The Community Redevelopment Agency of the City of Los ...

NEW ISSUES - BOOK-ENTRY ONLY RATINGS: Moody’s: “A3” S&P: “A”

(See “RATINGS” herein.)

In the opinion of Hawkins Delafield & Wood LLP, Bond Counsel to the CRA/LA, under existing statutes and court decisions and assuming continuing compliance with certain tax covenants described herein, (i) interest on the Series E Bonds is excluded from gross income for Federal income tax purposes pursuant to Section 103 of the Internal Revenue Code of 1986, as amended (the “Code”), and (ii) interest on the Series E Bonds is not treated as a preference item in calculating the alternative minimum tax imposed on individuals and corporations under the Code and is not included in the adjusted current earnings of corporations for purposes of calculating the alternative minimum tax. Interest on the Series D Bonds is included in gross income for Federal income tax purposes pursuant to the Code. In addition, in the opinion of Bond Counsel, under existing statutes, interest on the Bonds is exempt from personal income taxes imposed by the State of California. See “Tax Matters - Tax-Exempt Bonds” and “Tax Matters - Taxable Bonds” herein.

THE COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF LOS ANGELES, CALIFORNIA

(RESEDA/CANOGA PARK PROjECT AREA) TAx ALLOCATION BONDS

$8,980,000SERIES D (Taxable)

$11,020,000SERIES E (Tax-Exempt)

Dated: Date of Delivery Due: September 1, as shown on the inside cover hereof

The (Reseda/Canoga Park Project Area) Tax Allocation Bonds, Series D (Taxable) (the “Series D Bonds”) and the (Reseda/Canoga Park Project Area) Tax Allocation Bonds, Series E (Tax-Exempt) (the “Series E Bonds,” and together with the Series D Bonds, the “Bonds”) of The Community Redevelopment Agency of the City of Los Angeles, California (the “CRA/LA”) will be issued as fully registered bonds in book-entry form only, initially registered in the name of Cede & Co., New York, New York, as nominee of The Depository Trust Company (“DTC”), New York, New York. Interest payable on the Bonds will be payable on March 1 and September 1 of each year, commencing March 1, 2011. Principal payable on the Bonds will be paid by U.S. Bank National Association, Los Angeles, California, as fiscal agent for the Bonds (the “Fiscal Agent”), to DTC for subsequent disbursement to DTC Participants who will remit such payments to the beneficial owners of the Bonds.

The Series D Bonds are being issued by the CRA/LA for the purpose of (i) financing certain improvements in or benefiting the Reseda/Canoga Park Project Area of the CRA/LA (the “Project Area”), (ii) funding a Reserve Account for the Series D Bonds, and (iii) paying the costs of issuing the Series D Bonds. The Series E Bonds are being issued by the CRA/LA for the purpose of (i) financing certain improvements in or benefiting the Project Area, (ii) funding a Reserve Account for the Series E Bonds, and (iii) paying the costs of issuing the Series E Bonds.

The Bonds are limited obligations of the CRA/LA payable, as to interest thereon and principal thereof, exclusively from the Pledged Tax Revenues (defined herein), and the CRA/LA is not obligated to pay them except from the Pledged Tax Revenues. Pledged Tax Revenues with respect to the Bonds do not include Tax Revenues required by Section 33334.2 of the Redevelopment Law to be deposited in the Low and Moderate Income Housing Fund. See “SECURITY FOR THE BONDS – Pledged Tax Revenues” herein. All of the Bonds are equally secured by a pledge of, and charge and lien upon, all of the Pledged Tax Revenues, and the Pledged Tax Revenues constitute a trust fund for the security and payment of the principal of and interest on the Bonds. The lien of the Bonds on Pledged Tax Revenues is on parity with the lien of the Parity Debt (as defined herein). See “SECURITY FOR THE BONDS – Additional Parity Debt” herein for a description of the conditions upon which CRA/LA may issue additional obligations with a lien on a parity with the Bonds with respect to the Pledged Tax Revenues. The Bonds are issued pursuant to the Fiscal Agent Agreement, dated as of November 1, 2010, between CRA/LA and the Fiscal Agent.

The Bonds are subject to optional and mandatory redemption prior to maturity as described herein. See “THE BONDS” herein.

This cover page contains information for general reference only. It is not a summary of the security or terms of this issue. Investors must read the entire Official Statement, including the sections entitled “RISK FACTORS” and “LIMITATIONS ON TAX REVENUES AND POSSIBLE SPENDING LIMITATIONS” for a discussion of special factors which should be considered, in addition to the other matters set forth herein, in considering the investment quality of the Bonds. Capitalized terms used on this cover page and not otherwise defined shall have the meanings set forth herein.

THE BONDS ARE SPECIAL OBLIGATIONS OF THE CRA/LA AND AS SUCH ARE NOT A DEBT OF THE CITY OF LOS ANGELES (THE “CITY”), THE STATE OF CALIFORNIA OR ANY OF ITS POLITICAL SUBDIVISIONS, AND NEITHER THE CITY, THE STATE NOR ANY OF ITS POLITICAL SUBDIVISIONS IS LIABLE THEREFOR, NOR IN ANY EVENT SHALL THE BONDS BE PAYABLE OUT OF ANY FUNDS OR PROPERTIES OTHER THAN THOSE OF THE CRA/LA. THE BONDS DO NOT CONSTITUTE INDEBTEDNESS wITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY LIMITATION OR RESTRICTION, AND NEITHER THE MEMBERS OF THE CRA/LA NOR ANY PERSONS EXECUTING THE BONDS ARE LIABLE PERSONALLY ON THE BONDS BY REASON OF THEIR ISSUANCE. THE CRA/LA HAS NO TAXING POwER.

The Bonds are offered when, as and if issued and received by the Original Purchaser (as herein defined), subject to the approval as to legality by Hawkins Delafield & Wood LLP, Los Angeles, California, Bond Counsel, and certain other conditions. Certain legal matters will be passed upon for CRA/LA by Carmen A. Trutanich, City Attorney of the City of Los Angeles and general counsel to CRA/LA, and by Sidley Austin llp, Los Angeles, California, Disclosure Counsel. It is anticipated that the Bonds will be available for delivery through the facilities of DTC, New York, New York on or about November 9, 2010.

Dated: October 26, 2010

THE COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF LOS ANGELES, CALIFORNIA (RESEDA/CANOGA PARK PROJECT AREA)

TAX ALLOCATION BONDS

MATURITY SCHEDULE

$8,980,000 SERIES D (Taxable)

Maturity (September 1)

Principal Amount Interest Rate

Yield CUSIP

2027 $380,000 7.500% 6.550%* 54439NFJ12028 415,000 7.500 6.650* 54439FK82029 445,000 7.500 6.750* 54439FL62030 480,000 7.500 6.900* 54439FM42031 515,000 7.500 7.000* 54439FN22032 550,000 7.500 7.050* 54439FP72033 595,000 7.500 7.100* 54439FQ52034 645,000 7.500 7.150* 54439FR32035 685,000 7.500 7.250* 54439FS12036 735,000 7.300 7.300 54439FT9

$3,535,000 7.375% Series D Term Bond due September 1, 2040; Yield 7.375%; CUSIP† 554439FU6

$11,020,000 SERIES E (Tax-Exempt)

Maturity (September 1)

Principal Amount Interest Rate

Yield CUSIP†

2027 190,000 5.000% 4.600%* 54439NFA02028 195,000 5.000 4.650* 54439NFB82029 200,000 5.000 4.750* 54439NFC62030 215,000 5.000 4.850* 54439NFD42031 225,000 5.375 4.880* 54439NFE22032 240,000 5.250 5.000* 54439NFF92033 250,000 5.250 5.100* 54439NFG7

$9,505,000 5.250% Series E Term Bond due September 1, 2040; Yield 5.250%; CUSIP† 554439NFH5

_____________________________ * Yield to optional redemption date of September 1, 2020 at par.

† Copyright, American Bankers Association. A registered trademark of The American Bankers Association. CUSIP is provided by Standard & Poor’s CUSIP Service Bureau, a division of The McGraw-Hill Companies, Inc. CUSIP numbers are provided for convenience of reference only. The CRA/LA and the City take no responsibility for the accuracy of such numbers.

CITY AND CRA/LA OFFICIALS

MAYOR OF THE CITY OF LOS ANGELES Antonio R. Villaraigosa

CITY COUNCIL OF THE CITY OF LOS ANGELES Richard Alarcón Paul Koretz Ed P. Reyes Tony Cárdenas Paul Krekorian Bill Rosendahl Eric Garcetti Tom LaBonge Greig Smith Janice Hahn Bernard C. Parks Herb J. Wesson, Jr. José Huizar Jan Perry Dennis P. Zine

_____________________ OFFICIALS OF THE CITY OF LOS ANGELES

Carmen A. Trutanich, City Attorney Wendy Gruel, City Controller

Miguel Santana, City Administrative Officer June Lagmay, City Clerk

Steve Ongele, Interim City Treasurer


Board of Commissioners Kenneth H. Fearn, Chairman

Madeline Janis, Vice-Chair Joan Ling, Treasurer

Dr. Lula Bailey Balton Dave Sickler Alejandro Ortiz Dwayne Gathers

CRA/LA Management

Christine Essel, Chief Executive Officer Calvin E. Hollis, Chief Operating Officer Steve Valenzuela, Chief Financial Officer

Don Spivack, Deputy Chief of Operations and Policy Raymond L. Fors, Finance Director

Jay Virata, Regional Administrator (West Valley Region)

CRA/LA General Counsel Carmen A. Trutanich, City Attorney

Los Angeles, California

SPECIAL SERVICES Bond Counsel

Hawkins Delafield & Wood LLP Los Angeles, California

Fiscal Agent U.S. Bank National Association


Disclosure Counsel Sidley Austin LLP


Fiscal Consultant Katz Hollis

Los Angeles, California Financial Advisor

Public Financial Management, Inc. Los Angeles, California

TOPANGA CANYON BLVD.

SATICOY ST.

OWENSMOUTH AVE.

CANOGA AVE.

VARIEL AVE.

SHERMAN WAY

FARR

ALON

E AVE.

INDEPENDENT AVE.

DE SOTO AVE.

VICTORY

SHOU

P AVE.

ERWIN ST.

ELKWOOD ST.

MASON AVE.

OSO AVE.

SATICOY

COVELLO ST.

WINNETTKA AVE.

CORBIN AVE.

TAMPA AVE.

VANALDEN AVE.

ROSCOE BLVD.

SATICOY

RESEDA BLVD.

YOLANDA AVE

ARCHWOOD ST.

WILBUR AVE.

HART ST.

VANOWEN ST.

HESPERIA AVE.

LINDLEY AVE.RESEDA BLVD.

KITTRIDGE ST.

VICTORY BLVD.

LOUISE AVE.

ENCINO AVE.

WHITE OAK AVE.

BELMAR AVE.

VANOWEN ST.

ETIWANDA AVE.

CRA/LA

Reseda/Canoga Park

NORTH

No dealer, broker, salesperson or other person has been authorized by the CRA/LA to give any information or to make any representations with respect to the Bonds, other than those in this Official Statement, and if given or made, such other information or representations must not be relied upon as having been authorized by any of the foregoing. This Official Statement does not constitute an offer to sell or the solicitation of any offer to buy, and there shall not be any sale of the Bonds by any person in any jurisdiction in which it is unlawful for such person to make such offer, solicitation or sale.

The information contained herein has been obtained from the CRA/LA and sources other than the CRA/LA that are believed to be reliable, but it is not guaranteed as to accuracy or completeness by and is not to be relied upon or construed as a promise or representation by the CRA/LA. 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, create any implication that there has been no change in the affairs of the CRA/LA or DTC since the date hereof.

Certain statements contained in this Official Statement do not reflect historical facts but are forecasts and “forward-looking statements.” No assurance can be given that the future results discussed herein will be achieved, and actual results may differ materially from the forecasts described herein. In this context, the words “estimate,” “forecast,” “project” (when used as a verb), “anticipate,” “expect,” “intend,” “plan” (when used as a verb), “believe” and similar expressions are intended to identify forward-looking statements. All projections, forecasts, assumptions and other forward-looking statements are expressly qualified in their entirety by the cautionary statements set forth in this Official Statement.

This Official Statement is not a contract with the purchasers of the Bonds. Statements contained in this Official Statement that involve estimates, forecasts or matters of opinion, whether or not expressly so described herein, are intended solely as such and are not to be construed as representations of fact. The summaries and references to documents, statutes and constitutional provisions referred to herein do not purport to be comprehensive or definitive and are qualified in their entireties by reference to each such document, statute and constitutional provision.

This Official Statement is submitted in connection with the sale of the Bonds and may not be reproduced or used, in whole or in part, for any other purpose, unless authorized in writing by the CRA/LA.

THE BONDS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY STATE SECURITIES LAW, AND THE FISCAL AGENT AGREEMENT HAS NOT BEEN QUALIFIED UNDER THE TRUST INDENTURE ACT OF 1939, AS AMENDED, IN RELIANCE UPON THE EXEMPTIONS CONTAINED IN SUCH ACTS. THE BONDS WILL NOT BE LISTED ON ANY STOCK OR OTHER SECURITIES EXCHANGE. THE BONDS HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY AND NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER FEDERAL, STATE OR GOVERNMENTAL ENTITY OR AGENCY WILL HAVE PASSED UPON THE ACCURACY OR ADEQUACY HEREOF. ANY REPRESENTATION TO THE CONTRARY MAY BE A CRIMINAL OFFENSE.

IN CONNECTION WITH THIS OFFERING, THE ORIGINAL PURCHASER MAY OVERALLOT OR EFFECT TRANSACTIONS THAT STABILIZE OR MAINTAIN THE MARKET PRICE OF THE BONDS AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING TRANSACTIONS, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. THE ORIGINAL PURCHASER MAY OFFER AND SELL THE BONDS TO CERTAIN DEALERS, INSTITUTIONAL

INVESTORS AND OTHERS AT PRICES LOWER THAN THE INITIAL PUBLIC OFFERING PRICES, AND SUCH PUBLIC OFFERING PRICES MAY BE CHANGED FROM TIME TO TIME BY THE ORIGINAL PURCHASER.

Table of Contents

Page

INTRODUCTORY STATEMENT .............................................................................................................. 1 The Bonds ........................................................................................................................................ 1 The CRA/LA .................................................................................................................................... 1 The Project Area .............................................................................................................................. 2 Tax Allocation Financing ................................................................................................................ 2 Outstanding Parity Debt ................................................................................................................... 2 The Bonds Are Special Obligations ................................................................................................. 3 Reference to Underlying Documents ............................................................................................... 3

THE BONDS ................................................................................................................................................ 3 General ............................................................................................................................................ 3 Redemption of the Series D Bonds .................................................................................................. 4 Redemption of the Series E Bonds .................................................................................................. 4 Selection of Bonds for Redemption ................................................................................................. 5 Notice of Redemption ...................................................................................................................... 5 Purchase in Lieu of Redemption ...................................................................................................... 6 Partial Redemption........................................................................................................................... 6 Effect of Redemption ....................................................................................................................... 6 Book-Entry System .......................................................................................................................... 6

PLAN OF FINANCE .................................................................................................................................... 7 The Series D Bonds Estimated Sources and Uses of Funds ............................................................ 8 The Series E Bonds Estimated Sources and Uses of Funds ............................................................. 8

SECURITY FOR THE BONDS ................................................................................................................... 9 General ............................................................................................................................................ 9 Limited Obligations ......................................................................................................................... 9 Tax Allocation Financing ................................................................................................................ 9 Allocation of Taxes ........................................................................................................................ 10 Pledged Tax Revenues ................................................................................................................... 10 No Tax Sharing Agreements .......................................................................................................... 11 Statutory Tax Sharing Payments (AB 1290 Payments) ................................................................. 11 Pledged Revenue Fund; Debt Service Fund; Deposit of Pledged Tax Revenues .......................... 11 Reserve Accounts .......................................................................................................................... 13 Low and Moderate Income Housing Requirements ...................................................................... 14 Additional Parity Debt ................................................................................................................... 14 Subordinate Debt ........................................................................................................................... 16

RISK FACTORS ........................................................................................................................................ 16 Pledged Tax Revenues ................................................................................................................... 16 Assessment Appeals and Reductions to Assessed Values ............................................................. 17 Weakening of Housing Market; Potential Effect on Assessed Valuation ...................................... 20 Economic Risks ............................................................................................................................. 21 Concentration of Ownership .......................................................................................................... 21 Direct and Overlapping Indebtedness ............................................................................................ 21 Bankruptcy and Foreclosure .......................................................................................................... 22 Risk of Earthquake and Other Disasters ........................................................................................ 22

Additional Parity Debt ................................................................................................................... 22 The State Budget and the Educational Revenue Augmentation Fund ........................................... 22 Changes in Law ............................................................................................................................. 25 Levy and Collection of Property Taxes ......................................................................................... 25 Reduction in Inflationary Rate ....................................................................................................... 26 Hazardous Substances .................................................................................................................... 26 Secondary Market .......................................................................................................................... 27 Loss of Tax Exemption .................................................................................................................. 27

LIMITATIONS ON TAX REVENUES AND POSSIBLE SPENDING LIMITATIONS ......................... 27 Property Tax Limitations: Article XIIIA of the State Constitution ............................................... 27 Appropriations Limitations: Article XIIIB of the State Constitution ............................................ 28 Articles XIIIC and XIIID of the State Constitution ....................................................................... 29 Unitary Property ............................................................................................................................ 29 Property Tax Collection Procedures .............................................................................................. 30 Filing of Statement of Indebtedness .............................................................................................. 31 Property Tax Administrative Costs ................................................................................................ 32 Section 33676 Payments ................................................................................................................ 32 Proposition 87 ................................................................................................................................ 32 Section 33607.5 (AB 1290) Payments ........................................................................................... 32 Low and Moderate Income Housing Fund .................................................................................... 34

THE CRA/LA ............................................................................................................................................. 34 General .......................................................................................................................................... 34 Personnel ........................................................................................................................................ 35 CRA/LA Projects ........................................................................................................................... 36

THE PROJECT AREA ............................................................................................................................... 38 The Redevelopment Plan ............................................................................................................... 38 Project Area Description ................................................................................................................ 38 Development Within the Project Area ........................................................................................... 39 Development Activity .................................................................................................................... 39 Housing Set-Aside Requirements .................................................................................................. 41 AB 1290 Payments ........................................................................................................................ 41

PROJECTED TAX REVENUES AND ANNUAL DEBT SERVICE FOR THE BONDS ....................... 42 Tax Rates ....................................................................................................................................... 42 Unitary Property Taxes .................................................................................................................. 42 Supplemental Property Taxes ........................................................................................................ 43 Assessed Valuations ...................................................................................................................... 43 Projected Tax Revenues ................................................................................................................. 46 Outstanding Parity Debt ................................................................................................................. 48 Estimated Annual Debt Service and Projected Debt Service Coverage ........................................ 49

TAX MATTERS ......................................................................................................................................... 53 SERIES D BONDS ........................................................................................................................ 53 Opinion of Bond Counsel .............................................................................................................. 53 Original Issue Discount .................................................................................................................. 53 Original Issue Premium ................................................................................................................. 53 Disposition and Defeasance ........................................................................................................... 54 Backup Withholding and Information Reporting .......................................................................... 54

U.S. Holders ................................................................................................................................... 54 IRS Circular 230 Disclosure .......................................................................................................... 54 Miscellaneous ................................................................................................................................ 55 SERIES E BONDS ........................................................................................................................ 55 Opinion of Bond Counsel .............................................................................................................. 55 Certain Ongoing Federal Tax Requirements and Covenants ......................................................... 55 Certain Collateral Federal Tax Consequences ............................................................................... 56 Original Issue Discount .................................................................................................................. 56 Bond Premium ............................................................................................................................... 57 Information Reporting and Backup Withholding .......................................................................... 57 Miscellaneous ................................................................................................................................ 58

NO LITIGATION ....................................................................................................................................... 58

RATINGS ................................................................................................................................................... 58

INDEPENDENT ACCOUNTANTS .......................................................................................................... 58

CONTINUING DISCLOSURE .................................................................................................................. 59

CERTAIN LEGAL MATTERS.................................................................................................................. 59

UNDERWRITING ..................................................................................................................................... 59

MISCELLANEOUS ................................................................................................................................... 60

APPENDICES

APPENDIX A — FISCAL CONSULTANT REPORT ........................................................................ A-1 APPENDIX B — SUMMARY OF CERTAIN PROVISIONS OF THE FISCAL AGENT

AGREEMENT ......................................................................................................... B-1 APPENDIX C — EXCERPTS FROM THE AUDITED FINANCIAL STATEMENTS OF THE

CRA/LA ................................................................................................................... C-1 APPENDIX D — FORM OF CONTINUING DISCLOSURE AGREEMENT ................................... D-1 APPENDIX E — PROPOSED FORMS OF BOND COUNSEL OPINION ........................................ E-1 APPENDIX F — DTC AND THE BOOK-ENTRY ONLY.................................................................. F-1

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OFFICIAL STATEMENT

THE COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF LOS ANGELES, CALIFORNIA (RESEDA/CANOGA PARK PROJECT AREA)

TAX ALLOCATION BONDS

$8,980,000 SERIES D (Taxable)

$11,020,000 SERIES E (Tax-Exempt)

INTRODUCTORY STATEMENT

This Introduction contains only a brief summary of certain of the terms of the Bonds being offered, and a full review should be made of the entire Official Statement including the cover page, the table of contents and the appendices for a more complete description of the terms of the Bonds. All statements contained in this Introduction are qualified in their entirety by reference to the entire Official Statement. References to, and summaries of provisions of, any other documents referred to herein do not purport to be complete, and such references are qualified in their entirety by reference to the complete provisions of such documents.

The Bonds

This Official Statement, including the cover page and appendices hereto, is provided to furnish information in connection with the issuance by The Community Redevelopment Agency of the City of Los Angeles, California (the “CRA/LA”) of $8,980,000 aggregate principal amount of its (Reseda/Canoga Park Project Area) Tax Allocation Bonds, Series D (Taxable) (the “Series D Bonds”) and $11,020,000 aggregate principal amount of its (Reseda/Canoga Park Project Area) Tax Allocation Bonds, Series E (Tax-Exempt) (the “Series E Bonds,” and together with the Series D Bonds, the “Bonds”).

The Bonds will be issued pursuant to the Constitution of the State of California (the “State”) and the Community Redevelopment Law (Part 1 of Division 24 of the Health and Safety Code of the State, as amended) (the “Redevelopment Law”), and resolutions adopted by the CRA/LA and the City of Los Angeles, California (the “City”). The Bonds will be issued pursuant to a Fiscal Agent Agreement, dated as of November 1, 2010 (the “Fiscal Agent Agreement”), by and between the CRA/LA and U.S. Bank National Association, as fiscal agent (the “Fiscal Agent”).

The Series D Bonds are being issued by the CRA/LA for the purpose of (i) financing certain improvements in or benefiting the Reseda/Canoga Park Project Area of the CRA/LA (the “Project Area”), (ii) funding a Reserve Account for the Series D Bonds, and (iii) paying the costs of issuing the Series D Bonds. The Series E Bonds are being issued by the CRA/LA for the purpose of (i) financing certain improvements in or benefiting the Project Area, (ii) funding a Reserve Account for the Series E Bonds, and (iii) paying the costs of issuing the Series E Bonds. See “PLAN OF FINANCE” herein for a description of how the CRA/LA expects to apply the proceeds of the Bonds.

The CRA/LA

The CRA/LA is a redevelopment agency, a public body, corporate and politic, duly created, established and authorized to transact business and exercise its powers, all under and pursuant to the Redevelopment Law. The powers of the CRA/LA include the power to issue bonds for any of its

2

corporate purposes. The CRA/LA was created in 1948 by the Council of the City of Los Angeles (the “City Council”). See “THE CRA/LA” herein.

The Project Area

The Redevelopment Plan for the Project Area was adopted on December 13, 1994 in order to provide for and facilitate the repair, restoration, demolition and/or replacement of property and facilities damaged as a result of the Northridge Earthquake, an earthquake which caused extensive damage in the City in January, 1994. Pursuant to the Redevelopment Law, the CRA/LA adopted the redevelopment plan for the Project Area (the “Redevelopment Plan”), designated as the “Earthquake Disaster Assistance Project for Portions of Council District 3 (Reseda/Canoga Park Project),” to aid in the recovery from the Northridge Earthquake.

The Project Area consists of approximately 2,400 acres located approximately 25 miles from the City’s downtown area. The Project Area is located in the west San Fernando Valley communities of Canoga Park, Reseda and Winnetka, including the Sherman Way commercial corridor and portions of the residential communities of Canoga Park and Reseda. See “THE PROJECT AREA” herein.

Tax Allocation Financing

Under a constitutionally authorized statutory process, certain property taxes collected in the Project Area due to any increases in the assessed valuation of land, improvements, personal property and public utility property (except public property and property exempt from taxation) over that shown on the assessment rolls for the adjusted base year assessment roll (the “Tax Revenues”) may be pledged to repayment of indebtedness incurred in conjunction with redevelopment of the Project Area. The Redevelopment Law requires that, in certain circumstances applicable in this instance, 20% of the Tax Revenues generated in the Project Area must be set aside for certain housing uses (the “Housing Tax Revenues”). See “LIMITATIONS ON TAX REVENUES AND POSSIBLE SPENDING LIMITATIONS – Low and Moderate Income Housing Fund” herein.

The Bonds are payable solely from, and are secured by, the Pledged Tax Revenues (as defined under “SECURITY FOR THE BONDS” herein), and from amounts on deposit in the respective Reserve Accounts and other funds and accounts pledged under the Fiscal Agent Agreement. Pledged Tax Revenues with respect to the Bonds do not include Tax Revenues required by Section 33334.2 of the Redevelopment Law to be deposited in the Low and Moderate Income Housing Fund. See “SECURITY FOR THE BONDS – Pledged Tax Revenues” herein. The CRA/LA has funded the Reserve Accounts for the Bonds so that the amounts on deposit are equal to the Reserve Requirement (defined herein). See “SECURITY FOR THE BONDS – Reserve Accounts” herein.

Outstanding Parity Debt

The lien of the Bonds on the Pledged Tax Revenues is on parity with the 2003 Parity Loans (defined below) and the 2006 Parity Loan (defined below). See “PROJECTED TAX REVENUES AND ANNUAL DEBT SERVICE FOR THE BONDS – Outstanding Parity Debt” herein for a description of the 2003 Parity Loans and the 2006 Parity Loan.

The CRA/LA may issue additional parity debt under the 2003 Parity Loan Agreements (defined below) or the 2006 Parity Loan Agreement (defined below), and any other indebtedness of the CRA/LA relating to the Project Area meeting the requirements of the Fiscal Agent Agreement (collectively, the “Parity Debt”). Such Parity Debt may be issued under any resolution, indenture of trust, loan agreement, trust agreement or other instrument authorizing the issuance of any Parity Debt (a “Parity Debt

3

Instrument”) secured by and payable from the Tax Revenues of the Project Area. See “SECURITY FOR THE BONDS – Additional Parity Debt” herein for a description of the conditions upon which the CRA/LA may issue additional obligations with a lien on parity with the Bonds with respect to the Pledged Tax Revenues. See also “SECURITY FOR THE BONDS – Subordinate Debt” herein.

The Bonds Are Special Obligations

THE BONDS ARE SPECIAL OBLIGATIONS OF THE CRA/LA AND AS SUCH ARE NOT A DEBT OF THE CITY, THE STATE OR ANY OF ITS POLITICAL SUBDIVISIONS, AND NEITHER THE CITY, THE STATE NOR ANY OF ITS POLITICAL SUBDIVISIONS IS LIABLE THEREFOR, NOR IN ANY EVENT SHALL THE BONDS BE PAYABLE OUT OF ANY FUNDS OR PROPERTIES OTHER THAN THOSE OF THE CRA/LA. THE BONDS DO NOT CONSTITUTE INDEBTEDNESS WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY LIMITATION OR RESTRICTION, AND NEITHER THE MEMBERS OF THE CRA/LA NOR ANY PERSONS EXECUTING THE BONDS ARE LIABLE PERSONALLY ON THE BONDS BY REASON OF THEIR ISSUANCE. THE CRA/LA HAS NO TAXING POWER.

Reference to Underlying Documents

Brief descriptions of the Bonds, the Fiscal Agent Agreement, the CRA/LA, the Project Area and the Redevelopment Plan are included in this Official Statement. Such descriptions do not purport to be comprehensive or definitive. All references herein to the Fiscal Agent Agreement, the Redevelopment Law and the Constitution and the laws of the State are qualified in their entirety by reference to such documents, statute or law, and all references to the Bonds are qualified in their entirety by reference to the form thereof included in the Fiscal Agent Agreement. Copies of the proceedings of the CRA/LA referred to above, the Fiscal Agent Agreement and other documents described in this Official Statement are available for inspection at the offices of the CRA/LA.

Terms used but not defined in this Official Statement have the meanings set forth in the Fiscal Agent Agreement (as defined below). See APPENDIX B—“SUMMARY OF CERTAIN PROVISIONS OF THE FISCAL AGENT AGREEMENT.”

THE BONDS

General

The Bonds will be issued only in the form of fully registered Bonds without coupons, in denominations of $5,000 or any integral multiples thereof. The Bonds will be dated the date of initial delivery, will mature on September 1 in the years and in the respective principal amounts, and will bear interest at the respective rates per annum, all as set forth on the cover hereof. Interest on the Bonds will be paid on March 1 and September 1 of each year, commencing March 1, 2011 (each, an “Interest Payment Date”), by check mailed by first class mail to the Owner at its address as it appears on such registration books, or by wire transfer to any Owner of $1,000,000 or more in aggregate principal amount of Bonds to the account in the United States specified by such Owner in a written request delivered to the Fiscal Agent on or prior to the Record Date (the fifteenth day of the month preceding each Interest Payment Date) for such Interest Payment Date. Interest on the Bonds will be computed on the basis of a 360 day year of twelve 30 day months.

The Bonds will bear interest from the Interest Payment Date next preceding the date of registration thereof, unless such date of registration is during the period from the 16th day of the month next preceding an Interest Payment Date to and including such Interest Payment Date, in which event

4

they will bear interest from such Interest Payment Date, or unless such date of registration is on or before February 15, 2010, in which event they will bear interest from the date of initial delivery; provided, however, that if, at the time of registration of any Bond, interest is then in default on the Outstanding Bonds, such Bond will bear interest from the Interest Payment Date to which interest previously has been paid or made available for payment on the Outstanding Bonds.

Principal and redemption premiums, if any, on the Bonds will be payable upon the surrender thereof at maturity or the earlier redemption thereof at the principal corporate trust office of the Fiscal Agent and will be paid in lawful money of the United States of America.

Redemption of the Series D Bonds

Optional Redemption of the Series D Bonds. The Series D Bonds maturing on or after September 1, 2027 are subject to redemption, as a whole or in part, as designated by the CRA/LA, or, absent such designation, pro rata among maturities, and by lot within any one maturity if less than all of the Series D Bonds of such maturity are to be redeemed, prior to their respective maturity dates, at the option of the CRA/LA, on any date on or after September 1, 2020, from funds derived by the CRA/LA from any source, at the redemption prices of the principal amount of the Series D Bonds to be redeemed, together with interest accrued thereon to the date fixed for redemption.

Mandatory Sinking Fund Redemption of the Series D Bonds. The Series D Bonds maturing on September 1, 2040 are also subject to mandatory redemption in part by lot prior to their stated maturity dates on any September 1, on or after September 1, 2037, solely from funds derived by the CRA/LA from the required deposit into the Sinking Account provided for in the Fiscal Agent Agreement, at the principal amount thereof plus accrued interest thereon to the redemption date, without premium, in the aggregate principal amounts and on the dates set forth below:

Series D Bonds maturing September 1, 2040

Sinking Fund Payment Date(September 1)

Principal Amount to be Redeemed

2037 $795,000,000

2038 845,000,000

2039 945,000,000

2040† 980,000,000 ______________ † Maturity

Redemption of the Series E Bonds

Optional Redemption of the Series E Bonds. The Series E Bonds maturing on or after September 1, 2027 are subject to redemption, as a whole or in part, as designated by the CRA/LA, or, absent such designation, pro rata among maturities, and by lot within any one maturity if less than all of the Series E Bonds of such maturity are to be redeemed, prior to their respective maturity dates, at the option of the CRA/LA, on any date on or after September 1, 2020, from funds derived by the CRA/LA from any source, at the redemption prices of the principal amount of the Series E Bonds to be redeemed, together with interest accrued thereon to the date fixed for redemption.

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Mandatory Sinking Fund Redemption of the Series E Bonds. The Series E Bonds maturing on September 1, 2040 are also subject to mandatory redemption in part by lot prior to their stated maturity dates on any September 1, on or after September 1, 2034, solely from funds derived by the CRA/LA from the required deposit into the Sinking Account provided for in the Fiscal Agent Agreement, at the principal amount thereof plus accrued interest thereon to the redemption date, without premium, in the aggregate principal amounts and on the dates set forth below:

Series E Bonds maturing September 1, 2040

Sinking Fund Payment Date(September 1)

Principal Amount to be Redeemed

2034 $1,155,000

2035 1,220,000

2036 1,285,000

2037 1,350,000

2038 1,425,000

2039 1,495,000

2040† 1,575,000 ______________ † Maturity

Selection of Bonds for Redemption

For purposes of selecting Series D Bonds and Series E Bonds for redemption, the Series D Bonds and Series E Bonds, as applicable, will be deemed to be composed of $5,000 portions and any such portions may be separately redeemed. If some but not all of the Series D Bonds or Series E Bonds, as applicable, have been redeemed pursuant to the Fiscal Agent Agreement, the total amount of all sinking account payments shall be allocated among such Sinking Account payments as determined by the CRA/LA (notice of which determination shall be given by the CRA/LA to the Fiscal Agent).

Notice of Redemption

When redemption is authorized or required, the Fiscal Agent will give notice (“Redemption Notice”), at the expense of the CRA/LA, of the redemption of the Bonds. Notice of redemption shall be mailed by first class mail by the Fiscal Agent, not less than 30 nor more than 60 days prior to the redemption date to (i) the respective Owners of the Bonds designated for redemption at their addresses appearing on the bond registration books of the Fiscal Agent, (ii) to one or more Information Services (defined in the Fiscal Agent Agreement) designated in writing to the Fiscal Agent by the CRA/LA and (iii) the Securities Depositories (defined in the Fiscal Agent Agreement).

