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HomeMy WebLinkAboutItem 4b: ARA Resolution 235 & Resolution 6724: Issuance of Tax Allocation Bondsri r7 �7 Yi Iii DATE: June 15, 2010 STAFF REPORT Arcadia Redevelopment Agency TO: Chairman and Agency Board Mayor and City Council FROM: Jason Kruckeberg, Assistant City Manager /Development Servicesc. Director By: Jerry Schwartz, Economic Development Manager As SUBJECT: ADOPT RESOLUTION NO. ARA -235 AUTHORIZING THE ISSUANCE OF NOT TO EXCEED $19 MILLION PRINCIPAL AMOUNT OF SUBORDINATE TAX ALLOCATION BONDS, AND APPROVING THE PRELIMINARY OFFICIAL STATEMENT AND OTHER NECESSARY DOCUMENTS AND AGREEMEDNTS Recommendation: Adopt ADOPT RESOLUTION NO. 6724 APPROVING THE ISSUANCE OF 2010A SUBORDINATE TAX ALLOCATION BONDS BY THE ARCADIA REDEVELOPMENT AGENCY AND MAKING CERTAIN DETERMINATIONS RELATING THERETO Recommendation: Adopt SUMMARY At its March 16 Study Session, the Agency Board gave staff direction to work with the financing team to prepare a tax allocation bond issue for the Redevelopment Agency. Staff and the financing team have worked together to put together a bond issue that will allow the Agency to pay its housing obligation and have adequate funding available for its priority redevelopment activities. The next step in this process is to approve the bond documents and financing agreements with the financing team. DISCUSSION The Redevelopment Agency is funded with the tax increment, which is growth in property tax paid in the Central Redevelopment Project area. Since the project area started in 1974, the Agency has seen tremendous growth in tax increment. Redevelopment Agencies handle some activities by paying as you go, but that system is limiting for larger projects or most land acquisition. When possible, larger projects are often funded through a bond issue, in which the Agency receives future tax increment upfront with the bonds paid over time as the tax increment is received. Some of these future property taxes used to pay bonds are often generated by the projects developed with bond proceeds. Since the Redevelopment Agency must have debt to receive its tax increment each year, a tax allocation bond issue ensures that an Agency will always receive all of the tax increment it is due. The Arcadia Redevelopment Agency last issued tax allocation bonds in 2001. Since then it has continued to have growth in tax increment so that it can pay the debt service on those bonds and still have surplus revenues for pay as you go activities. In 2007, the Agency began to look into issuing a new tax allocation bond to take advantage of these surplus revenues. The timing wasn't right from a market standpoint to proceed at that point. Efforts were again started in September 2008, just before the recession hit the stock and bond markets. In June 2010, the markets have stabilized, and interest rates are low enough for the Agency to issue bonds to generate new money and refund some of the 2001 bonds to reduce the interest costs. THE 2010 A BOND ISSUE AND USE OF PROCEEDS The total bond issue amount of not to exceed $19 million includes the refunding of a portion of the 2001 bonds at reduced interest cost, with the rest being new money to the Agency of around $9 million. The new money will come from the 2010 A Subordinate Tax Allocation Bond Issue. It is called a 'subordinate' bond issue because the debt payment on the 2010 A bonds will be made after paying the remaining 2001 bonds. There is more than sufficient tax increment to pay both bonds. The new money that the Agency will receive from the 2010 A bonds will be used for two primary purposes. First, as has been discussed with the Council, the Agency has an obligation to repay $4,045,715 to the affordable housing fund based on an audit finding by the Department of Housing and Community Development (HCD) several years ago. Paying off this obligation from bond proceeds will resolve this issue for HCD as the City and Agency have promised. The second use of the bond proceeds is to pursue priority redevelopment projects. Once the housing obligation is paid, there will still be at least $5 million in bond proceeds for any redevelopment purpose. As was discussed in the Agency's Five Year Implementation Plan and again during the March 16 Study Session, the Agency's priorities include land acquisition for the expansion of Rusnak Mercedes Benz and the opportunity to acquire property or assist a project as part of the Gold Line expansion into Arcadia, plus the "Shop Arcadia" campaign, facade Rehabilitation, and studying the potential for downtown parking district. Some of these priorities can be accomplished with bond proceeds. ARA Staff Report Tax Allocation Bonds June 15, 2010 Page2of5 BOND FINANCING TEAM The financing team that has worked with staff to put the bond issue together includes some individuals and organizations that have worked on previous Agency bond issues and others who are new to Agency financing. Their fees come from the bond issue itself as part of the cost of issuance, and are factored into the total proceeds that the Agency will receive. The members of the financing team are listed in Attachment A to this staff report. The financing team includes the Agency's financial advisors, Fieldman Rolapp and Associates, with Jim Fabian and Darryl Street who have been before the Agency Board many times, and Bond Counsel Kurt Yeager of Stradling Yocca Carlson & Rauth who has represented the Agency for several years and was before the Agency Board in May 2010. The Agency is also continuing to use HdL Coren & Cone as its Redevelopment Consultant. HdL does the tax increment projecting for the bond issue, a function it also performs for the Agency as part of its regular scope of services. New members of the financing team for this bond issue include Stone & Youngberg, the Underwriters for the bonds. It is their responsibility to market the Agency's bonds, securing the greatest amount of proceeds at the lowest interest cost. Stone & Youngberg is a market leader in tax allocation bond issues and utilizes a national sales force to sell the Agency's bonds. Best, Best & Krieger which is acting as the Agency Counsel on the bond issue, is also acting as the Disclosure Counsel, which makes them responsible for the Preliminary and Final Official Statements that disclose all of the important facts about the Agency and bond issue itself. The total cost for these and other services for the bond issue is $225,000, which is 1.18% of a $19 million bond issue. As stated above, this cost will be paid from the bond issue itself, and the Agency will still receive at least $9 million in new money proceeds. It should be noted that staff and the financing team working together were able to have the rating raised on the 2001 bonds to AA- and earn a rating on the 2010 subordinate bonds of an A. These very strong ratings will make the bonds more attractive to buyers which could result in a reduction of the overall interest cost. They also reinforce the financial strength of the Agency and City as viewed by Standard & Poors, which rates potential municipal bond issues from throughout the country. BOND DOCUMENTS There are several bond documents that must be approved by the Council and Agency before the bond issue can close and the Agency can receive its proceeds. These documents are summarized below: Preliminary Official Statement The Preliminary Official Statement (POS) is a critical document because it explains the structure of the transaction, provides the schedule for paying the principal and interest on the bonds, gives a summary about the Redevelopment Agency and provides the independent financial analysis (prepared by HdL Coren & Cone) to show that the ARA Staff Report Tax Allocation Bonds June 15, 2010 Page 3 of 5 Agency can support these bonds. When the bonds are priced, the POS will become the Official Statement for the 2010 A subordinate bonds. Bond Purchase Contract This is a contract between the Agency and the underwriter Stone & Youngberg. In the Bond Purchase Contract, Stone & Youngberg agrees to purchase the bonds from the Agency to sell then to the public. It insures that the Agency will receive the bond proceeds it is due, even if the Underwriter were to have difficulty selling the bonds. Indenture of Trust The parties to the Indenture of Trust are the Redevelopment Agency and the Bank of New York Mellon Trust Company, N.A. The Indenture of Trust enumerates the responsibilities of the Agency to agree to make the bond payments and to disclose any relevant information, financial or otherwise, that would compromise the bond issue at any time. It describes the responsibilities of the Trustee to make principal and interest payments to the bondholders, to keep complete and accurate records, and to invest all funds in Permitted Investments. It should be noted that Bank of New York Mellon Trust Company or its predecessor company is currently serving as the Trustee for the Agency's 2001 bonds under a similar Indenture of Trust and it has worked smoothly. Continuing Disclosure Agreement The Continuing Disclosure Agreement (CDA), which is shown as Appendix G to the Preliminary Official Statement requires the Agency to provide its annual financial report to the Municipal Securities Rulemaking Board (MSRB) and to report to the MSRB if a significant financial event occurs, as shown in Section 5 of the CDA. These are events that could result in the Agency being unable to make the bonds payments. The Agency's disclosure obligation will continue until the bonds are paid off. The CDA has been part of every Agency bond issue and every payment has always been made on time and without any issues arising. STEPS TO COMPLETE AGENCY BOND ISSUE After tonight's actions, there are a few very important steps remaining before the bonds close and the Agency receives its proceeds. The Preliminary Official Statement will be distributed on June 16 so that the market can begin to look at the proposed issue. The bonds will be pre - priced on June 23 and priced on June 24. At that time, the Agency will know the total interest costs, final bond sizing, and net proceeds. The bonds will close on July 8, which is when the Agency will receive its proceeds. The pricing and closing dates were selected so that the Agency bonds would reach the market ahead of other bond issues that might compete for the attention of bond buyers. ARA Staff Report Tax Allocation Bonds June 15, 2010 Page 4 of 5 CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA) The issuance of the 2010 Agency bonds is not considered a project under CEQA Section 15378, and thus is not subject to CEQA pursuant to Section 15060 (c) (3). FISCAL IMPACT The Agency will receive approximately $9 million in proceeds from the 2010 tax allocation bond issue. It will use $4,045,715 to pay back the low /mod housing fund and the remainder to pursue priority redevelopment projects and activities. The payment of the housing obligation will clear the existing HCD audit finding. RECOMMENDATION That the Agency Board and City Council adopt the attached resolutions approving the bond documents and authorizing the Redevelopment Agency's 2010 bond issue, and approve the financing team. Approved n- a --c.a.-`� Donald Penman City Manager /Executive Director Attachments: A - Bond Financing Team B - Redevelopment Agency Resolution No. ARA 235 C - City Council Resolution No. 6724 D - Preliminary Official Statement E - Bond Purchase Contract F - Indenture of Trust ARA Staff Report Tax Allocation Bonds June 15, 2010 Page 5 of 5 0 0 0 0 0 0 0 0 o O o 0 0 0 0 0 0 0 0 0 0 0 o 0 0 0 0 0 o 0 o 0 0 0 0 0 00 0 0 0 0 0 otn 00 p'? N O �O `O 00 ^ N N — , 0 tf, r 69 69 69 69 69 69 64 69 49 69 69 O O O O O O O O 0 O O v1 to Ci e} �t 69 69 69 69 64 69 44 64 69 69 0 0 O 0 0 O 0 O O O 0 600066666 0 0 O O O O O O O O O O O 0 0 0 0 0 0 0 0 0 O vl O O O in V O V1 M h O 00 N h W N N ... - 69 69 69 69 69 69 69 64 69 69 69 4, R ° • 0. C1. O N o a a 4) 4) 0 a) 00 OA ta, cl C x ; 00 N G o ^ oaca EU 40 in cnn v ...1 1 2 N 0 { p p,, 0 / O � V 40 0 0 0 0 E x , D E v L 04 z X .> � Q ti ti cat 00 z C 0 RESOLUTION NO. ARA 235 A RESOLUTION OF THE ARCADIA REDEVELOPMENT AGENCY AUTHORIZING THE ISSUANCE OF NOT TO EXCEED $19,000,000 PRINCIPAL AMOUNT OF SUBORDINATE TAX ALLOCATION BONDS ON CERTAIN TERMS AND CONDITIONS, APPROVING A CONTINUING DISCLOSURE AGREEMENT, APPROVING THE FORM AND DISTRIBUTION OF A PRELIMINARY OFFICIAL STATEMENT AND FINANCING DOCUMENTS, AUTHORIZING CERTAIN OTHER OFFICIAL ACTIONS AND PROVIDING FOR OTHER MATTERS RELATING THERETO WHEREAS, the Arcadia Redevelopment Agency (herein referred to as the "Agency ") is a redevelopment agency duly created, established and authorized to transact business and exercise its powers, all under and pursuant to the Community Redevelopment Law (Part 1 of Division 24 (commencing with Section 33000) of the Health and Safety Code of the State of California) (the "Law "), and the powers of the Agency include the power to issue bonds for any of its corporate purposes; and WHEREAS, a redevelopment plan for the Central Redevelopment Project, in the City of Arcadia (the "Redevelopment Project "), has been adopted in compliance with all requirements of the Law; and WHEREAS, the Agency has previously issued its $20,895,000 Tax Allocation Bonds (Central Redevelopment Project), Series 2001A and Series 2001B (Taxable) (collectively, the "2001 Bonds "), under a Trust Indenture dated as of May 1, 2001, by and between the Agency and The Bank of New York Mellon Trust Company, N.A., as successor Trustee (the "Senior Bond Indenture "); and WHEREAS, the Agency wishes at this time to issue its not to exceed $19,000,000 aggregate principal amount of tax allocation bonds to be designated "Arcadia Redevelopment Agency, Central Redevelopment Project, Subordinate Tax Allocation Bonds, Series 2010 (Taxable)" (the "2010 Bonds ") on a basis subject to federal income taxation pursuant to the provisions of the Law and Government Code Attachment B Section 5903 for the purpose of providing additional funds to finance and refinance the Redevelopment Project; and WHEREAS, the 2010 Bonds, when issued, will be secured by a pledge of and lien on the tax increment revenues from the Redevelopment Project on a subordinate basis to the outstanding 2001 Bonds; and WHEREAS, proceeds of the 2010 Bonds will be used (i) to refund on a current basis a portion of the 2001 Bonds; (ii) to provide funds to the Redevelopment Project; (iii) to establish a reserve account or satisfy the reserve requirement with respect to the 2010 Bonds; and (iv) to pay a portion of the costs of issuing the 2010 Bonds; and WHEREAS, there has been placed on file with the Agency Secretary and filed with this Board the forms of the Indenture of Trust providing for the issuance of the 2010 Bonds, the Preliminary Official Statement relating to the 2010 Bonds, the Continuing Disclosure Agreement (which is attached as Appendix F to the Preliminary Official Statement) and a Bond Purchase Agreement between the Agency and Stone & Youngberg LLC (the "Underwriter") pursuant to which the Underwriter may offer to purchase the 2010 Bonds from the Agency, all on the terms and conditions set forth therein; and WHEREAS, the Agency desires to authorize the issuance and sale of the 2010 Bonds upon the terms and conditions hereinafter set forth; and WHEREAS, the issuance of the 2010 Bonds is not a "project" within the meaning of the California Environment Quality Act ( "CEQA "), specifically CEQA Guidelines section 15378, and thus is not subject to CEQA pursuant to CEQA Guidelines section 15060(c)(3). NOW, THEREFORE, THE ARCADIA REDEVELOPMENT AGENCY DOES HEREBY RESOLVE AS FOLLOWS: SECTION 1. Issuance of 2010 Bonds. Pursuant to the Indenture (hereinafter defined), the 2010 Bonds in an aggregate principal amount of not to exceed 2 $19,000,000 are hereby authorized to be issued. The form of 2010 Bonds presented to this Board as Exhibit A to the Indenture is hereby approved and shall be executed by the manual or facsimile signature of the Chair, Executive Director or City Finance Director or their respective written designee (each an "Authorized Officer "), the seal of the Agency shall be reproduced thereon and attested by the manual or facsimile signature of the Secretary. SECTION 2. Approval of Indenture and Escrow Agreement. The proposed forms of Indenture of Trust (the "Indenture ") and Escrow Agreement ( "Escrow Agreement "), between the Agency and The Bank of New York Mellon Trust Company, N.A., as trustee (and in the case of the Escrow Agreement, as escrow agent ") (the "Trustee ") in the forms presented to this Board, are hereby approved. Each of the Authorized Officers are hereby authorized and directed to execute and deliver, and the Secretary is hereby authorized and directed to attest the Indenture and the Escrow Agreement in said form, with such additions thereto or changes therein as are approved by such Authorized Officer after consultation with, and approval by, Bond Counsel and General Counsel, the approval of such additions or changes to be conclusively evidenced by the execution and delivery of the Indenture by any one of the Authorized Officers. SECTION 3. Approval of Official Statement. The form of Preliminary Official Statement relating to the 2010 Bonds presented to this Board is hereby approved. The preparation of a final Official Statement relating to the 2010 Bonds is hereby approved and each of the Authorized Officers is hereby authorized and directed, for and in the name and on behalf of the Agency, to execute and deliver a final Official Statement containing such changes from the Preliminary Official Statement as may be approved by the officer executing the same after consultation with Disclosure Counsel and General Counsel and the distribution of such Preliminary and final Official Statement in connection with the sale of the 2010 Bonds is hereby authorized. Each of the 3 Authorized Officers is also authorized to deem the Preliminary Official Statement final within the meaning of Rule 15c2 -12 (the "Rule ") of the Securities Exchange Act of 1934, excepting only such information as is permitted under the Rule, and to execute an appropriate certificate stating the Agency's determination that the Preliminary Official Statement has been deemed final within the meaning of such Rule. SECTION 4. Approval of Purchase Agreement. The form of Purchase Contract (the "Purchase Agreement ") presented to this Board by and between the Agency and the Underwriter and the sale of the 2010 Bonds by the Agency to the Underwriter pursuant thereto upon the terms and conditions set forth therein is hereby approved, and subject to such approval and subject to the provisions hereof, each of the Authorized Officers are hereby authorized and directed to evidence the Agency's acceptance of the offers made by the Purchase Agreement by executing and delivering the Purchase Agreement in said form with such changes therein as the officer executing the same may approve and such matters as are authorized by this Resolution, such approval to be conclusively evidenced by the execution and delivery thereof by any one of the foregoing officers. SECTION 5. The Authorized Officers to Establish Final Terms of Issuance of 2010 Bonds. The Board hereby authorizes each of the Authorized Officers to establish and determine (i) the final principal amount of the 2010 Bonds, not to exceed $19,000,000; (ii) the final interest rates on various maturities of the 2010 Bonds, not to exceed a true interest cost of eight percent (8 %) per annum; and (iii) the Underwriter's discount for the purchase of the 2010 Bonds, not to exceed one percent (1%) of the principal amount of the 2010 Bonds. SECTION 6. Approval of Continuing Disclosure Agreement. The Agency hereby approves the Continuing Disclosure Agreement in substantially the form presented to this Board, together with any additions thereto or changes therein as may be necessary to conform the terms of the Continuing Disclosure Agreement to the terms thereof 4 described in the final Official Statement deemed necessary or advisable by the Authorized Officers. Each of the Authorized Officers is hereby authorized and directed to execute the final form of the Continuing Disclosure Agreement for and in the name and on behalf of the Agency. SECTION 7. Professional Services. The Authorized Officers are authorized to execute contracts with Stradling Yocca Carlson & Rauth, a Professional Corporation, to act as Bond Counsel to the Agency, and Best Best & Krieger LLP, to act as Disclosure Counsel to the Agency, which contracts shall be in substantially the form on file with the Secretary, together with such changes as may be approved by the Authorized Officers and General Counsel, which changes shall be deemed approved by the execution and delivery of such contracts by any one of such officers. SECTION 8. Official Actions. Each of the Authorized Officers, the Secretary, the General Counsel and any and all other officers of the Agency are hereby authorized and directed, for and in the name and on behalf of the Agency, to do any and all things and take any and all actions, including execution and delivery of any and all assignments, certificates, documents (including, without limitation, any amendment to the Senior Bond Indenture required to issue the 2010 Bonds in accordance with the Indenture), the procurement of municipal bond insurance for the 2010 Bonds if such insurance would reduce the costs of borrowing and the payment of all costs of issuance of the 2010 Bonds, including, but not limited to, the fees and expenses of Bond Counsel, Disclosure Counsel, the Financial Advisor, the Fiscal Consultant, the Trustee (as provided in the Indenture), the Underwriter (as provided in the Purchase Agreement), any rating agency rating the 2010 Bonds, the printer and any other fees or expenses necessary or appropriate to facilitate the issuance of the 2010 Bonds in accordance with this Resolution. Additionally, the Authorized Officers are each hereby authorized and directed to take any action with respect to the refunding of the 2001 Bonds to be 5 refunded with proceeds of the Bonds, with the advice of General Counsel, , as may be necessary or desirable to facilitate the refunding of such portion of the 2001 Bonds. SECTION 9. Additional Determinations. The Agency hereby determines that interest on the Bonds will be subject to federal income taxation, as further described in the Official Statement, for purposes of Government Code Section 5903. SECTION 10. Effective Date. This Resolution shall take effect from and after the date of its passage and adoption. SECTION 11. The Agency Secretary shall certify to the adoption of this Resolution. Passed, approved and adopted this day of , 2010. ATTEST: Agency Secretary APPROVED AS TO FORM: Stephen P. Deitsch General Counsel 6 Chairman of the Arcadia Redevelopment Agency RESOLUTION NO. 6724 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ARCADIA, APPROVING THE ISSUANCE BY THE ARCADIA REDEVELOPMENT AGENCY OF ITS CENTRAL REDEVELOPMENT PROJECT SUBORDINATE TAX ALLOCATION BONDS, SERIES 2010 (TAXABLE) AND MAKING CERTAIN DETERMINATIONS RELATING THERETO WHEREAS, the Arcadia Redevelopment Agency (the "Agency ") is a redevelopment agency duly created, established and authorized to transact business and exercise its powers, all under and pursuant to the Community Redevelopment Law (Part 1 of Division 24 (commencing with Section 33000) of the Health and Safety Code of the State of California) and the powers of the Agency include the power to issue bonds for any of its corporate purposes; and WHEREAS, a Redevelopment Plan for the Central Redevelopment Project has been adopted and approved by Ordinance No. 1490, of the City of Arcadia (the "City "), and all requirements of law for and precedent to the adoption and approval of said Redevelopment Plan and any and all subsequent amendments to the Redevelopment Plan have been duly complied with; and WHEREAS, the Agency has adopted its resolution entitled: A RESOLUTION OF THE ARCADIA REDEVELOPMENT AGENCY AUTHORIZING THE ISSUANCE OF NOT TO EXCEED $19,000,000 PRINCIPAL AMOUNT SUBORDINATE TAX ALLOCATION BONDS ON CERTAIN TERMS AND CONDITIONS, APPROVING A CONTINUING DISCLOSURE CERTIFICATE, APPROVING THE FORM AND DISTRIBUTION OF A PRELIMINARY OFFICIAL STATEMENT AND FINANCING DOCUMENTS, AUTHORIZING CERTAIN OTHER OFFICIAL ACTIONS AND PROVIDING FOR OTHER MATTERS RELATING THERETO WHEREAS, under and pursuant to the above - referenced Resolution, the Agency has authorized the issuance of the Arcadia Redevelopment Agency, Central Attachment C Redevelopment Project, Subordinate Tax Allocation Bonds, Series 2010 (Taxable) (the "Bonds ") to provide additional moneys to finance and refinance the Agency's undertakings under the Central Redevelopment Project pursuant to the Redevelopment Plan therefor, as further described in said Resolution of the Agency; and WHEREAS, the approval by the City of the Agency's issuance of Bonds is not a "project" within the meaning of the California Environment Quality Act ( "CEQA "), specifically CEQA Guidelines section 15378, and thus is not subject to CEQA pursuant to CEQA Guidelines section 15060(c)(3). NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF ARCADIA, CALIFORNIA DOES HEREBY FIND, DETERMINE AND RESOLVE AS FOLLOWS: SECTION 1. The City Council hereby approves the issuance of the Bonds in order to further finance and refinance the Agency's undertakings and for other purposes related thereto, including, but not limited to, the funding of capitalized interest with respect to the Bonds, all of which constitute a "redevelopment activity ", as such term is defined in Health and Safety Code Section 33678, pursuant to the terms of the Agency resolution referenced in the recitals hereof and the accompanying Indenture of Trust. SECTION 2. All actions heretofore taken by the officers and agents of the City with respect to the issuance of the Bonds are hereby approved, confirmed and ratified. The Mayor, the City Manager, the Finance Director, the City Clerk, the City Attorney and any and all other officers of the City are hereby authorized and directed, for and in the name and on behalf of the City, to do any and all things and take any and all actions which they, or any of them, may deem necessary or advisable in order to consummate the purchase of the Bonds by Stone & Youngberg LLC (the "Underwriter ") pursuant to a Bond Purchase Contract to be entered into by the Agency and the Underwriter. SECTION 3. The City Council hereby reaffirms that any indebtedness of the Agency to the City, including any interest accrued therein, shall be payable from tax increment revenues on a basis subordinate to the payment of the Bonds and any 2 obligations of the Agency under the Indenture of Trust pursuant to which the Bonds are to be issued. SECTION 4. Effective Date. This Resolution shall take effect from and after the date of its passage and adoption. SECTION 5. The City Clerk shall certify to the adoption of this Resolution. Passed, approved and adopted this day of , 2010. ATTEST: City Clerk APPROVED AS TO FORM:, ,7kiteiteA„ n >r(4 Stephen P. Deitsch City Attorney 3 Mayor of the City of Arcadia o ' o oN 9 U a+ • N o o p � b • 8 nw . a;ao o � i3 g o g 11.1 1j o0O o 4`" o o The 2010 Bonds are subject to optional and mandatory sinking account redemption prior to maturity. See "THE : 1 2010 BONDS – Optional Redemption" and "THE 2010 BONDS – Sinking Account Redemption" herein. •8 THE 2010 BONDS ARE SPECIAL OBLIGATIONS OF THE AGENCY PAYABLE SOLELY OUT OF TAX ° REVENUES, AS DESCRIBED HEREIN, AND AMOUNTS IN CERTAIN ACCOUNTS MAINTAINED UNDER THE • ° INDENTURE AND, AS SUCH, THE 2010 BONDS ARE NOT A DEBT OF THE CITY OF ARCADIA (THE "CITY "), THE •F STATE OF CALIFORNIA (THE "STATE "), OR ANY OF ITS POLITICAL SUBDIVISIONS, AND NEITHER THE CITY, .1 -a THE STATE, NOR ANY OF THEIR POLITICAL SUBDIVISIONS, IS LIABLE THEREFOR, NOR IN ANY EVENT '$ . SHALL THE 2010 BONDS BE PAYABLE OUT OF ANY FUNDS OR PROPERTIES OTHER THAN THOSE OF THE E b AGENCY AS SET FORTH IN THE INDENTURE. NEITHER THE MEMBERS OF THE AGENCY NOR ANY PERSONS o ° ' • o EXECUTING THE 2010 BONDS ARE LIABLE PERSONALLY FOR THE 2010 BONDS. THE AGENCY HAS NO • TAXING POWER. THE 2010 BONDS DO NOT CONSTITUTE AN INDEBTEDNESS WITHIN THE MEANING OF ANY • CONSTITUTIONAL OR STATUTORY DEBT LIMITATION OR RESTRICTION. •v cn 3 .g J: 'b . o 2. y•- PRELIMINARY OFFICIAL STATEMENT DATED In the opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California, ( "Bond Counsel "), under existing statutes, regulations, rulings and judicial decisions, the interest (and original issue discount) due with respect to the 2010 Bonds is exempt from State of California personal income tax. See "TAX MATTERS" herein. NEW ISSUE —FULL BOOK —ENTRY ONLY RATINGS: (See "RATINGS" herein) Standard & Poor's: A Arcadia Redevelopment Agency Central Redevelopment Project Subordinate Tax Allocation Bonds Series 2010 (Taxable) Dated: Date of Delivery Due: As set forth below Proceeds from the sale of the Arcadia Redevelopment Agency (the "Agency "), Central Redevelopment Project, Subordinate Tax Allocation Bonds, Series 2010 (Taxable) (the "2010 Bonds "), will be used to (i) refund certain prior bonds of the Agency; (ii) finance the Agency's undertakings in or benefitting the Central Redevelopment Project pursuant to the Redevelopment Plan (as defined herein), (iii) make a deposit to a reserve fund, and (iv) provide for the costs of issuing the 2010 Bonds. The 2010 Bonds will be issued under and pursuant to an Indenture of Trust, dated as of June I, 2010 (the "Indenture "), by and between the Agency and The Bank of New York Mellon Trust Company, N.A., as trustee (the "Trustee "). The 2010 Bonds are special obligations of the Agency and are payable solely from and secured by a pledge of the Tax Revenues (as defined herein), subject to the provisions of the Indenture permitting the application thereof for other purposes, and by a pledge of amounts in certain funds and accounts established under the Indenture, as further described herein. The pledge of the Tax Revenues under the Indenture is expressly subordinate to the prior lien of the Senior Bonds, as defined in the Indenture, and will be on a parity with the pledge thereof with respect to any future Parity Bonds. See "SECURITY FOR THE 2010 BONDS – Pledge Under the Indenture" herein. Interest on the 2010 Bonds will be payable semi- annually on each March 1 and September 1, commencing September 1, 2010. The 2010 Bonds will be issued in fully registered form without coupons and will be registered in the name of Cede & Co., as nominee for The Depository Trust Company, New York, New York ( "DTC "). DTC will act as securities depository for the Bonds. Purchases of beneficial interests in the 2010 Bonds will be made in book -entry form only in denominations of $5,000 or any integral multiple thereof. Purchasers of such beneficial interests will not receive physical certificates representing their interests in the 2010 Bonds. Payment of principal of, interest and premium, if any, on the 2010 Bonds will be made directly to DTC or its nominee, Cede & Co., so long as DTC or Cede & Co. is the registered owner of the 2010 Bonds. Disbursement of such payments to the DTC Participants (as defined herein) is the responsibility of DTC and disbursement of such payments to the Beneficial Owners (as defined herein) is the responsibility of the DTC Participants, as more fully described herein. See "THE 2010 BONDS – Book Entry System" herein. MATURITY SCHEDULE (See inside cover page) The 2010 Bonds are offered when, as and if issued, subject to the approval as to their legality by Stradling Yocca Carlson & Rauth. a Professional Corporation, Newport Beach, California, Bond Counsel. Certain legal matters will be passed on for the Agency by Agency Counsel, Best Best & Krieger LLP, Riverside, California. Best Best & Krieger LLP is also acting as Disclosure Counsel to the Agency. It is anticipated that the 2010 Bonds will be available for delivery in book -entry form in New York, New York on or about , The date of this Official Statement is : , 2010 Preliminary, subject to change. Stone & Youngberg LLC Attachment D Maturity Principal Interest Maturity Principal Interest (September 1) Amount Rate Yield CUSIPS (September 1) Amount Rate Yield CUSIPS t $ % Term 2010 Bonds due September 1, 20 - Price % - CUSIP $ % Term 2010 Bonds due September 1, 20 - Price % - CUSIPt Preliminary, subject to change. Copyright 2010, American Bankers Association CUSIP data herein are provided by Standard & Poor's CUSIF Service Bureau, a division of The McGraw -Hill Companies, Inc, and are provided for convenience of reference only. Neither the Agency nor the Underwriter assume any responsibility for the accuracy of these CUSIP data. R V PUB \FB AUM \7703 79.1 $ Arcadia Redevelopment Agency Central Redevelopment Project Subordinate Tax Allocation Bonds Series 2010 (Taxable ) MATURITY SCHEDULE* BASE CUSIPt: No dealer, broker, salesperson or other person has been authorized by the Arcadia Redevelopment Agency or the City of Arcadia to give any information or to make any representations other than those contained herein and, if given or made, such other information or representations must not be relied upon as having been authorized by any of the foregoing. This Official Statement does not constitute an offer to sell or the solicitation of any offer to buy any 2010 Bonds by any person in any jurisdiction in which such offer of solicitation is not authorized or in which the person making such offer or solicitation is not qualified to do so or to any person to whom 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 2010 Bonds. Statements contained in this Official Statement which involve estimates, forecasts or matter of opinion, whether or not expressly so described herein, are intended solely as such and are not to be construed as a representation of fact. The information set forth herein has been obtained from the City, the Agency and other sources which are believed to be reliable, but it is not guaranteed as to its accuracy or completeness and is not to be construed as a representation by the Agency. The information and expressions of opinions herein are subj ect to change without notice, and neither delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the Agency or the City since the date hereof. All summaries of the resolutions, indentures of trust, laws and statutes or other documents are made subject to the provisions of such documents, respectively, and do not purport to be complete statements of any or all of such provisions. 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. This Official Statement is submitted in connection with the sale of the 2010 Bonds referred to herein and may not be reproduced or used, in whole or in part, for any other purpose. The 2010 Bonds have not been registered under the Securities Act of 1933, as amended, nor has the Indenture been qualified under the Trust Indenture Act of 1939, as amended, in reliance upon an exception from the registration requirements contained in such acts. The 2010 Bonds have not been registered or qualified under the securities laws of any state. IN CONNECTION WITH THE OFFERING OF THE 2010 BONDS, THE ORIGINAL PURCHASER MAY OVERALLOT 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 ORIGINAL PURCHASER MAY OFFER AND SELL 2010 BONDS TO CERTAIN DEALERS AND OTHERS AT A PRICE LOWER THAN THE OFFERING PRICE. THE OFFERING PRICE MAY BE CHANGED FROM TIME TO TIME BY THE ORIGINAL PURCHASER. RVPUB\FBAUM\770379. I RVPUB\FBAUM \7703 79.1 ARCADIA REDEVELOPMENT AGENCY ARCADIA, CALIFORNIA AGENCY MEMBERS AND CITY COUNCIL Peter Amundson, Agency Chair and Mayor Gary A. Kovacic, Agency Vice Chair and Mayor Pro Tem Roger Chandler, Council Member Robert C. Harbicht, Council Member Mickey Segal, Council Member AGENCY SECRETARY Jim Barrows, Agency Secretary /City Clerk AGENCY STAFF AND CITY STAFF Don Penman, Executive Director and City Manager Jason Kruckeberg, Deputy Executive Director and Assistant City Manager Hue Quach, Administrative Services Director Jerry Schwartz, Economic Development Manager SPECIAL SERVICES Bond Counsel Stradling Yocca Carlson & Rauth, a Professional Corporation Newport Beach, California Trustee The Bank of New York Mellon Trust Company, N.A. Los Angeles, California Financial Advisor Fieldman, Rolapp & Associates Irvine, California Fiscal Consultant HdL Coren & Cone Diamond Bar, California Agency Counsel and Disclosure Counsel Best Best & Krieger LLP Riverside, California TABLE OF Pate INTRODUCTION 1 General 1 Purpose of Issuance 1 The Agency 1 The Redevelopment Project 2 Tax Allocation Financing 2 The 2010 Bonds 2 Source of Payment for the Bonds; Senior Obligations 3 Reserve Account 4 Parity Debt 4 Fiscal Consultant's Report 4 Risk Factors 4 Continuing Disclosure 4 Professionals Involved in the Offering 4 Forward - Looking Statements 5 Other Matters 5 Other Information 5 FINANCING PLAN 5 ESTIMATED SOURCES AND USES OF FUNDS 6 DEBT SERVICE SCHEDULE 6 THE 2010 BONDS 7 General Provisions 7 Book -Entry System 7 Optional Redemption 8 Sinking Account Redemption 8 Purchase In Lieu of Redemption 9 Notice of Redemption 9 Effect of Redemption 9 SECURITY FOR THE 2010 BONDS 9 Limited Obligations 9 Tax Revenues 10 Pledge Under the Indenture 11 Senior Lien on Tax Revenues 11 Special Fund; Deposit of Tax Revenues 12 Reserve Account 13 Issuance of Parity Debt 14 Issuance of Subordinate Debt 15 Investments 15 BONDOWNERS' RISKS 16 General 16 Appeals to Assessed Values; Proposition 8 Reassessmentsl7 Reduction in Inflationary Rate 17 Levy and Collection 18 Parity Debt 18 The California State Budget and the Educational Revenue Augmentation Fund 18 Low and Moderate Income Housing Fund 20 Investment Risk 20 Development and Economic Risks 20 Bankruptcy 21 Earthquake, Flood and Fire Hazard 21 Hazardous Substances 22 Secondary Market 22 Possible Future Actions 22 TAX ALLOCATION FINANCING AND LIMITATIONS ON RECEIPT OF TAX revenues 22 Introduction 22 CONTENTS Paae Property Tax Limitations — Article XIIIA of the State Constitution 23 Appropriations Limitations — Article XIIIB of the State Constitution 24 Proposition 218 24 Assembly Bill 1290 and Time Limits for Agency Existence and Powers and Tax Increment Limitation 24 SB211 24 AB 1389 Payments 25 Unitary Property 25 Property Tax Collection Procedures 25 Certification of Agency Indebtedness 26 Low and Moderate Income Housing Fund 27 Future Initiatives 28 ARCADIA REDEVELOPMENT AGENCY 28 Members and Staff 28 Agency Staff 28 Agency Powers and Duties 28 Financing 29 Factors Affecting Redevelopment Agencies Generally 29 Financial Statements 29 CENTRAL REDEVELOPMENT PROJECT AREA 29 General 29 Location and Surrounding Areas 30 Redevelopment Plan Purposes and Objectives 30 Redevelopment Plan Limitations 32 Land Uses and Taxable Vah 32 Recent Development in the Project Area 33 Assessed Valuation; Tax Revenues 33 Top Ten Tax Payers 34 Annual Tax Receipts to Tax Levy 35 Appeals of Assessed Values 35 Pass - Through Payments 36 Tax Revenue Projections 36 CONTINUING DISCLOSURE 38 CERTAIN INFORMATION CONCERNING THE CITY 39 APPROVAL OF LEGAL PROCEEDINGS 39 TAX MATTERS 39 ABSENCE OF LITIGATION 40 RATINGS 40 UNDERWRITING 40 MISCELLANEOUS 40 APPENDIX A — SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE A-1 APPENDIX B — AUDITED FINANCIAL STATEMENTS OF THE AGENCY FOR THE FISCAL YEAR ENDED JUNE 30, 2009 E -1 APPENDIX C — GENERAL INFORMATION ON THE CITY OF ARCADIA C -1 APPENDIX D — FISCAL CONSULTANT'S REPORT D -1 APPENDIX E — FORM OF BOND COUNSEL OPINION E -1 APPENDIX F — THE BOOK -ENTRY SYSTEM F-1 APPENDIX G — FORM OF CONTINUING DISCLOSURE CERTIFICATE G -1 R V PUB\FB AUM \770379.1 REGIONAL LOCATION MAP City of Arcadia Redevelopment Project Area (Los Angeles County, California) Regional Location Map Garden Grove San Fernando Torrance Burbank Los Angeles LOS ANGELES COUNTY Arcadia Glendora Pomo a L r Chino Rancho Cucamonga Coron ORANGE COUNTY RVPUB\FBAUM \7703 79.1 AERIAL PHOTOGRAPH OFFICIAL STATEMENT M Arcadia Redevelopment Agency Central Redevelopment Project Subordinate Tax Allocation Bonds Series 2010 (Taxable) INTRODUCTION The purpose of this Official Statement, including the cover page and the appendices hereto, is to provide information regarding the issuance by the Arcadia Redevelopment Agency (the "Agency ") of its Central Redevelopment Project Subordinate Tax Allocation Bonds, Series 2010 (Taxable) (the "2010 Bonds "). Definitions of certain capitalized terms used in this Official Statement are set forth in APPENDIX A— "SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE." General This introduction is not a summary of this Official Statement. It is only a brief description of and guide to, and is qualified by, more complete and detailed information contained in the entire Official Statement, including the cover page and appendices hereto, and the documents summarized or described herein. A full review should be made of the entire Official Statement. The offering of the Bonds to potential investors is made only by means of the entire Official Statement. This Official Statement contains brief descriptions of the 2010 Bonds, the Indenture, the Agency and the Agency's Central Redevelopment Project (the "Redevelopment Project "). Such descriptions do not purport to be comprehensive or definitive. All references in this Official Statement to specific documents are qualified in their entirety by reference to such documents and references to the 2010 Bonds are qualified in their entirety by reference to the form of the 2010 Bonds included in the Indenture. Copies of the Indenture and other documents described in this Official Statement may be obtained from the Agency as described under the subheading "Other Information" below. Purpose of Issuance Proceeds from the sale of the 2010 Bonds will be used to (a) refund certain prior bonds of the Agency, (b) finance redevelopment activities of the Agency within or of benefit to the Central Redevelopment Project area (the "Project Area "), (c) fund a reserve account for the 2010 Bonds, and (d) pay the costs of issuing the 2010 Bonds. See "ESTIMATED SOURCES AND USES OF FUNDS" and "FINANCING PLAN." The Agency The Agency was activated on December 17, 1968, by action of the City Council of the City of Arcadia, California (the "City ") pursuant to the California Community Redevelopment Law, constituting Part 1 of Division 24 of the California Health and Safety Code (the "Redevelopment Law "). The Agency has the authority, and is charged generally with the responsibility, to redevelop and upgrade blighted areas of the City. The members of the City Council serve as the governing body of the Agency. See "ARCADIA REDEVELOPMENT AGENCY." Preliminary, subject to change. RVPUB\FBAUM \7703 79.1 1 The Redevelopment Project The City Council of the City adopted the Redevelopment Plan for the Central Redevelopment Project on December 26, 1973, pursuant to its Ordinance No. 1490. The area that is subject to the Redevelopment Plan (the "Project Area ") consists of approximately 252 acres. The Redevelopment Plan was subsequently amended eight times: Ordinance No. 1722 adopted May 19, 1981 to add planned development use in a portion of the Project Area; Ordinance No. 1847 adopted November 18, 1986 to establish plan limits pursuant to AB 1135; Ordinance No. 2025 adopted November 1, 1994 to establish time limits pursuant to AB 1290; Ordinance No. 2102 adopted on May 4, 1999 to reinstate the use of eminent domain; Ordinance No. 2181 adopted on October 7, 2003 to eliminate the time limit on incurring new debt pursuant to SB 211; Ordinance No. 2184 adopted on November 18, 2003 to extend the Plan by one year under SB 1045; Ordinance 2231 adopted on August 7, 2007 eliminating provision for eminent domain in the Project Area; and Ordinance No. 2239 adopted on March 4, 2008 to extend the Plan by two years under SB 1096. See "PROJECT AREA." The total secured and unsecured assessed valuation of taxable property in the Project Area in Fiscal Year 2009 -10, based upon information obtained