Loading...
The URL can be used to link to this page
Your browser does not support the video tag.
Home
My WebLink
About
020910 CC Agenda
In compliance with the Americans with Disabilities Act, if you need special assistance to participate in this meeting, please contact the office of the City Clerk (951) 694-6444. Notification 48 hours prior to a meeting will enable the City to make reasonable arrangements to ensure accessibility to that meeting [28 CFR 35.102.35.104 ADA Title II] AGENDA TEMECULA CITY COUNCIL A REGULAR MEETING CITY COUNCIL CHAMBERS 43200 BUSINESS PARK DRIVE FEBRUARY 9, 2010 — 7:00 PM At approximately 9:45 P.M., the City Council will determine which of the remaining agenda items can be considered and acted upon prior to 10:00 P.M. and may continue all other items on which additional time is required until a future meeting. All meetings are scheduled to end at 10:00 P.M. Next in Order: Ordinance: 10-04 Resolution: 10-09 CALL TO ORDER: Mayor Jeff Comerchero Prelude Music: Susan Miyamoto Invocation: Pastor Dominic Rivkin of Trinity Lutheran Church Flag Salute: Council Member Roberts ROLL CALL: Edwards, Naggar, Roberts, Washington, Comerchero "Request to Speak" form should be filled out and filed with the City Clerk. When you are called to speak, please come forward and state your name for the record. For all Public Hearing or Council Business matters on the agenda, a "Request to Speak" form must be filed with the City Clerk prior to the Council addressing that item. There is a five minute (5) time limit for individual speakers. CITY COUNCIL REPORTS Reports by the members of the City Council on matters not on the agenda will be made at this time. A total, not to exceed, ten (10) minutes will be devoted to these reports. CONSENT CALENDAR NOTICE TO THE PUBLIC All matters listed under Consent Calendar are considered to be routine and all will be enacted by one roll call vote. There will be no discussion of these items unless Members of the City Council request specific items be removed from the Consent Calendar for separate action. Standard Ordinance and Resolution Adoption Procedure RECOMMENDATION: 1.1 Motion to waive the reading of the text of all ordinances and resolutions included in the agenda. 2 Action Minutes RECOMMENDATION: 2.1 Approve the action minutes of January 26, 2010. 3 List of Demands RECOMMENDATION: 3.1 Adopt a resolution entitled: RESOLUTION NO. 10- A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TEMECULA ALLOWING CERTAIN CLAIMS AND DEMANDS AS SET FORTH IN EXHIBIT A 4 City Treasurer's Report as of December 31, 2009 RECOMMENDATION: 4.1 Approve and file the City Treasurer's Report as of December 31, 2009. 5 Approval of Projects for Annual Federal Appropriation Requests for FY 2011 RECOMMENDATION: 5.1 Adopt a resolution entitled: RESOLUTION NO. 10- A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TEMECULA APPROVING A LIST OF PROJECTS TO BE SENT TO FEDERAL LEGISLATORS REQUESTING ANNUAL APPROPRIATIONS 6 Letter to County Auditor specifying how the Redevelopment Agency intends to fund the 2009-2010 Supplemental Educational Revenue Augmentation Fund ("SERAF) RECOMMENDATION: 6.1 Approve the letter to the Riverside County Auditor specifying how the Temecula Redevelopment Agency intends to fund its Fiscal Year 2009-2010 SERAF shift payment. 7 Letter of Intent for University Hills Development; 270.8 Acres West of Puiol Street Owned by John and Juanita Firestone RECOMMENDATION: 7.1 Authorize the Mayor to sign the attached Letter of Intent (LOI). TEMECULA COMMUNITY SERVICES DISTRICT MEETING CSD PUBLIC COMMENTS A total of 15 minutes is provided so members of the public may address the Board of Directors on items that are not listed on the agenda or on the Consent Calendar. Speakers are limited to two (2) minutes each. If you decide to speak to the Board of Directors on an item not on the agenda or on the Consent Calendar, a pink "Request to Speak" form should be filled out and filed with the City Clerk. When you are called to speak, please come forward and state your name for the record For all other agenda items, a "Request to Speak" form must be filed with the City Clerk Prior to the Board of Directors addressing that item. There is a five (5) minute time limit for individual speakers. Anyone wishing to address the Board of Directors should present a completed pink "Request to Speak" form to the City Clerk. When you are called to speak, please come forward and state your name for the record. CSD CONSENT CALENDAR 8 Action Minutes RECOMMENDATION: 8.1 Approve the action minutes of January 26, 2010. 9 Fourth Amendment to the Temecula Valley Museum, Inc. License Agreement RECOMMENDATION: 9.1 Approve the Fourth Amendment to the Temecula Valley Museum, Inc., License Agreement to extend the term. CSD DIRECTOR OF COMMUNITY SERVICES REPORT CSD GENERAL MANAGERS REPORT CSD BOARD OF DIRECTORS REPORTS CSD ADJOURNMENT TEMECULA REDEVELOPMENT AGENCY MEETING RDA PUBLIC COMMENTS A total of 15 minutes is provided so members of the public may address the Redevelopment Agency on items that are not listed on the agenda or on the Consent Calendar. Speakers are limited to two (2) minutes each. If you decide to speak to the Board of Directors on an item not on the agenda or on the Consent Calendar, a pink "Request to Speak" form should be filled out and filed with the City Clerk. When you are called to speak, please come forward and state your name for the record For all other agenda items, a "Request to Speak" form must be filed with the City Clerk Prior to the Board of Directors addressing that item. There is a five (5) minute time limit for individual speakers. Anyone wishing to address the Board of Directors should present a completed pink "Request to Speak" form to the City Clerk. When you are called to speak, please come forward and state your name for the record. C7BL'11doL 61=1ki 11Ke7e14=1ki 197e1: 10 Action Minutes RECOMMENDATION: 10.1 Approve the action minutes of January 26, 2010. 11 Exclusive Negotiating Aqreement with the RC Hobbs Company for the potential development of Agency owned property for affordable housing located at 28640 Puiol Street (APN 922-053-020 and 021) RECOMMENDATION: 11.1 Approve an Exclusive Negotiating Agreement ("ENA") between the Temecula Redevelopment Agency and the RC Hobbs Company. 12 Second Amendment to the Owner Participation Agreement between the Redevelopment Agency of the City of Temecula and the Warehouse at Creekside, LLC RECOMMENDATION: 12.1 Approve the Second Amendment to the Owner Participation Agreement between the Redevelopment Agency of the City of Temecula and the Warehouse at Creekside. LLC. 13 Funding source for AB 4X 26 Supplemental Educational Revenue Augmentation Fund Payment RECOMMENDATION: 13.1 Adopt a resolution entitled: RESOLUTION NO. RDA 10- A RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY OF TEMECULA PROVIDING FOR THE PAYMENT OF ITS SUPPLEMENTAL EDUCATIONAL REVENUE OBLIGATION FOR FISCAL YEAR 2009-2010 14 Issuance of Tax Allocation Housing Bonds by the Redevelopment Agency of the City of Temecula for the Temecula Redevelopment Project No. 1 RECOMMENDATION: 14.1 The City Council adopt a resolution entitled: RESOLUTION NO. 10- A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TEMECULA APPROVING THE ISSUANCE BY THE REDEVELOPMENT AGENCY OF THE CITY OF TEMECULA OF TAX ALLOCATION HOUSING BONDS 14.2 The Redevelopment Agency adopt a resolution entitled: RESOLUTION NO. RDA 10- A RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY OF TEMECULA AUTHORIZING THE ISSUANCE AND SALE OF TAX ALLOCATION HOUSING BONDS, AND APPROVING RELATED DOCUMENTS AND ACTIONS 14.3 The Temecula Public Financing Authority adopt a resolution entitled: RESOLUTION NO. TPFA 10- A RESOLUTION OF THE BOARD OF DIRECTORS OF THE TEMECULA PUBLIC FINANCING AUTHORITY AUTHORIZING THE PURCHASE AND SALE OF TAX ALLOCATION HOUSING BONDS OF THE REDEVELOPMENT AGENCY OF THE CITY OF TEMECULA, AND APPROVING OTHER MATTERS RELATED THERETO RDA EXECUTIVE DIRECTORS REPORT RDA AGENCY MEMBERS REPORTS RDA ADJOURNMENT RECONVENE TEMECULA CITY COUNCIL PUBLIC HEARING Any person may submit written comments to the City Council before a public hearing or may appear and be heard in support of or in opposition to the approval of the project(s) at the time of the hearing. If you challenge any of the project(s) in court, you may be limited to raising only those issues you or someone else raised at the public hearing or in written correspondence delivered to the City Clerk at, or prior to, the public hearing. CITY COUNCIL BUSINESS 15 Discussion of the Blue Ribbon Committee Selection Process for the Quality of Life/Temecula 2030 Master Plan (at the request of Mayor Pro Tern Roberts and Council Member Washington) RECOMMENDATION: 15.1 Establish a Blue Ribbon Committee for the Quality of Life/Temecula 2030 Master Plan, approve the process for appointing members to the Committee, authorize the Quality of Life/Temecula 2030 Subcommittee to proceed with forming the Blue Ribbon Committee. CITY MANAGER REPORT CITY ATTORNEY REPORT ADJOURNMENT Next regular meeting: Tuesday, February 23, 2010, at 5:30 PM, for a Closed Session, with regular session commencing at 7:00 PM, City Council Chambers, 43200 Business Park Drive, Temecula. California. PRESENTATIONS CONSENT CALENDAR Item No. 1 Item No. 2 ACTION MINUTES TEMECULA CITY COUNCIL A REGULAR MEETING CITY COUNCIL CHAMBERS 43200 BUSINESS PARK DRIVE JANUARY 26, 2010 — 7:00 PM 5:30 P.M. - Closed Session of the City Council/Temecula Redevelopment Agency pursuant to Government Code Section: 1) Conference with real property negotiators pursuant to Government Code Section 54956.8 regarding the potential sale of the real property located at 28640 Pujol Street, Temecula, California (APN Nos. 922-053-020 and -021) owned by the Redevelopment Agency of the City of Temecula. The parties to the negotiations for the potential sale of the property are the Redevelopment Agency of the City of Temecula, City of Temecula, and R.C. Hobbs Co. Negotiators for the Agency and City are Bob Johnson, Assistant City Manager; Patrick Richardson, Director of Planning and Redevelopment; and Luke Watson, Management Analyst. Under negotiation are the price and terms of the potential sale of the real property. 2) Conference with real property negotiators pursuant to Government Code Section 54956.8 regarding one parcel of real property owned by John and Juanita Firestone and their affiliates consisting of approximately 37.58 acres (APN Nos. 940-032-005 to -007) generally located southwesterly of the extensions of Pujol Street and Temecula Parkway. The parties to the negotiations for the purchase of the property are John and Juanita Firestone and the City of Temecula. Negotiators for the City of Temecula are Shawn Nelson, City Manager; Bob Johnson, Assistant City Manager; and Patrick Richardson, Director of Planning and Redevelopment. Under negotiation are price and the terms of the purchase of the property. Public Information concerning existing litigation between the City and various parties may be acquired by reviewing the public documents held by the City Clerk. At 5:37 P.M., Mayor Comerchero called the Closed Session meeting to order; Council Members Edwards and Roberts were absent at that time but were in attendance of the Closed Session. The City Council meeting convened at 7:00 P.M. CALL TO ORDER: Mayor Jeff Comerchero Prelude Music: Bryce Russell Invocation: Pastor Dave Hadden of House of Praise Flag Salute: Council Member Naggar ROLL CALL: Edwards, Naggar, Roberts, Washington, Comerchero PRESENTATIONS/PROCLAMATIONS City Service Awards: • Old Town Local Review Board Member Peg Moor — 10 years • Public/Traffic Safety Commission Member Tomi Arbogast — 5 years PUBLIC COMMENTS • Alisa Rene President, representing International of Tri Valley, addressed the City Council. • Wayne Hall commented on Rancho Springs Hospital. • Cynthia Robles proudly introduced her father, Moses Lechuga, who is an ex Prisoner of War of World War II. CITY COUNCIL REPORTS CONSENT CALENDAR 1 Standard Ordinance and Resolution Adoption Procedure - Approved Staff Recommendation (5-0-0) — Council Member Edwards made the motion; it was seconded by Council Member Washington; and electronic vote reflected unanimous approval. RECOMMENDATION: 1.1 Motion to waive the reading of the text of all ordinances and resolutions included in the agenda. 2 Action Minutes - Approved Staff Recommendation (5-0-0) — Council Member Edwards made the motion; it was seconded by Council Member Washington; and electronic vote reflected unanimous approval. RECOMMENDATION: 2.1 Approve the action minutes of January 12, 2010. z 3 List of Demands- Approved Staff Recommendation (5-0-0) — Council Member Edwards made the motion; it was seconded by Council Member Washington; and electronic vote reflected unanimous approval. RECOMMENDATION: 3.1 Adopt a resolution entitled: RESOLUTION NO. 10-06 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TEMECULA ALLOWING CERTAIN CLAIMS AND DEMANDS AS SET FORTH IN EXHIBIT A 4 Community Development Block Grant ADDlication Proposals for Fiscal Year 2010-11 - Approved Staff Recommendation as amended (5-0-0) — Mayor Comerchero made the motion; it was seconded by Council Member Naggar; and electronic vote reflected unanimous approval. It was noted by the Council to approve the CASA allocation of $7,793 contingent upon receipt of an expenditure plan, reflecting that the proposed allocation will be spent locally — the expenditure plan is subject to the approval of the Finance Director. In the event the City's allocation were increased, Council directed the Finance Committee to readdress the allocation of additional funds. RECOMMENDATION: 4.1 Approve the Community Development Block Grant (CDBG) Finance Committee funding recommendations for fiscal year 2010-11; 4.2 Authorize the Director of Finance to execute Sub -Recipient Agreements for 2010-11 funding recipients and reprogram CDBG funds in accordance with the budget resolution for general administration of the fiscal year 2010-11 CDBG Funds; 4.3 Authorize the City to apply for separate CDBG funding allocated to the Third District Supervisors office to be used for the construction of the Old Town Gymnasium. Considered under separate discussion; see page 6. 5 Approval of the Plans and Specifications and Authorization to Solicit Construction Bids for the Citywide Storm Drain Improvements, Rancho California Road at Vincent Moraga Drive — Proiect No. PW09-09 - Approved Staff Recommendation (5-0-0) — Council Member Edwards made the motion; it was seconded by Council Member Washington; and electronic vote reflected unanimous approval. RECOMMENDATION: 5.1 Approve the plans and specifications and authorize the Department of Public Works to solicit construction bids for the Citywide Storm Drain Improvements, Rancho California Road at Vincent Moraga Drive, Project No. PW09-09. 6 Approval of Change Order No. 1 to the Construction Contract for the Street Striping Program, FY 2009-2010 — Proiect No. PW09-04 - Approved Staff Recommendation (5-0-0) — Council Member Edwards made the motion; it was seconded by Council Member Washington; and electronic vote reflected unanimous approval. RECOMMENDATION: 6.1 Approve Change Order No. 1 in the Construction Contract for the Street Striping Program for FY 2009-2010, Project No. PW09-04 to Pacific Striping, Inc. in the amount of $174,417.18. 7 Purchase of Eden Software Support and Maintenance - Approved Staff Recommendation (5-0-0) — Council Member Edwards made the motion; it was seconded by Council Member Washington; and electronic vote reflected unanimous approval. RECOMMENDATION: 7.1 Approve the purchase of annual Financials and Payroll Software Support from Eden Systems, Inc., for the Fiscal Year 2009/10 for the total amount of $36,013.61. 8 Agreement for Library Operations Services at the Temecula Public Library between the City of Temecula and the County of Riverside - Approved Staff Recommendation (5- 0-0) — Council Member Edwards made the motion; it was seconded by Council Member Washington; and electronic vote reflected unanimous approval. RECOMMENDATION: 8.1 Approve the two year Agreement for Library Operations Services at the Temecula Public Library between the City of Temecula and the County of Riverside for an annual amount not to exceed $180,000. City Attorney Thorson announced that Mayor Pro Tern Roberts had no conflict of interest in this matter and was allowed to participate in the Council Action. Although Mayor Pro Tern Roberts is employed by the County of Riverside as a Legislative Assistant to Supervisor Stone, he did not participate on behalf of the County in the negotiations or County approval for the Library Agreement and the agreement does not directly involve his department. 9 Parking Citation Bail Schedule Update - Approved Staff Recommendation (5-0-0) — Council Member Edwards made the motion; it was seconded by Council Member Washington; and electronic vote reflected unanimous approval. RECOMMENDATION: 9.1 Adopt a resolution entitled: RESOLUTION NO. 10-07 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TEMECULA AMENDING THE CITY'S FEE SCHEDULE AS TO PENALTIES FOR PARKING VIOLATIONS 10 Old Town Police Department Storefront Lease Extension - Approved Staff Recommendation (5-0-0) — Council Member Edwards made the motion; it was seconded by Council Member Washington; and electronic vote reflected unanimous approval. RECOMMENDATION: 10.1 Approve a month to month lease extension for the Police Department Old Town Storefront property to include a monthly base rental rate of $2,205.53 a month and a variable common area maintenance (CAM) charge, with a total annual amount not to exceed $36,000. 11 Second Reading of Ordinance No. 10-01 - Approved Staff Recommendation (5-0-0) — Council Member Edwards made the motion; it was seconded by Council Member Washington; and electronic vote reflected unanimous approval. RECOMMENDATION: 11.1 Adopt an ordinance entitled: ORDINANCE NO. 10-01 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF TEMECULA AMENDING SECTION 3.40.040.B. OF THE TEMECULA MUNICIPAL CODE TO INCREASE THE ASSESSMENT AGAINST LODGING BUSINESSES WITHIN THE TEMECULA VALLEY TOURISM BUSINESS IMPROVEMENT DISTRICT FROM TWO PERCENT (2%) TO FOUR PERCENT (4%) OF ROOM RENT 12 Second Reading of Ordinance No. 10-02 - Approved Staff Recommendation (5-0-0) — Council Member Edwards made the motion; it was seconded by Council Member Washington; and electronic vote reflected unanimous approval. RECOMMENDATION: 12.1 Adopt an ordinance entitled: ORDINANCE NO. 10-02 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF TEMECULA AMENDING CHAPTER 15.08 OF THE TEMECULA MUNICIPAL CODE TO UPDATE THE CITY'S PARTICIPATION IN THE WESTERN RIVERSIDE COUNTY TRANSPORTATION UNIFORM MITIGATION FEE PROGRAM Although voting in support of the overall Ordinance, Council Member Naggar reiterated is previously noted objections. 13 Second Reading of Ordinance No. 10-03 - Approved Staff Recommendation (5-0-0) — Council Member Edwards made the motion; it was seconded by Council Member Washington; and electronic vote reflected unanimous approval. RECOMMENDATION: 13.1 Adopt an ordinance entitled: ORDINANCE NO. 10-03 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF TEMECULA, AMENDING SECTION 10.28.01(D) OF THE TEMECULA MUNICIPAL CODE REGARDING PRIMA FACIE SPEED LIMITS ON CERTAIN STREETS CONSENT CALENDAR ITEM CONSIDERED UNDER SEPARATE DISCUSSION 4 Community Development Block Grant Application Proposals for Fiscal Year 2010-11 - Approved Staff Recommendation as amended (5-0-0) — Mayor Comerchero made the motion; it was seconded by Council Member Naggar; and electronic vote reflected unanimous approval. It was noted by the Council to approve the CASA allocation of $7,793 contingent upon receipt of an expenditure plan, reflecting that the proposed allocation will be spent locally — the expenditure plan is subject to the approval of the Finance Director. In the event the City's allocation was increased, Council directed the Finance Committee to readdress the allocation of additional funds. RECOMMENDATION: 4.1 Approve the Community Development Block Grant (CDBG) Finance Committee funding recommendations for fiscal year 2010-11; 4.2 Authorize the Director of Finance to execute Sub -Recipient Agreements for 2010-11 funding recipients and reprogram CDBG funds in accordance with the budget resolution for general administration of the fiscal year 2010-11 CDBG Funds; 4.3 Authorize the City to apply for separate CDBG funding allocated to the Third District Supervisors office to be used for the construction of the Old Town Gymnasium. Larry McAdara, representing Riverside Area Rape Crisis Center, requested that the City Council reconsider its decline of requested allocation for the Center. PUBLIC HEARING 17 Extension of Time application for the Temecula Regional Hospital - Approved Staff Recommendation (5-0-0) — Council Member Naggar made the motion; it was seconded by Council Member Washington; and electronic vote reflected unanimous approval. RECOMMENDATION: 17.1 Adopt a resolution entitled: RESOLUTION NO. 10-08 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TEMECULA EXTENDING THE TERM OF CERTAIN LAND USE ENTITLEMENTS TO PERMIT THE BEGINNING OF SUBSTANTIAL CONSTRUCTION OF THE TEMECULA REGIONAL HOSPITAL PRIOR TO JANUARY 22, 2011 (PLANNING APPLICATION NO. PA09-0362) By way of a PowerPoint presentation, Director of Planning Richardson provided the staff report as per written material (of record). The public hearing was opened with Rebecca Weersing, representing the Temecula Valley Council of PTA, addressing the Council. For the record, City Clerk Jones read into the record letter from Paul Jacobs. There being no additional input, the public hearing was closed. DEPARTMENTAL REPORTS CITY MANAGER REPORT Commending staff on a phenomenal job, echoed by Mayor Comerchero, City Manager Nelson commented on staff's response during the recent storms. CITY ATTORNEY REPORT With respect to the two Closed Session items, City Attorney Thorson advised that the City Council gave direction to staff and that there will be no final action other than that taken in Open Session. ADJOURNMENT At 8:08 P.M., the City Council meeting was formally adjourned to Tuesday, February 9, 2010, at 5:30 P.M., for a Closed Session, with regular session commencing at 7:00 P.M., City Council Chambers, 43200 Business Park Drive, Temecula, California. Jeff Comerchero, Mayor ATTEST: Susan W. Jones, MMC City Clerk [SEAL] Item No. 3 Approvals City Attorney Director of Finance City Manager CITY OF TEMECULA AGENDA REPORT TO: City Manager/City Council FROM: Genie Roberts, Director of Finance DATE: February 9, 2010 SUBJECT: List of Demands PREPARED BY: Pascale Brown, Accounting Manager Leah Thomas, Accounting Specialist RECOMMENDATION: That the City Council: 1. Adopt a resolution entitled: RESOLUTION NO. 10- A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TEMECULA ALLOWING CERTAIN CLAIMS AND DEMANDS AS SET FORTH IN EXHIBIT A BACKGROUND: All claims and demands are reported and summarized for review and approval by the City Council on a routine basis at each City Council meeting. The attached claims represent the paid claims and demands since the last City Council meeting. FISCAL IMPACT: All claims and demands were paid from appropriated funds or authorized resources of the City and have been recorded in accordance with the City's policies and procedures. ATTACHMENTS: Resolution List of Demands RESOLUTION NO. 10- A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TEMECULA ALLOWING CERTAIN CLAIMS AND DEMANDS AS SET FORTH IN EXHIBIT A THE CITY COUNCIL OF THE CITY OF TEMECULA DOES HEREBY RESOLVE AS FOLLOWS: Section 1. That the following claims and demands as set forth in Exhibit A, on file in the office of the City Clerk, has been reviewed by the City Manager's Office and that the same are hereby allowed in the amount of $3,464,685.05. Section 2. The City Clerk shall certify the adoption of this resolution. PASSED, APPROVED, AND ADOPTED by the City Council of the City of Temecula this 9th day of February, 2010. Jeff Comerchero, Mayor ATTEST: Susan W. Jones, MMC City Clerk [SEAL] STATE OF CALIFORNIA ) COUNTY OF RIVERSIDE ) ss CITY OF TEMECULA ) I, Susan W. Jones, MMC, City Clerk of the City of Temecula, do hereby certify that the foregoing Resolution No. 10- was duly and regularly adopted by the City Council of the City of Temecula at a meeting thereof held on the 9th day of February, 2010, by the following vote: AYES: COUNCIL MEMBERS: NOES: COUNCIL MEMBERS: IG1 ►1�Ko1l1►NllNdiIAdi1:l4:&1 ABSTAIN: COUNCIL MEMBERS: Susan W. Jones, MMC City Clerk CITY OF TEMECULA LIST OF DEMANDS 01/21/2010 TOTAL CHECK RUN: $ 760,737.56 01/28/2010 TOTAL CHECK RUN: 2,274,529.49 01/21/2010 TOTAL PAYROLL RUN: 429,418.00 TOTAL LIST OF DEMANDS FOR 02/09/2010 COUNCIL MEETING: $ 3464,685.05 DISBURSEMENTS BY FUND CHECKS: 001 GENERAL FUND $ 569,087.91 130 RECOVERY ACT JAG FUNDING 734.55 165 AFFORDABLE HOUSING 19,616.75 190 TEMECULA COMMUNITY SERVICES DISTRICT 220,993.09 192 TCSD SERVICE LEVEL B 135.19 193 TCSD SERVICE LEVEL"C'LANDSCAPE/SLOPE 7,352.32 194 TCSD SERVICE LEVEL D 1,261.33 196 TCSD SERVICE LEVEL "L" LAKE PARK MAINT. 6,333.43 197 TEMECULA LIBRARY FUND 2,572.49 210 CAPITAL IMPROVEMENT PROJECTS FUND 1,091,374.53 275 CFD 03-3 WOLF CREEK IMPROVEMENT FUND 349.74 280 REDEVELOPMENT AGENCY - CIP PROJECT 13,413.89 300 INSURANCE FUND 7,725.36 320 INFORMATION SYSTEMS 46,611.24 330 SUPPORT SERVICES 7,176.88 340 FACILITIES 4,591.16 375 SUMMER YOUTH EMPLOYMENT PROGRAM 804.30 380 RDA DEBT SERVICE FUND 1,023,926.26 460 CFD 88-12 DEBT SERVICE FUND 1,464.20 472 CFD 01-2 HARVESTON A&B DEBT SERVICE 1,863.53 473 CFD03-1 CROWNE HILL DEBT SERVICE FUND 1,597.31 474 AD03-4 JOHN WARNER ROAD DEBT SERVICE 532.44 475 CFD03-3 WOLF CREEK DEBT SERVICE FUND 1,464.20 476 CFD 03-6 HARVESTON 2 DEBT SERVICE FUND 1,464.20 477 CFD- RORIPAUGH 2,820.75 $ 3,035,267.05 001 GENERAL FUND $ 266,308.17 165 AFFORDABLE HOUSING 10,730.75 190 TEMECULA COMMUNITY SERVICES DISTRICT 101,202.27 192 TCSD SERVICE LEVEL B 138.89 193 TCSD SERVICE LEVEL"C'LANDSCAPE/SLOPE 4,457.78 194 TCSD SERVICE LEVEL D 1,357.28 196 TCSD SERVICE LEVEL "L" LAKE PARK MAINT. 1,265.69 197 TEMECULA LIBRARY FUND 422.39 280 REDEVELOPMENT AGENCY - CIP PROJECT 4,043.38 300 INSURANCE FUND 1,321.98 320 INFORMATION SYSTEMS 23,461.77 330 SUPPORT SERVICES 5,620.61 340 FACILITIES 9,087.04 429,418.00 TOTAL BY FUND: $ 3,464,685.05 apChkLst Final Check List Page: 1 01/21/2010 2:15:17PM CITY OF TEMECULA Bank: union UNION BANK OF CALIFORNIA Check# Date Vendor Description 136593 01/21/2010 001700 A PLUS TEACHING MATERIALS misc supplies: tiny tot pgrm 136594 01/21/2010 009787 ALTEC INDUSTRIES INC Bucket Truck Repair: Pw Traffic 136595 01/21/2010 000101 APPLE ONE INC temp help ppe 12/5: Baleanu, A 136596 01/21/2010 002648 AUTO CLUB OF SOUTHERN CALIF membership: 70939893 Rosa, C 136597 01/21/2010 012583 BLANCAY PRICE 136598 01/21/2010 008605 BONTERRA CONSULTING 136599 01/21/2010 005384 BOYZ 136600 01/21/2010 009959 BRUDVIK INC 136601 01/21/2010 006908 C C & COMPANY INC 1/14 Ldscp Pln Ck Svc: Planning Dec cnslt svcs:rrsp desilting basin refreshments: CM mtg 11/24 generator rental: Old Town NYE FH Marionettes: Old Town 12/19 entertainment: Old Town 12/18 136602 01/21/2010 007040 CAFE BRAVO COFFEE ROASTING coffee thermos rental: Old Town 12/5 CO. 136603 01/21/2010 013265 CALIF BUILDING 4th Qtr 2009 pymt: SB1473 136604 01/21/2010 000638 CALIF DEPT OF CONSERVATION 2009 4th Qtr pmt:strong motion 136605 01/21/2010 009847 CALIFORNIA PRESENTERS 2010 mb renewal: Beers, Bruce 136606 01/21/2010 003986 COZAD & FOX INC 10/25-12/20 plan ck svcs: PW 136607 01/21/2010 013347 D & W CONSULTING, INC. Parcel Cleanup: GIS 136608 01/21/2010 012600 DAVID EVANS & ASSOCIATES INC Nov design eng svcs: Liefer Rd Amount Paid 112.23 2,037.40 71.00 47.00 750.00 2,663.00 145.18 445.00 800.00 425.00 375.00 300.00 112.35 726.00 1,792.22 150.00 1,680.00 6,337.00 13,598.00 Check Total 112.23 2,037.40 71.00 47.00 750.00 2,663.00 145.18 445.00 1,900.00 112.35 726.00 1,792.22 150.00 1,680.00 6,337.00 13,598.00 Page apChkLst Final Check List Page: 2 01/21/2010 2:15:17PM CITY OF TEMECULA Bank: union UNION BANK OF CALIFORNIA (Continued) Check# Date Vendor Description Amount Paid 136609 01/21/2010 003962 DAVID NEAULT ASSOCIATES INC Dec Ldscp Insp Svcs: Pechanga II 831.25 136610 01/21/2010 011476 DIVERSIFIED INV COMPANY refund: balance of owl study 136611 01/21/2010 002390 EASTERN MUNICIPAL WATER Jan 95366-02 Diego Dr Ldscp DIST 136612 01/21/2010 003347 FIRST BANKCARD CENTER 013374 MITSUBISHI DIGITAL GBtraffic camera projector lamp ELECTONICS 003198 HOME DEPOT, THE SJ tarps for offsite records: City Clerk 008669 VONS SJ misc supplies: Council 136613 01/21/2010 008362 FUNES, MARTHA refund: sec dep:crc rm rental 1/9/10 136614 01/21/2010 000177 GLENN I ES OFFICE PRODUCTS Office Supplies: Fire INC Office Supplies: Finance Office Supplies: CM Office Supplies: Planning Office Supplies: TCC Office Supplies: Theater Office Supplies: CRC Office Supplies: MPSC Office Supplies: Records Office Supplies: TV Museum Office Supplies: Info Sys/GIS 136615 01/21/2010 011826 GRIP. JERRY reimb:Comm Enf School 1216-18 136616 01/21/2010 012954 HANEY, JOHN THOMAS 136617 01/21/2010 013321 HESS, JOHN 136618 01/21/2010 013373 HUM, RAYMOND AND JUDY 136619 01/21/2010 002531 K A T Y FM RADIO 12/21-29 Plan Ck Svcs: B&S 12/1-8 Plan Ck Svcs: B&S 12/9-18 Plan Ck Svcs: B&S Billing Adj: Recalculated Fees Inv 18 Billing Adj: Recalculated Fees Inv 16 Billing Adj: Recalculated Fees Inv 17 holiday performance:Old Town sttlmnt/release Claim No.09-663 broadcasting: Old Town holidays broadcasting: Old Town holidays 129.71 79.53 543.16 71.30 30.43 400.00 592.79 479.01 459.38 291.74 215.04 119.60 108.88 106.69 100.74 66.21 37.59 594.21 4,334.33 2,021.62 1,636.33 444.36 26.92 -52.92 375.00 795.00 1,062.50 1,062.50 Check Total 831.25 129.71 79.53 644.89 400.00 2,577.67 594.21 8,410.64 375.00 795.00 2,125.00 Page2 apChkLst Final Check List Page: 3 01/21/2010 2:15:17PM CITY OF TEMECULA Bank: union UNION BANK OF CALIFORNIA (Continued) Check # Date Vendor Description Amount Paid Check Total 136620 01/21/2010 013108 KORESH DANCE COMPANY sttlmnt: Jon Kimura Parker 1/24 15,000.00 15,000.00 136621 01/21/2010 004051 L O R GEOTECHNICAL GROUP Dec Geotech Svcs: Rch Ca Rd 15,470.00 INC billing adj: lab tests not complete -200.00 15,270.00 136622 01/21/2010 003782 MAIN STREET SIGNS constr. signs for town square 244.69 signs for town square 71.78 316.47 136623 01/21/2010 007210 MIDORI GARDENS Dec ldscp maint srvcs:var parks 70,105.00 70,105.00 136624 01/21/2010 012580 MINUTEMAN PRESS Letterhead stationery:csd 121.23 121.23 136625 01/21/2010 001868 MIYAMOTO-JURKOSKY, SUSAN A. Page turning services:theater 1/24/10 80.00 80.00 136626 01/21/2010 004586 MOORE FENCE COMPANY Fence repair:murrieta creek trail 527.47 527.47 136627 01/21/2010 002925 NAPA AUTO PARTS Auto parts & misc supplies:Stn 73 & 96 9.54 9.54 136628 01/21/2010 005006 NBS GOVERNMENT FINANCE Spcl tax admin srvcs:fnance dept 10,515.63 10,515.63 GROUP 136629 01/21/2010 009337 NOLTE ASSOCIATES INC Nov dsgn srvcs:ped bridge 502.47 502.47 136630 01/21/2010 002139 NORTH COUNTY TIMES Dec newspaper subscr:mpsc 29.90 29.90 136631 01/21/2010 002105 OLD TOWN TIRE & SERVICE City Vehicle Maint Svcs: PW Maint 2,105.49 2,105.49 136632 01/21/2010 013127 ON STAGE MUSICALS "A Holiday Party" thtr settlement 12/27 2,464.16 2,464.16 136633 01/21/2010 013161 OPUS 3 ARTISTS Performance Kimura Parker 1/24/10 6,510.00 6,510.00 136634 01/21/2010 004529 QUAID TEMECULA Dec veh repair & maint:pd motorcycles 4,937.84 4,937.84 HARLEY-DAVIDSON 136635 01/21/2010 002012 R D O EQUIPMENT COMPANY Veh repair & maint:pw maint div 34.71 34.71 Page3 apChkLst Final Check List Page: 4 01/21/2010 2:15:17PM CITY OF TEMECULA Bank: union UNION BANK OF CALIFORNIA (Continued) Check # Date Vendor Description Amount Paid Check Total 136636 01/21/2010 000262 RANCHO CALIF WATER DISTRICT 10/21-12/29/09 meters:41000 main st 4,427.55 11/5-12129/09 meters:mercedes:ps 413.23 5/2&12129/09 meters :mercedes:cc 105.79 11/5-12129/09 meters:mercedes:ps 69.26 9/15-12129/09 meters:mercedes:ps 52.06 5,067.89 136637 01/21/2010 000271 RBF CONSULTING Nov eng srvcs:I-15/SR-79 Ult. Intrchg 81,652.37 81,652.37 136638 01/21/2010 003591 RENES COMMERCIAL Weed abatementcity lots 10,975.00 10,975.00 MANAGEMENT 136639 01/21/2010 012288 RENT A CENTER #4086 rental:Ryhthms teen dance 1/23/10 216.86 216.86 136640 01/21/2010 010917 RICHARDSON, PATRICK reimb:business phone exp. 1214-1/3/10 97.00 97.00 136641 01/21/2010 008739 ROSE CITY LABEL Promo items:pd badge stickers 390.47 390.47 136642 01/21/2010 009980 SANBORN, GWYN Country @ the Merc: 1/2/10 736.50 736.50 136643 01/21/2010 009213 SHERRY BERRY MUSIC Jazz @ the Merc: 12/17/09 & 1/7/10 362.60 362.60 136644 01/21/2010 009746 SIGNS BY TOMORROW Public Notice Sign Posting Xx-40:Pln 445.50 Public Notice Sign Posting Xx-17:Pln 297.00 Public Notice Sign Posting Xx-01:Pln 297.00 Public Notice Sign Posting Xx-97:Pln 297.00 Public Notice Sign Posting Xx-32:Pln 148.50 Public Notice Sign Posting Xx-42:Pln 148.50 Posters:gallery at the merc 85.17 Public Notice Sign Posting Xx-17:Pln 54.65 1,773.32 136645 01/21/2010 008823 SILVER STAR PAINTING Res Impry Prgm: Gerber, J & C 1,980.00 1,980.00 136646 01/21/2010 004814 SIMON WONG ENGINEERING INC Nov Dsgn:Main Street Bridge/Murr Creek 2,049.13 2,049.13 136647 01/21/2010 000645 SMART & FINAL INC Recreation Supplies:Mspc 184.11 184.11 136648 01/21/2010 000537 SO CALIF EDISON Jan 2-00-397-5059:comm svc utl 6,793.65 Jan 2-26-887-0789:40233 vlg rd ped 1,669.19 Jan 2-28-171-2620: Police Stn 677.88 Dec 2-31-936-3511:45647 pech. pkwy 171.61 9,312.33 Page:4 apChkLst Final Check List Page: 5 01/21/2010 2:15:17PM CITY OF TEMECULA Bank: union UNION BANK OF CALIFORNIA (Continued) Check # Date Vendor Description Amount Paid Check Total 136649 01/21/2010 002503 SOUTH COAST AIR QUALITY emerg generator ann'I op fees:city hall 293.21 emerg generator emissions fees:city hall 109.00 402.21 136650 01/21/2010 000519 SOUTH COUNTY PEST CONTROL pest control srvcs: Stn 95 124.00 124.00 INC 136651 01/21/2010 008164 SUN CITY GRANITE INC Engraved pavers:veterans memorial 957.00 957.00 136652 01/21/2010 013372 TAYLOR, BEATRICE M. holiday performance:Old Town 12118 100.00 100.00 136653 01/21/2010 004260 TEMECULA STAMP & GRAPHICS Self -inking stamp:fnance 59.81 59.81 136654 01/21/2010 010046 TEMECULA VALLEY Jan-Jun'10 Marketing Agreement Pmt 54,000.00 54,000.00 CONVENTION & 136655 01/21/2010 003862 THYSSENKRUPP Elevator repair & maint:theater 12/4 352.50 352.50 ELEVATOR.BRNCH 37 136656 01/21/2010 012626 TOMSETH, DIANA H. TCSD Instructor Earnings 537.60 TCSD Instructor Earnings 448.00 TCSD Instructor Earnings 266.00 TCSD Instructor Earnings 239.40 TCSD Instructor Earnings 196.00 TCSD Instructor Earnings 100.80 1,787.80 136657 01/21/2010 004261 VERIZON Jan xxx-5072 general usage 2,335.79 Jan xxx-6400 general usage 1,633.59 Jan xxx-7530 gen usage:Library 424.49 Jan xxx-0682 gen usage:civic ctr camera 92.49 Jan xxx-7562 gen usage:irrig cntrlr 37.65 Jan xxx-2372 gen usage:wolf crk pk 35.77 4,559.78 136658 01/21/2010 012292 VIAMEDIA INC Dec broadcasting:old town 2,765.00 2,765.00 136659 01/21/2010 011740 WEST COAST LIGHTS & SIRENS seat belt kit:police motor 176.72 176.72 INC 136660 01/21/2010 000621 WESTERN RIVERSIDE COUNCIL Dec 2009 TUMF Payment 137,800.00 OF Oct'09 Add'I TUMF Payment 1,312.00 139,112.00 136661 01/21/2010 008402 WESTERN RIVERSIDE COUNTY Dec 2009 MSHCP payment 24,820.00 24,820.00 Grand total for UNION BANK OF CALIFORNIA: 522,073.59 Pages apChkLst 01/21/2010 4:14:56PM Final Check List CITY OF TEMECULA Page: 1 Bank: union UNION BANK OF CALIFORNIA Check # Date Vendor Description Amount Paid Check Total 1402 01/21/2010 010349 CALIF DEPT OF CHILD SUPPORT Support Payment 578.84 578.84 1404 01/21/2010 000389 NATIONWIDE RETIREMENT OBRA- Project Retirement Payment 2,149.68 2,149.68 SOLUTION 1405 01/21/2010 000246 PERS (EMPLOYEES' PERS ER Paid Member Contr Payment 114,061.91 114,061.91 RETIREMENT) 1406 01/21/2010 001065 NATIONWIDE RETIREMENT Nationwide Retirement Payment 14,287.11 14,287.11 SOLUTION 1407 01/21/2010 000283 INSTATAX(IRS) Federal Income Taxes Payment 76,946.94 76,946.94 1408 01/21/2010 000444 INSTATAX (EDD) State Disability Ins Payment 23,977.38 23,977.38 136662 01/21/2010 004405 COMMUNITY HEALTH CHARITIES Community Health Charities Payment 106.00 106.00 136663 01/21/2010 000194 I C M A RETIREMENT -PLAN I C M A Retirement Trust 457 Payment 6,138.57 6,138.57 303355 136664 01/21/2010 001958 PERS LONG TERM CARE PERS Long Term Care Payment 169.04 169.04 PROGRAM 136665 01/21/2010 006815 SAN DIEGO, COUNTY OF Support Payment 12.50 12.50 136666 01/21/2010 008529 SHERIFF'S CIVIL DIV - CENTRAL Support Payment 200.00 200.00 136667 01/21/2010 000325 UNITED WAY United Way Charities Payment 36.00 36.00 Grand total for UNION BANK OF CALIFORNIA: 238,663.97 Page Item No. 4 Approvals City Attorney Director of Finance City Manager CITY OF TEMECULA AGENDA REPORT TO: City Manager/City Council FROM: Genie Roberts, Director of Finance DATE: February 9, 2010 SUBJECT: City Treasurer's Report as of December 31, 2009 PREPARED BY: Rudy Graciano, Revenue Manager RECOMMENDATION: Approve and file the City Treasurer's Report as of December 31, 2009. BACKGROUND: Government Code Sections 53646 and 41004 require reports to the City Council regarding the City's investment portfolio, receipts, and disbursements respectively. Adequate funds will be available to meet budgeted and actual expenditures of the City for the next six months. Current market values are derived from the Local Agency Investment Fund (LAIF) reports, Union Bank of California trust and custody statements, and from US Bank trust statements. Attached is the City Treasurer's Report that provides this information. The City's investment portfolio is in compliance with the statement of investment policy and Government Code Sections 53601 and 53635 as of December 31, 2009. FISCAL IMPACT: None. ATTACHMENTS: City Treasurer's Report as of December 31, 2009 City of Temecula City of Temecula, California 43200 Business Park Drive Portfolio Management g Po. Temecula, Box 9033 CA, 92596 IMV i� Portfolio Summary (951)6946430 --_ —! December 31, 2009 Par Market Book %of Days to YTM YTM Investments Value Value Value Portfolio Term Maturity 360 Equiv. 365 Equive Certificates of DepositBank373,933.53 373,933.A 373,929.63 053 1,177 243 6.BBo 5B73 Managed Pool Accounts 59,70k,818.66 59,]08,818. 66 59,70k,818.66 39.86 1 1 e679 0.636 Letter of credit 1.00 1.00 1.00 0.00 1 1 0.000 0.000 Local As ends l mevornern Funds 61,993C29.68 6203262B.02 41,993,32968 2739 1 1 0.del 0.689 Federal Agency Callable 5eouriics 31,000,000.00 31,290,350. 00 31,000,000.00 20.59 1,380 1,034 232B 23B8 Federal Agency Bullet Securities 15,000,000.00 15,211,33000 14,977,910.00 995 1,112 75B 2696 2529 Investment oantrads 2031,6B87B 2031,6BBCG 2031,6BH7B 135 8979 2300 6.609 6636 150,610,399.30 151,147,,225.86 150,588,309.30 100.00% 492 338 1.283 1.301 Investments Cash Passbook/obeokirg 7,869,600. 03 7,B49,600. 03 7,869,600. 03 1 1 0.000 0.000 (not included In yield oaloulations) Total Cash and Investments 158,259,799.33 158,796,625.89 158,237,709.33 492 338 1.283 1.301 Total Earnings Decembi Month Ending Fiscal Year To Date Current Year 167,804 53 1,336,094 87 Average Daily Balance 161,50.,988.94 188,3a,591.20 Effective Rate of Return 1.22% 1.41 Reporting period 12/01/2009-1211/2009 Portfolio TEME CP Run Date 0112DM10 1823 PMIeaF `Mll3yMRDPt842 aetortver. 500 Item No. 5 Approvals City Attorney /10 Director of Finance City Manager CITY OF TEMECULA AGENDA REPORT TO: City Manager/City Council FROM: Grant Yates, Deputy City Manager DATE: February 9, 2009 SUBJECT: Approval of Projects for Annual Federal Appropriation Requests - FY 2011 PREPARED BY: Tamra Middlecamp, Senior Management Analyst RECOMMENDATION: That the City Council Adopt a resolution entitled: RESOLUTION NO. 10- A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TEMECULA APPROVING A LIST OF PROJECTS TO BE SENT TO FEDERAL LEGISLATORS REQUESTING ANNUAL APPROPRIATIONS BACKGROUND: The City of Temecula works on an annual basis to obtain congressionally directed funding for City -sponsored projects. The City cannot recommend every proposed project request to our Members of Congress and Senators. Therefore, the City selects the projects that are of the highest priority. Ultimately, we expect to forward six projects to our congressional delegation as part of the City's formal appropriations request for the upcoming federal fiscal year. Key legislators have requested a City Council approved resolution of the project list. These projects include: Murrieta Creek Flood Control, Environmental Restoration, Recreation Project — This project will help prevent flooding of Old Town Temecula. Phase I has been completed and it is important that Phase 11 be completed as soon as possible. There is a history of recurrent flooding along Murrieta Creek and public health and safety, as well as, environmental impacts continue to be of great concern. Phase III and Phase IV would require additional funding. French Valley Parkway Interchange — This project provides for the construction of a new freeway interchange, auxiliary lanes, and collector/distributor system between the Winchester Road Interchange (SR 79-North) and the 1-15/1-215 Junction. The Project will correct operational and merging deficiencies on 1-15, reduce congestion on the freeway and local arterials, and significantly improve motorist safety. Interstate 15 / State Route 79 South Interchange — This project provides for reconfiguration of the existing 1-15 / State Route 79 South Interchange through the redesign and construction of the entrance/exit ramps and related intersection improvements. The Project will reduce congestion, improve motorist safety, and enhance the existing and future operations of Temecula Parkway, State Route 79 South and Interstate 15. Old Town Gymnasium — This project would include the design and construction of a 6,800 square foot recreation facility to be located in the southwest corner of the City. This recreation facility will feature a full -court basketball court; approximate bleacher seating for 100 spectators, as well as, a small office. This facility will be built adjacent to the existing Boys & Girls Club of Temecula and will become a cooperative/joint-use facility between the Boys & Girls Club and the City of Temecula. Workforce Development Program — This project would support a Workforce Development Program in the City of Temecula to include: a Workforce Development Center presence that would provide a variety of services. Services would include: Office technology and computerized accounting courses to adults (23 years and older) who have been displaced due to the economic downturn. Youth Opportunity Center — This project will take a holistic approach to youth development. There will be cooperative efforts between local private and public organizations to implement structured activities that are geared toward youths and their abilities to gain knowledge of new life skills through training and employment. Providing mentoring paid work experience, occupational skills training, computer program courses, college/vocational counseling, English as a Second Language, health education and most importantly a safe and nurturing environment. City staff recommends approval of the list of projects to be sent to federal legislators in the annual appropriations application process. FISCAL IMPACT: None. ATTACHMENTS: None. RESOLUTION NO. 10- A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TEMECULA APPROVING A LIST OF PROJECTS TO BE SENT TO FEDERAL LEGISLATORS RQUESTING ANNUAL FEDERAL APPROPRIATIONS THE CITY COUNCIL OF THE CITY OF TEMECULA DOES HEREBY RESOLVE AS FOLLOWS: WHEREAS, THE City of Temecula works on an annual basis to obtain congressionally directed funding for City -sponsored projects; and WHEREAS, the City of Temecula selects projects that are of the highest priority; and WHEREAS, the City of Temecula is submitting six projects to federal legislators for funding for consideration; and WHEREAS, the projects include the Murrieta Creek Flood Control Environmental Restoration Recreation Project, French Valley Interchange; Interstate 15/State Route 79 South Interchange, Old Town Gymnasium, Youth Opportunity Center and a Workforce Development Program; and WHEREAS, these projects would provide a great economic stimulus to the City and region. NOW, THEREFORE, BE IT RESOLVED THAT the City of Temecula supports the recommendation to submit the projects to our federal legislators in the annual appropriations application process. PASSED, APPROVED, AND ADOPTED by the City Council of the City of Temecula this gth day of February, 2010. Jeff Comerchero, Mayor ATTEST: Susan W. Jones, MMC City Clerk [SEAL] STATE OF CALIFORNIA ) COUNTY OF RIVERSIDE ) ss CITY OF TEMECULA ) I, Susan W. Jones, MMC, City Clerk of the City of Temecula, do hereby certify that the foregoing Resolution No. 10- was duly and regularly adopted by the City Council of the City of Temecula at a meeting thereof held on the gth day of February , 2010, by the following vote AYES: COUNCIL MEMBERS: NOES: COUNCIL MEMBERS: IG1 ►1�Ko1l1►NllNdiIAdi1:l4:&1 ABSTAIN: COUNCIL MEMBERS: Susan W. Jones, MMC City Clerk Item No. 6 Consent Calendar Item No. 6 Amended Exhibit City of Temecula Temecula Redevelopment Agency 43200 Business Park Drive • Temecula, CA 92590 P.O. Box 9033 • Temecula, CA 92589-9033 FAX (951) 694-6477 February 9, 2010 Mr. Robert E. Byrd, CGFM Riverside County Auditor -Controller 4080 Lemon Street, 11'" Floor P.O. Box 1326 Riverside CA, 92502 SUBJECT: AB 4X 26 required notification of Redevelopment Agency intent to and source of payment of fiscal year 2009-2010 SERAF shift obligation. Dear Mr. Byrd: As required by AB 4X 26 signed into law by the Governor on July 1, 2009, this letter is intended to satisfy the Temecula Redevelopment Agency's requirement to notify the Riverside County Auditor of the Agency's intent to pay the fiscal year 2009-2010 SERAF shift obligation, and to indentify the funding source for that payment. Per the letter received by the Agency from the California State Department of Finance, dated November 13, 2009, the Temecula Redevelopment Agency's fiscal year 2009-2010 SERAF shift payment obligation is a total of $4,354,450. The Agency intends to make this payment in full, utilizing existing fund balance in the Agency's 20% Low and Moderate Housing Set -Aside Fund. This funding source has been approved by the Agency Board of Directors at its February 9, 2010 meeting. Please receive this letter as official notification and satisfaction of the requirement by AB 4X 26 that the Temecula Redevelopment Agency report to the County Auditor of its intent to pay and the source of funds for that payment. As you may know, the validity of the legislation mandating this SERAF transfer has been challenged in litigation pending in the Superior Court for Sacramento County, California Redevelopment Association et al. v. Genest et al., Case No. 34-2009-80000359-CU-WM-GDS (CRA v. Genest). This case alleges, among other things, that the duties of county auditors under Health and Safety Code Sections 33690(a) and 33690.5(a) to deposit funds received from redevelopment agencies in County Supplemental Educational Revenue Augmentation Funds are inconsistent with various state and federal constitutional provisions and are therefore unlawful and unenforceable. The Redevelopment Agency of the City of Temecula reserves any rights it may have to withhold the payment of funds to you under Health and Safety Code Section 33690 or to recover those funds after payment or transfer based on any order or judgment of the Court in CRA v. Genest. Sincerely, Mike Naggar Agency Chair Approvals City Attorney Director of Finance City Manager CITY OF TEMECULA AGENDA REPORT TO: City Manager/City Council FROM: Patrick Richardson, Director of Planning and Redevelopment DATE: February 09, 2010 SUBJECT: Letter to County Auditor specifying how the Redevelopment Agency intends to fund the 2009-2010 Supplemental Educational Revenue Augmentation Fund ("SERAF") PREPARED BY: Luke Watson, Management Analyst RECOMMENDATION: That the City Council approve the letter to the Riverside County Auditor specifying how the Temecula Redevelopment Agency intends to fund its Fiscal Year 2009-2010 SERAF shift payment. BACKGROUND: On July 28, 2009 the Govenor signed AB 4X 26 to address the fiscal emergency declared by the Govenor on July 1, 2009. This bill amends the Health and Safety code to require a $1.7 billion SERAF shift from redevelopment agencies for Fiscal Year 2009-2010 and a $350 million SERAF shift for Fiscal Year 2010-2011. Per this legistation the California State Department of Finance has notified the Agency that its payment obligation for Fiscal Year 2009-2010 SERAF shift is $4.3 million. AB 4X 26 also requires that the City Council notify the Riverside County Auditor by March 1, 2010, as to how the Agency intends to make its Fiscal Year 2009-2010 SERAFshift payment. The notification due March 1, 2010 is not a payment deadline. The deadline for payment of the Fiscal Year 2009-2010 SERAF shift is May 10, 2010. FISCAL IMPACT: Agnecy staff recommends that the $4.3 million SERAF shift payment obligation for Fiscal Year 2009-2010 be paid with existing funds in the Agency's housing set -aside fund. AB 4X 26 allows Agencies to loan themselves housing set -aside funds in order to meet their SERAF shift obligation. The Fiscal Year 2009-2010 loan must be repaid to the housing set -aside fund by June 30, 2015. The Agency intends to repay its housing set - aside loan with tax increment revenues that would have otherwise gone to the Agency's redevelopment fund. ATTACHMENTS: Letter to the County Auditor CItV of Temecula Temecula Redevelopment Agency 43200 Business Park Drive • Temecula, CA 92590 P.O. Box 9033 • Temecula, CA 92589-9033 FAX (951) 694-6477 February 9, 2010 Mr. Robert E. Byrd, CGFM Riverside County Auditor -Controller 4080 Lemon Street, 11 t" Floor P.O. Box 1326 Riverside CA, 92502 SUBJECT: AB 4X 26 required notification of Redevelopment Agency intent to and source of payment of Fiscal Year 2009-2010 SERAF shift obligation. Dear Mr. Byrd: As required by AB 4X 26 signed into law by the Governor on July 1, 2009, this letter is intended to satisfy the Temecula Redevelopment Agency's requirement to notify the Riverside County Auditor of the Agency's intent to pay the Fiscal Year 2009-2010 SERAF shift obligation, and to indentify the funding source for that payment. Per the letter received by the Agency from the California State Department of Finance, dated November 13, 2009, the Temecula Redevelopment Agency's Fiscal Year 2009-2010 SERAF shift payment obligation is a total of $4,354,450. The Agency intends to make this payment in full, utilizing existing fund balance in the Agency's 20% Low and Moderate Housing Set -Aside Fund. This funding source has been approved by the Agency Board of Directors at its February 9, 2010 meeting. Please receive this letter as official notification and satisfaction of the requirement by AB 4X 26 that the Temecula Redevelopment Agency report to the County Auditor of its intent to pay and the source of funds for that payment. Sincerely, Mike Naggar Agency Chair Item No. 7 Approvals City Attorney Director of Finance City Manager CITY OF TEMECULA AGENDA REPORT TO: City Manager/City Council FROM: Bob Johnson, Assistant City Manager DATE: February 9, 2010 SUBJECT: Letter of Intent for University Hills Development; 270.8 Acres West of Pujol Street Owned by John and Juanita Firestone PREPARED BY: Patrick Richardson, Director of Planning and Redevelopment RECOMMENDATION: That the City Council authorize the Mayor to sign the attached Letter of Intent (LOI). BACKGROUND: John and Juanita Firestone (Firestone's) have approached the City regarding the development of approximately 270.8 acres of land located west of the Old Town Specific Plan area (see attached map). They are proposing to develop the property for residential, commercial and professional office uses, including a 26-acre site for an acute care hospital and a 56.1 acre site for a university. The project would also include dedication and/or acquisition of land for open space, parks, and traffic improvements including the western bypass. The Firestone's are requesting that the City sign a non -binding Letter of Intent whereby the City and the Firestone's would enter into negotiations which if successful, would result in a mutually acceptable "Entitlement Processing Agreement" (EPA) that would outline the process for entitling the project and the allocation of costs of the entitlement between the Firestone's and the City. Signature of the non -binding LOI by the Mayor only opens negotiations between the parties and in no event shall be deemed or construed to be a binding or enforceable agreement or create any contractual legal rights or obligations between the parties. If negotiations are successful, these agreements would be reflected in a EPA which would require consideration by the full City Council at a public hearing, and if approved executed by each party. As stated in the LOI, the Firestone's fully understand that execution of an LOI or EPA cannot guarantee the outcome of any public hearing process before the Planning Commission or City Council and the City may not contract away its police powers by guaranteeing any project entitlements. FISCAL IMPACT: None ATTACHMENTS: Letter of Intent signed by John and Juanita Firestone Property Map JOHN AND JUANITA FIRESTONE 92 LINDA ISLE NEWPORT BEACH, CA 92660 TEL. No. (949) 566-9884 FAx No. (949) 566-9885 January 29, 2010 Hon. Jeff Comerchero Mayor City of Temecula 43200 Business Park Dr. Temecula, CA 92589 Re: University Hills Dear Mayor Comerchero: We own approximately 270.8 acres of property in the City of Temecula west of the Old Town Area as generally shown on the attached map ("Property"). Our ownership is through various entities that we control. We proposed to develop the Property for residential, commercial, and professional office uses, including a 26-acre site for an acute -care hospital and a 56.1 acre site for a university. Our project would also include the dedication and/or acquisition of land for open space, parks, traffic improvements and the Western Bypass. In order to process this proposal and provide its benefits to the City, we proposed that the City enter into negotiations with us for the development of a mutually acceptable "Entitlement Processing Agreement" that would outline the process for entitling this complex project and the allocation of the costs of entitlement between us and the City. We understand and agree that this letter of intent merely constitutes a preliminary statement of the present intent of the parties and shall in no event be deemed or construed to be a binding or enforceable agreement or create any contractual legal rights or obligations between the parties. Any such rights or obligations shall only be reflected in a definitive Entitlement Processing Agreement, if and when such agreement has been considered by the City Council at a public meeting and executed by each party to it as required by law. Additionally, we understand and agree that, in the context of processing the land use entitlements for the Property, the City cannot guarantee the ultimate outcome of any public hearings before the Planning Commission or the City Council, nor prevent any opposition to proposed entitlements by members of the public affected by or interested in the eventual entitlements. We further understand and agree that entitlements for the Property will involve the exercise of the City's police power and that the City may not contract away its right to exercise its police power in the future except under limited circumstances. Therefore, nothing in this letter of intent is intended nor shall it be construed as any approval or commitment of the City Council for any land use entitlements for the Property. 