Such Redemption Notice will specify: (a) the Bonds to be redeemed, (b) the date of issue of such Bonds, (c) the redemption date, (d) the redemption price, (e) the place or places of redemption (including the name and appropriate address or addresses), (f) the CUSIP number (if any) of the maturity or maturities, and, (g) if less than all of any such maturity are to be redeemed, the distinctive certificate numbers of the Bonds of such maturity to be redeemed and, in the case of Bonds to be redeemed in part only, the respective portions of the principal amount thereof to be redeemed. Each such notice will also

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state that on the date there will become due and payable on each of such Bonds the redemption price thereof or of the specified portion of the principal amount thereof in the case of a Bond to be redeemed in part only, together with interest accrued thereon to the redemption date, and that from and after such redemption date interest thereon will cease to accrue, and will require that such Bonds be then surrendered at the address or addresses of the Fiscal Agent specified in the redemption notice.

The CRA/LA has the right to rescind any optional redemption by written notice to the Fiscal Agent on or prior to the date fixed for redemption. Any notice of redemption will be canceled and annulled if for any reason funds are not available on the date fixed for redemption for the payment in full of the Bonds then called for redemption, and such cancellation will not constitute an Event of Default under the Fiscal Agent Agreement. The CRA/LA and the Fiscal Agent have no liability to the Owners or any other party related to or arising from such rescission of redemption. The Fiscal Agent will mail notice of such rescission of redemption in the same manner as the original notice of redemption was sent.

Purchase in Lieu of Redemption

In lieu of redemption of any Term Bond, amounts on deposit in the Revenue Fund or in the Sinking Account therein may also be used and withdrawn by the Fiscal Agent at any time, upon the request of the CRA/LA, for the purchase of such Term Bonds at public or private sale as and when and at such prices (including brokerage and other charges, but excluding accrued interest, which is payable from the Interest Fund) as the CRA/LA may in its discretion determine, but not in excess of the principal amount thereof plus accrued interest to the purchase date. The principal amount of any Term Bonds so purchased by the Fiscal Agent in any twelve month period ending 60 days prior to any Sinking Account Payment Date in any year will be credited towards and will reduce the principal amount of such Term Bonds required to be redeemed on such Sinking Account Payment Date in such year. In the event that such Term Bonds are purchased in lieu of redemption, such Term Bonds shall be canceled upon purchase.

Partial Redemption

Upon surrender of any Series D Bond or Series E Bond redeemed in part only (other than as redeemed pursuant to the schedules provided in the Fiscal Agent Agreement), the CRA/LA will execute and the Fiscal Agent will authenticate and deliver to the Owner thereof, at the expense of the CRA/LA, a new Bond of such Series of Authorized Denominations equal in aggregate principal amount to the unredeemed portion of the Bond of such Series surrendered and of the same interest rate and the same maturity.

Effect of Redemption

From and after the date fixed for redemption, if notice of such redemption is duly given and funds available for the payment of such redemption price of the Series of Bonds so called for redemption is duly provided, no interest will accrue on such Series of Bonds from and after the redemption date specified in such notice. All Series of Bonds redeemed pursuant to the provisions of this section will be canceled.

Book-Entry System

DTC will act as securities depository for the Bonds. The Bonds will be issued as fully-registered bonds registered in the name of Cede & Co. (DTC’s partnership nominee). One fully-registered Bond will be issued for each maturity of each Series of the Bonds, each in the aggregate principal amount of such maturity, and will be deposited with DTC. See APPENDIX F—“DTC AND THE BOOK-ENTRY ONLY.”

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The CRA/LA and the Fiscal Agent cannot and do not give any assurances that DTC, DTC Participants or others will distribute payments of principal, interest or premium with respect to the Bonds paid to DTC or its nominee as the registered owner, or will distribute any redemption notices or other notices, to the Beneficial Owners, or that they will do so on a timely basis or will serve and act in the manner described in this Official Statement. The CRA/LA and the Fiscal Agent 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 with respect to the Bonds or an error or delay relating thereto.

PLAN OF FINANCE

The proceeds of the Bonds will be used to finance certain improvements in or benefiting the Project Area.

The CRA/LA expects to use the proceeds of the Series D Bonds to fund projects that satisfy the CRA/LA’s low and moderate income housing obligations under the Redevelopment Law and the Redevelopment Plan for the Project Area, and to acquire land relating to Reseda Town Center where CRA/LA is assembling parcels for a future development project designed to enhance street level pedestrian activity, stimulate new investment and create new jobs for the area. See “THE PROJECT AREA – Development Within the Project Area” for additional information about the Reseda Town Center project. Notwithstanding the CRA/LA’s expectation to use the proceeds of the Series D Bonds to fund housing projects, Pledged Tax Revenues with respect to the Bonds do not include Tax Revenues required by Section 33334.2 of the Redevelopment Law to be deposited in the Low and Moderate Income Housing Fund. See “SECURITY FOR THE BONDS – Pledged Tax Revenues” herein.

The CRA/LA expects to use the proceeds of the Series E Bonds for various public improvements, including improvement to medians and streetscapes in Reseda, Winnetka, and Canoga Park; new alleys in the West Valley; utility undergrounding in Reseda; and various improvements to the Los Angeles River.

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The Series D Bonds Estimated Sources and Uses of Funds

The proceeds of the Series D Bonds will be used to (i) finance certain improvements in or benefiting the Project Area (described above), (ii) fund a Reserve Account for the Series D Bonds, and (iii) pay costs of issuance of the Series D Bonds.

The following table sets forth the estimated sources and uses of proceeds of the Series D Bonds:

Sources of Funds: Par Amount of the Series D Bonds $8,980,000.00 Original Issue Premium 173,772.25

Total Sources of Funds: $9,153,772.25 Uses of Funds: Deposit to Series D Project Fund $8,000,000.00 Deposit to Series D Reserve Account 898,000.00 Original Purchaser’s compensation 173,578.01 Deposit to Series D Bonds Costs of Issuance Fund(1) 82,194.24

Total Uses of Funds: $9,153,772.25 (1) Includes legal, printing, rating agency fees and expenses, financial advisor’s fee, fiscal consultant’s fees, bond counsel and

disclosure counsel fees, and other issuance costs. The Series E Bonds Estimated Sources and Uses of Funds

The proceeds of the Series E Bonds will be used to (i) finance certain improvements in or benefiting the Project Area (described above), (ii) fund a Reserve Account for the Series E Bonds, and (iii) pay costs of issuance of the Series E Bonds.

The following table sets forth the estimated sources and uses of proceeds of the Series E Bonds:

Sources of Funds: Par Amount of the Series E Bonds $11,020,000.00 Original Issue Premium 33,613.95

Total Sources of Funds: $11,053,613.95 Uses of Funds: Deposit to Series E Project Fund $9,665,000.00 Deposit to Series E Reserve Account 1,092,788.83 Original Purchaser’s compensation 196,938.42 Deposit to Series E Bonds Costs of Issuance Fund(1) 98,886.70

Total Uses of Funds: $11,053,613.95 (1) Includes legal, printing, rating agency fees and expenses, financial advisor’s fee, fiscal consultant’s fees, bond counsel and

disclosure counsel fees, and other issuance costs.

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SECURITY FOR THE BONDS

General

The Bonds and all Parity Debt are equally secured for the benefit of the Owners of the Bonds and other Parity Debt, including the 2003 Parity Loans and the 2006 Parity Loan, by a pledge of and lien on all of the Pledged Tax Revenues (defined below). The payment obligations of the CRA/LA pursuant to any Qualified Credit Instrument (as defined in the Fiscal Agent Agreement) will be secured for the benefit of the provider thereof by a pledge and lien on all of the Pledged Tax Revenues which pledge and lien will be subordinate to the pledge and lien securing the Bonds and any Parity Debt. The Bonds are additionally secured for the benefit of the Owners of the Bonds by a first pledge of and lien upon all of the moneys in the respective Reserve Accounts, excluding Investment Earnings. Except for Tax Revenues and the Reserve Accounts, no funds or properties of the CRA/LA are pledged to, or otherwise liable for, the payment of principal of or interest or premium, of any, on the Bonds. See “ – Additional Parity Debt” below for a description of the conditions upon which CRA/LA may issue additional obligations with a lien on a parity with the Bonds. See “PROJECTED TAX REVENUES AND ANNUAL DEBT SERVICE FOR THE BONDS – Outstanding Parity Debt” for a description of Outstanding Parity Debt with respect to the Pledged Tax Revenues.

Limited Obligations

The Bonds are limited obligations of the CRA/LA and are payable, as to interest thereon and principal thereof, exclusively from the Pledged Tax Revenues, and the CRA/LA is not obligated to pay them except from the Pledged Tax Revenues. All of the Bonds are equally secured by a pledge of, and charge and lien upon, all of the Pledged Tax Revenues, and the Pledged Tax Revenues constitute a trust fund for the security and payment of the principal of and interest on the Bonds.

The Bonds are not a debt of the City, the State or any of its political subdivisions, and neither the City, the State nor any of its political subdivisions is liable therefor, nor in any event will the Bonds be payable out of any funds or properties other than those of the CRA/LA. The Bonds do not constitute indebtedness within the meaning of any constitutional or statutory limitation or restriction, and neither the members of the CRA/LA nor any persons executing the Bonds are liable personally on the Bonds by reason of their issuance.

Tax Allocation Financing

The Redevelopment Law and the California Constitution provide a method for financing redevelopment projects based upon an allocation of taxes collected within a project area. First, the assessed valuation of the taxable property in a project area last equalized prior to adoption of the redevelopment plan is established and that valuation becomes the base roll. Thereafter, except for any period during which the assessed valuation drops below the base roll, the taxing agencies on behalf of which taxes are levied on property within a project area will receive the taxes produced by the levy of the then current tax rate upon the base roll. Except as discussed in the following section, taxes collected upon any increase in the assessed valuation of the taxable property in a project area over the levy upon the base roll may be pledged by a redevelopment agency to the repayment of any indebtedness incurred in financing the redevelopment project. Redevelopment agencies themselves have no authority to levy taxes on property and must look specifically to the allocation of taxes produced as described above.

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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 Constitution of the State, taxes levied upon taxable property in the Project Area each year by or for the benefit of the State and any city, county, city and county, district or other public corporation (herein collectively referred to as “taxing agencies”) for Fiscal Years beginning after January 1 subsequent to the effective date of the ordinance adopting the Redevelopment Plan for the Project Area, or any amendment thereof, are divided as follows:

1. To taxing agencies: That portion of the taxes which would be produced by the rate upon which the tax is levied each year by or for each of the taxing agencies upon the total sum of the assessed value of the taxable property in the Project Area as shown upon the assessment roll used in connection with the taxation of such property by the taxing agencies last equalized prior to the ordinance approving the Redevelopment Plan, shall be allocated to, and when collected shall be paid into the funds of the respective taxing agencies as taxes by or for the taxing agencies on all other property are paid; and

2. To the CRA/LA: Except for taxes allocated to taxing agencies as described above and taxes which are attributable to a tax levied by a taxing agency for the purpose of producing revenues to repay bonded indebtedness approved by the voters of the taxing agency on or after January 1, 1989, that portion of the levied taxes each year in excess of such amounts shall be allocated to, and when collected, shall be paid to the CRA/LA to pay for redevelopment projects and principal of and interest on loans, moneys advanced to, or indebtedness (whether funded, refunded, assumed or otherwise) incurred by the CRA/LA to finance or refinance, in whole or in part, the redevelopment project.

The CRA/LA has no power to levy and collect taxes, and any provision of law limiting property taxes or allocating additional sources of income to taxing agencies and having the effect of reducing the property tax rate must necessarily reduce the amount of Pledged Tax Revenues that would otherwise be available to pay debt service on the Bonds. Likewise, broadened property tax exemptions could have a similar effect. Additionally, Pledged Tax Revenues will be reduced each year by a collection fee charged by the County of Los Angeles (the “County”). See “RISK FACTORS” and “LIMITATIONS ON TAX REVENUES AND POSSIBLE SPENDING LIMITATIONS” herein.

Conversely, any increase in assessed valuation or the present tax rate (other than by reason of certain voter approved bonded indebtedness), or any reduction or elimination of present property tax exemptions, would increase the Pledged Tax Revenues available to pay debt service on the Bonds. See “LIMITATIONS ON TAX REVENUES AND POSSIBLE SPENDING LIMITATIONS” for discussion of the Constitutional constraints of increasing tax rates and assessed valuation.

Pledged Tax Revenues

“Pledged Tax Revenues” means with respect to the Bonds and any Parity Debt, for the 12-month period ending on September 1, 2011 and for each 12-month period beginning on September 2, 2011 and ending on September 1 of each year thereafter (each 12-month period constitutes a “Bond Year”) until payment in full of the Bonds and any Parity Debt, the first Tax Revenues, when and as received by the CRA/LA pursuant to the Redevelopment Law and the Redevelopment Plan (without deduction for payments under Section 33607.5 of the Redevelopment Law to the extent that such payments are lawfully subordinate to the amounts payable on the Bonds and any Parity Debt in each Bond Year (“Annual Debt Service”)), in an amount equal to (a) 100% of Annual Debt Service on such Outstanding Bonds and any Parity Debt for such period; plus (b) an amount, if any, required to maintain the Reserve Accounts at the Reserve Requirement; plus (c) an amount, if any, required to be paid to any insurer under a municipal bond insurance policy for any Parity Debt. See APPENDIX B—“SUMMARY OF CERTAIN

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PROVISIONS OF THE FISCAL AGENT AGREEMENT” for the complete definition of Annual Debt Service.

“Tax Revenues” means all taxes annually allocated within the Plan Limit (as defined in the Fiscal Agent Agreement) and paid to the CRA/LA with respect to the Project Area following the date of delivery of the Bonds, pursuant to Article 6 of Chapter 6 (commencing with Section 33670) of the Redevelopment Law and Section 16 of Article XVI of the State Constitution and other applicable State laws and as provided in the Redevelopment Plan, including all payments, subventions and reimbursements, if any, to the CRA/LA specifically attributable to ad valorem taxes lost by reason of tax exemptions and tax rate limitations (but excluding payments to the CRA/LA with respect to personal property within the Project Area pursuant to Section 16110 et seq. of the State Government Code); and including that portion of such taxes, if any, otherwise required by Section 33334.2 of the Redevelopment Law to be deposited in the Low and Moderate Income Housing Fund, but only to the extent necessary to repay that portion of the proceeds of any Parity Debt (including applicable reserves and financing costs) used to finance or refinance the increasing or improving of the supply of low and moderate income housing within or of benefit to the Project Area, but excluding all other amounts of such taxes required to be deposited into the Low and Moderate Income Housing Fund and excluding Investment Earnings; provided however, that with respect to the Bonds, Tax Revenues shall exclude that portion of such taxes, if any, otherwise required by Section 33334.2 of the Redevelopment Law to be deposited in the Low and Moderate Income Housing Fund.

No Tax Sharing Agreements

The CRA/LA has not entered into any agreements which require payment of Tax Revenues to other taxing agencies.

Statutory Tax Sharing Payments (AB 1290 Payments)

Pursuant to Section 33607.7 of the Health and Safety Code added by Assembly Bill 1290 (Statutes of 1993, Chapter 942) (“AB 1290”), either (a) the adoption of a redevelopment plan for any redevelopment project after January 1, 1994, or (b) the adoption of a redevelopment plan amendment for any redevelopment plan adopted prior to January 1, 1994 that increases the limitation on the number of dollars to be allocated to the redevelopment agency or the time limit on the establishing of loans, advances and indebtedness, will trigger a requirement that an agency must begin making statutory payments to affected taxing entities that do not have existing pre-AB 1290 tax sharing agreements. These payments are to begin once any of the original redevelopment plan limitations of the project area would have taken effect.

The Project Area, adopted subsequent to the enactment of Section 33607.7, is subject to the statutory payment requirements of AB 1290. See APPENDIX A—“FISCAL CONSULTANT REPORT” for information regarding the AB 1290 payments for the Project Area and a detailed discussion of the formulas upon which calculation of the AB 1290 payments is based. The definition of Tax Revenues does not exclude Tax Revenues used to pay the AB 1290 payments to affected taxing entities, and such payments are payable from the Tax Revenues. Such AB 1290 payments are expected to be subordinated by the taxing entities to the payment of principal and interest on the Bonds.

Pledged Revenue Fund; Debt Service Fund; Deposit of Pledged Tax Revenues

The special fund known as the “Earthquake Disaster Assistance Project for Portions of Council District 3 Pledged Revenue Fund” (the “Pledged Revenue Fund”) is established pursuant to the Fiscal Agent Agreement and held by the CRA/LA. The CRA/LA will deposit all of the Pledged Tax Revenues

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received in any Bond Year in the Pledged Revenue Fund promptly upon the receipt thereof. Any Tax Revenues received during such Bond Year in excess of Pledged Tax Revenues for such Bond Year will be released from the pledge and lien under the Fiscal Agent Agreement and may be used for any lawful purpose of the CRA/LA. Prior to the payment in full of the principal of and interest and redemption premium, if any, on the Bonds and all Parity Debt, and the payment in full of all other amounts payable under the Fiscal Agent Agreement and under any Parity Debt Instrument, the CRA/LA will not have any beneficial right or interest in the moneys on deposit in the Pledged Revenue Fund, except as provided in the Fiscal Agent Agreement and in any Parity Debt Instrument, and such moneys will be used and applied as set forth in the Fiscal Agent Agreement and in any Parity Debt Instrument.

The special fund known as the “Earthquake Disaster Assistance Project for Portions of Council District 3 Debt Service Fund” (the “Debt Service Fund”) is established pursuant to the Fiscal Agent Agreement and held by the CRA/LA. The CRA/LA will timely transfer amounts from the Pledged Revenue Fund ratably to the Debt Service Fund and in any applicable debt service fund created by any Parity Debt Instrument promptly upon receipt thereof by the CRA/LA, until such time, if any, during such Bond Year as the amounts on deposit in such debt service funds equal the aggregate amounts required to be transferred to the Fiscal Agent pursuant to the Fiscal Agent Agreement for such Bond Year (except as may be otherwise provided in any Parity Debt Instrument). In the event that there are insufficient Pledged Tax Revenues to make all payments required into the Pledged Revenue Fund, the Debt Service Fund and any other applicable debt service funds created by Parity Debt Instruments, the CRA/LA will allocate Pledged Tax Revenues from the Pledged Revenue Fund among the Debt Service Fund and any applicable debt service funds created by Parity Debt Instruments on a proportionate basis based on the relative amount of Pledged Tax Revenues that would have been required to make all such deposits in full.

In addition, the following accounts are established pursuant to the Fiscal Agent Agreement and held by the Fiscal Agent: the “Earthquake Disaster Assistance Project for Portions of Council District 3 Series D Interest Account” (the “Series D Interest Account”), the “Earthquake Disaster Assistance Project for Portions of Council District 3 Series D Principal Account” (the “Series D Principal Account”), the “Earthquake Disaster Assistance Project for Portions of Council District 3 Series E Interest Account” (the “Series E Interest Account”), and the “Earthquake Disaster Assistance Project for Portions of Council District 3 Series E Principal Account” (the “Series E Principal Account”).

At such time as the CRA/LA deems appropriate, as moneys become available for such purpose, but not later than each February 20 and August 25 of each year, commencing February 20, 2011, the CRA/LA will withdraw from the Debt Service Fund and transfer to the Fiscal Agent for deposit into the Series D Interest Account and the Series E Interest Account an amount equal to the interest on the Series D Bonds and the Series E Bonds and any Parity Debt payable from the Debt Service Fund and shall withdraw from the Debt Service Fund and transfer to the Fiscal Agent for deposit into the Series D Principal Account and Series E Principal Account an amount equal to the principal of the Series D Bonds and the Series E Bonds and any Parity Debt payable from the Debt Service Fund becoming due and payable on the applicable Interest Payment Date pursuant to the Fiscal Agent Agreement and any applicable Parity Debt Instrument.

Except as may be otherwise provided in any Parity Debt Instrument, the CRA/LA is not obligated to deposit in the Pledged Revenue Fund in any Bond Year an amount of Tax Revenues which, together with other available amounts in the Pledged Revenue Fund, exceeds Pledged Tax Revenues for the Outstanding Parity Debt and the Bonds for such Bond Year. In the event that any amounts remain on deposit in the Pledged Revenue Fund or the Debt Service Fund on any September 2 after making all of the transfers theretofore required to be made pursuant to the provisions of the Fiscal Agent Agreement and any Parity Debt Instrument, the CRA/LA may withdraw such amounts from the Pledged Revenue Fund and the Debt Service Fund for use for any lawful purposes of the CRA/LA.

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Reserve Accounts

In order to further secure the payment of principal of and interest on the Series D Bonds and the Series E Bonds, the Fiscal Agent is required pursuant to the Fiscal Agent Agreement to set aside and deposit into the Council District 3 Series D Reserve Account (the “Series D Reserve Account”) and the Council District 3 Series E Reserve Account (the “Series E Reserve Account, and together with the Series D Reserve Account, the “Reserve Accounts”) such amount of money sufficient to maintain the respective Reserve Requirement for each Series of the Bonds.

The “Reserve Requirement” means with respect to both of the Series D Bonds and the Series E Bonds and any series of Parity Debt, as of any calculation date, the least of (a) 10% of the outstanding principal amount of the Series D Bonds and the Series E Bonds, as applicable, and any such Parity Debt; provided that if the original issue discount of the Series D Bonds or the Series E Bonds, as applicable, or such Parity Debt exceeds 2% of such original principal amount, then initially 10% of the original principal amount of, less original issue discount on the Series D Bonds or the Series E Bonds, as applicable, or such Parity Debt, as applicable, but excluding from such calculation any proceeds of the Series D Bonds and the Series E Bonds, as applicable, or such Parity Debt deposited in an escrow described in the definitions of Annual Debt Service and Maximum Annual Debt Service; (b) Maximum Annual Debt Service with respect to the Series D Bonds and the Series E Bonds, as applicable, and such Parity Debt, as applicable; or (c) 125% of average Annual Debt Service on the Series D Bonds and the Series E Bonds, as applicable, and such Parity Debt, as applicable; provided further that the CRA/LA may meet all of a portion of the Reserve Requirement for either or both of the Series D Bonds and the Series E Bonds, by depositing a Qualified Credit Instrument meeting the requirements of the Fiscal Agent Agreement. For purposes of calculating Maximum Annual Debt Service with respect to determining the Reserve Requirement, any variable rate Parity Debt will be deemed to bear interest rate at the maximum rate permitted by the Parity Debt Instrument. See APPENDIX B—“SUMMARY OF CERTAIN PROVISIONS OF THE FISCAL AGENT AGREEMENT” for the definition of Maximum Annual Debt Service.

Upon the issuance of the Series D Bonds, the CRA/LA will deposit, or cause to be deposited, $898,000.00 in the Series D Reserve Account. Upon the issuance of the Series E Bonds, the CRA/LA will deposit, or cause to be deposited, $1,092,788.83 in the Series E Reserve Account. See “PLAN OF FINANCE” herein.

In the event that the Fiscal Agent notifies the CRA/LA pursuant to the provisions of the Fiscal Agent Agreement that the amount on deposit in the Series D Reserve Account or the Series E Reserve Account is less than the Reserve Requirement, or the CRA/LA has withdrawn amounts on deposit in the Series D Reserve Account or the Series E Reserve Account to make payments on the Series D Bonds or the Series E Bonds, as applicable, the CRA/LA shall immediately withdraw from the Debt Service Fund and transfer to the Fiscal Agent for deposit in the Series D Reserve Account or the Series E Reserve Account, as applicable, an amount of money necessary to maintain amounts on deposit therein at the Series D Reserve Requirement or the Series E Reserve Requirement, as applicable (on a pro rata basis with amounts withdrawn from any applicable debt service fund established under a Parity Debt Instrument); provided that amounts required to be transferred to the Series D Reserve Account or the Series E Reserve Account, as applicable, shall, if necessary, first be used to reinstate the principal amount of any applicable Qualified Credit Instrument and shall then be used to replenish any cash portion of the Reserve Requirement. No such transfer and deposit need be made to the Series D Reserve Account or the Series E Reserve Account so long as there shall be on deposit therein a sum at least equal to the Series D Reserve Requirement or the Series E Reserve Requirement, as applicable.

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The Reserve Requirement may be satisfied, in whole or in part, by crediting to the Reserve Accounts a Qualified Credit Instrument as provided for in the Fiscal Agent Agreement. Upon deposit by the CRA/LA with the Fiscal Agent of any such Qualified Credit Instrument, the Fiscal Agent shall withdraw from the Series D Reserve Account or the Series E Reserve Account, as applicable, and transfer to the CRA/LA for deposit in the applicable Series 2010 Project Fund, an amount equal to the principal amount of such Qualified Credit Instrument. See APPENDIX B—“SUMMARY OF CERTAIN PROVISIONS OF THE FISCAL AGENT AGREEMENT” for a discussion of specific provisions relating to the application of the cash and Qualified Surety Bond components of the Reserve Account.

If, and to the extent the Fiscal Agent is obligated to make a draw on a Reserve Account due to an insufficiency of Pledged Tax Revenues to make payments on the applicable Series of Bonds and the Parity Debt, the CRA/LA will transfer Tax Revenues attributable to the Project Area to the Fiscal Agent to replenish the applicable Reserve Account to the extent and as permitted by the Fiscal Agent Agreement and any applicable Parity Debt Instrument.

Low and Moderate Income Housing Requirements

Under Section 33334.2 of the Redevelopment Law, redevelopment agencies in California are generally required, unless certain annual findings are made, to set aside at least 20% of all tax increment revenues allocated annually in a low and moderate income housing fund to be used within the jurisdiction of the CRA/LA to increase and improve the supply of low and moderate income housing. See “LIMITATIONS ON TAX REVENUES AND POSSIBLE SPENDING LIMITATIONS – Low and Moderate Income Housing Fund.”

Additional Parity Debt

So long as the Bonds remain Outstanding, the CRA/LA has covenanted in the Fiscal Agent Agreement not to issue any bonds, notes or other obligations, enter into any agreement or otherwise incur any loans, advances or indebtedness, which is secured by a lien on all or any part of the Tax Revenues which is superior to or on a parity with the lien established under the Fiscal Agent Agreement for the security of the Bonds, excepting only Parity Debt issued pursuant to the provisions of the Fiscal Agent Agreement.

However, in addition to the Bonds, the 2003 Parity Loans, and the 2006 Parity Loan, the Fiscal Agent Agreement permits the CRA/LA to issue or incur Parity Debt in such principal amount as determined by the CRA/LA.

The CRA/LA may issue and deliver any Parity Debt subject to the following specific conditions:

(a) No Event of Default (as defined in the Fiscal Agent Agreement) has occurred and is continuing, and the CRA/LA is otherwise in compliance with all covenants set forth in the Fiscal Agent Agreement.

(b) The CRA/LA will provide the Fiscal Agent with a report of an Independent Redevelopment Consultant (as defined in the Fiscal Agent Agreement) containing at least the following information:

(i) Tax Revenues projected to be collected in the then-current Bond Year (for purposes of this section, Tax Revenues (1) will be based upon the most recent assessed valuation of taxable property in the Project Area as indicated in the applicable records of the County, which valuation may be adjusted to reflect the potential impact of assessment appeals and amounts

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attributable to any misplaced taxable value and (2) will not include amounts payable by the CRA/LA pursuant to Section 33607.5 of the Redevelopment Law unless the amounts are lawfully subordinated to the payment of Annual Debt Service on the Bonds and the Outstanding Parity Debt);

(ii) Maximum Annual Debt Service on the Bonds and Parity Debt that will be outstanding immediately following the issuance of such Parity Debt;

(iii) Total assessed value of taxable property in the Project Area based on the tax roll for the most recent Fiscal Year for which such information is available (“Current Year Total Assessed Value”);

(iv) The total assessed value of property in the Project Area as shown on the assessment roll last equalized prior to the approval of the Redevelopment Plan, including any adjustments thereto as incorporated into the records of the County (“Base Year Value”);

(v) The difference between Current Year Total Assessed Value and Base Year Value (“Incremental Value”); and

(vi) For each of the 10 assesses with the highest assessed value of taxable property in the Project Area based on the tax roll for the most recent Fiscal Year for which such information is available (x) the total assessed value for each owner and (y) the sum of the total assessed values for the top 10 owners (“Top 10 Total Assessed Value”). For the purpose of this subsection (b), the property owner having the highest assessed value is referred to as the “Largest Property Owner.”

(c) The report of the Independent Redevelopment Consultant shows that Tax Revenues will equal at least 250% of the Maximum Annual Debt Service on the Bonds and Parity Debt that will be outstanding immediately following the issuance of such Parity Debt (the “Debt Service Coverage Ratio”);

provided such Debt Service Coverage Ratio will be reduced to 175% in the event that the report shows that each of the following conditions have been satisfied: (i) the Base Year Value is not more than 80% of the Current Year Total Assessed Value; (ii) the Top 10 Total Assessed Value is not more than 35% of the Incremental Value; and (iii) the Assessed Value of all taxable property in the Project Area owned by the Largest Property Owner is not more than twenty percent (20%) of the Incremental Value

provided further, however, that such Debt Service Coverage Ratio will be reduced to 125% in the event that the report shows that each of the following conditions have been satisfied: (iv) the Base Year Value is not more than 75% of the Current Year Total Assessed Value; (v) the Top 10 Total Assessed Value is not more than 20% of the Incremental Value; and (vi) the Assessed Value of all taxable property in the Project Area owned by the Largest Property Owner is not more than 20% of the Incremental Value.

(d) The CRA/LA will deliver to the Fiscal Agent a Certificate of the CRA/LA certifying that the conditions precedent to the issuance of such Parity Debt set forth in subsections (a), (b) and (c) above have been satisfied.

(e) The CRA/LA will fund a Reserve Account in an amount equal to the Reserve Requirement.

The CRA/LA may incur Parity Debt for the purpose of refunding a portion of the Outstanding Parity Debt without complying with the requirements of subsection (b) above, so long as Maximum

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Annual Debt Service on the Outstanding Parity Debt after the issuance of such Parity Debt is not greater than Maximum Annual Debt Service on the Outstanding Parity Debt prior to the issuance of such Parity Debt.

Subordinate Debt

In addition to the Bonds and any Parity Debt, the CRA/LA may issue or incur Subordinate Debt in such principal amount as will be determined by the CRA/LA.

RISK FACTORS

This section describes certain additional specific risk factors affecting the payment and security of the Bonds. The following discussion of risks is not meant to be an exhaustive list of the risks associated with the purchase of the Bonds and the order of presentation does not necessarily reflect the relative importance of the various risks. Potential investors are advised to consider the following factors along with all other information in this Official Statement in evaluating the Bonds. There can be no assurance that other risk factors will not become material in the future.

Pledged Tax Revenues

Tax Revenues allocated to the CRA/LA are determined in part by the amount by which the assessed valuation of property in the Project Area exceeds the base year assessed valuation for such property, as well as by the current rate at which property in the Project Area is taxed. Assessed valuation of taxable property within the Project Area may be reduced by economic factors beyond the control of the CRA/LA (see “ – Assessment Appeals and Reductions to Assessed Values” below), such as: (i) a relocation out of the Project Area by one or more major property owners; (ii) the transfer, pursuant to the State Revenue and Taxation Code Section 68, of a lower assessed valuation to property within the Project Area by a person displaced by eminent domain or similar proceedings; (iii) the transfer of property in the Project Area to a governmental or other property tax-exempt entity; and (iv) further reductions in assessed value by the Assessor (defined below) pursuant to Proposition 8 (defined below), or as a result of substantial damage, destruction or condemnation of such property. Further, assessed valuation and/or tax rates can be reduced as a result of actions of the State Legislature or electorate. Such a reduction of assessed valuations or tax rates could result in a reduction of the Tax Revenues that secure the Bonds, which in turn could impair the ability of the CRA/LA to make payments of principal and/or interest on the Bonds when due.

In addition, substantial delinquencies in the payment of property taxes to the County or assessment appeals of such property taxes by the owners of taxable property within the Project Area could have an adverse effect on the ability of the CRA/LA to make payments of principal and/or interest on the Bonds when due. See “ – Assessment Appeals and Reductions to Assessed Values” below.

Both Article XIIIA and Article XIIIB of the California Constitution, which significantly affect the rate of property taxation and the expenditure of tax proceeds, were adopted pursuant to the State’s constitutional initiative process. From time to time, other initiative measures could be adopted by State voters. The adoption of any such initiative might place limitations on the ability of public entities to increase revenues or to increase appropriations. For a further description of Article XIIIA and Article XIIIB of the State’s Constitution, see “LIMITATIONS ON TAX REVENUES AND POSSIBLE SPENDING LIMITATIONS – Property Tax Limitations: Article XIIIA of the State Constitution,” and “– Appropriations Limitations: Article XIIIB of the State Constitution.”

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In order to estimate the Tax Revenues available to pay debt service on the Bonds, the CRA/LA has made certain assumptions with regard to the availability of Tax Revenues. The CRA/LA believes these assumptions to be reasonable, but to the extent Tax Revenues are less than anticipated, the Tax Revenues available to pay debt service on the Bonds may be less than those projected herein. See “PROJECTED TAX REVENUES AND ANNUAL DEBT SERVICE FOR THE BONDS” herein and APPENDIX A— “FISCAL CONSULTANT REPORT.”

Assessment Appeals and Reductions to Assessed Values

Proposition 8 Appeals. Appeals may be based on Proposition 8 (the 1978 voter approved amendment to Article XIIIA of the State Constitution), which requires that, for each January 1 lien date, the taxable value of real property must be the lesser of its base year value, annually adjusted by the inflation factor pursuant to Article XIIIA of the State Constitution, or its full cash value, taking into account reductions in value due to damage, destruction, depreciation, obsolescence, removal of property or other factors causing a decline in value. See “LIMITATIONS ON TAX REVENUES AND POSSIBLE SPENDING LIMITATIONS – Property Tax Limitations: Article XIIIA of the State Constitution.”

