, Chief Financial/Operating Officer Dave Irish, Director of Finance Robert A. Ryan, Jr., Esq., County Counsel Paul J. Hahn, Administrator Municipal Services Agency Mark Norris, Administrator, Internal Service Agency Michael J. Penrose, Director, Department of County Engineering Cindy H. Turner, Clerk of the Board of Supervisors ______

BOND COUNSEL

Orrick, Herrington & Sutcliffe LLP

FINANCIAL ADVISOR

First Southwest Company Santa Monica, California

DISCLOSURE COUNSEL

Stradling Yocca Carlson & Rauth, a Professional Corporation Newport Beach, California

SPECIAL TAX CONSULTANT

Goodwin Consulting Group Sacramento, California

APPRAISER

Seevers Jordan Zeigenmeyer Real Estate Appraisal and Consultation Rocklin, California Investment in the 2007A Bonds involves risks which are not appropriate for certain investors. Therefore, only persons with substantial financial resources (in net worth or income) who understand (either alone or with competent investment advice) the risk of investment in the 2007A Bonds should consider such an investment.

All information for investors regarding the County of Sacramento (the County), its Community Facilities District No. 2005-2 (North Vineyard Station No. 1) (the District), and the 2007A Bonds is contained in this Official Statement. While the County maintains an internet website for various purposes, none of the information on that website is intended to assist investors in making any investment decision or to provide any continuing information with respect to the 2007A Bonds or any other obligations of the County or the District. No dealer, broker, salesperson or other person has been authorized by the County to provide any information or to make any representations other than as contained herein and, if given or made, such other information or representation must not be relied upon as having been authorized by the County. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the 2007A Bonds by a person in any jurisdiction in which it is unlawful for such person to make such an offer, solicitation or sale.

This Official Statement is not to be construed as a contract with the purchasers of the 2007A Bonds. Statements contained in this Official Statement that involve estimates, forecasts or matters of opinion, whether or not expressly so described herein, are intended solely as such and are not to be construed as a representation of facts. The information and expressions of opinion herein are subject to change without notice; and neither delivery of this Official Statement nor any sale of securities made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the County, the District, the property in the District or any matters discussed herein since the date hereof.

The Underwriter has provided the following sentence for inclusion in this Official Statement:

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

CAUTIONARY INFORMATION REGARDING FORWARD-LOOKING STATEMENTS IN THIS OFFICIAL STATEMENT

Certain statements included or incorporated by reference in this Official Statement constitute forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995, Section 21E of the United States Exchange Act of 1934, as amended, and Section 27A of the United States Securities Act of 1933, as amended. Such statements are generally identifiable by the terminology used such as plan,expect,estimate, budget or other similar words.

The achievement of certain results or other expectations contained in such forward-looking statements involves known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements described to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. No updates or revisions to those forward-looking statements are expected to be issued if or when the expectations, or events, conditions or circumstances on which such statements are based change.

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SECURITIES OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. THE UNDERWRITER MAY OFFER AND SELL SECURITIES AT PRICES LOWER THAN THE PUBLIC OFFERING PRICES SET FORTH ON THE INSIDE FRONT COVER PAGE HEREOF, SUCH PUBLIC OFFERING PRICES MAY BE CHANGED FROM TIME TO TIME BY THE UNDERWRITER.

THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, IN RELIANCE UPON AN EXEMPTION CONTAINED IN SUCH ACT. THEY HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATE. TABLE OF CONTENTS Page

INTRODUCTION ...... 1

THE 2007A BONDS ...... 3 Authority for Issuance...... 3 Purpose of the 2007A Bonds ...... 4 Description of the 2007A Bonds...... 4 Limited Obligation...... 4 Redemption...... 5 Selection of Bonds for Redemption ...... 6 Notice of Redemption ...... 6 Book-Entry Only System...... 7

ESTIMATED SOURCES AND USES OF FUNDS ...... 7

DEBT SERVICE SCHEDULE...... 8

SECURITY AND SOURCES OF PAYMENT FOR THE BONDS ...... 8 General...... 8 The Special Tax ...... 9 Special Tax Analysis...... 14 Proceeds of the Special Tax...... 19 Letter of Credit Agreement...... 19 Letter of Credit Bank ...... 20 Bond Reserve Fund...... 21 Covenant for Foreclosure...... 22 Property Values...... 22 Direct and Overlapping Bonded Indebtedness...... 24 Parity Bonds...... 26

THE DISTRICT...... 27 General Description ...... 27 Facilities...... 28 Status of Entitlements ...... 28

THE DEVELOPERS ...... 29 LW Vineyard Point, LLC...... 29 Standard Pacific Corp...... 30 North Vineyards Investors, GP ...... 31

THE DEVELOPMENT PLAN...... 31 Vineyard Point Development Plan LW Vineyard Point ...... 31 Vineyard Creek Development Plan Standard Pacific Owned Property ...... 32 Vineyard Creek Development Plan North Vineyard Investors...... 33

THE DEVELOPERS FINANCING PLANS ...... 33 LW Vineyard Point...... 33 Standard Pacific ...... 35 North Vineyard Investors...... 37

SPECIAL RISK FACTORS ...... 37 Introduction...... 37 Zoning and Land Use Decisions ...... 38 Concentration of Ownership ...... 38

i TABLE OF CONTENTS (continued) Page Levy of Special Tax...... 39 Collection of the Special Tax...... 40 Exempt Properties...... 40 Failure to Develop Properties ...... 41 Proceedings to Reduce or Terminate the Special Tax...... 42 Maximum Special Tax...... 42 Payment of Special Tax Not Personal Obligation of Property Owners ...... 42 Disclosures to Future Purchasers ...... 42 Parity Taxes and Special Assessments...... 43 Reductions in Property Values...... 44 Risks Related to Adjustable Rate Mortgages and Creative Mortgage Financing Tools ...... 44 Bankruptcy and Legal Delays ...... 44 FDIC/Federal Government Interests In Properties...... 45 Geologic, Topographic and Climatic Conditions...... 46 Endangered Species ...... 46 Legal Requirements ...... 46 Hazardous Substances...... 47 No Acceleration Provision...... 47 No Obligation To Pay Debt Service...... 47 Loss of Tax Exemption...... 47 Ballot Initiatives...... 48

CONCLUDING INFORMATION ...... 48 Legality ...... 48 Tax Matters ...... 48 Continuing Disclosure...... 50 No Litigation...... 51 No General Obligation of the County or the District ...... 51 No Ratings ...... 51 Underwriting...... 52 Financial Advisor...... 52 Miscellaneous ...... 52

APPENDIX A APPRAISAL REPORT ...... A-1

APPENDIX A-1 UPDATE APPRAISAL...... A-1-1

APPENDIX B AMENDED RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX...... B-1

APPENDIX C FORM OF CONTINUING DISCLOSURE CERTIFICATE OF THE COUNTY...... C-1

APPENDIX D INFORMATION CONCERNING THE DEPOSITORY TRUST COMPANY ...... D-1

APPENDIX E PROPOSED FORM OF OPINION OF BOND COUNSEL ...... E-1

APPENDIX F FORM OF DEVELOPER CONTINUING DISCLOSURE AGREEMENT...... F-1

APPENDIX G SUMMARY OF CERTAIN PROVISIONS OF THE BOND RESOLUTION...... G-1

ii $14,415,000 COUNTY OF SACRAMENTO COMMUNITY FACILITIES DISTRICT NO. 2005-2 (NORTH VINEYARD STATION NO. 1) SPECIAL TAX BONDS, SERIES 2007A

INTRODUCTION

The purpose of this Official Statement, which includes the cover page and attached appendices, is to provide certain information concerning the County of Sacramento Community Facilities District No. 2005-2 (North Vineyard Station No. 1) Special Tax Bonds, Series 2007A in the principal amount of $14,415,000 (the 2007A Bonds). The 2007A Bonds are being issued by the County on behalf of its Community Facilities District No. 2005-2 (North Vineyard Station No. 1) (the District or the CFD) to provide funds to (i) pay costs of the acquisition and construction of certain public facilities required in connection with the development of land within the District, (ii) fund the Bond Reserve Fund in the amount of the Required Bond Reserve (each as defined herein), and (iii) pay certain delivery costs of the 2007A Bonds.

The 2007A Bonds are authorized to be issued pursuant to the Mello-Roos Community Facilities Act of 1982, as amended (Section 53111 et seq. of the Government Code of the State of California), and pursuant to Resolution No. 2007-0997 (the Bond Resolution) adopted by the Board of Supervisors of the County (the Board of Supervisors) on August 7, 2007. Capitalized terms that are not otherwise defined herein shall have the respective meanings ascribed to them in the Bond Resolution.

The 2007A Bonds and any additional bonds issued pursuant to the Bond Resolution and payable on a parity with the 2007A Bonds (Parity Bonds and, together with the 2007A Bonds the Bonds) are payable from the proceeds of an annual special tax (the Special Tax) to be levied and collected from Parcels of Taxable Property (as defined herein) in the District. The Special Tax is to be levied according to the amended rate and method of apportionment approved by the Board of Supervisors, as the legislative body of the District, and by the vote of the qualified landowner-electors in the District at an election held on May 29, 2007 (the Special Tax Formula). The 2007A Bonds are referred to in the Special Tax Formula and the Bond Resolution as Vineyard Point Bonds. See APPENDIX BAMENDED RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX. The Special Tax is expected to be collected in the same manner and at the same time as ad valorem property taxes applicable to the Parcels of Taxable Property. See SECURITY AND SOURCES OF PAYMENT FOR THE BONDSThe Special Tax.

The District is situated west of Bradshaw Road, north of Gerber Road and south of Florin Road, within an unincorporated area of the County. The District consists of approximately 284 gross acres and includes two master planned communities known as Vineyard Point and Vineyard Creek, respectively. The District is planned for approximately 1,100 residential units, and also includes an additional 6.1 acres of single family residential property, 10.5 acres of medium density single family residential property and 7.0 acres of multifamily residential property. The District is also expected to include approximately 13 acres of parks, an approximately 10 acre school site, and approximately 90 acres for streets and public utilities.

All of the property within the Vineyard Point master planned community, consisting of approximately 180 gross acres, is owned by LW Vineyard Point, LLC, a Delaware Limited Liability Company (LW Vineyard Point), whose members are (i) Lennar Land Partners II, a Florida general partnership, which is wholly-owned by LandSource Holding Company, LLC, a Delaware limited liability company, which is wholly-owned by LandSource Communities Development, LLC of which Lennar Homes of California, Inc., a California corporation (Lennar) is the managing member; (ii) Reynen & Bardis Communities Inc., a California corporation (Reynen & Bardis); and (iii) Lennar. LW Vineyard Point is the master developer which plans to develop the portion of Vineyard Point located within the District to a finished lot condition and then either construct single family homes therein or sell some or all of the property within Vineyard Point to other merchant builders, including, but not limited to, affiliates of Lennar. At buildout, the portion of Vineyard Point located within the District is anticipated to consist of 532 low density detached single family homes and 193 medium density single family homes. Vineyard Point also contains a 6.9 acre multifamily site which is not located within the boundaries of the District and not subject to the Special Tax.

Vineyard Creek consists of approximately 104 gross acres, all, except for approximately 16.61 gross acres of which, are currently owned by Standard Pacific Corp., a Delaware Corporation (Standard Pacific). Standard Pacifics plan for Vineyard Creek includes the development of approximately 373 single family residential lots and 6.9 acres of multifamily land upon which Standard Pacific anticipates constructing approximately 80 condominium units. The remaining approximately 16.61 gross acres in Vineyard Creek is owned by North Vineyard Investors G.P. (North Vineyard Investors and, together with Lennar and Standard Pacific, the Developers), and consists of 10.5 gross acres (5.0 net acres) of medium density residential land and 6.1 gross acres (2.1 net acres) of single family residential land.

As of August 1, 2007, development in the Vineyard Point portion of the District had commenced. Improvements completed to date include: mass grading of the site and detention basins, wet utilities to Villages A, B and C and substantial portions of the underground improvements in Gerber Road. LW Vineyard Point anticipates that Villages A, B and C will be paved and Gerber Road improvements will be completed by the fall of 2007. LW Vineyard Point anticipates selling the approximately 350 home sites in Villages A, B and C to one or more merchant builders (including affiliates of Lennar) in the third quarter of 2007. LW Vineyard Point anticipates that site improvements for Villages D, E and F will be started in the summer of 2007 and completed in 2008. As of August 1, 2007, development in the Vineyard Creek portion of the District had not yet commenced and all of the Parcels of Taxable Property in Vineyard Creek were raw land.

An appraisal of the Taxable Property within the District, dated August 6, 2007 (the Appraisal), has been prepared by Seevers Jordan Ziegenmeyer, Real Estate Appraisal and Consultation, Rocklin, California (the Appraiser). A copy of the Appraisal is attached to this Official Statement as Appendix A. The purpose of the Appraisal is to set forth in the Appraisers opinions of value of the Taxable Property on the assumptions (among others) that the improvements expected to be financed with 2007A Bond proceeds were installed and that the Taxable Property were subject to the lien of the Special Taxes. Based on the assumptions set forth in the Appraisal, and subject to the limiting conditions described therein, the Appraiser is of the opinion that the market value of the Taxable Property was $106,370,000 as of May 4, 2007. Additionally, the Appraiser has prepared an update appraisal dated August 8, 2007 (the Update Appraisal), pursuant to which the Appraiser has concluded that, as of August 6, 2007, the market value of the Taxable Property was not less than the value stated in the Appraisal. A copy of the Update Appraisal is attached to this Official Statement as Appendix A-1. This value is approximately 7.20 times the $14,415,000 aggregate principal amount of the 2007A Bonds and the $359,584 amount of direct and overlapping tax and assessment debt on the Taxable Property. See SECURITY AND SOURCES OF PAYMENT FOR THE BONDSProperty Values and Direct and Overlapping Bonded Indebtedness.

The County is authorized to issue up to a maximum of $30,000,000 in bonded indebtedness on behalf of the District. The 2007A Bonds are the first of at least two series of bonds that may be so issued by the County. The principal amount of the 2007A Bonds has been determined based upon the projected Maximum Annual Special Taxes which could be levied on Parcels of Taxable Property within Vineyard Point at buildout equaling or exceeding 110% of the annual debt service on the 2007A Bonds in each Fiscal Year. The 2007A Bonds are referred to in to the Special Tax Formula and the Bond Resolution as Vineyard Point Bonds. The County may issue one or more Series of Parity Bonds to finance the construction or acquisition of additional facilities described under the caption THE DISTRICTFacilities in a principal amount equal to the lesser of (i) the amount remaining under the $30,000,000 in bond authorization or (ii) an amount determined based upon the projected Maximum Annual Special Taxes which could be levied on Parcels of Taxable Property within Vineyard Creek at buildout. Such Parity Bonds are referred to in the Special Tax Formula as Vineyard Creek Bonds. See SECURITY AND SOURCES OF PAYMENT FOR THE BONDSSpecial Tax Analysis. Upon the issuance of such Parity Bonds, Special Taxes would be levied on the Parcels of Taxable Property

2 within both Vineyard Point and Vineyard Creek to pay debt service on the 2007A Bonds and Parity Bonds. Although the 2007A Bonds have been sized based on 110% coverage from Special Taxes in Vineyard Point, the Parcels of Taxable Property within Vineyard Creek could be taxed in the event of a shortfall in Special Tax revenues from Parcels of Taxable Property in Vineyard Point or upon such Parcels of Taxable Property becoming classified as Developed Property pursuant to the Special Tax Formula as described further below. See SECURITY AND SOURCES OF PAYMENT FOR THE BONDSParity Bonds and The Special Tax Classification of Parcels Subject to Special Tax herein.

Pursuant to the Special Tax Formula so long as only Vineyard Point Bonds have been issued, the Special Taxes are apportioned first to Developed Property, then to Parcels of Taxable Property within the Vineyard Point Tentative Map (as defined in the Special Tax Formula) and then to Parcels of Taxable Property within the Vineyard Creek Tentative Map (as defined in the Special Tax Formula), to the extent necessary to meet the Special Tax Requirement (as defined in the Special Tax Formula). As of August 1, 2007, there was no Developed Property (i.e., assessors parcels for which a building permit has been issued) within the District. Accordingly, the County anticipates levying Special Taxes only on the Parcels of Taxable Property within Vineyard Point until such time as Parcels of Taxable Property in Vineyard Creek become classified as Developed Property, Vineyard Creek Bonds are issued or unless there are delinquencies in the payment of Special Taxes in Vineyard Point.

Brief descriptions of the 2007A Bonds, the Bond Resolution, the security for the Bonds, the Special Tax, the County and the District are included in this Official Statement together with summaries of certain provisions of the 2007A Bonds, the Bond Resolution and certain other documents. Such descriptions do not purport to be comprehensive or definitive. All references herein to the Bond Resolution and other documents are qualified in their entirety by reference to such documents, and references herein to the 2007A Bonds are qualified in their entirety by reference to the form thereof included in the Bond Resolution, copies of which are available for inspection at the office of the Clerk of the Board of Supervisors.

This information speaks only as of its date, and the information contained herein is subject to change. Unless otherwise defined elsewhere in this Official Statement, capitalized terms shall have the meanings assigned to them in the Bond Resolution.

THE 2007A BONDS

Authority for Issuance

The MelloRoos Community Facilities Act of 1982, as amended (Sections 53311 et seq.ofthe California Government Code) (the Act), was enacted by the California Legislature to provide an alternate method of financing certain public capital facilities and services, especially in developing areas of the State of California (the State). Once duly established by a local governmental agency, a community facilities district is a legally constituted governmental entity, with the governing board or legislative body of the local agency acting on its behalf. Subject to approval by a two-thirds vote of a districts qualified electors and compliance with the provisions of the Act, a legislative body of a local agency may issue bonds for a community facilities district to finance certain public improvements and may levy and collect a special tax within such district to repay such indebtedness. The legislative body is also authorized to issue bonds to refund such indebtedness, subject to compliance with the provisions of the Act.

Pursuant to the Act, the Board of Supervisors adopted on December 13, 2005, Resolution No. 2005-1517 providing for the establishment of the District and calling an election to authorize the issuance of bonds and the levying of a special tax within the District and adopted Resolution No. 2005-1518 determining the necessity to incur bonded indebtedness within the District in an amount not to exceed $30,000,000. On January 19, 2006, at an all-mailed ballot election held pursuant to the Act, the Developers as the sole owners of land within the District, who under the terms of the Act were the only qualified electors within the District, authorized the issuance of up to $30,000,000 principal amount of special tax bonds to

3 finance certain public facilities to serve the property within the District and approved the maximum rate and method of apportionment of the Special Tax to pay the principal of and interest on such bonds. The rate and method of apportionment was subsequently amended at a May 29, 2007 mailed ballot election. See caption SECURITY AND SOURCES OF PAYMENT FOR THE BONDSThe Special Tax herein. The 2007A Bonds are being issued pursuant to the Bond Resolution adopted by the Board of Supervisors of the County on August 7, 2007.

Purpose of the 2007A Bonds

The 2007A Bonds are being issued to provide funds to (i) pay costs of the acquisition and construction of certain public facilities required in connection with the development of land within the District, (ii) fund the Bond Reserve Fund in the amount of the Required Bond Reserve (each as defined herein), and (iii) pay certain costs of issuing the 2007A Bonds.

Description of the 2007A Bonds

The 2007A Bonds will be issued as fully registered bonds without coupons in denominations of $5,000, or any integral multiple thereof (not exceeding the principal amount maturing at any one time), and shall be dated the date of their initial issuance (the Dated Date).

The 2007A Bonds will mature on September 1, in the principal amounts and years, and will bear interest at the rates, shown on the inside front cover of this Official Statement. Interest on the 2007A Bonds will be computed on the basis of a 360-day year consisting of twelve 30-day months and will be payable semiannually on March 1 and September 1 of each year, commencing March 1, 2008 (each an Interest Payment Date). Each 2007A Bond will bear interest from the Interest Payment Date next preceding the date of registration thereof, unless (i) it is registered on a day during the period from the sixteenth day of the calendar month next preceding an Interest Payment Date to such Interest Payment Date (both dates inclusive), in which event it shall bear interest from such Interest Payment Date, or (ii) it is registered on a day on or before the fifteenth day of the month preceding the first Interest Payment Date, in which event it shall bear interest from its date; provided, that if at the time of registration of any 2007A Bond interest is then in default thereon, such 2007A Bond shall bear interest from the Interest Payment Date to which interest thereon has previously been paid or made available for payment.

Interest on the 2007A Bonds will be payable in lawful money of the United States only to the Holders thereof at the close of business as of the fifteenth day of the month next preceding each Interest Payment Date (the Record Date), whether or not such day is a business day. Such interest shall be paid by check mailed on each such Interest Payment Date to such Holders at their addresses as they appear in the registration books required to be kept by the Countys Director of Finance (sometimes referred to as the Paying Agent), except that in the case of a Holder of $1,000,000 or more in aggregate principal amount of the 2007A Bonds then Outstanding, payment on any Interest Payment Date shall be made at such Holders option by wire transfer of immediately available funds according to instructions provided by such owner to the Paying Agent not later than the applicable Record Date. Payment of the principal of a 2007A Bond will be made only to the person whose name appears as the registered owner thereof in the registration books to be kept by the Paying Agent and only on the surrender thereof at the office of the Paying Agent. See Book-Entry Only System herein.

Limited Obligation

The 2007A Bonds are not general obligations of the County but are limited obligations of the County payable solely from the proceeds of the Special Tax and certain funds and accounts as provided in the Bond Resolution. Neither the full faith and credit nor the general taxing power of the County, the State of California or any political subdivision thereof is pledged to the payment of the 2007A Bonds. See SPECIAL RISK FACTORSNo Obligation to Pay Debt Service and CONCLUDING INFORMATIONNo General Obligation of the County or the District.

4 Redemption

Mandatory Sinking Fund Redemption. The Bond Resolution authorizes the provision of certain amounts (the Minimum Sinking Fund Account Payments) for the mandatory redemption and payment of the 2007A Bonds that are Term Bonds. Minimum Sinking Fund Account Payments are to be deposited in the Sinking Fund Account in the Bond Redemption Fund to be used and withdrawn by the County at any time for the mandatory redemption or payment of the principal of the Term Bonds or for the purchase of Term Bonds at public or private sale as and when and at such prices (including brokerage and other charges, but excluding accrued interest, which is payable from the Bond Redemption Fund) as it may in its discretion determine, but not to exceed the principal amount of such Term Bonds.

The Term Bonds maturing on September 1, 2037 are subject to mandatory redemption in part on any September 1 on or after September 1, 2022, upon mailed notice as provided in the Bond Resolution, at the principal amount thereof called for redemption together with accrued interest thereon to the date of redemption, on September 1 of each year, beginning on September 1, 2022, in the following amounts:

Minimum Sinking Fund Account Payments Term Bonds Maturing September 1, 2037

Year Ending Minimum Sinking Fund September 1 Account Payment 2022 $ 355,000 2023 400,000 2024 445,000 2025 495,000 2026 550,000 2027 605,000 2028 665,000 2029 730,000 2030 800,000 2031 875,000 2032 955,000 2033 1,010,000 2034 1,070,000 2035 1,135,000 2036 1,205,000 2037 (Maturity) 1,275,000

In the event of a partial redemption of any of the Term Bonds (other than as a result of the application of Minimum Sinking Fund Account Payments) the amounts of the Minimum Sinking Fund Account Payments shown in the foregoing table will be reduced proportionately by the principal amount of all such Term Bonds which are redeemed by such partial redemption.

Optional Redemption. The 2007A Bonds maturing by their terms on or after September 1, 2018 are subject to optional redemption by the County prior to their respective stated maturity dates on any Interest Payment Date on or after September 1, 2017, in whole or in part, from funds derived by the County from any source (including the proceeds of bonds issued in order to refund the 2007A Bonds) other than Minimum Sinking Fund Account Payments or prepayments of the Special Tax, upon notice mailed in the manner described under Notice of Redemption below, at a redemption price equal to the principal amount of the 2007A Bonds or Portions thereof called for redemption together with accrued interest to the date fixed for redemption without premium.

5 Extraordinary Redemption from Prepayment of Special Tax. The 2007A Bonds are subject to extraordinary redemption by the County prior to their respective stated maturity dates on any Interest Payment Date, in whole or in part, from funds derived by the County solely from prepayments of the Special Tax, upon notice mailed in the manner described under Notice of Redemption below, at the following redemption prices (computed upon the principal amount of the 2007A Bonds or portions thereof called for redemption) together with accrued interest thereon to the date of redemption:

Redemption Date Redemption Price Any Interest Payment Date prior to September 1, 2015 103% September 1, 2015 and March 1, 2016 102 September 1, 2016 and March 1, 2017 101 September 1, 2017 and thereafter 100

The 2007A Bonds and any Parity Bonds subject to extraordinary redemption from prepayments of Special Taxes shall be redeemed pro rata (as nearly as possible given minimum authorized denominations) in proportion to the total principal amount Outstanding of each Series at the time of Redemption.

Transfers of property ownership and certain other circumstances could result in prepayments of the Special Tax applicable to particular parcels. Such prepayments would result in redemption of the Bonds prior to their stated maturity, at the redemption prices corresponding to the redemption dates as shown above, and could cause a reduction of the amount on deposit in the Bond Reserve Fund.

Selection of Bonds for Redemption

If less than all the Outstanding Bonds are to be redeemed at any one time, the County shall select the Series and the maturity date or dates of the Bonds of such Series to be redeemed, and if less than all the Outstanding Bonds of any maturity of a Series are to be redeemed at any one time, the Director of Finance shall select the Bonds or the portions thereof of such maturity date to be redeemed in integral multiples of five thousand dollars ($5,000) in any manner that he deems appropriate and fair; provided, that any such partial redemption will result in the least disturbance of the proportionality of Annual Debt Service on the Bonds in each Bond Year (except the last Bond Year after such redemption) unless the Paying Agent has first received a report from an Independent Financial Consultant to the effect that the proceeds of the Special Taxes that would be available to the County if the Special Taxes were to be levied and collected at their maximum rate and amount on all Parcels of Taxable Property in the District, based upon the Special Tax Formula as applied on the date of the proposed partial redemption, would be equal to at least one hundred ten percent (110%) of the Maximum Annual Debt Service on the Bonds (after giving effect to such partial redemption). The County shall notify the Paying Agent in writing at least fifteen (15) days prior to the date fixed for the selection of any Bonds for redemption, and after such selection the Paying Agent shall promptly notify the County in writing of the numbers of the Bonds selected for redemption in whole or in part.

Notice of Redemption

The Paying Agent will mail a notice of redemption to the respective Holders of all Bonds selected for redemption in whole or in part and to all securities depositories and securities information services selected by him to comply with custom or the rules of any securities exchange or commission or brokerage board or otherwise as may be determined by it in its sole discretion and to the original underwriter of the Bonds selected for redemption. Such notice will state the date of such notice, the Bonds to be redeemed, the Series and date of issue of the Bonds to be redeemed, the redemption date of the Bonds to be redeemed, the redemption price of the Bonds to be redeemed, the place of redemption (being the address of the Paying Agents Office) of the Bonds to be redeemed, the CUSIP number (if any) of the maturity or maturities and, if less than all of any such maturity, the numbers of the Bonds of such maturity to be redeemed and, in the case of Bonds to be redeemed in part only, the respective portions of the principal amount thereof to be redeemed, and will give notice that further interest on such Bonds or the portions thereof redeemed will not accrue after the redemption date, and

6 will require that such Bonds be surrendered at the Paying Agents Office for payment of the redemption price thereof. If any Bond so chosen for redemption is not be redeemable in whole, such notice will also state that such Bond is to be redeemed in part only and that upon presentation of such Bond for redemption there will be issued in lieu of the unredeemed portion of principal thereof a new Bond or Bonds of the same Series and maturity date of authorized denominations equal in aggregate principal amount to such unredeemed portion.

Book-Entry Only System

The 2007A Bonds are to be initially registered in the name of Cede & Co., as nominee of The Depository Trust Company of New York, New York (DTC). One fully registered 2007A Bond will be issued for each maturity of the 2007A Bonds in the aggregate principal amount of such maturity and will be deposited with DTC. So long as Cede & Co. is the registered owner of the 2007A Bonds, references herein to the Holders of the 2007A Bonds shall refer to Cede & Co. and shall not refer to the beneficial owners of such 2007A Bonds. The County does not give any assurance that DTC, its participants or others will distribute payments with respect to the 2007A Bonds or notices concerning the 2007A Bonds to the beneficial owners thereof or that DTC or its participants will otherwise serve and act in the manner described in this Official Statement. See Appendix D for a further description of DTC and its book-entry system. The information presented therein is based solely on information provided by DTC.

ESTIMATED SOURCES AND USES OF FUNDS

The estimated sources and uses of funds in connection with the issuance of the 2007A Bonds are shown in the following table:

Estimated Sources and Uses of Funds

Estimated Sources of Funds Principal Amount $ 14,415,000.00 Less: Original Issue Discount ( 101,164.70) Less: Underwriters Discount ( 100,905.00) Total Sources of Funds $ 14,212,930.30

Estimated Uses of Funds Acquisition and Construction Fund $ 12,468,930.30 Bond Reserve Fund 1,354,000.00 Costs of Issuance Fund 190,000.00 Expense Fund 200,000.00 Total Uses of Funds $ 14,212,930.30

7 DEBT SERVICE SCHEDULE

The following is the debt service schedule for the 2007A Bonds for the Bond Years ending after September 1, 2007, assuming that no 2007A Bonds are redeemed except from Minimum Sinking Fund Account payments.

Debt Service Schedule

Year (Ending Total Annual September 1) Principal Interest Debt Service 2008 $ - $ 839,761.13 $ 839,761.13 2009 5,000.00 851,588.76 856,588.76 2010 25,000.00 851,368.76 876,368.76 2011 40,000.00 850,218.76 890,218.76 2012 60,000.00 848,318.76 908,318.76 2013 85,000.00 845,393.76 930,393.76 2014 105,000.00 841,143.76 946,143.76 2015 130,000.00 835,893.76 965,893.76 2016 155,000.00 829,231.26 984,231.26 2017 185,000.00 821,093.76 1,006,093.76 2018 215,000.00 811,381.26 1,026,381.26 2019 245,000.00 800,093.76 1,045,093.76 2020 280,000.00 786,925.00 1,066,925.00 2021 315,000.00 771,525.00 1,086,525.00 2022 355,000.00 754,200.00 1,109,200.00 2023 400,000.00 732,900.00 1,132,900.00 2024 445,000.00 708,900.00 1,153,900.00 2025 495,000.00 682,200.00 1,177,200.00 2026 550,000.00 652,500.00 1,202,500.00 2027 605,000.00 619,500.00 1,224,500.00 2028 665,000.00 583,200.00 1,248,200.00 2029 730,000.00 543,300.00 1,273,300.00 2030 800,000.00 499,500.00 1,299,500.00 2031 875,000.00 451,500.00 1,326,500.00 2032 955,000.00 399,000.00 1,354,000.00 2033 1,010,000.00 341,700.00 1,351,700.00 2034 1,070,000.00 281,100.00 1,351,100.00 2035 1,135,000.00 216,900.00 1,351,900.00 2036 1,205,000.00 148,800.00 1,353,800.00 2037 1,275,000.00 76,500.00 1,351,500.00

Total $ 14,415,000.00 $ 19,275,637.49 $ 33,690,637.49

SECURITY AND SOURCES OF PAYMENT FOR THE BONDS

General

The Bonds are limited obligations of the County and, except as otherwise provided in the Bond Resolution, the interest on and principal of the Bonds are payable solely from the Special Tax which is to be levied annually against the property in the District. NEITHER THE FULL FAITH AND CREDIT NOR THE GENERAL TAXING POWER OF THE COUNTY, THE DISTRICT, THE STATE OF CALIFORNIA, OR ANY POLITICAL SUBDIVISION THEREOF IS PLEDGED TO THE PAYMENT OF THE BONDS.

8 Although the Special Tax constitutes a lien on property subject to taxation in the District, it does not constitute a personal indebtedness of the owners of such property. There is no assurance that the owners will be financially able to pay the annual Special Tax or that they will pay such tax even if financially able to do so. The risk of nonpayment by property owners is more fully described in SPECIAL RISK FACTORS Collection of the Special Tax.

The Special Tax

In accordance with the provisions of the Act, the Board of Supervisors established the District on December 13, 2005 for the purpose of providing for the financing of certain public facilities in and for the District. At an all-mailed ballot election conducted on January 19, 2006, the landowners-electors within the District authorized both the issuance of up to $30,000,000 principal amount of special tax bonds for the purpose of financing such public facilities and the annual levy of the Special Tax to be used for the purpose, among others, of paying the interest on and principal of and redemption premiums, if any, on such bonds. On March 20, 2007, the Board of Supervisors adopted Resolution No. 2007-0331 declaring its intent to amend the special tax formula and to annex certain additional property (the Annexed Parcels) to the District. Following a public hearing conducted on May 8, 2007, the Board of Supervisors adopted Resolution No. 2007-0542 calling an election for May 29, 2007 on the annexation of the Annexed Parcels to the District and the amendment to the special tax formula. On May 29, 2007 at an all-mailed ballot election held pursuant to the Act, El Dorado Corners, LLC, as the owner of the Annexed Parcels, approved the annexation of Annexed Parcels to the District, and Lennar, Standard Pacific, North Vineyard Investors and El Dorado Corners, LLC as the sole owners of land within the District, who under the terms of the Act were the only qualified electors within the District, authorized the amendment to the special tax formula (as amended, the Special Tax Formula). A copy of the Special Tax Formula is attached as Appendix B hereto.

Pursuant to the Bond Resolution, so long as any Bonds are outstanding, the County is required to annually levy the Special Tax against Parcels of Taxable Property (as defined in the Special Tax Formula) in the District and make provision for the collection of the Special Tax in amounts which will be sufficient, together with the money then on deposit in the Bond Redemption Fund, after making allowance for contingencies and errors in the estimates, to yield proceeds equal to the amounts required for compliance with the agreements, conditions, covenants and terms contained in the Bond Resolution, and (i) to pay the interest on and the principal of and Minimum Sinking Fund Account Payments for and redemption premiums, if any, on the Bonds as they respectively become due and payable, (ii) to replenish the Bond Reserve Fund, and (iii) to pay all current Expenses as they become due and payable in accordance with the provisions of the Bond Resolution. The Special Tax Formula annually allocates the Special Tax required among the Parcels of Taxable Property based upon location, land uses and development status. The Special Tax Formula involves a number of separate steps to be performed by the County which are described in Appendix B and summarized below. For purposes of this section only, terms with initial capital letters not otherwise defined in this Official Statement shall have the meanings assigned to them in Appendix B.

Classification of Parcels Subject to Special Tax. On or about July 1 of each Fiscal Year, the Administrator shall identify the current Assessors Parcel numbers for all Parcels of Taxable Property. The Administrator shall also determine: (i) whether each Assessors Parcel of Taxable Property is Developed Property, Final Map Property, Large Lot Subdivision Map Property, Vineyard Creek Tentative Map Property, Vineyard Point Tentative Map Property or Annexation Property, (ii) for Developed Property, which Parcels are Single Family Detached Property, Single Family Attached Property, Multifamily Property and Other Property, (iii) for Parcels of Single Family Attached Property, the number of Residential Units on each Parcel, (iv) the Specific Plan Land Use Designation for each Parcel, and (v) the Special Tax Requirement.

9 roll), (ii) because of the date the parcel map was recorded, the Assessor does not yet recognize the new Parcels created by the parcel map, and (iii) one or more of the newly-created parcels is in a different Development Class than other parcels created by the subdivision, the Administrator shall calculate the Special Tax for the property affected by recordation of the parcel map by determining the Special Tax that applies separately to the property within each Development Class, then applying the sum of the individual Special Taxes to the Parcel that was subdivided by recordation of the parcel map.

For purposes of making the classification described above, Developed Property means all Parcels for which building permits have been issued on or prior to June 1 of the preceding Fiscal Year. Final Map Property means in any Fiscal Year, all Single Family Detached Property for which a Final Map had been recorded prior to June 1 of the preceding Fiscal Year and which had not yet become Developed Property. Large Lot Subdivision Map Property means, in any Fiscal Year, all Single Family Detached Property included within a Large Lot Subdivision Map that was recorded by June 1 of the prior Fiscal Year, and which has not yet become Final Map Property. Vineyard Creek Tentative Map means the vesting tentative map for the Vineyard Creek project approved by the Board of Supervisors on November 10, 2004. Vineyard Point Tentative Map means the vesting tentative map for the Vineyard Point project approved by the Board of Supervisors on November 10, 2004. Additionally, the Special Tax Formula exempts up to 112.67 acres of Public Property from the levy of the Special Tax and 2.048 acres of privately owned property transferred to El Dorado Corners, LLC by Standard Pacific (the Exempt Parcel) in exchange for the Annexed Parcels.

Maximum Special Tax Rate. A summary of the maximum special tax rates in the District is provided in the following tables (all of these rates escalate each fiscal year by two percent (2%) of the amount in effect in the prior fiscal year).

The following maximum rates for Fiscal Year 2007-08 shall apply to all Parcels of Developed Property, Final Map Property and Large Lot Property within CFD No. 2005-2:

10 Map Property (Fiscal Year 2007-08) Large Lot Subdivision Maximum Special Tax Final Map Property (Fiscal Year 2007-08) Maximum Special Tax $5,202 per Acre N/A N/A Developed Property (Fiscal Year 2007-08) Maximum Special Tax $988 per Residential Unit$988 per Residential Unit$988 per Residential Unit N/A $988 per SFD Lot N/A $5,202 per Acre N/A N/A $988 per Residential Unit $988 per SFD Lot $11,860.56 per Acre $1,457 per Residential Unit$1,301 per Residential $1,457 Unit per SFD Lot $1,301 per SFD Lot $7,283 per Acre $9,104 per Acre MAXIMUM SPECIAL TAXES (SFR 3-5) (SFR 4-7) (SFR 7-12) (SFR 7-12) Designation (MFR 12-22) (MFR 12-22) (MFR 12-22) Specific Plan Land Use Single Family Residential 3-5 Single Family Residential 4-7 Multifamily Residential 12-22 Multifamily Residential 12-22 Medium Density Residential 7-12 Medium Density Residential 7-12 Single Family Single Family Single Family Single Family Single Family Single Family Other Property N/A $9,884 per Acre N/A N/A means single family dwelling unit. Attached Property Attached Property Detached Property Detached Property Detached Property Detached Property Land Use Category Multifamily Property Multifamily Residential 12-22 SFD

11 The Maximum Special Tax for Vineyard Point Tentative Map Property and Vineyard Creek Tentative Map Property is $7,595 per Acre for Fiscal Year 2007-08.

Method of Apportionment of the Annual Special Tax. The Special Tax is to be levied each Fiscal Year in accordance with the following procedures until the amount of the levy equals the Special Tax Requirement for that Fiscal Year. The Special Tax Requirement is the amount necessary in any Fiscal Year to: (i) pay principal and interest on Bonds that is due in the calendar year that begins in such Fiscal Year; (ii) create and/or replenish reserve funds for the Bonds; (iii) cure any delinquencies in the payment of principal or interest on Bonds which have occurred in the prior Fiscal Year or, based on existing delinquencies in the payment of Special Taxes, are expected to occur in the Fiscal Year in which the tax will be collected; (iv) pay Administrative Expenses; and (v) pay the costs of public improvements and public infrastructure authorized to be financed by the District. The amounts referred to in clauses (i) and (ii) of the preceding sentence may be reduced in any Fiscal Year by: (i) interest earnings on or surplus balances in funds and accounts for the Bonds to the extent that such earnings or balances are available to apply against debt service pursuant to a Bond Resolution, Bond resolution, or other legal document that sets forth these terms; (ii) proceeds received by the District from the collection of penalties associated with delinquent Special Taxes; and (iii) any other revenues available to pay debt service on the Bonds as determined by the Administrator.

The Administrator shall determine the Special Tax Requirement to be collected each Fiscal Year, and the Special Tax shall be levied according to the steps outlined below.

Step 1: The Special Tax shall be levied proportionately on each Parcel of Developed Property within the District up to 100% of the Maximum Special Tax for each Parcel for such Fiscal Year until the amount levied on Developed Property is equal to the Special Tax Requirement prior to applying any Capitalized Interest that is available in the District accounts. [Based on the Bonds that have been issued each Fiscal Year (if any), the Administrator shall determine which alternative set forth below is applicable for that Fiscal Year.] Alternative 1: Bonds Have Not Been Issued or only Vineyard Point Bonds Have Been Issued: Step 2: If additional revenue is needed after Step 1, and after applying Capitalized Interest to the Special Tax Requirement, the Special Tax shall be levied proportionately on each Assessors Parcel of Final Map Property within the Vineyard Point Tentative Map, up to 100% of the Maximum Special Tax for Final Map Property for such Fiscal Year. Step 3: If additional revenue is needed after applying the first two steps, the Special Tax shall be levied proportionately on each Parcel of Large Lot Subdivision Map Property within the Vineyard Point Tentative Map, up to 100% of the Maximum Special Tax for Large Lot Subdivision Map Property for such Fiscal Year. Step 4: If additional revenue is needed after applying the first three steps, the Special Tax shall be levied proportionately on each Parcel of Vineyard Point Tentative Map Property, up to 100% of the Maximum Special Tax for Vineyard Point Tentative Map Property for such Fiscal Year. Step 5: If additional revenue is needed after applying the first four steps, the Special Tax shall be levied proportionately on each Assessors Parcel of Final Map Property within the Vineyard Creek Tentative Map, Annexed Parcel One, and Annexed Parcel Two, up to 100% of the Maximum Special Tax for Final Map Property for such Fiscal Year. Step 6: If additional revenue is needed after applying the first five steps, the Special Tax shall be levied proportionately on each Parcel of Large Lot Subdivision Map Property within the Vineyard Creek Tentative Map, Annexed Parcel One, and Annexed Parcel Two, up to 100% of the Maximum Special Tax for Large Lot Subdivision Map Property for such Fiscal Year.

12 Step 7: If additional revenue is needed after applying the first six steps, the Special Tax shall be levied proportionately on each Parcel of Vineyard Creek Tentative Map Property and Annexation Property, up to 100% of the Maximum Special Tax for such property for such Fiscal Year. Step 8: If additional revenue is needed after the first seven steps, the Special Tax shall be levied proportionately on each Assessors Parcel of Excess Public Property, up to 100% of the Maximum Special Tax for Vineyard Creek Tentative Map Property and Vineyard Point Tentative Map Property for such Fiscal Year. Alternative 2: Only Vineyard Creek Bonds Have Been Issued: Step 2: If additional revenue is needed after Step 1, and after applying Capitalized Interest to the Special Tax Requirement, the Special Tax shall be levied proportionately on each Assessors Parcel of Final Map Property within the Vineyard Creek Tentative Map, Annexed Parcel One, and Annexed Parcel Two, up to 100% of the Maximum Special Tax for Final Map Property for such Fiscal Year. Step 3: If additional revenue is needed after applying the first two steps, the Special Tax shall be levied proportionately on each Parcel of Large Lot Subdivision Map Property within the Vineyard Creek Tentative Map, Annexed Parcel One, and Annexed Parcel Two, up to 100% of the Maximum Special Tax for Large Lot Subdivision Map Property for such Fiscal Year. Step 4: If additional revenue is needed after applying the first three steps, the Special Tax shall be levied proportionately on each Parcel of Vineyard Creek Tentative Map Property and Annexation Property, up to 100% of the Maximum Special Tax for such property for such Fiscal Year. Step 5: If additional revenue is needed after applying the first four steps, the Special Tax shall be levied proportionately on each Assessors Parcel of Final Map Property within the Vineyard Point Tentative Map, up to 100% of the Maximum Special Tax for Final Map Property for such Fiscal Year. Step 6: If additional revenue is needed after applying the first five steps, the Special Tax shall be levied proportionately on each Parcel of Large Lot Subdivision Map Property within the Vineyard Point Tentative Map, up to 100% of the Maximum Special Tax for Large Lot Subdivision Map Property for such Fiscal Year. Step 7: If additional revenue is needed after applying the first six steps, the Special Tax shall be levied proportionately on each Parcel of Vineyard Point Tentative Map Property, up to 100% of the Maximum Special Tax for Vineyard Point Tentative Map Property for such Fiscal Year. Step 8: If additional revenue is needed after applying the first seven steps, the Special Tax shall be levied proportionately on each Assessors Parcel of Excess Public Property, up to 100% of the Maximum Special Tax for Vineyard Creek Tentative Map Property and Vineyard Point Tentative Map Property for such Fiscal Year. Alternative 3: Both Vineyard Point Bonds and Vineyard Creek Bonds Have Been Issued: Step 2: If additional revenue is needed after Step 1, and after applying Capitalized Interest to the Special Tax Requirement, the Special Tax shall be levied proportionately on each Assessors Parcel of Final Map Property within the District, up to 100% of the Maximum Special Tax for Final Map Property for such Fiscal Year. Step 3: If additional revenue is needed after applying the first two steps, the Special Tax shall be levied proportionately on each Parcel of Large Lot Subdivision Map Property within the

13 District, up to 100% of the Maximum Special Tax for Large Lot Subdivision Map Property for such Fiscal Year. Step 4: If additional revenue is needed after applying the first three steps, the Special Tax shall be levied proportionately on each Parcel of Vineyard Creek Tentative Map Property, Vineyard Point Tentative Map Property, and Annexation Property, up to 100% of the Maximum Special Tax for such property for such Fiscal Year. Step 5: If additional revenue is needed after applying the first four steps, the Special Tax shall be levied proportionately on each Assessors Parcel of Excess Public Property, up to 100% of the Maximum Special Tax for Vineyard Creek Tentative Map Property and Vineyard Point Tentative Map Property for such Fiscal Year.

Prepayment of Special Tax. The Special Tax obligation applicable to an AssessorsParcelinthe District may be prepaid and the obligation of the Assessors Parcel to pay the Special Tax permanently satisfied as described in APPENDIX BAMENDED RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX, provided that a prepayment may be made only if there are no delinquent Special Taxes with respect to such Assessors Parcel at the time of prepayment. Any prepayment of the Special Tax will result in an extraordinary redemption of Bonds. See THE 2007A BONDSRedemptionExtraordinary Redemption from Prepayment of Special Tax.

Limitations. In general, the Special Tax shall be levied and collected until principal and interest on Bonds have been repaid, costs of constructing or acquiring authorized facilities from Special Tax proceeds have been paid, and all Administrative Expenses have been reimbursed. However, in no event shall a Special Tax be levied after Fiscal Year 2045-46. Under no circumstances may the Special Tax on one Assessors Parcel in the District be increased by more than ten percent (10%) as a consequence of delinquency or default in payment of the Special Tax levied on another Assessors Parcel or Assessors Parcels in the District.

Interpretation. The County reserves the right to make minor administrative and technical changes to the Special Tax Formula that do not materially affect the rate and method of apportioning Special Taxes. In addition, the County may, in its discretion, interpret and apply the Special Tax Formula.

Special Tax Analysis

The Special Tax is exempt from the tax rate limitation of California Constitution Article XIIIA pursuant to Section 4 thereof as a special tax authorized by a two-thirds vote of the qualified electors as set forth in the Act. Consequently, the County has the power and is obligated to cause the levy and collection of the Special Tax in an amount determined according to the Special Tax Formula. The Act prohibits the Board of Supervisors from adopting a resolution to reduce the rate of the Special Tax or terminate the levy of the Special Tax unless the Board of Supervisors determines that the reduction or termination of the Special Tax would not interfere with the timely retirement of the outstanding Bonds. California Constitution Article XIIIC, which removed certain limitations on the initiative power, provides that the initiative power shall not be prohibited or otherwise limited in matters of reducing or repealing any local tax, assessment, fee or charge. Although the matter is not free from doubt, it is likely that the exercise by the voters of the initiative power referred to in Article XIIIC to reduce the Special Tax is subject to the same restrictions as are applicable to the Board of Supervisors pursuant to the Act. See SPECIAL RISK FACTORSProceedings to Reduce or Terminate the Special Tax.

Although the Special Tax constitutes a lien on property subject to taxation within the District, it does not constitute a personal indebtedness of the current owners of such property or of their successors. There is no assurance that the owners will be financially able to pay the annual Special Tax or that they will pay such tax even if financially able to do so. Subject to the covenant by the County to pursue accelerated foreclosure proceedings under certain circumstances as described under Delinquent Payments of Special Tax; Covenant for Foreclosure below, the Special Tax is expected to be collected in the same manner and at the same time as

14 ad valorem property taxes are collected; and it will be subject to the same penalties and the same procedure, sale and lien priority in case of delinquency as is provided for ad valorem property taxes. See SPECIAL RISK FACTORSCollection of the Special Tax.

Pursuant to Section 53340 of the Act, properties or entities of federal, state or local governments are exempt from the Special Tax except that, under Section 53317.3 of the Act, property not otherwise exempt which is acquired by a public entity through a negotiated transaction, or by gift or demise, remains subject to the Special Tax. (Notwithstanding the foregoing statutory exceptions, property owned by the federal government may be exempt from the Special Tax regardless of the manner in which it was acquired.) It is not clear under the Act whether property acquired by a public entity following a tax sale or foreclosure based upon failure of a non-exempt person or entity to pay property taxes would remain subject to the Special Tax under Section 53317.3 of the Act or would become exempt from the Special Tax under Section 53340 of the Act. Pursuant to Section 53317.5 of the Act, 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 is to be treated as if it were a special annual assessment. For this purpose, the present value of the obligation to pay the Special Tax to pay principal and interest on any Bonds Outstanding prior to the date of apportionment is to be treated the same as a fixed lien special annual assessment. 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 tax under the Act or to alter the rate or method of apportionment of an existing tax under the Act. See SPECIAL RISK FACTORSExempt Properties.

Neither the faith and credit nor the general taxing authority of the County, the State or any political subdivision of any of the foregoing is pledged to the payment of the Bonds.

The County is to establish tax rates, within the limits of the Maximum Annual Special Tax for each Parcel of Taxable Property set forth in the Special Tax Formula, to be used to levy and apportion the Special Tax against Parcels of Taxable Property within the District on an annual basis. The actual amount of the Special Tax that could be levied and collected against property within the District during any future Fiscal Year will depend upon a number of factors, including without limitation the land use categories then in effect in the District, the tax rates imposed pursuant to the Special Tax Formula (subject to the Maximum Annual Special Tax rates) and the level of delinquent Special Tax installments. See SPECIAL RISK FACTORS Collection of the Special Tax.

The principal amount of the 2007A Bonds has been determined based on the estimated Special Taxes that will be generated from Parcels of Taxable Property within Vineyard Point based upon the projected Maximum Annual Special Taxes which could be levied on Parcels of Taxable Property within Vineyard Point at buildout. Pursuant to the Special Tax Formula, until such time as Vineyard Creek Bonds are issued, the Special Taxes are apportioned first to Developed Property regardless of its location in Vineyard Point or Vineyard Creek, then to Parcels of Taxable Property located within the Vineyard Point Tentative Map and then to Parcels of Taxable Property located within the Vineyard Creek Tentative Map to the extent necessary to meet the Special Tax Requirement. Upon the issuance of Vineyard Creek Bonds, the Special Taxes will be apportioned first to Developed Property and then proportionally to similarly classified Parcels of Taxable Property in Vineyard Point and Vineyard Creek. The Maximum Annual Special Taxes that could be levied in each Fiscal Year on Parcels of Taxable Property within Vineyard Point at planned buildout is equal to or exceeds 110% of the annual debt service on the 2007A Bonds in each Fiscal Year. The table below shows the estimated coverage of annual debt service on the 2007A Bonds that will be provided both from estimated Maximum Special Tax revenues from Vineyard Point only and from the entire District. Such coverage would be reduced upon the issuance of Parity Bonds for Vineyard Creek. See Parity Bonds below for a description of the conditions precedent to the issuance of Parity Bonds for Vineyard Creek, and SPECIAL RISK FACTORSLevy of Special Tax for a discussion of potential limitations on the ability of the District to increase the levy of Special Taxes on parcels of residential property in the event of delinquencies.

15 COVERAGE TABLE

Vineyard Point Only Total District Estimated Annual Debt Maximum Special Estimated Maximum Special Estimated Year(1) Service Tax Revenues(2) Coverage(3) Tax Revenues(4) Coverage(5) 2008 $ 839,761 $ 927,100 110% $1,530,350 182% 2009 856,589 945,642 110 1,560,957 182 2010 876,369 964,555 110 1,592,177 182 2011 890,219 983,846 110 1,624,020 182 2012 908,319 1,003,523 110 1,656,500 182 2013 930,394 1,023,594 110 1,689,630 182 2014 946,144 1,044,066 110 1,723,423 182 2015 965,894 1,064,947 110 1,757,892 182 2016 984,231 1,086,246 110 1,793,049 182 2017 1,006,094 1,107,971 110 1,828,910 182 2018 1,026,381 1,130,130 110 1,865,489 182 2019 1,045,094 1,152,733 110 1,902,798 182 2020 1,066,925 1,175,788 110 1,940,854 182 2021 1,086,525 1,199,303 110 1,979,671 182 2022 1,109,200 1,223,289 110 2,019,265 182 2023 1,132,900 1,247,755 110 2,059,650 182 2024 1,153,900 1,272,710 110 2,100,843 182 2025 1,177,200 1,298,164 110 2,142,860 182 2026 1,202,500 1,324,128 110 2,185,717 182 2027 1,224,500 1,350,610 110 2,229,432 182 2028 1,248,200 1,377,623 110 2,274,020 182 2029 1,273,300 1,405,175 110 2,319,501 182 2030 1,299,500 1,433,278 110 2,365,891 182 2031 1,326,500 1,461,944 110 2,413,208 182 2032 1,354,000 1,491,183 110 2,461,473 182 2033 1,351,700 1,521,007 113 2,510,702 186 2034 1,351,100 1,551,427 115 2,560,916 190 2035 1,351,900 1,582,455 117 2,612,134 193 2036 1,353,800 1,614,104 119 2,664,377 197 2037 1,351,500 1,646,386 122 2,717,665 201

(1) Debt service is presented on a Bond Year basis for each Bond Year. Special tax revenues are presented for the Fiscal Year ending in the same Bond Year. (2) Estimated Maximum Special Tax Revenues in Vineyard Point only at buildout assuming anticipated development. (3) Estimated Maximum Special Tax Revenues in Vineyard Point at buildout divided by Estimated Annual Debt Service on the 2007A Bonds. (4) Estimated Maximum Special Tax Revenues in Vineyard Point and Vineyard Creek assuming anticipated development at buildout. Does not include Maximum Special Tax Revenues available from 2.1 acres owned by North Vineyard Investors. Estimated Maximum Special Tax Revenues for Fiscal Year 2007-08 based on development status as of August 1, 2007 is actually $1,716,972 due to higher acreage-based Special Tax for Vineyard Creek Tentative Map Property. (5) Estimated Maximum Special Tax Revenues at buildout divided by Estimated Annual Debt Service. Does not include Maximum Special Tax Revenues available from 2.1 acres owned by North Vineyard Investors. Estimated coverage in Fiscal Year 2007-08 based on development status as of August 1, 2007 is 204%. Estimated all in coverage will be less upon issuance of Parity Bonds.

16 The actual amount of the Special Tax that could be levied and collected against Parcels of Taxable Property during any future year will depend upon a number of factors, including without limitation the land use categories then in effect in the District, the tax rates imposed pursuant to the Special Tax Formula (subject to the Maximum Annual Special Tax rates) and the level of delinquent Special Tax installments. See SPECIAL RISK FACTORSCollection of the Special Tax herein. Additionally, pursuant to the terms of the Bond Resolution, the County may issue Parity Bonds pursuant to certain conditions precedent. Upon the issuance of such Parity Bonds, Special Taxes would need to be levied on the Parcels of Taxable Property within Vineyard Creek to pay debt service on the 2007A Bonds and Parity Bonds. See SECURITY AND SOURCES OF PAYMENT FOR THE BONDSParity Bonds herein.

The table below sets forth the respective share of the Projected Fiscal Year 2007-08 Special Tax levy for each of the Developers and the Villages they own based on ownership, development status and entitlements as of August 1, 2007. The table also shows the allocable share of 2007A Bonds attributable to each of the Developers based upon the share of the projected 2007-08 Special Tax Levy and based on their respective share of the Maximum Special Taxes at buildout. Currently, all of the Parcels of Taxable Property within the District are undeveloped.

17 295,714 1,796,822 Special Tax of Maximum Based on Share $ 8,732,741 $ 5,263,311 $ 5,682,259 $ 14,415,000 - 418,948 2,965,986 of Projected Allocable Shares of 2007A Bonds 2007-08 Levy Based on Share $ 14,415,000 $- %$% - $ 14,415,000 2.1 0.0 - 12.4 %of Taxes Special Maximum % 36.5% %2.9 %39.4 % 60.6% %100.0 0.0 0.0 0.0 %of Levy 20.6 100.0 100.0 2007-08 Projected (1) In Aggregate $ 558,773 $ 44,477 Special Tax 5,202 31,394 Fiscal Year 2007-08 Max CFD Total $ 1,530,350 6,600 1,457 - Lot Size Per Unit Standard Pacific subtotal Minimum Vineyard Creek subtotal $ 603,250 (2) (3) North Vineyard Investors subtotal 725 Vineyard Point subtotal $ 927,100 SPECIAL TAX LEVY BY DEVELOPMENT PLAN Owner Village Zoning Units Based on anticipated development at buildout. Represents 86% of 7.0 acresNot in Appraisal. included in Special Tax revenue estimate. (1) (2) (3) LW Vineyard Point, LLC F MDR 7-12 193 lots 2,500 988 190,757 LW Vineyard Point, LLCLW Vineyard Point, LLCLW Vineyard Point, LLCLW Vineyard Point, LLCLW Vineyard A Point, LLC B C D SFR 4-7 SFR 4-7 E SFR 3-5 138 lots SFR 3-5 59 lots 152 lots SFR 4-7 133 lots 4,725 31 lots 4,725 5,775 $ 5,775 1,301 $ 1,301 4,725 1,457 179,469 1,457 76,730 19.4% 221,397 1,301 193,722 23.9 8.3 11.7% 20.9 40,316 $ 2,790,470 14.5 4.3 5.0 12.7 $ 1,690,492 3,442,388 2.6 1,193,027 3,012,090 2,085,431 1,824,752 722,747 626,845 379,748 Standard Pacific Homes Corp. F MFR 12-22 6.04 acres LW Vineyard Point, LLC D SFR 4-7 19 lots 4,725 1,301 24,710 2.7 1.6 384,195 232,749 Standard Pacific Homes Corp.Standard Pacific Homes Corp. A, B, C, D SFR E 3-5 271 lots SFR 4-7 102 lots 5,500 4,725 1,457 394,728 1,301 132,651 25.8% 8.7 $ 3,718,103 1,249,494 North Vineyard Investors GPNorth Vineyard Investors GP G (Rem) H (Rem) MDR 7-12 SFR 3-5 45 units 2.1 acres 2,500 988 44,477 2.9 418,948 Vineyard Point Vineyard Creek

18 In addition to payment of the Special Tax, the property within the District will also be obligated to pay ad valorem property taxes levied against such property and special assessments and special taxes levied to pay certain existing and any additional overlapping debt for which the property within the District is or may become obligated. Debt for the repayment of which taxes or assessments are currently being levied includes (in addition to the 2007A Bonds) bonds issued by or on behalf of Elk Grove Unified School District Community Facilities District No. 1. See Direct And Overlapping Bonded Indebtedness herein. The actual amount of those taxes and assessments which may be levied or assessed in the future will vary depending upon a number of factors, including without limitation the assessed valuation of the property within the District at such time, the actual amount of the Special Tax that is levied annually in the future against such property and the existence of additional bonded and overlapping debt in the future. Special taxes and special assessments may also be levied to pay for the costs of certain services and/or to maintain certain public improvements.

Proceeds of the Special Tax

The County has covenanted in the Bond Resolution that all proceeds of the Special Tax, when and as received, will be immediately deposited in the County of Sacramento Community Facilities District No. 2005-2 (North Vineyard Station No. 1) Special Tax Fund, established in the treasury of the County (the Special Tax Fund). All money in the Special Tax Fund is to be held by the County in trust under the Bond Resolution and is to be disbursed, allocated and applied solely to the uses and purposes set forth in the Bond Resolution. See APPENDIX GSUMMARY OF CERTAIN PROVISIONS OF THE BOND RESOLUTIONDeposit of Special Taxes in the Special Tax Fund.

Letter of Credit Agreement

In connection with the issuance of the 2007A Bonds, the County and LW Vineyard Point have entered into a Letter of Credit Agreement (the Letter of Credit Agreement) pursuant to which LW Vineyard Point is required to post a letter of credit with the County in an amount initially equal to 102% of the annual maximum Special Tax allocable to all Parcels of Taxable Property owned by LW Vineyard Point at the time of commencement of the letter of credit (approximately $945,642 at issuance). Such letter of credit may be drawn upon by the County in the event that LW Vineyard Point is delinquent in the payment of Special Taxes or if LW Vineyard Point does not renew the then current letter of credit or provide a substitute letter of credit on or before the date specified in the Letter of Credit Agreement. Such letter of credit must be renewed or a substitute letter of credit provided not less than 30 days prior to its stated expiration date which is initially December 31, 2008. The stated amount of the letter of credit may be reduced or the letter of credit terminated upon the sale or transfer of the Parcels of Taxable Property owned by LW Vineyard Point or its affiliates, in accordance with the Letter of Credit Agreement. In any event, the letter of credit requirement shall terminate when all legal lots that are owned by LW Vineyard Point or its affiliates are collectively responsible for less than 10% of the total annual Special Taxes to be levied on all property in the District.

The Letter of Credit Agreement requires that the letter of credit bank be: (a) rated A or better by Moodys or Standard & Poors and B/C or better by Thompson BankWatch for a domestic bank and B or better for an international bank; or (b) a subsidiary of a parent organization rated A or better by Moodysor Standard & Poors, with parents confirmation, and with a bank rating of B/C for a domestic bank or B for an international bank from Thompson BankWatch; or (c) on a case-by-case basis as determined by the County Director of Finance, rated below investment grade or not rated by Moodys or Standard & Poors but meets the following test: (1) assets of at least $1 billion, (2) capital and surplus of at least $100 million, and (3) collateral of 110% of liability exposure to be held by a trustee (collateral to be those types of government securities used for bond defeasance) and to be marked-to-market weekly. The County may amend or waive the requirements of the Letter of Credit Agreement at any time without the consent of the Bond Owners.

19 Under the Letter of Credit Agreement, the Paying Agent is authorized to draw upon the letter of credit in an amount equal to the aggregate amount of Special Taxes applicable to Parcels of Taxable Property owned by LW Vineyard Point or any affiliate thereof that are delinquent. The proceeds of any such draw will be deposited into the Special Tax Fund but they will not be deemed to have cured the Special Tax delinquencies. To the extent the letter of credit is drawn upon as a result of delinquent Special Taxes, net proceeds, if any, of delinquent Special Taxes recovered by the County will be used to reimburse the issuer of the letter of credit for the amount of the draw as described in the Letter of Credit Agreement and the Bond Resolution.

The Letter of Credit Agreement also permits the Paying Agent to draw on the letter of credit in the full stated amount thereof in the event that LW Vineyard Point fails to renew it or to provide a substitute letter of credit prior to the date specified in the Letter of Credit Agreement. The proceeds of any such drawing are to be deposited into the Letter of Credit Fund maintained by the County within the Special Tax Fund. Money on deposit in the Letter of Credit Fund is to be withdrawn therefrom and transferred to the Special Tax Fund in the event and to the extent that LW Vineyard Point or any affiliate thereof becomes delinquent in the payment of Special Taxes.

LetterofCreditBank

The information under this heading has been provided by Bank of America, N.A. (the .The County has not independently verified such information, cannot assure that it is accurate and complete and makes no representation as to its accuracy and completeness. LW Vineyard Point may substitute a letter of credit from a different qualified letter of credit bank in accordance with the Letter of Credit Agreement. Accordingly, neither the County nor the Underwriter make any assurance that the Bank will remain the letter of credit bank for LW Vineyard Point beyond the stated expiration date of B of A Letter of Credit.

LW Vineyard Point has satisfied the requirement described above by delivering a letter of credit issued by the Bank (the B of A Letter of Credit). The Bank is a national banking association organized under the laws of the United States, with its principal executive offices located in Charlotte, North Carolina. The Bank is a wholly-owned indirect subsidiary of Bank of America Corporation (the Corporation)andis engaged in a general consumer banking, commercial banking and trust business, offering a wide range of commercial, corporate, international, financial market, retail and fiduciary banking services. As of March 31, 2007, the Bank had consolidated assets of $1,204 billion, consolidated deposits of $761 billion and stockholders equity of $109 billion based on regulatory accounting principles.

The Corporation is a bank holding company and a financial holding company, with its principal executive offices located in Charlotte, North Carolina. Additional information regarding the Corporation is set forth in its Annual Report on Form 10-K for the fiscal year ended December 31, 2006, together with any subsequent documents it filed with the Securities and Exchange Commission (the SEC) pursuant to the Securities Exchange Act of 1934, as amended (the Exchange Act).

Recent Developments: On April 22, 2007, the Corporation entered into a contract with ABN AMRO Bank, N.V. ("ABN") to purchase ABN AMRO North America Holding Company, the indirect parent company of LaSalle Bank, N.A. On April 26, 2007, a Dutch shareholder group known as VEB filed an emergency inquiry proceeding in a Dutch business court known as the Enterprise Chamber seeking an order enjoining and prohibiting ABN from completing the sale of LaSalle. On May 3, 2007, the Enterprise Chamber entered an order prohibiting ABN from completing the sale of LaSalle prior to a vote of its shareholders. The Corporation and ABN appealed that matter to the Dutch Supreme Court. On July 13, 2007, the Dutch Supreme Court reversed the Enterprise Chamber's temporary injunction prohibiting the sale of LaSalle in the absence of a vote by ABN's shareholders approving the transaction. The Supreme Court held that no such vote was required and that, in addition, the lower court's injunction improperly affected the rights of the Corporation as a third party to the dispute between ABN and its shareholders.

20 Additional information regarding the foregoing is available from the filings made by the Corporation with the SEC, which filings can be inspected and copied at the public reference facilities maintained by the SEC at 100 F Street, N.E., Washington, D.C. 20549, United States, at prescribed rates. In addition, the SEC maintains a website at http://www.sec.gov, which contains reports, proxy statements and other information regarding registrants that file such information electronically with the SEC.

The information concerning the Corporation, the Bank and the foregoing mergers contained herein is furnished solely to provide limited introductory information and does not purport to be comprehensive. Such information is qualified in its entirety by the detailed information appearing in the documents and financial statements referenced herein.

The B of A Letter of Credit has been issued by the Bank. Moodys Investors Service, Inc. (Moodys) currently rates the Banks long-term debt as Aaa and short-term debt as P-1. The outlook is stable. Standard & Poors rates the Banks long-term debt as AA+ and its short-term debt as A-1+. The outlook is stable. Fitch Ratings, Inc. (Fitch) rates long-term debt of the Bank as AA and short-term debt as F1+. The outlook is stable. Further information with respect to such ratings may be obtained from Moodys, Standard & Poors and Fitch, respectively. No assurances can be given that the current ratings of the Banks instruments will be maintained.

The Bank will provide copies of the most recent Bank of America Corporation Annual Report on Form 10-K, any subsequent reports on Form 10-Q, and any required reports on Form 8-K (in each case as filed with the Commission pursuant to the Exchange Act), and the publicly available portions of the most recent quarterly Call Report of the Bank delivered to the Comptroller of the Currency, without charge, to each person to whom this document is delivered, on the written request of such person. Written requests should be directed to: Bank of America Corporate Communications, 100 North Tryon Street, 18th Floor, Charlotte, North Carolina 28255, Attention: Corporate Communications.

Bond Reserve Fund

In order to further secure the payment of interest and principal on the Bonds, the County is required upon the delivery of the 2007A Bonds and upon the delivery of any Parity Bonds, to deposit in the Bond Reserve Fund and thereafter maintain therein an amount equal to the Required Bond Reserve which is defined as the amount, as of any date of calculation, the least of (a) ten percent (10%) of the original principal amount of the Bonds, or (b) the Maximum Annual Debt Service, or (c) one hundred twenty-five percent (125%) of the average Annual Debt Service payable in the current and in all future Bond Years (provided that the amount calculated pursuant to clause (c) shall not increase at any time, except upon the issuance of a new Series of Bonds), all as determined by the County pursuant to the Code (the Required Bond Reserve).

Subject to the limits on the maximum annual Special Tax which may be levied within the District as described in Appendix B, the County has covenanted to levy Special Taxes in an amount that is anticipated to be sufficient in light of other intended uses of the Special Tax proceeds to maintain the balance in the Bond Reserve Fund at the Required Bond Reserve.

All moneys in the Bond Reserve Fund will be used and withdrawn by the County solely for the purpose of (i) paying the interest on or principal or redemption premiums, if any, on the Bonds in the event there is insufficient money in the Bond Redemption Fund available for this purpose, or (ii) retiring Bonds, in whole or in part, to the extent that the amount on deposit in the Bond Reserve Fund exceeds the required Bond Reserve due to a redemption of Bonds or a prepayment of Special Taxes; provided that, if as a result of a valuation of the investments held in the Bond Reserve Fund it is determined that the amount of money in the Bond Reserve Fund exceeds the Required Bond Reserve, the Director of Finance is required to withdraw the amount of such excess from the Bond Reserve Fund and deposit the same in the Special Tax Fund.

21 Covenant for Foreclosure

The Bond Resolution provides that the Special Tax is to be collected in the same manner as ordinary ad valorem property taxes are collected and, except as provided in the special covenant for foreclosure described below and in the Act, are subject to the same penalties and the same collection procedure, sale, and lien priority in case of delinquency as is provided for ad valorem property taxes.