11086-0100\1202674v1 Hon. Jeff Comerchero Mayor City of Temecula January 29, 2010 Page 2 If the terms contained in this letter of intent are acceptable to the City, please acknowledge the City's agreement by signing this letter in the space provided below and returning a signed copy to us. Very truly yours, ohn Firestone jata Firestone •� City Approval of Letter of Intent: The City Council of the City of Temecula has reviewed this letter of intent at the City Council Meeting of February 9, 2010. In accordance with the acknowledged limitations to the Council's authority described in the letter, the Council approved its terms and authorized me to sign it on behalf of the City. Jeff Comerchero Mayor -2- 11086-0100\ 1202674v 1 TEMECULA COMMUNITY SERVICES DISTRICT Item No. 8 ACTION MINUTES of JANUARY 26, 2010 City Council Chambers, 43200 Business Park Drive, Temecula, California TEMECULA COMMUNITY SERVICES DISTRICT MEETING The Temecula Community Services District Meeting convened at 7:28 PM. CALL TO ORDER: President Chuck Washington ROLL CALL: DIRECTORS: Comerchero, Edwards, Naggar, Roberts, Washington CSD PUBLIC COMMENTS There were no public comments. CSD CONSENT CALENDAR 14 Action Minutes - Approved Staff Recommendation (5-0-0) — Director Comerchero made the motion; it was seconded by Director Roberts and electronic vote reflected unanimous approval RECOMMENDATION: 14.1 Approve the action minutes of January 12, 2010. CSD DIRECTOR OF COMMUNITY SERVICES REPORT CSD GENERAL MANAGERS REPORT 1 CSD BOARD OF DIRECTORS REPORTS CSD ADJOURNMENT At 7:29 P.M., the Temecula Community Services District meeting was formally adjourned to Tuesday, February 9, 2010, at 5:30 PM., for a Closed Session, with regular session commencing at 7:00 P.M., in the City Council Chambers, 43200 Business Park Drive, Temecula, California. Chuck Washington, President ATTEST: Susan W. Jones, MMC City Clerk/District Secretary [SEAL] Item No. 9 Approvals City Attorney Director of Finance City Manager TEMECULA COMMUNITY SERVICES DISTRICT AGENDA REPORT TO: General Manager/Board of Directors FROM: Herman D. Parker, Director of Community Services DATE: February 9, 2010 SUBJECT: Fourth Amendment to the Temecula Valley Museum, Inc. License Agreement PREPARED BY: Barbara Smith, Senior Management Analyst RECOMMENDATION: That the Board of Directors approve the Fourth Amendment to the Temecula Valley Museum, Inc., License Agreement to extend the term. BACKGROUND: The Temecula Valley Museum and Chapel of Memories complex is located on Mercedes Street in Old Town Temecula. The museum building is a two-story history based facility with permanent and rotating historical exhibits and houses a 511 square foot gift shop. The Chapel of Memories is a 3,400 square foot historic church building with a small patio. Since the opening of the Temecula Valley History Museum and Chapel of Memories, the Temecula Valley Museum, Inc., a non-profit organization has overseen both the gift shop and chapel rental operations. During the past ten (10) years they have successfully managed both operations. Proceeds from the gift shop and chapel operations have allowed contributions worth approximately $33,000. Items such as exhibit cases; DVD player and monitor; an organ for the Chapel; security cameras and monitors; video transfers; special exhibit receptions and acquisitions for the Museum's permanent collection have been provided by Temecula Valley Museum, Inc. Temecula Valley Museum, Inc. has also sponsored, on an annual basis, lectures, volunteer recognition brunch, the Summer Explorers program, Earle Stanley Gardner weekend and edits and prints the High County magazine. This Fourth Amendment to the original agreement will extend the term to June 30, 2012 with the option to extend the term another two (2) years to June 30, 2014. FISCAL IMPACT: In addition to the gifts and services listed above,the Temecula Valley Museum, Inc. returns $30.00 per event held at the chapel to TCSD. This revenue is included in TCSD's 2009-2010 operating budget in the amount of $1,200.00 for indoor rentals. ATTACHMENTS: Fourth Amendment FOURTH AMENDMENT TO LICENSE AGREEMENT BETWEEN TEMECULA COMMUNITY SERVICES DISTRICT AND TEMECULA VALLEY MUSEUM, INC. OPERATION OF THE MUSEUM GIFT SHOP AND WEDDING CHAPEL THIS FOURTH AMENDMENT is made and entered into as of February 9, 2010 by and between the Temecula Community Services District, a community services district (hereinafter referred to as "City"), and Temecula Valley Museum, Inc. a California non-profit corporation (hereinafter referred to as "Association"). In consideration of the mutual covenants and conditions set forth herein, the parties agree as follows: This Amendment is made with the respect to the following facts and purposes: a. On May 25, 1999, the City and Association entered into that certain License Agreement entitled "License Agreement between the Temecula Community Services District and the Temecula Valley Museum, Inc., for Operation of the Museum Gift Shop and Wedding Chapel". b. On July 25, 2000, The City and Association entered into that certain agreement entitled "First Amendment to the License Agreement between the Temecula Community Services District and the Temecula Valley Museum, Inc. for Operation of Museum Gift Shop and Wedding Chapel". This amendment suspended license fee in Section 4 and required the Association prepare and submit quarterly financial statements. C. On February 24, 2004, the City and Association entered into that certain agreement entitled "Amendment No. 2 License Agreement between the Temecula Community Services District and the Temecula Valley Museum, Inc. for Operation of Museum Gift Shop and Wedding Chapel". This amendment extended the term. d. On June 26, 2007, the City and Association entered into that certain agreement entitled "Amendment No. 3 to License Agreement between Temecula Community Services District and the Temecula Valley Museum, Inc. for Operation of Museum Gift Shop and Wedding Chapel. This amendment extended the term. e. The parties now desire to extend the term of this agreement and amend the Agreement as set forth in this Amendment. follows: 2. Section 3 of the Agreement entitled "TERM" is hereby amended to read as "This Agreement shall remain and continue in effect until June 30, 2012. The City may, upon mutual agreement, extend the contract for two (2) additional one (1) year terms. In no event shall the contract be extended beyond June 30, 2014." 3. Except for the changes specifically set forth herein, all other terms and conditions of the Agreement shall remain in full force and effect. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed the day and year first above written. City of Temecula By: Chuck Washington, President ATTEST: By: Susan W. Jones, MMC, City Clerk/Board Secretary APPROVED AS TO FORM: By: Peter M. Thorson, City Attorney Temecula Valley Museum, Inc., a California non-profit corporation By: By: Pam Grender, President Gerard Verkuylen, Vice President CONTRACTOR Temecula Valley Museum, Inc Pam Grender, President 28314 Mercedes Street, Temecula, CA 92590 951 302-9578 pkgrender@roadrunner.com FSM Initials: Date: REDEVELOPMENT AGENCY Item No. 10 ACTION MINUTES of JANUARY 26, 2010 City Council Chambers, 43200 Business Park Drive, Temecula, California TEMECULA REDEVELOPMENT AGENCY MEETING The Temecula Redevelopment Agency Meeting convened at 7:29 PM. CALL TO ORDER: Chair Person Mike Naggar ROLL CALL: AGENCY MEMBERS: Comerchero, Edwards, Washington, Roberts, Naggar RDA PUBLIC COMMENTS There were no public comments. RDA CONSENT CALENDAR 15 Action Minutes - Approved Staff Recommendation (5-0-0) — Agency Member Edwards made the motion; it was seconded by Agency Member Comerchero and electronic vote reflected unanimous approval RECOMMENDATION: 15.1 Approve the action minutes of January 12, 2010. RDA DEPARTMENTAL REPORT RDA EXECUTIVE DIRECTORS REPORT 1 RDA AGENCY MEMBERS REPORTS RDA ADJOURNMENT At 7:30 P.M., the Temecula Redevelopment Agency meeting was formally adjourned to Tuesday, February 9, 2010, at 5:30 P.M., for a Closed Session, with regular session commencing at 7:00 P.M., in the City Council Chambers, 43200 Business Park Drive, Temecula, California. Mike Naggar, Chair Person ATTEST: Susan W. Jones, MMC City Clerk/Agency Secretary [SEAL] Item No. I I Approvals City Attorney Director of Finance City Manager TEMECULA REDEVELOPMENT AGENCY AGENDA REPORT TO: Executive Director/Agency Members FROM: Patrick Richardson, Director of Planning and Redevelopment DATE: February 9, 2010 SUBJECT: Exclusive Negotiating Agreement with the RC Hobbs Company for the potential development of Agency Owned Property for affordable housing located at 28640 Pujol Street (APN 922-053-020 and 021). PREPARED BY: Luke Watson, Management Analyst RECOMMENDATION: That the Temecula Redevelopment Agency Board approve an Exclusive Negotiating Agreement ("ENA") between the Temecula Redevelopment Agency ("Agency") and the RC Hobbs Company ("Hobbs"). BACKGROUND: On May 25, 2007, the Agency issued a Request for Interest ("RFI") to solicit interest from qualified firms for the development of the Agency's 30-acre site located at the northwest corner of Diaz Road and Dendy Lane. Seven firms responded to the RFI. On August 9, 2007, Staff and the Ad Hoc Committee interviewed five firms and selected the Hobbs Company as the preferred developer and opened discussions on the Exclusive Negotiating Agreement During its presentation, Hobbs demonstrated considerable experience in property development, leasing and management. Hobbs has over 30 years of experience and has developed a significant number of office, commercial and industrial projects, as well as, residential entitlements and apartment projects throughout Southern California. After considerable effort rendered in good faith by Hobbs, it was determined that the project proposed on the Agency's Diaz Road property was not financially feasible and the ENA for that project was allowed to expire. Hobbs recently approached the Agency regarding the possible development of affordable housing on vacant Agency owned property located at 28640 Pujol Street. Considering Hobbs' background and recent Staff experience working with the organization staff feels that Hobbs would be a quality partner on an affordable housing development at the aforementioned location. Proiect Description The subject property consists of .89 gross acres on two Agency owned parcels located at 28640 Pujol Street (APN: 922-053-020 and 922-053-021). Hobbs has expressed a serious interest in acquiring the Agency owned parcels as well as one (1) adjacent parcels totaling an additional 2.5 acres (APN: 922-053-013). Hobbs intends to develop all three (3) of these parcels as a mixed income housing project, including a mix of market rate and affordable housing targeting the low and moderate income designations. Exclusive Neaotiatina Aareement Hobbs has requested that the Agency and Hobbs enter into an ENA with a one (1) year term with a potential six (6) month extension by written approval of the Executive Director. The proposed ENA includes the following deal points: One (1) year term with potential six (6) month administrative extension Developer will provide a $50,000 deposit Developer is required to investigate the physical condition of the property Developer will pay for cost to prepare all environmental documents Based upon Hobbs' ability to perform, draft deal points for a subsequent Disposition and Development Agreement ("DDA") would be formulated. No Agency commitment to sell the property can be made until a final DDA is approved following a public hearing. FISCAL IMPACT: Pending a full pro forma financial feasibility analysis by staff and Keyser Marston Associates the Agency would determine the amount of funding necessary to complete the development. Currently there is no credible Agency assistance figure available but the funding source for this project would be the Agency's Housing Set -aside Fund, specifically the proceeds from the sale of Tax Allocation Bonds. ATTACHMENTS: Exclusive Negotiating Agreement Hobbs ENA Request Letter EXCLUSIVE NEGOTIATING AGREEMENT This EXCLUSIVE NEGOTIATING AGREEMENT (this "Agreement") is dated as of February 9, 2010, and is entered into by and between the REDEVELOPMENT AGENCY OF THE CITY OF TEMECULA, a public body, corporate and politic (the "Agency") and RC HOBBS CO., a California corporation (the "Developer"). RECITALS A. The Agency owns the land in the City of Temecula, State of California that is described in Attachment No. 1 (the "Site"). B. The Agency is interested in developing the Site with a mixed income housing development (the "Project"). C. The Agency has instructed the Agency's staff to proceed with this Agreement between Agency and Developer to negotiate on an exclusive basis to establish the terms and conditions of a "disposition and development agreement" ("DDA") that would result in the Developer's development of the Site with the understanding that the Agency shall be under no obligation to reach agreement on the terms thereof with Developer. D. The Developer and the Agency are willing to enter into this Agreement setting forth, among other things, the terms pursuant to which the Agency will negotiate with the Developer on an exclusive basis for a limited period regarding the Project and the proposed DDA. E. The staff, consultants and attorneys of the Agency have devoted and/or will devote substantial time and effort in meeting with the Developer and its representatives, reviewing and preparing proposals, plans and reports, and negotiating and preparing the terms of this Agreement and the proposed DDA. NOW, THEREFORE, the Parties hereto agree as follows: 1. The term of this Agreement shall commence on the date hereof and shall end on the earlier of: (i) February 9. 2011 i.e., one year after the date hereof), or (ii) the date on which the Agency or Developer terminates this Agreement as provided in Section 2 below (the "ENA Period"). Provided that the Developer is not in default under this Agreement and that the Agency has not terminated this Agreement pursuant to Section 2 below, the ENA period may be extended by the mutual written agreement of Developer and the Executive Director of the Agency (acting for the Agency, and acting in his sole and absolute discretion) one (1) time for a period of up to six U months each time i.e., for a maximum of 6 months in the aggregate). 2. Either parry may terminate this Agreement if the other parry fails to comply with or perform any provisions of this Agreement and fails to cure the default within ten (10) days after written notice from the other parry. 11087-0001\1199434v1.doc 3. During the ENA Period (as extended under Section 1, if applicable), the Agency shall not negotiate with any person or entity other than the Developer for the sale, lease or development of the Site. 4. The Developer shall deliver the materials and information identified on Attachment No. 2 attached hereto to the Agency within the times set forth on Attachment No. 2. Concurrently with the execution of this Agreement, the Developer and the Agency shall execute and deliver a Right of Entry and Access Agreement in the form attached hereto as Attachment No. 3. 5. During the ENA Period (as extended under Section 1, if applicable), the Agency shall use good faith efforts to complete (or cause to be completed) the matters set forth in Attachment No. 4 attached hereto. Throughout the ENA Period, Agency staff shall use good faith efforts to be reasonably available to meet with the Developer to discuss the Project and the proposed DDA. 6. Excluding reimbursement for Agency staff time, Developer shall reimburse Agency for up to $($50,000) of Agency's actual out-of-pocket costs and expenses (including legal fees and costs and consultants' fees and costs) incurred in preparing this Agreement and fulfilling its obligations under this Agreement from the date hereof, including, but not limited to: (i) the costs of compliance with the California Environmental Quality Act ("CEQA"); (ii) the cost of negotiating and preparing the DDA and related documents; and (iii) the costs of reviewing reports and plans relating to the Project (collectively, the "Reimbursable Costs"). Concurrently with its execution of this Agreement, Developer shall deposit with the Agency the sum of Fifty Thousand and No/100 Dollars ($50,000) (the "Reimbursement Funds"). The Reimbursement Funds shall be used and applied from time to time by the Agency to pay or reimburse itself for the Reimbursable Costs. In the event this Agreement is terminated by Agency under Section 2, the balance of the Reimbursement Funds shall be retained by Agency. In the event this Agreement is terminated by Developer under Section 2, the balance of the Reimbursement Funds shall be refunded to Developer. In the event that this ENA expires and a DDA is not approved and executed, then any unused Reimbursement Funds shall be returned to the Developer. If a DDA is negotiated, signed by Developer and submitted by Agency staff for approval by the Agency board, and the Agency board does not approve the DDA (due to an unacceptable material business term) or approves the DDA subject to a change in a material business term, then the balance of the Reimbursement Funds shall be refunded to Developer. The provisions of this Section shall survive the expiration or earlier termination of this Agreement. 7. The Agency and Developer acknowledge that all applicable requirements of CEQA must be met in order to approve the DDA and that this may require an environmental impact report, supplemental environmental impact report and/or other reports or analyses for CEQA purposes (collectively, the "EIR"). The Developer will, at its cost, fully cooperate with 11087-0001\1199434v1.doc 2 the Agency as the lead agency for the FIR. The FIR shall be prepared by Agency or its consultants at Developer's cost. 8. The Developer shall also bear all costs and expenses of any and all title, environmental, physical, engineering, financial, and feasibility investigations, reports and analyses and other analyses or activities performed by or for the Developer. 9. The Developer and the Agency understand and agree that neither Parry is under any obligation whatsoever to enter into a DDA. In the event of the expiration or earlier termination of this Agreement, the Agency shall be free at the Agency's option to negotiate with any persons or entities with respect to the sale, lease and/or development of the Site. 10. This Agreement may not be assigned by the Developer without the prior express written consent of the Agency in its sole and absolute discretion. 11. Any notice, request, approval or other communication to be provided by one Parry to the other shall be in writing and provided by personal service or a reputable overnight delivery service (such as Federal Express) and addressed as follows: If to the Agency: Redevelopment Agency of the City of Temecula 43200 Business Park Drive Temecula, California 92589-9033 Attn: Patrick Richardson with a copy to: Richards, Watson & Gershon 355 South Grand Avenue, 40th Floor Los Angeles, California 90071-3101 Attn: Bruce Galloway If to the Developer: R.C. Hobbs Company I I10 East Chapman Avenue, Suite 206 Orange, California 92866 Attn: Roger C. Hobbs, President 12. For purposes of the negotiations contemplated by this Agreement, the Developer's representative shall be Roger C. Hobbs (Phone: (714) 633-8100; Email: rch@rchobbs.com), and the Agency's representative shall be [Patrick Richardson (Phone: (951) 694-6412; Email: Patrick.Richardson@cityoftemecula.org]). 13. This Agreement constitutes the entire agreement of the Parties hereto with respect to the subject matter hereof. There are no other agreements or understandings between 11087-0001\1199434v1.doc 3 the Parties with respect to the subject matter hereof or any related subject and no representations by either Parry to the other have been made as an inducement to enter into this Agreement. All prior negotiations between the Parties are superseded by this Agreement. 14. This Agreement may not be altered, amended or modified except by a writing executed by all Parties. 15. If any Parry should bring any legal action or proceeding relating to this agreement or to enforce any provision hereof, or if the Parties agree to arbitration or mediation relating to this Agreement, the Parry in whose favor a judgment or decision is rendered shall be entitled to recover reasonable attorneys' fees and expenses from the other. The Parties agree that any legal action or proceeding or agreed -upon arbitration or mediation shall be filed in and shall occur in the County of Riverside. 16. The interpretation and enforcement of this Agreement shall be governed by the laws of the State of California. 17. Time is of the essence of each and every provision hereof. 18. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same Agreement. 11087-0001\1199434v1.doc 4 IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the day and year first written above. DEVELOPER: RC HOBBS CO., a California corporation By: Roger Hobbs, President CITY: REDEVELOPMENT AGENCY OF THE CITY OF TEMECULA, a public body, corporate and politic Mike Naggar, Chairperson ATTEST: Susan Jones, MMC, City Clerk, Agency Secretary APPROVED AS TO FORM: Peter Thorson, Agency Counsel 11087-0001\1199434v1.doc ATTACHMENT NO. 1 DESCRIPTION OF SITE flue following 6eacribN P my in the City of TEMECULA. Count' of RIVERSIDE Sims of Califomia; PARCELS I AND 2 OF PARCEL MAP 9W9 AS SHOWN BY MAP ON FH.E IN BOOK 61, PAGE 14 OF PARCEL 161A , RECORDS OF RIVERSIDE COONTP, CALIFORNIA. 11087-0 1\1199434v1.da ATTACHMENT NO.2 MATERIALS TO BE DELIVERED BY DEVELOPER TO THE AGENCY 1. Within thirty (30) days after the date of this Agreement, Developer shall deliver to Agency a site plan and concept drawings identifying building location and dimensions, uses, parking, landscaping areas and proposed design characteristics of the Project. (Agency staff shall then review the same for the purpose of issuing a non -binding preliminary approval or disapproval thereof.) 2. Within one hundred twenty (120) days after the date of this Agreement, Developer shall submit to Agency in a form acceptable to Agency staff: (i) a list of the sources of equity required for the Project and the proposed structure for investment of the equity, a list of the contemplated sources of debt financing for the Project, the projected costs of development of the Project, and the percentages of the costs that will be paid from equity and debt, respectively; (ii) a financial proforma for the Project on a phase by phase basis, if applicable, reflecting all projected Project income and revenues with a comparison to anticipated operating costs; and (iii) a financial analysis of the Project setting forth the Developer's projected return on its investment in the Project and a detailed description of the assistance or subsidy requested by Developer of Agency (if any) and the manner in which it was calculated. 3. Within one hundred twenty (120) days after the date of this Agreement, Developer shall submit to Agency a list of potential major tenants and/or types of major tenants for space at the Project, together with, on a phase by phase basis, if applicable, the details of the type and size of spaces such tenants which may be interested in and the time periods for potential occupancy for such tenants, together with such tenant letters of intent as may be obtainable. 4. Within one hundred twenty (120) days after the date of this Agreement, Developer shall submit to Agency a schedule of development setting forth the proposed timetable for the commencement, substantial completion and final completion of each component of the Project (the "Development Schedule"). 5. Within one hundred and twenty (120) days after the date of this Agreement, the Developer shall (subject to the terms of the Right of Entry and Access Agreement executed by Agency and Developer pursuant to and concurrently with this Agreement) investigate physical condition of the Site (including the soils thereon) and submit to the Agency in writing any and all objections Developer may have to the physical condition of the Site together with a detailed written explanation of the reasons for each objection. 6. Within one hundred and twenty (120) days after the date of this Agreement, Developer shall (i) obtain a title report for the Site and copies of the title exceptions described therein (and deliver a copy to the Agency); (ii) submit to Agency an ALTA survey of the Site certified to Developer and its title company based on the title report; and (iii) submit 11087-0001\1199434v1.doc 7 to Agency Developer's written objections to any matter revealed by such survey or title report and a detailed written explanation of the reason for such objections. 7. Prior to execution of the DDA, the Developer shall submit to the Agency for its review and approval all organizational documents for the entities signing the DDA (and, to the extent requested by Agency, information, certifications and/or documents relating to the ownership, control, financial condition and signing authority of the direct and indirect owners and managers of each such entity). 8. Developer shall also diligently prepare and revise the EIR (as defined in the Agreement) to the extent permitted by the negotiations. 11087-0001\1199434v1.doc 8 ATTACHMENT NO.3 FORM OF RIGHT OF ENTRY AND ACCESS AGREEMENT (Attached.) 11087-0001\1199434v1.doc 9 RIGHT OF ENTRY AND ACCESS AGREEMENT THIS RIGHT OF ENTRY AND ACCESS AGREEMENT (herein called this "Agreement") is made and entered into as of February 9, 2010, by the REDEVELOPMENT AGENCY OF THE CITY OF TEMECULA, a public body, corporate and politic ("Agency"), and RC HOBBS CO., a California corporation (the "Developer") WITNESSETH: WHEREAS, the Agency is the owner of the real property more particularly described on Exhibit "A", attached hereto (herein called the "Site"); WHEREAS, the Agency and the Developer have entered into a Exclusive Negotiating Agreement related to the Site (the "ENA"); WHEREAS, the Developer needs the right of entry upon and access to the Site for the purpose of undertaking tests, inspections and other due diligence activities (herein called the "Due Diligence Activities") in connection with the proposed acquisition and development of the Site by Developer; WHEREAS, the Agency has agreed to give Developer a non-exclusive license to enter upon the Site to perform the Due Diligence Activities subject to and in accordance with the terms and provisions of this Agreement. NOW, THEREFORE, in consideration of the foregoing recitals, the mutual covenants and agreements contained herein, and other good and valuable consideration, the sufficiency of which is hereby acknowledged, the Agency and the Developer do hereby covenant and agree as follows: 1. Access by Developer. Subject to Developer's compliance with the terms and provisions of this Agreement, Developer and Developer's employees, agents and consultants designated in writing by Developer to Agency (herein collectively called "Developer's Designees") shall have the right to enter upon the Site for the purpose of conducting the Due Diligence Activities, until the earliest to occur of: (i) the expiration or earlier termination of the ENA; (ii) the termination of this Agreement; or (iii) the execution of the DDA contemplated by the ENA. Developer expressly agrees as follows: (i) any activities by or on behalf of Developer, including, without limitation, the entry by Developer or Developer's Designees onto the Site in connection with the Due Diligence Activities shall not damage the Site in any manner whatsoever except for minor damage normally resulting from typical site investigation activities such as soil borings and ground water testing; (ii) in the event the Site is altered or disturbed in any manner in connection with the Due Diligence Activities, Developer shall immediately return the Site to the condition existing prior to the Due Diligence Activities (unless otherwise agreed in writing by the Executive Director of the Agency), and (iii) Developer shall indemnify, defend and hold Grantor harmless from and against any and all claims, liens, liabilities, damages, losses, costs and expenses of any kind or nature whatsoever (including, without limitation, attorneys' 11087-0001\1199434v1.doc 10 fees and expenses and court costs) suffered, incurred or sustained by the Agency or the Site as a result of, by reason of, or in connection with the Due Diligence Activities or the entry by Developer or Developer's Designees onto the Site, except to the extent they are caused by the gross negligence or willful misconduct of the Agency, or its agents, contractors or employees. 2. Insurance. Developer shall procure and maintain for the duration of the contract insurance against claims for injuries to persons or damages to property, which may arise from or in connection with the performance of the work hereunder by the Developer, its agents, representatives, or employees. Minimum Scope of Insurance. Coverage shall be at least as broad as: Insurance Services Office Commercial General Liability form No. CG 00 01 1185 or 88. Insurance Services Office Business Auto Coverage form CA 00 0106 92 covering Automobile Liability, code 1 (any auto). If the Developer owns no automobiles, a non - owned auto endorsement to the General Liability policy described above is acceptable. Worker's Compensation insurance as required by the State of California and Employer's Liability Insurance. If the Developer has no employees while performing under this Agreement, worker's compensation insurance is not required, but Developer shall execute a declaration that it has no employees. Minimum Limits of Insurance. Developer shall maintain limits no less than: General Liability: One million ($1,000,000) per occurrence for bodily injury, personal injury and property damage. If Commercial General Liability Insurance or other form with a general aggregate limit is used, either the general aggregate limit shall apply separately to this project/location or the general aggregate limit shall be twice the required occurrence limit. Automobile Liability: One million ($1,000,000) per accident for bodily injury and property damage. Worker's Compensation as required by the State of California; Employer's Liability: One million dollars ($1,000,000) per accident for bodily injury or disease. Other Insurance Provisions. The general liability and automobile liability policies are to contain, or be endorsed to contain, the following provisions: The City, the Community Services District, the Agency and their officers, officials, employees and volunteers are to be covered as insured's as respects: liability arising out of activities performed by or on behalf of the Developer; products and completed operations of the Developer; premises owned, occupied or used by the Developer; or automobiles owned, leased, hired or borrowed by the Developer. The coverage shall contain no special limitations on the scope of protection afforded to the City, the Community Services District, the Agency and their officers, officials, employees and volunteers. 11087-0001\1199434v1.doc 11 For any claims related to this project, the Developer's insurance coverage shall be primary insurance as respects the City, the Community Services District, the Agency and their officers, officials, employees and volunteers. Any insurance or self -insured maintained by the City, the Community Services District, the Agency or their officers, officials, employees or volunteers shall be excess of the Developer's insurance and shall not contribute with it. Any failure to comply with reporting or other provisions of the policies including breaches of warranties shall not affect coverage provided to the City, the Community Services District, the Agency and their officers, officials, employees and volunteers. The Developer's insurance shall apply separately to each insured against whom claim is made or suit is brought, except with respect to the limits of the insurer's liability. Each insurance policy required by this agreement shall be endorsed to state: should the policy be cancelled before the expiration date the issuing insurer will endeavor to mail thirty (30) days' prior written notice to the Agency. If insurance coverage is cancelled or, reduced in coverage or in limits the Developer shall within two (2) business days of notice from insurer phone, fax, and/or notify the Agency via certified mail, return receipt requested of the changes to or cancellation of the policy. Acceptability of Insurers. Insurance is to be placed with insurers with a current A.M. Best's rating of no less than A:VII, unless otherwise acceptable to the Agency. Self insurance shall not be considered to comply with these insurance requirements. Verification of Coverage. Developer shall furnish the Agency with original endorsements effecting coverage required by this clause. The endorsements are to be signed by a person authorized by that insurer to bind coverage on its behalf. The endorsements are to be on forms provided by the Agency. All endorsements are to be received and approved by the Agency before work commences. As an alternative to the Agency's forms, the Developer's insurer may provide complete, certified copies of all required insurance policies, including endorsements effecting the coverage required by these specifications. 3. Limitations; No Recording. Agency does not hereby convey to Developer any right, title or interest in or to the Property, but merely grants the specific and limited contractual rights set forth herein. In no event shall this Agreement or any memorandum hereof be recorded, and any such recordation or attempted recordation shall constitute a breach of this Agreement and the ENA by the party responsible for such recordation or attempted recordation. 4. Notices. Whenever any notice, demand, or request is required or permitted under this Agreement, such notice, demand, or request shall be in writing and shall be addressed and delivered as provided in the notices provision of the ENA. 5. Assignment. This Agreement may not be assigned by Developer, in whole or in part, without the prior express written consent of the Agency in its sole and absolute discretion. 11087-0001\1199434v1.doc 12 6. Governine Law. This Agreement shall be construed, enforced and interpreted in accordance with the laws of the State of California. 7. Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed an original, and all of such counterparts together shall constitute one and the same agreement. IN WITNESS WHEREOF, Agency and Developer have caused this Agreement to be executed and sealed, all the day and year first written above. 11087-0001\1199434v1.doc 13 111 D\L DI961 U DI 'IT RC HOBBS CO., a California corporation By: Roger Hobbs, President CITY: REDEVELOPMENT OF THE CITY OF TEMECULA, a public body, corporate and politic Mike Naggar, Chairperson ATTEST: Susan Jones, MMC, City Clerk, Agency Secretary APPROVED AS TO FORM: Peter Thorson, Agency Counsel 11087-0001\1199434v1.doc 14 EXHIBIT A to Right of Entry and Access Agreement Description Of The Site the following 6ruribc propnny in the City of TEBIECULA. County of RIVERSIDE Sims of California: PARCELS I AND 2 OF PARCEL h P 9W9 AS SHOWN BY MAP ON FILE IN BOOK 61. PAGE 14 OF PARCEL hlA , RECORDS OF RIVERSIDE COUNfP, CALIFORNIA. 11087-0 1\1199434v1.dac IS ATTACHMENT NO.4 AGENCY TASKS 1. Provide to Developer all currently existing plans, studies and other written information regarding the Site that are in the possession of the Agency (to the extent not previously delivered to Developer) to the extent they are material and are not privileged. 2. Obtain a fair market value appraisal of the Site (based on current zoning). 3. Review the Developer's Site Plans, concept drawings and other submissions. 4. Cause the EIR to be prepared and review the EIR (as defined in this Agreement). 5. Prepare and revise drafts of the DDA to the extent reasonably permitted by the negotiations. 11087-0001\1199434v1.doc 16 R.C. HOBBS COMPANY I110 East Chapman Avenue, Suite 206 1 Orange, California 92866 T- 714.633.8100 1 F- 714.633.7132 1 www.rchohhsco.com Mr. Patrick Richardson Housing and Redevelopment Director City of Temecula 43200 Business Park Dr Temecula, California 92589 RECEIVED m OCT 0 9 2009 October 81h, 2009 RE: City RDA Property located at 28640 Pujol Street, Temecula CA (922053020 & 922053021) Dear Mr. Richardson, The RC Hobbs Company (Developer) proposes to enter into an Exclusive Negotiation Agreement (ENA) with the City of Temecula Redevelopment Agency (RDA) on the property located at 28640 Pujol Street, Temecula CA. The RC Hobbs Company's intention is to provide a sustainable, attractive, and uniquely complimentary mixed income multifamily housing development in the City of Temecula providing a minimum of 20% set aside for low/moderate income residents. The Old Town area of Temecula offers citizens a focal attraction point, and our proposed development would offer the city a new housing development that would make Old Town even more appealing allowing its residents to walk to work, shopping and entertainment. The RC Hobbs Company has been very privileged to work with The City of Temecula Redevelopment Agency. We look forward to continuing our dedication and relationship with the City of Temecula Redevelopment Agency by entering into an Exclusive Negotiation Agreement on the subject property. As discussed, our request is for an initial term of twelve (12) months from our mutual execution of the "ENA" with an additional six (6) month extension. Thank you in advance for your support and cooperation. Very Truly Yours, Roger C. Hoos�-7 President Item No. 12 Approvals City Attorney Director of Finance City Manager TEMECULA REDEVELOPMENT AGENCY AGENDA REPORT TO: Executive Director/Agency Members FROM: Patrick Richardson, Director of Planning and Redevelopment DATE: February 09, 2010 SUBJECT: Second Amendment to the Owner Participation Agreement between the Redevelopment Agency of the City of Temecula and the Warehouse at Creekside, LLC PREPARED BY: Luke Watson, Management Analyst RECOMMENDATION: That the Agency Members approve the Second Amendment to the Owner Participation Agreement between the Redevelopment Agency of the City of Temecula and the Warehouse at Creekside, LLC. BACKGROUND: On August 12, 2008 the Agency Board and City Council approved Resolution RDA No. 08-06 and City Council Resolution No. 08-81 which entered the Redevelopment Agency into an Owner Participation Agreement ("OPA") with The Warehouse at Creekside LLC. The Agency Board then approved the First Amendment to the Owner participation Agreement on February 24, 2009. The purpose of the Second Amendment to the OPA is to change the funding source from existing housing set -aside fund balance to bond proceeds. The bond proceeds would originate from the pending sale of housing set -aside tax increment revenue backed tax allocation bonds. The fundamental terms of the OPA will not be affected by this amendment. The Warehouse at Creekside LLC and Agency will be responsible for all obligations previously approved by Resolutions RDA No. 08-06 and City Council Resolution No. No. 08-81, as well as the obligations established in the OPA and first Amendment to the OPA (unless specifically amended by the Second Amendment). FISCAL IMPACT: The OPA provides for a total of $6,000,000 in Agency assistance to be delivered at completion of the development. The Second Amendment does not change or alter in any way the Agency's obligation to deliver that assistance upon completion. ATTACHMENTS: Second Amendment to the OPA SECOND AMENDMENT TO OWNER PARTICIPATION AGREEMENT AND IRREVOCABLE LOAN COMMITMENT THIS SECOND AMENDMENT TO OWNER PARTICIPATION AGREEMENT AND IRREVOCABLE LOAN COMMITMENT (the "Second Amendment') is dated as of February 9, 2009 and is entered into by and between the REDEVELOPMENT AGENCY OF THE CITY OF TEMECULA, a public body, corporate and politic ("Agency") and THE WAREHOUSE AT CREEKSIDE, LLC, a California limited liability company ("Developer"), with the consent of COMMERCIAL BANK OF CALIFORNIA ("Construction Lender"). RECITALS A. Agency and Developer entered into an Owner Participation Agreement dated as of August 12, 2008, and amended it by a First Amendment to owner Participation Agreement dated as of February 24, 2009 (including all exhibits thereto, the "OPA"). The OPA provides for, among other things, the execution, delivery and recordation of a Regulatory Agreement between Agency and Developer (the "Regulatory Agreement') for affordable housing (the "Project") on the property described in the OPA, and a permanent loan by the Agency to the Developer to be used to repay construction financing provided to Developer by the Construction Lender to construct the Project. Capitalized terms used but not defined in this Amendment shall have the meanings ascribed thereto in the OPA. B. Agency and Developer entered into an Irrevocable Loan Commitment dated August 12, 2008, which was amended by a First Amendment to Irrevocable Loan Commitment dated February 24, 2009, that conditionally requires the Agency to make a $6,000,000 loan to repay the construction loan for the Project (the "Commitment Letter"). (The Commitment Letter expires on February 12, 2011.) C. Pursuant to Assignment of Commitment Letter dated march 4, 2009, Developer assigned its rights under the Commitment Letter to Construction Lender, and the Agency executed a Consent to Assignment dated March 6, 2009. D. Agency and Developer desire to modify the OPA, the documents described therein, and the Commitment Letter (with the consent of the Construction Lender) to reflect that the Agency has the right to make a conditional grant of $6,000,000 to Developer in lieu of the $6,000,000 loan (but if the Agency fails to make the grant, the Agency shall remain obligated to make the $6,000,000 loan as currently described in the Commitment Letter and OPA). NOW, THEREFORE, in consideration of the foregoing recitals and other consideration, the adequacy of which is hereby acknowledged, Agency and Developer hereby agree as follows: 1. Modifications. a. Developer, Agency and Construction Lender agree that the Agency may make a grant of $6,000,000 to Developer in lieu of the $6,000,000 loan described in the OPA and Commitment Letter; however, Agency hereby agrees and confirms that if Agency does not make such grant, Agency shall remain obligated to make the $6,000,000 loan described in the OPA 11087-0021\1188948v1.doc 1 and Commitment Letter upon and subject to the terms and conditions in the OPA and Commitment Letter. b. If a grant is made by the Agency, the grant shall be disbursed upon the same terms and subject to the same conditions as set forth in the Commitment Letter, except that no promissory note shall be required, and the Regulatory Agreement and Deed of Trust (which have not yet been executed) shall reflect that a grant rather than a loan is being made and that the grant shall become reimbursable to the Agency by Developer upon the occurrence of any of the events that would entitle the Agency to accelerate the Loan under the current terms of OPA and Loan Agreement. 2. General Provisions. a. Entire Agreement. This Second Amendment constitutes the entire agreement between the parties pertaining to the subject matter hereof, and supersedes all prior agreements and understandings of the parties with respect to the subject matter hereof. This Second Amendment may not be modified, amended, supplemented, or otherwise changed, except by a writing executed by both parties hereto. b. Waiver. No failure or delay by any party in the exercise of any right hereunder shall constitute a waiver thereof, nor shall any single or partial exercise of any such right preclude other or further exercise thereof, or any other right. C. Counterparts. This Second Amendment may be executed in two or more counterparts and by different parties hereto on separate counterparts, each of which when so executed and delivered shall be deemed an original and all of which, when taken together, shall constitute one and the same instrument. d. Governing Law. This Second Amendment shall be deemed to be a contract made under the laws of the State of California and for all purposes shall be governed by and construed in accordance with the laws of the State of California. e. Attorneys' Fees and Costs. If a dispute arises under or in connection with this Second Amendment (including, without limitation, the enforcement or interpretation of this Second Amendment), the prevailing party (as determined by the trier of fact) shall be entitled to recover its reasonable attorneys' fees and costs from the other party. 11087-0021\1188948v1.doc 2 IN WITNESS WHEREOF, the Parties have entered into this Second Amendment as of the day and year first above written. THE WAREHOUSE AT CREEKSIDE, LLC, a California limited liability company William R. Dalton, Managing Member Todd L. Dalton, Managing Member REDEVELOPMENT AGENCY OF THE CITY OF TEMECULA, a public body, corporate and politic C ATTEST: Susan Jones, CMC City Clerk/Agency Secretary APPROVED AS TO FORM: Richards, Watson & Gershon, a professional corporation Peter Thorson, Agency Counsel Mike Naggar, Chairperson 11087-0021\1 188948vl.doc 3 APPROVED BY CONSTRUCTION LENDER: COMMERCIAL BANK OF CALIFORNIA By: Print Name: Title: 11087-0021\1 188948vl.aoc 4 Item No. 13 Approvals City Attorney Director of Finance City Manager TEMECULA REDEVELOPMENT AGENCY AGENDA REPORT TO: Executive Director/Agency Members FROM: Patrick Richardson, Director of Planning and Redevelopment DATE: February 09, 2010 SUBJECT: Funding Source for AB 4X 26 Supplemental Educational Revenue Augmentation Fund Payment PREPARED BY: Luke Watson, Management Analyst RECOMMENDATION: That the Board of Directors approve the borrowing of Four Million Three Hundred Fifty Four Thousand Four Hundred Fifty Dollars ($4,354,450.00) from the Agency's Low and Moderate Income Housing Fund for the purposes of paying the Agency's Fiscal Year2009- 2010 SERAF obligation. Adopt a resolution entitled: RESOLUTION NO. RDA 10- A RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY OF TEMECULA PROVIDING FOR THE PAYMENT OF ITS SUPPLEMENTAL EDUCATIONAL REVENUE OBLIGATION FOR FISCAL YEAR 2009-10 BACKGROUND: On July 28, 2009 the Governor signed AB 4X 26 to address the fiscal emergency declared by the Governor on July 1, 2009. This bill amends the Health and Safety Code Section 33690 to require a $1.7 billion payment from redevelopment agencies to the Supplement Educational Revenue Augmentation Fund ("SERAF") for Fiscal Year 2009-2010 and a $350 million SERAF shift for Fiscal Year 2010-2011. The SERAF monies are then used to make up the funds taken by the Legislature from school districts as part of the state budget adjustments. Per this legislation, the California State Department of Finance has notified the Agency that its payment obligation for Fiscal Year 2009-2010 SERAF shift is $4,354,450.00. AB 4X 26 provides Redevelopment Agencies with the ability to loan themselves housing set -aside funds in order to meet their SERAF shift obligation if findings are made that insufficient other moneys are available to meet that obligation. After analysis of the Agency's finances it is staff's opinion that the only feasible way to meet the Fiscal Year 2009-2010 SERAF payment is to borrow the full amount from the housing set -aside fund. The loan from the housing fund must be repaid by June 30, 2015. Therefore, Agency staff recommends that the ($4,354,450.00) SERAF payment obligation for Fiscal Year 2009-2010 be paid with existing funds in the Agency's housing set -aside fund. FISCAL IMPACT: If approved the Agency's would borrow from the housing set -aside fund a total of ($4,354,450.00) in order to meet the Fiscal Year 2009-2010 SERAF obligation. The Agency would be required to repay the housing set -aside fund the entire amount borrowed by June 30, 2015. The Agency intends to repay its housing set -aside loan with tax increment revenues that would have otherwise gone to the Agency's redevelopment fund. ATTACHMENTS: Resolution RESOLUTION NO. RDA 10- A RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY OF TEMECULA PROVIDING FOR THE PAYMENT OF ITS SUPPLEMENTAL EDUCATIONAL REVENUE OBLIGATION FOR FISCAL YEAR 2009-10 THE BOARD OF DIRECTORS OF THE REDEVELOPMENT AGENCY OF THE CITY OF TEMECULA DOES HEREBY RESOLVE AS FOLLOWS: Section 1. The Agency hereby finds, determines and declares as follows: (a) Chapter 21 of the Statutes of 2009 (AB 4X 26) and Chapter 652 of the Statutes of 2009 (SB 68) enacted Health and Safety Code Section 33690 requiring redevelopment agencies in the state to pay certain amounts to the county auditor for deposit into the county's Supplemental Educational Revenue Augmentation Fund ("SERAF"). (All further references to "sections" shall be to sections of the Health and Safety Code.) (b) To make the full allocation to SERAF, Section 33690(c)(1) authorizes redevelopment agencies to borrow from either the amount required to be allocated to the agency's low and moderate income housing fund, pursuant to Sections 33334.2, 33334.3, and 33334.6, or any monies in that fund or both, unless executed contracts exist that would be impaired if the agency reduced the amount allocated to the low and moderate income housing fund or the amount of moneys in the fund, or both. 1) In order to borrow from the low and moderate income housing fund or the amounts to be allocated to the fund for payment of SERAF, an agency shall make a finding that there are insufficient other moneys to meet the SERAF payment requirements. 