Pursuant to State law, a property owner may apply for a reduction of the property tax assessment for such owner’s property by filing a written application, in form prescribed by the State Board of Equalization, with the appropriate county board of equalization or assessment appeals board. In most cases, the appeal is filed because the applicant believes that the present market conditions (such as residential home prices) cause the property to be worth less than its current assessed value.

In the County, a property owner desiring to reduce the assessed value of such owner’s property in any one year must submit an application to the Los Angeles County Assessment Appeals Board (the “Appeals Board”). Applications for any tax year must be submitted by September 15 of such tax year. Following a review of the application by the County Assessor’s Office (the “Assessor”), the Assessor may offer to the property owner the opportunity to stipulate to a reduced assessment, or may confirm the assessment. If no stipulation is agreed to, and the applicant elects to pursue the appeal, the matter is brought before the Appeals Board for a hearing and decision. The Appeals Board generally is required to determine the outcome of appeals within two years of each appeal’s filing date. Any reduction in the assessment ultimately granted applies only to the year for which application is made and during which the written application is filed. The assessed value increases to its pre-reduction level for fiscal years following the year for which the reduction application is filed. However, the Assessor has the power to grant a reduction not only for the year for which application was originally made, but also for the then current year as well.

The County Assessor has, in recent years, undertaken a proactive review of the value of single-family homes and condominiums. The reviews conducted for Fiscal Years 2008-09 and 2009-10 years resulted in the reduction of value of more than 330,000 properties in the County. For Fiscal Year 2009-10, approximately 560,000 homes were reviewed and assessed values were reduced for 290,000 single-family homes and 115,000 condominiums.

These reductions are subject to yearly reappraisals and are adjusted back to their original values when market conditions improve. 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. See “LIMITATIONS ON TAX REVENUES AND POSSIBLE SPENDING LIMITATIONS – Property Tax Limitations: Article XIIIA of the State Constitution.”

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Recently Resolved Appeals and Pending Assessment Appeals. The Fiscal Consultant has conducted a review of recently resolved and pending assessment appeals filed with the County in the Project Area in order to determine potential impact on current and future Project Area value and Tax Revenues. The Fiscal Consultant’s analysis of currently pending and recently resolved assessment appeals in the Project Area disclosed 70 appeals that have recently been resolved resulting in reductions to Project Area value of an estimated $11,000, and 142 appeals pending hearing before the Appeals Board that could result in reductions to Project Area value of an estimated $88,425,000.

The following table summarizes recently resolved assessment appeals for the Project Area. The valuation reductions shown below represent the changes that are assumed to occur in the Fiscal Year 2010-11 roll value of the property.

Resolved Assessment Appeals(1)(2)

Assessee 2010-11

Value Reduction Estimated

RefundsSecured Westfield Topanga Owner LP - $ 8,134,000(3) Basrock Renaissance California, LLC - 97,000 ECI Owensmouth, LLC - 21,000 Ryuichi Matsuda - 12,000 BBB Saticoy LLC - 10,000 Vallerio Vista LLC - 10,000 Majestic Plaza, LLC - 8,000 Paul Daneshrad - 3,000 Other appeals under $5.0 million in initial value $ 11,000 125,000 Unsecured Vons Co. Inc. N/A 2,000Estimated 2010/11 Impact $ 11,000 $ 8,422,000

Source: Fiscal Consultant Report. (1) Information provided by the County Assessment Appeals Board as of July 31, 2010. (2) The estimated impact of resolved appeals has been verified by the Fiscal Consultant against actual assessed value

adjustments show on the County Assessor’s Property Database as of August 27, 2010. (3) Represents refunds for more than one fiscal year for this assessee.

Such resolved assessment appeals will result in an estimated net refund due the taxpayers of $8,422,000. All of the recently resolved appeals shown above have had their reduced value included in the 2010-11 assessed values for the Project Area. The Fiscal Consultant has assumed that the estimated refunds resulting from recently resolved appeals will be payable during Fiscal Year 2010-11. The impacts of the reduction of Project Area value and the refund of taxes that will result from the recently resolved assessment appeals are also discussed in “PROJECTED TAX REVENUES AND ANNUAL DEBT SERVICE FOR THE BONDS” herein.

The following table summarizes the pending assessment appeals in the Project Area. The amounts shown under the caption “Estimated 2010-11 Value Reduction” represent the potential assessed value decline which could be experienced if the appeals are resolved in favor of the taxpayers. The Fiscal Consultant assumed that pending appeals will be reduced by 18% of assessed value, based on the historical reductions resulting from successful appeals in the Project Area since Fiscal Year 2003-04.

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Pending Assessment Appeals(1) (2)

Assessee 2010-11

Value Reduction Estimated

RefundsSecured ASN Woodland Hills East LLC $ 32,054,000 $ 321,000 Basrock Renaissance California, LLC 9,609,000 - Catellus Development Corp. 3,888,000 42,000 ELPF Northridge 18350 Roscoe, LLC 2,658,000 27,000 Parkside Land Partners LLC 2,349,000 24,000 Reseda Marketplace, L.P. 2,295,000 23,000 ECI Owensmouth, LLC 2,130,000 - 1439 Curson Partners 2,126,000 21,000 Macy's California Inc. - 62,000(3) Sears - 33,000 Other appeals between $7.7 and $2.0 million in initial value 22,459,000 179,000(3) Other appeals under $2.0 million in initial value 8,857,000 85,000(3) Unsecured Westfield Topanga Owner LP N/A $ 951,000 Macy`s Department Stores, Inc. N/A 22,000 Radnet Management Inc. N/A 6,000 Vons Companies Inc. N/A 3,000 Express LLC #338 N/A 2,000 Tesoro South Coast Company LLC N/A 2,000 GUESS? Retail Inc. N/A 1,000 Estimated 2010/11 Impact $88,425,000 $1,804,000

Source: Fiscal Consultant Report. (1) Information provided by the County Assessment Appeals Board as of July 31, 2010. (2) The estimated impact of pending appeals is the result of reducing the initial value by an amount similar to a prior year’s

successful appeal, or 18% of initial value. The historical reduction rate of successful appeals for the Project Area since May 2004 is 18%.

(3) Represents refunds for more than one fiscal year for this assessee.

The total refunds associated with pending assessment appeals is estimated at $1,804,000. This estimate reflects an approximation of the total refund for Fiscal Year 2010-11 and prior Fiscal Years due to the taxpayers if the tax appeals resulted in the valuation reductions shown above. These appeals are still pending; therefore, the impact of the appeals will be experienced in the Fiscal Year(s) when the appeal is resolved, assumed to be Fiscal Year 2010-11 in the Fiscal Consultant’s analysis. Estimates of the impacts resulting if the pending assessment appeals are resolved in favor of taxpayers are included in the projections of Tax Revenues discussed in “PROJECTED TAX REVENUES AND ANNUAL DEBT SERVICE FOR THE BONDS” herein. There can be no assurance as to the level of appeal activity in the Project Area or of the outcome of any of the above pending appeals. See APPENDIX A—“FISCAL CONSULTANT REPORT” for the assumptions made by the Fiscal Consultant concerning the resolved and pending appeals in the Project Area.

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The table below sets forth historical assessment appeal statistics from Fiscal Year 2003-04 through the second quarter of Fiscal Year 2009-10 based on information provided by the County Assessment Appeals Board as of June 30, 2010.

Resolved Appeals (1) (2)

Year All Appeals

(Total) Pending

Appeals (Total) Total Successful Unsuccessful Success

Rate2003-04 69 0 69 8 61 12%2004-05 54 0 54 9 45 17%2005-06 24 0 24 3 21 13%2006-07 40 0 40 14 26 35%2007-08 124 5 119 4 115 3%2008-09 383 15 368 167 201 44%2009-10 294 150 144 38 106 13%

_____________________________ Source: Fiscal Consultant Report. (1) Information provided by the County Assessment Appeals Board as of July 31, 2010. (2) A successful resolved assessment appeal involves a reduction in assessed pursuant to information provided by the County Assessment Appeals Board. However, unsuccessful assessment appeals may also result in a reduction in assessed value due to assessee negotiations with the County Assessor.

Historically, the CRA/LA has addressed resolved and pending refunds resulting from assessment appeals through its budgeting process. Each quarter, as new appeal information becomes available, the CRA/LA reviews such information and makes appropriate budget adjustments to incorporate any expected impact from assessment appeals.

Base Year Valuation Appeals. A second type of assessment appeal involves a challenge to the base year value of an assessed property. 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 thereafter. 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.

Other Reductions in Assessed Valuation. The Assessor may also initiate Proposition 8 reductions in assessed value, independent of any individual property owner’s appeal. Further Proposition 8 reductions for properties in the Project Area could cause a reduction in tax increment revenues received by the CRA/LA from the Project Area. Such a reduction in tax increment revenues could have an adverse effect on the ability of the CRA/LA to pay debt service on the Bonds.

No assurance can be given that property tax appeals or other reductions in the future will not significantly affect the assessed valuation of property within the Project Area.

Weakening of Housing Market; Potential Effect on Assessed Valuation

There has been a significant slowdown in the County’s housing market, as in many parts of the State and the United States. Reductions in assessed values for properties in the Project Area could cause a reduction in Tax Revenues received the CRA/LA from the Project Area. See “ – Assessment Appeals and Reductions to Assessed Values” above for a discussion of reductions in assessed values of properties in the Project Area. Approximately 63% of property within the Project Area is residential.

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The Fiscal Consultant conducted a review of single family and condominium residential properties (“Single Unit Sales Housing”) to provide some indication of potential effects of the factors prompting concern on the market value, assessed value, and resulting revenues from this category of property in the Project Area. Approximately 35.86% of property within the Project Area is Single Unit Sales Housing. In Fiscal Year 2008-09, the combined assessed value of Single Unit Sales Housing in the Project Area was approximately $1,750,144,472. This value decreased by approximately 16% to $1,471,153,497 in Fiscal Year 2009-10 and decreased further by approximately 3% to $1,431,591,508 for Fiscal Year 2010-11. For more information, see APPENDIX A – “FISCAL CONSULTANT REPORT.”

Development within the Project Area may be subject to unexpected delays, disruptions and changes. Real estate development operations may be adversely affected by changes in general economic conditions, fluctuations in the real estate market and interest rates, unexpected increases in development costs and by other similar factors. Further, real estate development operations within the Project Area could be adversely affected by future governmental policies, including policies that restrict or control development. If any future development in the Project Area is delayed or halted, the economy of the Project Area could be affected, potentially causing a reduction of the Tax Revenues available to repay the Bonds.

Economic Risks

The CRA/LA’s ability to make payments on the Bonds is partially dependent upon the economic strength of the Project Area. If there is a decline in the general economy of the Project Area, or disruption of the national, State or local economy in general, the owners of property within the Project Area may be less able or less willing to make timely payments of property taxes or petition to reduce assessed valuation causing a delay or reduction in Tax Revenues received by the CRA/LA from the Project Area. In the event of reductions to assessed values, Tax Revenues may decline even if property owners make timely payment of taxes. Future activities could adversely impact the property values of the Project Area and, in turn, could adversely impact the Tax Revenues available to pay the Bonds.

The CRA/LA cannot predict the impact or duration of a weakening economy on the property values in the Project Area, but a persistently weak economy could have a prolonged negative effect on overall real estate valuations in the Project Area. An extensive downturn in the economy would likely result in significantly lowered real estate valuations, increased delinquencies in property tax collections, lessened development of property in the Project Area and a reduction in redevelopment opportunities for the CRA/LA in the Project Area.

Concentration of Ownership

The cumulative taxable value of the ten major assessees represents 22.85%% of the total taxable value of the Project Area and 42.59% of the 2010-11 incremental value of the Project Area. The timely payment of the Bonds depends upon the willingness and ability of those assessees to pay property taxes with respect to their property when due. There can be no assurance that the concentration of ownership will not adversely impact the Tax Revenues available to pay the Bonds. See “PROJECTED TAX REVENUES AND ANNUAL DEBT SERVICE FOR THE BONDS – Assessed Valuations” herein, including Table 4 – Vacancy Rates for The Project Area.

Direct and Overlapping Indebtedness

The ability of land owners within the Project Area to pay property tax installments as they come due could be affected by the existence of other taxes and assessments, imposed upon the land. In addition, other public agencies whose boundaries overlap those of the Project Area could impose

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additional taxes or assessment liens on the property to finance public improvements without consent of the CRA/LA, and in certain cases without the consent of the owners of the land within the Project Area. See “ – Bankruptcy and Foreclosure” below.

Bankruptcy and Foreclosure

The payment of the Tax Revenues and the ability of the CRA/LA to foreclose the lien of a delinquent unpaid tax may be limited by bankruptcy, insolvency, or other laws generally affecting creditors’ rights or by the laws of the State relating to judicial foreclosure. The various legal opinions to be delivered concurrently with the delivery of the Bonds (including Bond Counsel’s approving legal opinion) will be qualified as to the enforceability of the various legal instruments by bankruptcy, insolvency, reorganization, moratorium, or other similar laws affecting creditors’ rights, by the application of equitable principles and by the exercise of judicial discretion in appropriate cases.

Although bankruptcy proceedings would not cause the liens to become extinguished, bankruptcy of a property owner could result in a delay in prosecuting superior court foreclosure proceedings. Such delay would increase the likelihood of a delay or default in payment of the principal of and interest on the Bonds and the possibility of delinquent tax installments not being paid in full.

Risk of Earthquake and Other Disasters

The State is subject to periodic earthquake activity. The Northridge Earthquake that occurred on January 17, 1994 caused significant damage to certain parts of the City, including properties within the Project Area. The Project Area was formed to address property damage caused by the Northridge Earthquake. If a future earthquake were to substantially damage or destroy taxable property within the Project Area, the assessed valuation of such property would be reduced. Such a reduction of assessed valuations could result in a reduction of the Tax Revenues that secure the Bonds, thereby impairing ability of the CRA/LA to make payments of principal and interest on the Bonds when due.

On September 11, 2001, terrorist attacks occurred in New York City and the Washington, D.C. metropolitan area resulting in significant damage and casualties in those cities. Any terrorist activities in the Los Angeles metropolitan area could adversely impact the property values of the Project Area and, in turn, could adversely impact the Tax Revenues available to pay the Bonds.

Additional Parity Debt

The CRA/LA may, subject to certain conditions, issue or incur obligations payable from Tax Revenues on a parity with the Bonds, as described in “SECURITY FOR THE BONDS—Additional Parity Debt.” The existence of and the potential for such obligations increases the risks associated with the CRA/LA’s payment of debt service on the Bonds in the event of a decrease in the CRA/LA’s collection of Tax Revenues.

The State Budget and the Educational Revenue Augmentation Fund

In connection with its approval of the State Budget for Fiscal Years 1992-93, 1993-94 and 1994-95, the State Legislature enacted legislation which, among other things, reallocated funds from redevelopment agencies to school districts by shifting a portion of each agency’s tax increment revenues, net of amounts due to other taxing agencies, to school districts for such fiscal years for deposit in the Education Revenue Augmentation Fund (“ERAF”). The amount required to be paid by a redevelopment agency under such legislation was apportioned among all of its redevelopment project areas on a collective basis, and was not allocated separately to individual project areas.

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Faced with a projected $23.6 billion budget deficit for Fiscal Year 2002-03, the State Legislature enacted Assembly Bill 1768 requiring redevelopment agencies to pay an aggregate amount of $75 million into ERAF for Fiscal Year 2002-03. For Fiscal Year 2003-04, the State Legislature adopted Senate Bill 1045 requiring redevelopment agencies to make ERAF transfers to school districts in the aggregate amount of $135 million. See “LIMITATIONS ON TAX REVENUES AND POSSIBLE SPENDING LIMITATIONS” below.

Due to continuing State Budget deficits, the State Legislature enacted Senate Bill 1096 (“SB 1096”) requiring ERAF shifts of $250 million for Fiscal Years 2004-05 and 2005-06. As with prior ERAF shifts, the legislation required half of the shift to be calculated on the basis of the gross tax increment of a project area and the other half of the shift to be calculated on the basis of net revenues after tax sharing payments. SB 1096 provides that the CRA/LA’s ERAF payment obligations under SB 1096 are subordinate to the payment of debt service on the Bonds.

In connection with the ERAF payments by redevelopment agencies, Senate Bill 1045 (“SB 1045”) allowed a redevelopment agency to extend the effective date of its redevelopment plan and the date to receive incremental Tax Revenues by one year. Pursuant to Ordinance No. 175,666, adopted by the City Council on November 21, 2003, the Redevelopment Plan for the Project Area was amended to include the one-year extension provided by SB 1045.

The State Budgets for Fiscal Years 2005-06, 2006-07 and 2007-08 were adopted without any further reallocation of funds. However, in connection with the State Budget for Fiscal Year 2008-09, the State required the CRA/LA to make an ERAF payment of $70.8 million. The California Redevelopment Association (the “CRA”) and two redevelopment agencies (together, the “Petitioners”), brought suit in Superior Court in Sacramento seeking to invalidate portions of the State legislation requiring the Fiscal Year 2008-09 ERAF payments from redevelopment agencies. On April 30, 2009, the Superior Court granted declaratory and injunctive relief to the Petitioners, invalidating and enjoining the operation of the legislation requiring the new ERAF payment. On May 7, 2009, the Superior Court entered a judgment enjoining the county auditor class in the case (including the County Auditor) from taking actions to carry out or enforce the ERAF payment for Fiscal Year 2008-09. Based on this judgment, the CRA/LA is not required to make any ERAF payment for Fiscal Year 2008-09. While the State initially filed a notice of intent to appeal the ruling of the Superior Court, the State noticed its withdrawal of its appeal on September 28, 2009.

On July 24, 2009, in connection with various legislation related to the State Budget for Fiscal Year 2009-10, Assembly Bill 26 (the “2009 ERAF Legislation”) was enacted. The 2009 ERAF Legislation provided for supplemental ERAF payments (the “SERAF Payments”) in the aggregate amount of $1.7 billion payable by redevelopment agencies by May 10, 2010 for Fiscal Year 2009-10 and SERAF Payments in the aggregate amount of $350 million payable by May 10, 2011 for Fiscal Year 2010-11.

Based upon information provided by the CRA/LA, total SERAF Payments payable by the CRA/LA pursuant to the 2009 ERAF Legislation are approximately $70.8 million for Fiscal Year 2009-10 and $14.6 million for Fiscal Year 2010-11. The CRA/LA duly made its SERAF Payment of approximately $70.8 million for Fiscal Year 2009-10 by the May 10, 2010 deadline.

The 2009 ERAF Legislation allows for redevelopment agencies to borrow from their low and moderate income housing funds to make their mandated SERAF Payments, for their related legislative body to make the required SERAF Payments on their behalf, or for redevelopment agencies to participate in a pooled borrowing secured by a pledge of future tax increment revenues. The Project Area borrowed

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$5,179,067.85 from its low and moderate income housing fund to make its portion of the SERAF payment on May 10, 2010.

The 2009 ERAF Legislation imposes various restrictions on redevelopment agencies that fail to timely make the required SERAF Payments, including (i) a prohibition on adding or expanding project areas, (ii) a prohibition on the incurrence of additional debt, (iii) limitations on the expenditure of funds for operation and maintenance expenses, and (iv) commencing with the July 1 following the due date of an annual SERAF Payment that is not timely made, a requirement that the applicable redevelopment agency allocate an additional 5% of all tax revenues that are allocated to the redevelopment agency under the Redevelopment Law for low and moderate income housing for the remainder of the time that the applicable redevelopment agency receives allocations of tax revenues under the Redevelopment Law. The 5% additional housing set-aside penalty provision referred to in the 2009 ERAF Legislation (the “Penalty Set-Aside Requirement”) would be in addition to the 20% of such tax revenues already required to be used for low and moderate income housing purposes. A redevelopment agency that borrows from its housing set-aside funds to make required SERAF Payments but does not timely repay the funds by 2015 may also be subject to the Penalty Set-Aside Requirement.

While the 2009 ERAF Legislation contains provisions that subordinate the obligation of redevelopment agencies to make the SERAF Payments specified therein to certain indebtedness (which would include a subordination of the CRA/LA’s obligations with respect to the new SERAF Payments to the CRA/LA’s obligation to pay debt service on the Bonds), there is no provision in the 2009 ERAF Legislation subordinating the Penalty Set-Aside Requirement to any indebtedness of a redevelopment agency that fails to timely make the SERAF Payments mandated by the 2009 ERAF Legislation.

On October 20, 2009, the CRA, along with two local redevelopment agencies (together, the “Petitioners”), brought suit in Superior Court in Sacramento seeking to invalidate portions of the State legislation that required the SERAF payments from redevelopment agencies, challenging the constitutionality of the 2009 ERAF Legislation and seeking to prevent the State from taking redevelopment funds for non-redevelopment purposes. The case was heard on February 5, 2010 in Sacramento Superior Court. The Court issued a ruling in favor of the State on May 4, 2010 and denied the petitioners’ request to stay the transfer of funds from redevelopment agencies to County Auditor-Controllers. The CRA filed a Notice of Appeal on May 5, 2010. The appeal remains pending as of the date hereof. No assurance can be given that future court action will be successful.

Text of the State Budget may be found at the website of the Department of Finance, www.dof.ca.gov. An impartial analysis of the State Budget is posted by the Office of the Legislative Analyst (the “LAO”) at www.lao.ca.gov. In addition, State official statements for its various debt obligations, many of which contain a summary of the current and past State budgets, may be found at the website of the State Treasurer, www.treasurer.ca.gov. All of such websites are provided for general informational purposes only and the material on such sites is in no way incorporated into this Official Statement.

The State Legislature approved the State budget for Fiscal Year 2010-11 on October 8, 2010. However, the 2010-11 State Budget Act is not expected to resolve the State’s structural budget deficit. The budget package includes legislation proposed by the Governor to decrease pension benefits for State employees hired in the future. The package also places a measure on a future State ballot that is intended to stabilize State finances in the future by increasing amounts deposited to the State’s rainy-day fund in certain years. While these changes may help the State’s longer-term fiscal situation, the LAO estimates they will have little effect in the shorter term. The LAO also estimates that well over two-thirds of the 2010-11 budget solutions are one-time or temporary in nature. This means that the State is likely to face sizable annual budget problems in Fiscal Year 2011-12 and beyond. It is anticipated that there will be

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additional future legislation to address the State’s structural budget deficit. Should such legislation be enacted, Tax Revenues available for payment of the Bonds may, in the future, be substantially reduced, and the CRA/LA’s ability to pay debt service on the Bonds may be impaired.

Local Government Initiative Borrowing. As part of the State Budget for Fiscal Year 2004-05, the Governor and the State Legislature placed Proposition 1A on the November 2004 ballot (the “Local Government Initiative”), which passed on November 2, 2004. The Local Government Initiative amended the State Constitution to, among other things, prohibit the shift of property tax revenues from cities, counties and special district except to address a “severe state financial hardship,” and only then if (x) such amounts were agreed to be repaid with interest within three years, (y) the State had repaid any other borrowed amounts, and (z) such borrowing could not occur more often than twice in ten years. However, the Local Government Initiative does not specifically protect against reallocation of redevelopment agency funds to other uses within a corresponding city or county.

Changes in Law

There can be no assurance that the State electorate will not adopt initiatives or that the State Legislature will not enact legislation that will amend the Redevelopment Law or other laws or the State Constitution resulting in a reduction of Tax Revenues, which could have an adverse effect on the CRA/LA’s ability to pay debt service on the Bonds. If such initiative or legislation would impair the CRA/LA’s ability to make principal and interest payments on the Bonds, such initiative or legislation may be subject to legal challenge.

Levy and Collection of Property Taxes

The CRA/LA 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 Tax Revenues, and accordingly, could have an adverse impact on the ability of the CRA/LA to repay on the Bonds. Likewise, delinquencies in the payment of property taxes could have an adverse effect on the CRA/LA’s ability to make timely debt service payments on the Bonds.

The major component of the allocation procedures that impact the CRA/LA’s receipt of Tax Revenues from the Project Area is the County’s current policy of allocating estimated tax increment revenues with offsets for taxable value adjustments, for refunds of taxes as a result of successful assessment appeals, for delinquencies, and for administrative charges.

Tax receipts for the Project Area were reviewed by the Fiscal Consultant in order to analyze collection trends. The Fiscal Consultant’s review revealed the collection trends shown below for Fiscal Years 2006-07 through 2009-10 when compared to original levies. The effects on collection percentages of redemption payments received each year are also identified to indicate whether delinquencies in tax payments are being cured on a consistent basis.

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PERCENTAGE COLLECTIONS

Current Year Collections Fiscal Year Collections Including Redemption Payments

2006-07 93.6% 95.7% 2007-08 92.6 95.8 2008-09 93.3 103.1 2009-10 85.6 90.3

Average Collections 91.3% 96.2%

Source: Fiscal Consultant Report.

The percentage collections shown above represent the revenues paid by taxpayers to the County, not necessarily the revenues realized by the CRA/LA. Pursuant to the Redevelopment Law, the CRA/LA may not be allocated more revenues than indebtedness outstanding.

Reduction in Inflationary Rate

As described in greater detail below, Article XIIIA of the State 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, not to exceed a 2% increase for any given year, or may be reduced to reflect a reduction in the consumer price index or comparable local data for the area under taxing jurisdiction, or may be reduced to reflect substantial damage, destruction, or other factors causing a decline in value. Such measure is computed on a 12-month basis from October to the following October. 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: for Fiscal Year 1983-84, 1.01%; for Fiscal Year 1995-96, 1.0119%; for Fiscal Year 1996-97, 1.0111%; for Fiscal Year 1999-2000, 1.0185%; and for Fiscal Year 2004-05, 1.0186%. For purposes of the Fiscal Consultant Report, the Fiscal Consultant has assumed no increase in assessed value from Fiscal Year 2010-11 to Fiscal Year 2011-12, an increase in assessed value from Fiscal Year 2011-12 to Fiscal Year 2013-14 based on an assumed 1.00% annual inflation factor, and an increase in assessed value from Fiscal Year 2013-14 to Fiscal Year 2040-2041 based on an assumed 2.00% annual inflation factor. The CRA/LA is unable to predict if any adjustments to the full cash value base of real property within the Project Area, whether an increase or a reduction, will be realized in the future. See “LIMITATIONS ON TAX REVENUES AND POSSIBLE SPENDING LIMITATIONS – Property Tax Limitations: Article XIIIA of the State Constitution.”

Hazardous Substances

The discovery of hazardous substances on properties in the Project Area may result in the reduction of assessed value of those properties. In general, the owners and operators of a property may be required by certain environmental laws to remediate the hazardous condition of the property. The federal Comprehensive Environmental Response, Compensation and Liability Act of 1980, known as “CERCLA” or the “Superfund Act,” is the most widely applicable of these laws, however, State laws with regard to hazardous substances are also similarly stringent. The current owner or operator may be required to remediate the hazardous condition of the property whether or not such owner or operator created or handled the hazardous substance. Any property within the Project Area affected by a hazardous substance may become less marketable and the value of the property may be reduced by the costs of remediation.

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Secondary Market

There can be no guarantee that there will be a secondary market for the Bonds, or, if a secondary market exists, that such Bonds can be sold for any particular price. Occasionally, because of general market conditions or because of adverse history or economic prospects connected with a particular issue, secondary marketing practices in connection with a particular issue are suspended or terminated. Additionally, prices of issues for which a market is being made will depend upon the then prevailing circumstances. Such prices could be substantially different from the original purchase price.

Loss of Tax Exemption

As discussed under “TAX MATTERS,” interest on the Series E Bonds could become includable in gross income for purposes of federal income taxation retroactive to the date the Series E Bonds were issued as a result of future acts or omissions of the CRA/LA in violation of its covenants contained in the Fiscal Agent Agreement. Should such an event of taxability occur, the Series E Bonds are not subject to special redemption or any increase in interest rate and may remain Outstanding until maturity.

In addition, future legislative proposals, if enacted into law, clarification of the Code, or court decisions, may cause interest on the Series E 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 Series E Bonds. Prospective purchasers of the Bonds should consult their own tax advisors regarding any pending or proposed federal or state tax legislation, regulations or litigation.

LIMITATIONS ON TAX REVENUES AND POSSIBLE SPENDING LIMITATIONS

Property Tax Limitations: Article XIIIA of the State Constitution

General. On June 6, 1978, California voters approved Proposition 13, which added Article XIIIA to the State Constitution (“Article XIIIA”). Article XIIIA limits the amount of any ad valorem tax on real property to 1% of the full cash value thereof, except that additional ad valorem taxes may be levied to pay debt service on indebtedness approved by the voters prior to October 1, 1978 and (as a result of an amendment to Article XIIIA approved by State voters on June 3, 1986) on bonded indebtedness for the acquisition or improvement of real property which has been approved on or after October 1, 1978 by the voters voting on such indebtedness. Article XIIIA defines “full cash value” to mean “the county assessor’s valuation of real property as shown on the 1975/76 tax bill under ‘full cash value,’ or thereafter, the appraised value of real property when purchased, newly constructed, or a change in ownership has occurred after the 1975 assessment.” This full cash value may be increased from year to year by the lesser of the inflationary rate and 2%.

Article XIIIA also permits the reduction of the “full cash value” base in the event of declining property values caused by reduction in the consumer price index, damage, destruction or other factors, to provide that there would be no increase in the “full cash value” base in the event of reconstruction of property damaged or destroyed in a disaster and in various other minor or technical ways.

The CRA/LA has no power to levy and collect taxes. Any further reduction in the tax rate or the implementation of any constitutional or legislative property tax changes may reduce Tax Revenues, and adversely impact on the ability of the CRA/LA to pay debt service on the Bonds.

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Implementing Legislation. Legislation has been enacted and amended a number of times since 1978 to implement Article XIIIA. Under Article XIIIA, local agencies are no longer permitted to levy directly any property tax (except to pay voter-approved indebtedness). The 1% property tax is automatically levied by the County and distributed according to a formula among taxing agencies. The formula apportions the tax roughly in proportion to the relative shares of taxes levied prior to 1978.

Increases of assessed valuation resulting from reappraisals of property due to new construction, change in ownership or from the 2% annual adjustment are allocated among the various jurisdictions in the “taxing area” based upon their respective “situs.” Any such allocation made to a local agency continues as part of its allocation in future years.

In the general elections of 1986, 1988, 1990 and 2000, the voters of the State approved various measures which amended Article XIIIA. One such amendment generally provides that the purchase or transfer of (i) real property between spouses or (ii) the principal residence and the first $1,000,000 of the full cash value of other real property between parents and children, do not constitute a “purchase” or “change of ownership” triggering reassessment under Article XIIIA. This amendment could reduce property tax revenues and the Tax Revenues of the CRA/LA. Other amendments permitted the State Legislature to allow persons over 55 who sell their residence and, on or after November 5, 1986, buy or build another of equal or lesser value within two years in the same county, to transfer the old residence’s assessed value to the new residence, and permitted the State Legislature to authorize each county under certain circumstances to adopt an ordinance making such transfers or assessed value applicable to situations in which the replacement dwelling purchased or constructed after November 8, 1988, is located within that county and the original property is located in another county within the State. The County has not adopted the ordinance regarding residences replacing dwellings in other counties.

In the June 1990 election, the voters of the State approved additional amendments to Article XIIIA permitting the State Legislature to extend the replacement dwelling provisions applicable to persons over 55 to severely disabled homeowners for replacement dwellings purchased or newly constructed on or after June 5, 1990, and to exclude from the definition of “new construction” triggering reassessment improvements to certain dwellings for the purpose of making the dwelling more accessible to severely disabled persons. In the November 1990 election, the voters also approved an amendment of Article XIIIA to permit the State Legislature to exclude from the definition of “new construction” seismic retrofitting improvements or improvements utilizing earthquake hazard mitigation technologies constructed or installed in existing buildings after November 6, 1990.

Beginning in Fiscal Year 1981-82, assessors in the State no longer record property values on tax rolls at the assessed value of 25% of market value, which was expressed as $4.00 per $100 of assessed value. All taxable property is now shown at full market value on the tax rolls. Consequently, the tax rate is expressed as $1.00 per $100 of taxable value. All taxable property value included in this Official Statement is shown at 100% of market value (unless noted differently) and all tax rates reflect the $1.00 per $100 of taxable value.

Both the State Supreme Court and the United States Supreme Court have upheld the constitutionality of Article XIIIA.

Appropriations Limitations: Article XIIIB of the State Constitution

On November 6, 1979, State voters approved Proposition 4, the so-called Gann Initiative, which added Article XIIIB to the State Constitution (“Article XIIIB”). The principal effect of Article XIIIB is to limit the annual appropriations of the State and any city, county, school district, authority or other

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political subdivision of the State to the level of appropriations for the prior Fiscal Year, as adjusted for changes in the cost of living, population and services rendered by the government entity.

Effective November 30, 1980, the State Legislature added Section 33678 to the Redevelopment Law which provides that the allocation of taxes to a redevelopment agency for the purpose of paying principal of, or interest on, loans, advances, or indebtedness 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, and such portion of taxes will not be deemed receipt of taxes by, or an appropriation subject to the limitation of, any other public body within the meaning or for the purpose of the Constitution and laws of the State, including Section 33678 of the Redevelopment Law.

Articles XIIIC and XIIID of the State Constitution

On November 5, 1996, State voters approved Proposition 218, “The Right to Vote on Taxes Act.” Proposition 218 added Articles XIIIC and XIIID to the State Constitution, imposing certain vote requirements and other limitations on the imposition of new or increased taxes, assessments and property-related fees and charges. Tax Revenues securing the Bonds are derived from property taxes which are outside the scope of taxes, assessments and property-related fees and charges which were limited by Proposition 218.

Unitary Property

Assembly Bill 2890 (Statutes of 1986, Chapter 1457) provides that, commencing with Fiscal Year 1988-89, assessed value derived from State-assessed unitary property (consisting mostly of operational property owned by utility companies and herein defined as “Unitary Property”) is to be allocated county-wide as follows: (i) each tax rate area will receive that same amount from each assessed utility received in the previous Fiscal Year unless the applicable county-wide values are insufficient to do so, in which case values will be allocated to each tax rate area on a pro-rata basis; and (ii) if values to be allocated are greater than in the previous Fiscal Year, each tax rate area will receive a pro-rata share of the increase from each assessed utility according to a specified formula. Additionally, the lien date on State-assessed property has been changed to January 1.