Pursuant to Section 53356.1 of the Act, in the event of any delinquency in the payment of the Special Tax, the County may order the institution of a superior court action to foreclose the lien therefor within specified time limits. In such an action, the real property subject to the unpaid Special Tax may be sold at a judicial foreclosure sale. Such judicial foreclosure action is not mandatory. However, the County has covenanted for the benefit of the Holders of the Bonds that the County will, not later than October 15 of each year, review its public records relating to the collection of the Special Taxes in the District during the prior Fiscal Year in order to determine the amount of the Special Taxes collected and the amount thereof delinquent in the District in such prior Fiscal Year, and on the basis of such review the County will thereupon institute foreclosure proceedings as authorized by the Act in order to enforce the lien of each then delinquent installment of the Special Taxes in such prior Fiscal Year and will diligently prosecute and pursue such foreclosure proceedings to judgment and sale; provided, that if the total amount of such delinquencies is less than five percent (5%) of the total amount of Special Taxes levied in the District in such Fiscal Year and the Bond Reserve Fund is then fully funded in the amount of the Required Bond Reserve, the County shall not be required to institute any foreclosure proceedings against any Parcel of Taxable Property with a delinquency for such Fiscal Year of less than two thousand dollars ($2,000) or against any Parcels of Taxable Property owned by a common owner with total delinquencies for such Fiscal Year of less than five thousand dollars ($5,000).

In the event that sales or foreclosures of property are necessary, there could be a delay in payments to Holders of the Bonds pending such sales or the prosecution of such foreclosure proceedings and receipt by the County of the proceeds of sale. However, the County may adjust the Special Tax levied in the next fiscal year, subject to the limitation on the maximum Special Tax, to provide an amount required to pay interest on and principal of the Bonds, and the amount, if any, necessary to pay all current Expenses. There is, however, no assurance that the total amount of the Special Tax that could be levied and collected in the District will be at all times sufficient to pay the amounts required to be paid by the Bond Resolution, even if the Special Tax is levied at the maximum special tax rates. See SPECIAL RISK FACTORSMaximum Special Tax.

No assurance can be given that the real property subject to sale or foreclosure will be sold, or if sold, that the proceeds of sale will be sufficient to pay any delinquent installments of the Special Tax. The Act does not require the County to purchase or otherwise acquire any lot or parcel of property to be sold if there is no other purchaser at such sale. The Act and the Bond Resolution do specify that the Special Tax will have the same lien priority as for ad valorem property taxes in the case of delinquency. 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.

After the County has ordered a foreclosure action, it shall dismiss the action before judgment if the owner of the subject property (or any other person) pays all of the following amounts: the delinquent Special Tax and all penalties, interests and costs accrued; costs of the foreclosure action; authorized attorneys fees; the Countys administrative expenses in connection with the foreclosure action; and the tax collectors authorized costs.

Property Values

The extent to which the Special Tax provides security for the Bonds is, at least in part, a function of the value of each parcel of land within the District that is subject to the Special Tax because, in the event that a property owner defaults in the payment of the applicable Special Tax, such property owner will not have any

22 personal liability for the payment of the Special Tax, and the principal remedy available to the County will be to take foreclosure proceedings with respect to the subject property.

The Appraisal, a copy of which is attached as Appendix A to this Official Statement, sets forth the Appraisers opinion as to the market value of the Parcels of Taxable Property as of May 4, 2007, subject to certain assumptions and limiting conditions. The value reported in the Appraisal is the value of the Parcels of Taxable Property owned by each of the Developers. The respective values of each individual parcel within a Developers ownership will vary depending on factors such as the size, shape and permitted land use of the parcel and the costs associated with its development.

The estimated fee simple market value of the Parcels of Taxable Property reported in the Appraisal is based upon a subdivision development method for valuing the Parcels of Taxable Property which includes aspects of the cost, sales comparison and income approaches to determine the value. As a component of the subdivision development method, the Appraiser applied the sales comparison approach, and residual sales analyses were used to estimate the value for the various typical sized lot configuration within the District. All direct and indirect costs (exclusive of the costs of fee credits in the amount of $11,658,000 for the infrastructure that will be acquired from the Developer with 2007A Bond proceeds) and entrepreneurial profit were then deducted from the gross sales proceeds, and the resultant net proceeds were then discounted to present value at a market-derived rate over the development absorption period to indicate the market value of the Parcels of Taxable Property. The Appraiser relied upon estimates provided by the Developers to determine the amount of development costs and concluded that such estimates were reasonable. Based upon the methodology and the assumptions set forth in the Appraisal, the estimated value of the Parcels of Taxable Property as of May 4, 2007 was:

Vineyard Point (Lennar) $ 81,770,000 Vineyard Creek (Villages A through F) (Standard Pacific) 21,280,000 Vineyard Creek (Remainders G & H) (North Vineyard Investors) 3,320,000 $ 106,370,000

Additionally, the Appraiser has prepared an Update Appraisal pursuant to which the Appraiser has concluded that, as of August 6, 2007, the market value of the Taxable Property was not less than the value stated in the Appraisal. A copy of the Update Appraisal is attached to this Official Statement as Appendix A-1.

The Appraisal and the Update Appraisal merely indicate the Appraisers opinion as to the market value of the Parcels of Taxable Property as of the date and under the conditions and subject to the limitations set forth in the Appraisal and the Update Appraisal. See APPENDIX AAPPRAISAL REPORT and APPENDIX A-1UPDATE APPRAISAL for a complete list of the assumptions and limiting conditions applicable to the Appraisal and the Update Appraisal, including the costs projected to be incurred in connection with the development of the Parcels of Taxable Property as well as the costs to hold and market the Parcels of Taxable Property, and the discount rate applied to projected future revenues. If any of the Appraisers assumptions are not realized, the value of the Parcels of Taxable Property may be less than estimated in the Appraisal. The Appraisers opinion reflects conditions prevailing in the applicable market as of the date of value. The Appraisers opinion does not predict the future value of the Parcels of Taxable Property, and there can be no assurance that market conditions will not change adversely in the future.

23 The following table shows the appraised value to lien ratios of the Parcels of Taxable Property based on ownership and development status as set forth in the Appraisal.

VALUE-TO-LIEN

Allocable Share of Estimated Appraised 2007A Bonds Value to Lien(1) Based on Based on Based on Based on Appraised Projected FY Maximum Projected FY Maximum Owner Value 2007-08 Levy Special Tax(2) 2007-08 Levy Special Tax LW Vineyard Point, LLC $ 81,770,000 $14,415,000 $ 8,732,741 5.67 9.36 Standard Pacific Corp. 21,280,000 0 5,263,311 n/a 4.04 North Vineyard Investors GP 3,320,000 0 418,948 n/a 7.92 Total $ 106,370,000 $14,415,000 $14,415,000 5.67 7.38

(1) Does not include $359,584 in direct and overlapping tax and assessment debt which, if included, would reduce the estimated appraised value to lien ratios from those shown in the table to 7.20 to 1. (2) Based on anticipated development at buildout of Vineyard Point and Vineyard Creek. For purposes of the foregoing, buildout is based upon issuance of building permits for all Parcels of Taxable Property.

Direct and Overlapping Bonded Indebtedness

The property within the District is included within the boundaries of numerous overlapping agencies providing public services, some of which have outstanding bonded indebtedness secured by such property. The direct and overlapping bonded indebtedness of property in the District as of February 1, 2007 is shown in the table below (the Debt Report). In addition to the bonded indebtedness set forth in said table, new community facilities districts or special assessment districts may be formed which encompass all or a portion of the property and, upon approval of registered voters or landowners within such districts, may issue more bonds and levy additional special or other taxes or assessments. In addition to the Special Tax and other special taxes and assessments, the property owners in the District will be required to pay the general ad valorem property tax.

The Debt Report has been derived from data assembled and reported to the County by California Municipal Statistics Inc. Neither the County nor the Underwriter has independently verified the information in the Debt Report and do not guarantee its completeness or accuracy.

24 DIRECT AND OVERLAPPING DEBT STATEMENT

2006-07 Local Secured Assessed Valuation: $59,024,646

DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT: % Applicable Debt 6/1/07 Los Rios Community College District General Obligation Bonds 0.040 $ 63,086 Elk Grove Unified School District Community Facilities District No. 1 0.209 296,498 Sacramento County Community Facilities District No. 2005-2 100. - (1) TOTAL DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT $359,584

OVERLAPPING GENERAL FUND DEBT: Sacramento County General Fund Obligations 0.051% $185,504 Sacramento County Pension Obligations 0.051 481,932 Sacramento County Board of Education Certificates of Participation 0.051 6,253 Los Rios Community College District Certificates of Participation 0.043 3,034 Southgate Recreation and Park District Certificates of Participation 0.804 8,804 Sacramento Metropolitan Fire District Pension Obligations 0.115 78,452 TOTAL GROSS OVERLAPPING GENERAL FUND DEBT $763,979 Less: Sacramento County self-supporting obligations 3,972 TOTAL NET OVERLAPPING GENERAL FUND DEBT $760,007

GROSS COMBINED TOTAL DEBT $1,123,563 (2) NET COMBINED NET TOTAL DEBT $1,119,591

(1) Excludes Mello-Roos Act bonds to be sold. (2) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and tax allocation bonds and non-bonded capital lease obligations.

Source: California Municipal Statistics, Inc.

25 The following table sets forth a sample property tax bill for a home on land zoned SFR 3-5 and with a home value of $500,000.

ANALYSIS OF TAXES AND ASSESSMENTS AS A PERCENT OF SINGLE FAMILY UNIT VALUE (Fiscal Year 2007-08)

Assumptions AverageSingleFamilyHomeValue(1) $500,000.00

%of Levy Value Amount Ad Valorem Taxes General Property Tax 1.0000% $5,000.00 Los Rios College General Obligation Bond 0.0072 36.00

Assessment and Special Tax Liens CSA 1 0.0036% $17.88 CSA 10 0.0165 82.57 Elk Grove School District CFD #1 0.0400 200.00 Police CFD 0.0631 315.69 Southgate CFD (Park Maintenance)(2) 0.0863 431.64 Southgate Lighting & Landscaping District 0.0040 20.00 Zone 13 0.0031 15.32 CFD No. 2005-2 (North Vineyard Station No. 1)(1) 0.2919 1,459.56

Total Assessments and Taxes 1.5157% $7,578.66

(1) Average home value and special tax rate assume a home on land zoned SFR 3-5. (2) Fiscal Year 2006-07 special tax rate shown. Source: Lennar Communities, County of Sacramento; Goodwin Consulting Group, Inc.

Parity Bonds

The County may issue one or more Series of Parity Bonds payable from the Special Taxes as provided in the Bond Resolution on a parity with all other Bonds theretofore or thereafter issued under the Bond Resolution, but only subject to certain conditions precedent to the issuance of such Bonds as set forth in the Bond Resolution which include:

(a) The County is in compliance with all agreements, conditions, covenants and terms contained herein and in all Supplemental Resolutions required to be observed or performed by it, and no Event of Default has occurred and is continuing;

(b) The estimated Special Taxes available to the County if the Special Taxes were to be levied and collected at the maximum rate and amount on all Taxable Property in the District during each Fiscal Year that any Bonds of such Series of Bonds will be Outstanding (excluding the estimated Special Taxes from any Parcel of Taxable Property then delinquent in the payment of any Special Taxes) would produce (1) a sum equal to at least one hundred ten percent (110%) of the Annual Debt Service during the Bond Year which begins in such Fiscal Year, and (2) a sum equal to at least one hundred percent (100%) of the Annual Debt Service plus the estimated Expenses during each such Bond Year; all as shown by a certificate of an Independent Financial Consultant on file with the Paying Agent;

(c) The aggregate Value-to-Lien Ratio of all Taxable Property (excluding the Value of any Parcels of Taxable Property then delinquent in the payment of any Special Taxes) is at least 3:1; and for the

26 purposes of this paragraph, the term Value means either the current assessed valuation of a Parcel of Taxable Property or the appraised value of a Parcel of Taxable Property determined by an MAI appraiser, and the term Value-to-Lien Ratio means the ratio of (i) the Value of all Taxable Property to (ii) the aggregate principal amount of all Bonds Outstanding or proposed to be issued reasonably allocable to such Taxable Property plus the aggregate principal amount of all other assessment bonds and bonds issued under the Act reasonably allocable to such Taxable Property; and

(d) The aggregate Value-to-Lien Ratio of all Undeveloped Property (excluding the Value of any Parcel of Undeveloped Property then delinquent in the payment of any Special Taxes) shall be at least 2:1; and for the purposes of this paragraph, the term Value means either the current assessed valuation of a Parcel of Undeveloped Property or the appraised value of a Parcel of Undeveloped Property determined by an MAI appraiser, and the term Value-to-Lien Ratio means the Value of all Undeveloped Property to the aggregate principal amount of all Bonds Outstanding or proposed to be issued reasonably allocable to such Undeveloped Property plus the aggregate principal amount of all other assessment bonds and bonds issued under the Act reasonably allocable to such Undeveloped Property.

Notwithstanding the limitations contained in paragraphs (b), (c) and (d) above, nothing contained in the Bond Resolution shall limit the issuance of any Series of Bonds thereunder if after the issuance and delivery of such Series of Bonds none of the Bonds theretofore issued thereunder will be Outstanding, and nothing contained in the Bond Resolution shall limit the issuance of any Series of Bonds thereunder if after the issuance and delivery of such Series of Bonds the Annual Debt Service on all Bonds to be Outstanding after the issuance of the Bonds of such Series of Bonds in each Bond Year thereafter shall not be increased by reason of the issuance of such Series of Bonds.

THE DISTRICT

General Description

The District is situated west of Bradshaw Road, north of Gerber Road and south of Florin Road, within an unincorporated area of the County. The District consists of approximately 284 gross acres and includes two master planned communities known as Vineyard Point and Vineyard Creek, respectively. The District is planned for approximately 1,100 residential units, and an additional 6.1 acres of single family residential property, 10.5 acres of medium density residential property and 7.0 acres of multifamily residential property. The District is also expected to include approximately 13 acres of parks, an approximately 10 acre school site, and approximately 90 acres for streets and other utilities.

All of the property within the Vineyard Point master planned community, consisting of approximately 180 gross acres, is owned by LW Vineyard Point. LW Vineyard Point is the master developer and plans to develop Vineyard Point to a finished lot condition and then either construct single family or multifamily homes therein or sell some or all of the property within Vineyard Point to other merchant builders, including, but not limited to, affiliates of Lennar. At buildout, Vineyard Point is anticipated to consist of 532 low density detached single family homes and 193 medium density single family homes.

Vineyard Creek consists of approximately 104 gross acres, all, except for approximately 16.61 gross acres of which, are currently owned by Standard Pacific. Standard Pacifics plan for Vineyard Creek includes the development of approximately 373 single family residential lots and 6.9 acres of multifamily land upon which Standard Pacific anticipates constructing approximately 80 condominium units. The remaining approximately 16.61 gross acres in Vineyard Creek is owned by North Vineyard Investors and consists of 10.5 gross acres (5.0 net) of medium density residential land and 6.1 gross acres (2.1 net) of single family residential land.

27 B and C and substantial portions of the underground improvements in Gerber Road. LW Vineyard Point anticipates that Villages A, B and C will be paved and Gerber Road improvements will be completed by the fall of 2007. Villages D, E and F will be started in the summer of 2007 and completed in 2008. LW Vineyard Point anticipates selling the approximately 350 home sites in Villages A, B and C to one or more merchant builders (including affiliates of Lennar) in the third quarter of 2007.

As of August 1, 2007, all of the property in Vineyard Creek was in a raw land condition.

Facilities

Following the completion of various studies, the Board of Supervisors approved the North Vineyard Station Specific Plan Public Facilities Financing Plan for the North Vineyard Station (the Financing Plan)in November of 2004. The Financing Plan constituted a comprehensive plan for the financing of various public improvements in the North Vineyard Station Specific Plan area, including schools, roadway improvements, domestic water supply, sewage collection and treatment facilities, recreation and park facilities, regional transit facilities, drainage facilities, fire protection facilities, libraries and sheriff facilities. The facilities that are authorized to be financed by the District and their estimated cost include:

Cost Item Cost Estimate Roadway Improvements $ 19,609,747 Frontage Lane Improvements 3,107,817 Water Improvements 5,357,883 Sewer Improvements 5,724,300 Zone 11A Drainage Improvements 3,856,000 Supplemental Drainage Improvements 4,645,017 Estimated Cost of Eligible Facilities $ 42,300,764

It is anticipated that the Developer will receive credits against required development impact fees with respect to their respective developments for a portion of the public improvements financed by the District. Furthermore, it is not anticipated that proceeds of the 2007A Bonds and Parity Bonds, if any, will be sufficient to finance all of the facilities listed above. See caption THE DEVELOPERS FINANCING PLANS herein.

Status of Entitlements

The District is located within the area covered by the North Vineyard Station Specific Plan which was approved by the County Board of Supervisors on November 4, 1998. On November 10, 2004, the County Board of Supervisors approved tentative tract maps for both Vineyard Point and Vineyard Creek. The entire Vineyard Creek tentative tract map and a majority of the Vineyard Point tentative tract map are included in the District. Approximately 7.0 acres of multifamily residential property in Vineyard Point is planned as an affordable housing project and is not included within the boundaries of the District.

Lennar has recorded final Maps for Villages A through F which includes all of the Taxable Property in Vineyard Point.

Standard Pacifics tentative tract map for Vineyard Creek expires in December 2007. However, Standard Pacific has requested an extension from the County and expects to record a large lot final map for portions of Vineyard Creek in the fall of 2007, which would extend the tentative tract map for an additional 3 years.

A very small portion of Vineyard Point is currently located within the designated 100-year FEMA floodplain, as shown on the Flood Insurance Rate Maps (FIRM). Of the 725 home sites within the Vineyard Point Project, approximately 6 home sites within Village A are partially affected by the existence of the floodplain. The localized shallow floodplain is associated with the nearby Gerber Creek. The removal of the

28 site from the floodplain is anticipated to be accomplished by grading to raise the building pad elevations, and does not involve any levees or similar structures. Lennar has received from FEMA a Conditional Letter of Map Revision (CLOMR). The County has submitted a request to FEMA to issue a Final Letter of Map Revision (LOMR) to permanently take the affected area out of the 100-year floodplain. Issuance of the LOMR is required prior to home occupancy on those six lots.

Portions of Vineyard Creek are located within the designated 100-year FEMA flood plain, as shown on the FIRM. Of the approximately 373 home sites and the 6.9 acre multi-family site in Vineyard Creek owned by Standard Pacific approximately 124 units are affected by the existence of the flood plain. The localized shallow flood plain is associated with the nearby Gerber Creek and Elder Creek. The removal of the site from the flood plain is anticipated to be accomplished by grading to raise the building pad elevations and by expanding capacity of portions of Gerber Creek and Elder Creek. See THE DEVELOPMENT PLAN Standard Pacific Owned Property. Additional rights of way from adjacent property owners will be required for the Creek improvements. Standard Pacific expects to apply to FEMA for a CLOMR pursuant to which Standard Pacific expects to be required to complete the above mentioned grading and creek improvements to obtain a LOMR from FEMA, which is required prior to home occupancy of the affected lots.

Development within Vineyard Creek is conditioned upon obtaining two separate permits from the U.S. Army Corps of Engineers pursuant to Section 404 of the Clean Water Act (33 U.S.C. 1347) (each a 404 Permit). Lennar, on behalf of Standard Pacific has obtained the site specific 404 Permit required for Vineyard Creek. However, development of Vineyard Creek is also conditioned on the County obtaining a 404 Permit in connection with the proposed construction of the master plan drainage facilities for Vineyard Creek and other adjacent areas, which do not include Vineyard Point. This 404 Permit has not yet been obtained. Standard Pacific also obtained a 1603 permit from the Department of Fish and Game which is required to develop its portion of Vineyard Creek. It is not anticipated that Parity Bonds will be issued until such time as the remaining Section 404 permit for Vineyard Creek has been obtained.

Lennar has obtained the required 404 permit from the U.S. Army Corps of Engineers and the required 1603 permit from the Department of Fish and Game for Vineyard Point.

THE DEVELOPERS

The following information has been provided by the Developers and has not been verified and is not guaranteed as to accuracy or completeness by the County. The information herein regarding ownership of property in the District has been included because it is considered relevant to an informed evaluation of the 2007A Bonds. The inclusion in this Official Statement of information related to the Developers should not be construed to suggest that the 2007A Bonds or the Special Taxes that will be used to repay the 2007A Bonds are recourse obligations of any property owner in the District. A property owner may sell or otherwise dispose of land within the District or any interest therein at any time. The 2007A Bonds and the Special Taxes are not personal obligations of the Developers or any subsequent landowners and, in the event the Developers or any subsequent landowner default in the payment of the Special Taxes, the County may proceed with judicial foreclosure but has no direct recourse to the assets of the Developers or any subsequent landowner. The 2007A Bonds are secured solely by the Special Taxes and other amounts pledged under the Bond Resolution. See SECURITY AND SOURCES OF PAYMENT FOR THE BONDS and SPECIAL RISK FACTORS herein.

LW Vineyard Point, LLC

LW Vineyard Point, LLC, is a Delaware, Limited Liability Company, whose members are (i) Lennar Land Partners II, a Florida general partnership, which is wholly-owned by LandSource Holding Company, LLC, a Delaware limited liability company, which is wholly-owned by LandSource Communities Development, LLC of which Lennar Homes of California, Inc., a California corporation (Lennar)isthe managing member; (ii) Reynen & Bardis Communities Inc., a California corporation (Reynen & Bardis);

29 and (iii) Lennar. Lennar Corporation (Lennar Corporation), a diversified real estate company headquartered in Miami, Florida and publicly traded on the New York Stock Exchange under the symbol LEN. It has two classes of stock: Class A common stock which is entitled to one vote per share; and Class B common stock, which is entitled to ten votes per share. Stuart Miller, the President and Chief Executive Officer, has voting control, through family owned entities and personal holdings of Class A and Class B common stock. This entitles Mr. Miller to approximately 48% of the combined votes that can be cast by the holders of their outstanding Class A and Class B common stock combined.

Lennar Corporation started as a Dade County, Florida homebuilder in 1954 and currently reports that it is one of the largest homebuilders in the United States with operations in Arizona, California, Colorado, Florida, Illinois, Maryland, Minnesota, Nevada, New Jersey, North Carolina, Ohio, Pennsylvania, South Carolina, Texas, Virginia, West Virginia, and Wisconsin. Lennar currently employs over 10,000 associates company-wide. Year-ended 2006 marked the ninth year Lennar Corporation through its various affiliates has operated in the Sacramento Area.

Lennar Corporation is subject to the informational requirements of the Securities Exchange Act of 1934, as amended, and in accordance therewith files reports, proxy statements and other information with the SEC. Such filings, particularly the Annual Report on Form 10-K and its most recent Quarterly Report on Form 10-Q, may be inspected and copied at the public reference facilities maintained by the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates. Such files can also be accessed over the Internet at the SECs website at www.sec.gov. Copies of such material can be obtained from the public reference section of the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates. In addition, the aforementioned material may also be inspected at the office of the NYSE at 20 Broad Street, New York, New York 10005. Additionally, Lennar Corporation provides investor relations information on its website.

Reynen & Bardis Corporation. Reynen & Bardis which is a member of LW Vineyard Point, LLC, is the parent company for all Reynen & Bardis subsidiaries. Mr. John D. Reynen and Mr. Christo D. Bardis each have over 30 years of residential development experience, beginning in 1969 with their development of a multifamily residential project near Sacramento. Since then, Mr. Reynen and Mr. Bardis have partnered to develop over 10,000 finished homes, over 10,000 finished lots and several thousand acres of residentially- zoned land, mostly in the Sacramento area. In 1982, Mr. Reynen and Mr. Bardis formed a homebuilding venture with Tom Winn that later became Winncrest Homes. From its formation until the company was sold to Lennar Corporation in 1998, Winncrest Homes built over 7,000 homes in the Sacramento area.

With its headquarters in Sacramento, California, Reynen & Bardis primarily builds and sells homes in the Central Valley and Sacramento areas of California as well as in the Reno/Sparks area of Nevada. Information on current home offerings of Reynen & Bardis can be found on the internet at its website or by calling the home office at (916) 366-3665.

Standard Pacific Corp.

Standard Pacific Corp., a Delaware Corporation (Standard Pacific) is the developer of a majority of the property located within Vineyard Creek. Standard Pacific was founded in Orange County in 1966 and is publicly owned and traded on the New York Stock Exchange under the symbol SPF. Standard Pacific is one of the largest builders in the State of California. A listing of Standard Pacifics current projects may be found on its website.

Standard Pacific is subject to the informational requirements of the Securities Exchange Act of 1934, as amended, and in accordance therewith files reports, proxy statements and other information with the SEC. Such filings, particularly the Annual Report on Form 10-K and its most recent Quarterly Report on Form 10 Q, may be inspected and copied at the public reference facilities maintained by the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates. Such files can also be accessed over the Internet at the SECs website at www.sec.gov. Copies of such material can be obtained from the public reference section of the SEC

30 at 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates. In addition, the aforementioned material may also be inspected at the office of the NYSE at 20 Broad Street, New York, New York 10005.

The Internet addresses and references to filings with the SEC are included for reference only, and the information on these Internet sites and on file with the SEC are not a part of this Official Statement and are not incorporated by reference into this Official Statement.

Standard Pacific purchased its property within Vineyard Creek from U.S. Home Corporation (US Home), an affiliate of Lennar, in August of 2005. In 2007, Standard Pacific failed to make certain payments when due to US Home under a promissory note executed in connection with its purchase of the property and US Home caused a notice of default to be recorded under the deed of trust securing the promissory note. Standard Pacific and US Home have subsequently entered into a supplement to the purchase agreement for the property (the Supplemental Purchase Agreement) which significantly reduced the purchase price Standard Pacific paid for the property and, in return, provides for profit participation in the development of the property between US Home and Standard Pacific. See THE DEVELOPERS FINANCING PLANSStandard Pacific herein.

North Vineyards Investors, GP

North Vineyards Investors, GP is a privately held general partnership. North Vineyards Investors owns approximately 16.61 acres of the property within Vineyard Creek.

THE DEVELOPMENT PLAN

The information under this heading includes forward-looking statements SEE CAUTIONARY INFORMATION REGARDING FORWARDLOOKING STATEMENTS IN THIS OFFICIAL STATEMENT on the page immediately preceding the Table of Contents. Moreover, the information under this heading has been obtained from the Developers, and the County has not independently verified it, cannot assure that it is accurate and complete, and makes no representation as to its accuracy and completeness. The following description sets forth the current development plans of each of the Developers with respect to their ownership of property within the District. No assurance can be given that the proposed development within the District will occur as described below.

Vineyard Point Development Plan LW Vineyard Point

The Vineyard Point site includes land for approximately 725 single family home sites, a 6.9 acre multifamily site (which is not located within the boundaries of the district and not subject to the Special Tax), an elementary school site, park site, detention basin, water tank site, creek corridor and wetland preserve parcel. Lennar plans to develop the infrastructure and construct homes within the communities. The home sites are comprised of three distinct sizes to accommodate previously zoned product types. The home building product lines, while not known specifically at this time, are expected to fit within the following ranges:

Number Minimum Number of of Units Zoning Lot Size Home Size Bedrooms 285 RD-5 55 x 105 2,000 - 3,400 sq.ft. 3-5 247 RD-7 45 x 105 1,500 - 2,800 sq.ft. 3-4 193 RD-10 50 x50 1,200 - 1,800 sq. ft. 3-4

Source: LW Vineyard Point.

As of August 1, 2007, development in the Vineyard Point portion of the District had commenced. Improvements completed to date include: mass grading of site and detention basin, wet utilities to Villages A, B and C and substantial portions of the underground improvements in Gerber Road. LW Vineyard Point

31 anticipates that Villages A, B and C will be paved and Gerber Road improvements will be completed by the fall of 2007. Villages D, E and F will be started in the summer of 2007 and completed in 2008. LW Vineyard Point anticipates selling the approximately 350 home sites in Villages A, B and C to one or more merchant builders (including affiliates of Lennar) in the third quarter of 2007. The multifamily site (which is located outside of the boundaries of the District) has been transferred to a developer of affordable multifamily apartments, which is intended to satisfy the County of Sacramento affordable Housing Ordinance requirements for all of Vineyard Point single family and multifamily units.

The park site is expected to be transferred to Southgate Recreation and Park District and the school site is expected to be sold to the Elk Grove Unified School District. LW Vineyard Point will develop the RD-5 and RD-7 home sites referenced above during the 2007 construction season along with the accompanying infrastructure including Gerber Road which contains trunk water and trunk sewer facilities along with dry utilities. LW Vineyard Point anticipates that the detention basin and onsite drainage facilities will also be constructed during the 2007 construction season and model home construction is anticipated to begin in the summer of 2007. Lennar expects to begin home site development of the RD-10 type product referenced above in the 2007 construction season and models to begin in that area during the 2008 construction season. The site is currently accessed by both Gerber Road and Bradshaw Road.

The discussion set forth above merely reflects LW Vineyard Points present plans for Vineyard Point. Those plans are subject to change. LW Vineyard Point is under no legal obligation of any kind whatsoever to install any of the necessary infrastructure (other than improvement to be acquired from Lennar with 2007A Bond proceeds), and there can be no assurance that LW Vineyard Point will have the resources, willingness and ability to successfully implement the development plan described above. See THE DEVELOPERS FINANCING PLANSLW Vineyard Point herein.

Vineyard Creek Development Plan Standard Pacific Owned Property

The Vineyard Creek site includes land for approximately 373 single-family home sites, a 6.9 acre multi-family site zoned RD-20 which is anticipated to be developed with approximately 80 condominium units, a park site, a detention basin and various creek corridors. The 373 single-family home sites are comprised of two distinct lot sizes. The 6.9 acre RD-20 site will consist of approximately 80 units, which are anticipated to be built out as condominiums. In all, Standard Pacific expects approximately 454 units to be built in Vineyard Creek. The units are in the design stage, however their sizes are expected to fall within the following ranges:

Number Minimum Number of of Units Zoning Lot Size Home Size Bedrooms 271 RD-5 50 x 105 1,680 2,900 sq.ft. 3-5 102 RD-7 45 x 105 1,600 - 2,400 sq.ft. 3-4 80 RD-20 condominium 1,200 - 1,800 sq. ft. 3-4

Standard Pacific anticipates that the required detention basin and creek corridor improvements will be constructed concurrently with the development of the home sites. Such improvements are required in order to remove portions of the site from the 100 year flood plain. See THE DISTRICTStatus of Entitlements above. The park site is anticipated to be graded with the single-family home sites and will be transferred to the Southgate Recreation and Park District. The 6.9 acre RD-20 multi-family site will be developed at a later date.

Vineyard Creek is currently accessed from Highway 99 at the Florin Road exit and from Highway 50 at the Bradshaw Road exit. Vineyard Creek will be developed in phases that correspond to the completion of off-site utilities and on-site infrastructure. The initial phase of construction is anticipated to be the mass grading operation for the entire site, which will include the in-tract lots and streets, detention basin, park site, Gerber and Elder Creek drainage improvements and the extension of Waterman Road as well as the in-tract subdivision work such as utilities and street improvements. This is anticipated to include sewer, storm drain,

32 water, electric, gas, cable and telephone. Once the utilities are installed, the surface improvements, such as streets, curb and gutter, sidewalk and landscaping will be completed. The next phase of construction is anticipated to consist of Florin Road widening.

The following dates and time frames are contingent upon the issuance by the Army Corps of Engineers of a Section 404 permit required in connection with the Drainage Master Plan, which has been filed by the County of Sacramento Water Resources Department. Once the Section 404 permit has been successfully obtained by the County, Standard Pacific will be permitted to commence the grading operation and construction of the subdivisions and corresponding roadways that comprise Vineyard Creek. Standard Pacific expects to begin grading in April of 2008 with model home construction commencing late 2008 to early 2009, weather and market conditions permitting. Subject to market conditions, production home construction and sales are anticipated to begin in the first quarter of 2009.

Vineyard Creek Development Plan North Vineyard Investors

North Vineyard Investors, G.P. does not currently have plans to develop its property within the District.

THE DEVELOPERS FINANCING PLANS

The information under this heading includes forward-looking statements. See, CAUTIONARY INFORMATION REGARDING FORWARD-LOOKING STATEMENTS IN THIS OFFICIAL STATEMENT on the page immediately preceding the Table of Contents. As previously discussed, such forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in or implied by such statements. Readers are cautioned not to place undue reliance on such forward-looking statements, which only speak as of the date of this Official Statement. Moreover, the information under this heading has been obtained from the Developers; and the County has not independently verified it, cannot assure that it is accurate and complete and makes no representation as to its accuracy and completeness.

LW Vineyard Point

LW Vineyard Point believes that the funding sources described below are expected to be sufficient to complete LW Vineyard Point There is no assurance, however, that amounts necessary to finance any outstanding development costs will be available from LW Vineyard Point, any other entities described below, the sale of property within the District, or any other source when needed. Neither LW Vineyard Point nor any of its affiliated entities are under any legal obligation of any kind to expend funds for the development of property within the District. Any contributions by LW Vineyard Point or any of its affiliated entities to fund the costs of such development are entirely voluntary.

As discussed above, LW Vineyard Points current plan is to develop Vineyard Point into finished lots and to sell such lots to various merchant builders which may include one or more affiliates of Lennar. LW Vineyard Point has financed a portion of its development activities in Vineyard Point from the proceeds of a Secured Revolving Line of Credit (the Land Loan) from City National Bank and U.S. Bank National Association. The Land Loan is secured by a deed of trust on the property within Vineyard Point and matures on November 1, 2008 subject to extension until May 1, 2009. As of August 1, 2007, LW Vineyard Point had an outstanding balance of approximately $49,300,000 on the Land Loan and approximately $4,700,000 of remaining capacity on the Land Loan.

33 The following table shows Lennars estimated sources and uses of funds for developing Vineyard Point:

COUNTY OF SACRAMENTO COMMUNITY FACILITIES DISTRICT NO. 2005-2 (NORTH VINEYARD STATION NO. 1) LW VINEYARD POINT CASH FLOW AS OF MAY 1, 2007

Through May 1, 2007 to May 1, 2008 to May 1, 2009 to Total Budget May 1, 2007 April 30, 2008 April 30, 2009 April 30, 2010+ Sources of Funds Land Sales Revenue(1) $ 79,507,000 $ 701,400 $45,800,200 $32,691,400 $ 314,000 Estimated 2007A Bond Proceeds 12,400,000 0 12,400,000 0 0 Reimbursements 39,203,000 400,000 16,301,000 12,918,400 9,583,600 Land Loan 54,000,000 47,000,000 7,000,000 0 Total Sources of Funds $ 185,110,000 $48,101,400 $81,501,200 $45,609,800 $ 9,897,600

Uses of Funds Land Cost $ 12,000,000 $12,000,000 $ 0 $ 0 $ 0 Land Loan Payment 54,000,000 0 41,898,500 12,101,500 0 Land Loan Interest & Closing Costs 4,276,900 1,934,800 2,138,500 203,600 0 Property Tax 289,600 211,700 77,900 0 0 Affordable Subsidy 2,996,200 2,996,200 0 0 0 Village A 4,428,100 2,656,900 1,771,200 0 0 Village B 1,615,100 969,100 646,000 0 0 Village C 6,820,700 4,092,400 2,728,300 0 0 Village D 4,874,800 2,924,900 1,949,900 0 0 Village E 968,800 581,300 387,500 0 0 Village F 6,118,600 3,671,200 2,447,400 0 0 Gerber Road 15,920,100 4,776,000 11,144,100 0 0 Bradshaw Road 1,238,100 61,900 123,800 1,052,400 0 Drainage Basin/PS 4,189,400 2,932,600 1,256,800 0 0 Gerber Creek 490,300 392,200 98,100 0 0 Park 2,182,500 0 873,000 1,309,500 0 Water T-main 3,700,000 370,000 3,330,000 0 0 Common Cost 7,000,000 5,250,000 1,750,000 0 0 General & Administrative 905,000 254,700 279,600 185,400 185,300 Total Uses of Funds $ 134,014,200 $46,075,900 $72,900,600 $14,852,400 $ 185,300

Net Cash Flow $ 51,095,800 $ 2,025,500 $ 8,600,600 $30,757,400 $ 9,712,300

Cumulative Cash Flow $ 2,025,500 $10,626,100 $41,383,500 $51,095,800

(1) Net of closing costs. Source: LW Vineyard Point.

34 Standard Pacific

Standard Pacific believes that the funding sources described below are expected to be sufficient to complete Standard Pacific activities and obligations with respect to its development as described herein. There is no assurance, however, that amounts necessary to finance any outstanding development costs will be available from Standard Pacific, the sale of property within the District, or any other source when needed. Neither Standard Pacific nor any of its affiliated entities are under any legal obligation of any kind to expend funds for the development of property within the District. Any contributions by Standard Pacific or any of its affiliated entities to fund the costs of such development are entirely voluntary.

As discussed above, Standard Pacifics current plan is to construct single family homes and condominiums. Standard Pacific has financed the purchase of its property in Vineyard Creek through a promissory note from US Home, which as of June 30, 2007 was outstanding in the principal amount of $26,375,000. Standard Pacifics development costs described below are subject to a number of variables, some of which may be beyond Standard Pacifics control, and the actual aggregate cost of its development activities within the District may be significantly more or less than the foregoing estimates. Standard Pacific plans to use internal corporate resources to fund lot development and anticipates using a combination of internal resources and revenues from sales of completed homes within the project to fund home construction. Other than the promissory note from U.S. Home pursuant to which it has secured the purchase of the property, Standard Pacific does not currently plan to obtain third-party financing secured by its property in the District. However, notwithstanding the foregoing, there is no assurance that funds from internal corporate sources will be available or that such development will be completed. Standard Pacific and its affiliates are under no obligation of any kind to fund or develop the property or to fund or develop other property within the District in any manner. If and to the extent Standard Pacific does not complete its anticipated development of the property, portions of the project may not be developed.

Pursuant to the Supplemental Purchase Agreement, Standard Pacific is required to share a portion of its profits from the project with US Home if certain minimum profit thresholds are reached. The pro forma below assumes that such profit sharing thresholds are not reached. If such profit sharing thresholds are reached, Standard Pacific anticipates that the cash flow shown below would be improved.

35 6,450,000 63,512,365 $248,930,103 $ 12,153262 0 49,498,175 2011 and thereafter Total $ 90,258,738 $ 12,153,262 0 14,014,190 $60,909,000 $0 0 6,450,000 $41,285,050 $0 0 $31,634,341 $0 0 STANDARD PACIFIC COUNTY OF SACRAMENTO 10,764,501 Dec. 2007 2008 2009 2010 July 2007- CASH FLOW AS OF JUNE 30, 2007 $ $0 (NORTH VINEYARD STATION NO. 1) COMMUNITY FACILITIES DISTRICT NO. 2005-2 Through $ 5,227,378 $ 5,625,000 $ 5,000,000 $ 6,764,000 $ 9,880,000 $ 7,817,083 $ 40,313,461 June 30, 2007 (1) Mass GradingFlorin Road 0 0 2,405,000 200,000 3,268,400 0 0 0 0 0 3,468,400 2,405,000 Waterman RoadROW acquisition 3,323,392 0 2,282,444 0 6,018,160 0 0 0 0 0 0 5,605,836 6,018,160 Other 0 0 1,920,450 1,920,450 0 3,840,900 Engineering 1,879,703 1,607,357 1,071,571 0 0 0 4,558,631 Land Home Sales RevenueInternal Funding $ 14,078,473 0 10,764,501 $ 31,634,341 0 7,035,050 $ 0 $27,800,000 0 $60,909,000 $102,412,000 $191,121,000 0 63,512,365 Unit 1Unit 2 & 3Unit 4 0 0 0 0 0 0 6,567,000 2,008,610 825,800 0 0 2,590,100 0 0 0 0 0 7,392,800 0 2,008,610 2,590,100 Off-tract Improvements: Estimated Bond Proceeds 0 Includes repayment of promissory note and accrued interest to US Homes for the purchase price of the property. Internal Funding Repayment 0 Source: Standard Pacific FeesHome ConstructionFinancing CostSales and MarketingGeneral and Administrative 146,951 3,357,043 11,834 0 132,172 195,000 498,000 2,535,000 556,700 1,584,000 0 16,250,000 0 3,195,000 2,851,000 1,600,000 23,115,000 7,542,000 2,250,000 2,734,000 34,679,049 0 9,395,000 76,921,000 1,975,000 1,112,000 667,957 9,254,128 1,863,166 2,436,360 11,692,000 30,075,000 7,700,000 4,096,480 7,644,840 Total Sources of FundsUse of Funds: $ 14,078,473 $10,764,501 $31,634,341 $41,285,050 $60,090,000 $102,412,000 $261,083,365 Total Uses of FundsNet Cash Flow(1) $ 14,078,473 $ 0 Sources of Funds: In-tract Improvements Reimbursements 0 0 (550,000) (4,088,700) (4,561,000) (17,617,300) (26,817,000)

36 North Vineyard Investors

North Vineyard Investors has not provided a financing plan for the property it owns in Vineyard Creek.

SPECIAL RISK FACTORS

Introduction

The principal source of payment of debt service on the Bonds will be payments of the Special Tax made with respect to the Taxable Property in the District. As discussed under SECURITY AND SOURCES OF PAYMENT FOR THE BONDSThe Special Tax, the Special Tax is to be levied annually against all Taxable Property either at the maximum rates authorized by the Special Tax Formula or at such lower rates as are determined by the Board of Supervisors to raise sufficient funds to comply with the agreements, conditions, covenants and terms contained in the Bond Resolution. The Special Tax is to be collected on the tax roll of the County of Sacramento at the same time and in the same manner as general ad valorem real property taxes are collected. The annual levy of the Special Tax cannot be made at a tax rate higher than the maximum tax rates established by the Special Tax Formula even if that rate is insufficient to comply with the agreements, conditions, covenants and terms contained in the Bond Resolution. See discussions below under Levy of Special Tax and Collection of the Special Tax.

Payment of the Special Tax is secured by a lien against Parcels of Taxable Property in the District. In the event an installment of the Special Tax included in the tax bill for a Parcel of Taxable Property is not paid when due, the County has covenanted that, under certain circumstances, it will institute foreclosure proceedings in court to cause the Parcel of Taxable Property to be sold in order to recover the delinquent amount from the sale proceeds. Tax roll collection remedies will be used in the event that foreclosure proceedings are not instituted. Foreclosure and sale may not always result in the recovery of the full amount of delinquent installments of the Special Tax. See Collection of the Special Tax.

The sufficiency of the tax or foreclosure sale proceeds to cover the delinquent amount depends in part upon the market for and the value of the parcel at the time of the tax or foreclosure sale. The value of the Parcels of Taxable Property in the District, and the relationship of such value to the principal amount of the 2007A Bonds, and the proportionate share of debt service of the 2007A Bonds to be borne by the parcels of various landowners, are based upon present facts and circumstances. Future substantial adverse changes in those facts and circumstances may result in future value relationships and proportionate shares of debt service, that differ significantly from the current appraised values and such relationships and shares. Those facts and circumstances include land ownership, development plans and other factors affecting the progress of land development, natural conditions relating to the enjoyment of property and legal requirements affecting the development of property, as well as a number of additional factors many of which are discussed or referred to in this section of the Official Statement. These factors may result in a significant erosion in value, with consequent reduced security for the 2007A Bonds.

Sufficiency of the tax or foreclosure sale proceeds to cover a delinquency may also depend upon the amount of prior or parity liens and similar claims. Thus, a variety of governmental liens may presently exist or may arise in the future with respect to a parcel which, unless subordinate to the Special Tax, may effectively reduce the value of the parcel that is realizable for the benefit of the Special Tax. Further, other governmental claims, such as hazardous substance claims, may affect the realizable value even though such claims may not rise to the status of liens. See Hazardous Substances.

Timely foreclosure and sale proceedings with respect to a parcel may be forestalled or delayed by a stay in the event the owner of the parcel becomes the subject of bankruptcy proceedings. Not only may foreclosure and sale proceedings be forestalled or delayed, but the sale of a parcel may also be similarly

37 affected by a bankruptcy stay. Further, should the stay not be lifted, payment of the Special Tax may be subordinated to bankruptcy law priorities. See Bankruptcy and Legal Delays.

Although bankruptcy proceedings may forestall or delay a foreclosure and sale or a tax sale of a delinquent parcel, the Special Tax is secured by a lien which, assuming proper procedures are followed, may be enforced against the parcel. However, there will not be any recourse against a bankrupt property owner since the owner is not personally obligated to pay the Special Tax. Further, if proper disclosure of the authorization of the Special Tax is not made to the owner, the willingness or ability of an owner to pay the Special Tax may be adversely affected. See Payment of the Special Tax Not a Personal Obligation of Property Owners.

The County is not obligated to pay debt service on the Bonds in the event collections of the Special Tax are delinquent and no money is available from the Redemption Account. See No Obligation to Pay Debt Service.

Even if debt service is timely paid, it is possible that interest on the Bonds may have to be included in the gross income of the owner of the Bonds by reason of some circumstance occurring subsequent to issuance of the Bonds, thereby reducing the after-tax yield. See Loss of Tax Exemption.

Zoning and Land Use Decisions

Land development is subject to comprehensive federal, state and local regulations. Approval is required from various agencies in connection with the layout and design of developments, the nature and extent of improvements to be required in connection therewith, construction activity, land use, zoning, school and health requirements, and numerous other matters. Failure to obtain any such approval or to satisfy any such governmental requirement in a timely manner would adversely affect the successful development of the District. Currently, all of the property within Vineyard Creek is undeveloped, and development in Vineyard Point is underway. As discussed above under the captions THE DISTRICTStatus of Entitlements and THE DEVELOPMENT PLAN, portions of the Taxable Property require additional entitlements to be developed. In particular, development within Vineyard Creek is contingent upon obtaining a Section 404 permit from the U.S. Army Corps of Engineers. Also Lennar is waiting for a FEMA LOMR to remove 6 lots within Village A of Vineyard Point from the 100-year Floodplain in order to receive certificates of occupancy on such lots. Additionally, Standard Pacific needs to grade its property within Vineyard Creek and complete certain improvements to portions of Elder and Gerber Creeks in order to obtain a FEMA LOMR necessary to occupy significant portions of its development. Such creek improvements require the acquisition of additional rights of way from adjacent property owners. See THE DISTRICTStatus of Entitlements above. Standard Pacific has yet to commence these improvements, and cannot do so until the 404 Permit is issued by the Army Corps in connection with the Drainage Master Plan.

The Special Tax is to be levied annually based upon the land use categories in effect and location for each Parcel of Taxable Property. The zoning and land use decisions made by the Board of Supervisors can impact the tax base of the Special Tax as well as the actual rate of development of the property within the District that has not yet been developed.

Concentration of Ownership

All of the taxable land within the District is currently owned by the Developers. See SECURITY AND SOURCE OF PAYMENT FOR THE BONDSSpecial Tax Analysis above for a description of each Developers share of the projected Fiscal Year 2007-08 Special Tax levy and the maximum Special Tax. Until the sale of parcels by the Developers, the receipt of the Special Taxes is dependent on their willingness and ability to pay the Special Taxes when due. Failure of the Developers, or any successor, to pay the annual Special Taxes when due could result in a default in payments of the principal of, and interest on, the Bonds, when due. See SPECIAL RISK FACTORSFailure to Develop Properties below.

38 No assurance can be made that the Developers, or their successors, will complete the intended construction and development in the District. See SPECIAL RISK FACTORSFailure to Develop Properties below. As a result, no assurance can be given that the Developers, and their successors, will pay Special Taxes in the future or that they will be able to pay such Special Taxes on a timely basis. See SPECIAL RISK FACTORSBankruptcy and Foreclosure below, for a discussion of certain limitations on the Districts ability to pursue judicial proceedings with respect to delinquent parcels.

Levy of Special Tax

The principal source of payment of debt service on the Bonds is the proceeds of the annual levy and collection of the Special Tax against Parcels of Taxable Property in the District. The annual levy of the Special Tax is subject to the maximum tax rates authorized. The levies cannot be made at higher rates even if the failure to do so would mean that the estimated proceeds of the levy and collection of the Special Tax, together with other available funds, will not be sufficient to pay debt service on the Bonds. Other funds which might be available include funds derived from the payment of delinquent Special Tax levies and funds derived from the tax sale or foreclosure and sale of parcels on which levies of the Special Tax are delinquent.

The levy of the Special Tax will rarely, if ever, result in a uniform relationship between the value of particular parcels and the amount of the levy of the Special Tax against such parcels. Thus, there will rarely, if ever, be a uniform relationship between the value of such parcels and their proportionate share of debt service on the Bonds.

The Special Tax levied in any particular tax year on a parcel is based upon the revenue needs and application of the Special Tax Formula. Application of the Special Tax Formula will, in turn, be dependent upon certain factors with respect to each parcel (its location, land use classification and size) in comparison to similar factors with respect to the other parcels in the District. Thus, in addition to annual variations of the revenue needs from the Special Tax, the following are some of the factors which might cause the levy of the Special Tax on any particular parcel to vary from the Special Tax that might otherwise be expected:

Changes in the land use classifications applicable to parcels;

Reduction in the number of parcels and/or the aggregate area thereof for such reasons as acquisition of parcels by a government and failure of the government to pay the Special Tax based upon a claim of exemption or, in the case of the federal government or an agency thereof, immunity from taxation; and

Failure of the owners of parcels to pay the Special Tax and delays in the collection of or inability to collect the Special Tax by tax sale or foreclosure and sale of the delinquent parcels.

Additionally, Section 53321(d) of the Act provides that under no circumstances will Special Taxes levied against any parcel used for private residential purposes be increased as a consequence of a delinquency or default by the owner of any other parcel or parcels within a community facilities district by more than 10%. It is unclear from the text of Section 53321(d) of the Act how to apply the 10% limitation. Some interpret the limitation as being equal to 10% of the previous Fiscal Years special tax levy. Under this interpretation, the District could continue to levy the Special Tax at 100% of the assigned Special Tax for each Parcel of Taxable Property (as it did in Fiscal Year 2007-08 plus the 2% annual increase), because such a levy would not represent an increase over the previous Fiscal Years levy (other than the permitted 2% increase). Others interpret the limitation as being equal to 10% of a hypothetical special tax levy for each Fiscal Year, that is calculated on the assumption that there were no delinquencies in previous Fiscal Years. Under this interpretation, the Community Facilities District would have to determine what rate of Special Tax would need to be levied in Fiscal Year 2008-09 and each subsequent Fiscal Year in order to satisfy the applicable Special Tax Requirement assuming that there had been no prior delinquencies; and the District could increase that rate

39 by only 10% even if that increase would not produce sufficient Special Taxes to pay debt service on the Bonds in the event of a repeat of the previous Fiscal Years delinquencies.

Collection of the Special Tax

In order for the County to pay debt service on the Bonds it will generally be necessary that the Special Tax be paid in a timely manner. The Bond Resolution provides that the Special Tax is to be collected in the same manner as ordinary ad valorem property taxes are collected and, except as provided in the special covenant for foreclosure described above and in the Act, is to be subject to the same penalties and the same procedure, sale and lien priority in case of delinquency as is provided for ad valorem property taxes. Pursuant to these procedures, if taxes are unpaid for a period of five years or more, the property is subject to sale by the County.

Pursuant to the Act, in the event of any delinquency in the payment of the Special Tax, the County may order the institution of a superior court action to foreclose the lien therefor within specified time limits. In such an action, the real property subject to the unpaid amount may be sold at judicial foreclosure sale. Such judicial foreclosure action is not mandatory. However, the County has covenanted for the benefit of the owners of the Bonds that it will institute foreclosure proceedings as authorized by the Act in order to enforce the lien of the delinquent installments of the Special Tax under certain circumstances. See SECURITY AND SOURCES OF PAYMENT FOR THE BONDSCovenant for Foreclosure. In the event that foreclosure proceedings are commenced, such foreclosure proceedings could be stayed by the commencement of bankruptcy proceedings by or against the owner of the property being foreclosed. In the event that sales or foreclosures of property are necessary, there could be a delay in payments to Holders of the Bonds pending such sales or the prosecution of foreclosure proceedings and receipt by the County of the proceeds of sale.

Exempt Properties

Certain properties are exempt from the Special Tax in accordance with the Special Tax Formula. 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 in the District which is acquired by a public entity through a negotiated transaction or by gift or devise and which is not otherwise exempt from the Special Tax, will continue to be subject to the Special Tax. 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 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 in the District, it may be unconstitutional. If for any reason property in the District becomes exempt from taxation by reason of ownership by a non-taxable entity such as the federal government or another public agency, subject to the limitation of the maximum authorized rates, the Special Tax will be reallocated to the remaining taxable properties in the District in the manner set forth in the Special Tax Formula. 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 in the District becomes exempt from the Special Tax because of public ownership, or otherwise, the maximum annual special tax which 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 could 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.

40 Failure to Develop Properties

Development of property within the District is ongoing. See the captions THE DEVELOPMENT PLAN,THE DISTRICTStatus of Entitlements for a description of the development status of the Taxable Property. Undeveloped or partially developed land is inherently less valuable than developed land and provides less security to the Bondowners should it be necessary for the District to foreclose on the property due to the nonpayment of Special Taxes. The failure to complete development of the required infrastructure for development in the District as planned, or substantial delays in the completion of the development or the required infrastructure for the development due to litigation or other causes may reduce the value of the property within the District and increase the length of time during which Special Taxes will be payable from undeveloped property, and may affect the willingness and ability of the owners of property within the District to pay the Special Taxes when due.

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

The Developers and future merchant builders may likely need to obtain financing to complete the development of the units that they are developing. No assurance can be given that the required funding will be secured or that the proposed development will be partially or fully completed, and it is possible that cost overruns will be incurred which will require additional funding beyond what the Developers, have projected, which may or may not be available. See THE DEVELOPERS FINANCING PLANS herein.

The future development of the land within the District may be adversely affected by existing or future governmental policies, or both, restricting or controlling the development of land in the District. See THE DISTRICTStatus of Entitlements for a discussion of certain limitations on the ability of the Developer and other merchant builders to complete the projected development within the District.

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

Bondowners should assume that any event that significantly impacts the ability to develop land in the District or delays the timing of development would cause the property values within the District to decrease substantially from those estimated by the Appraiser and could affect the willingness and ability of the owners of land within the District to pay the Special Taxes when due. See THE DISTRICTStatus of Entitlements herein.

Based on current development status, the payment of principal of and interest on the 2007A Bonds depends entirely upon the receipt of Special Taxes levied on undeveloped property. Undeveloped property is less valuable per unit of area than developed land, especially if there are no plans to develop such land or if there are severe restrictions on the development of such land. The undeveloped property also provides less security to the 2007A Bondowners should it be necessary for the District to foreclose on undeveloped property due to the nonpayment of the Special Taxes. Furthermore, an inability to develop the land within the District as currently proposed will make the 2007A Bondowners dependent upon timely payment of the Special Taxes

41 levied on undeveloped property for a longer period of time than projected. A slowdown or stoppage in the continued development of the District could reduce the willingness and ability of the landowners to make Special Tax payments on undeveloped property and could greatly reduce the value of such property in the event it has to be foreclosed upon. See SPECIAL RISK FACTORSReductions in Property Values below.

Proceedings to Reduce or Terminate the Special Tax

Pursuant to the Act, proceedings could be initiated to reduce or terminate the levy of the Special Tax. However, the Act prohibits the Board of Supervisors from adopting resolutions to reduce the rate of the Special Tax or terminate the levy of the Special Tax unless the Board of Supervisors determined that the reduction or termination of the Special Tax would not interfere with the timely retirement of any outstanding indebtedness secured by the Special Tax.

On November 5, 1996, the voters of the State approved Proposition 218, popularly known as the Right to Vote on Taxes Act. Among other things, Proposition 218 added Article XIIIC to the State Constitution. Section 3 of Article XIIIC, which removes certain limitations on the initiative power, states that the initiative power shall not be prohibited or otherwise limited in matters of reducing or repealing any local tax, assessment, fee or charge. As noted above, the Act provides for a procedure to alter the rate and method of apportionment of an existing special tax. However, as also noted above, the Act prohibits the legislative body from adopting a resolution to reduce the rate of a special tax if the proceeds of that tax are being utilized to retire any debt incurred pursuant to the Act unless such legislative body determines that the reduction of that tax would not interfere with the timely retirement of that debt. Although the matter is not free from doubt, it is likely that the exercise by the voters of the initiative power referred to in Article XIIIC to reduce the Special Tax is subject to the same restrictions as are applicable to the Board of Supervisors pursuant to the Act. Accordingly, it is likely, but by no means certain, that the voters may not reduce the Special Tax through the initiative process if such reduction would interfere with the timely retirement of the Bonds.

Maximum Special Tax

Within the limits of the Special Tax, the County may adjust the Special Tax levied on all property in the District to provide an amount required to pay interest on and principal of the Bonds, and the amount necessary and to pay all current Expenses. However, the amount of the Special Tax that may be levied against particular categories of property in the District is subject to the maximum Special Tax applicable to that category. There is no assurance that the maximum Special Tax on the property in the District will be sufficient to pay the amounts required to be paid by the Bond Resolution at all times. See SECURITY AND SOURCES OF PAYMENT FOR THE BONDSThe Special Tax.

Payment of Special Tax Not Personal Obligation of Property Owners

No owner of property within the District is personally obligated to pay the Special Tax applicable to his or her property. Rather, the Special Tax is an obligation only against the property, and recourse is limited to judicial foreclosure on the property. If the value of a parcel is not sufficient, taking into account other obligations also payable thereby, to fully secure the Special Tax, the County has no recourse against the owner.

Disclosures to Future Purchasers

The District has recorded a notice of the Special Tax lien in the Office of the County Recorder of the County. While title companies normally refer to such notices in title reports, there can be no guarantee that such reference will be made or, if made, that a prospective purchaser or lender will consider such Special Tax obligation in the purchase of a parcel of land, a home or a commercial or industrial facility or the lending of money thereon. The Act requires the subdivider (or its agent or representative) of a subdivision to notify a prospective purchaser or long-term lessor of any lot, parcel, or unit subject to a MelloRoos special tax of the existence and maximum amount of such special tax using a statutorily prescribed form. California Civil Code

42 Section 1102.6b requires that in the case of transfers other than those covered by the above requirement, the seller must at least make a good faith effort to notify the prospective purchaser of the special tax lien in a format prescribed by statute. Failure by an owner of the property to comply with the above requirements, or failure by a purchaser or lessor to consider or understand the nature and existence of the Special Tax, could adversely affect the willingness and ability of the purchaser or lessor to pay the Special Tax when due.

Parity Taxes and Special Assessments

The ability or willingness of an owner of property within the District to pay the Special Tax could be affected by the existence of other taxes and assessments imposed upon the property. The Special Tax and any penalties thereon will constitute a lien against the lots and parcels of land on which they will be annually imposed until they are paid. Such lien is on a parity with all Special Tax and special assessments levied by other agencies and is co-equal to and independent of the lien for general property taxes, other Special Tax, and certain special assessments regardless of when they are imposed upon the same property. The Special Tax has priority over all existing and future private liens imposed on the property. In addition, other public agencies whose boundaries overlap those of the District could, with or in some circumstances without the consent of the owners of the land in the District, impose additional taxes or assessment liens on the property in the District in order to finance public improvements to be located inside or outside of the District.

The County has no control over the ability of other entities to issue indebtedness secured by other special taxes or assessments payable from all or a portion of the property in the District. In addition, the County is not prohibited itself from establishing assessment districts, community facilities districts or other districts which might impose assessments or taxes against property in the District. In the event any additional improvements or fees are financed pursuant to the establishment of an assessment district, community facilities district or other district, any taxes or assessments levied to finance such improvements will have a lien on a parity with the lien of the Special Tax. The imposition of additional liens on a parity with the Special Tax could reduce the ability or willingness of the property owners to pay the Special Tax and increases the possibility that foreclosure proceeds will not be adequate to pay delinquent Special Tax or the principal of and interest on the Bonds when due. See SECURITY AND SOURCES OF PAYMENT FOR THE BONDS Direct And Overlapping Bonded Indebtedness.

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

Neither the County nor the District has control over the ability of other entities and districts to issue indebtedness secured by special taxes, ad valorem taxes or assessments payable from all or a portion of the property within the District. In addition, the landowners within the District may, without the consent or knowledge of the County, petition other public agencies to issue public indebtedness secured by special taxes, ad valorem taxes or assessments. Any such special taxes, ad valorem taxes or assessments may have a lien on such property on a parity with the Special Taxes and could reduce the estimated value-to-lien ratios for property within the District described herein.

43 Reductions in Property Values

The value of the land within the District is an important factor in determining the investment quality of the Bonds. If a property owner is delinquent in the payment of Special Taxes, the Districtsonlyremedyis to commence foreclosure proceedings in an attempt to obtain funds to pay the Special Taxes. Reductions in property values due to a downturn in the economy, physical events such as earthquakes or floods, stricter land use regulations, delays in development or other events will adversely impact the security underlying the Special Taxes.

The Appraiser has estimated, on the basis of certain assumptions and limiting conditions contained in the Appraisal and the Update Appraisal, that as of August 6, 2007 the value of the land within the District was not less than $106,370,000. The Appraisal and the Update Appraisal are based on the assumptions as stated in Appendix AAPPRAISAL REPORT and Appendix A-1UPDATE APPRAISAL. The Appraisal does not reflect any possible negative impact which could occur by reason of future slow or no growth voter initiatives, any potential limitations on development occurring due to time delays, an inability of landowners within the District to obtain any needed development approval or permit, the presence of hazardous substances within the Community Facilities District, the listing of endangered species or the determination that habitat for endangered or threatened species exists within the Community Facilities District, or other similar situations.

Risks Related to Adjustable Rate Mortgages and Creative Mortgage Financing Tools

Recent news accounts indicate that many borrowers in recent years have financed 100% of the price of their home with adjustable rate loans. In the event there is a decline in home values, such borrowers may not be able to obtain replacement financing because outstanding loan balances could exceed the value of their homes. Additionally, according to recent articles in the financial press, state and federal regulators will likely require a tightening of underwriting criteria for mortgage loans, such that lenders will no longer offer 100% financing and will require stricter income verification, higher income to loan ratios, higher credit ratings, or some combination of such credit factors. Tightening of credit criteria could reduce the Developers projected absorption rates, increase their respective carrying costs and slow the diversification of ownership of property in the District.

In the event that the owners of property within a community facilities district experience a decline in income or an increase in mortgage interest rates, or both, they may be less able to pay their special tax payments when due. Additionally, the tightening of credit standards may reduce the number of home buyers who can afford to purchase a home in the District.

For the reasons discussed above, future homeowners in the District who purchase their homes with adjustable rate loans may experience difficulty in making their loan payments and paying the Special Taxes levied on their property. This could result in an increase in the Special Tax delinquency rate in the District and depletion of the Bond Reserve Fund. If there were significant delinquencies in Special Tax collections in the District and the Bond Reserve Fund was depleted, there could be a default in the payment of principal of and interest on the Bonds.

Some economists have also predicted that if housing prices decline, causing certain homeowners to have loan balances in excess of the value of their homes, bankruptcies are likely to increase. Bankruptcy by homeowners with delinquent Special Taxes would delay the commencement and completion of foreclosure proceedings to collect delinquent Special Taxes. See Payment of Special Taxes is not a Personal Obligation of the Property Owners and Bankruptcy and Legal Delays herein.

Bankruptcy and Legal Delays

The payment of the Special Tax and the ability of the County to foreclose the lien of a delinquent unpaid tax, as discussed in SECURITY AND SOURCES OF PAYMENT FOR THE BONDS, may be limited by bankruptcy, insolvency or other laws generally affecting creditors rights or by the laws of the State

44 relating to judicial foreclosure. In addition, the prosecution of a foreclosure action could be delayed due to crowded local court calendars or delays in the legal process. The various legal opinions to be delivered concurrently with the delivery of the 2007A Bonds (including Bond Counsels 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 obligation to pay the Special Tax to become extinguished, the bankruptcy of a property owner could result in a delay in prosecuting superior court foreclosure proceedings because federal bankruptcy laws may provide for an automatic stay of foreclosure and sale of tax sale proceedings. Any such delays could increase the likelihood of a delay or default in payment of the principal of and interest on the Bonds and the possibility of delinquent tax installments not being paid in full. Moreover, if the value of the subject property is less than the lien of the Special Tax, such excess could be treated as an unsecured claim by the bankruptcy court. Further, should remedies be exercised under the federal bankruptcy laws against Taxable Property, payment of the Special Tax may be subordinated to bankruptcy law priorities. Thus, certain claims may have priority over the Special Tax in a bankruptcy proceeding even though they would not outside of a bankruptcy proceeding.

FDIC/Federal Government Interests In Properties

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

The FDICs 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 propertys 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 institutions affairs, unless abandonment of the FDICs 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 FDICs consent. In addition, the FDIC will not permit a lien or security interest held by the FDIC to be eliminated by foreclosure without the FDICs 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 FDICs federal immunity.

The County is unable to predict what effect the application of the Policy Statement would have in the event of a delinquency in the payment of Special Taxes on a parcel within the District in which the FDIC has or obtains an interest, although prohibiting the lien of the FDIC to be foreclosed out at a judicial foreclosure

45 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 Bond Reserve Fund and perhaps, ultimately, a default in payment on the Bonds.

Geologic, Topographic and Climatic Conditions

The value of the Taxable Property in the future can be adversely affected by a variety of additional factors, particularly those which may affect infrastructure and other public improvements and private improvements on Taxable Property and the continued habitability and enjoyment of such private improvements. Such additional factors include, without limitation, geologic conditions such as earthquakes, topographic conditions such as earth movements, landslides and floods and climatic conditions such as droughts. It may be expected that one or more of such conditions may occur and may result in damage to improvements of varying seriousness, that 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 Property may well depreciate or disappear.

As discussed above, a portion of the Taxable Property within Village A of Vineyard Point, encompassing approximately 6 lots, is located within the 100-year Floodplain. Lennar is currently processing a FEMA LOMR and anticipates that such property will be removed from the Floodplain. A LOMR removing such property from the Floodplain is required prior to the issuance of certificates of occupancy for such 6 lots. See THE DISTRICTStatus of Entitlements above.

Endangered Species

During recent years, there has been an increase in activity at the State and federal level related to the possible listing of certain plant and animal species found in California as endangered species. An increase in the number of endangered species is expected to curtail development in a number of areas. At present, the property in the District is known to contain habitat for two protected species of vernal pool crustaceans (fairy shrimp and tadpole shrimp) that are listed as protected species by the United States Fish and Wildlife Service as well as habitat for the Swainsons hawk, a species listed as protected by the California Department of Fish and Game. The United States Fish and Wildlife Service has authorized an incidental take for the fairy shrimp and tadpole shrimp; and the California Department of Fish and Game has approved a SwainsonsHawk Management Plan for the property which allows for development within the District. As part of the mitigation for direct adverse affects to suitable federally listed vernal pool brachiopod habitat (i.e., fairy shrimp and tadpole shrimp), the Developers have been required by U.S. Army Corps of Engineers to purchase wetted acres at designated preserves at a ratio of 2 times the impacted habitat or preserve certain specified vernal pools on site. As of August 1, 2007, all of the property within Vineyard Point had been graded. As of August 1, 2007, development had not yet commenced in Vineyard Creek. Prior to the commencement of grading, Standard Pacific must conduct a survey to verify that the tri-color blackbird, the giant garter snake or the northwestern pond turtle, all of which are threatened or protected species, do not inhabit the site. If found on site, Standard Pacific expects that the project could be delayed until mitigation measures are put in place.

New species are proposed to be added to the State and federal protected lists on a regular basis. Any action by the State or federal governments to protect species located on or adjacent to the property in the District could negatively affect the Developers ability to complete the development of the remaining undeveloped property.

Legal Requirements

Other events which may affect the value of property in the District include changes in the law or application of the law. Such changes may include, without limitation, local growth control initiatives, local

46 utility connection moratoriums and local application of statewide tax and governmental spending limitation measures.

Hazardous Substances

While governmental taxes, assessments, and charges are a common claim against the value of a parcel, other less common claims may be relevant. One example is a claim with regard to a hazardous substance. 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 similar and stringent. Under some of these laws, the owner (or operator) is obligated to remedy a hazardous substance condition of property whether or not the owner (or operator) had anything to do with creating or handling the hazardous substance. The effect, therefore, should any of the property in the District be affected by a hazardous substance is to reduce the marketability and value of the property 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. Further, such liabilities may arise not simply from the existence of a hazardous substance but from the method of handling it. All of these possibilities could significantly affect the financial and legal liability of a property owner to develop the affected parcel or other parcels, as well as the value of the property that is realizable upon a delinquency and foreclosure.

The estimated appraised valuation of property in the District does not take into account the possible reduction in marketability and value of any of the property by reason of the possible liability of the owner (or operator) for the remedy of a hazardous substance condition of the parcel. While the County is not aware that the owner (or operator) of any of the property in the District has such a current liability with respect to any such property, it is possible that such liabilities do currently exist and that the County is not aware of them.

Further, it is possible that liabilities may arise in the future with respect to any of the property in the District resulting from the current existence on the parcel of a substance presently classified as hazardous but which has not been released or the release of which is not presently threatened, or may arise in the future resulting from the current existence on the parcel of a substance not presently classified as hazardous but which may in the future be so classified. Any of these possibilities could impact the value of a parcel that is realizable upon a delinquency.

No Acceleration Provision

The Bond Resolution does 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 Bond Resolution.

No Obligation To Pay Debt Service

The County has no obligation to pay debt service on the Bonds in the event collections of the Special Tax are delinquent, other than from amounts, if any, on deposit in the Redemption Account or funds derived from the tax sale or foreclosure and sale of parcels on which levies of the Special Tax are delinquent, nor is the County obligated to advance funds to pay such debt service.

Loss of Tax Exemption

As discussed under CONCLUDING INFORMATIONTax Matters, interest on the Bonds could become includable in gross income for purposes of federal income taxation retroactive to the date of issuance, as a result of acts or omissions of the County subsequent to the issuance of the Bonds in violation of the Countys covenants with respect to the Bonds. Should interest become includable in gross income, the Bonds are not subject to redemption by reason thereof and will remain outstanding until maturity.

47 Ballot Initiatives

From time to time initiative measures could be adopted by voters which might place limitations on the ability of the State, the County or local public agencies to increase revenues or to increase appropriations or on the ability of the owners of undeveloped land within the District to complete the development thereof. See Zoning and Land Use Decisions.

CONCLUDING INFORMATION

Legality

The validity of the 2007A Bonds and certain other legal matters are subject to the approving opinion of Orrick, Herrington & Sutcliffe LLP, bond counsel to the County (Bond Counsel). A complete copy of the proposed form of Bond Counsel opinion is set forth in Appendix E hereto.

Bond Counsel undertakes no responsibility for the accuracy, completeness or fairness of this Official Statement.