2) Any funds borrowed from the low and moderate income housing fund or the amounts to be allocated to the fund for payment of SERAF shall be repaid in full on or before June 30, 2015. Section 2. Pursuant to the provisions of Section 33690, the Agency specifically finds and determines that: (a) There are no existing executed contracts to which the Agency is a party that would be impaired if the Agency reduced the amount allocated to the Low and Moderate Income Housing Fund or the amount of moneys in the fund, or both. (b) There are insufficient other moneys to meet the SERAF payment requirements of Section 33690(a). Section 3. The Agency hereby approves the borrowing of four million three hundred fifty four thousand four hundred fifty dollars ($4,354,450.00) from the Agency's Low and Moderate Income Housing Fund or the amounts to be allocated to the Fund for i i osz000i \12o27bi vi the purposes of paying the Agency's SERAF obligation pursuant to Section 33690(a).The funds borrowed from the Low And Moderate Income Housing Fund for payment of SERAF shall be repaid in full to the Low And Moderate Income Housing Fund on or before June 30, 2015. The Agency hereby appropriates said funds for the purposes of paying the SERAF obligation and authorizes the Executive Director or his designee to make the required SERAF payment to the Riverside County Auditor as required by law. PASSED, APPROVED, AND ADOPTED by the Board of Directors of the Temecula Redevelopment Agency of the City of Temecula this day of , Mike Naggar,Chairperson r_Y40r:61n Susan W. Jones, MMC City Clerk/Board Secretary [SEAL] -2- i i osz000i \12o27bi vi STATE OF CALIFORNI ) COUNTY OF RIVERSIDE ) ss CITY OF TEMECULA ) I, Susan W. Jones, MMC, City Clerk/Board Secretary of the Temecula Redevelopment Agency of the City of Temecula, do hereby certify that the foregoing Resolution No. RDA - was duly and regularly adopted by the Board of Directors of the Temecula Redevelopment Agency of the City of Temecula at a meeting thereof held on the day of I , by the following vote: AYES: BOARD MEMBERS: NOES: BOARD MEMBERS: ABSENT: BOARD MEMBERS: ABSTAIN: BOARD MEMBERS: Susan W. Jones, MMC City Clerk/Board Secretary -3- iiosz000i\izoz7bivi JOINT CITY COUNCIL/RDA/TPFA BUSINESS Item No. 14 Approvals City Attorney /V Director of Finance City Manager CITY OF TEMECULA and REDEVELOPMENT AGENCY OF THE CITY OF TEMECULA and TEMECULA PUBLIC FINANCING AUTHORITY AGENDA REPORT TO: City Council / Redevelopment Agency Governing Board / Temecula Public Financing Authority Governing Board FROM: Genie Roberts, Director of Finance/Treasurer/Treasurer DATE: February 9, 2010 SUBJECT: Issuance of Tax Allocation Housing Bonds by the Redevelopment Agency of the City of Temecula for the Temecula Redevelopment Project No. 1 PREPARED BY: Genie Roberts, Director of Finance and Treasurer RECOMMENDATION: That the City Council: 1. That the City Council adopt a resolution entitled RESOLUTION NO. 10- A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TEMECULA APPROVING THE ISSUANCE BY THE REDEVELOPMENT AGENCY OF THE CITY OF TEMECULA OF TAX ALLOCATION HOUSING BONDS 2. That the Redevelopment Agency adopt a resolution entitled: RESOLUTION NO. RDA10- A RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY OF TEMECULA AUTHORIZING THE ISSUANCE AND SALE OF TAX ALLOCATION HOUSING BONDS, AND APPROVING RELATED DOCUMENTS AND ACTIONS 3. That the Temecula Public Financing Authority adopt a resolution entitled: RESOLUTION NO. TPFA 10- A RESOLUTION OF THE BOARD OF DIRECTORS OF THE TEMECULA PUBLIC FINANCING AUTHORITY AUTHORIZING THE PURCHASE AND SALE OF TAX ALLOCATION HOUSING BONDS OF THE REDEVELOPMENT AGENCY OF THE CITY OF TEMECULA, AND APPROVING OTHER MATTERS RELATED THERETO BACKGROUND: Under the Community Redevelopment Law, the Redevelopment Agency is obligated to use not less than twenty percent of the tax increment revenues that are allocated to the Redevelopment Agency pursuant to the Community Redevelopment Law to increase, improve and preserve the community's supply of low and moderate income housing (the 'low and moderate income housing funds"). In order to finance the Redevelopment Agency's housing activities, the Redevelopment Agency is recommending the issuance of tax allocation housing bonds, which would be repaid from the low and moderate income housing funds, to fund some of its outstanding housing obligations and to provide funds to assist with other prospective housing projects. On December 8, 2009, the Redevelopment Agency adopted a Resolution entitled "A Resolution of the Redevelopment Agency of the City of Temecula Designating Consultants in Connection With the Proposed Issuance of Tax Allocation Housing Bonds and Authorizing and Directing Certain Actions With Respect Thereto", expressing the intent of the Agency to issue tax allocation housing bonds to finance housing activities of the Redevelopment Agency, and designating various professionals, including a financial advisor, a fiscal consultant, bond counsel, disclosure counsel and a bond underwriter, to assist the Redevelopment Agency in connection with the issuance of the bonds. The Redevelopment Agency Staff and consultants have been working to prepare the necessary documents to issue the bonds, including an Indenture of Trust which provides for the terms of the proposed bonds, a Preliminary Official Statement which describes the bond issue and is to be used to market the bonds to prospective investors, a Bond Purchase Agreement pursuant to which the bonds would be sold, and a Continuing Disclosure Certificate regarding ongoing disclosure of the Agency over the term of the bonds. It is proposed that the proceeds of the bonds be used to finance housing activities of the Redevelopment Agency within or of benefit to the Temecula Redevelopment Project No. 1. The primary activities anticipated to be financed with proceeds of the bonds include (i) funding the Redevelopment Agency's $6,000,000 contribution to the Warehouse at Creekside development which was approved by Resolution RDA No. 08-06 by the Redevelopment Agency Board and City Council Resolution No. 08-81 on August 12, 2008, and (ii) using approximately $6,000,000 of bond proceeds to assist in the development of a mixed income affordable housing project on Redevelopment Agency -owned property (and adjacent parcels) on Pujol Street adjacent to the Main Street Apartments. Bond proceeds may also be used for other housing activities of the Redevelopment Agency. The proposed bond issue will be payable solely from a pledge of that portion of the tax increment revenues arising from the Redevelopment Project required by the Redevelopment Law to be deposited to the Low and Moderate Income Housing Fund of the Agency. Only the portion of the tax increment revenues required by the Redevelopment Law to be used for housing purposes will be pledged to and used for the repayment of the bonds. No City general funds or other moneys will in any way be pledged or obligated towards the payment of the bonds. In order to issue the bonds, the Redevelopment Law requires that the City Council approve the issuance of the bonds by the Redevelopment Agency. In addition, in order for the Redevelopment Agency to sell the bonds on a negotiated basis with Stone & Youngberg LLC, the bond underwriter that has been working with the Redevelopment Agency on the bond issue (the "Underwriter"), relevant State law requires that the Temecula Public Financing Authority buy the bonds from the Redevelopment Agency for immediate resale to the Underwriter. The purchase price from the Redevelopment Agency to be paid by the Public Financing Authority will be the same as the sale price of the Bonds by the Public Financing Authority to the Underwriter, so no Public Financing Authority funds are involved in the transaction. The proposed resolution of the Public Financing Authority approves the purchase and sale by it of the Bonds and makes related findings required by applicable law. The Redevelopment Agency resolution being presented for approval authorizes the issuance of the bonds and approves the related financing documents including a draft of a preliminary official statement that describes the terms of the bonds. These documents will be finalized when the exact terms of the Bonds are determined at the time the bonds are sold to investors, expected to occur in mid February. The date for the closing of the bond issue, and the time when bond proceeds are expected to be available, is currently expected to be February 25 2010. On February 17, 2009, the President signed into law the American Recovery and Reinvestment Act of 2009 (the 'Recovery Act'). The Recovery Act allows for the issuance by local governmental agencies of Build America Bonds ("BABs") to finance certain capital projects. The interest paid on the BABs is not tax-exempt, so the interest rate on BABs is higher than the interest rate on traditional tax-exempt municipal bonds, but the issuer of the BABs receives a payment from the federal government, on each bond interest payment date, equal to 35% of the interest paid on the BAB. Subject to bond market conditions, the net amount of interest payable on the BABs, after taking into account the federal reimbursement, may be less than what the interest payable would be on a traditional tax-exempt obligation. The resolutions of the Redevelopment Agency and of the Public Financing Authority allow for the proposed Redevelopment Agency bonds to be issued as traditional tax-exempt bonds, as BABs or as a combination of both, based upon a determination by the Treasurer of the Redevelopment Agency, following consultation with the Financial Advisor and Underwriter for the bonds, as is in the best economic interest of the Redevelopment Agency. SPECIFIC ACTIONS: The action requested of the City Council is to adopt a resolution approving the issuance of the bonds by the Redevelopment Agency. The action requested of the Redevelopment Agency is to adopt a resolution authorizing the issuance of the bonds and approving the related financing documents. The action requested of the Public Financing Authority is to adopt a resolution approving the purchase of the bonds from the Redevelopment Agency and the immediate resale of the bonds to the Underwriter. FISCAL IMPACT: The bonds will have no financial impact on the City or the Public Financing Authority, as all payments of principal and interest on the bonds will be paid solely from the housing tax increment revenues of the Redevelopment Agency. The Redevelopment Agency will be obligated to use tax housing increment revenues from the Temecula Redevelopment Project No. 1 each year to pay the estimated annual debt service of $955,000 on the bonds, and to pay the annual costs of administering the bond program. ATTACHMENTS: Resolution No. 10-_ (City of Temecula) Resolution No. 10-_ (Redevelopment Agency) Resolution No. 10-_ (TPFA) Preliminary Official Statement Continuing Disclosure Certificate Bond Purchase Agreement RESOLUTION NO. 10- A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TEMECULA APPROVING THE ISSUANCE BY THE REDEVELOPMENT AGENCY OF THE CITY OF TEMECULA OF TAX ALLOCATION HOUSING BONDS THE CITY COUNCIL OF THE CITY OF TEMECULA DOES HEREBY RESOLVE AS FOLLOWS: Section 1. The Redevelopment Agency of the City of Temecula (the "Agency") has determined at this time to issue its Redevelopment Agency of the City of Temecula, Temecula Redevelopment Project No. 1 2010 Tax Allocation Housing Bonds (the "Bonds") to provide funds to finance certain housing activities of the Agency Section 2. In accordance with the requirements of Section 33640 of the California Health and Safety Code, the City Council wishes at this time to approve the issuance and sale of the Bonds by the Agency. Section 3. The issuance and sale of the Bonds by the Agency in the aggregate principal amount of not to exceed $15,000,000, and the use of the proceeds of the Bonds to finance housing activities of the Agency is hereby approved. Section 4. This Resolution shall take effect upon its adoption. PASSED, APPROVED, AND ADOPTED by the City Council of the City of Temecula this 9th day of February, 2010. Jeff Comerchero, Mayor ATTEST: Susan W. Jones, MMC City Clerk [SEAL] STATE OF CALIFORNIA ) COUNTY OF RIVERSIDE ) ss CITY OF TEMECULA ) I, Susan W. Jones, MMC, City Clerk of the City of Temecula, do hereby certify that the foregoing Resolution No. 10- was duly and regularly adopted by the City Council of the City of Temecula at a meeting thereof held on the 9th day of February, 2010, by the following vote: AYES: COUNCIL MEMBERS: NOES: COUNCIL MEMBERS: IG1►1�Ko1l1►NllNdiIAdil:l:4:& 1 ABSTAIN: COUNCIL MEMBERS: Susan W. Jones, MMC City Clerk RESOLUTION NO. RDA 10- A RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY OF TEMECULA AUTHORIZING THE ISSUANCE AND SALE OF TAX ALLOCATION HOUSING BONDS, AND APPROVING RELATED DOCUMENTS AND ACTIONS THE BOARD OF DIRECTORS OF THE TEMECULA REDEVELOPMENT AGENCY OF THE CITY OF TEMECULA DOES HEREBY RESOLVE AS FOLLOWS: Section 1. Part 1 of Division 24 of the Health and Safety Code of the State of California, as amended (the "Law"), authorizes redevelopment agencies to incur indebtedness for the purpose of financing housing activities within or of benefit to redevelopment project areas of redevelopment agencies. Section 2. The Redevelopment Agency of the City of Temecula (the "Agency") has determined at this time to issue revenue bonds (as further described below, the "Bonds"), under the provisions of the Law to finance housing activities within or of benefit to the Agency's Temecula Redevelopment Project No. 1 (the "Redevelopment Project"), with the payment of the principal of and interest on the Bonds to be secured by a pledge of the tax increment revenues received by the Agency from the Redevelopment Project required to be deposited to the Low and Moderate Income Housing Fund of the Agency. Section 3. All conditions, things and acts required to exist, to have happened and to have been performed precedent to and in the issuance of the Bonds as contemplated by this Resolution and the documents referred to herein exist, have happened and have been performed in due time, form and manner as required by the laws of the State of California, including the Law, and the Agency now desires to authorize the issuance of the Bonds, as provided herein. Section 4. The Agency hereby authorizes the issuance of its Temecula Redevelopment Project No. 1 Tax Allocation Housing Bonds (the "Bonds") in one or more series (as described below), in the aggregate initial principal amount of not to exceed $15,000,000. The Bonds shall be issued pursuant to the Law and an Indenture of Trust (the "Indenture"), by and between the Agency and U.S. Bank National Association, as trustee (the "Trustee"). The Agency hereby approves the Indenture in the form on file with the Secretary. The Executive Director is hereby authorized and directed to execute, and the Secretary is hereby authorized and directed to attest, the Indenture in such form together with such additions thereto and changes therein as the Executive Director, upon consultation with Bond Counsel and the Agency's General Counsel, shall deem necessary, desirable or appropriate, and the execution thereof by the Executive Director shall be conclusive evidence of the approval of any such additions and changes. The Agency hereby authorizes the delivery and performance of the Indenture as so executed. The Bonds may be issued in one or more series, including (a) bonds the interest on which is excluded from the gross income of the owners thereof for purposes of federal income taxation ("Tax -Exempt Bonds"); (b) bonds to be designated in the Indenture as "Build America Bonds" under the provisions of the American Recovery and Reinvestment Act of 2009, the interest on which is included in the gross income of the owners thereof for federal income tax purposes ("Build America Bonds"); or (c) both a series of Tax -Exempt Bonds and a series of Build America Bonds. The Treasurer, upon consultation with the Agency's Financial Advisor for the Bonds and Stone & Youngberg LLC, the underwriter for the Bonds (the "Underwriter"), shall determine, subject to the limitation on the aggregate initial principal amount of the Bonds set forth in the preceding sentence, the portion of the Bonds, if any, to be issued as Tax -Exempt Bonds and as Build America Bonds, as is in the best economic interest of the Agency. Section 5. The Agency hereby approves the bond purchase contract (the "Bond Purchase Agreement"), by and among the Underwriter, the Temecula Public Financing Authority (the "Authority"), and the Agency, in the form on file with the Secretary. The Executive Director is hereby authorized and directed to execute the Bond Purchase Agreement in such form together with such additions thereto and changes therein as the Executive Director, upon consultation with Bond Counsel and the Agency's General Counsel, shall deem necessary, desirable or appropriate, and the execution thereof by the Executive Director shall be conclusive evidence of the approval of any such additions and changes. The Agency hereby approves the negotiated sale of the Bonds to the Authority, and the sale of the Bonds by the Authority to the Underwriter, pursuant to the Bond Purchase Agreement, so long as the Underwriter's discount, excluding original issue discount, does not exceed 2.00% of the principal amount of the Bonds, the net interest cost of any Bonds as Tax -Exempt Bonds does not exceed 7.50%, the net interest cost of any Bonds issued as Build America Bonds does not exceed 9.50%, and the initial aggregate principal amount of the Bonds is not in excess of $15,000,000. Section 6. The Agency hereby authorizes the Executive Director to approve and deem final within the meaning of Rule 15c2-12 of the Securities Exchange Act of 1934, except for permitted omissions, a form of Official Statement describing the Bonds in the preliminary form on file with the Secretary. Distribution of such preliminary Official Statement by the Underwriter to prospective purchasers of the Bonds is hereby approved. The Executive Director is hereby authorized to execute the final form of the Official Statement, including as it may be modified by such additions thereto and changes therein as the Executive Director, upon consultation with Disclosure Counsel and the Agency's General Counsel, shall deem necessary, desirable or appropriate, and the execution of the final Official Statement by the Executive Director shall be conclusive evidence of the approval of any such additions and changes. The Agency hereby authorizes the distribution of the final Official Statement by the Underwriter. Section 7. The Bonds, when executed, shall be delivered to the Trustee for authentication. The Trustee is hereby requested and directed to authenticate the Bonds by executing the Trustee's certificate of authentication and registration appearing thereon, and to deliver the Bonds, when duly executed and authenticated, to or upon the instruction of the Underwriter in accordance with written instructions executed on behalf of the Agency by the Executive Director, which instructions such officer is hereby authorized and directed to execute and deliver to the Trustee. Such instructions shall provide for the delivery of the Bonds to the Underwriter in accordance with the Bond Purchase Agreement upon payment of the purchase price therefor. Section 8. The Continuing Disclosure Certificate, in the form on file with the Secretary, is hereby approved. The Executive Director is hereby authorized and directed to execute and deliver the Continuing Disclosure Certificate in such form with such additions thereto or changes therein as the Executive Director, upon consultation with Disclosure Counsel, shall deem necessary, desirable or appropriate, the approval of such changes to be conclusively evidenced by the execution and delivery by the Executive Director of the Continuing Disclosure Certificate. Section 9. The Chairperson, the Vice Chairperson, the Executive Director, the Treasurer and the Secretary of the Agency, 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 (including, but not limited to, obtaining bond insurance for the Bonds if the Agency's Financial Advisor determines that such insurance is economically advantageous in the circumstances) and take any and all actions, including execution and delivery of any and all assignments, certificates, requisitions, agreements, notices, consents, instruments of conveyance, warrants and other documents which they, or any of them, may deem necessary or advisable in order to consummate the lawful issuance and sale of the Bonds as described herein, including any certificates or agreements (or changes to the documents herein approved) related to the provision of bond insurance if it is obtained for the Bonds. Whenever in this Resolution any officer of the Agency is authorized to execute or countersign any document or take any action, such execution, countersigning or action may be taken on behalf of such officer by any person designated by such officer to act on his or her behalf in the case such officer shall be absent or unavailable. Section 10. This Resolution shall take effect upon its adoption. PASSED, APPROVED, AND ADOPTED by the Board of Directors of the Temecula Redevelopment Agency of the City of Temecula this 9th day of February, 2010. Michael S. Naggar, Chairperson ATTEST: Susan W. Jones, MMC City Clerk/Board Secretary [SEAL] STATE OF CALIFORNIA ) COUNTY OF RIVERSIDE ) ss CITY OF TEMECULA ) I, Susan W. Jones, MMC, City Clerk/Board Secretary of the Temecula Redevelopment Agency of the City of Temecula, do hereby certify that the foregoing Resolution No. RDA 10- was duly and regularly adopted by the Board of Directors of the Temecula Redevelopment Agency of the City of Temecula at a meeting thereof held on the 9th day of February, 2010, by the following vote: AYES: BOARD MEMBERS: NOES: BOARD MEMBERS: ABSENT: BOARD MEMBERS: ABSTAIN: BOARD MEMBERS: Susan W. Jones, MMC City Clerk/Board Secretary RESOLUTION NO. TPFA 10- A RESOLUTION OF THE BOARD OF DIRECTORS OF THE TEMECULA PUBLIC FINANCING AUTHORITY AUTHORIZING THE PURCHASE AND SALE OF TAX ALLOCATION HOUSING BONDS OF THE REDEVELOPMENT AGENCY OF THE CITY OF TEMECULA, AND APPROVING OTHER MATTERS RELATED THERETO THE BOARD OF DIRECTORS OF THE TEMECULA PUBLIC FINANCING AUTHORITY OF THE CITY OF TEMECULA DOES HEREBY RESOLVE AS FOLLOWS: Section 1. The City of Temecula and the Redevelopment Agency of the City of Temecula (the "Agency") have entered into a Joint Exercise of Powers Agreement (the "Agreement") creating the Temecula Public Financing Authority (the "Authority"). Section 2. Pursuant to Article 4 of Chapter 5 of Division 7 of Title 1 of the Government Code of the State of California (the "Law"), the Authority is authorized to purchase bonds issued by the Agency, the proceeds of which are to be used to finance public capital improvements, working capital, liability and other insurance needs, or projects whenever there are significant public benefits, as determined by the Authority, and pursuant to the Law and the Agreement, the Authority is further authorized to sell bonds so purchased to public or private purchasers by means of public or negotiated sales. Section 3. The Authority desires to purchase from the Agency not to exceed $15,000,000 aggregate initial principal amount of the Agency's Temecula Redevelopment Project No. 1 Tax Allocation Housing Bonds (the "Bonds"), with the purchase price to be paid solely from the proceeds received from the Authority's concurrent sale of the Bonds to Stone & Youngberg LLC (the "Underwriter"). Section 4. The Treasurer of the Agency, following consultation with the Agency's Financial Advisor for the Bonds and the Underwriter, will determine if the Bonds will be issued as (a) bonds the interest on which is excluded from the gross income of the owners thereof for purposes of federal income taxation ("Tax -Exempt Bonds"); (b) bonds to be designated in the indenture of trust for the Bonds as "Build America Bonds" under the provisions of the American Recovery and Reinvestment Act of 2009, the interest on which is included in the gross income of the owners thereof for federal income tax purposes ("Build America Bonds"); or (c) both a series of Tax - Exempt Bonds and a series of Build America Bonds. Section 5. The Agency has caused a bond purchase contract to be submitted to the Authority for approval; and the Authority now desires to approve the bond purchase contract and any other documents necessary for the purchase and sale of the Bonds as provided below. Section 6. Pursuant to the Law, this Board of Directors hereby finds and determines that the issuance of the Bonds and the purchase and sale thereof by the Authority will result in savings in effective interest rates, bond underwriting costs and bond issuance costs and thereby result in significant public benefits to the Agency and the Authority within the contemplation of Section 6586 of the Law. Section 7. The proposed bond purchase contract (the "Bond Purchase Agreement"), by and among the Agency, the Authority and the Underwriter, in the form on file with the Secretary of the Authority, is hereby approved. The Executive Director of the Authority is hereby authorized and directed, for and in the name and on behalf of the Authority, to accept the request that the Authority purchase the Bonds from the Agency and to accept the offer of the Underwriter to purchase the Bonds from the Authority, each subject to the terms and conditions of the Bond Purchase Agreement, and to execute and deliver the Bond Purchase Agreement; provided, however, that, the net interest cost of any Bonds issued as Tax -Exempt Bonds shall not exceed 7.50%, the net interest cost of any Bonds issued as Build America Bonds shall not exceed 9.50% and the Underwriter's discount (without regard to any original issue discount) shall not be more than 2.00% of the principal amount of the Bonds. The final aggregate principal amount of the Bonds shall be the amount set forth in the executed Bond Purchase Agreement, not to exceed an aggregate of $15,000,000. The approval of any additions or changes in such form of the Bond Purchase Agreement shall be conclusively evidenced by the execution and delivery by the Executive Director or his designee of the Purchase Contract. Section 8. The Chairperson, the Executive Director, the Treasurer and the Secretary of the Authority, and any and all other officers of the Authority, are hereby authorized and directed, for and in the name and on behalf of the Authority, to do any and all things and take any and all actions, including execution and delivery of any and all assignments, certificates, requisitions, agreements, notices, consents, instruments of conveyance, warrants and other documents which they, or any of them, may deem necessary or advisable in order to consummate the lawful purchase and sale of the Bonds as described herein. Whenever in this Resolution any officer of the Authority is authorized to execute or countersign any document or take any action, such execution, countersigning or action may be taken on behalf of such officer by any person designated by such officer to act on his or her behalf in the case such officer shall be absent or unavailable. Section 9. This Resolution shall take effect upon its adoption. PASSED, APPROVED, AND ADOPTED by the Board of Directors of the Temecula Public Financing Authority of the City of Temecula this 9th day of February, 2010. Jeff Comerchero, Chairperson ATTEST: Susan W. Jones, MMC City Clerk/Board Secretary [SEAL] STATE OF CALIFORNIA ) COUNTY OF RIVERSIDE ) ss CITY OF TEMECULA ) I, Susan W. Jones, MMC, City Clerk/Board Secretary of the Temecula Public Financing Authority of the City of Temecula, do hereby certify that the foregoing Resolution No. TPFA 10- was duly and regularly adopted by the Board of Directors of the Temecula Public Financing Authority of the City of Temecula at a meeting thereof held on the 9th day of February, 2010, by the following vote: AYES: BOARD MEMBERS: NOES: BOARD MEMBERS: ABSENT: BOARD MEMBERS: ABSTAIN: BOARD MEMBERS: Susan W. Jones, MMC City Clerk/Board Secretary PRELIMINARY OFFICIAL STATEMENT DATED 2010 NEW ISSUE — BOOKENTRYONLY RATING Standard &Poor's: A (See "Rating" herein) In the opinion of Quint & Thimmig LLP, San Francisco, California, Bond Counsel, subject, however, to certain qualifications described in this Official Statement, under existing law, interest on the 2010 Series A Bonds (i) is excludable from gross income of the owners thereof for federal income tax purposes, (in is not included as an item of tax preference in computing the federal alternative minimum tax for individuals and corporations, and (iii) is not taken into account in computing adjusted current earnings, which is used as an adjustment in determining the federal alternative minimum tax for certain corporations. In addition, in the opinion of Bond Counsel, interest on the 2010 Series A, and interest on the 2010 Series B Bonds is exempt from personal income taxation imposed by the State of California. Interest on the 2010 Series B Bonds is subject to all applicable federal taxation See "TAX MATTERS" herein. S S REDEVELOPMENT AGENCY OF THE REDEVELOPMENT AGENCY OF THE CITY OF TEMECULA CITY OF TEMECULA TEMECULA REDEVELOPMENT PROJECT NO. 1 TEMECULA REDEVELOPMENT PROJECT NO. 1 TAX ALLOCATION HOUSING BONDS TAX ALLOCATION HOUSING BONDS 2010 SERIES A (TAX-EXEMPT) 2010 SERIES B (TAXABLE BUILD AMERICA BONDS) Dated: Date of Issuance Bonds Due: August 1, as set forth on the inside front cover Proceeds from the sale by the Redevelopment Agency of the City of Temecula (the "Agency") of its Temecula Redevelopment Project No. 1 Tax Allocation Housing Bonds 2010 Series A (Tax -Exempt) (the "2010 Series A Bonds") and its Temecula Redevelopment Project No. 1 Tax Allocation Housing Bonds 2010 Series B (Taxable Build America Bonds) (the "2010 Series B Bonds" and together with the 2010 Series A Bonds, the "2010 Bonds") will be used to (i) finance eligible housing activities within the City of Temecula (the "City"); (in establish a Reserve Account for the 2010 Bonds and any parity debt (collectively, the `Bonds"); and (iii) provide for the costs of issuing the 2010 Bonds. The 2010 Series B Bonds will be designated as "Direct Payment Build America Bonds" under the provisions of the American Recovery and Reinvestment Act of 2009, the interest on which is not excluded from gross income for purposes of federal income taxation. With respect to the 2010 Series B Bonds, the Agency expects to receive a cash subsidy payment from the United States Treasury equal to 35% of the interest payable on such 2010 Series B Bonds. See "THE 2010 BONDS — Designation of 2010 Series B Bonds as Build America Bonds" Interest on the 2010 Bonds will be payable semi-annually on each February 1 and August 1 (each an "Interest Payment Date," as applicable), commencing August 1, 2010. The 2010 Bonds will be issued in fully -registered form without coupons and will be registered in the time of Cede & Co., as nominee for The Depository Trust Company, New York, New York ("DTC"). DTC will act as securities depository for the 2010 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 in Appendix G hereto) is the responsibility of DTC and disbursement of such payments to the Beneficial Owners (as defined in Appendix G hereto) is the responsibility of the DTC Participants, as more fully described herein See "THE 2010 BONDS —Book-Entry and DTC" herein. The 2010 Bonds will be issued under an Indenture of Trust, dated as of March 1, 2010 (the "Indenture"), by and between the Agency and U.S. Bank National Association, as trustee (the "Trustee"). The 2010 Bonds will be sold to the Temecula Public Financing Authority (the "Authority") for immediate resale to the Underwriter. The 2010 Bonds are special obligations of the Agency and are payable from and secured by a pledge of the Housing Tax Increment Revenues (as defined herein) receivable by the Agency with respect to the Temecula Redevelopment Project No. 1 (the `Project Area") pursuant to Article 6 of Chapter 6 of the Community Redevelopment Law (herein referred to as the "Housing Tax Increment Revenues"), 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 discussed herein. See `SECURITY FOR THE 2010 BONDS — Parity Debt" The Agency may issue debt on a parity with the 2010 Bonds, subject to the provisions of the Indenture. The 2010 Bonds are subject to optional redemption, mandatory redemption and special mandatory redemption prior to maturity. See "THE 2010 BONDS — Redemption" herein. MATURITY SCHEDULE (See Inside Cover) This cover page contains information for quick reference only. It is not intended to be a summary of all factors relating to an investment in the 2010 Bonds. Investors should review the entire Official Statement before making any investment decision with respect to the 2010 Bonds. I Preliminary, subject to change. THE 2010 BONDS ARE SPECIAL OBLIGATIONS OF THE AGENCY PAYABLE FROM THE HOUSING TAX INCREMENT REVENUES, AS DESCRIBED HEREIN, AND AMOUNTS IN CERTAIN FUNDS AND ACCOUNTS MAINTAINED UNDER THE INDENTURE AND, AS SUCH, ARE NOT A DEBT OF THE CITY OR THE STATE OF CALIFORNIA (THE "STATE") OR ANY OF THE STATE'S POLITICAL SUBDIVISIONS (OTHER THAN THE AGENCY, TO THE LIMITED EXTENT SET FORTH IN THE INDENTURE); AND NEITHER THE CITY NOR THE STATE OR ANY OF ITS POLITICAL SUBDIVISIONS (OTHER THAN THE AGENCY) IS LIABLE THEREFOR. THE 2010 BONDS ARE NOT PAYABLE FROM, AND ARE NOT SECURED BY, ANY FUNDS OF THE AGENCY OTHER THAN THE HOUSING TAX INCREMENT REVENUES AND THE FUNDS PLEDGED PURSUANT TO THE INDENTURE. NEITHER THE MEMBERS OF THE AGENCY NOR ANY PERSONS RESPONSIBLE FOR THE EXECUTION OF THE 2010 BONDS ARE LIABLE PERSONALLY FOR PAYMENT OF THE 2010 BONDS. The 2010 Bonds are offered when, as and if issued, subject to the approval as to their legality by Quint & Thimmig LLP, San Francisco, California Bond Counsel, and subject to certain other conditions. Certain legal matters will be passed upon for the Agency by Richards, Watson & Gershon, Los Angeles, California acting as Counsel to the Agency, and by McFarlin & Anderson LLP, Lake Forest, California in its capacity as Disclosure Counsel to the Agency. Stradling Yocca Carlson & Rauth, a Professional Corporation, NewpoH Beach, California is acting as Underwriter's Counsel. It is anticipated that the 2010 Bonds will be available for delivery through DTC on or about 2010. Dated: , 2010 STONE & YOUNGBERG 2 The following language to be inserted by the printer, in red, at the top of the POS front cover: PRELIMINARY OFFICIAL STATEMENT DATED 2010 The following language to be inserted by the printer, in re4 vertically along the left margin of the POS front cover: This Preliminary Official Statement and the information contained herein are subject to completion or amendment. Under no circumstances shall this Preliminary Official Statement constitute an offer to sell or a solicitation of an offer to buy nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful. ILIoil toN011Y$Oi1DIBig 11D 7 REDEVELOPMENT AGENCY OF THE CITY OF TEMECULA TEMECULA REDEVELOPMENT PROJECT NO. 1 TAX ALLOCATION HOUSING BONDS 2010 SERIES A (TAX-EXEMPT) $ Serial Bonds Base CUSIP® No. 87970Ft Maturity Principal Interest Price/ CUSIP® Maturity Principal Interest Price/ (August 1 Amount Rate Yield Nei (August 1 Amount Rate Yield 2011 $ % % 2018 $ 2012 2019 2013 2020 2014 2021 2015 2022 2016 2023 2017 2024 $ _% Term Bonds due August 1, 20 Yield % CUSIP® No. 87970F t $ _% Term Bonds due August 1, 20 Yield % CUSIP® No. 87970F t $ cuslp® No.t REDEVELOPMENT AGENCY OF THE CITY OF TEMECULA TEMECULA REDEVELOPMENT PROJECT NO. 1 TAX ALLOCATION HOUSING BONDS 2010 SERIES B (TAXABLE BUILD AMERICA BONDS) Maturity Principal Interest Price/ CUSIP® Maturity Principal Interest Price/ CUSIP® (August 1 Amount Rate Yield Nei (August 1 Amount Rate Yield No.t Preliminary, subject to change. t CUSIP® A registered trademark of the American Bankers Association. Copyright © 1999-2010 Standard & Poor's, a Division of The McGraw-Hill Companies, Inc. CUSIP® data herein is provided by Standard & Poor's CUSIP® Service Bureau. This data is not intended to create a database and does not serve in any way as a substitute for the CUSIP® Service Bureau. CUSIP® numbers are provided for convenience of reference only. Neither the Agency nor the Underwriter take any responsibility for the accuracy of such numbers. REDEVELOPMENT AGENCY OF THE CITY OF TEMECULA AGENCY BOARD MEMBERS Michael S. Naggar, Chairperson Ron Roberts, Vice Chairperson Jeff Comerchero, Board Member Maryann Edwards, Board Member Charles W. Washington, Board Member AGENCY STAFF Shawn Nelson, Executive Director Genie Roberts, Agency Treasurer Patrick R. Richardson, AICP, Director ofPlanning and Redevelopment Susan Jones, Agency Secretary SPECIAL SERVICES Counsel to the Agency Richards, Watson & Gershon Los Angeles, California Bond Counsel Quint & Thimmig LLP San Francisco, California Disclosure Counsel McFarlin & Anderson LLP Lake Forest, California Underwriter's Counsel Stradling Yocca Carlson & Rauth, a Professional Corporation Newport Beach, California Fiscal Consultant HdL Coren & Cone Diamond Bar, California Financial Advisor Fieldman, Rolapp & Associates Irvine, California Trustee U.S. Bank National Association Los Angeles, California GENERAL INFORMATION ABOUT THE OFFICIAL STATEMENT Use of Official Statement. This Official Statement is submitted in connection with the offer and sale of the 2010 Bonds referred to herein and may not be reproduced or used, in whole or in part, for any other purpose. This Official Statement is not to be construed as a contract with the purchasers of the 2010 Bonds. All summaries of the documents referred to in this Official Statement 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. Estimates and Forecasts. When used in this Official Statement and in any continuing disclosure by the Agency, in any press release by the Agency and in any oral statement made with the approval of an authorized officer of the Agency or any other entity described or referenced herein, the words or phrases "will likely result," "are expected to," "will continue," "is anticipated," "estimate," "project," "forecast," "expect," "intend," and similar expressions identify "forward -looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 21E of the United States Securities Exchange Act of 1934, as amended, and Section 27A of the United States Securities Act of 1933, as amended. 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 information and expressions of opinion herein are subject to change without notice, and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, give rise to any implication that there has been no change in the affairs of the Agency or any other entity described or referenced herein since the date hereof The Agency does not plan to issue any updates or revision to the forward -looking statements set forth in this Official Statement. Limited Offering. No dealer, broker, salesperson or other person has been authorized by the Agency to give any information or to make any representations in connection with the offer or sale of the 2010 Bonds other than those contained herein and if given or made, such other information or representation must not be relied upon as having been authorized by the Agency or the Underwriter. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the 2010 Bonds by a person in any jurisdiction in which it is unlawful for such person to make such an offer, solicitation or sale. Involvement of Underwriter. The Underwriter has submitted the following statement for inclusion in this Official Statement: The Underwriter has reviewed the information in this Official Statement in accordance with, and as a 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. Stabilization of Prices. In connection with this offering, the Underwriter may overallot or effect transactions which stabilize or maintain the market price of the 2010 Bonds at a level above that which might otherwise prevail in the open market. Such stabilizing, if commenced, may be discontinued at any time. The Underwriter may offer and sell the 2010 Bonds to certain dealers and others at prices lower than the public offering prices set forth on the inside cover page hereof and said public offering prices may be changed from time to time by the Underwriter. THE 2010 BONDS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, IN RELIANCE UPON AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS CONTAINED IN SUCH ACT. THE 2010 BONDS HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATE. TABLE OF CONTENTS Page INTRODUCTION........................................................................................................................................ 4 General..................................................................................................................................................... 4 The Agency and the Redevelopment Plan................................................................................................ 5 Purposeof Issuance.................................................................................................................................. 6 The2010 Bonds........................................................................................................................................ 6 Source of Payment for the 2010 Bonds.................................................................................................... 6 Parity Debt; Subordinate Debt.................................................................................................................. 7 Bondowners' Risks................................................................................................................................... 7 ContinuingDisclosure.............................................................................................................................. 7 TaxMatters............................................................................................................................................... 7 Professionals Involved in the Offering..................................................................................................... 8 AdditionalInformation............................................................................................................................. 8 ESTIMATED SOURCES AND USES OF FUNDS.................................................................................... 8 RedevelopmentActivities......................................................................................................................... 8 DEBT SERVICE SCHEDULE................................................................................................................... 10 THE2010 BONDS..................................................................................................................................... 10 GeneralProvisions.................................................................................................................................. 10 Designation of 2010 Series B Bonds as Build America Bonds.............................................................. 11 Redemption............................................................................................................................................. 11 Book -Entry and DTC.............................................................................................................................. 15 Discontinuance of DTC Services........................................................................................................... 15 TAX ALLOCATION FINANCING........................................................................................................... 15 General................................................................................................................................................... 15 Allocationof Taxes................................................................................................................................ 16 SECURITY FOR THE 2010 BONDS........................................................................................................ 16 Pledge of Housing Tax Increment Revenues.......................................................................................... 16 LimitedObligations................................................................................................................................ 17 Application of Housing Tax Increment Revenues.................................................................................. 17 ReserveAccount..................................................................................................................................... 20 County Payment of Tax Increment......................................................................................................... 20 ParityDebt.............................................................................................................................................. 20 RISKFACTORS........................................................................................................................................ 22 2010 Bonds Are Limited Obligations and Not General Obligations...................................................... 22 Housing Tax Increment Revenues.......................................................................................................... 23 Estimated Housing Tax Increment Revenues......................................................................................... 24 Educational Revenue Augmentation Fund; State Budget Uncertainties ................................................ 24 RealEstate Volatility.............................................................................................................................. 26 Economic Concentration........................................................................................................................ 26 Concentration of Ownership................................................................................................................... 26 BankruptcyRisks.................................................................................................................................... 27 Investment of Tax Increment Revenues and Other Funds...................................................................... 27 ParityDebt.............................................................................................................................................. 28 Future Land Use Regulations and Growth Control Initiatives............................................................... 28 County Payment of Housing Tax Increment Revenues.......................................................................... 28 Levyand Collection................................................................................................................................ 28 Seismic Factors and Flooding................................................................................................................. 29 Hazardous Substances............................................................................................................................ 29 No Acceleration on Default.................................................................................................................... 29 Loss of Federal Tax Exemption.............................................................................................................. 29 -i- IRS Audit of Tax -Exempt Bond Issues.................................................................................................. 30 Risks Relating to Build America Bonds................................................................................................. 30 Assumptions and Projections.................................................................................................................. 31 Changein Law........................................................................................................................................ 31 LimitedSecondary Market..................................................................................................................... 31 LIMITATIONS ON HOUSING TAX INCREMENT REVENUES.......................................................... 31 Property Tax Collection Procedure........................................................................................................ 31 Supplemental Assessments..................................................................................................................... 32 UnitaryProperty ..................................................................................................................................... 32 Property Tax Rate Limitations — Article XIIIA...................................................................................... 32 Article XIIIB of the California Constitution.......................................................................................... 34 Exclusion of Tax Increment Revenues for General Obligation Bonds Debt Service ............................. 34 Future Initiatives or Legislation............................................................................................................. 34 Low and Moderate Income Housing...................................................................................................... 35 Redevelopment Plan Limitations............................................................................................................ 35 THE REDEVELOPMENT AGENCY OF THE CITY OF TEMECULA.................................................. 35 AgencyMembers.................................................................................................................................... 35 AgencyAdministration........................................................................................................................... 36 AgencyPowers....................................................................................................................................... 36 Limitations Under 1991 Settlement Agreement; Plan Limitations........................................................ 37 Outstanding Indebtedness of the Agency............................................................................................... 37 Investment of Agency Funds.................................................................................................................. 40 Controls, Land Use and Building Restrictions....................................................................................... 40 THE REDEVELOPMENT PLAN.............................................................................................................. 43 Description of the Project Area.............................................................................................................. 44 Proceedsof the 2010 Bonds................................................................................................................... 44 LandUses............................................................................................................................................... 44 Development in the Project Area............................................................................................................ 45 Assessed Valuation; Housing Tax Increment Revenues........................................................................ 45 Appeals of Assessed Values................................................................................................................... 49 Direct and Overlapping Bonded Debt.................................................................................................... 51 Project Area Pass -Through Agreements................................................................................................. 52 COVERAGE ANALYSIS.......................................................................................................................... 52 THE TEMECULA PUBLIC FINANCING AUTHORITY........................................................................ 54 CERTAIN LEGAL MATTERS.................................................................................................................. 54 LegalOpinions....................................................................................................................................... 54 Enforceabilityof Remedies.................................................................................................................... 54 CONTINUING DISCLOSURE.................................................................................................................. 54 ABSENCE OF LITIGATION.................................................................................................................... 55 TAXMATTERS......................................................................................................................................... 55 2010 Series A Bonds.............................................................................................................................. 55 2010 Series B Bonds............................................................................................................................... 57 UNDERWRITING..................................................................................................................................... 57 RATING..................................................................................................................................................... 58 PROFESSIONAL FEES............................................................................................................................. 58 MISCELLANEOUS................................................................................................................................... 58 APPENDIX A — SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE ......................... A-1 APPENDIX B — FISCAL CONSULTANT'S REPORT........................................................................ B-1 APPENDIX C — TEMECULA REDEVELOPMENT AGENCY COMPONENT UNIT ...................... FINANCIAL STATEMENTS FOR FISCAL YEAR ENDING DUNE 30, 2009 ....... C-1 APPENDIX D — FORM OF OPINION OF BOND COUNSEL.............................................................D-1 -ii- APPENDIX E -FORM OF CONTINUING DISCLOSURE CERTIFICATE ...................................... E-1 APPENDIX F - GENERAL INFORMATION REGARDING THE CITY...........................................F-1 APPENDIX G - BOOK -ENTRY SYSTEM..........................................................................................G-1 [INSERT REGIONAL AREA MAP IN LIEU OF THIS PAGE] OFFICIAL STATEMENT P REDEVELOPMENT AGENCY OF THE CITY OF TEMECULA TEMECULA REDEVELOPMENT PROJECT NO. 1 TAX ALLOCATION HOUSING BONDS 2010 SERIES A (TAX-EXEMPT) S REDEVELOPMENT AGENCY OF THE CITY OF TEMECULA TEMECULA REDEVELOPMENT PROJECT NO. 1 TAX ALLOCATION HOUSING BONDS 2010 SERIES B (TAXABLE BUILD AMERICA BONDS) INTRODUCTION This introduction is not a summary of this Official Statement. It is only a brief description of and guide to, and is qualified in its entirety by, more complete and detailed information contained in this Official Statement and the documents summarized or described herein. A full review should be made of the entire Official Statement. The offering of the 2010 Bonds to potential investors is made only by means of the entire Official Statement. References to, and summaries of, provisions of the laws of the State of California or any other document referred to herein do not purport to be complete and such references are qualified in their entirety by reference to the original source document. General This Official Statement of the Redevelopment Agency of the City of Temecula (the "Agency") provides information regarding the sale by the Agency of its $ aggregate initial principal amount of Temecula Redevelopment Project No. 1 Tax Allocation Housing Bonds 2010 Series A (Tax - Exempt Bonds) (the "2010 Series A Bonds") and its $ aggregate initial principal amount of Temecula Redevelopment Project No. 1 Tax Allocation Housing Bonds 2010 Series B (Taxable Build America Bonds) (the "2010 Series B Bonds," and collectively with the 2010 Series A Bonds, the "2010 Bonds" and collectively with any Parity Debt (defined below), the `Bonds"). The 2010 Bonds are issued under the provisions of the Redevelopment Law (defined below) and an Indenture of Trust, dated as of March 1, 2010 (the "Indenture"), by and between the Agency and U.S. Bank National Association, as trustee (the "Trustee"), to finance eligible housing activities within the City of Temecula (the "City"). The 2010 Series B Bonds will be designated as "Direct Payment Build America Bonds" under the provisions of the American Recovery and Reinvestment Act of 2009, the interest on which is not excluded from gross income for purposes of federal income taxation. As such, the Agency expects to receive a cash subsidy payment from the United States Treasury equal to 35% of the interest payable on the 2010 Series B Bonds. See "THE 2010 BONDS." The 2010 Bonds are secured by a pledge of, security interest in and a lien on Housing Tax Increment Revenues (defined below) and by the moneys in I Preliminary, subject to change. certain funds and accounts established by the Indenture. The Indenture permits the Agency to, upon satisfaction of certain conditions, incur additional parity debt ("Parity Debt") payable from and secured by a lien and charge upon Housing Tax Increment Revenues on a parity with the lien and charge securing the 2010 Bonds. See "INTRODUCTION — Source of Payment for the 2010 Bonds," "SECURITY FOR THE 2010 BONDS" and "APPENDIX A — SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE." Definitions of certain capitalized terms used in this Official Statement are set forth in "APPENDIX A — SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE." This Official Statement contains brief descriptions of the 2010 Bonds, the Indenture, the Agency, Temecula Redevelopment Project No. 1 (the "Redevelopment Project") and the Redevelopment Plan (as defined herein). Such descriptions do not purport to be comprehensive or definitive. All references in this Official Statement to documents are qualified in their entirety by reference to those documents, and references to the 2010 Bonds are qualified in their entirety by reference to the forms 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 "Additional Information" below. The Agency and the Redevelopment Plan On July 12, 1988, prior to the incorporation of the City, the County of Riverside (the "County") (adopted the "County of Riverside Redevelopment Plan 1 — 1988" (the "County Redevelopment Plan") by Ordinance No. 658. On December 1, 1989, the City was incorporated. All of the area within the County Redevelopment Plan was included within the boundaries of the City. The Agency was established on March 26, 1991, by the City Council of the City (the "City Council") by adoption of Ordinance No. 91-08 under the provisions of the Community Redevelopment Law, constituting Part 1 of Division 24 (commencing with Section 33000) of the California Health and Safety Code, as amended (the "Redevelopment Law"). The City Council at the same time declared itself to be the governing body of the Agency. The five members of the City Council serve as the governing body of the Agency and exercise all rights, powers, duties and privileges of the Agency. See "THE REDEVELOPMENT AGENCY OF THE CITY OF TEMECULA" herein. The City has no responsibility whatsoever for the repayment of the 2010 Bonds. The City Council subsequently adopted Ordinance No. 91-11 on April 9, 1991, and Ordinance No. 91-15 on April 9, 1991, approving the County Redevelopment Plan as the Temecula Redevelopment Plan No. 1 (the "Redevelopment Plan") and transferring jurisdiction over the Redevelopment Plan to the Agency. This transfer was effective July 1, 1991. Thereafter, the City Council adopted Ordinance No. 94-33 on December 20, 1994, Ordinance No. 06-11 on September 26, 2006, Ordinance No. 07-20 on January 8, 2008, and Ordinance No. 07-21 on January 8, 2008, amending certain provisions relating to the Redevelopment Plan. The Temecula Redevelopment Project No. 1, the area encompassed by the Redevelopment Plan (the "Project Area"), is primarily commercial and industrial in nature. It is generally located along Interstate 15 from the City's northern border with the City of Murrieta to the intersection of Highway 79 on the south. The Project Area encompasses approximately 1,635 acres. The Project Area includes the Promenade Mall site, Old Town and industrial and business park areas west of Interstate 15. See "THE REDEVELOPMENT PLAN" herein. The total assessed valuation of taxable property in the Project Area for Fiscal Year 2009-10 is approximately $1,975,746,757 greater than the aggregate adjusted assessed valuation in the applicable base year. Assessed valuations in the Project Area are subject to various factors which could result in decreases from those assessed valuations reported for Fiscal Year 2009-10. See "RISK FACTORS" herein. 