79265288

ANNUAL REPORT

OF

LENNAR HOMES OF CALIFORNIA, INC.

Dated as of March 23,2015

Providing Continuing Disclosure Relating to the

$7,075,000 City of Roseville

Diamond Creek Community Facilities District No. 1 (Public Facilities) Special Tax Bonds, Series 2007

TABLE OF CONTENTS

Page

IN"TIZODUCTO.RY STATEMENT ........................ .... .................................................................................. 1

CUSIP NUMBERS ...................................................................................................................................... 2

FORWARD-LOOKlNG STATEJ\1ENTS .................................................................................................... 3

REPORTING OF SIGNIFICANT EVENTS ............................................................................................... 3

SPECIFIC CONTINUIN G DISCLOSURE INFORMATION .................................................................... 4

CERTIFICi\ TION ..................................................................................................................................... S-1

INTRODUCTORY STATEMENT

This Annual Repmi, dated as of March 23, 2015 (the "Annual Report"), has been prepared by Lennar Homes of Califomia, Inc. ("Lennar") with respect to the following property only (collectively, the "Property"):

• Placer County Assessor's Parcel Number: 017-117-071 (herein, :'Parcel 071"); and

• Placer County Assessor's Parcel Numbers: 482-440-026; 482-440-039; 482-440-041; 482-440-042; 482-440-043; 482-440-044; 482-440-045; 482-440-046; 482-440-047; 482-440-050; 482-440-52; and 482-440-054 (herein, collectively, the "12 Lots").

All of the Property is located within the City of Roseville Diamond Creek Community Facilities District No. 1 (Public Facilities) (the "J>istrict"). Lennar believes that the Property was originally owned by Diamond Creek Partners, Ltd. ("Diamond Partners"), but was subsequently acquired by BBC Diamond Creek, LLC ("BBC"). The 12 Lots were part of a larger purchase of propeity from BBC that occtuTed in two separate closings held on December 21,2012 and February 8, 2013. Lennar acquired Parcel 071 from BBC on March 7, 2014.

In connection with the issuance of the bond captioned on the cover page of this Almual Report (the "Bonds"), a Continuing Disclosure Agreement, dated as of September 1, 2007 (the '~Disclosure Agreement"), was entered into by Diamond Partners. The Disclosure Agreement applied to the Property and other property owned by Diamond Partners at the time. It is unknown whether BBC assumed any continuing disclosure obligations from Diamond Partners with respect to the Property under the Disclosure Agreement.

Capitalized terms used in this Annual Report but not otherwise defmed have the meanings given to them in the Disclosure Agreement or the Official Statement, dated April 25, 2007 (the "Official Statement"), relating to the Bonds.

In acquiring the Property, Lennar was never required to execute, and Lennar has not executed, any fmm of assumption of the Disclosme Agreement. Moreover, Lennar has been infonncd by Willdan Financial Services (formerly MuniFinancial, Inc.), the Dissemination Agent under the Disclosure Agreement (herein, "Willdan"), that Willdan is unaware of any assumption or written continuing disclosme agreement between Willdan and Lennar related to the Bonds. Accordingly, Lennar is not obligated to provide continuing disclosure with respect to the Property in the District.

However, Lennar is voluntal'ily pi'Oviding this Annual Report, but witlt relpect to the Property only and only for the time pel·iodfrom and after Ma1·ch 23, 2015. All references in this Annual Report to the ownership of, and development and financing plans for, the Property are those of Lennar only, and not of Diamond Partners, BBC, or any prior owner of the Property. Lennar makes no representations about the accuracy or applicability of the information in the Official Statement regarding the Property, and makes no attempt to reconcile any development and

fmancing plans of Diamond Partners, BBC, or any prior owner of the Property with the development and financing plans of Lennar set forth in this Annual Report.