The fees of Bond Counsel are contingent upon the sale and delivery of the 2007A Bonds.

Certain legal matters will be passed upon for the County by the County Counsel and by Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California, its Disclosure Counsel.

Both Bond Counsel and Disclosure Counsel have represented and currently represent the Underwriter in connection with bonds issued by entities other than the County.

Tax Matters

In the opinion of Orrick, Herrington & Sutcliffe LLP, Bond Counsel to the County, based upon an analysis of existing laws, regulations, rulings and court decisions, and assuming, among other matters, the accuracy of certain representations and compliance with certain covenants, interest on the 2007A Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 (the Code) and is exempt from State of California personal income taxes. Bond Counsel is of the further opinion that interest on the 2007A Bonds is not a specific preference item for purposes of the federal individual or corporate alternative minimum taxes, although Bond Counsel observes that such interest is included in adjusted current earnings when calculating corporate alternative minimum taxable income. A complete copy of the proposed form of opinion of Bond Counsel is set forth in Appendix E hereto.

To the extent the issue price of any maturity of the 2007A Bonds is less than the amount to be paid at maturity of such 2007A Bonds (excluding amounts stated to be interest and payable at least annually over the term of such 2007A Bonds), the difference constitutes original issue discount, the accrual of which, to the extent properly allocable to each Beneficial Owner thereof, is treated as interest on the 2007A Bonds which is excluded from gross income for federal income tax purposes and State of California personal income taxes. For this purpose, the issue price of a particular maturity of the 2007A Bonds is the first price at which a substantial amount of such maturity of the 2007A Bonds is sold to the public (excluding bond houses, brokers, or similar persons or organizations acting in the capacity of underwriters, placement agents or wholesalers). The original issue discount with respect to any maturity of the 2007A Bonds accrues daily over the term to maturity of such 2007A Bonds on the basis of a constant interest rate compounded semiannually (with straight- line interpolations between compounding dates). The accruing original issue discount is added to the adjusted basis of such 2007A Bonds to determine taxable gain or loss upon disposition (including sale, redemption, or payment on maturity) of such 2007A Bonds. Beneficial Owners of the 2007A Bonds should consult their own tax advisors with respect to the tax consequences of ownership of 2007A Bonds with original issue discount,

48 including the treatment of Beneficial Owners who do not purchase such 2007A Bonds in the original offering to the public at the first price at which a substantial amount of such 2007A Bonds is sold to the public.

2007A Bonds purchased, whether at original issuance or otherwise, for an amount higher than their principal amount payable at maturity (or, in some cases, at their earlier call date) (Premium Bonds) will be treated as having amortizable bond premium. No deduction is allowable for the amortizable bond premium in the case of bonds, like the Premium Bonds, the interest on which is excluded from gross income for federal income tax purposes. However, the amount of tax-exempt interest received, and a Beneficial Owners basis in a Premium Bond, will be reduced by the amount of amortizable bond premium properly allocable to such Beneficial Owner. Beneficial Owners of Premium Bonds should consult their own tax advisors with respect to the proper treatment of amortizable bond premium in their particular circumstances.

The Code imposes various restrictions, conditions and requirements relating to the exclusion from gross income for federal income tax purposes of interest on obligations such as the 2007A Bonds. The County has made certain representations and covenanted to comply with certain restrictions, conditions and requirements designed to ensure that interest on the 2007A Bonds will not be included in federal gross income. Inaccuracy of these representations or failure to comply with these covenants may result in interest on the 2007A Bonds being included in gross income for federal income tax purposes, possibly from the date of original issuance of the 2007A Bonds. The opinion of Bond Counsel assumes the accuracy of these representations and compliance with these covenants. Bond Counsel has not undertaken to determine (or to inform any person) whether any actions taken (or not taken), or events occurring (or not occurring), or any other matters coming to Bond Counsels attention after the date of issuance of the 2007A Bonds may adversely affect the value of, or the tax status of interest on, the 2007A Bonds. Accordingly, the opinion of Bond Counsel is not intended to, and may not, be relied upon in connection with any such actions, events or matters.

Although Bond Counsel is of the opinion that interest on the 2007A Bonds is excluded from gross income for federal income tax purposes and is exempt from State of California personal income taxes, the ownership or disposition of, or the accrual or receipt of interest on, the 2007A Bonds may otherwise affect a Beneficial Owners federal, state or local tax liability. The nature and extent of these other tax consequences depends upon the particular tax status of the Beneficial Owner or the Beneficial Owners other items of income or deduction. Bond Counsel expresses no opinion regarding any such other tax consequences.

Future legislative proposals, if enacted into law, clarification of the Code, or court decisions may cause interest on the 2007A Bonds to be subject, directly or indirectly, to federal income taxation or to be subject to or exempted from state income taxation, or otherwise prevent Beneficial Owners from realizing the full current benefit of the tax status of such interest. As one example, on May 21, 2007, the United States Supreme Court agreed to hear an appeal from a Kentucky state court which ruled that the United States Constitution prohibited the state from providing a tax exemption for interest on bonds issued by the state and its political subdivisions but taxing interest on obligations issued by other states and their political subdivisions. The introduction or enactment of any such future legislative proposals, clarification of the Code or court decisions may also affect the market price for, or marketability of, the 2007A Bonds. Prospective purchasers of the 2007A Bonds should consult their own tax advisors regarding any pending or proposed federal or state tax legislation, regulations, or litigation, as to which Bond Counsel expresses no opinion.

The opinion of Bond Counsel is based on current legal authority, covers certain matters not directly addressed by such authorities, and represents Bond Counsels judgment as to the proper treatment of the 2007A Bonds for federal income tax purposes. It is not binding on the Internal Revenue Service (IRS)orthe courts. Furthermore, Bond Counsel cannot give and has not given any opinion or assurance about the future activities of the County, or about the effect of future changes in the Code, the applicable regulations, the interpretation thereof or the enforcement thereof by the IRS. The County has covenanted, however, to comply with the requirements of the Code.

49 Bond Counsels engagement with respect to the 2007A Bonds ends with the issuance of the 2007A Bonds, and, unless separately engaged, Bond Counsel is not obligated to defend the County or the Beneficial Owners regarding the tax-exempt status of the 2007A Bonds in the event of an audit examination by the IRS. Under current procedures, parties other than the County and its appointed counsel, including the Beneficial Owners, would have little, if any, right to participate in the audit examination process. Moreover, because achieving judicial review in connection with an audit examination of tax-exempt bonds is difficult, obtaining an independent review of IRS positions with which the County legitimately disagrees, may not be practicable. Any action of the IRS, including but not limited to selection of the 2007A Bonds for audit, or the course or result of such audit, or an audit of bonds presenting similar tax issues may affect the market price for, or the marketability of, the 2007A Bonds, and may cause the County or the Beneficial Owners to incur significant expense.

Continuing Disclosure

The County has covenanted to comply with the Countys Continuing Disclosure Certificate and to provide certain financial information and operating data relating to the District within seven months after the end of the Countys fiscal year (the Annual Report) and notices of the occurrence of certain enumerated events (the Listed Events). The Annual Reports are required to be filed with each Nationally Recognized Municipal Securities Information Repository. Notices of Listed Events are required to be filed with the Municipal Securities Rulemaking Board. The specific nature of the information to be included in the Annual Reports and the notices of Listed Events is set forth in Appendix C. These obligations have been undertaken by the County in order to assist the Underwriter in complying with Securities and Exchange Commission Rule 15c2-12(b)(5) (the Rule). Notwithstanding any provision of the Bond Resolution, failure of the County to comply with the Continuing Disclosure Certificate shall not be considered an Event of Default; however, any Holder of the 2007A Bonds may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the County to comply with its obligations with respect to the Continuing Disclosure Certificate. The County has never failed to comply in all material respects with any previous undertaking with regard to the Rule to provide Annual Reports or notices of material events.

To assist the Underwriter in complying with Rule 15c2-12(b)(5), LW Vineyard Point LLC will enter into a Continuing Disclosure Agreement (each a Developer Disclosure Agreement) covenanting prior to the termination of such Developer Disclosure Agreement to provide Semi-Annual Reports not later than March 1 and September 1 of each year beginning March 1, 2008. The Semi-Annual Report provided by the LW Vineyard Point LLC on March 1 of each year will contain audited financial statements, if any, and the additional financial and operating data outlined in Section 4 of the Developer Disclosure Agreement, a form of which is attached in Appendix F. In addition to the information expressly required to be provided pursuant to the Developer Disclosure Agreement, the LW Vineyard Point LLC is also required to 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. LW Vineyard Point has not previously entered into an undertaking with respect to the Rule. However, Lennar (the Managing Member of LW Vineyard Point) has numerous affiliates consisting of various entities that are developing or have been involved in the development of numerous different projects in states throughout the country over the last five years. It is possible that some of such affiliates have been in default at one time or another in compliance with continuing disclosure covenants undertaken in connection with an issuance of community facilities district or assessment district bonds. Lennar has certified that in the previous five years, neither Lennar nor any entity providing annual financial information or notices of material events under its Developer Disclosure Agreement has ever failed to comply, in all material respects, with any previous undertaking to provide annual reports, semi-annual reports, and notices of material events set forth in a written contract or agreement specified in the Rule, except as follows:

In connection with covenants relating to a 2001 financing for a project in the City of Murrieta by Community Facilities District No. 2000-1 of the Murrieta Valley Unified School District,

50 continuing disclosure reports due on September 15, 2002 were not provided on a timely basis. Greystone Homes, Inc., a Delaware corporation, which is now owned by Lennar Homes, as successor to Pacific Century Homes Inc., a California corporation, filed the continuing disclosure report with the dissemination agent on May 15, 2003.

In connection with covenants relating to the certain assessment district bonds issued by the Association of Bay Area Governments for the Windermere development in San Ramon, an affiliate of Lennar did not provide a semi-annual report due April 1, 2005 on a timely basis. The affiliate of Lennar filed the continuing disclosure report with the dissemination agent on October 10, 2005.

Lennar reports that it has reviewed and updated its system for filing reports and expects to satisfy its obligations with regard to disclosure in the future.

The Developer Disclosure Agreement will inure solely to the benefit of the County, any Dissemination Agent, the Underwriter and owners or beneficial owners from time to time of the 2007A Bonds.

Standard Pacific has not covenanted to enter into an undertaking with respect to the Rule. However, the County anticipates that Standard Pacific will enter into such an undertaking in connection with the issuance of the Vineyard Creek Bonds if Standard Pacific was determined by the Underwriter to be an Obligated Person with respect to the Rule at such time.

No Litigation

At the time of delivery of and payment for the 2007A Bonds, the County will certify that there is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court or regulatory agency, public board or body pending or threatened against the County or the District affecting their existence, or the titles of their respective officers, or seeking to restrain or to enjoin the issuance, sale or delivery of the 2007A Bonds, the application of the proceeds thereof in accordance with the Bond Resolution, or the collection or application of the Special Tax to pay the principal of and interest on the 2007A Bonds, or in any way contesting or affecting the validity or enforceability of the 2007A Bonds, the Bond Resolution, the agreement entered into between the County and the Underwriter for the sale of the 2007A Bonds (the Bond Purchase Agreement), or any other applicable agreements or any action of the County or the District contemplated by any of said documents, or in any way contesting the completeness or accuracy of this Official Statement or any amendment or supplement thereto, or contesting the powers of the County or the District or their authority with respect to the 2007A Bonds or any action of the County or the District contemplated by any of said documents, nor, to the knowledge of the County, is there any basis therefor.

No General Obligation of the County or the District

The Bonds are not general obligations of the County or the District, but are limited obligations of the County payable solely from proceeds of the Special Tax and investment income on funds held pursuant to the Bond Resolution (other than as necessary to be rebated to the United States of America pursuant to Section 148(f) of the Code and any applicable regulations promulgated pursuant thereto). Any tax for the payment of the Bonds shall be limited to the Special Tax to be collected within the jurisdiction of the District.

No Ratings

The 2007A Bonds have not been rated by any securities rating agency.

51 Underwriting

The 2007A Bonds were purchased through negotiation by Stone & Youngberg (the Underwriter)at a price of $14,212,930.30, which is equal to the principal amount of 2007A Bonds less original issue discount of $101,164.70 and less an underwriters discount of $100,905.00. The Underwriter may change the initial public offering prices set forth on the cover page and may offer and sell the 2007A Bonds to certain dealers and others at prices lower than the public offering prices set forth on the cover page hereof.

Financial Advisor

First Southwest Company is employed as Financial Advisor to the County in connection with the issuance of the 2007A Bonds. The Financial Advisors fee for services rendered with respect to the sale of the 2007A Bonds is contingent upon the issuance and delivery of the 2007A Bonds. First Southwest Company, in its capacity as Financial Advisor, does not assume any responsibility for the information, covenants and representations contained in any of the legal documents with respect to the federal income tax status of the 2007A Bonds, or the possible impact of any present, pending or future actions taken by any legislative or judicial bodies.

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

Miscellaneous

All of the preceding summaries of the Bond Resolution, other applicable legislation, agreements and other documents are made subject to the provisions of such documents respectively, and do not purport to be complete statements of any or all of such provisions. Reference is hereby made to such documents on file with the County for further information in connection therewith.

This Official Statement does not constitute a contract with the purchasers of the 2007A Bonds.

Any statements made in this Official Statement involving matters of opinion or of estimates, whether or not so expressly stated, are set forth as such and not as representations of fact, and no representation is made that any of the estimates will be realized.

References are made herein to certain documents and reports which are brief summaries thereof which 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. Copies of such documents and reports are available for inspection at the office of the Countys Municipal Services Agency.

52 The execution and delivery of the Official Statement by the County have been duly authorized by the Board of Supervisors of the County of Sacramento on behalf of the District.

COUNTY OF SACRAMENTO

By /s/ Don Nottoli Chair of the Board of Supervisors

By /s/ Linda Foster-Hall County Budget Officer

53 [THIS PAGE INTENTIONALLY LEFT BLANK] APPENDIX A

APPRAISAL REPORT [THIS PAGE INTENTIONALLY LEFT BLANK]

August 6, 2007 Self-Contained Appraisal Mr. Dave Irish, CPA Report Director of Finance County of Sacramento 700 H Street Properties within County of Sacramento, California 95814 Sacramento Community Facilities District No. 2005-2 (North Vineyard Station No. 1) RE: Properties within County of Sacramento CFD No. 2005-2 (North Vineyard Station No. 1) Sacramento, California 95829 Sacramento, California 95829

Dear Mr. Irish:

At your request and authorization, Seevers x Jordan x Ziegenmeyer has analyzed market data for the

A-1 purpose of estimating the hypothetical market value (fee simple estate) of the properties within the Date of Report: August 6, 2007 County of Sacramento Community Facilities District (CFD) No. 2005-2 (North Vineyard Station No. 1) under the assumptions and conditions contained in this report. Prepared For: The appraisal report has been conducted in accordance with appraisal standards and guidelines found Mr. Dave Irish, CPA in the Uniform Standards of Professional Appraisal Practice (USPAP) and the Appraisal Standards Director of Finance for Land Secured Financing, published by the California Debt and Investment Advisory County of Sacramento Commission. The appraisal is also conducted in accordance with the Amended and Restated County 700 H Street of Sacramento Special Assessment and Community Facilities District Financing Program Policies. Sacramento, California 95814 This document is presented in a Self-Contained Appraisal Report format and is intended to comply with the reporting requirements set forth under Standards Rule 2-2(a) of USPAP.

The first County of Sacramento CFD No. 2005-2 (North Vineyard Station No. 1) bond issuance is scheduled to fund certain portions of the public improvements required for the development of the Vineyard Point master-planned community; however, the boundaries of the CFD also include the Prepared By: proposed Vineyard Creek master planned community. The Vineyard Point development will contain 532 single-family residential lots and 193 medium-density residential lots, while the Vineyard Creek P. Richard Seevers, MAI development will contain 375 single-family residential lots and is zoned for an additional 6.1 acres Eric A. Segal, Appraiser of single-family residential land, 10.5 acres of medium-density residential land and 7.0 acres of Sean C. Lim, Appraiser multifamily residential land. The primary facilities authorized to be constructed with the bond proceeds will be used for improvements in the North Vineyard Station Specific Plan Area, including, drainage and flood control facilities, sanitary sewer facilities, water facilities, transportation, roadway and related facilities, landscaping facilities, and other public facilities; in each case including design, planning, project management and other soft project costs. It was reported by LW Vineyard Point, LLC, as of the date of inspection, approximately 70% of the infrastructure and in-tract Mr. Dave Irish, CPA Mr. Dave Irish, CPA August 6, 2007 August 6, 2007 Page 2 Page 3

development costs have been completed. Conversely, infrastructure and in-tract development work The facilities to be financed through the County of Sacramento CFD No. 2005-2 (North Vineyard for Vineyard Creek has not yet commenced. Station No. 1) bonds issued for Vineyard Point were not all in place as of our date of inspection; therefore, the cumulative value of the District is subject to a hypothetical condition, defined as that The subject properties, which comprise the land areas situated within the boundaries of the County which is contrary to what exists but is supposed for the purposes of analysis. Specifically, the of Sacramento CFD No. 2005-2 (North Vineyard Station No. 1), are located in the North Vineyard hypothetical cumulative value estimate assumes the completion of the public facilities to be financed Station Specific Plan, within an unincorporated area of Sacramento County, California. by the first County of Sacramento CFD No. 2005-2 (North Vineyard Station No. 1) bond issuance. The estimate of value also accounts for the impact of the lien of the Special Tax securing the bonds. The subject properties are situated west of Bradshaw Road, north of Gerber Road and south of Florin As a result of our analysis, it is our opinion the hypothetical market values of the subject properties, Road. The following tables detail the various land use components encompassing County of in accordance with the definitions, certifications, assumptions and significant factors set forth in the Sacramento CFD No. 2005-2 (North Vineyard Station No. 1). It is noted the public/quasi-public land attached document (please refer to pages 8 through 10), as of May 4, 2007, are… areas within the District will not be encumbered by special taxes. Therefore, they will not be included in this analysis. Owner Component Value Conclusions LW Vineyard Point, LLC Vineyard Point $81,770,000 VINEYARD POINT No. of Lots / Units Typical Lot Standard Pacific Homes, Corp. Vineyard Creek Village Specific Plan Zoning / Acres Size (SF) (Units 1 through 4 and $21,280,000 A SFR 4-7 138 lots 4,725 Parcels 1 and 2) B SFR 4-7 59 lots 4,725 North Vineyard Investors, GP Vineyard Creek $3,320,000 A-2 C SFR 3-5 152 lots 6,600 (Remainders A and B) D SFR 3-5 133 lots 6,600 Hypothetical Cumulative Value: $106,370,000 SFR 4-7 19 lots 4,725 E SFR 4-7 31 lots 4,725 The estimates of hypothetical market value are representative of the individual components by F MDR 7-12 193 lots 2,500 ownership. The sum of the component values represents the aggregate, or cumulative, value of the components, which is not equivalent to the market value of the District as a whole. VINEYARD CREEK No. of Lots/ Units Typical Lot Unit Proposed Land Use(s) / Acres Size (SF) This letter must remain attached to the report, which contains 155 pages, plus related exhibits and 1 SFR 4-7 103 lots 4,725 Addenda, in order for the value opinion(s) contained herein to be considered valid. 2 SFR 3-5 207 lots 5,500 3 SFR 3-5 65 lots 5,500 We hereby certify the property has been inspected and we have impartially considered all data 4 MFR 12-22 5.1 acres - collected in the investigation. Further, we have no past, present or anticipated future interest in the Parcel 1 MFR 12-22 1.5 acres - property. Parcel 2 MFR 12-22 0.4 acres - Remainder A MDR 7-12 10.5 acres - Remainder B SFR 3-5 6.1 acres -

We have been requested to provide estimates of hypothetical market value of the subject properties as of our date of inspection, May 4, 2007, subject to the assumptions and limiting conditions contained herein. It is noted this report supersedes the previous appraisal dated June 8, 2007. The value estimates assume a transfer would reflect a cash transaction or terms considered to be equivalent to cash. The estimates are also premised on an assumed sale after reasonable exposure in a competitive market under all conditions requisite to a fair sale, with buyer and seller each acting prudently, knowledgeably, for their own self-interest, and assuming neither is under duress. Mr. Dave Irish, CPA TABLE OF CONTENTS August 6, 2007 Page 4 Transmittal Letter

Table of Contents Thank you for the opportunity to work with your office on this assignment. Summary of Important Facts and Conclusions 1 Sincerely, DRAFT DRAFT Introduction P. Richard Seevers, MAI Eric A. Segal, Appraiser Property Description 3 State Certification No.: AG001723 State Certification No.: AG026558 Type and Definition of Value 4 Expires: August 12, 2008 Expires: February 18, 2009 Client, Intended User and Intended Use of the Appraisal 5 Property Rights Appraised 5 Type of Appraisal and Report Format 5 DRAFT Dates of Inspection, Value and Report 6 Sean C. Lim, Appraiser Scope of the Appraisal 6 State Certification No.: AG041090 Extraordinary Assumptions, Significant Factors and Hypothetical Conditions 8 Expires: September 5, 2008 General Assumptions and Limiting Conditions 9 Certification(s) of Value 11 /lam Market Area

A-3 Sacramento Metropolitan Area Regional Overview 14 Neighborhood Overview 27 Sacramento Area Housing Market Overview 35 South Sacramento Housing Submarket Overview 46

Subject Property – Vineyard Point

Property Identification and Legal Data 53 Site Description 58 Facilities to be Financed By the District 63 Subject Photographs 64 Highest and Best Use Analysis 65

Valuation Analysis – Vineyard Point

Approaches to Value 68 Appraisal Methodology 71 Hypothetical Market Valuation 72 Final Conclusion of Hypothetical Market Value (Vineyard Point) 111

Subject Property – Vineyard Creek

Property Identification and Legal Data 113 Site Description 118 Subject Photographs 122 Highest and Best Use Analysis 123

07-093 Valuation Analysis – Vineyard Creek SUMMARY OF IMPORTANT FACTS AND CONCLUSIONS

Appraisal Methodology 127 Property: The appraised properties comprise the taxable land Market Valuation 128 situated within the boundaries of County of Component Valuation – Standard Pacific Homes, Corp. 128 Sacramento CFD No. 2005-2 (North Vineyard Final Conclusion of Market Value Station No. 1). (Vineyard Creek Units 1 through 4 and Parcels 1 and 2) 143 Component Valuation – North Vineyard Investors, GP 144 Location: West of Bradshaw Road, north of Gerber Road and Final Conclusion of Market Value south of Florin Road, within an unincorporated area of (Vineyard Creek Remainders A and B) 155 Sacramento County, California Addenda Land Uses: The properties within the District will be located in two proposed developments, Vineyard Point and CFD Report Vineyard Creek. The Vineyard Point community will Rate and Method of Apportionment of Special Tax contain 532 single-family residential lots and 193 Preliminary Title Reports medium-density residential lots, while the Vineyard Glossary of Terms Creek community will contain 375 single-family Qualifications of Appraiser(s) residential lots and is zoned for an additional 6.1 acres of single-family residential land, 10.5 acres of medium-density residential land and 6.9 acres of multifamily residential land.

Assessor’s Parcel Number(s): A-4 Vineyard Point Villages A through F are identified by the following assessor’s parcel numbers: 066-0120-001 through - 082, 066-0130-001 through -058, 066-0140-001 through -069, 066-0150-001 through -070, 066-0160- 001 through -072, 066-0170-001 through 076, 066- 0180-001 through -076, 066-0190-001 through -031, and 066-0200-002.

Vineyard Creek Units 1 through 4, Parcels 1 and 2 and Remainders A and B are identified by the following assessor’s parcel numbers: 065-0052-033 through -036, 065- 0080-103, -105, -107 and -108, and 066-0080-033.

Owner(s) of Record: Vineyard Point LW Vineyard Point, LLC

Vineyard Creek (Villages A through F) Standard Pacific Homes, Corp.

Vineyard Creek (Remainders A and B) North Vineyard Investors, GP

Zoning: The various land use components representing the subject properties are zoned and designated for single-family, medium-density and multifamily residential uses. For a complete description of the underlying zoning ordinances, please refer to the respective Property Identification and Legal Data 1 Seevers x Jordan x Ziegenmeyer 3 ) ) SF SF ( (

Size Size Size Typical Lot Typical Lot

/ Acres / Acres No. of Lots/ Units of Lots/ No. No. of Lots / Units / Units No. of Lots Ziegenmeyer x Jordan x INTRODUCTION SFR 4-7SFR 19 lots 4,725 VINEYARD POINT VINEYARD CREEK Seevers

123 4-7 SFR 3-5 SFR 3-5 SFR 103 lots 207 lots 65 lots 4,725 5,500 5,500 4 12-22 MFR 5.1 acres - F 7-12 MDR 193 lots 2,500 E 4-7 SFR 31 lots 4,725 BC 4-7 SFR 3-5 SFR 59 lots 152 lots 4,725 6,600 AD 4-7 SFR 3-5 SFR 138 lots 133 lots 4,725 6,600

Unit Proposed Land Use(s) Village Specific Plan Zoning Parcel 1Parcel 12-22 MFR 1.5 acres - Parcel 2Parcel 12-22 MFR 0.4 acres - Remainder BRemainder 3-5 SFR 6.1 acres - Remainder ARemainder 7-12 MDR 10.5 acres - Property Description CFD No. 2005-2 the land areas within County of Sacramento The subject properties represent (North Vineyard Station No. 1), and are identified as the Point Creek master lots residential will contain 532 single-family The Vineyard Point community planned communities. residential lots, while the Vineyard Creek community will contain 375 and 193 medium-density residential residential lots and is zoned for an additional 6.1 acres of single-family single-family residential land. It is and 7.0 acres of multifamily land residential land, 10.5 acres of medium-density by special taxes. District will not be encumbered the land areas within noted the public/quasi-public Thus, these sites will be excluded from this analysis. The following tables detail the various land use the subject properties. comprising components Road, north of Gerber Road and south The appraised properties are situated west of Bradshaw California. Land uses in the County, Sacramento of area unincorporated an within Florin Road, some uses, with residential to rural devoted primarily area are currently subject’s immediate of North the development With and supporting commercial development. industrial development Springs and Florin-Vineyard Special Plan areas, there Vineyard Station and neighboring recreational residential, commercial and single and multifamily of land uses, including are a variety term. area in the near to mid into the uses, that will be incorporated 2

Ziegenmeyer x $ 81,770,000 $ 21,280,000 $ 3,320,000 sections of this report. in Flood Zone X – The subject properties are located areas outside of the 100 and 500-year floodplains Flood Zone AE - areas within the 100-year floodplain. revision (LOMR), which letter of map conditional A portions of the subject properties out would remove to the submitted has been of the 100-year flood zone, Agency (FEMA). Management Federal Emergency Zone 3 – Moderate seismic activity (not located in a Fault-Rupture Hazard Zone) and medium-density as single-family, Development with in accordance properties residential multifamily the North Vineyard Station Specific Plan. May 4, 2007 May 4, 2007 August 6, 2007 Fee simple estate $ 106,370,000 Note: The value conclusions reported above are significant factors and subject to the assumptions, (please in this document set forth conditions limiting the refer to pages 8 through 10). Specifically, the assumes value estimate hypothetical cumulative of the public facilities to be financed by completion CFD No. 2005-2 the first County of Sacramento (North Vineyard Station No. 1) bond issuance. The of the of value also accounts for the impact estimate Tax securing the bonds. lien of the Special Jordan x Seevers

Vineyard Point Vineyard Creek (Villages A through F) Vineyard Creek (Remainders G and H) Hypothetical Cumulative Value Flood Zone: Flood Zone: Earthquake Zone: Highest and Best Use: Date of Inspection: Effective Date of Value: Date of Report: Property Rights Appraised: Conclusions of Market Value:

A-5 5 1 2

Ziegenmeyer x Jordan x General and Extraordinary Assumptions, Limiting Conditions General and Extraordinary Assumptions, ed. (Chicago: Appraisal Institute, 2002), 113. 113. Appraisal Institute, 2002), (Chicago: ed. Seevers th

, 4

subject only to the limitations imposed by the governmental by the governmental imposed subject only to the limitations police power, and escheat. domain, powers of taxation, eminent

by any other interest or estate, absolute ownership unencumbered :

contained in this report and to any exceptions, encroachments, easements easements contained in this report and to any exceptions, encroachments, of a specified date and the passing of title from seller to buyer under title from of a specified date and the passing both parties are conditions whereby: buyer and seller are typically motivated; best what they consider their own well informed or advised, and acting in is allowed for exposure in the open market; interests; a reasonable time of of cash in United States Dollars or terms in terms is made payment the and the price represents thereto; comparable financial arrangements consideration for the property sold unaffected by special or creative normal financing or sales concessions granted by anyone associated with the sale.

Fee Simple Estate The Dictionary of Real Estate Appraisal of Real The Dictionary Federal Register, vol. 55, no. 163, August 22, 1990, pp. 34228 and 34229. and 34228 pp. 1990, August 22, 163, no. vol. 55, Federal Register, In light of the fact the improvements to be financed by the District bonds were not all in place as of improvements In light of the fact are subject to a hypothetical condition, estimates inspection), the value the date of value (date defined as that which is contrary to what exists but is supposed for the purposes of analysis. Client, Intended User and Use of the Appraisal The appraisal of Sacramento. The client and intended user of this appraisal report is the County used to will be included in the official statement report is intended for use in bond underwriting, and the bonds. market Property Rights Appraised estate, defined as follows: the fee simple derived herein are for The value estimates are subject to the The rights appraised 1 2 and Significant Factors that the in this analysis is the premise the assumptions among and rights-of-way recorded. Primary of the public facilities to be financed by District bonds and reflect the completion value estimates of the Special Tax securing bonds. account for the impact Type of Appraisal and Report Format with the of the subject properties and is intended to comply This report is a Self-Contained Appraisal Standards of Rule 2-2(a) of the Uniform set forth under Standards reporting requirements (USPAP). Professional Appraisal Practice 4

Ziegenmeyer x Jordan x Seevers

initiated foreclosure action on the property. However, a subsequent action on the foreclosure initiated

open market under all conditions requisite to a fair sale, the buyer and seller buyer to a fair sale, the requisite under all conditions open market assuming the price is not affected each acting prudently, knowledgeably and of a sale as consummation in this definition is the by undue stimulus. Implicit

: and bring in a competitive should probable price which a property The most

Market value supplemental agreement has been agreed upon that will amend the terms and conditions of the and conditions the terms upon that will amend has been agreed agreement supplemental indicates the principal amount of agreement original transaction. Specifically, the supplemental loan will be reduced from $41,395,450 to $26,375,000 and the notices of default rescinded. Pacific Standard properties from Vineyard Point, LLC will also acquire several potential LW to pay LW Corp. will be obligated Pacific Homes, Area. Standard Corp. in the Bay Homes, note of $5,625,000 upon close escrow to aid in Vineyard Point, LLC an unsecured promissory Corp. will be Standard Pacific Homes, the proposed Bay Area transactions. Additionally, completing or finished lots in Vineyard homes the completed required to share any of the profit from sales Vineyard Point, LLC. Creek with LW A and B Finally, to the best of our knowledge, Vineyard Creek Remainders have not been involved length transactions during the previous three-year period and are not currently being in any arm’s for sale marketed Type and Definition of Value value of Vineyard Point the hypothetical market The purpose of this appraisal is to estimate infrastructure and facilities to be financed by the first of the primary the completion assuming CFD No. 2005-2 (North Vineyard Station No. 1) bond issuance, and the County of Sacramento follows: as defined is value value of Vineyard Creek. Market market Regarding the sales history of Vineyard Point, Mr. Don Barnett, of Lennar Communities, reported Regarding the sales history of Vineyard Point, Mr. Don Barnett, Lennar Communities, during the previous length transactions arm’s the subject property has not been involved in any for sale. three-year period and is not currently being marketed Units 1 through 4 and Parcels 2 sold (in For Vineyard Creek, Lennar Communities reported Pacific Homes, Corp. for $53,855,000 on August 26, LLC to Standard Lennar Winncrest, bulk) from length transaction with no unusual contingencies. As part of the agreement, 2005. This was an arm’s and will receive all the buyer will be responsible for all infrastructure related to development $42,500,000 of the potential bond proceeds. Additionally, the seller financed approximately and conditions were purchase price. However, based on discussions with the seller loan terms value the conclusion of market It is noted time. conditions at the of market considered reflective derived herein is lower than the purchase price; however, this attributable to subsequent market have occurred after the sale date. costs that moderation and the increases in overall site development of this loan and LW Corp. defaulted on payments It’s been reported Standard Pacific Homes, Vineyard Point, LLC (Seller)

A-6 7

assuming the completion of

Ziegenmeyer x Jordan x Seevers

the improvements to be financed by the first County of the Sacramento CFD No. by 2005-2 (North Vineyard financed be to improvements the Station No. 1) bond issuance. The sales comparison approach was exclusively relied upon to value Vineyard Creek Remainders A Specifically, land with no approved tentative map. and B, because these parcels represent transitional land transitional sales of comparable recent we analyzed value, to develop an opinion of market were capitalization approaches area. The cost and income market subject’s general parcels in the applicable to the valuation of vacant land. excluded from the analysis, because they were not deemed The individuals involved in the preparation of this appraisal include Mr. P. Richard Seevers, MAI, Mr. Eric A. Segal, Appraiser, and and Lim inspected the Mr. Sean C. Lim, Appraiser. Messrs. Segal data related to the subjects, comparables and subject properties; collected and confirmed data; and prepared a draft report with preliminary area; analyzed market neighborhood/market the properties, offered professional guidance and also inspected of value. Mr. Seevers estimates necessary revisions. and made instruction, reviewed the draft report This appraisal report has been conducted in accordance with standards and guidelines Practice (USPAP) and the Appraisal Standards of Professional Appraisal found in the Uniform Advisory Debt and Investment Standards for Land Secured Financing, published by the California Commission. square foot lot, the data set and other market indicators were utilized to determine the value of indicators were utilized to determine square foot lot, the data set and other market residential lots. The sales comparison subject properties’ 5,500 and 4,725 square foot single-family value for the medium-density to estimate approach and extraction technique were also employed size of 2,500 square feet. For the multifamily which have a typical lot components, residential we solely relied on the sales comparison within Vineyard Creek (Village F), residential component approach to value. The resultant value (revenue) indicators were then incorporated into two separate value of Vineyard Point and the hypothetical market discounted cash flow analyses to estimate value of Vineyard Creek (Units 1 through 4 and Parcels 2), market 6

Ziegenmeyer x Jordan x Seevers

Dates of Inspection, Value and Report on May 4, 2007, which represents the An inspection of the subject properties was completed and assembled values. This appraisal report was completed effective date of the hypothetical market on August 6, 2007. Scope of the Appraisal with the Uniform Standards of Professional The appraisal report has been prepared in accordance as defined by (USPAP). This analysis is intended to be an “appraisal assignment,” Appraisal Practice that the result of in such a manner is the appraisal service be performed USPAP; the intention analysis, opinions or conclusions be that of a disinterested third party. subject properties. A several legal and physical aspects of the We researched and documented descriptions and serves as the basis for site was completed physical inspection of the properties with representatives of Lennar Communities, were conducted this report. Interviews in contained and North Vineyard Investors, regarding the property history Standard Pacific Homes provided tentative maps Hartstein, of MacKay & Somps, and Mr. Scott information, development verified by consulting and anticipated layout maps for the subject properties. The sales history was title public records. Various other documents were provided for the appraisal, including preliminary We contacted the County of and fees estimates. reports, a developer’s budget and permits The earthquake zone, flood regarding zoning and entitlements. Planning Department Sacramento for the zone and utilities were verified with applicable public agencies. Property tax information Treasurer-Tax Collector’s Office. Sacramento the County of current tax year was obtained from data relating to the subject properties’ neighborhood and surrounding We analyzed and documented was obtained through personal inspections of portions the areas. This information market articles, real estate conferences and interviews with areas, newspaper neighborhood and market brokers, developers and participants, including property owners, managers, various market agencies. local government the highest and In this appraisal, we determined best use of the subject properties as though vacant, physical possibility, financial feasibility and based on the four standard tests (legal permissibility, productivity). maximum value of the subject properties as of hypothetical market You have requested we provide an estimate method (discounted cash flow of our date inspection, May 4, 2007. The subdivision development were relied upon in the analysis of Vineyard approaches to value analysis) and sales comparison Point and Vineyard Creek (Units 1 through 4 Parcels 2). As a component of the approach and extraction technique were the sales comparison method, subdivision development residential lot configuration (6,600 single-family value for a typical production to estimate employed of lot value for a 6,600 square feet) within the subject properties. Using reconciled estimate

A-7 9

Ziegenmeyer x Jordan x Seevers

GENERAL ASSUMPTIONS AND LIMITING CONDITIONS stated. for such conditions or or less valuable. No responsibility is assumed that render it more be required to discover them. obtaining the engineering studies that may organization have been or can be obtained or renewed for any use on which the value estimate organization have been or can be obtained renewed for any use on which the value estimate contained in this report is based. or trespass unless noted in the lines of the property described and there is no encroachment report. or title considerations. Title to the property is assumed to be good and marketable unless or title considerations. Title to the property is assumed otherwise stated. no warranty is given for its accuracy. reliable, but is stated, described, and regulations and laws unless the lack of compliance environmental considered in the appraisal report. has been identified, described and considered in the appraisal report. unless a nonconformity or private entity or national government any local, state, authority from administrative not be present on the property, was not observed by the appraiser. The appraiser has no not be present on the property, was observed or in the property. The appraiser, however, is on knowledge of the existence such materials not qualified to detect such substances. The presence of substances as asbestos, urea- may affect the value of hazardous materials insulation, and other potentially foam formaldehyde on or there is no such material the assumption on is predicated The value estimated the property. in the property that would cause a loss value. No responsibility is assumed for such conditions The intended user of or for any expertise engineering knowledge required to discover them. this report is urged to retain an expert in field, if desired. whether the physical aspects of a specific survey or analysis of this property to determine made each matches the ADA accessibility guidelines. Since compliance meet the improvements characteristics, potential physical cure the property’s owner’s financial ability with the cost-to of the with ADA. A brief summary compliance the real estate appraiser cannot comment on 1. pertaining to legal for the legal description provided or matters No responsibility is assumed 2. of law or legal interpretation. for matters No responsibility is assumed 3. unless otherwise The property is appraised free and clear of any or all liens encumbrances 4. and data furnished by others in preparation of this report The information is believed to be 5. there are no hidden or unapparent conditions It is assumed of the property, subsoil, or structures 6. local with all applicable federal, state, and the property is in full compliance It is assumed 7. the property conforms to all applicable zoning and use regulations restrictions It is assumed 8. all required licenses, certificates of occupancy, consents, and other legislative or It is assumed 9. the use of land and improvements is confined within the boundaries or property It is assumed or may which may 10. Unless otherwise stated in this report, the existence of hazardous materials, 11. The Americans with Disabilities Act (ADA) became effective January 26, 1992. I (we) have not with Disabilities Act (ADA) became 11. The Americans 8

Ziegenmeyer x Jordan CONDITIONS x Seevers

developer and MacKay and Somps. Any significant change in the number or size of the proposed Any significant change in the number developer and MacKay Somps. the subject properties properties. It is assumed could affect the value of subject developments future date, If, at some by the developers for this analysis. as represented will be subdivided there will necessarily be a or phasing of the subject properties is implemented, alternate mapping the opinion(s) of value on value, and the appraisers reserve right to amend direct impact stated herein. and Planning and Economic provided by Lennar Communities, Mackay & Somps information developments. which appear reasonable based on comparison with other similar Systems, for this analysis. Therefore, the most available Updated costs were requested, but not made March 7, 2006, were relied upon. Any significant which are dated current available estimates, concluded herein. on the value estimate change in these costs could have a direct impact CFD No. 2005-2 (North to be financed by the first County of Sacramento improvements facilities authorized to be constructed with Vineyard Station No. 1) bond issuance. The primary in the North Vineyard Station Specific Plan the bond proceeds will be used for improvements sanitary sewer facilities, water Area, including, drainage and flood control facilities, in landscaping facilities, and other public facilities; transportation, roadway and related facilities, and other soft project costs. each case including design, planning, project management EXTRAORDINARY ASSUMPTIONS, SIGNIFICANT FACTORS AND HYPOTHETICAL Extraordinary Assumptions and Significant Factors Extraordinary Assumptions and Significant 1. provided by the maps The values derived in this report are directly tied to the anticipated layout 2. cost The value conclusions contained in this report are based, part, on development Hypothetical Conditions 1. the completion of public infrastructure value assume of hypothetical market The estimates

A-8 11

Ziegenmeyer x Jordan x CERTIFICATION OF VALUE Seevers

DRAFT The statements of fact contained in this report are true and correct; The statements only by the reported assumptions are limited The reported analyses, opinions and conclusions and unbiased professional analyses, personal, impartial conditions, and are my and limiting opinions and conclusions; of this report, and that are the subject I have no present or prospective interest in the properties no personal interest with respect to the parties involved; parties this report or to the subject of are the I have no bias with respect to the properties that involved with this assignment; was not contingent upon developing or reporting in this assignment My engagement results; predetermined or is not contingent upon the development for completing this assignment My compensation value that favors the cause of client, value or direction in reporting of a predetermined of a stipulated result or the occurrence of the value opinion, attainment amount subsequent event directly related to the intended use of this appraisal; of this report; are the subject an inspection of the properties that I have made Appraiser, provided significant real property Eric A. Segal, Appraiser, and Sean C. Lim, of the inspection This assistance included of this report. preparation in the appraisal assistance and confirmation of data, the analysis necessary to the subject properties, collection of value; estimates prepare a draft report with preliminary The reported analyses, opinions, and conclusions were developed, this report has been of of the Code Professional Ethics & Standards with the requirements prepared, in conformity Professional Practice of the Appraisal Institute, which include Uniform Standards Professional Appraisal Practices; of the Appraisal Institute relating to review The use of this report is subject to the requirements by its duly authorized representatives; State of California general real estate appraiser certificate has never been I certify that my revoked, suspended, cancelled or restricted; and have appraised this appraisal assignment I have the knowledge and experience to complete properties in the past. Please see Qualifications of Appraiser portion Addenda similar information; for additional to this report under the requirements As of the date this report, I, P. Richard Seevers, MAI, have completed of the Appraisal Institute. the continuing education program I certify that, to the best of my knowledge and belief: I certify that, to the best of my x x x x x x x x x x x x x ______P. RICHARD SEEVERS, MAI State Certification No.: AG001723 (Expires: August 12, 2008) 10 x Jordan x

Ziegenmeyer. Seevers Ziegenmeyer. x Ziegenmeyer x Jordan Jordan x Jordan x Ziegenmeyer and its employees/subcontractors for errors/ and its employees/subcontractors Ziegenmeyer x Seevers

Jordan x

Ziegenmeyer. Ziegenmeyer.

Jordan Jordan x subject’s physical aspects is included in this report. It in no way suggests ADA compliance by subject’s physical aspects is included in this report. It no way compliance suggests ADA can change with each owner’s financial ability to cure the current owner. Given that compliance Specific possible non-compliance. consider not does of the subject non-accessibility, the value study of both the owner’s financial ability and cost-to-cure any deficiencies would be needed compliance. to determine of Justice for the Department appraisal invalid. previous written consent of it be used for any purpose by anyone other than the client without Seevers identity of the appraiser, or the firm with which the appraiser is connected) shall be disseminated with which the appraiser is connected) shall be disseminated identity of the appraiser, or firm to the public through advertising, relations, news, sales, or without the any other media prior written consent and approval of Seevers Ziegenmeyer authorizes the reproduction of this report in its entirety for bond proposes. Ziegenmeyer for the work to the amount of its compensation any, in this work is limited if omissions, in this assignment. performed stated in this report. conditions limiting However, the exact locations of typical the subject. other conditions, which currently impact which would be referenced in a or any additional easements, roadway and utility easements, appraiser is not a surveyor nor to the appraiser. The title report, were not provided preliminary do not typical easements location of easements. It is assumed exact the qualified to determine future date, these in this report. If, at some on the opinion (s) of value as provided have an impact impact on value, the appraiser reserves right to have a detrimental are determined easements the opinion (s) of value. to amend are authorized to rely upon this report without the express consent of appraiser. 12. The appraisal is to be considered in its entirety and use of only a portion thereof will render the not carry with it the right of publication nor may 13. Possession of this report or a copy thereof, does 14. Neither all nor any part of the contents this report (especially conclusions as to value, 15. The liability of Seevers and acceptance of all assumptions constitutes the appraisal report 16. Acceptance and/or use of or 17. An inspection of the subject property revealed no apparent adverse easements, encroachments use of the appraiser’s client. No third parties 18. This appraisal report is prepared for the exclusive

A-9 13

Ziegenmeyer x Jordan x CERTIFICATION OF VALUE Seevers

DRAFT and limiting conditions, and are my personal, impartial and unbiased professional analyses, personal, impartial conditions, and are my and limiting opinions, and conclusions; that is the subject of this report, and no I have no present or prospective interest in the property personal interest with respect to the parties involved; I have no bias with respect to the property that is subject of this report or parties involved with this assignment; was not contingent upon developing or reporting in this assignment My engagement results; predetermined or is not contingent upon the development for completing this assignment My compensation value that favors the cause of client, value or direction in reporting of a predetermined of a stipulated result, or the occurrence of the value opinion, attainment amount subsequent event directly related to the intended use of this appraisal; this report; an inspection of the property that is subject I have made The reported analyses, opinions, and conclusions were developed, this report has been of the Code Professional Ethics and with the requirements prepared, in conformity include the Uniform Professional Practice of the Appraisal Institute, which Standards of Professional Appraisal Practice; Standards of of the Appraisal Institute relating to review The use of this report is subject to the requirements by its duly authorized representatives; State of California general real estate appraiser certificate has never been I certify that my revoked, suspended, cancelled, or restricted; and and have appraised this appraisal assignment I have the knowledge and experience to complete properties in the past. Please see Qualifications of Appraiser portion Addenda similar information. for additional to this report The statements of fact contained in this report are true and correct; The statements only by the reported assumptions are limited The reported analyses, opinions, and conclusions I certify to the best of my knowledge and belief: x x SEAN C. LIM, APPRAISER 5, 2008) State Certification No.: AG041090 (Expires: September x x x x x x x x x 12

Ziegenmeyer x Jordan x CERTIFICATION OF VALUE Seevers

The statements of fact contained in this report are true and correct; The statements only by the reported assumptions are limited The reported analyses, opinions and conclusions and unbiased professional analyses, personal, impartial conditions, and are my and limiting opinions and conclusions; of this report, and that are the subject I have no present or prospective interest in the properties no personal interest with respect to the parties involved; parties this report or to the subject of are the I have no bias with respect to the properties that involved with this assignment; was not contingent upon developing or reporting in this assignment My engagement results; predetermined or is not contingent upon the development for completing this assignment My compensation value that favors the cause of client, value or direction in reporting of a predetermined of a stipulated result or the occurrence of the value opinion, attainment amount subsequent event directly related to the intended use of this appraisal; My analyses, opinions and conclusions were developed, this report has been prepared, in of the Uniform Standards Professional Appraisal Practice; with the requirements conformity of this report; are the subject an inspection of the properties that I have made Sean C. Lim, Appraiser, also inspected the property and provided real appraisal subject of the the inspection included of this report. This assistance the preparation assistance in of data, and the analysis necessary to prepare a draft properties, the collection and confirmation of value; estimates report with preliminary P. Richard Seevers, MAI, reviewed this report; The reported analyses, opinions, and conclusions were developed, this report has been of of the Code Professional Ethics & Standards with the requirements prepared, in conformity Professional Practice of the Appraisal Institute, which include Uniform Standards Professional Appraisal Practices; of the Appraisal Institute relating to review The use of this report is subject to the requirements by its duly authorized representatives; State of California general real estate appraiser certificate has never been I certify that my revoked, suspended, cancelled or restricted; and and have appraised this appraisal assignment I have the knowledge and experience to complete properties in the past. Please see Qualifications of Appraiser portion Addenda similar information. for additional to this report DRAFT I certify that, to the best of my knowledge and belief: I certify that, to the best of my x x x x x x x x x x x x x x ______ERIC A. SEGAL, APPRAISER State Certification No.: AG026558 (Expires: February 18, 2009)

A-10 15 F q

Ziegenmeyer x Jordan x Seevers

. During the rainy season from November through April, an November . During the rainy season from q

at night. During Sacramento’s winter, daytime high temperatures are high temperatures winter, daytime at night. During Sacramento’s q

and 60

F, and a comfortable 58 q Geography & Climate role in the quality of play an important conditions in the region and seismic The geography, climate relatively flat land along the valley floor, to steep ranges from life. The topography of the region 15 feet below sea level of the area. Elevations range from mountain terrain in the eastern portion 10,000 feet above sea level at the summit of Joaquin River Delta, to near the Sacramento-San waterways in the region. Rivers are the two major Sierra Nevada. The American and Sacramento the Area, joining part of the Sacramento the southern west along River flows The American River Central Business District. The Sacramento of Sacramento’s River just northwest Sacramento traverses south along the western side of city Sacramento. rainfall in winter, virtually none summer, and a with moderate is fairly mild, The region’s climate can reach over 100 relatively comfortable temperature range year-round. However, temperatures in the summer on the valley floor, and heavy rain and snowfall can occur during winter months in and snowfall can occur during winter months in the summer on valley floor, and heavy rain Placer and El Dorado Counties. areas of the northeastern part of region in mountainous high temperature of with an average daytime and dry in the summer is warm climate Sacramento’s 93 typically between 53 accumulation of about 18 inches of rain is normal. of about 18 inches rain is normal. accumulation to the San Francisco Bay The region has relatively stable seismic conditions, especially compared the lowest in state for and adjoining cities rank among Area and Southern California. Sacramento earthquake. Most of the region is not located within an Alquist-Priolo the probability of a major Earthquake Fault Zone. Yolo County is the only county with an Zone, located in a The Dunnigan Hills fault, known as Jericho Valley. the county of the northwest part portion small by mapped is the closest known active fault northwest of the city Sacramento, located 19 miles active San seismically the California Division of Mines and Geology. The closest branches southwest) and the Green Valley/Concord fault are the Antioch fault (42 miles Andreas fault system southwest). (45 miles Recreation & Culture interests, offering innumerable recreational and The Sacramento Area appeals to a diverse range of acres of recreation area along both River Parkway offers 5,000 cultural opportunities. The American are Discovery Park, of the destinations along parkway Some sides of the river for 30 miles. Lake State Recreation Fish Hatchery, CSUS Aquatic Center, and Folsom Goethe Park, Nimbus Area. The parkway includes walking, biking and horseback riding trails, as well as picnic and beach of waterways. The rivers and lakes Joaquin Delta has over 1,000 miles areas. The Sacramento-San and water-skiing opportunities. In addition, Area offer boating, fishing within the Sacramento parks and golf courses are located throughout the region. numerous 14

Ziegenmeyer x Jordan x Seevers

SACRAMENTO METROPOLITAN AREA REGIONAL OVERVIEW Introduction Dorado, Yolo, Yuba and Sutter Placer, El of Sacramento, The Sacramento Area is comprised Area has in the north-central part of Counties. Located the state of California, Sacramento areas in the United metropolitan among major proven to be one of the fastest-growing markets States. In order to provide a closer look at the region’s progressive growth and its outlook for and on geographical, social, demographic, economic next few years, we will present information these region. In the final section, we will summarize impact influences within the environmental of the region. forces have on the overall desirability and competitiveness River the Sacramento from 6,561 square miles, approximately The six-county region encompasses range in the east. At center of region is Delta in the west to Sierra Nevada mountain of the near the middle 996 square miles approximately County, which encompasses Sacramento for the County, as is the seat of government Central Valley. The county’s largest city, Sacramento, towns and communities, smaller are several Sacramento Surrounding Capital. well as the State including college towns, tourist destinations, suburban communities and agricultural centers. The south of north of Los Angeles, 500 miles 385 miles is located approximately city of Sacramento west of South Lake Tahoe, and 135 miles northeast of San Francisco, 105 miles Oregon, 85 miles southwest of Reno, Nevada.

A-11 17 25,100

28,100

4,400

11,000 13,500 Ziegenmeyer x 22,800 Jordan x 28,100 SIX-COUNTY REGION EMPLOYMENT GROWTH Seevers

40,400

30,200

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 21,500 0 5,000 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 Source: California Employment Development Department (EDD) Department Development Source: California Employment The region’s population grew by 12% between 2001 and 2006, for an annual growth rate of 2.3%. Placer County has led the region with growth of 4.1% per year. Most this occurred in growth is attributed to in- of the region’s The majority the cities of Roseville, Rocklin and Lincoln. other California and U.S. areas. In fact, in each of the last five years, of residents from migration between 60% and 80% of the population growth was attributed to in-migration. The population in the region is expected to continue growing. According California Area is projected to increase about 2.4 of Finance, the population in Sacramento Department the growth growth is expected to outpace by 2020. The region’s by 2010 and about 3 million million areas in California, as well the state a whole. of nearly all other metropolitan Employment many centers in California. While employment of the strongest The Sacramento Area represents one slowing and even recessions in the 2000-2003 areas in the state and nation experienced economic region has been positive each year for at least the last growth in the Sacramento period, employment years. 10 the past in the region over growth employment decade. The following table exhibits and agricultural center to a more diverse a government has transitioned from The local economy nearly half of regional employment. where the business services and trade sectors comprise economy Growing industries in the region include technology, clean energy, life sciences and healthcare. In 16 2.7% of Growth Annual Rate Annual

91,450

89,170 86,694 Ziegenmeyer x Jordan 84,177 x POPULATION TRENDS Seevers

81,912

County 2001 2002 2003 2004 2005 2006 Total 1,985,503 2,044,290 2,098,249 2,148,709 2,193,018 2,229,940 2.3% PlacerEl DoradoYoloYubaSutter 160,486 258,563 164,066 271,109 172,677 61,060 167,238 283,942 80,208 177,575 170,205 62,382 297,033 181,337 173,511 308,431 63,749 184,673 176,204 316,508 187,575 65,237 190,344 1.9% 4.1% 67,394 2.0% 69,827 2.7% Sacramento 1,252,509 1,287,246 1,317,806 1,344,867 1,366,937 1,385,607 2.0% Other recreational opportunities are available within a few hours drive of the Sacramento Area. To a few hours drive of the Sacramento Other recreational opportunities are available within the west are San Francisco Bay Area, Napa Valley wine country, coastal redwood forests, and the beaches of Pacific Ocean. To east are Lake Tahoe Sierra Nevada Mountains, is available in casino gambling than a dozen snow-skiing resorts. Legalized to more which are home region. Nevada, as well several Indian casinos in the Sacramento Historic District, California State Sacramento region include the Old in the Cultural attractions Crocker Art Museum, Historic Governor’s Mansion, Towe Auto Museum, Railroad Museum, Opera to the Sacramento Zoo. Sacramento is home Sutter’s Fort State Historic Park and Sacramento Philharmonic Orchestra Sacramento Theatre Company, Ballet, Sacramento Association, Sacramento Traditional Jazz Society. A recent addition to the cultural landscape is Robert and Sacramento the University of California of Arts on the campus Performing and Margrit Mondavi Center for the Fair, the Music Circus and include the California State Davis. Annual events in Sacramento Jazz Jubilee. Sacramento and to three professional athletic teams the region is home of sports entertainment, In terms franchise, acquired a National Basketball Association (NBA) Sacramento college teams. numerous in the 17,300-seat Arco Arena. In 1996, games the Kings, in 1985. The Kings play their home National Basketball Association (WNBA); the the Women’s was granted a franchise of Sacramento at Arco Arena. games Monarchs began their season in 1997 and also play homes Sacramento The league baseball team. River Cats, a triple-A minor to the Sacramento The region is also home even international sporting events. For example, Area often hosts regional, national and Sacramento hosted the track and field qualifying trials for 2000 2004 Summer Olympics. Sacramento have been hosted at area courses. Also, several professional golf tournaments Population with areas in the United States, the fastest-growing metropolitan The Sacramento Area is among growth of 20% between 1990 and 2000. The following table shows recent population in the six-county region. of Finance Source: California Department

A-12 19 No. of Employees

in Area Year Est. Year Ziegenmeyer Industry Industry x Jordan x Seevers TOP 10 PRIVATE EMPLOYERS

Company

Kaiser Permanente Permanente Kaiser Inc. Raley’s HealthDavis System UC West Healthcare Mercy/Catholic Corp. Intel Sierra Sacramento Health Sutter Healthcare Healthcare SBC) (formerly AT&T California Healthcare Co. Hewlett-Packard Healthcare Inc. Stores Wal-Mart Telecommunications Retail grocery Corp. Target 1896 1881 1965 1973 1923 6,845 4,697 Semiconductors 1935 hardware 7,734 Computer 6,897 Retail 6,026 1979 7,158 1984 Retail 4,000 6,800 1991 3,503 1962 3,435 Source: Sacramento Business Journal, Top 25 Book of Lists 2006 Top 25 Book of Journal, Business Source: Sacramento Although government employment is becoming a smaller share of the total, this industry remains share of the total, this industry remains a smaller is becoming employment Although government entities, including universities and school region. In fact, government significant in the Sacramento 30% in 1990). in the region (down from districts, account for about one-quarter of total employment County. The of California and Sacramento are the State employers The largest government jobs; in fact, is not a result of reduction in government decreasing share of total employment grew by 6.3% between 2000 and 2005. The region’s largest non- in government employment are listed in the following table. employers government 18

2005

2000 Ziegenmeyer x Jordan x SIX-COUNTY REGION EMPLOYMENT BY INDUSTRY BY EMPLOYMENT Seevers

0 50,000 100,000 150,000 200,000 250,000

Agriculture Information Government Construction Other Services Other Manufacturing Leisure & Hosp. Leisure & Prof. & Bus. Svcs. Financial Activities Financial Natural Res. & Min. & Res. Natural Educ. & Health Svcs. Health & Educ. Trade, Transp. & Util. & Transp. Trade, Source: SACTO Sacramento Region 2006/2007 Economic Profile Region 2006/2007 Economic Source: SACTO Sacramento 2005 Sacramento was one of the few places considered for a statewide stem cell research center. The cell research center. for a statewide stem was one of the few places considered 2005 Sacramento call centers and other corporate back a western hub for data processing, customer region has become office support activities. by industry in 2000 and 2005. During this The following chart compares the region’s employment five-year period, the Construction sector experienced largest percentage increase in jobs (+38%), (+21%) and Leisure & Financial Activities followed by Educational & Health Services (+24%), Hospitality (+17%). The only sectors to experience notable negative job growth in the past five years (-19%). Overall, the region is continuing were Natural Resources & Mining (-33%) and Agriculture to a service-providing economy. to shift from a goods-producing economy

A-13 21 Sutter

Yuba

Yolo El Dorado El Ziegenmeyer x Jordan Placer x Seevers

Sacr am en t o PER CAPITA PERSONALPER CAPITA INCOME

2000 2001 2002 2003 2004

California $45,000 $40,000 $35,000 $30,000 $25,000 $20,000 $15,000 Source: U.S. Department of Commerce, Bureau of Economic Analysis (BEA) of Economic Analysis of Commerce, Bureau Department U.S. Source: dependence on agricultural employment. Overall, unemployment in the Sacramento region has been in the Sacramento unemployment Overall, dependence on agricultural employment. This is an indication of the stability areas in California. other metropolitan most than steadier regional economy. For the past five years, job growth in region has been within range of about 1% to 2% per growth in the Sacramento employment expect year. Most local experts and forecasting organizations job region’s expects the Economy.com The consulting firm Area to be around 2% for the year 2007. through 2009. the national average growth to outpace Personal Income trends by county for the six counties within The following chart shows per capita personal income region, as well the state of California. the Sacramento As indicated in the chart above, Placer and El Dorado Counties exhibit highest personal income in those levels in the region. This is attributed part to large degree of high-tech employment the Bay Area. of high-income households from in-migration areas, and a significant amount of in these counties trail those only four other the state: Marin, San Personal incomes in the Yuba Counties have the lowest incomes Mateo, Contra Costa and Santa Clara. Sutter in these areas. region, related to significant agricultural employment Sacramento 20 3.4% 3.4% 7.2% 6.1% 26,500 24,600 41,100 38,600

165,400 159,900 Oct. 2006 Oct.

4.1% 4.1% 8.5% 7.6% 26,600 24,400 41,200 38,000

159,900 159,900 153,300 Oct. 2005 2005 Oct. 2000 2000 3.1% 3.1% 11.8% 13.1% 21,200 18,700 36,700 31,900 125,600 125,600 121,600 Ziegenmeyer x 1995 6.2% 15.0% 15.0% 17.2% 96,500 21,200 18,000 34,600 28,600 102,900 Jordan x 1990 1990 4.1% 10.3% 13.7% 91,500 87,700 22,900 20,500 34,200 29,500 Seevers

LABOR FORCE AND EMPLOYMENT TRENDS

Source: California Employment Development Department Development Source: California Employment Employment 62,400 67,700 74,100 87,600 89,000 87,600 74,100 67,700 Labor Force 62,400 Employment Rate Unemployment 4.4% 65,200 Labor Force 72,700 6.9% Employment 77,300 Rate Unemployment 4.1% 91,700 4.4% 92,400 Rate Unemployment 3.7% 6.7% 6.9% Rate Unemployment 4.3% 4.8% Rate Unemployment 3.9% Rate Unemployment 5.2% 7.4% 4.6% 4.9% 4.1% Sacramento County Labor Force Employment Rate Unemployment El DoradoCounty 533,600 4.5% 538,900 509,700 602,900 502,100 6.8% 577,400 685,100 4.2% 652,100 County Placer 686,100 657,900 4.8% 4.1% Yolo County Labor Force Employment Yuba County 76,100 Labor Force 71,000 87,300 Employment 81,300 93,100 89,100 95,900 Sutter County 91,400 Labor Force 95,000 Employment 91,300 TOTAL REGION Labor Force Employment 823,500 857,600 780,800 956,800 794,200 912,800 1,100,400 1,046,800 1,106,500 1,061,300 The following table details historical trends in labor force, employment and unemployment rates for and unemployment force, employment historical trends in labor The following table details region as a whole. the six individual counties and Sacramento a region was 4.1% as of October 2006, which marks rate in the Sacramento The unemployment California and 4.1% for to 4.2% for the state of decrease from 4.9% in October 2005. This compares saw rising unemployment the nation. Most areas within state and nation, including Sacramento, rates in 2001 and 2002, stabilization 2003, declines 2004 through 2006. It is noted Sutter due in large part to a greater rates, and Yuba Counties have relatively high unemployment

A-14 23

Ziegenmeyer x Jordan x Seevers

Traffic congestion has intensified throughout the region in recent years along with population Traffic congestion has intensified throughout the Funding has been a challenge on both of new suburban communities. growth and the development years. One major several projects are proposed in the coming the State and Federal levels; however, and reconfiguring the Douglas Boulevard/Sunrise project completed in 2005 involved improving in Roseville. Another project the planning pipeline is 15- Avenue interchange on Interstate 80 Placer Parkway, which would provide a new east-west route between State Highway 99/70 in mile Sutter County and State Highway 65 in Roseville. A bypass of around the city Lincoln is also planned. Regional Transit Area is operated by Sacramento in the Sacramento public transit system The main Regional private transit operators. public and by other local service provided (RT), with additional service area that is serviced by 258 buses and 76 light rail vehicles, Transit covers a 418-square mile operation in 1987 along a two- Light Rail began annually. passengers over 27 million transporting with populous suburbs to the east Sacramento and north. In 2003 pronged route linking Downtown and Sunrise extensions to the Meadowview area in South Sacramento and 2004, RT completed was extension to the city of Folsom Boulevard in Rancho Cordova to the east. In 2005, an eastward new light rail stations This route added seven and four park-and-ride lots, providing a completed. on the Highway 50 corridor. During next 20 viable transportation alternative for commuters International and the Sacramento years, RT plans to extend toward Elk Grove the south, Natomas Airport to the north, Roseville east and Davis west. The north-south and east-west main railroads. of has access to a number The Sacramento region of Union and, as a result of the merger lines of the Union Pacific Railroad intersect in Sacramento has access to the Burlington Northern Santa Fe Pacific and Southern in 1996, Sacramento freight classification facility for Northern California, Nevada and Railway. Union Pacific’s major was traffic volume additional upgrade to handle in Roseville. A $140 million Oregon is located provides over the past few years. Amtrak daily passenger service in all directions from completed Roseville from provides high-speed commuter rail service The Capital Corridor system Sacramento. to San Jose. is a deep-water port located Port of Sacramento Water transport is also available in the region. The vessels serving ocean-going Sacramento, West northeast of San Francisco in the city 79 miles of the channel, along with extensive rail and handling a variety of cargo types. The 30-foot depth the Port highly productive for long distance shipping. The truck cargo handling facilities, make of agricultural and forest products. The Port has is equipped for handling bulk cargo and a number experienced shrinking revenue and netis using cash reserves and real losses for several years, and the port is expected in near term. estate sales to cover the losses. A new operator for 22

Ziegenmeyer x Jordan x Seevers

Education & Healthcare The educational institutions in the region produce a well-educated community and stable work force. of higher education. Two large in terms The Sacramento region offers a number of alternatives in the are located State University, Sacramento universities, the University of California Davis and are located within the region and are recognized throughout the nation. Seven community colleges River, Sacramento River, Cosumnes Sierra College, American region, including greater Sacramento College and Yuba College. Several private colleges are located in the Community City, Woodland of colleges headquartered elsewhere. The region also contains area, as well satellite campuses vocational schools, such as Heald Business College, ITT Technical Institute and MTI numerous area in are planning to open in the Sacramento universities private College. At least two additional the future. a hub for general and specialized healthcare in Northern The Sacramento region has become centers within the six- medical 28 major California and the Central Valley. There are currently Shriners, UC Davis Health System, county region, operated by providers such as Kaiser Permanente, Several of the larger medical and Sutter Health System. Healthcare West Mercy/Catholic organizations are expanding their facilities or have plans to do so. Kaiser is constructing a new a large expansion at its Sutter is also completing in Roseville. center health and children’s women education a $40 million is building in Sacramento Davis Medical Center Roseville facility. The UC students. building for medical Transportation to large markets and its region is its proximity of the Sacramento advantage strategic A significant and air rail, water provided by extensive highway, markets accessibility to these transportation systems. The hub of freeways in the state highways. of maintained The Sacramento region has over 800 miles Highway 50, Interstate the Sacramento Area a good center for freight distribution. U.S. region makes living in the densely 80, and the Capital City Freeway are principal routes for commuters travel on Interstate 5 the north and south of Sacramento populated eastern suburbs. Commuters from and State Highway 99. Highways 65 70 link Yuba Sutter Counties with the rest of to the Area. Interstate 5 provides a direct route to Redding, Oregon and Washington Sacramento the east and travel to Nevada and Utah Angeles to the south. Interstate 80 permits north and Los Lake Tahoe and Nevada are reachable within a couple hours the San Francisco Bay Area to west. on U.S. Highway 50, which originates in Sacramento. State 99 provides access to the San Valleys. Joaquin and upper Sacramento

A-15 25

Ziegenmeyer x Jordan x Seevers

amount of solvents in consumer products, and Federal regulations on solvents contained in painting of solvents in consumer amount and expand public transportation have taken steps to improve products. In addition, policymakers in the region. systems Sacramento’s location along two concern in the area is flooding, light of Another environmental areas in 1986 and in multiple Major floods occurred rivers with several creeks and tributaries. major County and eastern Yolo 1997. Most flood-prone areas are concentrated in western Sacramento Rivers converge. The Sacramento Area Flood Control and Sacramento County, where the American and a regional effort to finance, implement Agency (SAFCA) was established in 1989 to coordinate were facilities necessary to provide flood protection. Many proposed improvements maintain District, established in June 1996. A large portion approved and funded by the SAFCA Assessment in 1998, which resulted a new flood designation outside the was completed of these improvements County. As a result of significant 100-year flood zone for most areas in northern Sacramento Agency Management to river and creek levees, in early 2005 the Federal Emergency improvements (FEMA) revised flood maps to designate the American River floodplain outside 100-year As a result, property County. Sacramento zone. This area includes most of eastern and central flood insurance. In 2006, another new map owners in these areas are no longer required to maintain declared neighborhoods in the southern portion of county out 100-year floodplain as well. the region continues to face flood concerns. In early January 2007, Despite the above improvements, County) (northern Sacramento to show Natomas FEMA announced it will revise its flood-risk maps in response to a ruling last year by the U.S. Army action came as a Special Flood Hazard Area. The 100-year flood a minimal levees no longer meet Corps of Engineers, which found that Natomas protection standard. Starting in November 2007, flood insurance will be required for properties or home-equity loans. However, SAFCA proposed a $414 with federally backed mortgages Natomas District. In April 2007, voters levees through a new Assessment Natomas plan to improve million by 2010. approved this proposal and 100-year flood protection could be restored to Natomas by seven feet; installing new Dam Folsom Ongoing and future flood control projects include raising Dam; Folsom River just below American Dam; constructing a new bridge over the gates on Folsom work involving work already under way. The remaining levee-strengthening major and completing ultimate but will result in SAFCA’s to complete, than a decade take more Dam will likely Folsom goal of 200-year flood protection for the entire region. in the past few years, there has been growing concern regarding rapid increases in development With and the conservation of open space. Most and species of endangered habitats the protection from Yolo Counties, face opposition in Placer and particularly projects in the region, development in the regard to endangered habitats and species, development various special interest groups. With region is subject to Federal and State laws concerning this issue. The region contains an extensive including land, sensitive of environmentally amount species and a significant list of endangered 24

Ziegenmeyer x Jordan x Seevers

Finally, the region benefits from several air transport facilities. Most notably, Sacramento several air transport facilities. Most notably, Sacramento Finally, the region benefits from West, American, International Airport is served by 14 carriers – Alaska, Aloha, America JetBlue, Mexicana, Northwest, Southwest and Continental, Delta, Frontier, Hawaiian, Horizon, parking 5,300-stall a multi-story, International opened United/United Express. In 2004, Sacramento Sacramento International Airport during 2005. passengers traveled through garage. Over 10 million facilities, including Besides the International Airport, region is also served by several smaller Airport, Yuba County Sutter Lincoln Regional Executive Airport, Sacramento Mather Air Force Base). In addition to passengers, Airport, and Mather Airport (formerly in of airfreight pounds million over 260 and Mather Airport processed International Sacramento 2005. Environment issues exist, including water supply, in the region expands, various environmental As development air quality, flood control, endangered habitat/species, and open space preservation. Numerous addressing these issues as they pertain to the Sacramento organizations are constantly environmental constraints. to environmental costs due and time face increasing region, and land developers abundant water resources. Purveyors draw surface from The Sacramento Area benefits from groundwater from underground sources in and pump and Feather Rivers, Sacramento the American, normally east of Sacramento, Valley. The Sierra Nevada snowfields, about 70 miles the Sacramento According to the California months. provide a plentiful water supply during the dry summer 30% of the Sacramento Plan, approximately Resource’s California Water of Water Department River Region is irrigated with groundwater. Nevertheless, water supply and quality issues continue rate of growth that has occurred over the in the area. The significant concerns to be environmental of water to southern for water, and the delivery increased the demand has notably last decade on all issue. The future impact and environmental portions of the state continues to be a hot political water sources by geological factors, as no new of the users depends on the natural replenishment are anticipated in the near future. dams Valley. The region is designated a severe Air quality continues to be a concern in the Sacramento Agency (EPA). This non- Protection area” by the U.S. Environmental ozone “non-attainment County and parts of El Dorado, Placer, Solano, Sutter area includes all of Sacramento attainment both the State and Federal health the region fails to meet Yolo Counties. During the summer, Valley is shaped like a bowl, of days. Because the Sacramento standards for ozone on a number close to the when an inversion layer traps pollutants in the summer, presents a critical problem smog ground, causing unhealthy air quality levels. However, in the past decade, has improved check include cleaner cars, smog region. Factors contributing to the improvement in the Sacramento gas, statewide regulation on the reformed vapor recovery nozzles on gas dispensers, requirements,

A-16 27

Ziegenmeyer x 3 Jordan x ed. (Chicago: Appraisal Institute, 2002), 160. 160. Appraisal Institute, 2002), (Chicago: ed. Seevers th NEIGHBORHOOD OVERVIEW

, 4

The Dictionary of Real Estate Appraisal of Real The Dictionary Introduction analysis of the observable data that indicate patterns of growth, This section of the report provides an property values. For the purpose of this enhance or detract from structure and/or change that may land uses; a congruous grouping analysis, a neighborhood is defined as “a group of complementary or business enterprises.” of inhabitants, buildings, Neighborhood Boundaries of the subject The boundaries of a neighborhood identify the physical area that influences value coincide with observable changes in prevailing land use or boundaries may properties. These street patterns, terrain, occupant characteristics. Physical features such as the type of development, vegetation and parcel size tend to identify neighborhoods. Roadways, waterways changing elevations can also create neighborhood boundaries. area, within an unincorporated market The subject properties are located in the South Sacramento Business District of 10 miles southeast of the Central County, approximately area of Sacramento The subject’s neighborhood is generally bound by State Highway 16/Jackson Road to Sacramento. the north, Calvine Road to south, Excelsior east and French Road/Florin Perkins Road to the west. 3 26 out th

ranked the Sacramento region 11 ranked the Sacramento Ziegenmeyer x Business 2.0 Jordan x out of 296 U.S. metropolitan areas for “best-performing” areas for “best-performing” out of 296 U.S. metropolitan th Seevers

vernal pools, wetlands, woodlands and grasslands. In 2002, the U.S. Fish and Wildlife Service vernal pools, wetlands, woodlands and grasslands. In 2002, the U.S. Fish Wildlife and Placer counties as critical habitat for proposed designating 154,000 acres in Sacramento endangered species living in vernal issued pools. However, in August 2005, the Bush administration of both counties where developers intend to build. As a large portions a revised rule exempting County were designated as critical habitat. Most of this result, only 37,098 acres in Sacramento development. acreage is in the county’s rural, southeastern corner, which not currently planned for the critical habitat category, with only 2,580 from was largely removed Placer County, meanwhile, acres affected. Summary of population, The Sacramento region is an integral part of California and the U.S. in terms productivity. The region has established itself as one of the and economic government employment, Several geographical, social and economic in the state. stable economies strongest and most other region from advantages have induced businesses and residents to relocate the Sacramento research parts of the state and nation. In 2004, Milken Institute, a highly regarded economic 15 organization, ranked Sacramento of 61 metropolitan areas most likely to become “boom towns” during the next four years. With the towns” during the next four years. With “boom likely to become areas most of 61 metropolitan Area advantages, Sacramento investor confidence in the many growing recognition of Sacramento’s has grown. of the state and nation, experienced some Area, along with most In 2002 and 2003, the Sacramento The weakening economy was attributed to several factors, including the slowing in the economy. 11, of September energy crisis of 2000, the rapid slowdown in technology sector, events recessions, and the State budget crisis. During 2004 through 2006, 2001, national and international and with large gains in the housing market showed signs of improvement, the local economy moderate job growth. In 2007, growth is expected to be about 2%, which toward the high end of the 1%-2% range annual growth experienced in recent years. The long-term outlook for the region is very good. Characterized by a diverse economy, mild opportunities and stability, good water supply, ample recreational and cultural seismic climate, sized over similar advantage has secured a locational Sacramento systems, expansive transportation Southern relatively affordable compared to the Bay Area and remains Further, the region markets. of these resources and advantages provides a productive environment California. The combination for residents. These for current and prospective businesses, a satisfying living environment commercial real estate for the factors will continue to drive for residential and the demand foreseeable future. economies in the nation, based on criteria such as wage and salary growth, job growth high-tech economies In 2004, the business publication output growth.