5 Purpose of Issuance Proceeds from the sale of the 2010 Bonds will be used to (i) finance eligible housing activities within the City; (ii) establish a Reserve Account with respect to the Bonds; and (iii) provide for the costs of issuing the 2010 Bonds. See "ESTIMATED SOURCES AND USES OF FUNDS" herein. The 2010 Bonds The 2010 Bonds are being issued pursuant to the laws of the State of California (the "State"), including the provisions of the Redevelopment Law, Resolution No. RDA _, adopted by the Agency on [February 9], 2010 (the "Resolution"), and the Indenture. See "THE 2010 BONDS" herein and "APPENDIX A — SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE" attached hereto. The 2010 Bonds will be issued in denominations of $5,000 each or integral multiples thereof. Interest on the 2010 Bonds is payable on each February 1 and August 1, commencing on August 1, 2010. Interest and principal on the 2010 Bonds are payable by the Trustee to DTC (as defined herein) which will be responsible for remitting such principal and interest to the Participants (as defined in Appendix G) which will, in turn, be responsible for remitting such principal and interest to the Beneficial Owners (as defined in Appendix G) of the 2010 Bonds. No physical distribution of the 2010 Bonds will be made to the public initially. See "THE 2010 BONDS — Book -Entry and DTC" herein. Source of Payment for the 2010 Bonds The Redevelopment Law provides a means for financing redevelopment projects based upon an allocation of taxes collected within a redevelopment project area. Pursuant to the Redevelopment Law, the "base roll" is established by determining the taxable value of property within a project area last equalized prior to adoption of a redevelopment plan by a redevelopment agency. Except for any period during which the taxable value drops below the base year level, the taxing agency thereafter generally receives the taxes produced by the levy of the then -current tax rate upon the base roll. Taxes collected on any increase in taxable value over the base roll (commonly known as "tax increment revenues") (with the exception of taxes derived from increases in the tax rate imposed by taxing agencies to support new bonded indebtedness) are allocated to a redevelopment agency and, subject to certain limitations discussed herein, may be pledged by the redevelopment agency to the repayment of indebtedness incurred in financing or refinancing a redevelopment project. Under Section 33334.2 and Section 33334.6 of the Redevelopment Law, redevelopment agencies are generally required, unless certain annual findings are made, to set aside 20% of all tax increment revenues allocated annually in a low and moderate income housing fund to be used within the jurisdiction of the agency to increase and improve the supply of low and moderate income housing. See "SECURITY FOR THE 2010 BONDS." The 2010 Bonds are special obligations of the Agency and are payable from and secured by a pledge of "Housing Tax Increment Revenues" and amounts in certain funds and accounts held under the Indenture. The term Housing Tax Increment Revenues is defined in the Indenture as all taxes annually allocated and paid to the Agency with respect to the Project Area 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 (the "California Constitution") 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, which are required to be deposited into the Low and Moderate Income Housing Fund of the Agency in any Fiscal Year pursuant to Section 33334.3 of the Redevelopment Law. See "SECURITY FOR THE 2010 BONDS — Pledge of Housing Tax Increment Revenues" and "SECURITY FOR THE 2010 BONDS — Parity Debt' herein. C The Housing Tax Increment Revenues are not subject to the pledge and lien of any indebtedness of the Agency other than Parity Debt that may be issued in accordance with the Indenture. The 2010 Bonds are not payable from, and are not secured by, any funds of the Agency other than the Housing Tax Increment Revenues, and amounts in certain funds and accounts specifically pledged therefor under the Indenture. See "SECURITY FOR THE 2010 BONDS" herein. Parity Debt; Subordinate Debt The Agency may incur parity debt secured under the Indenture on a parity with the 2010 Bonds subject to certain specific conditions set forth in the Indenture. Such Parity Debt, if incurred, is payable from and secured by a lien and charge upon Housing Tax Increment Revenues on a parity with the lien and charge securing the 2010 Bonds. The Agency may issue or incur subordinate debt subject to certain specific conditions set forth in the Indenture. See "SECURITY FOR THE 2010 BONDS — Parity Debt' and "THE REDEVELOPMENT AGENCY OF THE CITY OF TEMECULA — Outstanding Indebtedness of the Agency" herein. Bondowners' Risks Investment in the 2010 Bonds involves risks that may not be appropriate for some investors. Prospective investors should review this Official Statement and the Appendices hereto in their entirety in considering the investment quality of the 2010 Bonds 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 "RISK FACTORS." The scheduled payment of principal of and interest on the 2010 Bonds will be payable from Housing Tax Increment Revenues. Continuing Disclosure The Agency has covenanted, for the benefit of Owners (as defined in the Indenture) and Beneficial Owners of the 2010 Bonds, to provide certain financial information and operating data related to the Agency by not later than eight months following the end of the Agency's Fiscal Year (the "Annual Report') and to provide notices of the occurrence of certain enumerated events, if material. The Annual Report will be filed by the Agency with the Municipal Securities Rulemaking Board ("MSRB") through the Electronic Municipal Market Access system ("EMMA"). The specific nature of the information to be contained in the Annual Report and any notices of material events are summarized below under the caption "CONTINUING DISCLOSURE." A complete copy of the Continuing Disclosure Certificate is set forth in "APPENDIX E — FORM OF CONTINUING DISCLOSURE CERTIFICATE." The covenants of the Agency in the Continuing Disclosure Certificate have been made in order to assist the underwriter of the 2010 Bonds in complying with S.E.C. Rule 15c2-12(b)(5) (the "Rule"). The Agency has substantially complied with all of its previous disclosure obligations under the Rule. Tax Matters In the opinion of Quint & Thimmig LLP, San Francisco, California, Bond Counsel, subject, however, to certain qualifications described herein, under existing law, interest on the 2010 Series A Bonds (i) is excludable from gross income of the beneficial owners thereof for federal income tax purposes, (ii) is not included as an item of tax preference in computing the federal alternative minimum tax for individuals and corporations, and (iii) is not taken into account in computing adjusted current earnings, which is used as an adjustment in determining the federal alternative minimum tax for certain corporations. Interest on the 2010 Series B Bonds is subject to all applicable federal taxation. In the further opinion of Bond Counsel, interest on the 2010 Series A Bonds and on the 2010 Series B Bonds is exempt from California personal income taxes. See "TAX MATTERS" herein. 7 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 Quint & Thimmig LLP, San Francisco, California, Bond Counsel to the Agency. McFarlin & Anderson LLP, Lake Forest, California, is serving as Disclosure Counsel to the Agency for the 2010 Bonds. Certain legal matters will be passed upon for the Agency by Richards, Watson & Gershon, Los Angeles, California, Counsel to the Agency. HdL Coren & Cone, Diamond Bar, California, is acting as Fiscal Consultant to the Agency. Fieldman, Rolapp & Associates, Irvine, California, is acting as Financial Advisor to the Agency. U.S. Bank National Association, Los Angeles, California, will act as Trustee under the Indenture. Additional Information This Official Statement speaks only as of its date, and the information contained herein is subject to change without notice. Copies of documents referred to herein are available from the Agency upon written request, c/o the Redevelopment Agency of the City of Temecula, 43200 Business Park Drive, Temecula, California 92590, Attention: Agency Secretary. The Agency may impose a charge for copying, mailing and handling expenses related to any request for documents. ESTIMATED SOURCES AND USES OF FUNDS The following table sets forth a summary of the sources and uses of funds associated with the issuance and sale of the 2010 Series A Bonds. 2010 Series 2010 Series B A Bonds Bonds Total Sources of Funds Par Amount of 2010 Bonds Less: Net Original Issue Discount Less: Underwriter's Discount Total Sources Uses of Funds Deposit into applicable Reserve Subaccoumn) $ Deposit into applicable Housing Projects Account Deposit into applicable Costs of Issuance Accounta) Total Uses Equal to the pro rata portion of the initial Reserve Requirement with respect to the 2010 Bonds. «� Includes, among other things, the fees and expenses of Bond Counsel, Disclosure Counsel, the Financial Advisor, the Trustee and the cost of preparation of the Preliminary and final Official Statements. Redevelopment Activities The Agency has determined to use 2010 Bonds proceeds to finance eligible housing activities within the City. The primary housing activities anticipated to be financed with proceeds of the 2010 Bonds include funding the Agency's contribution to the Warehouse at Creekside development which was 8 approved by the Redevelopment Agency Board by Resolution RDA No. 08-06 and by the City Council by Resolution No. 08-81 on August 12, 2008. This development is under construction and, when complete, is anticipated to be a 42,717 square foot mixed use project on .52 acres along the south side of 3rd Street, west of Old Town Front Street, adjacent to Murrieta Creek. The project is planned as a three story building with 32 units of affordable housing and about 3,500 square feet of commercial/retail space. Allowable rents are estimated to range from $67041,250 per month. The Agency has committed a $6,000,000 contribution to this project through the Owner Participation Agreement. The Agency anticipates releasing project funds upon the completion of construction and receipt of certificate of occupancy in the spring of 2010. Bond proceeds may also be used in connection with the Agency owned property on Pujol Street adjacent to the Main Street Apartments. On February 9, 2010, the Agency Board [approved] an Exclusive Negotiating Agreement with The RC Hobbs Company. [Confirm/update status prior to printing POS] The proposed mixed income affordable housing project relates to the assemblage of 3 parcels of land (approximately 3.5 acres) of which two parcels are currently owned by the Agency. The Agency plans to use approximately $6,000,000 of the Bond proceeds to provide private gap funding for the project. Bond proceeds may also be used in connection with other eligible housing purposes. 9 111 DIR MMDI041NJM O01DI11U1111 The following table represents the annual debt service for the 2010 Bonds, assuming no redemption of the 2010 Bonds other than mandatory sinking account redemption. 2010 Series A Bonds 2010 Series B Bonds Period Ending Bond Bond Bond Bond (August 1) Principal Interest Principal Interest 2010 $ $ $ $ $ 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 Total $ $ $ $ $ 11IIWill [I71117► OR General Provisions Total Annual Debt Service The 2010 Series A Bonds will be issued and sold in the initial aggregate principal amount of $ and the 2010 Series B Bonds will be issued and sold in the initial aggregate principal amount of $ The 2010 Bonds will be delivered in registered form, without coupons, in 10 authorized denominations of $5,000 or any integral multiples thereof. Interest on the 2010 Bonds is payable semi-annually on February 1 and August 1 of each year (as defined on the cover of the Official Statement, each an "Interest Payment Date," as applicable), commencing August 1, 2010, to the registered Owner thereof as of the close of business on the fifteenth calendar day of the month preceding such Interest Payment Date, whether or not such fifteenth calendar day is a Business Day (each a "Record Date," as applicable). Principal of the 2010 Bonds will be payable on August 1 in each of the years and in the principal amounts shown on the inside cover page hereof. Interest on the 2010 Bonds is payable by check of the Trustee mailed by first-class mail, postage prepaid, on each Interest Payment Date to the Owners of the 2010 Bonds at their respective addresses shown on the Registration Books (as defined in the Indenture) kept by the Trustee as of the applicable Record Date; provided, however, that payment of interest to each registered Owner of $1,000,000 or more aggregate principal amount of the 2010 Bonds may be made by wire transfer to an account in the United States of America as specified by such Owner in a written request filed with the Trustee prior to the applicable Record Date. Principal of and premium, if any, on the 2010 Bonds is payable in lawful money of the United States of America by check of the Trustee upon presentation and surrender thereof at the corporate trust office of the Trustee designated pursuant to the Indenture. The 2010 Bonds will be dated their date of issuance and will bear interest (calculated on the basis of a 360-day year comprised of twelve 30-day months) from the Interest Payment Date next preceding the date of authentication thereof, unless (i) a 2010 Bond is authenticated on or before an Interest Payment Date and after the close of business on the preceding Record Date, in which event such 2010 Bond will bear interest from such Interest Payment Date, (ii) a 2010 Bond is authenticated on or before the Record Date preceding the first Interest Payment Date, in which event interest thereon shall be payable from the date of issuance of the 2010 Bonds, or (iii) interest on any 2010 Bond is in default as of the date of authentication thereof, in which event such interest thereon shall be payable from the date to which interest has been paid in full, payable on each Interest Payment Date. Any interest not paid when due or duly provided for on any Interest Payment Date shall be paid to the person in whose name the 2010 Bond is registered at the close of business on a special record date for the payment of such defaulted interest to be fixed by the Trustee. The Trustee shall give notice of such special record date to the Owner not less than 10 days prior thereto. Designation of 2010 Series B Bonds as "Build America Bonds" The 2010 Series B Bonds will be issued as "Direct Payment Build America Bonds" for purposes of the American Recovery and Reinvestment Act of 2009, signed into law on February 17, 2009 (the "Recovery Act'). The Agency expects to receive a cash subsidy payment from the United States Treasury pursuant to the Recovery Act equal to 35% of the interest payable on such 2010 Series B Bonds on or about each Interest Payment Date. The cash payment does not constitute a full faith and credit guarantee of the United States, but is required to be paid by the Treasury under the current provisions of the Recovery Act. Any cash subsidy payments received by the Agency will be applied towards eligible low and moderate income housing purposes. The Agency is obligated to make all payments of principal of and interest on the 2010 Series A Bonds and 2010 Series B Bonds whether or not it receives cash subsidy payments pursuant to the Recovery Act. The Agency has made an irrevocable designation of the 2010 Series B Bonds issued as "Direct Payment Build America Bonds" pursuant to the provisions of Section 54AA(g) of the Code. Redemption 11 The 2010 Bonds are subject to redemption upon the circumstances, on the dates and at the prices as follows: Optional Redemption of the 2010 Bonds. (i) The 2010 Series A Bonds maturing on or after August 1, 20__, shall be subject to redemption in whole or in part on any date at the request of the Agency, among maturities as determined by the Agency, and in any case by lot within a maturity on or after August 1, 20, at the option of the Agency, from any available source of funds, at a redemption price equal to one hundred percent (100%) of the principal amount thereof to be redeemed together with accrued interest thereon to the redemption date, without premium. (ii) The 2010 Series B Bonds maturing on or after August 1, 20__, shall be subject to redemption in whole or in part on any date at the request of the Agency, among maturities as determined by the Agency, and in any case by lot within a maturity on or after August 1, 20__, at the option of the Agency, from any available source of funds, at a redemption price equal to one hundred percent (100%) of the principal amount thereof to be redeemed together with accrued interest thereon to the redemption date, without premium. Mandatory Sinking Account Redemption of 2010 Bonds. (i) The 2010 Series A Bonds maturing on August 1, 20__, and August 1, 20 , shall also be subject to redemption in whole, or in part by lot, on August 1, 20 , and August 1, 20 , respectively, and on August 1 in each year thereafter as set forth in the following tables, from Sinking Account payments made by the Agency pursuant to the Indenture, at a redemption price equal to the principal amount thereof to be redeemed together with accrued interest thereon to the redemption date, without premium, or in lieu thereof shall be purchased pursuant to the Indenture, in the aggregate respective principal amounts and on the dates as set forth in the following tables; provided, however, that if some but not all of such 2010 Series A Bonds have been redeemed pursuant to the optional redemption provisions of the Indenture, the total amount of all future Sinking Account payments pursuant to the Indenture shall be reduced by the aggregate principal amount of such 2010 Series A Bonds so redeemed, to be allocated among such Sinking Account payments in integral multiples of $5,000 as determined by the Agency (written notice of which determination shall be given by the Agency to the Trustee). 2010 Series A Bonds Maturing on August 1, 20 Sinking Account Redemption Date (August 1) Principal Amount To Be Redeemed 20 20 20 20 (maturity) 12 2010 Series A Bonds Maturing on August 1, 20 Sinking Account Redemption Date Principal Amount (August 1) To Be Redeemed 20 20 20 20 20 (maturity) (ii) The 2010 Series B Bonds maturing on August 1, _, and August 1, _, shall also be subject to redemption in whole, or in part by lot, on August 1, __, and August 1, _, respectively, and on August 1 in each year thereafter as set forth in the following tables, from Sinking Account payments made by the Agency pursuant to the Indenture, at a redemption price equal to the principal amount thereof to be redeemed together with accrued interest thereon to the redemption date, without premium, or in lieu thereof shall be purchased pursuant to the Indenture, in the aggregate respective principal amounts and on the respective date as set forth in the following tables; provided, however, that if some but not all of such 2010 Series B Bonds have been redeemed pursuant to the Indenture, the total amount of all future Sinking Account payments pursuant to the Indenture shall be reduced by the aggregate principal amount of such 2010 Series B Bonds so redeemed, to be allocated among such Sinking Account payments in integral multiples of $5,000 as determined by the Agency (written notice of which determination shall be given by the Agency to the Trustee). 2010 Series B Bonds Maturing August 1, Sinking Account Redemption Date Principal Amount (August 1) To Be Redeemed 20 20 20 20 (maturity) 2010 Series B Bonds Maturing August 1, Sinking Account Redemption Date Principal Amount (August 1) To Be Redeemed 20 20 20 20 (maturity) In lieu of redemption of the 2010 Bonds pursuant to the preceding paragraphs, amounts on deposit in the Special Fund [(to the extent not required to be transferred to the Trustee pursuant to the Indenture, or the trustee for any Parity Debt pursuant to any Parity Debt Instrument, to pay principal (including any sinking payments)] and interest due on the Bonds during the then current Bond Year) may 13 also be used and withdrawn by the Agency at any time prior to the selection of 2010 Bonds for redemption for the purchase of such 2010 Bonds at public or private sale as and when and at such prices (including brokerage and other charges and including accrued interest) as the Agency may in its discretion determine. The par amount of any of such 2010 Bonds so purchased by the Agency and surrendered to the Trustee for cancellation at least sixty (60) days prior to any scheduled redemption date shall be credited towards and shall reduce the par amount of 2010 Series A Bonds and 2010 Series B Bonds, as applicable, required to be redeemed pursuant to the Indenture on such date. Notice of Redemption. The Trustee, on behalf and at the expense of the Agency, shall mail (by first-class mail, postage prepaid) notice of any redemption at least thirty (30) but not more than sixty (60) days prior to the redemption date, to (i) the Owners of any 2010 Bonds designated for redemption at their respective addresses appearing on the Registration Books, and (ii) the Securities Depositories (as defined in the Indenture) and to one or more Information Services (as defined in the Indenture); provided, however, that such mailing shall not be a condition precedent to such redemption and neither failure to receive any such notice nor any defect in any notice given shall affect the validity of the proceedings for the redemption of such 2010 Bonds or the cessation of the accrual of interest thereon. Such notice shall state the redemption date and the redemption price, shall designate the CUSIP® numbers and series of the 2010 Bonds to be redeemed, and shall require that such 2010 Bonds be then surrendered at the office of the Trustee for redemption at the said redemption price, giving notice also that further interest on the 2010 Bonds to be redeemed will not accrue from and after the date fixed for redemption. Notwithstanding the foregoing, in the case of any optional redemption of the 2010 Bonds under the Indenture, the notice of redemption shall state that the redemption is conditioned upon receipt by the Trustee of sufficient moneys to redeem the 2010 Bonds on the anticipated redemption date, and that the optional redemption shall not occur if by no later than the scheduled redemption date sufficient moneys to redeem the 2010 Bonds have not been deposited with the Trustee. In the event that the Trustee does not receive sufficient funds by the scheduled optional redemption date to so redeem the 2010 Bonds to be optionally redeemed, the Trustee shall send written notice to the Owners of the 2010 Bonds, to the Securities Depositories and to one or more of the Information Services to the effect that the redemption did not occur as anticipated and the 2010 Bonds for which notice of optional redemption was given shall remain Outstanding for all purposes of the Indenture. Manner of Redemption. Whenever provision is made in the Indenture for the redemption of less than all of the 2010 Bonds, unless otherwise provided in the Indenture, the Agency in its discretion shall determine the maturities to be redeemed by written notice to the Trustee, and the Trustee shall select the 2010 Bonds within a maturity to be redeemed by lot in any manner which the Trustee in its sole discretion, shall deem appropriate. For purposes of such selection, all 2010 Bonds shall be deemed to be comprised of separate $5,000 denominations and such separate denominations shall be treated as separate 2010 Bonds which may be separately redeemed. Notwithstanding the foregoing, if for any reason the Agency fails to provide the Trustee with direction as to the maturities to be redeemed, the Trustee shall select the 2010 Bonds to be redeemed pro rata among maturities. Partial Redemption of 2010 Bonds. In the event only a portion of any 2010 Bond is called for redemption, then upon surrender thereof the Agency shall execute and the Trustee shall authenticate and deliver to the Owner thereof, at the expense of the Agency, a new 2010 Bond or 2010 Bonds of the same series, interest rate and maturity, of authorized denominations in aggregate principal amount equal to the unredeemed portion of the 2010 Bond to be redeemed. Effect of Redemption. From and after the date fixed for redemption, if funds available for payment of the redemption price of and interest on the 2010 Bonds so called for redemption shall have been duly deposited with the Trustee, such 2010 Bonds so called shall cease to be entitled to any benefit 14 under the Indenture other than the right to receive payment of the redemption price and accrued interest to the redemption date, and no interest shall accrue thereon from and after the redemption date specified in such notice. Book -Entry and DTC The Depository Trust Company ("DTC"), New York, New York, will act as securities depository for the 2010 Bonds. The 2010 Bonds will be issued as fully -registered securities registered in the name of Cede & Co. (DTC's partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully -registered Bond certificate will be issued for each maturity of the 2010 Bonds, each in the aggregate principal amount of such maturity, and will be deposited with DTC. See "APPENDIX G — BOOK -ENTRY SYSTEM." So long as Cede & Co. is the registered Owner of the 2010 Bonds, references in this Official Statement to the holders, owners, Owners, registered Owners or Bondholders of the 2010 Bonds shall mean Cede & Co. and shall not mean the Beneficial Owners of the 2010 Bonds. Discontinuance of DTC Services In the event that (a) DTC determines not to continue to act as securities depository for the 2010 Bonds, or (b) the Agency determines that DTC shall no longer act as securities depository, and delivers a written certificate to the Trustee to that effect, then the Agency will discontinue the Book -Entry System with DTC for the 2010 Bonds. If the Agency determines to replace DTC with another qualified securities depository, the Agency will prepare or direct the preparation of a new single, separate, fully -registered Bond for each maturity of the 2010 Bonds registered in the name of such successor or substitute securities depository as are not inconsistent with the terms of the Indenture. If the Agency fails to identify another qualified securities depository to replace the incumbent securities depository for the 2010 Bonds, then such 2010 Bonds shall no longer be restricted to being registered in the Registration Books in the name of the incumbent securities depository or its nominee, but shall be registered in whatever name or names the incumbent securities depository or its nominee transferring or exchanging the applicable 2010 Bonds shall designate. In the event that the Book -Entry System is discontinued, the following provisions would also apply: (i) the 2010 Bonds will be made available in physical form, (ii) principal of, and redemption premiums, if any, on the 2010 Bonds will be payable upon surrender thereof at the trust office of the Trustee identified in the Indenture, and (iii) the 2010 Bonds will be transferable and exchangeable as provided in the Indenture. TAX ALLOCATION FINANCING General Tax Allocations. 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, or base roll, is established in the base year. 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 to support new bonded indebtedness) are allocated to the redevelopment agency and may be pledged to the repayment of any indebtedness incurred in financing or refinancing redevelopment. Redevelopment agencies themselves have no 15 authority to levy property taxes and must look exclusively to such allocation of taxes. Currently, such taxes are collected by the county and paid to the affected entities. Allocation of Taxes As provided in the Redevelopment Plan and pursuant to Article 6 of Chapter 6 of the Redevelopment Law and Section 16 of Article XVI of the California Constitution, taxes levied upon taxable property in the project area each year by or for the benefit of the State, cities, counties, districts or other public corporations (collectively, the "Taxing Agencies"), for fiscal years beginning after the effective date of the respective redevelopment plan, will be divided as follows: (1) To Taxing Agencies: The portion equal to the amount of those taxes which would have been produced by the current tax rate, applied to the taxable valuation of such property in the redevelopment project area as last equalized prior to the establishment of the redevelopment project, or base roll, is paid into the funds of those respective taxing agencies as taxes by or for said taxing agencies; and (2) To Redevelopment Agencies: The portion of said levied taxes each year in excess of the amount referred to in (1) above is allocated to, and when collected, is paid into the special fund of the redevelopment agency; provided that the portion of the taxes identified in (1) above which are attributable to a tax rate levied by a taxing agency to pay indebtedness approved by the voters of that taxing agency on or after January 1, 1989, shall be allocated to, and when collected shall be paid into, the fund of such taxing agency. Such excess is referred to as "Tax Increment Revenues." Housing Tax Increment Amounts. The Redevelopment Law requires generally that, unless a specified finding is made, redevelopment agencies must set aside 20% of all tax increment revenues (as described above) derived from redevelopment project areas into a low and moderate income housing fund (the "Low and Moderate Income Housing Fund"), to be used for the purpose of increasing, improving and/or preserving the supply of low and moderate income housing. Sections 33334.2 and 33334.6 of the Redevelopment Law dictate the low and moderate income housing set aside requirement for the redevelopment project. The Agency covenanted in the Indenture that the Agency shall not make any findings with the purpose or effect of reducing the percentage of taxes below 20% of all tax increment revenues. See "LIMITATIONS ON HOUSING TAX INCREMENT REVENUES — Low and Moderate Income Housing" herein. The pledge of Housing Tax Increment Revenues under the Indenture is a pledge of the Housing Tax Increment Revenues arising from the Redevelopment Plan that are required to be deposited by the Agency to the Low and Moderate Income Housing Fund. SECURITY FOR THE 2010 BONDS Pledge of Housing Tax Increment Revenues Pursuant to the Indenture, all right, title and interest of the Agency in Housing Tax Increment Revenues paid to the Agency under the California Constitution, the Redevelopment Law and other applicable laws, are pledged to secure the payment of principal of and interest on the 2010 Bonds. The Indenture defines the term "Housing Tax Increment Revenues" to mean all taxes annually allocated and paid to the Agency with respect to the Project Area pursuant to Article 6 of Chapter 6 (commencing with Section 33670) of the Redevelopment Law and Section 16 of Article XVI of the California Constitution 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, which are required to be 16 deposited into the Low and Moderate Income Housing Fund of the Agency in any Fiscal Year pursuant to Section 33334.3 of the Redevelopment Law. See "SECURITY FOR THE 2010 BONDS — Parity Debt' herein for a discussion of the future obligations of the Agency which will also be payable from Housing Tax Increment Revenues. See also "LIMITATIONS ON HOUSING TAX INCREMENT REVENUES — Redevelopment Plan Limitations" herein for certain other constraints on the availability of Housing Tax Increment Revenues to pay debt service on the 2010 Bonds. The Agency has not pledged any Federal Subsidy Payments received by the Agency from the federal governrnent with respect to interest on the 2010 Series B Bonds to the payment of the 2010 Series A Bonds or the 2010 Series B Bonds. The Agency has no independent power to levy and collect property taxes, and any property tax limitation, legislative measure, voter initiative or provision of additional sources of income to taxing agencies having the effect of reducing the property tax rate or collections, could reduce the amount of Housing Tax Increment Revenues that would otherwise be available to pay the principal of, and interest on, the 2010 Bonds. Likewise, broadened property tax exemptions could have a similar effect. See "RISK FACTORS" herein. Limited Obligations THE PRINCIPAL OF AND INTEREST AND PREMIUM, IF ANY, ON THE 2010 BONDS ARE PAYABLE SOLELY FROM HOUSING TAX INCREMENT REVENUES AND FROM AMOUNTS IN CERTAIN FUNDS AND ACCOUNTS PLEDGED THEREFOR UNDER AND PURSUANT TO THE INDENTURE. THE 2010 BONDS ARE NOT A DEBT OF THE CITY, OR THE STATE OR ANY POLITICAL SUBDIVISION OF THE STATE (OTHER THAN THE AGENCY TO THE LIMITED EXTENT SET FORTH IN THE INDENTURE); AND NEITHER THE CITY NOR THE STATE OR ANY OF ITS POLITICAL SUBDIVISIONS (OTHER THAN THE AGENCY) IS LIABLE THEREFOR. NEITHER THE MEMBERS OF THE AGENCY NOR ANY PERSON RESPONSIBLE FOR THE EXECUTION OF THE 2010 BONDS IS LIABLE PERSONALLY FOR THE 2010 BONDS BY REASON OF THE ISSUANCE THEREOF. Application of Housing Tax Increment Revenues Under the Indenture there is established a special fund known as the "Special Fund," which is held by the Agency. The Agency is required under the Indenture to transfer all of the Housing Tax Increment Revenues received with respect to any Bond Year (August 2 in any year to the next succeeding August 1) to the Special Fund created thereunder promptly upon receipt thereof by the Agency; provided, that the Agency will not be obligated to deposit in such Special Fund with respect to any Bond Year an amount of Housing Tax Increment Revenues which, together with other available amounts then in such Special Fund, exceeds the amounts required to be transferred under the Indenture to the Trustee for deposit in the Interest Account, Principal Account, Sinking Account, applicable subaccounts in the Reserve Account and the Redemption Account established under the Indenture with respect to any Bond Year as described below. After the amount on deposit in the Special Fund established under the Indenture equals the aggregate amount required to be deposited into the Interest Account, the Principal Account, the Sinking Account, applicable subaccounts in the Reserve Account and the Redemption Account established under the Indenture in such Bond Year as described below, all additional Housing Tax Increment Revenues received during such Bond Year will be released from the pledge and lien of the Indenture and may be used for any lawful purpose of the Agency. Prior to the payment in full of principal of and interest and redemption premium (if any) on the 2010 Bonds and the payment in full of all other amounts payable under the Indenture and under any 17 resolution, indenture of trust, trust agreement or other instrument authorizing the issuance and/or execution and delivery of any Parity Debt (collectively, a "Parity Debt Instrument'), the Agency will not have any beneficial right or interest in the moneys on deposit in the Special Fund, except only as provided in the Indenture and in any Parity Debt Instrument, and such moneys will be used and applied as set forth in the Indenture and in any Parity Debt Instrument. Under the Indenture there is established a trust fund known as the "Debt Service Fund," which is held by the Trustee in trust. Moneys in the Special Fund are required to be transferred by the Agency to the Trustee in the following amounts, at the following times, for deposit by the Trustee in the following accounts within the Debt Service Fund, which are held by the Trustee, and in the following order of priority: Interest Account. Three Business Days before each date on which interest on the Bonds becomes due and payable, the Agency will withdraw from the Special Fund and transfer to the Trustee for deposit in the Interest Account an amount which, when added to the amount then on deposit in the Interest Account, will be equal to the aggregate amount of the interest becoming due and payable on the Outstanding Bonds on such date. All moneys in the Interest Account shall be used and withdrawn by the Trustee solely for the purpose of paying the interest on the Bonds as it becomes due and payable. Principal Account; Sinking Account. Three Business Days before each date on which principal of the Bonds becomes due and payable at maturity or date on which any Outstanding Term Bonds become subject to mandatory Sinking Account redemption, the Agency shall withdraw from the Special Fund and transfer to the Trustee for deposit (i) in the Principal Account an amount which, when added to the amount then on deposit in the Principal Account, will be equal to the amount of the principal coming due and payable on such date on the Outstanding Bonds; and (ii) 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 subject to mandatory Sinking Account redemption on such date. In the event that the amount then in the Special Fund, following the transfer described in the preceding sentence, is not sufficient to fully fund the amounts described in the preceding clauses (i) and (ii), the Trustee shall deposit the available funds in the Special Fund pro rata to the Principal Account and the Sinking Account, based on the aggregate principal and Sinking Account payments then due on the Bonds. All moneys in the Principal Account shall be used and withdrawn by the Trustee solely for the purpose of paying the principal on the Bonds upon the maturity thereof. All moneys on deposit in the Sinking Account shall be used and withdrawn by the Trustee for the sole purpose of paying the principal of the Term Bonds as it shall become due and payable upon the mandatory Sinking Account redemption thereof. Reserve Account. In the event that the aggregate amount on deposit in the 2010 Series A Bonds Reserve Subaccount and the 2010 Series B Bonds Reserve Subaccount of the Reserve Account at any time becomes less than the Reserve Requirement, the Trustee (to the extent known to it) shall promptly notify the Agency of such fact. Promptly upon receipt of any such notice, the Agency shall transfer to the Trustee from the Special Fund pro rata (based upon the amounts theretofore withdrawn from such subaccounts) to the subaccounts within the Reserve Account an amount sufficient to maintain an aggregate amount equal to the Reserve Requirement on deposit in the 2010 Series A Bonds Reserve Subaccount and the 2010 Series B Bonds Reserve Subaccount of the Reserve Account. Amounts in the subaccounts in the Reserve Account shall be used and withdrawn by the Trustee pro rata from each such subaccount (based upon the amounts then in such subaccounts) for the purpose of making transfers to (i) the Interest Account, and (ii) the Principal Account and the Sinking Account, in such order of priority(pro rata to the 18 Principal Account and the Sinking Account, based upon the principal and sinking account payments then due, if the amount then in subaccounts in the Reserve Account, after satisfying any deficiency in the Interest Account, is not sufficient to fully satisfy any then deficiencies in the Principal Account and the Sinking Account), on any date on which the principal of or interest on the Bonds becomes due and payable under the Indenture, in the event of any deficiency at any time in any of such accounts, or at any time for the retirement of all the Bonds then Outstanding. If, as of any Interest Payment Date, no Event of Default shall have occurred and then be continuing and the aggregate amount on deposit in the subaccounts of the Reserve Account is in excess of the then Reserve Requirement, the Trustee shall withdraw the excess amount pro rata (based on the amounts then in such subaccounts) from the 2010 Series A Bonds Reserve Subaccount and the 2010 Series B Bonds Reserve Subaccount and, unless otherwise directed in a Request of the Agency, transfer the amount withdraw (i) from the 2010 Series B Bonds Reserve Subaccount to the 2010 Series B Bonds Housing Projects Account to be used for the purposes of such account, and (ii) from the 2010 Series A Bonds Reserve Subaccount to the Interest Account to be used for the purposes of such account. The Agency reserves the right at any time to release any funds from the accounts within the Reserve Account, in whole or in part, by tendering to the Trustee: (i) a Qualified Reserve Account Credit Instrument, and (ii) 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 (i) interest on the 2010 Series A Bonds to become includable in gross income for purposes of federal income taxation or (ii) the 2010 Series B Bonds to no longer qualify as "build America bonds" under Section 54AA of the Tax Code. 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 applicable subaccount or subaccounts within the Reserve Account (upon which calculation the Trustee may conclusively rely), the Trustee shall, unless otherwise directed in a Request of the Agency, transfer such funds (i) if withdrawn from the 2010 Series B Bonds Reserve Subaccount, to the 2010 Series B Bonds Housing Projects Account, or (ii) if withdrawn from the 2010 Series A Bonds Reserve Subaccount, to the Agency free and clear of the lien of the Indenture. "Qualified Reserve Account Credit Instrument" is defined in the Indenture to mean an irrevocable standby or direct -pay letter of credit or surety bond issued by a commercial bank or insurance company and deposited with the Trustee, provided that all of the following requirements are met at the time any such instrument is delivered to the Trustee: (a) the long-term credit rating or claims paying ability of such bank or insurance company is in the highest rating category by S&P or Moody's; (b) such 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 the Indenture; and (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, the Principal Account or the Sinking Account for the purpose of making payments required pursuant to the Indenture. Redemption Account. Three Business Days before each date on which the Bonds are subject to redemption, other than mandatory Sinking Account redemption of Term Bonds, the Agency will withdraw from the Special Fund and transfer to the Trustee for deposit in the Redemption Account an amount required to pay the principal of and premium, if any, on the Bonds to be so redeemed on such date taking into account any funds then on deposit in the Redemption Account available for such purpose. All moneys in the Redemption Account shall be used and withdrawn by the Trustee solely for the purpose of paying the principal of and premium, if any, on the Bonds upon the redemption thereof, on the date set for such redemption, other than mandatory Sinking Account redemption of Term Bonds. 19 Reserve Account Pursuant to the Indenture, a Reserve Account (the "Reserve Account") has been established and held by the Trustee in trust for the benefit of the Agency and the registered Owners of the Bonds. The amount on deposit in the Reserve Account is required to be maintained at an amount equal to the Reserve Requirement. The term "Reserve Requirement' means, as of the date of any calculation by the Agency, the least of (a) Maximum Annual Debt Service, (b) one hundred twenty-five percent (125%) of average Annual Debt Service, or (c) ten percent (10%) of the initial principal amount of the Bonds. In the event that the Reserve Requirement shall at any time be maintained in the Reserve Account in the form of a combination of cash and a Qualified Reserve Account Credit Instrument, the Trustee shall apply the amount of such cash to make any payment required to be made from the Reserve Account before the Trustee shall draw any moneys under the Qualified Reserve Account Credit Instrument for such purpose. In the event that the Trustee shall at any time draw funds under the Qualified Reserve Account Credit Instrument to make any payment then required to be made from the Reserve Account, the Housing Tax Increment Revenues thereafter received by the Trustee, to the extent remaining after making the other deposits (if any) then required to be made to the Interest Account, Principal Account and Sinking Account pursuant to the Special Fund provisions of the Indenture, shall be used to reinstate the Qualified Reserve Account Credit Instrument. If there is more than one Qualified Reserve Account Credit Instrument held in the Reserve Account, any draw or reinstatement shall be made upon them pro rata. Additional subaccounts may be established in the Reserve Account for the purpose of holding the proceeds of separate issues of Parity Debt in conformity with applicable provisions of the Tax Code. County Payment of Tax Increment The County currently pays to the Agency property tax payments at 100% of the Agency's share of levied amounts, subject to any tax sharing agreements. Consequently, delinquent property taxes do not currently impact the Agency's tax increment revenues. The Riverside County Auditor -Controller remits tax increment revenues to the Agency in periodic payments each fiscal year. However, the foregoing payment description is an administrative practice of the County that could be subject to change. While the current administrative practice continues in existence and is carried out as described above, the County's administrative practice may help protect the Owners of the 2010 Bonds from the risk of delinquencies in ad valorem taxes. Parity Debt Pursuant to the Indenture, in addition to the 2010 Bonds, the Agency may issue or incur Parity Debt payable from Housing Tax Increment Revenues on a parity with the 2010 Bonds in such principal amount as will be determined by the Agency. The Agency may issue or incur any such Parity Debt subject to the following specific conditions: (a) No Event of Default, as defined in the Indenture, shall have occurred and be continuing, and the Agency shall otherwise be in compliance with all covenants set forth in the Indenture. 20 (b) Subject to paragraph (d) below, the Housing Tax Increment Revenues for the then current Fiscal Year (based on the assessed valuation of property in the Project Area as evidenced in a written document from an appropriate official of the County) plus, at the option of the Agency, the Additional Allowance, shall be at least equal to one hundred fifty percent (150%) of the Maximum Annual Debt Service on the Bonds and such new Parity Debt. (c) Subject to paragraph (d) below, the issuance of such Parity Debt shall not cause the Agency to exceed any applicable Plan Limitations (as defined in the Indenture). Without limiting the generality of the foregoing, the Agency shall not issue or execute and deliver any Parity Debt in the event and to the extent that either (i) the sum of the aggregate amount of debt service on all outstanding obligations of the Agency payable from Housing Tax Increment Revenues, including such Parity Debt, exceeds the aggregate amount of Housing Tax Increment Revenues which are eligible to be allocated and paid to the Agency while such obligations remain outstanding or (ii) the aggregate principal amount of all outstanding obligations of the Agency, including such Parity Debt, exceeds any applicable limit in the Redevelopment Plan on the aggregate principal amount of indebtedness payable from Housing Tax Increment Revenues which the Agency is permitted to have outstanding at any one time. (d) In computing the Maximum Annual Debt Service on the Bonds and the Parity Debt, for purposes of paragraph (b) above, and the debt service for purposes of paragraph (c) above, if interest on any Bonds or the Parity Debt is payable at a variable rate or is otherwise incapable of determination, (A) if the Agency has entered into a variable to fixed swap arrangement with respect to such Bonds or Parity Debt the term of which extends for the term of such Bonds or Parity Debt and payments by the counterparty on the swap arrangement are guaranteed or insured by an entity whose unsecured debt obligations are rated in the highest rating category by Moody's or S&P, the maximum annual debt service due by the Agency under the swap arrangement shall be used rather than the maximum annual debt service on such Bonds or Parity Debt, or (B) the Bonds or Parity Debt shall be assumed to bear interest at a fixed rate equal to the average of the daily interest rate on such Bonds during the three-year period preceding the first day of the month in which the determination is made (and, if such Bonds or Parity Debt have not been outstanding for the entire three-year period, for the portion of such time period such Bonds or Parity Debt were not outstanding, the interest rate on a debt instrument of similar credit quality and maturity as determined by an Independent Redevelopment Consultant (as defined in the Indenture)). (e) The related Parity Debt Instrument shall provide that (i) Interest on such Parity Debt shall be payable on February 1 and August 1 in each year in which interest is payable on such Parity Debt except the first twelve-month period, during which interest may be payable on any February 1 or August 1 and provided that (A) there shall be no requirement that such Parity Debt pay interest on a current basis and (B) the interest rate on all Parity Debt shall be fixed for the term of the Parity Debt; (ii) The principal of such Parity Debt shall be payable on August 1 in any year in which principal is payable; and (iii) Money (and/or a Qualified Reserve Account Credit Instrument) shall be deposited in the Reserve Account in an amount such that the amount in the Reserve Account equal to the Reserve Requirement to be in effect immediately following the issuance of the Parity Debt. 21 (f) The related Parity Debt Instrument shall designate, if applicable, that the Parity Debt or any series thereof authorized thereby are Tax -Exempt Bonds or are Build America Bonds. (g) The Agency shall deliver to the Trustee a Certificate of the Agency certifying that the conditions precedent to the issuance of such Parity Debt set forth in subsections (a), (b), (c), (e) and, if applicable (f) above have been satisfied. "Additional Allowance" is defined under the Indenture, as of the date of calculation, the sum of the following: (a) the amount of Housing Tax Increment Revenues which, as shown in the report of an Independent Redevelopment Consultant, are estimated to be receivable by the Agency in the next succeeding Fiscal Year as a result of increases in the assessed valuation of taxable property in the Project Area due to construction which has been completed but has not yet been reflected on the tax roll; and (b) the amount of Housing Tax Increment Revenues which, as shown in the report of an Independent Redevelopment Consultant, are estimated to be receivable by the Agency in the next succeeding Fiscal Year as a result of increases in the assessed valuation of taxable property in the Project Area due to inflation at an assumed annual inflation rate equal to the lesser of (i) the annual rate of inflation for the preceding twelve-month period for which figures are available or (ii) two percent (2%), but only if the rate of inflation had increased by at least two percent (2%) in each of the preceding three Fiscal Years. 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 in the next succeeding Fiscal Year is estimated to exceed the assessed valuation of taxable property in the Project Area (as reported by the County Auditor -Controller) in the Fiscal Year in which such calculation is made. With respect to the 2010 Bonds, the Agency may issue or incur Refunding Debt in such principal amount as shall be determined by the Agency so long as the conditions set forth in subsections (a), (c) and (e) above are met, and the Agency delivers to the Trustee a Certificate of the Agency certifying that such conditions precedent to the issuance of such Refunding Debt set forth in subsections (a), (c) and (e) above have been met and such Refunding Debt is otherwise in accordance with the definition of Refunding Debt. "Refunding Debt' is defined in the Indenture to mean any loan, bond, note, advance or indebtedness the proceeds thereof are used to refund all or a portion of any Parity Debt (and to pay costs of issuance of and fund a reserve subaccount, account or fund for such Refunding Debt), and the debt service due on such Refunding Debt in any Bond Year in which the Refunding Debt is Outstanding is not greater than the debt service due in such Bond Year on the portion of the Parity Debt refunded with the proceeds of such Refunding Debt. The following information should be considered by prospective investors in evaluating the 2010 Bonds. However, the following does not purport to be an exhaustive listing of risks and other considerations which may be relevant to investing in the 2010 Bonds. In addition, the order in which the following information is presented is not intended to reflect the relative importance of any such risks. 