by the Agency's Fiscal Consultant for the Project Area from the Los Angeles County Assessor's Office, is $475,199,751, and is $438,346,037 greater than the $36,853,694 adjusted assessed valuation in the adjusted base year (1973 -74, adjusted in 2008 -09). See "CENTRAL REDEVELOPMENT PROJECT AREA— Assessed Valuation; Tax Revenues." Assessed valuations in the Project Area are subject to numerous risks which could result in decreases from the assessed valuations reported for Fiscal Year 2009 -10. See "BONDOWNERS' RISKS." Also see "CENTRAL REDEVELOPMENT PROJECT AREA" and APPENDIX D— "FISCAL CONSULTANT'S REPORT." Tax Allocation Financing The Redevelopment Law provides a means for financing redevelopment projects based upon an allocation of taxes collected within a designated redevelopment project area. The redevelopment agency establishes the taxable valuation of a project area based on the last equalized County assessment roll before the adoption of the redevelopment plan, or base roll (the "Base Year Valuation "). Subsequently, the taxing agencies receive the taxes produced by the levy of the then - current tax rate upon the Base Year Valuation (except for any period during which the taxable valuation drops below the Base Year Valuation). Taxes collected upon any increase in taxable valuation over the Base Year Valuation are allocated to a redevelopment agency and may be pledged by a redevelopment agency to the repayment of any indebtedness incurred in fmancing or refinancing a redevelopment project. Twenty percent of taxes allocated to a redevelopment agency are set aside in a separate fund to develop and maintain low and moderate income housing in the city in which the redevelopment project area is located, and certain redevelopment agencies are required to make payments from taxes allocated to them to other Taxing Agencies, and the Tax Revenues pledged to secure the repayment of the 2010 Bonds do not include any of such [housing funds] or payments to other Taxing Agencies. Redevelopment agencies themselves have no taxing power. See "SECURITY FOR THE 2010 BONDS —Tax Revenues." The 2010 Bonds The 2010 Bonds are being issued pursuant to the Redevelopment Law, a resolution adopted by the Agency on , 2010, and an Indenture of Trust, dated as of June 1, 2010 (the "Indenture "), by and between the Agency and The Bank of New York Mellon Trust Company, N.A., as trustee (the "Trustee "). See "THE 2010 BONDS" and APPENDIX A— "SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE." The 2010 Bonds will be sold by the Agency to the underwriter named on the cover of this Official Statement. The 2010 Bonds will be issued in denominations of $5,000 each or integral multiples thereof. Interest on the 2010 Bonds will be payable on March 1 and September 1, commencing September 1, 2010. RVPUBWBAUM \770379.1 2 Principal of and interest on the 2010 Bonds will be payable by the Trustee to The Depository Trust Company ( "DTC ") which will be responsible for remitting such principal and interest to the DTC participants which will in turn be responsible for remitting such principal and interest to the beneficial owners of the 2010 Bonds. No physical distribution of the 2010 Bonds will be made to the public. See "THE 2010 BONDS — Book -Entry System." Source of Payment for the Bonds; Senior Obligations The 2010 Bonds are special obligations of the Agency and are payable from and secured by a pledge of Tax Revenues and amounts in certain accounts held by the Trustee under the Indenture. The term "Tax Revenues" is defined in the Indenture as all taxes annually allocated to the Agency with respect to the Project Area following the Closing Date, pursuant to Article 6 of Chapter 6 (commencing with Section 33670) of the Redevelopment Law and Section 16 of Article XVI of the Constitution of the State of California, and as provided in the Redevelopment Plan, including all payments, subventions and reimbursements, if any, to the Agency specifically attributable to ad valorem taxes lost by reason of tax exemptions and tax rate limitations; but excluding (i) all amounts of such taxes required to be deposited into the Low and Moderate Income Housing Fund of the Agency in any Fiscal Year pursuant to Section 33334.2 or 33334.6 of the Redevelopment Law; (ii) all amounts of such taxes required to be paid to taxing agencies under Sections 33607.5 and 33607.7 of the Redevelopment Law to the extent such required payments create a prior lien on such taxes; (iii) amounts, if any, payable by the State of California to the Agency under and pursuant to the provisions of Chapter 1.5 of Part 1 of Division 4 of Title 2 (commencing with Section 16110) of the Government Code of the State of California; (iv) amounts retained by the County as costs of collection pursuant to Chapter 466, Statues of 1990; and (v) such taxes in any "Bond Year" (as defined in the Senior Indenture) to the extent subject to the prior senior pledge under the Senior Bond Indenture with respect to the Senior Bonds (as described below). The Agency currently has certain outstanding bonds that have a lien on Tax Revenues senior to the lien securing the 2010 Bonds, which are referenced in clause (v) of the definition of Tax Revenues above. Outstanding senior lien debt consists of the Agency's Tax Allocation Bonds (Central Redevelopment Project), Series 2001A and Series 2001B (Taxable), issued on June 5, 2001 in the initial aggregate principal amount of $20,895,000, of which $15,115,000 is outstanding (collectively, the "Outstanding Senior Bonds "), a portion of which Outstanding Senior Bonds is being refunded with proceeds of the 2010 Bonds. Upon delivery of the 2010 Bonds, $7,795,000 of the Outstanding Senior Bonds will remain. Under the Indenture, the Agency has covenanted not to issue any additional senior lien debt except for purposes of refunding, in whole or in part, the Outstanding Senior Bonds ( "Senior Refunding Debt" and, collectively with the Outstanding Senior Bonds, the "Senior Bonds ") or any Senior Refunding Debt, but only so long as sucl- refunding results in debt service savings for the refunded Senior Bonds in each fiscal year, and the maturity of the refunding bonds is not later than the maturity of the Senior Bonds to be refunded. See "SECURITY FOR THE 2010 BONDS — Senior Lien on Tax Revenues." Except with respect to the Senior Bonds, the Tax Revenues are not subject to the pledge and lien of any indebtedness of the Agency other than the 2010 Bonds and any Parity Bonds hereafter issued in accordance with the Indenture, and certain other obligations which are made or are by their terms subordinate to the payment of the 2010 Bonds. See "TAX ALLOCATION FINANCING AND LIMITATIONS O1 RECEIPT OF TAX REVENUES" and "CENTRAL REDEVELOPMENT PROJECT AREA— Outstanding Indebtedness." The 2010 Bonds are not payable from, and are not secured by, any funds of the Agency other than the Tax Revenues and amounts in certain accounts held by the Trustee and pledged therefore under the Indenture. See "SECURITY FOR THE 2010 BONDS." . Preliminary, subject to change. RVPUB\FBAUM \770379.1 3 Reserve Account A reserve account (the "Reserve Account ") will be established and held under the Indenture in order to secure the payment of principal of and interest on the 2010 Bonds in an amount, as of the Closing Date, equal to the Reserve Requirement. If, on any Interest Payment Date for the 2010 Bonds, the amounts on deposit under the Indenture to pay the principal of or interest due on the 2010 Bonds are insufficient therefor, the Trustee will draw on the Reserve Account to replenish the Interest Account, the Principal Account or the Sinking Account, in that order, to make up such deficiencies. The Indenture permits the Agency at any time to substitute a Qualified Reserve Account Credit Instrument for funds on deposit in the Reserve Account; and, in certain circumstances in connection with the issuance of Parity Bonds, to fund the Reserve Account at an amount that is less than the then Reserve Requirement. See "SECURITY FOR THE 2010 BONDS — Reserve Account," "SECURITY FOR THE 2010 BONDS — Issuance of Parity Debt" and APPENDIX A— "SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE —Funds and Accounts — Reserve Account" for additional information regarding the Reserve Account. Parity Debt The Indenture provides that in addition to the 2010 Bonds, the Agency may provide for the issuance of Parity Bonds secured by a lien on Tax Revenues on a parity with the lien under the Indenture securing the repayment of the 2010 Bonds, to finance redevelopment activities within or of benefit to the Redevelopment Project in such principal amount as shall be determined by the Agency. The Agency may deliver Parity Bonds subject to certain specific conditions set forth in the Indenture. See "SECURITY FOR THE 2010 BONDS— Issuance of Parity Debt." Fiscal Consultant's Report HdL Coren & Cone, Diamond Bar, California (the "Fiscal Consultant ") has been retained to prepare a report (the "Fiscal Consultant's Report") in connection with the issuance of the 2010 Bonds. See APPENDIX D— "FISCAL CONSULTANT'S REPORT." Risk Factors Prospective investors should review this Official Statement and the appendices hereto in their entirety and should consider certain risk factors associated with the purchase of the 2010 Bonds, some of which have been summarized in the section herein entitled "BONDOWNERS' RISKS." Continuing Disclosure The Agency will covenant in a Continuing Disclosure Certificate to prepare and deliver an annual report to the Municipal Securities Rulemaking Board's Electronic Municipal Market Access (EMMA) system, and to provide notices of the occurrence of certain events. See "CONTINUING DISCLOSURE" and APPENDIX G — "FORM OF CONTINUING DISCLOSURE CERTIFICATE." Professionals Involved in the Offering The proceedings of the Agency in connection with the issuance of the 2010 Bonds are subject to the approval as to their legality of Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California, Bond Counsel. Certain legal matters will be passed upon for the Agency by Best Best & Krieger LLP, Riverside, California, Counsel to the Agency and as Disclosure Counsel to the Agency for the 2010 Bonds. HdL Coren & Cone, Diamond Bar, California has been retained by the Agency to prepare a Fiscal Consultant's report for the 2010 Bonds. Fieldman, Rolapp & Associates, Irvine, California is serving as financial advisor to the Agency for the 2010 Bonds. Payment of the fees of Stradling Yocca Carlson & Rauth, a Professional Corporation, Best Best & Krieger LLP and Fieldman, Rolapp & Associates is contingent upon the sale and delivery of the 2010 Bonds. RVPUB\FBAUM \770379.1 4 Forward - Looking Statements Certain statements included or incorporated by reference in this Official Statement constitute "forward- looking statements" as defined in the Private Securities Litigation Reform Act of 2000. When used in this Official Statement, the words "estimate," "forecast," "intend," "expect" and similar expressions identify forward - looking statements. Such statements are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated in such forward - looking statements. Any forecast is subject to such uncertainties. Inevitably, some assumptions used to develop the forecasts will not be realized and unanticipated events and circumstances may occur. Therefore, there are likely to be differences between forecasts and actual results, and those differences may be material. The Agency is not obligated to issue any updates or revisions to the forward - looking statements if or when its expectations, or events, conditions or circumstances on which such statements are based occur. Other Matters There follows in this Official Statement brief descriptions of the 2010 Bonds, the security for the 2010 Bonds, the Indenture, the Agency, the Project Area, and certain other information relevant to the issuance of the 2010 Bonds. The descriptions and summaries of documents herein do not purport to be comprehensive or definitive, and reference is made to each such document for the complete details of all its respective terms and conditions. All statements herein with respect to certain rights and remedies are qualified by reference to laws and principles of equity relating to or affecting creditors' rights generally. The information and expressions of opinion herein speak only as of the date of this Official Statement and are subject to change without notice. Neither delivery of this Official Statement nor any sale made hereunder nor any future use of this Official Statement shall, under any circumstances, create any implication that there has been no change in the affairs of the Agency since the date hereof. Other Information Copies of the Indenture are available for inspection during business hours at the corporate trust office of the Trustee. FINANCING PLAN The Agency will use a portion of the proceeds of the 2010 Bonds, [together with certain funds on hand], to refund a portion of the Outstanding Senior Bonds, being the serial Series 2001B (Taxable) Bonds maturing in the years 2011 through 2018 in the aggregate principal amount of $ and the term Series 2001B (Taxable) Bonds maturing in 2020 and 2023 in the aggregate principal amount of $3,985,000 (the "Refunded Series 2001B Bonds ") by means of a deposit of a portion of the proceeds of the 2010 Bonds with the trustee for the Outstanding Senior Bonds (the "Escrow Bank ") under an Escrow Deposit and Trust Agreement between said trustee and the Agency and dated as of June 1, 2010 (the "Escrow Agreement "). The Agency will only refund those maturities that provide positive debt service savings. In addition to the foregoing, the Agency expects to use the proceeds of the 2010 Bonds to make a deposit to the Reserve Account to be held by the Trustee under the Indenture in the amount of the Reserve Requirement in effect on the date of delivery of the 2010 Bonds (see "SECURITY FOR THE 2010 BONDS — Reserve Account "); to make a deposit to the Costs of Issuance Fund to be held by the Trustee under the Indenture in an amount sufficient to pay the Costs of Issuance; and to make a deposit to the Redevelopment Fund to be held by the Agency, to be used to finance all or a portion of the following eligible costs of the Central Redevelopment Project Area pursuant to the Redevelopment Plan, as the Agency shall determine: • Repay obligation to low and moderate income housing fund – $4,045,715 • Land acquisition RVPUB\FBAUM \770379.1 5 • Land or improvements in support of the Gold Line expansion into Arcadia • Business rehabilitation • Capital Improvements • Other legally permitted redevelopment uses ESTIMATED SOURCES AND USES OF FUNDS The following table sets forth a summary of the estimated sources and uses of funds associated with the issuance and sale of the 2010 Bonds. Sources of Funds Principal Amount of 2010 Bonds Less: Underwriters' Discount Less: Original Issue Discount Plus: Portion of 2001 Bond Reserve Total Sources Uses of Funds Transfer to Escrow Bank (1) Deposit to Redevelopment Fund Deposit to Reserve Account Deposit to Costs of Issuance Fund Total Uses (1) For deposit under the Escrow Agreement to refund the Refunded Series 2001B Bonds, see "FINANCING PLAN." (2) Equal to the initial Reserve Requirement for the 2010 Bonds. See "SECURITY FOR THE 2010 BONDS — Reserve Account." (3) To be used to pay the fees and expenses of the Trustee, the Fiscal Consultant, the Financial Advisor, Bond Counsel and Disclosure Counsel, printing expenses, rating agency fees and other costs incurred in connection with the issuance of the Bonds. The following table sets forth the scheduled annual debt service for the 2010 Bonds, assuming no redemption of the 2010 Bonds other than mandatory sinking payment redemptions. Bond Year Ending September 1 (1) Indicates mandatory sinking payment installments. RVPUB\FBAUM \770379.1 6 DEBT SERVICE SCHEDULE Principal Amount(1) Interest Total General Provisions The 2010 Bonds will be dated their date of delivery, and will bear interest (calculated on the basis of a 360 -day year comprised of twelve 30 -day months) at the rates and mature in the amounts and on the dates set forth on the cover page of this Official Statement. The 2010 Bonds will be issued as fully registered Bonds, without coupons, in the denomination of $5,000 each or any integral multiple thereof. The Trustee will maintain at its office books for the registration, exchange and transfer of the 2010 Bonds. Interest on the 2010 Bonds is payable semiannually on each March 1 and September 1, commencing September 1, 2010 (each, an "Interest Payment Date "), by check of the Trustee mailed on each Interest Payment Date to the registered owners whose names appear on the registration books of the Trustee as of the close of business on the fifteenth calendar day of the month preceding each Interest Payment Date (a "Record Date ") or, upon the written request filed with the Trustee prior to any Record Date by a registered owner of at least $1,000,000 in aggregate principal amount of 2010 Bonds, by wire transfer in immediately available funds to an account in the United States designated by such owner in such written request. Principal of and premium, if any, on the 2010 Bonds is payable at maturity or redemption upon presentation and surrender thereof at the corporate trust office of the Trustee described in the Indenture (the "Trust Office "). The 2010 Bonds will bear interest from the Interest Payment Date immediately preceding the date of authentication by the Trustee, unless (i) it is authenticated after a Record Date and on or before the following Interest Payment Date, in which event it shall bear interest from such Interest Payment Date; or (ii) it is authenticated on or prior to August 15, 2010, in which event it shall bear interest from the date of delivery of the 2010 Bonds; provided, however, that if, as of the date of authentication of any 2010 Bond, interest thereon is in default, such 2010 Bond shall bear interest from the Interest Payment Date to which interest has previously been paid or made available for payment thereon. The 2010 Bonds may be transferred or exchanged upon presentation and surrender at the Trust Office in Los Angeles, Califomia, provided that the Trustee will not be required to register the transfer or exchange of any 2010 Bonds during the fifteen days prior to the date established by the Trustee for the selection of the 2010 Bonds for redemption, or as to 2010 Bonds the notice of redemption of which has been mailed pursuant to the Indenture. The Trustee may require the payment by the registered owners of the 201(1 Bonds requiring such transfer or exchange of any tax or other governmental charge required to be paid with respect to such transfer or exchange. The Trustee will, under certain circumstances, replace 2010 Bonds which have been mutilated, lost, destroyed or stolen. The Trustee may require posting of an adequate surety bond, cash, or other collateral and payment of a reasonable fee to cover the expenses which may be incurred by the Trustee for each new 2010 Bond issued to replace a 2010 Bond which has been mutilated, lost, destroyed or stolen. Book -Entry System THE 2010 BONDS The 2010 Bonds will be issued as one fully registered bond without coupons for each maturity of the 2010 Bonds and, when issued, will be registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York ( "DTC "). DTC will act as securities depository of the 2010 Bonds. Individual purchases may be made in book -entry form only, in the principal amount of $5,000 and integral multiples thereof for each maturity. Purchasers will not receive certificates representing their interest in the 2010 Bonds purchased. Principal and interest will be paid to DTC, which will in turn remit such principa' and interest to its participants for subsequent dispersal to the beneficial owners of the 2010 Bonds as described herein. So long as Cede & Co., as the nominee of DTC, is the registered owner of all of the 2010 Bonds, references herein to the holders or owners of the 2010 Bonds will mean Cede & Co. and . will not mean the Beneficial Owners of the 2010 Bonds. See "APPENDIX F —THE BOOK ENTRY SYSTEM." RVPUB\FBAUM \770379.1 7 Optional Redemption* The 2010 Bonds are subject to redemption, at the option of the Agency, any date on or after September 1, 2020, as a whole or in part, among such maturities as shall be determined by the Agency and by lot within a maturity, from any available source of funds at a redemption price equal to the principal amount of the 2010 Bonds to be redeemed, together with accrued interest thereon to the date fixed for redemption, without premium. The Agency has the right to rescind any optional redemption by written notice to the Trustee on or prior to the dated fixed for redemption. Any notice of optional redemption shall be cancelled and annulled if for any reason funds will not be or are not available on the date fixed for redemption for the payment in full of the 2010 Bonds then called for redemption, and such cancellation shall not constitute an Event of Default under the Indenture. The Agency and the Trustee shall have no liability to the owners of the Bonds or any other party related to or arising from such rescission of redemption. The Trustee shall mail notice of such rescission of redemption in the same manner as the original notice of redemption was sent. Sinking Account Redemption The 2010 Bonds maturing on September 1, 20_ (the "20_ Term Bonds ") are subject to mandatory redemption in whole, or in part by lot, prior to maturity from and to the extent of Sinking Account payments commencing September 1, 20_, and on each September 1 of the years and in the amounts as follows, without premium, plus accrued interest to the date of redemption: t Final maturity 20_ Term Bonds Sinking Account Redemption Principal Amount Date (September 1) to be Redeemed t Final maturity The 2010 Bonds maturing on September 1, 20_ (the "20_ Term Bonds ") are subject to mandatory redemption in whole, or in part by lot, prior to maturity from and to the extent of Sinking Account payments commencing September 1, 20_, and on each September 1 of the years and in the amounts as follows, without premium, plus accrued interest to the date of redemption: Sinking Account Redemption Principal Amount Date (September 1) to be Redeemed " Preliminary, subject to change. RVPUB\FBAUM \770379.1 8 20 Term Bonds Purchase In Lieu of Redemption In lieu of any optional or sinking account redemption of the 2010 Bonds, amounts on deposit in the Special Fund or in the Sinking Account may also be used and withdrawn by the Trustee at any time, upon the Written Request of the Agency, for the purchase of 2010 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 Interest Account) as the Agency may in its discretion determine The par amount of any Term Bonds se purchased by the Agency in any twelve -month period ending on June 1 in any year shall be credited towards and shall reduce the par amount of Term Bonds required to be redeemed pursuant to the Indenture on September 1 in such year. Notice of Redemption Notice of redemption shall be mailed by the Trustee not less than thirty (30) nor more than sixty (60) days prior to the redemption date to the registered owner of each such 2010 Bond at the address of such owner shown on the Bond registration books maintained by the Trustee and to the Securities Depositories and to one or more Information Services designated in a Written Request of Agency delivered to the Trustee. The notice of redemption shall (a) state the redemption date; (b) require the 2010 Bonds called for redemption be surrendered at the principal Trust Office of the Trustee; (c) state the redemption price; (d) state the CUSIP number and the individual numbers of the 2010 Bonds to be redeemed, provided, however, that whenever any call for redemption includes all of the outstanding 2010 Bonds, the CUSIP numbers of the 2010 Bonds need not be stated; and (e) state that interest on the principal portion of the 2010 Bonds designated for redemption shall cease to accrue from and after the redemption date. The mailing of notice of redemption shall not be a condition precedent to any redemption, and neither the failure to receive any such notice nor any defect therein shall affect the validity of the proceedings for the redemption of the 2010 Bonds or the cessation of the accrual of interest thereon on the redemption date. Notice of redemption of 2010 Bonds shall be given by the Trustee on behalf of the Agency at the expense of the Agency. Effect of Redemption From and after the date fixed for redemption, if funds available for the payment of the principal of and interest (and premium, if any) on the 2010 Bonds so called for redemption shall have been duly provided, such 2010 Bonds so called shall cease to be entitled to any benefit under the Indenture other than the right to receive payment of the redemption price, and no interest shall accrue thereon from and after the redemption date specified in such notice. All 2010 Bonds redeemed or purchased pursuant to the Indenture shall be canceled and shall be surrendered to the Agency. SECURITY FOR THE 2010 BONDS Limited Obligations The 2010 Bonds and all payments required of the Agency under the Indenture are not general obligations of the Agency but are limited special obligations of the Agency and are secured by an irrevocable pledge of, and are payable as to principal and interest, from Tax Revenues and funds in certain accounts maintained by the Trustee under the Indenture, as hereinafter described. The 2010 Bonds and interest thereon are not a debt of the City, the State or any of its political subdivisions (other than the Agency to the limited extent set forth in the Indenture), and neither the City, the State nor any of its political subdivisions (other than the Agency to the limited extent set forth in the Indenture) is liable on them. In no event shall the 2010 Bonds or interest thereon be payable out of any funds or properties other than those of the Agency as set forth in the Indenture. The 2010 Bonds do not constitute an indebtedness within the meaning of any constitutional or statutory debt limitation or restriction. Neither the members of the Agency nor any persons executing the 2010 Bonds are liable personally on the 2010 Bonds by reason of their issuance. RVPUB\FBAUM \770379.1 9 Tax Revenues Allocation of Taxes. The Redevelopment Law provides a means for financing redevelopment projects based upon an allocation of taxes collected within a project area. The taxable valuation of a project area last equalized prior to adoption of the redevelopment plan for the project area, or base roll, is established as of the adoption of the redevelopment plan. Thereafter, except for any period during which the taxable valuation drops below the base year level, the taxing bodies receive the taxes produced by the levy of the then current tax rate upon the base roll. Taxes collected upon any increase in taxable valuation over the base roll (with the exception of taxes derived from increases in the tax rate imposed by Taxing Agencies (defined below) to support new bonded indebtedness) (the "Tax Increment Revenues ") are allocated to the redevelopment agency and may be pledged to the repayment of any indebtedness incurred in financing or refinancing redevelopment activities. Redevelopment agencies themselves have no authority to levy or collect property taxes and must look exclusively to such allocation of taxes. As provided in the redevelopment plan for the Project Area, and pursuant to Article 6 of Chapter 6 of the Redevelopment Law and Section 16 of Article XVI of the State Constitution, taxes levied upon taxable property in the Project Area each year by or for the benefit of the State of California, the County, the City, any district or other public corporation (collectively, the "Taxing Agencies "), for fiscal years beginning after the effective date of the redevelopment plan, will be divided as follows: (1) To Taxing Agencies: The portion of the taxes that would be produced by the rate upon which the tax is levied each year by or for each of the Taxing Agencies upon the total sum of the assessed value of the taxable property in the Project Area as shown upon the assessment roll used in connection with the taxation of such property by such Taxing Agency last equalized before the establishment of the Project Area will be allocated to, and when collected will be paid into the funds of, the respective Taxing Agencies as taxes by or for those Taxing Agencies. (2) To the Agency: Except as provided in (3) below, the portion of such levied taxes each year in excess of the amount referred to in (1) above will be allocated to, and when collected will be paid into a special fund of, the Agency to the extent necessary to pay indebtedness of the Agency, including but not limited to its obligation to repay the Outstanding Senior Bonds and the Bonds. (3) To Taxing Agencies: The portion of the taxes identified in (2) above that is attributable to a tax rate levied by a Taxing Agency for the purpose of producing revenues in an amount sufficient to make annual repayments of principal of, and the interest on, any bonded indebtedness for the acquisition or improvement of real property approved by the voters of the Taxing Agency on or after January 1, 1989, will be allocated to, and when collected shall be paid into, the fund of the Taxing Agency. Housing Set -Aside Amounts. Sections 33334.2 and 33334.3 of the Redevelopment Law require each redevelopment agency to set aside not less than 20% of all Tax Increment Revenues in a low and moderate income housing fund (the "Low and Moderate Income Housing Fund ") to be expended for authorized low and moderate income housing purposes (the "Housing Set- Aside Amount "). Amounts on deposit in the Low and Moderate Income Housing Fund may also be applied to pay debt service on bonds, loans or advances used to provide financing for such low and moderate income housing purposes. Under the Redevelopmen: Law, the Housing Set -Aside Amount could be reduced or eliminated by a redevelopment agency if the respective agency finds that (a) no need exists in the community to improve or increase the supply of low and moderate income housing, (b) that some stated percentage less than 20% of the tax increment is sufficient to meet the housing need or (c) that other substantial efforts, including the obligation of funds from certain local, state or federal sources for low and moderate income housing, or equivalent impact are being provided for in the community The Agency has made no such finding. The 2010 Bonds are not secured by or payable from any amounts deposited in the Low and Moderate Income Housing Fund. RVPUB\FBAUM \770379.1 10 Tax Sharing Payments. Pursuant to the Redevelopment Law, the Agency is required to make certain payments to affected Taxing Agencies, payable from tax increment revenues allocated to the Agency. See "CENTRAL REDEVELOPMENT PROJECT AREA— Pass - Through Payments." The Tax Revenues do not include tax increment revenues from the Project Area required to make any such payments. Possible Limitations on Tax Revenues. The Agency has no power to levy and collect property taxes, and any property tax limitation, legislative measure, voter initiative or provisions of additional sources of income to Taxing Agencies that have the effect of reducing the property tax rate could reduce the amount of Tax Revenues that would otherwise be available to pay the Agency's obligations including the principal of, premium (if any) and interest on the 2010 Bonds. Likewise, broadened property tax exemptions could have a similar effect. See "BONDOWNERS' RISKS" and "TAX ALLOCATION FINANCING AND LIMITATIONS ON RECEIPT OF TAX REVENUES." Pledge Under the Indenture The 2010 Bonds and any future Parity Bonds are secured by a first pledge of all of the Tax Revenues (subject to the prior lien on Pledged Tax Revenues, as defined in the Senior Bond Indenture, of the Senior Bonds and any related obligations pursuant to the Senior Bond Indenture), and a pledge of all of the moneys in the Special Fund, the Interest Account, the Principal Account, the Sinking Account, the Redemption Account and the Reserve Account, including all amounts derived from the investment of such moneys, without preference or priority for series, issue, number, dated date, sale date, date of execution or date of delivery. Except for the Tax Revenues and such other moneys, no funds or properties of the Agency are pledged to, or otherwise liable for, the payment of principal of or interest or redemption premium (if any) on the 2010 Bonds Amounts in the Costs of Issuance Fund and the Redevelopment Fund established pursuant to the Indenture are not pledged as security for the 2010 Bonds. The term "Tax Revenues" is defined in the Indenture as all taxes annually allocated to the Agency with respect to the Project Area following the Closing Date, pursuant to Article 6 of Chapter 6 (commencing with Section 33670) of the Redevelopment Law and Section 16 of Article XVI of the Constitution of the State of California, and as provided in the Redevelopment Plan, including all payments, subventions and reimbursements, if any, to the Agency specifically attributable to ad valorem taxes lost by reason of tax exemptions and tax rate limitations; but excluding (i) all amounts of such taxes required to be deposited into the Low and Moderate Income Housing Fund of the Agency in any Fiscal Year pursuant to Section 33334.2 or 33334.6 of the Redevelopment Law; (ii) all amounts of such taxes required to be paid to taxing agencies under Sections 33607.5 and 33607.7 of the Redevelopment Law to the extent such required payments create a prior lien on such taxes; (iii) amounts, if any, payable by the State of California to the Agency under and pursuant to the provisions of Chapter 1.5 of Part 1 of Division 4 of Title 2 (commencing with Section 16110) of the Government Code of the State of California; (iv) amounts retained by the County as costs of collection pursuant to Chapter 466, Statues of 1990; and (v) such taxes in any "Bond Year" (as defined in the Senior Indenture) to the extent subject to the prior senior pledge under the Senior Bond Indenture with respect to the Senior Bonds. Except with respect to the Senior Bonds, the Tax Revenues are not subject to the pledge and lien of any indebtedness of the Agency other than the 2010 Bonds and any Parity Bonds that may hereafter be issued in accordance with the Indenture, and certain other obligations which are made or are by their term subordinate to the payment of the 2010 Bonds. See "TAX ALLOCATION FINANCING AND LIMITATIONS ON RECEIPT OF TAX REVENUES" and "CENTRAL REDEVELOPMENT PROJECT AREA — Outstanding Indebtedness." Senior Lien on Tax Revenues The Agency currently has Outstanding Senior Bonds that have a lien on Tax Revenues senior to the lien securing the 2010 Bonds, which are referenced in clause (v) of the definition of Tax Revenues above. Under the Indenture, the Agency has covenanted not to issue any additional senior lien debt except for RVPUB\FBAUM \770379.1 11 purposes of refunding, in whole or in part, the Outstanding Senior Bonds ( "Senior Refunding Debt" and, collectively with the Outstanding Senior Bonds, the "Senior Bonds ") or any Senior Refunding Debt, but only so long as such refunding results in debt service savings for the refunded Senior Bonds in each fiscal year, and the maturity of the refunding bonds is not later than the maturity of the Senior Bonds to be refunded. Special Fund; Deposit of Tax Revenues There has been established by the Indenture a special fund known as the "Special Fund," which is held by the Trustee in trust. The Agency shall pay or cause to be paid to the Trustee all of the Tax Revenues received in any Bond Year, and the Trustee shall deposit all of the Tax Revenues in the Special Fund promptly upon receipt thereof; provided, however, that the Agency shall not be obligated to deposit or cause to be deposited in the Special Fund in any Bond Year an amount of Tax Revenues which, together with amounts in the Special Fund, exceeds the amounts required to be deposited into the Interest Account, the Principal Account, the Sinking Account, the Reserve Account and the Redemption Account in such Bond Year. All Tax Revenues at any time paid into the Special Fund shall be held by the Trustee solely for the uses and purposes set forth in the Indenture so long as the 2010 Bonds and Parity Bonds are Outstanding, and the Agency shall not have any beneficial right or interest in the Tax Revenues, except as provided in the Indenture. Pursuant to the Indenture, moneys in the Special Fund will be withdrawn by the Trustee in the following amounts at the following times, for deposit by the Trustee in the following respective special accounts (which are established by the Indenture to be held by the Trustee in trust) in the following order of priority: Interest Account. On or before the Business Day preceding each Interest Payment Date, the Trustee shall withdraw from the Special Fund and deposit in the Interest Account an amount which, when added to the amount then contained in the Interest Account, will be equal to the aggregate amount of the interest becoming due and payable on the Outstanding 2010 Bonds and Parity Bonds on such Interest Payment Date. All moneys in the Interest Account shall be used and withdrawn by the Trustee for the sole purpose of paying the interest on the 2010 Bonds and Parity Bonds as it shall become due and payable (including accrued interest on any 2010 Bonds and Parity Bonds purchased or redeemed prior to maturity pursuant to this Indenture). Principal Account. On or before the Business Day preceding each Principal Payment Date, the Trustee shall withdraw from the Special Fund and deposit in the Principal Account an amount which, when added to the amount then contained in the Principal Account, will be equal to the aggregate amount of principal becoming due and payable on the Outstanding serial 2010 Bonds and any serial Parity Bonds on such Principal Payment Date. All moneys in the Principal Account shall be used and withdrawn by the Trustee for the sole purpose of paying the principal on the serial 201C Bonds and any serial Parity Bonds as it shall become due and payable. Sinking Account. On or before the Business Day preceding each September 1 on which any Outstanding Bonds are subject to mandatory Sinking Account redemption, the Trustee shall withdraw from the Special Fund and deposit in the Sinking Account an amount which, when added to the amount then contained in the Sinking Account, will be equal to the aggregate principal amount of the Term Bonds and any Parity Bonds that are term bonds required to be redeemed on the next succeeding September 1. All moneys on deposit in the Sinking Account shall be used and withdrawn by the Trustee for the sole purpose of redeeming or purchasing (in lieu of redemption) Term Bonds and any Parity Bonds that are term bonds. Reserve Account. On or before each Interest Payment Date, the Trustee shall withdraw frorn the Special Fund and deposit in the Reserve Account an amount of money (if any) which shall be required to maintain in the Reserve Account the full amount of the Reserve Requirement. All moneys in the Reserve Account shall be used and withdrawn by the Trustee for the sole purpose of RVPUB\FBAUM \770379.1 12 making transfers to the Interest Account, the Principal Account and the Sinking Account, in such order, in the event of any deficiency at any time in any of such accounts or for the retirement of all the 2010 Bonds and any Parity Bonds then Outstanding, or to the Redemption Account in the event an optional or mandatory sinking fund redemption would cause a reduction in the Reserve Requirement. Redemption Account. On or before any date on which 2010 Bonds or any Parity Bonds are to be optionally redeemed pursuant to the Indenture, the Trustee shall withdraw from the Special Fund and deposit in the Redemption Account an amount required to pay the principal of and premium, if any, on the 2010 Bonds or any Parity Bonds to be redeemed on such date pursuant to the Indenture. All moneys in the Redemption Account shall be used and withdrawn by the Trustee for the sole purpose of paying the principal of and premium, if any, on the 2010 Bonds or any Parity Bonds to be redeemed on the date set for such redemption. Reserve Account There is established under the Indenture a separate account known as the "Reserve Account," which is to be held by the Trustee in trust. The Indenture requires that an amount equal to the Reserve Requirement be maintained in the Reserve Account at all times, and any deficiency therein be replenished from the first available moneys in the Special Fund as described in the preceding paragraphs above. The amount required to be maintained in the Reserve Account may be increased by any Supplemental Indenture authorizing the issuance of any Parity Bonds; provided, however, in certain circumstances, the Indenture permits the issuance of Parity Bonds without increasing the amount in the Reserve Account to the then Reserve Requirement [due to restrictions in the Tax Code] (see "SECURITY FOR THE 2010 BONDS— Issuance of Parity Debt "). Any amounts on deposit in the Reserve Account at any time in excess of the Reserve Requirement will be withdrawn from the Reserve Account by the Trustee and transferred to the Special Fund. As defined in the Indenture, the term "Reserve Requirement" means, as of the date of any calculation by the Agency, the lesser of $ with respect to the 2010 Bonds, plus, with respect to the balance of Parity Bonds (a) Maximum Annual Debt Service on the Parity Bonds, (b) 125% of average Annual Debt Service on the Parity Bonds, or (c) 10% of the original principal amount of the Parity Bonds (less original issue discount if in excess of two percent (2 %) of the stated redemption amount at maturity); provided however that the Indenture allows for the Reserve Requirement to be computed without regard for the portions of Parity Bonds which remain as deposits in escrow funds not secured by the Tax Revenues. The Agency has the right at any time to release funds from the Reserve Account, in whole or in part, by tendering to the Trustee: (a) a Qualified Reserve Account Credit Instrument, and (b) an opinion of Bond Counsel stating that neither the release of such funds nor the acceptance of such Qualified Reserve Account Credit Instrument will cause interest on any Parity Bonds that are issued as tax- exempt bonds to become includable in the gross income of the Owners for purposes of federal income taxation. Upon tender of such items to the Trustee, and upon delivery by the Agency to the Trustee of written calculation of the amount permitted to be released from the Reserve Account (upon which calculation the Trustee may conclusively rely), the Trustee shall transfer such funds from the Reserve Account, at the request of the Agency, either (i) to the [Redevelopment] Fund to be held by the Agency, or (ii) to the Agency for deposit into such fund or funds as the Agency shall have established for the financing of the Redevelopment Project. Upon the expiration of any Qualified Reserve Account Credit Instrument, the Agency shall be obligated either (i) t replace such Qualified Reserve Account Credit Instrument with a new Qualified Reserve Account Credr, Instrument, (ii) to deposit or cause to be deposited with the Trustee an amount of funds equal to the Reserve Requirement, to be derived from the first available Tax Revenues, or (iii) to draw upon the Qualified Reserve Account Credit Instrument an amount of funds equal to the stated amount thereof prior to its expiration. See APPENDIX A— "SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE – Definitions" for the defmition of Qualified Reserve Account Credit Instrument. RVPUB\FBAUM \770379.1 13 The Reserve Account may be maintained in the form of one or more separate subaccounts which are established for the purpose of holding