A-17 29

Ziegenmeyer x Jordan x acres and is generally bound by Elder Creek to the west, r Seevers

Florin Road to the north, Gerber south and Vineyard east. The Specific Plan County Board of Supervisors on January 19, 1994. After several was initiated by the Sacramento reviews and public hearings, the North Vineyard impact years of technical studies, environmental The most prominent development in the neighborhood is the Florin Mall, located west of subject in the neighborhood is development prominent The most at the intersection of Florin Road and Stockton Boulevard. On July 19, 2005, County plan for the Florin approved the adoption of a redevelopment Board of Supervisor’s Sacramento Agency of Road area, which includes the Florin Mall to east of subject. The Redevelopment decline of the area area given the County recommended designation as a redevelopment Sacramento and the JC Penny Outlet Store, began to vacate tenants, such as Weinstocks since 1996, when major was demolished, with the center in lieu of more desirable areas. In June 2006, 39-year-old mall way for the proposed, $65 million Florin Towne Centre. The the exception of Sears, to make Mervyn’s, several Supercenter, first Wal-Mart County’s Towne Centre will feature Sacramento construction on the project is other anchor stores, and 75 to 80 shops restaurants. Completion of 2007. expected by December properties represent gas stations, convenience stores and restaurants. Significant Nearby commercial within the neighboring are being developed residential development of new single-family amounts in the urban development proximate cities of Elk Grove and Rancho Cordova. The most of the neighborhood is located to the west and south of subject properties. The majority however, there has development; residential represents older single-family residential development years. over the past several been substantial new in-fill development Community Uses a suburban residential The subject neighborhood is served by several community uses typical of area, including schools, parks, churches, libraries, hospitals and open space. Neighborhood parks Florin Town and Vintage Parks. Churchill Downs Community include Sunrise Florin, Southwoods, Road, offers basketball Park, located near the intersection of Vintage Park Drive and Waterman courts, soccer fields, lighted tennis picnic areas and bike trails. There are several golf courses Links, Bradshaw Ranch Golf Course and Golf in the neighborhood, including Champions Wildhawk Golf Club. Lane, south of Florin High School is located along the west line of Cottonwood Sheldon High School is located on the north line of Calvine Road, just east and Avenue, Elsie Bradshaw Road. The nearest post office is located south of Florin Road, along Elk Grove areas closer to State Highway 99 the west. are situated in Road. Additional community amenities higher than in the subject’s immediate area. Overall build-out in these areas is much North Vineyard Station Specific Plan The subject properties represent a portion of the North Vineyard Station Specific Plan, which is of 1,595 projected for the development 28 th

Ziegenmeyer x Jordan x Seevers

Demographics industrial with some consists of rural residential development, The subject neighborhood primarily The population in the 95829 zip code is development. supporting commercial and limited neighborhood residents is about 34 years. age of 12,413 persons. The median approximately couples, and about of married 63% of the neighborhood’s households are comprised Approximately County has 38% of the households contain children. Historically, this area Sacramento Metropolitan area. to the overall Sacramento class neighborhood in comparison represented a middle close that still offer rural residences for more looking attracted residents The area has primarily Central Business District. and the Sacramento corridors transportation major to proximity Transportation a convenient location it thoroughfares in the subjects’ neighborhood, making There are several major traffic corridors north-south communities. The primary neighboring with good access to many the subject are Bradshaw Road, Elk Grove Florin Road and French within the immediate vicinity of Road/Florin Perkins Road. The primary east-west connectors are Gerber Road, Florin Calvine provide adequate access to all areas within the South The road systems Road and Elder Creek Road. of Elk Grove and Rosemont. communities the neighboring as well other area, market Sacramento serving the Sacramento highway system the primary Access to the subject neighborhood from residential and commercial Metropolitan Area is adequate. The subject properties and adjoining facilities are accessible to State Highway 99 via Florin Road, Calvine Elder Creek Road/47 Avenue and Fruitridge Road. This highway is one of two major north-south routes through north-south This highway is one of two major Avenue and Fruitridge Road. Fresno and Bakersfield to the south, Downtown and provides access to Stockton, Sacramento US Highway 50, an east-west running route is and Yuba City to the north. Natomas Sacramento, north of the subject properties. This highway connects six miles situated approximately County and provides access areas of Sacramento Central Business District to the eastern Sacramento to Interstate 80 and 5 the west. Land Uses agricultural/residential uses, and residential of single-family The subjects’ area consists primarily Neighborhood and general hobby farms. uses, including rural residential home sites, horse farms residences are generally considered to be in fair average condition and exhibit effective ages of 15 development of industrial and commercial amount to 50 years. Currently, there is only a limited situated near the subject. The closest industrial properties are located along Bradshaw Road and Elk Grove Florin Road. Typical industrial properties in the subjects’ vicinity include vehicle storage is development processing plants and large-scale nurseries. Commercial yards, raw material development. located closer to higher density residential primarily

A-18 31

Ziegenmeyer x Jordan x Vineyard Point Map Seevers

Ziegenmeyer x Jordan x Seevers

Station Specific Plan was officially approved on November 4, 1998. The Specific Plan area will Station Specific Plan was officially approved on November network of represent a cohesive likely be developed over a 10 to 20 year period and will ultimately recreational and educational development. residential, commercial, undeveloped, with of approval, the North Vineyard Station Specific Plan was primarily At the time However, the area properties. and agriculture of rural residential existing uses consisting primarily supporting commercial areas as area with residential into a higher density will be transitioned approved under the guidelines of Specific Plan. Proposed residential build out includes a total of units, and 1,119 6,050 residential units, with 4,622 low-density 309 medium-density served by 78 acres of parks, 22 schools units. These residential areas will be multifamily and 39 acres of retail business uses. The parks will be dispersed throughout the Specific Plan along will be situated Retail and business development area and two schools are also planned. commercial properties located at the intersection of concentration largest Bradshaw Road, with the interior streets and numerous with Florin Road. A network of pedestrian and bicycle pathways, access within the North site will provide acre regional transit a multiple thoroughfares and major Vineyard Station Specific Plan. Existing streets, such as Florin Road, Bradshaw Road and Gerber Specific Plan. future growth within the the to accommodate upgraded or extended Road, will be portions of the North Vineyard Station Specific Plan and are The subject properties represent and Vineyard Creek, respectively. A discussion of the Point identified as Vineyard Point begins below. and Vineyard Creek developments Vineyard Point of the following development the will include community planned The Vineyard Point master residential lots. The western 193 medium-density residential lots and 532 single-family components: portion of the community will be devoted to public uses, including a school, park, water tank site and a detention basin. It is noted certificates of occupancy will not be issued for six lots Village A revision has been approved by FEMA. However, a conditional letter of until a final letter of map The 725 total revision has already been issued and final approval is expected in the near term. map of this six villages identified as A through F. map residential lots will be divided among community is displayed on the following page.

A-19 33

Ziegenmeyer x Jordan x Vineyard Creek Map Seevers

Ziegenmeyer x Jordan x Seevers

Vineyard Creek 7.0 acres of multifamily single-family residences, for 375 The Vineyard Creek community is entitled residential land (MFR 12-22), 16.6 acres of transitional land, a park space, landscape corridors and densities of single-family varying will include this community open space areas. As proposed, to the west. It just parks and recreational areas available and have multiple development residential project with a would likely be a condominium component residential was reported the multifamily 18 units per acre. A copy of the anticipated layout Vineyard Creek is density of approximately displayed on the next page.

A-20 35 25,100

28,100

4,400

11,000 13,500 Ziegenmeyer x 22,800 Jordan x 28,100 SIX-COUNTY REGION EMPLOYMENT GROWTH Seevers

40,400

30,200

SACRAMENTO AREA HOUSING MARKET OVERVIEW 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 21,500 0 5,000 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 Source: California Employment Development Department Department Development Source: California Employment The regional area housing information is an important part of the appraisal report because it provides is an important The regional area housing information The are made. the basis upon which judgments observation of the community and forms a macro viability of the influence the economic characteristics of the region’s residential real estate market the reader with specifics of area, including the subject property. In order to familiarize and regarding supply and demand information general market, some area new home Sacramento this section of within Unless otherwise noted, will be discussed. market in the overall trends current El Dorado, Placer, Yolo, counties of Sacramento, Region refers to the six Sacramento the the report Yuba and Sutter. Employment & Economy Region was creating almost 28,000 new jobs per year, which During the late 1980s, Sacramento during that period. Following the onset of recession in in housing demand a boom stimulated and with corresponding declines in new home growth turned negative in 1992, 1990, employment gains in values. The region began a slow climb back to producing positive employment resale home during the late 1990s. The in housing demand 1993, which greatly contributed to the increase decade. the Sacramento Region over past growth in employment illustrates following chart Since peaking in 1999, job growth the region gradually decreased each year through 2004, then in 2005 and 2006. improvement showed marked 34

Ziegenmeyer x Jordan x Seevers

Conclusion within North Vineyard plan development In conclusion, the infrastructure upgrades and overall for Station Specific Plan indicate the subject properties will likely experience on-going demand for residential moderating in the region, demand growth residential With development. residential is likely to be less than in recent years; however, the subject properties benefit from development Central Business District. In centers, as well the Sacramento to local employment being proximate with property is projected in the near term, for residential development general, steady demand values stabilizing.

A-21 37 $474,000 $450,000 $489,000

$398,000 $472,000 Resale Homes Resale $318,000 $393,000 Ziegenmeyer x New Homes New Jordan $270,000 $350,000 x Seevers $247,000 $309,000 AVERAGE HOME SALE PRICE*

$217,000 $282,000 2000 2001 2002 2003 2004 2005 2006 $0 $600,000 $500,000 $400,000 $300,000 $200,000 $100,000 *Six-county region for new homes; four-county region for resale region four-county new homes; for region *Six-county Estate (resale) Lyon Real Group (new); Gregory Source: The As shown above, prices for both new and resale homes climbed steadily through 2005, then began to climbed As shown above, prices for both new and resale homes to types of product in 2007 compared fall in 2006. Prices are expected to be flat or down for most 2006, which reflects the moderation that is occurring as market returns to a level of normal activity after a frenzied pace between 2000 and 2005. Housing Permits of housing is the number housing market of the condition region’s An operative measure in the Sacramento increased has steadily activity New residential permit issued over time. permits Region. activity for the Sacramento Region since 1996. The following table reflects new permit 36 20,866 9,596

30,836

14,094

32,848 17,155 Resale Homes Resale Ziegenmeyer 27,761 x 15,405 New Homes New Jordan x 24,560 15,851 NUMBER OF HOME SALES* NUMBER OF HOME Seevers

22,122

10,936

22,583

2000 2001 2002 2003 2004 2005 2006 12,216 0 5,000 35,000 30,000 25,000 20,000 15,000 10,000 *Six-county region for new homes; four-county region for resale region four-county new homes; for region *Six-county Estate (resale) Lyon Real Group (new); Gregory Source: The Based on information reported by the California Employment Development Department (EDD), the the California Employment reported by Based on information Region increased by 19,500 jobs, or 2.1%, in of non-farm jobs in the Sacramento total number increases were seen in Leisure & Hospitality (5,200 jobs), the year ending August 2006. The largest (3,900 jobs), Trade, Transportation & Professional & Business Services (5,000 jobs), Government jobs). The only sectors to see job Education & Health Services (1,700 jobs), and Utilities (2,900 rate in the Sacramento Activities. The unemployment and Financial were Information declines 5.0% in 2005. Region averaged 4.8% in 2006, which was down from job growth in the range of about 2% for experts predict moderate For the year 2007, most in the region is good. outlook for employment Region. Beyond that, the long-term Sacramento grow 8.6% between 2005 region is projected to in the Sacramento According to EDD, employment 2010 and 2015 (about 2.1% per and 2010 (about 1.7% per year on average), 10.3% between Trade to occur in Services, industries, the largest gains are expected of employment year). In terms and Government. Trends Historical Region. The following chart exhibits new and resale home sales in the Sacramento The chart indicates sales of new and resale homes declined in 2005 and 2006. However, the sales to historical figures. In 2007, sales are expected healthy compared figures for 2005 and 2006 remain to levels seen in 2006. to be similar Region. prices in the Sacramento The following chart exhibits average new and resale home

A-22 39 E/P Ratio

Permits

Single-family E/P Ratio Ziegenmeyer x Jordan Total x Permits Seevers

E/P RATIO - SIX-COUNTY REGION

Employment Gains (Non-farm)

1996 19,200 9,351 2.05 8,470 2.27 8,470 2.42 2.05 8,898 2.74 2.11 11,035 9,351 3.60 2.06 1996 19,200 10,168 11,212 2.04 2.90 1997 21,500 14,694 13,744 1.49 1.63 1998 30,200 13,941 15,256 0.72 1.21 1999 40,400 17,225 18,665 0.56 0.58 2000 28,100 0.21 18,871 19,606 0.45 21,339 2001 22,800 23,177 1.52 0.18 2002 13,500 24,429 18,479 2.34 1.31 2003 11,000 24,840 10,730 1.72 2004 4,400 21,477 2005 28,100 14,574 2006 25,100 Year Source: Gregory Group The The following table illustrates E/P ratio trends in the Sacramento Region. The following table illustrates E/P ratio trends in the Sacramento The table above illustrates that job growth was particularly strong relative to building permits that played a part in between in the late 1990s through 2001. This led to significant pent-up demand between 2000 and 2005. The E/P ratio declined in the market the rapid price appreciation seen activity increased and job growth slowed. steadily between 2001 and 2004 as construction permit Job growth was very strong in the years 2005 and 2006, is projected to be for year for new housing. demand 2007 as well, which should help maintain Population Trends Another significant factor with direct influence on the region’s housing market is population. Since the San from by migration Region has been significantly impacted the Sacramento the mid-1980s, Area and Southern California urban centers, as well areas outside the state of Francisco Bay area new Sacramento California. In contrast to the Los Angeles and San Francisco regions, most seeking job opportunities, lower costs of housing and a less within California from residents come congested living environment. 2001 through Region from The following table illustrates the total population of Sacramento 2006, with corresponding growth for the periods noted. 38

Multifamily Ziegenmeyer x Single-family Jordan x Seevers

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 RESIDENTIAL BUILDING PERMITS - SIX-COUNTY REGION 0 5,000 25,000 20,000 15,000 10,000 Source: Gregory Group The A total of 2,864 building permits were issued during Fourth Quarter 2006 in the Sacramento Region, were issued during Fourth Quarter 2006 in the Sacramento A total of 2,864 building permits 1,817 were single- a year ago. Of the 2,864 total permits, which represents a 32.1% decrease from showed a segment to a year ago, the single-family Compared and 1,047 were multifamily. family data (Note: Permit by 28.2%. increased permits of multifamily decrease of 41.9%, and the number not yet available.) for First Quarter 2007 is E/P Ratio Trends strength is the E/P ratio. This ratio a statistic of the new housing market Another viable measure issued in versus the new residential permits growth (non-farm) the new employment that measures the corresponding year. The benchmark balance recognized by industry is that for every 1.2 new or for one new housing unit (whether single-family a need or demand jobs created, there is normally whenever the E/P ratio for this type side of the formula, the single-family Concerning multifamily). is considered to be in a very favorable and strong of unit alone is 1.5 or higher, then the marketplace condition. demand

A-23 41

Last Year % Change

Last Qtr. % Change Ziegenmeyer x Jordan Qtr. 2007 Qtr. x st 1 Seevers AVERAGE NEW HOME PRICE

County

Placer $524,278 -2.7% -3.5% -9.6% -7.7% -9.2% -1.5% +0.2% -2.7% +1.3% Sacramento $430,367 -5.4% El Dorado +0.2% Placer $524,278 Yolo $489,321 Yuba $345,897 Sutter $338,097 $813,705 6-County Region -0.4% $465,149 -2.0% +11.5% -6.3% Source: Gregory Group The ago and down 2.0% from the previous quarter. The region’s average home price reached a peak in ago and down 2.0% from the previous quarter. The region’s average home in each subsequent quarter. has declined Second Quarter 2006 and to a year quarter compared prices for the current average new homes The following table compares ago and last quarter. to compared areas of the region sale prices were lower in most The table above indicates new home a year ago. El Dorado County was the only county to see notable increase in average price from prices are expected to continue submarkets, last year, with a strong gain of 11.5%. In most participants expect the average moderate throughout 2007 and likely into early 2008. Most market the peak in 2005/2006, with improvement to be in the 10-15% range from regional price correction projected to begin in 2008 or 2009. trends over the past several quarters by The Gregory Group, new home Based on statistics compiled are presented in the following table. 40 2.7% of Growth Annual Rate % Change

91,450

2006

89,170 % Change 86,694 Ziegenmeyer x 2005 Jordan 84,177 x NEW HOME SALES POPULATION TRENDS Seevers 2004 81,912

County Placer 3,309 2,609 -21.2% 2,600 -0.3% -19.5% -56.0% -44.5% 2,600 -38.8% 915 550 4,723 445 -21.2% -18.3% -18.0% -10.2% 7,718 +28.5% 2,609 1,136 Sacramento 9,385 1,249 El Dorado Placer 3,309 802 Yolo 1,391 Yuba 1,391 Sutter 624 1,055 6-County Region 17,155 580 14,094 -45.0% -17.8% 356 9,596 -38.6% -31.9% Source: Gregory Group The County 2001 2002 2003 2004 2005 2006 Total 1,985,503 2,044,290 2,098,249 2,148,709 2,193,018 2,229,940 2.3% Source: California Department of Finance Source: California Department El DoradoYoloYuba 160,486 164,066 172,677 61,060 167,238 177,575 62,382 170,205 181,337 173,511 63,749 184,673 176,204 187,575 65,237 190,344 67,394 1.9% 2.0% 69,827 2.7% SacramentoPlacer 1,252,509 1,287,246Sutter 1,317,806 258,563 1,344,867 271,109 1,366,937 1,385,607 283,942 80,208 297,033 2.0% 308,431 316,508 4.1% New Home Sales New following the past three years is detailed in for the six counties over sales activity New home table. all areas of fell sharply in 2005 almost sales of new home The table above indicates the number Region. The only county to see an increase in sales volume 2005 was Sutter the Sacramento County. El Dorado County experienced the sharpest decline, with a 45% reduction in new home to 2005. The declines compared sales. For the year 2006, all six counties had fewer new home sales had only a slight decline of less than 1%. which were steep in all counties except Placer, very sales were down for the year 2006 overall, fourth quarter showed some While new homes were results. A total of 2,445 new homes sold during Fourth Quarter 2006 in the six- promising to the last quarter of 2005, Region. This represented a 57.8% increase compared county Sacramento and a 25.0% increase from the previous quarter. Region. were sold in the six-county Sacramento In First Quarter 2007, a total of 2,695 new homes This represents a 30.6% increase from year ago (First Quarter 2006), and 10.2% sales levels were relatively strong, prices continued to last quarter (Fourth Quarter 2006). While a year price in First Quarter 2007 was $465,149, down 6.3% from decline. The average new home

A-24 43

2,321

2,187 Ziegenmeyer x 842 Jordan x 332 Seevers

SALES OF NEW ATTACHED UNITS

129 2002 2003 2004 2005 2006

0 500 2,500 2,000 1,500 1,000 Source: Gregory Group The Attached Housing Market Region have escalated, the cost in the Sacramento homes As prices for new and resale single-family area households of ownership has increased. According to Grubb & Ellis, only 12% Sacramento (and only about 25% can afford an existing home). new home can afford the area’s median-priced half- affordable alternatives such as condominiums, has increased for more As a result, demand lots. on very small plexes and homes Developers have quickly responded to this trend, constructing new condos and high-density housing, In 2002, only two attached projects were selling product to condominiums. or converting apartments projects have of 129 sales for the year. Since then, several condominium in the region, with a total of attached The following chart shows the number apartments. been constructed or converted from unit sales since 2002. have increased The Gregory Group, shown above, sales of attached homes According to data from sales, attached product continues to in the past few years. As a percent of total home dramatically sales in 2002, attached units Representing less than 1% of all new home of the market. capture more about 15% of the total in 2005 and 24% 2006. As First Quarter 2007, there were accounted for Region. In addition, several offering attached units in the Sacramento over 50 active developments years. projects are proposed for the coming 42 Qtr. st 2007 1 Qtr. 2006 th 4

Qtr. 2006 rd 3

Qtr. 2006 nd 2 Ziegenmeyer x Qtr. st 2006 1 Jordan x Qtr. 2005 th 4 Seevers

Qtr. 2005 rd

NEW HOME TRENDS - SIX-COUNTY REGION 3

Category Avg. Home Size 2,360 2,343 2,404 2,347 2,310 2,306 2,288 Price Avg. Price Home Sales Median Week 3,590 1,549 2,063 3,124 1,956 2,445 2,695 $492,985 $489,329 $496,305 $498,027 $484,019 $474,482 $465,149 1.08 0.45 0.59 0.72 0.43 0.56 0.56 $457,950 $456,619 $465,726 $459,990 Price/SF $440,240 $434,990 $423,990 Avg. of Avg. per $215.72 $215.97 $213.02 $221.76 $217.95 $215.21 $213.27 Number Inventory 2,404 3,299 3,780 4,222 4,598 3,925 4,268 Sales Unsold Weeks of Inventory 6 10 12 13 16 14 15 Source: The Gregory Group has experienced rapid increases in unsold inventory starting around the second half of The market are continuing to offer significant incentives prospective buyers. These 2005. Most homebuilders and closing costs, toward down payments contributions such as cash items incentives include upgrades, cars and vacations. Many builders are offering incentives to avoid swimming pools, home have lowered their prices as well. prices, although many reductions in base home or minimize Developer Market Share region were in the Sacramento active homebuilders most Based on year 2006 home sales, the five (802), Centex (1,103), KB Homes Lennar Communities D.R. Horton Inc. (1,162 sales in 2006), (395). The top five builders combined for about 44% of the local (745) and Pacific West Homes share in 2006. market The Sacramento region, along with much of the rest of the country, is experiencing a trend in which into fewer consolidates As the market of the market. and more more fewer builders are capturing for can afford to pay more suppliers and lower costs from can command hands, the larger companies or fighting entitlements easily bear legal costs associated with securing land. They can also more Street Journal, five 2005 article in The Wall opposition to development. According a November that share rose to controlled about 10% of the U.S. market; years ago the top five homebuilders about 25% in 2005 and is expected to top 50% within a decade.

A-25 45

Ziegenmeyer x Jordan x Seevers

The dramatic increase in new home prices in recent years has made single-family homes homes single-family recent years has made prices in new home increase in The dramatic for This trend has resulted in increased demand entry-level homebuyers. unaffordable to many lots and and Yuba Counties, for alternatives such as small as Sutter such alternative locations, near the Placer/ development include Placer Vineyards Other areas of future attached product. County. County intersection, and Delta Shores in southern Sacramento Sacramento/Sutter in several the first time For point in the local housing market. a turning The late part of 2005 marked to the sales dropped significantly in the fourth quarter compared years, the number of new home continued slowing in sales rates, and slight previous year. The first three quarters of 2006 brought In the fourth quarter, sales activity was stronger price declines are now being seen in the market. than expected but prices continued downward. The general consensus among local experts is that the sustainable level of activity. The outlook for is stabilizing to a more housing market Sacramento product should see stable of pricing, most number of sales as 2006. In terms 2007 is for a similar pricing or slight declines, with the average regional price correction expected to be in 10-15% price corrections. dramatic the peak in 2005/2006. Upper-end product could see more range from in 2008 or 2009. time conditions is expected some in market Improvement 44

Ziegenmeyer x Jordan RECORDER x Seevers

NOTICES OF DEFAULT FILINGS WITH COUNTY OF SACRAMENTO CLERK- 2003-04 428 418 389 426 342 409 417 382 372 339 325 355 4,602 2004-05 333 351 330 336 318 337 396 334 392 301 298 356 4,082 2005-06 313 336 400 378 396 457 529 503 611 515 711 777 5,926 2006-07 846 1,077 1,031 1,304 1,414 1,463 1,757 1,762 2,134 2,024 N/A N/A 14,812 Fiscal YearFiscal July August September October November December January February March April May June Total Foreclosure Activity buyers relied on creative financing like first-time many At the peak of 2000-2005 housing boom, or “nonconforming” loans which allowed adjustable-rate and interest-only loans, subprime or “conforming” loans. Interest rates have than they could have under prime buyers to borrow more recent for many payments to higher mortgage couple years, leading slowly risen over the past than owe more of these homeowners not a viable option because many buyers. Refinancing is often region, Sacramento The result is the in the market. of declining prices are worth because their homes defaults along with other areas in the state and nation, is seeing a significant increase mortgage of default filing within the table below, the number and foreclosures. Specifically, as displayed in the higher and have reached significantly since May 2006 have increased steadily County of Sacramento levels than in previous years. Although a notice of default is only the first step in foreclosure correction. current market of the the magnitude process, the data still exhibits Conclusion Region, as evidenced by sales activity, generally for new housing in the Sacramento The demand of 2005, with the exception 2001 when a slight most each year from 1995 through improved to can be attributed boom The recent housing national economy. decrease was seen due to a slowing created by robust job growth around the historically low interest rates, coupled with pent-up demand other parts of the state and nation to turn of the century. Further, buyers have been drawn from base, variety of diversified employment infrastructure, Region for its established Sacramento housing products, stable local economy and good climate. Further, DataQuick Information Systems reported there were 1,464 foreclosures in the six-county Systems Further, DataQuick Information just 139 foreclosures in First Quarter 2006. than 10-fold from region in First Quarter 2007, up more standards have tightened significantly in the As a result of the heightened owner default, lending discussion, the region is expected to experience a preceding period. Based on the market current stringent lending and more downward trend in pricing as a result of the increased foreclosures policies.

A-26 47

project is encumbered by a special tax Street and currently offers three separate floor offers three separate floor Street and currently Ziegenmeyer th x Jordan x Seevers

of $32 per unit month. products and amenities and have relatively similar economic characteristics as that likely proposed economic and have relatively similar amenities products and for the subject properties. Willow Walk by Richmond American is developing a 48-lot subdivision located south of American Opened in August 2005, Richmond and offers four Walk 99. This project is known as Willow Florin Road, just east of State Highway $346,990 1,399 to 2,212 square feet, with base prices from detached floor plans, ranging in size from within the project have sold, and total to $399,990, as of the First Quarter 2007. All 48 homes month. This weekly sales rate was 0.68 units, or 2.92 per Aspen Village by Meritage Homes sales in May and commenced 105 units planned of has a total Aspen Village by Meritage Homes is located south of US Highway 50 at the intersection Mayhew Road and 2005. The community 1,866 to 3,233 square feet in size and ranging from Kiefer Road. The project offers six floor plans has sold 97 of 105 units offered. As the First Quarter 2007, base prices were $391,900 to sales rate of 1.14 sales, or 4.90 per a total weekly $482,900. This project has maintained a it will have property, but the encumbering month, since opening for sale. There are no special taxes of $94 per unit. association fee monthly homeowner’s Lewis Communities Visions and Legacy by Tim for a total are planned Sacramento Lewis Communities’ Visions and Legacy projects in South Tim sales on April 7, 2005 and have standard lot sizes of of 114 units. These projects commenced 5,000 and 5,300 square feet, respectively. The Legacy project is located along the approximately north side of Meadowview Road and west 24 plans ranging in size from 1,504 to 2,506 square feet, with corresponding January 1, 2007 base 2007, this project had sold 38 of 45 homes prices of $341,900 to $431,900. As the First Quarter offered for sale. Visions is located at the northwest corner of Franklin Boulevard and Mack Road 1,695 to 2,506 square feet. As of and currently offers four separate floor plans ranging in size from January 1, 2007, base prices were $419,900 to $484,900 and the project had sold 54 of 55 units experienced a total weekly sales rate of 0.42 units, offered. As of the First Quarter 2007, Legacy has Visions has experienced a total weekly sale rate of 0.60 units, or 2.58 sales or 1.81 sales per month. per month. Legacy is encumbered by special taxes ranging from $100 to $150 per unit month, while Visions has a special tax obligation of $50 per unit per month. 46

Ziegenmeyer x Jordan x Seevers

SOUTH SACRAMENTO SUBMARKET

Base Price Range Average Base Price Size Range (SF) $248,900 - $484,900 Average Size (SF) Price/SF Range $368,470 Average Price/SF 3,233 SF 1,041 – 1,889 $273.08 $149.37 - $199.70

SOUTH SACRAMENTO HOUSING SUBMARKET OVERVIEW Introduction of the Sacramento submarket in the South Sacramento The subject properties are situated this area is homebuilders, by the region’s major targeted not historically Area. While Metropolitan lots in the region is of available residential now being considered viable, because the inventory Central Business District of to the proximity Residents are drawn by the area’s smaller. becoming of builders are now recognizing the area offers opportunities for new and a number Sacramento active housing submarkets in the region, new to occur. Compared other residential development area are generally offered at more affordable price levels. in the South Sacramento homes generally ranged from prices in this market As of the end First Quarter 2007, new home roughly $248,900 to $484,900. According The Gregory Group Report, the average base price at was $368,470. The in South Sacramento homes for active subdivisions marketing this time sales statistics within the area. Quarter 2007 the First following table summarizes communities residential of active single-family a survey The above statistics were derived from 2007. It is noted this survey includes sales data the First Quarter (detached) based on statistics from typical projects are more an age-restricted community, Sun Meadows. However, the remaining from projects reported a range of 2007, the remaining residential projects. As of the First Quarter $248,900 to $484,900 with an average base price of $377,746 based on a 1,959 square foot floor County was $452,744, based on a floor plan plan. The average base price within Sacramento containing 2,237 square feet of area. Active Communities and are have entered the market During the past couple of years, several new developments of the more recent discussions detail some subject. The following with the anticipated to compete area. Given the subject properties’ medium-density Sacramento in the South activity market we have also included discussions regarding higher density detached residential components, projects are considered to offer similar region. Overall, the following projects within the Sacramento

A-27 49

Ziegenmeyer x commenced sales in February 2005 and is located the Jordan x Seevers

h Sacramento and Natomas Projects

as of January 1, 2007, 4 of 5 units offered have been sold. This project is encumbered by a special tax January 1, 2007, as of $50 per unit per month, but does not have an HOA fee. The Hamptons - Montauk Small Lot Projects – Sout South residential projects from The following discussion relates to five active single-family of offering lot sizes less than 3,200 square feet (standard). Though some and Natomas Sacramento they are considered to be good submarket, Sacramento these projects are not located in the South residential components. the subject properties’ medium-density indicators of Liberty Lane by Ryland Homes 2006 and is located at the December sales during commenced Cobblestone project Syncon Homes’ First the of As intersection of Elk Grove-Florin Road and Robbins in South Sacramento. 1,346 to 2,220 square Quarter 2007, this project offered six separate floor plans ranging in size from feet with corresponding base prices ranging from $324,990 to $399,990. Cobblestone offers a standard reported a total weekly 2007, Syncon Homes had lot size of 2,336 square feet. As the First Quarter sales rate of 1.33, or approximately 5.72 sales per month. There are 100 units planned in the project and, project KB Homes’ The Hamptons-Montauk located north of Del Paso Road, Specifically, the community is Natomas area of the city Sacramento. The Liberty Lane project represents a 74-lot located along subdivision Mack Road, west of Franklin Boulevard in South Sacramento. The project offers four floor plans ranging from 1,511 to 1,885 square 1, 2007. The typical lot size is 2,030 square feet in size and sold 48 of 55 units offered, as January feet and, as of the First Quarter 2007, base prices were $319,990 to $345,990. This project has along Hampton Bays Way. This project offers seven separate floor plans ranging in size from 1,364 to lot size of 2,700 square feet. As the First Quarter 2007, base prices with a standard 2,561 square feet to $423,000. The total weekly sales rate, since this project $328,000 within this project ranged from opened in the First Quarter 2005, is 2.06 sales, or approximately 8.86 sales per month. There are 423 project is encumberedunits planned in the project, with 200 sold as of First Quarter 2007. This by a special tax of $81 per unit month and a homeowner’s fee $66 month. Maplewood maintained a total weekly sales rate of 0.80 sales, or 3.44 sales per month, since opening for sale. There a total weekly sales rate of 0.80 sales, maintained is a monthly special tax of $56 per unit, but there is no homeowner’s association fee. Cobblestone 48

Street community at the intersection of st Ziegenmeyer x Jordan x Seevers

Street. Home sales in this development commenced in July 2006 and, as of commenced Street. Home sales in this development

st Street by Caramazza Development Street by Caramazza Development Street by Caramazza Development is situated at the intersection of Vintage intersection is situated at the Development by Caramazza Street

th th

Street and Fruitridge Road. This project offers three floor plans ranging in size from 1,267 to three floor plans ranging in size from Street and Fruitridge Road. This project offers Street Estates by Green Gable Construction Green Gable Construction by Street Estates st th 1,879 square feet, with corresponding base prices of $335,990 to $379,990. Sales commenced in 1,879 square feet, with corresponding base prices of $335,990 to $379,990. Sales commenced July 2006 and there are a total of 22 units planned. As the First Quarter 2007, 4 special tax or an HOA fee. The is not encumbered by a monthly offered have sold. This community sales rate is 0.15 sales, or 0.65 per month. total weekly Newhaven by The Hofmann Company in for nearly a decade, the 69 improved lots (5,500± square feet) remaining After sitting dormant as the Newhaven new-home Street began being marketed Bend Unit 1 along Amherst Steamboat reached sell-out of the 69 in September 2002. The project Company subdivision by The Hofmann added additional phases in units in the Third Quarter 2003. During First 2004, Hofmann which 215 total units were offered. As of the First Quarter 2007, all had sold. The final $429,990 to $449,990, with corresponding floor plans of 1,536 and 2,271 base prices ranged from 0.97 sales per week, or 4.17 rate of square feet in size. This project had a total absorption special tax of $33.00 per unit and no month, since opening for sale. The community has a monthly HOA fees. Sun Meadows for seniors, gated community Sun Meadow the 136-unit is developing New Faze Development in this project are restricted to buyers located near Franklin Boulevard and Brookfield Way. Homes 1,100 to ranging in size from aged 55 and over. The subdivision offers five floor plans, with homes Amenities the $264,900 to $320,900, as of First Quarter 2007. 1,525 square feet and priced from include a clubhouse, swimming pool and putting green. The grounds recreation center are association with monthly dues of $96. The total weekly sales rate by a homeowners' maintained 2.67 sales per month. is 0.62 sales, which equates to approximately reported at this development 71 Green Gable Construction is developing the 21-unit 71 The Residence at 65 at 65 The Residence Fruitridge Road and 71 Fruitridge Road 65 the First Quarter 200, 8 of the 21 units offered had sold. The project offers seven floor plans, with the First Quarter 200, 8 of 21 units $349,900 to $399,900. There 1,512 to 2,464 square feet and priced from ranging in size from homes fees. The total weekly sales rate reported at this development is 0.33 or HOA are no special taxes 1.42 sales per month. sales, which equates to approximately

A-28 51 Absorption

*(Total) Monthly

Absorption (Total) Weekly Ziegenmeyer x Jordan x Location SMALL LOT PROJECTS Seevers

Street South Sacramento 0.15 0.65 th

Project Visions South Sacramento 0.60 2.58 1.81 0.60 0.42 4.17 0.97 Sacramento Sacramento Sacramento 5.72 1.33 Willow Walk Aspen Village Visions South Legacy South Sacramento Newhaven South 3.74 Sun Meadows 71st Street Estates South Sacramento The Residence at 65 South Sacramento 0.87 Liberty Lane 0.68 1.14 Cobblestone South – Montauk The Hamptons South Sacramento South Sacramento Maplewood Natomas Villa Terrassa 0.33 0.62 2.92 4.90 Natomas South Sacramento 0.80 1.42 2.67 South Sacramento 2.06 0.22 3.44 8.86 0.95 *Based on 4.3 weeks per month In summary, the South Sacramento area has in recent years become a target for homebuilders with a target for homebuilders area has in recent years become the South Sacramento In summary, points for the area is its proximity marketing of the strongest product at affordable price levels. One on the previous pages illustrate described projects to the Central Business District. The recent acceptance. The market with steady has been met is active in the area and development residential discussions of the subdivisions presented on the previous pages generally suggest an overall monthly absorption rate of between one and six units per month. In general, these comparable projects are the subject properties. considered good indicators of achievable absorption rates for 50

Ziegenmeyer x Jordan x Seevers

Regis Homes’ Villa Terrassa project is located at the southwest corner of Franklin Boulevard and Villa Terrassa project is located at Regis Homes’ this 2007, Quarter First the of sales during the First Quarter 2006. As Mack Road and commenced project offered four separate floor plans ranging in size from 1,041 to 1,785 square feet with corresponding base prices ranging from $289,000 to $350,000. Villa Terrassa offers a standard lot size sales rate of a total weekly of 2,800 square feet. As the First Quarter 2007, Regis Homes had reported 0.22, or approximately 0.95 sales per month. There are 100 units planned in the project and 2 of 10 fee of tax, but has a homeowner’s offered have been sold. This projectby a special is not encumbered $90 per unit per month. Maplewood by Griffin Industries commenced sales in March 2005 and has a typical lot size of 2,100 Maplewood by Griffin Industries commenced 1,481 to 1,823 square square feet. This project offers four separate floor plans ranging in size from feet with base prices of $319,990 to $359,990, as the First Quarter 2007. The project is located intersection of Del Paso Road and El Centro the is situated near area and market Natomas within the sales, 0.87 this project opened in the Second Quarter 2005, is sales rate, since Road. The total weekly There are 114 units planned, with 81 of the 94 offered month. per sales 3.74 approximately or unit per $51 of tax special a by encumbered is project having sold as of the First Quarter 2007. This per month and a homeowner’s fee of $98 per unit per month. Villa Terrassa Absorption Analysis in the subject required for the disposition of homes the exposure time to estimate In attempting of a number sales, as area, we have looked at both the historical exposure times properties’ market conditions. The table on the following page details well as current and projected economic projects located throughout the area. The data is taken reported absorption for several comparable the First Quarter 2007 Gregory Group report. from lot sizes projects with standard statistics from absorption we have also included In this analysis, of these projects are situated outside the subjects’ under 3,200 square feet. Although some these projects are still considered good absorption the indicated absorption rates from submarket, residential components. medium-density the subjects’ indicators for

A-29 53

Ziegenmeyer x Jordan x Seevers

PROPERTY IDENTIFICATION AND LEGAL DATA

Location certain land areas situated within the boundaries of The appraised property, which comprises CFD No. 2005-2 (North Vineyard Station No. County of Sacramento 1) subject to the special tax Road, Florin of south and Road Gerber of north Road, Bradshaw of securing the bonds, is located west within an unincorporated area of Sacramento County, California. Assessor’s Parcel Number(s) A through F and these lots are now identified have recorded for Villages The final subdivision maps by assessor’s parcel numbers 066-0120-001 through -082, 066-0130-001 -058, 066-0140- 001 through -069, 066-0150-001 -070, 066-0160-001 -072, 066-0170-001 076, 066-0180-001 through -076, 066-0190-001 -031, and 066-0200-002. of Record Owner Vineyard Point, LLC. vested with LW is presently Title to the subject property Legal Description title report, which is is included in the preliminary property A legal description of the subject reproduced and included in the Addenda to this report. Property Taxes Constitution, in 1978 by Article XIII to the State The property tax system in California was amended on property taxes and for a commonly referred to as Proposition 13. It provides for a limitation real property by reference to a base year value, value of current taxable the establish procedure to (if any). Annual increases cannot exceed 2% per annually to reflect inflation which is then modified year. the property is substantially The base year was set at 1975-76, or any thereafter in which is to be re- the property occur, either of these two conditions or changes ownership. When improved the new base year assessed value. value, which becomes Proposition 13 also assessed at market tax rate to 1% of the value property, exclusive bonds and supplemental the maximum limits Taxes for bonded indebtedness approved prior to 1975, and any bonds subsequently assessments. the property is located, can be added to 1% approved by the requisite vote of district in which tax rate. due to the fact primarily in this appraisal, consequence taxes are of nominal The existing ad valorem are improvements and property substantially as the infrastructure these taxes will be adjusted 52

Ziegenmeyer x Jordan x Seevers

SUBJECT PROPERTY – VINEYARD POINT

A-30 55

RD-7, RD-10 RD-10 RD-7,

RD-3, RD-4, RD-5

RD-15, RD-20, RD-25 RD-4, RD-5, RD-6, RD-7

County Zoning Designation County Zoning Ziegenmeyer x Jordan acre acre acre acre acre x Description Seevers residential: 7-12 units per acre per acre 7-12 units residential: Medium-density single-family

Single-family residential: 3-5 units per per 3-5 units residential: Single-family per 4-7 units residential: Single-family Multifamily residential: 12-22 units per 12-22 units residential: Multifamily

SFR 3-5 SFR 4-7 MDR 7-12 MFR 12-22 Designation Specific Plan value, the appraiser assumes no negative title restrictions have been recorded since the date of the been recorded since the have no negative title restrictions assumes appraiser value, the pertaining to title. matters for report. The appraiser accepts no responsibility Zoning the subject parcels are currently According to the County of Sacramento Planning Department, of A description residential development. and multifamily medium-density zoned for single-family, The information was is presented in the table below. use designations each of the allowable land Vineyard Station and the North obtained from the County of Sacramento Planning Department the zoning designations contain numbers that indicate the county Specific Plan text. It is noted the RD-3 zone allows for of dwelling units allowed per acre land. For example, number maximum of three dwelling units per acre. a maximum Entitlements for Vineyard Point the tentative map According to the County of Sacramento Planning Department, was approved on November 10, 2004. It was reported the large lot final map recorded on November E recorded on October 9, 2006 and the small for Villages A through lot final map 23, 2005, the small for Village F recorded in May 2007. lot final map Flood Zone The subject property is located within two flood zones, Flood Zone X, described as areas outside of the 100- and 500-year flood plains, Flood Zone AE – described as areas within 100-year of the Federal with our interpretation accordance in flood plain. This information was determined Map, Community Panel Numbers 060260-0330D, dated Agency (FEMA) Management Emergency a letter of map revision (LOMR), which would remove the July 6, 1998. The developer reported to the the 100-year flood zone, has been submitted affected portions of the subject property from revision will be approved a map Agency (FEMA). It is assumed Management Federal Emergency will be developable. 100-year flood zone and the from areas will be removed and the impacted 54

t t t

Lot/Unit/Acre Ziegenmeyer Maximum Special Tax Per x : Jordan x Seevers SFR 4-7SFR $1,250 per lo SFR 3-5SFR $1,400 per lo MDR 7-12MDR $950 per uni MFR 12-22MFR or $5,000 per acre $950 per unit

Proposed Land Use

SFR - Single-Family Residential; MDR - Medium Density Residential; MFR - Multifamily Residential

completed. Additionally, the definition of market value employed in this appraisal assumes a sale of appraisal assumes in this value employed of market the definition Additionally, completed. the appraised property. The subject property is located in tax rate area 51-297, which has an annual tax rate of 1.0072% based on assessed value. Additionally, the appraised property will be encumbered by County of respect to special taxes, we CFD No. 2005-2 (North Vineyard Station 1) bond. With Sacramento by Goodwin Consulting Group, have relied upon the Community Facilities District Report, prepared the subject property. It is our understanding the annual special tax levy on Inc., to determine CFD No. 2005-2 (North Vineyard Station annual special taxes under the County of Sacramento 1) bond will not exceed the following amounts increases. Therefore, based on the annual to 2% special tax rates are subject maximum the It is noted special taxes are approximately maximum District, the current two years following approval of the 4-7, $988 per lot for MDR 7-12 and $1,456 per lot for SFR 3-5, $1,301 CFD or $5,202 per acre for MFR 12-22. The financing provided by the first County of Sacramento including, No. 2005-2 (North Vineyard Station 1) bond issuance will be used for improvements drainage and flood control facilities, sanitary sewer water transportation, roadway and related facilities, landscaping other public facilities; in each case and other soft project costs. including design, planning, project management Grove School District CFD #1 Mello-Roos by the Elk The subject property is also encumbered of the Elk Grove Unified School District, upon special tax. According to Marcia Grambusch, would be calculated as a residential project, annual Mello-Roos payments subject’s re-development or condominiums. residence and at $120 per dwelling unit for apartments at $200 per single-family The bond indebtedness and any direct charges will be accounted for in the valuation. Conditions of Title and dated August 9, 2006, title report, prepared by North American Title Company A preliminary While the report. to this in the Addenda was provided for use in this appraisal and is included on there are no adverse impacts has determined appraiser has reviewed the conditions of title and

A-31 57

Ziegenmeyer x Jordan x ASSESSOR’S PARCEL MAP Seevers

Ziegenmeyer x Jordan x Seevers

Earthquake Zone Earthquake Zone Safety Commission, the subject property is located within Zone 3, areas of According to the Seismic risk zone in California. In addition, activity. Zone 3 is considered to be the lowest moderate seismic referred to as an Alquist- (formerly Hazard Zone within a Fault-Rupture the subject is not located of Priolo Special Study Zone), as defined by Publication 42 of the California Department Conservation, Division of Mines and Geology. Easements adverse apparent no revealed title report and preliminary An inspection of the subject property to the According currently impact the subject. conditions that or other encroachments easements, for easements contains the subject (see Addenda), title report provided for this appraisal preliminary are typical for the area and not easements these ingress/egress and public utilities. However, The appraiser is not subject property. of the considered to adversely affect the value or marketability any It is assumed easements. of any location the exact qualified to determine a surveyor nor future If, at some report. on the opinion(s) of value set forth in this do not have an impact easements reserves the the appraiser impact on value, to have a detrimental are determined date, any easements the opinion(s) of value contained herein. right to amend

A-32 59

County of Sacramento Water Agency County of Sacramento SRCSD CSD-1 Pacific Gas and Electric District Utility Municipal Sacramento AT&T Fire District Metropolitan Sacramento Sheriff County of Sacramento Ziegenmeyer x development development development A soils report was not provided for this analysis. and of residential However, based on the existence commercial structures situated within the subject’s property area, it appears the subject immediate load bearing capacity for possesses adequate development. plan, a physical inspection Based on the development typical grading of the subject property, and assuming it is expected the and paving work will be completed, subject property will have adequate drainage. frontage along The subject property offers primary Gerber Road, Bradshaw Road and several proposed interior streets. Public utilities, including electricity, natural gas, water and telephone service, are available at the and will be extended to each of the property perimeter Public utilities will be served of the land components. by the following providers: the appraiser did not of inspection, At the time which observe the existence of hazardous material, not be present on the property. The or may may appraiser has no knowledge of the existence such on the property. However, appraiser is materials not qualified to detect such substances. The presence affect the could of potentially hazardous materials is value of the property. The estimate is no such there the assumption predicated on cause a loss on or in the property that would material for any such in value. No responsibility is assumed Water: Sewer: Natural Gas: Electricity: Telephone: Fire: Police: Jordan x Seevers

North South East West residential Vacant land proposed for single-family Rural residential development and public Vacant land proposed for residential Proposed landscape corridor Soils: Drainage: Frontage/Access: Adjacent Uses: Utilities: Environmental Issues: 58 ) SF

(

Size Typical Lot

nia. Land uses in the subject’s / Acres No. of Lots / Units / Units No. of Lots acres of land area. The subject parcels are r Ziegenmeyer x According to the most recently available assessor’s recently available assessor’s According to the most the subject property contains a total of parcel map, 179.72 have recorded for The final subdivision maps Villages A through F and these lots are now identified by assessor’s parcel numbers 066-0120-001 through - 082, 066-0130-001 through -058, 066-0140-001 through -069, 066-0150-001 -070, 066-0160- 001 through -072, 066-0170-001 076, 066- 0180-001 through -076, 066-0190-001 -031, and 066-0200-002. The topography of the property is generally level. either rectangular or trapezoidal in shape. Combined, Combined, in shape. or trapezoidal either rectangular shape. an irregular they form Jordan Vineyard Point x SFR 4-7SFR 19 lots 4,725 SITE DESCRIPTION Seevers

F 7-12 MDR 193 lots 2,500 E 4-7 SFR 31 lots 4,725 BC 4-7 SFR 3-5 SFR 59 lots 152 lots 4,725 6,600 AD 4-7 SFR 3-5 SFR 138 lots 133 lots 4,725 6,600 Village Specific Plan Zoning

The subject property represents a portion of the County of Sacramento CFD No. 2005-2 (North of Sacramento County The subject property represents a portion of the the subject property will consist of 532 of development, Vineyard Station No. 1). At completion residential lots. Public/quasi-public land areas residential lots and 193 medium-density single-family such, these land areas are excluded by special taxes. As be encumbered District will not within the the various developable land use components details following table The this analysis. from the subject property. comprising The subject property is situated west of Bradshaw Road, north Gerber Road and south Florin Road, within County, Sacramento an unincorporated area of Califor and Shape: Size Assessor’s Parcel Number(s): Topography: immediate area are devoted primarily to rural residential uses, with some limited commercial commercial limited to rural residential uses, with some primarily area are devoted immediate Station Specific Plan area is built out, a wide range of land As the North Vineyard development. uses, will be commercial and recreational residential, multifamily uses, including single and term. to mid near area over the into the incorporated as follows: The subject property is further discussed

A-33 61

Ziegenmeyer x $20,972,815 (gross) project management and other soft project costs. and other soft project project management costs are gross offsite improvement The remaining as follows: estimated -$14,680,971 (70% completed) $6,291,844 (30% remaining) contained value estimate The hypothetical market the completion of public facilities herein assumes CFD to be financed by the first County of Sacramento No. 2005-2 (North Vineyard Station 1). work, the offsite improvement to the Similar was development developer reported the in-tract as of the date 70% complete approximately inspection. costs per in-tract development As such, the remaining lot are estimated as follows: 6,000 square foot lots = $10,500 per lot 4,725 square foot lots = $8,400 per lot 2,500 square foot lots = $9,600 per lot and fees pertaining to The subject’s proposed permits construction costs have been estimated the home and provided by Economic based on documents and Inc. Specifically, total permits Planning Systems, in Vineyard Point are fees paid by the developer $67,547 per lot. to be approximately estimated to However, it is noted fee credits attributable constructed by the infrastructure improvements and fees effective permits developer will lower the permit. of building paid at time required to be Specifically, facilities financed by the first County of CFD No. 2005-2 (North Vineyard Station Sacramento No. 1) bond issuance will result in a fee reduction of $11,658,800, or $16,081 per lot. Additionally, it is and fees will be noted a portion of the total permits used to fund initial infrastructure improvements. for all of the paying Because the developer will be fee credits further additional initial improvements, and fees costs paid by the permits reduce the overall provided by developer. Based on information Inc., approximately and Planning Systems, Economic $5,824,127 of the $20,972,815 in total construction Jordan x Seevers

In-Tract Development Costs: Permits and Fees: 60

Ziegenmeyer x conditions, or for any expertise engineering The client is knowledge required to discover them. urged to retain an expert in the field if desired. to completed has been plan A wetlands mitigation of the Section the guidelines for issuance establish Corps of Engineers. by the U.S. Army 404 Permits Act, a the Clean Water According to Section 404 of or fill to discharge dredged is required permit waters of the United States, including into materials U.S. Armywetlands. The Corps of Engineers is the is therefore authority. A 404 Permit permitting area required before any wetland or impacted has been issued can be developed. The 404 Permit by for the subject, and property is not encumbered wetlands. plan for the subject property calls The development residential for the construction of 532 single-family lots. The residential medium-density lots and 193 residential sizes for the single-family typical lot and 6,600 square feet, will be 4,725 components will have component residential the medium-density a typical lot size of 2,500 square feet. There will also be public/quasi-public land areas, such as parks and property. the subject open space areas, throughout will require an of the subject property Development that connects with Gerber Road interior street system and Bradshaw Road serves all of the various of the subject. Based upon tentative components is considered to be overall functional utility map, good. It is noted the Central California Traction has a railway corridor along the Company southwestern border of the subject property. This line is not currently being utilized and considered to the subject property’s effect on have an adverse potential. development As of the date value, developer estimated work 70% of the offsite improvement approximately facilities However, the primary had been completed. authorized to be constructed with the bond proceeds in the North Vineyard will be used for improvements Station Specific Plan Area, including, drainage and sewer facilities, water flood control facilities, sanitary related facilities, transportation, roadway and facilities, landscaping and other public design, planning, facilities; in each case including Jordan x Seevers

Wetlands: Development Plan: Functional Adequacy: Offsite Improvements:

A-34 63

Ziegenmeyer x Jordan x Seevers

FACILITIES TO BE FINANCED BY THE DISTRICT

This report will address the hypothetical market value of the subject property, assuming the assuming subject property, value of the the hypothetical market This report will address CFD No. 2005-2 to be financed by the first County of Sacramento of the improvements completion authorized to be financed by the (North Vineyard Station No. 1) bond issuance. The improvements District are detailed in the CFD Report prepared by Goodwin Consulting Group, Inc., a copy of constructed to be facilities authorized in the Addenda to this report. The primary which is included in the North Vineyard Station Specific Plan proceeds will be used for improvements with the bond water facilities, Area, including, drainage and flood control facilities, sanitary sewer in facilities; facilities, and other public landscaping roadway and related facilities, transportation, and other soft project costs. project management design, planning, each case including of formation with the associated expenses The cited list of facilities is proposed to include incidental to, the cost of Facilities Act of 1982, including, but not limited Community the Mello-Roos the facilities, cost associated with creation of planning, engineering and designing of the special tax, of the amount District, the issuance of bonds thereof, determination incurred in order to of the special tax or costs otherwise the special tax, payment collection of carry out the authorized purposes of the District and any other expenses incidental to and inspection of the facilities. completion construction, 62

725 lots) per lot will be created. will be lot 725 lots) per y Ziegenmeyer x costs will be eligible for additional fee credits that are for additional fee credits costs will be eligible exclusive of the CFD. Given 725 lots in Vineyard fee reduction of approximately Point, an additional $8,033 ($5,824,127 are property The configuration and size of the subject The on-going considered adequate for development. bodes well for for residential development demand for the this project and should increase the demand land uses within the Specific Plan. complementary with We expect the subject property to be competitive the other local developments, as well projects region. located elsewhere throughout the Sacramento Considering the above-mentioned fee credits, the Considering the above-mentioned and fees costs are effective permits property owner’s to be $43,433 ($67,547 -$16,081- $8,033) estimated fees are relatively similar and These permits per lot. projects located throughout the market to competing area. Jordan x Seevers

Conclusion:

A-35 65

4 rth Vineyard Station Specific Plan has Station Specific rth Vineyard Ziegenmeyer x Jordan x in the Addenda to this report. in the Addenda to this report. Seevers

HIGHEST AND BEST USE ANALYSIS

Glossary of Terms possibility, financial feasibility and maximum productivity. possibility, financial feasibility and maximum physically possible, appropriately supported, financially feasible, and that results in the highest physical permissibility, are legal value. The four criteria the highest and best use must meet undergone extensive planning and review. Modifications to zoning or designated uses are considered Vineyard Point has been approved and the final for Additionally, the tentative map unlikely. highly North with the Therefore, in accordance F have been recorded. for Villages A through maps are the developments residential or medium-density Vineyard Station Specific Plan, single-family of the subject property. uses legally permissible primary, The term “highest and best use,” as used in this report, is defined as follows: report, is defined in this “highest and best use,” as used The term property, which is The reasonably probable and legal use of vacant land or an improved Best Use – As Vacant Highest and highest and best use, it is appropriate to analyze the subject definition of with the In accordance physical possibility, financial permissibility, as it relates to legal property as though vacant productivity. feasibility and maximum Legal Permissibility regulations, such as government The legal factors influencing the highest and best use are primarily the land Planning Department, zoning and building codes. According to the County of Sacramento and medium-density the subject property are zoned for single-family comprising use components under the designations for these components Specific allowable zoning residential development. RD-4, RD-5, RD-6, RD-7 and RD-10. These North Vineyard Station Specific Plan include RD-3, No for the parcels. The zones dictate the allowable density Physical Possibility to, its possible use(s) include, but are not limited The physical characteristics of a property that affect location, street frontage, visibility, access, size, shape, topography, availability of utilities, off-site test has the legally permissible Since and soil subsoil conditions. easements improvements, use of the subject property, physical as the primary concluded residential development uses. they are suited for the legally permissible to see if characteristics of the parcels are examined Two analyses are typically required for highest and best use. The first analysis is is not and best use as improved) (highest The second analysis vacant. use of the property as though are relevant due to the fact subject property represents vacant land. Definitions of these terms provided in the 64

Ziegenmeyer x Jordan x SUBJECT PHOTOGRAPHS Seevers

Looking west along Gerber Road Looking east along Gerber Road Looking east across subject property Looking southeast across subject property Looking north across subject property Looking west across subject property

A-36 67

Ziegenmeyer x Jordan x Seevers

this report. The subject’s proximity to the employment sectors throughout the region has been sectors throughout to the employment this report. The subject’s proximity recently developed, and currently developing, in South Sacramento beneficial for residential projects for residential product Elk Grove and Rancho Cordova. The demand and neighboring areas of prices over has led to increases in home community amenities centers and employment to proximate environment, especially in the current market prices are moderating previous years. Although, home is expected to remain considering the incentives and concessions being offered by builders, demand relatively steady over the long-term. area, current pricing and absorption in the subject’s immediate the housing market Upon examining rates suggest profit levels and of return that are still attractive to builders. Additionally, the area is the subject’s market in of entitled residential land that is near-ready for development amount for new housing in Based on the preceding discussion, and considering stable demand limited. are considered financially feasible developments residential area, medium-density the Sacramento uses of the subject property. Maximum Productivity – Conclusion the conditions have been analyzed to evaluate the highest and best use of Legal, physical and market will generate the the type of use(s) that is presented to evaluate The analysis subject property. discussed, greatest level of future benefits possible to the property. Based on factors previously productive land uses is the maximally residential development and medium-density single-family considering the financially feasible. Therefore, physically possible and that are legally permissible, subject’s specific characteristics, the highest and best use of subject property is for residential subdivisions. and medium-density of well balanced single-family development 66 sections of 14.5% 17.7%

999 1,093 1,251 Ziegenmeyer x 1,101 1,530 Jordan South Sacramento Housing Market Overview x and ed. (Chicago: Appraisal Institute, 2002), 135. 135. Appraisal Institute, 2002), (Chicago: ed. Seevers th 2,047 929

, 4

2,660 2,082 $459,795 $465,699 $463,240 $464,641 $466,442 $465,967 $444,088 $436,780 $430,367 -1.5% -7.7% Housing Market Overview Community Quarter Sales) 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr 1st Qtr % Change % Change (Average Price/(Average 2005 2006 2007 Quarter Ago Year The Dictionary of Real Estate Appraisal of Real The Dictionary Sacramento County Sacramento Based on our physical inspection of the subject property, we know of no reason why the property Based on our physical inspection of the subject property, The property is not located within a flood zone or Fault- would not support any legal development. and evidence of residential construction in Rupture Hazard Zone. All utility services are available, Typical roadway and utility of development. the area provides additional support for possibility exist and there is an abandoned Central California Traction Railroad corridor running easements do not adversely affect any easements along the western border of subject property. It is assumed the subject’s potential for development. uses. Overall, the subject property has physical characteristics that support legally permissible Financial Feasibility influences. The of financial feasibility is dependent on regional supply and demand A determination County, in an area proposed subject property is located within an unincorporated area of Sacramento stable area has experienced urbanization. Overall, the subject’s market term for near and mid throughout the growth over the past several years. Sales of new homes population and employment significantlyresidential sector is experiencing region have improved over recent years; however, the Absorption environment. moderation with respect to pricing and absorption in the current market to the robust growth experienced over past few years. and pricing figures are lower compared County over the past two pricing within Sacramento The table below details the average new home years, as reported by The Gregory Group, an enterprise that tracks the regional housing market. 4 In an effort to attract prospective homebuyers, many homebuilders are now offering incentives such many In an effort to attract prospective homebuyers, upgrades, pools, home and closing costs, swimming as cash contributions toward down payments during the period of to generate interest have been initiated These incentives cars and vacations. to decreases in overall base prices, incentives and concessions Thus, in addition moderating demand. period, effectively reducing base prices further. Overall time have increased during the same to previous years. Market participants absorption figures during 2006 were also lower compared builders, brokers, etc.) attribute a portion of the decline to speculative investors canceling (home the current state of in to remain is not anticipated the residential market contracts. However, moderation over the long-term. subject property, reference is subdivision on the In considering the feasibility of a single-family to the made

A-37 69 8

Ziegenmeyer x Jordan x ed. (Chicago: Appraisal Institute, 2002), 255. 255. Appraisal Institute, 2002), (Chicago: ed. Seevers th

, 4 , 88. , 315.

7 9 A set of procedures in which a value indication is derived by comparing the property being A set of procedures in which a value indication is derived by comparing then applying appropriate units of recently, have been sold that properties appraised to similar based on the comparables of the prices to the sale adjustments and making comparison be used to value improved approach may The sales comparison of comparison. elements as though vacant; it is the most common and land being considered land, or properties, vacant sales are of land valuation when an adequate supply comparable preferred method available. of a single year’s income Direct capitalization is a method used to convert an estimate estimate step, either by dividing the income expectancy into an indication of value in one direct factor. by an appropriate estimate the income rate or by multiplying by an appropriate Yield capitalization is the capitalization method used to convert future benefits into present used to convert capitalization method Yield capitalization is the appropriate yield rate or by developing an value by discounting each future benefit at an pattern, value change, and yield income overall rate that explicitly reflects the investment’s rate. The Dictionary of Real Estate Appraisal of Real The Dictionary Estate Appraisal of Real The Dictionary Estate Appraisal of Real The Dictionary The definition of the sales comparison approach is offered as follows: The definition of the sales comparison Approach Income Capitalization real estate is that income-producing capitalization approach is based on the premise The income an investor's point of view, the potential earning power From typically purchased as an investment. The concepts of anticipation and change, as they affecting value. of a property is the critical element to this valuation approach. relate to supply and demand issues substitution, are fundamental real estate is created by the income-producing because the value of These concepts are important in market to changes is subject to be derived in the future, which expectation of benefits (income) be defined as the present worth of rights to these future benefits. The conditions. Value may which the income accuracy of upon the hinges approach capitalization of the income validity of a property can be measured. expectancy are two basic techniques that can be utilized to there capitalization approach the income Within capitalization and yield of valuation are direct techniques value. These market estimate capitalization. 7 8 9 68

Ziegenmeyer x Jordan x This process involves the investigation, organization and 5 APPROACHES TO VALUE ed. (Chicago: Appraisal Institute, 2002), 305. 305. Appraisal Institute, 2002), (Chicago: ed. Seevers th

, 4 , 67.

6 A set of procedures through which a value indication is derived for the fee simple interest in a A set of procedures through which a value indication is derived for the fee simple for) the a reproduction of (or replacement the current cost to construct property by estimating from the total depreciation deducting existing structure, including an entrepreneurial incentive, to the indicated fee then be made may land value. Adjustments cost, and adding the estimated value of the subject property to reflect interest being simple appraised. The Dictionary of Real Estate Appraisal of Real The Dictionary Estate Appraisal of Real The Dictionary The valuation process is a systematic procedure employed to provide the answer to a client’s procedure employed to provide the answer a client’s process is a systematic The valuation of real property. question about the value Cost Approach for a particular prudent buyer would pay more that no on the premise is based The cost approach of equivalent desirability site and construct improvements property than the cost to acquire a similar principle of substitution, as economic relates directly to the and utility. Thus, this approach to value The cost approach is most applicable when valuing properties where the well as supply and demand. amount of accrued depreciation, and is especially are new or suffer only a minor improvements persuasive when the site value is well supported. The cost approach also highly relevant properties and other that are not frequently valuing special-purpose or specialty exchanged in the market. The definition of the cost approach is offered as follows: Sales Comparison Approach that the value of a property is directly related on the premise is based approach The sales comparison to Similar properties in the marketplace. being generated for comparable, competitive to the prices are basic to as well supply and demand principles of substitution, the cost approach, economic the sales comparison approach. This approach has broad applicability and is particularly persuasive properties that transactions of similar of recent, reliable when there has been an adequate volume approach is this are available, When sufficient data market. indicate value patterns or trends in the sales comparison Typically, the approach to value estimation. direct and systematic the most owner-occupied and small, homes approach is most pertinent when valuing land, single-family commercial and office properties. 5 6 analysis of pertinent market data and other related factors that affect the market value of real estate. affect the market value factors that data and other related analysis of pertinent market to approaches of any one or all the three traditional in terms data is analyzed The market capitalization and income cost, sales comparison real estate value. These are the estimating approaches. In the valuation of subject property, two additional approaches, extraction also applicable. Each approach to value is are method, technique and the subdivision development briefly discussed and defined as follows:

A-38 71

Ziegenmeyer x Jordan x Seevers APPRAISAL METHODOLOGY APPRAISAL

We have been requested to provide an estimate of hypothetical market value of the subject property of hypothetical market We have been requested to provide an estimate as of our date inspection May 4, 2007. It is noted not all the facilities to be financed through CFD No. 2005-2 (North Vineyard Station 1) bond issuance were in first County of Sacramento value of the subject property is to a market Therefore, the place as of our date inspection. hypothetical condition, defined as that which is contrary to what exists but is supposed for the of the completion assumes value estimate hypothetical market the purposes of analysis. Specifically, CFD No. 2005-2 (North the public facilities to be financed by first County of Sacramento of value also accounts for the impact lien Vineyard Station No. 1) bond issuance. The estimate of the Special Tax securing bonds. to value (discounted cash flow analysis) will be relied upon in method The subdivision development the method, of the subdivision development the analysis of subject property. As a component value for a typical to estimate and extraction technique will be employed approach sales comparison feet) within the subject property. residential lot configuration (6,600 square production single-family square foot lot, we will utilize the data set and of lot value for a 6,600 Using our reconciled estimate 4,725 square foot single- of the subject property’s the value indicators to determine other market sales comparison approach and extraction technique will also be residential lots. The family which has a typical lot residential component, value for the medium-density to estimate employed size of 2,500 square feet. analysis to cash flow into a discounted incorporated will be indicators value (revenue) The resultant of completion the of the subject property (in bulk), assuming value the hypothetical market estimate CFD No. 2005-2 (North Vineyard first County of Sacramento the by financed be to improvements the Station No. 1) bond issuance. This appraisal report has been conducted in accordance with standards and guidelines Practice (USPAP) and the Appraisal Standards of Professional Appraisal found in the Uniform Advisory Debt and Investment published by the California Standards for Land Secured Financing The appraisal is also conducted in accordance with Commission. and Restated County the Amended Policies. Program Facilities District Financing and Community Special Assessment of Sacramento 70

Ziegenmeyer x Jordan 10 x 12 Seevers , 4th ed. (Chicago: Appraisal Institute, 2002), 143. 143. Appraisal Institute, 2002), (Chicago: ed. , 4th , 106. , 279.