2010 Bonds Are Limited Obligations and Not General Obligations The 2010 Bonds and the interest thereon are limited obligations of the Agency and do not constitute a general obligation of the Agency. See "SECURITY FOR THE 2010 BONDS" herein. No Owner of the 2010 Bonds may compel exercise of the taxing power of the State or any of its political subdivisions or agencies to pay the principal of or premium, if any, or interest due on the 2010 Bonds. 22 Housing Tax Increment Revenues The Housing Tax Increment Revenues allocated to the Agency, which constitute the primary security for the 2010 Bonds, are determined by the incremental assessed value of taxable property in the Project Area, the current rate or rates at which property in the Project Area is taxed and (in the absence of the County's administrative practice described under the heading "SECURITY FOR THE 2010 BONDS— County Payment of Tax Increment") the percentage of taxes collected in the Project Area. Several types of events which are beyond the control of the Agency could occur and cause a reduction in available Housing Tax Increment Revenues. A reduction of taxable assessed values of property in the Project Area caused by economic or other factors beyond the Agency's control could occur (such as successful appeals by the property owner for a reduction in a property's assessed value, deflation or a reduction of the general inflationary rate, a reduction in transfers of property, construction activity or other events that permit reassessment of property at lower values, relocation out of the Project Area by one or more major property owners or the destruction of property caused by natural or other disasters). Some of the foregoing has occurred in recent years, thereby causing a reduction in Housing Tax Increment Revenues. Such a reduction in Housing Tax Increment Revenues could have an adverse impact on the Agency's ability to make timely payment of principal of and interest on the 2010 Bonds. As described in greater detail under "LIMITATIONS ON HOUSING TAX INCREMENT REVENUES — Property Tax Rate Limitations — Article XIIIA," Article XIIIA of the California Constitution provides that the full cash value base of real property used in determining taxable value may be adjusted from year to year to reflect the inflation rate, absent a change in ownership, not to exceed a two percent (2%) increase for any given year; or may be reduced to reflect a reduction in the consumer price index or deflation, comparable local data or any reduction in the event of declining property value caused by damage, destruction or other factors (as described above). Such adjustment is computed on a calendar year basis. For example, for Fiscal Year 2010-11, the State Board of Equalization has indicated that the California Consumer Price Index had a negative inflation factor, or deflation of-0.237%. Any resulting reduction in the full cash value of the property in the Project Area over the term of the 2010 Bonds could reduce Housing Tax Increment Revenues securing the 2010 Bonds. See "LIMITATIONS ON HOUSING TAX INCREMENT REVENUES — Property Tax Rate Limitations — Article XIIIA." Historically, some property owners within the Project Area have appealed for reductions in the assessed value of their properties. Reductions in the assessed value of the secured property in the Project Area in recent years, as shown in the summaries of historical assessed valuation set forth herein (see "THE REDEVELOPMENT PLAN — Appeals of Assessed Values" and " — Assessed Valuation"), can be attributed in part to such appeals and reductions in property values generally. In addition, in the past the County Assessor has, from time to time, reduced the assessed values of residential parcels throughout the County due to reductions in the market values to levels below their enrolled assessed values ("Proposition 8 Reductions"). The County performed such County -wide reductions in Fiscal Year 2009- 10. The County Assessor may also reduce values of commercial, retail, industrial or other non-residential properties. No assurance can be given that there will not be additional property owner assessment appeals for parcels in the Project Area or additional actions by the County Assessor to reduce assessed values of parcels in the Project Area. Reductions in taxable values in the Project Area resulting from successful appeals by property owners and Proposition 8 Reductions will reduce the amount of tax increment revenues available to pay the principal of and interest on the 2010 Bonds. In its projection of tax increment revenues, the Fiscal Consultant has assumed that the pending appeals filed by property owners will be resolved at historical rates. See "THE REDEVELOPMENT PLAN— Assessed Valuation" and " — Appeals of Assessed Values" and "APPENDIX B — FISCAL CONSULTANT'S REPORT" herein. In addition to the other existing limitations on Housing Tax Increment Revenues described below under "LIMITATIONS ON HOUSING TAX INCREMENT REVENUES," the California electorate or 23 Legislature could adopt a constitutional or legislative property tax decrease with the effect of reducing Housing Tax Increment Revenues payable to the Agency. There is no assurance that the California electorate or Legislature will not at some future time approve additional limitations that could reduce the Housing Tax Increment Revenues and adversely affect the security of the 2010 Bonds. The Agency has no power to levy and collect property taxes. Although the County currently administers its property tax collection/disbursement system such that the Agency gets 100% of what is due as of the beginning of the fiscal year. However, any substantial delinquencies in the payment of property taxes by property owners in the Project Area could have an adverse effect on the Agency's ability to make timely debt service payments on the 2010 Bonds if the County were to terminate the administrative procedure of paying the Agency property tax payments at 100% of the Agency's share of levied amounts, subject to any tax sharing agreements. Housing Tax Increment Revenues allocated to the Agency are distributed throughout the year in installments, with the first installment distributed in November and the last installment distributed in August of the succeeding fiscal year. The payments are adjusted to reflect actual collections. See "LINIITATIONS ON HOUSING TAX INCREMENT REVENUES — Property Tax Collection Procedure" herein. Estimated Housing Tax Increment Revenues The Fiscal Consultant has projected the assessed value of the property in the Project Area based on deflation of-0.237% in Fiscal Year 2010-11 and 0% growth in Fiscal Year 2011-12 and thereafter. Because Article XIIIA limits inflationary assessed value adjustments to the lesser of the actual inflationary rate or 2%, there have been years in which the assessed values were adjusted by actual inflationary rates, which were less than 2%. Since Article XIIIA was approved, the annual adjustment for inflation has fallen below the 2% limitation five times: 1% in Fiscal Year 1983-84; 1.19% in Fiscal Year 1995-96; 1.11% in Fiscal Year 1996-97; 1.85% in Fiscal Year 1999-00; and 1.867% in Fiscal Year 2004- 05. In addition, for the first time since Article XIIIA was approved, the State Board of Equalization has announced that there will be deflation (negative inflation) of-0.237% in Fiscal Year 2010-11. The Agency is unable to predict if any increase in or reduction of the full cash value of real property within the Project Area will be realized in the future. If the assessed value of real property in the Project Area does not increase at the estimated annual rate of 2% beginning in Fiscal Year 2011-12, the Agency's receipt of future tax increment revenues and, correspondingly, Housing Tax Increment Revenues may be adversely affected. See "COVERAGE ANALYSIS" herein. No representations are being made as to the future Housing Tax Increment Revenues or as to whether the estimated Housing Tax Increment Revenues, as shown under the heading "COVERAGE ANALYSIS," will be realized. Educational Revenue Augmentation Fund; State Budget Uncertainties The State budget for Fiscal Year 1993-94 transferred $2.6 billion to school districts from cities, counties and other local governments, including redevelopment agencies. As part of the budget's transfer of moneys to school districts, the State Legislature required redevelopment agencies to transfer approximately $65 million to the Educational Revenue Augmentation Fund ("ERAF") in both Fiscal Years 1993-94 and 1994-95. From 1994 through 2001-02, state budgets were adopted with no additional shifting of tax increment increases from redevelopment agencies. Commencing in 2002, legislation has been enacted requiring statewide shift of $75 million for Fiscal Year 2002-03, $135 million for Fiscal Year 2003-04, $250 million for Fiscal Year 2004-05 and $250 million for Fiscal Year 2005-06. The amount of such transfers by the Agency was $253,618 with respect to Fiscal Year 2002-03, $445,334 with respect to Fiscal Year 2003-04, $769,553 with respect to Fiscal Year 2004-05 and $745,277 with respect to Fiscal Year 2005-06. There was no shift required for Fiscal Year 2006-07 or Fiscal Year 2007- 24 08. For Fiscal Year 2008-09, legislation was enacted requiring a statewide shift of $350 million. For Fiscal Year 2008-09, the amount of such transfers by the Agency was to have been approximately $895,684. However, the California Redevelopment Association (the "CRA"), the Executive Director of the CRA, the Madera Redevelopment Agency and the Moreno Valley Redevelopment Agency filed a lawsuit in the Sacramento Superior Court challenging the constitutionality of the statutory provisions requiring the $350 million shift of tax increment revenues from redevelopment agencies to ERAF. The court ruled that the requirement that these funds be taken from redevelopment agency revenues and paid into county ERAF accounts was unconstitutional in that this use of redevelopment tax increment revenues conflicts with and violates the Redevelopment Law requiring that tax increment revenues be used to finance redevelopment activities. The ruling eliminated the requirement to make the ERAF payment described above. For Fiscal Year 2009-10 legislation was enacted which requires a $1.7 billion statewide transfer from redevelopment agencies to their respective County Supplemental Educational Revenue Augmentation Fund ("SERAF"), plus another $350 million aggregate transfer in 2010-11. A SERAF transfer is similar to the prior statewide transfers, except that there is an additional requirement for the SERAF (in response, in part, to the litigation described above) 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. The Agency's Fiscal Year 2009-10 SERAF payment is estimated by the Agency to be $4,354,450 and is due by May 10, 2010. The Agency's Fiscal Year 2010-11 SERAF payment is estimated by the Agency to be $895,685 and is due by May 10, 2011. The Agency fully expects to fund the entire amount of its Fiscal Year 2009-10 SERAF payment by the May 10, 2010, deadline and the entire amount of its Fiscal Year 2010-11 SERAF payment by the May 10, 2011, deadline. If the litigation described below is unsuccessful, the Agency anticipates borrowing the Fiscal Year 2009-10 SERAF payment from the Low and Moderate Income Housing Fund. The Agency has covenanted in the Indenture (i) to maintain on hand sufficient funds to make any required payment due for Fiscal Year 2009-10 to the Riverside County Supplemental Education Revenue Augmentation Fund, and (ii) to maintain sufficient funds from Housing Tax Increment Revenues received by it in Fiscal Year 2010-11 not needed to pay debt service on the Bonds, set aside and maintained to make any required payment due for Fiscal Year 2010-11 to the SERAF; in each case until such time as such payments are made by the Agency or a court of competent jurisdiction finds, in a final non -appealable judgment, that the Agency is not required to make such payments. Similar to prior legislation, the 2009 legislation 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 the 2009 legislation, 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 tax increment amounts borrowed or suspended, etc.), a sanction is imposed which would require the housing tax increment amount to be increased from 20% of gross tax increment to 25% of gross tax increment for the balance of the time the sanctioned redevelopment agency receives tax increment. On October 20, 2009, the CRA, the Union City Redevelopment Agency and the Fountain Valley Redevelopment Agency filed a lawsuit in Sacramento Superior Court challenging the constitutionality of the 2009 legislation. With this suit, the plaintiffs will seek to invalidate the State's effort to require the redevelopment agencies to shift $2.05 billion in tax increment revenue to the SERAF. The Agency cannot predict whether the challenge will be successful and as indicated above, has covenanted in the Indenture to make the payments should they be required. There can be no assurance that the State Legislature will not require similar or increased deposits in future years to deal with budget deficits. 25 Real Estate Volatility Changes in the assessed valuation of property within the Project Area and throughout the City have occurred and will continue to occur while the 2010 Bonds are outstanding. Economic and other factors beyond the Agency's control, such as a general market decline in land values, reclassification of property to a class that is exempt from taxation, whether by ownership or use (such as exemptions for property owned by State and local agencies and property used for qualified educational, hospital, charitable or religious purposes), or the complete or partial destruction of taxable property caused by natural or manmade disaster, including (but not limited to) earthquake, flood, fire, terrorist activities or toxic dumping, could cause a reduction in the assessed value of taxable property within the City and could thereby result in a decrease in the general revenues of the City and Agency including the Housing Tax Increment Revenues. From 2002 through the first half of 2006, the California housing, commercial, industrial and other real estate markets experienced significant price appreciation. In the second half of 2007, lenders began tightening standards for providing mortgages and other loans. In addition, the economy has experienced a downturn since the end of 2007, with an increased unemployment rate and with the financial markets experiencing significant credit and liquidity problems, including reduction in the availability of commercial loans for new purchases and for refinancing of existing loans. As a result of such factors, there has been a decline in the California housing, commercial, industrial and other real estate markets since the end of 2007, as evidenced by a decrease in sale prices, increasing inventory and slowing demand. Specifically, RealtyTrac, a company which publishes information regarding foreclosure, auction and bank -owned homes throughout the United States, reports that Riverside County as a whole posted the highest county residential foreclosure rate in the State for October 2009, with one in every 78 housing units receiving a foreclosure filing 4.9 times the national average and twice the state average. The Agency and the Fiscal Consultant have no information on any possible commercial or industrial foreclosures or bank owned property within the Project Area. The Agency is aware that some commercial centers within the Project Area are experiencing vacancies. It is unclear if or how these vacancies may impact the Project Area assessed values in future years. The Agency has not undertaken to assess the financial condition of the current owners of the properties within the Project Area and expresses no view concerning these matters. The Agency cannot predict and expresses no view as to how the current market conditions will affect property assessed valuations within the Project Area. A decline in demand could, however, cause a reduction in the assessed value of taxable property within the Project Area and could thereby result in a decrease of available Housing Tax Increment Revenues. Economic Concentration A significant portion of the Project Area assessed value is related to commercial and industrial property. Consequently, property values in the Project Area are strongly influenced by the vitality of the regional economy and the resulting demand for commercial and industrial space. To the extent that the County economy were to decline, resulting in diminished demand for commercial and industrial space, such a decline could negatively impact the Project Area's assessed values and the receipt of Housing Tax Increment Revenues. Concentration of Ownership The largest property taxpayer in the Project Area accounts for approximately 22.77% of the incremental assessed value of the Project Area, and together the ten largest property taxpayers account for approximately 45.45% of the incremental assessed value in the Project Area. The largest property taxpayer has recently completed an expansion of its facilities in the Project Area, which increased its total 26 assessed value by $92.6 million above its value for 2008-09 and added significantly to its share of the Project Area's total and incremental assessed value. If the County were to terminate the administrative procedure of paying the Agency property tax payments at 100% of the Agency's share of levied amounts, subject to any tax sharing agreements, concentration of ownership presents a risk in that if one or more of the largest property owners were to default on their taxes or were to successfully appeal the tax assessments on property within the Project Area, a substantial decline in Housing Tax Increment Revenues would result. The largest property owners and their ability to pay property taxes could be adversely affected by various factors such as a continued recession or a decline in the value of real estate. In addition, events causing a reduction in assessed value of, or physical damage to, property in the Project Area owned by one or more of the ten largest property owners therein, or any future owner of significant property in the Project Area, such as physical damage by fire, earthquake, flood, hazardous materials or other causes, may significantly delay or ultimately reduce the payment of property taxes in the Project Area, which may affect the amount or receipt of Housing Tax Increment Revenues. In addition, bankruptcy or financial difficulties arising with respect to a current or future major property owner may also significantly delay or ultimately reduce payment of property taxes in the Project Area, which also may affect the amount or receipt of Housing Tax Increment Revenues. See "THE REDEVELOPMENT PLAN — Assessed Valuation" and "THE REDEVELOPMENT PLAN — Appeals of Assessed Values" and "APPENDIX B — FISCAL CONSULTANT'S REPORT." As of January 1, 2010, the County's records indicate that property taxes for the ten largest assessees are current through the first installment of Fiscal Year 2009-10. Four of the ten largest property taxpayers filed assessment appeals that are currently pending. See "THE REDEVELOPMENT PLAN — Assessed Valuation" and "APPENDIX B — FISCAL CONSULTANT'S REPORT — IV — Tax Allocation and Disbursement — F. — Assessment Appeals" herein. Bankruptcy Risks The enforceability of the rights and remedies of the owners of the 2010 Bonds and the obligations of the Agency may become subject to the following: the Federal Bankruptcy Code and applicable bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or affecting the enforcement of creditors' rights generally, now or hereafter in effect; usual equitable principles which may limit the specific enforcement under State law of certain remedies; the exercise by the United States of America of the powers delegated to it by the federal Constitution; and the reasonable and necessary exercise, in certain exceptional situations, of the police power inherent in the sovereignty of the State and its governmental bodies in the interest of servicing a significant and legitimate public purpose. Bankruptcy proceedings, or the exercise of powers by the federal or state governrnent, if initiated, could subject the Owners of the 2010 Bonds to judicial discretion and interpretation of their rights in bankruptcy or otherwise and consequently may entail risks of delay, limitation or modification of their rights. Investment of Tax Increment Revenues and Other Funds Tax Increment Revenues (which include Housing Tax Increment Revenues) are invested by the City prior to their transfer to the Trustee for deposit by the Trustee in the funds and accounts established under the Indenture. Under the Indenture, moneys in the Debt Service Reserve Fund, the Interest Account, the Principal Account, the Sinking Account and the Reserve Account must be invested by the Trustee in Permitted Investments (as defined in the Indenture), and moneys in the Special Fund may be invested by the Agency in any lawful investment of Agency funds. See "APPENDIX A — SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE — Definitions." The Agency cannot predict the impact on the investment of any tax increment revenues by the Agency if the City experiences significant losses in its investments. 27 Parity Debt The Agency may issue or incur obligations payable from Housing Tax Increment Revenues on a parity with its pledge of Housing Tax Increment 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 Bonds in the event of a decrease in the Agency's collection of Housing Tax Increment Revenues. See "SECURITY FOR THE 2010 BONDS — Parity Debt' and "THE REDEVELOPMENT PLAN — Assessed Valuation." Future Land Use Regulations and Growth Control Initiatives In the past, citizens of a number of local communities in Southern California have placed measures on the ballot designed to limit the issuance of building permits or impose other restrictions to control the rate of future growth in those areas. It is possible that future initiatives could be enacted, could be applicable to the City and have a negative impact on the ability of developers in the Project Area to complete any existing or proposed development. Bondowners should assume that any event that significantly affects the ability to develop land in the City could cause the land values within the Project Area to decrease substantially and could affect the willingness and ability of the owners of land within the Project Area to pay property taxes when due. There can be no assurance that land development within the City will not be adversely affected by future governmental policies, including, but not limited to, government policies to restrict or control development. Under current State law, it is generally accepted that proposed development is not exempt from future land use regulations until building permits have been issued and substantial work has been performed and substantial liabilities have been incurred in good faith reliance on the permits prior to the adoption of such regulations. County Payment of Housing Tax Increment Revenues Pursuant to its administrative practice, the County provides the Agency with full tax and assessment levies instead of actual tax and assessment collections. Thus, the County's payments may help protect Owners of the 2010 Bonds from the risk of delinquencies in the payment of ad valorem taxes. However, if the County were to change such payment procedures, such a change with respect to the Agency would eliminate such protection from delinquent ad valorem taxes. See "SECURITY FOR THE 2010 BONDS — County Payment of Housing Tax Increment." Levy and Collection The Agency has no 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 Housing Tax Increment 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 if the County were to terminate the administrative procedure of paying the Agency property tax payments at 100% of the Agency's share of levied amounts, subject to any tax sharing agreements. See "LINHTATION ON HOUSING TAX INCREMENT REVENUES — Property Tax Collection Procedure" for more information about the collection of property taxes. To estimate the Housing Tax Increment Revenues available to pay debt service on the 2010 Bonds, the Fiscal Consultant has made certain assumptions with regard to the assessed valuations in the Project Area, future tax rates and percentage of taxes collected. The Fiscal Consultant and the Agency 28 believe these assumptions to be reasonable; but to the extent that the assessed valuations, the tax rates or the percentage of taxes collected are less than such assumptions, the Housing Tax Increment Revenues available to pay debt service on the 2010 Bonds will, in all likelihood, be less than those projected herein. See "THE REDEVELOPMENT PLAN" and "COVERAGE ANALYSIS." Seismic Factors and Flooding The occurrence of severe seismic activity and/or flooding or other similar natural disasters in the Project Area could result in substantial damage to property located in the Project Area and could lead to successful appeals for reduction of assessed values of such property. Such a reduction could result in a decrease in Housing Tax Increment Revenues collected by the Agency. Portions of the Project Area, primarily those near Murrieta Creek which runs through the middle of the Project Area, are within the 100-year flood plain. The total project area is approximately 2,096 acres of which approximately 421 acres (including the acreage of Murrieta Creek) are within the 100 flood plain. [Review] The Project Area is located in an active seismic region. The Elsinore, San Jacinto, Wildomar and San Andreas Fault Zones are all in the vicinity of the City. The proximity to these faults makes the Project Area subject to the hazards associated with ground shaking and soil instability. Hazardous Substances An environmental condition that may result in the reduction in the assessed value of parcels would be the discovery of a hazardous substance that would limit the beneficial use of a 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 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, would be to reduce the marketability and value of the property by the costs of remedying the condition. The Agency is unaware of any environrental condition that may result in the reduction in the assessed value of parcels at this time. No Acceleration on Default In the event of default under the Indenture, as a practical matter, Bondowners will be limited to obtaining the moneys in the Reserve Account and enforcing the obligation of the Agency to repay the Bonds on an annual basis to the extent of the Housing Tax Increment Revenues. No real or personal property in the Project Area is pledged to secure the Bonds, and it is not anticipated that the Agency will have available moneys sufficient to redeem all of the Bonds upon the occurrence of an event of default. Loss of Federal Tax Exemption In order to maintain the exclusion from gross income for federal income tax purposes of the interest on the 2010 Series A Bonds, the Agency has covenanted in the Indenture to comply with the requirements of the Internal Revenue Code of 1986, as amended (the "Code"), applicable to the 2010 Series A Bonds. These requirements include limitations on the use of 2010 Series A Bond proceeds, limitations on the investment earnings of 2010 Series A Bond proceeds prior to expenditure, a requirement that certain investment earnings on 2010 Series A Bond proceeds be paid periodically to the United States of America and a requirement that the Agency file an information report with the Internal Revenue Service (the "IRS"). The interest on the 2010 Series A Bonds could become includable in gross income for purposes of federal income taxation retroactive to the date of issuance of the 2010 Series A 29 Bonds as a result of acts or omissions of the Agency in violation of covenants in the Indenture. Should such an event of taxability occur, the 2010 Series A Bonds may not be subject to acceleration or redemption, and no increase in interest rates will occur, and the 2010 Series A Bonds will remain Outstanding until maturity or until redeemed under one of the redemption provisions contained in the Indenture. See "TAX MATTERS" herein. Future legislative proposals, if enacted into law, clarification of the Code or court decisions may cause interest on the 2010 Series A Bonds to be subject, directly or indirectly, to federal income taxation or to be subject to or exempted from State income taxation, or otherwise prevent Beneficial Owners from realizing the full current benefit of the tax status of such interest. The introduction or enactment of any such future legislative proposals, clarification of the Code or court decisions may also affect the market price for, or marketability of, the 2010 Series A Bonds. Prospective purchasers of the 2010 Series A Bonds should consult their own tax advisors regarding any pending or proposed federal or state tax legislation, regulations or litigation as to which Bond Counsel expresses no opinion. IRS Audit of Tax -Exempt Bond Issues The IRS has initiated an expanded program for the auditing of tax-exempt bond issues, including both random and targeted audits. As a part of a larger reorganization of the IRS, the IRS commenced operation of its Tax Exempt and Government Entities Division (the "TE/GE Division"), as the successor to its Employee Plans and Exempt Organizations Division. The TE/GE Division has a subdivision that is specifically devoted to tax-exempt bond compliance. Public statements by IRS officials indicate that the number of tax-exempt bond examinations is expected to increase significantly under the TE/GE Division. It is possible that the 2010 Bonds will be selected for audit by the Internal Revenue Service. It is also possible that the market value of the 2010 Bonds might be affected as a result of such an audit of the 2010 Bonds (or by an audit of similar bonds). Risks Relating to Build America Bonds The Agency must comply with certain requirements of the Internal Revenue Code of 1986, as amended (the "Code"), in order for the 2010 Series B Bonds to be treated as qualified bonds and to continue to be eligible for the Federal Subsidy Payments which are pledged to the 2010 Series B Bonds. The Agency has covenanted to comply with each of these requirements. However, failure by the Agency to comply with these requirements may result in a delay or forfeiture of all or a portion of the Federal Subsidy Payments which are pledged to the 2010 Series B Bonds and may cause the 2010 Series B Bonds to cease to be treated as qualified bonds either prospectively from the date of determination of a failure to comply with the requirements or retroactively to the date of issuance of the 2010 Series B Bonds. In addition, the Federal Subsidy Payments are subject to offset under Code Section 6402 for tax liabilities of the Agency (such as employment tax liabilities) or other liabilities of the Agency to any federal agency. Should any such event occur, the 2010 Series B Bonds are not subject to extraordinary redemption and will remain outstanding until maturity or until redemption under one of the other redemption provisions contained in the Indenture. In addition, it is important to note that Build America Bonds are a new product introduced by the Recovery Act. As such, the Agency can provide no assurance that future legislation or clarifications or amendments to the Tax Code, if enacted into law, or future court decisions will not reduce or eliminate the Federal Subsidy Payments with respect to the 2010 Series B Bonds. The Federal Subsidy Payments do not constitute a full faith and credit guarantee of the United States of America government but are required to be paid by the Treasury under the Recovery Act. If the Agency were to provide for the issuance of refunding obligations in order to prepay the 2010 Series B Bonds prior to their maturity, the 30 Agency would be subject to the various risks attendant to issuance of refunding obligations, potentially including higher -than -desired interest rates and duplicative transaction costs. Assumptions and Projections Any reduction in Housing Tax Increment Revenues, whether for any of the foregoing reasons or any other reason, could have an adverse effect on the Agency's ability to make timely payments of principal of, premium, if any, and interest on the 2010 Bonds which are secured by such Housing Tax Increment Revenues. To estimate the total Housing Tax Increment Revenues available to pay debt service on the 2010 Bonds, the Agency has made certain assumptions with regard to the assessed valuation in the Project Area and estimated increase in assessed valuation. See "COVERAGE ANALYSIS" for a discussion of the assumptions underlying the projections set forth herein with respect to Housing Tax Increment Revenues. The Agency believes these assumptions to be reasonable, but to the extent that the assessed valuations and the change in assessed valuation differ from the Agency's assumptions, the total Housing Tax Increment Revenues available will, in all likelihood, be different than those projected herein. See "COVERAGE ANALYSIS" herein. Change in Law No assurance can be given that the State electorate will not adopt initiatives or that the Legislature will not enact legislation that will amend the Constitution of the State, the Redevelopment Law or other laws in a manner that results in a reduction of Housing Tax Increment Revenues that could adversely affect the Agency's ability to make debt service payments on the 2010 Bonds. In addition, tax legislation, administrative actions taken by tax authorities and court decisions, whether at the federal or State level, may adversely affect the tax-exempt status of interest on the 2010 Bonds under federal or State law and could affect the market price for, or the marketability of, the 2010 Bonds. Prospective purchasers on the 2010 Bonds should consult their own tax advisors regarding any pending or proposed federal or State tax legislation, regulations, rulings or litigation. Limited Secondary Market As stated herein, investment in the 2010 Bonds poses certain economic risks which may not be appropriate for certain investors; and only persons with substantial financial resources who understand the risk of investment in the 2010 Bonds should consider such investment. There can be no guarantee that there will be a secondary market for purchase or sale of the 2010 Bonds or, if a secondary market exists, that the 2010 Bonds can or could be sold for any particular price. From time to time there may be no market for the 2010 Bonds, depending upon prevailing market conditions, the financial condition or market position of firms who may make the secondary market, the financial condition and results of operations of the owners of property located within the boundaries of the Project Area and the extent of the development of property within the Project Area. LIMITATIONS ON HOUSING TAX INCREMENT REVENUES Property Tax Collection Procedure 31 In California, property which is subject to ad valorem taxes is classified as "secured" or "unsecured." The secured classification includes property on which any property tax levied by the County becomes a lien on that property. A tax levied on unsecured property does not become a lien against the unsecured property but may become a lien on certain other property owned by the taxpayer. Every tax which becomes a lien on secured property has priority over all other liens on the secured property, regardless of the time of the creation of other private liens. Secured and unsecured property are entered on separate parts of the assessment roll maintained by the county assessor. The method of collecting delinquent taxes is substantially different for the two classifications of property. The taxing authority has four ways of collecting unsecured personal property taxes: (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, improvement or possessory interests belonging or assessed to the assesses. 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 ten percent (10%) penalty is added to delinquent taxes which have been levied with respect to property on the secured roll. In addition, on or about June 30 of the fiscal year, property on the secured roll on which taxes are delinquent is declared in default by operation of law and declaration of the tax collector. Such property may thereafter be redeemed by payment of the delinquent taxes and a delinquency penalty, plus a redemption penalty of one -and -a -half percent (1-1/2%) per month to the time of redemption. If taxes are unpaid for a period of five years or more, the property is subject to sale by the County tax collector. The valuation of property is determined as of the January 1 lien date as equalized in August of each year, and equal installments of taxes levied upon secured property become delinquent on the following December 10 and April 10. Taxes on unsecured property are due January 1 and become delinquent August 31. Supplemental Assessments Under State law, upon the occurrence of a change in ownership or completion of new construction, the property is subject to supplemental assessments and taxation. Supplemental assessments provide increased revenue to redevelopment agencies to the extent that supplemental assessments of new construction or changes of ownership occur within the boundaries of redevelopment projects subsequent to the January 1 lien date. To the extent such supplemental assessments occur within the Project Area, Agency revenues may increase. Unitary Property State law provides for the consolidation of all State -assessed property, except for non -operating, non -unitary and regulated railroad property, into a single tax rate area in each county and provides the method of establishing tax rates on State -assessed property and distribution of property tax revenues derived from State -assessed property to taxing jurisdictions within each county in accordance with a specified formula. Railroads are assessed and revenues allocated to all tax rate areas where railroad property is sited. Redevelopment agencies receive their appropriate share of revenue generated from the property assessed by the State Board of Equalization. Property Tax Rate Limitations — Article XIIIA 32 California voters, on June 6, 1978, approved an amendment (commonly known as Proposition 13) to the California Constitution. This amendment, which added Article XIIIA to the California Constitution among other things, affects the valuation of real property for the purpose of taxation in that it defines the full cash property 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." Since the enactment of Proposition 13, additional legislation and propositions have been approved which affect the levy of taxes and allocation of taxes to various jurisdictions. Under State law, the full cash value may be adjusted annually to reflect inflation at a rate not to exceed two percent (2%) per year, a reduction in the consumer price index or comparable local data or declining property value caused by damage, destruction or other factors, including a general economic downturn. State law limits the amount of any ad valorem tax on real property to one percent (1%) of the full cash value except that additional taxes may be levied to pay debt service on indebtedness approved by the voters prior to July 1, 1978, and bonded indebtedness for the acquisition or improvement of real property approved on or after July 1, 1978, by two-thirds (2/3) of the votes cast by the voters voting on the proposition. Under State law, the terms "purchased" and "change of ownership," for purposes of determining full cash value of property under Article XIIIA, do not include the purchase or transfer of (1) real property between spouses and (2) the principal residence and the first $1,000,000 of other property between parents and children. In addition, persons over age 55 who sell their residence to buy or build another of equal or lesser market value within two years in the same county, may transfer the old residence's assessed value to the new residence. Challenges to Article XIIIA. On September 22, 1978, the California Supreme Court upheld the amendment over challenges on several state and federal constitutional grounds (Amador Valley Joint Union High School District v. State Board of Equalization). The California Supreme Court reserved certain constitutional issues and the validity of legislation implementing the amendment for future determination in proper cases. Since 1978, several cases have been decided interpreting various provisions of Article XIIIA, however, none of them have questioned the ability of redevelopment agencies to use tax allocation financing. The United States Supreme Court upheld the validity of the assessment procedures of Article XIIIA in Nordlinger v. Hahn. The Agency cannot predict whether there will be any future challenges to California's present system of property tax assessment and cannot evaluate the ultimate effect on the Agency's receipt of Housing Tax Increment Revenues should a future decision hold unconstitutional the method of assessing property. Allocation of Assessed Valuation Growth. Future assessed valuation growth allowed under Article XIIIA (new construction, change of ownership, two percent (2%) annual value growth) will be allocated on the basis of "situs" among the jurisdictions that serve the tax rate area within which the growth occurs, except for certain utility property assessed by the State Board of Equalization. Local agencies and school districts will share the growth of "base" revenue from the tax rate area. Each year's growth allocation becomes part of each agency's allocation the following year. The Agency is unable to predict the nature or magnitude of future revenue sources which may be provided by the State of California to replace lost property tax revenues. Article XIIIA effectively prohibits the levying of any other ad valorem property tax above the one percent (1%) limit except for taxes to support indebtedness approved by the voters as described above. 33 County of Orange v. Bezaire. Section 51 of the Revenue and Taxation Code permits county assessors who have reduced the assessed valuation of a property as a result of natural disasters, economic downturns or other factors, to subsequently "recapture" such value (up to the pre -decline value of the property) at an annual rate higher than 2%, depending on the assessor's measure of the restoration of value of the damaged property. The constitutionality of this procedure was challenged in a lawsuit brought in the Orange County Superior Court, and in similar lawsuits brought in other counties, on the basis that the decrease in assessed value creates a new "base year value" for purpose of Proposition 13 and that subsequent increases in the assessed value of a property by more than 2% in a single year violate Article XIIIA. On appeal, the California Court of Appeal upheld the recapture practice in 2004, and the State Supreme Court declined to review the ruling, leaving the recapture law in place. Article XIIIB of the California Constitution On November 6, 1979, California voters approved Proposition 4 which added Article XIIIB to the California Constitution, subsequently amended several times. 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. The base years for establishing such appropriation limit is Fiscal Year 1986-87 and the limit is to be adjusted annually to reflect changes in population, cost of living and certain increases in the cost of services provided by these public agencies. Appropriations subject to Article XIIIB include generally the proceeds of taxes levied by the State or other entity of local government, exclusive of certain State subventions, refunds of taxes, benefit payments from retirement, unemployment insurance and disability insurance funds. State law provides that the allocation of taxes to a redevelopment agency for the purpose of paying principal of, or interest on, loans, advances or indebtedness will not be deemed the receipt by the agency of proceeds of taxes levied by or on behalf of the agency within the meaning of Article XIIIB or any statutory provision enacted in implementation thereof. The constitutionality of Section 33678 has been upheld by the Second and Fourth District Court of Appeals in two decisions: Bell Redevelopment Agency v. Woosely and Brown v. Redevelopment Agency of the City of SantaAna, which cases were not accepted for review by the California Supreme Court. Exclusion of Tax Increment Revenues for General Obligation Bonds Debt Service State law prohibits redevelopment agencies from receiving any of the property tax revenues raised by increased property tax rates imposed by local governments to make payments on their bonded indebtedness. These provisions only apply to tax rates levied to finance general obligation bonds approved by the voters on or after January 1, 1989. Any revenue reduction to redevelopment agencies would depend on the number and value of the general obligation bonds approved by voters in prior years, which tax rate will reduce due to increased valuation subject to the tax or the retirement of the indebtedness. Future Initiatives or Legislation 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 and legislation described above was adopted by the California Legislature. From time to time, other initiative measures or legislation could be adopted further affecting Agency revenues or the Agency's ability to expend revenues. The nature and impact of these measures cannot be anticipated by the Agency. 34 Low and Moderate Income Housing As discussed above, Chapter 1337, Statutes of 1976, added Sections 33334.2 and 33334.3 to the Redevelopment Law requiring redevelopment agencies to set -aside 20% of all tax increment derived from redevelopment project areas adopted after December 31, 1976, in a low and moderate income housing fund. This low and moderate income housing requirement could be reduced or eliminated if a redevelopment 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; and (c) any increase in revenue above two percent (2%) would be allocated in the same proportion as the taxing entity's local secured taxable values are to the local secured taxable values of the County (the low and moderate income housing requirement may not be reduced pursuant to finding in this third clause after June 30, 1993). The Agency covenanted in the Indenture that the Agency shall not make any findings to reduce the low and moderate income housing requirement below 20% of all tax increment derived from the Project Area. The Agency has historically and intends in the future to annually set aside, in its low and moderate income housing fund, 20% of the gross tax increment revenues allocated to the Agency with respect to the Project Area. The Housing Tax Increment Revenues are tax increment set aside pursuant to the Agency's 20% low and moderate income housing set aside requirement. Redevelopment Plan Limitations The amended Redevelopment Plan contains various limitations on the Agency's ability to incur indebtedness and to receive tax increment revenues. Pursuant to a subsequent amendment, the plan termination date is July 12, 2029, and the debt repayment date is July 12, 2039. The date of the existing limit to incur debt was July 12, 2008 but was subsequently amended as discussed below. In addition, the City is a party to the 1991 Settlement Agreement (as defined below) which imposes additional limitations on the Agency's ability to incur indebtedness and to receive tax increment revenues. See "THE REDEVELOPMENT AGENCY OF THE CITY OF TEMECULA — Agency Powers" and " — Limitations Under 1991 Settlement Agreement; Plan Limitations" below. Senate Bill 211 was signed into law as of Chapter 741, Statutes of 2001. This legislation has two main impacts on the limits contained in an agency's redevelopment plan. First, a city council may amend the redevelopment plan to eliminate the time limit to establish indebtedness in project areas adopted prior to January 1, 1994, by ordinance. If the plan is so amended, existing tax sharing agreements will continue and certain statutory tax sharing for entities without tax sharing agreements will commence in the year the eliminated limit would have taken effect. Second, a city council may extend the time limit for plan effectiveness and repayment of debt for up to ten years if it can make certain specified findings. As amended by Ordinance No. 07-20, adopted on January 8, 2008, there is no time limit on establishing loans, advances or indebtedness to be paid with the proceeds of Tax Increment Revenues to finance in whole or in part the Redevelopment Project. THE REDEVELOPMENT AGENCY OF THE CITY OF TEMECULA Agency Members On July 12, 1988, prior to the incorporation of the City, the County adopted the "County of Riverside Redevelopment Plan 1 — 1988" by Ordinance No. 658. On December 1, 1989, the City was incorporated. All of the area within the County Redevelopment Plan was included within the boundaries of the City. 35 The Agency was established on March 26, 1991, by the City Council with the adoption of Ordinance No. 91-08 pursuant to the Redevelopment Law. The five members of the City Council serve as the governing body of the Agency and exercise all rights, powers, duties and privileges of the Agency. The persons holding the positions of Chairperson and Vice Chairperson are subject to change each year. The members of the governing body of the Agency are as follows: Michael S. Naggar, Chairperson Ron Roberts, Vice Chairperson Jeff Comerchero, Board Member Maryann Edwards, Board Member Charles W. Washington, Board Member Agency Administration The Agency is administered by certain staff of the City. The City is a general law city and operates according to the Council/Manager form of government. The City Manager is appointed by the City Council to administer the City's staff and generally implement policies established by the City Council. Current City staff assigned to administer the Agency include Shawn Nelson, City Manager of the City and Executive Director of the Agency, Genie Roberts, Finance Director of the City and Treasurer of the Agency, Patrick R. Richardson, AICP, Director of Planning and Redevelopment Director, and Susan Jones, City Clerk and Secretary to the Agency. The Agency has an arrangement with the City for financial assistance and services, facilities and personnel support. As moneys become available, the Agency reimburses the City for all such services performed in amounts equal to a portion of the gross salary and employee fringe benefits for certain City employees utilized by the Agency, plus other miscellaneous operating and equipment costs. The Redevelopment Law requires redevelopment agencies to have an independent financial audit conducted each year. The financial audit is also required to include an opinion of the Agency's compliance with laws, regulations and administrative requirements governing activities of the Agency. Lance, Soll & Lunghard, LLP, Irvine, California, audited the financial statements of the Agency for the fiscal year that ended June 30, 2009, and rendered its financial opinion and compliance opinion with respect thereto, which are included in Appendix C attached hereto. The Agency has not requested nor did the Agency obtain permission from Lance, Soll & Lunghard, LLP, to include the audited financial statements as an appendix to this Official Statement. Accordingly, Lance, Soll & Lunghard, LLP, has not performed any post -audit review of the financial condition or operations of the Agency. Agency Powers All powers of the Agency are vested in its governing body. Pursuant to the Redevelopment Law, the Agency may exercise broad governmental functions and authority to accomplish its purposes, including, but not limited to, the right to issue bonds for authorized purposes and to expend their proceeds and the right to acquire, sell, rehabilitate, develop, administer or lease property. The Agency may demolish buildings, clear land and cause to be constructed certain improvements, including streets, sidewalks and utilities. 36 The Agency may not construct or develop buildings, with the exception of public facilities and housing, but must sell or lease cleared property for construction and development in accordance with the Redevelopment Plan. Limitations Under 1991 Settlement Agreement; Plan Limitations Pursuant to a Settlement Agreement (the "1991 Settlement Agreement') entered on June 5, 1991, in the Superior Court of the State of California for the County, the Agency and the City, as amended in 1995, various additional limitations are placed on the Redevelopment Plan, including that subject to certain exceptions, no more than $150 million of tax increment revenues shall be allotted or paid to the Agency during the term of the Redevelopment Plan (excluding the Housing Tax Increment Revenues, interest on bonds and certain other amounts). The Settlement Agreement specifically excludes from the $150 million limitation all sums required by the Redevelopment Law or other applicable law to be set aside and utilized for low and/or moderate income housing purposes. The limitation on the use of tax increment revenues that is stipulated in the 1991 Settlement Agreement does not limit the Agency's ability to receive Housing Tax Increment Revenues until the tax increment revenues allocated to the Agency exceeds the $1.11 billion amount contained in the amended Redevelopment Plan. In the event that the tax increment revenues allocated to the Agency reach the $150 million limitation listed within the modified judgment prior to the expiration of the time limit on the Agency's ability to repay indebtedness with tax increment revenues, the Agency would continue to have the ability to repay indebtedness with Housing Tax Increment Revenues. Based on Agency records, the Agency has received approximately $182,415,632 of gross tax increment revenues, as calculated pursuant to the amended Redevelopment Plan, from its inception through Fiscal Year 2008-09. The Agency will annually cause to be prepared a report regarding the estimated cumulative tax increment revenues, and, if necessary, deposit in an escrow account an amount to be used to pay obligations of the Agency so that such obligations are paid prior to the Agency being limited by the $1.11 billion amount contained in the amended Redevelopment Plan. Outstanding Indebtedness of the Agency Certification of Agency Indebtedness. Pursuant to Section 33675 of the Redevelopment Law, on or before October 1 of each year an agency must file with the county auditor a statement of indebtedness certified by the chief fiscal officer of the agency for each redevelopment project that receives tax increment. The statement of indebtedness is required to contain the date on which any bonds were delivered, the principal amount, term, purpose and interest rate of 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. The Agency has complied with the requirements of Section 33675 each year since its effective date. 