Assembly Bill 454 (Statutes of 1987, Chapter 921) modified Chapter 1457 regarding the distribution of tax revenues derived from property assessed by the State Board of Equalization. Chapter 921 provides for the consolidation of all State-assessed property, into a single tax rate area in each county. Chapter 921 further provides for a new 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 as follows: for revenues generated from the 1% tax rate, each jurisdiction, including redevelopment project areas, will receive a percentage up to 102% of its prior year State-assessed unitary revenue; and if county-wide revenues generated for unitary property are greater than 102% of the previous year’s unitary revenues, each jurisdiction will receive a percentage share of the excess unitary revenue generated from the application of the debt service tax rate to county wide unitary taxable value, further, each jurisdiction will receive a percentage share of revenue based on the jurisdiction’s annual debt service requirements and the percentage of property taxes received by each jurisdiction from unitary property taxes.

The intent of Chapters 1457 and 921 is to provide redevelopment agencies with their appropriate share of revenue generated from the property assessed by the State Board of Equalization.

The Redevelopment Plan for the Project Area was adopted after the enactment of AB 454, and therefore did not have a share of the original allocation of unitary revenues among the taxing jurisdictions

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of the County. However, the operation of the formula for the allocation of tax revenues after the initial allocation can result in jurisdictions receiving a share of unitary revenues in spite of their exclusion from the original allocation because the formula distributes tax revenues on the basis of growth in secured assessed value. As a result, in recent fiscal years, the Project Area has received a small amount of unitary revenues. See APPENDIX A—“FISCAL CONSULTANT REPORT” for additional information.

Property Tax Collection Procedures

Classifications. In the State, property which is subject to ad valorem taxes is classified as “secured” or “unsecured.” Secured and unsecured property are entered on separate parts of the assessment roll maintained by the county assessor. The secured classification includes property on which any property tax levied by the County becomes a lien on that property that is sufficient, in the opinion of the county assessor, to secure payment of the taxes. 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 liens. A tax levied on unsecured property does not become a lien on the unsecured property, but may become a lien on certain other property owned by the taxpayer.

Collections and Distributions. The method of collecting delinquent taxes is substantially different for the two classifications of property. The taxing authority has four ways of collecting unsecured property taxes in the absence of timely payment by the taxpayer: (1) a civil action against the taxpayer; (2) filing a certificate in the office of the county clerk specifying certain facts in order to obtain a judgment lien on certain property of the taxpayer; (3) filing a certificate of delinquency for recordation in the county recorder’s office, in order to obtain a lien on certain property of the taxpayer; and (4) seizure and sale of the personal property, improvements or possessory interests belonging or assessed to the assessee.

The exclusive means of enforcing the payment of delinquent taxes with respect to property on the secured roll is the sale of the property securing the taxes to the State for the amount of taxes which are delinquent.

Current tax payment practices by the County provide for payment to the CRA/LA of Tax Revenues monthly throughout the Fiscal Year, with the majority of Tax Revenues derived from secured property paid to the CRA/LA in mid-December and mid-April, and the majority of Tax Revenues derived from unsecured property paid to the CRA/LA by mid-November. A final reconciliation is made after the close of the Fiscal Year to incorporate all adjustments to previously reported current year taxable values. The difference between the final reconciliation and Tax Revenues previously allocated to the CRA/LA is allocated mid-August.

Penalties. A 10% penalty is added to delinquent taxes which have been levied with respect to property on the secured roll. In addition, property on the secured roll on which taxes are delinquent is declared in default on or about June 30 of the Fiscal Year. Such property may thereafter be redeemed by payment of the delinquent taxes and a delinquency penalty, plus a redemption penalty of 1.5% per month to the time of redemption and a $15 redemption fee. If taxes are unpaid for a period of five years or more, the property is recorded in a “Power to Sell” status and is subject to sale by the county tax collector. A 10% penalty also applies to the delinquent taxes on property on the unsecured roll, and further, an additional penalty of 1.5% per month accrues with respect to such delinquent taxes on the unsecured roll beginning the first day of the third month following the delinquency date.

Delinquencies. The valuation of property is determined as of January 1 each year and equal installments of taxes levied upon secured property becomes delinquent on the following December 10 and April 10. Taxes on unsecured property are due January 1. Unsecured taxes enrolled by July 31, if

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unpaid, are delinquent August 31 at 5:00 p.m. and are subject to penalty; unsecured taxes added to roll after July 31, if unpaid, are delinquent on the last day of the month succeeding the month of enrollment.

Supplemental Assessments. Enacted in 1983, Senate Bill 813 (Statutes of 1983, Chapter 498) provides for the supplemental assessment and taxation of property as of the occurrence of a change in ownership or completion of new construction. Previously, statutes enabled the assessment of such changes only as of the next tax lien date following the change and thus delayed the realization of increased property taxes from the new assessments for up to 14 months. As enacted, Chapter 498 provides increased revenue to redevelopment agencies to the extent that supplemental assessments occur as a result of new construction or changes of ownership within the boundaries of redevelopment projects subsequent to the tax lien date. To the extent such supplemental assessments occur within the Project Area, Tax Revenues may increase or decrease.

Filing of Statement of Indebtedness

Section 33675 of the Redevelopment Law was added by the State Legislature in 1976 and amended by AB 1290 in 1993. No later than October 1 of each year, Section 33675 requires the filing with the County auditor of a statement of indebtedness certified by the chief financial officer of a redevelopment agency for each redevelopment project area receiving tax increment.

The statement of indebtedness is required to contain the date on which the bonds were delivered, the principal amount, term, purpose and interest rate of the bonds, the principal amount and interest due in the fiscal year in which the statement is filed, and the total principal and interest remaining to be paid. 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 revenues. The statement must also indicate the total principal and interest due on all bonds, loans, advances or other indebtedness indicated on the statement, both for the current fiscal year and cumulatively over the lives of such debt, and the total amount of “available revenues” on hand at the time of filing of the statement. “Available revenues,” defined in Section 33675, is based upon a calculation of the amounts received by the CRA/LA in the prior fiscal year from all sources, less amounts paid on all bonds, loans, advances or indebtedness in the prior fiscal year, plus amounts held by the CRA/LA and pledged to the payment of bonds, loans advances or indebtedness. The difference between the cumulative amount remaining to be paid over the lives of all bonds, loans, advances or other indebtedness as shown on the statement and the amount of available revenues is the maximum amount which can be paid to CRA/LA in tax increment revenue for the Fiscal Year in which the statement is filed.

Section 33675 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 will 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 made to a public agency in connection with payments made by such public agency pursuant to a bond issue which will not be disputed in any action under Section 33675.

The CRA/LA has determined that the amendments to Section 33675 limiting the payment of tax revenues to an amount not greater than the difference between a redevelopment agency’s total outstanding debt obligations and total available revenues, as reported on the redevelopment agency’s reconciliation statement, will not have an adverse impact on the CRA/LA’s ability to meet its debt service obligations.

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Property Tax Administrative Costs

In 1990, the State Legislature enacted Senate Bill 2557 (Chapter 466, Statutes of 1990) which allows counties to charge for the cost of assessing, collecting and allocating property taxes to local government jurisdictions on a prorated basis. It has been the practice of most counties, including the County, to reduce an agency’s tax increment revenues or bill an agency for its pro rata share of property tax administration costs. The amount charged by the County from Fiscal Year 2009-10 from Tax Revenues for the Project Area for this purpose was approximately $339,607. The administrative fee for Fiscal Year 2010-11 is estimated to be $431,251. For purposes of estimating the administrative fee for Fiscal Year 2010-11 and subsequent fiscal years, the Fiscal Consultant used 2.00% of then current year Tax Revenues. For additional information on property tax administrative costs, see APPENDIX A—“FISCAL CONSULTANT REPORT.”

Section 33676 Payments

Health & Safety Code Section 33676 permits taxing entities affected by the adoption of a redevelopment project area to adopt resolutions requiring the County to transfer a portion of the tax revenues otherwise payable to the CRA/LA to such taxing entities. Affected taxing agencies which are school districts and community college districts are automatically eligible to receive such payments and do not have to adopt a resolution. Such payments are of: (i) tax revenues attributable to an increase in the tax rate imposed for the benefit of the affected taxing entity, and (ii) tax revenues attributable to the affected taxing entity equal to the difference between the amount of tax increment which a redevelopment agency would have received based on a plan amendment to receive tax increment using as the base year the year of the original plan adoption, and using as a base year the year of the plan amendment which permits the agency to receive tax increment revenues.

Since the Redevelopment Plan was adopted subsequent to the enactment of AB 1290, no payments are required to be made by the CRA/LA from the Tax Revenues of the Project Area pursuant to Health & Safety Code Section 33676.

Proposition 87

On November 8, 1988, the voters of the State approved Proposition 87, which amended Article XVI, Section 16 of the State Constitution. Under prior law, a redevelopment agency using tax increment revenue received additional property tax revenues whenever a local government increased its property tax rate to pay off its general obligation bonds. This initiative amended the State Constitution to allow the State Legislature to prohibit redevelopment agencies from receiving any of the property tax revenue raised by increased property tax rates imposed by local governments to make payments on their general obligation bonded indebtedness. The initiative applies to tax rates levied to finance bonds issued to fund facilities approved by the voters on or after January 1, 1989. As a result, redevelopment agencies no longer receive an increase in tax increment when taxes on property in a project area are increased to repay voter approved general obligation debt.

Section 33607.5 (AB 1290) Payments

Assembly Bill 1290 (“AB 1290”) was adopted by the State Legislature and became law on January 1, 1994. Pursuant to Section 33607.7 of the Health and Safety Code added by AB 1290 (Statutes of 1993, Chapter 942), either (a) the adoption of a redevelopment plan for any redevelopment project after January 1, 1994, or (b) the adoption of a redevelopment plan amendment for any redevelopment plan adopted prior to January 1, 1994 that increases the limitation on the number of dollars to be allocated to the redevelopment agency or the time limit on the establishing of loans, advances and indebtedness, will

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trigger a requirement that an agency must begin making statutory payments to affected taxing entities that do not have existing pre-AB 1290 tax sharing agreements. These payments are to begin once any of the original redevelopment plan limitations of the project area would have taken effect.

Since the Project Area was adopted subsequent to the enactment of AB 1290, the Project Area is subject to the statutory payment requirements of AB 1290. See APPENDIX A—“FISCAL CONSULTANT REPORT” for information regarding the AB 1290 payments for the Project Area and a detailed discussion of the formulas upon which calculation of the AB 1290 payments is based.

Agencies may request the subordination of the AB 1290 payments to debt secured by a project area’s revenue. The request must be made prior to incurring the debt and is to be accompanied by substantial evidence that anticipated debt service and revenues will allow the projected payments to the taxing entities to be made. An affected taxing entity may disapprove the agency’s request within 45 days of its receipt only if the taxing entity finds, based upon substantial evidence, that the agency will not be able to pay both debt service and the AB 1290 payments due the taxing entity. Absent such disapproval, the subordination is deemed approved. The definition of Tax Revenues does not exclude Tax Revenues used to pay the AB 1290 payments to affected taxing entities, and such payments are payable from the Tax Revenues, although such payments are expected to be subordinated by the taxing entities to the payment of principal and interest on the Bonds. See APPENDIX A—“FISCAL CONSULTANT REPORT” for estimates of future AB 1290 payments and for an additional discussion of AB 1290 payments. See also “THE PROJECT AREA – AB 1290 Payments” herein.

Los Angeles Unified School District Lawsuit. In March of 2007, the Los Angeles Unified School District (“LAUSD”) filed suit in the Superior Court of the County of Los Angeles alleging that the County and certain redevelopment agencies and other public entities in the County, including the CRA/LA, have under-allocated the LAUSD’s share of AB 1290 payments. The suit seeks to have the AB 1290 payments reallocated among the affected taxing entities to include a share of the AB 1290 payments representative of the ERAF, which share, or a substantial portion thereof, would be allocated to LAUSD.

The County prevailed at the Superior Court level on the question of LAUSD’s share of the AB 1290 payments, however, that decision has been reversed by an opinion of the Court of Appeal entered January 27, 2010. The appellate court found that “LAUSD’s pass-through payments have been based on an erroneous calculation of its percentage share of property taxes.” Further, the Court of Appeal held that ERAF “must be included in the calculation of percentage share of property tax revenues, which will necessarily increase [the LAUSD’s] future pass through allocations.”

The lawsuit and the opinion of the appellate court does not affect the total amount of AB 1290 payments that must be paid by the CRA/LA and, therefore, requires no changes in the estimates of Tax Revenues included in the Fiscal Consultant Report and the related tables therein. Rather, the current opinion would require the reallocation of AB 1290 payments among the entities receiving the payments. Other non-fiscal impacts of the appellate court’s opinion could include some uncertainty as to the entities that would be required to subordinate to the CRA/LA’s debt service on bonds as allowed by AB 1290 and whether entities sharing in the funds allocated from the ERAF would become “affected taxing entities” in the adoption or amendment of redevelopment plans.

A petition filed by the County for a rehearing by the appellate court was denied and the case was remanded to the Superior Court for further proceedings on LAUSD’s right to reimbursement. Discussions among the parties as to resolution and the calculation of the effect of the appellate court’s decision are ongoing as of the date hereof. For additional information on the LAUSD lawsuit described above, see APPENDIX A—“FISCAL CONSULTANT REPORT.”

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Low and Moderate Income Housing Fund

Chapter 1337, Statutes of 1976, added Sections 33334.2 and 33334.3 to the Health and Safety Code. Under Section 33334.2 of the Redevelopment Law, redevelopment agencies in California are generally required, unless certain annual findings are made, to set aside at least 20% of all tax increment revenues allocated annually in a Low and Moderate Income Housing Fund to be used within the jurisdiction of the CRA/LA to increase and improve the supply of low-and moderate-income housing (the “Housing Set-Aside Requirement”). Funds available from the Housing Set-Aside Requirement may be used outside the respective Project Area based on a finding by the CRA/LA and the City Council that such use will benefit the Project Area. The Redevelopment Law also permits redevelopment agencies with more than one project area to set aside less than 20% of the taxes allocated to the agency from one project area if the difference is made up from another project area in the same year, and if the agency and the legislative body of the community find that such use of funds will benefit such other project areas.

Under the Redevelopment Law, the Housing Set-Aside Requirement is applicable unless the CRA/LA makes certain specified findings. As provided by Section 33334.2, the low and moderate income housing requirement can be reduced or eliminated if a redevelopment agency finds that: (1) no need exists in the community to improve or increase the supply of low and moderate income housing; (2) that some stated percentage less than 20% of the tax increment revenues is sufficient to meet the housing need; or (3) that other substantial or equivalent efforts, including the obligation of funds of equivalent impact from state, local and federal sources for low and moderate income housing are being provided for in the community.

The CRA/LA has made no such findings with respect to the Project Area. Pursuant to such provisions, the Project Area is subject to the Housing Set-aside Requirement.

Should an eligible redevelopment agency defer the Housing Set-Aside Requirement, the amount equal to the difference between the Housing Set-Aside Requirement for a given year and the amount deposited that year will constitute a deficit in the housing fund and an indebtedness of the project area. Pursuant to the Redevelopment Law, an agency is required to adopt a plan to eliminate the cumulative deficit created by such shortfalls in subsequent years. Since Fiscal Year 1993-94, the CRA/LA has set aside the full Housing Set-Aside Requirement for housing purposes and has provided assurances that it will continue to do so. The Project Area borrowed $5,179,067.85 from its low and moderate income housing fund to make its portion of the SERAF payment on May 10, 2010. For additional information on low and moderate income housing, see APPENDIX A—“FISCAL CONSULTANT REPORT.”

THE CRA/LA

General

The CRA/LA is a redevelopment agency, a public body, corporate and politic, duly created, established and authorized to transact business and exercise its powers, all under and pursuant to the Redevelopment Law. The CRA/LA was activated in 1948 by the City Council. The City encompasses 469 square miles and is the second largest city by population in the United States. The mission of the CRA/LA is to serve as the entity responsible for devising and implementing geographically based action strategies that serve to halt and reverse deterioration in the City’s most troubled urban neighborhoods. The CRA/LA directs governmental and private sector investment to implement these strategies and undertakes the necessary steps required to encourage new investment and growth in these areas.

All powers of the CRA/LA are vested in its seven appointed commissioners, although the City Council retains certain approval authority over CRA/LA. Pursuant to the Redevelopment Law, the

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CRA/LA is a separate public body and exercises governmental functions in planning and implementing redevelopment projects. Within its area of operation, the CRA/LA may exercise broad governmental functions and authority to accomplish its purposes, including, but not limited to, the right of eminent domain, the right to issue bonds for authorized purposes and to expend the proceeds thereof, and the right to acquire, sell, rehabilitate, develop, administer or lease property. The CRA/LA may demolish buildings, clear land, and cause to be constructed certain improvements including streets, sidewalks and utilities, and may also prepare for use as a building site any real property which it owns or administers.

CRA/LA may, from any funds made available to it for such purposes, pay for all or part of the costs of land and buildings, facilities or other improvements to be publicly owned and operated, provided that such improvements are of benefit to a redevelopment project area and cannot be financed by any other reasonable method.

Currently, the CRA/LA administers 33 redevelopment projects, of which 31 are currently active, and one revitalization project. The 33 existing redevelopment projects cover over 21,800 acres of land located throughout the City. None of the tax increment revenues generated by the other 30 active redevelopment projects is pledged to pay debt service on the Bonds. For additional information on CRA/LA, see CRA/LA’s website at www.crala.net. Such information is not incorporated herein by reference.

Personnel

The CRA/LA is governed by a board of seven Commissioners appointed to staggered four-year terms by the Mayor and confirmed by the City Council. The present Commissioners of the CRA/LA, the dates of expiration of their terms of office and their current principal occupations are as follows:

Commissioner Term Expires* Occupation Kenneth H. Fearn, Chairman November 4, 2012 Managing Partner, real estate company Madeline Janis, Vice-Chair November 4, 2010 Attorney; nonprofit CEO Joan Ling, Treasurer November 4, 2011 CEO, real estate company Dr. Lula Bailey Ballton November 4, 2012 CEO, West Angeles Community

Development Corporation Alejandro Ortiz November 4, 2009 Architect Dave Sickler November 4, 2011 Exec. Dir. of Employee Relations, Los

Angeles DWP Dwayne Gathers November 4, 2011 Business Development; Government

Relations; International Trade & Investment ______________________ * Commissioners whose terms expire continue to serve until replaced or reappointed.

Operations of the CRA/LA are conducted under the direction of the Chief Executive Officer assisted by a staff of approximately 260 employees. Principal employees of the CRA/LA staff are as follows:

Christine Essel. Chief Executive Officer of the CRA/LA since May 2010. Previously served as Senior Vice President of Government Affairs and Community Affairs at Paramount Studios and Senior Vice President of Planning and Development at Paramount Studios. Served as Commissioner on the Board of the CRA/LA, as Los Angeles World Airports Commissioner, and as a Commissioner of the California Film Commission Board. Served as Chair and First Vice-Chair of FilmLA; and also as Officer

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and immediate Past Chair of the Central City Association. Served also as Vice-Chair of the California Workforce Investment Board and as Board President of Alternative Living for The Aging.

Calvin E. Hollis. Chief Operating Officer, Economic Development and Real Estate since July 2010. Interim Chief Executive Officer of the CRA/LA (5 months), Deputy Chief of Operations for Real Estate and Economic Development of the CRA/LA (11 months), Managing principal of Keyser Marston Associates, Inc, (Los Angeles office) (26 years).

Steve Valenzuela. Chief Financial Officer of the CRA/LA since September 2009. Regional Administrator (Eastside Region) of the CRA/LA (4 years); President/CEO of the Los Angeles Community Development Bank (1.5 years); Chief Operating Officer of the Los Angeles Community Development Bank (6 years); Senior Manager, Ernst & Young, (6 years); Director of Operations of the CRA/LA (1 year); Bunker Hill Project Manager, CRA/LA (1 year); Senior Real Estate Development Agent, CRA/LA (1 year); and Senior Associate, Economics Research Associates (8 years).

Donald R. Spivack. Deputy Chief of Operations and Policy since October 2004. Deputy Administrator (Community Operations I) of the CRA/LA (4 years); Deputy Administrator (Community Development) of the CRA/LA (4 years); Director of Operations of the CRA/LA (8 years); Senior Project Manager (Central Business District) of the CRA/LA (4.5 years); Transportation Manager of the CRA/LA (8 months); Chief of Community Planning of Montgomery County, Maryland Planning Department, the Maryland-National Capital Park and Planning Commission (“MNCPPC”) (9.5 years); Transportation Coordinator, MNCPPC (1 year); Director of Physical Planning of Southeastern Michigan Transportation Authority (2 years); Assistant Professor, Architecture and Planning, Ohio University (Athens, Ohio) (3 years).

Raymond L. Fors. Finance Director of the CRA/LA since May 1988; Finance Officer of the CRA/LA (3 years); Public Finance Consultant and Investment Banker (9 years); various positions in the Trust and Operations Research departments of Security Pacific National Bank (7 years).

Jay Virata. Regional Administrator for the West San Fernando Valley, including the Reseda Canoga Park Project Area, since 2008. Previously Regional Administrator (Harbor Region) of the CRA/LA (1.5 years); Director for CRA/LA’s Budget, Capital Finance, Property Management, and Asset Management functions (6 Years); Redevelopment Project Manager for the City of Monterey Park (7 years).

The CRA/LA also contracts for professional services covering such areas as marketing, planning, law, economics, finance, engineering, and architecture.

CRA/LA Projects

The following table provides a brief comparative description of the CRA/LA’s 33 current redevelopment project areas (including the Project Area):

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CRA/LA PROJECTS

Redevelopment Project Date

Created Size

(Acres)

Base Year Assessed Value (1)

Fiscal Year 2009-10

Assessed Value

Fiscal Year 2009-10

Incremental Taxable Value

Adams-Normandie (2) 5/79 404 $ 42,441,528 -- (2) N/A Adelante Eastside 3/99 2,164 1,194,256,788 $ 2,047,221,239 $ 852,964,451 Beacon Street 4/69 60 6,763,528 217,506,455 210,742,927 Broadway/Manchester 12/94 189 78,897,280 151,659,240 72,761,960 Bunker Hill 3/59 133 20,353,759 3,487,729,426 3,467,375,667 Central Industrial 11/02 738 796,286,059 1,126,790,716 330,504,657 Chinatown 1/80 303 109,237,360 822,606,411 713,369,051 City Center 5/02 880 182,025,700 865,641,196 683,615,496 Council District 9 Corridors 12/95 2,817 1,678,584,138 3,216,651,152 1,538,067,014 Crenshaw (3) 5/84 204 106,211,545 439,527,147 333,315,602 Crenshaw/Slauson 10/95 262 125,153,766 286,663,635 161,509,869 East Hollywood/Beverly-Normandie 12/94 464 770,982,838 1,505,838,757 734,855,919 Exposition/University Park (4) (5) 1/66 573 92,618,818 551,466,923 458,848,105 Hollywood 5/86 1,107 1,217,812,439 5,617,487,032 4,399,674,593 Laurel Canyon 12/94 248 228,109,639 503,857,951 275,748,312 Little Tokyo 2/70 67 29,596,759 488,243,520 458,646,761 Los Angeles Harbor 7/74 232 9,803,244 183,250,772 173,447,528 Mid-City 5/96 725 440,683,174 952,308,793 511,625,619 Monterey Hills 7/71 211 1,173,740 398,757,381 397,583,641 Normandie 5 10/69 210 24,798,740 301,824,712 277,025,972 North Hollywood 2/79 740 164,396,710 2,025,870,647 1,861,473,937 Pacific Corridor 5/02 673 472,606,062 883,367,140 410,761,078 Pacoima/Panorama City 11/94 2,914 2,370,167,823 4,548,713,790 2,178,545,967 Pico Union 1 2/70 155 34,680,989 206,380,915 171,699,926 Pico Union 2 11/76 227 52,047,000 400,145,890 348,098,890 Reseda/Canoga Park 12/94 2,400 1,937,984,101 4,365,375,698 2,427,391,597 Rodeo/La Cienega 5/82 24 2,016,285 72,255,593 70,239,308 Vermont/Manchester 5/96 163 80,874,665 188,269,307 107,394,642 Watts 12/68 107 8,002,685 38,713,201 30,710,516 Watts Corridors 11/95 245 46,218,304 136,218,165 89,999,861 Western/Slauson 5/96 377 187,033,704 371,756,218 184,722,514 Westlake 5/99 638 705,133,413 1,480,474,411 775,340,998 Wilshire Center/Koreatown 12/95 1,207 2,515,955,183 5,076,931,940 2,560,976,757

(1) As reported by the County. Upon passage of AB454, the County implemented the measure by reducing the base year assessed values of all redevelopment projects by the amount of unitary values existing in the base. (See Taxes in the Fiscal Consultant Report in APPENDIX A – “FISCAL CONSULTANT REPORT.”). (2) Project has reached its cap for its receipt of tax increment revenue (3) Project was expanded in 1994. (4) Project was expanded in 1983 and in 1989. (5) Project Area was formerly known as Hoover.

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THE PROJECT AREA

The Redevelopment Plan

Under the Redevelopment Law, every redevelopment agency is required to adopt, by ordinance, a redevelopment plan for each redevelopment project specifically authorized in a redevelopment plan. The CRA/LA adopted the Redevelopment Plan on December 13, 1994, and has subsequently amended such plan from time to time. The overall objective of the Redevelopment Plan is to eliminate blighted conditions in the Project Area by undertaking all appropriate projects pursuant to the Redevelopment Law.

The termination date of the effectiveness of the Redevelopment Plan is December 13, 2015. The CRA/LA cannot receive Tax Revenues with respect to the Project Area after June 30, 2041. Maximum bonded indebtedness for the Project Area is $190,000,000, and the CRA/LA cannot incur debt with respect to the Project Area after December 13, 2014. The Redevelopment Plan does not limit the dollar amount of tax increment revenues to be received from the Project Area.

The above limits for the effectiveness and duration of the Redevelopment Plan and for the receipt of Tax Revenues are one year later than the limits originally specified in the Redevelopment Plan. The extensions are the result of amendments adopted by the City Council pursuant to State legislation. City Ordinance No. 167,666, enacting the time extensions, was adopted on November 21, 2003. On the same date, the City Council adopted Ordinance No. 165,677, which extended the time limit for incurring debt by five years to December 13, 2009. The time limit for incurring debt was further extended by City Ordinance 180612, adopted on March 20, 2009, which extended the time limit for incurring debt by five years to December 13, 2014.

Project Area Description

The 2,400-acre Project Area is located in the West San Fernando Valley communities of Canoga Park, Reseda and Winnetka and generally includes the Sherman Way commercial corridor from Topanga Canyon Boulevard on the west to Louise Avenue on the east and Saticoy Street from Mason Street on the west to Oakdale Avenue on the east. Portions of the residential communities of Canoga Park and Reseda are also included within the Project Area boundaries, as well as a major regional shopping center located at Topanga Canyon and Victory Boulevards.

The Project Area was adopted to provide for and facilitate the repair, restoration, demolition and/or replacement of properties damaged as a result of the Northridge Earthquake and to take actions necessary for the economic recovery of communities impacted by that disaster.

The Project Area was found to contain the following conditions resulting from the Northridge Earthquake: (i) 286 (59%) of the sites in Council District 3 containing damaged commercial/industrial buildings; (ii) 930 of the sites containing damaged single family homes (10% of the Council District 3’s damaged single family units), 434 of the District’s damaged multiple family apartment sites (41% of the damaged apartment units), and 84 of the District’s damaged condominium sites (12% of the damaged condominium units); and (iii) 350 or 76% of the residential units located in “red tagged” buildings within the Council District 3, 1,894 or 38% of the “yellow tagged” units, and 10,936 or 27% of the “green tagged” units with damage. A number of retail stores were destroyed, including stores located in small strip centers, major centers and freestanding structures, and the decline in population in the immediate market area had reduced retail expenditures. Retail outlets located near (or in) the residential and commercial “ghost towns” had suffered a great deal from a loss of their customer base. The Northridge Earthquake also caused a reorientation of personal expenditure patterns as a greater percentage of

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disposable income paid for repairs and replacement of items destroyed, thereby adversely affecting discretionary expenditures. Retailers seeking to repair their damaged shops and replace lost inventories were confronted with an even weaker market than existed prior to January 1994. Those retailers located in heavily damaged areas, such as the above described “ghost towns,” faced the dual burden of a poor economy and lack of a consumer base. Without a reliable revenue source, many of these businesses were forced to close.

Development Within the Project Area

Recent completed development in the Project Area includes (i) the new 12,000 square foot community center (Dennis Zine Community Center), which serves as an economic resource for the community, (ii) façade improvements on over 100 storefronts in Canoga Park, Reseda and Winnetka, (iii) Hart Village, which provides 47 units of rental housing affordable to extremely low- and very low- income families and an on-site child care center, (iv) phase 3 of the Canoga Park streetscape improvements, and (v) the Reseda Commercial District alley reconstruction program. Past projects and initiatives include (i) the 480-seat Madrid Theater in Canoga Park, (ii) the First Time Home Buyer Program that provided first time housing for 25 families, (iii) acquisition and rehabilitation of the eight-unit bungalow court at Alabama and Valerio Streets in Canoga Park by a community-based nonprofit, including the relocation of households into decent, safe and sanitary housing, (iv) the completion of Tierra del Sol multifamily housing project, which includes 119 units of family and large family housing affordable to extremely low- and very low-income households, (v) completion of the renovation of the Guadalupe Center in Canoga Park, and (vi) completion of the Reseda Parking Lot Improvement Project.

The CRA/LA also assisted in the creation and startup of the Reseda and Canoga Park Business Improvement Districts. The CRA/LA undertook the development and administration of the Canoga Park Targeted Neighborhoods Initiative Program. The CRA/LA also provided assistance in the formation and certification of the Reseda, Canoga Park, and Winnetka Neighborhood Councils.

Canoga Park was awarded the prestigious All-America City Award in 2005, one of only ten communities nation-wide to receive this honor and the first community to receive the award in the City. This award is given to communities that demonstrate inclusiveness in civil governance and goal setting as well as success in accomplishing these goals. The CRA/LA also accomplished the certification of Canoga Park as a California Main Street Community and the provision of technical and funding assistance for administration of the Main Street Canoga Park nonprofit corporation.

Major CRA/LA-led commercial projects include (i) the Reseda Theater Adaptive Reuse Project, for which proposals are currently being solicited for the redevelopment of the CRA/LA-owned Reseda Theater and an adjacent property demolished for reuse of the site as a parking lot to serve the theater, and (ii) the Reseda Town Center, which is expected to be a catalytic project in the Reseda commercial district. CRA/LA has already acquired two parcels for the Reseda Town Center project. Rehabilitation of the former Canoga Park Library into a 6,500 state-of-the-art child assessment, diagnostic and therapeutic services facility is also underway. The CRA/LA is currently assisting affordable housing projects, including Sherman Village (72 units of affordable family housing), Canby Woods (98 affordable senior housing units), Geyser House (a group home for six severely disabled individuals), and New Horizons (a six bed group home for developmentally disabled adults). The CRA/LA is also planning public improvements along the commercial district in Reseda.

Development Activity

Recently there has been significant capital investment within and immediately surrounding the Project Area, as illustrated by the following table. The ultimate configuration, value, and completion dates

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of the projects listed below are subject to change and subject to construction and other risks. See “RISK FACTORS – Weakening of Housing Market; Potential Effect on Assessed Valuation” and “ – Economic Risks.”

Development Activity

Activity Type/Status Northridge Medical Center Cancer Center. Renovation and expansion of a 12,500 square foot cancer center to supplement the existing 400-bed Northridge Hospital Medical Center facility.

Medical / Completed 2010

West Hills Hospital Expansion. A newly constructed 47,000 square foot expansion to the Emergency Department and Intensive Care Unit has been added to this 212-bed facility.

Medical / Completed 2010

Dennis Zine Community Center. Construction of a 12,000 square foot facility as part of the Tierra del Sol community that includes pre-kindergarten, child development classrooms, and youth counseling offices.

Non-Profit / Completed 2009

Fountain View at Eisenberg Village (Jewish Home for Aging Facility). Construction of 108 1- and 2-bedroom assisted living apartments.

Non-Profit / Completed February 2010

The Enclave. Construction of 195-unit apartment building located in Warner Center.

Residential / Completed January 2010

Millennium Warner Center. Construction of 438-unit apartment building located in Warner Center.

Residential / Under Construction

Pavillions (Ventura Boulevard). Construction of a 47,000 square foot Grocery Store.

Retail / Under Construction

Tarzana Village Walk (Ventura Boulevard). New construction of a 250,000 square foot retail center anchored with a 50,000 square foot Whole Foods

Retail / Completed May 2010

CVS Drug Store (Vanowen and Corbin). Construction of 14,000 square foot CVS Drug Store

Retail / Under Construction

Victory Tampa Medical Square (Tampa and Victory). New construction of 13,000 square foot Walgreens and 1,300 square foot Yogurtland (under construction) to complement the existing 66,000 square foot medical office building.


Smart and Final. Rehabilitation of a 30,000 square foot Albertsons into a Smart and Final Extra.


Certain of the development projects listed above are owned and operated by tax-exempt entities and consequently, no additional Tax Revenues are expected to be payable in connection with such developments.

The CRA/LA budget for the Project Area for Fiscal Year 2010-11 is approximately $34 million. The CRA/LA has included numerous residential, commercial and industrial rehabilitation projects in its

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proposed Fiscal Year 2010-11 budget for the Project Area, including the following projects: (i) additional façade and streetscape improvements in Canoga Park and Reseda, (ii) rehabilitation of a large parking lot in the Reseda commercial district, (iii) administration of the Main Street Program and the Business Attraction and Retention Program, (iv) ongoing community participation initiatives, and (v) other residential, commercial, and industrial development initiatives.

Housing Set-Aside Requirements

In accordance with Section 33334.2 of the Redevelopment Law, not less than 20% of all tax revenues that are allocated to the CRA/LA will be used by the CRA/LA for purposes of improving, increasing and preserving the City’s supply of housing for persons and families of low or moderate income (including the payment of indebtedness, such as the Bonds, issued or incurred for such purposes). See “LIMITATIONS ON TAX REVENUES AND POSSIBLE SPENDING LIMITATIONS – Low and Moderate Income Fund.”