11 A set of procedures through which an appraiser derives a value indication for an income- producing property by converting its anticipated benefits (cash flows and reversion) into in two ways. One year’s income can be accomplished This conversion property value. or at a capitalization rate capitalization rate at a market-derived can be capitalized expectancy and change in the value of on investment, pattern, return that reflects a specified income Alternatively, the annual cash flows for holding period and reversion can investment. be discounted at a specified yield rate. The Dictionary of Real Estate Appraisal of Real The Dictionary Estate Appraisal of Real The Dictionary Estate Appraisal of Real The Dictionary The definition of the income capitalization approach is offered as follows: The definition of the income Extraction Technique (Residual Analysis) on the land value in which the depreciated cost of improvements of estimating A method sale at an estimated sale price to arrive and deducted from the total property is estimated improved price for the land. Subdivision Development Method are the highest and best use subdivision and development land value when of estimating A method and entrepreneurial profit are of the parcel land being appraised. All direct and indirect costs are then resultant net sales proceeds sales; the of the anticipated gross deducted from an estimate and absorption period to rate over the development discounted to present value at a market-derived value of property. market indicate the 10 11 12

A-39 73 The principle of

basis. Loaded lot values incorporate the Ziegenmeyer x loaded lot loaded Jordan ” x Seevers

Edition, published by the Appraisal Institute, 2001 – “ published by the Appraisal Institute, Edition, th

, 12

EVENUE Discussions about these four components begin below, with the discounted cash flow analysis offered at the end of this section. R residential The revenue will be generated by the sale of subject’s single-family and medium-density we begin by estimating revenues for the single-family residential In the following section, components. of the other components. Subsequent sections will detail the revenue streams components. Sales Comparison Approach – Single-Family Residential Component values of the subject’s individual villages approach, the hypothetical market In the sales comparison have sold, are listed for sale or under that properties to similar by a comparison will be estimated value of a property the sales comparison approach is market of contract. The underlying premise properties in the marketplace. is directly related to the price of comparable, competitive to The According principle of substitution. This approach is based on the economic Appraisal of Real Estate Appraisal of unimproved lot price, site development costs, special assessments and permits and fees. and permits costs, special assessments lot price, site development unimproved After deriving a loaded lot indicator for the subject property’s single-family residential components residential components for the subject property’s single-family After deriving a loaded lot indicator property, as lot within the subject for a typical and fees the comparable sales data, permits from indicator. loaded lot the derived costs, will be subtracted from site development well as remaining the needed to transform of development costs per lot quantifies the amount The site development of in-tract the completion status includes lots. Improved lot lots into improved unimproved were partially improved. lots As of the date our inspection, subject’s residential development. The sales comparison approach will be utilized to estimate the expected revenues for the subject’s the will be utilized to estimate approach The sales comparison In the case of land used for production oriented residential residential component. single-family this process typically entails the analysis of an entitled site on a finished, or fully development, lots, as well tentatively and fully improved lot basis. Bulk sales of final mapped improved, a based on compare properties builders merchant unimproved lots will be analyzed. Many mapped possess different finished lot prices because properties may basis. However, two similar finished lot and fees relatively lower than similar permits they have different permits and fees. Lots possessing all else being equal. Thus, in the following lots will have a higher finished lot price, comparable are analyzed on a analysis, sales comparables substitution holds that the value of a property tends to be set by price would paid desirability within a reasonable amount of time. acquire a substitute property of similar utility and sales comparison approach is diminished if substitute The principle implies that the reliability of properties are not available in the market. 72 ) SF

(

Size Typical Lot

/ Acres No. of Lots / Units / Units No. of Lots Ziegenmeyer x 13 Jordan Vineyard Point x SFR 4-7SFR 19 lots 4,725 ed. (Chicago: Appraisal Institute, 2002), 279. 279. Appraisal Institute, 2002), (Chicago: ed. th Seevers , 4 – the time frame required to sell off the components. Of primary Of primary frame required to sell off the components. – the time HYPOTHETICAL MARKET VALUATION HYPOTHETICAL MARKET

– an appropriate discount rate is derived employing a variety of data. – an appropriate discount rate is derived employing F 7-12 MDR 193 lots 2,500 E 4-7 SFR 31 lots 4,725 BC 4-7 SFR 3-5 SFR 59 lots 152 lots 4,725 6,600 AD 4-7 SFR 3-5 SFR 138 lots 133 lots 4,725 6,600 Village Specific Plan Zoning

– the expenses associated with sell-off are calculated in this section including – the gross income of the individual components is derived in this section. of the individual components – the gross income Revenue Absorption Analysis Expenses Discount Rate importance in this analysis is the allocation of the revenue over absorption period – is the allocation in this analysis importance of an appreciation factor (if any). including the estimation administration, marketing and commission costs, as well as taxes and special assessments. and commission costs, as well taxes special assessments. marketing administration, x x x x The Dictionary of Real Estate Appraisal of Real The Dictionary The hypothetical market value of the subject’s single-family and medium-density residential and medium-density value of the subject’s single-family The hypothetical market property subject the of valuation in this section of the report. The will be estimated components to be financed by the firstrepresents the hypothetical component values, assuming the improvements place. in CFD No. 2005-2 (North Vineyard Station 1) bond issuance are County of Sacramento For reference, the subject property consists of the following components: follows: as and is defined will be employed method The subdivision development METHOD DEVELOPMENT SUBDIVISION are the highest and best use subdivision and development land value when of estimating A method are incentive and entrepreneurial indirect costs of the parcel land being appraised. All direct and are net sales proceeds the resultant of the anticipated gross sales price; an estimate deducted from and absorption rate over the development value at a market-derived to present then discounted value of the property. period to indicate the market 13 The four main items of the discounted cash flow analysis are listed as follows: of the discounted cash flow analysis items The four main

A-40 75

(est.)

Ziegenmeyer x Jordan x Sale Sale Sale of No. to Costs Permits PV of Loaded Typical 2006 $13,950,000 90 $155,000 $0 $40,000 $0 $195,000 7,100 Jul-06 $32,400,000 862 $37,587 $76,768 $50,000 $22,200 $186,554 5,775 Jun-06 $11,000,000 199 $55,276 $90,736 $48,575 $22,200 $216,787 5,460 Sep-05 $11,475,000 75 $153,000 $33,000 $50,000 $15,898 $251,898 6,100 Mar-07 $9,215,000 97 $95,000 $38,838 $56,350 $49,283 $239,471 6,050 Aug-05 $36,720,000 272 $135,000 $113,102 $30,895 $2,753 $281,750 5,500 Seevers

COMPARABLE BULK LOT SALES

Fiddyment Farm, Village F-14A Village Farm, Fiddyment West side of Fiddyment Road, north of Blue Oaks Boulevard Oaks Blue of Road, north Fiddyment of side West Roseville Arbor Ranch Lincoln 22 24 (portion) and - Villages III Anatolia South side of Poppy Ridge Road, east of Bruceville Road Bruceville of Road,east Ridge Poppy of side South Grove Elk Highlands Lincoln NEQ McCourtney Road Road and Virginiatown West side of Jaeger Road, north of Kiefer Blvd Rancho Cordova (portion) Vineyard Creek Road Bradshaw of west Road, Florin of side South County Sacramento North side of Bilby Road, east of Bruceville Road Bruceville of Road, east Bilby of side North Grove Elk Ranch McGeary 1 2 5 4 6 3 No. Location Date Price Lots $/Lot Complete* and Fees Bonds Value Lot Size Lot * Inclusive of a 10% allocation for profit for 10% allocation a of Inclusive * 74

Ziegenmeyer x Jordan x Seevers

Additionally, the value estimates assume all of the improvements to be financed by the first County all of the improvements assume Additionally, the value estimates CFD No. 2005-2 (North Vineyard Station 1) bond issuance are in place and of Sacramento the comparables utilized in our analysis have a available for use. The subject property and several of will be analyzed to reflect the impact (bond) obligation. The comparables assessment special tax or of the bond indebtedness on value. residential single-family the subject property’s different typical lot sizes within There are two of lot count, is 4,725 and 6,600 square feet. The largest single group of lots, in terms components, to facilitate the following analysis, we will use 6,600 the subject’s 6,600 square foot lots. Thus, Additionally, we will utilize Village C (152 square foot lot grouping as the basis for our analysis. component residential single-family largest lots) as our basis of comparison because it represents the indicators the data set and other market utilize in Vineyard Point. At the end of this section, we will lots. 4,725 square foot single-family for the subject’s to establish a value estimate area and market in the subject’s The survey of recent transactions revealed six comparables value for the subject’s considered good indicators of hypothetical market surrounding submarkets August 2005 to March 2007 and range the period from residential lots. The sales cover single-family 75 to 862 lots. The sales relied upon in this analysis are summarized the table on in quantity from Detailed sales sheets and an adjustment discussion the following page, along with a location map. table. follow the summary

A-41 77

Ziegenmeyer x Road Jordan x BULK LOT SALE 2 Seevers

Ziegenmeyer x Boulevard 21.46 4.52 Jordan x BULK LOT SALE 1 Seevers

Property Identification Project NameLocation Village F-14A Farm, Fiddyment Blue Oaks of Road, north West side of Fiddyment APNCityCountySale Data GrantorGranteeContract DateClosing DateDeed Book PageProperty Rights Conveyed SaleConditions of Financing TermsSale PriceAnnual Special Assessments per LotLand Data Zoning 017-115-001 (portion) Topography Placer County Roseville Utilities Fee Simple Number of Lots $3,774 Land Area (Acres) March 2007 Signature Properties Pending Lewis Communities Tim May 2007 Market Cash Equivalent $9,215,000 Level 97 Residential All Available Density (Units per Acre) Status at SaleDevelopment Typical Lot Size (SF)Indicators (per Lot) Sale PriceSite Development Costs IncentiveDeveloper's IndicatorFinished Lot PV of Bonds and FeesPermits Lots Partially Improved Loaded Lot IndicatorRemarks 6,050 to close in May2007. The project represents This contract was negotiated in March 2007 and is scheduled blue top The seller will deliver the lots in Village F-14A and is located in Roseville. Farm Fiddyment The buyer costs are $35,307 per lot. intends to site development remaining condition and the estimated $ 35,307 plans. four floor containing one community develop the property with $ 3,531 $133,838 $ 95,000 $239,471 $ 56,350 $ 49,283

A-42 79

Ziegenmeyer x Virginiatown Road Jordan x BULK LOT SALE 4 Seevers

APNCityCountySale Data GrantorGranteeContract DateClosing DateDeed Book PageProperty Rights Conveyed SaleConditions of Financing TermsSale PriceAnnual Special Assessments per LotLand Data Zoningand -07 (portions) 021-231-011 Topography Placer County Lincoln Utilities Fee Simple Number of Lots $0 Land Area (Acres) N/A Lincoln Palisades dba California Homes Density (Units per Acre) N/Ap Richmond American Homes N/A Status at SaleDevelopment Market Typical Lot Size (SF) Cash Equivalent Indicators (per Lot) Sale PriceSite Development Costs $13,950,000 IncentiveDeveloper's 4.10 Lots Improved Generally Level 90 residential Single-family 44.00 All Available 7,100 $0 $0 $155,000 Property Identification Project NameLocation Lincoln Highlands (portion) Road and Northeast quadrant of McCourtney Finished Lot IndicatorFinished Lot PV of Bonds and FeesPermits Loaded Lot IndicatorRemarks closing, the buyer lot. Before wanted a $20,000 per was under contract at $155,000 per finished This property seller refused and the deal fell through. The the conditions; market of moderating lot price reduction in light up to an yearsentitlements seller has owned the property for several and has pursued obtained all be noted the indicated acreage above represents total for It should map. approved tentative subdivision subdivision. entire 182-lot $155,000 $195,000 $40,000 (est.) $0 78

Ziegenmeyer x Bruceville Road Jordan x BULK LOT SALE 3 Seevers

Property Identification Project NameLocation McGeary Ranch of Poppy Along the south line Ridge Road, east of APNCityCountySale Data GrantorGranteeContract DateClosing DateDeed Book PageProperty Rights Conveyed SaleConditions of Financing TermsSale PriceAnnual Special Assessments per LotLand Data Zoning 132-0050-068 Topography Sacramento County Elk Grove Utilities Fee Simple Number of Lots $1,700 Land Area (Acres) June 2006 Centex Homes Density (Units per Acre) 60628-1256 ReynenBardis and June 2006 Status at SaleDevelopment Market Typical Lot Size (SF) Cash Equivalent Indicators (per Lot) Sale PriceSite Development Costs $11,000,000 IncentiveDeveloper's Lots 4.30 Unimproved Level 199 Residential Single-family 46.00 All Available 5,460 $ 82,487 $ 8,249 $ 55,276 Finished Lot IndicatorFinished Lot PV of Bonds and FeesPermits Loaded Lot IndicatorRemarks there At the time of acquisition, propertyhad a proposed tentative map that was not approved. However, after COE, on was granted shortly approval. Approval tentative map likelihood of was little question as to the and 95 RD-4), (104 RD-5 lots includes 199 single-family 2, 2006. As approved, the tentative map November a 1.6-acre park, and 1.1-acre park. $146,012 $216,787 $ 48,575 $ 22,200

A-43 81

Ziegenmeyer x Sacramento County, California Sacramento County, California (portion) N/A N/A Jordan x BULK LOT SALE 6 Seevers

APNCityCountySale Data GrantorGranteeContract DateClosing DateDeed Book PageProperty Rights Conveyed SaleConditions of Financing TermsSale PriceAnnual Special Assessments per LotLand Data and 065-0080-087 through -036 065-0052-033 ZoningTopography Sacramento County Sacramento Utilities Fee Simple Number of Lots $1,600 Land Area (Acres) August 12, 2005 Inc. Lennar Communities, N/A Standard Pacific, Corp. August 26, 2006 Market Seller Financed $37,720,000 Level 272 Residential Single-family All Available Property Identification Project NameLocation Vineyard Creek (portion) west of Bradshaw Road, Florin Road, South side of Density (Units per Acre) Status at SaleDevelopment Typical Lot Size (SF)Indicators (per Lot) Sale PriceSite Development Costs IncentiveDeveloper's IndicatorFinished Lot PV of Bonds and FeesPermits Lots Unimproved Loaded Lot IndicatorRemarks 5,500 sale is a portionThis comparable of the overall sale Vineyard Station Specific Creek in the North Vineyard residential residential lots and 6.90 acres of multifamily purchase price for 375 single-family Plan. The total Specifically, the buyeroverall purchase price was calculated per component. land was $53,855,000. The paid $102,820 total) and total), $125,000 per 4,725 square foot lot (103 lots lots 5,500 square foot lot (272 $135,000 per in the is included acres total). It is noted profit residential land (6.90 acre of multifamily $600,000 per $ 10,282 estimated remaining site costs; therefore, no additional profit allocation is necessary. and fees Total permits $248,102 paid by the developer in Vineyard Creek are estimated to be approximatelyper lot; however, fee $67,547 $135,000 constructed by will lower the the developer credits attributable to sizeable infrastructure improvements lot. effective permits and fees to $30,895 per $281,750 $ 30,895 $ 2,753 80

Ziegenmeyer x N/A N/A Jordan x BULK LOT SALE 5 Seevers

Property Identification Project NameLocationAPNCityCountySale Data GrantorGranteeContract DateClosing DateDeed Book PageProperty Rights Conveyed SaleConditions of Financing Terms Anatolia III, Villages 22 and 24 (portion) Sale PriceAnnual Special Assessments per Lotof Kiefer Boulevard West side of Jaeger Road, north Land Data Zoning N/A Topography Sacramento County Rancho Cordova Utilities Fee Simple Number of Lots $1,392 Land Area (Acres) 2005 September Lennar Renaissance, Inc. N/A Investments Corinthian Land N/A Market Cash Equivalent $11,475,000 Level 75 Residential RD-5, Single-family All Available Density (Units per Acre) Status at SaleDevelopment Typical Lot Size (SF)Indicators (per Lot) Sale PriceSite Development Costs IncentiveDeveloper's IndicatorFinished Lot PV of Bonds and FeesPermits Lots Unimproved Loaded Lot IndicatorRemarks 6,100 by and fees were estimated is located in the Anatolia master-planned Permits community. This comparable the appraiser. $ 30,000 $ 3,000 $186,000 $153,000 $251,898 $ 50,000 $ 15,898

A-44 83

Ziegenmeyer x Jordan x Seevers

Financing terms terms Financing Conditions of sale (motivation) features Market conditions (time) Physical a seller acting under duress, open market, to the a lack of exposure or business interest, transaction for the sake of family an inter-family or inter-business an unusual tax consideration, paid for site assemblage, a premium auction, or a sale at legal proceeding. domain an eminent x x x x x x x x x x x Property Rights Conveyed In transactions of real property, the rights being conveyed vary widely and have a significant impact on the sales price. As previously noted, opinion of value in this report is based a fee simple powers of taxation, eminent by the governmental imposed estate, subject only to the limitations community facility easements, escheat, as well non-detrimental police power and domain, districts and conditions, covenants restrictions (CC&Rs). All of the comparables represent fee necessary. rights are not for property adjustments Therefore, estate transactions. simple Financing Terms market to adjust it is necessary for financing terms that differ from the comparables, In analyzing financing (other than the seller) for the purpose of third party retained Typically, if the buyer terms. is required. However, in and no adjustment purchasing the property, a cash price is presumed have been paid may a premium financing as a debt instrument, seller provides where the instances have been by the buyer demanded or a discount may financing terms by the buyer for below market then be adjusted to or discounted price must The premium were above market. if the financing terms therefore, do to the seller transactions and, cash sales were The comparable basis. a cash equivalent not require adjustments. Conditions of Sale the sales price actually discrepancy from Adverse conditions of sale can account for a significant in price is generally attributed to the This discrepancy to that of the market. paid compared non-market of sale are considered to be Certain conditions of the buyer and seller. motivations include the following: and may A paired sales analysis is performed in a meaningful way when the quantity and quality of data are in a meaningful A paired sales analysis is performed require the appraiser’s experience and knowledge of of the adjustments many available. However, A knowledgeable and active in the marketplace. those obtained from and information the market detailed analysis involving each of these factors is presented on the following pages. 82

Ziegenmeyer x Jordan x Seevers

basis. Loaded lot values incorporate the unimproved lot price, site development costs and site development lot price, lot values incorporate the unimproved Loaded basis. Property rights conveyed rights Property x Adjustments lot basis. However, two similar properties based on a finished builders compare Many merchant and fees. Properties differing permits possess different finished lot prices because of properties may and fee schedule relative to other properties will have a higher finished lot possessing a lower permit are considered on a following analysis, sales comparables price, all else being equal. Thus, in the loaded lot Site Development Costs of the however, some lots transferred in various stages of improvement; The comparable costs are added to as such, site development and, lot transactions represent unimproved comparables for the profit to account In order purposes. lots for comparison to loaded equate these comparables the lots, a profit allocation in amount of 10% site development improving associated with costs is also incorporated. Fees) Fees (Impact Permits and of loaded lot value basis. After the conclusion a dollar-for-dollar and fees are applied on The permits to arrive and fees will be subtracted of the subject’s permits and fees paid), the amount (with permits of revenue. at an estimate Bonds and Assessments as well the subject utilized for this analysis, the comparables Special tax obligations encumber of bond indebtedness on value (included the impact are adjusted based on property. The comparables in the loaded lot indicators). Additional Adjustments transactions are adjusted based on the profile of subject property with regard to The comparable has an attribute considered superior to that of the If a comparable value. affect market that categories The of the comparable. has on the price item the to negate the effect subject, it is adjusted downward opposite is true of categories considered inferior to the subject property. are considered appropriate in orderPercentage or dollar adjustments to isolate and quantify the to make the need the appraiser considers sales data. At a minimum, on the comparable adjustments items: for the following adjustments permits and fees, plus any differences relating to bonds. These items are discussed in the following and fees, plus any differences relating to bonds. These items permits paragraphs.

A-45 85

Ziegenmeyer x Jordan x Seevers

Number of Lots Number lot such that price per of lots and relationship between the number Generally, there is an inverse to projects price per lot compared lower of lots sell for a a greater number projects (or phases) with discounting associated with larger transactions. of lots due to the (or phases) with a fewer number #6 receive project size and Sales #2 for its smaller adjustment Sale #5 receives a downward is relatively The balance of the comparables sizes. for their larger project upward adjustments property and does not require adjustment. to the subject in size compared similar Lot Sizes lot sizes and for inferior (smaller) In the following analysis, sales require upward adjustments to the subject’s 6,600 square foot lot compared for superior (larger) lot sizes downward adjustments size category. The degree of adjustment is dependent on the disparity between comparable the Sacramento projects from and the subject’s 6,600 square foot lot size. A survey of comparable factor of approximately $5.00 per square foot difference Metropolitan Area suggests an adjustment is reasonable. Topography and Utility therefore, the market can affect the utility and, or soil conditions drainage Differences in contour, site utility as the subject possesses similar properties the comparable value of the lots. Each are necessary. property; therefore, no adjustments and Discounts Lot Premiums value (in bulk) of the subject property. As This analysis is concerned with the hypothetical market been considered based that would be achieved on an individual retail basis have such, premiums the properties in bulk. All of comparable sales have similar upon their influence on the value of are required for this factor. thus, no adjustments as the subject; lot premiums Zoning/Specific Plan Designation to the subject property All of the sales have similar zoning or specific plan designations compared are required. no adjustments and, as such, Loaded Lot Indicator – Sales Comparison Approach our analysis, which was the basis of to the subject’s 6,600 square foot lot category, In comparison sales of new homes for discrepancies in typical lot size. While the data set required adjustments significantly over the past several years, region have improved throughout the Sacramento residential sector is experiencing with respect to pricing and absorption in the current moderation 84 Quarter rd

Ziegenmeyer x Jordan x Seevers

All of the comparable transactions were arms-length market transactions and do not require a market All of the comparable transactions were arms-length condition of sale adjustment. Market Conditions (Time) in but the date of this appraisal is for a specific point Market conditions generally change over time, is undergoing changes in the value of dollar, Therefore, in an unstable economy, one that time. interest rates and economic growth or decline, extra attention needs to be paid assess changing in several areas of a changes in price levels can occur monthly conditions. Significant market for relatively stable. Although the adjustment municipality, while prices in other areas remain adjustment. is not the cause of time adjustment, as a time conditions is often referred to market changes between the sale dates and effective date of this conditions, market In evaluating conditions have not changed, then no time however, if market warrant adjustment; appraisal may steadily improved over area have is required. Market conditions in the subject’s market adjustment to be stabilizing or moderating in the current sector appears the residential the past several years, but are now homebuilders many prospective homebuyers, In an effort to attract environment. market and closing costs, swimming down payments offering incentives such as cash contributions toward to generate interest upgrades, cars and vacations. These incentives have been initiated pools, home addition to decreases in overall base prices, Thus, in demand. during the period of moderating period, effectively reducing base time incentives and concessions have increased during the same to a year ago. current absorption rates are significantly lower compared prices further. Furthermore, Sales #5 and #6, which represent 3 market, in the residential moderation To reflect the Physical Characteristics value impact The physical characteristics of a property can impact the selling price. Those that may include the following: Location and Community Appeal The subject property is located within the North Vineyard Station Specific Plan in Sacramento The subject property is located within the North Vineyard Station Specific Plan in Sacramento #3 are located within County and is considered to have a good overall location. Sales #1 through to the subject to be superior overall locations compared Roseville or Elk Grove, which are deemed of surrounding land uses, desirability and property values. As such, downward property in terms are necessary. location. No other adjustments for are warranted to these comparables adjustments 2005 sales, are adjusted downward. The balance of the data set was negotiated during current are considered necessary for this factor. contracting real estate cycle and, thus, no other adjustments

A-46 87

Ziegenmeyer x Jordan x Seevers

the overall quality of construction. Construction costs are generally classified into two groups, direct and indirect costs. Direct costs reflect the cost of labor and materials to build project. Direct Costs included to establish the total consideration paid. Specifically, we have estimated a present value of Specifically, we have estimated paid. the total consideration included to establish $21,000. approximately Direct and Indirect Costs analysis is a determination of the quality construction for cost The initial step in the improvement when determining is fundamental subject homes. of both materials and workmanship An examination of construction costs an estimate to determine We surveyed projects throughout Northern California reported The table on the next page details cost estimates for a hypothetical 2,100 square foot home. other subdivisions. from of $147,000, or $70 per cost estimate presented, a construction Based on the cost comparables square foot, is considered reasonable for a hypothetical 2,100 foot plan. 86 Price Average Base Base Average Plan (SF) Plan

Average Floor Floor Average

Sales Rate Total Weekly

(SF) Lot Size No. of Ziegenmeyer Units Sold x Units Planned Jordan x tilizing the indications of data set, and considering the Seevers

Project Builder Aspen VillageAspen Homes Meritage 105 97 6,000 1.14 2,537 $436,567 Willow WalkWillow NewhavenVisionsLegacy American Richmond Company Hoffmann The 48Communities Lewis Tim 215Communities Lewis Tim 48 55 215 59 5,750 5,500 54 38 0.68 5,300 0.97 5,000 1,763 0.60 1,903 0.42 $374,240 2,169 $439,990 2,099 $454,400 $393,567 71st Street Estates Street 71st EstatesBelleview Street 65th at Residence The Development Caramazza Construction Gable Green 22 Development BK 21 4 8 14 5,500 6,500 8 0.15 0.33 8,960 1,548 2,029 0.31 $355,323 $379,614 2,426 $462,500 market environment. Consequently, downward adjustments for market conditions were applied to for market Consequently, downward adjustments environment. market sales. As discussed, differences in lot counts, location and size were several of the comparable also accounted for in our analysis. U subject property previously discussed, an between the data set and and dissimilarities similarities indicator of $230,000 per loaded lot for the subject’s 6,600 square foot lots is concluded via sales and fees value is inclusive of permits comparison approach. This estimate of hypothetical market costs to complete. Residual Analysis (Extraction Technique) value, the extraction technique will be utilized. As a supporting indication of hypothetical market to be offered at the subject prices of homes The extraction technique considers the likely selling and then reduces that value by the direct costs, indirect costs developer’s profit for developments of the residual lot value represents an estimate The result of this analysis the construction of a home. for a loaded lot. and considering the approved lot sizes, residential market, Based on the profile of area of new homes that would generally target the subject property could be developed with a range market. of the new home buyer segment middle-income Price Average Home utilized as the will be 6,600 square foot lot the subject’s approach, sales comparison to the Similar for the subject property is basis of comparison. Specifically, a typical new production home For the purposes based on a survey of active subdivisions within the Sacramento market. estimated plan will be used. This floor is considered of our extraction technique, a 2,100 square foot floor The following table developments. being offered in similar product representative of the average The from The data is taken market. Sacramento projects in the South competitive details several Gregory Group First Quarter 2007 Housing Report. After examination of some of the comparable active single-family residential developments in the in the residential developments single-family of the comparable active of some After examination an average base price of $415,000 is concluded for the subject’s 2,100 market, South Sacramento square foot floor plan. The present value of bonds, based on a 30-year holding period, is also

A-47 89

Ziegenmeyer x Jordan x Seevers

achieved - The cost of carrying the investment after construction is complete, but before sell-out is is complete, but after construction carrying the investment - The cost of - Marketing, sales commissions or title transfers - Marketing, sales commissions or - Developer fee earned by the project coordinator Accrued Depreciation or economic nature. A physical the normal Depreciation is of a physical, functional loss results from aging process of a structure as well wear and tear on the improvements. A functional loss results from an inefficient or super adequate design of the improvements. Economic depreciation is the result of an adverse influence that exists beyond the property's boundaries. Since the homes are proposed construction, no deductions for depreciation are considered necessary in this analysis. Developer’s Incentive 5% According to industry sources, developer’s incentive (profit) historically has ranged anywhere from Under the existing Profit is based on the perceived risk associated with development. 30%. to affordable focus on more conditions, low profit expectations are the result of market’s market risk, projects with faster sales rates. Higher profit expectations are common in more project size produces an extended holding period where sales rates are slower, such as developments or the product type is considered weak or untested. frame time construction risk, anticipated include location, supply/demand, affecting profit Elements stage of a in profit expectations is for the development considered and project type. Another element due to cautious or conservative pricing, margin project. First phases typically generate a lower profit established to generate a fair market share. become areas must in competitive as new subdivisions phases can produce lower profit margins. costs on first Additionally, up front development of 10% the margin area, a profit conditions in the subject’s market Based on current market indicated retail value is considered reasonable for a hypothetical 2,100 square foot plan. Conversations with local homebuilders indicate the cost items, which comprise the indirect cost comprise which indicate the cost items, Conversations with local homebuilders category, can range anywhere from 15% to 30% of the direct costs. Based on experience with other direct costs will be utilized to account area, a factor of 15% projects in the subject’s market similar for the indirect items. 88

1,5191,935 $75.67 $71.65 1,9262,1532,632 $76.62 2,916 $74.41 $68.34 $68.83 1,5351,651 $76.00 $75.00 2,0192,1322,321 $70.86 $69.48 $69.82 1,2532,0342,370 $76.90 $64.46 $62.90 2,5832,8032,950 $62.50 $60.37 $59.56 2,0432,0872,331 $62.00 $63.50 $61.00 Ziegenmeyer x 2007 1,379 $79.82 2006 1,414 $89.72 2006 1,8292006 $70.64 768 $99.00 Jordan Dec-06 2,300Dec-06 $64.91 1,871 $60.00 Mar-07 1,324 $78.00 x Seevers

Project Effective Plan Floor Costs Direct

Location Date (SF) SF per

Sacramento Lincoln Homes)(Solar Cameron Park 1,604 $86.69 Elk Grove Elk Sacramento Cordova Rancho Sacramento

property is financed, the points, fees or service charges on construction loans are considered on construction property is financed, the points, fees or service charges - Architectural and engineering fees for plans, plan checks, surveys and environmental studies - Architectural and engineering fees for plans, plan checks, surveys environmental - Appraisal, consulting, accounting and legal fees during construction. If the in land and contract payments carrying the investment - The cost of - All-risk insurance Indirect items are the carrying costs and fees incurred in developing project during Indirect items generally which of the typical components, some list itemizes cycle. The following construction indirect costs: comprise Indirect Costs

A-48 91 $5,240,000 $9,980,000 $3,210,000 $23,350,000 $91,960,000 $26,760,000 $23,420,000

$169,167 $5,244,189 $169,167 $23,345,099 $169,167 $9,980,876 $176,067 $26,762,242 $176,067 $23,416,962 $169,167 $3,214,180 Ziegenmeyer x ($43,433) ($8,400) ($43,433) ($8,400) ($43,433) ($8,400) ($43,433) ($10,500) ($43,433) ($10,500) ($43,433) ($8,400) Jordan x $221,000 $221,000 $221,000 $230,000 $230,000 $221,000 Seevers

4,725

19 4,725 532 No. of No. Lot Typical Concluded Permits In-Tract Imp. Partially E31 C 152 6,600 B594,725 B594,725 A 138 4,725 D 133 6,600 Village Lots (SF) Size Lot Value Loaded Fees and Costs Dev. Value Lot Extension Rounded Conclusion of Revenue – Single-Family Residential Components Conclusion of Revenue – Single-Family Residential Components residential components, the total revenue for subject’s single-family In order to estimate Vineyard and fees. LW costs and permits site development remaining for are required deductions developer of the subject property and reported in-tract is the master remaining LLC Point, $10,500 per 6,600 square foot lot and $8,400 4,725 costs were approximately development at and fees were estimated subject’s permits the square foot lot. After accounting for fee credits, $43,433 per lot. These costs will be deducted to calculate the partially improved lot values for the subject. will be integrated into the discounted Revenues are generated by the sale of each villages and in order to reflect the hypothetical market method) cash flow analysis (subdivision development is estimated value of the subject property. The revenue for single-family residential components is arranged by village. and table in the following 90

($22,050) ($41,500) ($147,000)

per lot for the subject’s typical $221,000 Ziegenmeyer x Jordan x per lot for the subject’s typical 6,600 square foot lot. Seevers $230,000 $230,000

$230,000

Loaded Lot Value Lot Loaded $225,450 Indirect costs @ 15% of direct costs direct 15% of @ costs Indirect profitDeveloper's @ 10% price sales of Direct costs of construction (2,100 sf x $70 psf) x (2,100 sf construction of costs Direct Rounded $230,000 Living Area (SF) Area Living PriceSale TaxSpecial ConsiderationTotal Less: 2,100 $436,000 $415,000 $21,000 Sales Comparison Approach Extraction Technique To derive a loaded lot value indicator for the subject’s 4,725 square foot single-family lots, we have 4,725 square foot single-family To derive a loaded lot value indicator for the subject’s configuration and overall size discrepancy, accounting for lot qualitative adjustments made desirability. Based on these factors, a loaded lot value of Conclusion The residual analysis, based upon the cited factors, is presented below: Reconciliation of Loaded Lot Value lot of the subject property via typical derived for the predominant, The loaded lot value estimates extraction technique and the sales comparison approach are presented below. in the valuation of the best overall method Generally, the sales comparison approach is deemed as the supporting indication of value. Under was employed vacant land. The extraction technique based on the amount the land value of subject property is derived as a remainder this premise, the extraction technique derived via most likely end product. As illustrated above, the value indicator approach and is believed to substantiate as the value concluded via sales comparison is the same cited above, we have conclusion. Considering the information the sales comparison approach value concluded a loaded lot value of As discussed under the highest and best use section, the subject property is considered most As discussed under the highest and best use section, subject property is considered most production subdivisions, geared generally toward the middle-income profitable as new home in this analysis does not Correspondingly, the extraction procedure performed market. homebuyer require an absorption analysis or any further discounting. The extraction technique would be similar builder. by a merchant to an analysis performed 4,725 square foot lot is concluded.

A-49 93

and Fees Bonds Value Lot Size Lot *

Complete Ziegenmeyer x Jordan Sale Sale Sale No. of Costs to Permits PV of Loaded Typical x Oct-05 $4,500,000 56 $80,357 $44,000 $30,000 $0 $154,357 4,000 Oct-06 $7,650,000 75 $102,000 $23,187 $30,000 $0 $155,187 4,950 Feb-06 $2,025,000 21 $96,429 $44,000 $25,000 $0 $165,429 3,000 Mar-06 $6,496,000 56 $116,000 $48,950 $21,600 $0 $186,550 2,832 Nov-05 $2,061,000 21Nov-05 $1,330,000 $98,143 19 $46,955 $38,378 $70,000 $47,850 $0 $15,193 $183,476 $0 2,614 $133,043 4,184 Seevers

COMPARABLE BULK LOT SALES

North side of Fair Oaks Boulevard, west of Miles Lane Miles of west Boulevard, Oaks Fair of side North Carmichael 21-Lot Subdivision West side of Mariposa Avenue, north of Madison Avenue Citrus Heights North side of Levy Road, east of Sibley Street Sibley of east Road, Levy of side North Folsom Madison Estates 80 Interstate of northwest Way, Zachary of East Sacramento Mariposa Subdivision Carmichael 21-Lot Subdivision Northwest quadrant of Fair Oaks Boulevard and Marshall Avenue Parkside and Dahlia Garden South side of Orange Avenue, of west Stockton BoulevardSacramento Promenade Carmichael (pending) 4 5 6 3 1 2 No. Location Date Price Lots $/Lot * Inclusive* of a 10% allocation for profit 92 loaded lot

Ziegenmeyer x Jordan x Seevers

Sales Comparison Approach – Medium-Density Residential Component subject’s for the the expected revenues estimate approach to We will utilize the sales comparison is identified as component Specifically, the medium-density residential component. medium-density to the analysis 2,500 square feet. Similar a typical lot size of 193 lots with will contain Village F and will be analyzed on a residential components, the sales comparables of the single-family basis. Loaded lot values incorporate the unimproved lot price, site development costs, special site development lot price, basis. Loaded lot values incorporate the unimproved and fees. and permits assessments throughout the data investigation considers land sales within several submarkets The market and analyzed. sales will be presented follows, six comparable analysis that region. In the Sacramento tabulation is presented Detailed sales A summary on the following page, along with a location map. table, followed by a discussion that leads to the conclusion of sheets are presented after the summary for Village F. value hypothetical market

A-50 95

Ziegenmeyer x Marshall Avenue Jordan x BULK LOT SALE 2 Seevers

Ziegenmeyer x 050-0323-010 Pomegranate, west of Stockton Boulevard Jordan x BULK LOT SALE 1 Seevers

CityCountySale Data GrantorGranteeContract DateClosing DateDeed Book PageProperty Rights Conveyed SaleConditions of Financing TermsSale PriceAnnual Special Assessments per LotLand Data ZoningTopography Sacramento County Sacramento Utilities Fee Simple Number of Lots $0 Land Area (Acres) October 2006 Jerry Slinkard, et al Density (Units per Acre) N/A Blackstone Development Pending Status at SaleDevelopment Market Typical Lot Size (SF) Cash Equivalent Indicators (per Lot) Sale PriceSite Development Costs $7,650,000 IncentiveDeveloper's 7.00 Lots Unimproved Level to Slightly Sloping 75 RD-5 11.00 All Available 4,950 $ 21,079 $ 2,108 $102,000 Property Identification Project NameLocation Parkside and Dahlia Garden of Orange Avenue, north line of South line APN -025, -026; 050-0331-024, -002, -003; 050-0331-001, Finished Lot IndicatorFinished Lot PV of Bonds and FeesPermits Loaded Lot IndicatorRemarks typical lot is the pending sale of Parkside and Dahlia Garden subdivisions, which contain This property 4,950 square feet (43 lots within Dahlia Garden. sizes of 4,500 square feet (32 lots within Parkside) and Parkside and Dahlia Garden are adjacent properties. The developer plans to construct three floor for sale 2,000 square feet on both properties. 1,500 to ranging from $125,187 $155,187 $ 30,000 0 $

A-51 97

Ziegenmeyer x Development N/A N/A Jordan x BULK LOT SALE 4 Seevers

TopographyUtilitiesNumber of LotsLand Area (Acres) Sloping 21 All Available Property Identification Project NameLocationAPNCityCountySale Data GrantorGranteeContract DateClosing DateDeed Book PageProperty Rights Conveyed SaleConditions of Financing Terms 21-lot Subdivision Sale PriceAnnual Special Assessments per LotLevyStreet North line of Road, east of Sibley Land Data Zoning N/A Sacramento County Folsom Fee Simple $0 N/A Levy Road Estates, LLC N/A Addison Place Development February2006 Market Cash Equivalent $2,061,000 R4 PD - General Apartment District Planned Density (Units per Acre) Status at SaleDevelopment Typical Lot Size (SF)Indicators (per Lot) Sale PriceSite Development Costs IncentiveDeveloper's IndicatorFinished Lot PV of Bonds and FeesPermits Lots Unimproved Loaded Lot IndicatorRemarks 2,614 closed escrow in February contract date is not known. The property includes one This comparable 2006. The The buyer sale price of $208,833. indicated with a maximum lot designated as low-income housing purchase. At the time of sale, the property had tentative subdivision plans were included in the improvement $42,686 use. for the proposed permit development map approval and a planned $4,269 $145,098 $98,143 $183,476 $38,378 $0 96

Ziegenmeyer x Jordan x BULK LOT SALE 3 Seevers

County Sacramento County Smeding LLC Property Identification Project Name Location APN 245-0222-030 City Carmichael County Sacramento Available Sale Data Grantor Sonja Grantee Sixells, Contract Date Closing Date Deed Book Page Property Rights Conveyed Sale Conditions of Financing Terms 21-lot Subdivision Sale Price Annual Special Assessments per Lot Fair Oaks Boulevard, North side of west of Miles Lane Land Data Zoning RD-10 Topography Level Utilities All Fee Simple Number of Lots $0 Land Area (Acres) February2006 Density (Units per Acre) 60619-1610 March 2006 Status at Sale Development Market Typical Lot Size (SF) Cash Equivalent Indicators (per Lot) Sale Price Site Development Costs $2,025,000 Incentive Developer's 10.50 Lots Unimproved 21 2.00 3,000 $40,000 $4,000 $96,429 Loaded Lot Indicator Loaded Lot Indicator Remarks sold for west of Miles Lane, this comparable Located along the north side of Fair Oaks Boulevard, exhibits a project density with cluster housing and of will reportedly be developed The property $2,025,000. feet. per acre. The typical 10.50 units lot size is 3,000 square $165,429 Finished Lot Indicator Finished Lot PV of Bonds and Fees Permits $140,429 $25,000 $0

A-52 99

Ziegenmeyer x Avenue Jordan x BULK LOT SALE 6 Seevers

Ziegenmeyer x Jordan x BULK LOT SALE 5 Seevers

Property Identification Project NameLocationAPNCityCountyAvailable Sale Data GrantorGranteeContract DateClosing DateDeed Book PageProperty Rights Conveyed SaleConditions of Financing Terms Madison Estates Sale PriceAnnual Special Assessments per Lot of Interstate 80 northwest East of Zachary Way, Land Data Zoning N/A Topography Sacramento County Unincorporated Utilities All Fee Simple Number of Lots $0 Land Area (Acres) 2005 November Koraf Corporation Density (Units per Acre) N/A Madison Estates Development, LLC December 2005 Status at Sale Development Market Typical Lot Size (SF) Cash Equivalent Indicators (per Lot) Sale PriceSite Development Costs $1,330,000 IncentiveDeveloper's N/A Lots Unimproved Level 19 N/A residential Single-family 4,184 $43,500 $4,350 $70,000 Finished Lot IndicatorFinished Lot PV of Bonds and FeesPermits Loaded Lot IndicatorRemarks the sale of a proposed 19 lot single family This comprises residential subdivision located east of Zachary The project area of Sacramento County, California. unincorporated of Interstate 80 within an Way,northwest $117,850 $133,043 $15,193 $0 sold in December 2005 for $1,330,000, or $70,000 per unimproved lot. Tentative map approval was a 2005 for $1,330,000, or $70,000 per unimproved sold in December condition of sale.

A-53 101 Price Average Base Average Base Plan (SF) Plan Average Floor Floor Average

Sales Rate 4th Qts. Weekly Weekly 4th Qts.

Sales Rate Total Weekly Total Weekly (SF) Lot Size Ziegenmeyer x No. of No. Units Sold Jordan x Units Planned Seevers

Project Builder Cottage GardensCottage Beazer Homes 141 27 1,500 0.79 -1.00 1,274 $290,823 Liberty LaneLiberty Homes Ryland 74 48 2,030 0.80 0.62 1,684 $321,740 Maplewood Industries Griffin 114 81 2,100 0.87 0.08 1,608 $336,490 Cobblestone Stoneybrook- Hamptons The Montauk- Hamptons Tha Homes KB Homes KB Homes Syncon 400 423 148 100 200 3,200 4 2,700 1.53 2,336 2.06 1.33 3.69 0.92 1.33 1,929 2,090 $344,720 1,739 $378,714 $362,490 Barrington SquareBarrington American Richmond 51 2 3,800 0.33 0.33 1,750 $370,990 The Hamptons - Westbury- Hamptons The KB Homes 400 170 3,000 2.00 3.69 1,808 $318,750 Villa TerrassaVilla Homes Regis 100 2 2,800 0.22 0.22 1,381 $319,750 Average Home Price Average Home utilized as the will be 2,500 square foot lot the subject’s approach, sales comparison to the Similar for the subject property is basis of comparison. Specifically, a typical new production home residential subdivisions within the based on a survey of active, medium-density estimated For the purposes of extraction technique, a 1,900 square foot floor plan will market. Sacramento the average product being offered in similar be utilized, which is considered representative of the Sacramento region. projects in competitive several table details The following developments. Group First Quarter 2007 Housing Report. The Gregory The data is taken from Direct and Indirect Costs Direct Costs presented in the previous component section, a construction cost Based on the cost comparables of $142,500, or $75 per square foot, is considered reasonableestimate for a hypothetical 1,900 square foot plan. Indirect Costs of 15% direct costs will be to the previous single-family residential lot analysis, a factor Similar utilized to account for the indirect items. After examination of some of the comparable active medium-density residential developments in the residential developments of the comparable active medium-density of some After examination area, an average base price of $335,000 is concluded for the subject’s 1,900 subject’s general market square foot floor plan. The present value of bonds is also included to establish the total consideration $15,000. paid. In this analysis, the present to be approximately value of the special tax is estimated 100

Ziegenmeyer x Jordan x Seevers

Loaded Lot Indicator – Sales Comparison Approach to reflect differences in location, to the comparables were applied adjustments In this analysis, sizes. The following paragraph details the reasoning behind conditions and lot market previously, the residential sector appears to As mentioned comparables. applied to the adjustments In an effort to attract prospective environment. market current in the be stabilizing or moderating or even reducing base prices. To homebuilders are now offering incentives many homebuyers, reflect the current conditions in the residential market, Sales #4 through #6, which transferred in second half of 2005, were adjusted downward. The balance the data set was negotiated during were considered necessary for current contracting real estate cycle and, thus, no other adjustments North Vineyard within the this factor. The subject is also considered to have a good overall location, County. Sales #2 through #4 are located in areas considered to Station Specific Plan in Sacramento to the subject property. As such, downward adjustments have superior overall locations compared for Finally, the sales required upward adjustments for location. to these comparables were warranted to the sizes compared for superior (larger) lot inferior (smaller) lot sizes and downward adjustments the size was dependent on subject’s 2,500 square foot typical lot size. The degree of adjustment disparity between the comparable and subject’s 2,500 square foot lot size. residential bulk lot sales located we identified several medium-density During our investigation, helpful in that proved have been presented region. In total, six comparables Sacramento within the residential component. the loaded lot value for subject property’s medium-density estimating to the but of adjustment, all are considered reasonably similar amount Each sale required some a value conclusion of $150,000 per subject property. Therefore, considering the entire data set, estimate loaded lot is considered reasonable Vineyard Point. This for a 2,500 square foot lot within and cost to complete. fees and of hypothetical market permits value is inclusive of Residual Analysis (Extraction Technique) value, the extraction technique will be used. This As a supporting indication of hypothetical market and development selling prices of homes to be offered at the subject the likely analysis considers then reduces that value by the direct costs, indirect costs and developer’s profit for construction an improved for lot value the residual of The result of this analysis represents an estimate of a home. lot. and considering the approved lot sizes, residential market, Based on the profile of area of new homes that would generally target the subject property could be developed with a range market. of the new home buyer segment middle-income

A-54 103

$96,967 $18,714,705

($43,433) ($9,600) Ziegenmeyer x Jordan x $150,000 Seevers

No. of Lot Typical Concluded Permits In-Tract PartiallyImp.

F 193 2,500 Village Lots (SF) Size Value Lot Loaded Fees and Costs Dev. Value Lot Extension Conclusion of Revenue – Medium-Density Residential Component residential components, the total revenue for subject’s single-family In order to estimate Vineyard and fees. LW costs and permits site development remaining for are required deductions developer of the subject property and reported in-tract is the master remaining LLC Point, and fees residential lot. Permits $9,600 per medium-density costs were approximately development $53,033 $43,433. As such, a total deduction of to be approximately were previously estimated ($9,600 + $43,433) is applied to the conclusion of loaded lot value calculate partially lot value. improved will be integrated into the discounted Revenues are generated by the sale of each villages and in order to derive the hypothetical market method) cash flow analysis (subdivision development is residential component medium-density value of the subject property. The revenue for table. lot value in the following based on the unimproved estimated 102

($21,375) ($33,500) ($142,500)

Ziegenmeyer x Jordan x Seevers $150,000

$150,000

per lot for the subject’s typical 2,500 square foot medium-density residential lot. per lot for the subject’s typical 2,500 square foot medium-density Loaded Lot Value Lot Loaded $152,625 Indirect costs @ 15% of direct costs direct 15% of @ costs Indirect profitDeveloper's @ 10% price sales of Direct costs of construction (1,900 sf x $75 psf) x (1,900 sf construction of costs Direct Rounded $150,000 Living Area (SF) Area Living PriceSale TaxSpecial ConsiderationTotal Less: 1,900 $350,000 $335,000 $15,000 $150,000 Sales Comparison Approach Extraction Technique Accrued Depreciation or economic nature. A physical the normal Depreciation is of a physical, functional loss results from aging process of a structure as well wear and tear on the improvements. A functional loss results from an inefficient or super adequate design of the improvements. Economic depreciation is the result of an adverse influence that exists beyond the property's boundaries. Since the homes are proposed construction, no deductions for depreciation are considered necessary in this analysis. Developer’s Incentive of 10% the margin area, a profit conditions in the subject’s market Based on current market indicated retail value is considered reasonable for a hypothetical 1,900 square foot plan. Conclusion The residual analysis, based upon the cited factors, is presented below: Reconciliation of Loaded Lot Value sales comparison and the extraction technique derived via the The loaded lot value estimates below. approach are presented as the value same is the the extraction technique derived via As illustrated above, the value indicator approach and is believed to substantiate the sales comparison concluded via the sales comparison cited above, we have concluded a loaded lot the information approach value conclusion. Considering value of

A-55 105 Sacramento

Ziegenmeyer x Jordan x Seevers section of this report. With the robust growth experienced in section of this report. With

XPENSES The preceding discussion suggests there is ongoing demand for developable residential land in the for developable residential land in the demand suggests there is ongoing discussion The preceding that experienced in previous years. For an absorption scale than at a tempered though region; region, please reference the sales in the Sacramento discussion relating to new home E Marketing Costs/Commissions/Closing Costs/Administrative at 4% of total of the properties are estimated costs relative to the transfer and closing Commissions negotiable, it is considered to be consistent with current retail value. Although this rate is somewhat includes closing costs. industry trends. Further, this estimate with associated costs administrative various covers the category expense The administrative legal and accounting fees other including management, the overall development, managing For purposes of this analysis we have professional services common to a large-scale development. expense at 2% of the gross sale proceeds. this estimated closing costs and costs, commissions, In total, we have included an allowance of 6% for marketing expenses. administrative Area Housing Market Overview previous years, most projects have benefited, experiencing strong increases in prices and absorption previous years, most level of appreciation as prices are not sustaining the same new home market, current rates. In the offered by and concessions being years, especially considering the incentives recent they have in over growth experienced to the strong compared are lower absorption figures builders. Furthermore, in the current state of is not anticipated to remain the past few years. However, residential market moderation over the long-term. availability of residential for residential product and the limited Considering the on-going demand subject will the the residential lots comprising it is anticipated region, the Sacramento land within most probable buyer of the subject property is sell within a two-year period. Additionally, the area. with the local market familiar builders considered to be merchant 104

Ziegenmeyer x Jordan x Component Revenue Seevers

Single-Family Residential (SFR 3-5) (SFR Residential Single-Family 4-7) (SFR Residential Single-Family 7-12) (MDR Residential Medium-Density RevenueTotal $50,180,000 $18,714,705 $41,780,000 $110,674,705

NALYSIS A BSORPTION Conclusion – Aggregate Revenue into the incorporated be which will property, for the subject component To restate, the total revenue discounted cash flow analysis, is as follows: A disposition discussed and the annual will be absorption period (time) the of the report, In this section summarized. will be components of the revenue to of the absorption period for subject property, we have attempted In developing an estimate in the market. changes as well anticipated conditions for present market the impacts consider both over a demand forecast specific and it is difficult to accurately Real estate is cyclical in nature, absorption is based on several factors. One consideration projected absorption period. Estimating projects. This analysis is best similar residential developers marketing of local the past experience by historic absorption rates for lots in the northern California region. The continued measured supply of area, coupled with the limited in the subject’s market homes for single-family demand should bode well for the subject property. entitled land near ready for development, for residential land in the of the more convincing observations suggesting stable demand Some sales of the residential villages, or portions thereof, within The area are the subject’s immediate recent sale occurring in June 2006. Grove. The first sales began in January 2005, with the most residential lots, Thus, in a period of 18 months, nine villages, containing total 932 single-family builders. were sold to seven merchant within the Laguna Ridge Specific Plan. Reynen and Bardis recently purchased two developments in July 2006. This Specifically, Reynen and Bardis purchased Arbor Ranch from Ryland Homes school site. Of the 862 single- and an elementary lots, two parks, project includes 862 single-family lot size of 5,775 square feet, 242 will have a a typical 394 will have lots, approximately family Reynen and Bardis also purchased McGeary be 6-pack homes. typical lot size of 4,725, and 226 will lots, one 1.6- Centex Homes in June 2006. McGeary Ranch includes 199 single-family Ranch from lot size of a typical will have lots, 104 acre park, and one 1.1-acre park. Of the 199 single-family 5,460 square feet and 95 will have a typical lot size of 6,825 feet.

A-56 e s 107 g g ) e g er 20% ran er 20% pp ed basis g g er-term land holdin land er-term g

national avera (

subdivisions y rice trendin rice ital to lon ital

ment p p p le-famil ear cash flow, mid to u mid flow, ear cash g

y ment, either entitled or unentitled entitled either ment, s

p p The Korpacz Real Estate Investor The Korpacz ion ment deals on an unlevera on deals ment g p for land develo , rofit for sin uired to attract ca q e in the absence of absence of the e in gp g lace p Quarter 2006, Volume 19, Number 4. Number Volume 19, Quarter 2006, Ziegenmeyer nificant infrastructure costs infrastructure nificant th ield rate re ield rate g x y e g erties close to tentative ma erties close to tentative ed entitlements in in entitlements p g g ro Jordan p erties with si erties with x p ro land tract developments. Larger land holdings would require 25% to 30%. challengedEnvironmentally or politically development risky could run in well 35%. of excess or leveraged. 25% to 30% from tentative map to pad sales to merchant builders, builders, to pad sales to merchant map tentative 25% 30% to from or leveraged. unlevera timelines Range of 12.00% to 25.00%, with an average of 18.15%, inclusive of profit and and profit of 18.15%, inclusive of average an 12.00% to 25.00%, with of Range assumin p develo land for 20% to 30% IRR ran 20% Low PUDs in the California/Pacific re those those ) Seevers uarter q g

p other other y , Peter F. Korpacz and Associates, 4 Associates, F. Korpacz and , Peter

Grou y ment 10 8 to an for 20-25%; of IRR Minimum

dated ever dated Data Expectations Yield / IRR p Source (Inclusive of Profit) u ( ATE h - California Pacific Homes No less than 20% IRR for land develo R - Hon Develo Hon - g y , discount rates for land development range from 12.00% to 25.00%, with an average of range from , discount rates for land development uarter 2006 uarter 14 Q mous source - Lennar As low as the low 20% ran y le McCullo ISCOUNT y The Real Estate Investor Survey The Real Lin Stinson - Providence Realt Korpacz Real Estate Investor Survey - Survey Korpacz Real Estate Investor Fourth Gary Gorian - Dale Poe - Development Gorian Gary for higher slightly (no entitlements); typical is land development for 25% IRR Dan Boyd - ESE Land Company ESE Land - Boyd Dan financed traditionally for 20% range the in requirements yield builder Merchant Anon Mark Palkowitsh - MSP California, LLC MSP California, - Palkowitsh Mark unleveraged stage, map to tentative unentitled raw deals from land 35% for large Gordon MacKenzie - Brookfield Development Brookfield - MacKenzie Gordon exists risk entitlement typical 30% when than less No David Jacobsen - Ridgecrest Homes - Jan. 2007 - Homes Ridgecrest - Jacobsen David development year 1-2 with subdivisions residential single-family 10% to 40% for Homes Premier - Grant Mike Chris Downe 15% to 20% IRR David Pitts - Newhall Land and Land Farmin Newhall PittsDavid - RealtyRates.com - Second Quarter 2007 Quarter Second - RealtyRates.com and subdivisions 21.68%, for of average an 13.54% to 33.30%, with of Range L Roy Robertson - Ekotec - Robertson Roy reflect would range the of end lower the property; unentitled an 20% to 30% for Rick Nieman - GFC - Nieman Rick unentitled 30% raw for unleveraged. entitlements, some with 18% to 22% for land Tulare Windmill Ventures, LLC - June 2007 June - LLC Ventures, Windmill Tulare rate excludin 10% discount 18.15% during the Fourth Quarter of 2006. This represents no change from the Second Quarter of 2006. This represents no change from the Second Quarter of 18.15% during the Fourth Quarter of According entitlements are in place. and assume 2006. These rates are inclusive of developer’s profit are typically increased for projects that lack entitlements to the Korpacz survey, discount rates of those respondents who use the discounted cash between 300 and 600 basis points. The majority a reflect the participants Additionally, do so free and clear of financing. flow (DCF) method for this a separate line item rate, versus preference in including the developer’s profit discount factor. The discount rates are based on a survey that includes residential, office, retail and industrial expected returns are on large-scale, the highest indicate survey Participants in the developments. projects where certain The low end of the range was extracted from unapproved developments. Several respondents indicate they expect slightly or eliminated. risks had been lessened development are already in place. lower returns when approvals/entitlements database in-house with a developing rate is compared yield In the table below, Korpacz project of project yield rates for reasonableness. D appraisal industry, within the According to a leading publication 14 Survey 106

t t t

Lot/Unit/Acre Ziegenmeyer Maximum Special Tax Per x Jordan x Seevers

Proposed Land Use SFR 3-5 (6,600 SF Lots) 3-5 (6,600 SF SFR $1,400 per lo SFR 4-7 (4,725 SF Lots) 4-7 (4,725 SF SFR $1,250 per lo MDR 7-12 (2,500 SF Lots) 7-12 (2,500 SF MDR $950 per uni

MDR - Medium Density Residential - Medium Density MDR SFR - Single-Family Residential SFR - Single-Family

Interim Ad Valorem Taxes and Assessments Interim Ad Valorem Taxes and Assessments ad valorem a sale of the appraised property. Interim This appraisal is predicated on, and assumes, real estate taxes are based on the subject’s current tax rate (1.0127%). As parcels sold off, are the taxes Additionally, inventory. to the unsold and then applied average tax liability is estimated anticipated to increase 2.0% annually. Community Facilities District (CFD) Mello-Roos County of the appraised property is located within boundaries of respect to special taxes, With have relied upon the CFD Report, CFD No. 2005-2 (North Vineyard Station 1). We Sacramento the annual special tax levy on prepared by Goodwin Consulting Group, Inc., for determining table. following the as detailed in appraised property for the first bond issuance, Grove School District CFD #1 Mello-Roos by the Elk The subject property is also encumbered of the Elk Grove Unified School District, upon special tax. According to Marcia Grambusch, would be calculated as a residential project, annual Mello-Roos payments subject’s re-development residence. at $200 per single-family Infrastructure Costs Inc., indicated and Planning Systems, prepared by Economic A development cost estimate, at $11,658,800, $20,972,815 in total infrastructure costs. However, bond proceeds are estimated which indicates an effective infrastructure cost of $9,314,015 for the developer ($20,972,815 - 70% of the total $11,658,800). As of the date inspection, developer reported approximately Because the been completed. ($20,972,815 x 70%), had work, or $14,680,971 infrastructure infrastructure cost obligation noted above, no than the effective developer has already paid more costs will be deducted in this analysis. remaining

A-57 109

Ziegenmeyer x Jordan x Seevers

Conclusion approach, the discounted cash of the subdivision development After deriving the four components the subject property is offered on following value conclusion of flow and hypothetical market page. 108 , 18.00%

Ziegenmeyer x Jordan x Seevers

Entitlements Entitlements Physical status of the property (raw/improved/partially improved) Moratoriums species Endangered period Price range of the proposed units Construction/absorption Location competition such as golf course orientation or views Amenities Future x x x x x x x x x Higher profits are generally required for longer construction and sellout periods, as well riskier are not These include, but of factors to consider. with a number is site specific projects. Profit to, the following: limited Profit is estimated based on the perspective of a new buyer, not the current owner. The profit must based on the perspective of a new buyer, not current owner. The profit must Profit is estimated based on the relative risks of project. be sufficient to attract investment revision (LOMR), The subject property exhibits risk relating to the lack of an approved letter map status of the 100-year flood plain. The conditional portions of the subject from which will remove when selecting an property and is considered the LOMR increases overall risk of subject has continued appropriate discount rate for this residential market analysis. Further, the Sacramento through the First Quarter 2007. Overall inventory levels in region are to experience moderation and incentives have also risen over the of downward price adjustments increasing and the amount factors only increase the perceived risk associated with a large-scale residential past year. These project. trends Conversely, the positive attributes of subject include: 1) population and employment to major competing projects and 3) the proximity acceptance of for the area, 2) stable market linkages. All of these factors tend to lessen the perceived risk subject development. the facilities to Additionally, under the hypothetical valuation of subject property, it is assumed CFD 2005-2 (North Vineyard Station No. 1) bond be financed by the first County of Sacramento it is because is thus further mitigated risk of the project issuance are all in place. The overall Based on the specifics of the subject property has completed infrastructure improvements. assumed of the a discount rate toward the middle the Vineyard Point project discussed throughout report, reasonable. Thus, a discount factor of range reflected by the survey respondents appears inclusive of developer’s incentive, will be utilized in this analysis. inclusive of developer’s incentive, will

A-58 ) 111 fee simple estate

Ziegenmeyer x Jordan ($81,770,000) x (VINEYARD POINT) Seevers

FINAL CONCLUSION OF HYPOTHETICAL MARKET VALUE EIGHTY ONE MILLION SEVEN HUNDRED SEVENTY THOUSAND DOLLARS The purpose of this appraisal has been to estimate the hypothetical market value ( the hypothetical market The purpose of this appraisal has been to estimate of the subject property, assuming the completion of the primary infrastructure and facilities to be of the primary the completion of the subject property, assuming financed by the first County of Sacramento CFD No. 2005-2 (North Vineyard Station 1) bond financed by the first County of Sacramento of the lien accounts for the impact also value estimate issuance. The hypothetical market and trends, in information Special Tax securing the bonds. After analyzing current market and significant factors set forth in the assumptions with the definitions, certifications, accordance 10), it is our opinion the hypothetical market (please refer to pages 8 through attached document value of the subject property, as May 4, 2007, is… 110

Ziegenmeyer x Jordan x Seevers

HYPOTHETICAL BULK MARKET VALUE – VINEYARD POINT

A-59 113

Ziegenmeyer x Jordan x Seevers

PROPERTY IDENTIFICATION AND LEGAL DATA

Location certain land areas situated within the boundaries of The subject property, which comprises Bradshaw of west CFD No. 2005-2 (North Vineyard Station No. 1), is located County of Sacramento of Sacramento Road, north of Gerber Road and south Florin within an unincorporated area County, California. Assessor’s Parcel Number(s) A and B are identified by the following Units 1 through 4, Parcels and 2 Remainders 065-0052-033 through -036, 065-0080-103, -105, -107 and -108, assessor’s parcel numbers: 066-0080-033. of Record Owner Parcels 1 and 2) is presently vested with (Units 1 through 4 and Title to the subject property planned A and B of the Vineyard Creek master Corp. Title to Remainders Standard Pacific Homes, community are held with North Vineyard Investors, GP. Legal Description title report, which is is included in the preliminary property A legal description of the subject reproduced and included in the Addenda to this report. Property Taxes Constitution, in 1978 by Article XIII to the State The property tax system in California was amended on property taxes and for a commonly referred to as Proposition 13. It provides for a limitation real property by reference to a base year value, value of current taxable the establish procedure to (if any). Annual increases cannot exceed 2% per annually to reflect inflation which is then modified year. the property is substantially The base year was set at 1975-76, or any thereafter in which is to be re- the property occur, either of these two conditions or changes ownership. When improved the new base year assessed value. value, which becomes Proposition 13 also assessed at market tax rate to 1% of the value property, exclusive bonds and supplemental the maximum limits Taxes for bonded indebtedness approved prior to 1975, and any bonds subsequently assessments. the property is located, can be added to 1% approved by the requisite vote of district in which tax rate. 112

Ziegenmeyer x Jordan x Seevers

SUBJECT PROPERTY – VINEYARD CREEK

A-60 115

RD-3, RD-4, RD-5 RD-5 RD-4, RD-3, RD-15, RD-20, RD-25

RD-4, RD-5, RD-6, RD-7 RD-7 RD-6, RD-5, RD-4, County Zoning Designation County Zoning Ziegenmeyer x Jordan x per acre per acre per acre Description Description Seevers

Single-family residential: 3-5 units Single-family residential: 4-7 units Multifamily residential: 12-22 units Multifamily

SFR 3-5 SFR 4-7 MFR 12-22 Designation Specific Plan has reviewed the conditions of title and has determined no adverse impacts on value, the appraiser no adverse impacts and has determined has reviewed the conditions of title the report. The appraiser the date of since have been recorded title restrictions no negative assumes title. pertaining to for matters accepts no responsibility Zoning the subject parcels are currently zoned County Planning Department, According to the Sacramento of each the allowable A description residential development. and multifamily for single-family the County was obtained from land use designations is presented in the table below. The information and the North Vineyard Station Specific Plan text. It is noted Planning Department of Sacramento of dwelling number that indicate the maximum contain numbers the county zoning designations of three dwelling the RD-3 zone allows for a maximum units allowed per acre of land. For example, units per acre. Entitlements for Vineyard Creek the tentative map According to the County of Sacramento Planning Department, for Vineyard Creek recorded in June maps was approved on November 10, 2004. The large lot final and October 2006. Flood Zone The subject property is located within two flood zones, Flood Zone X, described as areas outside of the 100- and 500-year flood plains, Flood Zone AE – described as areas within 100-year of the Federal with our interpretation accordance in flood plain. This information was determined Map, Community Panel Numbers 060260-0330D, dated Agency (FEMA) Management Emergency and the final revision has been approved letter of map the conditional It was reported July 6, 1998. the 404 revision is currently being reviewed by FEMA. Additionally, approval of letter of map final phases. in the is reportedly permit Earthquake Zone Safety Commission, the subject property is located within Zone 3, areas of According to the Seismic risk zone in California. In addition, activity. Zone 3 is considered to be the lowest moderate seismic 114

t t t

Lot/Unit/Acre Ziegenmeyer Maximum Special Tax Per x : Jordan x Seevers SFR 4-7SFR $1,250 per lo SFR 3-5SFR $1,400 per lo MDR 7-12MDR $950 per uni MFR 12-22MFR or $5,000 per acre $950 per unit

Proposed Land Use

SFR - Single-Family Residential; MDR - Medium Density Residential; MFR - Multifamily Residential

The existing ad valorem taxes are of nominal consequence in this appraisal, primarily due to the fact primarily in this appraisal, consequence taxes are of nominal The existing ad valorem are improvements and property substantially as the infrastructure these taxes will be adjusted a sale of appraisal assumes in this value employed of market the definition Additionally, completed. the appraised property. The subject property is located in tax rate area 51-297, which has an annual tax rate of 1.0072% based on assessed value. Additionally, the appraised property will be encumbered by County of respect to special taxes, we CFD No. 2005-2 (North Vineyard Station 1) bond. With Sacramento by Goodwin Consulting Group, have relied upon the Community Facilities District Report, prepared the subject property. It is our understanding the annual special tax levy on Inc., to determine CFD No. 2005-2 (North Vineyard Station annual special taxes under the County of Sacramento 1) bond will not exceed the following amounts increases. Therefore, based on the annual to 2% special tax rates are subject maximum the It is noted special taxes are approximately maximum District, the current two years following approval of the 4-7, $988 per lot for MDR 7-12 and $1,456 per lot for SFR 3-5, $1,301 or $5,202 per acre for MFR 12-22. The financing provided through the first County of Sacramento CFD No. 2005-2 (North Vineyard Station 1) bond issuance will finance facilities for properties within be no special tax levy for this CFD encumbering Point only. Therefore, there may Vineyard Creek until the second bond issuance. Grove School District CFD #1 Mello-Roos by the Elk The subject property is also encumbered of the Elk Grove Unified School District, upon special tax. According to Marcia Grambusch, would be calculated as a residential project, annual Mello-Roos payments subject’s re-development or condominiums. residence and at $120 per dwelling unit for apartments at $200 per single-family The bond indebtedness and any direct charges will be accounted for in the valuation. Conditions of Title and dated July 11, 2005, was title report, prepared by North American Title Company A preliminary the appraiser provided for use in this appraisal and is included the Addenda to report. While

A-61 117

Ziegenmeyer x Jordan x ASSESSOR’S PARCEL MAPS Seevers

116

Ziegenmeyer x Jordan x Seevers

the subject is not located within a Fault-Rupture Hazard Zone (formerly referred to as an Alquist- (formerly Hazard Zone within a Fault-Rupture the subject is not located of Priolo Special Study Zone), as defined by Publication 42 of the California Department Conservation, Division of Mines and Geology. Easements or revealed no apparent adverse easements, encroachments An inspection of the subject property provided title report other conditions that currently impact the subject. According to preliminary for ingress/egress and public for this appraisal (see Addenda), the subject contains easements to adversely affect are not considered the area and for are typical these easements utilities. However, nor qualified to a surveyor The appraiser is not of the subject property. or marketability the value do not have an impact any easements is assumed It exact location of any easements. the determine are future date, any easements on the opinion(s) of value set forth in this report. If, at some the reserves the right to amend the appraiser impact on value, to have a detrimental determined opinion(s) of value contained herein.