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. 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 must 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 Section 33675. 37 Outstanding Indebtedness. The Agency has no outstanding indebtedness which is senior to or on a parity with the 2010 Bonds. The Agency has issued obligations payable from the portion of the tax increment revenues which are not required to be allocated to low and moderate income housing purposes. Such obligations are not payable from Housing Tax Increment Revenues. The Agency has also entered into obligations for multi -family housing purposes. Such obligations are payable from amounts paid by the developer of the applicable project and are not payable from Housing Tax Increment Revenues. See the Notes to the financial statement in APPENDIX C " TEMECULA REDEVELOPMENT AGENCY COMPONENT UNIT FINANCIAL STATEMENT FOR FISCAL YEAR ENDING JUNE 30, 2009." Obligation to the City. In the first quarter of 1996, the City conveyed certain real property to the Agency for use on a redevelopment project in exchange for a promissory note in the amount of $918,171. As of September 30, 2009, the outstanding amount of the note was $1,558,878. This obligation is not payable from Housing Tax Increment Revenues. Pass -Through Agreements and Owner Participation Agreements. Pass -Through Agreements. Pursuant to Section 33401(b) of the Redevelopment Law (as in effect prior to January 1, 1994), a redevelopment agency was authorized to enter into an agreement to pay tax increment revenues to any taxing agency that has territory located within a redevelopment project in an amount which, in the agency's determination, is appropriate to alleviate any financial burden or detriment caused by the redevelopment project. These agreements normally provide for a pass -through of tax increment revenue directly to the affected taxing agency, and, therefore, are commonly referred to as "pass -through" or "fiscal" agreements. As discussed earlier, the County originally adopted the Project Area. At the time of adoption, the County entered into a number of pass -through agreements (collectively, the "Pass -Through Agreements"). All of these agreements with school districts called for the districts to receive 29.62% of their shares of general levy tax increment revenue. All non -school district Pass -Through Agreements called for the taxing entities to receive 100% of their general levy tax increment revenue. These Pass - Through Agreements became obligations of the Agency at the time that the Project Area was adopted by the Agency. The Agency covenants in the Indenture that it will not enter into any amendment to a Pass - Through Agreement that will adversely affect its ability to meet its obligations under the Indenture. The agreements are summarized in the table below: Taxing Entity Fiscal Year 2009-10 1% Share Pass -Through Share County of Riverside 18.12% 100.00% County Library Department 2.18 100.00 County Structural Fire Department 4.70 100.00 Temecula Public Cemetery District 0.39 100.00 Eastern Municipal Water District 9.51 100.00 Riverside County Flood Control District 1.71 100.00 Rancho California Water District 6.05 100.00 Temecula Valley Unified School District 30.73 29.62 Mt. San Jacinto Community College District 3.54 29.62 Riverside County Superintendent of Schools 10.23 29.62 38 At the time the Agency adopted the Redevelopment Plan, it entered into an agreement with the County that called for tax -sharing payments to be made to the County General Fund, the County Structural Fire Department and the County Library Department. It also provided for a partial deferral of the payments to the County General Fund. The Agency and the County entered into an amended and restated County Pass -Through Agreement, dated January 22, 2002. The new agreement calls for the Agency to make tax -sharing payments to the County General Fund, County Structural Fire Department and County Library Department from general levy tax increment revenues net of the allowed administrative fees. The General Fund share is 18.12%, the County Structural Fire Department share is 4.70% and the County Library Department share is 2.18%. In addition to the tax -sharing payments, the agreement specified that the Agency pay the County a total of $6 million from the proceeds of bonds issued by the Agency in 2002 as repayment of the County tax -sharing payments deferred under the May 21, 1991 agreement. The $6 million was paid to the County in July 2002. The Agency further agreed to contribute $5 million toward the acquisition of right of way for a project referred to as the Date/Cherry Interchange. According to the Agency, funding for this improvement was provided from sources other than Housing Tax Increment Revenues. Under the County Pass -Through Agreement, the Auditor -Controller is responsible for calculating the amount of the tax -sharing payments and allocating these payments to the various taxing entities. The County Pass -Through Agreement does not provide for subordination of the tax -sharing payments to the County, Structural Fire Department or Library Department to debt service on the 2010 Bonds. Owner Participation Agreements. The Agency has entered into three Owner Participation Agreements, two of which call for payments to be made to the Owner Participants. The first agreement, between the Agency and International Rectifier Corporation ("International Rectifier"), was entered into on December 9, 1997, and amended on December 15, 1998. Pursuant to the agreement, the Agency notified International Rectifier on April 23, 2002, that the agreement was terminated. International Rectifier never satisfied the requirements of the agreement, and no payments were ever made by the Agency pursuant to the agreement. The second agreement, between the Agency and Advanced Cardiovascular Systems, Inc. (the "Participant'), was entered into on February 12, 2002. Subsequent to the agreement, the Participant was purchased by Abbott Laboratories and is presently known as Abbott Vascular. Under the terms of this agreement, the Participant agreed to add not less than 90,000 square feet of gross building area to its present facilities and to add not less than 150 new full time jobs. The Participant further agreed to add another 150 new full-time jobs within five years of the issuance of the certificate of occupancy on the Phase I improvements. The Participant also agreed that within five years of the issuance of a certificate of occupancy for the Phase I improvements, it would receive a certificate of occupancy for at least 90,000 additional square feet of building area (Phase 11). Alternatively, the agreement specified that the Participant could increase the size of the Phase I improvements to at least 135,000 square feet and the Phase II requirement of improvements would be deemed satisfied. The Participant has completed construction on the parking structure and an office building totaling more than 383,000 square feet, which satisfies both the Phase I and Phase II building requirements. The agreement has additional requirements for creation of new jobs. The Agency has indicated that it believes that this requirement has been met but is awaiting documentation of such. Upon completion of the prerequisites set forth in the agreement, the Agency agreed to remit to the Participant 50% of the net tax increment revenue derived from the increase in assessed value that results from development of Phases I and 11. "Net tax increment" is defined in the agreement as being the total tax increment received by the Agency from Phases I and II, less 20% for housing tax increment and amounts required by existing tax sharing agreements. Phase I improvements have been completed and 39 enrolled at their full value for 2009-10. Based on the assessed value of the structures, the Fiscal Consultant has estimated the amount of tax increment revenues that will be paid to the Participant. The agreement makes no pledge of any funds of the Agency or the City and, in particular, there is no pledge of Housing Tax Increment Revenues or pledge of the City's general fund. The payments made by the Agency pursuant to the agreement will, therefore, be subordinate to any pledge of tax increment revenues. The Housing Tax Increment Revenues that are pledged to the repayment of the 2010 Bonds have a lien on Agency revenues superior to the payments required by the agreement. The third agreement, among the Agency, Temecula Towne Center Associates, L.P. ("Temecula Towne Center Associates"), a California limited partnership, and F.C. Temecula, Inc. ("F.C. Temecula, Inc."), a California corporation, was dated as of July 24, 2007. No payments of Housing Tax Increment Revenues will be made to the Owner Participant. Under the terms of this agreement, F.C. Temecula, Inc. agreed to construct a parking facility adjacent to Edwards Cinema (the "East Parking Facility") with a minimum of 936 parking spaces. The East Parking Facility is available to the public patronizing nearby businesses. The agreement calls for the Agency to sublease the site of the East Parking Facility constructed by F.C. Temecula Inc. and then to purchase the completed East Parking Facility for use as a public parking facility for the term of 30 years. The Agency's sublease of the site requires payment by the Agency of $1 per year for 30 years and its purchase price for the East Parking Facility was $11 million. On expiration of the sublease, the site and the facility will revert to F.C. Temecula Inc. The Agency issued bonds to pay for the purchase of the East Parking Facility from F.C. Temecula Inc. F.C. Temecula Inc. will manage the East Parking Facility under a parking management agreement and assumes all responsibilities for maintenance, insurance and liability. The cost of construction and the value of the East Parking Facility was estimated to be at least $22 million. In addition, as a part of this agreement, Temecula Towne Center Associates agrees to complete certain road improvements benefitting the Mall and surrounding properties. Investment of Agency Funds The Agency may invest moneys not immediately required for operations in a manner consistent with the City's investment policy (the "Investment Policy"). For a description of the types of investments in which the Agency may invest, see "APPENDIX C — TEMECULA REDEVELOPMENT AGENCY COMPONENT UNIT FINANCIAL STATEMENTS FOR FISCAL YEAR ENDING DUNE 30, 2009 — [Note 2]." Controls, Land Use and Building Restrictions All real property in the Project Area is subject to the controls and restrictions of the Redevelopment Plan. The Redevelopment Plan provides that all new construction in the Project Area shall comply with all applicable State and local laws in effect, including the various codes of the City. The Redevelopment Plan specifies particular land use areas by reference to the City's General Plan. The Agency may permit an existing but nonconforming use to continue so long as the Agency determines that the use is generally compatible with other surrounding development uses. Within the limits, restrictions and controls established in the Redevelopment Plan, the Agency is authorized to limit the number, type, size and height of buildings in the Project Area and to establish design criteria, traffic circulation, traffic access and other development and design controls necessary for property development within the Project Area. Under exceptional circumstances, the Agency is authorized to permit minor variations from the limits, restrictions and controls established by the Redevelopment Plan. However, no variation shall be 40 granted which changes a basic land use or which permits substantial departures from the Redevelopment Plan's provisions. In permitting a variation, the Agency must impose such conditions as are necessary to protect the public health, safety or welfare and to assure compliance with the objectives of the Redevelopment Plan. 41 [INSERT COLOR MAP OF THE PROJECT AREA HERE] 42 THE REDEVELOPMENT PLAN 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 content of which is largely prescribed in the Redevelopment Law rather than a "plan" in the customary sense of the word. The City Council adopted Ordinance No. 91-11 on April 9, 1991, and Ordinance No. 91-15 on April 9, 1991, approving the County Redevelopment Plan as the Temecula Redevelopment Plan No. 1 (defined above as the "Redevelopment Plan") and transferring jurisdiction over the Redevelopment Plan to the Agency. This transfer was effective July 1, 1991. The Temecula Redevelopment Project No. 1, the area encompassed by the Redevelopment Plan (the "Project Area"), is primarily commercial and industrial in nature. It is generally located along Interstate 15 from the City's northern border with the City of Murrieta to the intersection of Highway 79 on the south. The Project Area encompasses approximately 1,635 acres. The Project Area includes the Promenade Mall site, Old Town and industrial and business park areas west of the freeway. The Redevelopment Plan for the Project Area was adopted prior to January 1, 1994. Chapter 942 specifies that a time limit on establishment of new debt be incorporated into the Redevelopment Plan and that time limit shall be 20 years from the adoption of the Redevelopment Plan or January 1, 2004, whichever is later. SB 211 was signed into law as Chapter 741, Statutes of 2001 and provides that on or after January 1, 2002, a redevelopment plan may be amended by a legislative body to repeal the time limit on the establishment of loans, advances and indebtedness. On January 8, 2008, the Agency adopted Ordinance No. 07-20 repealing the time limit on the establishment of loans, advances and indebtedness. In accordance with the amended Redevelopment Plan, taxes, as defined in Section 33670 of the Redevelopment Law, shall not be divided and shall not be allocated to the Agency in excess of $1.11 billion except by amendment of the Redevelopment Plan. Pursuant to the 1991 Settlement Agreement, as amended in 1995, various additional limitations are placed on the Redevelopment Plan, including that, subject to certain exceptions, no more than $150 million of tax increment revenues shall be allotted or paid to the Agency during the term of the Plan (excluding the Housing Tax Increment Revenues amounts and certain other amounts). See "THE REDEVELOPMENT AGENCY OF THE CITY OF TEMECULA — Limitations Under 1991 Settlement Agreement." As amended by Ordinance No. 94-33, the Redevelopment Plan restricts the amount of bonded indebtedness that may be outstanding at any one time. The Agency may issue bonds and/or notes for any of its authorized purposes. These bonds and/or notes may be secured with a pledge of tax increment revenues. The total outstanding principal of any bonds so issued and repayable from tax increment revenues shall not exceed $340 million at any one time, except by amendment of the Redevelopment Plan. After issuance of the 2010 Bonds, which are payable from Housing Tax Increment Revenues, and taking into account Agency bonds previously issued that are payable from tax increment revenues other than Housing Tax Increment Revenues, the Agency will have $75,820,000* aggregate principal amount of bonds outstanding. As amended by Ordinance No. 06-11, adopted on September 26, 2006, the amended Redevelopment Plan specifies that, except for the non-discrimination and non -segregation provisions that Preliminary, subject to change. 43 continue in perpetuity, the effectiveness of the Redevelopment Plan shall expire on July 12, 2029, that is, forty-one years from the adoption of the Redevelopment Plan. After expiration of the effectiveness of the Redevelopment Plan, the Agency shall have no authority to act pursuant to the Redevelopment Plan except to pay previously incurred indebtedness and to enforce existing covenants, contracts and other obligations. The Agency may not receive additional tax increment revenue or pay indebtedness after July 12, 2039, except for such purposes as specifically permitted under the Redevelopment Law. As amended by Ordinance No. 07-20, adopted on January 8, 2008, there is no time limit on establishing loans, advances or indebtedness to be paid with the proceeds of Tax Increment Revenues to finance in whole or in part the Redevelopment Project. Description of the Project Area The Project Area includes approximately 1,635 acres of land primarily located west of Interstate 15 and partially straddling Interstate 15 along Winchester and Ynez Roads. The Project Area includes the Old Town area of the City along Front Street. Proceeds of the 2010 Bonds Proceeds from the sale of the 2010 Bonds will be used (i) to finance eligible housing activities within the City; (ii) to establish a Reserve Account for the Bonds; and (iii) to provide for the costs of issuing the 2010 Bonds. See "ESTIMATED SOURCES AND USES OF FUNDS" herein. Land Uses 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 assessed value for Fiscal Year 2009-10. See "APPENDIX B — FISCAL CONSULTANT'S REPORT." 44 IR1111001 Category TEMECULA REDEVELOPMENT PROJECT NO. 1 LAND USE(' FISCAL YEAR 2009-10 No. Parcels (2) Assessed Value(3) % of Total Residential 168 $ 49,269,321 2.10% Commercial 371 1,066,954,774 45.58 Industrial 248 634,175,516 27.09 Recreational 2 1,953,904 0.08 Institutional 8 34,941,751 1.49 Government 3 372,403 0.02 Exempt 143 0 0.00 VacantLand 151 64,864,364 2.78 Possessory Interest - 4,298,321 0.18 Unsecured 484,009,682 20.68 Totals: 1,094 $2,340,840,036 100.00% a) The category values and parcel counts are based on the use codes assigned by the County to parcels on the lien date tax roll. (2) Possessory Interest and Unsecured categories have no parcels listed. This is because values associated with these categories are applied to secured parcels that are accounted for in the other categories. The lien date values reported by the Auditor -Controller do not include tax roll adjustments that have occurred after the lien date. Source: Fiscal Consultant's Report Development in the Project Area The Redevelopment Plan provides for redevelopment within the Project Area. The Agency has identified a number of projects that are currently under construction or have been recently completed and are not yet reflected on the tax rolls. It is estimated that these projects will produce approximately $86.2 million of new assessed value for Fiscal Year 2010-11 and $6.2 million of new assessed value for Fiscal Year 2011-12. These new developments include hotel, office, retail, residential, restaurant and commercial buildings. The anticipated new developments also include the remaining $54.6 million in new assessed value that has not yet been enrolled as a result of the 126,000 square foot expansion of the Promenade Shopping Mall mentioned below. For a list of these new developments and the estimated timing of their completion, see Table 5 of "APPENDIX B — FISCAL CONSULTANT'S REPORT." In addition to the development listed above, there have been nine transfers of ownership that have occurred after the January 1, 2009, lien date for the current fiscal year. These transfers have resulted in an increase in value of $512,000 on the nine properties transferred. It is estimated that this increase in value will be reflected on the tax roll for Fiscal Year 2010-11. A summary of the new developments and transfers of ownership are shown on Table 5 of the Fiscal Consultant's Report. See "APPENDIX B — FISCAL CONSULTANT'S REPORT." Assessed Valuation; Housing Tax Increment Revenues The Project Area's aggregate base year assessed adjusted valuation is $365,093,279. 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. 45 TABLE2 TEMECULA REDEVELOPMENT PROJECT NO. 1 HISTORICAL VALUES AND REVENUES Base Year Fiscal Year Seeurert') 1987-88 2005-06 2006-07 2007-08 2008-09 2009-10 Land $167,283,021 $ 392,162,253 $ 426,934,738 $482,270,750 $508,605,272 $523,021,415 Improvements 184,324,369 1,011,701,868 1,068,599,164 1,137,276,308 1,222,103,943 1,323,666,558 Personal Property 11,212,042 86,281,976 77,283,761 34,708,538 31,062,559 28,325,551 Exemptions (235,673) (9,398,918) (11,956,277) (14,419,746) (15,865,934) (18,183,170) Total Secured $362.583759 $1.480747.179 $1.560.861386 $1.639.835.850 $1745.905.840 $1.856.830354 Unsecured Land $ 2,211 $ 239,344 $ 211,036 $166,748 $148,158 $98,309 Improvements 324,497 87,929,361 95,845,756 213,766,372 339,563,384 261,364,403 Personal Property 2,225,879 126,621,907 133,245,303 201,959,455 256,654,302 222,931,168 Exemptions (43,067) (82,415) (151,211) (120,846) 185183 384198 Total Unsecured $2,509.520 $214,708.197 $229.150.884 $415771.729 $59 80.661 $484009.682 Grand Total $365,093,279 $1,695,455,376 $1,790,012,270 $2,055,607,579 $2,342,086,501 $2,340,840,036 Incremental Value: $1,330,362,097 $1,424,918,991 $1,690,514,300 $1,976,993,222 $1,975,746,757 %Annual Change: 6.14% 7.11% 18.64% 16.95% -0.06% Gross Revenues $15,458,291 $15,616,961 $18,741,727 $20,315,017 Unavailable (actual) Housing Tax $3,091,658 $3,123,392 $3,724,633 $4,063,121 Unavailable Increment Revenues(2) (1) Secured values include state assessed non -unitary utility property. (2) Housing Tax Increment Revenues are 20% of Gross Revenues. Source: Fiscal Consultant's Report/Cmnty ofRiverside 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 $1,147,680,695 (96.19%). Project Area values did not decline in any fiscal year from Fiscal Year 2000- 01 through Fiscal Year 2008-09 but declined by $1,246,465 (-0.05%) in Fiscal Year 2009-10. Project Area unsecured values experienced reductions in value in Fiscal Year 2002-03 (.79%) and in Fiscal Year 2005-06 (5.00%) but increased dramatically in Fiscal Year 2007-08 and Fiscal Year 2008-09 due to new unsecured values added by Abbott Vascular. In 2009-10 a reduction in unsecured value of over $80 million at Abbott Vascular and unsecured value reductions elsewhere in the Project Area resulted in a $112,170,979 (-18.82%) reduction in the Project Area unsecured value. The reduction in unsecured value for 2009-10 was almost entirely offset by increased secured value of $110.9 million that resulted from expansions of the Promenade Mall and the Abbott Vascular campus. Another large property owner, International Rectifier Corp. (IRC), has seen its valuation decrease since Fiscal Year 2002-03 by $47.1 million (35.01%). This has been the result of several successful assessment appeals filed by the property owner. That property owner currently has no appeals outstanding. See "APPENDIX B — FISCAL CONSULTANT'S REPORT — III. Project Area Assessed Values — A. Assessed Values." 46 In response to the downturn in residential property values over the past several years, the County Assessor has reduced the 2007-08, 2008-09 and 2009-10 assessed values of residential parcels throughout the County due to reductions in their market values to levels below their enrolled assessed values. Residential property values within the Project Area increased steadily through 2007-08 and then dropped by $5.9 million (-11.03%) in 2008-09. Residential property values rose in 2009-10 by $1.55 million (3.2%). (The Project Area is primarily commercial and industrial property. Residential values account for approximately 2.1% of assessed values within the Project Area.) The Fiscal Consultant indicates that there is no indication from the County Assessor that he is considering any further wholesale reductions to residential property values in the County. The Assessor has not historically enacted wholesale reductions to commercial, retail, industrial or other non-residential properties in the past but the Agency and the Fiscal Consultant can make no representations regarding the Assessor's actions in the future. The Agency is aware that some commercial centers within the Project Area are experiencing vacancies. It is unclear if or how these vacancies may impact Project Area assessed values in future years. 47 The following table shows the ten largest contributors to the Housing Tax Increment Revenues in the Project Area. TABLE3 TEMECULA REDEVELOPMENT PROJECT NO. 1 TOP TEN TAXABLE PROPERTY OWNERS FISCAL YEAR 2009-10 Property Owner Type of Business Abbott Vascular (i) Medical appliances mfg. Temecula Town Center Associates Regional shopping center International Rectifier Electronic mfg. Inland Western Temecula Commonst2I Commercial shopping center Kimco Palm Plaza Commercial shopping center DCH Investments Inc. (2) Vacant land/Auto dealer Macy's Department Stores (2) Retail store WGA Bel Villaggio Commercial shopping center 27511 Ynez Road LLC Commercial shopping center Costco Wholesale Corporation(2) Retail store Total Value % Total Project Area Value %Total Incr. Value $449,932,657 19.22% 22.77% 117,117,378 5.00 5.93 88,617,163 3.79 4.49 55,784,203 2.38 2.82 46,272,004 1.98 2.34 33,932,937 1.45 1.72 28,561,629 1.22 1.45 27,325,790 1.17 1.38 26,348,475 1.13 1.33 24,076,879 1.03 1.22 $ 897,969,115 Total Project Area Value $2,340,840,036 38.36 Project Area Total Incremental Value $1,975,746,757 45.45 Abbott Vascular is a subsidiary of Abbott Laboratories, which acquired Advanced Cardiovascular Systems, Inc. in April 2006, in connection with Boston Scientific Corporation's purchase of Guidant Corporation. Abbott Vascular has filed appeals in the past, but the Agency is not aware that Abbott Vascular has any appeals pending at this time. (2) Assessment Appeals Pending. See APPENDIX B— FISCAL CONSULTANT'S REPORT —IV—Tax Allocation and Disbursement— F. — Assessment Appeals." Source: Fiscal Consultant's Report. Abbott Vascular has recently completed an expansion of its campus. The expansion entailed construction of over 383,000 square feet of office space and a three-story parking garage. The project increased Abbott Vascular's assessed value by $92.6 million above its value for 2008-09 and added significantly to its share of the Project Area's total and incremental assessed value. Temecula Town Center Associates, owners of the Temecula Promenade shopping mall, recently completed an expansion of its mall property improvements to add approximately 126,000 square feet of retail space. This expansion increased Temecula Towne Center's assessed values by $18.99 million (19.4%) over Fiscal Year 2007-08. The expansion of the Temecula Promenade Mall was completed earlier in 2009, and not all of the new assessed value is reflected in the 2009-10 tax roll. It is expected that an additional $54.6 million in value will be added to the tax rolls in 2010-11 as the full completed value of the shopping center expansion is realized. See "APPENDIX B — FISCAL CONSULTANT'S REPORT — IX — New Development Activities" herein for additional information with respect to the Abbott Vascular's properties and the Temecula Town Center Associates' properties. 48 Appeals of Assessed Values Pursuant to California law, property owners may apply for a reduction of their property tax assessment by filing a written application, in the form prescribed by the State Board of Equalization, with the appropriate county board of equalization or assessment appeals board. After the applicant and the assessor have presented their arguments, the appeals board makes a final decision on the proper assessed value. The appeals board may rule in the assessor's favor or in the applicant's favor or the appeals board may set its own opinion of the proper assessed value, which may be more or less than either the assessor's opinion or the applicant's opinion. Any reduction in the assessment ultimately granted applies to the year for which application is made and during which the written application was filed. After a reduction is allowed, the property is reviewed on an annual basis to determine its full cash value, and the valuation may be adjusted accordingly. This may result in further reductions or increases in value. Such increases are in accordance with the actual cash value of the property and may exceed the maximum annual inflationary growth rate allowed on other properties under Article XIIIA of the California Constitution. Once the property has regained its prior value, adjusted for inflation, it is once again subject to the annual inflationary growth rate allowed under Article XIIIA. Appeals for reduction in the "base year" value of an assessment, if successful, reduce the assessment for the year in which the appeal is taken and prospectively after that. The "base year" is determined by the completion date of new construction or the date of change of ownership. Any base year appeal must be made within four years of the change of ownership or new construction date. Refunds for taxpayer overpayment of property taxes may include refunds for overpayment of taxes in years after that which was appealed. Any taxpayer payment of property taxes that is based on a value that is subsequently adjusted downward will require a refund for overpayment. 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 Housing Tax Increment Revenues. Within the Project Area since 2005, there have been a total of 116 appeals filed. Of these, 16 have been allowed with a reduction in value, 21 have been denied or withdrawn, and 79 assessment appeals are currently pending. Reductions in value on the successful appeals have totaled $48,603,748. The amount of assessed value currently under appeal is $295,325,584. 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 $22,690,118 on 34 of the pending appeals during 2010-11. The following table summarizes the Fiscal Consultant's estimate for losses on pending appeals. No. of No. of Total No. Resolved Successful of Appeals Appeals Appeals 116 37 16 Assessment Appeals Summary Average No. & Value of Reduction Appeals Pending 17.77% 79 ($295,325,584) Est. Reduction on Est. No. of Pending Appeals Appeals Allowed (2010-11 Allowed Value Adjustment) 34 $22,690,118 49 Within the top ten tax payers in the Project Area, four have filed assessment appeals that are currently pending. Inland Western Temecula Commons is seeking a reduction of its 2008-09 valuation in the amount of $18.1 million (33.08%) and is seeking reduction of its 2009-10 valuation in the amount of $28.0 million (50.16%). DCH Investment Inc., Macy's Department Stores and Costco Wholesale Corp. are also seeking reductions of their 2008-09 assessed values. The table below summarizes the reductions in assessed value sought by these taxpayers. Top Four Taxpayer Assessment Appeals Owner Inland Western Temecula Commons Inland Western Temecula Commons DCH Investment Inc. Macy's Department Stores Costco Wholesale Corp. Fiscal Year No. of Parcels Value Under Appeal 2008-09 8 $54,726,401 2009-10 8 55,784,203 2008-09 15 33,267,598 2008-09 1 4,918,260 2008-09 1 21,957,079 Owner Opinion Potential Value Value Loss $36,625,000 $18,101,401 27,805,000 27,979,203 16,593,000 16,674,598 4,189,909 728,351 15,000,000 6,957,079 Where a property owner has a pending assessment appeal on the initial valuation of a new development, a successful appeal will adjust the base value for the property and that base value will carry forward into future years. The assessor typically rolls a reduction in value for a particular fiscal year forward into subsequent years with adjustments for inflation, improvements to the property and other factors. However, if the values are reduced, the taxpayer may receive property tax refunds for the cumulative reductions. See "APPENDIX B —FISCAL CONSULTANT'S REPORT." Many of the successful appeals filed in the Project Area are based on Section 51 of the Revenue and Taxation Code, which 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 California 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. Significant reductions have taken place in some counties due to declining real estate values. Reductions made under this code section may be initiated by the 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. Such increases shall be in accordance with 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 California 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. 50 Direct and Overlapping Bonded Debt The Direct and Overlapping Bonded Debt Statement of the Project Area, as of December 1, 2009, is shown below. It does not include the 2010 Bonds. TABLE 4 TEMECULA REDEVELOPMENT PROJECT NO. 1 SECURED PROPERTY TAX ROLL AND DIRECT AND OVERLAPPING DEBT CITY OF TEMECULA REDEVELOPMENT AGENCY 2009-10 Assessed Valuation: $2,322,980,924 Base Year Valuation: 365,093,279 Incremental Valuation: $1,957,887,645 DIRECT DEBT: %Applicable (1) Debt 12/1/09 2002 Tax Allocation Bonds 100. % $25,690,000 2006 Series A Tax Allocation Bonds 100. 17,300,000 2006 Series B Subordinate Tax Allocation Bonds 100. 3,040,000 2007 Subordinate Tax Allocation Bonds 100. 15,790,000 TOTAL DIRECT DEBT $61,820,000 (1) Ratio to Incremental Valuation: 3.16% OVERLAPPING TAX AND ASSESSMENT DEBT: Metropolitan Water District 0.020% $ 52,911 Eastern Municipal Water District, I.D. No. U-8 17.901 862,291 Temecula Valley Unified School District 14.032 4,695,809 City of Temecula Community Services District Certificates of Participation 19.590 870,776 Riverside County 1915 Act Bonds (Estimate) 18.597 947,099 City of Temecula Community Facilities District No. 88-12 15.671 1,511,468 TOTAL OVERLAPPING TAX AND ASSESSMENT DEBT $8,940,354 OVERLAPPING GENERAL FUND DEBT: Riverside County General Fund Obligations 0.240% $1,782,239 Riverside County Pension Obligations 0.240 917,016 Riverside County Board of Education Certificates of Participation 0.240 17,376 Mt. San Jacinto Community College District General Fund Obligations 0.633 80,518 City of Temecula Certificates of Participation 3.688 888,992 TOTAL GROSS OVERLAPPING GENERAL FUND DEBT $3,686,141 Less: Riverside County self-supporting obligations 39,251 TOTAL NET OVERLAPPING GENERAL FUND DEBT $3,646,890 GROSS COMBINED TOTAL DIRECT AND OVERLAPPING DEBT $74,446,495 (2) NET COMBINED TOTAL DIRECT AND OVERLAPPING DEBT $74,407,244 (1) Excludes tax allocation housing bonds to be sold. (2) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and non -bonded capital lease obligations Ratios to 2009-10 Assessed Valuation: Gross Combined Total Direct and Overlapping Debt ...................... 3.20% Net Combined Total Direct and Overlapping Debt .......................... 3.20% STATE SCHOOL BUILDING AID REPAYABLE AS OF 6/30/09: $0 51 Project Area Pass -Through Agreements See "APPENDIX B — FISCAL CONSULTANT'S REPORT" herein for a discussion of certain Pass - Through Agreements and other contracts to which the Agency is a party. The Housing Tax Increment Revenues pledged to the repayment of the 2010 Bonds has a lien on the Agency revenues that is superior to the payment required by the Pass -Through Agreements and such other contracts. COVERAGE ANALYSIS The following table sets forth projections of Housing Tax Increment Revenues for the Project Area, together with the estimated debt service coverage for the 2010 Bonds to August 1, 2039. These projections are based on certain assumptions, and no assurance can be given that this or any level of Housing Tax Increment Revenues will be achieved. See "RISK FACTORS — Estimated Housing Tax Increment Revenues" herein. 52 Fiscal Year (June 30)/ Bond Year (August 1) TABLE 5 TEMECULA REDEVELOPMENT PROJECT NO. 1 Projected Debt Service Coverage(') Housing Total Tax Taxable Incremental Gross Tax Increment Total Value Value Increment Revenues Debt (000's) (000's) (000's) (000's)"J Service 2010 $2,340,840 $1,975,747 $19,973 $3,995 2011 2,398,510 2,033,417 20,503 4,103 2012 2,403,273 2,038,179 20,536 4,107 2013 2,403,273 2,038,179 20,536 4,107 2014 2,403,273 2,038,179 20,536 4,107 2015 2,403,273 2,038,179 20,536 4,107 2016 2,403,273 2,038,179 20,536 4,107 2017 2,403,273 2,038,179 20,536 4,107 2018 2,403,273 2,038,179 20,536 4,107 2019 2,403,273 2,038,179 20,536 4,107 2020 2,403,273 2,038,179 20,536 4,107 2021 2,403,273 2,038,179 20,536 4,107 2022 2,403,273 2,038,179 20,536 4,107 2023 2,403,273 2,038,179 20,536 4,107 2024 2,403,273 2,038,179 20,536 4,107 2025 2,403,273 2,038,179 20,536 4,107 2026 2,403,273 2,038,179 20,536 4,107 2027 2,403,273 2,038,179 20,536 4,107 2028 2,403,273 2,038,179 20,536 4,107 2029 2,403,273 2,038,179 20,536 4,107 2030 2,403,273 2,038,179 20,536 4,107 2031 2,403,273 2,038,179 20,536 4,107 2032 2,403,273 2,038,179 20,536 4,107 2033 2,403,273 2,038,179 20,536 4,107 2034 2,403,273 2,038,179 20,536 4,107 2035 2,403,273 2,038,179 20,536 4,107 2036 2,403,273 2,038,179 20,469 4,094 2037 2,403,273 2,038,179 20,448 4,090 2038 2,403,273 2,038,179 20,448 4,090 2039 2,403,273 2,038,179 20,448 4,090 Estimated Debt Service Coverage For a discussion of assumptions made with respect to the projections of total taxable value and Housing Tax Increment Revenues, see "APPENDIX B -FISCAL CONSULTANT'S REPORT." Among the assumptions made are an assumption of a deflation of-0.237%in Fiscal Year2010-11 and a zero percent (0%growth rate on real property value in Fiscal Year 2011-12 and each fiscal year thereafter, an increase in values related to property transfers since January 1, 2009, and an increase related to a number of pry ects identified by the Agency that are currently under construction or have been recently completed and are not yet reflected on the tax rolls. It is estimated that projects currently under construction or recently completed will produce $86.2 million in new assessed value for Fiscal Year 2010-11 and $6.2 million of new assessed value for Fiscal Year2011-12. In addition to these new developments, there have been nine transfers of ownership that have occurred after the R January 1, 2009, lien datewhich are estimatedtoresult in an increasein assessedvalue of$512,000 for Fiscal Year 2010-11. Housing Tax Increment Revenues are20%of the Gross Tax Increment. Source: Fiscal Consultant's Report'City ofTemecuda as to assessed value and Hovering Tax Increment Revenues and Stone & Youngberg LLC as to debt service • Preliminary, subjectto change. 53 The Temecula Public Financing Authority was established pursuant to a Joint Exercise of Powers Agreement, dated April 10, 2001, by and between the City and the Agency in accordance with the provisions of the Act. The Authority was created for the purpose of providing financing for public capital improvements for the City and the Agency through the acquisition by the Authority of such public capital improvements and/or the purchase by the Authority of local obligations within the meaning of the Act and/or the making of secured or unsecured loans to the City or the Agency in connection with the financing of public capital improvement projects. Under the Act, the Authority has the power to purchase the 2010 Bonds and resell them to the Underwriter. The Authority has no responsibility whatsoever for repayment of the 2010 Bonds. CERTAIN LEGAL MATTERS Legal Opinions The legal opinion of Quint & Thimmig LLP, San Francisco, California, as Bond Counsel, approving the validity of the 2010 Bonds, will be made available to purchasers at the time of original delivery of the 2010 Bonds, and the proposed form thereof appears in Appendix D hereto. McFarlin & Anderson LLP is serving as Disclosure Counsel to the Agency. Certain legal matters will be passed upon for the Agency by Richards, Watson & Gershon, Agency Counsel. Stradling Yocca Carlson & Rauth, a Professional Corporation, is acting as Underwriter's Counsel. Enforceability of Remedies The remedies available to the Trustee and the registered Owners of the 2010 Bonds upon an event of default under the Indenture and any other document described herein are in many respects dependent upon regulatory and judicial actions which are often subject to discretion and delay. Under existing law and judicial decisions, the remedies provided for under such documents may not be readily available or may be limited. The various legal opinions to be delivered concurrently with the delivery of the 2010 Bonds will be qualified to the extent that the enforceability of the legal documents with respect to the 2010 Bonds are subject to limitations imposed by bankruptcy, reorganization, insolvency or other similar laws affecting the rights of creditors generally and by equitable remedies and proceedings generally. The Agency has covenanted 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 eight months following the end of the Agency's fiscal year (which reporting date would be March 1), commencing with the report for the 2009-10 Fiscal Year (the "Annual Report'), and to provide notices of the occurrence of certain enumerated events, if material. The Annual Report will be filed by the Agency with the Municipal Securities Rulemaking Board ("MSRB") through the Electronic Municipal Market Access System (the "EMMA System") in an electronic format and accompanied by identifying information as prescribed by the MSRB. The notices of material events will be filed by the Agency with the MSRB through the EMMA System. The specific nature of the information to be contained in the Annual Report or the notices of material events is set forth in the Form of Continuing Disclosure Certificate in Appendix E hereto. These covenants have been made in order to assist the Underwriter in complying with S.E.C. Rule 15c2-12(b)(5). The Agency has never failed to comply in all material 54 respects with any previous undertakings with regard to said Rule to provide annual reports or notices of material events. ABSENCE OF LITIGATION At the time the 2010 Bonds are delivered, the Agency will certify that, to the best knowledge of the officers of the Agency so certifying, there is no litigation pending with respect to which the Agency has been served with process or known 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. YalklakiRIV0YDIEM 2010 Series A Bonds Federal tax law contains a number of requirements and restrictions which apply to the 2010 Series A Bonds, including investment restrictions, periodic payments of arbitrage profits to the United States, requirements regarding the proper use of 2010 Series A Bond proceeds, and certain other matters. The Agency has covenanted to comply with all requirements that must be satisfied in order for the interest on the 2010 Series A Bonds to be excludable from gross income for federal income tax purposes. Failure to comply with certain of such covenants could cause interest on the 2010 Series A Bonds to become includable in gross income for federal income tax purposes retroactively to the date of issuance of the 2010 Series A Bonds. Subject to the Agency's compliance with the above -referenced covenants, under existing law, in the opinion of Quint & Thimmig LLP, San Francisco, California, Bond Counsel, interest on the 2010 Series A Bonds (i) is excludable from the gross income of the owners thereof for federal income tax purposes, (ii) is not included as an item of tax preference in computing the federal alternative minimum tax for individuals and corporations, and (iii) is not taken into account in computing "adjusted current earnings" as described below. The Internal Revenue Code of 1986, as amended (the "Code"), includes provisions for an alternative minimum tax ("AMT") for corporations in addition to the corporate regular tax in certain cases. The AMT for a corporation, if any, depends upon the corporation's alternative minimum taxable income ("AMTI"), which is the corporations' taxable income with certain adjustments. One of the adjustment items used in computing the AMTI of a corporation (with certain exceptions) is an amount equal to 75% of the excess of such corporation's "adjusted current earnings" over an amount equal to its AMU (before such adjustment item and the alternative tax net operating loss deduction). "Adjusted current earnings" would generally include certain tax-exempt interest, but not interest on the 2010 Series A Bonds. In rendering its opinion, Bond Counsel will rely upon certifications of the Agency and others with respect to certain material facts within their respective knowledge. Bond Counsel's opinion represents its legal judgment based upon its review of the law and the facts that it deems relevant to render such opinion and is not a guarantee of a result. Ownership of the 2010 Series A Bonds may result in collateral federal income tax consequences to certain taxpayers, including, without limitation, corporations subject to the branch profits tax, financial institutions, certain insurance companies, certain S corporations, individual recipients of Social Security or Railroad Retirement benefits and taxpayers who may be deemed to have incurred (or continued) 55 indebtedness to purchase or carry tax-exempt obligations. Prospective purchasers of the 2010 Series A Bonds should consult their tax advisors as to applicability of any such collateral consequences. The issue price (the "Issue Price") for each maturity of the 2010 Series A Bonds is the price at which a substantial amount of such maturity of the 2010 Series A Bonds is first sold to the public. The Issue Price of a maturity of the 2010 Series A Bonds may be different from the price set forth, or the price corresponding to the yield set forth, on the inside cover page hereof. Owners of 2010 Series A Bonds who dispose of 2010 Series A Bonds prior to the stated maturity (whether by sale, redemption or otherwise), purchase 2010 Series A Bonds in the initial public offering, but at a price different from the Issue Price or purchase 2010 Series A Bonds subsequent to the initial public offering should consult their own tax advisors. If a 2010 Series A Bond is purchased at any time for a price that is less than the 2010 Series A Bond's stated redemption price at maturity (the "Reduced Issue Price"), the purchaser will be treated as having purchased a 2010 Series A Bond with market discount subject to the market discount rules of the Code (unless a statutory de minimis rule applies). Accrued market discount is treated as taxable ordinary income and is recognized when a 2010 Series A Bond is disposed of (to the extent such accrued discount does not exceed gain realized) or, at the purchaser's election, as it accrues. Such treatment would apply to any purchaser who purchases a 2010 Series A Bond for a price that is less than its Revised Issue Price. The applicability of the market discount rules may adversely affect the liquidity or secondary market price of such 2010 Series A Bond. Purchasers should consult their own tax advisors regarding the potential implications of market discount with respect to the 2010 Series A Bonds. An investor may purchase a 2010 Series A Bond at a price in excess of its stated principal amount. Such excess is characterized for federal income tax purposes as "bond premium" and must be amortized by an investor on a constant yield basis over the remaining term of the 2010 Series A Bond in a manner that takes into account potential call dates and call prices. An investor cannot deduct amortized bond premium relating to a tax-exempt bond. The amortized bond premium is treated as a reduction in the tax-exempt interest received. As bond premium is amortized, it reduces the investor's basis in the 2010 Series A Bond. Investors who purchase a 2010 Series A Bond at a premium should consult their own tax advisors regarding the amortization of bond premium and its effect on the 2010 Series A Bond's basis for purposes of computing gain or loss in connection with the sale, exchange, redemption or early retirement of the related 2010 Series A Bond. There are or may be pending in the Congress of the United States legislative proposals, including some that carry retroactive effective dates, that, if enacted, could alter or amend the federal tax matters referred to above or affect the market value of the 2010 Series A Bonds. It cannot be predicted whether or in what form any such proposal might be enacted or whether, if enacted, it would apply to bonds issued prior to enactment. Prospective purchasers of the 2010 Series A Bonds should consult their own tax advisors regarding any pending or proposed federal tax legislation. Bond Counsel expresses no opinion regarding any pending or proposed federal tax legislation. The Internal Revenue Service (the "Service") has an ongoing program of auditing tax exempt obligations to determine whether, in the view of the Service, interest on such tax exempt obligations is includable in the gross income of the owners thereof for federal income tax purposes. It cannot be predicted whether or not the Service will commence an audit of the 2010 Series A Bonds. If an audit is commenced, under current procedures the Service may treat the Agency as a taxpayer and the 2010 Series A Bondholders may have no right to participate in such procedure. The commencement of an audit could adversely affect the market value and liquidity of the 2010 Series A Bonds until the audit is concluded, regardless of the ultimate outcome. See "RISK FACTORS —IRS Audit of Tax -Exempt Bond Issues." 56 Payments of interest on, and proceeds of the sale, redemption or maturity of, tax exempt obligations, including the 2010 Series A Bonds, are in certain cases required to be reported to the Service. Additionally, backup withholding may apply to any such payments to any 2010 Series A Bond owner who fails to provide an accurate Form W 9 Request for Taxpayer Identification Number and Certification, or a substantially identical form, or to any 2010 Series A Bond owner who is notified by the Service of a failure to report any interest or dividends required to be shown on federal income tax returns. The reporting and backup withholding requirements do not affect the excludability of such interest from gross income for federal tax purposes. In the further opinion of Bond Counsel, interest on the 2010 Series A Bonds is exempt from personal income taxation imposed by the State. Ownership of the 2010 Series A Bonds may result in other state and local tax consequences to certain taxpayers. Bond Counsel expresses no opinion regarding any such collateral consequences arising with respect to the 2010 Series A Bonds. Prospective purchasers of the 2010 Series A Bonds should consult their tax advisors regarding the applicability of any such state and local taxes. The complete text of the final opinion that Bond Counsel expects to deliver upon issuance of the 2010 Series A Bonds is set forth in Appendix D. 2010 Series B Bonds The interest on the 2010 Series B Bonds is not excluded from gross income for federal income tax purposes, and is subject to all applicable federal taxation. In the opinion of Bond Counsel, however, interest on the 2010 Series B Bonds is exempt from California personal income taxes. Owners of the 2010 Series B Bonds should also be aware that the ownership or disposition of, or the accrual or receipt of interest on the 2010 Series B Bonds may have federal or state tax consequences. Bond Counsel expresses no opinion regarding any federal or state tax consequences arising with respect to the 2010 Series B Bonds other than as expressly described above. The complete text of the final opinion that Bond Counsel expects to deliver upon the issuance of the 2010 Series B Bonds is set forth in Appendix D. LO►111If.19V07I01001 The Agency will sell the 2010 Bonds to the Authority for immediate resale to Stone & Youngberg LLC (the "Underwriter"). The 2010 Bonds are being purchased from the Authority by the Underwriter on , 2010, at a purchase price of $ _ (which represents the aggregate principal amount of the 2010 Bonds of $ less an underwriter's discount of $ and less a net original issue discount of $_ ). The initial public offering prices stated on the inside cover of this Official Statement may be changed from time to time by the Underwriter. The Underwriter may offer and sell the 2010 Bonds to certain dealers, banks, acting as agents, and others at prices lower than said public offering prices. 57 16AIN .IF Standard & Poor's Ratings Services has assigned its municipal bond rating of "A" to the 2010 Bonds. The credit rating reflects the view of the rating agency and any explanation of the significance of such rating should be obtained from the agency. There is no assurance that any rating will not subsequently be revised or withdrawn entirely if, in the judgment of the assigning agency, circumstances so warrant. The Agency undertakes no responsibility either to bring to the attention of the Owners of the 2010 Bonds any downward revision or withdrawal of such rating, and any such downward revision or withdrawal could have an adverse effect on the market price of the 2010 Bonds. The Agency has no obligation to maintain any rating for the 2010 Bonds. IWoil] 0D"11111 W M 0D1D61 In connection with the issuance of the 2010 Bonds, fees payable to certain professionals, including the Underwriter, Quint & Thimmig LLP, as Bond Counsel, Fieldman, Rolapp & Associates, as Financial Advisor, McFarlin & Anderson LLP, as Disclosure Counsel to the Agency, and U.S. Bank National Association, as Trustee, are contingent upon the issuance of the 2010 Bonds. MISCELLANEOUS The purpose of this Official Statement is to supply information to prospective buyers of the 2010 Bonds. Quotations from, and summaries and explanations of, the Indenture and other documents and statutes contained herein do not purport to be complete, and reference is made to such documents, the Indenture and statutes for full and complete statements of their provisions. Unless otherwise noted, all information contained in this Official Statement pertaining to the Agency, the Authority and the Project Area has been furnished by the Agency. Any statement in this Official Statement involving matters of opinion, whether or not expressly so stated, are intended as such and not as representations of fact. This Official Statement is not to be construed as a contract or agreement between the Agency and the purchasers or registered Owners of any of the 2010 Bonds. The execution and delivery of this Official Statement have been duly authorized by the Agency. REDEVELOPMENT AGENCY OF THE CITY OF TEMECULA IM Shawn Nelson, Executive Director 58 UU 01►D]Ala1 SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE IM U D1►D7 Rr i3 FISCAL CONSULTANT'S REPORT UU 11►11]A,(4 TEMECULA REDEVELOPMENT AGENCY COMPONENT UNIT FINANCIAL STATEMENTS FOR FISCAL YEAR ENDING DUNE 30, 2009 UU 11►111Ar17 FORMS OF OPINIONS OF BOND COUNSEL Upon delivery of the 2010 Bonds, Quint & Thinning LLP, San Francisco, California, Bond Counsel to the Redevelopment Agency of the City of Temecula proposes to render its final approving opinions with respect to the 2010 Bonds in substantially the following forms: 2010 SERIES A BONDS 2010 Redevelopment Agency of the City of Temecula 43200 Business Park Drive Temecula, California 92590 OPINION: $ Redevelopment Agency of the City of Temecula Temecula Redevelopment Project No. 1 Tax Allocation Housing Bonds, 2010 Series A (Tax -Exempt) Members of the Agency: We have acted as bond counsel in connection with the issuance by the Redevelopment Agency of the City of Temecula (the "Agency") of its $ Redevelopment Agency of the City of Temecula Temecula Redevelopment Project No. 1 2010 Tax Allocation Housing Bonds (the "Bonds"), pursuant to the provisions of the Community Redevelopment Law of the State of California (the "Law"), Resolution No. RDA , adopted by the Agency on January 26, 2010, and an Indenture of Trust, dated as of March 1, 2010 (the "Indenture"), between the Agency and U.S. Bank National Association, as trustee (the "Trustee"). In connection with this opinion, we have examined the law and such certified proceedings and other papers as we deem necessary to render this opinion. As to questions of fact material to our opinion, we have relied upon representations of the Agency contained in the Indenture and in the certified proceedings and certifications of public officials and others furnished to us without undertaking to verify the same by independent investigation. Based upon the foregoing we are of the opinion, under existing law, that: 1. The Agency is duly created and validly existing as a public body, corporate and politic, with the power to enter into the Indenture, perform the agreements on its part contained therein and issue the Bonds. 