the proceeds of separate issues of the 2010 Bonds and any Parity Bonds in conformity with applicable provisions of the Tax Code to the extent directed by the Agency in writing to the Trustee. Issuance of Parity Debt In addition to the 2010 Bonds, the Agency may, by Supplemental Indenture, from time to time issue or incur other loans, advances or indebtedness payable from Tax Revenues and amounts in the Reserve Account on a parity with the 2010 Bonds (and referred to herein as "Parity Bonds ") to finance or refinance redevelopment activities within or for the benefit to the Redevelopment Project (including the refunding of the 2010 Bonds or any Parity Bonds) in such principal amount as shall be determined by the Agency. The Agency may issue and deliver any such Parity Bonds subject to the following specific conditions precedent to the issuance and delivery of such Parity Bonds, as set forth in the Indenture: (a) The Agency shall be in compliance with all covenants set forth in the Indenture. (b) The Tax Revenues and Senior Tax Revenues to be received by the Agency in each Fiscal Year during the term of the Parity Bonds, based on the then current year Tax Revenues and Senior Tax Revenues, assuming no growth in assessed value, plus at the option of the Agency the Additional Allowance, as set forth in a Written Certificate of the Agency filed with the Trustee, shall be equal to one hundred twenty -five percent (125 %) of the sum of Annual Debt Service on all 2010 Bonds and Parity Bonds (exclusive of debt service due on the proceeds of any Parity Bonds deposited in an escrow fund pursuant to the terms of a Supplemental Indenture which are not secured by Tax Revenues) and Senior Bond Annual Debt Service in each Fiscal Year through maturity of the 2010 Bonds which will be Outstanding following the issuance of such Parity Bonds. (c) The Supplemental Indenture providing for the issuance of such Parity Bonds shall provide that: (i) interest on the Parity Bonds shall be payable on March 1 and September 1 in each year in which interest is payable on such Parity Bonds except the first twelve -month period, during which interest may be payable on any March 1 or September 1, and provided that there shall be no requirement that such Parity Bonds pay interest on a current basis; (ii) the principal of such Parity Bonds shall be payable on September 1 in any year in which principal is payable; and (iii) money shall be deposited in the Reserve Account from the proceeds of the sale of said Parity Bonds, or from other sources available to the Agency, to increase the amount on deposit in the Reserve Account to an amount equal to the Reserve Requirement:, provided, however, that the Agency shall not be required to deposit moneys to the Reserve Account in an amount in excess of the applicable Tax Code limit with respect to the issuance of such series of Parity Bonds. (d) To the extent Bond Tax Subsidy Payments are reasonably expected to be received in connection with any Bonds, such Bond Tax Subsidy Payments are pledged as security for the Bonds. "Senior Bond Annual Debt Service" is defiled in the Indenture to mean, for the Senior Bonds for each Bond Year, the sum of (a) the interest payable on the Outstanding Senior Bonds in such Bond Year, assuming that the Outstanding serial Senior Bonds are retired as scheduled and that the Outstanding term Senior Bonds are redeemed from sinking account payments as scheduled, (b) the principal amount of the Outstanding serial Senior Bonds payable by their terms in such Bond Year, and (c) the principal amount of the Outstanding term Senior Bonds scheduled to be paid or redeemed from sinking account payments in such RVPUB\FBAUM \770379.1 14 Bond Year, excluding the redemption premiums (if any) thereon; provided however, that any interest or principal which the Agency certifies in writing is legally payable from moneys deposited into the Low and Moderate Income Housing Fund of the Agency shall be excluded from such calculation. "Senior Tax Revenues" is defined in the Indenture to mean all taxes annually allocated to the Agency with respect to the Project Area following the Closing Date, pursuant to Article 6 of Chapter 6 (commencing with Section 33670) of the Law and Section 16 of Article XVI of the Constitution of the State of California and as provided in the Redevelopment Plan, including all payments, subventions and reimbursements (if any) to the Agency specifically attributable to ad valorem taxes lost by reason of tax exemptions and tax rate limitations that is equal to the amount required to pay Senior Bond Annual Debt Service; but excluding (i) all amounts of such taxes required to be deposited into the Low and Moderate Income Housing Fund of the Agency in any Fiscal Year pursuant to Section 33334.2 or 33334.6 of the Redevelopment Law, (ii) all amounts of such taxes required to be paid to taxing entities under Sections 33607.5 and 33607.7 of the Law to the extent such required payments create a prior lien on such taxes, (iii) amounts, if any, payable by the State of California to the Agency under and pursuant to the provisions of Chapter 1.5 of Part 1 of Division 4 of Title 2 (commencing with Section 16110) of the Government Code of the State of California, and (iv) amounts retained by the County as costs of collection pursuant to Chapter 466, Statutes of 1990. "Additional Allowance" is defined in the Indenture to mean, as the date of calculation, the amount of Tax Revenues which, as shown in the Report of an Independent Financial Consultant, are estimated to be receivable by the Agency within the Fiscal Year following the Fiscal Year in which such calculation is made as a result of increases in the assessed valuation of taxable property in the Project Area due to either (a) construction which has been completed but not yet reflected on the tax rolls, or (b) transfer of ownership or any other interest in real property which has been recorded but which is not then reflected on the tax rolls. For purposes of such definition, the term "increases in the assessed valuation" means the amount by which the assessed valuation of taxable property in the Project Area is estimated to increase above assessed valuation of taxable property in the Project Area (as evidenced on the written records of the Los Angeles County Auditor - Controller) as of the date in which such calculation is made. "Bond Tax Subsidy Payments" means the interest portion of Annual Debt Service that is reimbursed to or for the benefit of the Agency by the United States of America pursuant to Section 54AA of the Code (Section 1531 of Title I of Division B of the American Recovery and Reinvestment Act of 2009, Section 1400U -2 of the Act, or any future similar program) payable in respect of any Bonds, or, if applicable, similar payments received by or for the benefit of the City in respect of any Parity Bonds in lieu of tax - exempt treatment of such obligations for federal tax purposes. Issuance of Subordinate Debt The Agency may issue or incur loans, advances, contracts or indebtedness which are either: (a) payable from, but not secured by a pledge of or lien upon, the Tax Revenues; or (b) secured by a pledge of or lien upon the Tax Revenues which is subordinate to the pledge of and lien upon the Tax Revenues under the Indenture for the security of the 2010 Bonds and any Parity Bonds ( "Subordinate Debt "), in such principal_ amount as shall be determined by the Agency, provided that the issuance of such Subordinate Debt shall not cause the Agency to exceed any applicable Plan Limitation. Investments The proceeds of the 2010 Bonds and other moneys required to be deposited in the funds and accounts established by the Indenture and held by the Trustee or the Agency will be invested in Permitter Investments, as defined in the Indenture. See APPENDIX A— "SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE — Definitions." RVPUB\FBAUM \770379.1 15 The following section describes certain specific risk factors affecting the payment and security of the 2010 Bonds. The following discussion of risks is not meant to be an exhaustive list of the risks associated with the purchase of the 2010 Bonds and does not necessarily reflect the relative importance of the various risks. Potential investors are advised to consider the following factors along with all other information in this Official Statement in evaluating the 2010 Bonds. There can be no assurance that other risk factors will not become material in the future. General BONDOWNERS' RISKS Tax Revenues allocated to the Agency by the County of Los Angeles (the "County ") are determined in part by the amount by which the assessed valuation of property in the Project Area exceeds the base year assessed valuation for such property, as well as by the current rate at which property in the Project Area is taxed. The Agency itself has no taxing power with respect to property, nor does it have the authority to affect the rate at which property is taxed. Assessed valuation of taxable property within the Project Area may be reduced by economic factors beyond the control of the Agency (see "CENTRAL REDEVELOPMENT PROJECT — Appeals of Assessed Values" herein) or by substantial damage, destruction or condemnation of such property. Further, assessed valuation can be reduced as a result of actions of the California Legislature or electorate. Such a reduction of assessed valuations or tax rates could result in a reduction of the Tax Revenues that secure the 2010 Bonds, which in turn could impair the ability of the Agency to make payments of principal and/or interest on the 2010 Bonds when due. It is the current practice of the County to distribute Tax Revenues to the Agency as received based upon real property taxes levied on the annual tax roll during the then current fiscal year. The County does not reduce the Agency's receipts of such Tax Revenues on account of amounts refunded to a taxpayer as the result of a successful appeal. Instead, the County applies any tax refunds paid to property owners in the Project Area against the Agency's allocation of supplemental assessment revenue. While it is the County's current practice not to apply refunds in excess of the supplemental revenue, there can be no assurance that such practice will not be discontinued by the County in the future. See "TAX ALLOCATION FINANCING AND LIMITATIONS ON RECEIPT OF TAX REVENUES— Property Tax Collection Procedures." In such event, substantial delinquencies in the payment of property taxes to the County or assessment appeals of such property taxes by the owners of taxable property within the Project Area could have an adverse effect on the ability of the Agency to make payments of principal and/or interest on the 2010 Bonds when due. See "— Appeals to Assessed Values" below. Both Article XIIIA and Article XIIIB of the California Constitution, which significantly affected the rate of property taxation and the expenditure of tax proceeds, were adopted pursuant to California's constitutional initiative process. From time to time, other initiative measures could be adopted by California voters. The adoption of any such initiative might place limitations on the ability of public entities to increase revenues or to increase appropriations. For a further description of Article XIIIA and Article XIIIB of the California Constitution, see "TAX ALLOCATION FINANCING AND LIMITATIONS ON RECEIPT OF TAX REVENUES— Property Tax Limitations — Article XIIIA of the State Constitution" and "— Appropriation Limitations — Article XIIIB of the State Constitution." To estimate the total revenues available to pay debt service on the 2010 Bonds, the Agency has made certain assumptions with regard to the availability of Tax Revenues. The Agency believes these assumptions to be reasonable, but to the extent Tax Revenues are less than anticipated, the total revenues available to pay debt service on the 2010 Bonds may be less than those projected herein. See "CENTRAL REDEVELOPMENT PROJECT--Tax Revenue Projections," and "APPENDIX D— FISCAL CONSULTANT REPORT." RVPUB\FBAUM \770379.1 16 Appeals to Assessed Values; Proposition 8 Reassessments There are two basic types of property tax assessment appeals provided for under California law. The first type of appeal, commonly referred to as a base year assessment appeal, involves a dispute on the valuation assigned by the assessor immediately subsequent to an instance of a change in ownership or completion of new construction. If the base year value assigned by the assessor is reduced, the valuation of the property cannot increase in subsequent years more than two percent annually unless and until another change in ownership and/or additional new construction activity occurs. In addition to reductions in assessed valuations in the Project Area due to appeals and inflationary adjustments, the County Assessor also may reduce assessed values pursuant to Section 51 of the California Revenue and Taxation Code (referred to as "Proposition 8" reductions "). This code section requires that for each lien date the value of real property shall be the lesser of its base year value annually adjusted by the inflation factor pursuant to Article XIIIA of the State Constitution or its full cash value taking into account reductions in value due to damage, destruction, depreciation, obsolescence, removal of property or other factors causing a decline in value. Reductions made under this code section may be initiated by the County Assessor or requested by the property owner. After a roll reduction is granted under this section, the property is reviewed on an annual basis to determine its full cash value and the valuation is adjusted accordingly. This may result in further reductions or in value increases. Increases reflect the actual full cash value of the property and may exceed the maximum annual inflationary growth rate allowed on other properties under Article XIIIA of the State Constitution. Once the property has regained its prior value, adjusted for inflation it once again is subject to the annual inflationary factor growth rate allowed under Article XIIIA The Fiscal Consultant reports that a review of residential values over the past five years shows that in the Project Area residential values increased in each fiscal year. The residential market downturn has not created any identifiable residential value losses within the Project Area. See "APPENDIX D – FISCAL CONSULTANT'S REPORT – Part III. Redevelopment Project Assessment Values – A. Assessed Values." Further significant appeals to assessed values in the Project Area may be filed from time to time in the future. The Agency cannot predict the extent of these appeals or their likelihood of success. For more information concerning appeals to assessed values in the Project Area, see "THE CENTRAL REDEVELOPMENT PROJECT — Appeals of Assessed Values" and "APPENDIX D— FISCAL CONSULTANT REPORT" attached hereto. Reduction in Inflationary Rate As described in greater detail herein, Article XIIIA of the California Constitution provides that the full cash value basis of real property used in determining taxable value may be adjusted from year to year to reflect the inflationary rate, not to exceed a 2% increase for any given year, or may be reduced to reflect a reduction in the consumer price index or comparable local data. This measure is computed on a calendar year basis. The State Board of Equalization has notified assessors that the California Consumer Price Index to be applied to the fiscal year 2010 -11 assessment roll is 0.99736, representing a decrease of 0.237%. Properties whose 2010 -11 assessed valuation is determined by a Proposition 8 assessment adjustment would not be subject to the Proposition 13 annual adjustment until the County Assessor restored their valuation to the factored base year valuation, which would then reflect all annual inflation adjustments from the time the property was originally sold or constructed. The Fiscal Consultant has projected Tax Revenues to be received by the Agency based, among other things, upon a 0.237% decrease. The decrease in assessed valuation in the Project Area as a result of such adjustment is approximately $1,553,903 million, or $15,772 in tax increment. Should the assessed valuation of taxable property in the Project Area decrease at tire projected annual rate in excess of 0.237 %, the Agency's receipt of future Tax Revenues may be adversely: affected. RVPUB\FBAUM \770379.1 17 Levy and Collection The Agency does not have any independent power to levy and collect property taxes. Any reduction in the tax rate or the implementation of any constitutional or legislative property tax decrease could reduce the Tax Revenues, and accordingly, could have an adverse impact on the ability of the Agency to repay the 2010 Bonds. Likewise, delinquencies in the payment of property taxes could have an adverse effect on the Agency's ability to make timely debt service payments. Parity Debt As described in "SECURITY FOR THE 2010 BONDS — Issuance of Parity Debt," the Agency may issue or incur obligations payable from Tax Revenues on a parity with its pledge of Tax Revenues to payment of debt service on the 2010 Bonds. The existence of and the potential for such obligations increases the risks associated with the Agency's payment of debt service on the 2010 Bonds in the event of a decrease in the Agency's collection of Tax Revenues. The California State Budget and the Educational Revenue Augmentation Fund Since Fiscal Year 1992/93, the State Legislature has authorized the reallocation of property tax revenues from redevelopment agencies multiple times in an effort to assist the State in balancing its General Fund budget. Each time the State reallocates property tax revenues from redevelopment agencies, it reduces the amount of revenues that the Agency can use in the payment of debt service on the 2010 Bonds. Further, Proposition 1 A, which was approved by the California electorate in November 2004 and which placed restrictions in the State Constitution on the ability of the State Legislature to reallocate property tax revenues from local agencies, does not restrict or prevent the State Legislature from reallocating property tax revenues from redevelopment agencies, including the Agency. As such, no assurances can be made that the State will not make further reallocations in property tax revenues that would reduce the amount of property tax revenues to which the Agency is entitled. The following is a list of recent actions taken by the State Legislature which reallocated property tax revenues from redevelopment agencies: In connection with its approval of the budget for the State for the 1992 -93, 1993 -94, 1994 -95, 2002- 03, 2003 -04, and 2004 -05 Fiscal Years, the State Legislature enacted legislation which, among other things, reallocated funds from redevelopment agencies to school districts by shifting a portion of each agency's tax increment, net of amounts due to other taxing agencies, to school districts for such fiscal years for deposit in the Education Revenue Augmentation Fund ( "ERAF "). The amount required to be paid by a redevelopment agency under such legislation was apportioned among all of its redevelopment project areas on a collective basis, and was not allocated separately to individual project areas. The Agency's ERAF Payment was $96,765 for fiscal year 2002 -03, $155,085 for fiscal year 2003 -04, $315,457 for fiscal year 2004 -05 and $354,408 for fiscal year 2005 -06. The Agency has made all of the foregoing ERAF payments as required by applicable law. The State budgets for 2006 -07 and 2007 -08 had no new ERAF payment requirements. However, in connection with the State budget for Fiscal Year 2008 -09, on September 30, 2008, the California Legislature enacted AB 1389. AB 1389 required a one -time shift of $350 million from redevelopment agencies to thei: respective ERAF. The validity of AB 1389 was challenged in litigation in the Superior Court for Sacramento County, California Redevelopment Association et al. v. Genest et al., Case No. 34 - 2008 - 00028334 - CUWM - GDS ( "CRA v. Genest"). This case alleged, among other things, that the duties of county auditors to deposit funds received from redevelopment agencies in County ERAFs are inconsistent with various state and federal constitutional provisions and are therefore unlawful and unenforceable. The lawsuit argued that the State raids of redevelopment funds to balance the State budget are unconstitutional, violating Article XVI, Section 16 of the California Constitution, which states that redevelopment funds can only be used to fmance redevelopment projects. The lawsuit contended that taking redevelopment funds to balance the State's RVPUB\FBAUM \770379.1 18 budget does not qualify as a constitutionally permitted use of tax increment. On April 30, 2009, the Sacramento Superior Court ruled in favor of the petitioners, holding that petitioners are entitled to declaratory and injunctive relief invalidating and enjoining Health and Safety Code Section 33685 as provided for in AB 1389. The court stated that the "distribution of contributions by RDAs to their county ERAFs ... can be expected to regularly result in the use of RDA's tax increment revenues by schools and education programs unrelated to the RDA's redevelopment projects." A judgment was signed by the Sacramento Superior Court on May 7, 2009, forbidding any of the defendants from taking any actions to carry out or enforce any of the payment requirements in AB 1389. The State appealed the decision; however, on September 23, 2009, the State filed a notice of abandonment of its appeal with the Court, so that the Superior Court judgment became final and no longer subject to appeal on that date. In connection with legislation related to the budget for the State for Fiscal Year 2009 -10, on July 24, 2009 the State Legislature adopted AB 26, which was signed by the Governor and became law on July 28, 2009. AB 26 requires a $1.7 billion one -year transfer, in the aggregate, from redevelopment agencies to their respective County Supplemental Educational Revenue Augmentation Fund ( "SERAF ") in 2009 -10, plus another $350 million aggregate transfer in 2010 -11. A SERAF is similar to an ERAF, except that there is an additional requirement for the SERAF (in response, in part, to the CRA v. Genest litigation) that moneys in the SERAFs must be used by school districts and county offices of education to serve pupils living in redevelopment areas or in housing supported by redevelopment agency funds. In October 2009, the California Redevelopment Association (the "CRA ") filed a lawsuit in the Superior Court for Sacramento County, California Redevelopment Association et al. v. Genest et al., Case No. 34 2009 - 8000359 challenging the validity of AB 26 and petitioning the court to issue a stay of the transfer of funds by redevelopment agencies to the county auditor- controllers. On May 4, 2010, the Court upheld AB 26 and denied the CRA's petition to stay the transfer of such funds.. The method for calculating each redevelopment agency's payment and respective share of the 2009 -10 and 2010 -11 transfers is similar to that in prior ERAF legislation, except that instead of using the prior year's tax increment figures for the basis of calculation, AB 26 requires the calculation to use the tax increment figures from fiscal year 2006 -07 with respect to the SERAF payment required for both 2009 -10 and 2010 -11. The Agency's 2009 -10 SERAF payment is $1,945,203, and was due by May 10, 2010. The Agency's 2010 -11 SERAF payment is estimated by the CRA to be $245,367, and is due by May 10, 2011. The Agency funded the entire amount of its 2009 -10 SERAF payment by the May 10, 2010 deadline from non - housing funds of the Agency and fully expects to fund the entire amount of its 2010 -11 SERAF payment by the May 10, 2011 deadline. AB 26 provides that the Agency may suspend Housing Set -Aside contributions to its Low and Moderate Income Housing Fund for 2009 -10 or borrow Housing Set -Aside funds in the Agency's Low and Moderate Income Housing Fund, in order to make the SERAF payments — provided the funds are repaid by June 30 of the Fiscal Year occurring 5 years after the Fiscal Year of the commencement of suspension or borrowing. Agencies that do not repay their Low and Moderate Income Housing Funds within such timeframe are required to increase their contribution to such Funds by an additional five percent (5 %) for each unmet repayment date. AB 26 expressly provides that the obligation of any redevelopment agency to make the SERAF payments for fiscal years 2009 -10 and 2010 -11 shall be subordinate to the lien of any pledge of collateral securing, directly or indirectly, the payment of the principal or interest on any bonds of the agency including, without limitation, bonds secured by a pledge of taxes allocated to the agency pursuant to Section 33670 of the California Health and Safety Code. Pursuant to AB 26, under a number of circumstances (e.g., failure to pay, or have paid on its behalf, any SERAF payment; failure to repay when due housing set -aside amounts borrowed or suspended, etc.), a sanction will be imposed on a redevelopment agency which would require the agency's annual housing set -aside amount to be increased from 20% of its gross tax increment to 25% of its gross tax increment, for the balance of the time the sanctioned redevelopment agency receives tax increment. There can be no assurance that the State Legislature will not require similar or other diversion of tax increment funds in future years to deal with its budget deficits, nor can there be any assurance that any R VPUB\FBAUM \770379.1 19 Investment Risk RVPUB\FBAUM\770379.1 20 obligation to make any future payments from tax increment funds will be made subordinate to a pledge of taxes to pay 2010 Bond debt service. The potential impact of future legislation could be material to the Agency and its ability to repay existing and future obligations and conduct its redevelopment activities. The Agency cannot predict whether the State Legislature will enact additional legislation which shifts tax increment revenues away from redevelopment agencies to the State or to schools (whether through an arrangement similar to ERAF or SERAF or by any other arrangement), whether any future shifts in tax increment revenue would be limited or affected (such as by an offset of amounts required to be shifted) by pre - existing agreements between redevelopment agencies and school districts, community college districts and county superintendents of schools, or what impact such legislation may have on the Tax Revenues pledged to pay debt service on the 2010 Bonds. Accordingly, the Agency is not able to predict the effect, if any, such a shift, if enacted, would have on future Tax Revenues. Information about the State budget and State spending is available at various State - maintained websites. None of such websites are in any way incorporated into this Official Statement, and the Agency makes no representation whatsoever as to the accuracy or completeness of any of the information on such websites. Low and Moderate Income Housing Fund The Redevelopment Law requires that, except under certain circumstances, redevelopment agencies set aside 20% of all gross tax increment revenues derived from redevelopment project areas into a low and moderate income housing fund, to be used for the purpose of increasing, improving and/or preserving the community's supply of low and moderate income housing. The provisions of the Redevelopment Law regarding the funding of low and moderate and income housing funds have been frequently amended since their original adoption. In addition, the interpretations of these laws by the California Attorney General and agency counsels throughout the State have at times been subject to variation and change. There can be no assurance as to whether a claim challenging the Agency's practices in this area might be filed. The Agency currently sets aside 20% of all gross Tax Increment Revenues from the Project Area into the Low and Moderate Income Housing Fund. The Agency does not have an excess surplus in the Low and Moderate Income Housing Fund. The Housing Set -Aside Amounts do not secure debt service payments on the 2010 Bonds. See "TAX ALLOCATION FINANCING AND LIMITATIONS ON RECEIPT OF TAX REVENUES —Low and Moderate Income Housing Fund." All funds held under the Indenture are required to be invested in Permitted Investments as provided under the Indenture. See APPENDIX A attached hereto for a summary of the defmition of Permitted Investments. The Special Fund, into which all Tax Revenues are initially deposited, may be invested by the Agency in Permitted Investments. All investments, including the Investment Securities and those authorized by law from time to time for investments by municipalities, contain a certain degree of risk. Such risks include, but are not limited to, a lower rate of return than expected and loss or delayed receipt of principal. The occurrence of these events with respect to amounts held under the Agreement or the Special Fund could have a material adverse affect on the security for the 2010 Bonds. Further, the Agency cannot predict the effects on the receipt of Tax Revenue if the County or the City were to suffer significant losses in their portfolio of investments or if the County or the City were to become insolvent or declare bankruptcy. Development and Economic Risks Project development within the Project Area may be subject to unexpected delays, disruptions and changes. Real estate development operations may be adversely affected by changes in general economic conditions, fluctuations in the real estate market and interest rates, unexpected increases in development costs and by other similar factors. Further, real estate development operations within the Project Area could be adversely affected by future governmental policies, including policies that restrict or control development. If projected development in the Project Area is delayed or halted, the economy of the Project Area could be affected, potentially causing a reduction of the Tax Revenues available to repay the 2010 Bonds. In addition, if there is a general decline in the economy of the Project Area, the owners of property in the Project Area may be less able or willing to make timely payments of property taxes, causing a delay or stoppage of Tax Revenues received by the Agency. Bankruptcy The bankruptcy of a major assessee in the Project Area could delay and/or impair the collection of property taxes by the County with respect to properties in the bankruptcy estate. Although the Agency is not aware of any major property owners in the Project Area that are in bankruptcy or threatening to declare bankruptcy, the Agency cannot predict the effects on the collections of Tax Revenues if such an event were to occur. Earthquake, Flood and Fire Hazard The City is approximately 35 miles from the San Andreas Fault which runs southeast to northwest from the Palm Springs area, San Bernardino, and through Palmdale, directly north of Arcadia. Like most of southern California, the Project Area is subject to seismic activity which could be severe. The Sierra Madre Fault runs in an east /west direction across the northern semi - mountainous section of the City. The Raymond Hill Fault runs in a generally east /west direction from Monrovia through Foothill Middle School, the north end of the Project Area, the Santa Anita Race Track, and the Arboretum. Deep beneath the City are two so- called blind thrust faults: the shallower Elysian Park fault and the deeper Puente Hills fault. During the Whittier Narrows Earthquake, which occurred October 1, 1987, areas of the City experienced the following damage: significant chimney collapse in residential areas throughout the north part of the City, numerous broken windows, facade and interior cracks in the downtown and north parts of the City, damage to tennis courts near the intersection of Baldwin and Orangegrove, minor damage at City handball courts, minor damage to City Hall, and broken water pipes at the Library which caused significant damage. Minor damage occurred to chimneys in the north part of the City during the Sierra Madre Earthquake of June 28, 1991. A portion of the damage described above was experienced in or adjacent to the Project Area. Relative to flood risk, the City has four inundation areas: (a) Santa Anita Dam — This area includes the entire east part of the City east of the Arcadia Wash in into Monrovia; (b) Sierra Madre Dam — This arez includes the northern extreme of the City to the 210 Wash and overlaps the Santa Anita Dam area; (c) Sawpi, Dam — This includes the extreme eastern edge of the City east of the Arcadia Wash south of Duarte Road anc'_ running south of Live Oak Avenue; and (d) Morns S. Jones Reservoir — This area includes the northwest area of the City extending from the 210 Freeway to the Santa Anita Race Track. The inundation areas do not extend into the Project Area. Relating to fire hazard, the northern extension of the City is semi- mountainous terrain There is an extreme fire hazard zone north and east (Monrovia) of the City, a narrow high fire hazard zone along the RVPUB\FBAUM \770379.1 21 northern edge of the City extension, and a low fire hazard zone south of the mountains and extending almost to Foothill Boulevard. The Project Area does not include any such area. If an earthquake, flood or fire or the aftermath of any of these events, were to substantially damage or destroy taxable property within the Project Area, the assessed valuation of such property would be reduced. Such a reduction of assessed valuations could result in a reduction of the Tax Revenues that secure the 2010 Bonds, which in turn could impair the ability of the Agency to make payments of principal of and/or interest on the 2010 Bonds when due. Hazardous Substances An additional environmental condition that may result in the reduction in the assessed value of property would be the discovery of a hazardous substance that would limit the beneficial use of taxable property within the Project Area. In general, the owners and operators of a property may be required by law to remedy conditions of the property relating to releases or threatened releases of hazardous substances. The owner or operator may be required to remedy a hazardous substance condition of property whether or not the owner or operator has anything to do with creating or handling the hazardous substance. The effect, therefore, should any of the property within the Project Area be affected by a hazardous substance, could be to reduce the marketability and value of the property by the costs of remedying the condition and/or other amounts. Secondary Market There can be no guarantee that there will be a secondary market for the 2010 Bonds, or, if a secondary market exists, that such 2010 Bonds can be sold for any particular price. Occasionally, because of general market conditions or because of adverse history or economic prospects connected with a particular issue, secondary marketing practices in connection with a particular issue are suspended or terminated. Additionally, prices of issues for which a market is being made will depend upon the then prevailing circumstances. Such prices could be substantially different from the original purchase price. Possible Future Actions Introduction In recent years several initiative measures have been adopted which affect property and other local taxes. There is no assurance that the California electorate or Legislature will not at some future time approve additional limitations which could reduce the Tax Revenues and adversely affect the security of the 2010 Bonds. TAX ALLOCATION FINANCING AND LIMITATIONS ON RECEIPT OF TAX REVENUES The Redevelopment Law and the California Constitution provide a method for financing and refinancing redevelopment projects based upon an allocation of taxes collected within a project area. First, the assessed valuation of the taxable property in a project area last equalized prior to adoption of the related redevelopment plan is established and becomes the base roll. Thereafter, except for any period during which the assessed valuation drops below the base year level, the taxing agencies on behalf of which taxes are levied on property within the project area will receive the taxes produced by the levy of the then current tax rate upon the base roll. Except as discussed in the following paragraph, taxes collected upon any increase in the assessed valuation of the taxable property in a project area over the levy upon the base roll may be pledged by a redevelopment agency to the repayment of any indebtedness incurred in financing the redevelopment project. Redevelopment agencies themselves have no authority to levy taxes on property and must look specifically to the allocation of taxes produced as above indicated. The California Legislature placed on the ballot for the November 1988, general election Proposition No. 87 (Assembly Constitutional Amendment No. 56) pertaining to allocation of tax increment revenues. RVPUB\FBAUM \770379.1 22 This measure, which was approved by the electorate, authorized the Legislature to cause tax increment revenues attributable to certain increases in tax rates occurring after January 1, 1989 to be allocated to the entities on whose behalf such increased tax rates are levied rather than to the applicable redevelopment agency, as would have been the case under prior law. The measure applies to tax rates levied to pay principal of and interest on general obligation bonds approved by the voters on or after January 1, 1989. Assembly Bill 89 (Statutes of 1989, Chapter 250), which implements this Constitutional Amendment, became effective on January 1, 1990. The projection of Tax Revenues to be allocated to the Agency assumes a 1 %;property tax rate as set forth in "APPENDIX D— FISCAL CONSULTANT REPORT." Property Tax Limitations – Article XIIIA of the State Constitution General. On June 6, 1978, California voters approved Proposition 13, which added Article XIIIA to the California Constitution ( "Article XIIIA"). Article XIIIA limits the amount of any ad valorem tax on real property to 1% of the full cash value thereof, except that additional ad valorem taxes may be levied to pay debt service on indebtedness approved by the voters prior to October 1, 1978 and (as a result of an amendment to Article XIIIA approved by California voters on June 3, 1986) on bonded indebtedness for the acquisition or improvement of real property which has been approved on or after October 1, 1978 by the voters voting on such indebtedness. Article XIIIA defines full cash value to mean "the county assessor's valuation of real property as shown on the 1975/76 tax bill under `full cash value,' or thereafter, the appraised value of real property when purchased, newly constructed, or a change in ownership has occurred after the 1975 assessment." This full cash value may be increased from year to year by the lesser of the inflationary rate and two percent. Article XIIIA also permits the reduction of the "full cash value" base in the event of declining property values caused by reduction in the consumer price index, damage, destruction or other factors, to provide that there would be no increase in the "full cash value" base in the event of reconstruction of property damaged or destroyed in a disaster and in various other minor or technical ways. The Agency has no power to levy and collect taxes. Any further reduction in the tax rate or the implementation of any constitutional or legislative property tax de- emphasis will reduce Tax Revenues, and, accordingly, would have an adverse impact on the ability of the Agency to pay debt service on the 2010 Bonds. Implementing Legislation. Legislation has been enacted and amended a number of times since 1978 to implement Article XIIIA. Under current law, local agencies are no longer permitted to levy directly any property tax (except to pay voter - approved indebtedness). The 1% property tax is automatically levied by the county and distributed according to a formula among taxing agencies. The formula apportions the tax roughly in proportion to the relative shares of taxes levied prior to 1978. Increases of assessed valuation resulting from reappraisals of property due to new construction, change in ownership or from the 2% annual adjustment are allocated among the various jurisdictions in the "taxing area" based upon their respective "situs." Any such allocation made to a local agency continues as part of its allocation in future years. Beginning in the 1981/82 fiscal year, assessors in California no longer record property values on tas_ rolls at the assessed value of 25% of market value, which was expressed as $4.00 per $100 of assessed value. All taxable property is now shown at full market value on the tax rolls. Consequently, the tax rate. is expressed as $1.00 per $100 of taxable value. All taxable property value included in this Official Statem°nt is shown at 100% of market value (unless noted differently) and all tax rates reflect the $1 per $100 of taxable value. RVPUB\FBAUM \770379.1 23 Appropriations Limitations – Article XIIIB of the State Constitution On November 6, 1979, California voters approved Proposition 4, the so -called Gann Initiative, which added Article XIIIB to the California Constitution. The principal effect of Article XIIIB is to limit the annual appropriations of the State and any city, county, school district, authority or other political subdivision of the State to the level of appropriations for the prior fiscal year, as adjusted for changes in the cost of living, population and services rendered by the government entity. Effective November 30, 1980, the California Legislature added Section 33678 to the Redevelopment Law which provides that the allocation of taxes to a redevelopment agency for the purpose of paying principal of, or interest on, loans, advances, or indebtedness shall not be deemed the receipt by such agency of proceeds of taxes levied by or on behalf of the agency within the meaning of Article XIIIB, nor shall such portion of taxes be deemed receipt of taxes by, or an appropriation subject to the limitation of, any other public body within the meaning or for the purpose of the Constitution and laws of the State, including Section 33678 of the Redevelopment Law. Proposition 218 On November 5, 1996, California voters approved Proposition 218 —Voter Approval for Local Government Taxes — Limitation on Fees, Assessments, and Charges — Initiative Constitutional Amendment. Proposition 218 added Articles XIIIC and XIIID to the California Constitution, imposing certain vote requirements and other limitations on the imposition of new or increased taxes, assessments and property - related fees and charges. Tax Revenues securing the 2010 Bonds are derived from property taxes which are outside the scope of taxes, assessments and property - related fees and charges which were limited by Proposition 218. Assembly Bill 1290 and Time Limits for Agency Existence and Powers and Tax Increment Limitation In 1993, Assembly Bill 1290 ( "AB 1290 "), amending various provisions of the Redevelopment Law, was passed by the California Legislature and signed into law by the Governor. Among other amendments to the Redevelopment Law, AB 1290 imposed time limits on existing redevelopment plans for the incurrence of indebtedness, the duration of the plan and the collection of the Tax Increment Revenues. On November 1, 1994, the City passed Ordinance No. 2025 to bring the Redevelopment Plan into compliance with AB 1290. SB211 The California Legislature enacted SB211, Chapter 741, Statutes 2001, effective January 1, 2002 ( "SB211 "). SB211 provides, among other things, that at anytime after January 1, 2002 the time limitation on incurring indebtedness contained in a redevelopment plan adopted prior to January 1, 1994 may be deleted by ordinance of the legislative body. However, such deletion will trigger statutory tax sharing with