A-62 119

County of Sacramento Water Agency County of Sacramento County of Sacramento Pacific Gas and Electric District Utility Municipal Sacramento AT&T Fire District Metropolitan Sacramento Sheriff County of Sacramento Ziegenmeyer x development development development The topography of the property is generally level. A soils report was not provided for this analysis. and of residential However, based on the existence commercial structures situated on parcels in the property area, it appears the subject immediate load bearing capacity for possesses adequate development. plan, a physical inspection Based on the development typical grading of the subject property, and assuming it is expected the and paving work will be completed, subject property will have adequate drainage. frontage along The subject property offers primary Florin Road, the proposed extension of Waterman Road and several proposed interior streets. Public utilities, including electricity, natural gas, water and telephone service, are available will be Public extended to each of the land components. utilities will be served by the following providers: the appraiser did not of inspection, At the time which observe the existence of hazardous material, not be present on the property. The or may may appraiser has no knowledge of the existence such on the property. However, appraiser is materials not qualified to detect such substances. The presence affect the could of potentially hazardous materials is value of the property. The estimate is no such there the assumption predicated on cause a loss on or in the property that would material Water: Sewer: Natural Gas: Electricity: Telephone: Fire: Police: Jordan x Seevers

North Vacant land land North Vacant South East West Vacant land proposed for residential and public and public Vacant land proposed for residential development Rural residential Topography: Soils: Drainage: Frontage/Access: Adjacent Uses: Utilities: Environmental Issues: ) 118 SF ( Size Typical Lot

/ Acres

No. of Lots/ Units

nia. Land uses in the subject’s Ziegenmeyer acres of land area. Remainders A and B contain acres of land area. Remainders x r Based on the assessor’s parcel map and information and information Based on the assessor’s parcel map Planning Department, the County of Sacramento from Units 1 through 4 and Parcels 2 of the Vineyard contain a total of planned community Creek master 87.8 065-0052-033 through -036, 065-0080-103, -105, - 107 and -108, 066-0080-033 16.6± acres of land area. The subject parcels are irregular in shape. Together, the parcels also form an irregular shape. Jordan x Vineyard Creek SITE DESCRIPTION 1234 4-7 SFR 3-5 SFR 3-5 SFR 12-22 MFR 103 lots 207 lots 5.1 acres 65 lots 4,725 5,500 5,500 - Parcel 1Parcel 2 12-22 MFR 12-22 MFR 1.5 acres 0.4 acres - - Seevers Remainder BRemainder 3-5 SFR acres 2.1 - Remainder ARemainder 7-12 MDR 5.0 acres -

Owner Unit Proposed Land Use(s) North Vineyard Investors, GP Vineyard North Standard Pacific Homes, Corp. Homes, Pacific Standard The subject property is situated within the County of Sacramento CFD No. 2005-2 (North Vineyard The subject property is situated within the County of Sacramento of 375 Parcels 1 and 2) will consist through 4 and (Units 1 Station No. 1). The appraised property the It was reported residential land. acres of multifamily lots and 7.0 residential single-family in Village F would likely consist of a component residential Vineyard Creek multifamily density of 18 units per acre. It was reported Vineyard Creek project with an estimated condominium 16.6 acres of land and are designated for single-family G and H consist of approximately remainders of public/quasi- There are also a number residential development. residential and medium-density following this analysis. The from public land areas within the District and these sites are excluded table details the various developable land use components comprising the subject property. The subject property is situated west of Bradshaw Road, north Gerber Road and south Florin Road, within County, Sacramento an unincorporated area of Califor and Shape: Size Assessor’s Parcel Number(s): immediate area are devoted primarily to rural residential uses, with some limited commercial commercial limited to rural residential uses, with some primarily area are devoted immediate Station Specific Plan area is built out, a wide range of land As the North Vineyard development. uses, will be commercial and recreational residential, multifamily uses, including single and term. to mid near area over the into the incorporated as follows: The subject property is further discussed

A-63 121

375 lots) per lot will be created. 375 lots) per lot y Ziegenmeyer x Considering the above-mentioned fee credits, the Considering the above-mentioned and fees costs are effective permits property owner’s to be $30,895 ($67,547 - $36,652) per lot. estimated than and fees are slightly lower These permits projects located throughout the market competing to the attributable is primarily area; however, this available. fee reductions significant be used for waste water management and to link with be used for waste water management Plant Treatment Regional Wastewater the Sacramento in Elk Grove is already completed. budget provided by the According to a development are costs per lot developer, in-tract development as follows: estimated 5,500 square foot lots = $35,000 per lot 4,725 square foot lots = $28,000 per lot and fees pertaining to The subject’s proposed permits construction costs have been estimated the home and provided by Economic based on documents and Inc. Specifically, total permits Planning Systems, in Vineyard Creek are fees paid by the developer $67,547 per lot. to be approximately estimated to However, it is noted fee credits attributable constructed by the infrastructure improvements and fees effective permits developer will lower the As permit. of building paid at time required to be proceeds previously, construction fund mentioned CFD No. 2005-2 the first County of Sacramento from (North Vineyard Station No. 1) bond issuance will not be available for Vineyard Creek. However, there for infrastructure will be fee credits available constructed by the developer. Based on improvements and Planning provided by Economic information $13,744,492 of the Inc., approximately Systems, will be costs $30,009,269 in total construction lots in Vineyard the 375 Given for fee credits. eligible $36,652 Creek, a fee reduction of approximately ($13,744,492 are property The configuration and size of the subject The on-going considered adequate for development. bodes well for for residential development demand for the this project and should increase the demand land uses within the Specific Plan. complementary with We expect the subject property to be competitive the other local developments, as well projects region. located elsewhere throughout the Sacramento Jordan x Seevers

In-Tract Development Costs: Permits and Fees: Conclusion: 120

Ziegenmeyer x in value. No responsibility is assumed for any such in value. No responsibility is assumed conditions, or for any expertise engineering The client is knowledge required to discover them. urged to retain an expert in the field if desired. been yet has not plan A wetlands mitigation for Vineyard Creek to establish the completed guidelines for issuance of the Section 404 Permits by the U.S. Army Corps of Engineers. However, it was is in the final phases. reported approval of the permit Act, a According to Section 404 of the Clean Water or fill to discharge dredged is required permit waters of the United States, including into materials U.S. Armywetlands. The Corps of Engineers is the authority. permitting Based on the North Vineyard Station Specific Plan, feature construction or the subject property will residential lots and of 375 single-family development land. The typical residential 7.0 acres of multifamily components residential lot sizes for the single-family A and 5,500 square feet. Remainders will be 4,725 16.6 acres of land and B contain approximately and medium-density designated for single-family There will also be residential development. public/quasi-public land areas, such as parks and property. the subject open space areas, throughout will require an of the subject property Development that connects with Florin Road interior street system of the and serves all of the various components overall subject. Based upon the tentative map, functional utility is considered to be good. It noted Company railroad the Central California Traction in a southeasterly bisects the subject property currently being utilized and is not line direction. This is not considered to have an adverse effect on the potential. subject property’s development As of the date value, subject requires work. significant infrastructure improvement at $30,009,269. Specifically, total costs are estimated It is noted the first County of Sacramento CFD No. 2005-2 (North Vineyard Station No. 1) bond issuance facilities for Vineyard Point. As will only finance such, there will be no special tax levy for this CFD properties within Vineyard Creek. encumbering owners will be responsible for all Instead, property to interceptor costs. It is noted a sewer infrastructure Jordan x Seevers

Wetlands: Development Plan: Functional Adequacy: Offsite Improvements:

A-64 123

15 Station Specific Plan has undergone extensive Ziegenmeyer x Jordan x in the Addenda to this report. in the Addenda to this ed. (Chicago: Appraisal Institute, 2002), 135. 135. Appraisal Institute, 2002), (Chicago: ed. th Seevers , 4 HIGHEST AND BEST USE ANALYSIS

Glossary of Terms possibility, financial feasibility and maximum productivity. possibility, financial feasibility and maximum physically possible, appropriately supported, financially feasible, and that results in the highest physical permissibility, are legal value. The four criteria the highest and best use must meet The Dictionary of Real Estate Appraisal of Real The Dictionary The term “highest and best use,” as used in this report, is defined as follows: report, is defined in this “highest and best use,” as used The term property, which is The reasonably probable and legal use of vacant land or an improved Two analyses are typically required for highest and best use. The first analysis is is not and best use as improved) (highest The second analysis vacant. use of the property as though vacant land. Definitions of these terms due to the fact that subject property represents relevant in the are provided Best Use – As Vacant Highest and highest and best use, it is appropriate to analyze the subject definition of with the In accordance physical possibility, financial permissibility, as it relates to legal property as though vacant productivity. feasibility and maximum Legal Permissibility regulations, such as government The legal factors influencing the highest and best use are primarily the Planning Department, zoning and building codes. According to the County of Sacramento Specific residential development. and multifamily for single-family is zoned subject property Vineyard Station Specific Plan under the North allowable zoning designations for these components include RD-3, RD-4, RD-5, RD-6, RD-7, RD-15, RD-20 and RD-25. These zones dictate the Vineyard North parcels. The allowable density for the Physical Possibility to, its possible use(s) include, but are not limited The physical characteristics of a property that affect location, street frontage, visibility, access, size, shape, topography, availability of utilities, off-site test has the legally permissible Since and soil subsoil conditions. easements improvements, use of the subject property, physical as the primary concluded residential development uses. they are suited for the legally permissible to see if characteristics of the parcels are examined 15 planning and review. Modifications to zoning or designated uses are considered highly unlikely. It is for Unitsthe tentative map 1 through 4 and Parcels 2 of Vineyard Creek have been noted also and medium-density A and B are designated for single-family Remainders approved; whereas, Vineyard with the North Plan. Therefore, in accordance under the Specific development residential are the developments residential and multifamily single-family Station Specific Plan, well-balanced of the subject property. uses legally permissible primary, 122

Ziegenmeyer x Jordan x SUBJECT PHOTOGRAPHS Seevers

Looking west along Florin Road Looking east along Florin Road Looking south across subject property Looking southwest across subject property Looking southeast across subject property Looking south across subject property

A-65 125

Ziegenmeyer x Jordan x Seevers

have increased during the same time period, effectively reducing base prices further. Overall period, effectively reducing base prices further. Overall time have increased during the same to previous years. Market participants absorption figures during 2006 were also lower compared builders, brokers, etc.) attribute a portion of the decline to speculative investors canceling (home the current state of in to remain is not anticipated the residential market contracts. However, moderation over the long-term. the financially feasible, or profitable, use of to consider it is necessary in our analysis, At this point residential for single-family The strong demand component. the subject’s attached residential price over the past several home area has led to increases in the median product in the Sacramento unaffordable to entry-level homebuyers, increasingly more years. Housing in the area has become in outlying areas, such as Sutter and Yuba Counties, homes who are being forced to either purchase and alternative for multifamily As a result, demand or search for an alternative housing product. significantly. increased of housing in the area have forms under the RD-15, RD-20 and RD-25 zoning complex is legally permissible While an apartment or townhouse project, is more such as a condominium ordinances, a “for-sale” development, by the fact that in subject’s project. This is supported apartment profitable than a “for-rent” projects that have undergone or are in of apartment area, there have been a number general market is the Stonelake conversion. One example for condominium the process of obtaining entitlements located within Elk Grove, which is currently being converted into condominiums. Apartments into a 2006 to convert this 432-unit apartment Tentative map approval was granted in November of higher-density, attached housing Additionally, a number community. “for-sale” condominium Sacramento in the or are proposed construction been developed, are under recently projects have overall supply of entry-level residential projects in the subject’s region. Considering the limited towards “for-sale” (apartments) rental developments area, as well the trend away from market would be a financially feasible use of the subject property. development projects, multifamily area, current pricing and absorption in the subject’s immediate the housing market Upon examining rates suggest profit levels and of return that are still attractive to builders. Additionally, the area is the subject’s market in of entitled residential land that is near-ready for development amount area, single-family housing in the Sacramento for new Overall, given the on-going demand limited. are considered financially feasible uses of the subject residential developments or multifamily property. Maximum Productivity – Conclusion the conditions have been analyzed to evaluate the highest and best use of Legal, physical and market will generate the the type of use(s) that is presented to evaluate The analysis subject property. discussed, greatest level of future benefits possible to the property. Based on factors previously productive land uses that are the maximally residential developments and multifamily single-family 124 14.5% 17.7%

999 1,093 1,251 Ziegenmeyer x 1,101 1,530 Jordan x Seevers 2,047 929

2,660 2,082 $459,795 $465,699 $463,240 $464,641 $466,442 $465,967 $444,088 $436,780 $430,367 -1.5% -7.7% Community Quarter Sales) 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr 1st Qtr % Change % Change (Average Price/(Average 2005 2006 2007 Quarter Ago Year Sacramento County Sacramento Based on our physical inspection of the subject property, we know of no reason why the property Based on our physical inspection of the subject property, However, it is noted portions of the subject property are would not support any legal development. revision situated within the 100-year flood plain. The developer reported a conditional letter of map the affected portions of subject property out 100-year flood (LOMR), which would remove Agency (FEMA). For purposes of Management plain, has been approved by the Federal Emergency revision will be approved and the subject areas a final letter of map this analysis, it is assumed is not located within a Fault- zone will be developable. The property flood 100-year within the and evidence of residential construction in Rupture Hazard Zone. All utility services are available, Typical roadway and utility of development. the area provides additional support for possibility Traction Railroad) bisecting the exist and there is an inactive railroad (Central California easements subject property in a southeasterly direction. The railroad is not believed to have an adverse effect on do not adversely affect the any easements of the subject. It is also assumed the development subject’s potential for development. 4 and Parcels 1 2 represent three contiguous land parcels. Based on the smaller It is noted Unit sizes and irregular shapes of Parcels 1 2, assemblage these parcels with Unit 4 is considered the preceding discussion, subject property the overall site utility. Given appropriate to maximize uses. has physical characteristics that support the legally permissible Financial Feasibility influences. The of financial feasibility is dependent on regional supply and demand A determination County, in an area proposed subject property is located within an unincorporated area of Sacramento stable area has experienced urbanization. Overall, the subject’s market term for near and mid throughout the growth over the past several years. Sales of new homes population and employment significantlyresidential sector is experiencing region have improved over recent years; however, the Absorption environment. moderation with respect to pricing and absorption in the current market to the robust growth experienced over past few years. and pricing figures are lower compared County over the past two pricing within Sacramento The table below details the average new home years, as reported by The Gregory Group, an enterprise that tracks the regional housing market. In an effort to attract prospective homebuyers, many homebuilders are now offering incentives such many In an effort to attract prospective homebuyers, upgrades, pools, home and closing costs, swimming as cash contributions toward down payments during the period of to generate interest have been initiated These incentives cars and vacations. to decreases in overall base prices, incentives and concessions Thus, in addition moderating demand.

A-66 127

Ziegenmeyer x Jordan x Seevers APPRAISAL METHODOLOGY

We have been requested to provide an estimate of market value of the subject property as our date of market We have been requested to provide an estimate to the valuation analysis for Vineyard Point, subdivision of inspection, May 4, 2007. Similar analysis) will once again be relied upon in the cash flow to value (discounted method development method, the sales of the subdivision development analysis of the subject property. As a component to estimate value for a typical employed will be extraction technique approach and comparison feet) within the subject property. residential lot configuration (5,500 square production single-family analysis, we will in the previous square foot lot derived for a 6,600 lot value Using the estimated values of the subject property’s the determine to indicators market set and other utilize the data residential lots. Unit 4 and Parcels 1 2, which 5,500 and 4,725 square foot single-family as for development are proposed acreage, residential parcels of multifamily represent contiguous a density of will likely have component It was reported this multifamily condominiums. analysis, we will solely rely on the sales comparison acre. In this 18 units per approximately component. multifamily subject’s approach to value the analysis to cash flow into a discounted incorporated will be indicators value (revenue) The resultant value of the subject property (Units 1 through 4 and Parcels 2) held by the market estimate the Corp. It is noted Vineyard Creek will not receive bond proceeds from Standard Pacific Homes, CFD No. 2005-2 (North Vineyard Station 1) bond issuance; first County of Sacramento the developer is responsible for all costs to develop. As such, reflect therefore, it is assumed of facilities in place, a higher condition of the property as date value, without assumption analysis will be considered. in the Vineyard utilized Point discount rate than that planned community held by North of the Vineyard Creek master value of the component The market This to value. approach using the sales comparison GP will be estimated Vineyard Investors, A and B represent transitional land Remainders approach is considered most applicable, because for development. with no entitlements This appraisal report has been conducted in accordance with standards and guidelines Practice (USPAP) and the Appraisal Standards of Professional Appraisal found in the Uniform Advisory Debt and Investment published by the California Standards for Land Secured Financing The appraisal is also conducted in accordance with Commission. and Restated County the Amended Policies. Program Facilities District Financing and Community Special Assessment of Sacramento 126

Ziegenmeyer x Jordan x Seevers

are legally permissible, physically possible and financially feasible. Therefore, considering the are legally permissible, subject’s specific characteristics, the highest and best use of subject property is for subdivisions. residential and multifamily of well-balanced single-family development

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basis. Loaded lot values incorporate the Ziegenmeyer x loaded lot loaded Jordan x Seevers

per lot for the subject’s typical 5,500 square foot is concluded. loaded lot The $225,000 indicator for the subject property’s 4,725 square foot lot sizes was derived in previous valuation the 4,725 square foot lot category was concluded at $221,000 per section of this report. Specifically, and fees loaded lot. As with the previous component valuation, deductions are necessary for permits costs. in-tract development and remaining in the residential components of the subject property is estimated The revenue for the single-family table on the next page and is arranged by Unit. The sales comparison approach will be utilized to estimate the expected revenues for the subject’s the will be utilized to estimate approach The sales comparison In the case of land used for production oriented residential residential component. single-family this process typically entails the analysis of an entitled site on a finished, or fully development, lots, as well tentatively and fully improved lot basis. Bulk sales of final mapped improved, a based on compare properties builders merchant unimproved lots will be analyzed. Many mapped prices because possess different finished lot properties may basis. However, two similar finished lot and fees relatively lower than similar permits they have different permits and fees. Lots possessing all else being equal. Thus, in the following lots will have a higher finished lot price, comparable are analyzed on a analysis, sales comparables Conclusion of Revenue – Single-Family Residential Components in the Vineyard Point The loaded lot value of a 6,600 square foot was previously estimated for the subject’s 5,500 valuation to be $230,000. To derive a loaded lot value indicator component size accounting for lot qualitative adjustments made lots, we have square foot single-family discrepancy, configuration and overall desirability to this value. Based on these factors, a loaded lot value of unimproved lot price, site development costs, special assessments and permits and fees. and permits costs, special assessments lot price, site development unimproved After deriving a loaded lot indicator for the subject property’s single-family residential components residential components for the subject property’s single-family After deriving a loaded lot indicator property, as lot within the subject for a typical and fees the comparable sales data, permits from the derived loaded lot indicator. The site costs, will be subtracted from well as site development the unimproved needed to transform of development the amount costs per lot quantify development As of of in-tract development. the completion Improved lot status includes lots. improved lots into Additionally, the subject the date of our inspection, subject’s residential lots were unimproved. (bond) utilized in our analysis have a special assessment property and several of the comparables will be analyzed to reflect the impactobligation. The comparables of the bond indebtedness on value. two different typical lot of the subject properties, there are As with the Vineyard Point component residential components, 4,725 and 5,500 square sizes within the subject property’s single-family feet. 128 The principle of ) SF

(

Size Size Typical Lot

/ Acres No. of Lots/ Units of Lots/ No. Ziegenmeyer x Jordan ” x MARKET VALUATION Seevers

Edition, published by the Appraisal Institute, 2001 – “ published by the Appraisal Institute, Edition, th

, 12 1 4-7 SFR 103 lots 4,725 2 3-5 SFR 207 lots 5,500 34 3-5 SFR 12-22 MFR 5.1 acres 65 lots - 5,500 Unit Proposed Land Use(s)

Vineyard Creek (Units 1 through 4 and Parcels 2) Parcel 1Parcel 12-22 MFR 1.5 acres - Parcel 2Parcel 12-22 MFR 0.4 acres - Remainder BRemainder 3-5 SFR 6.1 acres - Remainder ARemainder 7-12 MDR 10.5 acres - EVENUE COMPONENT VALUATION – STANDARD PACIFIC HOMES, CORP. planned community held by of the Vineyard Creek master value of the component The market 4 and Parcels 1 2, will be Corp., which includes Units 1 through Standard Pacific Homes, in this section of the report. For reference, component subject property consists estimated of the following land uses: will once again be employed. method The subdivision development R residential and multifamily the subject’s single-family The revenue will be generated by the sale of we begin by estimating revenues for the single-family residential In the following section, components. of the other components. Subsequent sections will detail the revenue streams components. Sales Comparison Approach – Single-Family Residential Component will be villages individual values of the subject’s market approach, the In the sales comparison have sold, are listed for sale or under properties that to similar by a comparison estimated value of a property the sales comparison approach is market of contract. The underlying premise properties in the marketplace. is directly related to the price of comparable, competitive to The According principle of substitution. This approach is based on the economic Appraisal of Real Estate Appraisal of substitution holds that the value of a property tends to be set by price would paid desirability within a reasonable amount of time. acquire a substitute property of similar utility and sales comparison approach is diminished if substitute The principle implies that the reliability of properties are not available in the market.

A-68 131 $82,271 $55,902 $89,966 $73,913 $79,995 $80,000

Ziegenmeyer x $ 1.43 24 17.00 $0 $ 12.11 183 15.11 $29,994 $ 4.79 103 21.50 $562 $ $ 1.99 23 0.70$ 11.56 10 $0 4.19 14.29 56 $0 13.37 $0 Jordan x Seevers MULTIFAMILY LAND SALES

Roseville -085 and 011-260-084, 011-250-066; APNs: Rancho Cordova 058-0270-056 APN: Lincoln 25-17-02 APN: Antelope 203-0070-138 APN: (pending) Rocklin 045-160-018 APN: Carmichael -018 and -015, 258-0310-005, APNs: (pending) 5 Project Condominium 24-Unit Jan-05 1,999,999 6 Road Moore of 65, south Highway State of West Mar-04 10,974,966 2 Blvd. El Don of Dr., north Ambassador East of Aug-06 799,950 1 Court 1 Skyland Jan-07 1,700,000 3 Dr. Gibbons of north Ave., Manzanita of West 4 and Barbara Boulevard Way Junction of SEC Dec-05 4,480,000 Mar-05 5,700,000 No. Property Identification Date Sale Price (Acres) Units (Units/Acre) Bonds/Unit (Incl. Bonds) Sale Sale Area Land of No. Density PV of Price/Unit 130 $10,340,000 $59,970,000 $16,700,000 $32,930,000

$159,105 $10,341,824 $162,105 $16,696,813 $159,105 $32,934,731 Ziegenmeyer x ($30,895) ($35,000) ($30,895) ($28,000) ($30,895) ($35,000) Jordan x $225,000 $221,000 $225,000 Seevers

5,500

375 No. of No. Lot Typical Concluded Permits In-Tract Unimproved 1 103 4,725 2 207 5,500 365 Unit Lots Size (SF) LoadedLot Value and Fees Dev. Costs Lot Value Extension Rounded Sales Comparison Approach – Multifamily Residential Component The sales will be estimated. component subject’s multifamily value of the the market In this section, portions. The value for the subject’s multifamily to estimate approach will be employed comparison component is identified as Unit 4, Parcel 1 and 2, contains a total of subject’s multifamily 7.0 acres of land area. It is noted Parcels 1 and 2 are situated contiguous to Unit 4 judged Additionally, it was project. with Unit 4 to create one multifamily assemblage best suited for a density of project with be developed as a condominium areas will likely reported the multifamily for high-density, sale residential properties, and 18 units per acre. Based on the on-going demand Metropolitan Area, a density projects within the Sacramento multi-family a review of comparable rate of 18 units per acre is considered reasonable for Unit 4, Parcel 1 and 2. As mentioned the utility of sites would maximize above, assemblage of the three portions into one development to contain approximately is estimated component residential the subject’s multifamily and, as such, 126 units (18 x 7.0 acres). is given to factors such as property rights approach, consideration Under the sales comparison appreciation or depreciation since the date of conveyed, financing, conditions of sale and market sale. Differences in physical characteristics, such as location, parcel area, shape, topography, onsite utilities and zoning, are also considered in the analysis. The basis of and offsite improvements, is price per developable unit. comparison throughout the data investigation considers land sales within several submarkets The market and analyzed, sales will be presented follows, six comparable analysis that region. In the Sacramento Detailed page, along with a location map. a summary tabulation on the following beginning with table, followed by a discussion that leads to sales sheets are presented after the summary components. value for the subject’s multifamily conclusion of

A-69 133

Ziegenmeyer x Boulevard, Rocklin, Placer County, California Jordan x Seevers

MULTIFAMILY LAND SALE NO. 2

This comparable is located in the city of Rocklin, which adjacent to Roseville. The 30,274 This comparable units, indicating a of 10 condominium square foot site is planned for the development density of 14.39 units per acre. Sale Data Land Data Indicators Remarks Number(s) Assessor’s Parcel 045-160-018 Property Type Location Grantor Grantee Sale Sale Date of Property Rights Conditions land Multifamily Financing Price Drive, north of El Don East of Ambassador Sale PV of Bonds per Unit Market Zoning Undisclosed Topography Dave Hood and Stephen Maki Fee simple August 7, 2006 Utilities & Off-sites Shape Units $0 Land Area $799,950 Planned All cash to the seller Density Total Consideration per Unit Level All available PD-14 10 $79,995 Rectangular 0.70 acres 14.39 units per acre Property Identification Property Identification 132

Ziegenmeyer x California Jordan x Seevers

MULTIFAMILY LAND SALE NO. 1

This comparable represents the pending sale of 23 townhouse lots located in This comparable unincorporated community of Antelope, situated southwest Roseville. The overall location of this property is considered to be inferior the subject property. The as Tierra Del Sol. is identified development Sale Data Land Data Indicators Remarks Number(s) Assessor’s Parcel 203-0070-138 Property Type Location Grantor Grantee Sale Sale Date of Property Rights Conditions land Multifamily Financing Price County, 1 Skyland Court, Antelope, Sacramento Sale PV of Bonds per Unit Market Zoning Undisclosed Topography Inc. Thunder Development, Fee simple January 19, 2007 (pending) Utilities & Off-sites Shape Units $0 Land Area $1,700,000 Planned All cash to the seller Density Total Consideration per Unit Level All available RD-20 23 $73,913 Irregular 1.99 acres 11.56 units per acre Property Identification Property Identification

A-70 135

Ziegenmeyer x Barbara Way, Roseville, Placer County, California California Roseville, Placer County, Barbara Way, Jordan x Seevers

MULTIFAMILY LAND SALE NO. 4

The purchase price was $5,700,000, which equates to $55,340 per unit based on the The purchase price was $5,700,000, which equates 103 units. Escrow closed in May 2005. of for development approved tentative map Sale Data Land Data Indicators Remarks Number(s) Assessor’s Parcel 011-250-066, 011-260-084 and -085 Property Type Location Grantor Grantee Sale Sale Date of Property Rights Conditions land Multifamily Financing Price Sale Southeast corner of Junction Boulevard and PV of Bonds per Unit Market Zoning Topography City Developers Corporation Fee simple Corporation Cresleigh Homes March 2005 Utilities & Off-sites Shape Units $562 Land Area $5,700,000 Planned All cash to the seller Density Total Consideration per Unit Level All available R3 103 $55,902 Irregular 4.79 acres 21.50 units per acre Property Identification Property Identification 134

Ziegenmeyer x Drive, Carmichael, Sacramento County, California Drive, Carmichael, Sacramento Jordan x Seevers

MULTIFAMILY LAND SALE NO. 3

After the sale, the three parcels identified above were assembled. The site is planned for the identified above were assembled. After the sale, three parcels the property is zoned SC – project. Although construction of a 56-unit condominium for the were approved entitlements and Use Permit Shopping Center, a Conditional of the property as planned. development Sale Data Land Data Indicators Remarks Number(s) Assessor’s Parcel 258-0310-005, -015 and -018 Property Type Location Grantor Grantee Sale Sale Date of Property Rights Conditions land Multifamily Financing Price West of Manzanita Avenue, north Gibbons Sale PV of Bonds per Unit Market LLC Sixells, Zoning Topography Trust Tsakapoulos Family Fee simple 8, 2005 December Utilities & Off-sites Shape Units $0 Land Area $4,480,000 Planned All cash to the seller Density Total Consideration per Unit Level All available 56 SC, Shopping Center $80,000 Irregular 4.19 acres 13.37 units per acre Property Identification Property Identification

A-71 137

Ziegenmeyer x Lincoln, Placer County, California of escrow) Jordan x Seevers

MULTIFAMILY LAND SALE NO. 6

within the Lincoln Crossing master planned community in Lincoln. D.R. Horton offered planned community within the Lincoln Crossing master of bonds. property, plus the assumption $10,974,966 for this comparable Sale Data Land Data Indicators Remarks Number(s) Assessor’s Parcel 25-17-02 Sale of Property Rights Conditions Financing Price Sale PV of Bonds per Unit Market Fee simple $29,994 $10,974,966 All cash to the seller Property Type Location Grantor Grantee Sale Date land Multifamily West of State Highway 65, south Moore Road, Zoning SunCal Lincoln Crossing Topography D.R. Horton March 2004 (letter of intent), October (close Utilities & Off-sites Shape Units Land Area Planned Density Residential Total Consideration per Unit Level All available High-density 183 units multifamily represents the acquisition of 174 tentatively mapped This comparable $89,966 Irregular 12.11 acres 14.37 units per acre Property Identification Property Identification 136

Ziegenmeyer x Boulevard, Rancho Cordova, Sacramento County, Boulevard, Rancho Cordova, Sacramento California Jordan x Seevers

MULTIFAMILY LAND SALE NO. 5

Boulevard. The property transferred in January 2005 for $1,999,999. A 24-unit project is proposed for the site. condominium Sale Data Land Data Indicators Remarks Number(s) Assessor’s Parcel 058-0270-056 Property Type Location Grantor Grantee Sale Sale Date land Multifamily of Property Rights Conditions Financing of Point East Drive and Folsom Northeast corner Price Sale PV of Bonds per Unit Market N/A Zoning Topography Fee simple Inc. Capital City Development, January 2005 Utilities & Off-sites Shape Units $0 Land Area $1,999,999 Planned All cash to the seller Density Total Consideration per Unit Level All available N/A 24 Folsom corner of Point East Drive and northeast is located at the This comparable $82,271 Irregular 1.43 acres 17.00 units per acre Property Identification Property Identification

A-72 139

. Market conditions first showed signs Ziegenmeyer x Jordan x Component Revenue Seevers

Single-Family Residential (SFR 3-5) (SFR Residential Single-Family 4-7) (SFR Residential Single-Family 12-22) (MFR Residential Multifamily RevenueTotal $43,270,000 $16,700,000 $8,820,000 $68,790,000

NALYSIS A Sacramento Metropolitan Area Housing Market Overview BSORPTION Conclusion – Aggregate Revenue Conclusion for the subject method subdivision development of the To restate, the total revenue component property, which will be incorporated into the discounted cash flow analysis, is as follows: A region, please reference For an absorption discussion relating to new home sales in the Sacramento the of moderation in the Fall of 2005, when some projects in the Sacramento Metropolitan Area lowered projects in the Sacramento in the Fall of 2005, when some of moderation sales in 2006 were base pricing and/or began offering significant incentives. Regional new home increasing and conditions market to moderating which was attributable to 2005, down compared the subject’s area has begun to in for residential development interest rates. However, demand Over this period, projects with steady over the near term. stabilize and is expected to remain rates. The reported absorption rates absorption to achieve adequate are expected pricing reasonable current quarterly rates that are area indicate some subject's projects in the of active comparable stabilization. Despite the recent market of some higher than the total sales rates, which is indicative at development remains residential and multifamily for single-family moderation, adequate demand pricing. projects with competitive region has been for high-density residential product in the Sacramento In recent years, demand price, which forced entry- home in light of the escalating median particularly stable to increasing, of housing. Generally, as to seek housing in outlying areas or find alternate forms level homebuyers housing prices continue to increase, the affordability of entry-level residential single-family and residential housing (e.g., condominiums for attached decreases, creating a demand market have begun increasing the densities of their single- homebuilders townhouses). Additionally, many available land and also target entry-level homebuyers. projects to better utilize the remaining family to high-density, “for sale,” for medium trend is the increased demand this Also highlighting have undergone conversion complexes apartment residential projects. As noted previously, several and are being sold as individual units. into condominiums When concluding an appropriate absorption period for the subject property, appraiser has availability of residential for residential product and the limited considered the on-going demand as region. Additionally, for purposes of this analysis, it is assumed land within the Sacramento 138

$8,820,000

data set, and in consideration of the $70,000 Ziegenmeyer x No. of Concluded Jordan x Seevers

Components Units Unit Value Extension

Unit 4, Parcel 1, 2Unit 126

Conclusion of Revenue – Multifamily Residential Component conditions, location, to reflect differences in market were applied to the comparables Adjustments were conditions, downward adjustments parcel area and density. Specifically, in regards to market #3 through #5 because their contract dates are considered to be at or near the peak of applied to Sales was applied to Sale adjustment Conversely, an upward prior to the recent moderation. the market, since this comparable’s improvement there has been market #6, which transferred in 2004, because appeal differences, Sales #2 and #4 were judged to have superior sale date. For location/community to these downward adjustments were applied therefore, subject property; to the locations compared comparables. Typically, developers are willing to pay a higher price per unit for larger parcels in order ensure As identity. enjoy project does not in-fill project, which a small, versus synergy with their product, efforts. Therefore, in greater costs per unit for marketing incur projects generally such, smaller for their through #5 required upward adjustments #1 to the subject property, Sales comparison #6 to reflect its larger land area. was applied to Sale adjustment areas. A downward land smaller of 18.00 reported Unit 4 and Parcels 1 2 will likely be developed with a density Finally, it was open offer superior appeal due to additional units per acre. In general, projects with lower densities to adjustments Therefore, Sales #1 through #3 received downward with them. space associated to the subject property. reflect their lower overall densities compared region over the past several price in the Sacramento new home Due to the rapid increases in median As a result, unaffordable to entry-level homebuyers. more years, housing in the area has become past several over the area has increased significantly in the for-sale housing for multifamily demand years. the located throughout land sales we identified several multifamily During our investigation, value market the six comparables were analyzed to estimate Area. In total, Metropolitan Sacramento the from indication the on for Unit 4 and Parcels 1 2. Based adjustments detailed on the previous pages, a market value of $70,000 per developable unit is unit count yields the to the component’s estimated considered reasonable. Applying this unit indicator following revenue conclusion:

A-73 141

inclusive of developer’s incentive, will be inclusive of developer’s incentive, Ziegenmeyer x 20%, Jordan x Seevers

ATE R ISCOUNT ONCLUSION Infrastructure Costs Inc. and indicates and Planning Systems, was provided by Economic An infrastructure cost estimate residential lot, for Vineyard total infrastructure costs of $30,009,269, or $80,025 per single-family CFD No. 2005-2 (North of Sacramento Creek. Because bond proceeds from the first County of Vineyard Creek, the total amount available for be will not Vineyard Station No. 1) bond issuance infrastructure costs will be deducted in the discounted cash flow. Based on significant estimated will be completed the infrastructure improvements of required infrastructure, it is assumed amount over four periods. D discount rate accounts for the overall risks previously, the selection of appropriate As mentioned and a 404 permit, revision (LOMR) lack of an approved letter map of the subject property. The risk of the increases the overall market residential in the Sacramento and the continued moderation subject property and is accounted for in our discount rate selection. Mitigating this risk are the trends for the area, 2) the population and employment 1) which include: attributes, subject’s positive All of linkages. to major proximity and 3) the of competing projects acceptance the stable market However, as previously these factors tend to lessen the perceived risk of subject development. CFD No. the first County of Sacramento from only Vineyard Point will receive proceeds mentioned, in are assumed 2005-2 (North Vineyard Station No. 1) bond issuance. Consequently, no facilities risk factor to have a higher overall project is judged thus, the place in the Vineyard Creek valuation; on the details of Vineyard Creek project Specifically, based to Vineyard Point. compared discussed throughout the report, a discount rate of C approach, the discounted cash of the subdivision development After deriving the four components is method property via the subdivision development the subject value conclusion of flow and market offered on the following page. utilized in this analysis. utilized in this 140

t t

Lot/Unit/Acre Ziegenmeyer Maximum Special Tax Per x Jordan x Seevers SFR 4-7SFR $1,250 per lo SFR 3-5SFR $1,400 per lo MFR 12-22MFR or $5,000 per acre $950 per unit

Proposed Land Use

SFR - Single-Family Residential; MFR - Multifamily Residential

XPENSES infrastructure commences, the first lot sales within the subject property are estimated to occur in the to the subject property are estimated sales within the first lot commences, infrastructure the subject on these factors, it is estimated fourth period, or tenth month, of the analysis. Based probable buyer of the subject the most Additionally, months. or 24 eight quarters, would sell within area. with the local market builder familiar be a merchant property is considered to E Marketing Costs/Commissions/Closing Costs/Administrative closing costs and costs, commissions, As previously indicated, an allowance of 6% for marketing expenses are considered. administrative Interim Ad Valorem Taxes and Assessments ad valorem a sale of the appraised property. Interim This appraisal is predicated on, and assumes, real estate taxes are based on the subject’s current tax rate (1.0072%). As parcels sold off, annual tax It is noted inventory. and then applied to the unsold average tax liability is estimated analysis. in this increases of 2% are utilized Community Facilities District (CFD) Mello-Roos County of the appraised property is located within boundaries of respect to special taxes, With throughout CFD No. 2005-2 (North Vineyard Station 1). However, as mentioned Sacramento the report, first bond issuance will only finance facilities for Vineyard Point. Therefore, of Vineyard Creek. For in the valuation special tax levy for this CFD will not be considered reference, the the District is detailed in following schedule of projected annual debt service for table. School District CFD #1 Mello-Roos special by the Elk Grove The subject property is encumbered of the Elk Grove Unified School District, upon subject’s tax. According to Marcia Grambusch, would be calculated at $200 re-development as a residential project, annual Mello-Roos payments or condominiums. apartments residence and $120 per dwelling unit for per single-family

A-74 143 ) of the subject

fee simple estate Ziegenmeyer x Jordan ($21,280,000) x Seevers

FINAL CONCLUSION OF MARKET VALUE

(VINEYARD CREEK UNITS 1 THROUGH 4 AND PARCELS 2) TWENTY ONE MILLION TWO HUNDRED EIGHTY THOUSAND DOLLARS The purpose of this appraisal has been to estimate the market value ( the market The purpose of this appraisal has been to estimate property. After analyzing current market information and trends, in accordance with the information property. After analyzing current market factors set forth in the attached document and significant assumptions certifications, definitions, value of the subject property, as (please refer to pages 8 through 10), it is our opinion the market May 4, 2007, is… 142

Ziegenmeyer x Jordan x Seevers

BULK MARKET VALUE – VINEYARD CREEK

A-75 145

Ziegenmeyer x Jordan x LAND SALES SUMMARY Seevers

south of Calvine Road Jan-07 463,478 RD-4 APN: 066-0100-034 CountySacramento APN: 066-0100-035 Nov-05 211,702 MDR 7-12 Elk Grove APN: 121-0180-026 south of Calvine RoadAPN: 121-0040-015 CountySacramento May-06 422,096 Nov-05 217,800 AR-2 MDR 7-12 Elk Grove APN: 121-0180-025 CountySacramento Pending 439,956 RD-4 1 line of Jordanthe east Along Road, Ranch N/A $1,350,000 10.64 $126,880 AR-5 2 Road, line of Waterman the east Along N/A $975,0004 Road 7361 Bradshaw 9.69 $100,6195 Road 7359 Bradshaw AR-5 N/A $1,521,000 N/A 5.00 $1,523,500 $304,200 4.86 $313,477 AG-20 AG-20 3 9244 Rogers Road Dec-05 $1,700,000 10.10 $168,317 AR-10 No. Location Date Close Price (Acres) AcreSpecific General or Plan / Date Sale Sale Sizeper Price / Zoning 144 The principle of

Ziegenmeyer x Jordan ” x Seevers

Edition, published by the Appraisal Institute, 2001 – “ published by the Appraisal Institute, Edition, th

, 12

COMPONENT VALUATION – NORTH VINEYARD INVESTORS, GP SALES COMPARISON APPROACH planned community held by North of the Vineyard Creek master value of the component The market section of the in this A and B, will be estimated Remainders GP, which includes Vineyard Investors, of the sales comparison premise The underlying to value. approach the sales comparison report using competitive comparable, related to the price of is directly value of a property approach is the market will analyze property, we value for the subject the market To estimate the marketplace. properties in searched public records and other area. We transitional land sales in the subject’s market comparable parties directly related to the with the data obtained data sources for leads, then confirmed brokers,transactions (primarily buyers and sellers). to The According principle of substitution. on the economic is based approach The sales comparison Appraisal of Real Estate Appraisal of We have collected five comparables from the subject’s general market area. The data from the area. The data from general market the subject’s from We have collected five comparables by a location map, page, followed in the table on following sales is summarized comparable grid and our conclusion of value. an adjustment detailed sales sheets, a discussion of adjustments, substitution holds that the value of a property tends to be set by price would paid desirability within a reasonable amount of time. acquire a substitute property of similar utility and sales comparison approach is diminished if substitute The principle implies that the reliability of properties are not available in the market.

A-76 147

Ziegenmeyer x Jordan LAND SALE 2 x Seevers

Property Identification Ag/Res Land Road, Along the east line of Waterman south of Calvine Road 95624 Elk Grove, CA Sacramento County Map Grid: 359-A2 APN: 121-0180-025 Sale Data Agricultural/Residential Grantor Rectangular Grantee Sale Date Deed Book Page Property Rights Sale Conditions of Level Financing Terms Sale Price PV of Bonds Land Data Land Area (SF) Land Area (Acres) Zoning AR-5, 60501-1892 Candelario & Gloria Tapia Shape Nearly Grace Evangelical Free Church Fee Simple Market 05/01/2006 Corner Orientation Cash Equivalent Street Frontage Topography Generally Off-Site Improvements On-Site Improvements $0 $975,000 Indicators 9.69 422,096 Sale Price per SF Sale Price per Acre PV Bonds per SF No PV Bonds per Acre Streets only Remarks Waterman Road None AR-2, or rural zoning is under the general plan, property's site is zoned AR-5; however, This 9.69-acre the portion of the property is located under power lines, which will impact residential. It is noted the western site. potential of the development $2.31 $100,619 $0.00 $0 146

Ziegenmeyer x Jordan LAND SALE 1 x Seevers

Property Identification Ag/Res Land Ranch Road, Along the east line of Jordan south of Calvine Road 95624 Elk Grove, CA Sacramento County Map Grid: 359-A1 APN: 121-0180-026 Sale Data Agricultural-Residential Grantor Grantee Sale Date Deed Book Page Property Rights Sale Conditions of Level Financing Terms Sale Price PV of Bonds Land Data Land Area (SF) Land Area (Acres) Zoning AR-5, 70111-311 Tony Boa and Tanya Phong Tran Shape Rectangular Van Dyke Franklin A. Fee Simple Market 01/11/2007 Corner Orientation Cash Equivalent Street Frontage Topography Generally Off-Site Improvements On-Site Improvements $585 $1,350,000 Indicators 10.64 463,478 Sale Price per SF Sale Price per Acre PV Bonds per SF No PV Bonds per Acre Partial Remarks Jordan Ranch Road residence Single-family represents a 10.64 acre site located in Elk Grove. The property currently zoned AR-5 - This comparable is units per acre) development of four (maximum Agricultural Residential; however, it is designated for RD-4 under the City of Elk Grove General Plan. There was an existing residence at time sale, but land only. purchase was based on the $2.91 $126,880 $0.00 $585

A-77 149

Ziegenmeyer x Jordan LAND SALE 4 x Residential) Seevers

Property Identification Ag/Res Land 7361 Bradshaw Road Sacramento, CA 95829 Sacramento County Map Grid: 339-C1 APN: 066-0100-034 ShapeCorner OrientationStreet FrontageTopographyOff-Site ImprovementsOn-Site ImprovementsIndicators Sale Price per SFSale Price per AcrePV Bonds per SF No PV Bonds per Acre Streets only Remarks None None represents the sale of a property This comparable located on the east side of Bradshaw Road, north Gerber Rectangular Specific Plan, North Vineyard Road. The purchase price was $1,521,000, or $6.98 per square foot. Under the Level is landlocked and It is noted this comparable is designated for medium-density development. this comparable with adjacent parcels. was purchased for assemblage $6.98 $304,200 $0.00 $132 Sale Data GrantorGranteeSale DateDeed Book PageProperty Rights SaleConditions of Financing TermsSale PricePV of BondsLand Data Land Area (SF)Land Area (Acres)Zoning 200511301575 Garcia Family Trust Florin Bradshaw Investors, LLC Market Fee Simple 11/30/2005 Cash Equivalent $1,521,000 $659 5.00 217,800 AG-20, Agricultural (Designated for Medium-Density 148

Ziegenmeyer x Jordan LAND SALE 3 x Seevers

Property Identification Ag/Res Land 9244 Rogers Road Sacramento, CA 95829 Sacramento County Map Grid: 339-A4 APN: 121-0040-015 Sale Data Agricultural-Residential Grantor Grantee N/A Sale Date Deed Book Page Property Rights Sale Conditions of Level Financing Terms Sale Price PV of Bonds Land Data Land Area (SF) Land Area (Acres) Zoning AR-10, N/A Roy and Carol Hausler Shape Rectangular Fee Simple Market 12/19/2005 Corner Orientation Cash Equivalent Street Frontage Topography Generally Off-Site Improvements On-Site Improvements $0 $1,700,000 Indicators 10.10 439,956 Sale Price per SF Sale Price per Acre PV Bonds per SF No PV Bonds per Acre All to Site Remarks Road Along Rogers None of 10.10 acres AR-10located at 9244 Rogers zoned land represents the pending sale This comparable downward transaction price; therefore, we have applied a moderate the final not report did Road. The broker to account for typical negotiations between buyer and seller over the list price. This propertyadjustment is transversed by heavywest side. power lines on the $3.86 $168,317 $0.00 $0

A-78 151

Ziegenmeyer x Jordan x Seevers

Property rights conveyed rights Property terms Financing Conditions of sale (motivation) features Market conditions (time) Physical x x x x x Adjustments used for this analysis is the sale price per acre of land area. This most The unit of comparison the to estimate In order to the subject. land sales similar for transitional common unit of comparison their sale via the comparable sales, it is necessary to adjust value of the subject property market to those of the subject. that are dissimilar prices for characteristics has an attribute considered superior to that of the subject, it is adjusted downward If a comparable The opposite is true of categories has on the price of comparable. negate the effect item subject property. considered inferior to the are considered appropriate in orderPercentage or dollar adjustments to isolate and quantify the to make the need the appraiser considers sales data. At a minimum, on the comparable adjustments items: for the following adjustments Property Rights Conveyed In transactions of real property, the rights being conveyed vary widely and have a significant impact on the sales price. As previously noted, opinion of value in this report is based a fee simple powers of taxation, eminent by the governmental imposed estate, subject only to the limitations community facility easements, escheat, as well non-detrimental police power and domain, districts and conditions, covenants restrictions (CC&Rs). All of the comparables represent fee necessary. rights are not for property adjustments Therefore, estate transactions. simple Financing Terms market to adjust it is necessary for financing terms that differ from the comparables, In analyzing financing (other than the seller) for the purpose of third party retained Typically, if the buyer terms. is required. However, in and no adjustment purchasing the property, a cash price is presumed have been paid may a premium financing as a debt instrument, seller provides where the instances have been by the buyer demanded or a discount may financing terms by the buyer for below market A paired sales analysis is performed in a meaningful way when the quantity and quality of data are in a meaningful A paired sales analysis is performed require the appraiser’s experience and knowledge of of the adjustments many available. However, A knowledgeable and active in the marketplace. those obtained from and information the market detailed analysis involving each of these factors is presented below. 150

Ziegenmeyer x Jordan LAND SALE 5 x Seevers

Property Identification Ag/Res Land 7359 Bradshaw Road Sacramento, CA 95829 Sacramento County Map Grid: 339-C1 APN: 066-0100-035 Sale Data GrantorGranteeSale DateDeed Book PageProperty Rights SaleConditions of Financing TermsSale PricePV of BondsLand Data Land Area (SF)Land Area (Acres)Zoning 20051116-1127 Garcia Family Trust Shape Florin Bradshaw Investors, LLC Market Fee Simple 11/16/2005 Corner OrientationStreet Frontage Cash Equivalent TopographyOff-Site ImprovementsOn-Site Improvements $1,523,500 $659 Indicators 4.86 211,702 Sale Price per SFSale Price per AcrePV Bonds per SF No PV Bonds per Acre Streets only Remarks residential) AG-20, Agricultural (Designated for medium-density Bradshaw Road None This property closed escrow on November 16, 2005. As of the date sale, this property existing had an Rectangular with is proposed for assemblage residence that The property offered no contributory value. single-family Level per acre. adjacent parcels. The purchase price was $1,523,500, or $313,477 $7.20 $313,477 $0.00 $136

A-79 153

Ziegenmeyer x Jordan x Seevers

Physical Characteristics Physical Characteristics value impact The physical characteristics of a property can impact the selling price. Those that may include the following: Location The subject property is located within the North Vineyard Station Specific Plan in Sacramento County and is considered to have a good overall location. Sales #1 #2 are located within the Elk to the subject property in compared to have superior locations area and are deemed Grove market are warranted to of overallAs such, downward adjustments desirability and property values. terms are necessary. adjustments No other for location. these comparables Land Area of 16.6 acres of land area. In general, due to economies The subject property contains approximately scale, the market exhibits an inverse relationship between size and price per unit (acre/sf/unit), such As parcels, all else being equal. than smaller acre tend to sell for a lower price per that larger parcels overall land reflect their smaller are applied to the entire date set such, downward adjustments to the subject. areas compared Topography and Utility therefore, the market can affect the utility and, or soil conditions drainage Differences in contour, similar site utility as the properties possesses of the comparable value of the lots. The majority However, Sales #2 and #3 contain significant subject property and does not require adjustment. of the properties. Therefore, upward that decrease the overall utility power line easements Sale #4 inferior site utility. Additionally, to these sales reflect their are applied adjustments subject to equate it with the adjustment an upward represents a landlocked parcel and warrants property. Zoning/Specific Plan Designation zoning or specific plan designations the exception of Sale #2, all sales have similar With However, Sale #2 is proposed for to the subject property and do not warrant adjustment. compared to equate it with the subject. and requires an upward adjustment agricultural-residential development Value Conclusion – Remainders A and B Metropolitan Area, the Sacramento land within availability of residential Based on the diminishing over the past several years. for residentially zoned parcels has increased significantly demand to major to its proximity stable due remain for the subject property should Additionally, demand identified several centers and transportation routes. During our investigation, we employment 152

Ziegenmeyer x Jordan x Seevers

a seller acting under duress, open market, to the a lack of exposure or business interest, transaction for the sake of family an inter-family or inter-business an unusual tax consideration, paid for site assemblage, a premium auction, or a sale at legal proceeding. domain an eminent x x x x x x x if the financing terms were above market. The premium or discounted price must then be adjusted to or discounted price must The premium were above market. if the financing terms therefore, do to the seller transactions and, cash sales were The comparable basis. a cash equivalent not require adjustments. Conditions of Sale the sales price actually discrepancy from Adverse conditions of sale can account for a significant in price is generally attributed to the This discrepancy to that of the market. paid compared non-market of sale are considered to be Certain conditions of the buyer and seller. motivations include the following: and may Market Conditions (Time) sales date and the effective of changes between the comparable conditions, market In evaluating conditions have not changed, then no market however, if warrant adjustment; may this appraisal are necessary for land sales within 2006 and is required. It our opinion no adjustments adjustment for residential land 2007 as prices have been relatively stable over this period. However, the market transactions that occurred in 2005. declines in prices from region has shown some in the Sacramento the generally lower overall average base prices currently being achieved This has resulted from downward adjustments are applied to Sales #4 to average base prices in 2005. Therefore, compared changes. through #7 to reflect subsequent market The majority of the comparable transactions were arms-length market transactions and did not market of the comparable transactions were arms-length The majority However, because the listing broker would not reveal of sale adjustment. require a condition is required to reflect typical negotiations final transaction price for Sale #3, a downward adjustment over the list price.between buyers and sellers #4 and #5 were purchased for Sales Additionally, paid by premium to reflect the these comparables to are applied Downward adjustments assemblage. the buyer.

A-80 155 ) of the subject

fee simple estate Ziegenmeyer x ($3,320,000) Jordan x Seevers

FINAL CONCLUSION OF MARKET VALUE (VINEYARD CREEK REMAINDERS A AND B)

THREE MILLION THREE HUNDRED TWENTY THOUSAND DOLLARS The purpose of this appraisal has been to estimate the market value ( the market The purpose of this appraisal has been to estimate property. After analyzing current market information and trends, in accordance with the information property. After analyzing current market factors set forth in the attached document and significant assumptions certifications, definitions, value of the subject property, as (please refer to pages 8 through 10), it is our opinion the market May 4, 2007, is… 154

ased on the indicated value range from the Ziegenmeyer x Jordan Rd. $3,320,000 x Seevers

16.6 acres x $200,000 per acre = $3,320,000 = 16.6 acres x $200,000 peracre

transitional land sales located within the subject’s surrounding area. Specifically, five comparables the subject’s surrounding area. Specifically, five comparables transitional land sales located within were applied to the A and B. Adjustments value of Remainders the market were analyzed to estimate the subject property. B date set to equate it with comparable comparables, and considering the adjustments detailed on the previous pages, a market value of and considering the comparables, $200,000 per acre is considered reasonable for the subject property. Applying this indicator to subject’s total acreage results in the following market value conclusion:

A-81 [THIS PAGE INTENTIONALLY LEFT BLANK] APPENDIX A-1

UPDATE APPRAISAL [THIS PAGE INTENTIONALLY LEFT BLANK] Update Appraisal Report

Properties within County of Sacramento Community Facilities District No. 2005-2 (North Vineyard Station No. 1) Sacramento, California 95829

Date of Report: August 8, 2007

Prepared For:

Mr. Dave Irish, CPA Director of Finance County of Sacramento 700 H Street Sacramento, California 95814

Prepared By:

P. Richard Seevers, MAI Eric A. Segal, Appraiser Sean C. Lim, Appraiser August 8, 2007

Mr. Dave Irish, CPA Director of Finance County of Sacramento 700 H Street Sacramento, California 95814

RE: Properties within County of Sacramento Community Facilities District No. 2005-2 (North Vineyard Station No. 1) Sacramento, California 95829

Dear Mr. Irish:

At your request and authorization, Seevers x Jordan x Ziegenmeyer has prepared an update to our appraisal of the property within the County of Sacramento Community Facilities District No. 2005-2 (North Vineyard Station No. 1), under the assumptions and conditions contained in this report. The original appraisal is a Self-Contained Appraisal Report conforming to the requirements set forth under Standards Rule 2-2(a) of the Uniform Standards of Professional Appraisal Practice (USPAP). Our original appraisal had an effective date of value of May 4, 2007. This update appraisal may only be used in conjunction with our original report.

The financing provided by the County of Sacramento Community Facilities District No. 2005-2 (North Vineyard Station No. 1) Special Tax Bonds, Series 2007A will be used for local and regional infrastructure improvements and services. These improvements include—but are not limited to— drainage and flood control facilities, sanitary sewer facilities, water facilities, transportation, roadway and related facilities, landscaping facilities, and other public facilities; in each case including design, planning, project management and other soft project costs. Payments of principal and interest on the Bonds will be paid by a Special Tax levied against the developable properties within the County of Sacramento Community Facilities District No. 2005-2 (North Vineyard Station No. 1), which is hereinafter referred to as the “subject properties.”

The subject properties represent the land areas within the County of Sacramento CFD No. 2005-2 (North Vineyard Station No. 1), and are identified as the Vineyard Point and Vineyard Creek master planned communities. Specifically, these communities are situated west of Bradshaw Road, north of Gerber Road and south of Florin Road. It is noted public land use areas will not be subject to the lien of the Special Taxes securing the Bonds; therefore, these areas are omitted from this analysis. The tables on the next page detail the land areas encompassing the District. Mr. Dave Irish, CPA August 8, 2007 Page 2

VINEYARD POINT No. of Lots / Units Typical Lot Village Specific Plan Zoning / Acres Size (SF) A SFR 4-7 138 lots 4,725 B SFR 4-7 59 lots 4,725 C SFR 3-5 152 lots 6,600 D SFR 3-5 133 lots 6,600 SFR 4-7 19 lots 4,725 E SFR 4-7 31 lots 4,725 F MDR 7-12 193 lots 2,500

VINEYARD CREEK No. of Lots/ Units Typical Lot Unit Proposed Land Use(s) / Acres Size (SF) 1 SFR 4-7 102 lots 4,725 2 SFR 3-5 207 lots 5,500 3 SFR 3-5 64 lots 5,500 4 MFR 12-22 5.1 acres - Parcel 1 MFR 12-22 1.5 acres - Parcel 2 MFR 12-22 0.4 acres - Remainder A MDR 7-12 10.5 acres - Remainder B SFR 3-5 6.1 acres -

The estimates of value reported in the original appraisal and in the attached update appraisal report are subject to the hypothetical condition that the improvements to be financed by the Bonds are in place. As of the date of value of the original appraisal report (May 4, 2007), improvements to be financed in the Bonds were not complete. The estimates of hypothetical market value assume a transfer would be either an all cash transaction or terms considered to be equivalent to cash. The estimates are also premised on an assumed sale after reasonable exposure in a competitive market under all conditions requisite to a fair sale, with buyer and seller each acting prudently, knowledgeably, for their own self interests and assuming neither is under duress. The estimates of hypothetical market value account for the impact of the lien of the Special Taxes securing the Bonds. Considering the completion of additional site development on the subject properties, and an analysis of market conditions as of the date of this update appraisal report, August 6, 2007, it is our conclusion the hypothetical market values, and hypothetical cumulative, or aggregate, value of the subject properties, as of August 6, 2007, is not less than that reported in the original appraisal. The estimates are subject to the hypothetical conditions, significant factors, general assumptions and limiting conditions set forth on pages 4 through 6 of this report.

The not-less-than estimates of hypothetical market value, by ownership, are presented in the table on the following page. Mr. Dave Irish, CPA August 8, 2007 Page 3

Owner Component Value Conclusions LW Vineyard Point, LLC Vineyard Point $81,770,000 Standard Pacific Homes, Corp. Vineyard Creek (Units 1 through 4 and $21,280,000 Parcels 1 and 2) North Vineyard Investors, GP Vineyard Creek $3,320,000 (Remainders A and B) Hypothetical Cumulative Value: $106,370,000

We hereby certify the property has been inspected, and we have impartially considered all data collected in the investigation. Further, we have no past, present or anticipated future interest in the property. This letter must remain attached to the Update Appraisal Report, dated August 8, 2007, which contains 9 pages, as well as our original Self-Contained Appraisal Report dated August 6, 2007, which contains 155 pages plus Addenda, in order for the value opinion contained herein to be considered valid. The subject property does not have any significant natural, cultural, recreational or scientific value. The appraisers certify this appraisal assignment was not based on a requested minimum valuation, a specific valuation or the approval of a loan.

This appraisal has been performed in accordance with the requirements of the Uniform Standards of Professional Appraisal Practice (USPAP), the Code of Professional Ethics and the Standards of Professional Practice of the Appraisal Institute, and the Appraisal Standards for Land Secured Financing published by the California Debt and Investment Advisory Commission. Mr. Dave Irish, CPA August 8, 2007 Page 4

Thank you for the opportunity to work with your office on this assignment.

Sincerely,

P. Richard Seevers, MAI Eric A. Segal, Appraiser State Certification No.: AG001723 State Certification No.: AG026558 Expires: August 12, 2008 Expires: February 18, 2009

Sean C. Lim, Appraiser State Certification No.: AG041090 Expires: September 5, 2008

/smh

07-093 This report represents an update to our previous appraisal of the properties within the County of Sacramento Community Facilities District No. 2005-2 (North Vineyard Station No. 1), under the assumptions and conditions contained in this report and the original appraisal report. In the original document, dated August 6, 2007, we completed a Self-Contained Appraisal Report conforming to the requirements set forth under Standards Rule 2-2(a) of the Uniform Standards of Professional Appraisal Practice (USPAP). Our original appraisal had an effective date of value of May 4, 2007. This update appraisal may only be used in conjunction with our original report.

Subsequent to our original appraisal, the total number of single-family lots within Vineyard Creek has been reduced by two to 373. Specifically, Units 1 and 3 have each been reduced by one lot. However, offsetting this lot adjustment is the fact additional site development within the District has been completed on the Vineyard Point portion of the subject properties. Additionally, the 404 permit for Vineyard Creek has been signed and is expected to be completed within the near-term. Based on the preceding factors, the conclusions of value for the subject properties are judged to be not less than the original appraisal, with a date of value of May 4, 2007.

As a Summary Appraisal Report, this update appraisal does not present complete discussions of the data, reasoning and analyses that were used in the appraisal process to develop the appraisers’ opinion of value. Supporting documentation concerning the data, reasoning and analyses is retained in the appraisers’ work file.

Property: The appraised property comprises the land within the boundaries of County of Sacramento Community Facilities District No. 2005-2 (North Vineyard Station No. 1), subject to the lien of the Special Tax securing the Bonds.

Location: West of Bradshaw Road, north of Gerber Road and south of Florin Road, within an unincorporated area of Sacramento County, California

Assessor’s Parcel Number(s): Vineyard Point Villages A through F are identified by the following assessor’s parcel numbers: 066-0120-001 through - 082, 066-0130-001 through -058, 066-0140-001 through -069, 066-0150-001 through -070, 066-0160- 001 through -072, 066-0170-001 through 076, 066- 0180-001 through -076, 066-0190-001 through -031, and 066-0200-002.

Vineyard Creek Units 1 through 4, Parcels 1 and 2 and Remainders A and B are identified by the following assessor’s parcel numbers: 065-0052-033 through -036, 065-

Seevers x Jordan x Ziegenmeyer 1 0080-103, -105, -107 and -108, and 066-0080-033.

Owner(s) of Record: Vineyard Point LW Vineyard Point, LLC

Vineyard Creek (Villages A through F) Standard Pacific Homes, Corp.

Vineyard Creek (Remainders A and B) North Vineyard Investors, GP

Sales History: Please reference page 4 of our original appraisal report, dated June 8, 2007.

Purpose of the Appraisal: The purpose of this update appraisal is to estimate the not-less-than hypothetical market value (fee simple estate) and hypothetical cumulative, or aggregate, value of the subject properties, assuming all improvements to be financed by the Bonds are in place.

Client and Intended User: The client and intended user of the report is the County of Sacramento.

Intended Use of the Report: It is our understanding the report will be used for bond underwriting purposes.

Property Rights Appraised: Fee simple estate

Type of Appraisal and Report Format: As requested, this update appraisal is presented in a Summary Appraisal Report format, which is intended to comply with the reporting requirements set forth under Standards Rule 2-2(b) of the Uniform Standards of Professional Appraisal Practice (USPAP).

Date of Inspection: August 6, 2007

Effective Date of Value: August 6, 2007

Date of Report: August 8, 2007

Scope of Work: In preparing this update appraisal, we analyzed market data presented in our original appraisal report. In addition, we analyzed current market conditions in the market area of the subject property. This Summary Appraisal Report sets forth only the appraisers’ conclusions. Supporting documentation is retained in the appraisers’ work file.

Highest and Best Use: An analysis of the highest and best use of the subject

Seevers x Jordan x Ziegenmeyer 2 properties is contained on pages 65 through 67 and pages 123 through 126 of the original appraisal.

Prepared For: Mr. Dave Irish, CPA, Director of Finance, representing the County of Sacramento

Prepared By: P. Richard Seevers, MAI Eric A. Segal, Appraiser Sean C. Lim, Appraiser

Conclusion of Not-Less-Than Hypothetical Cumulative, or Aggregate, Value: $106,370,000

The hypothetical market value noted above is subject to the General and Extraordinary Assumptions, Hypothetical Conditions, Limiting Conditions and Significant Factors referenced on pages 4 through 6 of this report.

Seevers x Jordan x Ziegenmeyer 3 EXTRAORDINARY ASSUMPTIONS, HYPOTHETICAL CONDITONS AND SIGNIFICANT FACTORS

Extraordinary Assumptions and Significant Factors

1. The values derived in this report are directly tied to the anticipated layout maps provided by the developer and MacKay and Somps. Any significant change in the number or size of the proposed developments could affect the value of the subject properties. It is assumed the subject properties will be subdivided as represented by the developers for this analysis. If, at some future date, alternate mapping or phasing of the subject properties is implemented, there will necessarily be a direct impact on value, and the appraisers reserve the right to amend the opinion(s) of value stated herein. 2. The value conclusions contained in this report are based, in part, on development cost information provided by Lennar Communities, Mackay & Somps and Economic and Planning Systems, which appear reasonable based on comparison with other similar developments. Updated costs were requested, but not made available for this analysis. Therefore, the most current available estimates, which are dated March 7, 2006, were relied upon. Any significant change in these costs could have a direct impact on the value estimate concluded herein.

Hypothetical Condition 1. The estimates of hypothetical market value assume the completion of the public infrastructure improvements to be financed by the first County of Sacramento CFD No. 2005-2 (North Vineyard Station No. 1) bond issuance. The primary facilities authorized to be constructed with the bond proceeds will be used for improvements in the North Vineyard Station Specific Plan Area, including, drainage and flood control facilities, sanitary sewer facilities, water facilities, transportation, roadway and related facilities, landscaping facilities, and other public facilities; in each case including design, planning, project management and other soft project costs.

Seevers x Jordan x Ziegenmeyer 4 GENERAL ASSUMPTIONS AND LIMITING CONDITONS

This appraisal report is subject to the following general assumptions and limiting conditions:

1. No responsibility is assumed for the legal description provided or for matters pertaining to legal or title considerations. Title to the property is assumed to be good and marketable unless otherwise stated.

2. No responsibility is assumed for matters of law or legal interpretation.

3. The property is appraised free and clear of any or all liens or encumbrances unless otherwise stated.

4. The information and data furnished by others in preparation of this report is believed to be reliable, but no warranty is given for its accuracy.

5. It is assumed there are no hidden or unapparent conditions of the property, subsoil, or structures that render it more or less valuable. No responsibility is assumed for such conditions or for obtaining the engineering studies that may be required to discover them.

6. It is assumed the property is in full compliance with all applicable federal, state, and local environmental regulations and laws unless the lack of compliance is stated, described, and considered in the appraisal report.

7. It is assumed the property conforms to all applicable zoning and use regulations and restrictions unless a nonconformity has been identified, described and considered in the appraisal report.

8. It is assumed all required licenses, certificates of occupancy, consents, and other legislative or administrative authority from any local, state, or national government or private entity or organization have been or can be obtained or renewed for any use on which the value estimate contained in this report is based.

9. It is assumed the use of the land and improvements is confined within the boundaries or property lines of the property described and there is no encroachment or trespass unless noted in the report.

10. Unless otherwise stated in this report, the existence of hazardous materials, which may or may not be present on the property, was not observed by the appraiser. The appraiser has no knowledge of the existence of such materials on or in the property. The appraiser, however, is not qualified to detect such substances. The presence of substances such as asbestos, urea- formaldehyde foam insulation, and other potentially hazardous materials may affect the value of the property. The value estimated is predicated on the assumption there is no such material on or in the property that would cause a loss in value. No responsibility is assumed for such conditions or for any expertise or engineering knowledge required to discover them. The intended user of this report is urged to retain an expert in this field, if desired.

11. The Americans with Disabilities Act (ADA) became effective January 26, 1992. I (we) have not made a specific survey or analysis of this property to determine whether the physical aspects of the improvements meet the ADA accessibility guidelines. Since compliance matches each owner’s financial ability with the cost-to cure the property’s potential physical characteristics, the real estate appraiser cannot comment on compliance with ADA. A brief summary of the

Seevers x Jordan x Ziegenmeyer 5 subject’s physical aspects is included in this report. It in no way suggests ADA compliance by the current owner. Given that compliance can change with each owner’s financial ability to cure non-accessibility, the value of the subject does not consider possible non-compliance. Specific study of both the owner’s financial ability and the cost-to-cure any deficiencies would be needed for the Department of Justice to determine compliance.

12. The appraisal is to be considered in its entirety and use of only a portion thereof will render the appraisal invalid.

13. Possession of this report or a copy thereof, does not carry with it the right of publication nor may it be used for any purpose by anyone other than the client without the previous written consent of Seevers x Jordan x Ziegenmeyer.

14. Neither all nor any part of the contents of this report (especially any conclusions as to value, the identity of the appraiser, or the firm with which the appraiser is connected) shall be disseminated to the public through advertising, public relations, news, sales, or any other media without the prior written consent and approval of Seevers x Jordan x Ziegenmeyer. Seevers x Jordan x Ziegenmeyer authorizes the reproduction of this report in its entirety for bond proposes.

15. The liability of Seevers x Jordan x Ziegenmeyer and its employees/subcontractors for errors/ omissions, if any, in this work is limited to the amount of its compensation for the work performed in this assignment.

16. Acceptance and/or use of the appraisal report constitutes acceptance of all assumptions and limiting conditions stated in this report.

17. An inspection of the subject properties revealed no apparent adverse easements, encroachments or other conditions, which currently impact the subject. However, the exact locations of typical roadway and utility easements, or any additional easements, which would be referenced in a preliminary title report, were not provided to the appraiser. The appraiser is not a surveyor nor qualified to determine the exact location of easements. It is assumed typical easements do not have an impact on the opinion (s) of value as provided in this report. If, at some future date, these easements are determined to have a detrimental impact on value, the appraiser reserves the right to amend the opinion (s) of value.

18. This appraisal report is prepared for the exclusive use of the appraiser’s client. No third parties are authorized to rely upon this report without the express consent of the appraiser.