2. The Indenture has been duly approved by the Agency and constitutes a valid and binding obligation of the Agency enforceable in accordance with its terms. D-1 3. Pursuant to the Law, the Indenture creates a valid lien on the funds pledged by the Indenture for the security of the Bonds, on a parity with the lien thereon with respect to any future Parity Debt, as such term is defined in the Indenture. 4. The Bonds have been duly authorized, executed and delivered by the Agency and are valid and binding special obligations of the Agency, payable solely from the sources provided therefor in the Indenture. 5. Subject to the Agency's compliance with certain covenants, interest on the Bonds (i) is excludable from gross income of the owners thereof for federal income tax purposes, (ii) is not included as an item of tax preference in computing the alternative minimum tax for individuals and corporations under the Code of 1986, as amended, and (iii) is not taken into account in computing adjusted current earnings, which is used as an adjustment in determining the federal alternative minimum tax for certain corporations. Failure by the Agency to comply with one or more of such covenants could cause interest on the Bonds to be includable in gross income for federal income tax purposes retroactively to the date of issuance of the Bonds. 6. The interest on the Bonds is exempt from personal income taxation imposed by the State of California. Ownership of the Bonds may result in other tax consequences to certain taxpayers, and we express no opinion regarding any such collateral consequences arising with respect to the Bonds. The rights of the owners of the Bonds and the enforceability of the Bonds and the Indenture may be subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors' rights heretofore or hereafter enacted and also may be subject to the exercise of judicial discretion in accordance with general principles of equity. In rendering this opinion, we have relied upon certifications of the Agency and others with respect to certain material facts. Our opinion represents our legal judgment based upon such review of the law and the facts that we deem relevant to render our opinion and is not a guarantee of a result. This opinion is given as of the date hereof and we assume no obligation to revise or supplement this opinion to reflect any facts or circumstances that may hereafter come to our attention or any changes in law that may hereafter occur. Respectfully submitted, D-2 f tDI D7s9:1.� I:Fs'l :l :iO01 �Is9 D-3 Pi\»BlOolArDl FORM OF CONTINUING DISCLOSURE CERTIFICATE PilWWBI►u1Ary GENERAL INFORMATION REGARDING THE CITY The following information is provided for general background information only. The City of Temecula (the "City') has no responsibility whatsoever with respect to the payment of the 2010 Bonds or the obligations of the Agency under the Indenture. General Information Following a vote by the residents on November 7, 1989, the City incorporated under the general laws of the State of California on December 1, 1989. The City has a Council -Manager form of government, and is represented by the five members of the City Council who are each elected at -large to serve a four-year term. The Mayor is selected annually by the members of the City Council. The Temecula Community Services District (TCSD) was also established in 1989. The TCSD is responsible for providing parks and recreation services to the citizens of Temecula, as well as street lighting and slope maintenance in certain areas of the district. Other governmental entities, such as the State of California, the County of Riverside and various school, water and other districts, also provide various levels of service within the City. However, the City Council does not have a continuing oversight responsibility over these other governmental entities. Located on Interstate 15, the City of Temecula is the 9th largest city in the Inland Empire and the 4`h largest in Riverside County, encompassing 30.15 square miles. The City of Temecula is 85 miles southeast of Los Angeles, 60 miles north of San Diego, 61 miles southeast of Orange County, and 20 miles inland from the cities of San Juan Capistrano and Oceanside. The City's approximately 102,604 residents are offered a broad range of housing options from apartments to luxury custom homes. F-1 Population From 2000 — 2009, the City's population grew from 53,791 to 102,604, a gain of 48,813 or 90.75%. In this same period, Riverside County added 584,798, a gain of 38.4%. CITY OF TEMECULA AND COUNTY OF RIVERSIDE POPULATION FROM 2000 TO 2009 Temecula Riverside County Year Population % Change Population % Change 2000 53,791 1,522,855 2001 61,766 14.8 1,590,122 4.4 2002 73,086 18.3 1,652,808 3.9 2003 75,873 3.8 1,724,329 4.3 2004 78,640 3.6 1,804,117 4.6 2005 81,681 3.9 1,883,735 4.4 2006" 93,673 14.7 1,962,014 4.2 2007 97,141 3.7 2,030,315 3.5 2008 99,873 2.8 2,078,601 2.4 2009 102,604 2.7 2,107,653 1.4 Ineludes annexation of Vail Ranch area. Ineludes annexation ofRedhawk area. Source: California Department ofFinanee. Construction Activity The following table shows a five year history of construction activity in the City. CITY OF TEMECULA BUILDING PERMITS AND VALUATIONS (Calendar Year 2004 — 2008) 2004 2005 2006 2007 Valuation ($000): Residential 185,041,089 261,657,164 145,638,382 194,888,351 Non-residential 56,658,233 73,749,612 144,623,957 151,320,960 Total 241,699,322 335,406,776 290,262,339 346,209,311 Residential Units: Single family 888 996 589 697 Multiple family 408 360 18 237 Total 1,296 1,356 607 934 Source: Construetion Industry Researeh Board F-2 2008 100,451,479 138,074,079 238,525,558 301 274 575 Economic Condition and Outlook Temecula's economic base is anchored by a number of firms specializing in biomedical technology and supplies, high technology controllers and semi -conductors, among others. The City's retail base is also experiencing growth and is home to several auto dealers including Honda, Ford, Lincoln and Mercury. The following table sets forth major manufacturing and non -manufacturing employers: CITY OF TEMECULA LARGEST EMPLOYERS BY NUMBER OF EMPLOYEES (As of June, 2009) Approximate No. Employer of Employees Type of Business Abbott Vascular (Abbott Laboratories f/k/a Guidant Corporation or Abbott Cardiovascular Systems, Inc.) 3,229 Medical equipment Temecula Valley Unified School District 2,788 Public school system Professional Hospital Supply 1,200 Medical equipment and supplies International Rectifier 560 Power semi -conductors Costco Wholesale Corporation 335 Wholesale warehouse Macy's 327 Retail Chemi-Con International 280 Manufacturing Southwest Traders 250 Distribution Albertson's 232 Supermarket Norm Reeves Auto Group 205 Auto Dealer Plant Equipment, Inc. 201 Telephone equipment Milgard Manufacturing 200 Windows Channell Commercial Corp. 200 Cable enclosures City of Temecula 197 Municipal corporation FEE Enterprises Inc. 189 Pharmaceutical Temecula Creek Inn 184 Hotel Opto 22, Inc. 180 Manufacturing Rancho Ford Lincoln Mercury 180 Automotive Source: City Finanee Department Financial Information The City's financial records for general governmental operations are maintained on a modified accrual basis, with revenues recorded when available and measurable and expenditures recorded when the services or goods are received and the liability incurred. Management of the City is responsible for establishing and maintaining an internal control structure designed to ensure that the assets of the government are protected from loss, theft or misuse and to ensure that adequate accounting data are compiled to allow the preparation of financial statements in conformity with generally accepted accounting principles. The internal control structure is designed to provide reasonable, but not absolute, assurance that these objectives are met. The concept of reasonable assurance recognizes that: (1) the cost of the control should not exceed the benefits likely to be derived; and (2) the valuation of costs and benefits requires estimates and judgments by management. F-3 Budgetary Policy and Control Budgets are adopted annually by the City Council by resolution and are prepared for each fund in accordance with its basis of accounting. As provided by City ordinance, the Finance Officer is responsible for preparing the budget and for its implementation after adoption. All appropriations lapse at year end. The City Manager has the legal authority to transfer operating budget appropriations within a budgetary department, provided that total appropriations for a department are not changed. Changes to total departmental appropriations require the majority approval of the City Council. The City maintains budgetary controls to ensure compliance with legal provisions embodied in the annual budget adopted by the City Council. The level of budgetary control (that is, the level at which expenditures cannot legally exceed the appropriated amount) is established by department. Sales Tax Assessed Values The City of Temecula provides high quality services to residents. Industrial and business parks offering clean industries and convenient office space provide growing employment opportunities. The retail community is expanding rapidly with excellent shopping venues including the regional Promenade Mall, a unique Historic Old Town area, and neighborhood strip centers. A wide selection of restaurants allows diners to choose between nationally recognized chains or intimate dining bistros. Source: City of Temecula. CITY OF TEMECULA SALES TAX HISTORY Year Amount 1999-00 $14,009,321 2000-01 $16,321,929 2001-02 $19,237,317 2002-03 $21,572,199 2003-04 $25,392,314 2004-05 $26,070,553 2005-06 $30,429,106 2006-07 $30,124,026 2007-08 $27,415,799 2008-09 $23,327,370 F-4 CITY OF TEMECULA PRINCIPAL SECURED PROPERTY OWNERS FOR FISCAL YEAR 2009-10 Secured Unsecured Total 2008-09 2008-09 Percent of 2008-09 Assessed Assessed Total Assessed Valuation Valuation Assessed Valuation Taxpayer(l) Type of Business (in 000s) (in 000s) (Valuation) (in 000s) Abbott Vasculart2I Medical Appliances Mfg. $205,037 $270,608 4.00% $475,645 Temecula Towne Center Associates Regional Mall 116,419 826 .99 117,245 International Rectifier Corporation Electronics Mfg. 88,617 0 .75 88,617 Inland Western Temecula Commons() Commercial Shopping Center 88,426 0 .74 88,426 Universe at Temecula Park Residential Housing 55,878 0 .47 55,878 Lakha Properties Temecula TC Regional Shopping Center 52,890 0 .44 52,890 Cape May Harveston Company Residential Housing 49,441 0 .42 49,441 Kimco Palm Plaza Shopping Center 46,272 .49 46,272 FG Temecula Senior Apartments Residential Housing 45,251 0 .38 45,251 Redhawk Town Center II Retail Store 41,974 0 .35 41,974 Totals $790,206 $271,434 8.93% $1,061,640 Assessed values of parcels owned by related entities have been aggregated. (2) The facility operating in the City is locally now known as Abbott Vascular, which is a subsidiary of Abbott Laboratories. Ownership of some parcels is in the name of Advanced Cardiovascular Systems, Inc., or Abbott Cardiovascular Systems, Inc. Abbott Laboratories acquired Advanced Cardiovascular Systems, Inc. in April 2006, in connection with Boston Scientific Corporation's purchase of Guidant Corporation. Some personal property and fixtures are listed as owned by Abbott Vascular, Inc. Owner had pending appeals on one or more parcels. Source: HdL Coren & Cone. CITY OF TEMECULA ASSESSED AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY FOR THE FISCAL YEARS 2000-01 THROUGH 2O09-10 (Values in Thousands) Fiscal Year Total Secured and Unsecured Real Estate Exemptions Net Taxable Assessed Value Homeowners Exemption Net Total Assessed Value Estimated Actual Value 2000-01 $4,563,253 $(29,666) $4,533,587 $(64,372) $4,469,215 $4,469,215 2001-02 5,201,010 (33,360) 5,167,650 (68,938) 5,098,712 5,098,712 2002-03 6,201,896 (30,010) 6,171,886 (82,926) 6,088,960 6,088,960 2003-04 6,931,291 (43,142) 6,888,149 (92,362) 6,795,787 6,795,787 2004-05 7,794,688 (53,240) 7,741,448 (94,237) 7,647,211 7,647,211 2005-06 10,328,098 (51,722) 10,276,375 (108,654) 10,167,721 10,167,721 2006-07 11,836,051 (75,481) 11,760,570 (111,392) 11,649,178 11,649,178 2007-08 13,434,244 (88,385) 13,345,859 (113,341) 13,232,517 13,232,517 2008-09 13,537,210 (101,719) 13,435,491 (114,841) 13,320,650 13,320,650 2009-10 12,003,382 (112,286) 11,891,096 (115,783) 11,775,313 11,775,313 Source: Riverside County Assessor's Ofji'ee/HdL Coren & Cone F-5 General Information Industrial Real Estate. According to the Husing Report, dated September 10, 2008, the City is part of America's strongest industrial market. In 2002, the Inland Empire saw its manufacturers and distributors take a record 48.0 million square feet of space. However, by the 2vd Quarter 2008, the area's vacancy rate was 17.5% based on construction of 18.4 million square feet in the prior 12 months. In June 2008, the City had 10.5 million square feet of manufacturing space in existence or under construction representing 2.3% of the Inland Empire's 457.4 million square feet. Only 292,413 square feet of the City's space was vacant, giving it a 2.8% rate, with no facilities under construction. Another 249,715 square feet were occupied but coming on to the market, making 5.2% of its stock eventually available. According to Grubb & Ellis, the Inland Empire's office market had 27.2 million square feet of office space completed or under construction in June 2008. The City was the area's 8`h largest sub -market with 1,47 million square feet or 5.4% of the market and only 5,937 square feet under construction. Agriculture. The climate and soil in the City are particularly favorable for growing avocado, grape and citrus crops. There are currently several agricultural management firms in the Temecula area which manage agricultural production of thousands of acres of land owned by individual investors, partnerships and corporations. The agricultural managers apply economies of scale, by combining many small and medium sized parcels of land as if these parcels were one large ranch. In addition, a substantial wine industry has been developed in the area near the City. As of September, 2009, there were approximately fifty-one (51) vineyards and wineries which produce wine with locally grown grapes. Climate. Temecula Valley enjoys a mild Mediterranean climate with year-round temperatures averaging in the mid 70's. The weather is comparable to the Napa Valley, as evidenced by a thriving wine industry, with warm, dry days and cool evenings. Summer -time temperatures, which can average in the mid 80's or the mid 90's during the day, are often cooled by afternoon ocean breezes blowing into the valley through gaps in the Santa Ana foothills to the west. Although separated from the Pacific by the Santa Rosa range of mountains, the Rainbow Gap funnels the mild beach climate into the valley. Mild winter temperatures average in the mid 60's. Yearly average rainfall in the Temecula Valley is approximately 14 inches, as compiled by the Rancho California Water District. The quality of air in the Temecula Valley is consistently better than that of surrounding communities. Ocean breezes flow through the Rainbow Gap almost every day, sweeping away smog. In the summer, Pacific winds yield temperatures up to 10 degrees lower than in towns just a few miles away. Education. The City is served by Temecula Valley Unified School District, one of the fastest growing school districts in the State, with 5 high schools (including 2 alternative schools), 6 middle schools, 2 charter schools, 1 home -schooling program, 17 elementary schools and 1 adult school. In addition, there are 11 private schools and several preschools. The general boundaries extend north to Jean Nicholas Road in French Valley, south to the Riverside County line, east to Vail Lake and west to the Temecula city limit. The District covers approximately 150 square miles. As of July 7, 2009, approximately 29,492 students (Grades K-12) are enrolled in the District. F-6 The University of California, Riverside has opened an extension center in the City and Mt. San Jacinto Community College operates a campus ten miles north of the City to serve the growing population. The City began the 2000's with a well-educated population, and its population trends and school performance figures have allowed it to maintain that position. Transportation. Interstate 15 and its connecting arterials provide convenient links to San Diego and Riverside, Los Angeles (Interstate 10), Orange County (Highway 91) and San Bernardino (Interstate 215). The French Valley Airport, 4 miles north of Interstate 15 on Winchester Road, accommodates business jets and commuter airlines. Housing. Temecula is unique in that its residents are about equidistant from both San Diego and Orange County via the Interstate 15 freeway. As a result, it is receiving growth impulses from the south as well as the north, as families spill into the Inland Empire from Southern California's more congested coastal counties. Temecula's rapid population growth represents a relatively new phenomenon in Southern California. A large number of the City's new residents have migrated north from San Diego County along the Interstate 15 freeway. Normally, a Southern California community undergoes rapid growth only when population spills from Orange or Los Angeles counties. The latest population data shows Temecula with 102,604 residents as of January 1, 2009, which includes the annexation of the Vail Ranch area in July, 2001 and the March, 2004 annexation of the community of Redhawk, which became official June 30, 2005. F-7 k\» BI►111 k19V BOOK -ENTRY SYSTEM The following description of the procedures and record keeping with respect to beneficial ownership interests in the 2010 Bonds, payment of principal of and interest on the 2010 Bonds to Direct Participants, Indirect Participants or Beneficial Owners (as such terms are defined below) of the 2010 Bonds, confirmation and transfer of beneficial ownership interests in the 2010 Bonds and other Bond - related transactions by and between DTC, Direct Participants, Indirect Participants and Beneficial Owners of the 2010 Bonds is based solely on information furnished by DTC to the Agency which the Agency believes to be reliable, but the Agency and the Underwriter do not and cannot make any independent representations concerning these matters and do not take responsibility for the accuracy or completeness thereof. Neither the DTC, Direct Participants, Indirect Participants nor the Beneficial Owners should rely on the foregoing information with respect to such matters, but should instead confirm the same with DTC or the DTC Participants, as the case may be. The Depository Trust Company ("DTC"), New York, NY, will act as securities depository for the 2010 Bonds. The 2010 Bonds will be issued as fully -registered securities registered in the name of Cede & Co. (DTC's partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully -registered Bond will be issued for each maturity of the 2010 Bonds, each in the aggregate principal amount of such maturity, and will be deposited with DTC. DTC, the world's largest securities depository, is a limited -purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues and money market instruments (from over 100 countries) that DTC's participants ("Direct Participants") deposit with DTC. DTC also facilitates the post -trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book -entry transfers and pledges between Direct Participants' accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly -owned subsidiary of The Depository Trust & Clearing Corporation ("DTCC"). DTCC, is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (the "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 and www.dtc.org. 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 G-1 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 the 2010 Bonds, except in the event that use of the book -entry system for the 2010 Bonds is discontinued. To facilitate subsequent transfers, all 2010 Bonds deposited by Direct Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co. or such other name as requested by an authorized representative of DTC. The deposit of the 2010 Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the 2010 Bonds; DTC's records reflect only the identity of the Direct Participants to whose accounts such 2010 Bonds are credited, which may or may not be the Beneficial Owners. The Direct or 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 the transmission to them of notices of significant events with respect to the 2010 Bonds, such as redemptions, tenders, defaults, and proposed amendments to the 2010 Bonds documents. For example, Beneficial Owners of the 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 Trustee and request that copies of notices be provided directly to them. Redemption notices shall be sent to DTC. If less than all of the 2010 Bonds are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such maturity to be redeemed. Neither DTC nor Cede & Co. (nor 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 XM 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). Principal, redemption price and interest payments on 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 Trustee, on payable date in accordance with their respective holdings shown on DTC's records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Participant and not of DTC, the Trustee or the Agency, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal, redemption price and interest payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Trustee, 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. G-2 DTC may discontinue providing its service as depository with respect to the 2010 Bonds at any time by giving reasonable notice to the Agency or the Trustee. Under such circumstances, in the event that a successor depository is not obtained, the 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, the 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. Discontinuance of DTC Services In the event that (a) DTC determines not to continue to act as securities depository for a series of the 2010 Bonds, or (b) the Agency determines that DTC shall no longer act and delivers a written certificate to the Trustee to that effect, then the Agency will discontinue the Book -Entry System with DTC for the applicable series of the 2010 Bonds. If the Agency determines to replace DTC with another qualified securities depository, the Agency will prepare or direct the preparation of a new single separate, fully -registered Bond for each maturity of the 2010 Bonds registered in the name of such successor or substitute securities depository as are not inconsistent with the terms of the Indenture. If the Agency fails to identify another qualified securities depository to replace the incumbent securities depository for the applicable series of the 2010 Bonds, then the applicable series of the 2010 Bonds shall no longer be restricted to being registered in the Bond registration books in the name of the incumbent securities depository or its nominee, but shall be registered in whatever name or names the incumbent securities depository or its nominee transferring or exchanging the applicable series of the 2010 Bonds shall designate. In the event that the Book -Entry System is discontinued, the following provisions would also apply: (i) the applicable series of the 2010 Bonds will be made available in physical form, (ii) principal of, and redemption premiums if any, on the applicable series of the 2010 Bonds will be payable upon surrender thereof at the trust office of the Trustee identified in the Indenture, and (iii) the applicable series of the 2010 Bonds will be transferable and exchangeable as provided in the Indenture. The Agency and the Trustee do not have any responsibility or obligation to DTC Participants, to the persons for whom they act as nominees, to Beneficial Owners, or to any other person who is not shown on the registration books as being an owner of the 2010 Bonds, with respect to (i) the accuracy of any records maintained by DTC or any DTC Participants; (ii) the payment by DTC or any DTC Participant of any amount in respect of the principal of, redemption price of or interest on the 2010 Bonds; (in) the delivery of any notice which is permitted or required to be given to registered owners under either Indenture; (iv) the selection by DTC or any DTC Participant of any person to receive payment in the event of a partial redemption of a series of the 2010 Bonds; (v) any consent given or other action taken by DTC as registered owner; or (vi) any other matter arising with respect to a series of the 2010 Bonds or an Indenture. The Agency and the Trustee cannot and do not give any assurances that DTC, DTC Participants or others will distribute payments of principal of or interest on the applicable series of the 2010 Bonds paid to DTC or its nominee, as the registered owner, or any notices to the Beneficial Owners or that they will do so on a timely basis or will serve and act in a manner described in this Official Statement. The Agency and the Trustee are not responsible or liable for the failure of DTC or any DTC Participant to make any payment or give any notice to a Beneficial Owner in respect to the 2010 Bonds or any error or delay relating thereto. G-3 CONTINUING DISCLOSURE CERTIFICATE This CONTINUING DISCLOSURE CERTIFICATE (the "Disclosure Certificate") is executed and delivered by the Redevelopment Agency of the City of Temecula (the "Agency") and acknowledged by U. S. Bank National Association, a national banking association, organized and existing under and by virtue of the laws of the United States of America, as trustee (the "Trustee") and in its capacity as dissemination agent (the "Dissemination Agent'), in connection with the issuance of $ aggregate principal amount of Redevelopment Agency of the City of Temecula Temecula Redevelopment Project No. 1 Tax Allocation Housing Bonds, 2010 Series A (Tax -Exempt) (the "2010 Series A Bonds") and $ aggregate principal amount of Redevelopment Agency of the City of Temecula Temecula Redevelopment Project No. 1 Tax Allocation Housing Bonds, 2010 Series B (Taxable Build America Bonds) (the "2010 Series B Bonds" and with the 2010 Series A Bonds, the "2010 Bonds"). The 2010 Bonds are being issued pursuant to an Indenture of Trust, dated as of March 1, 2010, by and between the Agency and U.S. Bank National Association, as trustee (the "Trustee") (the "Indenture"). Pursuant to the Indenture, the Agency hereby covenants and agrees as follows: Section 1. Purpose of the Disclosure Certificate. This Disclosure Certificate is being executed and delivered by the Agency for the benefit of the owners 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 in the Indenture, which apply to any capitalized term used in this Disclosure Certificate, unless otherwise defined in this Section, the following capitalized terms shall have the following meanings: "Annual Report" shall mean any Annual Report provided by the Agency pursuant to, and described in, Sections 3 and 4 of this Disclosure Certificate. "Disclosure Representative" shall mean the Executive Director of the Agency, or his or her designee, or such other officer or employee as the Agency shall designate in writing to the Trustee from time to time. "Dissemination Agent" shall mean U.S. Bank National Association, or any successor Dissemination Agent designated in writing by the Agency and the Trustee and which has filed with the Agency and the Trustee a written acceptance of such designation. "EMMA System" shall mean the Electronic Municipal Market Access system of the MSRB or such other electronic system designated by the MSRB or the Security and Exchange Commission for compliance with S.E.C. Rule 15c2-12(b). "Listed Events" shall mean any of the events listed in Section 5(a) of this Disclosure Certificate. "MSRB" shall mean the Municipal Securities Rulemaking Board and any successor entity designated under the Rule as the repository for filings made pursuant to the Rule. "Official Statement" shall mean the Official Statement, dated , 2010, prepared and distributed in connection with the initial sale of the 2010 Bonds. "Participating Underwriter" shall mean the original underwriter of the 2010 Bonds required to comply with the Rule in connection with the offering of the 2010 Bonds. "Rule" shall mean Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time. Section 3. Provision of Annual Reports. (a) The Agency shall provide, or shall cause the Dissemination Agent to provide to the MSRB through the EMMA System in an electronic format and accompanied by identifying information as prescribed by the MSRB, an Annual Report which is consistent with the requirements of Section 4 of this Disclosure Certificate not later than eight (8) months after the end of the Agency's fiscal year (which date currently would be the first day of March, based upon the June 30 end of the Agency's fiscal year), commencing with the report for the 2009-10 Fiscal Year. (b) Not later than fifteen (15) Business Days prior to said date, the Agency shall provide the Annual Report to the Dissemination Agent (if other than the Agency) and the Trustee. 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 thatthe audited financial statements of the Agency may be submitted separately from the balance of the Annual Report and later than the date required above for the filing of the Annual Report if 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). (c) If the Agency is unable to provide to the MSRB through the EMMA System and to the Participating Underwriter an Annual Report by the date required in subsection (a), the Agency shall send a notice to the MSRB through the EMMA System in substantially the form attached as Exhibit A. (d) The Dissemination Agent shall: (i) Determine each year prior to the date for providing the Annual Report the electronic filing requirements of the MSRB for the Annual Reports; and (ii) If the Dissemination Agent is other than the Agency, and if the Agency has provided an Annual Report in final form to the Dissemination Agent for dissemination, file a report with the Agency and the Trustee certifying that the Annual Report has been provided to the MSRB through the EMMA System pursuant to this Disclosure Certificate. Section 4. Content of Annual Reports. The Agency's Annual Report shall contain or incorporate by reference the following: (a) Audited Financial Statements prepared in accordance with generally accepted accounting principles as promulgated to apply to government entities from time to time by the Governmental Accounting Standards Board. If the Agency's audited financial statements are not available by the time the Annual Report is required to be filed pursuant to Section 3(a), the Annual Report shall contain unaudited financial statements in a format similar to the financial statements contained in the final Official Statement, and the audited financial statements shall be filed in the same manner as the Annual Report when they become available. (b) The following financial information and operating data set forth in the final Official Statement. (i) Ten largest property taxpayers in the Project Area, including name, total value and percentage of total value substantially in the format set forth as Table [3] of the Official Statement; (ii) Annual assessed valuations, tax increment values, Housing Tax Increment Revenues (as defined in the Indenture) and coverage ratio of Housing Tax Increment Revenues to debt service on 2010 Bonds and all Parity Debt (as defined in the Official Statement), in substantially the formats set forth as Tables [2 and 5] of the Official Statement; and (iii) Discussion of any property tax appeals, which, either alone or in the aggregate could have a material adverse effect on Housing Tax Increment Revenues. (c) The following information regarding the 2010 Bonds: (i) Balances in all funds and accounts maintained with respect to the 2010 Bonds; (ii) A statement of the Reserve Requirement; and (iii) Outstanding principal amount of the 2010 Bonds, any Parity Bonds and Subordinate Debt (as defined in the Official Statement). 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 have been submitted to the MSRB through the EMMA System or the Securities and Exchange Commission. If the document included by reference is a final official statement, it must be available from the MSRB. The Agency shall clearly identify each such other document so included by reference. Section 5. Reporting of Significant Events. (a) Pursuant to the provisions of this Section 5, 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: (i) Principal and interest payment delinquencies; (ii) Non-payment related defaults; (iii) Unscheduled draws on debt service reserves reflecting financial difficulties; (iv) Unscheduled draws on credit enhancements reflecting financial difficulties; (v) Substitution of credit or liquidity providers, or their failure to perform; (vi) Adverse tax opinions or events affecting the tax-exempt status of the security; (vii) Modifications to rights of security holders; (viii) Contingent or unscheduled bond calls; (ix) Defeasances; (x) Release, substitution, or sale of property securing repayment of the securities; and 3 (xi) Rating changes. (b) As soon as practicable based on the time needed to discover the occurrence of a Listed Event, to assess its materiality and to prepare and disseminate the notice of the occurrence in a format suitable for filing with the MSRB, the Agency shall promptly file a notice of such occurrence with the MSRB through the EMMA System. Notwithstanding the foregoing, notice of Listed Events described in subsections (a)(viii) and (ix) need not be given under this subsection any earlier than the notice (if any) of the underlying event is given to owners of affected 2010 Bonds pursuant to the Indenture. The Dissemination Agent shall have no responsibility for such determination and shall be entitled to conclusively rely on the Agency's determination. Section 6. Termination of Reporting Obligation. All of the Agency's obligations hereunder shall terminate upon the earliest to occur of (i) the legal defeasance of the 2010 Bonds, (ii) prior redemption of the 2010 Bonds, (iii) payment in full of all the 2010 Bonds or (iv) upon the delivery to the Dissemination Agent of an opinion of nationally recognized bond counsel to the effect that continuing disclosure is no longer required. If such determination 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(b). Section 7. Dissemination Agent. The Agency may, from time to time, appoint or engage a Dissemination Agent to assist in carrying out its obligations under this Disclosure Certificate, and may discharge any such Agent, with or without appointing a successor Dissemination Agent. The Dissemination Agent may resign by providing thirty days' prior written notice to the Agency and the Trustee. The Dissemination Agent shall have no duty to prepare any information report nor shall the Dissemination Agent be responsible for filing any report not provided to it by the Agency in a timely manner and in a form suitable for filing. The Dissemination Agent shall not be responsible in any manner for the content of any notice or report prepared by the Agency pursuant to this Disclosure Certificate. The initial Dissemination Agent shall be U.S. Bank National Association. If at any time there is no designated Dissemination Agent appointed by the Agency, or if the Dissemination Agent so appointed is unwilling or unable to perform the duties of Dissemination Agent hereunder, the Agency shall be the Dissemination Agent and undertake or assume its obligations hereunder. Any company succeeding to all or substantially all of the Dissemination Agent's corporate trust business shall be the successor to the Dissemination Agent hereunder without the execution or filing of any paper or any further act, but should notify the Agency, in writing, of such occurrence. The Dissemination Agent shall be paid compensation by the Agency for its services provided hereunder in accordance with its schedule of fees as agreed to between the Dissemination Agent and the Agency from time to time and for all expenses, legal fees and advances made or incurred by the Dissemination Agent in the performance of its duties hereunder. 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, owners or Beneficial Owners or any other party. The Dissemination Agent may rely and shall be protected in acting or refraining from acting upon any direction from the Agency or an opinion of nationally recognized bond counsel. Section 8. 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 4 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 owners of the 2010 Bonds in the manner provided in the Indenture, or (ii) does not, in the opinion of a nationally recognized bond counsel, materially impair the interests of the owners or beneficial owners of the 2010 Bonds. In the event of any amendment or waiver of a provision of this Disclosure Certificate, the Agency shall describe such amendment in the next Annual Report, and shall include, as applicable, a narrative explanation of the reason for the amendment or waiver and its impact on the type (or, in the case of a change of accounting principles, on the presentation) of financial information or operating data being presented. 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 sent to the MSRB in the same manner as for a Listed Event under Section 5(b). The Agency shall not amend this Disclosure Certificate in a manner which affects the rights and obligations of the Dissemination Agent without receiving the written approval of the then acting Dissemination Agent. Section 9. 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 10. Default. In the event of a failure of the Agency to comply with any provision of this Disclosure Certificate any owner or Beneficial Owner of the 2010 Bonds 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 Indenture, and the sole 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 11. Duties, Immunities and Liabilities of Dissemination Agent. All of the immunities, indemnities and exceptions from liability in Article VI of the Indenture insofar as they relate to the Trustee shall apply to the Trustee and the Dissemination Agent in this Disclosure Certificate. The Dissemination Agent shall have only 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 it 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 may rely and shall be protected in acting or refraining from acting upon any direction from the Agency or an opinion of nationally recognized bond counsel. The obligations of the Agency under this Section shall survive resignation or removal of the Dissemination Agent and payment of the 2010 Bonds. No person shall have any right to commence any action against the Trustee or Dissemination Agent seeking any remedy other than to compel specific performance of this Disclosure Certificate. Section 12. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the Agency, the Dissemination Agent, the Participating Underwriter and owners and Beneficial Owners from time to time of the 2010 Bonds, and shall create no rights in any other person or entity. Section 13. Notices. Any notice or communications to or among any of the parties to this Disclosure Certificate shall be given to all of the following and may be given as follows: If to the Agency: Redevelopment Agency of the City of Temecula 43200 Business Park Drive Temecula, California 92590 Telephone: 9 51 /694-6430 Tel ec opier: 951 /694-6479 Attention: Treasurer If to the U.S. Bank National Association Dissemination Attn: Corporate Trust Services Agent: 633 West Fifth Street, 24th Floor Los Angeles, California 90071 Ref: Temecula RDA 2010 Tax Allocation Housing Bonds Telephone:213/615-6005 Telecopier:213/615-6196 If to the Stone & Youngberg LLC Participating One Ferry Building Underwriter: San Francisco, California 94111 Telephone: 415/445 -23 00 Tel ec opier: 415/445-2395 Attention: Municipal Research Department Dated: 2010 REDEVELOPMENT AGENCY OF THE CITY OF TEMECULA ACCEPTANCE OF DISSEMINATION AGENT AND TRUSTEE: The undersigned hereby accepts the designation of Dissemination Agent and agrees to comply with the duties set forth in the foregoing Continuing Disclosure Agreement as Dissemination Agent and Trustee U.S. BANK NATIONAL ASSOCIATION, as Dissemination Agent and as Trustee U-3 Authorized Signatory U-3 EXHIBIT A NOTICE TO MUNICIPAL SECURITIES RULEMAKING BOARD OF FAILURE TO FILE ANNUAL REPORT Name of Issuer: Redevelopment Agency of the City of Temecula Name of Bond Issue: Temecula Redevelopment Project No. 1 Tax Allocation Housing Bonds, 2010 Series A (Tax -Exempt) and Temecula Redevelopment Project No. 1 Tax Allocation Housing Bonds, 2010 Series B (Taxable Build America Bonds) Date of Issuance: 12010 NOTICE IS HEREBY GIVEN that the Redevelopment Agency of the City of Temecula (the "Agency"), has not provided an Annual Report with respect to the above -named Bonds as required by the Continuing Disclosure Certificate, dated as of [February] 1, 2010, by the Agency, and as acknowledged and agreed to by U.S. Bank National Association, as dissemination agent. [The Agency anticipates that the Annual Report will be filed by ] Dated: cc: U.S. Bank National Association REDEVELOPMENT AGENCY OF THE CITY OF TEMECULA Authorized Officer A-1 S REDEVELOPMENT AGENCY OF THE CITY OF TEMECULA TEMECULA REDEVELOPMENT PROJECT NO. 1 TAX ALLOCATION HOUSING BONDS 2010 SERIES A (TAX-EXEMPT) $ REDEVELOPMENT AGENCY OF THE CITY OF TEMECULA TEMECULA REDEVELOPMENT PROJECT NO. 1 TAX ALLOCATION HOUSING BONDS 2010 SERIES B (TAXABLE BUILD AMERICA BONDS) BOND PURCHASE AGREEMENT February , 2010 Redevelopment Agency of the City of Temecula 43200 Business Park Drive Temecula, California 92590 Temecula Public Financing Authority 43200 Business Park Drive Temecula, California 92590 Ladies and Gentlemen: Stone & Youngberg LLC (hereinafter referred to as the "Underwriter") offers to enter into this Bond Purchase Agreement (the "Bond Purchase Agreement') with the Redevelopment Agency of the City of Temecula (herein referred to as the "Agency") and the Temecula Public Financing Authority (herein referred to as the "Authority"), which will be binding upon the Agency, the Authority and the Underwriter upon the acceptance hereof by the Agency and the Authority. This offer is made subject to the acceptance hereof by the Agency and the Authority by execution of this Bond Purchase Agreement and its delivery to the Underwriter on or before 9:00 A.M., California time, on the date hereof. All capitalized terms used herein, but not defined herein, shall have the meanings ascribed thereto in the Indenture (as hereinafter defined). 1. Purchase and Sale. Upon the terms and conditions and upon the basis of the representations, warranties and agreements hereinafter set forth, the Authority agrees to purchase from the Agency, and the Agency agrees to sell and deliver to the Authority, and the Underwriter hereby agrees to purchase from the Authority, and the Authority agrees to sell and deliver to the Underwriter, all (but not less than all) of the Redevelopment Agency of the City of Temecula Temecula Redevelopment Project No. 1 Tax Allocation Housing Bonds, 2010 Series A (Tax -Exempt) (the "2010 Series A Bonds"), in the aggregate principal amount of $ and the Redevelopment Agency of the City of Temecula Temecula Redevelopment Project No. 1 Tax Allocation Housing Bonds, 2010 Series B (Taxable Build America Bonds) (the "2010 Series B Bonds" and with the 2010 Series A Bonds, the "2010 Bonds"). The purchase price of the 2010 Series A Bonds is $ (which is the aggregate principal amount of the 2010 Series A Bonds, less an underwriting discount of $___, and less net original issue discount of $ ). The purchase price of the 2010 Series B Bonds is $ (which is the aggregate principal amount of the 2010 Series B Bonds, less an underwriting discount of $ and less net original issue discount of $ ). I Preliminary, subject to change. ="A BPAi.doc/MC/ The 2010 Bonds will be dated the date of issuance thereof and will have the maturities, bear interest at the rates and be subject to redemption as set forth on Exhibit A hereto. 2. Authorizing Instruments and Law. The 2010 Bonds will be issued pursuant to the provision 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), and Resolution No. RDA _ , adopted by the Agency on January 26, 2010 (the "Resolution"). The 2010 Bonds will be issued under an Indenture of Trust, dated as of March 1, 2010 (the "Indenture"), by and between the Agency and U.S. Bank National Association, as trustee (the "Trustee"). The proceeds of the 2010 Bonds will be used to (i) finance eligible housing activities within the City, (ii) finance the amount in a Reserve Account established under the Indenture, and (iii) provide for the costs of issuing the 2010 Bonds. The 2010 Bonds will be special obligations of the Agency, payable from and secured by a pledge of the Housing Tax Increment Revenues (as defined in the Indenture) and a pledge of amounts in certain funds and accounts established under the Indenture, all as further described in the Indenture and Final Official Statement (described below). 3. Public Offering. The Agency hereby ratifies, confirms and approves of the use and distribution by the Underwriter prior to the date hereof of the preliminary official statement, dated 2010, relating to the 2010 Bonds (the "Preliminary Official Statement'), which Preliminary Official Statement the Agency has deemed final as of its date for purposes of Rule 15c2-12 promulgated under the Securities Exchange Act of 1934 (the "Rule"), except for information permitted to be omitted therefrom by the Rule. Within seven (7) business days from the date hereof (or such earlier date so as to allow the Underwriter to meet its obligations under the Rule and Rule G-32 of the Municipal Securities Rulemaking Board), the Agency shall deliver to the Underwriter a final official statement relating to the 2010 Bonds, executed on behalf of the Agency by an authorized representative of the Agency and dated the date hereof, which shall include the information permitted to be omitted in the Preliminary Official Statement by paragraph (b)(1) of the Rule and with such other amendments or supplements as shall have been approved by the Agency and by the Underwriter (the "Final Official Statement'). The Underwriter agrees that it will not confirm the sale of any 2010 Bonds unless the confirmation of sale is accompanied or preceded by the delivery of a copy of the Final Official Statement. The Agency further authorizes the Underwriter to use, in connection with the offer and sale of the 2010 Bonds, the Final Official Statement, that certain Continuing Disclosure Certificate, dated as of March 1, 2010 (the "Continuing Disclosure Certificate"), and the Indenture (all such documents referred to in this sentence, together with this Bond Purchase Agreement are hereinafter collectively referred to as the "Financing Documents"), and all information contained herein and therein and all other documents, agreements, certificates or written statements furnished by the Agency to the Underwriter or entered into by the Agency in connection with the transactions contemplated by this Bond Purchase Agreement and the 2010 Bonds. The Agency will undertake, pursuant to the Indenture and 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. The Underwriter agrees to make a bona fide offering of all the 2010 Bonds initially at the public offering prices (or yields) set forth on the inside cover page of the Final Official Statement. Subsequent to the initial public offering, the Underwriter reserves the right to change the public offering prices (or ="A BPAj.doc/MC/ yields) as it deems necessary in connection with the marketing of the 2010 Bonds. The 2010 Bonds may be offered and sold to certain dealers at prices lower than such initial public offering prices. 4. The Closing. At 8:00 A.M., California time, on February _, 2010, or at such other time or on such earlier or later business day as shall have been mutually agreed upon by the Authority, the Agency and the Underwriter, the Agency will release the 2010 Bonds to the Authority; and the Authority will, subject to the terms and conditions hereof, cause The Depository Trust Company in New York, New York ("DTC") to release the 2010 Bonds for the beneficial ownership of the Underwriter; and the Agency will deliver to the Underwriter the other documents hereinafter mentioned at the offices of Quint & Thimmig LLP, San Francisco, California ("Bond Counsel"), 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 2010 Bonds as set forth in Section 1 hereof payable in immediately available funds to the order of the Agency on the date of Closing (as hereinafter defined). This payment and delivery, together with the delivery of the aforementioned documents, is herein called the "Closing." 5. Agency Representations, Warranties and Covenants. The Agency represents, warrants and covenants to the Underwriter and the Authority that: (a) The Agency is a public body, corporate and politic, organized and existing under the Constitution (the "Constitution") and laws of the State of California (the "State"), including the Redevelopment Law, with full right, power and authority to sell, issue and deliver the 2010 Bonds to the Authority for sale to the Underwriter as provided herein, and to execute, deliver and perform its obligations under the 2010 Bonds, this Bond Purchase Agreement, the Continuing Disclosure Certificate and the Indenture. (b) This Bond Purchase Agreement, the 2010 Bonds, the Continuing Disclosure Certificate and the Indenture, when duly executed and delivered by all parties thereto, will constitute valid, legal and binding obligations of the Agency enforceable against the Agency in accordance with their respective terms, except as the enforceability thereof may be limited by the application of equitable principles, if equitable remedies are sought, or by applicable bankruptcy, insolvency or other similar laws affecting the enforcement of creditors' rights generally. (c) The Agency has, and at the date of the Closing (the "Closing Date") will have, the full legal right, power and authority to enter into and perform its obligations under this Bond Purchase Agreement, the Continuing Disclosure Certificate and the Indenture, to issue and deliver the 2010 Bonds for sale to the Authority and resale to the Underwriter as provided herein, and will have duly authorized and approved the execution and delivery of, and the performance by the Agency of its obligations contained in, the 2010 Bonds, this Bond Purchase Agreement, the Continuing Disclosure Certificate and the Indenture. (d) As of the date thereof, the Final Official Statement did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. (e) If between the date hereof and the date which is 25 days after the End of the Underwriting Period (as defined below) for the 2010 Bonds, an event occurs of which the Agency has knowledge and which might or would cause the information contained in the Final Official Statement, as then supplemented or amended, to contain any untrue statement of a material fact or to omit to state a material fact required to be stated therein or necessary to make the information therein, in the light of the circumstances under which it was presented, not misleading, the Agency will notify the Underwriter; and, if, in the opinion of the Agency, Disclosure Counsel, the Underwriter or its counsel, such event requires 3 ="A BPAj.doc/MC/ the preparation and publication of a supplement or amendment to the Final Official Statement, the Agency will forthwith prepare and furnish to the Underwriter (at the expense of the Agency) a reasonable number of copies of an amendment of or supplement to the Final Official Statement, in form and substance satisfactory to Bond Counsel, Disclosure Counsel and Underwriter's Counsel (as hereinafter defined), which will amend or supplement the Final Official Statement so that it will not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances existing at the time the Final Official Statement is delivered to the Underwriter, not misleading. For the purposes of this subsection, between the date hereof and the date which is 25 days after the End of the Underwriting Period for the 2010 Bonds, the Agency will furnish such information with respect to itself as the Underwriter may from time to time reasonably request. As used herein and for purposes of the foregoing, the term "End of the Underwriting Period" for the 2010 Bonds shall mean the earlier of (i) the Closing Date unless the Agency shall have been notified in writing to the contrary by the Underwriter on or prior to the Closing Date, or (ii) the date on which the Underwriter does not retain, directly or as a member of an underwriting syndicate, an unsold balance of the securities for sale to the public; provided, however, that the Agency may treat as the End of the Underwriting Period for the 2010 Bonds the date specified as such in a notice from the Underwriter stating the date which is the End of the Underwriting Period. (f) If the information contained in the Final Official Statement is amended or supplemented pursuant to paragraph (e) above, at the time of each supplement or amendment thereto, the portions of the Final Official Statement so supplemented or amended (including any financial and statistical data contained therein) will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the information therein, in the light of the circumstances under which it was presented, not misleading. (g) At the time of the Closing, there shall not have been any material adverse changes in the financial condition of the Agency or any material adverse change in the valuation of taxable property in the Project Area (as described in the Final Official Statement) since the date of the Final Official Statement. (h) As of the time of acceptance hereof and as of the time of the Closing, the Agency is not and will not be in material breach of or in material default under any applicable law or administrative regulation of the State or the United States of America, 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 which breach would have a material adverse effect on the 2010 Bonds; and, as of such times, the execution and delivery by the Agency of this Bond Purchase Agreement, the Indenture, the Continuing Disclosure Certificate and the 2010 Bonds, and compliance by the Agency 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 law or administrative regulation of the State or the United States of America applicable to the Agency 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 which breach or default would have a material adverse effect on the 2010 Bonds. (i) Between the time of acceptance hereof and the Closing, the Agency will not, without the prior written consent of the Underwriter, issue any bonds or securities secured by a pledge of or lien on the Housing Tax Increment Revenues. 