The provision of this Annuat Report does not imply or impose any ob]jgation on Lennar to update such infonnation. While this Annual Report provides the jnformation required by the Disclosure Agreement, Lennar is not bound by the terms of the Disclosure Agreement. Furthennore, Lennar may discontinue provjding such information provided in this Annual Report as to any or all of the Property at any time without notice.

Because Lennar is not a party to or obligated under 1he Disclosure Agreement, to the extent it provides Annual Reports on a voluntary basis, it will file Annual Reports directly with EMMA, and there is, and will be, no dissemination agent. Willdan will not be providing any such services (including, but not limited to, providing notification about the trulure, if any, to timely file an Annual Report) with respect to the Property or any Annual Report filed by Lennar.

CUSIP NUMBERS

The following CUSIP numbers have been assigned to the outstanding Bonds by Standard & Poor's CUSTP Service Bureau, a division of The McGraw-Hill Companies, Inc., and are provided for convenience of reference only. Lennar does not assume any responsibility for the accuracy of these CUSIP data.

Maturity (September 1)

2015 2016 2017 2018 2019

CUSJP(l) 777870 SM9 777870 SN7 777870 SP2 777870 SQO 777870 SR8

Matu1·jty (September 1)

2020 2021 2026 2037

CUSIP<1>

777870 SS6 777870 ST4 777870 SUl 777870 SV9

(i') CUSIP® is a registered ll'ademark of the American Bankers Association. Copyright© 1999-2015 American Bankers Association. All rights reserved. CUSIP~) data are provided by CUSIP Global Services, managed by Standard & Poor's financial Services LLC on behalf of the American Bankers .1\.ssociation. 111ese data are not intended to create a database and do not serve in any way as a sub~1itute for CUSlP Global Services. CUSIP® numbers are provided for convenience of reference only. Lennar takes no responsibility for tile a.ccuracy of such numbers.

[Remainder of Page Intentionally Left Blank]

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FORWARD-LOOKING STATEMENTS

Certain statements included or incorporated by reference in this Annual Report constitute "forward-looking statements'' within the meaning of the United States Private Securities Litigation Reform Act of 1995, Section 21E of the United States Securities Exchange Act of 1934, as amended, and Section 27 A of the United States Securities Act of 1933, as amended. Such statements are generally identifiable by the terminology used such as "plan," "intend," "expect," "propose," "estimate," "project," ''budget," "anticipate," 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 that may cause the actual results, performance, or achievements described to be materially different from any futw-e results, performance, or achievements expressed or implied by such forward-looking statements. Updates or revisions to these forward-looking statements may be provided if the expectations, events, conditions, or circumstances on which such statements are based change in a material way. The forward-looking statements in this Annual Report are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in or implied by such forward-looking statements. READERS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON SUCH FORWARD-LOOKING STATEMENTS, WlllCH SPEAK ONLY AS OF THE DATE INDICATED.

REPORTING OF SIGNJFICANT EVENTS

The following Listed Events referenced in Section 4 of the Disclosure Agreement and listed below, have occurred with respect to the Property owned by Lcnnar from and after the date of this Annual Report:

X No significant events, including the Significant Events listed below, have occurred with respect to the Property.

Failure by Lennar to pay any real property taxes (including any assessments or special taxes) levied within the District on a parcel of Property owned by Lennar.

The discovery oftoxic material or hazardous waste which will require remediation on any Property owned by Lennar subject to the District special tax.

Default by Lennar on any loan with respect to the construction or pcnnanent financing of public or private improvements with respect to the development of the Property.

Initiation of bbank:ruptcy proceedings (whether voluntary or involuntary) by Lennar or any related entity.

[Remainder of Page Intentionally Left Blank]

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SPECIFIC CONTINUING ])JSCLOSURE INFORMATION

This Annual Report generally follows the information requested in Section 3 of the Disclosure Agreement, tailored to relate to Lcnnar and the Property. The source for the following information is Lennar, except as noted. The information in this section is provided as of March 23, 2015, unless otherwise noted.

(i) Any sign!ficant changes in the information contained in the Official Statement under the headings: ((THE DISTRICT- Anticipated Development in the District".