Seevers x Jordan x Ziegenmeyer 6 CERTIFICATION OF VALUE

I certify that, to the best of my knowledge and belief: x The statements of fact contained in this report are true and correct; x The reported analyses, opinions and conclusions are limited only by the reported assumptions and limiting conditions, and are my personal, impartial and unbiased professional analyses, opinions and conclusions; x I have no present or prospective interest in the properties that are the subject of this report, and no personal interest with respect to the parties involved; x I have no bias with respect to the properties that are the subject of this report or to the parties involved with this assignment; x My engagement in this assignment was not contingent upon developing or reporting predetermined results; x My compensation for completing this assignment is not contingent upon the development or reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value opinion, the attainment of a stipulated result or the occurrence of a subsequent event directly related to the intended use of this appraisal; x I have made an inspection of the properties that are the subject of this report; x Eric A. Segal, Appraiser, and Sean C. Lim, Appraiser, provided significant real property appraisal assistance in the preparation of this report. This assistance included the inspection of the subject properties, the collection and confirmation of data, and the analysis necessary to prepare a draft report with preliminary estimates of value; x The reported analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the requirements of the Code of Professional Ethics & Standards of Professional Practice of the Appraisal Institute, which include the Uniform Standards of Professional Appraisal Practices; x The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives; x I certify that my State of California general real estate appraiser certificate has never been revoked, suspended, cancelled or restricted; x I have the knowledge and experience to complete this appraisal assignment and have appraised similar properties in the past. Please see the Qualifications of Appraiser portion of the Addenda to this report for additional information; x As of the date of this report, I, P. Richard Seevers, MAI, have completed the requirements under the continuing education program of the Appraisal Institute.

______

P. RICHARD SEEVERS, MAI State Certification No.: AG001723 (Expires: August 12, 2008)

Seevers x Jordan x Ziegenmeyer 7 CERTIFICATION OF VALUE

I certify that, to the best of my knowledge and belief: x The statements of fact contained in this report are true and correct; x The reported analyses, opinions and conclusions are limited only by the reported assumptions and limiting conditions, and are my personal, impartial and unbiased professional analyses, opinions and conclusions; x I have no present or prospective interest in the properties that are the subject of this report, and no personal interest with respect to the parties involved; x I have no bias with respect to the properties that are the subject of this report or to the parties involved with this assignment; x My engagement in this assignment was not contingent upon developing or reporting predetermined results; x My compensation for completing this assignment is not contingent upon the development or reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value opinion, the attainment of a stipulated result or the occurrence of a subsequent event directly related to the intended use of this appraisal; x My analyses, opinions and conclusions were developed, and this report has been prepared, in conformity with the requirements of the Uniform Standards of Professional Appraisal Practice; x I have made an inspection of the properties that are the subject of this report; x Sean C. Lim, Appraiser, also inspected the properties and provided real property appraisal assistance in the preparation of this report. This assistance included the inspection of the subject properties, the collection and confirmation of data, and the analysis necessary to prepare a draft report with preliminary estimates of value; x P. Richard Seevers, MAI, reviewed this report; x The reported analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the requirements of the Code of Professional Ethics & Standards of Professional Practice of the Appraisal Institute, which include the Uniform Standards of Professional Appraisal Practices; x The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives; x I certify that my State of California general real estate appraiser certificate has never been revoked, suspended, cancelled or restricted; and x I have the knowledge and experience to complete this appraisal assignment and have appraised similar properties in the past. Please see the Qualifications of Appraiser portion of the Addenda to this report for additional information.

______

ERIC A. SEGAL, APPRAISER State Certification No.: AG026558 (Expires: February 18, 2009) Seevers x Jordan x Ziegenmeyer 8 CERTIFICATION OF VALUE

I certify to the best of my knowledge and belief: x The statements of fact contained in this report are true and correct; x The reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions, and are my personal, impartial and unbiased professional analyses, opinions, and conclusions; x I have no present or prospective interest in the property that is the subject of this report, and no personal interest with respect to the parties involved; x I have no bias with respect to the property that is the subject of this report or to the parties involved with this assignment; x My engagement in this assignment was not contingent upon developing or reporting predetermined results; x My compensation for completing this assignment is not contingent upon the development or reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value opinion, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of this appraisal; x I have made an inspection of the properties that are the subject of this report; x The reported analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the requirements of the Code of Professional Ethics and the Standards of Professional Practice of the Appraisal Institute, which include the Uniform Standards of Professional Appraisal Practice; x The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives; x I certify that my State of California general real estate appraiser certificate has never been revoked, suspended, cancelled, or restricted; and x I have the knowledge and experience to complete this appraisal assignment and have appraised similar properties in the past. Please see the Qualifications of Appraiser portion of the Addenda to this report for additional information.

SEAN C. LIM, APPRAISER State Certification No.: AG041090 (Expires: September 5, 2008)

Seevers x Jordan x Ziegenmeyer 9 APPENDIX B

COUNTY OF SACRAMENTO COMMUNITY FACILITIES DISTRICT NO. 2005-2 (NORTH VINEYARD STATION NO. 1)

AMENDED RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX

A Special Tax applicable to each Assessors Parcel in the Community Facilities District No. 2005-2 (North Vineyard Station No. 1) shall be levied and collected according to the tax liability determined by the Board of Supervisors of the County of Sacramento, acting in its capacity as the legislative body of CFD No. 2005-2, through the application of the appropriate Special Tax rate, as described below. All of the property in CFD No. 2005-2, unless exempted by law or by the provisions of Section F below, shall be taxed for the purposes, to the extent, and in the manner herein provided, including property subsequently annexed to CFD No. 2005-2 unless a separate Rate and Method of Apportionment of Special Tax is adopted for the annexation area.

A. DEFINITIONS

The terms hereinafter set forth have the following meanings:

Acre means each acre of the land area making up an Assessors Parcel as shown on an Assessors Parcel Map, or if the land area is not shown on an Assessors Parcel Map, the land area shown on the applicable Final Map or other recorded County parcel map.

Act means the Mello-Roos Community Facilities Act of 1982, as amended, being Chapter 2.5, (commencing with Section 53311), Division 2 of Title 5 of the California Government Code.

Administrative Expenses means any or all of the following: the fees and expenses of any fiscal agent or trustee (including any fees and expenses of its counsel) employed in connection with any Bonds of CFD No. 2005-2, and the expenses of the County in carrying out its duties for such Bonds, including, but not limited to, the levy and collection of the Special Tax, the fees and expenses of its counsel, charges levied by the County Department of Finance, amounts needed to rebate the federal government with respect to arbitrage earnings on any of such Bonds, costs associated with complying with continuing disclosure requirements, and all other costs and expenses of the County in any way related to the establishment or administration of CFD No. 2005-2.

Administrator means the Administrator of the County Municipal Services Agency or his/her designee or such other person or department as the Board may designate to serve as the Administrator of the Special Tax.

Amended RMA means this Amended Rate and Method of Apportionment of Special Tax.

Annexation Approval means the date on which the Board declares the results of a successful election to authorize the levy of a Special Tax in the first area annexed into CFD No. 2005-2.

Annexation Property means those Assessors Parcels within Annexed Parcel One and Annexed Parcel Two that have not yet become Large Lot Subdivision Map Property, Final Map Property, or Developed Property.

Annexed Parcel One means the lot designated as Parcel 1 on Attachment 1 of this Amended RMA.

Annexed Parcel Two means the lot designated as Parcel 2 on Attachment 1 of this Amended RMA.

Assessors Parcel or Parcel means a lot or parcel shown on an Assessors Parcel Map with an assigned Assessors Parcel number.

B-1 Assessors Parcel Map means an official map of the County Assessor designating parcels by Assessors Parcel number.

Board means the Sacramento County Board of Supervisors.

Bonds means bonds or other debt (as defined in the Act), whether in one or more series, issued, insured or assumed by CFD No. 2005-2 related to public infrastructure and/or improvements that are authorized to be funded by CFD No. 2005-2.

Building Permits means a single permit or set of permits required to construct an entire structure, which structure may include stand-alone surface parking, common areas, landscaping, or other areas. If a permit is issued for parking, landscaping or another related facility or amenity, but a building permit has not yet been issued for the structure that these facilities or amenities serve, such permits shall not be considered Building Permits for purposes of application of the Special Tax herein.

Capitalized Interest means funds in any capitalized interest account available to pay debt service on Bonds.

CFD or CFD No. 2005-2 means the County of Sacramento Community Facilities District No. 2005-2 (North Vineyard Station No. 1).

CFD Formation means the date on which the Resolution of Formation to form CFD No. 2005-2 was adopted by the Board.

County means the County of Sacramento.

Developed Property means, in any Fiscal Year, all Parcels in CFD No. 2005-2 for which Building Permits have been issued on or prior to June 1 of the preceding Fiscal Year.

Development Class means, individually, Developed Property, Final Map Property, Large Lot Subdivision Map Property, Vineyard Creek Tentative Map Property, Vineyard Point Tentative Map Property, and Annexation Property.

Excess Public Property means the acres of Public Property that exceed the acreage exempted in Section F below. In any Fiscal Year in which a Special Tax must be levied on Excess Public Property pursuant to the steps set forth in Section D below, Excess Public Property shall be those Assessors Parcel(s) that most recently became Public Property based on the dates on which Final Maps recorded creating such Public Property.

Exempt Parcel means the lot designated as Parcel 3 on Attachment 1 of this Amended RMA.

Expected Land Uses means the total number of Residential Units and Acres of Multi-Family Property expected to be developed within the CFD. The Expected Land Uses at Annexation Approval are identified in Attachment 1 and summarized in Attachment 2 hereto; the Administrator shall update Attachments 1 and 2 each time a change occurs to the land use plans for property in the CFD.

Expected Maximum Special Tax Revenue means the expected aggregate Maximum Special Tax revenue that can be collected from all property within the CFD. The Expected Maximum Special Tax Revenue is shown in Attachment 2 of this Amended RMA and may be reduced due to prepayments or land use changes.

Final Bond Sale means the last series of Bonds that will be issued on behalf of CFD No. 2005-2 (excluding any Bond refundings), as determined in the sole discretion of the Board.

B-2 Final Map means a final map, or portion thereof, approved by the County pursuant to the Subdivision Map Act (California Government Code Section 66410 et seq.) that creates SFD Lots. The term Final Map shall not include any Large Lot Subdivision Map, Assessors Parcel Map, or subdivision map or portion thereof, that does not create SFD Lots, including Assessors Parcels that are designated as remainder parcels.

Final Map Property means, in any Fiscal Year, all Single Family Detached Property for which a Final Map had recorded prior to June 1 of the preceding Fiscal Year and which has not yet become Developed Property.

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

Land Use Categories means Single Family Detached Property, Single Family Attached Property, Multi- Family Property and Other Property.

Large Lot Subdivision Map means a subdivision map recorded at the County Recorders Office that subdivides the property in CFD No. 2005-2 into large Parcels, most of which will be subject to future subdivision.

Large Lot Subdivision Map Property means, in any Fiscal Year, all Single Family Detached Property included within a Large Lot Subdivision Map that was recorded by June 1 of the prior Fiscal Year, and which has not yet become Final Map Property.

Maximum Special Tax means the greatest amount of Special Tax that can be levied on an Assessors Parcel in any Fiscal Year determined in accordance with Sections C below.

Multi-Family Property means, in any Fiscal Year, all Parcels within the CFD for which a building permit was issued for construction of a residential structure with multiple Residential Units that share common walls, all of which are offered or are expected to be offered for rent to the general public and/or employees.

Other Property means, in any Fiscal Year, all Parcels of Developed Property which are not Single Family Detached Property, Single Family Attached Property, or Multi-Family Property.

Proportionately means that the ratio of the actual Special Tax levied in any Fiscal Year to the Maximum Special Tax authorized to be levied in that Fiscal Year is equal for all Assessors Parcels.

Public Property means any property within the boundaries of CFD No. 2005-2 that is either (i) owned by the federal government, the State of California, the County, another public agency, or a private non-profit organization that owns and is responsible for conservation of open space areas or (ii) encumbered by an easement owned by any such public agency or private organization which easement makes the development of such property impractical. Notwithstanding the foregoing, a leasehold or other possessory interest in any such property which is subject to taxation pursuant to Section 53340.1 of the Act shall not constitute Public Property.

Residential Unit means (i) for Single Family Detached Property, an individual single-family detached unit, and (ii) for Single Family Attached Property, an individual residential unit within a duplex, triplex, fourplex, townhome, or condominium structure. An accessory residential dwelling unit, as defined by the County Zoning Code, shall not be considered as a Residential Unit for taxation purposes.

SFD Lot means an individual residential lot, identified and numbered on a recorded Final Map, on which a building permit has been or is permitted to be issued for construction of a single family detached unit without further subdivision of the lot and for which no further subdivision of the lot is anticipated pursuant to an approved tentative map.

B-3 Single Family Attached Property means, in any Fiscal Year, all Parcels of Taxable Property for which a building permit was issued or is permitted to be issued for construction of a residential structure consisting of two or more Units that share common walls and are offered or expected to be offered as for-sale units, including residential structures that meet the statutory definition of a condominium contained in Civil Code Section 1351.

Single Family Detached Property means, in any Fiscal Year, all Parcels of Taxable Property for which a building permit was issued or is permitted to be issued for construction of a Residential Unit that does not share a common wall with another Residential Unit.

Special Tax means a Special Tax levied in any Fiscal Year to pay the Special Tax Requirement.

Special Tax Requirement means the amount necessary in any Fiscal Year to: (i) pay principal and interest on Bonds that is due in the calendar year that begins in such Fiscal Year; (ii) create and/or replenish reserve funds for the Bonds; (iii) cure any delinquencies in the payment of principal or interest on Bonds which have occurred in the prior Fiscal Year or, based on existing delinquencies in the payment of Special Taxes, are expected to occur in the Fiscal Year in which the tax will be collected; (iv) pay Administrative Expenses; and (v) pay the costs of public improvements and public infrastructure authorized to be financed by CFD No. 2005-2. The amounts referred to in clauses (i) and (ii) of the preceding sentence may be reduced in any Fiscal Year by: (i) interest earnings on or surplus balances in funds and accounts for the Bonds to the extent that such earnings or balances are available to apply against debt service pursuant to a Bond indenture, Bond resolution, or other legal document that sets forth these terms; (ii) proceeds received by CFD No. 2005-2 from the collection of penalties associated with delinquent Special Taxes; and (iii) any other revenues available to pay debt service on the Bonds as determined by the Administrator.

Specific Plan means the North Vineyard Station Specific Plan approved by the Board on November 4, 1998, as may be amended from time to time.

Specific Plan Land Use Designation means the land use designation assigned to a particular Parcel in the Specific Plan.

Taxable Property means all of the Assessors Parcels within the boundaries of CFD No. 2005-2 which are not exempt from the Special Tax pursuant to law or Section F below.

Vineyard Creek Bonds means Bonds that are sized based on Maximum Special Tax revenues that can be generated from Taxable Property within the Vineyard Creek Tentative Map, Annexed Parcel One, and Annexed Parcel Two.

Vineyard Point Bonds means Bonds that are sized based on Maximum Special Tax revenues that can be generated from Taxable Property within the Vineyard Point Tentative Map.

Vineyard Creek Tentative Map means the vesting tentative map for the Vineyard Creek project approved by the Board on November 10, 2004.

Vineyard Point Tentative Map means the vesting tentative map for the Vineyard Point project approved by the Board on November 10, 2004.

Vineyard Creek Tentative Map Property means all Parcels of Taxable Property included within the Vineyard Creek Tentative Map that have not yet become Large Lot Subdivision Map Property, Final Map Property, or Developed Property.

B-4 Vineyard Point Tentative Map Property means all Parcels of Taxable Property included within the Vineyard Point Tentative Map that have not yet become Large Lot Subdivision Map Property, Final Map Property, or Developed Property.

B. DATA FOR ANNUAL ADMINISTRATION

On or about July 1 of each Fiscal Year, the Administrator shall identify the current Assessors Parcel numbers for all Parcels of Taxable Property. The Administrator shall also determine: (i) whether each Assessors Parcel of Taxable Property is Developed Property, Final Map Property, Large Lot Subdivision Map Property, Vineyard Creek Tentative Map Property, Vineyard Point Tentative Map Property, or Annexation Property, (ii) for Developed Property, which Parcels are Single Family Detached Property, Single Family Attached Property, Multi-Family Property and Other Property, (iii) for Parcels of Single Family Attached Property, the number of Residential Units on each Parcel, (iv) the Specific Plan Land Use Designation for each Parcel, and (v) the Special Tax Requirement.

For Single Family Attached Property, the number of Residential Units shall be determined by referencing the site plan, condominium plan, or other development plan. In any Fiscal Year, if it is determined that: (i) a parcel map for property in CFD No. 2005-2 was recorded after January 1 of the prior Fiscal Year (or any other date after which the Assessor will not incorporate the newly-created Parcels into the then current tax roll), (ii) because of the date the parcel map was recorded, the Assessor does not yet recognize the new Parcels created by the parcel map, and (iii) one or more of the newly-created parcels is in a different Development Class than other parcels created by the subdivision, the Administrator shall calculate the Special Tax for the property affected by recordation of the parcel map by determining the Special Tax that applies separately to the property within each Development Class, then applying the sum of the individual Special Taxes to the Parcel that was subdivided by recordation of the parcel map.

C. MAXIMUM SPECIAL TAX

1. Developed Property

The following maximum rates shall apply to all Parcels of Developed Property within CFD No. 2005-2:

TABLE 1 DEVELOPED PROPERTY MAXIMUM SPECIAL TAX Maximum Specific Plan Land Use Special Tax Land Use Category Designation (Fiscal Year 2005-06)* Single Family Residential 3-5 $1,400 per Single Family Detached Property (SFR 3-5) Residential Unit Single Family Detached Property Single Family Residential 4-7 $1,250 per (SFR 4-7) Residential Unit Single Family Detached Property Medium Density Residential 7-12 $950 per or Single Family Attached Property (SFR 7-12) Residential Unit Single Family Detached Property Multi-Family Residential 12-22 $950 per or Single Family Attached Property (MFR 12-22) Residential Unit Multi-Family Property Multi-Family Residential 12-22 (MFR 12-22) $5,000 per Acre Other Property N/A $9,500 per Acre

* On July 1, 2006 and on each July 1 thereafter, the Maximum Special Taxes shown in Table 1 shall be increased by an amount equal to 2.0% of the amount in effect for the prior Fiscal Year.

B-5 2. Final Map Property

The following maximum rates shall apply to all Parcels of Final Map Property within CFD No. 2005-2:

TABLE 2 FINAL MAP PROPERTY MAXIMUM SPECIAL TAX Maximum Specific Plan Land Use Special Tax Land Use Category Designation (Fiscal Year 2005-06)* Single Family Single Family Residential 3-5 $1,400 per Detached Property (SFR 3-5) SFD Lot Single Family Single Family Residential 4-7 $1,250 per Detached Property (SFR 4-7) SFD Kit Single Family Medium Density Residential 7-12 $950 per Detached Property (SFR 7-12) SFD Lot Single Family Multi-Family Residential 12-22 $950 per Detached Property (MFR 12-22) SFD Lot

* On July 1, 2006 and on each July 1 thereafter, the Maximum Special Taxes shown in Table 2 shall be increased by an amount equal to 2.0% of the amount in effect for the prior Fiscal Year.

3. Large Lot Subdivision Map Property

The following maximum rates shall apply to all Parcels of Large Lot Subdivision Map Property within CFD No. 2005-2:

TABLE 13 LARGE LOT SUBDIVISION MAP PROPERTY MAXIMUM SPECIAL TAX Maximum SpecificPlanLandUse Special Tax Land Use Category Designation (Fiscal Year 2005-06)* Single Family Single Family Residential 3-5 $7,000 Detached Property (SFR 3-5) per acre Single Family Single Family Residential 4-7 $8,750 Detached Property (SFR 4-7) per acre Single Family Medium Density Residential 7-12 $11,400 Detached Property (SFR 7-12) per acre Single Family Multi-Family Residential 12-22 $5,000 Detached Property (MFR 12-22) per acre

* If more than one Specific Plan Land Use Designation occurs on a single Assessors Parcel, the Administrator shall calculate the Maximum Special Tax that applies to the acreage within each Specific Plan Land Use Designation; the sum of the Maximum Special Taxes shall be the Maximum Special Tax for the Parcel.

** On July 1, 2006 and on each July 1 thereafter, the Maximum Special Taxes shown in Table 3 shall be increased by an amount equal to 2.0% of the amount in effect for the prior Fiscal Year.

B-6 4. Vineyard Point Tentative Map Property, Vineyard Creek Tentative Map Property, and Annexation Property

The Maximum Special Tax for Fiscal Year 2005-06 for Vineyard Point Tentative Map Property, Vineyard Creek Tentative Map Property, and Annexation Property is $7,300 per Acre. On July 1, 2006 and on each July 1 thereafter, this Maximum Special Tax shall be increased by an amount equal to two percent (2%) of the amount in effect for the prior Fiscal Year.

D. METHOD OF LEVY OF THE SPECIAL TAX

The Administrator shall determine the Special Tax Requirement to be collected each Fiscal Year, and the Special Tax shall be levied according to the steps outlined below.

Step 1. The Special Tax shall be levied proportionately on each Parcel of Developed Property within the CFD up to 100% of the Maximum Special Tax for each Parcel for such Fiscal Year until the amount levied on Developed Property is equal to the Special Tax Requirement prior to applying any Capitalized Interest that is available in the CFD accounts.

[Based on the Bonds that have been issued each Fiscal Year (if any), the Administrator shall determine which alternative set forth below is applicable for that Fiscal Year.]

Alternative 1: Bonds Have Not Been Issued or only Vineyard Point Bonds Have Been Issued:

Step 2. If additional revenue is needed after Step 1, and after applying Capitalized Interest to the Special Tax Requirement, the Special Tax shall be levied proportionately on each Assessors Parcel of Final Map Property within the Vineyard Point Tentative Map, up to 100% of the Maximum Special Tax for Final Map Property for such Fiscal Year.

Step 3. If additional revenue is needed after applying the first two steps, the Special Tax shall be levied proportionately on each Parcel of Large Lot Subdivision Map Property within the Vineyard Point Tentative Map, up to 100% of the Maximum Special Tax for Large Lot Subdivision Map Property for such Fiscal Year.

Step 4. If additional revenue is needed after applying the first three steps, the Special Tax shall be levied proportionately on each Parcel of Vineyard Point Tentative Map Property, up to 100% of the Maximum Special Tax for Vineyard Point Tentative Map Property for such Fiscal Year.

Step 5. If additional revenue is needed after applying the first four steps, the Special Tax shall be levied proportionately on each Assessors Parcel of Final Map Property within the Vineyard Creek Tentative Map, Annexed Parcel One, and Annexed Parcel Two, up to 100% of the Maximum Special Tax for Final Map Property for such Fiscal Year.

Step 6. If additional revenue is needed after applying the first five steps, the Special Tax shall be levied proportionately on each Parcel of Large Lot Subdivision Map Property within the Vineyard Creek Tentative Map, Annexed Parcel One, and Annexed Parcel Two, up to 100% of the Maximum Special Tax for Large Lot Subdivision Map Property for such Fiscal Year.

B-7 Step 7. If additional revenue is needed after applying the first six steps, the Special Tax shall be levied proportionately on each Parcel of Vineyard Creek Tentative Map Property and Annexation Property, up to 100% of the Maximum Special Tax for such property for such Fiscal Year.

Step 8. If additional revenue is needed after the first seven steps, the Special Tax shall be levied proportionately on each Assessors Parcel of Excess Public Property, up to 100% of the Maximum Special Tax for Vineyard Creek Tentative Map Property and Vineyard Point Tentative Map Property for such Fiscal Year.

Alternative 2: Only Vineyard Creek Bonds Have Been Issued:

Step 2. If additional revenue is needed after Step 1, and after applying Capitalized Interest to the Special Tax Requirement, the Special Tax shall be levied proportionately on each Assessors Parcel of Final Map Property within the Vineyard Creek Tentative Map, Annexed Parcel One, and Annexed Parcel Two, up to 100% of the Maximum Special Tax for Final Map Property for such Fiscal Year.

Step 3. If additional revenue is needed after applying the first two steps, the Special Tax shall be levied proportionately on each Parcel of Large Lot Subdivision Map Property within the Vineyard Creek Tentative Map, Annexed Parcel One, and Annexed Parcel Two, up to 100% of the Maximum Special Tax for Large Lot Subdivision Map Property for such Fiscal Year.

Step 4. If additional revenue is needed after applying the first three steps, the Special Tax shall be levied proportionately on each Parcel of Vineyard Creek Tentative Map Property and Annexation Property, up to 100% of the Maximum Special Tax for such property for such Fiscal Year.

Step 5. If additional revenue is needed after applying the first four steps, the Special Tax shall be levied proportionately on each Assessors Parcel of Final Map Property within the Vineyard Point Tentative Map, up to 100% of the Maximum Special Tax for Final Map Property for such Fiscal Year.

Step 6. If additional revenue is needed after applying the first five steps, the Special Tax shall be levied proportionately on each Parcel of Large Lot Subdivision Map Property within the Vineyard Point Tentative Map, up to 100% of the Maximum Special Tax for Large Lot Subdivision Map Property for such Fiscal Year.

Step 7. If additional revenue is needed after applying the first six steps, the Special Tax shall be levied proportionately on each Parcel of Vineyard Point Tentative Map Property, up to 100% of the Maximum Special Tax for Vineyard Point Tentative Map Property for such Fiscal Year.

Step 8. If additional revenue is needed after applying the first seven steps, the Special Tax shall be levied proportionately on each Assessors Parcel of Excess Public Property, up to 100% of the Maximum Special Tax for Vineyard Creek Tentative Map Property and Vineyard Point Tentative Map Property for such Fiscal Year.

Alternative 3: Both Vineyard Point Bonds and Vineyard Creek Bonds Have Been Issued:

Step 2. If additional revenue is needed after Step 1, and after applying Capitalized Interest to the Special Tax Requirement, the Special Tax shall be levied proportionately on each

B-8 Assessors Parcel of Final Map Property within the CFD, up to 100% of the Maximum Special Tax for Final Map Property for such Fiscal Year.

Step 3. If additional revenue is needed after applying the first two steps, the Special Tax shall be levied proportionately on each Parcel of Large Lot Subdivision Map Property within the CFD, up to 100% of the Maximum Special Tax for Large Lot Subdivision Map Property for such Fiscal Year.

Step 4. If additional revenue is needed after applying the first three steps, the Special Tax shall be levied proportionately on each Parcel of Vineyard Creek Tentative Map Property, Vineyard Point Tentative Map Property, and Annexation Property, up to 100% of the Maximum Special Tax for such property for such Fiscal Year.

Step 5. If additional revenue is needed after applying the first four steps, the Special Tax shall be levied proportionately on each Assessors Parcel of Excess Public Property, up to 100% of the Maximum Special Tax for Vineyard Creek Tentative Map Property and Vineyard Point Tentative Map Property for such Fiscal Year.

E. COLLECTION OF SPECIAL TAX

The Special Taxes for CFD No. 2005-2 shall be collected in the same manner and at the same time as ordinary ad valorem property taxes, provided, however, that prepayments are permitted as set forth in Section G below and provided further that the County may directly bill the Special Tax, may collect Special Taxes at a different time or in a different manner, and may collect delinquent Special Taxes through foreclosure or other available methods.

The Special Tax shall be levied and collected until principal and interest on Bonds have been repaid, costs of constructing or acquiring authorized facilities from Special Tax proceeds have been paid, and all Administrative Expenses have been reimbursed. However, in no event shall a Special Tax be levied after Fiscal Year 2045-46. Under no circumstances may the Special Tax on one Parcel in the CFD be increased by more than ten percent (10%) as a consequence of delinquency or default in payment of the Special Tax levied on another Parcel or Parcels in the CFD.

F. EXEMPTIONS

Notwithstanding any other provision of this Amended RMA, no Special Tax shall be levied on up to 112.67 Acres of Public Property, which is planned for and comprised of approximately 49.73 acres for streets, 12.95 acres for parks, a 10.0 acre school site, a 4.17 acre water storage site, a 0.32 acre pump station site, a 3.87 acre drainage channel site, a 9.75 drainage corridor site, a 0.37 acre SMUD site, 17.15 acres for two detention basins, 0.33 acres for two well sites, 0.23 acres of utility easements, and 3.79 acres of landscaping. Vineyard Point includes approximately 66 percent, or 74.87 acres, of Public Property, while Vineyard Creek includes the remaining 34 percent, or 37.79 acres, of Public Property. A Special Tax may be levied on Excess Public Property pursuant to steps set forth in Section D; however, a public agency may require that the special tax obligation on land conveyed to it that would be classified as Excess Public Property be prepaid pursuant to Section G below. No Special Tax shall be levied in any Fiscal Year on Parcels that have fully prepaid the Special Tax obligation pursuant to the formula set forth in Section G.

In addition to the exemptions set forth above, no Special Tax shall be levied on the Exempt Parcel subsequent to Annexation Approval.

B-9 G. PREPAYMENT OF SPECIAL TAX

The following definitions apply to this Section G:

Outstanding Bonds means all Previously Issued Bonds which remain outstanding, with the following exception: if a Special Tax has been levied against, or already paid by, an Assessors Parcel making a prepayment, and a portion of the Special Tax will be used to pay a portion of the next principal payment on the Bonds that remain outstanding (as determined by the Administrator), that next principal payment shall be subtracted from the total Bond principal that remains outstanding, and the difference shall be used as the amount of Outstanding Bonds for purposes of this prepayment formula.

Previously Issued Bonds means all Bonds that have been issued on behalf of the CFD prior to the date of prepayment.

Public Facilities Requirements means either $18,500,000 in 2005 dollars, which shall increase on January 1, 2006, and on each January 1 thereafter by the percentage increase, if any, in the construction cost index for the San Francisco region for the prior twelve (12) month period as published in the Engineering News Record or other comparable source if the Engineering News Record is discontinued or otherwise not available, or such other number as shall be determined by the Administrator to be an appropriate estimate of the net construction proceeds that will be generated from all Bonds that have been or are expected to be issued on behalf of CFD No. 2005-2.

Remaining Facilities Costs means the Public Facilities Requirements (as defined above), minus any portion of the Public Facilities Requirements funded by Previously Issued Bonds (as defined above), developer equity, Special Tax revenues, and/or any other source of funding.

The Special Tax obligation applicable to an Assessors Parcel in the CFD may be prepaid and the obligation of the Assessors Parcel to pay the Special Tax permanently satisfied as described herein, provided that a prepayment may be made only if there are no delinquent Special Taxes with respect to such Assessors Parcel at the time of prepayment. An owner of an Assessors Parcel intending to prepay the Special Tax obligation shall provide the County with written notice of intent to prepay. Within 30 days of receipt of such written notice, the Administrator or its designee shall notify such owner of the prepayment amount for such Assessors Parcel. Prepayment must be made not less than 75 days prior to any redemption date for Bonds to be redeemed with the proceeds of such prepaid Special Taxes. The Prepayment Amount shall be calculated as follows: (capitalized terms as defined below):

Bond Redemption Amount plus Remaining Facilities Amount plus Redemption Premium plus Defeasance Requirement plus Administrative Fees and Expenses less Reserve Fund Credit equals Prepayment Amount

As of the proposed date of prepayment, the Prepayment Amount shall be determined by application of the following steps:

Step 1. Compute the total Maximum Special Tax that could be collected from the Assessors Parcel prepaying the Special Tax in the Fiscal Year in which prepayment would be received by the County.

B-10 Step 2. Divide the Maximum Special Tax from Step 1 by the then-current Expected Maximum Special Tax Revenues for the CFD.

Step 3. Multiply the quotient computed pursuant to Step 2 by the Outstanding Bonds to compute the amount of Outstanding Bonds to be retired and prepaid (the Bond Redemption Amount).

Step 4. Compute the current Remaining Facilities Costs (if any).

Step 5. Multiply the quotient computed pursuant to Step 2 by the amount determined pursuant to Step 4 to compute the amount of Remaining Facilities Costs to be prepaid (the Remaining Facilities Amount).

Step 6. Multiply the Bond Redemption Amount computed pursuant to Step 3 by the applicable redemption premium, if any, on the Outstanding Bonds to be redeemed (the Redemption Premium).

Step 7. Compute the amount needed to pay interest on the Bond Redemption Amount starting with the first Bond interest payment date after which the prepayment has been received until the earliest redemption date for the Outstanding Bonds, which, depending on the Bond offering document, may be as early as the next interest payment date.

Step 8. Compute the amount of interest the County reasonably expects to derive from reinvestment of the Bond Redemption Amount plus the Redemption Premium from the first Bond interest payment date after which the prepayment has been received until the redemption date for the Outstanding Bonds.

Step 9. Take the amount computed pursuant to Step 7 and subtract the amount computed pursuant to Step 8 (the Defeasance Requirement).

Step 10. Determine the costs of computing the prepayment amount, the costs of redeeming Bonds, and the costs of recording any notices to evidence the prepayment and the redemption (the Administrative Fees and Expenses).

Step 11. If and to the extent so provided in the indenture pursuant to which the Outstanding Bonds to be redeemed were issued, a reserve fund credit shall be calculated as a reduction in the applicable reserve fund for the Outstanding Bonds to be redeemed pursuant to the prepayment (the Reserve Fund Credit).

Step 12. The Special Tax prepayment is equal to the sum of the amounts computed pursuant to Steps 3, 5, 6, 9, and 10, less the amount computed pursuant to Step 11 (the Prepayment Amount).

H. INTERPRETATION OF SPECIAL TAX FORMULA

The County reserves the right to make minor administrative and technical changes to this document that do not materially affect the rate and method of apportioning Special Taxes. In addition, the interpretation and application of any section of this document shall be left to the Countys discretion. Interpretations may be made by the County by ordinance or resolution for purposes of clarifying any vagueness or ambiguity in this Amended RMA.

B-11 ATTACHMENT 1

COUNTY OF SACRAMENTO COMMUNITY FACILITIES DISTRICT NO. 2005-2 (NORTH VINEYARD STATION NO. 1)

IDENTIFICATION OF EXPECTED LAND USES

B-12 B-13 ATTACHMENT 2 COUNTY OF SACRAMENTO COMMUNITY FACILITIES DISTRICT NO. 2005-2 (NORTH VINEYARD STATION NO. 1)

EXPECTED LAND USES AND EXPECTED MAXIMUM SPECIAL TAX REVENUES AT ANNEXATION APPROVAL

Number of Expected Units/Acres Maximum Special Tax Total Expected Specific Plan Land Use Within Specific Plan Per Unit/Acre for Maximum Special Tax Designation Land Use Designation Fiscal Year 2005-06* Revenues*

VINEYARD POINT TENTATIVE MAP SFR 3-5 285 Residential Units $1,400 per $ 399,000 Residential Unit SFR 4-7 247 Residential Units $1,250 per 308,750 Residential Unit SFR 7-12 193 Residential Units $950 per 183,350 Residential Unit Subtotal, Vineyard Point Tentative Map $ 891,100

VINEYARD CREEK TENTATIVE MAP, ANNEXED PARCEL ONE, AND ANNEXED PARCEL TWO SFR 3-5 272 Residential Units $1,400 per $ 380,800 Residential Unit SFR 4-7 103 Residential Units $1,250 per 128,750 Residential Unit SFR 7-12 45 Residential Units $950 per 42,750 Residential Unit MFR 12-22 6.04 Residential Units $5,000 per Acre 30,175

Subtotal, Vineyard Creek Tentative Map $ 582,475

Total Expected Maximum Special Tax Revenues $ 1,473,575

* Figures are shown in fiscal year 2005-06 dollars and will escalate two percent (2%) per year thereafter.

B-14 APPENDIX C

FORM OF CONTINUING DISCLOSURE CERTIFICATE

This Continuing Disclosure Certificate (the Disclosure Certificate) is executed and delivered by the County of Sacramento (the Issuer) in connection with the issuance of its County of Sacramento Community Facilities District No. 2005-2 (North Vineyard Station No. 1) Special Tax Bonds, Series 2007A in the aggregate principal amount of $14,415,000 (the Bonds). The Bonds are being issued pursuant to Resolution No. 2007-0997 adopted by the Board of Supervisors of the County on August 7, 2007 (the Bond Resolution).

The Issuer covenants and agrees as follows:

SECTION 1. Purpose of the Disclosure Certificate. The Disclosure Certificate is being executed and delivered by the Issuer for the benefit of the holders and beneficial owners of the Bonds and in order to assist the Participating Underwriter in complying with Rule 15c2-12(b)(5) of the Securities Exchange Commission.

SECTION 2. Definitions. In addition to the definitions set forth in the Bond Resolution or parenthetically defined herein, which apply to any capitalized terms used in the Disclosure Certificate unless otherwise defined in this Section, the following capitalized terms shall have the following meanings:

Annual Report shall mean any Annual Report provided by the Issuer pursuant to, and as described in, Sections 3 and 4 of the Disclosure Certificate.

Dissemination Agent shall mean the Administrator of the Issuers Municipal Services Agency or any person or entity designated in writing by the Issuer which has filed with the Issuer a written acceptance of such designation.

Listed Events shall mean any of the events listed in Section 5 of the Disclosure Certificate.

National Repository shall mean any Nationally Recognized Municipal Securities Information Repository for purposes of the Rule.

Participating Underwriter shall mean any of the original underwriters of the Bonds required to comply with the Rule in connection with an offering of the Bonds.

Repository shall mean each National Repository and each State Repository.

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

State Repository shall mean any public or private repository or entity designated by the State of California as a state information depository for the purpose of the Rule. As of the date of the Disclosure Certificate, there is no State Repository.

SECTION 3. Provision of Annual Reports.

(a) The Issuer shall, or shall cause the Dissemination Agent to, not later than seven (7) months following the end of each of the Issuers fiscal years, commencing seven (7) months following the end of the Issuers fiscal year ending June 30, 2007, provide to each Repository an Annual Report which is consistent with the requirements of Section 4 of the Disclosure Certificate, provided that the Annual Report for the fiscal year ending June 30, 2007 shall consist solely of the Official Statement and the Countys most recent audited

C-1 financial statements. Not later than five (5) business days prior to said date, the Issuer shall provide the Annual Report to the Dissemination Agent (if the Dissemination Agent is someone other than the Issuer or an officer of the Issuer). 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 the Disclosure Certificate; provided that the audited financial statements of the Issuer may be submitted separately from the balance of the Annual Report.

(b) If the Issuer is unable to provide to the Repositories an Annual Report by the date specified in the preceding paragraph, the Issuer shall send a notice to the Municipal Securities Rulemaking Board (MSRB) and to the State Repository, if any, in substantially the form attached as Exhibit A.

(i) determine each year prior to the date for providing the Annual Report the name and address of each National Repository and each State Repository, if any;

(ii) provide any Annual Report received by it to each Repository, as provided in this Certificate; and

(iii) (if the Dissemination Agent is someone other than the Issuer or an officer of the Issuer) file a report with the Issuer certifying the Annual Report has been provided pursuant to the Disclosure Certificate, stating the date it was provided and listing all the Repositories to which it was provided.

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

(i) A copy of the annual financial statements of the County of Sacramento, prepared in accordance with generally accepted accounting principles audited by a firm of certified public accountants showing the financial condition of County of Sacramento Community Facilities District No. 2005-2 (North Vineyard Station No. 1). (If audited annual financial statements are not available by the time specified in the first paragraph of Section 3 above, unaudited financial statements will be provided as part of the Annual Report and audited financial statements will be provided when and if available); and

(ii) The information described in Exhibit B hereto.

Any or all of the items listed above may be incorporated by reference from other documents, including official statements of debt issues of the Issuer or related public entities, which have been submitted to each of the Repositories or the Securities and Exchange Commission. If the document incorporated by reference is a final official statement, it must be available from the MSRB. The Issuer shall clearly identify each such document incorporated by reference.

SECTION 5. Reporting of Significant Events. The Issuer shall provide or cause to be provided, in a timely manner, to the MSRB and the State Repository, if any, notice of any of the following events with respect to the Bonds, if such event is material:

(i) Principal and interest payment delinquencies;

(ii) Non-payment related defaults;

(iii) Unscheduled draws on debt service reserves reflecting financial difficulties;

(iv) Unscheduled draws on credit enhancements reflecting financial difficulties;

C-2 (v) Substitution of credit or liquidity providers, or their failure to perform;

(vi) Adverse tax opinions or events affecting the tax-exempt status of the Bonds;

(vii) Modifications to rights of bondholders;

(viii) Bond calls;

(ix) Defeasances;

(x) Release, substitution or sale of property securing repayment of the Bonds; or

(xi) Rating changes.

SECTION 6. Termination of Reporting Obligation. The Issuers obligations under the Disclosure Certificate shall terminate upon the date of legal defeasance, prior redemption or payment in full of all of the Bonds. If such termination occurs prior to the final maturity of the Bonds, the Issuer shall give notice thereof in the same manner as for a Listed Event under Section 5.

SECTION 7. Dissemination Agent. The Issuer may, from time to time, appoint or engage a Dissemination Agent to assist the Issuer in carrying out its obligations under the Disclosure Certificate, and may discharge any such Dissemination Agent, with or without appointing a successor Dissemination Agent.

SECTION 8. Amendment; Waiver. Notwithstanding any other provision of the Disclosure Certificate, the Issuer may amend the Disclosure Certificate, and any provision of the Disclosure Certificate may be waived, without the consent of the holders of the Bonds, if such amendment or waiver does not, in and of itself, cause the undertakings herein (or action of any Participating Underwriter in reliance on the undertakings herein) to violate the Rule, taking into account any subsequent change in or official interpretation of the Rule. The Issuer will provide notice of such amendment or waiver to the Repository.

SECTION 9. Additional Information. Nothing in the Disclosure Certificate shall be deemed to prevent the Issuer from disseminating any other information, using the means of dissemination set forth in the Disclosure Certificate or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Listed Event, in addition to that which is required by the Disclosure Certificate. If the Issuer chooses to include any information in any Annual Report or notice of a Listed Event in addition to what which is specifically required by the Disclosure Certificate, the Issuer shall have no obligation under the Disclosure Certificate to update such information or include it in any future Annual ReportornoticeofoccurrenceofaListedEvent.

SECTION 10. Default. In the event of a failure of the Issuer to comply with any provision of the Disclosure Certificate, any holder or beneficial owner of the Bonds may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the Issuer to comply with its obligations under the Disclosure Certificate. A default under the Disclosure Certificate shall not be deemed an event of default under the Bond Resolution, and the sole remedy under the Disclosure Certificate in the event of any failure of the Issuer to comply with the Disclosure Certificate shall be an action to compel performance.

C-3 SECTION 11. Beneficiaries. The Disclosure Certificate shall inure solely to the benefit of the Issuer, the Dissemination Agent, the Participating Underwriter, the holders and beneficial owners from time to time of the Bonds, and shall create no rights in any other person or entity.

DATED: September 6, 2007 COUNTY OF SACRAMENTO

By: Administrator, Municipal Services Agency

C-4 EXHIBIT A

NOTICE TO REPOSITORIES OF FAILURE TO FILE ANNUAL REPORT

Name of Issuer: County of Sacramento

Name of Bond Issue: County of Sacramento Community Facilities District No. 2005-2 (North Vineyard Station No. 1) Special Tax Bonds, Series 2007A in the aggregate principal amount of $14,415,000.

Date of Issuance: September 6, 2007

NOTICE IS HEREBY GIVEN that the Issuer has not provided an Annual Report with respect to the above-named Bonds as required the Continuing Disclosure Certificate executed on September 6, 2007 by the Issuer. The Issuer anticipates that the Annual Report will be filed by ______.

Dated: ______, ______

COUNTY OF SACRAMENTO

By: Its: Administrator, Municipal Services Agency

C-5 EXHIBIT B

INFORMATION TO BE INCLUDED IN ANNUAL REPORT

1. The principal amount of Bonds Outstanding as of the October 2 next preceding the date of the Annual Report.

2. The data that show, for the most recently completed fiscal year, the information set forth in the tables in the Official Statement relating to the Bonds that is titled Value to Lien Ratios; provided, however, that appraised values shall be replaced with assessed values as shown in the most recent equalized County Assessors tax roll and only those property owners responsible for more than 10% of the Special Tax levy for such Fiscal Year need to be shown separately. Property owners responsible for less than 10% of the Special Tax levy may be shown in the aggregate.

3. The status of foreclosure proceedings and a summary of the results of any foreclosure sales as of the November 30 next preceding the Annual Report Date.

4. The identity of any person owning property upon which Special Taxes have been levied in the preceding fiscal year that aggregate more than ten percent (10%) of the Special Taxes levied within the Community Facilities District for such fiscal year (as ownership is shown on the assessment roll of the County Assessor last equalized prior to the November 30 next preceding the Annual Report Date) who is delinquent in the payment of Special Taxes as of such November 30.

C-6 APPENDIX D

INFORMATION CONCERNING THE DEPOSITORY TRUST COMPANY

The information in this section concerning DTC and DTCs book-entry only system has been obtained from sources that the District believes to be reliable, but the District takes no responsibility for the completeness or accuracy thereof. The following description of the procedures and record keeping with respect to beneficial ownership interests in the Bonds, payment of principal, premium, if any, accreted value and interest on the Bonds to DTC Participants or Beneficial Owners, confirmation and transfers of beneficial ownership interests 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. Reference made to www.dttc.com is presented as a link for additional information regarding DTC and is not a part of this Official Statement.

The Depository Trust Company (DTC), New York, NY, will act as securities depository for the 2007A Bonds (the Bonds). The Bonds will be issued as fully-registered securities registered in the name of Cede & Co. (DTCs partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered certificate will be issued for each maturity of the Bonds, each in the aggregate principal amount of such maturity, 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 of such issue.

DTC, the worlds largest depository, is a limited-purpose trust company organized under the New York Banking Law, a banking organization within the meaning of the New York Banking Law, a member of the Federal Reserve System, a clearing corporation within the meaning of the New York Uniform Commercial Code, and a clearing agency registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 2 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments from over 85 countries that DTCs participants (Direct Participants) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (DTCC). DTCC, in turn, is owned by a number of Direct Participants of DTC and Members of the National Securities Clearing Corporation, Government Securities Clearing Corporation, MBS Clearing Corporation, and Emerging Markets Clearing Corporation, (NSCC, GSCC, MBSCC, and EMCC, also subsidiaries of DTCC), as well as by the New York Stock Exchange, Inc., the American Stock Exchange LLC, and the National Association of Securities Dealers, Inc. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (Indirect Participants). DTC has Standard & Poors highest rating: AAA. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com.

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

D-1 To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are registered in the name of DTCs partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTCs records reflect only the identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers.

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

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

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

Redemption proceeds, distributions, and dividend payments on the Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTCs practice is to credit Direct Participants accounts upon DTCs receipt of funds and corresponding detail information from the District or the Paying Agent, on payable date in accordance with their respective holdings shown on DTCs 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 nor its nominee, the Paying Agent, or the District, 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 the Paying 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.

A Beneficial Owner shall give notice to elect to have its Bonds purchased or tendered, through its Participant, to the Paying Agent, and shall effect delivery of such Bonds by causing the Direct Participant to transfer the Participants interest in the Bonds, on DTCs records, to the Paying Agent. The requirement for physical delivery of Bonds in connection with an optional tender or a mandatory purchase will be deemed satisfied when the ownership rights in the Bonds are transferred by Direct Participants on DTCs records and followed by a book-entry credit of tendered Bonds to the Paying Agents DTC account.

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

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

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

D-2 APPENDIX E PROPOSED FORM OF OPINION OF BOND COUNSEL

September 6, 2007

Board of Supervisors County of Sacramento Sacramento, California

County of Sacramento Community Facilities District No. 2005-2 (North Vineyard Station No. 1) Special Tax Bonds, Series 2007A (Final Opinion) Ladies and Gentlemen:

We have acted as bond counsel to the County of Sacramento (the “County”) in connection with the issuance of $14,415,000 aggregate principal amount of County of Sacramento Community Facilities District No. 2005-2 (North Vineyard Station No. 1) Special Tax Bonds, Series 2007A (the “Bonds”), issued pursuant to the provisions of the Mello-Roos Community Facilities Act of 1982 of the State of California (being Sections 53311 et seq. of the Government Code of the State of California, as amended) and Resolution No. 2007-0997 adopted by the Board of Supervisors of the County on August 7, 2007 (the “Resolution”). Capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Resolution.

In such connection, we have reviewed the Resolution; the Tax Certificate of the County dated the date hereof (the “Tax Certificate”); an opinion of counsel to the County; certificates of the County and others; and such other documents, opinions and matters to the extent we deemed necessary to render the opinions set forth herein.

The opinions expressed herein are based on an analysis of existing laws, regulations, rulings and court decisions and cover certain matters not directly addressed by such authorities. Such opinions may be affected by actions taken or omitted or events occurring after the date hereof. We have not undertaken to determine, or to inform any person, whether any such actions are taken or omitted or events do occur or any other matters come to our attention after the date hereof. Accordingly, this opinion is not intended to, and may not, be relied upon in connection with any such actions, events or matters. Our engagement with respect to the Bonds has concluded with their issuance, and we disclaim any obligation to update this letter. We have assumed the genuineness of all documents and signatures presented to us (whether as originals or

E-1 Board of Supervisors County of Sacramento September 6, 2007 Page 2 as copies) and the due and legal execution and delivery thereof by, and validity against, any parties other than the County. We have assumed, without undertaking to verify, the accuracy of the factual matters represented, warranted or certified in the documents, and of the legal conclusions contained in the opinions, referred to in the second paragraph hereof. Furthermore, we have assumed compliance with all covenants and agreements contained in the Resolution and the Tax Certificate including (without limitation) covenants and agreements compliance with which is necessary to assure that future actions, omissions or events will not cause interest on the Bonds to be included in gross income for federal income tax purposes. We call attention to the fact that the rights and obligations under the Bonds, the Resolution and the Tax Certificate and their enforceability may be subject to bankruptcy, insolvency, reorganization, arrangement, fraudulent conveyance, moratorium and other laws relating to or 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 counties in the State of California. We express no opinion with respect to any indemnification, contribution, penalty, choice of law, choice of forum, choice of venue, waiver or severability provisions contained in the foregoing documents, nor do we express any opinion with respect to the state or quality of title to or interest in any real or personal property described in or as subject to the lien of the Resolution or the Tax Certificate or the accuracy or sufficiency of the description contained therein of, or the remedies available to enforce liens on, any such property. We express no opinion with respect to the plans, specifications, maps, financial report or other engineering or financial details of the proceedings, or upon the rate and method of apportionment of the Special Taxes or the validity of the Special Taxes levied upon any individual parcel. Finally, we undertake no responsibility 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.

Based on and subject to the foregoing, and in reliance thereon, as of the date hereof, we are of the following opinions:

1. The Bonds constitute valid and binding special tax obligations of the County, payable solely from the Special Taxes and certain funds held under the Resolution.

2. The Resolution has been duly adopted and constitutes a valid and binding obligation of the County.

3. Interest on the Bonds is excluded from gross income for federal income tax purposes under section 103 of the Internal Revenue Code of 1986 and is exempt from State of California personal income taxes. Interest on the Bonds is not a specific preference item for purposes of the federal individual or corporate alternative minimum taxes, although we observe that it is included in adjusted current earnings when calculating corporate alternative minimum

E-2 Board of Supervisors County of Sacramento September 6, 2007 Page 3 taxable income. We express no opinion regarding other tax consequences related to the ownership or disposition of, or the accrual or receipt of interest on, the Bonds.

Faithfully yours,

ORRICK, HERRINGTON & SUTCLIFFE LLP

per

E-3 [THIS PAGE INTENTIONALLY LEFT BLANK] APPENDIX F

FORM OF DEVELOPER CONTINUING DISCLOSURE AGREEMENT

This Continuing Disclosure Agreement, dated as of September 1, 2007 (the Disclosure Agreement), is made and entered into by and between LW Vineyard Point, LLC (the Developer), and Goodwin Consulting Group, Inc., as dissemination agent (the Dissemination Agent), in connection with the issuance by the County of Sacramento (the Issuer) of its County of Sacramento Community Facilities District No. 2005-2 (North Vineyard Station No. 1) Special Tax Bonds, Series 2007A (the Bonds). The Bonds are issued pursuant to the Mello-Roos Community Facilities Act of 1982, as amended (the Act), and Resolution No. 2007-0997 adopted by the Board of Supervisors of the County on August 7, 2007 (the Bond Resolution).

The Developer and the Dissemination Agent covenant and agree as follows:

SECTION 1. Purpose of the Disclosure Agreement. This Disclosure Agreement is being executed and delivered by the parties hereto for the benefit of the Bond Owners and Beneficial Owners of the Bonds and in order to assist the Participating Underwriter in complying with the Rule.

SECTION 2. Definitions. In addition to the definitions set forth in the Indenture or parenthetically defined herein, which apply to any capitalized terms used in this Disclosure Agreement unless otherwise defined in this section, the following capitalized terms shall have the following meanings:

of another Person means (a) a Person directly or indirectly owning, controlling, or holding with power to vote, 25% or more of the outstanding voting securities of such other Person, (b) any Person 25% or more of whose outstanding voting securities are directly or indirectly owned, controlled, or held with power to vote, by such other Person, and (c) any Person directly or indirectly controlling, controlled by, or under common control with, such other Person; for purposes hereof, control means the power to exercise a controlling influence over the management or policies of a Person, unless such power is solely the result of an official position with such Person.

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

means the date that is two months after the end of the Developers fiscal year, which fiscal year currently ends on November 30. The first Annual Report Date shall be February 1, 2008.

means an agreement between a Major Developer, or an Affiliate thereof, and the Dissemination Agent containing terms substantially similar to this Disclosure Agreement, whereby such Major Developer or Affiliate agrees to provide Annual Reports, Semi-Annual Reports and notices of Listed Events with respect to the portion of the Property owned by such Major Developer and its Affiliates.

means an attorney or a firm of attorneys whose experience in matters relating to the issuance of obligations by the states and their political subdivisions and the tax-exempt status of the interest thereon is recognized nationally.

means County of Sacramento Community Facilities District No. 2005-2 (North Vineyard Station No. 1).

! means, with respect to a Major Developer, the specific improvements such Major Developer intends to make, or cause to be made, to the portion of the Property owned by such Major Developer, the time frame in which such improvements are intended to be made and the estimated costs of

F-1 such improvements. As of the date hereof, the Development Plan for the Property owned by the Developer and its Affiliates is described in the Official Statement under the caption THE DEVELOPMENT PLAN.

means Goodwin Consulting Group, Inc., acting in its capacity as the Dissemination Agent hereunder, or any successor Dissemination Agent designated in writing by the Developer and which has filed with the Issuer a written acceptance of such designation.

" means, with respect to a Person, that such Person files a petition or institutes a proceeding under any act or acts, state or federal, dealing with or relating to the subject or subjects of bankruptcy or insolvency, or under any amendment of such act or acts, either as a bankrupt or as an insolvent, or as a debtor, or in any similar capacity, wherein or whereby such Person asks or seeks or prays to be adjudicated a bankrupt, or is to be discharged from any or all of such Persons debts or obligations, or offers to such Persons creditors to effect a composition or extension of time to pay such Persons debts or asks, seeks or prays for reorganization or to effect a plan of reorganization, or for a readjustment of such Personsdebts,or for any other similar relief, or if any such petition or any such proceedings of the same or similar kind or character is filed or instituted or taken against such Person and the same shall remain undismissed for a period of sixty days, or if a receiver of the business or of the property or assets of such Person is appointed by any court, or if such Person makes a general assignment for the benefit of such Persons creditors.

nancing Plan means, with respect to a Major Developer, the method by which such Major Developer intends to finance its Development Plan, including specific sources of funding for such Development Plan. As of the date hereof, the Financing Plan for the Developer and its Affiliates is described in the Official Statement under the caption THE DEVELOPERS FINANCING PLAN.

# means, with respect to a Major Developer, the full financial statements, special purpose financial statements, project operating statements or other reports reflecting the financial position of each entity, enterprise, fund, account or other Person (other than a financial institution acting as a lender in the ordinary course of business) identified in such Major Developer's Development Plan or its Financing Plan as a source of future funding for such Major Developer's Development Plan, which statements shall be prepared in accordance with generally accepted accounting principles, as in effect from time to time, and which statements may be audited or unaudited; provided that, if such financial statements or reports are otherwise prepared as audited financial statements or reports, then Financial Statements means such audited financial statements or reports.

$ Financial Consultant means a financial consultant or special tax consultant or firm of such consultants generally recognized to be well qualified in the financial consulting or special tax consulting field, appointed and paid by the Developer, who is not controlled by either the Issuer or Developer, does not have any substantial interest (direct or indirect) in the Issuer or Developer and is not a member, officer or employee of the Issuer or Developer, but who may be regularly retained to make annual or other reports to the Issuer or Developer.

% " means any of the events listed in Section 5(a) of this Disclosure Agreement.

&' means, as of any date, any Property Owner, including the Developer, which owns a portion of the Property the sum of the Maximum Special Tax then applicable to which, plus the Maximum Special Tax then applicable to all portions of the Property that are owned by Affiliates of such Property Owner, is equal to or greater than 20% of the total Maximum Special Tax then applicable to all of the Property.

( means any Nationally Recognized Municipal Securities Information Repository for purposes of the Rule. The Nationally Recognized Municipal Securities Information Repository for purposes of the Rule are identified in the Securities and Exchange Commission website located at www.sec.gov/consumer/nrmsir.htm.

F-2 ) # means the Official Statement, dated August 24, 2007, relating to the Bonds.

! * means Stone & Youngberg LLC.

! means an individual, a corporation, a partnership, an association, a joint stock company, a trust, a limited liability company, any unincorporated organization or a government or political subdivision thereof.

! means the parcels within the boundaries of the Community Facilities District subject to Special Taxes.

! ) means any Person (other than the United States of America) that owns either the fee title to any portion of the Property or a leasehold interest therein that was, as of the date of this Disclosure Agreement, owned by the Developer or its Affiliates.

means each National Repository and each State Repository.

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.

# -Annual Report means any Semi-Annual Report provided pursuant to, and as described in, Sections 3 and 4 of this Disclosure Agreement.

# -Annual Report Date means the date that is eight months after the end of Developers fiscal year, which fiscal year currently ends on November 30. The first Semi-Annual Report Date shall be August 1, 2008.

# means any public or private repository or entity designated by the State of California as a state repository for the purpose of the Rule and recognized as such by the Securities and Exchange Commission. As of the date of this Disclosure Agreement, there is no State Repository.

SECTION 3. Provision of Annual Reports and Semi-Annual Reports.

(a) Not later than five (5) business days prior to each Annual Report Date, the Developer shall provide to the Dissemination Agent an Annual Report which is consistent with the requirements of Section 4 hereof and which is in a form suitable for filing with the Repositories. 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 Financial Statements of the Developer (if required) 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 the audited Financial Statements are not available by that date. Not later than five (5) business days after its receipt of the foregoing material from the Developer, the Dissemination Agent shall provide a copy thereof to each Repository and the Participating Underwriter. The Developer shall provide a written certification with each Annual Report furnished to the Dissemination Agent to the effect that such Annual Report constitutes the Annual Report required to be furnished by it hereunder. The Dissemination Agent may conclusively rely upon such certification of the Developer and shall have no duty or obligation to review such Annual Report.

(b) Not later than five (5) business days prior to each Semi-Annual Report Date, the Developer shall provide to the Dissemination Agent a Semi-Annual Report which is consistent with the requirements of Section 4 hereof and which is in a form suitable for filing with the Repositories. The Semi-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. Not later than five (5) business days after its receipt of the foregoing material from the Developer, the Dissemination Agent shall provide a copy

F-3 thereof to each Repository and the Participating Underwriter. The Developer shall provide a written certification with each Semi-Annual Report furnished to the Dissemination Agent to the effect that such Semi- Annual Report constitutes the Semi-Annual Report required to be furnished by it hereunder. The Dissemination Agent may conclusively rely upon such certification of the Developer and shall have no duty or obligation to review such Annual Report.

(c) If the Dissemination Agent has not received a copy of the Annual Report by the date required in subsection (a) hereof or if the Dissemination Agent has not received a copy of the Semi-Annual Report by the date required in subsection (b) hereof, the Dissemination Agent shall notify the Developer of such failure to receive the applicable report. If the Dissemination Agent is unable to verify that an Annual Report has been provided to the Repositories and the Participating Underwriter by the date required in subsection (a) hereof, or if the Dissemination Agent is unable to verify that a Semi-Annual Report has been provided to the Repositories and the Participating Underwriter by the date required in subsection (b) hereof, the Dissemination Agent shall send a notice to the Municipal Securities Rulemaking Board (MSRB) and to the State Repository, if any, in substantially the form attached as Exhibit A.

(d) The Dissemination Agent shall:

(i) determine each year prior to the date for providing the Annual Report and the Semi- Annual Report, the name and address of each National Repository and each State Repository, if any;

(ii) provide any Annual Report and any Semi-Annual Report received by it to each Repository and to the Participating Underwriter, as provided herein; and

(iii) if it has provided the applicable report pursuant to paragraph (ii) above, file a report with the Issuer and the Developer certifying that it provided the Annual Report or the Semi-Annual Report, as the case may be, pursuant to this Disclosure Agreement, stating the date it was provided and listing all the Repositories to which it was provided.

SECTION 4. Content of Annual Reports and Semi-Annual Reports. (a) The Developers Annual Report shall contain or incorporate by reference Financial Statements for each Major Developer for the prior fiscal year if required; provided, that, if such information is required from the Developer as to another Major Developer, the Developer shall only be required to provide such information that it has actual knowledge of after reasonable inquiry. If audited Financial Statements are required to be provided, and such audited Financial Statements are not available by the time the Annual Report is required to be filed pursuant to Section 3(a) hereof, the Annual Report shall contain unaudited Financial Statements, if prepared, and the audited Financial Statements shall be filed in the same manner as, or as an amendment or supplement to, the Annual Report when they become available. Such Financial Statements shall be for the most recently ended fiscal year for the entity covered thereby hereunder.

If the annual financial information or operating data provided in an Annual Report or a Semi-Annual Report is amended pursuant to the provisions hereof, the first Annual Report or Semi-Annual Report filed pursuant hereto containing the amended operating data or financial information shall explain, in narrative form, the reasons for the amendment and the impact of the change in the type of operating data or financial information being provided.

As required by the Rule, if an amendment is made to the provisions hereof specifying the accounting principles to be followed in preparing Financial Statements, the annual financial information for the year in which the change is made shall present a comparison between the Financial Statements or information prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. The comparison shall include a qualitative discussion of the differences in the accounting principles and the impact of the change in the accounting principles on the presentation of the financial information. To the extent reasonably feasible, the comparison shall be quantitative. A notice of the

F-4 change in the accounting principles shall be provided in the manner as for a Listed Event under Section 5(c) hereof.

(b) The Developers Annual Report and Semi-Annual Report shall contain or incorporate by reference the following information with respect to each Major Developer:

(i) If information regarding such Major Developer has not previously been included in an Annual Report, a Semi-Annual Report or the Official Statement, the Development Plan of such Major Developer; or, if information regarding such Major Developer has previously been included in an Annual Report, a Semi-Annual Report or the Official Statement, a description of the progress made in the implementation of the Development Plan of such Major Developer since the date of such information and a description of any significant changes in such Development Plan and the causes or rationale for such changes.

(ii) If information regarding such Major Developer has not previously been included in an Annual Report, a Semi-Annual Report or the Official Statement, the Financing Plan of such Major Developer; or, if information regarding such Major Developer has previously been included in an Annual Report, a Semi-Annual Report or the Official Statement, a description of any significant changes in the Financing Plan of such Major Developer and the causes or rationale for such changes, including an update of the table describing the Developers projected sources and uses of funds, which shall only be required in the Annual Report.

(iii) A statement as to the number of lots in the Community Facilities District for which building permits were issued during the six-month period covered by such Annual Report or Semi- Annual Report, the cumulative total of the lots for which building permits have been issued, the number of structures the construction or rehabilitation of which were completed in the Community Facilities District during the six-month period covered by such Annual Report or Semi-Annual Report, the cumulative total of such structures, the number of structures in the Community Facilities District sold or leased during the six-month period covered by or leased such Annual Report or Semi- Annual Report, and the cumulative total of such structures sold or leased.

(iv) With respect to any portion of the Property owned by such Major Developer and any of its Affiliates, a statement as to whether any taxes or assessment installments applicable to such portion of the Property are delinquent.

(v) A description of any change in the ownership structure of the Major Developer and/or the financial condition of the Major Developer or any of its Affiliates if such change in ownership structure and/or financial condition could materially interfere with the Major Developers ability to complete its Development Plan.

(vi) Any amendments to land use entitlements for any portion of the Property owned by a Major Developer that could have a material adverse affect on such Major Developers most recently disclosed Financing Plan or Development Plan or on the ability of such Major Developer, or any Affiliate of such Major Developer, to pay installments of Special Taxes when due.

(vii) Any precondition to commencement or continuation of development on any portion of the Property owned by a Major Developer imposed by a governmental entity after the date of issuance of the Bonds which has not been previously disclosed and which could have a material adverse affect, or any change in the status of any such precondition that was previously disclosed in the Official Statement, an Annual Report or a Semi-Annual Report, which could have a material adverse affect, on such Major Developers most recently disclosed Financing Plan or Development Plan or on the ability of such Major Developer, or any Affiliate of such Major Developer, to pay installments of Special Taxes when due.

F-5 (viii) Any previously undisclosed legislative, administrative or judicial challenges to development on any portion of the Property owned by such Major Developer, or any material change in the status of any such challenge that was previously disclosed in the Official Statement, an Annual Report or a Semi-Annual Report, that could have a material adverse affect on such Major Developers most recently disclosed Financing Plan or Development Plan or on the ability of such Major Developer, or any Affiliate of such Major Developer, to pay installments of Special Taxes when due.

(ix) A description of any change in the provider or amount of the Major Developers letter of credit deposited with the County pursuant to the Letter of Credit Agreement entered into on August 7, 2007 between the County and the Developer.

(x) An update of the status of any previously reported Listed Event described in Section 5 hereof.

(c) In addition to any of the information expressly required to be provided under subsections (a) and (b) of this section, the Developer 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.

Major Developers that are Affiliates of each other may file either separate Annual Reports and Semi- Annual Reports or combined Annual Reports and Semi-Annual Reports covering all such entities. Any or all of the items listed above may be included by specific reference to other documents which have been submitted to each of the Repositories or the Securities and Exchange Commission. If the document included by reference is a final official statement, it must be available from the MSRB. The Developer shall clearly identify each such other document so included by reference.

SECTION 5. Reporting of Significant Events. (a) The following events are Listed Events for purposes of this Agreement:

(i) Any conveyance by a Major Developer of any portion of the Property owned by such Major Developer to an entity that is not an Affiliate of such Major Developer, the result of which conveyance is to cause the transferee to become a Major Developer;

(ii) Any failure of a Major Developer, or any Affiliate of such Major Developer, to pay when due taxes or Special Taxes with respect to any portion of the Property owned by such Major Developer or Affiliate;

(iii) Any refusal to provide funds pursuant to or any termination of, or any event of default under, any line of credit, loan or other arrangement to provide funds to a Major Developer or its Affiliate or any other loss of a source of funds that could have a material adverse affect on such Major Developers most recently disclosed Financing Plan or Development Plan or on the ability of such Major Developer, or any Affiliate of such Major Developer, to pay installments of Special Taxes when due;

(iv) The occurrence of an Event of Bankruptcy with respect to a Major Developer or any Affiliate of such Major Developer that owns any portion of the Property;

(v) Any significant amendments to land use entitlements for such Major Developers Property, if material to such Major Developers most recently disclosed Development Plan;

(vi) The filing of any lawsuit against a Major Developer which, in the reasonable judgment of such Major Developer, will adversely affect the completion of the development of Property owned by such Major Developer, or litigation which if decided against the Major Developer, in the reasonable

F-6 judgment of the Major Developer, would materially adversely affect the financial condition of the Major Developer.

(vii) The assumption of any obligations by a Major Developer pursuant to Section 6 hereof; and

(viii) A change in a Major Developers fiscal year.

(b) Whenever the Developer obtains knowledge of the occurrence of a Listed Event, the Developer shall promptly (i) determine whether such event would be material under applicable federal securities laws and (ii) if the Developer determines that such event would be material under applicable federal securities laws, notify the Dissemination Agent and the Issuer in writing. Such notice shall instruct the Dissemination Agent to report the occurrence pursuant to subsection (c) hereof and shall be in a format suitable for reporting to the MSRB and the State Repository, if any.

(c) If the Dissemination Agent has been instructed by the Developer to report the occurrence of a Listed Event, the Dissemination Agent shall file a notice of such occurrence with the MSRB, the State Repository and the Participating Underwriter.

SECTION 6. Assumption of Obligations. If a portion of the Property owned by the Developer, or any Affiliate of the Developer, is conveyed to a Person that, upon such conveyance, will be a Major Developer, the obligations of the Developer hereunder with respect to the Property owned by such Major Developer and its Affiliates may be assumed by such Major Developer or by an Affiliate thereof. In order to effect such assumption, such Major Developer or Affiliate shall enter into an Assumption Agreement.

SECTION 7. Termination of Reporting Obligation. The Developers obligations hereunder shall terminate (except as provided in Section 12 hereof) upon the earliest to occur of (a) the legal defeasance, prior redemption or payment in full of all the Bonds, (b) the date on which those portions of the Rule which require this written undertaking are held to be invalid by a court of competent jurisdiction in a non-appealable action, have been repealed retroactively or otherwise do not apply to the Bonds, (c) the first date on which no Property Owner is a Major Developer or (d) the first date on which the Developer (i) is no longer a Major Developer and (ii) has no obligations hereunder with respect to any property because such obligations have been assumed by one or more Major Developers or Affiliates thereof pursuant to an Assumption Agreement. The Developers obligations under this Disclosure Agreement with respect to a Person that purchased Property from the Developer and that became a Major Developer as a result thereof shall terminate upon the earliest to occur of (w) date on which such Person is no longer a Major Developer, (x) the date on which the Developers obligations with respect to such Person are assumed under an Assumption Agreement entered into pursuant to Section 6 hereof, (y) the date on which all Special Taxes applicable to the portion of the Property owned by such Major Developer and its Affiliates are prepaid in full and (z) the date described in clause (e) of the preceding sentence; provided however, until the occurrence of any of the events described in clauses (w) through (z), the Developers obligations hereunder with respect to each other Major Developer, if any, shall remain in full force and effect. Upon the occurrence of any such termination prior to the final maturity of the Bonds, the Developer shall cause the Dissemination Agent to give notice of such termination in the same manner as for a Listed Event under Section 5(c) hereof.