In addition to the foregoing requirement of the Redevelopment Law, the Redevelopment Plan requires that, subject to certain limitations and exceptions available to the CRA/LA, not less than 20% of the tax increment revenues collected within the Project Area be used to increase and improve the supply of low-and moderate-income housing. The CRA/LA is in compliance with applicable law relating to the Housing Set-Aside Requirement.

AB 1290 Payments

Section 33607.5 of the Health and Safety Code requires that certain taxing entities affected by the adoption of the Redevelopment Plan receive an additional portion of Tax Revenues otherwise payable to the CRA/LA for the Project Area. See “LIMITATIONS ON TAX REVENUES AND POSSIBLE SPENDING LIMITATIONS – Section 33607.5 (AB 1290) Payments.”

The statute permits these amounts to be subordinated to the payment of debt service on obligations issued by the CRA/LA for the affected project areas under certain conditions. The CRA/LA has requested and received such subordination from all taxing entities with regards to the 2003 Parity Loans and the 2006 Parity Loan. The CRA/LA has received subordination from the City and expects to receive such subordination from all other taxing entities with regards to the Bonds.

The CRA/LA is liable for AB 1290 payments to the City, to the County, and to certain taxing entities administered by the County, and to the following independent taxing entities, which are not administered or controlled by the Los Angeles County Board of Supervisors:

• Los Angeles Community College District (“LACCD”) • Los Angeles Unified School District (“LAUSD”) • Los Angeles County School Services District • Los Angeles County West Vector Control District • Water Replenishment District of Southern California • Metropolitan Water District of Southern California (payments currently under review by the

CRA/LA) The Metropolitan Water District of Southern California was not originally included among the

taxing entities to whom subordination requests were sent with regards to the 2003 Parity Loans and the 2006 Parity Loan. However, the CRA/LA has since requested the subordination of such AB 1290 payments to the debt service on the Bonds and the Prior Debt pending final determination of the eligibility of the Metropolitan Water District to receive such AB 1290 payments.

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See APPENDIX A—“FISCAL CONSULTANT REPORT” for information regarding the AB 1290 payments for the Project Area and a detailed discussion of the formulas upon which calculation of the AB 1290 payments is based.

While the CRA/LA has pledged the Tax Revenues of each Project Area to pay principal and interest on the Bonds and all Parity Debt relating to the Project Area, the CRA/LA is liable for certain payments to the County for property tax administrative charges relating to the collection of the Tax Revenues and to the aforementioned taxing entities, which payments must also be made from the Tax Revenues. See “LIMITATIONS ON TAX REVENUES AND POSSIBLE SPENDING LIMITATIONS” See also “PROJECTED TAX REVENUES AND ANNUAL DEBT SERVICE FOR THE BONDS – Estimated Annual Debt Service and Projected Debt Service Coverage,” for projected debt service coverage tables for the Bonds and the Parity Debt after deduction of such property tax administrative charges and AB 1290 payments.

PROJECTED TAX REVENUES AND ANNUAL DEBT SERVICE FOR THE BONDS

Tax Rates

Property tax rates levied in the Project Area include the 1% ad valorem property tax rate and additional debt service tax rates, the latter levied by various taxing entities, including the City, to repay voter-approved indebtedness but accruing to the CRA/LA within the Project Area.

Those portions of the override tax levied by LAUSD and by LACCD provide funds to cover debt service payments on general obligation bonds issued for the purpose of constructing and renovating facilities. Authority for the levy was provided through voter approval of the issuance of general obligation bonds. Pursuant to State Constitutional and statutory provisions, the taxes generated by application of these levies to incremental value in a redevelopment project are to be paid to LAUSD and LACCD and not included in tax increment paid to the CRA/LA. The following table shows the deducted portion of the override rate and the applicable tax rate.

2009-10 Secured Tax Rate

Full Tax Rate $ 1.220441 City of Los Angeles (0.041220) LAUSD (0.151809) LACCD (0.023112)

Net Tax Rate $ 1.004300


For additional information on tax rates, see APPENDIX A—“FISCAL CONSULTANT REPORT.”

Unitary Property Taxes

Unitary property taxes for the Project Area are generated by certain properties of utilities within the County. The tax revenues are allocated among taxing entities and redevelopment projects in the County according to formula. The Project Area had not received unitary property taxes since the adoption of its Redevelopment Plan through Fiscal Year 2007-08 because the Project Area was created after the change to distributing unitary revenues on a county-wide basis. The County has indicated that

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the Project Area received $24,573 in unitary taxes for Fiscal Year 2009-10. This is the result of using secured assessed value, rather than unitary value, as the basis for the distribution of unitary revenues.

For more information about unitary property taxes, see “LIMITATIONS ON TAX REVENUES AND POSSIBLE SPENDING LIMITATIONS – Unitary Property” herein and APPENDIX A—“FISCAL CONSULTANT REPORT.”

Supplemental Property Taxes

The CRA/LA typically receives supplemental revenues on an annual basis. Supplemental property taxes are a function of new construction activity and transfers of ownership occurring in a project area after the January 1 property tax lien date. Shown below are annual supplemental property tax receipts for the Project Area from 2006-07 through 2009-10. For more information about supplemental property taxes see APPENDIX A—“ FISCAL CONSULTANT REPORT.”

2006-07 $ 2,261,397 2007-08 3,200,171 2008-09 425,804 2009-10 (1,343,089)


Assessed Valuations

The assessed valuation of properties located in the Project Area is $4,180,225,190 for Fiscal Year 2010-11. This represents an decrease of approximately $185,150,508 (or -4.24%) in value of the Project Area for Fiscal Year 2009-10. Table 1 sets forth the historical assessed values for Fiscal Year 2006-07 to 2010-11 and Table 2 sets forth Tax Revenues for Fiscal Years 2006-07 to 2009-10 based upon the County Auditor-Controller’s equalized rolls. Table 3 sets forth the ten largest assessees located within the Project Area and Table 4 sets forth the vacancy rates among the assessees located within the Project Area.

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TABLE 1

Historical Assessed Taxable Value

Fiscal Year Total Assessed

Value(1) Percentage

Growth

2006-07 $ 3,521,491,176 -- 2007-08 4,308,709,205 22.35% 2008-09 4,527,302,317 5.07 2009-10 4,365,375,698 -3.58 2010-11 4,180,225,190 -4.24

Source: Fiscal Consultant Report. (1) Values are as reported by the County Auditor-Controller.

TABLE 2

Historical Incremental Taxable Value And Tax Receipts

Fiscal Year

Historical Incremental

Taxable Value Original

Levy Levy

Adjustment Adjusted

Receivable Historical Receipts(1)

2006-07 $ 1,583,507,075 $ 15,574,546 $ 20,633 $ 15,595,179 $ 14,926,098 2007-08 2,370,725,104 23,904,586 1,356,045 25,260,631 24,209,762 2008-09 2,589,318,216 27,616,193 (5,666,744) 21,949,450 22,620,283 2009-10 2,427,391,597 20,072,398 16,976,141 37,048,539 33,443,299

Source: Fiscal Consultant Report. (1) Includes all current taxes and redemption payments collected.

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TABLE 3

Ten Major Assessees for the Fiscal Year 2010-11(1)

Rank Major Assessees No. of

Assessments Use 2009-10 Value

% of Project Value

1 Westfield Topanga Owner LP/ Topanga Plaza LP

6 Shopping Center $ 445,030,613 10.65%

2 ASN Woodland Hills East LLC

2 Apartments 180,763,054 4.32

3 Basrock Renaissance

4 Apartments 88,065,697 2.11

4 Nordstrom Inc.

2 Department Store 53,316,968 1.28

5 Essex Portfolio LP

1 Apartments 43,157,167 1.03

6 Sam Menlo TR

4 Apartments 30,918,769 0.74

7 Target Corporation

2 Retail Store 30,741,653 0.74

8 Catellus Development Corp.

2 Shopping Center 29,275,522 0.70

9 Medical Park Plaza

6 Medical Offices 28,004,985 0.67

10 Combined Properties Reseda 14 Shopping Center 25,698,778 0.61 TOTAL VALUE MAJOR ASSESSEES $ 954,973,206 TOTAL 2010-11 PROJECT VALUE $ 4,180,225,190 TOTAL % OF 2010-11 PROJECT VALUE 22.85% TOTAL % OF 2010-11 INCREMENTAL

VALUE42.59%

Source: Fiscal Consultant Report. (1) Based on information provided by the County. Includes all secured and unsecured value located within the Project Area attributable to each assessee.

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TABLE 4

Vacancy Rates for the Project Area

Type

% Vacant Fiscal Year

2009-10 2nd quarter


2009-10 3rd quarter


2009-10 4th quarter


2010-11 1st quarter

Office (1) 10.3% 11.5% 9.6% 10.9%

Retail (1) 3.5 4.1 3.4 3.4 (1) Based on data for zip codes within the Project Area. Source: The CRA/LA.

Table 5 sets forth the change in secured assessed value between Fiscal Years 2008-09 and 2010-11.

TABLE 5

Change in Secured Value By Land Use Fiscal Years 2008-09 through 2010-11(1)

Change in Secured Value (Fiscal Year 2008-09 to 2009-10)

Change in Secured Value (Fiscal Year 2009-10 to 2010-11) Type of Land Use 2008-09 2009-10 2010-11

Single Unit Sales Housing

$ 1,750,144,472 $ 1,471,153,497 -15.94% $ 1,431,591,508 -2.76%

Other Residential 1,020,010,537 1,121,780,202 9.98% 1,118,174,773 -0.32% Commercial 1,461,878,402 1,497,787,028 2.46% 1,352,550,225 -10.74% Industrial 60,868,552 65,431,041 7.50% 64,554,770 -1.36% Other 59,552,914 45,521,704 -23.56% 57,985,949 21.50% Total 4,352,454,877 4,201,673,472 -3.46% 4,024,857,225 -4.39%

SBE Inflation Factor Declaration (2) 2.00% -0.237%

Source: Fiscal Consultant. (1) Based on information extracted from the 2008-09, 2009-10 and 2010-11 secured County tax roll. (2) SBE Inflation Factor Declaration provided by the State Board of Equalization as of December 14, 2009. Projected Tax Revenues

Table 6 sets forth a schedule of Projected Tax Revenues for the Project Area for Fiscal Years 2010-11 through 2040-41. While the Fiscal Consultant has based these projections on certain assumptions it deems reasonable, there can be no assurance that the actual collection of tax increment revenues by the CRA/LA with respect to the Project Area will not differ significantly from the projections provided herein. See APPENDIX A—“FISCAL CONSULTANT REPORT.”

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TABLE 6

Projected Tax Revenues* (in thousands)

Fiscal Year

Total Assessed Value(1)

Incremental Assessed Value(2)

Gross TaxRevenues(3)

County Admin

Charge(4) Housing Tax

Revenues(5) Pledged Tax

Revenues

AB 1290 Paymentsto Taxing

Entities

Net Available

Tax Revenues

2010-11 $ 4,091,789 $ 2,153,805 $ 21,563 $ 431 $ 4,226 $ 16,905 $ 4,313 $ 12,593 2011-12 4,091,789 2,153,805 21,563 431 4,226 16,905 4,313 12,593 2012-13 4,131,335 2,193,351 21,958 439 4,304 17,215 4,392 12,823 2013-14 4,171,277 2,233,293 22,357 447 4,382 17,528 4,471 13,057 2014-15 4,251,959 2,313,975 23,164 463 4,540 18,161 4,633 13,528 2015-16 4,334,255 2,396,271 23,987 480 4,701 18,806 4,797 14,009 2016-17 4,418,197 2,480,213 24,827 497 4,866 19,464 4,965 14,499 2017-18 4,503,818 2,565,833 25,683 514 5,034 20,135 5,189 14,946 2018-19 4,591,151 2,653,166 26,556 531 5,205 20,820 5,510 15,310 2019-20 4,680,230 2,742,246 27,447 549 5,380 21,518 5,838 15,680 2020-21 4,771,091 2,833,107 28,356 567 5,558 22,231 6,172 16,058 2021-22 4,863,770 2,925,786 29,282 586 5,739 22,957 6,513 16,444 2022-23 4,958,302 3,020,318 30,228 605 5,925 23,699 6,861 16,837 2023-24 5,054,725 3,116,741 31,192 624 6,114 24,454 7,216 17,238 2024-25 5,153,076 3,215,092 32,175 644 6,306 25,226 7,578 17,647 2025-26 5,253,394 3,315,410 33,179 664 6,503 26,012 7,947 18,065 2026-27 5,355,719 3,417,734 34,202 684 6,704 26,814 8,324 18,490 2027-28 5,460,090 3,522,105 35,246 705 6,908 27,633 8,708 18,925 2028-29 5,566,548 3,628,564 36,310 726 7,117 28,467 9,100 19,367 2029-30 5,675,136 3,737,152 37,396 748 7,330 29,318 9,621 19,698 2030-31 5,785,895 3,847,911 38,504 770 7,547 30,187 10,153 20,034 2031-32 5,898,870 3,960,886 39,633 793 7,768 31,073 10,695 20,378 2032-33 6,014,104 4,076,120 40,786 816 7,994 31,976 11,248 20,728 2033-34 6,131,642 4,193,658 41,961 839 8,224 32,898 11,812 21,085 2034-35 6,251,532 4,313,548 43,160 863 8,459 33,837 12,388 21,450 2035-36 6,373,819 4,435,835 44,383 888 8,699 34,796 12,975 21,822 2036-37 6,498,552 4,560,568 45,630 913 8,944 35,774 13,573 22,201 2037-38 6,625,780 4,687,796 46,902 938 9,193 36,772 14,184 22,588 2038-39 6,755,552 4,817,568 48,200 964 9,447 37,789 14,807 22,982 2039-40 6,887,920 4,949,936 49,524 990 9,707 38,827 15,442 23,384 2040-41 7,022,935 5,084,951 50,874 1,017 9,971 39,885 16,090 23,795

TOTALS $1,056,228 $21,125 $207,021 $828,082 $269,829 $558,253 Source: Fiscal Consultant Report. * The deadlines for the receipt of Tax Revenues include effect of ordinances per SB 1045 and SB 1096, as applicable. (1) The Fiscal Consultant has assumed no increase in assessed value from Fiscal Year 2010-11 to Fiscal Year 2011-12, an increase in assessed value from Fiscal Year 2011-12 to Fiscal Year 2013-14 based on an assumed 1.00% annual inflation factor, and an increase in assessed value from Fiscal Year 2013-14 to Fiscal Year 2040-2041 based on an assumed 2.00% annual inflation factor. The Fiscal Consultant assumed a value impact of $11,000 and $88,425,000 for resolved and pending assessment appeals, respectively. (2) The base year of the Project Area is Fiscal Year 1994-95. (3) This figure is based on a 1.00% tax rate. Gross Tax Revenues include Unitary Revenue reported for Fiscal Year 2009-10. (4) The County administrative charge is estimated at 2.00% of gross tax increment revenues. (5) Housing Tax Revenues are estimated to be 20% of total estimated Tax Revenues.

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Outstanding Parity Debt

In September 2003 and June 2006, the CRA/LA entered into certain loan agreements relating to the Project Area. Under each of these loan agreements, payments of principal and interest on the loans made thereby were secured by and payable from the Tax Revenues of the Project Area. The payments of principal and interest on these loans will be made by the CRA/LA on a parity with the Bonds.

The 2003 Parity Loans and 2003 Authority Bonds. In September 2003, The Community Redevelopment Financing Authority of The Community Redevelopment Agency of the City of Los Angeles, California (the “Authority”) issued three series of its Pooled Financing Bonds: $17,970,000 aggregate principal amount of Series J – Taxable Bonds (Council District 9, Pacoima/Panorama City and Reseda/Canoga Park Projects) (the “Series J – Taxable Bonds”), $4,500,000 aggregate principal amount of Series J – Tax Exempt (Reseda/Canoga Park Project) (the “Series J – Tax Exempt Bonds” and together with the Series J – Taxable Bonds, the “Series J Bonds”), and $4,645,000 aggregate principal amount of Series K – Taxable (Laurel Canyon and East Hollywood/Beverly-Normandie Projects) (the “Series K Bonds” and collectively with the Series J Bonds, the “2003 Authority Bonds”).

In connection with the issuance of the 2003 Authority Bonds, the Authority loaned a portion of the proceeds of the Series J – Taxable Bonds (the “Reseda/Canoga Park 2003 Taxable Loan”) to the CRA/LA pursuant to a Loan Agreement secured by the Pledged Tax Revenues, dated as of September 1, 2003 (the “Reseda/Canoga Park 2003 Taxable Loan Agreement”), and loaned a portion of the proceeds of the Series J – Tax Exempt Bonds (the “Reseda/Canoga Park 2003 Tax Exempt Loan” and together with the Reseda/Canoga Park 2003 Taxable Loan, the “2003 Parity Loans”) to the CRA/LA pursuant to a Loan Agreement secured by the Pledged Tax Revenues, dated as of September 1, 2003 (the “Reseda/Canoga Park 2003 Tax Exempt Loan Agreement,” and together with the Reseda/Canoga Park 2003 Taxable Loan Agreement, the “2003 Parity Loan Agreements”).

As of September 30, 2010, there is a loan balance of $4,060,000 on the Reseda/Canoga Park 2003 Taxable Loan, secured by the Reseda/Canoga Park 2003 Taxable Loan Agreement, and an equivalent $4,060,000 in aggregate principal amount of outstanding Series J – 2003 Taxable Bonds. In addition, there is a loan balance of $7,580,000 on the Reseda/Canoga Park 2003 Tax Exempt Loan, secured by the Reseda/Canoga Park 2003 Tax Exempt Loan Agreement, and an equivalent $7,580,000 in aggregate principal amount of outstanding Series J – Tax Exempt Bonds. The foregoing loans made in 2003 by the Authority to the CRA/LA are herein referred to, collectively as the “2003 Parity Loans.”

The 2006 Parity Loan and 2006 Authority Bonds. In June 2006, the Authority issued its Pooled Financing Bonds: $32,000,000 aggregate principal amount of Series L (Taxable) (Reseda/Canoga Park, Pacoima/Panorama City and East Hollywood/Beverly-Normandie Project Areas) (the “Series L Bonds”).

In connection with the issuance of the 2006 Authority Bonds, the Authority loaned a portion of the proceeds of the Series L Bonds to make a loan (the “Reseda/Canoga Park 2006 Loan”) to the CRA/LA pursuant to a Loan Agreement secured by the Pledged Tax Revenues, dated as of June 1, 2006 (the “Reseda/Canoga Park 2006 Loan Agreement” or the “2006 Parity Loan Agreement”).

As of September 30, 2010, there is a loan balance of $15,237,000 on the Reseda/Canoga Park 2006 Loan, secured by the Reseda/Canoga Park 2006 Loan Agreement, and an equivalent $15,237,000 in aggregate principal amount of outstanding Series L Bonds. The foregoing loan made in 2006 by the Authority to the CRA/LA is herein referred to as the “2006 Parity Loan.”

The CRA/LA may in the future issue additional parity debt under the 2003 Parity Loan Agreements or the 2006 Parity Loan Agreement, or additional bonds, loans or other obligations or

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evidences of indebtedness under other indentures or loan agreements secured by and payable from the Tax Revenues of the Project Area (collectively, the “Parity Debt”). See “SECURITY FOR THE BONDS – Additional Parity Debt” and “SECURITY FOR THE BONDS – Subordinate Debt” herein.

Estimated Annual Debt Service and Projected Debt Service Coverage

The following tables show estimated annual debt service and projected debt service coverage with respect to the Bonds. The debt service coverages shown on Table 9 are derived from projections of available tax increment prepared by the CRA/LA, the Financial Advisor and the Fiscal Consultant. While the CRA/LA, in conjunction with the Financial Advisor and the Fiscal Consultant, has based these projections on assumptions it deems reasonable, there can be no assurance that the actual collection of tax increment revenues by the CRA/LA with respect to the Project Area will not differ significantly from the projections provided herein. Assumptions made by the Fiscal Consultant and the CRA/LA in preparing such projections include, but are not limited to, no increase in assessed value from Fiscal Year 2010-11 to Fiscal Year 2011-12, an increase in assessed value from Fiscal Year 2011-12 to Fiscal Year 2013-14 based on an assumed 1.00% annual inflation factor, and an increase in assessed value from Fiscal Year 2013-14 to Fiscal Year 2040-2041 based on an assumed 2.00% annual inflation factor. There can be no assurance that the actual collection of tax increment by the CRA/LA with respect to the Project Area will not differ significantly from the projections provided herein. See APPENDIX A—“FISCAL CONSULTANT REPORT” and “RISK FACTORS—Assessment Appeals and Reductions to Assessed Values.”

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TABLE 7

Debt Service Schedule for the Series D Bonds

Bond Year* Principal Interest Annual Debt

Service 2011 $ 541,506.91 $ 541,506.91 2012 667,611.26 667,611.26 2013 667,611.26 667,611.26 2014 667,611.26 667,611.26 2015 667,611.26 667,611.26 2016 667,611.26 667,611.26 2017 667,611.26 667,611.26 2018 667,611.26 667,611.26 2019 667,611.26 667,611.26 2020 667,611.26 667,611.26 2021 667,611.26 667,611.26 2022 667,611.26 667,611.26 2023 667,611.26 667,611.26 2024 667,611.26 667,611.26 2025 667,611.26 667,611.26 2026 667,611.26 667,611.26 2027 $ 380,000 667,611.26 1,047,611.26 2028 415,000 639,111.26 1,054,111.26 2029 445,000 607,986.26 1,052,986.26 2030 480,000 574,611.26 1,054,611.26 2031 515,000 538,611.26 1,053,611.26 2032 550,000 499,986.26 1,049,986.26 2033 595,000 458,736.26 1,053,736.26 2034 645,000 414,111.26 1,059,111.26 2035 685,000 365,736.26 1,050,736.26 2036 735,000 314,361.26 1,049,361.26 2037 795,000 260,706.26 1,055,706.26 2038 845,000 202,075.00 1,047,075.00 2039 915,000 139,756.26 1,054,756.26 2040 980,000 72,275.00 1,052,275.00

Total $ 8,980,000 $ 16,311,350.93 $ 25,291,350.93

Source: Financial Advisor

* Pursuant to the Fiscal Agent Agreement, a Bond Year means (i) with respect to the initial Bond Year, the period extending from the date the Bonds are originally delivered to September 1, 2011, and (ii) thereafter, each twelve month period extending from the day immediately following September 1 in any calendar year to the September 1 in the next following calendar year, all dates inclusive.

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TABLE 8

Debt Service Schedule for the Series E Bonds

Bond Year* Principal Interest Annual Debt

Service 2011 $ 467,874.24 $ 467,874.24 2012 576,831.26 576,831.26 2013 576,831.26 576,831.26 2014 576,831.26 576,831.26 2015 576,831.26 576,831.26 2016 576,831.26 576,831.26 2017 576,831.26 576,831.26 2018 576,831.26 576,831.26 2019 576,831.26 576,831.26 2020 576,831.26 576,831.26 2021 576,831.26 576,831.26 2022 576,831.26 576,831.26 2023 576,831.26 576,831.26 2024 576,831.26 576,831.26 2025 576,831.26 576,831.26 2026 576,831.26 576,831.26 2027 $ 190,000 576,831.26 766,831.26 2028 195,000 567,331.26 762,331.26 2029 200,000 557,581.26 757,581.26 2030 215,000 547,581.26 762,581.26 2031 225,000 536,831.26 761,831.26 2032 240,000 524,737.50 764,737.50 2033 250,000 512,137.50 762,137.50 2034 1,155,000 499,012.50 1,654,012.50 2035 1,220,000 438,375.00 1,658,375.00 2036 1,285,000 374,325.00 1,659,325.00 2037 1,350,000 306,862.50 1,656,862.50 2038 1,425,000 235,987.50 1,660,987.50 2039 1,495,000 161,175.00 1,656,175.00 2040 1,575,000 82,687.50 1,657,687.50

Total $ 11,020,000 $ 15,041,799.44 $ 26,061,799.44

Source: Financial Advisor

* Pursuant to the Fiscal Agent Agreement, a Bond Year means (i) with respect to the initial Bond Year, the period extending from the date the Bonds are originally delivered to September 1, 2011, and (ii) thereafter, each twelve month period extending from the day immediately following September 1 in any calendar year to the September 1 in the next following calendar year, all dates inclusive.

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TABLE 9

Projected Debt Service Coverage for the Parity Debt and the Bonds

Fiscal Year*

Pledged Tax Revenues**

Parity Debt Service***

Debt Service for the Bonds

Total Debt Service

Total Debt

Service Coverage

Net Available Tax

Revenues 2011 $ 16,905,000.00 $ 1,730,427.20 $ 1,009,381.15 $ 2,739,808.35 6.17 $ 14,165,191.65 2012 16,905,000.00 1,732,981.70 1,244,442.52 2,977,424.22 5.68 13,927,575.78 2013 17,215,000.00 1,729,678.32 1,244,442.52 2,974,120.84 5.79 14,240,879.16 2014 17,528,000.00 1,730,128.32 1,244,442.52 2,974,570.84 5.89 14,553,429.16 2015 18,161,000.00 1,731,048.57 1,244,442.52 2,975,491.09 6.10 15,185,508.91 2016 18,806,000.00 1,733,154.57 1,244,442.52 2,977,597.09 6.32 15,828,402.91 2017 19,464,000.00 1,730,793.95 1,244,442.52 2,975,236.47 6.54 16,488,763.53 2018 20,135,000.00 1,729,855.70 1,244,442.52 2,974,298.22 6.77 17,160,701.78 2019 20,820,000.00 1,729,372.32 1,244,442.52 2,973,814.84 7.00 17,846,185.16 2020 21,518,000.00 1,733,243.07 1,244,442.52 2,977,685.59 7.23 18,540,314.41 2021 22,231,000.00 1,729,758.57 1,244,442.52 2,974,201.09 7.47 19,256,798.91 2022 22,957,000.00 1,730,448.57 1,244,442.52 2,974,891.09 7.72 19,982,108.91 2023 23,699,000.00 1,730,082.38 1,244,442.52 2,974,524.90 7.97 20,724,475.10 2024 24,454,000.00 1,731,221.07 1,244,442.52 2,975,663.59 8.22 21,478,336.41 2025 25,226,000.00 1,731,315.57 1,244,442.52 2,975,758.09 8.48 22,250,241.91 2026 26,012,000.00 1,730,484.00 1,244,442.52 2,974,926.52 8.74 23,037,073.48 2027 26,814,000.00 672,870.75 1,814,442.52 2,487,313.27 10.78 24,326,686.73 2028 27,633,000.00 672,532.50 1,816,442.52 2,488,975.02 11.10 25,144,024.98 2029 28,467,000.00 674,373.00 1,810,567.52 2,484,940.52 11.46 25,982,059.48 2030 29,318,000.00 670,653.00 1,817,192.52 2,487,845.52 11.78 26,830,154.48 2031 30,187,000.00 672,861.75 1,815,442.52 2,488,304.27 12.13 27,698,695.73 2032 31,073,000.00 673,072.50 1,814,723.76 2,487,796.26 12.49 28,585,203.74 2033 31,976,000.00 671,337.00 1,815,873.76 2,487,210.76 12.86 29,488,789.24 2034 32,898,000.00 2,713,123.76 2,713,123.76 12.13 30,184,876.24 2035 33,837,000.00 2,709,111.26 2,709,111.26 12.49 31,127,888.74 2036 34,796,000.00 2,708,686.26 2,708,686.26 12.85 32,087,313.74 2037 35,774,000.00 2,712,568.76 2,712,568.76 13.19 33,061,431.24 2038 36,772,000.00 2,708,062.50 2,708,062.50 13.58 34,063,937.50 2039 37,789,000.00 2,710,931.26 2,710,931.26 13.94 35,078,068.74 2040 38,827,000.00 2,709,962.50 2,709,962.50 14.33 36,117,037.50 2041 39,885,000.00

Total $ 32,401,694.36 $ 51,353,150.37 $ 83,754,844.75 Source: Fiscal Consultant Report and Financial Advisor

* Fiscal Year means July 1 through June 30 of the following year. ** Pledged Tax Revenues with respect to the Bonds do not include Tax Revenues required by Section 33334.2 of the Redevelopment Law to be deposited in the Low and Moderate Income Housing Fund and assume that all AB 1290 Payments will be subordinated to the Bonds. See “SECURITY FOR THE BONDS – Pledged Tax Revenues” herein. *** Includes debt service for Parity Debt secured by non-housing tax revenues, which is equal to 75% of debt service on outstanding Parity Debt.

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TAX MATTERS

SERIES D BONDS

Opinion of Bond Counsel

In the opinion of Bond Counsel, interest on the Series D Bonds (the “Taxable Bonds”) (i) is included in gross income for Federal income tax purposes pursuant to the Code and (ii) is exempt, under existing statutes, from personal income taxes imposed by the State of California.

The following discussion is a brief summary of the principal United States Federal income tax consequences of the acquisition, ownership and disposition of Taxable Bonds by original purchasers of the Taxable Bonds who are “U.S. Holders”, as defined herein. This summary (i) is based on the Code, Treasury Regulations, revenue rulings and court decisions, all as currently in effect and all subject to change at any time, possibly with retroactive effect; (ii) assumes that the Taxable Bonds will be held as “capital assets”; and (iii) does not discuss all of the United States Federal income tax consequences that may be relevant to a holder in light of its particular circumstances or to holders subject to special rules, such as insurance companies, financial institutions, tax-exempt organizations, dealers in securities or foreign currencies, persons holding the Taxable Bonds as a position in a “hedge” or “straddle”, holders whose functional currency (as defined in Section 985 of the Code) is not the United States dollar, holders who acquire Taxable Bonds in the secondary market, or individuals, estates and trusts subject to the tax on unearned income imposed by Section 1411 of the Code.

Holders of Taxable Bonds should consult with their own tax advisors concerning the United States Federal income tax and other consequences with respect to the acquisition, ownership and disposition of the Taxable Bonds as well as any tax consequences that may arise under the laws of any state, local or foreign tax jurisdiction.

Original Issue Discount

In general, if Original Issue Discount (“OID”) on a Taxable Bond is greater than a statutorily defined de minimis amount, a holder of a Taxable Bond must include in Federal gross income (for each day of the taxable year, or portion of the taxable year, in which such holder holds such Taxable Bond) the daily portion of OID, as it accrues (generally on a constant yield method) and regardless of the holder’s method of accounting. “OID” is the excess of (i) the “stated redemption price at maturity” over (ii) the “issue price.” For purposes of the foregoing: “issue price” means the first price at which a substantial amount of the Taxable Bond is sold to the public (excluding bond houses, brokers, or similar persons or organizations acting in the capacity of underwriters, placement agents or wholesalers); “stated redemption price at maturity” means the sum of all payments, other than “qualified stated interest”, provided by such Taxable Bond; “qualified stated interest” is stated interest that is unconditionally payable in cash or property (other than debt instruments of the issuer) at least annually at a single fixed rate; and “de minimis amount” is an amount equal to 0.25 percent of the Taxable Bond’s stated redemption price at maturity multiplied by the number of complete years to its maturity. A holder may irrevocably elect to include in gross income all interest that accrues on a Taxable Bond using the constant-yield method, subject to certain modifications.

Original Issue Premium

In general, if a Taxable Bond is originally issued for an issue price (excluding accrued interest) that reflects a premium over the sum of all amounts payable on the Taxable Bond other than “qualified stated interest” (a “Taxable Premium Bond”), that Taxable Premium Bond will be subject to Section 171

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of the Code, relating to bond premium. In general, the holder of a Taxable Premium Bond may either deduct the bond premium under Section 171(a)(1) or may elect under Section 171(c) of the Code to amortize that premium as “amortizable bond premium” over the remaining term of the Taxable Premium Bond, determined based on constant yield principles (in certain cases involving a Taxable Premium Bond callable prior to its stated maturity date, the amortization period and yield may be required to be determined on the basis of an earlier call date that results in the highest yield on such bond). Any such election is generally irrevocable and applies to all debt instruments of the holder (other than tax-exempt bonds) held at the beginning of the first taxable year to which the election applies and to all such debt instruments thereafter acquired. Under certain circumstances, the holder of a Taxable Premium Bond may realize a taxable gain upon disposition of the Taxable Premium Bond even though it is sold or redeemed for an amount less than or equal to the holder's original acquisition cost.

Disposition and Defeasance

Generally, upon the sale, exchange, redemption, or other disposition (which would include a legal defeasance) of a Taxable Bond, a holder generally will recognize taxable gain or loss in an amount equal to the difference between the amount realized (other than amounts attributable to accrued interest not previously includable in income) and such holder’s adjusted tax basis in the Taxable Bond.

The CRA/LA may cause the deposit of moneys or securities in escrow in such amount and manner as to cause the Taxable Bonds to be deemed to be no longer outstanding under the indenture of the Taxable Bonds (a “defeasance”). Appendix B “Summary of Certain Provisions of the Fiscal Agent Agreement” attached hereto. For Federal income tax purposes, such defeasance could result in a deemed exchange under Section 1001 of the Code and a recognition by such owner of taxable income or loss, without any corresponding receipt of moneys. In addition, the character and timing of receipt of payments on the Taxable Bonds subsequent to any such defeasance could also be affected.

Backup Withholding and Information Reporting

In general, information reporting requirements will apply to non-corporate holders with respect to payments of principal, payments of interest, and the accrual of OID on a Taxable Bond and the proceeds of the sale of a Taxable Bond before maturity within the United States. Backup withholding may apply to holders of Taxable Bonds under Section 3406 of the Code. Any amounts withheld under the backup withholding rules from a payment to a beneficial owner, and which constitutes over-withholding, would be allowed as a refund or a credit against such beneficial owner’s United States Federal income tax provided the required information is furnished to the Internal Revenue Service.

U.S. Holders

The term “U.S. Holder” means a beneficial owner of a Taxable Bond that is: (i) a citizen or resident of the United States, (ii) a corporation, partnership or other entity created or organized in or under the laws of the United States or of any political subdivision thereof, (iii) an estate the income of which is subject to United States Federal income taxation regardless of its source or (iv) a trust whose administration is subject to the primary jurisdiction of a United States court and which has one or more United States fiduciaries who have the authority to control all substantial decisions of the trust.