All references in this Annual Report to the ownership of, and development and financing plans for, the Property are those of Lennar only, and not of Diamond Partners, BBC, or any prior owner of the Property. Lennar makes no representations about the accuracy or applicability of the information in the Official Statement regarding the Property, and makes no attempt to reconcile any development and financing plans of Diamond Partners, BBC, or any prior owner of the Property with the development and financing phms of Lennar set forth in this Annual Report.

/\.. New Ownership:

The owner ofthe Property is Lennar Homes of California, Inc. (previously defmed as "Lennar"). Lennar, which is based in Aliso Viejo, California, has been in the business of developing residential real estate communities in California since 1995.

Lennar is owned by U.S. Home Corporation, a Delaware corporation ("U.S. Home)'), and two other entities, Lcnnar Land Partners Sub, lnc. (7 .3 31% interest) and Lennar Land Partners Sub II, Inc. (11.933% interest). U.S. Home, Lcnnar Land Partners Sub, Inc., and Lcnnar Land Partners Sub IJ, Inc. are each wholly-owned by Lennar Corporation.

J,ennar Corporation, founded in 1954 and publicly traded under the symbol "LEN" since 1971, is one of the nation's largest home builders, operating w.1dcr a number of brand names, including Lennar, U.S. Home, and Greystone Homes. Leonar develops residential communities both within the Lennar family of builders and through consolidated and unconsolidated partnerships in which Lennar maintains an interest.

Current Finances and Operations. Lennar is an indirect wholly owned subsidiary of Lennar Corporation ("Lenna.r Corporation"). In its SEC filing on fonn 10-K filed on January 23, 2015 (for the twelve months ending November 30, 2014), Lennar Corporation reported that, for both the years ended November 30) 2014 and 2013, revenues from home sales were $7.02 billion and $5.3 5 billion, respectively. New home deliveries increased to 21)003 homes in the year ended November 30, 2014 from 18)290 homes in 2013. '!be average sales price of homes delivered by all of Lcnnar Corporation' s homebuilding segments increased to $326,000 in the year ended November 30,2014, from $290,000 in the same period in 2013.

A dditional Information. Lcnnar 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 fi lings, particularly the Atmual Report on Fonn 1 0-K and its most recent Quarterly Report on Form 10-Q, may be inspected and copied at

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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 SEC's website at www.sec.gov. This jnternet address is included for reference only and the information on the Internet site is uot a part of this Annual Report and is not incorporated by reference into this Annual Report. No representation is made in this Annual Report as to the accuracy or adequacy of the information contained on the internet site. Copies of such material can be obtajned from the public reference section of the SEC 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.

Copies of Lennar Corporation's Annual Report and related financial statements, prepared in accordance with generally accepted accounting standards, are available from Lennar Corporation's website at lezmar.com. This internet address is included for reference only and the information on the Internet site is not a part of this Aru1Ual Report and is not incorporated by reference into this A.tmual Report. No representation is made in this Anuua1 Report as to the accuracy or adequacy of the information contained on the internet site.

B. The 12 Lots:

History and Status: Lennar purchased 47 partially-improvement lots (Lots 85-131 of Diamond Creek 31B, Village 1, Subdivision No. 000050) from BBC on December 21, 2012. Lennar purchased Lot A from BBC on February 8, 2013, and then subdivided this lot into 6 new lots (Diamond Creek 3IB, Village 2, Subdivision No. 000169). Between the two purchases and the subdivision, Lennar had 53 lots to develop.

Lennar developed the 53 lot.;; as a medium density single frunjJy product line known as Chateau. In addition to the homebuilding, Lennar constructed alleys, paseos, and retaining walls necessary to serve the 53 lots.

As shown below, as of March 23, 2015, Lennar has sold and closed to homebuycrs 41 of the 53 lots, and Lennar now owns only the 12 Lots. Construction of single-family homes is completed or ongoing on all 12 Lots.