those taxing entities that do not have tax sharing, or pass - through, agreements. Tax sharing will be calculated based on the increase in assessed valuation after the year in which the limitation would otherwise have become effective. See "CENTRAL REDEVELOPMENT PROJECT AREA— Pass - Through Payments" herein. SB211 also authorizes the amendment of a redevelopment plan adopted prior to January 1, 1994, in order to extend for not more than 10 years the effectiveness of the redevelopment plan and the time to receive tax increment revenues and to pay indebtedness. Any such extension must meet certain specified requirements, including the requirement that the redevelopment agency establish the existence of both physical and economic blight within a specified geographical area of the redevelopment project and that any additional tax increment revenues received by the redevelopment agency because of the extension be used solely within the designated blighted area. SB211 authorizes any affected taxing entity, the State Department of Finance, or the State Department of Housing and Community Development to request the Attorney General to participate in the proceedings to effect such extensions. It also would authorize the Attorney General to bring a civil action to challenge the validity of the proposed extensions. RVPUB\FBAUM \770379.1 24 SB211 also prescribes additional requirements that a redevelopment agency would have to meet upon extending the time limit on the effectiveness of a redevelopment plan, including requiring an increased percentage of new and substantially rehabilitated dwelling units to be available at affordable housing cost to persons and families of low or moderate income prior to the termination of the effectiveness of the plan. On October 7, 2003, the City adopted Ordinance No. 2184 pursuant to SB211 eliminating the time limit on incurring indebtedness from the Redevelopment Plan. AB 1389 Payments On September 24, 2008, the State enacted a budget for Fiscal Year 2008 -09 that includes, among other things, the provisions of a bill known as AB 1389. AB 1389 requires redevelopment agencies, under certain circumstances, to submit reports to the office of the county auditor in the county in which they are located. These reports are required to include calculations of the tax increment revenues that redevelopment agencies have received and payments that redevelopment agencies have made pursuant to pass - through agreements with taxing entities and statutory pass - through requirements. County auditors are required to review the reports and, if they concur, issue a finding of concurrence. The State Controller is required to review such reports and submit a report to the Legislative Analyst's office and the Department of Finance identifying redevelopment agencies for which county auditors had not issued a finding of concurrence or are otherwise not in compliance with provisions of AB 1389. AB 1389 includes penalties for any redevelopment agency listed on the most recent State Controller's report, including a prohibition on issuing bonds or other obligations until the listed agency is removed from the State Controller's report. The Agency filed the required reports with the County Auditor - Controller, and the Agency received notification from the Auditor - Controller at the County to the effect that it concurs with the information contained in the Agency's calculation. In April of 2009, the State Controller's office issued a report which included the Agency on the list of redevelopment agencies with respect to which the County Auditor had concurred with their reports. Unitary Property AB 2890 (Statutes of 1986, Chapter 1457) provides that, commencing with the fiscal year 1988/89, assessed value derived from State - assessed unitary property (consisting mostly of operational property owned by utility companies and herein defined as "Unitary Property ") is to be allocated county -wide as follows: (i) each tax rate area will receive the same amount from each assessed utility received in the previous fiscal year unless the applicable county -wide values are insufficient to do so, in which case values will be allocated to each tax rate area on a pro -rata basis; and (ii) if values to be allocated are greater than in the previous fiscal year, each tax rate area will receive a pro -rata share of the increase from each assessed utility according to a specified formula. Additionally, the lien date on State - assessed property has been changed to January 1. Railroad property will continue to be assessed and revenues allocated to all tax rate areas where the railroad property is sited. Property Tax Collection Procedures Classifications. In California, property which is subject to ad valorem taxes is classified as "secured" or "unsecured." Secured and unsecured property are entered on separate parts of the assessment roll maintained by the county assessor. The secured classification includes property on which any pronert j- tax levied by the County becomes a lien on that property sufficient, in the opinion of the county assessor, ,5 secure payment of the taxes. Every tax which becomes a lien on secured property has priority over all othe- liens on the secured property, regardless of the time of the creation of other liens. A tax levied on unsecured property does not become a lien against the taxes on unsecured property, but may become a lien on certain other property owned by the taxpayer. RVPUB \FBAUM \770379.1 25 Collections. The method of collecting delinquent taxes is substantially different for the two classifications of property. The taxing authority has four ways of collecting unsecured property taxes in the absence of timely payment by the taxpayer: (1) a civil action against the taxpayer; (2) filing a certificate in the office of the county clerk specifying certain facts in order to obtain a judgment lien on certain property of the taxpayer; (3) filing a certificate of delinquency for record in the county recorder's office, in order to obtain a lien on certain property of the taxpayer; and (4) seizure and sale of the personal property, improvements or possessory interests belonging or assessed to the assessee. The exclusive means of enforcing the payment of delinquent taxes with respect to property on the secured roll is the sale of property securing the taxes to the State for the amount of taxes which are delinquent. A 10% penalty is added to delinquent taxes which have been levied with respect to property on the secured roll. In addition, property on the secured roll on which taxes are delinquent is declared in default on or about June 30 of the fiscal year. Such property may thereafter be redeemed by payment of the delinquent taxes and a delinquency penalty, plus a redemption penalty of 1.5% per month to the time of redemption and a $15 Redemption Fee. If taxes are unpaid for a period of five years or more, the property is recorded in a "Power to Sell" status and is subject to sale by the county tax collector. A 10% penalty also applies to the delinquent taxes on property on the unsecured roll, and further, an additional penalty of 1 -1/2% per month accrues with respect to such taxes beginning the first day of the third month following the delinquency date. The valuation of property is determined as of January 1 each year and equal installments of taxes levied upon secured property became delinquent on the following December 10 and April 10. Taxes on unsecured property are due January 1. Unsecured taxes enrolled by July 31, if unpaid, are delinquent August 31 at 5:00 p.m. and are subject to penalty; unsecured taxes added to roll after July 31, if unpaid, are delinquent on the last day of the month succeeding the month of enrollment. Supplemental Assessments. A bill enacted in 1983, SB 813 (Statutes of 1983, Chapter 498), provides for the supplemental assessment and taxation of property as of the occurrence of a change in ownership or completion of new construction. Previously, statutes enabled the assessment of such changes only as of the next tax lien date following the change and thus delayed the realization of increased property taxes from the new assessments for up to 14 months. As enacted, Chapter 498 provided increased revenue to redevelopment agencies to the extent that supplemental assessments as a result of new construction or changes of ownership occur within the boundaries of redevelopment projects subsequent to the tax lien date. To the extent such • supplemental assessments occur within the Project Area, Tax Revenues may increase. Property Tax Administrative Costs. In 1990, the Legislature enacted SB 2557 (Chapter 466, Statutes of 1990) which allows counties to charge for the cost of assessing, collecting and allocating property tax revenues to local government jurisdictions on a prorated basis. It has been the practice of most California counties, including Los Angeles County, to reduce an agency's tax increments or bill an agency for their pro rata share of property tax administration costs. The amount anticipated to be charged by the County from fiscal year 2009/10 Tax Increment Revenues for the Project Area for this purpose is approximately $65,640. Tax Allocation Procedures of the County of Los Angeles. The County determines the amount of property tax revenue to be levied in the Project Area for a given tax year in October and identifies the respective amounts due the Agency and the taxing entities represented in the base year at the time. In Los Angeles County, taxes are disbursed to a redevelopment agency based upon actual collections. Both secured and unsecured tax revenues are disbursed beginning in November through August. Secured and unsecured reconciliations are made in August of the following fiscal year. At that time, adjustments to taxes and revenues attributable to changes in parcel value since the establishment of the prior roll will be made. See "APPENDIX D— FISCAL CONSULTANT REPORT — Allocation of Taxes." Certification of Agency Indebtedness Section 33675 of the Redevelopment Law provides for the filing by redevelopment agencies not later than the first day of October of each year with the county auditor of a statement of indebtedness certified by RVPUB\FBAUM \770379.1 26 the chief fiscal officer of the agency for each redevelopment project which receives tax increment. The statement of indebtedness is required to contain the date on which any bonds were delivered, the principal amount, term, purpose, interest rate and total interest payable on such bonds, the principal and interest due in the fiscal year on such bonds and the outstanding balance and amount due on such bonds. Similar information must be given for each loan, advance or indebtedness that the agency has incurred or entered into to be payable from tax increment. Section 33675 also provides that the county auditor is limited in payment of tax increment to the agency to the amounts shown on the agency's statement of indebtedness less the "available revenues" as of the end of the previous fiscal year. The section further provides that the statement of indebtedness is prima facie evidence of the indebtedness of the agency, but that the county auditor may dispute the amount of indebtedness shown on the statement in certain cases. Provision is made for time limits under which the dispute can be made by the county auditor as well as provisions for determination by the Superior Court in a declaratory relief action of the proper disposition of the matter. The issue in any such action shall involve only the amount of the indebtedness and not the validity of any contract or debt instrument, or any expenditures pursuant thereto. An exception is made for payments to a public agency in connection with payments by such public agency pursuant to a bond issue which shall not be disputed in any action under the section. The 2010 Bonds should be entitled to the protection of that portion of the statute so that they cannot be disputed by the county auditor. Low and Moderate Income Housing Fund The Redevelopment Law requires that, except under certain circumstances, redevelopment agencies set aside 20% of all gross tax increment revenues derived from redevelopment project areas into a low and moderate income housing fund, to be used for the purpose of increasing, improving and/or preserving the community's supply of low and moderate income housing. Prior to September 1, 1986, in accordance with Section 33334.6(f) of the Law, the Agency adopted a Statement of Existing Obligations and a Statement of Existing Programs for the Project Area. Section 33334.6(0 of the Law specifies that a Statement of Existing Obligations be adopted if an Agency is depositing less than 20 percent of a project area's tax increment revenue into the Agency's low and moderate - income housing fund (the Housing Fund). Due to these prior obligations, the Agency was unable to make the required deposits into the Housing Fund for fiscal years 1986 -87 through 1995 -96. Since 1996- 97, 20 percent of the Agency's Gross Tax Revenue has been set aside annually in the Housing Fund and no additional deficits have been incurred. The Agency developed and adopted a housing deficit reduction plan to remedy its deferred housing set -aside obligation. The Redevelopment Agency resolution adopting the repayment plan (ARA Resolution No. 178) stipulates that repayment of the deficit will be made from all of the Agency's annual tax increment revenues less required pre- existing payments to bond holders, debt . repayment to the City of Arcadia and administrative and project costs related to the provision of low and moderate income housing. On April 3, 2001 the Agency adopted Resolution No. 19 -1 expressly subordinating the repayment of the housing deficit repayment obligation to the payment of debt service or the Agency's 2001 Tax Allocation Bonds, Series A and B. As of June 30, 2009 the deferred low and moderate - income housing obligation within the Project Area was $4,045,715 and is being repaid in full with proceeds of the 2010 Bonds deposited in the Redevelopment Fund. In 2006, the Agency received a draft audit report and findings from the California Department of Housing and Community Development (the "HCD Findings ") raising a number of questions about the Agency's Low and Moderate Income Housing Fund, deposits to it, and uses of such funds. The Agency responded to the HCD Findings and has taken appropriate corrective action on most items, and by using 2010 Bond proceeds, will take corrective action on the remainder of the items. The Housing Set -Aside Amounts are not pledged to and are not available to pay debt service on Agency obligations, unless and to the extent the proceeds of such obligations are deposited in the Low and RVPUB\FBAUM`,770379. 1 27 Moderate Income Housing Fund of the Agency. The Housing Set -Aside Amounts do not secure payment of debt service on the 2010 Bonds. Future Initiatives Article XIIIA, Article XIIIB and certain other propositions affecting property tax levies were each adopted as measures which qualified for the ballot pursuant to California's initiative process. From time to time other initiative measures could be adopted, further affecting Agency revenues or the Agency's ability to expend revenues. Members and Staff The Agency was activated pursuant to the Redevelopment Law when the City Council adopted Ordinance No. 1396 on December 17, 1968. Members of the City Council serve as members to the Agency. The City Council members are elected at large for 4 -year overlapping terms. Current members of the Agency Board are identified below. Name of Member Peter Amundson Gary A. Kovacic Roger Chandler Robert C. Harbicht Mickey Segal Agency Staff Don Penman, City Manager and Executive Director, Donald Penman has served in an executive management capacity for the City of Arcadia and Arcadia Redevelopment Agency for more than 12 years. Mr. Penman has been the City Manager and Agency Executive Director since January 2008. For the ter_ years prior to being named City Manager, Mr Penman was the Assistant City Manager and Development Services Director. In this capacity, Mr. Penman was also the Deputy Executive Director of the Redevelopment Agency. Mr. Penman started his municipal career in 1975 and has served City Manager or Chief Administrative Officer and Agency Executive Director for the cities of San Fernando and Baldwin Park, and held several executive positions with the City of Simi Valley including Assistant City Manager and Deputy City Manager. In each of these cities, Mr. Penman was responsible for the redevelopment and/or economic development programs. Mr. Penman received his Bachelor's degree from Cal State Long Beach and a Master's in Public Administration from the University of Southern California. Agency Powers and Duties RVPUB\FBAUM \770379.1 28 ARCADIA REDEVELOPMENT AGENCY Office Agency Chair and Mayor Mayor Pro Tem and Vice Chair Council Member Council Member Council Member Term of Expiration 2014 2012 2012 2014 2014 All powers of the Agency are vested in its five members. The Agency exercises all the governmental functions as authorized under the Redevelopment Law and has among other powers the authority to acquire, administer, develop, lease or sell property, including the right of eminent domain and the right to issue bonds. The Agency can clear buildings and other improvements and can develop as a building site any real property owned or acquired, and in connection with such development can cause streets, highways, and sidewalks to be constructed or reconstructed, and public utilities to be installed. The Agency may, out of funds available for such purposes, pay for all or part of the value of land and the cost of building facilities, structures or other public improvements of benefit to a redevelopment project area under specified circumstances. The Agency must sell or lease any property within the Project Area for the redevelopment by others in strict conformity with a redevelopment plan and may specify a period within which such redevelopment must begin or be completed. Financing The Redevelopment Law authorizes the financing of redevelopment projects through the use of tax increment revenues. This method provides that the taxable valuation of the property within a project area on the property tax roll last equalized prior to the effective date of the ordinance which adopts the redevelopment plan becomes the base year property tax roll, and the increase in taxable valuation in subsequent years over the base becomes the incremental valuation upon which taxes are levied and allocated to the redevelopment agency. All increased tax revenues (based on an increase in taxable valuation over the base year property tax roll) are allocated to the redevelopment agency and placed in a special fund. Redevelopment agencies have no authority to levy taxes but must look to the allocation of tax revenues as indicated above. The issuance of tax allocation bonds is authorized under the Redevelopment Law. The 2010 Bonds described herein are secured by the pledge of Tax Revenues to be paid into a special fund of the Agency. Factors Affecting Redevelopment Agencies Generally Other features of the Redevelopment Law which bear on redevelopment agencies include general provisions which require public agencies to award contracts for construction only after competitive bidding. The Redevelopment Law provides that construction in excess of a minimum amount undertaken by the Agency shall be done only after competitive bidding. California statutes also provide for offenses punishable as felonies which involve direct or indirect interest of a public official in a contract made by such official in his official capacity. In addition, the Redevelopment Law prohibits any Agency or City official or employee who, in the course of his duties, is required to participate in the formulation or approval of plans or policies, from acquiring any interest in property in the Project Area. Under a State initiative enacted in 1974, public officials are required to make extensive disclosures regarding their financial interests by filing such disclosures as public records. As of the date of this Official Statement, the members of the City Council and the Agency, and other City and Agency officials have made the required filings. California also has strict laws regarding public meetings (known as the Ralph M. Brown Act) which makes all Agency and City meetings open to the public, with certain exceptions not applicable here. Redevelopment agencies are required to file a statement of indebtedness with the county auditor - controller not later than the first day of October, stating the amount of indebtedness of the Agency as of the close of its fiscal year, June 30. The Agency has made such a filing for fiscal year 2008/09. Financial Statements Included in this Official Statement as APPENDIX B are the audited financial statements of the Agency for the year ended June 30, 2009 reproduced from the report thereon rendered by Caporicci & Larson, independent accountants for the Agency. The Agency has not requested such accountants to update or take any other action with respect to the audited financial statements in connection with this Official Statement. General CENTRAL REDEVELOPMENT PROJECT AREA Under the Redevelopment Law, every redevelopment agency is required to adopt, by ordinance, a redevelopment plan for each redevelopment project. A redevelopment plan is a legal document, the convent RVPUB\FBAUM \770379.1 29 Ordinance No. 1722 1847 2025 2102 2181 2184 2231 2239 Location and Surrounding Areas Date May 19, 1981 November 18, 1986 November 1, 1994 May 4, 1999 October 7, 2003 November 18, 2003 August 7, 2007 March 4, 2008 Redevelopment Plan Purposes and Objectives Following is a map of the Project Area. RVPUB\FBAUM \770379.1 30 Redevelopment Plan Amendment of which is largely prescribed in the Redevelopment Law rather than a "plan" in the customary sense of the word. The City Council of the City of Arcadia adopted the redevelopment plan for the Central Redevelopment Project by Ordinance No. 1490 on December 26, 1973. The Project Area is approximately 252 acres in size and is generally bounded by the Foothill Freeway (Interstate 210) on the north; Huntington Drive on the south; Fifth Avenue on the east and the Santa Anita Race Track on the west. The Redevelopment Plan was subsequently amended eight times. A list of these amendments and their purposes is set forth below: Purpose Added planned development Comply with AB 1135 by adding certain plan limits Establish time limits under AB 1290 Reinstated use of eminent domain in Project Area Eliminated time limit on incurring new debt under SB 211 Extended Plan effectiveness by one year under SB 1045 Eliminated provision for eminent domain in Project Area Extended Plan effectiveness by two years under SB 1096 The Project Area extends along Huntington Drive, between Colorado Place and Fifth Avenue, along Santa Anita Avenue, between Newman Avenue and California Street, along First Avenue between Colorado Boulevard and California Street, along Fifth Avenue, from the freeway to California Street, the commercial streets west of Santa Anita Avenue, including Morlan Place and Rolyn Place, and all of the perpendicular cross streets between Santa Anita Avenue and Fifth Avenue. The stated purposes and objectives of the Redevelopment Plan are to eliminate the conditions of blight existing in the Project Area and to prevent the recurrence of blighting conditions. The Agency proposes to eliminate such conditions and prevent such recurrence by providing, pursuant to the Redevelopment Plan, for the planning, development, replanning, redesign, clearance, reconstruction and rehabilitation of the Project Area. The Agency further proposes to eliminate the conditions of blight existing in the Project Area and prevent their recurrence by providing for the alteration, improvement, modernization. reconstruction or rehabilitation of existing structures in the Project Area and by providing for open space types of uses, public and private buildings, structures, facilities and improvements. In addition, the Agency proposes to eliminate such conditions and prevent their recurrence by providing for the replanning or redesign or development of undeveloped areas. RVPUB\FBAUM \770379.1 PROJECT AREA MAP 31 Redevelopment Plan Limitations Provisions of the Redevelopment Law and the Redevelopment Plan establish various time limits for undertaking redevelopment activities and for repaying debt incurred to finance redevelopment projects. These time limits for the Project Area are set forth in the table below. TABLE 1 CENTRAL REDEVELOPMENT PROJECT REDEVELOPMENT PLAN LIMITATIONS Plan Life January 25, 2017 Last Date to Repay Debt: January 25, 2027 Limit on Outstanding Bonded Indebtedness: None Cumulative Tax Increment Limit $200,000,000 The Agency currently may not receive, and may not repay indebtedness with the proceeds from property taxes received pursuant to Section 33670 of the Redevelopment Law and the Redevelopment Plan, beyond the respective dates for the Project Area indicated in the table above, except to repay debt to be paid from the Low and Moderate Income Housing Fund established pursuant to Section 33334.3 of the Redevelopment Law and the Redevelopment Plan, or debt established in order to fulfill the Agency's obligations under Section 33413 of the Redevelopment Law and the Redevelopment Plan, or certain refunding debt. Immediately following the issuance of the Bonds, the Agency will have $ of bonded indebtedness outstanding. Through August 20, 2009, the Agency has received $65,752,519 of tax increment revenues. Land Uses and Taxable Value Land use in the Project Area includes residential, commercial, industrial, recreational, institutional, government and exempt uses. The following table represents the breakdown of land use in the Project Area by the number of parcels and by net taxable value for Fiscal Year 2009 -10. See "APPENDIX D — FISCAL CONSULTANT'S REPORT — Part II.B. ". Catesory No. Parcels Value % of Total Residential 154 $ 58,860,562 12.39% Commercial 178 305,893,881 64.37% Industrial 68 46,155,676 9.71% Institutional 3 66,687 0.01% Government Owned 1 456,380 0.10% Recreational 2 10,805,073 2.27% Vacant Land 22 11,324,028 2.38% Exempt 55 0 0.00% Cross Reference 1,586,125 0.33% Unsecured 40,051,139 8.43% Total: 483 $475,199,751 100.00% (1) Values in the Cross Reference tax roll include escaped assessments, possessory interest values, mobile homes and some other less frequently appearing categories of value. The majority of the Cross Reference value within the Project Area consists of possessory interest values. Source: Fiscal Consultant's Report RVPUB\FBAUM\770379.1 32 TABLE 2 CENTRAL REDEVELOPMENT PROJECT LAND USE FISCAL YEAR 2009 -10 Recent Development in the Project Area Despite the recent economic downturn, the Agency has continued to have success facilitating development in the Project Area. In 2008, the Agency opened the Alta Street Classics, a six -unit townhome project for moderate income first time homebuyers. The Fire Department headquarters and Fire Station 105, for which the Agency invested $800,000, also opened in 2008. The Agency continued its facade improvement program, working to support local businesses with investments that upgrade the commercial environment throughout the Project Area. The Project Area also had construction begin on a 10,000 sq. ft. medical office building, the third building to complete a medical office campus at Fifth Avenue and Santa Clara Street. The Agency acquired property and leased one site to Rusnak Mercedes Benz for vehicle storage as part of new car sales and leased portions of another property to Rusnak for parts storage, allowing the dealership to bring its parts business to Arcadia from another location. In both 2008 and 2009, the Breeder's Cup was hosted at Santa Anita Park. The Breeder's Cup, the Super Bowl of horse racing, brought horses, owners, and race fans from around the world for the two day event. The Agency, working with staff at the track, created a variety of marketing materials, including both brochures and a website that promoted things to see, and places to stay and eat in Arcadia. The restaurants and hotels in the Project Area, many of which were brought with the assistance of redevelopment, were the primary beneficiaries of this event. The Gold Line, a rapid transit line that currently runs from Pasadena to downtown Los Angeles, is working on its extension east to Azusa. The Arcadia station, the first stop on the extended line, will be located in the Project Area. With a three story parking structure as part of the Arcadia station, the Gold Line will have a significant positive impact on businesses in the downtown, which is part of the Project Area. City staff is working with the Gold Line authority on the design of the various elements that will part of the Gold Line in Arcadia. In 2009, Methodist Hospital began an expansion program that will double its size. Because of the hospital's proximity to the Project Area, the expansion in generating strong interest in new medical office space in the Project Area. Assessed Valuation; Tax Revenues The Project Area's aggregate base year assessed adjusted valuation established in Fiscal Year 1973- 74 was $37,133,229. The County, however, adjusted the base year value in Fiscal Year 2008 -09 to be $36,853,694. (See "APPENDIX D — FISCAL CONSULTANT'S REPORT — Part III." for an explanation of the adjustment.) The following table shows the actual assessed values for Fiscal Years 2005 -06 to 2009 -10 based upon the County Auditor /Controller's equalized rolls and incremental values of property within the Project Area. RVPUB\FBAUM \770379.1 33 Base Year Base Year Secured 1973 -74 2005 -06 2006 -07 2007 -08 2008 -09 2008 -09 2009 -10 Land $14,022,571 $135,613,413 $143,194,259 $154,365,857 $ 13,807,737 $167,969,935 $179,256,898 Improvements 12,932,390 220,633,167 226,824,403 236,029,790 12,848,651 255,865,858 259,759,115 Personal Property 1,920,848 3,915,181 6,528,674 5,549,390 1,920,848 5,882,503 5,297,704 Exemptions (1,208,400) (9,473,392) (10,701,215) (11,588.199) (1,189,362) (11,570,789) (9,165.105) Total Secured $27,667,409 $350,688,369 $365,846,121 $384,356,838 $ 27,387,874 $418,147,507 $435,148.612 Unsecured Land Improvements Personal Property Exemptions $ 0 1,859,700 7,606,120 0 $ 0 6,673,489 20,861,097 (465,600) Total Unsecured $ 9,465,820 $ 27,068,986 GRAND TOTAL $37,133.229 $377,757,355 Incremental Value: $340,624,126 % Change: 4.83% Top Ten Tax Payers Area. TABLE 3 CENTRAL REDEVELOPMENT PROJECT HISTORICAL VALUES AND REVENUES $ 0 7,218,234 24,205,495 (360,000) $ 31,063,729 $396,909,850 $359,776,621 5.62% RVPUB\FBAUM\770379.1 34 $ 0 9,788,569 25,223,291 (312,519) $ 34,699,341 $419,056.179 $381,922,950 6.16% $ 0 1,859,700 7,606,120 0 $ 9.465.820 $ 36,853,694 $ 0 11,287,514 28,978,134 (155,000) $ 40,110,648 $458,258,155 $421,404,461 10.34% (1) Secured values include state assessed non - unitary utility property. (2) The base year value was established in Fiscal Year 1973 -74, but was adjusted by the County in Fiscal Year 2008- 09. Source: Fiscal Consultant's Report/County of Los Angeles. The Fiscal Consultant reviewed historic reported taxable values for the Project Area in order to ascertain the rate of taxable property valuation growth over the most recent ten fiscal years beginning with 2000 -01. Between 2000 -01 and 2009 -10, the taxable value within the Project Area increased by $187,973,317 (65.44 %). Project Area assessed value grew at an annual average of 6.54 %. See "APPENDIX D — FISCAL CONSULTANT'S REPORT — Part III.A. ". The following table shows the ten largest contributors to the tax increment revenues in the Project $ 0 12,702,879 27,591,260 (243.000) $ 40,051.139 $475.199.751 $438,346,057 4.02% Property Owner 1 Arcadia Hotel Venture LP 2 Apple Six Hospitality Inc 3 BRE Extended Stay America Properties 4 Arcadia Gateway Centre Delaware LLP 5 Pecos Properties LP 6 VG Property Investments 7 DPP Arcadia LLC 8 Marriott Residence Inn II Limited 9 Heprand Hospitality Inc 10 Ali A. and Sediagheh Farazian Trust Totals Total & Incremental Values TABLE 4 CENTRAL REDEVELOPMENT PROJECT TOP TEN TAXABLE PROPERTY OWNERS FISCAL YEAR 2009 -10 Principal Use Hotel Hotel Hotel Commercial/Office Commercial /Office Office Fitness Center Hotel Hotel Office (1) Pending appeals on parcels. Source: Fiscal Consultant's Report/County of Los Angeles Assessed Value $26,162,618 21,505,177 18,810,432 18,770,252 18,412,220 17,114,248 12,354,408 11,131,747 10,495,774 10,059,584 $164,816,460 % Total Value 5.51% 4.53% 3.96% 3.95% 3.87% 3.60% 2.60% 2.34% 2.21% 2.12% 34.68% $475.199.751 % Incr Value 5.97% 4.91% 4.29% 4.28% 4.20% 3.90 ° /0 2.82% 2.54% 2.39% 2.29% 37.60% $438.346.057 Annual Tax Receipts to Tax Levy The Agency received a total of $4,351,778 in tax increment revenue from the Redevelopment Project for fiscal year 2008 -09. This total is approximately 99.28% of the expected tax increment revenues based upon reported assessed values for the Project Area for such Fiscal Year and the applicable tax rate. See Table H in APPENDIX D — "FISCAL CONSULTANT'S REPORT" for a detail of historical receipts to the computed secured tax levy for the four most recent fiscal years. Appeals of Assessed Values Assessment appeals data from the County has been reviewed by the Fiscal Consultant to determine the potential impact that pending appeals may have on the projected Tax Revenues. Within the Project Area since Fiscal Year 2005 -06, there have been a total of 26 appeals filed. Of these, 2 have been allowed with a reduction in value, 4 have been denied, and 20 assessment appeals are currently pending. Reductions in value on the successful appeals have totaled $1,621,538. The amount of assessed value currently under appeal is $73,532,333. Based upon the historical rate that appeals have been allowed with a reduction in value and upon the average reduction in value that has been allowed on those successful appeals, the Fiscal Consultant has estimated the loss in value that may result from the currently pending appeals. By applying these historical averages to the pending appeals, the Fiscal Consultant has estimated that the Agency will experience a loss of assessed value of $2,664,070 on the pending appeals during 2010- 11. The following table summarizes the Fiscal Consultant's estimate for losses on pending appeals. RVPUB\FBAUM \770379.1 35 Total No. of Appeals 28 No. of No. of Resolved Appeals Appeals Allowed 13 9 Pass - Through Payments Tax Revenue Projections RVPUB\FBAUM \770379.1 36 TABLE 5 CENTRAL REDEVELOPMENT PROJECT ASSESSMENT APPEALS SUMMARY Average Reduction 9.45% No. & Value of Appeals Pending (Appealed Value) 15 ($73,532,333) Est. No. of Appeals Allowed 10 Est. Reduction on Pending Appeals Allowed (2010 -11 Value Adjustment) $4,808,755 Prior to the adoption of AB 1290, the Redevelopment Law authorized a redevelopment agency to enter into "pass- through" or "tax- sharing" agreements with Taxing Agencies affected by the adoption of a redevelopment plan. AB 1290 repealed the provisions of the Redevelopment Law which authorized pass - through agreements, and replaced it with a system of statutorily mandated pass - throughs (the "Section 33607.5 Payments "). Under Section 33607.5, with certain exceptions, with respect to a redevelopment plan or a territory - adding amendment adopted after January 1, 1994, commencing with the first fiscal year in which the agency receives tax increment revenues for the affected project area (or the affected added territory) and continuing through the last fiscal year in which the agency receives tax increment revenues, the agency must pay to the affected Taxing Agencies an amount equal to 25 percent of the tax increment revenues received by the agency after the amount required to be deposited in the agency's low and moderate income housing fund has been deducted. See "CONSTITUTIONAL AND STATUTORY PROVISIONS AFFECTING TAX REVENUES — Low and Moderate Income Housing." Commencing with the 11th fiscal year in which the agency receives tax increment revenues for the affected project area (or the affected added territory) and continuing through the last fiscal year in which the agency receives tax increment revenues, the agency shall pay to the affected Taxing Agencies (other than the city that established such redevelopment agency), in addition to the amounts paid pursuant to the preceding sentence and after deducting the amount allocated to the agency's low and moderate income housing fund, an amount equal to 21 percent of the portion of tax increment revenues received by the agency, which will be calculated by applying the tax rate against the amount of assessed value by which the current year assessed value exceeds the first adjusted base year assessed value. The first adjusted base year assessed value for the 21 percent additional pass - through is the assessed value of the project area (or the affected added territory) in the 10th fiscal year in which the agency receives tax increment revenues. Additional amounts are payable commencing with the 31st year. A redevelopment agency's obligations to make Section 33607.5 Payments are not subordinate to the redevelopment agency's obligations with respect to the Agency's loans or bonds unless the incurrence of such debt satisfies certain conditions and the affected taxing entity does not object to the subordination on grounds permitted by Section 33607.5. The debt service on the Outstanding Senior Bonds is not subordinate to Section 33607.5 Payments, as the Outstanding Senior Bonds were issued prior to enactment of AB 1290. Section 33607.5 permits Section 33607.5 Payments to be subordinated to the payment of debt service on obligations issued by the agency for the affected project areas under certain conditions. The Agency has not pursued such subordination action with respect to the 2010 Bonds. Section 33607.5 Payments are senior to debt service on the 2010 Bonds. As noted in the Fiscal Consultant's Report attached hereto as Appendix D, the Section 33607.5 Payments have been deducted from the future tax increment revenue projections. The table below shows the project growth of assessed valuation in the Redevelopment Project and the resulting Tax Revenues for fiscal years 2009 -10 through 2018 -19 as estimated by the Fiscal Consultant to be available to pay debt service on the Senior Bonds and the 2010 Bonds. 00 C 7 00 .- N M N V1 69 00 --r N •• N In rl 4 .ti d• ••1 ti '-a 69 O V' M 69 69 00 00 I, oo ���• O 00 l0 ten r M 69 v') N 00 d M N d' Ol N N I 00 N 00 krc N O O .-. 00 V) d' ...p V) N M VO N. 00 06 d d' d' 00 \O ["-- Cr) d' d' N d N N N V) O d' d' N- un N d' 00 Tr d' N d' 3 1/43 . ,..0 �O D O RI, .-. M c0 -0 LL Q4 8 'b `,1 > Q i0 r p 0 a) a) „, «i N OO u b O �� W vU� O M 64 U . a C3 `� 69 .0 y . N M Q N O -0 y - •0 r - O M V b� • .. O p .� 69 1 . c9 e) ;� . b O w —" , O ) a „ U (-1 r) .. n .� � . i •,`i'y (0 0 0 L'' ' ��^ y N D O N p " 00 W.) cal . a O ^ .....• ��� m N b � V] Q c/ 69 1-1 Cl > gla .= T • " C 1-• w O M id a a) rn ,-, , -, .-• .-., O N 0 0 v'> k ^ p " N g a) O m " 2 v . M .i y as b .0 >, w O • N 4) , Y y c,) c a 0 . ' A F 2 cd '-. — � O N y Q '� .fl , , VD d d< �. O O o 0 y rn g> a' o = A a . :b ca bs - 3. H m Oi w O O y os cd g 0 Q O Cr Cr, O M N p F. , Q � N i M 0) I. g O ;=. +p+ a � Q 68 .—, .5 �, O y y cd v> > O a c,' ,,... O 0 C� bA Y g . -. 1 O O M ° b G+ O C 7 p cu co w -•-••• cr • M M N M O V U ?� E" en +G' c w v O i • .�+ O 0O.Oin 0 �,c p 0 Vl d'�D In 0) y F, i DA o N M > Cl O a y 69 .G^ e0 N p .. e.?.' a.) CID I. -.. • O N .. y y cC Q O O s0. �0 �O h l� 00 0) .5 > -0 E� "' O ( ' �p O �O N O O N c '.O ..' `.i bM9 O y co F v co O 5 . g . ^' W y y E'^ 01 y . p O . � w y O y .�+ ,> id o ;" 0 0 p O 'C � .' . > O 0, GL •'' c` Q v > p v c0 O a) y ... y y -4 N a y — N 2 L5 . 0 0 p0o ') 0. c o a a'''''b o .4 N a Q i w r p 'b y N '> id O ea . N i ta, y w,- ti i-, - = O cs p ,, F. rn cd y p ,+. a) ., .., (0 0 O � oo �, b O "' OA (0 CI) >, p O •- O O y v m cC G 2 O 4 y O i K w 0 L ) LL Q G G7 p O o O 0 -2 Q ( 0 � E- > . O 0 a e o a te ) L) •E o -� m G:.. 