0) As of the time of acceptance hereof and the Closing, and except as described in the Final Official Statement, no litigation is or will be pending and served upon the Agency or, to the knowledge of the Agency, threatened in any court (i) in any way challenging any member of the Agency, or the Chairperson of the Agency, to their respective offices or (ii) seeking to restrain or enjoin the issuance or ="A BPAj.doc/MC/ delivery of any of the 2010 Bonds, or the collection of the Housing Tax Increment Revenues which are pledged to pay the principal of and interest on the 2010 Bonds, or in any way contesting or affecting the validity of the 2010 Bonds, this Bond Purchase Agreement, the Indenture, the Continuing Disclosure Certificate or the collection of the Housing Tax Increment Revenues, or the pledge of the Housing Tax Increment Revenues under the Indenture, or contesting the powers of the Agency or its authority for the issuance of the 2010 Bonds, or (iii) contesting in any way the completeness, accuracy or fairness of the Final Official Statement. (k) As of the time of acceptance hereof and as of the Closing Date, the Agency does not and will not have outstanding any indebtedness which is secured by a lien on the Housing Tax Increment Revenues of the Agency superior to or on a parity with the lien of the 2010 Bonds on the Housing Tax Increment Revenues except as described in the Final Official Statement. (1) The Agency will furnish such information, execute such instruments and take such other action in cooperation with the Underwriter, at the expense of the Underwriter, as it may reasonably request in order to qualify the 2010 Bonds for offer and sale under the "blue sky" or other securities laws and regulations of such states and other jurisdictions of the United States of America as the Underwriter may designate; provided, however, that the Agency will not be required to execute a special or general consent to service of process or qualify as a foreign corporation in connection with any such qualification in any jurisdiction. (m) As of the Closing Date, all approvals, consents or orders required of the Agency by any governmental authority, board, agency or commission having jurisdiction which would constitute conditions precedent to the performance by the Agency of its obligations under this Bond Purchase Agreement, the 2010 Bonds, the Indenture and the Continuing Disclosure Certificate will have been obtained. (n) The Agency is in compliance with its statutory reporting requirements under the Redevelopment Law, and the Agency has no "excess surplus" as defined in California Health and Safety Code Section 33334.12(g)(i). 6. Representations, Warranties and Agreements of the Authority. The Authority represents, warrants and agrees with the Agency and the Underwriter as follows: (a) The Authority is a joint exercise of powers authority duly organized and validly existing under the laws of the State of California. (b) The Authority has full legal right, power and authority to enter into this Bond Purchase Agreement and to perform the actions on its part contemplated hereby. (c) By all necessary official action, the Authority has duly authorized and approved the execution and delivery of and the performance by the Authority of the obligations on its part contained in this Bond Purchase Agreement. (d) As of the date hereof, there is no action, suit, proceeding, inquiry or investigation, notice of which has been served on the Authority, at law or in equity before or by any court, government agency, public board or body, pending with respect to which the Authority has been served with process or to the best knowledge of the officer of the Authority executing this Bond Purchase Agreement, threatened against the Authority, affecting the existence of the Authority or the titles of its officers to their respective offices, or affecting or seeking to prohibit, restrain or enjoin the sale, issuance or delivery of the 2010 Bonds or the execution and delivery by the Authority of this Bond Purchase Agreement, nor, to the best 5 ="A BPAj.doc/MC/ knowledge of the officer of the Authority executing this Bond Purchase Agreement, is there any basis for any such action, suit, proceeding, inquiry or investigation, wherein an unfavorable decision, ruling or finding would materially adversely affect the authorization, execution, delivery or performance by the Authority of this Bond Purchase Agreement. (e) Any certificate signed by any officer of the Authority and delivered to the Underwriter pursuant to this Bond Purchase Agreement or any document contemplated hereby shall be deemed a representation and warranty by the Authority to the Underwriter as to the statements made therein. 7. Closing Conditions. The Underwriter has entered into this Bond Purchase Agreement in reliance upon the representations, warranties and covenants of the Authority and the Agency contained herein and the performance by the Authority and the Agency of their respective obligations hereunder, both as of the date hereof and as of the Closing Date. The Underwriter's obligations under this Bond Purchase Agreement also are and shall be subject to the following conditions: (a) At the Closing Date, the 2010 Bonds, the Bond Purchase Agreement, the Indenture, the Continuing Disclosure Certificate and the Final Official Statement shall have been duly authorized, executed and delivered by the respective parties thereto, in substantially the forms heretofore submitted to the Underwriter with only such changes as shall have been agreed to by the Underwriter, and said agreements shall not have been amended, modified or supplemented, except as may have been agreed to by the Underwriter, and there shall have been taken in connection therewith, with the issuance of the 2010 Bonds and with the transactions contemplated thereby and by this Bond Purchase Agreement, all such actions as Bond Counsel shall deem to be necessary and appropriate. (b) The representations and warranties of the Authority and the Agency contained in this Bond Purchase Agreement, the Indenture and the Continuing Disclosure Certificate shall be true and correct in all material respects on the date hereof and on the Closing Date, as if made again on the Closing Date, and the Final Official Statement (as the same may be supplemented or amended with the written approval of the Underwriter) shall be true and correct in all material respects and shall not contain any untrue statement or fact or omit to state any fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which such statements were made, not misleading. (c) At the time of the Closing, the Authority and the Agency shall perform or have performed all of their obligations required under or specified in the Financing Documents at or prior to the Closing. (d) At the time of the Closing, no default shall have occurred or be existing under the Bond Purchase Agreement, the Indenture and the Continuing Disclosure Certificate and the Agency shall not be in default in the payment of principal or interest on any of its indebtedness which default may materially adversely impact the ability of the Agency to repay the 2010 Bonds. (e) In recognition of the desire of the Agency and the Underwriter to effect a successful public offering of the 2010 Bonds, and in view of the potential adverse impact of any of the following events on such a public offering, the Underwriter shall have the right to terminate this Bond Purchase Agreement by written notification to the Agency and the Authority if at any time at or prior to the Closing: (i) the marketability of the 2010 Bonds or the market price thereof, in the reasonable opinion of the Underwriter, has been materially adversely affected by any event occurring which causes any statement contained in the Final Official Statement as of the date thereof to be materially misleading or results in a failure of the Final Official Statement to state a material fact 6 ="A BPAj.doc/MC/ necessary to make the statements in the Final Official Statement, in the light of the circumstances under which they were made, not misleading; or (ii) the marketability of the 2010 Bonds or the market price thereof, in the reasonable opinion of the Underwriter, has been materially adversely affected by an amendment to the Constitution of the United States of America or by any legislation in or by the Congress of the United States of America or by the State, or the amendment of legislation pending as of the date of this Bond Purchase Agreement in the Congress of the United States of America, 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 of America, the Treasury Department of the United States of America, the Internal Revenue Service or the Chairperson 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 of America, or the favorable reporting for passage of legislation to either House of the Congress of the United States of America 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 2010 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, or a decision by any court of competent jurisdiction within the State shall be rendered which materially adversely affects the market price of the 2010 Bonds; or (iv) a stop order, ruling, regulation or official statement by, or on behalf of, the Securities and Exchange Commission 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 2010 Bonds, or the issuance, offering or sale of the 2010 Bonds, including all underlying obligations, as contemplated hereby or by the Final Official Statement, is in violation or would be in violation of any provision of the federal securities laws, including the Securities Act of 1933, as amended and as then in effect, or that the Indenture needs to be qualified under the Trust Indenture Act of 1939, as amended and as then in effect; or (v) legislation shall be enacted by the Congress of the United States of America, or a decision by a court of the United States of America shall be rendered, to the effect that obligations of the general character of the 2010 Bonds, or the 2010 Bonds, are not exempt from registration under the Securities Act of 1933, as amended and as then in effect, or the Securities Exchange Act of 1934, as amended and as then in effect, or that the Indenture is not exempt from qualification under or other requirements of the Trust Indenture Act of 1939, as amended and as then in effect; or (vi) 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 market the 2010 Bonds; or 7 ="A BPAj.doc/MC/ (vii) a general banking moratorium shall have been established by federal or State authorities; or (viii) the United States of America has become engaged in hostilities which have resulted in a declaration of war or a national emergency or there has occurred any other outbreak or escalation of hostilities or a national or international calamity or crisis, financial or otherwise, the effect of such outbreak, escalation, calamity or crisis on the financial markets of the United States of America, being such as, in the reasonable opinion of the Underwriter, would affect materially and adversely the ability of the Underwriter to market the 2010 Bonds (it being agreed by the Underwriter that there is no outbreak, escalation, calamity or crisis of such character as of the date hereof); or (ix) the rating on any bonds, notes or other obligations of the Agency shall have been downgraded, suspended or withdrawn by a national rating service, which, in the Underwriter's reasonable opinion, materially adversely affects the market price of the 2010 Bonds; or (x) the commencement of any action, suit or proceeding described in paragraph 50) hereof, which, in the reasonable judgment of the Underwriter, materially adversely affects the market price of the 2010 Bonds. (f) At or prior to the Closing, the Underwriter shall receive with respect to the 2010 Bonds (unless the context otherwise indicates) the following documents: (i) Bond Opinion. The approving opinion of Bond Counsel to the Agency, dated the Closing Date and substantially in the form included as Appendix D to the Final Official Statement, together with a letter from such counsel, dated the Closing Date 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 it. (ii) Supplemental Opinion. A supplemental opinion or opinions of Bond Counsel addressed to the Underwriter, dated the Closing Date to the following effect: (A) the 2010 Bonds are not subject to the registration requirements of the Securities Act of 1933, as amended, and the Indenture is exempt from qualification pursuant to the Trust Indenture Act of 1939, as amended; (B) this Bond Purchase Agreement has been duly executed and delivered by the Agency and the Authority and (assuming due authorization, execution and delivery by and validity against the Underwriter) is a valid and binding agreement of the Agency and the Authority, except as enforcement thereof may be limited by bankruptcy, insolvency or other laws affecting enforcement of creditors' rights and by the application of equitable principles if equitable remedies are sought; and (C) the statements contained in the Final Official Statement under the captions "INTRODUCTION," "THE 2010 BONDS" (except for information relating to The Depository Trust Company and the book -entry system for registration of the 2010 Bonds), "SECURITY FOR THE 2010 BONDS," and "TAX MATTERS," and in Appendices A and D, are accurate insofar as such statements expressly summarize certain provisions of the 2010 Bonds, the Indenture and the opinion attached as Appendix D to the Final Official Statement; provided that Bond Counsel need not express any opinion with respect to any financial or statistical information contained therein. 8 ="A BPAj.doc/MC/ (iii) Agency Counsel Opinion. An opinion of the City Attorney, as Counsel to the Agency, dated the Closing Date and addressed to the Underwriter, in the form of Exhibit B hereto. (iv) Agency Certificate. A certificate of the Agency, dated the Closing Date, signed on behalf of the Agency by the Executive Director or other duly authorized officer of the Agency to the effect that: (A) the representations and warranties of the Agency contained herein and in the Indenture and the Continuing Disclosure Certificate are true and correct in all material respects on and as of the Closing Date as if made on the Closing Date; and (B) no event affecting the Agency has occurred since the date of the Final Official Statement which has not been disclosed therein, or in any supplement or amendment thereto, which event should be disclosed in the Final Official Statement in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. (v) Authority Certificate. A certificate of the Authority, dated the Closing Date, signed on behalf of the Authority by the Executive Director or other duly authorized officer of the Authority, to the effect that: (A) the representations and warranties of the Authority contained herein are true and correct in all material respects on and as of the Closing Date as if made on the Closing Date; and (B) no event affecting the Authority has occurred since the date of the Final Official Statement which has not been disclosed therein, or in any supplement or amendment thereto, which event should be disclosed in the Final Official Statement in order to make the statements with respect to the Authority therein, in the light of the circumstances under which they were made, not misleading. (vi) Disclosure Counsel Opinion. An opinion, dated the Closing Date and addressed to the Agency and to the Underwriter, of McFarlin & Anderson LLP ("Disclosure Counsel"), stating that without having undertaken to determine independently the accuracy, fairness or completeness of the statements contained in the Final Official Statement, and based upon its participation in the preparation of the Final Official Statement, no information came to the attention of the attorneys in its firm rendering legal services in connection with such representation which cause such firm to believe that, as of the date of the Final Official Statement or as of the Closing Date, the Final Official Statement (except for any financial, statistical, economic, engineering or demographic data or forecasts, numbers, charts, tables, graphs, estimates, projections, assumptions or expression of opinion, any information about feasibility, valuation, appraisal, absorption, real estate ownership, archaeological or environmental matters, the Appendices thereto or any information about debt service requirements, book -entry, The Depository Trust Company or tax exemption included therein, as to which no opinion need be expressed) contained any untrue statement of a material fact or omitted to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. (vii) Trustee's Certificate. A certificate of the Trustee, dated the Closing Date, addressed to the Agency and the Underwriter, to the following effect: 9 ="A BPAj.doc/MC/ (A) the Trustee is a national banking association duly organized and validly existing under the laws of the United States of America; and (B) the Trustee has full power, authority and legal right to comply with the terms of the Indenture and to perform its obligations stated therein. (viii) Opinion of Counsel to Trustee. An opinion of counsel to the Trustee, to the effect that: (A) the Trustee has been duly organized and is validly existing and in good standing under the laws of the United States of America, with full corporate power to undertake the trust duties and obligations of it under the Indenture and its obligations under the Continuing Disclosure Certificate; (B) the Trustee has duly authorized, executed and delivered the Indenture and accepted and acknowledged the Continuing Disclosure Certificate and by all proper corporate action has authorized the acceptance of the duties and obligations of the Trustee under the Indenture and the Continuing Disclosure Certificate and to authorize in such capacity the authentication and delivery of the 2010 Bonds; (C) assuming due authorization, execution and delivery thereof by the Agency, the Indenture and the Continuing Disclosure Certificate constitute the valid, legal and binding agreements of the Trustee, enforceable in accordance with their respective terms, except as such enforcement may be limited by bankruptcy, insolvency, reorganization or other similar laws affecting the enforcement of creditors' rights in general and by general equity principles (regardless of whether such enforcement is considered in a proceeding in equity or at law); and (D) exclusive of federal or State securities laws and regulations, to the best of such counsel's knowledge after reasonable inquiry and investigation, other than routine filings required to be made with governmental agencies in order to preserve the Trustee's authority to perform a trust business (all of which routine filings such counsel believes, after reasonable inquiry and investigation, to have been made), no authorization, approval, consent, order or other action by any governmental or regulatory authority having jurisdiction over the Trustee is or will be required for the execution and delivery by the Trustee of the Indenture, the authentication by the Trustee of the 2010 Bonds or the acceptance or acknowledgment of the Continuing Disclosure Certificate. (ix) Certain Financing Documents. An executed copy of the Indenture and of the Continuing Disclosure Certificate. (x) City Resolution. A copy of the Resolution adopted by the City Council and certified by the City Clerk or Assistant City Clerk of the City approving issuance by the Agency of the 2010 Bonds. (xi) Agency Resolution. A copy of the Resolution adopted by the Agency and certified by the Secretary or Assistant Secretary of the Agency authorizing the execution and delivery of the Indenture, this Bond Purchase Agreement and the Continuing Disclosure Certificate. 10 ="A BPAj.doc/MC/ (xii) Authority Resolution. A certified copy of the Authority Resolution adopted by the Authority and certified by the Secretary or Assistant Secretary of the Authority authorizing the execution and delivery of this Bond Purchase Agreement. (xiii) Form 8038-G. Evidence that the federal tax information Form 8038-G has been prepared for filing. (xiv) Letter of Representations. A certified copy of the Letter of Representations by the Agency to DTC. (xv) Final Official Statement. An executed copy of the Final Official Statement. (xvi) Preliminary Official Statement. An executed certificate, dated the date of the Preliminary Official Statement, of the Agency in the form of Exhibit C hereto. (xvii) Tax Certificate. An Arbitrage Certificate of the Agency relating to the 2010 Bonds in form satisfactory to Bond Counsel. (xviii) Certificate of Fiscal Consultant. An executed certificate of the Fiscal Consultant, dated the Closing Date, addressed to the Agency and the Underwriter in the form of Exhibit D hereto. (xix) Underwriter's Counsel Opinion. An opinion, dated the Closing Date and addressed to the Agency and to the Underwriter, of Stradling Yocca Carlson & Rauth, a Professional Corporation ("Underwriter's Counsel"), in form and substance acceptable to the Underwriter. (xx) Evidence of Rating. Evidence satisfactory to the Underwriter that the 2010 Bonds have been rated "U" by Standard & Poor's Ratings Services and that any such rating has not been revoked or downgraded; (xxi) Additional Documents. Such additional certificates, instruments and other documents as the Underwriter, Bond Counsel or Disclosure Counsel may reasonably deem necessary to evidence the truth and accuracy as of the time of the Closing of the representations of the Agency herein and the due performance or satisfaction by the Agency at or prior to such time of all agreements then to be performed and all conditions then to be satisfied by the Agency hereunder. If the Agency shall be unable to satisfy the conditions contained in this Bond Purchase Agreement, or if the obligations of the Underwriter shall be terminated for any reason permitted by this Bond Purchase Agreement, this Bond Purchase Agreement shall terminate and none of the Underwriter, the Authority or the Agency shall be under further obligation hereunder, except as set forth in Section 9 hereof. 8. Certain Covenants. After the Closing: (a) the Agency will not adopt any amendment of or supplement to the Final Official Statement to which, after having been furnished a copy, the Underwriter shall reasonably object in writing; and if any event relating to or affecting the Agency or the Project Area shall occur as a result of which it is necessary, in the opinion of the Underwriter, to amend or supplement the Final Official Statement in order to make the Final Official Statement not misleading in the light of the circumstances existing at the time it is delivered to the Underwriter, the Agency shall cause to be forthwith prepared and 11 ="A BPAj.doc/MC/ furnished to the Underwriter (at the expense of the Agency) a reasonable number of copies of an amendment of or supplement to the Final Official Statement (in form and substance satisfactory to the Underwriter) that will amend or supplement the Final Official Statement so that it will not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances existing at the time it is delivered to the Underwriter, not misleading; and (b) the Agency shall not knowingly take or omit to take, as is appropriate, any action which would adversely affect the exclusion from gross income under federal tax law of the interest on the 2010 Bonds or which would cause the 2010 Bonds to become arbitrage bonds under Section 148 of the Code and the regulations thereunder. 9. Expenses. All expenses and costs of the Agency and the Authority incident to the performance of their obligations hereunder and in connection with the authorization, execution, sale and delivery of the 2010 Bonds to the Underwriter, including any printing costs, fees of the Trustee and the Dissemination Agent, fees and expenses of consultants, fees and expenses of Bond Counsel, fees and expenses of Disclosure Counsel and fees and expenses of counsel to the Agency and the City shall be paid from the 2010 Bond proceeds or in the event that 2010 Bonds are not issued for any reason, shall be paid by the Agency. All costs and expenses of the Underwriter, including travel, "blue sky" expenses, fees and expenses assessed upon the Underwriter with respect to the 2010 Bonds by the Municipal Securities Rulemaking Board or Financial Industry Regulatory Board (FINRA), CUSIP® Service Bureau charges, CDIAC fees, advertising expenses and any fees or expenses of counsel to the Underwriter shall be paid by the Underwriter. 10. Survival of Certain Representations and Obligations. The respective agreements, covenants, representations, warranties and other statements of the Agency and the Authority and of each of their respective officials and officers set forth in or made pursuant to this Bond Purchase Agreement shall survive delivery of and payment for the 2010 Bonds, regardless of any investigation, or statements as to the results thereof, made by or on behalf of the Underwriter. 11. Notice. Any notice or other communication to be given to the Agency or the Authority under this Bond Purchase Agreement may be given by delivering the same in writing, addressed as follows: Redevelopment Agency of the City of Temecula, 43200 Business Park Drive, Temecula, California 92590, Attention: Ms. Genie Roberts, Treasurer. Any notice or other communication to be given to the Underwriter under this Bond Purchase Agreement may be given by delivering the same in writing to Stone & Youngberg LLC, 515 South Figueroa Street, Suite 1800, Los Angeles, California 90071-3338, Attention: Sara Oberlies. 12. Entire Agreement. This Bond Purchase Agreement, when accepted by the Agency and the Authority, shall constitute the entire agreement among the Agency, the Authority and the Underwriter and is made solely for the benefit of the Agency, the Authority and the Underwriter (including the successors or assigns of the Underwriter). No other person or entity shall acquire or have any right hereunder by virtue hereof, except as expressly provided herein. 13. Counterparts. This Bond Purchase Agreement 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. 14. 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. 12 ="A BPAj.doc/MC/ 15. California Law Governs. The validity, interpretation and performance of this Bond Purchase Agreement shall be governed by the laws of the State applicable to contracts made and performed in the State. 13 ="A BPAj.doc/MC/ 16. No Assignment. The rights and obligations created by this Bond Purchase Agreement shall not be subject to assigninent by the Underwriter, the Authority or the Agency without the prior written consent of the other parties hereto. Accepted as of the date first stated above: REDEVELOPMENT AGENCY OF THE CITY OF TEMECULA By Name Title: Shawn Nelson Executive Director TEMECULA PUBLIC FINANCING AUTHORITY By Name Title: Shawn Nelson Executive Director STONE & YOUNGBERG LLC I� 14 Authorized Representative ="A BPAj.doc/MC/ 1W40111101K\ REDEVELOPMENT AGENCY OF THE CITY OF TEMECULA TEMECULA REDEVELOPMENT PROJECT NO. 1 TAX ALLOCATION HOUSING BONDS 2010 SERIES A (TAX-EXEMPT) MATURITY SCHEDULE Maturity Date Amount Rate Yield Price 8/1/2011 8/1/2012 8/1/2013 8/1/2014 8/1/2015 8/1/2016 8/1/2017 8/1/2018 8/1/2019 8/1/2020 8/1/2021 8/1/2022 8/1/2023 8/1/2024 8/1/20 8/1/20 8/1/20 A-1 ="A BPAj.doc/MC/ REDEVELOPMENT AGENCY OF THE CITY OF TEMECULA TEMECULA REDEVELOPMENT PROJECT NO. 1 TAX ALLOCATION HOUSING BONDS 2010 SERIES B (TAXABLE BUILD AMERICA BONDS) MATURITY SCHEDULE Maturity Date Amount Rate Yield Price 8/1/2011 8/1/2012 8/1/2013 8/1/2014 8/1/2015 8/1/2016 8/1/2017 8/1/2018 8/1/2019 8/1/2020 8/1/2021 8/1/2022 8/1/2023 8/1/2024 8/1/20 8/1/20 8/1/20 2 ="A BPAj.doc/MC/ REDEMPTION TERMS Optional Redemption of the 2010 Bonds. . (i) The 2010 Series A Bonds maturing on or after August 1, 20__, shall be subject to redemption in whole or in part on any date at the request of the Agency, among maturities as determined by the Agency, and in any case by lot within a maturity on or after August 1, 20, at the option of the Agency, from any available source of funds, at a redemption price equal to one hundred percent (100%) of the principal amount thereof to be redeemed together with accrued interest thereon to the redemption date, without premium. (ii) The 2010 Series B Bonds maturing on or after August 1, 20__, shall be subject to redemption in whole or in part on any date at the request of the Agency, among maturities as determined by the Agency, and in any case by lot within a maturity on or after August 1, 20__, at the option of the Agency, from any available source of funds, at a redemption price equal to one hundred percent (100%) of the principal amount thereof to be redeemed together with accrued interest thereon to the redemption date, without premium. Mandatory Sinking Account Redemption of 2010 Bonds. (i) The 2010 Series A Bonds maturing on August 1, 20__, and August 1, 20 , shall also be subject to redemption in whole, or in part by lot, on August 1, 20 , and August 1, 20 , respectively, and on August 1 in each year thereafter as set forth in the following tables, from Sinking Account payments made by the Agency pursuant to the Indenture, at a redemption price equal to the principal amount thereof to be redeemed together with accrued interest thereon to the redemption date, without premium, or in lieu thereof shall be purchased pursuant to the Indenture, in the aggregate respective principal amounts and on the dates as set forth in the following tables; provided, however, that if some but not all of such 2010 Series A Bonds have been redeemed pursuant to the optional redemption provisions of the Indenture, the total amount of all future Sinking Account payments pursuant to the Indenture shall be reduced by the aggregate principal amount of such 2010 Series A Bonds so redeemed, to be allocated among such Sinking Account payments in integral multiples of $5,000 as determined by the Agency (written notice of which determination shall be given by the Agency to the Trustee). 2010 Series A Bonds Maturing on August 1, 20 Sinking Account Principal Amount Redemption Date To Be Redeemed (August 1) or Purchased 20 $ 20 20 20 (maturity) 2010 Series A Bonds Maturing on August 1, 20 Sinking Account Principal Amount Redemption Date To Be Redeemed (August 1) or Purchased 20 $ 20 20 20 (maturity) A-2 (ii) The 2010 Series B Bonds maturing on August 1, 20 , and August 1, 20__, shall also be subject to redemption in whole, or in part by lot, on August 1, 20 , and August 1, 20 , respectively, and on August 1 in each year thereafter as set forth in the following tables, from Sinking Account payments made by the Agency pursuant to the Indenture, at a redemption price equal to the principal amount thereof to be redeemed together with accrued interest thereon to the redemption date, without premium, or in lieu thereof shall be purchased pursuant to the Indenture, in the aggregate respective principal amounts and on the dates as set forth in the following tables; provided, however, that if some but not all of such 2010 Series B Bonds have been redeemed pursuant to the optional redemption provisions of the Indenture, the total amount of all future Sinking Account payments pursuant to the Indenture shall be reduced by the aggregate principal amount of such 2010 Series B Bonds so redeemed, to be allocated among such Sinking Account payments in integral multiples of $5,000 as determined by the Agency (written notice of which determination shall be given by the Agency to the Trustee). 2010 Series B Bonds Maturing on August 1, 20 Sinking Account Principal Amount Redemption Date To Be Redeemed (August 1) or Purchased 20 $ 20 20 20 (maturity) 2010 Series B Bonds Maturing on August 1, 20 Sinking Account Principal Amount Redemption Date To Be Redeemed (August 1) or Purchased 20 $ 20 20 20 20 (maturity) A-3 OPINION OF AGENCY COUNSEL February _, 2010 Redevelopment Agency of the Stone & Youngberg LLC City of Temecula 515 South Figueroa Street, Suite 1060 43200 Business Park Drive Los Angeles, California 90071 Temecula, California 92590 Re: $_ Redevelopment Agency of the $_ Redevelopment Agency of the City of Temecula City of Temecula Temecula Redevelopment Project No. 1 Temecula Redevelopment Project No. 1 Tax Allocation Housing Bonds, 2010 Series A Tax Allocation Housing Bonds, 2010 Series B (Tax -Exempt) (Taxable Build America Bonds) Ladies & Gentlemen: In our capacity as counsel to the Redevelopment Agency of the City of Temecula (the "Agency") in connection with the issuance of the above -referenced bonds (the "2010 Bonds") by the Agency, we have examined the original, certified copies, or copies otherwise identified to our satisfaction as being true copies of the following documents: (1) the Agency Resolution No. RDA _ , adopted by the governing board of the Agency on January 26, 2010 (the "Resolution"); (2) the Indenture of Trust, dated as of March 1, 2010, between the Agency and U.S. Bank National Association, as trustee (the "Trustee"); (3) the Bond Purchase Agreement, dated [February 10], 2010 (the "Bond Purchase Agreement'), by Stone & Youngberg LLC, as underwriter (the "Underwriter"), as accepted by the Temecula Public Financing Authority (the "Authority") and the Agency; (4) the Continuing Disclosure Certificate, dated March 1, 2010, of the Agency, as accepted and agreed to by U.S. Bank National Association, as dissemination agent; and (5) the Official Statement, dated , 2010, relating to the 2010 Bonds (the "Final Official Statement'). Documents (2), (3) and (4) shall be referred to herein as the "Agreements." All capitalized terms used but not otherwise defined in this opinion have the meanings ascribed to them in the Bond Purchase Agreement and if not defined in the Bond Purchase Agreement then as ascribed to them in the Final Official Statement. Relying on such examination and pertinent law and subject to the limitations and qualifications hereinafter set forth, we are of the opinion that: 1. The Agency is a public body, corporate and politic, duly organized and validly existing under the laws of the State of California (the "State"). 2. The Resolution has been duly adopted at a meeting of the governing body of the Agency which was called and held pursuant to law and with all public notice required by law and at which a quorum was present and acting throughout, and the Resolution is in full force and effect and has not been modified, amended, or rescinded. 3. The information in the Final Official Statement with respect to the Agency and the Project Area (as referenced in the Official Statement) is fair and accurate, and nothing has come to our attention which would lead us to believe that such information (excluding therefrom the financial and statistical data and forecasts included therein, as to which we express no opinion) contains any untrue B-1 ="A BPAj.doc/MC/ statement of a material fact or omits to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. 4. To the best of our knowledge, except as otherwise disclosed in the Final Official Statement, there is no litigation or proceeding, pending against the Agency and notice of which has been served on the Agency, or threatened, challenging the creation, organization, or existence of the Agency, or the validity of the 2010 Bonds or the Agreements, or seeking to restrain or enjoin any of the transactions referred to therein or contemplated thereby, or under which a determination adverse to the Agency would have a material adverse effect upon the Agency's ability to pay principal of or interest on the 2010 Bonds when due, or which in any manner questions the right of the Agency to issue the 2010 Bonds or to use the Housing Tax Increment Revenues for repayment of the 2010 Bonds, or affects in any manner the right or ability of the Agency to collect or pledge the Housing Tax Increment Revenues or the lien priority thereof. 5. To the best of our knowledge, the Agency is not in breach of or default under any applicable law or administrative regulation of the State or any applicable judgment or decree or any loan agreement, trust agreement, certificate, resolution, agreement, or other instrument to which the Agency is a party, or is otherwise subject, which breach or default would materially adversely affect the Agency's ability to enter into or perform its obligations under the Agreements, 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 an event of default under any such instrument and which would materially adversely affect the Agency's ability to enter into or perform its obligations under the Agreements. 6. No authorization, approval, consent or other order of the State, any local agency of the State or the City, other than such authorizations, approvals and consents which have been obtained, is required for the authorization and distribution of the Preliminary Official Statement and the Final Official Statement (provided that no opinion need be expressed as to any action required under State securities or "blue sky" laws in connection with the purchase or distribution of the 2010 Bonds by the Underwriter); 7. Except as described in the Final Official Statement, interest on the 2010 Bonds and costs of issuance are not includable in the calculation of the limitations under the 1991 Settlement Agreement (as defined in the Final Official Statement). 8. No obligations of the Agency have a priority to or are on a parity with the Agency's pledge of Housing Tax Increment Revenues to payment of the 2010 Bonds. The opinions set forth above are subject to the following qualifications: Whenever our opinion herein with respect to the existence or absence of facts is indicated to be based on our knowledge, it is intended to signify that during the course of our representation of the Agency as herein described, no information has come to the attention of the lawyers in our firm actively representing the Agency in the matters described herein which would give them current actual knowledge of the existence or absence of such facts and that "constructive knowledge" is not sufficient to impart a duty or obligation to a party. Except to the extent expressly set forth herein, we have not undertaken any independent investigations to determine the existence or absence of such facts, and no inference as to our knowledge of the existence or absence of such facts should be drawn from our representation of the Agency. Any limited inquiries made by us during the preparation of this opinion letter should not be regarded as such an investigation. In expressing the opinions set forth above, we have assumed, without inquiry or investigation (i) the genuineness of all signatures, the authenticity of all documents submitted to us as originals, the conformity to original documents of documents submitted to us as copies or exhibits, and B-2 TABS -Bond Nuchase Agreement. doe/MC/ the authenticity of such originals of such latter documents; (ii) the due execution and delivery of the Agreements by persons duly representing the parties other than the Agency or Authority; (iii) that each party to the Agreements other than the Agency or Authority as applicable, is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization or formation; (iv) that each party to the Agreements, other than the Agency or Authority as applicable, has the power and authority to execute and deliver the Agreements and to perform its obligations thereunder and all such actions have been duly and validly authorized by all necessary proceedings on its part; (v) that the Agreements constitute the legal, valid, and binding obligations of each party thereto, other than the Agency or Authority as applicable, enforceable against such parties in accordance with their respective terms; and (vi) that there are no oral or written terms or conditions agreed to by the parries to the Agreements which would have an effect on the opinions rendered herein. We have made no examination of, and express no opinion as to, title to the properties within the Project Area. No opinions are expressed herein with respect to compliance with the anti -fraud provisions of applicable federal and state securities or other laws, rules or regulations. Our opinions set forth herein are based on such examinations of the laws of the State as we deemed relevant for the purposes of this opinion. We have not considered the effect, if any, of the laws decisions, rules, or regulations of any other jurisdiction upon matters covered by this opinion. We express no opinion as to the status of the 2010 Bonds or the interest thereon, or the Agreements or the Final Official Statement under any federal securities laws, decisions, rules, or regulations, or any state securities or "Blue Sky" law, decision, rule or regulation, or any federal, state or local tax law, decision, rule, or regulation. Further, we express no opinion with respect to any indemnification, contribution, choice of law, choice of forum or waiver provisions contained in the Agreements. Without limiting any of the foregoing, we express no opinion as to any matter other than as expressly set forth above. This letter is furnished by us as counsel to the Agency. No attorney -client relationship has existed or exists between our firm and Stone & Youngberg LLC in connection with the 2010 Bonds or by virtue of this letter. We disclaim any obligation to update this letter. This opinion letter is rendered solely for your benefit, as well as for the benefit of the Agency, and may not be relied upon, quoted, or used, nor its benefit claimed, by any other person or entity, or for any other purposes, without our prior written consent, except that reference may be made to it and copies included in closing document transcripts pertaining to the 2010 Bonds. This letter us not intended to, and may not, be relied upon by owners of the 2010 Bonds. Very truly yours, B-3 TABS -Bond Nuchase Agreement. doe/MC/ 1W401rlrr4 RULE 15c2-12 CERTIFICATE February , 2010 Stone & Youngberg LLC 515 South Figueroa Street, Suite 1800 Los Angeles, California 90071-3338 Re: $ Redevelopment Agency $ Redevelopment Agency of the City of Temecula of the City of Temecula Temecula Redevelopment Project No. 1 Temecula Redevelopment Project No. Tax Allocation Housing Bonds, 2010 Tax Allocation Housing Bonds, 2010 Series A (Tax -Exempt) Series B (Taxable Build America Bonds) Ladies and Gentlemen: You have been engaged by the Redevelopment Agency of the City of Temecula (the "Agency") to act as the underwriter in connection with the sale of the Redevelopment Agency of the City of Temecula Temecula Redevelopment Project No. 1 2010 Tax Allocation Housing Bonds (the "2010 Bonds"). For purposes of Rule 15c2-12 of the Securities and Exchange Commission ("Rule 15c2-12"), the undersigned hereby certifies on behalf of the Agency that the Preliminary Official Statement, dated February __, 2010, with respect to the 2010 Bonds is deemed final in accordance with Rule 15c2-12 as of its date except for the omission of certain matters which may be omitted under Rule 15c2-12 (including interest rates, redemption prices and dates, ratings, and related information). Very truly yours, REDEVELOPMENT AGENCY OF THE CITY OF TEMECULA U-3 Name: Shawn Nelson Title: Executive Director C-1 TABS -Bond Nuchase Agreement. doe/MC/ CERTIFICATE OF FISCAL CONSULTANT The undersigned, on behalf of HdL Coren & Cone, as Fiscal Consultant (the "Fiscal Consultant') to the Redevelopment Agency of the City of Temecula (the "Agency"), in connection with the issuance by the Agency of its $ aggregate principal amount of Redevelopment Agency of the City of Temecula Temecula Redevelopment Project No. 1 Tax Allocation Housing Bonds, 2010 Series A (Tax - Exempt) (the "2010 Series A Bonds") and $ aggregate principal amount of Redevelopment Agency of the City of Temecula Temecula Redevelopment Project No. 1 Tax Allocation Housing Bonds, 2010 Series B (Taxable Build America Bonds) (the "2010 Series B" and with the 2010 Series A, the "Bonds"), hereby confirms, as of the date hereof, the information set forth in its Report, dated 2010 (the "Report'), entitled "Projected Taxable Values and Anticipated Tax Increment Revenues," prepared in connection with the sale of the Temecula Redevelopment Project No. 12010 Tax Allocation Housing Bonds, and certifies the following that: 1. the undersigned is an authorized officer of the Fiscal Consultant and, as such, is familiar with the facts certified and is authorized and qualified to execute this certificate. 2. in the professional experience and opinion of the Fiscal Consultant, the assumptions made in the Report are reasonable. 3. the Fiscal Consultant is not aware of any event or act which has occurred since the date of the Report which, in the Fiscal Consultant's opinion, would materially and adversely affect the conclusions expressed therein. 4. the undersigned hereby consents to the references to the Fiscal Consultant and to the information from the Report reproduced in the Preliminary Official Statement and in the Official Statement for the Bonds. 5. the Fiscal Consultant hereby certifies that, as of the date of the Report and the date hereof, the information relating to the Projected Taxable Values and Anticipated Tax Increment Revenues contained in the Official Statement under the caption "THE REDEVELOPMENT PLAN" insofar as such statements purport to summarize portions of the Report, are accurate in all material respects and do not omit to state a material fact necessary in order to make the statements contained therein, in the light of the circumstances under which they are made, not misleading, and no events or occurrences have been ascertained by the Fiscal Consultant or have come to its attention that would substantially adversely change the opinions set forth in the Report. We note that in making the foregoing statements that the Fiscal Consultant has undertaken no additional research with respect to the Agency or the Project Area (as referenced in the Official Statement). The Agency and Stone & Youngberg LLC, as the Underwriter, are entitled to rely on this Certificate. Dated: 2010 HdL COREN & CONE RIM D-1 TABS -Bond Nuchase Agreement. doe/MC/ COUNCIL BUSINESS Item No. 15 Approvals City Attorney /V Director of Finance City Manager CITY OF TEMECULA AGENDA REPORT TO: City Manager/City Council FROM: Aaron Adams, Assistant City Manager DATE: February 9, 2010 SUBJECT: Discussion of the Blue Ribbon Committee Selection Process for the Quality of Life/Temecula 2030 Master Plan (at the Request of Mayor Pro-Tem Roberts and Council Member Washington) PREPARED BY: Tamra Middlecamp, Senior Management Analyst RECOMMENDATION: That the City Council: Establish a Blue Ribbon Committee for the Quality of Life/Temecula 2030 Master Plan, approve the process for appointing members to the Committee, authorize the Quality of Life/Temecula 2030 Subcommittee to proceed with forming the Blue Ribbon Committee. BACKGROUND: The City of Temecula has embarked in a process called the Quality of Life/Temecula 2030 Master Plan to be used as a road map and planning tool for the next twenty years. This plan will define the City's long-term goals in a variety of areas, including but not limited to sustainability of quality of life, continual maintenance of public infrastructure, public safety, higher education, business retention and attraction, economic development and fiscal stability. It will also allow the City to gain the community's vision about where the City should be headed in order to maintain the great quality of life enjoyed by our citizens. As part of the community input process, a Blue Ribbon Committee will be established consisting of local industry professionals, key community leaders, and community members. Mayor Pro-Tem Roberts and Council Member Washington were appointed to serve on the Quality of Life/Temecula 2030 Master Plan Subcommittee on May 12, 2009 and have been diligently working on this project. The Subcommitte is recommending that the Blue Ribbon Committee consist of 16-19 members, be representative of the community, and be structured and appointed as depicted in Exhibit A. City Council Appointments (5) It is recommended that each City Council Member appoint (1) individual to the Blue Ribbon Committee. These recommended appointments can be made directly to the Subcommittee and/or staff for formal invitations. QLMP Subcommittee (2) It is recommended that the Standing Subcommittee for the Quality of Life Master Plan, Mayor Pro Tern Roberts and Council Member Washington be included as members of the Blue Ribbon Subcommittee. At -Large Applications (3) The "At Large" Member recruitment will be representive of generations including a Senior Citizen, College Student and a High School student. These appointments would be made by the Subcommittee. Direct Appointments -Industry (6-9) The recruitment of business and community members will be done by selecting representatives from key areas and industries in the City. Names of candidates that fit into the key areas and industries would be approved for recruitment by the Quality of Life Master Plan Subcommittee. It is anticipated that the Blue Ribbon Committee members will be selected and seated before the end of March and will begin meeting in April. There will be a need for the Blue Ribbon Committee to meet approximately three to four times over the next few months. The Blue Ribbon Committee will provide input in focus group meeting(s) and also work to articulate a vision and define goals to be included in the Quality of Life/Temecula 2030 Master Plan. FISCAL IMPACT: There is no financial impact associated with the formation of the Blue Ribbon Committee for the Quality of Life/Temecula 2030 Master Plan. It is anticipated that the Quality of Life/Temecula 2030 Master Plan will be completed in the fall of 2010. ATTACHMENTS: Exhibt A -Blue Ribbon Committee proposed structure/appointment Quality of Life Master Plan: Temecula 2030 1 IIIETi] City Staff to provide support: -Technology -Planning/Land Use -Parks/Rec -Public Safety -Marketing/Branding/Image Historical Tourism/Hospitality Economic Development Professional Retail Professional REQUESTS TO SPEAK REQUEST TO SPEAK CITY OF TEMECULA After completing, please return to the City Clerk. Thank You. Date(2— C7— /,0 For Subject: ---� �ebv pty—'L,-, I wish to speak on Agenda Item No. Against Name:, VII�ET L}/i I P/✓Phone: (`���/T/ �� Address: City/State/Zip: l(f0l 6:y w (cl, If you are representing an organization or group, please give the name: The City Clerk will call your name when the matter comes up. Please go to the public podium and state your name and city of residence for the record. REQUEST TO SPEAK CITY OF TEMECULA Afte completing, please return to the City Clerk. Thank You.nn Date C" 1 C I wish to speak on Agenda Item No. CkJ -. Cb-VwVA For Against Subject: c) rA - �'n 2- Name: V-,Gv 'C-L �'y Phone: Address: ; City/State/Zip: Y'�� ,� 6`? D If you are representing an organization or group, please give the name: (JY'K�-'f c�rA �� r The City Clerk will call your name when the matter comes up. Please go to the public podium and state your name and city of residence for the record. REQUEST TO SPEAK CITY OF TEMECULA After completing, please return to the City Clerk. Thank You. Date 62, `ZI wish to speak on Agenda Item No. For Against Subject: Name: Phone: S_�'/ " T131( State/Zip: � ���t If you are representing an organization or group, please give the name: The City Clerk will call your name when the matter comes up. Please go to the public podium and state your name and city of residence for the record. R REQUEST TO SPEAK CITY OF TEMECULA After completing, please return to the City Clerk. Thank You. Date /d I wish to speak on Agenda Item No. For Against Subject: Name: Phone:_ ? �� - ( Address: � StatP/7in- OCKIV If you are representing an organization or group, please give the name: The City Clerk will call your name when the matter comes up. Please go to the public podium and state your name and city of residence for the record. REQUEST TO SPEAK CITY OF TEMECULA After completing, please return to the City Clerk. Thank You. Date o I wish to speak on Agenda Item No. For Against Subject: C� ii �L1 c. Name: r ) U Phone: Address: State/Zip: If you are representing an organization or group, please give the name: The City Clerk will call your name when the matter comes up. Please go to the public podium and state your name and city of residence for the record. REQUEST TO SPEAK CITY OF TEMECULA After completing, please return to the City Clerk. Thank You. Date Z / 2 1 wish to speak on Agenda Item No. For Against Subject: ( EXx&— Name: Address: ` s If you are representing an organization or ne: City/State/Zip: l v�(�t, q�v —I please give the name: The City Clerk will call your name when the matter comes up. Please go to the public podium and state your name and city of residence for the record. After completing, Date For Subject: REQUEST TO SPEAK CITY OF TEMECULA please return to the City Clerk. Thank You. I wish to speak on Agenda Item No. Against Name: D V/**' Phone: 7 City/State/Zip: dfGL�GC If you are representing an organization or group, please give the name: The City Clerk will call your name when the matter comes up. Please go to the public podium and state your name and city of residence for the record. REQUEST TO SPEAK CITY OF TEMECULA Flag pAfter completing, please return to the City Clerk. Thank You. Date I wish to speak on Agenda Item No. it G KU / VL S For Against !/ ! •-"--1- Name: rrrGG/ (S cr!//V��I Cl 6e Phone: Address: � City/State/Zip: - Cxec /a. `I �zS9z If you are representing an organization or group, please give the name: The City Clerk will call your name when the matter comes up. Please go to the public podium and state your name and city of residence for the record.