Number of Number of Number of Units Under Units Number of Units with Construction Under Units Sold and

Number Building or Contract to with Closed Homebuilder of Units Permits Completed be Sold Escrow

Lennar Homes of California, Inc. 53 53 12 47 41

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Development Plans for the 12 Lots: I~nnar's development plan with respect to the 12 Lots is to continue building single family homes under the Chateau product line and selling those homes to homebuyers. The close out of the 12 Lots is expected to occur in July of2015, as shown below:

Estimated Product Number of Begin Home First Home Sale Last Horne Sale Line Units Construction Closings Closings [1]

Chateau 53 Spring 2013 September 2013 July 2015

[1] This date is an estimate only; actual close out will be determined by construction schedules, which in tum are determined by the real estate market.

Financing Plan for the 12 Lots: Lellllar is financing the development of the 12 Lots through internal sources and intends to use this source of funds, together with proceeds of future home sales, to finance residential home construction costs and carrying costs of its property, including property taxes and the Special Taxes while it owns the 12 Lots.

Notwithstanding the belief of Lennar that it will have sufficient funds to complete its planned development of the 12 Lots, no assurance can be given that sources o.f financing available to Lennar will be sufficient to complete the property development and home construction as currently anticipated While Lennar has made such internal financing available in the past, there can be no assurance whatsoever of its willingness or ability to do so in the future. Neither Lennar nor any o.l its affiliates has any legal obligation (?f any kind to make any such funds available or to obtain loans. Other than pointing out the willingness of Lennar to provide internal financing in the past, Lennar has not represented in any way that it will do so in the future. If and to the extent that internal financing and home sales revenues are inadequate to pay the costs to complete Lennar 's planned development of the 12 Lots and other financing by Lennar is not put into place, there could be a shortfall in the funds required to complete the proposed development by Lennar and portions of the 12 J,ot<J may not he developed.

C. Parcel 071:

History and Status: LelUlar acquired Parcel 071 from BBC on March 7, 2014. Parcel 071 has an approved Tentative Map No. 2013PL-017, and Design Review approval, for 81 single family lots. At purchase, Parcel 071 was graded to a superpad condition. The streets around Parcel 071 are complete and services are stubbed to the site. Parcel 071 is currently vacant land.

To develop Parcel 071 under its current entitlement, various infrastructure improvements will be required to be constructed by Le1mar, including, but not limited to, intemal jnfi·astructure, sewer, water, storm drain, utilities, and paving.

Development Plan for Parcel 071: Lennar has no immediate plans to develop Parcel 071 at this time. Lennar is evaluating its development options with respect to Parcel 071.

Financing Plan for Parcel 071: Although final development plans for Parcel 071 have not been determined, Lennar anticipates that any such costs will be pajd through internal sources, together with proceeds of future home sales.

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Notwithstanding the belief of Len:nar that it will have sufficient fimds to complete any planned development of Parcel 071, no assurance can be given that sources ofjinancing available to Lennar will be sufficient to complete the property development and home construction as currently anticipated While Lennar has made such internal financing available in the past, there can be no assurance whatsoever of its willingness or ability to do so in the future. Neither Lennar nor any of its affiliates has any legal obligation of any kind to make any such funds available or to obtain loans. Other than pointing out the willingness of Lennar to provide internal financing in the past, Lennar has not represented in any way that it will do so in the future. If and to the extent that internal financing and home sales revenues are inadequate to pay the costs to complete Lennar 'planned development of Parcel 071 and other financing by Lennar is not put into place, there could be a shor(fall in the funds required to complete the any development by Lennar and portions(){ Parcel 071 may not be developed.

(ii) A general description of the development status ofthe Property within the District.

See the description in item (i) above.

(iii) A summary o.f property within the District sold by Lennar.

As discussed in item (i) above, Lenn.ar has constructed, marketed, and sold to homeowners 41 of the 53 lots it acquired and subdjvided.. Six of the remaining 12 Lots are under contract to be sold, but have not yet closed escrow, and the other six are currently being offered for sale to home buyers.