IRS Circular 230 Disclosure

The advice under the caption, “Tax Matters - Series D Bonds” herein, concerning certain income tax consequences of the acquisition, ownership and disposition of the Taxable Bonds, was written to support the marketing of the Taxable Bonds. To ensure compliance with requirements imposed by the

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Internal Revenue Service, Bond Counsel informs you that (i) any Federal tax advice contained in this official statement (including any attachments) or in writings furnished by Bond Counsel to the CRA/LA is not intended to be used, and cannot be used by any bondholder, for the purpose of avoiding penalties that may be imposed on the bondholder under the Code, and (ii) the bondholder should seek advice based on the bondholder’s particular circumstances from an independent tax advisor.

Miscellaneous

Tax legislation, administrative actions taken by tax authorities, or court decisions, whether at the Federal or state level, could affect the market price or marketability of the Taxable Bonds.

Prospective purchasers of the Taxable Bonds should consult their own tax advisors regarding the foregoing matters.

SERIES E BONDS

Opinion of Bond Counsel

In the opinion of Hawkins Delafield & Wood LLP, Bond Counsel to the CRA/LA, under existing statutes and court decisions and assuming continuing compliance with certain tax covenants described herein, (i) interest on the Series E Bonds is excluded from gross income for Federal income tax purposes pursuant to Section 103 of the Internal Revenue Code of 1986, as amended (the “Code”), and (ii) interest on the Series E Bonds is not treated as a preference item in calculating the alternative minimum tax imposed on individuals and corporations under the Code and is not included in the adjusted current earnings of corporations for purposes of calculating the alternative minimum tax. In rendering its opinion, Bond Counsel has relied on certain representations, certifications of fact, and statements of reasonable expectations made by the CRA/LA in connection with the Series E Bonds, and Bond Counsel has assumed compliance by the CRA/LA with certain ongoing covenants to comply with applicable requirements of the Code to assure the exclusion of interest on the Series E Bonds from gross income under Section 103 of the Code. The provisions of the American Recovery and Reinvestment Act of 2009 relating to the treatment of interest on certain tax-exempt bonds do apply to the Series E Bonds.

In addition, in the opinion of Bond Counsel to the CRA/LA, under existing statutes, interest on the Series E Bonds is exempt from personal income taxes imposed by the State of California.

Bond Counsel expresses no opinion regarding any other Federal or state tax consequences with respect to the Series E Bonds. Bond Counsel renders its opinion under existing statutes and court decisions as of the issue date, and assumes no obligation to update, revise or supplement its opinion to reflect any action hereafter taken or not taken, or any facts or circumstances that may hereafter come to its attention, or changes in law or in interpretations thereof that may hereafter occur, or for any other reason. Bond Counsel expresses no opinion on the effect of any action hereafter taken or not taken in reliance upon an opinion of other counsel on the exclusion from gross income for Federal income tax purposes of interest on the Series E Bonds, or under state and local tax law.

Certain Ongoing Federal Tax Requirements and Covenants

The Code establishes certain ongoing requirements that must be met subsequent to the issuance and delivery of the Series E Bonds in order that interest on the Series E Bonds be and remain excluded from gross income under Section 103 of the Code. These requirements include, but are not limited to, requirements relating to use and expenditure of gross proceeds of the Series E Bonds, yield and other restrictions on investments of gross proceeds, and the arbitrage rebate requirement that certain excess

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earnings on gross proceeds be rebated to the Federal government. Noncompliance with such requirements may cause interest on the Series E Bonds to become included in gross income for Federal income tax purposes retroactive to their issue date, irrespective of the date on which such noncompliance occurs or is discovered. The CRA/LA has covenanted to comply with certain applicable requirements of the Code to assure the exclusion of interest on the Series E Bonds from gross income under Section 103 of the Code.

Certain Collateral Federal Tax Consequences

The following is a brief discussion of certain collateral Federal income tax matters with respect to the Series E Bonds. It does not purport to address all aspects of Federal taxation that may be relevant to a particular owner of a Series E Bond. Prospective investors, particularly those who may be subject to special rules, are advised to consult their own tax advisors regarding the Federal tax consequences of owning and disposing of the Series E Bonds.

The Series E Bonds are not taken into account (subject to certain limitations) in determining the portion of a financial institution’s interest expense subject to the pro rata interest disallowance rule of Section 265(b) of the Code for costs of indebtedness incurred or continued to purchase or carry certain tax-exempt obligations. The Series E Bonds, however, are taken into account in the calculation of the amount of a financial institution’s preference items under Section 291 of the Code.

Prospective owners of the Series E Bonds should be aware that the ownership of such obligations may result in collateral Federal income tax consequences to various categories of persons, such as corporations (including S corporations and foreign corporations), financial institutions, property and casualty and life insurance companies, individual recipients of Social Security and railroad retirement benefits, individuals otherwise eligible for the earned income tax credit, and taxpayers deemed to have incurred or continued indebtedness to purchase or carry obligations the interest on which is excluded from gross income for Federal income tax purposes. Interest on the Series E Bonds may be taken into account in determining the tax liability of foreign corporations subject to the branch profits tax imposed by Section 884 of the Code.

Original Issue Discount

“Original issue discount” (“OID”) is the excess of the sum of all amounts payable at the stated maturity of a Series E Bond (excluding certain “qualified stated interest” that is unconditionally payable at least annually at prescribed rates) over the issue price of that maturity. In general, the “issue price” of a maturity means the first price at which a substantial amount of the Series E Bonds of that maturity was sold (excluding sales to bond houses, brokers, or similar persons acting in the capacity as underwriters, placement agents, or wholesalers). In general, the issue price for each maturity of Series E Bonds is expected to be the initial public offering price set forth on the cover page of the Official Statement. Bond Counsel further is of the opinion that, for any Series E Bonds having OID (a “Tax-Exempt Discount Bond”), OID that has accrued and is properly allocable to the owners of the Tax-Exempt Discount Bonds under Section 1288 of the Code is excludable from gross income for Federal income tax purposes to the same extent as other interest on the Series E Bonds.

In general, under Section 1288 of the Code, OID on a Tax-Exempt Discount Bond accrues under a constant yield method, based on periodic compounding of interest over prescribed accrual periods using a compounding rate determined by reference to the yield on that Tax-Exempt Discount Bond. An owner’s adjusted basis in a Tax-Exempt Discount Bond is increased by accrued OID for purposes of determining gain or loss on sale, exchange, or other disposition of such Series E Bond. Accrued OID may be taken into account as an increase in the amount of tax-exempt income received or deemed to have

57

been received for purposes of determining various other tax consequences of owning a Tax-Exempt Discount Bond even though there will not be a corresponding cash payment.

Owners of Tax-Exempt Discount Bonds should consult their own tax advisors with respect to the treatment of original issue discount for Federal income tax purposes, including various special rules relating thereto, and the state and local tax consequences of acquiring, holding, and disposing of Tax-Exempt Discount Bonds.

Bond Premium

In general, if an owner acquires a Series E Bond for a purchase price (excluding accrued interest) or otherwise at a tax basis that reflects a premium over the sum of all amounts payable on the Series E Bond after the acquisition date (excluding certain “qualified stated interest” that is unconditionally payable at least annually at prescribed rates), that premium constitutes “bond premium” on that Series E Bond (a “Tax-Exempt Premium Bond”). In general, under Section 171 of the Code, an owner of a Tax-Exempt Premium Bond must amortize the bond premium over the remaining term of the Tax-Exempt Premium Bond, based on the owner’s yield over the remaining term of the Tax-Exempt Premium Bond determined based on constant yield principles (in certain cases involving a Tax-Exempt Premium Bond callable prior to its stated maturity date, the amortization period and yield may be required to be determined on the basis of an earlier call date that results in the lowest yield on such bond). An owner of a Tax-Exempt Premium Bond must amortize the bond premium by offsetting the qualified stated interest allocable to each interest accrual period under the owner’s regular method of accounting against the bond premium allocable to that period. In the case of a Tax-Exempt Premium Bond, if the bond premium allocable to an accrual period exceeds the qualified stated interest allocable to that accrual period, the excess is a nondeductible loss. Under certain circumstances, the owner of a Tax-Exempt Premium Bond may realize a taxable gain upon disposition of the Tax-Exempt Premium Bond even though it is sold or redeemed for an amount less than or equal to the owner’s original acquisition cost. Owners of any Tax-Exempt Premium Bonds should consult their own tax advisors regarding the treatment of bond premium for Federal income tax purposes, including various special rules relating thereto, and state and local tax consequences, in connection with the acquisition, ownership, amortization of bond premium on, sale, exchange, or other disposition of Tax-Exempt Premium Bonds.

Information Reporting and Backup Withholding

Information reporting requirements apply to interest paid on tax-exempt obligations, including the Series E Bonds. In general, such requirements are satisfied if the interest recipient completes, and provides the payor with, a Form W-9, “Request for Taxpayer Identification Number and Certification,” or unless the recipient is one of a limited class of exempt recipients, including corporations. A recipient not otherwise exempt from information reporting who fails to satisfy the information reporting requirements will be subject to “backup withholding,” which means that the payor is required to deduct and withhold a tax from the interest payment, calculated in the manner set forth in the Code. For the foregoing purpose, a “payor” generally refers to the person or entity from whom a recipient receives its payments of interest or who collects such payments on behalf of the recipient.

If an owner purchasing a Series E Bond through a brokerage account has executed a Form W-9 in connection with the establishment of such account, as generally can be expected, no backup withholding should occur. In any event, backup withholding does not affect the excludability of the interest on the Series E Bonds from gross income for Federal income tax purposes. Any amounts withheld pursuant to backup withholding would be allowed as a refund or a credit against the owner’s Federal income tax once the required information is furnished to the Internal Revenue Service.

58

Miscellaneous

Tax legislation, administrative actions taken by tax authorities, or court decisions, whether at the Federal or state level, may adversely affect the tax-exempt status of interest on the Series E Bonds under Federal or state law and could affect the market price or marketability of the Series E Bonds.

Prospective purchasers of the Series E Bonds should consult their own tax advisors regarding the foregoing matters.

NO LITIGATION

There is no litigation pending and served or, to the CRA/LA’s knowledge, threatened in any way to restrain or enjoin the issuance, execution or delivery of the Bonds, or to contest the validity of the Bonds or the Fiscal Agent Agreement. Except as described herein, there is no litigation pending and served or, to the CRA/LA’s knowledge, threatened in any way to contest or affect the CRA/LA’s ability to receive and pledge the Tax Revenues, or any proceedings of the CRA/LA with respect thereto.

In the opinion of the CRA/LA and its counsel, there are no lawsuits or claims pending against the CRA/LA which will materially affect the CRA/LA’s finances so as to impair its ability to pay principal of and interest on the Bonds when due.

RATINGS

The Bonds have been rated “A” by Standard & Poor’s Financial Services LLC, a subsidiary of The McGraw-Hill Companies, Inc. (“S&P”) and “A3” by Moody’s Investors Service Inc. (“Moody’s”).

An explanation of the significance and status of such credit ratings may be obtained from the rating agencies furnishing the same. Such ratings reflect only the views of such organizations and an explanation of the significance of such ratings may be obtained from the respective agencies at the following addresses: Standard & Poor’s Financial Services LLC, 55 Water Street, New York, New York; and Moody’s Investors Service, Inc., 7 World Trade Center, 250 Greenwich Street, New York, New York.

There is no assurance that a rating will continue for any given period or that such rating will not be revised downward or withdrawn entirely by such rating agency, if in its judgment, circumstances so warrant. The CRA/LA and the Fiscal Agent undertake no responsibility either to notify the owners of the Bonds of any revision or withdrawal of the rating or to oppose any such revision or withdrawal. Any such downward revision or withdrawal of such rating may have an adverse effect on the market price of the Bonds.

INDEPENDENT ACCOUNTANTS

Attached as Appendix C are excerpts of the audited financial statements of the CRA/LA for the fiscal year ending June 30, 2009, prepared by the CRA/LA and audited by the certified public accounting firm of Simpson & Simpson (the “Auditor”). The CRA/LA has not requested nor did the CRA/LA obtain permission from the Auditor to include the audited financial statements as an Appendix to this Official Statement. Accordingly, the Auditor has made no representation in connection with inclusion of the audits herein that there has been no material change in the financial condition of the CRA/LA since the most recent audit was concluded. The Auditor has not been engaged to perform and has not performed, since the date of its report included herein, any procedures on the financial statements addressed in that report. The Auditor also has not performed any procedures relating to this Official Statement.

59

CONTINUING DISCLOSURE

The CRA/LA has covenanted for the benefit of Bondholders to provide certain financial information and operating data relating to the CRA/LA (the “Annual Report”) and to provide notices of the occurrence of certain enumerated material events. The Annual Report will be filed by the Fiscal Agent or Dissemination Agent (if the CRA/LA has appointed a Dissemination Agent) on behalf of the CRA/LA with the Municipal Securities Rulemaking Board (the “MSRB”) through its Electronic Municipal Market Access System (referred to as “EMMA”). The notices of material events will be filed by the Fiscal Agent or Dissemination Agent (if the CRA/LA has appointed a Dissemination Agent) on behalf of the CRA/LA with the MSRB. The specific nature of the information to be contained in the Annual Report or the notices of material events are set forth in APPENDIX D—“FORM OF CONTINUING DISCLOSURE AGREEMENT.”

These covenants have been made in order to assist the Original Purchaser in complying with Rule 15c2-12(b)(5) promulgated by the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended. The CRA/LA has never failed to comply, in all material respects, with an undertaking pursuant to the Rule.

CERTAIN LEGAL MATTERS

Hawkins Delafield & Wood LLP, Los Angeles, California, Bond Counsel, will render an opinion with respect to the validity and enforceability of the Fiscal Agent Agreement and as to the validity of the Bonds. Complete copies of the proposed forms of opinion of Bond Counsel with respect to the Series D Bonds and the Series E Bonds are set forth in Appendix E hereto. Bond Counsel has undertaken no responsibility for the accuracy, completeness, or fairness of this Official Statement. Compensation for Bond Counsel’s services is contingent upon the sale and delivery of the Bonds.

Certain legal matters will be passed on for the CRA/LA by Carmen A. Trutanich, City Attorney of the City of Los Angeles, California, as CRA/LA General Counsel, and by Sidley Austin LLP, as Disclosure Counsel. Compensation for Disclosure Counsel’s services is contingent upon the sale and delivery of the Bonds.

UNDERWRITING

The Series D Bonds are being purchased by Citigroup Global Markets Inc. (the “Series D Original Purchaser”) as winner of a competitive bid conducted on October 26, 2010. The Series D Original Purchaser has agreed to purchase the Series D Bonds from the CRA/LA at a purchase price of $8,980,194.24 (consisting of $8,980,000.00 aggregate principal amount of the Series D Bonds, plus net original issue premium of $173,772.25, less an underwriter’s discount of $173,578.01). Under the terms of its bid, the Series D Original Purchaser will be obligated to purchase all of the Series D Bonds if any are purchased, the obligation to make such purchase being subject to certain terms and conditions to be satisfied by the CRA/LA.

The Series E Bonds are being purchased by Citigroup Global Markets Inc. (the “Series E Original Purchaser”) as winner of a competitive bid conducted on October 26, 2010. The Series E Original Purchaser has agreed to purchase the Series E Bonds from the CRA/LA at a purchase price of $10,856,675.53 (consisting of $11,020,000.00 aggregate principal amount of the Series E Bonds, plus net original issue premium of $33,613.95, less an underwriter’s discount of $196,938.42). Under the terms of its bid, the Series E Original Purchaser will be obligated to purchase all of the Series E Bonds if any are purchased, the obligation to make such purchase being subject to certain terms and conditions to be satisfied by the CRA/LA.

60

The Original Purchasers have certified the reoffering prices or yields set forth on the inside cover hereof. The CRA/LA takes no responsibility for the accuracy of these prices or yields. The Original Purchasers may offer and sell the Bonds to certain dealers and others at prices lower than the offering prices stated on the inside cover page. The offering prices may be changed from time to time by the Original Purchasers.

MISCELLANEOUS

All references herein to the Fiscal Agent Agreement, the Continuing Disclosure Agreement, the Redevelopment Law, other applicable legislation, the Redevelopment Plan, the Parity Debt, and other agreements and other documents are made subject to the definitive provisions of such documents respectively and do not purport to be complete statements of any or all of such provisions. Reference is hereby made to such documents on file with the CRA/LA for further information in connection therewith.

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

The execution and delivery of this Official Statement has been duly authorized by the CRA/LA.


By: /s/ Raymond L. Fors Finance Director


APPENDIX A

FISCAL CONSULTANT REPORT


2010 CD3 FCR 10/1410

REPORT OF THE FISCAL CONSULTANT

Prepared for

THE COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF LOS ANGELES Los Angeles County, California

Reseda/Canoga Park Earthquake Disaster Assistance Project

for Portions of Council District 3

Tax Allocation Bonds Series D (Taxable)

and

Tax Allocation Bonds Series E (Tax-Exempt)

Submitted by Katz Hollis

October 2010

2010 CD3 FCR 10/1410

PART I

INTRODUCTION

The Community Redevelopment Agency of the City of Los Angeles, California (the “CRA/LA”) is considering the issuance of the 2010 Tax Allocation Bonds, Series A (Taxable) and 2010 Tax Allocation Bonds Series B (Tax Exempt) (the “Bonds”) to finance activities in support of its Reseda/Canoga Park Earthquake Disaster Assistance Project for Portions of Council District 3 (the “Reseda/Canoga Park Project” or the “Project”). In connection with the proposed pledge of tax increment revenue to the Bonds, the CRA/LA has requested that Katz Hollis review current and historical taxable values and property tax revenues, review currently pending and recently resolved assessment appeals and estimate future tax increment revenues to be pledged to the Bonds. Pursuant to that request, Katz Hollis has prepared this Fiscal Consultant’s Report (the “Report”). The key data for the Project is summarized in tabular format on Figure I-1, shown on the following page. This Report is organized into the following four parts:

Part I, “Introduction”, provides an outline of the Report and a summary of the Project including a Project Profile, Figure I-1.

Part II, “Project Taxable Value and Tax Increment Revenue”, covers current and historic values, taxable value attributable to major assessees, currently pending and recently resolved assessment appeals, and information on the sources of tax increment revenues including unitary property taxes, and supplemental property taxes. An analysis describing the impacts of existing liens (other than bonded debt) on tax increment revenues including the low and moderate income housing set-aside and property tax administrative charges is also included in Part II.

Part III, “Projection of Tax Increment Revenues”, includes a projection of future levels of taxable value for the Project and resultant tax increment revenues. Part III also discusses and demonstrates the impact of recently resolved assessment appeals on tax increment revenue of the Project. Part III also includes a brief discussion of the underlying assumptions of the projection.

Part IV, “Background Information”, contains background information on the topics covered in Parts I through III of this Report. It has been prepared for those readers of the Report who may wish further information on the analysis and conclusions presented in prior sections. It also contains a description of legislation which requires the contribution of funds from redevelopment agencies to support local schools.

It should be noted that the value estimates and tax increment revenue projections in this Report are based upon information believed to be reasonable and accurate as of the date of this analysis. To the extent that current information is modified, resulting tax increment revenue may be other than that projected. The discussion of allocation procedures for property taxes contained in this Report is based largely upon information provided by representatives of Los Angeles County (the “County”). These procedures are in some measure set administratively and are subject to change. No proposed changes to these procedures, other than those discussed herein, have been identified to date.

Figure I-1

Community Redevelopment Agency of the City of Los Angeles

Reseda/Canoga Park Earthquake Disaster Assistance Project

PROJECT PROFILE

GENERAL INFORMATION ASSESSED VALUES/TAX RECEIPTS MAJOR APPEALS (5)

Date of Adoption: December 13, 1994 Historical Resolved 2010/11 EstimatedAmendments: 1st November 21, 2003 Incremental Original Levy Adjusted Historical Assessee Value Impact Refunds

2nd March 20, 2009 Year Taxable Value Levy Adjustment Receivable Receipts (2) Secured Westfield Topanga Owner LP - 8,134,000

Area: 2,400 Acres 2006/07 1,583,507,075 15,574,546 20,633 15,595,179 14,926,098 Basrock Renaissance California, LLC - 97,000Tax Increment Limit: None 2007/08 2,370,725,104 23,904,586 1,356,045 25,260,631 24,209,762 ECI Owensmouth, LLC - 21,000Tax Increment Received Through 2009-10 $129,575,104 2008/09 2,589,318,216 27,616,193 (5,666,744) 21,949,450 22,620,283 Ryuichi Matsuda - 12,000Bond Indebtedness Limit: $190,000,000 2009/10 2,427,391,597 20,072,398 16,976,141 37,048,539 33,443,299 BBB Saticoy LLC - 10,000Bond Indebtedness Outstanding as of September 30, 2010 $26,877,000 Vallerio Vista LLC - 10,000Time Limit on Debt Incurrence: December 13, 2014 (2) Includes all current taxes and redemption payments collected. Majestic Plaza, LLC - 8,000Time Limit on the Effectiveness of the Paul Daneshrad - 3,000 Redevelopment Plan: December 13, 2015 49 Other Under $5.0 million Initial Value 11,000 125,000Time Limit to Receive TI/Repay Indebtedness: June 30, 2041 Percentage Collection Unsecured

Vons Co. Inc. N/A 2,0002010/11 REVENUE ESTIMATE (1) Current Year Collections including

Year Collections (3) Prior Year (4) Estimated 2010/11 Impact $11,000 $8,422,0001994/95 2010/11

2010/11 Base Year Incremental 2006/07 93.6% 95.7% Pending 2010/11 EstimatedSecured Value Value Value 2007/08 92.6% 95.8% Assessee Value Impact Refunds Land $1,841,440,315 $783,914,296 $1,057,526,019 2008/09 93.3% 103.1% Secured Improvements 2,482,606,304 1,197,988,619 1,284,617,685 2009/10 85.6% 90.3% ASN Woodland Hills East LLC 32,054,000 321,000 Personal Property 46,304,862 58,256,975 (11,952,113) Average Collections 91.3% 96.2% Basrock Renaissance California, LLC 9,609,000 - Less: Exemptions 354,865,088 190,979,346 163,885,742 Catellus Development Corp. 3,888,000 42,000

(3) All current year taxes collected. ELPF Northridge 18350 Roscoe, LLC 2,658,000 27,000Total Secured $4,015,486,393 $1,849,180,544 $2,166,305,849 (4) All current taxes and redemption payments collected. Parkside Land Partners LLC 2,349,000 24,000

Reseda Marketplace, L.P. 2,295,000 23,000Unsecured TAX SHARING PAYMENTS ECI Owensmouth, LLC 2,130,000 - Land 0 0 0 1439 Curson Partners 2,126,000 21,000 Improvements 73,876,656 34,215,863 39,660,793 Payments are required per AB1290. Macy's California Inc. - 62,000 Personal Property 92,566,141 54,623,094 37,943,047 Sears - 33,000Less: Exemptions 1 704 000 35 400 1 668 600 40 Other < $7 7 and > $2 0 million Initial Value 22 459 000 179 000Less: Exemptions 1,704,000 35,400 1,668,600 40 Other < $7.7 and > $2.0 million Initial Value 22,459,000 179,000

Value Per Land Use* 64 Other Under $2.0 million Initial Value 8,857,000 85,000Total Unsecured $164,738,797 $88,803,557 $75,935,240 Unsecured

Westfield Topanga Owner LP N/A 951,000Total Value $4,180,225,190 $1,937,984,101 $2,242,241,089 Macy`s Department Stores, Inc. N/A 22,000

Vons Companies Inc. N/A 3,000 Less: Resolved Appeal Valuation Reductions (11,000) Radnet Mangement Inc. N/A 6,000 Pending Appeal Valuation Reductions (88,425,000) Express LLC #338 N/A 2,000

GUESS? Retail Inc. N/A 1,000Adjusted Incremental Secured and Unsecured $2,153,805,089 Tesoro South Coast Company LLC N/A 2,000

Tax Increment Revenue $21,538,051 Estimated 2010/11 Impact $88,425,000 $1,804,000 Unitary Revenue 24,523 Less: Property Tax Administrative Charge 431,251 (5) See Part II, "Assessment Appeals" for additional information. Housing Tax Increment Revenue 4,226,265 TEN MAJOR ASSESSEES

Revenue By TypePLEDGED TAX INCREMENT REVENUE $16,905,058 Use/ % of

Common Project AB 1290 Payments 4,312,515 Assessee Name Amount Value

Westfield Topanga Owner LP/NET AVAILABLE TAX INCREMENT REVENUE $12,592,543 Topanga Plaza LP Shopping Center $445,030,613 10.65%

ASN Woodland Hills East LLC Apartments 180,763,054 4.32%Basrock Renaissance Apartments 88,065,697 2.11%Nordstrom Inc. Department Store 53,316,968 1.28%Essex Portfolio LP Apartments 43,157,167 1.03%Sam Menlo TR Apartments 30,918,769 0.74%

(1) Additional information is contained in Figure II-1A. Target Corporation Retail Store 30,741,653 0.74%Catellus Development Corporation Shopping Center 29,275,522 0.70%Medical Park Plaza Medical Offices 28,004,985 0.67%Combined Properties Reseda Shopping Center 25,698,778 0.61%

* Land use distribution based on the 2010/11 Los Angeles County secured roll.Total Major Assessees $954,973,206

Total 2010/11 Project Value $4,180,225,190Percentage of 2010/11 Total Value 22.85%

Percentage of 2010/11 Incremental Value 42.59%Project Profile

Copyright 1992 Katz Hollis

Secured96.61%

Unsecured3.39%

Residential -SUSH

35.57%

Residential -Other

27.78%

Commercial33.60%

Industrial1.60%

Other1.44%

The Community Redevelopment Agency of the City of Los Angeles, California Reseda/Canoga Park Project Part I – Introduction

I-3

Characteristics of the Project

The Reseda/Canoga Park Disaster Assistance Project for Portions of Council District 3 was adopted on December 13, 1994 in response to the economic and physical recovery needs resulting from the Northridge Earthquake.

The 2,500-acre Project Area is located in the West San Fernando Valley communities of Canoga Park, Reseda and Winnetka and generally includes the Sherman Way commercial corridor from Topanga Canyon Boulevard on the west to Louise Avenue on the east and Saticoy Street from Mason Street on the west to Oakdale Avenue on the east. Portions of the residential communities of Canoga Park and Reseda are also included within the project area boundaries.

Figure I-1 includes a chart, VALUE PER LAND USE, which provides the distribution of 2010-11 secured assessed value among the various land use categories. In the chart, the value of residential property is divided between Single Unit Sales Housing (“SUSH”) and other residential properties. SUSH is comprised of single-family detached housing and condominiums. Recently there has been a significant amount of discussion in the news media of the vulnerability of mortgages on such properties to foreclosure and of the decline of market value for SUSH properties. Per the provided chart, SUSH comprises 35.86% of the Project’s 2010-11 value.

Shown below are the various limits included in the redevelopment plan for the Project as required by the Community Redevelopment Law (the “CRL”)

Plan Effectiveness/ Tax Increment BondedDebt Incurrence Duration Receipt Indebtedness

Time Limit Time Limit Time Limit Dollar LimitDecember 13, 2014 December 13, 2015 June 30, 2041 $190,000,000

The above limits for Plan Effectiveness/Duration and for Tax Increment Receipt are one year later than the limits originally specified in the Project’s redevelopment plan. The extensions are the result of an amendment adopted by the Los Angeles City Council pursuant to a state legislative measure enacted to mitigate the impact of redevelopment agencies contribution to the state’s budget difficulties. Ordinance No. 167,666, which enacted the time extensions, was adopted on November 21, 2003. On that same date the City Council adopted Ordinance No. 165,677. which extended the Project’s Debt Incurrence Time Limit by five years to December 13, 2009. The Debt Incurrence Time Limit was further extended by Ordinance 180,612 , adopted March 20, 2009 , which yielded the time limit indicated above.

2010 CD3 FCR 10/1410

II-1

PART II

PROJECT TAXABLE VALUE AND TAX INCREMENT REVENUE

INTRODUCTION

The following paragraphs provide summarized information regarding property tax valuation and revenues realized or to be realized for the Project in the current and past fiscal years. Much of the information regarding current year values and resultant revenues is presented on Figure II-1, “Estimate of Incremental Property Tax Revenue for Fiscal Year 2010-11”. Additional specifics regarding the analyses and assumptions that underlie the information in this Part II can be found in Part IV, “Background Information”.

PROJECT TAXABLE VALUE

Current and Historical Taxable Value

The original statement of Project value is typically reported by the County in late September of each fiscal year and is based on the aggregation of parcel values in the Project as of August 20th of such year. Based on the County’s original report of Project values for the 2010-11 fiscal year, the total assessed value of the Project is $4.18 billion, representing an decrease of $175 million (or –4.24%) from the value of the Project for 2009-10.

The historical trend of valuation changes for the Project is shown on Figure II-2, “Historical Taxable Value”. As shown on Figure II-2, taxable value for the Project has increased from $3.52 billion in 2006-07 to $4.18 billion in 2010-11, an increase of 18.71 percent. , although the Project has declined in value in each of the two most current fiscal years.

Assessment Appeals

Pending and recently resolved assessment appeals were reviewed in order to determine the potential impact on current and future Project value and tax increment revenue should appeals be resolved in favor of the respective assessees. The analysis of currently pending and recently resolved assessment appeals in the Project disclosed 142appeals pending hearing before the Los Angeles County Assessment Appeals Board and 70 appeals having been recently resolved.

Table II-3, “Estimate of Assessment Appeals Impact” summarizes the recently resolved and pending appeals for the Project. The table includes, the actual or estimated valuation reduction, if not already reflected on the 2010-11 tax roll, and the estimated resulting refund due the assessee for each resolved appeal. All of the recently resolved appeals shown on Table II-3 have had their reduced value included in the 2010-11 values for the Project. It is assumed that the estimated refunds resulting from recently resolved appeals will be payable during the 2010-11 fiscal year.

There are also several pending assessment appeals. The pending appeals are assumed to reduce the value of the subject properties by 18 percent of the pre-appeal assessed value. The 18 percent reduction assumption is based on a review of historical reductions resulting from successful appeals. It has been assumed that the pending appeals will be resolved in fiscal year 2010-11 and result in the corresponding reduction of Project value and payment of appeal refunds during the fiscal year.

Figure II-1

Community Redevelopment Agency of the City of Los AngelesReseda/Canoga Park Earthquake Disaster Assistance Project

Estimate of Tax Increment Revenues (1)1994/95 2010/10

2010/11 Base IncrementalTaxable Value Taxable Value Taxable Value

SecuredLand (1) $1,841,440,315 $783,914,296 $1,057,526,019Improvements (1) 2,482,606,304 1,197,988,619 1,284,617,685Personal Property 46,304,862 58,256,975 (11,952,113)Gross Secured $4,370,351,481 $2,040,159,890 $2,330,191,591 Less: Exemptions 354,865,088 190,979,346 163,885,742Total Secured $4,015,486,393 $1,849,180,544 $2,166,305,849

UnsecuredLand 0 0 0Improvements 73,876,656 34,215,863 39,660,793Personal Property 92,566,141 54,623,094 37,943,047Gross Unsecured $166,442,797 $88,838,957 $77,603,840 Less: Exemptions 1,704,000 35,400 1,668,600Total Unsecured $164,738,797 $88,803,557 $75,935,240

Total Secured and Unsecured $4,180,225,190 $1,937,984,101 $2,242,241,089

Less: Resolved Appeal Valuation Reductions (2) (11,000) Pending Appeal Valuation Reductions (2) (88,425,000)

Adjusted Incremental Secured and Unsecured $2,153,805,089

Tax Increment Revenue $21,538,051 Unitary Revenue (3) 24,523 Less: Property Tax Administrative Charge 431,251 Housing Tax Increment Revenue(4) $4,226,265

PLEDGED TAX INCREMENT REVENUE $16,905,058

AB 1290 Payments 4,312,515

NET AVAILABLE TAX INCREMENT REVENUE (5) $12,592,543

(1) Based on information provided by the County of Los Angeles. (2) Estimated impact of assessment appeals based on information reported by the County as of July 2010.(3) Estimated 20010/11, as reported by the County as of August 2010 for the 2009/10 fiscal year.(4) Housing Revenue estimated at 20% of Total Estimated Tax Revenues.(5) It is estimated that the Agency will be impacted by $8.4 million, and $1.8 milllion in prior year Resolved and Pending Assessment Appeals Refunds, respectively. The Agency will reimburse this amount from funds on hand.

Figure II-2


Historical Taxable Value (1)

2006/07 2007/08 2008/09 2009/10 2010/11Secured

Land 1,678,855,818$ 1,887,693,976$ 2,009,222,502$ 1,894,857,768$ 1,841,440,315$ Improvements 2,001,599,166 2,519,703,423 2,593,406,145 2,627,385,649 2,482,606,304 Personal Property 36,984,336 38,134,123 8,865,714 47,297,002 46,304,862 Gross Secured 3,717,439,320$ 4,445,531,522$ 4,611,494,361$ 4,569,540,419$ 4,370,351,481$ Less: Exemptions 302,679,765 293,341,564 114,710,383 374,935,702 354,865,088 Exemption Adjustments (2) - - 150,027,783 - - Total Secured 3,414,759,555$ 4,152,189,958$ 4,346,756,195$ 4,194,604,717$ 4,015,486,393$

Unsecured Land 0 0 0 0 0 Improvements 37,121,542 62,159,533 74,716,727 75,187,638 73,876,656 Personal Property 70,645,339 95,375,384 106,963,621 96,796,595 92,566,141 Gross Unsecured 107,766,881$ 157,534,917$ 181,680,348$ 171,984,233$ 166,442,797$Gross Unsecured 107,766,881$ 157,534,917$ 181,680,348$ 171,984,233$ 166,442,797$ Less: Exemptions 1,035,260 1,015,670 1,134,226 1,213,252 1,704,000

Total Unsecured 106,731,621$ 156,519,247$ 180,546,122$ 170,770,981$ 164,738,797$

TOTAL PROJECT VALUE 3,521,491,176$ 4,308,709,205$ 4,527,302,317$ 4,365,375,698$ 4,180,225,190$

Percentage Increase/Decrease 22.35% 5.07% -3.58% -4.24%

(1) Values other than Exemption Adjustments are as reported by the Los Angeles County Auditor-Controller.(2) Exemption adjustments are based on specific situations where exemptions were filed late and not included in the initial roll values.