0 N ' -' en d' O The following table sets forth the projected Tax Revenues, debt service on the Senior Bonds and the 2010 Bonds, and debt service coverage for the life of the 2010 Bonds. Fiscal Year 2009 -10 2010 -11 2011 -12 2012 -13 2013 -14 2014 -15 2015 -16 2016 -17 2017 -18 2018 -19 2019 -20 2020 -21 2021 -22 2022 -23 2023 -24 2024 -25 2025 -26 2026 -27 Proj ected Tax Revenues (1) (1) Estimated from Table 6 above. TABLE 7 CENTRAL REDEVELOPMENT PROJECT PROJECTION OF TAX REVENUES, DEBT SERVICE AND DEBT SERVICE COVERAGE Scheduled Debt Service on Senior Bonds Payable from Tax Revenues Tax Revenues Available for Debt Service on 2010 Bonds Scheduled Debt Service on 2010 Bonds Debt Service Coverage No assurances are provided by the Agency as to the certainty of the projected tax increment revenues shown on the foregoing tables. Actual revenues may be higher or lower than what has been projected and are subject to valuation changes resulting from new developments or transfers of ownership not specifically identified herein, actual resolution of outstanding appeals, future filing of appeals, or the non - payment of taxes due. CONTINUING DISCLOSURE The Agency will covenant for the benefit of holders and beneficial owners of the 2010 Bonds to provide certain financial information and operating data relating to the Agency by not later than the date (March 31) which is nine months after the end of each fiscal year of the Agency (presently such fiscal year ends on June 30), commencing with the information relating to fiscal year 2009 -10 (the "Annual Report"), and to provide notices of the occurrence of certain enumerated events, if material. The Annual Report and notices of material events will be filed with each Nationally Recognized Municipal Securities Information Repository and with any then existing State Repository (collectively, the "Repositories "). Currently, there is no State Repository for California. The specific nature of the information to be contained in the Annual Report or the notices of material events is set forth in "APPENDIX G —FORM OF CONTINUING DISCLOSURE CERTIFICATE" attached hereto. These covenants will be made in order to assist the Underwriter in complying with Securities and Exchange Commission Rule 15c2- 12(b)(5). The Agency has never failed to comply in all material respects with any previous undertakings with regard to the Rule 15c2- 12 to provide annual reports or notices of material events. RVPUB\FBAUM \770379.1 38 CERTAIN INFORMATION CONCERNING THE CITY Certain general information concerning the City is included herein as APPENDIX C hereto. Such information is provided for informational purposes only. Neither the General Fund nor any other fund of the City is liable for the payment of the 2010 Bonds or the interest thereon, nor is the taxing power of the City pledged for the payment of the 2010 Bonds or the interest thereon. APPROVAL OF LEGAL PROCEEDINGS Certain legal matters are subject to the approving opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California, Bond Counsel to the Agency. A complete copy of the proposed form of Bond Counsel opinion is contained in APPENDIX E. Bond Counsel, as such, undertakes no responsibility for the accuracy, completeness or fairness of this Official Statement. Certain legal matters will be passed upon for the Agency by Best Best & Krieger LLP, Riverside, California, as general counsel and as disclosure counsel to the Agency. TAX MATTERS In the opinion of Bond Counsel, under existing statutes, regulations, rulings and judicial decisions, interest on the 2010 Bonds is exempt from State of California personal income tax. The difference between the issue price of a 2010 Bond (the first price at which a substantial amount of the 2010 Bonds of the same series and maturity is to be sold to the public) and the stated redemption price at maturity with respect to such 2010 Bond constitutes original issue discount. Original issue discount accrues under a constant yield method. The amount of original issue discount deemed received by the 2010 Bond Owner will increase the 2010 Bond Owner's basis in the 2010 Bond. The amount by which a 2010 Bond Owner's original basis for determining loss on sale or exchange in the applicable 2010 Bond(generally, the purchase price) exceeds the amount payable on maturity (or on an earlier call date) constitutes amortizable 2010 Bond premium, which a 2010 Bond Owner may elect to amortize under Section 171 of the Code; such amortizable 2010 Bond premium reduces the 2010 Bond Owner's basis in the applicable 2010 Bond (and the amount of taxable interest received), and is deductible for federal income tax purposes. The basis reduction as a result of the amortization of 2010 Bond premium may result in a 2010 Bond Owner realizing a taxable gain when a 2010 Bond is sold by the Owner for an amount equal to or less (under certain circumstances) than the original cost of the 2010 Bond to the Owner. Purchasers of the 2010 Bonds should consult their own tax advisors as to the treatment, computation and collateral consequences of amortizable 2010 Bond premium. The federal tax and State of California personal income tax discussion set forth above is included for general information only and may not be applicable depending upon an owner's particular situation. The ownership and disposal of the 2010 Bonds and the accrual or receipt of interest (and original issue discount) with respect to the 2010 Bonds may otherwise affect the tax liability of certain persons. Bond Counsel expresses no opinion regarding any such tax consequences. Any federal tax advice contained herein is nor intended or written to be used, and it cannot be used, for the purpose of (i) avoiding penalties under the Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein with respect to the 2010 Bonds. Accordingly, before purchasing any of the 2010 Bonds, all potential purchasers should consult their tax advisors with respect to collateral tax consequences relating to the 2010 Bonds. A copy of the proposed form of opinion of Special Counsel with respect to the 2010 Bonds is attached hereto in Appendix E. RVPUB\FBAUM \770379.1 39 At the time the 2010 Bonds are delivered, an officer of the Agency will certify that, to such officer's knowledge, there is no litigation pending with respect to which the Agency has been served with process or know to be threatened against the Agency in any court or other tribunal of competent jurisdiction, State or federal, which seeks to enjoin or challenges the authority of the Agency to participate in the transactions contemplated by this Official Statement, the 2010 Bonds or the Indenture. Standard & Poor's Ratings Services, a division of The McGraw Hill Companies, Inc. ( "S &P ") has assigned its municipal bond rating of "A" to the 2010 Bonds. Such rating reflects only the views of the rating agency and an explanation of the significance of such rating and any rating of the Agency's outstanding obligations may be obtained from Standard & Poor's Ratings Group, 55 Water Street, New York, New York 10041-0003. There is no assurance that such rating will continue for any given period or that they will not be revised downward or withdrawn entirely by S &P, if in their judgment, circumstances so warrant. The Agency and the Fiscal Agent undertake no responsibility either to notify the owners of the 2010 Bonds of any revision or withdrawal of the rating or to oppose any such revision or withdrawal. Any such downward revision or withdrawal of such rating may have an adverse effect on the market price of the 2010 Bonds. RVPUB\FBAUM \770379.1 40 ABSENCE OF LITIGATION RATINGS UNDERWRITING The 2010 Bonds are being purchased by Stone & Youngberg LLC (the "Underwriter "). The Underwriter has agreed to purchase the 2010 Bonds at a purchase price of $ , subject to certain terms and conditions to be fulfilled by the Agency and the City. The Underwriter has certified to the Agency that the 2010 Bonds were re- offered to the general public at the prices or yields set forth on the inside front cover page of this Official Statement. Based on such certification, the Underwriting compensation will be $ . The offering prices may be changed from time to time by the Underwriter. MISCELLANEOUS All of the preceding summaries of the 2010 Bonds, the Indenture, other applicable legislation, agreements and other documents are made subject to the provisions of the 2010 Bonds and 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 Agency for further information in connection therewith. Any statements made in this Official Statement involving matters of opinion or of estimates, whether or not 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. The execution and delivery of this Official Statement by the Executive Director of the Agency has been duly authorized by the Agency. REDEVELOPMENT AGENCY OF THE CITY OF ARCADIA By: Executive Director R V PU B\FB AUM \7 703 7 9.1 APPENDIX A SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE A -1 RVPUB\FBAUM \7703 79.1 APPENDIX B AUDITED FINANCIAL STATEMENTS OF THE AGENCY FOR THE FISCAL YEAR ENDED JUNE 30, 2009 B -1 APPENDIX C GENERAL INFORMATION ON THE CITY OF ARCADIA Information contained in this APPENDIX C is presented as general background data. The 2010 Bonds are payable solely from the Tax Revenues and other sources as described herein. The taxing power of the City of Arcadia, the State of California or any political subdivision thereof is not pledged to the payment of the 2010 Bonds. See "SECURITY FOR THE 2010 BONDS" herein for a description of the security for the 2010 Bonds. General The City is located approximately 20 miles northeast of Los Angeles and consists of approximately 11.2 square miles. Located in Los Angeles County, the City is a chartered city incorporated in 1903. The City provides police protection, fire protection, emergency medical aid, building safety regulation and inspection, street lighting, water and sewer service, refuse collection, land use planning, and zoning, recreational and community services, maintenance and improvement of streets and related structures, traffic safety maintenance and improvement and library and cultural programs for citizen participation. Government The City has adopted a Council - Manager form of government made up of five City Council Members elected to four -year overlapping terms. The Mayor is selected on an annual basis from its ranks. Community Service Facilities The City has a 30,000 square foot Community Center and patio area in active use by the entire community. The City has a five person staff specifically dedicated to the seniors in Arcadia in addition to the five full -time and numerous part-time Recreation and Community Services staff who operate numerous family, senior, youth group athletic programs and operate the City's twenty parks. Located in the Civic Center complex are the City Hall, which houses the City administrative, financial, legal and community development offices, the nearby Police Station, City Council Chambers, and Civic Center soccer field. The 36,000 square foot City Library houses over 130,000 books, as well as videos, books on tape and a children's section. The Library has a large community room for functions. The City is currently building a 4,000 square foot Historical Museum which will have a community room. The City has a permanent meeting room adjacent to the Police DARE/PACE office in the Westfield Shoppingtown Mall at Santa Anita, and utilizes upon occasion the Chamber of Commerce building, Arcadia Methodist Hospital, and Arcadia Unified School District buildings and play fields. There is an active Community Coordinating Council composed of all the civic, social, philanthropic, service, school, religious, welfare and community organizations. These activities are held in many of the same facilities as named above, as well as at the Women's Club, Assistance League building, Masonic Temple, and the Los Angeles County Arcadia Regional Park buildings. There are approximately 27 churches in Arcadia whose halls and assembly rooms are often used for community events. In addition to the regional Westfield Shoppingtown Mall at Santa Anita, the City has three other major community facilities. The privately owned world famous Santa Anita Race Track sponsors numerous civic . and community events in its clubhouse and grandstand areas and in the adjacent parking lot. The Los Angeles County Arboretum also has numerous flower and horticulture events, as well as cultural historical and presentations on its grounds. The Los Angeles County Park has community events in its open areas, play fields, buildings and event areas. Healthcare The 450 -bed and 640 medical staffed Arcadia Methodist Hospital is located immediately west of the City Hall on City -owned property, which is leased to them for $1 per year. The Hospital provides RVPUB \FBAUM \770379.1 C-1 comprehensive acute care such as medical, surgical, prenatal, pediatrics, oncology, intensive, neonatal and adult care, and serves as the "anchor" for numerous physicians, surgeons, clinics, and healthcare service providers operating in the Arcadia area. Education The schools within the City are governed by Arcadia Unified School District. There are eleven (11) schools - 6 elementary, 3 middle, 1 high and 1 alternative learning center The City is in the Pasadena City College District, but students also attend Citrus, Mount San Antonio and Rio Hondo Community Colleges. In the vicinity of Arcadia there are several nationally recognized universities - California Institute of Technology, Pasadena; the Claremont Colleges, Claremont; the University of California at Los Angeles; the University of Southern California, Los Angeles. Located within reasonable driving distance of the City are also California Polytechnic, Pomona; University of La Verne; and Occidental College. Utilities The City is served by: Water - City of Arcadia Public Works Services Department Sanitary Sewer - Los Angeles County Sanitation District Storm/Flood Drainage - Los Angeles Public Works Department Electric - Southern California Edison Gas - Southern California Gas Company Phone – SBC and Verizon Cable – Time Warner Cable Transportation Auto/Truck. The City is bisected east /west by the Interstate 210 (Foothill) Freeway which links autos and trucks to the Interstate 605 (San Gabriel) Freeway and then to the Interstate 10 (San Bernardino), California 71 (Chino Valley), and California 60 (Pomona) Freeways. To the west Interstate 210 links to the Interstate 5 (Golden State), US 101 (Hollywood), the California 134 (Ventura), and Interstate 405 (San Diego) Freeways. The City has three major north/south arterials — Santa Anita Avenue, Baldwin Avenue, and in the extreme southeast part of the City, Peck Road/Myrtle Avenue. A short distance to the west is Rosemead Boulevard, a major State Highway (Route 19). The City has five major east /west arterials — Foothill Boulevard, Colorado Boulevard, Huntington Drive, Duane Road, and Live Oak Avenue (Arrow Highway)/Las Tunas Drive. Rail. The Blue Line Authority is scheduled to construct the Blue Line from downtown Los Angeles to Pasadena's Sierra Madre Boulevard, immediately west of Arcadia. If there is sufficient funding in the future, this line is proposed to be continued east from Sierra Madre Boulevard to follow the old Southern Pacific Right of Way through downtown Arcadia where the City has designated a possible future station location (Santa Clara/Front Street) and then on to Claremont and San Bemardino. Two Miles south of the southern border of the City on Santa Anita Avenue in El Monte, is the MTA Metrolink Rail Station, the commuter train linking downtown Los Angeles to the suburbs and ultimately to Amtrak and the rest of the country. R V PUB\FB AUM\7 703 7 9.1 C -2 Bus. The City is served by two major bus carriers — Foothill Transit and the MTA. Passengers can travel throughout the County on these carriers. The City has its own demand bus /van system, Arcadia Transit, which is one the most successful of its kind in the County. Air. The City is served by three international airports — Los Angeles International, 25 miles to the southwest; Ontario International, 25 miles to the east; and Orange County, 40 miles to the southeast. Two regional airports also service Arcadia — Burbank/Pasadena/Glendale 20 miles to the west, and Long Beach, 30 miles to the south. The El Monte Airport, 5 miles from downtown Arcadia south on Santa Anita Avenue. is a local airport for small planes and helicopters. Shipping. Sea — The Ports of Los Angeles and Long Beach, collectively the third largest port in the world, and the largest in the United States, are 35 miles to the south. Trucking. The industrial areas to the south and east of the City are major distribution and warehousing centers including the cities of El Monte, Industry, Irwindale, Ontario, Fontana and Rancho Cucamonga. Climate and Topography The City enjoys a Mediterranean climate with temperatures ranging from an average low of 42 in the winter to an average high of 92 in the summer. The City receives an average of 16 inches of rain annually. The City slopes gradually upwards to the San Gabriel Mountains to the north with the extreme north end of the City and Wilderness Park area being semi - mountainous. There are two major flood channels bisecting the City in a north/south direction, the Arcadia Wash which runs through the Santa Anita Race Track, then through the center of the City into Temple City, and the Santa Anita Wash which drains the mountains to the north (Santa Ana Dam area) and runs through the downtown and along the eastern edge of the City into El Monte. Both drain into the Whittier Narrows area . and then into the San Gabriel River. Earthquake Fault Zones The City is approximately 35 miles from the San Andreas Fault which runs southeast to northwest from the Palm Springs area, San Bernardino, and through Palmdale, directly north of Arcadia. The Sierra Madre Fault runs in an east /west direction across the northern semi- mountainous section of the City. The Raymond Hill Fault runs in a generally east -west direction from Monrovia through Foothill Middle School, the Santa Anita Racetrack, and the Arboretum. Flood Areas The City has four inundation areas. Santa Anita Dam. _This area includes the entire east part of the City east of the Arcadia Wash an into Monrovia. Sierra Madre Dam _ This area includes the northern extreme of the City to the 210 Wash and overlaps the Santa Anita Dam area. Saxpit. Darn This includes the extreme eastern edge of the City east of the Arcadia Wash south of Duarte Road and running south of Live Oak Avenue. RVPUB\FBAUM \770379.1 C-3 Morris S. Jones Reservoir This area includes the northwest area of the City extending from the 210 Freeway to the Santa Anita Race Track. Fire Hazard Areas The northern extension of the City is semi- mountainous terrain. There is an extreme fire hazard zone north and east (Monrovia) of the City, a narrow high fire hazard zone along the northern edge of the City extension, and a low fire hazard zone south of the mountains and extending almost to Foothill Boulevard. Retirement Programs The City contributes to the California Public Employees' Retirement System (PERS), an agent multiple- employer public employee defined benefit pension plan. PERS provides retirement and disability benefits, annual cost -of- living adjustments, and death benefits to plan members and beneficiaries. PERS acts as a common investment and administrative agent for participating public entities within the State of California. Participants are required to contribute 8% for miscellaneous employees and 9% for safety employees of their annual covered salary. The City is required to contribute at an actuarially determined rate; the current rate is 12.426% for miscellaneous employees, and 29.053% for safety employees, of annual covered payroll. The contribution requirements of plan members and the City are established and may be amended by PERS. For the current fiscal year, the City's annual pension cost of $5,205,521 for PERS was equal to the City's required and actual contributions. The required contribution was determined as part of the June 30, 2006, actuarial valuation using the entry age normal actuarial cost method. The actuarial assumptions included (a) 7.75% investment rate of return (net of administrative expenses), (b) projected salary increases ranging from 3.25% to 14.45% for miscellaneous employees and from 3.25% to 13.15% for safety employees depending on age, service, and type of employment, and (c) 2% per year cost -of- living adjustments. Both (a) and (b) included an inflation component of 3.00 %. The City provides certain health insurance benefits, in accordance with the fringe benefits resolution, to retired employees. The required contribution of the City is based on a pay -as- you -go financing requirement. For fiscal year 2009, the City contributed $367,927 to the plan. The City also provides a $10,000 group term life insurance plan to management employees who retire after July 1, 1979, but who were hired into a management classification prior to September 21, 1982, in accordance with the controlling provisions of the plan. The City recognizes the cost of providing these benefits by recording the insurance premiums when expenditures occur. The plans are advance funded. There are 13 active plan participants. Contributions of $0 were paid for fiscal year ended June 30, 2009. The plan does not apply to employees hired after 1982. The City's annual Other Post Employment Benefits (OPEB) cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for 2009 is as follows: Fiscal Annual % of Annual Net Year OPEB Annual OPEB Cost OPEB Ended Cost Contribution Contributed Obligation 6/30/2009 $826,816 $367,927 44.5% 458,889 As of June 30, 2009, the most recent actuarial valuation date, the plan was zero percent funded. The Actuarial Accrued Liability for benefits was $9,217,688, and the actuarial value of assets was $0, resulting in an UAAL of $9,217,688. The covered payroll (annual payroll of active employees covered by the plan) was $24,371,421 and the ratio of UAAL to the covered payroll was 37.82 %. RVPUB\FBAUM \770379.1 C-4 Labor Relations [UPDATE] The City currently employs full -time and approximately 5 (excluding seasonal) part-time employees. of such employees are represented by four formal labor organizations as shown below. The City has executive and managerial employees who are not represented by any formal bargaining unit. CITY OF ARCADIA Labor Relations Labor Organization Arcadia Police Officers Association Arcadia Firefighter's Association Arcadia Public Works Employees Association Teamsters (Confidential/Supervisory /Professional Teamsters (General Employees) RVPUB\FBAUM \770379.1 C -5 Number of Employees Contract Expiration Date June 30, June 30, June 30, June 30, June 30, Source: City of Arcadia No Default The City has never defaulted in the payment of principal or interest on any of its loans, bonds, notes or other debt obligations or on any of its lease obligations. Population The population of the City as of January 1, 2010, was 56,719 according to the State Department of Finance. A historical summary of the City's population is shown below. CITY OF ARCADIA Population Year Population 2001 53,806 2002 54,855 2003 55,431 2004 55,713 2005 55,950 2006 55,971 2007 56,085 2008 56,169 2009 56,547 2010 56,719 (1) As of January 1 of each year. Source: California Department of Finance, Demographic Research Unit. Commerce The number of establishments selling merchandise subject to sales tax and the valuation of taxable transactions is presented in the following table. Retail Stores Apparel stores General merchandise stores Food Stores Eating and drinking places Home furnishings and appliances Bldg. matrl. and farm implements Auto dealers and auto supplies Service stations Other retail stores Retail Stores Totals All Other Outlets Total All Outlets Civilian Labor Force Civilian Employment Civilian Unemployment Civilian Unemployment Rate Agriculture Mining and Logging Construction Manufacturing Trade, Transportation & Utilities Retail Trade Transportation, Warehousing & Utilities Information Financial Activities Professional & Business Services Educational & Health Services Leisure & Hospitality Government Total, All Industries Source: California Economic Development Department. CITY OF ARCADIA Taxable Sales Taxable Transactions (in thousands of dollars) 2005 2006 2007 $140,102 $112,867 $112,914 204,967 197,732 192,183 36,289 35,241 36,269 114,219 119,595 132,457 9,295 9,694 8,582 4,567 5,241 5,635 N/A N/A N/A 53,727 59,529 60,183 167,091 178,007 188,470 $700,257 $717,906 $736,693 $126,199 $126,635 $120,031 $826,456 $844,541 $856,724 (1) As of first quarter 2009. Source: California State Board of Equalization Employment and Industry The City is a part of the Los Angeles County Primary Statistical labor market area. The distribution of employment is this area is as follows: LOS ANGELES COUNTY MSA Labor Force and Industry Employment (Data Not adjusted for Seasonality) Annual Averages 2005 -2009 2005 2006 4,771,400 4,516,000 255,400 5.4% 7,400 3,700 148,700 471,700 795,400 414,400 161,700 207,600 244,000 576,100 471,300 377,800 583,700 4,031,600 RVPUB\FBAUM \770379.1 C -6 4,797,400 4,568,200 229,300 4.8% 7,600 4,000 157,500 461,700 814,100 423,300 165,200 205,600 248,800 598,900 478,700 388,600 589,400 4,100,100 2007 4,863,800 4,617,100 246,700 5.1% 7,500 4,400 157,600 449,200 818,500 426,000 165,600 209,800 246,000 605,400 490,500 397,900 595,700 4,129,600 2008 $144,999 138,747 37,276 132,585 6,445 6,081 2009 $ 16,799 30,948 12,241 30,948 1,874 8,652 N/A 1,784 77,970 36,059 168,056 35,799 $712,158 $144,155 $111,775 $ 26,619 $823,933 $170,774 2008 2009 4,924,500 4,896,100 4,557,300 4,328,600 367,200 567,500 7.5% 11.6% 6,900 6,200 4,400 4,100 145,200 116.500 434,500 389.200 803,300 742,500 416,500 386.600 163,100 151,700 210,300 193,700 235,700 220,200 582,600 528,100 503,400 513,900 401,600 383,900 603,700 599,500 4,077,600 3,835,600 Employment The ten largest private employers in the City as of June 30, 2009 are shown in the following table. The City is not aware of the number of employees for these employers. CITY OF ARCADIA Major Private Employers Percentage of Total City Employer Employees Rank Employment Vons Companies Inc. 634 1 4.28% Worley Parsons Group, Inc. 360 2 2.43% JC Penney Corp. Inc. 322 3 2.18% Macy's West 312 4 2.11% Emergency Groups Office 300 5 2.03% Nordstrom Inc. 274 6 1.85% M W H Americas, Inc. 184 7 1.24% The Cheesecake Factory 168 8 1.14% Pavilions 161 9 1.09% Healthcare Partners Medical 161 10 1.09% Total 2,876 19.43% Source: City of Arcadia Annual Comprehensive Financial Report for Fiscal Year 2008 -09. The following table summarizes the labor force, employment and unemployment figures over the pas: five years for the City of Arcadia, the County of Los Angeles, the State of California, and the nation as a whole. RVPUB\FBAUM \770379.1 C -7 Source: California Employment Development Department. Effective Buying Income CITY OF ARCADIA County of Los Angeles, State of California, and United States Average Annual Civilian Labor Force, Employment and Unemployment RVPUB\FBAUM \770379.1 C -8 Unemployment Year and Area Labor Force Employment Unemployment Rate 2005 Arcadia Los Angeles County 4,771,400 4,516,000 255,400 5.4 California 17,544,800 16,592,200 952,600 5.4 United States 150,139 143,075 7,064 4.7 2006 Arcadia Los Angeles County 4,797,400 4,568,200 229,300 4.8 California 17,718,500 16,851,600 866,900 4.9 United States 152,519 146,073 6,446 4.2 2007 Arcadia Los Angeles County 4,863,800 4,617,100 246,700 5.1 California 17,970,800 17,011,000 959,800 5.3 United States 153,752 146,731 7,020 4.6 2008 Arcadia 28,300 27,200 1,200 4.2 Los Angeles County 4,924,500 4,557,300 367,200 7.5 California 18,251,600 16,938,300 1,313,200 7.2 United States 154,661 144,500 10,161 6.6 2009 Arcadia 27,600 25,800 1,800 6.7 Los Angeles County 4,896,100 4,328,600 567,500 11.6 California 18,250,200 16,163,900 2,086,200 11.4 United States 153,289 138,724 14,565 9.5 "Effective Buying Income" is defined as personal income less personal tax and nontax payments, a number often referred to as "disposable" or "after -tax" income. Personal income is the aggregate of wages and salaries, other than labor - related income (such as employer contributions to private pension funds), proprietor's income, rental income (which includes imputed rental income of owner - occupants of non -fare: dwellings), dividends paid by corporations, interest income from all sources and transfer payments (such as pensions and welfare assistance). Deducted from this total are personal taxes (federal, state and local, nontax payments, fines, fees, penalties, etc.) and personal contributions to social insurance. According to U.S. government definitions, the resultant figure is commonly known as "disposable personal income." The following table summarizes the personal and per capita income for Los Angeles -Long Beach - Santa Ana Metropolitan Statistical Area, the County of Los Angles and the State of California for the period 1995 through 1999. Source: U.S. Department of Commerce. Bureau of Economic Analysis. Los Angeles -Long Beach -Santa Ana Metropolitan Statistical Area Period Personal income Per capita personal income (dollars) 2004 468,530,100 36,705 2005 496,601,674 38,915 2006 536,330,465 42,185 2007 555,946,310 43,801 2008 568,434,957 44,519 Construction Activity The following table is a five - year summary of the valuation of building permits issued by the City: CITY OF ARCADIA Building Permit Activity Summary: Units and Valuations 2005 2006 2007 2008 2009 Valuation ($000): Residential Single Family Multifamily Alt. & Additions Total Non - Residential New Commercial New Industrial Other Alt. & Additions Total Total All Building Dwelling Units: Single family Multiple family Total Source: The City. RVPUB\FBAUM \770379.1 STATE OF CALIFORNIA County of Los Angeles and State of California Personal and Per Capita Income Period Personal income Per capita personal income 2004 1,312,244,154 36,904 2005 1,387,682,421 38,767 2006 1,495,559,996 41,567 2007 1,572,270,587 43,402 2008 1,604,112,764 43,852 2009 1,564,388,897 42,325 C -9 RVPUB\FBAUM \770379.1 D -1 APPENDIX D FISCAL CONSULTANT'S REPORT APPENDIX E FORM OF BOND COUNSEL OPINION RVPUB\FBAUM \770379.1 E -1 , 2010 Arcadia Redevelopment Agency San Diego, California Re: $ Arcadia Redevelopment Agency, Central Redevelopment Project Subordinate Tax Allocation Bonds, Series 2010 (Taxable) Ladies and Gentlemen: We have examined certified copies of proceedings of the Arcadia Redevelopment Agency (the "Agency "), and other information and documents submitted to us relative to the issuance and sale by the Agency of its Central Redevelopment Project Subordinate Tax Allocation Bonds, Series 2010 (Taxable) in (the "Bonds") aggregate principal amount of $ ( " " ) and such other information a documents as we consider necessary to render this opinion. In rendering this opinion, we also have relied upon certain representations of fact and certifications made by the Agency and the initial purchasers of the Bonds. We have not undertaken to verify through independent investigation the accuracy of the representations and certifications relied upon by us. The Bonds have been issued pursuant to the authority contained in Part 1 of Division 24 of the Health and Safety Code of the State of California and California Government Code Section 5903 (collectively, the "Act "), a resolution of the Agency adopted on June _, 2010, and in accordance with the terms and conditions of an Indenture of Trust dated as of July 1, 2010 (the "Indenture "), by and between the Agency and The Bank of New York Mellon Trust Company, N.A., as trustee. All terms not defined herein have the meanings ascribed to those terms in the Indenture. Based upon our examination of the foregoing, and in reliance thereon, and on all matters of fact as we deem relevant under the circumstances, and upon consideration of applicable laws, we are of the opinion that: 1. The Bonds have been duly and validly authorized by the Agency and are valid and binding special obligations of the Agency and, except as specifically limited in the Indenture, payable solely from Tax Revenues (as defined in the Indenture) and other sources as and to the extent provided for in the Indenture. The Bonds are enforceable in accordance with their terms and the terms of the Indenture, except to the extent that enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or transfer or other laws affecting creditors' rights generally and by the exercise of judicial discretion in accordance with general principles of equity or otherwise in appropriate cases and by limitations on remedies against public agencies in the State of California. 2. The Indenture has been duly authorized by the Agency, is valid and binding upon the Agency and is enforceable in accordance with its terms, except to the extent that enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or transfer or other laws affecting creditors' rights generally and by the exercise of judicial discretion in accordance with general principles of equity or otherwise in appropriate cases and by limitations on remedies against public agencies in the State of California.. 3. Under existing statutes, regulations, rulings and judicial decisions, interest (and original issue discount) evidenced by the Bonds is not excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986, as amended (the "Code "). 4. Interest (and original issue discount) on the Bonds is exempt from personal income taxes imposed in the State of California. 5. Except for certain exceptions, the difference between the issue price of a Bond (the first price at which a substantial amount of the Bonds of a maturity is to be sold to the public) and the stated payment price at maturity with respect to such Bond constitutes original issue discount. Original issue discount accrues under a constant yield method. The amount of original issue discount deemed received by a Bond owner will increase the Bond owner's basis in the applicable Bond. Except as expressly set forth in paragraphs (3), (4), and (5), we express no opinion regarding any tax consequences with respect to the Bonds. Any federal tax advice contained herein with respect to the Bonds is not intended or written to be used, and it cannot be used, for the purpose of avoiding penalties under the Code. The federal tax advice contained herein with respect to the Bonds was written to support the promoting and marketing of the Bonds. Before purchasing any of the Bonds, all potential purchasers should consult their independent tax advisors with respect to the tax consequences relating to the Bonds and the taxpayer's particular circumstances. We are admitted to the practice of law only in the State of California and our opinion is limited to matters governed by the laws of the State of California and federal law. We assume no responsibility with respect to the applicability or the effect of the laws of any other jurisdiction and express no opinion as to the enforceability of the choice of law provisions contained in the Indenture. We express no opinion herein as to the accuracy, completeness or sufficiency of the Official Statement or other offering material relating to the Bonds and expressly disclaim any duty to advise the Owners of the Bonds with respect to matters contained in the Official Statement or other offering material. The opinions expressed herein are based upon an analysis of existing statutes, regulations, rulings and judicial decisions and cover certain matters not directly addressed by such authorities. We call attention to the fact that the foregoing opinions may be affected by actions taken (or not taken) or events occurring (or not occurring) after the date hereof. We have not undertaken to determine, or to inform any person, whether such actions or events are taken (or not taken) or do occur (or do not occur). RVPUB\FBAUM \770379.1 E -2 Respectfully submitted, APPENDIX F THE BOOK -ENTRY SYSTEM The information contained in the following paragraphs of this subsection "Book- Entry-Only System" has been extracted from a schedule prepared by The Depository Trust Company ( "DTC ") entitled "SAMPLE OFFICIAL STATEMENT LANGUAGE DESCRIBING BOOK - ENTRY -ONLY ISSUANCE." The Agency makes no representation as to the completeness or the accuracy of such information or as to the absence of material adverse changes in such information subsequent to the date hereof. The Depository Trust Company ( "DTC "), New York, NY, will act as securities depository for the 2010 Bonds. The 2010 Bonds will be executed and delivered as fully- registered securities registered in the name of Cede & Co. ( DTC's partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully- registered Bond certificate will be issued for each maturity of the 2010 Bonds, each in the aggregate principal amount of such issue, and will be deposited with DTC. DTC, the world's 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, corporate and municipal debt issues, and money market instrument from over E5 countries that DTC's participants ( "Direct Participants ") deposit with DTC. DTC also facilitates the post - trade settlement among Direct Participants of sales and other securities transactions in deposited securities through electronic computerized book -entry transfers and pledges between Direct Participants' accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non -U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly -owned subsidiary of The Depository Trust & Clearing Corporation ( "DTCC "). DTCC, in turn, is owned by a number of Direct Participants of DTC and Members of the National Securities Clearing Corporation 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 & Poor's highest rating: AAA. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com. Purchases of 2010 Bonds under the DTC system must be made by or through Direct Participants. which will receive a credit for the 2010 Bonds on DTC's 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 2010 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 2010 Bonds is discontinued. To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co. or such other name as may be requested by an authorized representative of DTC. The deposit of 2010 Bonds with DTC and their registration in the name of Cede & Co. or such other nominee do not effect any change in beneficial ownership. DTC has no knowledge RVPUB\FBAUM \770379.1 F-1 of the actual Beneficial Owners of the 2010 Bonds; DTC's records reflect only the identity of the Direct Participants to whose accounts such Certificates 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 2010 Bonds may wish to take certain steps to augment transmission to them of notices of significant events with respect to the 2010 Bonds, such as redemptions, tenders, defaults, and proposed amendments to the security documents. For example, Beneficial Owners of 2010 Bonds may wish to ascertain that the nominee holding the 2010 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 the notices be provided directly to them. Redemption notices shall be sent to DTC. If less than all of the 2010 Bonds within an issue are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed. Neither DTC nor Cede & Co. (nor such other DTC nominee) will consent or vote with respect to the 2010 Bonds unless authorized by a Direct Participant in accordance with DTC's Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the Agency 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 the 2010 Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). Payment of principal of, premium, if any, and interest evidenced by the 2010 Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC's practice is to credit Direct Participants' accounts, upon DTC's receipt of funds and corresponding detail information from the Agency or the Fiscal Agent on payable date in accordance with their respective holdings shown on DTC's records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered m "street name," and will be the responsibility of such Participant and not of DTC nor its nominee, the Fiscal Agent, or the Agency, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal of, premium, if any, and interest evidenced by the 2010 Bonds to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Agency or the Fiscal Agent, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. DTC may discontinue providing its services as securities depository with respect to the 2010 Bonds at any time by giving reasonable notice to the Agency or the Fiscal Agent. Under such circumstances, in the event that a successor securities depository is not obtained, Bond certificates are required to be printed and delivered. The Agency may decide to discontinue use of the system of book - entry-only transfers through DTC (or a successor securities depository). In that event, Bond certificates will be printed and delivered to DTC. The information in this section concerning DTC and DTC's book -entry system has been obtained from sources that the Agency believes to be reliable, but the Agency takes no responsibility for the accuracy thereof. NONE OF THE AGENCY OR THE FISCAL AGENT WILL HAVE ANY RESPONSIBILITY OR OBLIGATION TO DTC PARTICIPANTS, INDIRECT PARTICIPANTS OR BENEFICIAL OWNERS RVPUB\FBAUM\770379.1 F -2 WITH RESPECT TO THE PAYMENTS OR THE PROVIDING OF NOTICE TO DTC PARTICIPANTS, INDIRECT PARTICIPANTS OR BENEFICIAL OWNERS OR THE SELECTION OF 2010 BONDS FOR PREPAYMENT. None of the Agency, the Underwriter or the Fiscal Agent can give any assurances that DTC, DTC Participants, Indirect Participants or others will distribute payments of principal of, premium, if any, and interest evidenced by the 2010 Bonds paid to DTC or its nominee, as the registered Owner, or any redemption or other notice, to the Beneficial Owners or that they will do so on a timely basis or that DTC will serve and act in a manner described in this Official Statement. In the event that the book -entry system is discontinued as described above, the requirements of the Agreement will apply. RVPUB\FBAUM \770379.1 F -3 The Agency covenants and agrees as follows: APPENDIX G FORM OF CONTINUING DISCLOSURE CERTIFICATE This Continuing Disclosure Certificate (the "Disclosure Certificate ") is executed and delivered by the Arcadia Redevelopment Agency (the "Agency ") in connection with the issuance of $ Arcadia Redevelopment Agency Central Redevelopment Project Subordinate Tax Allocation Bonds, Series 2010 (Taxable) (the "2010 Bonds "). The 2010 Bonds are being issued pursuant to a Trust Agreement, dated as of June 1, 2010, by and between the Agency and The Bank of New York Mellon Trust Company, as Trustee (the "Trustee ") (as so amended and supplemented, the "Agreement "). Section 1. Purpose of the Disclosure Certificate. This Disclosure Certificate is being executed and delivered by the Agency for the benefit of the holders and beneficial owners of the 2010 Bonds and in order to assist the Participating Underwriter in complying with S.E.C. Rule 15c2- 12(b)(5). Section 2. Definitions. In addition to the definitions set forth above and in the Agreement, which apply to any capitalized term used in this Disclosure Certificate unless otherwise defined in this Section 2, the following capitalized terms shall have the following meanings: "Annual Report" means any Annual Report provided by the Agency pursuant to, and as described in, Sections 3 and 4 of this Disclosure Certificate. "Annual Report Date" means the date that is 9 months after the end of the Agency's fiscal year (currently March 31 based on the Agency's fiscal year end of June 30). "Dissemination Agent" means the Agency, or any successor Dissemination Agent designated in writing by the Agency and which has filed with the Agency a written acceptance of such designation. "Listed Events" means any of the events listed in Section 5(a) of this Disclosure Certificate. "MSRB" means the Municipal Securities Rulemaking Board, which has been designated by the Securities and Exchange Commission as the sole repository of disclosure information for purposes of the Rule, or any other repository of disclosure information that may be designated by the Securities and Exchange Commission as such for purposes of the Rule in the future. "Official Statement" means the final official statement executed by the Agency in connection with the execution and delivery of the 2010 Bonds. "Participating Underwriter" means the original underwriter of the 2010 Bonds required to comply with the Rule in connection with offering of the 2010 Bonds. "Rule" means Rule 15c2- 12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as it may be amended from time to time Section 3. Provision of Annual Reports. (a) The Agency shall, or shall cause the Dissemination Agent to, not later than the Annual Report Date, commencing March 31, 2011, with the report for the 2009 -10 fiscal year, provide to the MSRB, in an electronic format as prescribed by the MSRB, an Annual Report that is consistent with the requirements of Section 4 of this Disclosure Certificate. Not later than 15 Business Days prior to the Annual Report Date, the Agency shall provide the Annual Report to the Dissemination Agent (if other than the Agency). If by 15 G -1 Business Days prior to the Annual Report Date the Dissemination Agent (if other than the Agency) has not received a copy of the Annual Report, the Dissemination Agent shall contact the Agency to determine if the Agency is in compliance with the previous sentence. The Annual Report may be submitted as a single document or as separate documents comprising a package, and may include by reference other information as provided in Section 4 of this Disclosure Certificate; provided that the audited financial statements of the Agency may be submitted separately from the balance of the Annual Report, and later than the Annual Report Date, if not available by that date. If the Agency's fiscal year changes, it shall give notice of such change in the same manner as for a Listed Event under Section 5(c). The Agency 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 the Agency hereunder. The Dissemination Agent may conclusively rely upon such certification of the Agency and shall have no duty or obligation to review such Annual Report. (b) If the Agency does not provide (or cause the Dissemination Agent to provide) an Annual Report by the Annual Report Date, the Agency shall provide (or cause the Dissemination Agent to provide) to the MSRB, in an electronic format as prescribed by the MSRB, a notice in substantially the form attached as Exhibit A. (c) With respect to each Annual Report, the Dissemination Agent shall: (i) determine each year prior to the Annual Report Date the then - applicable rules and electronic format prescribed by the MSRB for the filing of annual continuing disclosure reports; and (ii) if the Dissemination Agent is other than the Agency, file a report with the Agency certifying that the Annual Report has been provided pursuant to this Disclosure Certificate, and stating the date it was provided. Section 4. Content of Annual Reports. The Agency's Annual Report shall contain or incorporate by reference the following: (a) The Agency's audited financial statements prepared in accordance with generally accepted accounting principles as promulgated to apply to governmental entities from time to time by the Governmental Accounting Standards Board. If the Agency's audited financial statements are not available by the Annual Report Date, the Annual Report shall contain unaudited financial statements in a format similar to the financial statements contained in the final Official Statement, and the audited financial statements shall be filed in the same manner as the Annual Report when they become available. (b) Financial information and operating data with respect to the Agency for the prior fiscal year of the type included in the Official Statement in the following categories (to the extent not included in the Agency's audited financial statements): (i) aggregate assessed value of the Project Area; (ii) list of ten largest local secured property taxpayers for the Project Area, together with the assessed value and percentage of aggregate assessed value of the property owned by such assessees; (iii) calculation of the Tax Revenues and coverage ratio on debt service calculated in the same manner as provided in the Official Statement in Table 6 on page _ and Table 7 on page _ of the Official Statement; (iv) information on appeals by top ten taxpayers in the Project Area; and (v) description of outstanding indebtedness payable from Tax Revenues. (c) In addition to any of the information expressly required to be provided under this Disclosure Certificate, the Agency shall provide such further material 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. (d) Any or all of the items listed above may be included by specific reference to other documents, including official statements of debt issues of the Agency or related public entities, which are G -22 available to the public on the MSRB's Internet web site or filed with the Securities and Exchange Commission. The Agency shall clearly identify each such other document so included by reference. Section 5. Reporting of Significant Events. (a) The Agency shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the 2010 Bonds, if material: (1) Principal and interest payment delinquencies. (2) Non - payment related defaults. (3) Unscheduled draws on debt service reserves reflecting financial difficulties. (4) Unscheduled draws on credit enhancements reflecting financial difficulties. (5) Substitution of credit or liquidity providers, or their failure to perform. (6) Adverse tax opinions or events affecting the tax - exempt status of the security. (7) Modifications to rights of security holders. (8) Contingent or unscheduled bond calls. (9) Defeasances. (10) Release, substitution, or sale of property securing repayment of the securities. (11) Rating changes. (b) Whenever the Agency obtains knowledge of the occurrence of a Listed Event, the Agency shall as soon as possible determine if such event would be material under applicable Federal securities law. (c) If the Agency determines that knowledge of the occurrence of a Listed Event would be material under applicable Federal securities law, the Agency shall, or shall cause the Dissemination Agent (if not the Agency) to, promptly file a notice of such occurrence with the MSRB, in an electronic format as prescribed by the MSRB. Notwithstanding the foregoing, notice of Listed Events described in subsections (a)(8) and (9) above need not be given under this subsection any earlier than the notice (if any) of the underlying event is given to holders of affected 2010 Bonds under the Agreement. Section 6. Identifving Information for Filings with the MSRB. All documents provided to the MSRB under the Disclosure Certificate shall be accompanied by identifying information as prescribed by the MSRB. Section 7. Termination of Reporting Obligation. The Agency's obligations under this Disclosure Certificate shall terminate upon the legal defeasance, prior redemption or payment in full of all of the 2010 Bonds. If such termination occurs prior to the final maturity of the 2010 Bonds, the Agency shall give notice of such termination in the same manner as for a Listed Event under Section 5(c). Section 8. Dissemination Agent. The Agency may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Certificate, and may discharge any Dissemination Agent, with or without appointing a successor Dissemination Agent. The initial G -3 Dissemination Agent shall be the Agency. Any Dissemination Agent may resign by providing 30 days' written notice to the Agency. Section 9. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Certificate, the Agency may amend this Disclosure Certificate, and any provision of this Disclosure Certificate may be waived, provided that the following conditions are satisfied: (a) if the amendment or waiver relates to the provisions of Sections 3(a), 4 or 5(a), it may only be made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature, or status of an obligated person with respect to the 2010 Bonds, or type of business conducted; (b) the undertakings herein, as proposed to be amended or waived, would, in the opinion of nationally recognized bond counsel, have complied with the requirements of the Rule at the time of the primary offering of the 2010 Bonds, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and (c) the proposed amendment or waiver either (i) is approved by holders of the 2010 Bonds in the manner provided in the Agreement for amendments to the Trust Agreement with the consent of holders, or (ii) does not, in the opinion of nationally recognized bond counsel, materially impair the interests of the holders or beneficial owners of the 2010 Bonds. If the annual financial information or operating data to be provided in the Annual Report is amended pursuant to the provisions hereof, the first annual financial information 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. If an amendment is made to the undertaking 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, in order to provide information to investors to enable them to evaluate the ability of the Agency to meet its obligations. To the extent reasonably feasible, the comparison shall be quantitative. A notice of the change in the accounting principles shall be filed in the same manner as for a Listed Event under Section 5(c). Section 10. Additional Information. Nothing in this Disclosure Certificate shall be deemed to prevent the Agency from disseminating any other information, using the means of dissemination set forth in this 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 this Disclosure Certificate. If the Agency chooses to include any information in any Annual Report or notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Certificate, the Agency shall have no obligation under this Disclosure Certificate to update such information or include it in any future Annual Report or notice of occurrence of a Listed Event. Section 11. Default. If the Agency fails to comply with any provision of this Disclosure Certificate, the Participating Underwriter or any holder or beneficial owner of the Certificates may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the Agency to comply with its obligations under this Disclosure Certificate. A default under this Disclosure Certificate shall not be deemed an Event of Default under the Agreement, and the sole G -4 remedy under this Disclosure Certificate in the event of any failure of the Agency to comply with this Disclosure Certificate shall be an action to compel performance. Section 12. Duties, Immunities and Liabilities of Dissemination Agent. (a) The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Certificate, and the Agency agrees to indemnify and save the Dissemination Agent, its officers, directors, employees and agents, harmless against any loss, expense and liabilities which they may incur arising out of or in the exercise or performance of its powers and duties hereunder, including the costs and expenses (including attorneys fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent's negligence or willful misconduct. The Dissemination Agent shall have no duty or obligation to review any information provided to it by the Agency hereunder, and shall not be deemed to be acting in any fiduciary capacity for the Agency, the 2010 Bond holders or any other party. The obligations of the Agency under this Section shall survive resignation or removal of the Dissemination Agent and payment of the 2010 Bonds. (b) The Dissemination Agent shall be paid compensation by the Agency for its services provided hereunder in accordance with its schedule of fees as amended from time to time, and shall be reimbursed for all expenses, legal fees and advances made or incurred by the Dissemination Agent in the performance of its duties hereunder. Section 13. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the Agency, the Dissemination Agent, the Participating Underwriter and the holders and beneficial owners from time to time of the Certificates, and shall create no rights in any other person or entity. Section 14. Counterparts. This Disclosure Certificate may be executed in several counterparts, each of which shall be regarded as an original, and all of which shall constitute one and the same instrument. Date: , 2010 ARCADIA REDEVELOPMENT AGENCY By: Name: Don Penman Title: Executive Director EXHIBIT A NOTICE TO REPOSITORIES OF FAILURE TO FILE ANNUAL REPORT Name of Issuer: Arcadia Redevelopment Agency Name of Bond Issue: Arcadia Redevelopment Agency Central Redevelopment Project Subordinate Tax Allocation Bonds, Series 2010 (Taxable) Date of Issuance: , 2010 NOTICE IS HEREBY GIVEN that the Agency has not provided an Annual Report with respect to the above - named Bonds as required by the Continuing Disclosure Certificate executed by the Agency on the date of issuance of the 2010 Bonds. The Agency anticipates that the Annual Report will be filed by Dated: RVPUB\FBAUM \770379.1 G -6 ARCADIA REDEVELOPMENT AGENCY By: Name: Title: Arcadia Redevelopment Agency 240 West Huntington Drive Arcadia, CA 91007 Attention: Executive Director Ladies and Gentlemen: The undersigned, Stone & Youngberg LLC (the "Underwriter "), as underwriter, offers to enter into this Bond Purchase Contract (this "Bond Purchase Contract ") with the Arcadia Redevelopment Agency (the "Agency "), which will be binding upon the Agency and the Underwriter upon the acceptance hereof by the Agency. This offer is made subject to its acceptance by the Agency by execution of this Bond Purchase Contract and its delivery to the Underwriter on or before 12:00 p.m., California time, on the date hereof. All terms used herein and not otherwise defined shall have the respective meanings given to such terms in the Trust Indenture as hereafter defined. 1. Purchase and Sale of Bonds. Upon the terms and conditions and upon the basis of the representations, warranties and agreements hereinafter set forth, the Underwriter hereby agrees to purchase from the Agency for offering to the public, and the Agency hereby agrees to sell to the Underwriter for such purpose, all (but not less than all) of the above - captioned bonds (the "Bonds "), with the maturity dates, interest rates, reoffering yields and price set forth on Appendix A, at a purchase price of $ (being the aggregate principal amount thereof ($ .00) less a purchaser's discount of $ and plus a net original issue premium of $ ). 2. General. ARCADIA REDEVELOPMENT AGENCY Central Redevelopment Project Subordinate Tax Allocation Bonds Series 2010A (Taxable) BOND PURCHASE CONTRACT , 2010 (a) Description of Bonds. The Bonds shall be issued pursuant to an Indenture of Trust, dated as of June 1, 2010 (the "Trust Indenture "), by and between the Agency and The Bank of New York Mellon Trust Company, N.A., as trustee (the "Trustee ") and pursuant to the provisions of the Community Redevelopment Law of the State of California, constituting Part 1 of Division 24 of the Health and Safety Code of the State of California (the "Redevelopment Law "). The Bonds shall be as described in the Trust Indenture and the Official Statement (as defined below) relating to the Bonds. RVPUB\FBAUM \770763.1 Attachment E (b) Purpose of the Bonds. The Bonds are being issued for the following purposes: 1. Refund Certain Prior Bonds. To refund a portion of the Agency's outstanding Tax Allocation Bonds (Central Redevelopment Project) Series 2001B (Taxable), being serial bonds maturing in the years 2011 through 2018 in the aggregate outstanding principal amount of $ and the term Series 2001B (Taxable) maturing in 2020 and 2023 in the aggregate principal amount of $ (the "Refunded Bonds "). 2. Redevelopment Project. To finance a portion of the Redevelopment Project (the "Redevelopment Project ") 3. Reserve Fund. To fund a debt service reserve fund for the Bonds. 4. Costs of Issuance. To pay the costs of issuing the Bonds. (c) Security for the Bonds. The Bonds are limited obligations of the Agency secured by a pledge of and first lien on "Tax Revenues ". Tax Revenues is, in general, defined in the Indenture as the tax increment revenues derived from the Redevelopment Project Areas, subordinate to payment of debt service on the Senior Bonds (as defined in the Trust Indenture) and pledge for such purpose under the Senior Bonds Indenture (as defined in the Trust Indenture). (d) Continuing Disclosure. In order to assist the Underwriter with complying with Rule 15c2 -12 under the Securities Exchange Act of 1934 (the "Rule "), the Agency will execute concurrently with issuance of the Bonds a Continuing Disclosure Certificate with respect to the Bonds (the "Continuing Disclosure Certificate ") in the form attached as an exhibit to the Preliminary Official Statement (as defined below). 3. Public Offering. The Underwriter agrees to make a bona fide public offering of all the Bonds initially at the public offering prices (or yields) set forth on Appendix A attached hereto and incorporated herein by reference. Subsequent to the initial public offering, the Underwriter reserves the right to change the public offering prices (or yields) as it deems necessary in connection with the marketing of the Bonds, provided that the Underwriter shall not change the interest rates set forth on Appendix A. The Bonds may be offered and sold to certain dealers at prices lower than such initial public offering prices. 4. Delivery of Official Statement. The Agency has delivered or caused to be delivered to the Underwriter prior to the execution of this Bond Purchase Contract or the first offering of the Bonds, whichever first occurs, copies of the Preliminary Official Statement relating to the Bonds (the "Preliminary Official Statement "). Such Preliminary Official Statement is the official statement deemed final by the Agency for purposes of the Rule and approved for distribution by resolution of the Agency. The Agency shall execute and deliver to the Underwriter a certification in the form attached hereto as Appendix B in connection with distribution of the Preliminary Official Statement. Within seven (7) business days from the date hereof, but in no case less than 3 days prior to the Closing. the Agency shall deliver to the Underwriter a final Official Statement, executed on behalf of the Agency by authorized representatives of such entities and dated the date of RVPUB\FBAUM \770763.1 2 delivery thereof to the Underwriter, which shall include information permitted to be omitted by paragraph (b)(1) of the Rule and with such other amendments or supplements as shall have been approved by the Agency and the Underwriter (the "Final Official Statement "). The Preliminary Official Statement and the Final Official Statement, including the cover pages, the appendices thereto and all information incorporated therein by reference are hereinafter referred collectively to as the "Official Statement." 5. The Closing. At 8:00 a.m., California time, on , 2010, or at such other time or on such earlier or later business day as shall have been mutually agreed upon by the Agency and the Underwriter (the "Closing Date "), the Agency will deliver (i) the Bonds in definitive form to the Underwriter, through DTC in New York, New York, in book -entry form, duly executed and authenticated , and (ii) the closing documents hereinafter mentioned at the offices of Stradling, Yocca, Carlson & Rauth, a Professional Corporation ( "Bond Counsel ") in Newport Beach, California or another place to be mutually agreed upon by the Agency and the Underwriter. The Underwriter will accept such delivery and pay the purchase price of the Bonds, as set forth in Section 1 hereof, by federal wire transfer to the order of the Trustee on behalf of the Agency. This payment and delivery, together with the delivery of the aforementioned documents, is herein called the "Closing." The Bonds will be delivered in such denominations and deposited in the account or accounts specified by the Underwriter pursuant to written notice not later than two (2) business days prior to Closing. The Bonds will be made available to the Underwriter for inspection and packaging not less than 24 hours prior to the Closing. 6. Representations, Warranties and Covenants of the Agency. The Agency represents, warrants and covenants to the Underwriter that: (a) Due Organization, Existence and Authority. The Agency is a public body, corporate and politic, organized and existing under the laws of the State of California, including the Redevelopment Law, with full right, power and authority to issue the Bonds and to execute, deliver and perform its obligations under the Bonds, this Bond Purchase Contract, the Continuing Disclosure Certificate, the Escrow Agreement (as defined in the Trust Indenture) and the Trust Indenture (collectively, the "Financing Documents ") and to carry out and consummate the transactions contemplated by the Financing Documents and the Official Statement. (b) Due Authorization and Approval. By all necessary official action, the Agency has duly authorized and approved the execution and delivery of, and the performance by the Agency of the obligations contained in, the Bonds, the Preliminary Official Statement, the Official Statement, and the Financing Documents and as of the date hereof, such authorizations and approvals are in full force and effect and have not been amended, modified or rescinded. When executed and delivered, the Bonds and the Financing Documents will constitute the legally valid and binding obligations of the Agency enforceable in accordance with their respective terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles relating to or affecting creditors' rights generally. The Agency has complied, and will at the Closing be in compliance in all respects, with the terms of the Bonds and the Financing Documents. RVPUBIFBAUM1770763.1 3 (c) Official Statement Accurate and Complete. The Preliminary Official Statement was as of its date, and the Official Statement is, and at all times subsequent to the date of the Official Statement up to and including the Closing will be, true and correct in all material respects, and the Preliminary Official Statement and the Official Statement contain and up to and including the Closing will contain no misstatement of any material fact and do not, and up to and including the Closing will not, omit any statement necessary to make the statements contained therein, in the light of the circumstances in which such statements were made, not misleading. (d) Underwriter's Consent to Amendments and Supplements to Official Statement. The Agency will advise the Underwriter promptly of any proposal to amend or supplement the Official Statement and will not effect or consent to any such amendment or supplement without the consent of the Underwriter, which consent will not be unreasonably withheld. The Agency will advise the Underwriter promptly of the institution of any proceedings known to it by any governmental agency prohibiting or otherwise affecting the use of the Official Statement in connection with the offering, sale or distribution of the Bonds. (e) No Breach or Default. As of the time of acceptance hereof and as of the time of the Closing, except as otherwise disclosed in the Official Statement, the Agency is not and will not be in breach of or in default under any applicable constitutional provision, law or administrative rule or regulation of the State of California or the United States, or any applicable judgment or decree or any trust agreement, loan agreement, bond, note, resolution, ordinance, agreement or other instrument to which the Agency is a party or is otherwise subject, and no event has occurred and is continuing which, with the passage of time or the giving of notice, or both, would constitute a default or event of default under any such instrument; and, as of such times, except as disclosed in the Official Statement, the authorization, execution and delivery of the Financing Documents and the Bonds and compliance with the provisions of each of such agreements or instruments do not and will not conflict with or constitute a breach of or default under any applicable constitutional provision, law or administrative rule or regulation of the State of California or the United States or any applicable judgment, decree, license, permit, trust agreement, loan agreement, bond, note, resolution, ordinance agreement or other instrument to which the Agency (or any of its officers in their respective capacities as such) is subject, or by which it or any of its properties is bound, nor will any such authorization, execution, delivery or compliance result in the creation or imposition of any lien, charge or other security interest or encumbrance of any nature whatsoever upon any of its assets or properties or under the terms of any such law, regulation or instrument, except as may be provided by the Bonds and the Financing Documents. (f) No Litigation. As of the time of acceptance hereof and the Closing, except as disclosed in the Official Statement, no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, government agency, public board or body, pending or threatened (i) in any way questioning the corporate existence of the Agency or the titles of the officers of the Agency to their respective offices; (ii) affecting, contesting or seeking to prohibit, restrain or enjoin the issuance or delivery of any of the Bonds, or the payment or collection of any amounts pledged or to be pledged to pay the principal of and interest on the Bonds, or in any way contesting or affecting the validity of the Bonds or the Financing Documents or the consummation of the transactions contemplated thereby or hereby, or contesting the exclusion of the interest on the Bonds from taxation or contesting the powers of the Agency or its authority to issue the Bonds; (iii) which may result in any material adverse change relating to the Agency or RVPUB\FBAUM \770763.1 4 which may materially affect the Agency's finances so as to impair its ability to pay the principal of, premium (if any) and interest on the Bonds when due; or (iv) contesting the completeness or accuracy of the Preliminary Official Statement or the Official Statement or any supplement or amendment thereto or asserting that the Preliminary Official Statement or the Official Statement contained any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, and (v) there is no basis for any action, suit, proceeding, inquiry or investigation of the nature described in clauses (i) through (iv) of this sentence. (g) Preliminary Official Statement. For purposes of the Rule, the Agency has heretofore deemed final the Preliminary Official Statement prior to its use and distribution by the Underwriter, except for the information specifically permitted to be omitted by paragraph (b)(1) of the Rule. (h) Continuing Disclosure. The Agency will undertake, pursuant to the Continuing Disclosure Certificate, to provide certain annual financial information and notices of the occurrence of certain events, if material. A description of this undertaking is set forth in the Preliminary Official Statement and will also be set forth in the Final Official Statement. Except as disclosed in the Preliminary Official Statement (and as will be set forth in the Official Statement), the Agency has not previously failed to comply in all material terms with a previous continuing disclosure undertaking under the Rule. (i) Compliance with Senior Bonds Documents. Issuance of the Bonds will comply with the provisions of the Senior Bonds Indenture and the Senior Bonds (the "Senior Bond Documents "). (j) Excess Surplus. The Agency's Low and Moderate Income Housing Fund established pursuant to Section 33334.3 of the Redevelopment Law does not on the date hereof, and will not on the Closing Date, contain an "excess surplus" (within the meaning of Section 33334.12 of the Redevelopment Law) that would cause the Agency to be subject to the sanctions contained in Section 33334.12(e)(1) of the Redevelopment Law. (k) Filing Requirements. As of the time of acceptance hereof and of the date of the Closing, except as otherwise disclosed in the Official Statement, the Agency has complied with the filing requirements of Section 33080, Section 33334.6 (if applicable) and Section 33675 of the Law. (1) Order Prohibiting. The Agency does not on the date hereof, and will not as of the Closing, have "major violations" (within the meaning of Section 33080.8(i) of the Redevelopment Law) so as to be subject to a court order prohibiting the activities set forth in Section 33080.8(e)(3) of the Redevelopment Law. 7. Closing Conditions. The Underwriter has entered into this Bond Purchase Contract in reliance upon the representations, warranties and covenants herein and the performance by the Agency of its obligations hereunder, both as of the date hereof and as of the date of the Closing. The Underwriter's obligations under this Bond Purchase Contract to RVPUB\FBAUM\770763.1 5 purchase the Bonds from the Agency, and to pay the purchase price thereof, shall be subject to the following additional conditions: (a) Bring - Down Representation. The representations, warranties and covenants of the Agency contained herein shall be true, complete and correct at the date hereof and at the time of the Closing, as if made on the date of the Closing. (b) Executed Agreements and Performance Thereunder. At the time of the Closing (i) the Financing Documents shall be in full force and effect, and shall not have been amended, modified or supplemented except with the written consent of the Underwriter and (ii) there shall be in full force and effect such resolutions of the Agency (the "Agency Resolutions ")and the City of Riverside (the "City Resolutions ", and together with the Agency Resolutions, the "Resolutions ") as, in the opinion of Bond Counsel, shall be necessary in connection with the transactions contemplated by the Official Statement and the Financing Documents. (c) Termination Events. The Underwriter shall have the right to terminate this Bond Purchase Contract, without liability therefor, by notification to the Agency if at any time at or prior to the Closing: (i) any event shall occur which causes any statement contained in the Official Statement to be materially misleading or results in a failure of the Official Statement to state a material fact necessary to make the statements in the Official Statement, in the light of the circumstances under which they were made, not misleading; or (ii) the marketability of the Bonds or the market price thereof, in the opinion of the Underwriter, has been materially adversely affected by an amendment to the Constitution of the United States or by any legislation in or by the Congress of the United States or by the State of California, or the amendment of legislation pending as of the date of this Bond Purchase Contract in the Congress of the United States, or the recommendation to Congress or endorsement for passage (by press release, other form of notice or otherwise) of legislation by the President of the United States, the Treasury Department of the United States, the Internal Revenue Service or the Chairman or ranking minority member of the Committee on Finance of the United States Senate or the Committee on Ways and Means of the United States House of Representatives, or the proposal for consideration of legislation by either such Committee or by any member thereof, or the presentment of legislation for consideration as an option by either such Committee, or by the staff of the Joint Committee on Taxation of the Congress of the United States, or the favorable reporting for passage of legislation to either House of the Congress of the United States by a Committee of such House to which such legislation has been referred for consideration, or any decision of any Federal or State court or any ruling or regulation (final, temporary or proposed) or official statement on behalf of the United States Treasury Department, the Internal Revenue Service or other federal or State authority materially adversely affecting the federal or State tax status of the Agency, or the interest on bonds or notes or obligations of the general character of the Bonds; or (iii) any legislation, ordinance, rule or regulation shall be introduced in, or be enacted by any governmental body, department or agency of the State of California, or a decision by any court of competent jurisdiction within the State of California or any court RVPUB\FBAUM \770763.1 6 of the United States shall be rendered which, in the reasonable opinion of the Underwriter, materially adversely affects the market price of the Bonds; or (iv) legislation shall be enacted by the Congress of the United States, or a decision by a court of the United States shall be rendered, or a stop order, ruling, regulation or official statement by, or on behalf of, the Securities and Exchange Agency or any other governmental agency having jurisdiction of the subject matter shall be issued or made to the effect that the issuance, offering or sale of obligations of the general character of the Bonds, or the issuance, offering or sale of the Bonds, including all underlying obligations, as contemplated hereby or by the Official Statement, is in violation or would be in violation of, or that obligations of the general character of the Bonds, or the Bonds, are not exempt from registration under, any provision of the federal securities laws, including the Securities Act of 1933, as amended and as then in effect, or that the Trust Indenture needs to be qualified under the Trust Indenture Act of 1939, as amended and as then in effect; or (v) additional material restrictions not in force as of the date hereof shall have been imposed upon trading in securities generally by any governmental authority or by any national securities exchange which restrictions materially adversely affect the Underwriter's ability to trade the Bonds; or (vi) a general banking moratorium shall have been established by federal or State authorities; or (vii) the United States has become engaged in hostilities which have resulted in a declaration of war or a national emergency or there has occurred any other outbreak of hostilities or a national or international calamity or crisis, or there has occurred any escalation of existing hostilities, calamity or crisis, financial or otherwise, the effect of which on the financial markets of the United States being such as, in the reasonable opinion of the Underwriter, would affect materially and adversely the ability of the Underwriter to market the Bonds; or (viii) the commencement of any action, suit or proceeding described in Paragraph 6(0 hereof which,, in the judgment of the Underwriter, materially adversely affects the market price of the Bonds; or (ix) there shall be in force a general suspension of trading on the New York Stock Exchange. (d) Closing Documents. At or prior to the Closing, the Underwriter shall receive with respect to the Bonds (unless the context otherwise indicates) the following documents: (1) Bond Opinion. An approving opinion of Bond Counsel dated the date of the Closing and substantially in the form appended to the Official Statement, together with a letter from such counsel, dated the date of the Closing and addressed to the Underwriter, to the effect that the foregoing opinion addressed to the Agency may be relied upon by the Underwriter to the same extent as if such opinion were addressed to ot. RVPUB\FBAUM \770763.1 7 (2) Supplemental Opinion. A supplemental opinion or opinions of Bond Counsel addressed to the Underwriter, in form and substance acceptable to the Underwriter, and dated the date of the Closing substantially to the following effect: (i) The Bonds, this Bond Purchase Contract and the Trust Indenture have been duly authorized, executed and delivered by the Agency and constitute the valid, legal and binding agreements of the Agency enforceable in accordance with their respective terms. (ii) The statements contained in the Official Statement pertaining to the Bonds under the captions "INTRODUCTION," "FINANCING PLAN," "THE 2010 BONDS," "SECURITY FOR THE 2010 BONDS," and "TAX MATTERS" and in Appendix A to the Official Statement fairly and accurately summarize the Bonds, the Trust Indenture and the final approving opinion of Bond Counsel. (iii) The Bonds are exempt from registration under the Securities Act of 1933, as amended, and the Trust Indenture is exempt from qualification pursuant to the Trust Indenture Act of 1939, as amended. (iv) The Refunded Bonds have been defeased in accordance with the terms of the Senior Bonds Indenture (3) Agency Counsel Opinion. An opinion of Counsel to the Agency, dated the date of the Closing and addressed to the Underwriter, in form and substance acceptable to Bond Counsel and the Underwriter, substantially to the following effect: (i) The Financing Documents have been duly authorized, executed and delivered by the Agency and constitute the valid, legal and binding agreements of the Agency enforceable in accordance with their respective terms. (ii) The Agency is a public body corporate and politic duly organized and validly existing under the laws of the State of California. (iii) The Agency Resolution approving and authorizing the execution and delivery of the Financing Documents and approving the Official Statement has been duly adopted, and the Agency Resolution is in full force and effect and has not been modified, amended or rescinded. (iv) The information in the Official Statement relating to the Agency, the Tax Revenues and the Project Areas (excluding any financial or statistical data, as to which no opinion is expressed) is true and correct in all material respects, and the Official Statement does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. (v) Except as otherwise disclosed in the Official Statement, there is no litigation or proceeding pending or served, or to my current actual knowledge, threatened, challenging the creation, organization or existence of the Agency, or RVPUB\FBAUM \770763. ] 8 the validity of the Financing Documents or seeking to restrain or enjoin the repayment of the Bonds or in any way contesting or affecting the validity of the Financing Documents or contesting the authority of the Agency to enter into or perform its obligations under any of the Financing Documents, or which, in any manner, questions the right of the Agency to use the Tax Revenues for repayment of the Bonds or affects in any manner the right or ability of the Agency to collect or pledge the Tax Revenues or which may materially affect the Agency's finances so as to impair its ability to pay the principal of, premium (if any) and interest on the Bonds when due. (4) City Attorney Opinion. An opinion of the City Attorney, dated the date of the Closing and addressed to the City and the Underwriter, in form and substance acceptable to Bond Counsel, the City and the Underwriter, substantially to the following effect: (i) The City is a chartered city and municipal corporation duly organized and validly existing under the laws and the Constitution of the State of California. (ii) The City Resolutions approving and authorizing issuance of the Bonds are in full force and effect and have not been modified, amended or rescinded. (5) Disclosure Counsel Opinion. An opinion of Best Best & Krieger LLP, Riverside, California, as disclosure counsel to the Agency ( "Disclosure Counsel "), dated the Closing Date, and addressed to the Underwriter, to the effect that: (i) during the course of serving as Disclosure Counsel in connection with the execution and delivery of the Bonds and without having undertaken to determine independently or assuming any responsibility for the accuracy, completeness or fairness of the statements contained in the Official Statement, no information came to the attention of the attorneys in such firm rendering legal services in connection with the issuance of the Bonds that would lead them to believe that the Official Statement (excluding therefrom the financial statements, any financial or statistical data, or forecasts, charts, numbers, estimates, projections, assumptions or expressions of opinion included in the Official Statement, information relating to DTC and its book -entry only system and the appendices to the Official Statement as to which no opinion need be expressed), as of the date thereof, contains any untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; and (ii) the Bonds are exempt from registration pursuant to the Securities Act of 1933, as amended; (6) Opinion of Counsel to the Trustee. The opinion of counsel to the Trustee, dated the date of the Closing, addressed to the Underwriter, to the effect that: RVPUB\FBAUM \770763.1 9 (i) The Trustee is a national banking association organized and existing under the laws of the United States of America, having full power to enter into, accept and administer the trust created under the Trust Indenture, and to execute and deliver and perform its obligations under the Trust Indenture. (ii) The Trust Indenture has been duly authorized, executed and delivered by the Trustee and constitute the legal, valid and binding obligations of the Trustee enforceable in accordance with its terms, except as enforcement thereof may be limited by bankruptcy, insolvency or other laws affecting the enforcement of creditors' rights generally and by the application of equitable principles, if equitable remedies are sought. (7) Agency Certificate. A certificate of the Agency, dated the date of the Closing, signed on behalf of the Agency by the Executive Director or other duly authorized officer of the Agency to the effect that: (i) The representations, warranties and covenants of the Agency contained herein are true and correct in all material respects on and as of the date of the Closing as if made on the date of the Closing and the Agency has complied with all of the terms and conditions of this Bond Purchase Contract required to be complied with by the Agency at or prior to the date of the Closing. (ii) No event affecting the Agency has occurred since the date of the Official Statement which has not been disclosed therein or in any supplement or amendment thereto which event should be disclosed in the Official Statement in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. (8) Certificate of the Trustee. A certificate of the Trustee, dated the date of Closing, addressed to the Agency and the Underwriter, in form and substance acceptable to the Underwriter, to the following effect: (i) The Trustee is duly organized and existing as a national banking association under the laws of the United States of America, having the full power and authority to enter into and perform its duties under the Trust Indenture. (ii) The Trustee is duly authorized to enter into the Trust Indenture. (iii) To the best knowledge of the Trustee, after due inquiry, there is no action, suit, proceeding or investigation, at law or in equity, before or by any court or governmental agency, public board or body pending against the Trustee or threatened against the Trustee which in the reasonable judgment of the Trustee would affect the existence of the Trustee or in any way contesting or affecting the validity or enforceability of the Trust Indenture or contesting the powers of the Trustee or its authority to enter into and perform its obligation under the Trust Indenture. (9) Ratings. Evidence that Standard & Poor' s Corporation has given the Bonds a rating of "A ". RVPUB\FBAUM \770763.1 10 (10) Certification of Fiscal Consultant. A certification of HdL Coren & Cone, as fiscal consultant to the Agency ( "Fiscal Consultant "), in the form of Appendix C. (11) Additional Documents. Such additional certificates, instruments and other documents as Bond Counsel, Underwriter's Counsel, the Agency or the Underwriter may reasonably deem necessary. If the Agency shall be unable to satisfy the conditions contained in this Bond Purchase Contract, or if the obligations of the Underwriter shall be terminated for any reason permitted by this Bond Purchase Contract, this Bond Purchase Contract shall terminate and neither the Underwriter nor the Agency shall be under any further obligation hereunder. 8. Expenses. The Underwriter shall not be under any obligation to pay and the Agency shall pay or cause to be paid the expenses incident to the performance of the obligations of the Agency hereunder including but not limited to (a) the costs of the preparation and printing, or other reproduction (for distribution on or prior to the date hereof) of the Financing Documents and the cost of preparing, printing, issuing and delivering the definitive Bonds, (b) the fees and disbursements of any counsel, financial advisors, accountants or other experts or consultants (including the Fiscal Consultant) retained by the Agency and the City; (c) the fees and disbursements of Bond Counsel; and (d) the cost of printing and distributing the Preliminary Official Statement and any supplements and amendments thereto and the cost of printing and distributing the Official Statement, including the requisite number of copies thereof for distribution by the Underwriter. The Underwriter shall pay and the Agency shall not be under any obligation to pay the expenses incurred by the Underwriter in connection with the public offering and distribution of the Bonds, including but not limited to (a) reporting fees chargeable by the California Debt and Investment Advisory Commission, (b) fees and expenses of Underwriter's Counsel (except with respect to the costs allocable to the preparation of the Official Statement), and (c) CUSIP Service Bureau fees. 9. Notice. Any notice or other communication to be given to the Agency under this Bond Purchase Contract may be given by delivering the same in writing to such entity at the address set forth above. Any notice or other communication to be given to the Underwriter under this Bond Purchase Contract may be given by delivering the same in writing to Stone & Youngberg, LLC, 515 South Figueroa Street, No. 1060, Los Angeles, California 90071, Attn: Sara Oberlies. 10. Entire Agreement. This Bond Purchase Contract, when accepted by the Agency, shall constitute the entire agreement between the Agency and the Underwriter and is made solely for the benefit of the Agency and the Underwriter (including the successors or assigns of the Underwriter). No other person shall acquire or have any right hereunder by virtue hereof, except as provided herein. All the Agency's representations, warranties and agreements in this Bond Purchase Contract shall remain operative and in full force and effect, regardless of any investigation made by or on behalf of the Underwriter, until the earlier of (a) delivery of and payment for the Bonds hereunder, and (b) any termination of this Bond Purchase Contract. R V PUB\FB AUM \770763.1 11 11. Counterparts. This Bond Purchase Contract may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument. 12. 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. 13. State of California Law Governs. The validity, interpretation and performance of this Bond Purchase Contract shall be governed by the laws of the State of California. 14. No Assignment. The rights and obligations created by this Bond Purchase Contract shall not be subject to assignment by the Underwriter or the Agency without the prior written consent of the other parties hereto. Accepted as of the date first stated above: ARCADIA REDEVELOPMENT AGENCY By: Title: R V PUB\FB AUM \770763.1 STONE & YOUNGBERG LLC By: Title: 12 November 1 RVPUB\FBAUM \770763. 