(iv) A description of any change in the legal structure of Lennar which is material to Bond investors.

The Property is now owned by Lennar, as described jn item (i) above. The legal structure of Lennar is described in item (i) above.

(v) Material changes in project costs, status of any construction loans and any permanent financing received by Lennar with respect to the Property that could have a sign!ficant impact on Lennar 's ability to complete the construction and sale of homes within the Property.

See item (i) above for the development and financing plans of Lennar with respect to the Property as of March 23, 2015. All references in this Annual Report to the ownership of, and development and tinancing plans for, the Property are those of Lennar only, and not of Diamond. Partners, BBC, or any prior owner of the Property. Lennar makes no representations about the accuracy or applicability of the information in the Official Statement regarding the Property, and makes no attempt to reconcile any development and financing plans of Diamond Partners, BBC, or any prior owner of the Property with the development and fmancing plans of Lennar set forth in this Annual Report.

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(vi) Any denial (?f ctedit, lines of credit, loans or loss of source of capital that could have a sign?ficant impact on Lennar 's ability to pay the Special Tax or other taxes or assessments or to comply with its obligations under the Development Agreement.

For Lennar with respect to the Property only: None.

All references in this A.Imual Report to the ownership of, and development and financing plans for, the Property are those of Lennar only, and not of Diamond Partners, BBC, or any prior owner of the Property. Lennar makes no representations about the accuracy or applicability of the information in the Official Statement regarding the Property, and makes no attempt to reconcile any development and financing plans of Diamond Partners, BBC, or any prior owner of the Property ·with the development and financing plans of Le1mar set forth in this Annual Report.

(vii) Any .failure by Lennar to pay when due general property taxes, assessments or special taxes with re::.pect to the Property in the District.

For Lennar with respect to the Property only: None.

All references in this Annual Report to the ownership of, and development and fmancing plans for, the Property are those of Lennar only, and not of Diamond Partners, BBC, or any prior owner of the Property. Lennru· makes no representations about the accuracy or applicability of the information in the Official Statement regarding the Property, and makes no attempt to reconcile any development and financing plans of Diamond Partners, BBC, or any prior owner of the Property vvith the development and financing plans ofLennar set forth in this Annual Report.

(viii) Any previously undisclosed amendments to the land use entitlements or environmental conditions or other governmental conditions that are necessary to complete the development plan.

For Lennar with respect to the 12 Lots: None.

For Lennar with respect to Parcel 071: None. However, Lennar is evaluating its development options with respect to Parcel 071.

(ix) A description of any changes to the Development Agreement which materially and adversely affect the development of the Property within the District.

For Lennar with respect to the 12 Lots: None.

For Le1mar with respect to Parcel 071: None. However, Lcnnar is evaluating its development options with respect to Parcel 071.

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CERTIFICATION

This Annual Report is voluntarily provided by Lennar with respect to the Property only and only for the time pel'iodfrom and after March 23, 2015.

ANY OTHER STATEMENTS REGARDING LENNAR, THE DEVELOPMENT OP THE PROPERTY, LENNAR'S FINANCING PLAN OR FINANCIAL CONDITION, OTHER THAN STATEMENTS MADE BY LENNAR JN AN OFFICIAL RELEASE, OR FILED WITH THE MUNICIPAL SECURITIES RULEMAKING BOARD OR A NATIONALLY RECOGNIZED MUNICIPAL SECURJTIES JNFORMATION REPOSITORY, ARE NOT AUTHORIZED BY LENNAR. LENNAR IS NOT RESPONSIBLE FOR THE ACCURACY, COMPLETENESS OR FAIRNESS OF ANY SUCH UNAUTHORIZED STATEMENTS.

LENNAR HAS NO OBLIGATION TO UPDATE THIS ANNUAL REPORT.

Dated: As of March 23,2015 LENNAR HOMES OF CALIFORNIA, INC., a California corpor ·

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