Figure II-3


Estimate of Assessment Appeals Impact (1)

Resolved (2)No. of 2010/11 Estimated

Assessee Assmts Value Impact RefundsSecured

Westfield Topanga Owner LP 1 - 8,134,000 (3) Basrock Renaissance California, LLC 4 - 97,000 ECI Owensmouth, LLC 1 - 21,000 Ryuichi Matsuda 1 - 12,000 BBB Saticoy LLC 1 - 10,000 Vallerio Vista LLC 1 - 10,000 Majestic Plaza, LLC 4 - 8,000 Paul Daneshrad 1 - 3,000 Other Appeals Under $5.0 million Initial Value 54 11,000 125,000

Unsecured Vons Co. Inc. 2 N/A 2,000

Estimated 2010/11 Impact 70 $11,000 $8,422,000

Pending (4)No. of 2010/11 Estimated

Assessee Assmts Value Impact RefundsSecured

ASN Woodland Hills East LLC 2 32,054,000 321,000 Basrock Renaissance California, LLC 4 9,609,000 - Catellus Development Corp. 1 3,888,000 42,000 ELPF Northridge 18350 Roscoe, LLC 1 2,658,000 27,000g , , , , Parkside Land Partners LLC 1 2,349,000 24,000 Reseda Marketplace, L.P. 1 2,295,000 23,000 ECI Owensmouth, LLC 1 2,130,000 - 1439 Curson Partners 1 2,126,000 21,000 Macy's California Inc. 1 - 62,000 (3) Sears 1 - 33,000 Other Appeals < $7.7 and > $2.0 million Initial Value 47 22,459,000 179,000 (3) Other Appeals Under $2.0 million Initial Value 65 8,857,000 85,000 (3)

Unsecured Westfield Topanga Owner LP 3 N/A 951,000 Macy`s Department Stores, Inc. 4 N/A 22,000 Radnet Mangement Inc. 3 N/A 6,000 Vons Companies Inc. 1 N/A 3,000 Express LLC #338 2 N/A 2,000 Tesoro South Coast Company LLC 2 N/A 2,000 GUESS? Retail Inc. 1 N/A 1,000

Estimated 2010/11 Impact 142 $88,425,000 $1,804,000

(1) Based on information obtained from the Los Angeles County Assessment Appeals Board, as of July 31, 2010.(2) Estimated resolved appeals impact have been verified against actual assessed value adjustments shown on the Los Angeles County Assessor's Property Database, as of August 27, 2010. (3) Represents multi-year refunds for this assessee(s).(4) Estimated pending appeals impact is the result of reducing the initial value by an amount similar to a prior year's successful appeal, or 18 percent of the Initial Value. 18 percent is the historical reduction rate of successful appeals for the Project, since May 2004.

The Community Redevelopment Agency of the City of Los Angeles, California Reseda/Canoga Park Project Part II - Project Taxable Values and Tax Increment Revenue

II-2

The estimated valuation impacts shown above represent the reduction in Project value that would occur given the resolution of each of these appeals in favor of the taxpayer. The amount of actual impact would vary in future fiscal years based on the application of inflationary factors (up to 2 percent per year) to the reduced taxable values. The total estimated refunds associated with pending appeals represents an estimate of the total refund for the prior fiscal years due to the taxpayers if the resolution of the appeals were to result in the valuation reduction estimates shown above. The amount of the refund due will increase annually, so long as the appeal is outstanding, by the amount of revenue generated by the estimated valuation reduction (approximately one percent of the reduction in value).

For purposes of the estimate of Project revenues for fiscal year 2010-11 shown on Figure II-1, we have included a $88.4 million adjustment to incremental value to reflect the reductions estimated to occur as a result of pending and recently resolved appeals on Project value In addition to the impact on Project values, the resolution of the appeals will result in the refund of taxes paid on the erroneous, pre-appeal value estimated to be a combined $10.2 million.

Major Assessees

Figure II-4, “Ten Major Assessees” lists the ten major assessees in the Project and the total 2010-11 taxable value in the Project attributable to each assessee. As shown on Figure II-4, the cumulative taxable value of the ten major assessees represents approximately 2285 percent of the total taxable value of the Project and 42.59 percent of the 2010-11 incremental value of the Project.

PROJECT TAX REVENUE

Project tax revenues consist primarily of tax increment revenues generated from the application of appropriate tax rates to the incremental taxable value of the Project. Other tax increment sources can include unitary property taxes and supplemental property taxes.

Tax Rates

The actual tax rate for the Project for the 2010-11 fiscal year is not available from the County as of the preparation of this Report. For computing revenue of the Project for the Report a tax rate of $1.00 per $100 AV (i.e., 1%) was used, which was applied to both secured and unsecured property. This rate will likely closely approximate the actual 2010-11 tax rate because of the absence of any debt service levies (levies in excess of the 1% general tax levy) that are used in the computation of tax increment, as explained below.

Portions of the full override tax rate are levied by the City of Los Angeles (City), by the Los Angeles Community College District (LACCD) and by the Los Angeles Unified School District (LAUSD) to fund debt service payments on bonds issued for the purpose constructing and renovating facilities. Authority for the levy was provided through voter approval of the issuance of bonds. Pursuant to Constitutional and statutory provisions, the taxes generated by application of these levies to incremental value in a redevelopment project are to be paid to the City, LACCD and LAUSD and not included in tax increment paid to the CRA/LA. As shown below, when these override rates are deducted from the full, 2009-10 tax rate, the remaining rate is very close to 1.0%. For additional information regarding tax rates, please refer to “PROJECT AREA TAX REVENUE - Tax Increment and Tax Rates” in Part IV.

Figure II-4


TEN MAJOR ASSESSEES FOR FISCAL YEAR 2010/11 (1)

% ofMajor No. of 2010/11 Project

Rank Assessees Assessments Use Value Value

1 Westfield Topanga Owner LP/ Topanga Plaza LP 6 Shopping Center $445,030,613 10.65%

2 ASN Woodland Hills East LLC 2 Apartments 180,763,054 4.32%

3 Basrock Renaissance 4 Apartments 88,065,697 2.11%

4 Nordstrom Inc. 2 Department Store 53,316,968 1.28%

5 Essex Portfolio LP 1 Apartments 43,157,167 1.03%

6 Sam Menlo TR 4 Apartments 30,918,769 0.74%

7 Target Corporation 2 Retail Store 30,741,653 0.74%

8 Catellus Development Corporation 2 Shopping Center 29,275,522 0.70%

9 Medical Park Plaza 6 Medical Offices 28,004,985 0.67%

10 Combined Properties Reseda 14 Shopping Center 25,698,778 0.61%

TOTAL VALUE MAJOR ASSESSEES $954,973,206TOTAL 2010/11 PROJECT VALUE $4,180,225,190

TOTAL % OF 2010/11 PROJECT VALUE 22.85%TOTAL % OF 2010/11 INCREMENTAL VALUE 42.59%

(1) Based on information provided by the County of Los Angeles. Includes all secured and unsecured value located within the Project Area attributable to each assessee.


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2009-10 Secured Tax Rate

Full Tax Rate $ 1.220441City of Los Angeles (0.041220)LAUSD Facility Levy (0.151809)LACCD (0.023112)Net Tax Rate $ 1.004300


The Project had not received unitary property taxes since its adoption through the 2007-08 fiscal year because the Project Area was created after the change to distributing unitary revenues on a countywide basis. The County has indicated that the Project received $24,573 in unitary taxes for the 2009-10 fiscal year. This is the result of using secured assessed value, rather than unitary value, as the basis for the distribution of revenues. Please refer to “PROJECT AREA TAX REVENUE - Unitary Property Taxes” in Part IV.


The CRA/LA typically receives supplemental revenues from the Project on an annual basis. Supplemental property taxes shown on the following table are a function of new construction activity and transfers of ownership occurring in the Project after the property tax lien date and can result in an increase in or an off-set to Project revenues. Shown below are annual supplemental property tax receipts for the Project over the period analyzed from 2006-07 through 2009-10.

HISTORICAL PROJECT SUPPLEMENTAL RECEIPTS

2006-07 $ 2,261,3972007-08 $ 3,200,1712008-09 $ 425,8042009-10 ($1,343,089)

For additional information regarding supplemental revenues, please refer to “PROJECT AREA TAX REVENUE - Supplemental Property Taxes” in Part IV.

ADJUSTMENTS TO TAX INCREMENT REVENUE

It is our understanding that the CRA/LA intends to pledge those tax increment revenues described above, and allowed by law to be pledged, toward the payment of debt service on the Bonds. The CRA/LA is required to make certain payments from tax increment as discussed below. In addition, tax increment revenue available to the CRA/LA from the Project as shown on Figure II-1 has been offset by the adjustments to tax increment revenue, also as discussed below.


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Property Tax Administrative Costs

Legislation enacted in 1990, Senate Bill 2557, and in 1992, SB 1559, authorizes county auditors to determine property tax administrative costs proportionately attributable to local jurisdictions and to charge agencies for such costs. The administrative charge for the Project for the 2009-10 fiscal year was $339,607. For fiscal year 2010-11, it is estimated to be $431,506. Estimate of administrative cost assumes an amount equal to 2.0% of Project revenue, as shown on Figures II-2 and III-1.

Low and Moderate Income Housing

Per Sections 33334.2 and 33334.3 of the CRL and per the redevelopment plan for the Project, the CRA/LA must set-aside 20 percent of the Project’s tax increment for low and moderate income housing purposes, except under certain specified conditions. .It is our understanding that the tax revenue to be pledged to debt service on the Bonds will not include revenues required to be set aside for low and moderate income housing. The estimates of tax revenue contained in this Report isolate and deduct estimates of revenue to be dedicated to low and moderate income housing pursuant to the CRL.

Property Tax Refunds

The resolution of assessment appeals for prior fiscal years results in property tax refunds. It is the County’s practice to deduct the amount of taxpayer refunds, typically of prior year’s taxes, from the then current fiscal year’s disbursements to the CRA/LA. The CRA/LA disagrees with this practice, holding, instead, that the refunds should be paid by the CRA/LA from funds on hand, not from incoming revenue. Consistent with the CRA/LA’s opinion, we have not offset the revenue estimates of this Report with estimates of refunds due taxpayers. Property tax refunds from appeals are footnoted on Figure II-1 and are estimated to equal $8.4 million from resolved assessment appeals and $1.8 million from pending appeals. Refunds resulting from the identified resolved and pending assessment appeals are assumed to be paid by the CRA/LA in the 2010-11 fiscal year.

AB 1290 Payments to Taxing Entities

AB 1290 eliminated the provision of Section 33401 allowing redevelopment agencies to enter into agreements that provided for payments from tax increment to affected taxing entities as a mitigation of fiscal impact caused by the adoption or amendment of redevelopment projects. Payments due under agreements that pre-date AB 1290 will continue to be made, but for post-AB 1290 projects and amendments to projects payments that might otherwise be made under the former “pass-through” agreements have been replaced with a statutory tax increment sharing formula. The statutory payments are triggered when a project is adopted or amended to add territory after January 1, 1994 or when a redevelopment plan is amended to extend financial deadlines or to increase the amount of tax increment that may be received by an agency. The Project was adopted after January 1, 1994 and, as a result, must make statutory payments to all affected taxing entities. An estimate of the amount due taxing entities from the Project per the statutory formula is included on Table II-1 and estimated for future years in the projections of Part III.

AB 1290 also provides for the subordination of the payments due taxing entities to debt service on redevelopment agency debt. The subordination must be requested by an agency prior to incurring the debt.


II-5

Taxing entities must refuse the subordination (and substantiate the cause for refusal) within forty-five days of the agency’s request or the subordination is granted.

As part of an earlier issuance of bonds for the Project, subordination of the AB 1290 payments was requested and received from all taxing entities believed to be due payments from the Project. The request asked for subordination to the then pending issue of bonds and to all subsequent parity issues of bonds. In all instances except the County of Los Angeles, the subordination request was granted. However, some of the taxing entities did not respond to the CRA/LA’s request (which represents acceptance by the taxing entity of subordination to the then pending bond issue). The County’s subordination pertained only to the earlier issue and must be obtained for each subsequent issue. It our understanding that the County’s subordination of its AB 1290 payments to debt service on the Bonds and that of the entities that did not formally respond to the earlier subordination request have been requested and are anticipated.

Review of previous year’s AB 1290 payments disclosed that the CRA/LA has made AB1290 payments to the Metropolitan Water District of Southern California (MWD). The MWD was not included among the taxing entities to whom subordination requests were sent as part of the earlier bonding efforts for the Project. It is our understanding that the CRA/LA has requested the subordination of the MWD payments to the debt service on the Bonds and the Prior Parity Bonds.

The estimates of tax revenue provided in this Report for the Project include both tax revenue available for debt service on the Bonds (which is not offset by AB 1290 payments) and the amount of revenue available after payments required by AB 1290.

LOS ANGELES COUNTY ALLOCATION ADJUSTMENTS

Los Angeles County allocation procedures impact the CRA/LA’s receipt of tax increment revenues from the Project by providing offsets for delinquencies, taxable value adjustments and/or refunds of taxes as a result of successful assessment appeals.

Project Tax Increment Receipts

Tax receipts for the Project were reviewed in order to analyze collection trends. This review revealed the collection trends shown below for fiscal years 2006-07 through 2009-10 when compared to original levies. The effects on collection percentages of redemption payments received each year are also identified to indicate whether delinquencies in tax payments are being cured on a consistent basis.


II-6

PERCENTAGE COLLECTIONS

Current CollectionsFiscal Year Year Collections Including Redemption Payments

2006-07 93.6% 95.7% 2007-08 92.6% 95.8% 2008-09 93.3% 103.1% 2009-10 85.6% 90.3%

Average Collections 91.3% 96.2%

The revenue estimate shown on Figure II-1 has not been adjusted to reflect potential property tax payment delinquencies.

2010 CD3 FCR 10/1410

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PART III

PROJECTION OF TAX INCREMENT REVENUES

Introduction

The estimates of future taxable values and revenues for the Project presented as Figure III-1 are provided as an indication of the effect of pending instances of assessment changes and as a model of the future effects of some of the factors discussed in this Report. The estimates of annual value and revenue are constructed through a method that attempts to include only existing or imminent instances of changes in values or revenues. In addition, new development, either underway or planned has not been included in the projection. As such, the projection is an indication of the effects of less than the full universe of elements that can affect the generation of future revenues in the Project.

Projection of Project Taxable Values

Real property values included on Figure III-1 are comprised of locally-assessed secured and unsecured land and improvement values. The projection included in this Part III is based on the assumption that the 2010-11 value of real property (land and improvements) will not increase for the 2011-12 fiscal year. For the following two fiscal years, 2012-13 and 2013-14 the value of real property in the Project is assumed to increase at one percent per year. Thereafter, for the remaining fiscal years shown in the projection, Project real property value is assumed to increase at an annual rate of two percent. Please note that although a two percent inflation factor has been used, the estimated impact on Project value from the resolution of resolved assessment appeals has been deducted from the projection of tax increment shown on Figure III-1. Changes to taxable value which may occur as the result of changes in ownership or new construction are not included in the projection.

Other property values included on Figure III-1 represent the taxable value of secured and unsecured fixtures and personal property. No inflationary trend has been applied to Other Property value.

Project Tax Revenue

Tax increment revenue for 2010-11 and subsequent fiscal years shown on Figure III-1 has been calculated by applying a tax rate of 1.00% to the incremental taxable value of the Project

Total tax revenue includes neither supplemental property taxes nor other revenues that may result from activies like the curing of tax defaults. Possible offsets to revenue resulting from delinquencies or other factors impacting collections of property tax revenues have not been assumed.

Figure III-1

Community Redevelopment Agency of the City of Los AngelesCD 3 Reseda Canoga Park Redevelopment Project

PROJECTION OF TAX INCREMENT REVENUE(000'S omitted) (2)

Incremental (3) (4) (5) Pledged AB 1290(1) Value Over Gross County Housing Tax Tax Payments Net Available

Fiscal Total Base of Tax Increment Admin Increment Increment to Taxing Tax IncrementYear Value $1,937,984 Revenue Charge Revenue Revenue Entities Revenue

1 2010-11 4,091,789 2,153,805 21,563 431 4,226 16,905 4,313 12,5932 2011-12 4,091,789 2,153,805 21,563 431 4,226 16,905 4,313 12,5933 2012-13 4,131,335 2,193,351 21,958 439 4,304 17,215 4,392 12,8234 2013-14 4,171,277 2,233,293 22,357 447 4,382 17,528 4,471 13,0575 2014-15 4,251,959 2,313,975 23,164 463 4,540 18,161 4,633 13,5286 2015-16 4,334,255 2,396,271 23,987 480 4,701 18,806 4,797 14,0097 2016-17 4,418,197 2,480,213 24,827 497 4,866 19,464 4,965 14,4998 2017-18 4,503,818 2,565,833 25,683 514 5,034 20,135 5,189 14,9469 2018-19 4,591,151 2,653,166 26,556 531 5,205 20,820 5,510 15,31010 2019-20 4,680,230 2,742,246 27,447 549 5,380 21,518 5,838 15,68011 2020-21 4,771,091 2,833,107 28,356 567 5,558 22,231 6,172 16,05812 2021-22 4,863,770 2,925,786 29,282 586 5,739 22,957 6,513 16,44413 2022-23 4,958,302 3,020,318 30,228 605 5,925 23,699 6,861 16,83714 2023-24 5,054,725 3,116,741 31,192 624 6,114 24,454 7,216 17,23815 2024-25 5,153,076 3,215,092 32,175 644 6,306 25,226 7,578 17,64716 2025-26 5,253,394 3,315,410 33,179 664 6,503 26,012 7,947 18,06517 2026-27 5,355,719 3,417,734 34,202 684 6,704 26,814 8,324 18,49018 2027-28 5,460,090 3,522,105 35,246 705 6,908 27,633 8,708 18,92519 2028-29 5,566,548 3,628,564 36,310 726 7,117 28,467 9,100 19,36720 2029-30 5,675,136 3,737,152 37,396 748 7,330 29,318 9,621 19,69821 2030-31 5,785,895 3,847,911 38,504 770 7,547 30,187 10,153 20,03422 2031-32 5,898,870 3,960,886 39,633 793 7,768 31,073 10,695 20,37823 2032-33 6,014,104 4,076,120 40,786 816 7,994 31,976 11,248 20,72824 2033-34 6,131,642 4,193,658 41,961 839 8,224 32,898 11,812 21,08525 2034-35 6,251,532 4,313,548 43,160 863 8,459 33,837 12,388 21,45026 2035-36 6,373,819 4,435,835 44,383 888 8,699 34,796 12,975 21,82227 2036-37 6,498,552 4,560,568 45,630 913 8,944 35,774 13,573 22,20128 2037-38 6,625,780 4,687,796 46,902 938 9,193 36,772 14,184 22,58829 2038-39 6,755,552 4,817,568 48,200 964 9,447 37,789 14,807 22,98230 2039-40 6,887,920 4,949,936 49,524 990 9,707 38,827 15,442 23,38431 2040-41 7,022,935 5,084,951 50,874 1,017 9,971 39,885 16,090 23,795

TOTALS $1,056,228 $21,125 $207,021 $828,082 $269,829 $558,253

(1) This scenario assumes a variable annual growth rate. Real Property Value is assumed not to grow from fiscal year 2010-11 to 2011-12, grow at one percent from 2011-12 to 2013-14 annually, and two percent annually thereafter. Other Property Value is assumed to remain constant at the 2010-11 amount. We have assumed a value impact of $11,000 and $88,425,000 for resolved and pending assessment appeals, respectively.(2) The Base Year of the Project is fiscal year 1994-95.(3) Based on a one percent tax rate. Gross Tax Increment includes actual Unitary Revenue reported for 2009-10.(4) The County Administrative Charge is estimated at two percent of gross tax increment revenue.(5) Housing Revenue estimated at 20% of Total Estimated Tax Revenues.

2010 CD3 FCR 10/1410

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PART IV

BACKGROUND INFORMATION

INTRODUCTION

This Part IV contains background information on the topics covered in Parts I through III of this Report. It has been prepared for those readers of the Report who may wish further information on the analysis and conclusions presented in prior sections.

PROJECT AREA TAXABLE VALUE

Pursuant to provisions of the California Constitution and the California Revenue and Taxation Code, county assessors are directed to determine the full cash value of locally-assessed real and personal property as of January 1 of each year. Locally assessed property is classified as either secured or unsecured. The secured classification includes property on which the property tax levied becomes a lien on the property to secure payment of the taxes. Property taxes levied on unsecured property do not become a lien against the unsecured property, but may become a lien on other property owned by the taxpayer. The State Board of Equalization (“SBE”) is charged with assessing the value of state-assessed properties as of January 1 of each year. (All state-assessed property is classified as secured property.) Taxable property is assessed at 100 percent of its full cash value as defined by the California Constitution.

Locally Assessed Values

Real property is comprised of locally assessed secured and unsecured land and improvements. Pursuant to Article XIIIA of the California Constitution (effective as of the 1978-79 fiscal year) and Section 51 of the Revenue and Taxation Code, the taxable value of real property is limited to the lesser of actual market value or the 1975-76 value (the “base assessment value”) compounded by an inflation factor of up to 2 percent annually. A new base assessment value is determined in instances of new construction or changes of ownership, which may result in increased property values, in the year of the occurrence, above the 2 percent annual inflation factor.

Other property values are comprised of locally assessed secured and unsecured personal property. The taxable value of personal property is based on its full cash value and may be revalued annually without regard to the annual 2 percent inflation limitation imposed by Article XIIIA.

State Board of Equalization Values

The SBE determines the annual taxable value of real and personal property of state-assessed utilities. The SBE determines the value of both unitary and non-unitary property of utilities. The taxable value of unitary properties is based on the valuation of all properties utilized statewide in the primary function of a utility. Non-unitary properties are also assessed by the SBE but are not part of the primary function of the utility.

Following the passage of Proposition 13 adding Article XIIIA to the California Constitution, the SBE determined that the provisions of that Article requiring a “roll back” of real property values to their 1975-76 values and a constraint on inflationary growth of 2 percent per year did not apply to state-assessed property. This interpretation has been upheld by the California Supreme Court (ITT World Communications, Inc. vs. City

The Community Redevelopment Agency of the City of Los Angeles, California Reseda/Canoga Park Project Part IV - Background Information

IV-2

and County of San Francisco, et al, 37 Cal. 3d 859 - January, 1985). Consequently, state-assessed property may be revalued annually, and such assessments are not subject to the annual 2 percent inflation limitation of Article XIIIA.

Prior to the 1988-89 fiscal year, the SBE reported the value of each utility within each individual tax rate area to the auditor-controller of each county. Assembly Bill (“AB”) 454 (Chapter 921, Statutes of 1987) revised the method of reporting and allocating property taxes generated from state-assessed properties so that only the taxable value of non-unitary properties and unitary railroad properties are reported for each tax rate area. As a result, the taxable value of the Project does not include most state-assessed unitary property. The CRA/LA does receive an allocation of property taxes generated from state-assessed unitary property taxes, a description of which is included below in the “Project Area Tax Revenue” section of this Part IV.

Assessment Appeals

An assessee of locally assessed or state-assessed property may contest the taxable value enrolled by the county assessor or by the SBE, respectively. The assessee of state-assessed property or locally assessed personal property, the valuation of which is subject to annual reappraisal, actually contests the determination of the full cash value of property when filing an assessment appeal. Because of the limitations to the determination of the full cash value of locally assessed real property by Article XIIIA, an assessee of locally assessed real property generally contests the original determination of the “base assessment value” of the parcel (i.e., the value assigned after a change of ownership or completion of new construction). In addition, the assessee of locally assessed real property may contest the current assessment value (the base assessment value plus the compounded annual inflation factor) when specified conditions have caused the full cash value (i.e., market value) to drop below the current assessment value.

At the time of reassessment, after a change of ownership or completion of new construction, the assessee may appeal the base assessment value of the property. Under an appeal of a base assessment value, the assessee appeals the actual underlying market value of the sales transaction or the recently completed improvement. A base assessment appeal has significant future revenue impacts because a reduced base year assessment will then reduce the compounded value of the property prospectively. Except for the 2 percent inflation factor, the value of the property cannot be increased until a change of ownership occurs or additional improvements are added.

Pursuant to Section 51(b) of the Revenue and Taxation Code, the assessor may place a value on the tax roll lower than the compounded base assessment value if the full cash value of real property has been reduced by damage, destruction, depreciation, obsolescence, removal of property, or other factors causing a decline in the value. Reductions in value pursuant to Section 51(b), commonly referred to as Proposition 8 appeals, can be achieved by a taxpayer either by formal appeal or administratively by assessor staff appraising the property. A reduced full cash value placed on the tax roll does not change the base assessment value. The future impact of a parcel subject to a Proposition 8 appeal is dependent upon a change in the conditions that caused the drop in value. In fiscal years subsequent to a successful Proposition 8 appeal, the assessor may determine that the value of the property has increased as a result of corrective actions or improved market conditions and enroll a value on the tax roll up to the parcel’s compounded base assessment value.

In addition to the appeals procedure described above, owners of residential property may request a “Decline-in-Value” review of their assessed value. The Los Angeles County Assessor has, in recent years, undertaken a pro-active review of the value of single-family homes and condominiums. The reviews conducted for the


IV-3

2008-09 and 2009-10 fiscal years resulted in the reduction of value of more than 330,000 properties. For the 2009-10 fiscal year, approximately 560,000 homes were reviewed and values were reduced for 290,000 single-family residences and 115,000 condominiums. The Decline-in Value procedure is for those homeowners who disagree with the results of the review or whose propery was not reviewed, including residential property other than single-family residences or condominiums.

Appeals of the taxable value for Project assessments or reductions resulting from the Assessor’s review of residential property assessments could potentially lower taxable values, as currently reported, thereby reducing tax increment revenues. For this reason, currently pending and recently resolved assessment appeals filed by taxpayers in the Project were reviewed along with the reduction of residential property values. The results of this review are discussed in Part II of this Report.

The taxable value of utility property may be contested by utility companies and railroads to the SBE. Typically, the impact of utility appeals is on the statewide unitary value of a utility as determined by the SBE. As a result, the successful appeal of a utility may not impact the taxable value of the Project but could impact the Project’s allocation of unitary property taxes.

It should also be noted that the potential appeals impact as shown in the analyses in Section II of this Report, is based on estimated valuation reductions for each of the contested parcels. Actual impacts to tax increment revenues are dependent upon the actual revised value, if any, of assessments resulting from values determined by the Los Angeles County Assessment Appeals Board or through litigation, and upon the timing of successful appeals. The actual valuation impact to the Project from a successful assessment appeal will occur on the assessment roll next prepared after the actual valuation reduction.

PROJECT AREA TAX REVENUE

Pursuant to Article XVI, Section 16 of the California Constitution and Section 33670 of the California Health and Safety Code, redevelopment agencies are eligible to receive that portion of levied property taxes that are in excess of levied property taxes generated from the application of tax rates to the base year value of redevelopment project areas. The primary source of the excess property taxes (the “tax increment”) is dependent on the total taxable value of a project area. In addition, tax increment may also be generated from property tax sources, which are not included in the current taxable value of a project area, but may be directly or indirectly related to current or past taxable values. These sources include unitary property taxes and supplemental property taxes.

Tax Increment and Tax Rates

By subtracting the base year value of a project area from the total taxable value of secured and unsecured real and personal property, the county auditor-controller determines the incremental taxable value of a project area. The resultant tax increment revenue is determined by applying applicable tax rates to the incremental taxable value.

The tax increment revenues of the Project are computed using tax rates comprised of a “basic” rate ($1.00 per $100 of taxable value) and of debt service tax rates levied for purposes of repaying voter-approved debt, as prescribed by Article XIIIA. Except for recently approved debt service levies, as discussed below, the


IV-4

revenues generated by the application of such rates to incremental assessed value in redevelopment projects accrue to redevelopment agencies instead of the levying entity. Debt service tax rates (rates in excess of $1.00 per $100 of taxable value) typically decline each year. A declining debt service tax rate is the result of several factors: an effective limit from July 1, 1978 until June 3, 1986 established by Article XIIIA (and since amended, as discussed below) on the amount of property taxes that can be levied (equal to the annual obligations on indebtedness approved by the voters); rising taxable values within the jurisdictions of taxing entities levying the approved debt service tax rate (which reduces the tax rate needed to be levied by the taxing entity to meet debt service requirements); and the eventual retirement, over time, of the voter-approved indebtedness.

On June 3, 1986, California voters approved a constitutional amendment to Article XIIIA that allows, by a two-thirds vote, the levy of an ad valorem property tax in excess of 1 percent to pay debt service on indebtedness for the acquisition and improvement of real property approved on or after July 1, 1978. Further, a constitutional amendment approved by voters on November 8, 1988 and implementing legislation, AB 89 (Chapter 250, Statutes of 1989), added subdivision (e) to Section 33670. The new subdivision excludes from the calculation of tax increment revenues property taxes generated by any new voter-approved bonded indebtedness approved on or after January 1, 1989.

The Los Angeles Unified School District, the Los Angeles Community College District and the City of Los Angeles levy debt service tax rates to cover debt service on several series of bonds issued to provide public facilities. These debt service tax rates are not used in the determination of tax increment to be received by the CRA/LA from the Projects. All override tax rates are excluded from the estimates of tax revenue in this Report.


Prior to 1988-89, the SBE reported the value of each utility within each individual tax rate area to the auditor-controller of each county. AB 454 (Chapter 921, Statutes of 1987) revised the method of reporting and allocating property tax revenues generated from most state-assessed unitary properties beginning with the 1988-89 fiscal year. Under AB 454, the state reports to each county auditor-controller only the countywide unitary taxable value of each utility, without an indication of the distribution of the value among tax rate areas. AB 454 provides two formulas for auditor-controllers to utilize to determine the allocation of unitary property taxes derived from county-wide unitary value, as described below:

1) For revenue generated from the basic 1 percent tax rate, each jurisdiction, including redevelopment project areas, is to receive up to 102 percent of its prior year unitary property tax revenue. If countywide revenues generated from unitary properties are greater than 102 percent of prior year revenues, each jurisdiction receives a percentage share of the excess unitary revenues equal to the percentage of each jurisdiction’s share of secured property taxes.

2) For revenue generated from the application of the debt service tax rate to countywide unitary taxable value, each jurisdiction, including redevelopment project areas, is to receive a percentage share of revenue based on the jurisdiction’s annual debt service requirements and the percentage of property taxes received by each jurisdiction from unitary property taxes.


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The provisions of AB 454 apply to all state-assessed property except railroads and non-unitary properties. Non-unitary valuation continues to be allocated to individual tax rate areas. Railroad unitary property, as of the 2007-08 fiscal year, is subject to the provisions of AB 2670 (Chapter 791, Statutes of 2006). AB 2670 treats railroad unitary property in a manner very similar to the treatment of utility unitary property under AB 454. All railroad unitary value within a county, except for a portion of the value of certain facilities constructed after 2006, is assigned to a single tax rate area. The revenues generated by the application of tax rates to this value is distributed among the other tax rate areas of the county by the same formula as specified by AB 454 – with two modifications. First, AB 2670 requires that school entities be allocated the same percentage of taxes from railroad values that they received in the prior fiscal year. Second, the bill provides that no revenue is to be allocated to redevelopment agencies for the 2007-08 fiscal year. Generally, Chapters 921 and 791, except for the exclusion of redevelopment agencies from a year of revenue, allow valuation growth or decline of state-assessed unitary property to be shared by all jurisdictions within a county.

The Project was adopted after the provisions of AB 454 and therefore did not have a share of the original allocation of unitary revenues among the taxing jurisdictions of the County. The operation of the formula for allocation of revenues after the initial allocation, item 1) in the discussion above, because it distributes revenues on the basis of growth in secured assessed value, can result in jurisdictions receiving a share of unitary revenues in spite of their exclusion from the original allocation. As a result, the Project, in recent fiscal years, has received a small amount of unitary revenues.


Senate Bill (“SB”) 813 (Chapter 498, Statutes of 1983) added sections 75 through 75.13 to the Revenue and Taxation Code, which provide for the supplemental assessment and taxation of property as of the occurrence of a change of ownership or completion of new construction. Previously, statutes enabled the assessment of such changes only as of the property tax lien date next following the change, and thus delayed the realization of increased property taxes from the new assessment. As enacted, SB 813 provided increased revenue generated from the supplemental assessment of property to be allocated exclusively to school districts for the 1983-84 and 1984-85 fiscal years. That provision was amended by SB 794 (Chapter 447, Statutes of 1984) such that only supplemental property tax revenues collected for 1983-84 were to be allocated exclusively to school districts. As a result of SB 794, applicable legislation now provides that the supplemental revenues are to be allocated to redevelopment agencies and taxing entities in the same manner as regularly collected property taxes.

AVAILABLE TAX INCREMENT

It is our understanding that the CRA/LA intends to pledge those tax increment revenues described above, and allowed by law to be pledged, toward payments that will secure debt service on the Bonds. The pledge of tax increment revenues toward the payment of debt service may be subject to adjustments to tax increment described below.

Property Tax Administrative Charges


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In 1990, the Legislature enacted SB 2557 (Chapter 466, Statutes of 1990) which allows counties to charge for the cost of assessing, collecting and allocating property tax revenues to local government jurisdictions on a prorated basis. As enacted, SB 2557 appeared to exclude redevelopment agencies from either a reduction in tax increment revenues or a charge for a county’s property tax administration costs. SB 1559 (Chapter 697, Statutes of 1992) clarified the provisions of SB 2557 as they relate to redevelopment agencies. In addition to including redevelopment agencies among entities subject to the property tax administration charge, SB 1559 also provides that amounts due as local agencies’ contribution for such charge are to be allocated to the county as part of the overall system for the redistribution of property taxes (as opposed to being paid pursuant to invoices). The property tax administrative charges are included as a deduction to tax increment revenues on estimates provided in this Report.

