SITE AND FACILITIES General

The District will make Lease Payments pursuant to the Lease for the use and occupancy of the Site and Facilities. The term “Site and Facilities” is defined in the Lease as the following real property and improvements, subject to release and replacement as described below:

• Fire Station 44, located at 205 Guild Street in the City of Galt, and the site on which it sits

• Fire Station 46, located at 1050 Walnut Street in the City of Galt, and the site on which it sits.

• Fire Station 72, located at 10035 Atkins Drive in the City of Elk Grove, and the site on which it sits

• Fire Station 77, located at 8350 Poppy Ridge Road in the City of Elk Grove, and the site on which it is being constructed

Fire Station 44. Fire Station 44 is a warehouse utilized by the District in the City of Galt.

It consists of approximately 8,100 square feet, and has an insured value for Fiscal Year 2021-22 (excluding contents) of $815,397.

Fire Station 46. Fire Station 46 is a fire station operated by the District in the City of Galt.

It consists of approximately 3,488 square feet, and has an insured value for Fiscal Year 2021-22 (excluding contents) of $1,380,142.

Fire Station 72. Fire Station 72 is a fire station operated by the District in the City of Elk Grove. It consists of approximately 10,754 square feet, has an insured value for Fiscal Year 2021-22 (excluding contents) of $4,538,069.

Fire Station 77. Fire Station 77 is a fire station being constructed by the District in the City of Elk Grove, anticipated to consist of approximately 9,500 square feet. For additional details on Fire Station 77 and the sources and uses of its financing, see “PLAN OF FINANCE – The Project.”

As described in more detail below, upon the completion of construction of Fire Station 77 using proceeds of the Certificate and other available funds, the District anticipates there will be sufficient value in the site and facilities of Fire Station 77 to release the fire department headquarters and fire training facility located at 10573 East Stockton Boulevard as part of the Site and Facilities.

Substitution of Site and Facilities

The District shall have, and is hereby granted, the option at any time and from time to time during the Term of this Lease, to substitute other land, facilities, improvements or other property (a “Substitute Property”) for the Site and Facilities or any portion thereof (a “Former Property”), provided that the District shall satisfy all of the following requirements which are hereby declared to be conditions precedent to such substitution:

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• The District shall notify each rating agency then rating the Certificates in writing of such substitution, which notice shall contain the certification that all conditions set forth in the Lease are met with respect to such substitution.

• The District shall take all actions and shall execute all documents required to subject such Substitute Property to the terms and provisions of the Lease, including the filing with the Corporation and the Trustee an amended description of the site and facilities leased thereunder, which adds thereto a description of such Substitute Property and deletes therefrom the description of such Former Property, and the recordation of an executed amendment to the Lease with the Office of the Sacramento County Recorder, and shall file and cause to be recorded corresponding amendments to the Site and Facilities Lease and Assignment Agreement.

• The District shall provide to the Corporation and the Trustee a certificate of a District Representative which states that the annual fair rental value of such Substitute Property is no less than the maximum annual Lease Payments and anticipated Additional Rental Payments remaining unpaid at the time of the proposed substitution.

• The District shall certify in writing to the Corporation and the Trustee that such Substitute Property serves the public purposes of the District, is essential to the operation of the District, and constitutes property which the District is permitted to lease under the laws of the State of California.

• The District shall certify in writing to the Corporation and the Trustee that the estimated useful life of such Substitute Property at least extends to the date on which the final Lease Payment becomes due and payable under the Lease.

• The District shall obtain an CLTA policy of title insurance meeting the requirements of the Lease with respect to such Substitute Property.

• Substitution of the Substitute Property for the Former Property shall not cause the District to violate any of its covenants, representations and warranties made in the Lease or in the Trust Agreement.

• The District shall cause to be filed with the Trustee an Opinion of Special Counsel substantially to the effect that such substitution will not (i) affect the obligation of the District to continue to pay Lease Payments in the amounts and at the times and in the manner required by this Lease, or (ii) cause the interest components of the Lease Payments to become includable in gross income for purposes of federal or State of California personal income taxation.

From and after the date on which all of the foregoing conditions precedent to such substitution are satisfied, the Term of the Lease shall cease with respect to the Former Property and shall be continued with respect to the Substitute Property, and all references therein to the Former Property shall apply with full force and effect to the Substitute Property. The District shall not be entitled to any reduction, diminution, extension or other modification of the Lease Payments whatsoever as a result of such substitution.

10 Release of Site and Facilities

The District shall have, and is hereby granted, the option at any time and from time to time during the term of the Lease to remove from the Lease any portion of the Site and Facilities;

provided that the District shall satisfy all of the following requirements which are hereby declared to be conditions precedent to such removal (such conditions shall not be applicable in the event Site and Facilities released will be replaced by substitute property in accordance with the Lease):

• No event of default has occurred and is continuing under the Lease.

• The District shall file with the Corporation and the Trustee an amended exhibit to this Lease that deletes the legal description of such Site and Facilities, and record an executed amendment to the Lease with the Office of the Sacramento County Recorder, and shall file and cause to be recorded corresponding amendments to the Site and Facilities Lease and Assignment Agreement.

• The District shall cause to be filed with the Trustee an Opinion of Special Counsel substantially to the effect that such removal will not affect the obligation of the District to continue to pay Lease Payments in the amounts and at the times and in the manner required by the Lease.

• The District shall file with the Corporation and the Trustee a certificate of a District Representative which states that the annual fair rental value of the remaining Site and Facilities, taken into consideration the removal of the applicable portion of the Site and Facilities, is no less than the maximum annual Lease Payments and anticipated Additional Rental Payments remaining unpaid at the time of such removal.

• The District shall file with the Corporation and the Trustee a certificate of a District Representative which states that the remaining Site and Facilities continue to serve the public purposes of the District and are essential to the operation of the District.

• The removal shall not cause the District to violate any of its covenants, representations and warranties made in the Lease or in the Trust Agreement.

Notwithstanding the foregoing, upon the completion of construction of Fire Station 77, the District shall have the absolute right, without consent of the Corporation or the Trustee, to make Fire Station 77 the sole Site and Facilities subject to the Lease and the Site and Facilities Lease, and to release the other initial component of the Site and Facilities from the Lease and the Site and Facilities Lease, subject to the following conditions precedent: (1) an official of the District shall deliver to the Corporation and the Trustee a certification that structural improvements of Fire Station 77 are substantially complete and the fair rental value of Fire Station 77 following such release is no less than the value demonstrated by the as-built valuation; (and (2) causing an appropriate Termination, Release and Substitution of Lease of Real Property document to be executed by an official of the District and recorded in the real property records of Sacramento County with respect to the portion of the Site and Facilities to be released.

Upon the satisfaction of all such conditions precedent, the Term of this Lease will thereupon end as to the Released Property. District is not entitled to any reduction, diminution, extension or other modification of the Lease Payments whatsoever as a result of such release.

The Corporation and the District shall execute, deliver and cause to be recorded all documents required to discharge the Lease of record against the Released Property.

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SECURITY AND SOURCES OF PAYMENT FOR THE CERTIFICATES