1 A -1 APPENDIX A 2010 BONDS MATURITY SCHEDULE Principal Interest Amount Rate Yield RVPUB\FBAUM \770763. I APPENDIX B ARCADIA REDEVELOPMENT AGENCY Central Redevelopment Project Subordinate Tax Allocation Bonds Series 2010A (Taxable) RULE 15C2 -12 CERTIFICATE The undersigned hereby certifies and represents that he is a duly appointed and acting authorized officer of the Arcadia Redevelopment Agency (the "Agency "), and as such is duly authorized to execute and deliver this Certificate and further hereby certifies and reconfirms on behalf of the Agency as follows: (1) This Certificate is delivered in connection with the offering and sale of the above - referenced bonds (the "Bonds ") in order to enable the underwriters of the Bonds to comply with Securities and Exchange Agency Rule 15c2 -12 under the Securities Exchange Act of 1934 (the "Rule "). (2) In connection with the offering and sale of the Bonds, there has been prepared a Preliminary Official Statement setting forth information concerning the Bonds and the issuer of the Bonds (the "Preliminary Official Statement "). (3) As used herein, "Permitted Omissions" shall mean the offering price(s), interest rate(s), selling compensation, aggregate principal amount, principal amount per maturity, delivery dates, ratings and other terms of the Bonds depending on such matters, all with respect to the Bonds. (4) The Preliminary Official Statement is, except for the Permitted Omissions, deemed final within the meaning of the Rule. IN WITNESS WHEREOF, the undersigned has executed this Certificate as of this , 2010. ARCADIA REDEVELOPMENT AGENCY By: B -1 Authorized Officer The undersigned hereby states and certifies: (i) that the undersigned is the duly appointed, qualified and acting representative of HdL Coren & Cone, Diamond Bar, California, the fiscal consultant (the "Fiscal Consultant ") to the Redevelopment Agency of the City of Riverside (the "Agency ") in connection with the issuance by the Agency of the above - referenced bonds (the "Bonds "), and as such, is familiar with the facts herein certified and is authorized and qualified to certify the same on behalf Of the Fiscal Consultant; and (ii) that nothing has come to the attention of the Fiscal Consultant since the date of the Fiscal Consultant's Report set forth as Appendix D to the Official Statement relating to the Bonds (the "Report") which would cause the Fiscal Consultant to believe that the Report was materially incorrect in any respect; and (iii) that the Report sets forth the best estimates of the Fiscal Consultant with respect to the projections contained therein; and (iv) the Fiscal Consultant hereby consents to the reproduction of the Report as Appendix D to the Official Statement Dated: , 2010 R V PUB\FB AUM \770763. 1 APPENDIX C ARCADIA REDEVELOPMENT AGENCY Central Redevelopment Project Subordinate Tax Allocation Bonds Series 2010A (Taxable) CERTIFICATE OF FISCAL CONSULTANT C -1 HdL COREN & CONE, as Fiscal Consultant By: Its: DOCSOCi 1407184v5/024216 -0003 INDENTURE OF TRUST by and between ARCADIA REDEVELOPMENT AGENCY and THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Trustee Dated as of June 1, 2010 Relating to $[Bond Amount] ARCADIA REDEVELOPMENT AGENCY CENTRAL REDEVELOPMENT PROJECT SUBORDINATE TAX ALLOCATION BONDS, SERIES 2010 (TAXABLE) Attachment F Page Section 4.04 Establishment of Sub - Accounts For Separate Series of Bonds 23 Section 4.05 [Rebate Fund 23 Section 5.01 Punctual Payment 25 Section 5.02 Limitation on Superior Debt; Compliance with Plan Limitations '"5 Section 5.03 Extension of Bonds 25 Section 5.04 Management and Operations of Properties 25 Section 5.05 Payment of Claims 26 Section 5.06 Books and Accounts; Financial Statements 26 Section 5.07 Protection of Security and Rights of Bond Owners 26 Section 5.08 Payments of Taxes and Other Charges 26 Section 5.09 Taxation of Leased Property 26 Section 5.10 Disposition of Property 26 Section 5.11 Tax Revenues 26 Section 5.12 [Tax Covenants Relating to Tax - Exempt Bonds 27 Section 5.13 Further Assurances 27 Section 5.14 Continuing Disclosure Agreement 27 DOCSOC/ 1407184v5/024216 -0003 Table of Contents (continued) ARTICLE V OTHER COVENANTS OF THE AGENCY ARTICLE VI THE TRUSTEE Section 6.01 Duties, Immunities and Liabilities of Trustee. 27 Section 6.02 Merger or Consolidation 29 Section 6.03 Liability of Trustee. 29 Section 6.04 Right to Rely on Documents 30 Section 6.05 Preservation and Inspection of Documents 30 Section 6.06 Compensation and Indemnification 30 Section 6.07 Deposit and Investment of Moneys in Funds 31 Section 6.08 Accounting Records and Financial Statements 31 ARTICLE VII MODIFICATION OR AMENDMENT OF THIS INDENTURE Section 7.01 Amendment With Consent Of Owners 32 Section 7.02 Effect of Supplemental Indenture 33 Section 7.03 Endorsement or Replacement of Bonds After Amendment 33 Section 7.04 Amendment by Mutual Consent 33 Section 7.05 Trustee's Reliance 33 ii DOCSOC/ 1407184v5 /024216 -0003 INDENTURE OF TRUST This INDENTURE OF TRUST (this "Indenture ") made and entered into June 1, 2010, is by and between the ARCADIA REDEVELOPMENT AGENCY, a public body corporate and politic duly organized and existing under the laws of the State of California (the "Agency "), and THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., a national banking association organized and existing under the laws of the United States of America, as trustee (the "Trustee "). WITNESSETH: WHEREAS, the Agency is a public body, corporate and politic, duly established and authorized to transact business and exercise powers under and pursuant to the provisions of the Community Redevelopment Law of the State of California, constituting Part 1 of Division 24 of the Health and Safety Code of the State of California (the "Law "), including the power to issue bonds for any of its corporate purposes; and WHEREAS, a redevelopment plan for the Agency's Central Redevelopment Project, in the City of Arcadia (the "Redevelopment Project "), has been adopted in compliance with all requirements of the Law; and WHEREAS, the Agency has previously issued its $11,655,000 Tax Allocation Bonds (Central Redevelopment Project) Series 2001A and, its $9,240,000 Tax Allocation Bonds (Central Redevelopment Project) Series 2001B (Taxable) (collectively, the "2001 Bonds ") under an Indenture of Trust dated as of May 1, 2001 by and between the Agency and BNY Western Trust Company, to whose interest as trustee The Bank of New York Mellon Trust Company, N.A. has succeded as trustee (as so supplemented and amended, the "Senior Bond Indenture "); and WHEREAS, the Agency wishes at this time to issue its $[Bond Amount] aggregate principal amount of Central Redevelopment Project Subordinate Tax Allocation Bonds, Series 2010 (Taxable) (the "2010 Bonds ") pursuant to the provisions of the Law for the purpose of providing additional funds to finance the Redevelopment Project and to refinance a portion of the 2001 Bonds; and WHEREAS, the 2010 Bonds have been authorized to be issued pursuant to Resolution No. adopted by the Agency on , 2010, and the Agency hereby finds and determines that the 2010 Bonds which are authorized and issued hereunder constitute the bonds authorized to be issued pursuant to such Resolution No. ; and WHEREAS, the 2010 Bonds, when issued, will be secured by a pledge of and lien on Tax Revenues (as defined herein) on a subordinate basis to the pledge of and lien on Tax Revenues under the Senior Bond Indenture for the benefit of the 2001 Bonds; and WHEREAS, in order to provide for the authentication and delivery of the 2010 Bonds and any obligations issued on a parity therewith under the provisions of Section 3.06 below (collectively, the "Bonds "), to establish and declare the terms and conditions upon which the Bonds are to be issued and to secure the payment of the principal thereof and interest and redemption premium (if any) thereon, the Agency and the Trustee have duly authorized the execution and delivery of this Indenture; and scheduled and that the Outstanding Term Bonds are redeemed from sinking account payments as scheduled, (b) the principal amount of the Outstanding Serial Bonds payable by their terms in such Bond Year, and (c) the principal amount of the Outstanding Term Bonds scheduled to be paid or redeemed from sinking account payments in such Bond Year, excluding the redemption premiums (if any) thereon; provided for purposes of the Reserve Requirement and Section 3.06 (related to Parity Bonds) there may be excluded from Annual Debt Service amounts that the Agency reasonably anticipates to be reimbursed by the United States of America from Bond Tax Subsidy Payments, but only if such Bond Tax Subsidy Payments are pledged as security for the Bonds. "Bond Counsel" means (a) Stradling Yocca Carlson & Rauth, a Professional Corporation, or (b) any other attorney or firm of attorneys appointed by or acceptable to the Agency, of nationally - recognized experience in the issuance of obligations the interest on which is excludable from gross income for federal income tax purposes under the Tax Code. "Bond Tax Subsidy Payments" means the interest portion of Annual Debt Service that is reimbursed to or for the benefit of the Agency by the United States of America pursuant to Section 54AA of the Code (Section 1531 of Title I of Division B of the American Recovery and Reinvestment Act of 2009, Section 1400U -2 of the Act, or any future similar program) payable in respect of any Bonds, or, if applicable, similar payments received by or for the benefit of the aGENCY in respect of any Parity Bonds in lieu of tax - exempt treatment of such obligations for federal tax purposes. "Bond Year" means each twelve -month period beginning on September 2 in any year and extending to the next succeeding September 1, both dates inclusive. "Bonds" means the 2010 Bonds and, to the extent required by any Supplemental Indenture, any Parity Bonds authorized by and at any time Outstanding pursuant to this Indenture and such Supplemental Indenture. "Business Day" means a day of the year, other than Saturday or Sunday, on which banks in Los Angeles, California, are not required or authorized to remain closed and on which The New York Stock Exchange is not closed. "City" means the City of Arcadia, California. DOCS DC/1407184v5/024216-0003 3 "Closing Date" means , 2010, being the date on which the 2010 Bonds are delivered by the Agency to the original purchasers thereof, and as to each series of Parity Bonds, the date on which such Parity Bonds are delivered by the Agency to the original purchasers thereof. "Continuing Disclosure Agreement" means an undertaking entered into by the Agency relative to the Original Purchaser's obligations under Rule 15c2 -12 of the Securities and Exchange Commission, as provided pursuant to Section 5.15 of this Indenture. "Costs of Issuance" means all items of expense directly or indirectly payable by or reimbursable to the Agency relating to the authorization, issuance, sale and delivery of the Bonds, including but not limited to printing expenses, filing and recording fees, initial fees and charges of the Trustee, and its counsel, fees, charges and disbursements of attorneys, financial advisors, accounting firms, consultants and other professionals, fees and charges for preparation, execution and "Fitch" means Fitch Ratings and its successors, and if such company shall for any reason no longer perform the functions of a securities rating agency, "Fitch" shall be deemed to refer to any nationally recognized securities rating agency designated by the Agency and the City. "Indenture" means this Indenture of Trust by and between the Agency and the Trustee, as originally entered into or as it may be amended or supplemented by any Supplemental Indenture entered into pursuant to the provisions hereof. "Independent Certified Public Accountant" means any accountant or firm of such accountants duly licensed or registered or entitled to practice and practicing as such under the laws of the State of California, appointed by the Agency, and who, or each of whom: (a) is in fact independent and not under domination of the Agency; (b) does not have any substantial interest, direct or indirect, with the Agency; and (c) is not connected with the Agency as an officer or employee of the Agency, but who may be regularly retained to make reports to the Agency. "Independent Financial Consultant" means any financial consultant or firm of such consultants appointed by the Agency, and who, or each of whom: (a) is in fact independent and not under domination of the Agency; (b) does not have any substantial interest, direct or indirect, with the Agency, other than as original purchaser of the Bonds or any Parity Bonds; and (c) is not connected with the Agency as an officer or employee of the Agency, but who may be regularly retained to make reports to the Agency. "Information Services" means Financial Information, Inc.'s "Daily Called Bond Service ", 30 Montgomery Street, 10th Floor, Jersey City, New Jersey 07302, Attention: Editor; Kenny Information Services' "Called Bond Service," 65 Broadway, 16th Floor, New York, New York 10006; Moody's Investors Service "Municipal and Government," 99 Church Street, 8th Floor, New York, New York 10007, Attention: Municipal News Reports; Standard & Poor's Corporation "Called Bond Record," 25 Broadway, 3rd Floor, New York, New York 10004; and, in accordance with then current guidelines of the Securities and Exchange Commission, such other addresses and /or such other services providing information with respect to the redemption of bonds as the Agency may designate in a Written Request of the Agency delivered to the Trustee. "Interest Account" means the account by that name established and held by the Trustee pursuant to Section 4.03(a). "Interest Payment Date" means March 1 and September 1 in each year commencing 1; 20_ so long as any of the Bonds remain Outstanding hereunder. "Law" means the Community Redevelopment Law of the State of California, constituting Part 1 of Division 24 of the Health and Safety Code of the State of California, and the acts amendatory thereof and supplemental thereto. "Los Angeles County Auditor - Controller" means the person who holds the office designated Los Angeles County Auditor - Controller from time to time, or one of the duly appointed deputies of such person, or any person or persons performing substantially the same duties in the event said office is ever abolished or changed. "Maximum Annual Debt Service" means, as of the date of any calculation, the largest Annual Debt Service during the current or any future Bond Year. DOCSOC/ 1407184v51024216 -0003 5 DOCSOC/ 1407184v5 /024216 -0003 7 (5) Deposit accounts or certificates of deposit, whether negotiable or non- negotiable, issued by a state or national bank (including the Trustee and its affiliates) or a state or federal savings and loan association or a state - licensed branch of a foreign bank; provided, however, that such certificates of deposit or deposit accounts shall be either (a) continuously and fully insured by the Federal Deposit Insurance Corporation; or (b) have maturities of not more than 365 days (including certificates of deposit) and are issued by any state or national bank or a state or federal savings and loan association, the short -term obligations of which are rated in the highest short term letter and numerical rating category by two Rating Agencies; (6) Bills of exchange or time drafts drawn on and accepted by a commercial bank, otherwise known as bankers acceptances, which bank has short -term obligations outstanding which are rated by two Rating Agencies in their respective highest short -term rating categories, and which bankers acceptances mature not later than 180 days from the date of purchase; (7) Any repurchase agreement with any bank or trust company organized under the laws of any state of the United States or any national banking association (including the Trustee), or a state - licensed branch of a foreign bank, having a minimum permanent capital of one hundred million dollars ($100,000,000) and with short -term debt rated by two Rating Agencies in their respective three highest short -term rating categories or any government bond dealer reporting to, trading with, and recognized as a primary dealer by, the Federal Reserve Bank of New York, which agreement is secured by any one or more of the securities and obligations described in clause (1) of this definition, which shall have a market value (valued at least weekly) not less than 102% of the principal amount of such investment and shall be lodged with the Trustee, the Treasurer or other fiduciary, as custodian for the Trustee, by the bank, trust company, national banking association or bond dealer executing such repurchase agreement. The entity executing each such repurchase agreement required to be so secured shall furnish the Trustee with an undertaking satisfactory to it that the aggregate market value of all such obligations securing each such repurchase agreement (as valued at least weekly) will be an amount equal to 102% the principal amount of such repurchase agreement and the Trustee shall be entitled to rely on each such undertaking; (8) Investments in a money market fund, including those of an affiliate of the Trustee rated "AAAm" or "AAAm -G" or better by S &P and Moody's, investments of which are limited to investments described in clauses (1), (2) and (7) of this definition. (9) Certificates, notes, warrants, bonds or other evidence of indebtedness of the State or of any political subdivision or public agency thereof which are rated in the highest short - term rating category or within one of the three highest long -term rating categories of two Rating Agencies (excluding securities that do not have a fixed par value and /or whose terms do not promise a fixed dollar amount at maturity or call date); (10) For amounts less than $10,000, interest - bearing demand or time deposits (including certificates of deposit) in a nationally or state - chartered bank, or a state or federal savings and loan association in the State, fully insured by the Federal Deposit Insurance Corporation, including the Trustee or any affiliate thereof; (1 1) Investments in taxable money market funds or portfolios restricted to obligations with an average maturity of one year or less and which funds or portfolios are rated in either of the two highest rating categories by two Rating Agencies or have or are portfolios guaranteed as to payment of principal and interest by the full faith and credit of the United States of letter of credit or surety bond has a term of at least twelve (12) months; (c) such letter of credit or surety bond has a stated amount at least equal to the portion of the Reserve Requirement with respect to which funds are proposed to be released pursuant to Section 3.03; (d) the Trustee is authorized pursuant to the terms of such letter of credit or surety bond to draw thereunder an amount equal to any deficiencies which may exist from time to time in the Interest Account and the Principal Account for the purpose of making payments required pursuant to Section 4.03, and (e) written notice of the posting of such Qualified Reserve Account Credit Instrument is given to the Rating Agencies. "Rating Agencies" means any of the following which maintain a rating on the Bonds as of any applicable Closing Date: Fitch, Moody's and S &P. "Rebate Account" means the account by that name established and held by the Trustee pursuant to Section 4.05. "Rebate Calculation Period" means the twelve -month period beginning on the Closing Date or on any anniversary of the Closing Date and extending to but not including the next succeeding anniversary of the Closing Date. "Record Date" means the fifteenth (15th) calendar day of the month preceding each Interest Payment Date, whether or not such fifteenth (15th) calendar day is a Business Day. "Redemption Account" means the account by that name established and held by the Trustee pursuant to Section 4.03(d). "Redevelopment Fund" means the fund by that name established and held by the Agency pursuant to Section 3.05. "Redevelopment Plan" means the Redevelopment Plan for the Central Redevelopment Project, approved by Ordinance No. 1490 enacted by the City Council of the City of Arcadia on December 26, 1973, together with any amendments thereof heretofore or hereafter duly authorized pursuant to the Law. "Redevelopment Project" means the project area described in the Redevelopment Plan. "Registration Books" means the records maintained by the Trustee pursuant to Section 2.09 for the registration and transfer of ownership of the Bonds. "Report" means a document in writing signed by an Independent Financial Consultant and including: (a) a statement that the person or firm making or giving such Report has read the pertinent provisions of this Indenture to which such Report relates; (b) a brief statement as to the nature and scope of the examination or investigation upon which the Report is based; and (c) a statement that, in the opinion of such person or firm, sufficient examination or investigation was made as is necessary to enable said consultant to express an informed opinion with respect to the subject matter referred to in the Report. "Reserve Account" means the account by that name established and held by the Trustee pursuant to Section 3.03. "Reserve Requirement" means, as of the date of any calculation by the Agency, the lesser of $ with respect to the 2010 Bonds, plus, with respect to the balance of Parity Bonds DOCSOC/ 1407184v5/024216 -0003 9 DOCS OC/ 1407184v5/024216 -0003 11 "S &P" means Standard & Poor's Ratings Group, a division of The McGraw -Hill Companies, Inc., a corporation organized and existing under the laws of the State of New York, and its successors, and if such corporation shall for any reason no longer perform the functions of a securities rating agency, "S &P" shall be deemed to refer to any other nationally recognized securities rating agency designated by the Agency and the City. "Super- subordinate Debt" means any loans, advances, contracts or indebtedness issued or incurred by the Agency in accordance with the requirements of Section 3.08, which are either: (a) payable from, but not secured by a pledge of or lien upon, the Tax Revenues; or (b) secured by a pledge of or lien upon the Tax Revenues which is subordinate to the pledge of and lien upon the Tax Revenues hereunder for the security of the Bonds. "Supplemental Indenture" means any resolution, agreement or other instrument then in full force and effect which has been duly adopted or entered into by the Agency; but only if and to the extent that such Supplemental Indenture is specifically authorized hereunder. [ "Tax Certificate" means the Tax Certificate of the Agency executed and delivered on each Closing Date to establish certain facts and expectations with respect to any Tax - Exempt Bonds being issued on the respective Closing Date.] [ "Tax Code" means, with respect to a series of Tax - Exempt Bonds, the Internal Revenue Code of 1986, as in effect on the date of issuance of such Tax- Exempt Bonds or (except as otherwise referenced herein) as it may be amended to apply to obligations issued on the date of issuance of such Tax - Exempt Bonds, together with applicable proposed, temporary and final regulations promulgated, and applicable official public guidance published, under the Tax Code (including the Tax Regulations).] [ "Tax- Exempt Bonds" means any Bonds the interest on which is intended to be excluded from gross income for federal tax purposes, as set forth in a related Tax Certificate.] [ "Tax Regulations" means temporary and permanent regulations promulgated under Section 103 and all related provisions of the Tax Code.] "Tax Revenues" means all taxes annually allocated to the Agency with respect to the Project Area following the Closing Date, pursuant to Article 6 of Chapter 6 (commencing with Section 33670) of the Law and Section 16 of Article XVI of the Constitution of the State of California and as provided in the Redevelopment Plan, including all payments, subventions and reimbursements (if any) to the Agency specifically attributable to ad valorem taxes lost by reason of tax exemptions and tax rate limitations; but excluding (i) all amounts of such taxes required to be deposited into the Low and Moderate Income Housing Fund of the Agency in any Fiscal Year pursuant to Section 33334.2 or 33334.6 of the Redevelopment Law, (ii) all amounts of such taxes required to be paid to taxing entities under Sections 33607.5 and 33607.7 of the Law to the extent such required payments create a prior lien on such taxes, (iii) amounts, if any, payable by the State of California to the Agency under and pursuant to the provisions of Chapter 1.5 of Part 1 of Division 4 of Title 2 (commencing with Section 16110) of the Government Code of the State of California, (iv) amounts retained by the County as costs of collection pursuant to Chapter 466, Statutes of 1990, and (v) such taxes in any "Bond Year" (as defined in the Senior Bond Indenture) to the extent subject to the prior senior pledge under the. Senior Bond Indenture with respect to the Senior Bonds. Agency under and subject to the terms of this Indenture and the Law. This Indenture constitutes a continuing agreement with the Owners of all of the Bonds issued or to be issued hereunder and then Outstanding to secure the full and final payment of principal and premiums, if any, and the interest on all Bonds which may from time to time be executed and delivered hereunder, subject to the covenants, agreements, provisions and conditions herein contained. The 2010 Bonds shall be designated the "Arcadia Redevelopment Agency Central Redevelopment Project Subordinate Tax Allocation Bonds, Series 2010 (Taxable)." Section 2.02 Terms of Bonds. The 2010 Bonds shall be issued in fully registered form without coupons in denominations of $5,000 or any integral multiple thereof, so long as no 2010 Bond shall mature on more than one Principal Payment Date. The 2010 Bonds shall mature and become payable on the Principal Payment Dates in each of the years and in the principal amounts, and shall bear interest (calculated on the basis of a 360 -day year comprised of twelve 30 -day months) at the rates, as follows: Year Principal Interest Rate (September 1) Amount Per Annum Interest on the Bonds shall be payable on each Interest Payment Date to the person whose name appears on the Registration Books as the Owner thereof as of the close of business on the Record Date immediately preceding each such Interest Payment Date, such interest to be paid by check or draft of the Trustee mailed on the Interest Payment Date to the Owner at the address of such Owner as its appears on the Registration Books. Interest on the Bonds shall be paid by check of the Trustee mailed by first class mail, postage prepaid, on each Interest Payment Date to the Owners of the Bonds at their respective addresses shown on the Registration Books as of the close of business on the preceding Record Date; provided, however, that at the written request of the Owner of Bonds in an aggregate principal amount of at least $1,000,000, which written request is on file with the Trustee as of any Record Date, interest on such Bonds shall be paid on each succeeding Interest Payment Date by wire transfer in immediately available funds to such account within the United States of America as shall be specified in such written request. Principal of and premium (if any) on any Bond shall be paid upon presentation and surrender thereof at the Trust Office of the Trustee. Both the principal of and interest and premium (if any) on the Bonds shall be payable in lawful money of the United States of America. Each Bond shall be dated as of the date of its authentication and shall bear interest from the Interest Payment Date next preceding the date of authentication thereof, unless (a) it is authenticated after a Record Date and on or before the following Interest Payment Date, in which event it shall bear interest from such Interest Payment Date; or (b) it is authenticated on or prior to the first Record Date for such series of Bonds, in which event it shall bear interest from the Closing Date for such series of Bonds; provided, however, that if, as of the date of authentication of any Bond, interest thereon is in default, such Bond shall bear interest from the Interest Payment Date to which interest has previously been paid or made available for payment thereon. DOCSOC /1407184\ 5/024216 -0003 13 Bonds designated for redemption and the Securities Depositories and to one or more Information Services designated in a Written Request of the Agency delivered to the Trustee, at least thirty (30) but not more than sixty (60) days prior to the redemption date, at their addresses appearing on the Registration Books; provided that such mailing shall not be a condition precedent to such redemption and neither failure to mail or to receive any such notice nor any defect therein shall affect the validity of the proceedings for the redemption of such Bonds or the cessation of the accrual of interest thereon. Such notice shall state the redemption date and the redemption price and, if less than all of the then Outstanding Bonds are to be called for redemption, shall designate the CUSIP numbers of the Bonds to be redeemed by giving the individual number of each Bond or by stating that all Bonds between two stated numbers, both inclusive, or by stating that all of the Bonds of one or more Principal Payment Dates have been called for redemption, and shall require that such Bonds be then surrendered at the Trust Office of the Trustee for redemption at the said redemption price, giving notice also that further interest on such Bonds will not accrue after the redemption date. (d) Rescission. The Agency shall have the right to rescind any optional redemption by written notice to the Trustee on or prior to the dated fixed for redemption. Any notice of optional redemption shall be cancelled and annulled if for any reason funds will not be or are not available on the date fixed for redemption for the payment in full of the Bonds then called for redemption, and such cancellation shall not constitute an Event of Default under the Indenture. The Agency and the Trustee shall have no liability to the Owners or any other party related to or arising from such rescission of redemption. The Trustee shall mail notice of such rescission of redemption in the same manner as the original notice of redemption was sent. (e) Partial Redemption of Bonds. In the event only a portion of any Bond is called for redemption, then upon surrender of such Bond the Trustee shall authenticate and deliver to the Owner thereof, at the expense of the Agency, a new Bond or Bonds of the same series, interest rate and Principal Payment Date, of authorized denominations in aggregate principal amount equal to the unredeemed portion of the Bond to be redeemed. (f) Effect of Redemption. From and after the date fixed for redemption, if funds available for the payment of the principal of and interest (and premium, if any) on the Bonds so called for redemption shall have been duly provided, such Bonds so called shall cease to be entitled to any benefit under this Indenture other than the right to receive payment of the redemption price, and no interest shall accrue thereon from and after the redemption date specified in such notice. All Bonds redeemed or purchased pursuant to this Section shall be canceled and shall be surrendered to the Agency. Section 2.04 Book -Entry System. (a) It is intended that the Bonds be registered so as to participate in a securities depository system with a Securities Depository. The initial Securities Depository is DTC, and the initial securities depository system is the DTC system (the "DTC System "), as set forth in this Indenture. The Agency and the Trustee are authorized to execute and deliver such letters to or agreements with DTC as shall be necessary to effectuate the DTC System, including a letter of representations in the form required by DTC (the "Letter of Representations "). In the event of any conflict between the terms of any such letter or agreement, including the Letter of Representations, and the terms of this Indenture, the terms of this Indenture shall control. DTC may exercise the rights of a Bondholder only in accordance with the terms of this Indenture applicable to the exercise of such rights. The Bonds shall be initially issued in the form of a separate single fully registered DOC SOC/ 1407184v 5/024216 -0003 15 names the registered owners transferring or exchanging Bonds shall designate to the Trustee in writing, in accordance with the provisions of this Indenture. The Trustee may determine that the Bonds shall be registered in the name of and deposited with a successor depository operating a securities depository system, qualified to act as such under Section 17(a) of the Securities Exchange Act of 1934, as amended, as may be acceptable to the Agency, or such depository's agent or designee. Section 2.05 Form of Bonds. The 2010 Bonds, the form of Trustee's certificate of authentication, and the form of assignment to appear thereon, shall be substantially in the respective forms set forth in Exhibit A attached hereto and by this reference incorporated herein, with necessary or appropriate variations, omissions and insertions, as permitted or required by this Indenture. Parity Bonds shall be in the form set forth in the Supplemental Indenture for such Parity Bonds. Section 2.06 Execution of Bonds. The Bonds shall be executed on behalf of the Agency by the signature of its Executive Director and the signature of its Secretary who are in office on the date of execution and delivery of this Indenture or at any time thereafter, and the seal of the Agency shall be impressed, imprinted or reproduced by facsimile signature thereon. Both of such signatures shall be affixed by facsimile thereof. If any officer whose signature appears on any Bond ceases to be such officer before delivery of the Bonds to the purchaser, such signature shall nevertheless be as effective as if the officer had remained in office until the delivery of the Bonds to the purchaser. Any Bond may be signed and attested on behalf of the Agency by such persons as at the actual date of the execution of such Bond shall be the proper officers of the Agency although on the date of such Bond any such person shall not have been such officer of the Agency. Only such of the Bonds as shall bear thereon a certificate of authentication in the form hereinbefore set forth, executed and dated by the Trustee, shall be valid or obligatory for any purpose or entitled to the benefits of this Indenture, and such certificate of the Trustee shall be conclusive evidence that such Bonds have been duly authenticated and delivered hereunder and are entitled to the benefits of this Indenture. Section 2.07 Transfer of Bonds. Any Bond may, in accordance with its terms, be transferred, upon the Registration Books, by the person in whose name it is registered, in person or by a duly authorized attorney of such person, upon surrender of such Bond to the Trustee at its Trust Office for cancellation, accompanied by delivery of a written instrument of transfer in a form approved by the Trustee, duly executed. Whenever any Bond or Bonds shall be surrendered for registration of transfer, the Agency shall execute and the Trustee shall deliver a new Bond or Bonds, for like Principal Payment Date, interest rate and aggregate principal amount. The Trustee shall collect any tax or other governmental charge on the transfer of any Bonds pursuant to this Section 2.07. The cost of printing Bonds and any services rendered or expenses incurred by the Trustee in connection with any transfer shall be paid by the Agency. The Trustee may refuse to transfer any Bonds under the provisions of this Section 2.07 during the period fifteen (15) days prior to the date established by the Trustee for the selection of Bonds for redemption, or as to Bonds the notice of redemption of which has been mailed pursuant to the provisions of Section 2.03(c). Section 2.08 Exchange of Bonds. Bonds may be exchanged at the Trust Office of the Trustee for a like aggregate principal amount of Bonds of other authorized denominations of the same series, Principal Payment Date and interest rate. The Trustee shall collect any tax or other DOCSOC /I 407184v5/024216 -0003 I7 ARTICLE III ISSUANCE OF 2010 BONDS; PARITY BONDS Section 3.01 Issuance of 2010 Bonds. Upon the execution and delivery of this Indenture, the Agency shall execute and deliver 2010 Bonds in the aggregate principal amount of ($[Bond Amount]). Section 3.02 Application of Proceeds of Sale of 2010 Bonds. Upon the receipt of payment for any of the 2010 Bonds when the same shall have been sold by the Agency, the proceeds thereof shall be paid to the Trustee and applied as follows: (a) The Trustee shall deposit to the Costs of Issuance Fund the amount of (b) The Trustee shall deposit to the Reserve Account the amount of $ representing an amount equal to the initial Reserve Requirement. (c) The Trustee shall transfer the amount of $ to the Agency for deposit by the Agency into the Redevelopment Fund. (d) The Trustee shall transfer the amount of $ to the Escrow Bank for deposit pursuant to the Escrow Agreement. Section 3.03 Reserve Account. There is hereby established a separate account to be known as the "Reserve Account," which shall be held by the Trustee in trust. An amount equal to the Reserve Requirement shall be maintained in the Reserve Account at all times, and any deficiency therein shall be replenished from the first available moneys in the Special Fund pursuant to Section 4.03(c). The amount required to be maintained in the Reserve Account may be increased by any Supplemental Indenture authorizing the issuance of any Parity Bonds pursuant to Section 3.06. Any amounts on deposit in the Reserve Account at any time in excess of the Reserve Requirement shall be withdrawn from the Reserve Account by the Trustee and transferred to the Special Fund. The Agency shall have the right at any time to release funds from the Reserve Account, in whole or in part, by tendering to the Trustee: (I) a Qualified Reserve Account Credit Instrument, and (2) an opinion of Bond Counsel stating that neither the release of such funds nor the acceptance of such Qualified Reserve Account Credit Instrument will cause interest on any Tax - Exempt Bonds to become includable in the gross income of the Owners for purposes of federal income taxation. Upon tender of such items to the Trustee, and upon delivery by the Agency to the Trustee of written calculation of the amount permitted to be released from the Reserve Account (upon which calculation the Trustee may conclusively rely), the Trustee shall transfer such funds from the Reserve Account, at the request of the Agency, either (i) to the Redevelopment Fund to be held by the Agency for disbursement as set forth in Section 3.05, or (ii) to the Agency for deposit into such fund or funds as the Agency shall have established for the financing of the Redevelopment Project. Notice of the deposit of a Qualified Reserve Account Credit Instrument shall be given by the Agency to the Rating Agencies. The Trustee shall comply with all documentation relating to a Qualified Reserve Account Credit Instrument as shall be required to maintain such Qualified Reserve Account Credit Instrument in full force and effect and as shall be required to receive payments thereunder in the event and to the extent required to make any payment when and as required under this subsection (c). DOCSOC/ 1407184v5/024216 -0003 19 by Tax Revenues) and Senior Bond Annual Debt Service in each Fiscal Year through maturity of the Bonds which will be Outstanding following the issuance of such Parity Bonds. (c) The Supplemental Indenture providing for the issuance of such Parity Bonds under this Section 3.06 shall provide that: (i) Interest on said Parity Bonds shall be payable on March 1 and September 1 in each year in which interest is payable on such Parity Bonds; except the first twelve- month period, during which interest may be payable on any March 1 or September 1, and provided that there shall be no requirement that such Parity Bonds pay interest on a current basis; (ii) The principal of such Parity Bonds shall be payable on September 1 in any year in which principal is payable; and (iii) Money shall be deposited in the Reserve Account from the proceeds of the sale of said Parity Bonds, or from other sources available to the Agency, to increase the amount on deposit in the Reserve Account to an amount equal to the Reserve Requirement; provided, however, that the Agency shall not be required to deposit moneys to the Reserve Account in an amount in excess of the applicable Tax Code limit with respect to the issuance of such series of Parity Bonds. (d) To the extent Bond Tax Subsidy Payments are reasonably expected to be received in connection with any Bonds, such Bond Tax Subsidy Payments to the extent such amounts are pledged as security for the Bonds. Section 3.07 Issuance of Senior Bonds. The Agency hereby covenants not to issue any additional Senior Bonds except for the purposes of refunding, in whole or in part, the 2001 Bonds, or any refunding of all or any portion thereof, and only so long as such refunding results in debt service savings for the refunded Senior Bonds in each fiscal year, and the maturity of the Refunding Bonds is not later than the maturity of the Senior Bonds to be refunded, as evidenced by a Certificate of the Agency. Section 3.08 Issuance of Super - subordinate Debt. In addition to the Bonds and any Parity Bonds, from time to time the Agency may issue or incur Super- subordinate Debt in such principal amount as shall be determined by the Agency, provided that the issuance of such Super - subordinate Debt shall not cause the Agency to exceed any applicable Plan Limitation. Section 3.09 Validity of Bonds. The validity of the authorization and issuance of the Bonds shall not be dependent upon the completion of the Redevelopment Project or upon the performance by any person of its obligation with respect to the Redevelopment Project. PLEDGE OF TAX REVENUES; SPECIAL FUND AND ACCOUNTS Section 4.01 Pledge of Tax Revenues. The Bonds shall be secured by a first pledge (which pledge shall be effected in the manner and to the extent hereinafter provided) of all of the Tax Revenues (subject only to the prior lien on Pledged Tax Revenues (as defined in the Senior Bond Indenture) of the Senior Bonds and any related obligations pursuant to the Senior Bond Indenture) DOC S OC/ 1407184v5 /024216 -0003 ARTICLE IV 21 Interest Account, the Principal Account, in such order, in the event of any deficiency at any time in any of such accounts or for the retirement of all the Bonds then Outstanding or to the Redemption Account in the event an optional or mandatory sinking fund redemption would cause a reduction in the Reserve Requirement. (d) Redemption Account. On or before any date on which Bonds are to be redeemed pursuant to Section 2.03(a), the Trustee shall withdraw from the Special Fund and deposit in the Redemption Account an amount required to pay the principal of and premium, if any, on the Bonds to be redeemed on such date pursuant to Section 2.03(a). All moneys in the Redemption Account shall be used and withdrawn by the Trustee for the sole purpose of paying the principal of and premium, if any, on the Bonds to be redeemed pursuant to Section 2.03(a) on the date set for such redemption. (e) Surplus. The Agency shall not be obligated to deposit or cause to be deposited in the Special Fund in any Bond Year an amount of Tax Revenues which, together with other available amounts in the Special Fund, exceeds the amounts required to be deposited into the Interest Account, the Principal Account, the Redemption Account and the Reserve Account in such Bond Year pursuant to this Section 4.03. Once such amount of Tax Revenues has been deposited in the Special Fund in any Bond Year, the remaining Tax Revenues received in such Bond Year shall be declared surplus and shall be retained by or transferred to the Agency to be used for any lawful purpose under the Law. Section 4.04 Establishment of Sub - Accounts For Separate Series of Bonds. If directed in writing by the Agency, the Trustee shall establish and maintain a separate sub - account within each of the Interest Account, the Principal Account, the Reserve Account and the Rebate Account, for each separate series of Bonds. In such event, proceeds of sale of any series of Parity Bonds, and amounts required to be held for the payment or security of any series of Parity Bonds, shall be held solely in the respective sub - accounts established for such series of Parity Bonds and shall not be commingled with amounts held in the respective sub - accounts established for any other series of Bonds. For all purposes of this Indenture the sub - accounts established within any account shall be accounted for as a part of such account. Section 4.05 [Rebate Fund. (a) Establishment. The Trustee shall establish a separate account designated the "Rebate Account." Absent an opinion of Bond Counsel that the exclusion from gross income for federal income tax purposes of interest on any Tax - Exempt Bonds will not be adversely affected, the Agency shall cause to be deposited in the Rebate Account such amounts as are required to be deposited therein pursuant to this Section and the applicable Tax Certificate. All money at any time deposited in the Rebate Account shall be held by the Trustee in trust for payment to the United States Treasury. All amounts on deposit in the Rebate Account shall be governed by this Section and the Tax Certificate for the Tax - Exempt Bonds, unless and to the extent that the Agency delivers to the Trustee an opinion of Bond Counsel that the exclusion from gross income for federal income tax purposes of interest on the Tax - Exempt Bonds will not be adversely affected if such requirements are not satisfied. DOCSOC/ 1407184v5/024216 -0003 23 Subsection (a)(3) above being made may be withdrawn by the Agency and utilized in any manner by the Agency. (c) Survival of Defeasance. Notwithstanding anything in this Section to the contrary, the obligation to comply with the requirements of this Section shall survive the defeasance or payment in full of the Tax - Exempt Bonds. (d) Recordkeeping. The Agency shall retain records of all determinations made hereunder until six years after the complete retirement of the Tax- Exempt Bonds.] DOCS OC/ 1407 1 84v5/024216 -0003 ARTICLE V OTHER COVENANTS OF THE AGENCY Section 5.01 Punctual Payment. The Agency shall punctually pay or cause to be paid the principal and interest to become due in respect of all the Bonds together with the premium thereon, if any, in strict conformity with the terms of the Bonds and of this Indenture, and it will faithfully observe and perform all of the conditions, covenants and requirements of this Indenture and all Supplemental Indentures and of the Bonds. Nothing herein contained shall prevent the Agency from making advances of its own moneys howsoever derived to any of the uses or purposes referred to herein. Section 5.02 Limitation on Superior Debt; Compliance with Plan Limitations. So long as the Bonds are Outstanding, the Agency shall not issue any bonds, notes or other obligations, enter into any agreement or otherwise incur any indebtedness, which is in any case secured by a lien on all or any part of the Tax Revenues which is superior to or on a parity with the lien established hereunder for the security of the Bonds, excepting only Parity Bonds issued pursuant to Section 3.06 and Senior Bonds issued in accordance with Section 3.07. The Agency shall take no action, including but not limited to the issuance of its bonds, notes or other obligations, which causes or which, with the passage of time would cause, any of the Plan Limitations to be exceeded or violated. The Agency shall manage its fiscal affairs in a manner which ensures that it will have sufficient Tax Revenues available under the Plan Limitations in the amounts and at the times required to enable the Agency to pay the principal of and interest and premium (if any) on the Bonds when due. Section 5.03 Extension of Bonds. The Agency shall not, directly or indirectly, extend or consent to the extension of the time for the payment of any Bond or claim for interest on any of the Bonds and will not, directly or indirectly, be a party to approve any such arrangement by purchasing or funding the Bonds or claims for interest or in any other manner. In case the Principal Payment Date of any such Bond or claim for interest shall be extended or funded, whether or not with the consent of the Agency, such Bond or claim for interest so extended or funded shall not be entitled, in case of default hereunder, to the benefits of this Indenture, except subject to the prior payment in full of the principal of all of the Bonds then Outstanding and of all claims for interest which shall not have been so extended or funded. Section 5.04 Management and Operations of Properties. The Agency shall manage and operate all properties owned by the Agency and comprising any part of the Project Area in a sound and businesslike manner. 