SECTION 8. Dissemination Agent. The Developer may, from time to time, discharge the Dissemination Agent with or without appointing a successor Dissemination Agent. The Dissemination Agent may resign by providing thirty (30) days written notice to the Developer and the Issuer. If at any time there is no other designated Dissemination Agent, the Developer shall be the Dissemination Agent. If the Dissemination Agent is an entity other than the Developer, the Developer shall be responsible for paying the fees and expenses of such Dissemination Agent for its services provided hereunder.

F-7 SECTION 9. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Agreement, the Developer and the Dissemination Agent may amend this Disclosure Agreement (and the Dissemination Agent shall agree to any amendment so requested by the Developer, so long as such amendment does not adversely affect the rights or obligations of the Dissemination Agent), and any provision of this Disclosure Agreement may be waived, provided that (a) if the amendment or waiver relates to Sections 3(a), 4 or 5(a) hereof, such amendment or waiver is made in connection with a change in legal requirements, change in law or change in the identity, nature, or status of the Developer or the type of business conducted; (b) the undertakings herein, as proposed to be amended or waived, would, in the opinion of Bond Counsel approved by the Issuer and the Participating Underwriter, have complied with the requirements of the Rule at the time of the primary offering of the Bonds, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and (c) the amendment or waiver either (i) is approved by the Bond Owners in the same manner as provided in the Indenture for amendments to the Indenture with the consent of Bond Owners, or (ii) does not, in the opinion of the Issuer or Bond Counsel, materially impair the interests of the Bond Owners or Beneficial Owners of the Bonds.

SECTION 10. Additional Information. Nothing in this Disclosure Agreement shall be deemed to prevent the Developer 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 Semi-Annual Report or notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Agreement. If the Developer chooses to include any information in any Annual Report or Semi-Annual Report or notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Agreement, the Developer shall have no obligation under this Agreement to update such information or include it in any future Annual Report or Semi-Annual Report or notice of occurrence of a Listed Event.

SECTION 11. Default. In the event of a failure of the Developer or the Dissemination Agent to comply with any provision of this Disclosure Agreement, the Dissemination Agent may (and, at the written request of the Participating Underwriter or the Owners of at least 25% of the aggregate principal amount of Outstanding Bonds, and upon being indemnified to its reasonable satisfaction against the costs, expenses and liabilities to be incurred in compliance with such request, shall), or the Participating Underwriter or any Bond Owner or Beneficial Owner of the Bonds may, take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the Developer or the Dissemination Agent, as the case may be, to comply with its obligations under this Disclosure Agreement. A default under this Disclosure Agreement shall not be deemed an event of default under the Indenture, and the sole remedy under this Disclosure Agreement in the event of any failure of the Developer or the Dissemination Agent to comply with this Disclosure Agreement shall be an action to compel performance.

SECTION 12. Duties, Immunities and Liabilities of Dissemination Agent. The Dissemination Agent shall not have any responsibility for the content of any Annual Report, Semi-Annual Report or notice of a Listed Event. The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Agreement, and the Developer agrees to indemnify and save the Dissemination Agent, including its officers, directors, employees and agents (each, an Indemnified Party), harmless against any loss, expense and liabilities which it may incur arising out of or in the exercise or performance of its powers and duties hereunder, including the reasonable costs and expenses (including attorneys fees) of defending against any claim of liability, but excluding losses, expenses and liabilities due to such Indemnified Partys negligence or willful misconduct. The obligations of the Developer under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Bonds.

The Dissemination Agent will not, without the Developers prior written consent, settle, compromise or consent to the entry of any judgment in any pending or threatened claim, action or proceeding in respect of which indemnification may be sought hereunder unless such settlement, compromise or consent includes an unconditional release of the Developer and its Affiliates from all liability arising out of any such claim, action or proceedings. A request by the Dissemination Agent for the Developers written consent shall be answered

F-8 within a reasonable amount of time to allow the Dissemination Agent to act in a timely manner. If any claim, action or proceeding is settled with the consent of the Developer or if there is a judgment (other than a stipulated final judgment without the approval of the Developer) for the plaintiff in any such claim, action or proceeding, with or without the consent of the Developer, the Developer agrees to indemnify and hold harmless the Dissemination Agent to the extent described herein.

SECTION 13. Notices. Any notices or communications to or among any of the parties to this Disclosure Agreement may be given as follows:

Issuer: County of Sacramento 700 H Street, Room 7650 Sacramento, California 95814 Attn: Administrator Municipal Services Agency

with a copy to:

County of Sacramento 700 H Street, Room 2650 Sacramento, California 95814 Attn: County Counsel

Dissemination Agent: Goodwin Consulting Group, Inc. 555 University Ave., Suite 280 Sacramento, California 95825

Developer: Lennar Communities 1075 Creekside Ridge Drive, Suite 110 Roseville, California 95678

Participating Underwriter: Stone & Youngberg LLC One Ferry Building San Francisco, CA 94111 Attn: Municipal Research Department

SECTION 14. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit of the Issuer, the Dissemination Agent, the Developer, the Participating Underwriter and Bond Owners and Beneficial Owners from time to time of the Bonds, and shall create no rights in any other person or entity.

SECTION 15. Assignability. The Developer shall not assign this Disclosure Agreement or any right or obligation hereunder except to the extent permitted to do so under the provisions of Section 6 hereof. The Dissemination Agent may, with prior written notice to the Developer and the Issuer, assign this Disclosure Agreement and the Dissemination Agents rights and obligations hereunder to a successor Dissemination Agent.

SECTION 16. Merger. Any person succeeding to all or substantially all of the Dissemination Agents corporate trust business shall be the successor Dissemination Agent without the filing of any paper or any further act.

SECTION 17. Severability. In case any one or more of the provisions contained herein shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision hereof.

F-9 SECTION 18. Governing Law. The validity, interpretation and performance of this Disclosure Agreement shall be governed by the laws of the State of California.

F-10 SECTION 19. 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.

LW VINEYARD POINT, LLC,a Delaware limited liability company, as Developer

By: Its:

GOODWIN CONSULTING GROUP, INC.,as Dissemination Agent

By: Its:

F-11 EXHIBIT A

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

Name of Obligated Person: LW Vineyard Point, LLC

Name of Bond Issue: County of Sacramento Community Facilities District No. 2005-2 (North Vineyard Station No. 1)

Date of Issuance: September 6, 2007

NOTICE IS HEREBY GIVEN that LW Vineyard Point, LLC has not provided [an Annual Report] [a Semi-Annual Report] with respect to the above-named Bonds as required by Section 3 of the Continuing Disclosure Agreement, dated as of September 1, 2007. LW Vineyard Point, LLC anticipates that the required report will be filed by .

Dated:

GOODWIN CONSULTING GROUP, INC., as Dissemination Agent

By: cc: County of Sacramento Municipal Services Agency

F-12 APPENDIX G

SUMMARY OF CERTAIN PROVISIONS OF THE BOND RESOLUTION

The following is a summary of certain provisions of Resolution No. 2007-0997 (the “Resolution”) adopted by the Board of Supervisors of the County on August 7, 2007, that are not described elsewhere in this Official Statement. This summary of the Resolution is not to be considered a full description thereof and reference should be made to a complete copy of the Resolution for a full and complete description of such document. A complete copy of the Resolution is on file and available for inspection at the office of the Clerk of the Board of Supervisors of the County.

DEFINITIONS OF CERTAIN TERMS

“Accountant’s Report” means a report signed by an Independent Certified Public Accountant.

“Acquisition and Construction Fund” means the County of Sacramento Community Facilities District No. 2005-2 (North Vineyard Station No. 1) Special Tax Bonds Acquisition and Construction Fund established pursuant to the Resolution (to be maintained by the Director of Finance).

“Administrative Expenses” shall have the meaning ascribed thereto in the Special Tax Formula.

“Annual Debt Service” means, for any Bond Year, the sum of (1) the interest payable during such Bond Year on all Outstanding Bonds, assuming that all Outstanding Serial Bonds are retired as scheduled and that all Outstanding Term Bonds are redeemed or paid as scheduled at the times of and in amounts equal to the sum of the Minimum Sinking Fund Account Payments (except to the extent that such interest is to be paid from the proceeds of sale of any of the Bonds), (2) the principal amount of all Outstanding Serial Bonds maturing by their terms in such Bond Year, and (3) the Minimum Sinking Fund Account Payments required to be deposited in the Sinking Fund Account in such Bond Year.

“Board of Supervisors” means the Board of Supervisors of the County.

“Bond Redemption Fund” means the County of Sacramento Community Facilities District No. 2005-2 (North Vineyard Station No. 1) Special Tax Bonds Bond Redemption Fund established pursuant to the Resolution (to be maintained by the Director of Finance).

“Bond Reserve Fund” means the County of Sacramento Community Facilities District No. 2005-2 (North Vineyard Station No. 1) Special Tax Bonds Bond Reserve Fund established pursuant to the Resolution (to be maintained by the Director of Finance).

“Bonds” means the special tax bonds of the County at any time Outstanding under the Resolution that are executed, authenticated and delivered in accordance with the provisions of the Resolution and any applicable Supplemental Resolution.

“Bond Year” means the twelve-month period terminating on September 1 of each year; provided, that the first Bond Year shall commence on the date of the execution, authentication and initial delivery of the Bonds.

“Business Day” means any day (other than a Saturday or a Sunday) on which the office of the Paying Agent is open for business at the Paying Agent’s Office and on which the Federal Reserve System is open for business.

“Capitalized Interest Account” means the County of Sacramento Community Facilities District No. 2005-2 (North Vineyard Station No. 1) Special Tax Bonds Capitalized Interest Account within the Bond Redemption Fund for the payment of interest on Bonds established pursuant to the Resolution (to be maintained by the Director of Finance), including all subaccounts thereof.

G-1 “Code” means the Internal Revenue Code of 1986 and the regulations issued pursuant thereto from time to time to the extent that such regulations are, at the time, applicable and in effect, and in this regard reference to any particular section of the Code shall include reference to any successor to such section of the Code.

“Community Facilities District” means the County of Sacramento Community Facilities District No. 2005- 2 (North Vineyard Station No. 1), a community facilities district duly organized and existing in the County pursuant to the Law.

“Community Facilities Fund” means the County of Sacramento Community Facilities District No. 2005-2 (North Vineyard Station No. 1) Community Facilities Fund established pursuant to the Resolution (to be maintained by the Director of Finance).

“Costs of Issuance” means all costs and expenses payable by or reimbursable to the County that are related to the authorization, sale, execution, authentication and initial delivery of the Bonds, including, but not limited to, costs of preparation and reproduction of documents, rating agency fees (if any), filing fees, fees and charges of the Director of Finance, legal fees and charges and fees and charges of other consultants and professionals, together with all costs for the preparation of the Bonds, and any other cost or expense in connection with the authorization, sale, execution, authentication and initial delivery of the Bonds.

“Costs of Issuance Fund” means the County of Sacramento Community Facilities District No. 2005-2 (North Vineyard Station No. 1) Special Tax Bonds Costs of Issuance Fund established pursuant to the Resolution (to be maintained by the Director of Finance).

“Defeasance Securities” means cash, direct non-callable obligations of the United States of America and securities fully and unconditionally guaranteed as to the timely payment of principal and interest by the United States of America, to which direct obligation or guarantee the full faith and credit of the United States of America has been pledged, Refcorp interest strips, CATS, TIGRS, STRPS, or defeased municipal bonds rated AAA by S&P or Aaa by Moody’s (or any combination of the foregoing).

“Director of Finance” means the person who is the duly appointed and acting Director of Finance of the County or, in the event the position of Director of Finance is eliminated or renamed, the most nearly-comparable position.

“Expense Fund” means the County of Sacramento Community Facilities District No. 2005-2 (North Vineyard Station No. 1) Special Tax Bonds Expense Fund established pursuant to the Resolution (to be maintained by the Director of Finance).

“Expenses” means all costs associated with the creation of the Community Facilities District, the determination of the amount of the Special Taxes, the collection of the Special Taxes, the payment of the Special Taxes, and all costs associated with the administration of the Bonds and compliance with the duties, obligations and covenants established by this Resolution, or otherwise incurred in order to carry out the authorized purposes of the Community Facilities District, and any other expense incidental to the acquisition, construction, completion and inspection of the Facilities; all as determined in accordance with Generally Accepted Accounting Principles.

“Facilities” means those certain public facilities comprising the Facilities (as that term is defined in Resolution No. 2005-1517 adopted by the Board of Supervisors on December 13, 2005, establishing the Community Facilities District) constituting drainage and flood control facilities; sanitary sewer facilities; water facilities; transportation, roadway and related facilities; landscaping facilities; and other public facilities, in each case including design, planning, project management and other soft project costs.

“Fiscal Year” means the twelve-month period terminating on June 30 of each year, or any other annual accounting period hereafter selected and designated by the County as its Fiscal Year in accordance with applicable law.

G-2 “General Fund” means the fund by that name existing in the treasury of the County created pursuant to applicable law.

“Generally Accepted Accounting Principles” means the uniform accounting and reporting procedures and standards set forth in publications of the American Institute of Certified Public Accountants or its successor and the Governmental Accounting Standards Board or its successor, or by any other generally accepted authority on such procedures.

“Holder” means any person who shall be the registered owner of any Outstanding Bond, as shown on the registration books maintained by the Paying Agent pursuant to the Resolution.

“Independent Certified Public Accountant” means any certified public accountant or firm of such accountants duly licensed and entitled to practice and practicing as such under the laws of the State of California, appointed and paid by the County, and who, or each of whom –

(1) is in fact independent and not under the domination of the County;

(2) does not have a substantial financial interest, direct or indirect, in the operations of the County; and

(3) is not connected with the County as a supervisor, officer or employee of the County, but who may be regularly retained to audit the accounting records of and make reports thereon to the County.

“Independent Financial Consultant” means any consultant or firm of such consultants generally recognized to be well qualified in the field of consulting relative to special taxes and special tax bond financing for California community facilities districts formed pursuant to the Law, appointed and paid by the County, and who, or each of whom –

(1) is in fact independent and not under the domination of the County;

(2) does not have a substantial financial interest, direct or indirect, in the operations of the County; and

(3) is not connected with the County as a supervisor, officer or employee of the County, but who may be regularly retained to make annual or other reports on the Special Taxes to the County.

“Interest Payment Date” means any date established pursuant to the Resolution for the payment of interest on the Bonds.

“Law” means the Mello-Roos Community Facilities Act of 1982 (being Sections 53311 et seq. of the Government Code of the State, as amended), and all laws amendatory thereof or supplemental thereto.

“Letter of Credit Fund” means the County of Sacramento Community Facilities District No. 2005-2 (North Vineyard Station No. 1) Special Tax Bonds Letter of Credit Fund established pursuant to the Resolution.

“Letter of Credit Reimbursement Fund” means the County of Sacramento Community Facilities District No. 2005-2 (North Vineyard Station No. 1) Special Tax Bonds Letter of Credit Reimbursement Fund established pursuant to the Resolution.

“Maximum Annual Debt Service” means, as of any date of calculation, the greatest Annual Debt Service in any Bond Year during the period from the date of such calculation through the final maturity date of any Outstanding Bonds.

“Minimum Sinking Fund Account Payments” means the principal payments required to be deposited in the Sinking Fund Account for the payment of the Term Bonds.

G-3 “Opinion of Counsel” means a written opinion of a nationally recognized bond counsel retained by the County.

“Outstanding,” when used as of any particular time with reference to Bonds, means (subject to the provisions of the Resolution) all Bonds issued pursuant to the Resolution except –

(1) Bonds cancelled and destroyed by the Director of Finance or delivered to the Director of Finance for cancellation and destruction;

(2) Bonds paid or deemed to have been paid pursuant to the Resolution; and

(3) Bonds in lieu of or in substitution for which other Bonds shall have been executed by the County and authenticated and delivered by the Director of Finance.

“Parcel” means a lot or parcel with an assigned Assessor’s Parcel number shown on an official map of the County Assessor designating parcels by Assessor’s Parcel number.

“Paying Agent” means the person or institution serving as paying agent, registrar and transfer agent with respect to the Bonds pursuant to the Resolution, with the Director of Finance as the initial Paying Agent.

“Permitted Investments” means any of the following investments of County funds authorized by applicable law at the time of making such investment, namely:

(1) Direct obligations of, or obligations the interest on and the principal of which are unconditionally guaranteed by, the United States of America, including obligations issued or held in book entry form on the books of the Department of the Treasury of the United States of America and including a receipt, certificate or any other evidence of any ownership interest in such an obligation or in specified portions thereof (which may consist of specified portions of interest thereon);

(2) Obligations issued by the Resolution Funding Corporation, the Student Loan Marketing Association, the Federal National Mortgage Association, the Federal Home Loan Bank Board, the Federal Farm Credit Bank or the Federal Home Loan Mortgage Association, or obligations, participations, or other instruments of or issued by, or fully guaranteed as to interest and principal by, the Government National Mortgage Association (excluding stripped mortgage backed securities which are valued at greater than par on the unpaid principal);

(3) Bills of exchange or time drafts drawn on and accepted by a commercial bank, otherwise known as bankers acceptances, which are eligible for purchase through a bank that is a member of the Federal Reserve System and which are drawn on a commercial bank the short-term obligations of which are rated in the highest rating category by each of the Rating Agencies; provided, that purchases of eligible bankers acceptances may not exceed one hundred eighty (180) days’ maturity;

(4) Commercial paper of “prime” quality of a corporation which is rated in the highest rating category by each of the Rating Agencies, which commercial paper is limited to issuing corporations that are organized and operating within the United States of America and that have total assets in excess of five hundred million dollars ($500,000,000) and that have an “A” or higher rating for the issuer’s unsecured debentures (other than commercial paper) assigned by each of the Rating Agencies; provided, that purchases of eligible commercial paper may not exceed one hundred eighty (180) days’ maturity nor represent more than ten percent (10%) of the outstanding commercial paper of an issuing corporation;

(5) Negotiable and non-negotiable certificates of deposit or thrift or bank notes issued by a state or national bank or a state-licensed branch of a foreign bank that have maturities of not more than three hundred sixty- five (365) days and that are fully insured by the Federal Deposit Insurance Corporation or the short term obligations of which state or national bank or state-licensed branch of a foreign bank are rated no lower than “A1” by Moody’s

G-4 and “A+” by S&P; or medium-term notes with a maximum maturity of five (5) years that are subject to the same credit qualifications contained in the Resolution;

(6) Repurchase agreements or reverse repurchase agreements of any securities enumerated in subdivisions (1) and (2) of this definition with any state or national bank or government bond dealer reporting to, trading with, and recognized as a primary dealer by the Federal Reserve Bank of New York; provided, that any such repurchase agreement or reverse repurchase agreement is either: (A) with any institution which has debt rated no lower than “A1” by Moody’s and “A+” by S&P or whose commercial paper is rated no lower than “P-1” by Moody’s and “A-1” by S&P; (B) with any corporation or other entity that falls under the jurisdiction of the Federal Bankruptcy Code, so long as (i) the term of such repurchase agreement or reverse repurchase agreement is less than one (1) year or due on demand; (ii) the market value of the collateral (as determined at least once in every seven (7) days) exceeds the principal amount of such repurchase agreement or reverse repurchase agreement plus accrued interest and the market value of the collateral is maintained at levels acceptable to each of the Rating Agencies; (iii) the Paying Agent or a third party acting solely as agent for the Paying Agent has possession of the collateral; (iv) the Paying Agent has a perfected first priority security interest in the collateral; (v) the collateral is free and clear of third-party liens and, in the case of a Securities Investors Protection Corporation broker, was not acquired pursuant to a repurchase agreement or reverse repurchase agreement; and (vi) the failure to maintain the requisite collateral percentage will require the Paying Agent to liquidate the collateral immediately; and provided further, that with respect to any such reverse repurchase agreement, the investment is solely done to supplement the income normally received from such securities;

(7) Certificates, notes, warrants, bonds or other evidences of indebtedness of the State of California or any local agencies therein which are rated in the highest short-term rating category or within one of the three highest long-term rating categories by each of the Rating Agencies (excluding securities that do not have a fixed par value and/or whose terms do not provide a fixed dollar amount at maturity or call date);

(8) For amounts less than one hundred thousand dollars ($100,000), interest-bearing demand or time deposits (including certificates of deposit) of any state or national bank fully insured by the Federal Deposit Insurance Corporation (including the Paying Agent); provided, that not greater than one hundred thousand dollars ($100,000) in the aggregate shall be deposited in any one financial institution;

(9) Investments in units of a money-market fund portfolio that is rated in the highest letter and numerical rating category by each of the Rating Agencies and that is composed of obligations guaranteed by the full faith and credit of the United States of America or repurchase agreements collateralized by such obligations, including portfolios for which the Paying Agent or an affiliate provides investment advice or other services;

(10) Investment agreements that meet and maintain the following credit and collateral requirements: (A) if with a corporation or a corporate guarantor or a domestic bank, they are initially rated “Aaa” by Moody’s and “AAA” by S&P; (B) the provider must maintain a minimum credit quality at least equal to “A2” by Moody’s and “A” by S&P; and (C) the investment agreement must be terminated if the provider’s credit ratings fall below “A3” by Moody’s or “A” by S&P;

(11) Investments in the County of Sacramento Pooled Investment Fund (established by the Board of Supervisors and maintained by the Director of Finance); and

(12) Investments in the Local Agency Investment Fund maintained by the California State Treasurer, which such investments shall only be invested in the special portion of the Local Agency Investment Fund for bond proceeds that are not subject to arbitrage restrictions and for which such investments the Director of Finance shall be designated as the authorized authority to transact investments in such fund.

“Rating Agencies” means, to the extent such parties maintain a rating on the Bonds, Moody’s, S&P or any other nationally-recognized rating agency; provided, that if no rating agency maintains a rating on the Bonds, such term shall mean any such rating agency or rating agencies, or none at all, as selected by the County in its discretion.

G-5 “Rebate Fund” means the County of Sacramento Community Facilities District No. 2005-2 (North Vineyard Station No. 1) Special Tax Bonds Rebate Fund established pursuant to the Resolution (to be maintained by the Director of Finance).

“Required Bond Reserve” means, as of any date of calculation, the least of (a) ten percent (10%) of the original principal amount of the Bonds, or (b) the Maximum Annual Debt Service, or (c) one hundred twenty-five percent (125%) of the average Annual Debt Service payable under the Resolution in the current and in all future Bond Years (provided that the amount calculated pursuant to clause (c) shall not increase at any time, except upon the issuance of a new Series of Bonds), all as determined by the County pursuant to the Code.

“Serial Bonds” means Bonds for which no Minimum Sinking Fund Account Payments are established.

“Series” means a group or tranche of Bonds issued under the Resolution, each of which bears the same series designation.

“Sinking Fund Account” means the County of Sacramento Community Facilities District No. 2005-2 (North Vineyard Station No. 1) Special Tax Bonds Sinking Fund Account within the Bond Redemption Fund for the payment of the Term Bonds established pursuant to the Resolution (to be maintained by the Director of Finance).

“Special Taxes” means the special taxes authorized to be levied and collected annually on all Parcels of Taxable Property in the Community Facilities District pursuant to the Law at the special election held in the Community Facilities District on January 17, 2006 and pursuant to the Special Tax Formula as amended.

“Special Tax Formula” means the Rate and Method of Apportionment of Special Tax attached as Exhibit B to the Resolution of Formation and approved at the election held in the Community Facilities District on January 17, 2006 as amended from time to time in accordance with the provisions of the Law, including as amended by Resolution No. 2007-0741, adopted by the County on June 5, 2007.

“Special Tax Fund” means the County of Sacramento Community Facilities District No. 2005-2 (North Vineyard Station No. 1) Special Tax Bonds Special Tax Fund established pursuant to the Resolution (to be maintained by the Director of Finance).

“State” means the State of California.

“Supplemental Resolution” means any resolution then in full force and effect which has been duly adopted by the Board of Supervisors pursuant to the Law at a meeting of the Board of Supervisors duly convened and held, at which a quorum was present and acted thereon, amendatory of the Resolution or supplemental to the Resolution; but only if and to the extent that such Supplemental Resolution is specifically authorized under the Resolution and pursuant to the Law.

“Tax Certificate” means any certificate delivered upon the original issuance of a Series of Bonds relating to Section 148 of the Code, or any functionally similar replacement certificate.

“Taxable Property” means all Parcels of land within the Community Facilities District taxable pursuant to the Law as provided in the Special Tax Formula in accordance with the proceedings for the authorization of the issuance of the Bonds and the levy and collection of the Special Taxes.

“Term Bonds” means Bonds which are redeemable or payable in part on or before their specified maturity date or dates from Minimum Sinking Fund Account Payments established for the purpose of redeeming or paying such Bonds on or before their specified maturity date or dates.

“Undeveloped Property” means all Parcels of Taxable Property for which Building Permits (as such term is defined in the Special Tax Formula) have not been issued on or prior to the date of any calculation of the Value-to- Lien Ratio under the Resolution.

G-6 “Written Request of the County” means an instrument in writing signed by the Chair, the Director of Finance or the Chief Financial Officer, or by any other officer of the County duly authorized by the Board for that purpose.

BOND RESOLUTION

The Resolution sets forth the terms of the 2007A Bonds authorized thereunder, the application of the proceeds of the 2007A Bonds, the nature and extent of the security for the Bonds and various rights of the Holders of Bonds. Certain provisions of the Resolution are summarized below. Other provisions are summarized in this Official Statement under the captions “THE 2007A BONDS” and “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS.” This summary does not purport to be complete or definitive and is qualified in its entirety by reference to the full terms of the Resolution.

Conditions to Issuance of Additional Series of Bonds

In addition to the 2007A Bonds issued pursuant to the Resolution, the County may at any time issue a Series of Bonds payable from the Special Taxes as provided in the Resolution on a parity with all other Bonds theretofore or thereafter issued under the Resolution, but only subject to the following conditions, which are made conditions precedent to the issuance of such Series of Bonds:

(a) The issuance of such Series of Bonds shall have been authorized pursuant to and in accordance with the terms of the Law and pursuant the Resolution and shall have been provided for by a Supplemental Resolution in accordance therewith which shall specify (or provide for the determination of) the following:

(i) The purpose for which such Series of Bonds is to be issued; provided, that the proceeds of sale of such Series of Bonds shall be applied solely for the purpose of providing funds to finance or refinance the acquisition and construction costs of (or the reimbursement for) the Facilities, including the incidental expenses related thereto;

(ii) The principal amount and designation of such Series of Bonds and the authorized denomination or denominations of the Bonds of such Series of Bonds;

(iii) The date, the maturity date or dates, the Interest Payment Dates and the dates on which Minimum Sinking Fund Account Payments, if any, are due for such Series of Bonds; provided, that (1) the Serial Bonds of such Series shall be payable as to principal on September 1 of each year in which principal of such Series of Bonds becomes due, and the Term Bonds of such Series shall be subject to mandatory redemption or payment on September 1 of each year in which Minimum Sinking Fund Account Payments for the Term Bonds of such Series become due; (2) the Bonds of such Series shall be payable as to interest semiannually on March 1 and September 1 of each year or annually on March 1 or September 1 of each year, except that the first installment or installments of interest may be payable on either the March 1 or the September 1 date following their date and shall be for a period of not longer than twelve (12) months; (3) all Bonds of such Series of like maturity shall be identical in all respects, except as to number, denomination, interest rate or redemption provisions, and (4) serial maturities of the Serial Bonds of such Series or Minimum Sinking Fund Account Payments for the Term Bonds of such Series, or any combination thereof, shall be established to provide for the redemption or payment of the Bonds of such Series on or before their respective maturity dates;

(iv) The redemption premiums and redemption terms, if any, for such Series of Bonds;

(v) The form of the Bonds of such Series;

(vi) The amount, if any, to be deposited from the proceeds of sale of such Series of Bonds in the Bond Redemption Fund, and provisions concerning the use of such deposit to pay interest on the Bonds of such Series;

G-7 (vii) The amount to be deposited from the proceeds of sale of such Series of Bonds in the Bond Reserve Fund; provided, that the Bond Reserve Fund shall be increased at the time that such Series of Bonds becomes Outstanding to an amount at least equal to the Required Bond Reserve;

(viii) The amount to be deposited from the proceeds of sale of such Series of Bonds in the separate account for such Series of Bonds established and maintained in the Acquisition and Construction Fund;

(ix) The amount to be deposited from the proceeds of sale of such Series of Bonds in the Expense Fund;

(x) The amount to be deposited from the proceeds of sale of such Series of Bonds in the separate account for such Series of Bonds established and maintained in the Costs of Issuance Fund; and

(xi) Such other provisions that are appropriate or necessary and are not inconsistent with the provisions of the Resolution or of the Special Tax Formula;

(b) The County shall be in compliance with all agreements, conditions, covenants and terms contained in the Resolution and in all Supplemental Resolutions required to be observed or performed by it, and no Event of Default shall have occurred and shall be then continuing;

(c) The estimated Special Taxes available to the County if the Special Taxes were to be levied and collected at the maximum rate and amount on all Taxable Property in the Community Facilities District during each Fiscal Year that any Bonds of such Series will be Outstanding (excluding the estimated Special Taxes from any Parcel of Taxable Property then delinquent in the payment of any Special Taxes) would produce (1) a sum equal to at least one hundred ten percent (110%) of the Annual Debt Service during the Bond Year which begins in such Fiscal Year, and (2) a sum equal to at least one hundred percent (100%) of the Annual Debt Service plus the estimated Expenses during each such Bond Year; all as shown by a certificate of an Independent Financial Consultant on file with the Paying Agent;

(d) The aggregate Value-to-Lien Ratio of all Taxable Property (excluding the Value of any Parcels of Taxable Property then delinquent in the payment of any Special Taxes) shall be at least 3:1; and for the purposes of this paragraph, the term “Value” means either the current assessed valuation of a Parcel of Taxable Property or the appraised value of a Parcel of Taxable Property determined by an MAI appraiser, and the term “Value-to-Lien Ratio” means the Value of all Taxable Property to the aggregate principal amount of all Bonds Outstanding or proposed to be issued reasonably allocable to such Taxable Property plus the aggregate principal amount of all other assessment bonds and bonds issued under the Law reasonably allocable to such Taxable Property; and

(e) The aggregate Value-to-Lien Ratio of all Undeveloped Property (excluding the Value of any Parcel of Undeveloped Property then delinquent in the payment of any Special Taxes) shall be at least 2:1; and for the purposes of this paragraph, the term “Value” means either the current assessed valuation of a Parcel of Undeveloped Property or the appraised value of a Parcel of Undeveloped Property determined by an MAI appraiser, and the term “Value-to-Lien Ratio” means the Value of all Undeveloped Property to the aggregate principal amount of all Bonds Outstanding or proposed to be issued reasonably allocable to such Undeveloped Property plus the aggregate principal amount of all other assessment bonds and bonds issued under the Law reasonably allocable to such Undeveloped Property.

Notwithstanding the limitations contained in paragraphs (c), (d) and (e), nothing contained in the Resolution shall limit the issuance of any Series of Bonds under the Resolution if after the issuance and delivery of such Series of Bonds none of the Bonds theretofore issued under the Resolution will be Outstanding, and nothing contained in the Resolution shall limit the issuance of any Series of Bonds under the Resolution if after the issuance and delivery of such Series of Bonds the Annual Debt Service on all Bonds to be Outstanding after the issuance of the Bonds of such Series of Bonds in each Bond Year thereafter shall not be increased by reason of the issuance of such Series of Bonds.

G-8 Acquisition and Construction Fund

Costs of Issuance Fund

Capitalized Interest Account

There is established an account within the Bond Redemption Fund to be known as the “County of Sacramento Community Facilities District No. 2005-2 (North Vineyard Station No. 1) Special Tax Bonds Capitalized Interest Account,” and within such account a subaccount for each Series of Bonds issued under the Resolution. All money in each subaccount of the Capitalized Interest Account shall be applied by the Director of Finance to the payment of interest on Outstanding Bonds of the Series of Bonds for which such subaccount was created until such money is exhausted, unless the Director of Finance shall have received an Opinion of Counsel to the effect that such application may result in a violation of the Resolution and upon receipt of such Opinion of Counsel, the County shall apply such money in the Capitalized Interest Account in a manner consistent with the advice of such counsel regarding compliance with the Resolution.

Privilege of Redemption of Bonds

The Bonds subject to redemption prior to their respective stated maturity dates shall be redeemable, upon notice being given as provided in the Resolution, on such dates and upon payment of such redemption premiums, if any, as provided in the Resolution or in any Supplemental Resolution, and upon such further terms contained in the Resolution; provided, that redemption of Bonds other than from Minimum Sinking Fund Account Payments or from the application of refunding bond proceeds shall be made only from and to the extent that funds are on deposit with the Director of Finance and available for such purpose on the date the notice of redemption is given.

Partial Redemption of Bonds

Upon surrender of any Bond redeemed in part only, the County shall execute and the Paying Agent shall authenticate and deliver to the registered owner thereof at the expense of the County a new Bond or Bonds of the same Series and maturity date of authorized denominations equal in aggregate principal amount to the unredeemed portion of the Bond surrendered.

G-9 Effect of Redemption of Bonds

If notice of redemption has been duly given as aforesaid and money for the payment of the principal of and redemption premiums, if any, on, together with interest to the redemption date on, the Bonds or portions thereof so called for redemption is held by the Paying Agent, then on the redemption date designated in such notice such Bonds or such portions thereof shall become due and payable, and from and after the date so designated interest on the Bonds or such portions thereof so called for redemption shall cease to accrue and the Holders of such Bonds shall have no rights in respect thereof except to receive payment of the principal or such portions thereof and the redemption premiums, if any, thereon and the interest accrued thereon to the redemption date.

Deposit of Special Taxes in the Special Tax Fund

The County agrees and covenants that all Special Taxes, when and as received, shall be deposited in the “County of Sacramento Community Facilities District No. 2005-2 (North Vineyard Station No. 1) Special Tax Bonds Special Tax Fund,” which fund is established in the treasury of the County and shall be maintained by the Director of Finance, and all money in the Special Tax Fund shall be held by the Director of Finance in trust under the Resolution and shall be accounted for separately and apart from all other accounts, funds, money or other resources of the County and shall be disbursed, allocated and applied solely to the uses and purposes set forth in the Resolution.

Allocation of Money in the Special Tax Fund

All money in the Special Tax Fund shall be set aside by the Director of Finance in the following respective special accounts and funds within the Special Tax Fund (each of which accounts and funds is created) in the following order of priority, and all money in each of such accounts and funds shall be applied, used and withdrawn only for the purposes authorized in the Resolution, namely:

(1) County of Sacramento Community Facilities District No. 2005-2 (North Vineyard Station No. 1) Special Tax Bonds Letter of Credit Reimbursement Fund.

At any time, when and as proceeds of a foreclosure sale or delinquent payments of Special Taxes are received by the County with respect to a Parcel of Taxable Property for which the owner of such Parcel of Taxable Property has provided a letter of credit or other credit instrument for the purposes of providing security for the payment of such property owner’s Special Taxes, the Director of Finance shall transfer to and deposit in the Letter of Credit Reimbursement Fund an amount of money equal to such proceeds of the foreclosure sale or delinquent Special Taxes received less an amount equal to the County’s actual and reasonable costs of recovery, including but not limited to, administrative, title, court and legal fees incurred by the County in connection with such foreclosure action or other recovery of delinquent Special Taxes; provided, that, such deposit of proceeds of a foreclosure sale or delinquent Special Taxes received shall only be made in the event, and to the extent, that (i) the County has previously drawn upon such property owner’s letter of credit or other credit instrument or made transfers from the respective account in the Letter of Credit Fund to the Special Tax Fund in respect of delinquent Special Taxes relating to the Parcel of Taxable Property foreclosed upon or for which delinquent Special Taxes were received and (ii) the County has an obligation to reimburse such property owner or its letter of credit or other credit instrument provider from the proceeds of any such foreclosure sale or receipt of any such delinquent Special Taxes pursuant to a written agreement between the County and such property owner; and provided further, that, no such deposit of proceeds of a foreclosure sale or delinquent Special Taxes received need be made if the owner of the Parcel of Taxable Property foreclosed upon or with respect to which delinquent Special Taxes have been received is currently delinquent in the payment of Special Taxes with respect to any Parcel of Taxable Property in the Community Facilities District.

Each such deposit of proceeds of a foreclosure sale or delinquent Special Taxes received and deposited in the Letter of Credit Reimbursement Fund shall be used and withdrawn to reimburse the respective provider of the letter of credit or other credit instrument which was previously drawn upon with respect to the Parcel of Taxable Property which was foreclosed upon or for which delinquent Special Taxes

G-10 were received or to reimburse the prior owner of the Parcel of Taxable Property foreclosed upon or owner of the Parcel of Taxable Property with respect to which delinquent Special Taxes were received all as provided in a written agreement between the County and such property owner. After the County has fulfilled its reimbursement obligations, if any, with respect to the Parcel of Taxable Property foreclosed upon or with respect to which delinquent Special Taxes were received, the remaining proceeds of the foreclosure sale or the delinquent Special Taxes received and deposited in the Letter of Credit Reimbursement Fund with respect to such Parcel of Taxable Property, if any, shall be transferred to the Special Tax Fund.

(2) County of Sacramento Community Facilities District No. 2005-2 (North Vineyard Station No. 1) Special Tax Bonds Bond Redemption Fund (including the County of Sacramento Community Facilities District No. 2005-2 (North Vineyard Station No. 1) Special Tax Bonds Sinking Fund Account).

On or before March 1 and September 1 in each year, beginning on or before March 1, 2008, the Director of Finance shall, from the then remaining money in the Special Tax Fund, transfer to and deposit in the Bond Redemption Fund an amount of money which, when added to the amount of money, if any, then on deposit in the Bond Redemption Fund, including amounts held in the Capitalized Interest Account, shall be equal to the aggregate amount of interest becoming due and payable on all Outstanding Bonds on such March 1 or September 1, as the case may be; and on or before March 1 and September 1 in each year, beginning on March 1 in the Bond Year in which the first maturity of the Series 2007A Bonds occurs, the Director of Finance shall, from the then remaining money in the Special Tax Fund, transfer to and deposit in the Bond Redemption Fund an amount of money equal to one-half (1/2) of the aggregate amount of principal becoming due and payable on all Outstanding Serial Bonds on such September 1 plus one-half (1/2) of the Minimum Sinking Fund Account Payment required to be made on such September 1 into the Sinking Fund Account; provided, that no deposit shall be required for interest becoming due and payable on Outstanding Bonds of a Series to the extent of available moneys on deposit in the applicable subaccount of the Capitalized Interest Account; and provided further, that all of the aforesaid payments shall otherwise be made without priority of any payment over any other payment, and in the event that the available money in the Bond Redemption Fund on any March 1 or September 1 is not equal to the amount of interest becoming due on all Bonds on such date, or in the event that the money in the Bond Redemption Fund on any September 1 is not equal to the amount of principal of the Bonds becoming due on such date plus the amount of all Minimum Sinking Fund Account Payments for the Bonds becoming due on such date, then such money shall be applied pro rata in such proportion as such interest and such principal and such Minimum Sinking Fund Account Payments bear to each other.

No deposit need be made into the Bond Redemption Fund if the amount of money contained therein is at least equal to the amount required by the terms of the preceding paragraph to be deposited therein at the times and in the amounts provided in the Resolution.

All money in the Bond Redemption Fund shall be used and withdrawn by the Director of Finance solely to pay the interest on the Bonds as it shall become due and payable (including accrued interest on any Bonds purchased or redeemed prior to maturity) plus the principal of and redemption premiums, if any, on the Bonds as they shall mature or upon the prior redemption thereof, except that (i) moneys in any subaccount of the Capitalized Interest Account shall be used only to pay interest on the applicable Series of Bonds as it shall become due and payable, and (ii) any money in the Sinking Fund Account shall be used only to purchase or redeem or retire the Term Bonds for which Minimum Sinking Fund Account Payments allocable to such Term Bonds were made and deposited into the Sinking Fund Account. Notwithstanding any contrary provision of this Resolution, if the Paying Agent is a person other than the Director of Finance, the Director of Finance shall make the foregoing payments of interest, principal and redemption premium to the Paying Agent at least one (1) Business Day prior to respective due dates thereof, and the Paying Agent shall pay such amounts to the respective Holders on or before such respective due dates.

As soon as practicable after the receipt by the Director of Finance of any prepaid Special Taxes, but in any event not later than ten (10) Business Days after such receipt, the Director of Finance shall deposit such prepaid Special Taxes in (i) the Acquisition and Construction Fund, to the extent of any

G-11 component thereof representing the “Remaining Facilities Amount” (as defined in the Special Tax Formula), (ii) the Expense Fund, to the extent of any component thereof representing the “Administrative Fees and Expenses” (as defined in the Special Tax Formula), and (iii) the Bond Redemption Fund, any remaining amounts, for the extraordinary redemption of Bonds pursuant to the Resolution and the terms of any Supplemental Resolution. The respective amounts of the deposits described in clauses (i), (ii) and (iii) shall be determined by the Director of Finance.

(3) County of Sacramento Community Facilities District No. 2005-2 (North Vineyard Station No. 1) Special Tax Bonds Bond Reserve Fund.

On or before March 1 and September 1 in each year, beginning in March 2008, the Director of Finance shall, from the then remaining money in the Special Tax Fund, transfer to and deposit in the Bond Reserve Fund such amount of money as shall be required to restore the balance in the Bond Reserve Fund to an amount equal to the Required Bond Reserve, and for this purpose all investments in the Bond Reserve Fund shall (beginning in March 2008) be valued on March 1 and September 1 of each year at the face value thereof if such investments mature within twelve (12) months from the date of valuation, or if such investments mature more than twelve (12) months after the date of valuation, at the price at which such investments are redeemable by the holder at his option, if so redeemable, or if not so redeemable, at the lesser of (i) the cost of such investments plus the amortization of any premium or minus the amortization of any discount, or (ii) the market value of such investments.

No deposit need be made into the Bond Reserve Fund if the amount contained therein is at least equal to the Required Bond Reserve.

All money in the Bond Reserve Fund shall be used and withdrawn by the Director of Finance solely for the purpose of (i) paying the interest on or principal of or redemption premiums, if any, on the Bonds in the event there is insufficient money in the Bond Redemption Fund available for this purpose or (ii) retiring Bonds, in whole or in part, to the extent that the amount on deposit in the Bond Reserve Fund exceeds the Required Bond Reserve due to a redemption of Bonds or a prepayment of Special Taxes; provided, that if as a result of any of the valuations required by the first paragraph it is determined that the amount of money in the Bond Reserve Fund exceeds the Required Bond Reserve, the Director of Finance shall withdraw the amount of money representing such excess from such fund and shall deposit such amount of money in the Special Tax Fund.

(4) County of Sacramento Community Facilities District No. 2005-2 (North Vineyard Station No. 1) Special Tax Bonds Expense Fund.

On or before March 1 and September 1 in each year, beginning in March 2008, the Director of Finance shall, from the then remaining money in the Special Tax Fund, transfer to and deposit in the Expense Fund an amount of money equal to the amount required by the County to reimburse it for the payment of Expenses during the six-month period ending on the last day of the immediately preceding February or August, as the case may be, except that the first such deposit shall be used to reimburse the County for the payment of Expenses during the period beginning on the date the Bonds become Outstanding and ending on February 29, 2008; provided, that each such deposit shall be reduced to the extent of available moneys already on deposit in the Expense Fund; and provided further, that each such deposit shall not exceed Administrative Expenses. All money in the Expense Fund shall be used and withdrawn by the Director of Finance only to reimburse the County for the payment of Expenses as they become due and payable or to pay the interest on or principal of or redemption premiums, if any, on the Bonds in the event that no other money is available therefor.

(5) County of Sacramento Community Facilities District No. 2005-2 (North Vineyard Station No. 1) Community Facilities Fund

All money remaining in the Special Tax Fund (other than money in the Bond Redemption Fund or the Bond Reserve Fund or the Expense Fund ) on September 1 of each year, beginning in September 2008,

G-12 after transferring all of the sums required to be transferred therefrom on or prior to such date by the provisions of the Resolution, shall be withdrawn from the Special Tax Fund by the Director of Finance and deposited in the “County of Sacramento Community Facilities District No. 2005-2 (North Vineyard Station No. 1) Community Facilities Fund,” which fund is established in the treasury of the County and which fund the County agrees and covenants to maintain so long as any Bonds are Outstanding. All money in the Community Facilities Fund shall be used and withdrawn by the Director of Finance solely for the benefit of the Community Facilities District in accordance with the Law, including but not limited to, (i) deposit into any of the funds or accounts established pursuant to the Resolution and described above under “Allocaiton of Money in the Special Tax Fund” or (ii) the repayment of draws on any letter of credit or other credit instrument deposited with the County by an owner of property within the Community Facilities District for the purposes of providing security for the payment of such property owner’s Special Taxes to the extent that the County is obligated to make such repayments pursuant to a written agreement between such property owner and the County; provided, that the Director of Finance shall not make any such withdrawal of money in the Special Tax Fund if and when (to the Director of Finance’s actual acknowledge) an Event of Default is then existing under the Resolution.

Letter of Credit Fund

There is established in the treasury of the County of Sacramento a fund to be maintained by the Director of Finance to be known as the “County of Sacramento Community Facilities District No. 2005-2 (North Vineyard Station No. 1) Special Tax Bonds Letter of Credit Fund,” and within such fund an account for each letter of credit or other credit instrument deposited with the County by an owner of property within the Community Facilities District for the purposes of providing security for the payment of such property owner’s Special Taxes. All draws on such letters of credit or other credit instruments (other than draws relating to delinquent Special Taxes) shall be deposited in the respective account established within the Letter of Credit Fund for such letter of credit or other credit instrument. Money deposited in each respective account within the Letter of Credit Fund shall be used to make transfers to the Special Tax Fund in an amount equal to the amount, and at the time, that the respective property owner is delinquent in the payment of any installment of Special Taxes. At such time as a property owner is no longer required by the County (pursuant to the written agreement between the County and the property owner relating to the provision of such letter of credit or other credit instrument) to maintain a letter of credit or other credit instrument for the purposes of securing payment of such property owner’s Special Taxes, the remaining amount in the respective account in the Letter of Credit Fund shall be returned to the provider of such property owner’s letter of credit or other credit instrument or directly to the respective property owner all as provided in a written agreement between the County and such property owner.

Punctual Payment and Performance

The County will punctually pay the interest and the principal and the redemption premium, if any, to become due on every Bond issued under the Resolution in strict conformity with the terms of the Law and thereof and of the Bonds, and will faithfully observe and perform all the agreements, conditions, covenants and terms contained in the Resolution and in the Bonds required to be observed and performed by it.

Against Indebtedness and Encumbrances

The County will not issue any evidences of indebtedness payable from the Special Taxes except as provided in the Resolution, and will not create, nor permit the creation of, any pledge, lien, charge or other encumbrance upon any money in the Special Tax Fund other than as provided in the Resolution; provided, that the County may at any time, or from time to time, issue evidences of indebtedness for any lawful purpose of the Community Facilities District which are payable from any money in the Community Facilities Fund as may from time to time be deposited therein (as provided in the Resolution) so long as any payments due thereunder shall be subordinate in all respects to the use of the Special Taxes as provided in the Resolution.

G-13 Against Federal Income Taxation

The County will not take any action, or fail to take any action, if such action or failure to take such action could adversely affect the exclusion from gross income of the interest on the Bonds pursuant to Section 103 of the Code, and specifically the County will not directly or indirectly use or make any use of the proceeds of the Bonds or any other funds of the County or take or omit to take any action that would cause the Bonds to be “arbitrage bonds” subject to federal income taxation by reason of Section 148 of the Code or “private activity bonds” subject to federal income taxation by reason of Section 141(a) of the Code or obligations subject to federal income taxation because they are “federally guaranteed” as provided in Section 149 (b) of the Code; and to that end the County, with respect to the proceeds of the Bonds and such other funds, will comply with all requirements of such sections of the Code and all regulations of the United States Department of the Treasury issued thereunder to the extent that such regulations are, at the time, applicable and in effect; provided, that if the County shall obtain an Opinion of Counsel to the effect that any action required pursuant to the Resolution is no longer required, or to the effect that some further action is required, to maintain the exclusion from gross income of the interest on the Bonds pursuant to Section 103 of the Code, the County may rely conclusively on such Opinion of Counsel in complying with the provisions of the Resolution; and provided further, that in the event that the County at any time is of the opinion that it is necessary to restrict or limit the yield on the investment of any money held by the Director of Finance under the Resolution, the County shall so instruct the Director of Finance in writing, and the Director of Finance shall take such action as may be necessary in accordance with such instructions.

Without limiting the generality of the foregoing, the County will pay from time to time all amounts required to be rebated to the United States of America pursuant to Section 148 (f) of the Code and all regulations of the United States Department of the Treasury issued thereunder to the extent that such regulations are, at the time, applicable and in effect, which obligation shall survive payment in full or defeasance of the Bonds, and to that end, there is established in the treasury of the County a fund to be known as the “County of Sacramento Community Facilities District No. 2005-2 (North Vineyard Station No. 1) Special Tax Bonds Rebate Fund” to be held and administered by the Director of Finance. The County will comply with the provisions of the Tax Certificate with respect to making deposits in the Rebate Fund, and all money held in the Rebate Fund is pledged to provide payments to the United States of America as provided in the Resolution and in the Tax Certificate, and no other person shall have claim to such money except as provided in the Tax Certificate.

Payment of Claims

The County will pay and discharge any and all lawful claims which, if unpaid, might become payable from the Special Taxes or any part thereof or upon any funds in the hands of the County or the Director of Finance allocated to the payment of the interest on or the principal of or redemption premiums, if any, on the Bonds, or which might impair the security of the Bonds.

Expense Budgets

In accordance with paragraph B of the Special Tax Formula, the County will, on or before July 1 in each year, adopt a budget setting forth the costs of the estimated Expenses for the period from such July 1 through the next succeeding June 30; provided, that any budget adopted in accordance with the Resolution may be amended by the County at any time.

Accounting Records, Financial Statements and Other Reports

The County will keep, or in the case of transactions made by the Director of Finance it will cause the Director of Finance to keep, appropriate accounting records in which complete and correct entries shall be made of all transactions relating to the receipt, investment, disbursement, allocation and application of the Special Taxes and of the proceeds of the Bonds, which accounting records shall at all reasonable times during regular business hours be subject to the inspection of any Holder (or his representative authorized in writing) and of any investment banker, security dealer or other person interested in the Bonds requesting copies thereof.

G-14 The County will prepare annually within seven (7) months after the close of each Fiscal Year (commencing with the Fiscal Year ending June 30, 2007) financial statements of the County for the preceding Fiscal Year prepared in accordance with Generally Accepted Accounting Principles, together with an Accountant’s Report thereon and a special report prepared by the Independent Certified Public Accountant who examined such financial statements stating that nothing came to his attention in connection with such examination that caused him to believe that the County was not in compliance with any of the financial agreements or covenants contained in the Resolution. The County will furnish a copy of such financial statements and Accountant’s Report without charge to any Holder (or his representative authorized in writing) and to any investment banker, security dealer or other person interested in the Bonds requesting copies thereof.

The County will prepare annually not more than seven (7) months after the close of each Fiscal Year (commencing with the Fiscal Year ending June 30, 2008) a summary report showing in reasonable detail the Special Taxes levied and collected and the costs of the Expenses for the preceding Fiscal Year and containing a general statement of the physical condition of the Facilities. The County will furnish a copy of such summary report without charge to any Holder (or his representative authorized in writing) and to any investment banker, security dealer or other person interested in the Bonds requesting a copy thereof.

The County will prepare annually not later than October 30 of each year (commencing in the year 2008) and file with the California Debt and Investment Advisory Commission by mail, postage prepaid, all necessary information required to be filed pursuant to the Law, including:

(i) The principal amount of the Outstanding Bonds;

(ii) The balance in the Bond Reserve Fund;

(iii) The balance in the Capitalized Interest Account, constituting capitalized interest, if any;

(iv) The number of parcels securing the Bonds which are delinquent with respect to their payment of the Special Taxes, the amount that each delinquent parcel is delinquent, the length of time that each delinquent parcel has been delinquent and when foreclosure was commenced for each delinquent parcel; and

(v) The assessed value of all parcels subject to the levy of the Special Taxes to repay the Bonds, as shown on the most recent equalized assessment roll of the County.

Additionally, the County will notify the California Debt and Investment Advisory Commission by mail, postage prepaid, within ten (10) days if the Paying Agent fails to pay any interest on or principal of any of the Bonds on any scheduled payment date or if funds are withdrawn from the Bond Reserve Fund to pay any interest on or principal of the Bonds.

Protection of Security and Rights of Holders

The County will preserve and protect the security of the Bonds and the rights of the Holders and will warrant and defend their rights against all claims and demands of all persons.

Payment of Governmental Charges and Compliance with Governmental Regulations

The County will pay and discharge all taxes or payments in lieu of taxes, assessments and other governmental charges or liens that may be levied, assessed or charged upon the Facilities or any part thereof promptly as and when the same shall become due and payable, except that the County shall not be required to pay any such governmental charges so long as the application or validity thereof shall be contested in good faith and the County shall have set aside reserves to cover such charges. The County will duly observe and conform with all valid regulations and requirements of any governmental authority relative to the operation of the Facilities or any part thereof, except that the County shall not be required to comply with any such regulations or requirements so long as the application or validity thereof shall be contested in good faith.

G-15 Levy and Collection of the Special Taxes

The County, so long as any Bonds are Outstanding, will annually levy the Special Taxes against all Parcels of Taxable Property in the Community Facilities District in accordance with the Special Tax Formula and the Law and make provision for the collection of the Special Taxes in amounts which will be sufficient, together with the money then on deposit in the Bond Redemption Fund, after making reasonable allowances for contingencies and errors in the estimates, to yield proceeds equal to the amounts required for compliance with the agreements, conditions, covenants and terms contained in the Resolution, and to pay the interest on and principal of and Minimum Sinking Fund Account Payments for and redemption premiums, if any, on the Bonds as they respectively become due and payable and to replenish the Bond Reserve Fund and to pay all current Expenses as they become due and payable in accordance with the provisions and terms of the Resolution. The Special Taxes shall be collected in the same manner as ordinary ad valorem property taxes are collected and, except as otherwise provided in the Resolution and the Law, shall be subject to the same penalties and the same collection procedure, sale, and lien priority in case of delinquency as is provided for ad valorem property taxes.

Foreclosure of Special Tax Liens

The County shall, not later than October 15 of each year, review its public records relating to the collection of the Special Taxes in the Community Facilities District during the prior Fiscal Year in order to determine the amount of the Special Taxes collected and the amount thereof delinquent in the Community Facilities District in such prior Fiscal Year, and on the basis of such review the County will thereupon institute foreclosure proceedings as authorized by the Law in order to enforce the lien of each then delinquent installment of the Special Taxes in such prior Fiscal Year and will diligently prosecute and pursue such foreclosure proceedings to judgment and sale; provided, that if the total amount of such delinquencies is less than five percent (5%) of the total amount of Special Taxes levied in the Community Facilities District in such Fiscal Year and the Bond Reserve Fund is then fully funded in the amount of the Required Bond Reserve, the County shall not be required to institute any foreclosure proceedings against any Parcel of Taxable Property with a delinquency for such Fiscal Year of less than two thousand dollars ($2,000) or against any Parcels of Taxable Property owned by a common owner with total delinquencies for such Fiscal Year of less than five thousand dollars ($5,000).

Continuing Disclosure

The County will comply with and carry out all of the provisions of each continuing disclosure certificate executed by the County in connection with a Series of Bonds, as such continuing disclosure certificate may be originally executed and may be amended from time to time in accordance with the terms thereof, and notwithstanding any other provision of the Resolution, failure of the County to comply with such continuing disclosure certificate shall not be considered an Event of Default under the Resolution; provided, that any Holder may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the County to comply with its obligations pursuant to the Resolution.

Further Assurances

The County will adopt, deliver, execute make and file any and all further assurances, instruments and resolutions as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of the Resolution and for the better assuring and confirming unto the Holders of the rights and benefits provided in the Resolution.

Amendment or Supplement With Consent of Holders

The Resolution and the rights and obligations of the County and of the Holders may be amended or supplemented at any time by the adoption of a Supplemental Resolution by the Board of Supervisors, which Supplemental Resolution shall become binding when the written consents of the Holders of sixty percent (60%) or more in aggregate principal amount of the Bonds then Outstanding, exclusive of Bonds disqualified as provided in the Resolution, shall have been filed with the Director of Finance; provided, that no such amendment or supplement

G-16 shall (1) extend the maturity of or reduce the interest rate on or otherwise alter or impair the obligation of the County to pay the interest on or principal of or Minimum Sinking Fund Account Payment for or redemption premium, if any, on any Bond at the time and place and at the rate and in the currency and from the funds provided in the Resolution without the express written consent of the Holder of such Bond, or (2) permit the issuance by the County of any obligations payable from the Special Taxes on a parity with the Bonds other than the Bonds as provided in the Resolution, or jeopardize the ability of the County to levy and collect the Special Taxes, or (3) reduce the percentage of Bonds required for the written consent to any such amendment or supplement, or (4) modify any rights or obligations of the Director of Finance without his prior written assent thereto.

Amendment or Supplement Without Consent of Holders

The Resolution and the rights and obligations of the County and of the Holders may also be amended or supplemented at any time by the adoption of a Supplemental Resolution by the Board of Supervisors, which Supplemental Resolution shall become binding upon adoption without the prior written consent of any Holders, but only to the extent permitted by law and after receiving an approving Opinion of Counsel and only for any one or more of the following purposes –

(i) To add to the agreements and covenants required in the Resolution to be performed by the County other agreements and covenants thereafter to be performed by the County which shall not (in the opinion of the County) adversely affect the interests of the Holders, or to surrender any right or power reserved in the Resolution to or conferred in the Resolution upon the County which shall not (in the opinion of the County) adversely affect the interests of the Holders;

(ii) To make such provisions for the purpose of curing any ambiguity or of curing, correcting or supplementing any defective provision contained in the Resolution or in regard to questions arising under the Resolution which the County may deem desirable or necessary and not inconsistent with the Resolution and which shall not (in the opinion of the County) adversely affect the interests of the Holders;

(iii) To authorize the issuance pursuant to the Law and the Resolution of any Bonds and to provide the conditions and terms pursuant to which such Bonds may be issued;

(iv) To make such additions, deletions or modifications as may be necessary or appropriate to ensure compliance with Section 148 (f) of the Code relating to the required rebate of excess investment earnings to the United States of America, or otherwise as may be necessary to ensure the exclusion from gross income for purposes of federal income taxation of the interest on the Bonds or the exemption of such interest from State of California personal income taxes; or

(v) To make such additions, deletions or modifications as may be necessary or appropriate to maintain any then current rating by Moody’s or by S&P on the Bonds.

Amendment or Supplement by Mutual Consent

The provisions of the Resolution shall not prevent any Holder from accepting any amendment or supplement as to any particular Bonds held by him; provided, that due notation thereof is made on such Bonds.

Events of Default and Remedies of Holders

If one or more of the following events (“Events of Default”) shall happen, that is to say –

(a) if default shall be made by the County in the due and punctual payment of any interest on or principal of or Minimum Sinking Fund Account Payment for any of the Bonds when and as the same shall become due and payable;

(b) if default shall be made by the County in the observance or performance of any of the other agreements or covenants contained in the Resolution required to be observed or performed by it, and

G-17 such default shall have continued for a period of thirty (30) days after the County shall have been given notice in writing of such default by the Paying Agent; or

(c) if the County shall file a petition or answer seeking arrangement or reorganization pursuant to the federal bankruptcy laws or any other applicable law of the United States of America or any state therein, or if a court of competent jurisdiction shall approve a petition filed with or without the consent of the County seeking arrangement or reorganization pursuant to the federal bankruptcy laws or any other applicable law of the United States of America or any state therein, or if pursuant to the provisions of any other law for the relief or aid of debtors any court of competent jurisdiction shall assume custody or control of the County or of the whole or any substantial part of its property; then and in each and every such case during the continuance of such Event of Default any Holder shall have the right for the equal benefit and protection of all Holders similarly situated –

(a) by mandamus or other suit or proceeding at law or in equity to enforce his rights against the Board of Supervisors or the County or any of the officers or employees of the County, and to compel the Board of Supervisors or the County or any such officers or employees to perform and carry out their duties pursuant to the Law and the agreements and covenants with the Holders contained in the Resolution;

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

(c) by suit in equity upon the nonpayment of the Bonds to require the Board of Supervisors or the County or its officers and employees to account as the trustee of an express trust.

Non-waiver

Nothing in the Resolution or in the Bonds shall affect or impair the obligation of the County, which is absolute and unconditional, to pay the interest on and principal of and redemption premiums, if any, on the Bonds to the respective Holders of the Bonds at the respective dates of maturity or upon redemption prior to maturity as provided in the Resolution from the Special Taxes and the other funds as provided in the Resolution, or shall affect or impair the right of such Holders, which is also absolute and unconditional, to institute suit to enforce such payment by virtue of the contract embodied in the Resolution and in the Bonds.

A waiver of any Event of Default or breach of duty or contract by any Holder shall not affect any subsequent Event of Default or breach of duty or contract and shall not impair any rights or remedies on any such subsequent Event of Default or breach of duty or contract. No delay or omission by any Holder to exercise any right or remedy accruing upon any Event of Default or breach of duty or contract shall impair any such right or remedy or shall be construed to be a waiver of any such Event of Default or breach of duty or contract or an acquiescence therein, and every right and remedy conferred upon the Holders by the Law or may be enforced and exercised from time to time and as often as shall be deemed expedient by the Holders.

If any action, proceeding or suit to enforce any right or exercise any remedy is abandoned or determined adversely to any Holder, the County and such Holder shall be restored to their former positions, rights and remedies as if such action, proceeding or suit had not been brought or taken.

Remedies Not Exclusive

No remedy in the Resolution conferred upon or reserved to the Holders is intended to be exclusive of any other remedy, and every such remedy shall be cumulative and shall be in addition to every other remedy given under the Resolution or now or existing at law or in equity or by statute or otherwise, and may be exercised without exhausting and without regard to any other remedy conferred by the Law or any other law.

G-18 Discharge of Bonds

If the County shall pay or cause to be paid or there shall otherwise be paid to the Holders of any Outstanding Bonds the interest thereon and the principal thereof and the redemption premiums, if any, thereon at the times and in the manner stipulated therein and in the Resolution, then all agreements, covenants and other obligations of the County to the Holders of such Bonds under the Resolution shall thereupon cease, terminate and become void and be discharged and satisfied; and in such event, the Paying Agent shall execute and deliver to the County all such instruments as may be necessary or desirable to evidence such discharge and satisfaction, and the Paying Agent shall deposit all money or securities held by him pursuant to the Resolution which are not required for the payment of the interest on and principal of and redemption premiums, if any, on such Bonds in the Community Facilities Fund.

Any Outstanding Bonds shall prior to the maturity date or redemption date thereof be deemed to have been paid within the meaning of and with the effect expressed in the first paragraph if there shall be on deposit with the Paying Agent money which is sufficient to pay the interest due on such Bonds on and prior to such maturity date or redemption date, as the case may be, and the principal of and redemption premiums, if any, due on such Bonds on such maturity date or redemption date, as the case may be.

Any Outstanding Bonds shall prior to the maturity date or redemption date thereof be deemed to have been paid within the meaning and with the effect expressed in paragraph 1 if (1) in case any of such Bonds are to be redeemed on any date prior to their maturity date, the County shall have agreed to mail a notice of redemption pursuant to the Resolution to the respective Holders of all such Outstanding Bonds and to the securities depositories and securities information services selected by the Paying Agent pursuant to the Resolution and to the original underwriter or other first purchaser of the Bonds, (2) there shall have been deposited with an escrow agent or the Paying Agent either money in an amount which shall be sufficient or Defeasance Securities which are not subject to redemption except by the holder thereof prior to maturity (including any Defeasance Securities issued or held in book-entry form on the books of the Department of the Treasury of the United States of America) the interest on and the principal of which when paid will provide money which, together with the money, if any, deposited with such escrow agent or the Paying Agent at the same time, shall be sufficient to pay the interest on such Bonds due on and prior to the maturity dates or redemption dates thereof, as the case may be, and the principal of and redemption premiums, if any, due on such Bonds on and prior to the maturity dates or redemption dates thereof, as the case may be, as evidenced by an Accountant’s Report on file with the Paying Agent, and an Opinion of Counsel to the effect that the payment of such Bonds has been provided for in the manner set forth in the Resolution and that all obligations of the County with respect to such Bonds have been discharged and satisfied, shall have been filed with the County and the Paying Agent, and (3) in the event such Bonds are not by their terms subject to redemption within the next succeeding sixty (60) days, the County shall have agreed to publish and mail pursuant to the Resolution a notice to the Holders of such Bonds and to the securities depositories and securities information services selected by the Director of Finance pursuant to the Resolution and to the original underwriter or other first purchaser of the Bonds that the deposit required by clause (2) above has been made with such escrow agent or the Paying Agent and that such Bonds are deemed to have been paid in accordance with the Resolution and stating the maturity dates or redemption dates, as the case may be, upon which money is to be available for the payment of the principal of and redemption premiums, if any, on such Bonds.

Unclaimed Money

Anything contained in the Resolution to the contrary notwithstanding, any money held by the Paying Agent in trust for the payment and discharge of any of the Bonds or any interest thereon which remains unclaimed for two (2) years after the date when such Bonds or interest thereon have become due and payable, either at their stated maturity dates or by call for redemption prior to maturity, if such money was held by the Paying Agent on such date, or for two (2) years after the date of deposit of such money if deposited with the Paying Agent after the date when such Bonds or interest thereon became due and payable, shall be deposited by the Director of Finance in the Community Facilities Fund, and the Holders shall look only to the money (if any) therein for the payment of such Bonds and interest thereon; provided, that before the Director of Finance shall make any such deposit the County shall publish and mail pursuant to the Resolution a notice to the Holders of all Outstanding Bonds and to the securities depositories and securities information services selected by him pursuant to the Resolution and to the

G-19 original underwriter or other first purchaser of the Bonds that such money remains unclaimed and that after a date named in such notice, which date shall not be less than thirty (30) days after the date of the mailing of such notice, the balance of such money then unclaimed will be deposited in the Community Facilities Fund.

Appointment and Removal of Paying Agents

The Director of Finance shall be the initial Paying Agent for the purpose of paying the interest on and principal of and redemption premiums, if any, on the Bonds and for the purpose of performing the other obligations imposed on it in the Resolution. The Paying Agent may at any time resign, which resignation shall become effective upon the appointment of a successor Paying Agent. Upon receiving notice of such resignation, the County shall promptly appoint a successor Paying Agent, except that if no successor Paying Agent shall have been appointed by the County within thirty (30) days of receiving such notice, the resigning Paying Agent may petition any court of competent jurisdiction for the appointment of a successor Paying Agent. The County may at any time in its sole discretion remove the Paying Agent initially appointed and any successor thereto and may appoint a successor or successors thereto by an instrument in writing.

Liability of County Limited to Special Taxes and Certain Other Funds

Notwithstanding anything contained in the Resolution, the County shall not be required to advance any money derived from any source of income other than the Special Taxes and the other funds provided in the Resolution for the payment of the interest on or principal of or redemption premiums, if any, on the Bonds.

The Bonds are special tax obligations of the County, and the interest on and principal of and redemption premiums, if any, on the Bonds are payable solely from the Special Taxes and such other funds, and the County is not obligated to pay them except from the Special Taxes and such other funds. The General Fund of the County is not liable and the full faith and credit of the County is not pledged for the payment of the interest on or principal of or redemption premiums, if any, on the Bonds, and no tax or assessment other than the Special Taxes shall ever be levied or collected to pay the interest on or principal of or redemption premiums, if any, on the Bonds. The Bonds are not secured by a legal or equitable pledge of or charge, lien or encumbrance upon any property of the County or any of its income or receipts except the Special Taxes and such other funds as provided in the Resolution, and neither the payment of the interest on or principal of or redemption premiums, if any, on the Bonds is a general debt, liability or obligation of the County. The Bonds do not and will not constitute an indebtedness of the County within the meaning of any constitutional or statutory debt limitation or restriction, and neither the Board of Supervisors nor the County nor any officer or employee thereof shall be liable for the payment of the interest on or principal of or redemption premiums, if any, on the Bonds otherwise than from the Special Taxes and such other funds as provided in the Resolution.

Benefits of the Resolution Limited to Certain Parties

Nothing contained in the Resolution, express or implied, is intended to give to any person other than the Board of Supervisors, the County, the Director of Finance, the Paying Agent and the Holders any right, remedy or claim under or by reason, and any agreement or covenant required by the Resolution to be performed by or on behalf of the Board of Supervisors, the County, the Director of Finance or the Paying Agent shall be for the sole and exclusive benefit of the Holders.

Deposit and Investment of Money in Accounts and Funds

All money in the Special Tax Fund, the Bond Redemption Fund, the Bond Reserve Fund, the Expense Fund and the Community Facilities Fund shall be invested by the Director of Finance in Permitted Investments that mature not later than the date on which it is estimated that such money will be required to be paid out under the Resolution; provided, that any money held by the Director of Finance in any accounts and funds established under the Resolution and not otherwise invested in Permitted Investments shall be deposited in time or demand deposits in any state or nationally chartered bank or trust company or a state or federal savings and loan association, and shall be secured at all times by such obligations as are required by law and to the fullest extent required by law. The

G-20 Director of Finance shall not be responsible for any loss suffered in connection with any investment made in accordance with the Resolution.

All earnings on any money so deposited or invested which exceeds the requirements of the account or fund from which such money was deposited or invested shall (subject to the requirements of the Resolution) be deposited in the Special Tax Fund, and all losses on any such money so deposited or invested shall be borne by the account or fund from which the deposit or investment was made.

Waiver of Personal Liability

No member of the Board of Supervisors or officer or employee of the County shall be individually or personally liable for the payment of the interest on or principal of or redemption premiums, if any, on the Bonds, but nothing contained in the Resolution shall relieve any member of the Board of Supervisors or officer or employee of the County from the performance of any official duty provided or by the Law or by any other applicable provisions of law.

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County of Sacramento Community Facilities District No. 2005‑2 (North Vineyard Station No. 1) • Special Tax Bonds, Series 2007A Printed on Recycled Paper IMAGEMASTER 800.452.5152