25 timely filing of any necessary statements of indebtedness with appropriate officials of Los Angeles County and (in the case of supplemental revenues and other amounts payable by the State of California) appropriate officials of the State of California. The Agency shall not enter into any agreement with the County of Los Angeles or any other governmental unit which would have the effect of reducing the amount of Tax Revenues available to the Agency for payment of the Bonds, unless in the written opinion of an Independent Financial Consultant filed with the Trustee such reduction will not reduce Tax Revenues estimated to be received in the current and each future fiscal year while Bonds are Outstanding to be less than 125% of Annual Debt Service in such fiscal year. Section 5.12 [Tax Covenants Relating to Tax - Exempt Bonds. Notwithstanding any other provision of this Indenture, absent an opinion of Bond Counsel that the exclusion from gross income of interest with respect to the Tax - Exempt Bonds will not be adversely affected for federal income tax purposes, the Agency covenants to comply with all applicable requirements of the Tax Code necessary to preserve such exclusion from gross income. The Agency will take no action or refrain from taking any action inconsistent with its expectations stated in that any Tax Certificate executed by the Agency in connection with each issuance of Tax - Exempt Bonds and will comply with the covenants and requirements stated therein and incorporated by reference herein.] Section 5.13 Further Assurances. The Agency will adopt, make, execute and deliver any and all such further resolutions, instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of this Indenture, and for the better assuring and confirming unto the Trustee and the Owners the rights and benefits provided in this Indenture. Section 5.14 Continuing Disclosure Agreement. The Agency hereby covenants and agrees that it will comply with and carry out all of its obligations under the Continuing Disclosure Agreement (if any) to be executed and delivered by the Agency in connection with the issuance of the Bonds. Notwithstanding any other provision of this Indenture, failure of the Agency to comply with the Continuing Disclosure Agreement shall not be considered an Event of Default; however, any Owner or Beneficial Owner may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the Agency to comply with its obligations under this Section 5.15. For purposes of this Section, "Beneficial Owner" means any person which has or shares the power, directly or indirectly, to make investment decisions concerning ownership of any Bonds (including persons holding Bonds through nominees, depositories or other intermediaries). Section 6.01 (a) The Trustee shall, prior to the occurrence of an Event of Default, and after the curing of all Events of Default which may have occurred, perform such duties and only such duties as are specifically set forth in this Indenture. The Trustee shall only be obligated to perform such duties as are expressly set forth herein, and no duties or obligations not expressly set forth herein shall be implied. The Trustee shall, during the existence of any Event of Default (which has not been cured), exercise such of the rights and powers vested in it by this Indenture, and use the same degree D OC S O C/ 1407184v 5/024216 -0003 ARTICLE VI THE TRUSTEE Duties, Immunities and Liabilities of Trustee. 27 (e) Any Trustee appointed under the provisions of this Section in succession to the Trustee shall be a trust company, corporation or bank having the powers of a trust company having a trust office in the State of California, having a combined capital and surplus of at least Fifty Million Dollars ($50,000,000), and subject to supervision or examination by federal or state authority. If such bank, corporation or trust company publishes a report of condition at least annually, pursuant to law or to the requirements of any supervising or examining authority above referred to, then for the purpose of this subsection the combined capital and surplus of such bank, corporation or trust company shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. In case at any time the Trustee shall cease to be eligible in accordance with the provisions of this subsection (e), the Trustee shall resign immediately in the manner and with the effect specified in this Section. (fj The Trustee shall have no responsibility or liability with respect to any information, statements or recital in any offering memorandum or other disclosure material prepared or distributed with respect to the issuance of these Bonds. (g) Before taking any action under Article VIII or this Article at the request of the Owners, the Trustee may require that a satisfactory indemnity bond be furnished by the Owners for the reimbursement of all expenses to which it may be put and to protect it against all liability, except liability which is adjudicated to have resulted from its negligence or willful misconduct in connection with any action so taken. (h) No provision of the Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance or exercise of any of its duties hereunder. Section 6.02 Merger or Consolidation. Any bank, corporation or trust company into which the Trustee may be merged or converted or with which either of them may be consolidated or any bank, corporation or trust company resulting from any merger, conversion or consolidation to which it shall be a party or any bank, corporation or trust company to which the Trustee may sell or transfer all or substantially all of its corporate trust business, provided such bank, corporation or trust company shall be eligible under subsection (e) of Section 6.01 shall be the successor to such Trustee without the execution or filing of any paper or any further act, anything herein to the contrary notwithstanding. Section 6.03 Liability of Trustee. (a) The Trustee shall not be liable in connection with the performance of its duties hereunder, except for its own negligence or willful misconduct or breach. The Trustee may become the Owner of Bonds with the same rights it would have if they were not Trustee and, to the extent permitted by law, may act as depository for and permit any of its officers or directors to act as a member of, or in any other capacity with respect to, any committee formed to protect the rights of Bond Owners, whether or not such committee shall represent the Owners of a majority in principal amount of the Bonds then Outstanding. (b) The Trustee shall not be liable for any error of judgment made in good faith by a responsible officer, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts. DOCSOC/ 1407184v5 /024216 -0003 29 charges, legal and consulting fees and other disbursements and those of its attorneys, agents and employees, incurred in and about the performance of its powers and duties under this Indenture. The Agency further covenants and agrees to indemnify and save the Trustee harmless against any loss, expense and liabilities which it may incur arising out of or in the exercise and performance of its powers and duties hereunder, including the costs and expenses of defending against any claim of liability and the costs of enforcing any remedies hereunder or under any related document, but excluding any and all losses, expenses and liabilities which are due to the Trustee's negligence, willful misconduct or willful default. The obligations of the Agency under this paragraph shall survive resignation or removal of the Trustee under this Indenture and payment of the Bonds and discharge of this Indenture. Section 6.07 Deposit and Investment of Moneys in Funds. Moneys in the Special Fund, Interest Account, the Principal Account, the Reserve Account, the Rebate Fund, the Redemption Account and the Costs of Issuance Fund shall be invested by the Treasurer or the Trustee in Permitted Investments as specified in the Written Request of the Agency filed with the Trustee at least two (2) Business Days in advance of the making of such investments. The Trustee shall be entitled to rely on the Written Request of Agency that any investment specified therein, so long as it is an investment or obligation described in the definition of Permitted Investments, is permitted by law. In the absence of any such Written Request of the Agency, the Trustee shall invest any such moneys in obligations described in clause (8) of the definition of Permitted Investments set forth in Section 1.02. Obligations purchased as an investment of moneys in any fund shall be deemed to be part of such fund or account. Any or all interest or gain derived from the investment of amounts in any of the funds or accounts established hereunder shall be deposited by the Trustee in the respective fund or account and any loss incurred in connection with such investments shall be debited against the fund or account from which the investment was made. For purposes of acquiring any investments hereunder, the Trustee may commingle funds held by it hereunder. The Trustee may act as principal or agent in the acquisition of any investment. The Trustee shall incur no liability for losses arising from any investments made pursuant to this Section. The Agency acknowledges that to the extent regulations of the Comptroller of the Currency or other applicable regulatory entity grant the Agency the right to receive brokerage confirmations of security transactions as they occur, the Agency specifically waives receipt of such confirmations to the extent permitted by law. The Trustee will furnish the Agency periodic cash transaction statements which include detail for all investment transactions made by the Trustee hereunder. The Agency hereby covenants and agrees to invest all amounts in the Redevelopment Fund in Permitted Investments. Section 6.08 Accounting Records and Financial Statements. The Trustee shall at all times keep, or cause to be kept, proper books of record and account, prepared in accordance with industry standards, in which complete and accurate entries shall be made of all transactions relating to the proceeds of the Bonds and all funds and accounts held by the Trustee and established pursuant to this Indenture. Such books of record and account shall be available for inspection by the Agency at reasonable hours with reasonable notice and under reasonable circumstances. The Trustee shall furnish to the Agency, at least monthly, an accounting of all transactions relating to the proceeds of the Bonds and all funds and accounts held by the Trustee and established pursuant to this Indenture. DOCSOC/ 1407184v5 /024216 -0003 31 Books. Any failure to give such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such Supplemental Indenture. Section 7.02 Effect of Supplemental Indenture. From and after the time any Supplemental Indenture becomes effective pursuant to this Article VII, this Indenture shall be deemed to be modified and amended in accordance therewith, the respective rights, duties and obligations of the parties hereto or thereto and all Owners, as the case may be, shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modification and amendment, and all the terms and conditions of any Supplemental Indenture shall be deemed to be part of the terms and conditions of this Indenture for any and all purposes. Section 7.03 Endorsement or Replacement of Bonds After Amendment. After the effective date of any amendment or modification here if pursuant to this Article VII, the Agency may determine that any or all of the Bonds shall bear a notation, by endorsement in form approved by the Agency, as to such amendment or modification and in that case upon demand of the Agency the Owners of such Bonds shall present such Bonds for that purpose at the Office of the Trustee, and thereupon a suitable notation as to such action shall be made on such Bonds. In lieu of such notation, the Agency may determine that new Bonds shall be prepared and executed in exchange for any or all of the Bonds and in that case upon demand of the Agency the Owners of the Bonds shall present such Bonds for exchange at the Office of the Trustee, without cost to such Owners. Section 7.04 Amendment by Mutual Consent. The provisions of this Article VII shall not prevent any Owner from accepting any amendment as to the particular Bond held by such Owner, provided that due notation thereof is made on such Bond. Section 7.05 Trustee's Reliance. The Trustee may rely, and shall be protected in relying, upon a Certificate of the Agency and an opinion of counsel stating that all requirements of this Indenture relating to the amendment or modification hereof have been satisfied and that such amendments or modifications do not materially adversely affect the interests of the Owners. ARTICLE VIII EVENTS OF DEFAULT AND REMEDIES OF BOND OWNERS Section 8.01 Events of Default and Acceleration of Maturities. The following events shall constitute Events of Default hereunder: (a) Default by the Agency in the due and punctual payment of the principal of any Bonds when and as the same shall become due and payable, whether at maturity as therein expressed, by proceedings for redemption, by acceleration, or otherwise. (b) Default by the Agency in the due and punctual payment of any installment of interest on any Bonds when and as the same shall become due and payable. (c) Default by the Agency in the observance of any of the other covenants, agreements or conditions on its part in this Indenture or in the Bonds contained, if such default shall have continued for a period of sixty (60) days after written notice thereof, specifying such default and requiring the same to be remedied, shall have been given to the Agency by the Trustee or by the Owners of not less than 25 percent in aggregate principal amount of Bonds Outstanding; provided, DOC S O C/ 1407184 v5 /024216 -0003 33 First: To the payment to the persons entitled thereto of all installments of interest then due in the order of the maturity of such installments, and, if the amount available shall not be sufficient to pay in full any installment or installments maturing on the same date, then to the payment thereof ratably, according to the amounts due thereon, to the persons entitled thereto, without any discrimination or preference; and Second: To the payment to the persons entitled thereto of the unpaid principal of any Bonds which shall have become due, whether at maturity or by acceleration or redemption, with interest on the overdue principal at the rate of interest on the Bonds in default, and, if the amount available shall not be sufficient to pay in full all the Bonds, together with such interest, then to the payment thereof ratably, according to the amounts of principal due on such date to the persons entitled thereto, without any discrimination or preference. Section 8.04 Trustee to Represent Bond Owners. The Trustee is hereby irrevocably appointed (and the successive respective Owners of the Bonds, by taking and holding the same, shall be conclusively deemed to have so appointed the Trustee) as trustee and true and lawful attorney -in- fact of the Owners of the Bonds for the purpose of exercising and prosecuting on their behalf such rights and remedies as may be available to such Owners under the provisions of the Bonds or this Indenture and applicable provisions of any other law. Upon the occurrence and continuance of an Event of Default or other occasion giving rise to a right in the Trustee to represent the Bond Owners, the Trustee in its discretion may, and upon the written request of the Owners of a majority in aggregate principal amount of the Bonds then Outstanding, and upon being indemnified to its satisfaction therefor, shall proceed to protect or enforce its rights or the rights of such Owners by such appropriate action, suit, mandamus or other proceedings as it shall deem most effectual to protect and enforce any such right, at law or in equity, either for the specific performance of any covenant or agreement contained herein, or in aid of the execution of any power herein granted, or for the enforcement of any other appropriate legal or equitable right or remedy vested in the Trustee or in such Owners under the Bonds or this Indenture or any other law; and upon instituting such proceeding, the Trustee shall be entitled, as a matter of right, to the appointment of a receiver of the Revenues and other assets pledged under this Indenture, pending such proceedings. All rights of action under this Indenture or the Bonds or otherwise may be prosecuted and enforced by the Trustee without the possession of any of the Bonds or the production thereof in any proceeding relating thereto, and any such suit, action or proceeding instituted by the Trustee shall be brought in the name of the Trustee for the benefit and protection of all the Owners of such Bonds, subject to the provisions of this Indenture. Section 8.05 Bond Owners' Direction of Proceedings. Anything in this Indenture to the contrary notwithstanding, the Owners of a majority in aggregate principal amount of the Bonds then Outstanding shall have the right, by an instrument or concurrent instruments in writing executed and delivered to the Trustee, and upon indemnification of the Trustee to its reasonable satisfaction, to direct the method of conduct in all remedial proceedings taken by the Trustee hereunder, provided that such direction shall not be otherwise than in accordance with law and the provisions of this Indenture, and that the Trustee shall have the right to decline to follow any such direction which in the opinion of the Trustee would be unjustly prejudicial to Bond Owners not parties to such direction. Section 8.06 Limitation on Bond Owners' Right to Sue. No Owner of any Bonds shall have the right to institute any suit, action or proceeding at law or in equity, for the protection or enforcement of any right or remedy under this Indenture or any other applicable law with respect to such Bonds, unless (a) such Owners shall have given to the Trustee written notice of the occurrence DOCSOC/1407184v5/0242 1 6 -000 3 35 ARTICLE IX MISCELLANEOUS Section 9.01 Benefits Limited to Parties. Nothing in this Indenture, expressed or implied, is intended to give to any person other than the Agency, the Trustee and the Owners of the Bonds, any right, remedy, or claim under or by reason of this Indenture. Any covenants, stipulations, promises or agreements in this Indenture contained by and on behalf of the Agency shall be for the sole and exclusive benefit of the Trustee and the Owners of the Bonds. Section 9.02 Successor is Deemed Included in All References to Predecessor. Whenever in this Indenture or any Supplemental Indenture either the Agency or the Trustee is named or referred to, such reference shall be deemed to include the successors or assigns thereof, and all the covenants and agreements in this Indenture contained by or on behalf of the Agency or the Trustee shall bind and inure to the benefit of the respective successors and assigns thereof whether so expressed or not. Section 9.03 Defeasance of Bonds. If the Agency shall pay and discharge the entire indebtedness on any or all of the Outstanding Bonds in any one or more of the following ways: (a) by paying or causing to be paid the principal of and interest on such Bonds, as and when the same become due and payable; (b) by irrevocably depositing with the Trustee or another fiduciary, in trust, at or before maturity, money which, together with the available amounts then on deposit in the funds and accounts established pursuant to this Indenture, in the opinion or report of an Independent Certified Public Accountant or Bond Counsel is fully sufficient to pay such Bonds, including all principal, interest and redemption premium, if any; (c) by irrevocably depositing with the Trustee or another fiduciary, in trust, non - callable Defeasance Securities in such amount as an Independent Certified Public Accountant or Bond Counsel shall determine will, together with the interest to accrue thereon and available moneys then on deposit in any of the funds and accounts established pursuant to this Indenture (except for the Rebate Account and the Redevelopment Fund), be fully sufficient to pay and discharge the indebtedness on such Bonds (including all principal, interest and redemption premium, if any) at or before maturity; or (d) by purchasing such Bonds prior to maturity and tendering such Bonds to the Trustee for cancellation; and if such Bonds are to be redeemed prior to the maturity thereof notice of such redemption shall have been mailed pursuant to Section 2.03(c) or provision satisfactory to the Trustee shall have been made for the mailing of such notice, then, at the election of the Agency, and notwithstanding that any of such Bonds shall not have been surrendered for payment, the pledge of the Tax Revenues and other funds provided for in this Indenture and all other obligations of the Agency under this Indenture with respect to such Bonds shall cease and terminate, except only (a) the obligations of the Agency with respect to compliance with applicable provisions of the Tax Code, if any (b) the obligation of the Trustee to transfer and exchange Bonds hereunder, (c) the obligation of the Agency to pay or cause to be paid to the Owners of such Bonds, from the amounts so deposited with the DOC SOC/ 1407184v5/024216 -0003 37 the City (but excluding Bonds held in any employees' retirement fund) shall be disregarded and deemed not to be Outstanding for the purpose of any such determination, provided, however, that for the purpose of determining whether the Trustee shall be protected in relying on any such demand, request, direction, consent or waiver, only Bonds which the Trustee knows to be so owned or held shall be disregarded. Section 9.07 Waiver of Personal Liability. No member, officer, agent or employee of the Agency shall be individually or personally liable for the payment of the principal of or interest on the Bonds; but nothing herein contained shall relieve any such member, officer, agent or employee from the performance of any official duty provided by law. Section 9.08 Destruction of Canceled Bonds. Whenever in this Indenture provision is made for the surrender to the Agency of any Bonds which have been paid or canceled pursuant to the provisions of this Indenture, a certificate of destruction duly executed by the Trustee shall be deemed to be the equivalent of the surrender of such canceled Bonds and the Agency shall be entitled to rely upon any statement of fact contained in any certificate with respect to the destruction of any such Bonds therein referred to. Section 9.09 Notices. All written notices to be given under this Indenture shall be given by first class mail or personal delivery to the party entitled thereto at its address set forth below, or at such address as the party may provide to the other party in writing from time to time. Notice shall be effective either (a) upon transmission by facsimile transmission or other form of telecommunication, (b) 48 hours after deposit in the United States mail, postage prepaid, or (c) in the case of personal delivery to any person, upon actual receipt. The Agency or the Trustee may, by written notice to the other parties, from time to time modify the address or number to which communications are to be given hereunder. If to the Agency: If to the Trustee: Arcadia Redevelopment Agency 240 West Huntington Drive Arcadia, CA 91007 Attention: Agency Executive Director The Bank of New York Mellon Trust Company, N.A. 700 South Flower Street, Suite 500 Los Angeles, CA 90017 Attention: Corporate Trust Administration Section 9.10 Partial Invalidity. If any Section, paragraph, sentence, clause or phrase of this Indenture shall for any reason be held illegal, invalid or unenforceable, such holding shall not affect the validity of the remaining portions of this Indenture. The Agency hereby declares that it would have adopted this Indenture and each and every other Section, paragraph, sentence, clause or phrase hereof and authorized the issue of the Bonds pursuant thereto irrespective of the fact that any one or more Sections, paragraphs, sentences, clauses, or phrases of this Indenture may be held illegal, invalid or unenforceable. If, by reason of the judgment of any court, the Trustee is rendered unable to perform its duties hereunder, all such duties and all of the rights and powers of the Trustee hereunder shall be assumed by and vest in the Treasurer of the Agency in trust for the benefit of the Bond Owners. The Agency covenants for the direct benefit of the Bond Owners that its Treasurer in such case shall be vested with all of the rights and powers of the Trustee hereunder, and shall assume DO C S O C/ 1407184v 5 /024216 -0003 39 IN WITNESS WHEREOF, the ARCADIA REDEVELOPMENT AGENCY has caused this Indenture to be signed in its name by its Executive Director and attested by its Secretary, and THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., in token of its acceptance of the trusts created hereunder, has caused this Indenture to be signed in its corporate name by its officer thereunto duly authorized, all as of the day and year first above written, ATTEST: Secretary DOCSOC/1407184v5/024216 -0003 ARCADIA REDEVELOPMENT AGENCY By: Its: Executive Director THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Trustee By: Its: Authorized Officer S -1 the Interest Payment Date to which interest has previously been paid or made available for payment on this Bond), at the Interest Rate per annum specified above, payable semiannually on March 1 and September 1 in each year, commencing September 1, 2010 (the "Interest Payment Dates "). Principal hereof is payable at the principal corporate trust office of The Bank of New York Mellon Trust Company, N.A., as trustee (the "Trustee "), in Los Angeles, California or such other place designated by the Trustee. Interest hereon is payable by check or draft of the Trustee mailed on the Interest Payment Date to the Registered Owner hereof at the Registered Owner's address as it appears on the registration books of the Trustee as of the fifteenth (15th) day of the month preceding each Interest Payment Date, or at such other address as the Registered Owner may have filed . with the Trustee for such purpose. This Bond is one of a duly authorized issue of bonds of the Agency designated the "Arcadia Redevelopment Agency Central Redevelopment Project Subordinate Tax Allocation Bonds, Series 2010 (Taxable)" (the "Bonds ") of an aggregate principal amount of Dollars ($[Bond Amount]), all of like tenor and date (except for such variation, if any, as may be required to designate varying numbers, maturities, interest rates or redemption provisions) and all issued pursuant to the provisions of the Community Redevelopment Law, being Part 1 (commencing with Section 33000) of Division 24 of the Health and Safety Code of the State of California (the "Law "), and pursuant to an Indenture of Trust dated as of June 1, 2010, by and between the Agency and the Trustee (the "Indenture ") and a resolution of the Agency adopted on , 2010, authorizing the issuance of the Bonds. The Agency may issue or incur additional obligations secured under the Indenture on a parity with the Bonds, but only subject to the terms of the Indenture. Reference is hereby made to the Indenture (copies of which are on file at the office of the Agency) and all supplements thereto and to the Law for a description of the terms on which the Bonds are issued, the provisions with regard to the nature and extent of the Tax Revenues, as that term is defined in the Indenture, and the rights thereunder of the owners of the Bonds and the rights, duties and immunities of the Trustee and the rights and obligations of the Agency thereunder, to all of the provisions of which the Registered Owner of this Bond, by acceptance hereof, assents and agrees. The Bonds have been issued by the Agency to aid in financing the Central Redevelopment Project in the City of Arcadia, California (the "Project Area "), a duly designated redevelopment project area under the laws of the State of California. This Bond and the interest hereon and all other Bonds and the interest thereon (to the extent set forth in the Indenture) are payable from, and are secured by a charge and first lien on the Tax Revenues derived by the Agency from the Project Area subject only to the prior lien of the Senior Bonds (as defined in the Indenture). As and to the extent set forth in the Indenture, all of the Tax Revenues are irrevocably pledged in accordance with the terms and provisions of the Indenture and the Law, to the payment of the principal of and interest and premium (if any) on the Bonds. Notwithstanding the foregoing, certain amounts out of Tax Revenues may be applied for other purposes as provided in the Indenture. This Bond is not a debt of the City of Arcadia, the State of California, or any of its political subdivisions, and neither said City, said State, nor any of its political subdivisions, is liable hereon nor in any event shall this Bond be payable out of any funds or properties other than the Tax Revenues and amounts in the funds and accounts pledged therefore under the Indenture. DOC SOC/ 1407184v5/024216 -0003 A -2 This Bond shall not be entitled to any benefit under the Indenture or become valid or obligatory for any purpose until the certificate of authentication hereon shall have been signed by the Trustee. IN WITNESS WHEREOF, the Arcadia Redevelopment Agency has caused this Bond to be executed in its name and on its behalf with the facsimile signature of its Executive Director and attested by the facsimile signature of its Secretary. ATTEST: Secretary Dated: DOCSOC/ 1407184x5/024216 -0003 ARCADIA REDEVELOPMENT AGENCY By: Its: Executive Director [FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION TO APPEAR ON BONDS] IN WITNESS WHEREOF, this Bond, one of the fully registered Bonds described in the within - mentioned Indenture, has been executed and delivered by The Bank of New York Mellon Trust Company, N.A., as Trustee as of the date set forth below. THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Trustee By: Authorized Signatory A -4 For value received the undersigned hereby sells, assigns and transfers unto whose social security or other tax identifying number is , the within - mentioned Bond and hereby irrevocably constitute(s) and appoint(s) attorney, to transfer the same on the bond register of the Trustee with full power of substitution in the premises. Dated: Signature Guaranteed: [FORM OF ASSIGNMENT] Note: Signature(s) must be guaranteed by a Note: The signature(s) on this Assignment must member firm of the New York Stock Exchange correspond with the name(s) as written on the or a commercial bank or trust company. face of the within Bond in every particular without alteration or enlargement or any change whatsoever. DOCSOC/ 1407184v5/024216 -0003 A -6 Section 1. Section 2. Section 3. Section 4. Section 5. Section 6. Section 7. Section 8. Section 9. Section 10. Section 11. Section 12. Section 13. Signatures DOCSOC /1413 554v 1 /0242 1 6 -0003 Table of Contents Page Appointment of Escrow Bank 2 Establishment of 2001 B Bonds Escrow Fund 2 Deposit of Funds 2 Application of Deposit 2 Instructions as to Application of Deposit; Call and Redemption of 2001B Bonds 2 Application of Certain Terms of 2001B Bonds Indenture Compensation to Escrow Bank 3 Liabilities and Obligations of Escrow Bank 3 Amendment 4 Partial Invalidity 4 Execution in Counterparts 4 Governing Law 4 Notices 4 5 EXHIBIT A Schedule of Refunded Portion of 2001B Bonds Debt Service A -1 2001B BONDS ESCROW DEPOSIT AND TRUST AGREEMENT This 2001B BONDS ESCROW DEPOSIT AND TRUST AGREEMENT dated as of the 1st day of , 2010 (this "Agreement "), by and between the ARCADIA REDEVELOPMENT AGENCY, a redevelopment agency duly organized and existing under and by virtue of the laws of the State of California (the "Agency "), and THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A. , a national banking association organized and existing under the laws of the United States of America, as escrow holder hereunder (the "Escrow Bank ") and as successor trustee with respect to the 2001B Bonds (the Escrow Bank being hereinafter referred to in such respect as the "Trustee "): WITNESSETH, WHEREAS, the Agency has previously issued its Arcadia Redevelopment Agency Tax Allocation Bonds (Central Redevelopment Project) Series 2001B (Taxable) (the "2001B Bonds ") pursuant to an Indenture, dated as of May 1, 2001, by and between the Agency and the Trustee (the "2001B Bonds Indenture "), together with its $11,655,000 Tax Allocation Bonds (Central Redevelopment Project) Series 2001A (the "2001A Bonds ") (the 2001A Bonds and the 2001B Bonds are referred to collectively herein as the "2001 Bonds "); WHEREAS, the Escrow Bank is the trustee under the 2001B Bonds Indenture (the "Trustee "); WHEREAS, the Agency has determined to issue its Arcadia Redevelopment Agency Central Redevelopment Project Subordinate Tax Allocation Bonds, Series 2010 (Taxable) (the "2010 Bonds ") pursuant to the Indenture of Trust (the "Indenture ") made and entered into 1, 2010, by and between the Agency and the Trustee, for the purpose of providing funds, together with other available moneys, to refund and defease and discharge the 2001B Bonds in their entirety (the "Refunded Portion of the 2001 Bonds "); WHEREAS, the 2001B Bonds Indenture contains provisions relating to the defeasance of the Refunded Portion of the 2001 Bonds upon the deposit with the Escrow Bank, as 2001B Bonds Trustee, of cash and Federal Securities sufficient to pay when due the principal and interest due and to become due on the Refunded Portion of the 2001 Bonds on and prior to the maturity date or earlier redemption thereof, and the Agency wishes to make such a deposit with the Escrow Bank and to enter into this Agreement for the purpose of providing the terms and conditions for the deposit and application of amounts so deposited; and WHEREAS, the Escrow Bank has full powers to act with respect to the irrevocable escrow and trust created herein and to perform the duties and obligations to be undertaken pursuant to this Agreement; NOW, THEREFORE, in consideration of the above premises and of the mutual promises and covenants herein contained and for other valuable consideration, the parties hereto do hereby agree as follows: DOCSOC /1413 554v 1 /024216 -0003 1 Bonds prior to maturity and to the making of payments of principal and interest on the Refunded Portion of the 2001 Bonds, as applicable, are incorporated in this Agreement as if set forth in full herein. The provisions of the 2001B Bonds Indenture relating to the resignation and removal of the Trustee are also incorporated in this Agreement as if set forth in full herein and shall be the procedure to be followed with respect to any resignation or removal of the Escrow Bank hereunder. Section 7. Compensation to Escrow Bank. The Agency shall pay or cause the Agency to pay the Escrow Bank full compensation for its duties under this Agreement, including out -of- pocket costs such as publication costs, redemption costs and expenses, legal fees and expenses, which fees and expenses shall include the allocated costs and disbursements of in -house counsel (to the extent such counsel's services are not redundant of services provided by external counsel to Escrow Bank) and other costs and expenses relating hereto, pursuant to separate agreement between the Agency and the Escrow Bank. Such compensation shall not affect the right of Escrow Bank. as Trustee for the Refunded Portion of the 2001 Bonds, to compensation for its duties (including but not limited to, exchanges and transfers of Refunded Portion of the 2001 Bonds), under the 2001 B Bonds Indenture. Under no circumstances shall amounts deposited in the 2001B Bonds Escrow Fund be deemed to be available for said purposes prior to the payment in full of all of the principal of and interest on the Refunded Portion of the 2001 Bonds in accordance with Section 5 hereof. Section 8. Liabilities and Obligations of Escrow Bank. The Escrow Bank shall have no obligation to make any payment or disbursement of any type or incur any financial liability in the performance of its duties under this Agreement unless the Agency shall have deposited sufficient funds with the Escrow Bank. The Escrow Bank may rely and shall be protected in acting upon the written instructions of the Agency or its agents relating to any matter or action as Escrow Bank under this Agreement. The Escrow Bank shall not be required to act upon any oral instructions, but may request that such instruction be given in writing. The Agency covenants to indemnify and hold harmless the Escrow Bank against any loss, liability or expense, including legal fees and expenses, which fees and expenses shall include the allocated costs and disbursements of in -house counsel (to the extent such counsel's services are not redundant of services provided by external counsel to Escrow Bank) in connection with the performance of any of its duties hereunder, except the Escrow Bank shall not be indemnified against any loss, liability or expense resulting from its negligence or willful misconduct. Such indemnification shall survive the termination and discharge of this Agreement or the removal or resignation of the Escrow Bank. The Escrow Bank undertakes only such duties as are expressly and specifically set forth in this Agreement and no implied duties or obligations shall be read into this Agreement against the Escrow Bank. The Escrow Bank shall not be responsible for any of the recitals or representations made herein other than that the Escrow Bank is qualified to accept and administer the trusts created hereunder. The Escrow Bank shall not be liable for the accuracy of any calculations provided as to the sufficiency of the moneys deposited with it to pay the principal of and interest on the Refunded Portion of the 2001 Bonds. The Escrow Bank shall not have any liability hereunder except to the extent of its own negligence or willful misconduct. The Escrow Bank may consult with counsel of its own choice and the opinion of such counsel shall be full and complete authorization to take or suffer any action in accordance with such opinion of counsel. Except as otherwise provided in this Agreement, whenever in the administration of this Agreement the Escrow Bank shall deem it necessary or desirable that a matter be proved or DOCSOC /1413554v 1 /024216 -0003 3 IN WITNESS WHEREOF, the Agency and the Escrow Bank have each caused this Agreement to be executed by their duly authorized officers all as of the date first above written. DOCSOC /1413554v 1 /024216 -0003 ARCADIA REDEVELOPMENT AGENCY By: Its: Executive Director THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., as Escrow Bank By: Its: Authorized Officer 5