The County Accounting Standards and Procedures Committee of the State Association of County Auditors (SACA) published a document in June 1997, entitled “Uniform Guidelines for the County Property Tax Administrative Costs.” The Uniform Guidelines recommend that the administrative charges assigned to redevelopment projects should be based on revenue amounts that are not reduced by the amount of payments made to taxing entities to alleviate the fiscal detriment caused by redevelopment (payments pursuant to the pre- AB 1290 provisions of Section 33401). This approach to the treatment of the Section 33401 payments is a change from previous guidelines promulgated by SACA. The change is, however, the result of a recommendation of legal counsel for Los Angeles County and is, ostensibly, the manner that administrative costs for the Projects are now being calculated. The projections of tax revenue included in Part III of this Report contain no adjustment reflective of the change in the SACA guidelines.

Low- and Moderate-Income Housing

Set-Aside of Tax Increment Revenue

Chapter 1337, Statutes of 1976, added Sections 33334.2 and 33334.3 to the Health and Safety Code, requiring redevelopment agencies to set aside 20 percent of all tax increment allocated to redevelopment project areas adopted after December 31, 1976, into a low- and moderate-income housing fund. As provided by Section 33334.2, the low- and moderate-income housing requirement can be reduced or eliminated if a redevelopment agency finds that: 1) no need exists in the community to improve or increase the supply of low- and moderate-income housing; 2) that some stated percentage less than 20 percent of the tax increment revenues is sufficient to meet the housing need; or 3) that other substantial or equivalent efforts, including the obligation of funds of equivalent impact from state, local and federal sources for low- and moderate-income housing are being provided for in the community.

As amended by AB 315 (Chapter 872, Statutes of 1991), Section 33334.2 restricts the ability to reduce or eliminate the low- and moderate-income housing requirement. A community can claim that no need exists, or can claim that less than 20 percent of tax increment revenue is sufficient, only if that claim is consistent with the housing element of the community's general plan. As of June 30, 1993, communities may no longer claim an "equivalent effort" exemption except for obligations incurred prior to May 1, 1991 that were entered into with the understanding that the "equivalent effort" exemption would remain intact.

The Project was adopted after January 1, 1977, and is therefore subject to the requirements of Chapter 1337 regarding the set aside of funds each year for housing purposes. To our knowledge, the CRA/LA has never


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made any of the findings that would allow it to reduce or eliminate the annual requirement for the set aside of funds. The estimates of tax revenue in this Report are adjusted to deduct amounts equal to twenty percent of gross revenues as a representation of the amounts to be deposited to the housing fund

AB 1290 Payments

Pursuant to law prior to 1994, taxing entities, by adopting a resolution prior to a redevelopment plan adoption, were able to receive revenues generated by the inflationary growth of assessed value in newly adopted redevelopment projects (former Section 33676). Also, the law allowed redevelopment agencies to make payments to affected taxing entities to mitigate the fiscal impact to such agencies as the result of a redevelopment plan adoption (former Section 33401). The resolutions that allowed the use of Section 33676 provisions are commonly referred to as 2% resolutions. The payments using Section 33401 were typically made pursuant to agreements between agencies and a taxing entities commonly referred to as “pass-through” agreements.

AB 1290 repealed the provisions that enabled 2% resolutions and pass-through agreements. AB 1290 did not affect payments being made to taxing entities pursuant to agreements entered into before the measures effective date (January 1, 1994). AB 1290 replaces the payments resulting from the 2% resolutions and from the pass-through agreements with a statutory tax increment sharing formula for all redevelopment project areas established on or after the effective date (as was the Project) and requires statutory pass-throughs to all affected taxing entities. AB 1290 payments are paid based on increases in revenue at several periods over the term of a project area’s receipt of tax increment. The payments are in amounts determined per the following formulas:

(1) Commencing with the first fiscal year a project receives tax increment and continuing to the last fiscal year of such receipt, a redevelopment agency shall pay to the affected taxing entities an amount equal to 25 percent of the tax increments received by the agency after the amount required to be deposited in the Low- and Moderate-Income Housing Fund has been deducted.

(2) Commencing with the 11th fiscal year and continuing through the last fiscal year in which the agency receives tax increment, the agency shall pay to the affected taxing entities, in addition to the amounts paid pursuant to item (1) above and after deducting the amount allocated to the Low- and Moderate-Income Housing Fund, an amount equal to 21 percent of the portion of tax increments received by the agency.

(3) Commencing with the 31st fiscal and continuing through the last fiscal year in which the agency receives tax increments, the agency shall pay to the affected taxing entities, in addition to the amounts paid pursuant to items (1) and (2) above and after deducting the amount allocated to the Low- and Moderate-Income Housing Fund, an amount equal to 14 percent of the portion of tax increments received by the agency.

The agency’s legislative body (city council or board of supervisors) may elect to receive its share of payments generated by the first tier of payments. It is unclear whether second and third tier payments are reduced by the legislative body’s share or if that share is distributed among the other taxing entities. For purposes of


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estimating AB 1290 payments in this report, we have assumed that there will be no reduction of the second and third tier payments.

Agencies may request the subordination of the AB 1290 payments to debt secured by a project’s revenue. The request must be made prior to incurring the debt and is to be accompanied by substantial evidence that anticipated debt service and revenues will still allow the projected payments to the taxing entities to be made. An affected taxing entity may disapprove the agency’s request within forty-five days of its receipt only if the entity finds, based upon substantial evidence, that the agency will not be able to pay both debt service and the payment due the taxing entity. Absent such disapproval the subordination is deemed approved.

As part of an earlier issuance of bonds for the Project, subordination of the AB 1290 payments was requested and received from all taxing entities receiving payments from the Project. In all instances except the County of Los Angeles, the subordination extended to all subsequent, parity issues. The County’s subordination pertained only to the earlier issue and must be obtained for each subsequent issue. It our understanding that the County’s subordination of its AB 1290 payments to debt service on the Bonds has been requested and is anticipated.

Subordination is also being requested from those taxing entities that did not respond to the CRA/LA’s request for subordination to the earlier bonds. As indicated above the absence of a response results in the subordination being deemed approved as to the then pending bond issue. The additional request for subordination to debt service on the Bonds is to ensure that the entities that did not specifically approve the subordination of future, parity debt are aware of the issuance of the Bonds.

The CRA/LA is also requesting subordination of AB 1290 payments due the Metropolitan Water District of Southern California (MWD). Until recently, the CRA/LA was not aware that the MWD was an affected taxing entity eligible for AB 1290 payments. As part of a statewide audit of redevelopment agency AB 1290 payments, the CRA/LA received indication from the County that MWD was included in the County’s allocation of AB 1290 payments. The CRA/LA questions this determination because MWD does not receive part of the taxes generated by the 1% tax rate. MWD levies and receives revenue only from an override tax rate. Because the statewide audit requires that the CRA/LA obtain a determination by the County that its AB 1290 payments are in conformance with statutory requirements, the CRA/LA accepted the County’s characterization of MWD as an affected taxing entity and made AB 1290 payments to MWD pending final determination of the eligibility of the MWD for such payments.

The CRA/LA’s earlier assumption that MWD was not one of the entities eligible for receipt of AB 1290 payments led to the exclusion of MWD from the list of entities from whom subordination of the payments was requested. Since MWD is now included among the entities receiving AB 1290 payments the CRA/LA will be requesting MWD’s subordination to the Bonds and to all Prior Parity Bonds.

The estimates of tax revenue provided in this Report for the Project include both tax revenue available for debt service on the Bonds (which is not offset by AB 1290 payments) and the amount of revenue available after payments required by AB 1290.


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TAX ALLOCATION PROCEDURES OF LOS ANGELES COUNTY

Tax Increment Revenue

The County reports preliminary taxable values for redevelopment project areas by category in August of each fiscal year. Estimates of the amount of property tax revenues to be generated by the Project for a given tax year are typically prepared by the County in late September or early October.

When computing tax increment revenues, the County subtracts the base year taxable value from the current year taxable value for each tax rate area comprising a redevelopment project to arrive at incremental taxable value by tax rate area. Secured and unsecured tax rates are applied to incremental taxable values by tax rate area, and the resulting revenues are then aggregated to arrive at the total tax increment revenues due a given redevelopment project area and annexed area(s), if applicable, of a redevelopment project.

Tax Receipts

Based upon the County's most recent tax allocation schedule, 35 percent of the secured tax increment revenues are paid in December, followed by a 5 percent payment in January and the estimated balance of first installment (December 10) tax collections in late February. By April, 75 percent of the total adjusted tax levy would have been allocated to redevelopment agencies. Taxes from the second installment (April 10) tax collections are apportioned in May. After the close of the fiscal year, final tax revenues due agencies are determined and allocated in July and August.

Unsecured tax revenues are allocated in three payments, beginning with 80 percent paid in November. Allocation of the subsequent balance of unsecured tax collections is generally made in March. After the close of the fiscal year, a final tax payment is made in August of the following fiscal year.

The County adjusts its allocation of taxes to reflect delinquencies within a redevelopment project area. As a result, tax receipts have varied from anticipated levies for redevelopment projects in Los Angeles County. These variations can also be attributable to successful assessment appeals or to roll changes, which can either increase or decrease a project area's taxable value. These changes also have a corresponding impact on tax revenues received by an agency. The findings of a review of the Project’s tax collections are presented in Part II.

LEGISLATION/COURT DECISIONS

LAUSD Lawsuit

The Los Angeles Unified School District (LAUSD) has recently filed suit in Superior Court alleging that Los Angeles County and certain redevelopment agencies in the County, including the CRA/LA, have underallocated the LAUSD share of AB 1290 tax sharing payments (discussed above). The suit seeks to have the shares reallocated among the affected taxing entities to include a share representative of the Educational Revenue Augmentation Fund (ERAF) which share, or a substantial portion thereof, would be allocated to LAUSD. The lawsuit does not affect the total amount of AB 1290 payments that must be paid by the CRA/LA and, therefore, requires no changes in the estimates of revenue included in this Report.


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The California State Budget and the ERAF

2008-09

On September 30, 2008 the governor signed the budget passed by the California legislature for the state’s 2008-09 fiscal year. The provisions that determined the resources to be used in covering budgeted costs included taking $350 million from the state’s redevelopment agencies in the form of payments made to the Educational Revenue Augmentation Fund (ERAF) in May of the 2008-09 fiscal year. The California Redevelopment Association (the “Association”) prepared estimates of the impact of the budget proposal on individual redevelopment agencies. Per the Association’s estimate the CRA/LA would be liable for a contribution to ERAF in the amount of $14,653,485. This is an “CRA/LA-wide” obligation that in past instances has been distributed among most but not all of the CRA/LA’s redevelopment projects.

The Association and two redevelopment agencies filed suit against the state in Sacramento Superior Court, alleging that the diversion of redevelopment funds to balance the state’s budget is not a constitutionally permitted use of tax increment funds. The court agreed and in a judgment signed in April of 2009 forbade any of the defendants (who included all of the county auditor-controllers in the state) from taking any actions to require the payments included in the legislation implementating the 2008-09 state budget. As a result, no redevelopment agency funds were diverted to the ERAF for the 2008-09 fiscal year. The State Department of Finance, which was the primary respondent to the lawsuit, filed notice in May of 2009 that it would appeal the Superior Court’s decision.

In late September 2009, the Association distributed the news that the State Attorney General had informed the Association and the court that the State had abandoned its appeal of the April decision. As a result, the court’s decision will stand and redevelopment agencies will not need to make the $350 million payment to the ERAF included in the State’s 2008-09 budget.

2009-10 and 2010-11

One of the bills passed by the Legislature and signed by the governor to implement the 2009-10 state budget includes provisions for the diversion of redevelopment funds for the 2009-10 and 2010-11 fiscal years. The statewide diversion for the 2009-10 fiscal year is $1.7 billion of which the CRA/LA’s share, as estimated by the Association, is $70.8 million. The diversion for 2010-11 is $350 million of which the CRA/LA’s share is $14.6 million.

The provisions for the transfer of money are generally similar to prior years’ arrangements for the movement of funds to the ERAF: funds are due by May 10 of the applicable fiscal year; the responsibility for the payment falls to an agency’s legislative body (city council or board of supervisors) if the agency finds that it cannot make the payment because of existing indebtedness; and, agencies that do not make the payment are subject to severe curtailment of their activities (commonly referred to as the “death penalty”). A change from earlier years is the provision that the money paid by redevelopment agencies is to be deposited in a “Supplemental” ERAF. Expenditure from the Supplemental ERAF are to be constrained to the support of schools located in a project area of the agency or attended by pupils from a project area. This restriction is ostensibly an attempt to counter the court’s finding regarding the 2008-09 budget provision – that the funds would be used for purposes not authorized by the constitution.


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The Association has challenged the constitutionality of the new budget provisions as it did with those for 2008-09

On May 4, 2010 the Court ruled in favor of the State and thus required agencies to make the SERAF payments required by the budget legislation although the Association has appealed the Court’s decision. As required by the new law, CRA/LA made the required payment for 2009-10 prior to the May 10 deadline and CRA/LA staff have indicated that the resources necessary for the 2010-11 Supplemental ERAF payment due in May of 2011 have been preliminarily identified and that most, but not necessarily all, of the CRA/LA’s redevelopment projects will contribute to meeting the burden of complying with the requirements of the law. The payment to be made to the Supplemental ERAF will have a noticeable impact on the CRA/LA’s redevelopment activities but is not expected to adversely impact debt service payments on the Bonds.


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APPENDIX B

SUMMARY OF CERTAIN PROVISIONS OF THE FISCAL AGENT AGREEMENT

This Appendix B contains only a brief summary of certain of the terms of the Fiscal Agent Agreement (defined herein) and a full review should be made of the entire Official Statement, including the cover page and the appendices thereto. All statements contained in this Appendix B are qualified in their entirety by reference to the entire Official Statement, including the cover page and the appendices thereto. terms used herein but not defined herein shall be as defined in the Official Statement and the Fiscal Agent Agreement. References to and summaries of provisions of the documents referred to in the Fiscal Agent Agreement do not purport to be complete and such references are qualified in their entirety by reference to the complete provisions of such documents.

Definitions

“Additional Revenues” means, as the date of calculation, the amount of Tax Revenues which, as shown in a report of an Independent Redevelopment Consultant, are estimated to be receivable by the CRA/LA within the Fiscal Year following the Fiscal Year in which such calculation is made as a result of increases in the assessed valuation of taxable property in the Project Area due to either (a) construction which has been completed and for which a certificate of occupancy has been issued by the County or other appropriate governmental entity but which is not then reflected on the tax rolls or (b) transfer of ownership or any other interest in real property which has been recorded but which is not then reflected on the tax rolls. For purposes of this definition, the term “increases in the assessed valuation” means the amount by which the assessed valuation of taxable property in the Project Area is estimated to increase above the assessed valuation of taxable property in the Project Area (as evidenced in the written records of the County of Los Angeles) as of the date on which such calculation is made.

“Annual Debt Service” means for the Series 2010 Bonds and any Parity Debt, for each Bond Year, the amount payable on such Series 2010 Bonds and any Parity Debt for such Bond Year. For purposes of such calculation, variable rate Parity Debt will be deemed to bear interest at the maximum rate permitted by the Parity Debt Instrument pursuant to which such Parity Debt is issued. For purposes of such calculation, there will be excluded payments with respect to the Series 2010 Bonds or any Parity Debt to the extent that amounts due with respect to the Series 2010 Bonds or such Parity Debt are prepaid or otherwise discharged in accordance with the Fiscal Agent Agreement or the relevant Parity Debt Instrument or to the extent the proceeds thereof are then deposited in an escrow fund in which amounts are invested in Permitted Investments and from which moneys may not be released to the CRA/LA unless the amount of Tax Revenues (as determined in accordance with the applicable provision of the Fiscal Agent Agreement) and Additional Revenues for each succeeding Fiscal Year at least equals 125% of the amount of Annual Debt Service for each applicable succeeding Bond Year which would result if any such moneys on deposit in such escrow fund were released and deposited in the applicable project fund or the Low and Moderate Income Housing Fund.

“Authority” means the Community Redevelopment Financing Authority of The Community Redevelopment Agency of the City of Los Angeles, California, a joint powers authority duly organized and existing under the Agreement and the laws of the State.

“Authorized Denominations” means, with respect to each series of Series 2010 Bonds, $5,000 and integral multiples thereof.

“Bond Year” means (i) with respect to the initial Bond Year, the period extending from the date the Series 2010 Bonds are originally delivered to September 1, 2011, and (ii) thereafter, each twelve

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month period extending from the day immediately following September 1 in any calendar year to the September 1 in the next following calendar year, all dates inclusive.

“Book Entry Bonds” means the Series 2010 Bonds registered in the name of a Nominee of a Depository as the Owner thereof pursuant to the terms and provisions of the Fiscal Agent Agreement.

“Certificate of the CRA/LA” means a certificate in writing signed by a Designated Officer of the CRA/LA.

“City” means the City of Los Angeles, California.

“Closing Date” means the date of original issuance of the Series 2010 Bonds.

“Code” means the Internal Revenue Code of 1986, as amended, and any regulations promulgated thereunder.

“Continuing Disclosure Agreement” means that certain Continuing Disclosure Agreement by and between the CRA/LA and the Fiscal Agent, as dissemination agent and dated the date of issuance and delivery of the Series 2010 Bonds, as originally executed and as it may be amended from time to time in accordance with the terms thereof.

“Council District 3 Reserve Accounts” means collectively, the Council District 3 Series D Reserve Account and the Council District 3 Series E Reserve Account by those names established and held under the Fiscal Agent Agreement by the Fiscal Agent pursuant to the Fiscal Agent Agreement.

“CRA/LA” means The Community Redevelopment Agency of the City of Los Angeles, a public body, corporate and politic, duly organized and existing under and pursuant to the Redevelopment Law.

“Debt Service Fund” means the fund by that name established and held under the Fiscal Agent Agreement by the CRA/LA pursuant to the Fiscal Agent Agreement.

“Depository” means the securities depository acting as Depository pursuant to the Fiscal Agent Agreement.

“Designated Officer” means the Chairman, Vice-Chairman, Chief Executive Officer, Chief Operating Officer, Chief Financial Officer, Deputy Chief of Operations and Policy, Secretary, any Assistant Secretary or Finance Director or his or her designee, or any of them, of the CRA/LA duly authorized by the CRA/LA for that purpose.

“Disaster Project Law” means the Community Redevelopment Financial Assistance and Disaster Project Law pursuant to Section 34000, et seq. of the Health and Safety Code of the State as in effect on the date of adoption of the Redevelopment Plan.

“Event of Default” means any of the events described in the applicable sections of the Fiscal Agent Agreement.

“Federal Securities” means direct obligations of the United States of America and securities fully and unconditionally guaranteed as to the timely payment of principal and interest by the United States of America; provided, that the full faith and credit of the United States of America must be pledged to any such direct obligation or guarantee, including interest strips of the Resolution Funding Corporation for which separation of principal and interest is made by a Federal Reserve Bank in book-entry form.

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“Fiscal Agent” means U.S. Bank National Association, as fiscal agent under the Fiscal Agent Agreement, and its successors and assigns, if any, or any other corporation or association which may at any time be substituted in its place as provided in the Fiscal Agent Agreement.

“Fiscal Year” means any 12-month period extending from July 1 in one calendar year to June 30 of the succeeding calendar year, both dates inclusive, or any other 12 month period selected and designated by the CRA/LA as its official fiscal year period.

“Independent Certified Public Accountant” means any certified public accountant or firm of such accountants duly licensed and entitled to practice and practicing as such under the laws of the State of California, appointed and paid by the CRA/LA, and who, or each of whom:

(1) is in fact independent and not under the domination of the CRA/LA;

(2) does not have any substantial interest, direct or indirect, with the CRA/LA; and

(3) is not connected with the CRA/LA as a member, officer or employee of the CRA/LA, but who may be regularly retained to make annual or other audits of the books of or reports to the CRA/LA.

“Independent Financial Consultant” means a financial consultant or firm of such consultants generally recognized to be well qualified in the financial consulting field, appointed and paid by the CRA/LA and who, or each of whom:

(1) is in fact independent and not under the domination of the CRA/LA;

(2) does not have any substantial interest, direct or indirect, with the CRA/LA; and

(3) is not connected with the CRA/LA as a member, officer or employee of the CRA/LA, but who may be regularly retained to make annual or other reports to the CRA/LA.

“Independent Redevelopment Consultant” means any consultant or firm of such consultants appointed by the CRA/LA, and who, or each of whom:

(a) is judged by the CRA/LA to have experience in matters relating to the collection of Tax Revenues or otherwise with respect to the financing of redevelopment projects;

(b) is in fact independent and not under the domination of the CRA/LA;

(c) does not have any substantial interest, direct or indirect, with the CRA/LA, other than as original purchaser of CRA/LA bonds or other indebtedness; and

(d) is not connected with the CRA/LA as an officer or employee of the CRA/LA, but who may be regularly retained to make reports to the CRA/LA.

“Information Services” means, in accordance with the then-current guidelines of the U.S. Securities and Exchange Commission, the Electronic Municipal Market Access System and any other services selected by the CRA/LA which are then providing information with respect to the Series 2010 Bonds.

“Interest Payment Date” means each March 1 or September 1 on which interest on any Series 2010 Bond is scheduled to be paid, commencing on March 1, 2011.

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“Investment Earnings” means all interest earned and any gains and losses on the investment of moneys in any fund or account created by the Fiscal Agent Agreement.

“Letter of Representations” means the letter of the CRA/LA and the Fiscal Agent delivered to and accepted by the Depository setting forth the basis on which the Depository serves as depository for such Book Entry Bonds, as originally executed or as it may be supplemented or revised or replaced by a letter to a substitute depository.

“Loans” means, collectively, the Series A Loan, the Series B Loan and any other Outstanding Parity Debt in the form of a loan.

“Low and Moderate Income Housing Fund” means the fund of the CRA/LA by that name established pursuant to Section 33334.3 of the Redevelopment Law.

“Maximum Annual Debt Service” means for the Series D Bonds and the Series E Bonds, respectively, and any Parity Debt, as of the date of calculation, the largest Annual Debt Service for the current or any future Bond Year payable on the Series D Bonds and the Series E Bonds, respectively, and the Outstanding Parity Debt in such Bond Year. For purposes of such calculation, variable rate Parity Debt will be deemed to bear interest at the maximum rate permitted by the Parity Debt Instrument pursuant to which such Parity Debt is issued. For purposes of such calculation, there shall be excluded payments with respect to the Series D Bonds and the Series E Bonds and any Parity Debt (a) to the extent that amounts due with respect to the Series D Bonds and the Series E Bonds, respectively, or such Parity Debt are prepaid or otherwise discharged in accordance with the Fiscal Agent Agreement or the relevant Parity Debt Instrument; or (b) to the extent the proceeds thereof are then deposited in an escrow fund in which amounts are invested in Permitted Investments and from which moneys may not be released to the CRA/LA unless the amount of Tax Revenues (determined in accordance with the Fiscal Agent Agreement) and Additional Revenues for each succeeding Fiscal Year at least equals 125% of the amount of Annual Debt Service for each applicable succeeding Bond Year which would result if any such moneys on deposit in such escrow fund were released and deposited in the applicable project fund or the Low and Moderate Income Housing Fund.

“Moody’s” means Moody’s Investors Service, or any rating agency which is a successor thereto; and, if such corporation shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, Moody’s will be deemed to refer to any other nationally-recognized securities rating agency designated by the CRA/LA.

“Nominee” means the nominee of the Depository, which may be the Depository, as determined from time to time pursuant to the Fiscal Agent Agreement.

“Outstanding” means when used as of any particular time with reference to the Series 2010 Bonds, means all Series 2010 Bonds except:

(1) Series 2010 Bonds theretofore canceled by the Fiscal Agent or surrendered to the Fiscal Agent for cancellation;

(2) Series 2010 Bonds paid or deemed to have been paid within the meaning set forth in the Fiscal Agent Agreement; and

(3) Series 2010 Bonds in lieu of or in substitution for which other Series 2010 Bonds shall have been authorized, executed, issued and delivered by the CRA/LA pursuant to the Fiscal Agent Agreement.

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“Owner” means the Registered Owner of any Outstanding Series 2010 Bond.

“Parity Debt” means the Series A Loan, the Series B Loan and any other indebtedness of the CRA/LA relating to the Project Area meeting the requirements of the Fiscal Agent Agreement.

“Parity Debt Instrument” means any resolution, indenture of trust, loan agreement, trust agreement or other instrument authorizing the issuance of any Parity Debt.

“Participants” means those broker dealers, banks and other financial institutions from time to time for which the Depository holds Book Entry Bonds as securities depository.

“Permitted Investments” means any of the following which at the time of investment are legal investments under the laws of the State of California for the moneys proposed to be invested therein (the Fiscal Agent being entitled to rely upon the investment direction of the Agency given as provided in the Fiscal Agent Agreement as a determination by the Agency that such investment constitutes a legal investment):

(a) Federal Securities;

(b) direct obligations and fully guaranteed certificates of beneficial interest of the Export-Import Bank of the United States; consolidated debt obligations and letter of credit-backed issues of the Federal Home Loan Banks; participation certificates and senior debt obligations of the Federal Home Loan Mortgage Corporation (“FHLMCs”); debentures of the Federal Housing Administration; mortgage-backed securities (except stripped mortgage securities which are valued greater than par on the portion of unpaid principal) and senior debt obligations of the Federal National Mortgage Association (“FNMAs”); participation certificates of the General Services Administration; guaranteed mortgage-backed securities and guaranteed participation certificates of the Government National Mortgage Association (“GNMAs”); local authority bonds of the U.S. Department of Housing & Urban Development; guaranteed Title XI financings of the U.S. Maritime Administration; Resolution Funding Corporation securities; and consolidated system-wide debt securities of the Farm Credit System;

(c) direct obligations of any state of the United States of America or any subdivision or agency thereof whose unsecured, uninsured and unguaranteed general obligation debt is rated “Aa” or better by Moody’s and “AA” or better by S&P, or any obligation fully and unconditionally guaranteed by any state, subdivision or agency whose unsecured, uninsured and unguaranteed general obligation debt is rated “Aa” or better by Moody’s and “AA” or better by S&P;

(d) commercial paper (having original maturities of not more than 270 days) rated “P-1” by Moody’s and “A-1” or better by S&P;

(e) Federal funds, unsecured certificates of deposit, time deposits, investment agreements or bankers acceptances (in each case having maturities of one year or less or, if longer, which allows funds to be withdrawn as required by the Indenture with no penalty) of any domestic bank (including the Fiscal Agent and any affiliates of the Fiscal Agent) including a branch office of a foreign bank which branch office is located in the United States (provided legal opinions are received to the effect that full and timely payment of such deposit or similar obligation is enforceable against the principal office or any branch of such bank), or a financial institution or insurance company, in each case having uninsured, unsecured and unguaranteed obligations rated in one of the two highest rating categories by Moody’s and S&P;

(f) deposits, including certificates of deposit, of any bank, including the Fiscal Agent and its affiliates, or savings and loan association; provided such deposits are continuously and fully insured by

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the Bank Insurance Fund or the Savings Association Insurance Fund of the Federal Deposit Insurance Corporation;

(g) the Local Agency Investment Fund as defined by Section 16429.1 of the California Government Code and any other State of California administered pool investment fund in which the Agency is statutorily permitted or required to invest, provided that the Fiscal Agent must be able to maintain such investments in its own name, and the Fiscal Agent may restrict such investment if required to keep funds continuously available for purposes of the Fiscal Agent Agreement;

(h) investments in money-market funds (including funds of the Fiscal Agent and its affiliates) registered under the Federal Investment Company Act of 1940 rated “AAAm” or “AAAm-G” by S&P and “Aaa” by Moody’s, including money market funds for which the Fiscal Agent and its affiliates provide investment advisory or other management services; and

(i) repurchase agreements collateralized by Federal Securities, GNMAs, FNMAs or FHLMCs with any registered broker/dealer or any commercial bank or any financial institution if such broker/dealer or financial institution has an uninsured, unsecured and unguaranteed obligation rated “P-I” or “A3” or better by Moody’s, and “A-I” or “A-” or better by S&P; provided:

1. a master repurchase agreement or specific written repurchase agreement governs the transaction;

2. the securities are held by the Fiscal Agent or an independent third party acting solely as agent (“Agent”) for the Fiscal Agent, free and clear of any lien, and such third party is (a) a Federal Reserve Bank; or (b) a bank which is a member of the Federal Deposit Insurance Corporation and which has combined capital, surplus and undivided profits of not less than $50 million, and the Fiscal Agent shall have received written confirmation from such third party that it holds such securities; free and clear of any lien, as Agent;

3. a perfected first security interest under the Uniform Commercial Code, or book entry procedures prescribed at 31 C.F.R. 306.1 et seq. or 31 C.F.R. 350.0 et seq. in such securities is created for the benefit of the Fiscal Agent;

4. the repurchase agreement has a term of either one year or less, or, if longer, allows funds to be withdrawn as required by the Indenture with no penalty, and the Fiscal Agent or the Agent will value the collateral securities no less frequently than weekly and will liquidate the collateral securities if any deficiency in the required collateral percentage is not restored within two Business Days of such valuation;

5. the fair market value of the securities in relation to the amount of the repurchase obligation, including principal and interest, is equal to at least 104% (105% if the securities are GNMAs, FNMAs or FHLMCs), and if the value of such securities held as collateral slips below such level, then additional cash and/or acceptable securities must be transferred to the Agent; and

6. the Fiscal Agent receives a legal opinion from the provider’s counsel that the obligation is a legal, valid and binding obligation of the provider, enforceable on its term, that the collateral is free and clear of any third party liens and that a perfected security interest can be created for the benefit of the Fiscal Agent.

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“Plan Limit” means the limitation contained in the Redevelopment Plan on the number of dollars of taxes which may be divided and allocated to the CRA/LA pursuant to the Redevelopment Plan, as such limitation is prescribed by Section 33333.2 of the Redevelopment Law.

“Pledged Revenue Fund” means the fund by that name established and held by the CRA/LA pursuant to the Series A Loan Agreement and continued pursuant to the Series B Loan Agreement and pursuant to the Fiscal Agent Agreement.

“Pledged Tax Revenues” means with respect to the Series 2010 Bonds and any Parity Debt, for the 12-month period ending on September 1, 2011 and for each 12-month period beginning on September 2, 2011 and ending on September 1 of each year thereafter until payment in full of the Series 2010 Bonds and any Parity Debt, the first Tax Revenues, when and as received by the CRA/LA pursuant to the Redevelopment Law and the Redevelopment Plan (without deduction for payments under Section 33607.5 of the Redevelopment Law to the extent that such payments are lawfully subordinate to the payment of Annual Debt Service on the Series 2010 Bonds and any Parity Debt), in an amount equal to (a) 100% of Annual Debt Service on such Outstanding Series 2010 Bonds and any Parity Debt for such period; plus (b) an amount, if any, required to maintain the Reserve Account at the Reserve Requirement; plus (c) an amount, if any, required to be paid to any insurer under a municipal bond insurance policy for any Parity Debt.

“Principal Corporate Trust Office” means the corporate trust office of the Fiscal Agent set forth in the Fiscal Agent Agreement, or such other office designated by the Fiscal Agent from time to time.

“Principal Payment Date” means any date on which principal on any Series 2010 Bond is scheduled to be paid, which dates will be as set forth in the Fiscal Agent Agreement for the Series 2010 Bonds.

“Project Area” means the project area described in the Redevelopment Plan for the Reseda/Canoga Park Project.

“Qualified Credit Instrument” means any of the following:

(a) surety bond or insurance policy issued to the Fiscal Agent by a company licensed to issue an insurance policy guaranteeing the timely payment of debt service on the Loans (a “municipal bond insurer”) if the claims paying ability of the issuer thereof at the time of issuance shall be rated “AAA” and “Aaa” by S&P and Moody’s, respectively;

(b) a surety bond or insurance policy issued to the Fiscal Agent by an entity other than a municipal bond insurer if the claims paying ability of the issuer at the time of issuance thereof shall be rated “Aa” and “AA” or better by Moody’s and S&P; or

(c) an unconditional irrevocable letter of credit issued to the Fiscal Agent by a bank, if the issuer thereof is rated at the time of issuance at least “AA-” by S&P and “Aa3” by Moody’s.

“Record Date” means the 15th day of the month next preceding each Interest Payment Date, whether or not such day is a business day.

“Redevelopment Law” means the Community Redevelopment Law of the State, constituting Part 1 of Division 24 of the Health and Safety Code of the State, and the acts amendatory thereof and supplemental thereto.

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“Redevelopment Plan” means the Earthquake Disaster Assistance Plan for the Earthquake Disaster Assistance Project for Portions of Council District 3 Project, approved by ordinance of the City Council of the City on December 13, 1994, together with any amendments thereof at any time duly authorized pursuant to the Redevelopment Law and the Disaster Project Law.

“Redevelopment Project” means the Reseda/Canoga Park Project.

“Report” means a document in writing signed by an Independent Redevelopment Consultant and including:

(a) statement that the person or firm making or giving such Report has read the pertinent provisions of the Fiscal Agent Agreement to which such Report relates;

(b) a brief statement as to the nature and scope of the examination or investigation upon which the Report is based; and

(c) a statement that, in the opinion of such person or firm, sufficient examination or investigation was made as is necessary to enable said consultant to express an informed opinion with respect to the subject matter referred to in the Report.

“Request of the CRA/LA” means a request in writing signed by a Designated Officer or by any other officer of the CRA/LA duly authorized by the CRA/LA for that purpose.

“Reseda/Canoga Park Project” means the undertaking of the CRA/LA pursuant to the Redevelopment Plan, the Disaster Project Law and the Redevelopment Law for the redevelopment of the Project Area.

“Reserve Requirement” means (i) with respect to both of the Series D Bonds and the Series E Bonds and any series of Parity Debt, as of any calculation date, the least of (a) 10% of the outstanding principal amount of the Series D Bonds and the Series E Bonds, as applicable, and any such Parity Debt; provided that if the original issue discount of the Series D Bonds or the Series E Bonds, as applicable, or such Parity Debt exceeds 2% of such original principal amount, then initially 10% of the original principal amount of, less original issue discount on the Series D Bonds or the Series E Bonds, as applicable, or such Parity Debt, as applicable, but excluding from such calculation any proceeds of the Series D Bonds and the Series E Bonds, as applicable, or such Parity Debt deposited in an escrow described in the definitions of Annual Debt Service and Maximum Annual Debt Service; (b) Maximum Annual Debt Service with respect to the Series D Bonds and the Series E Bonds, as applicable, and such Parity Debt, as applicable; or (c) 125% of average Annual Debt Service on the Series D Bonds and the Series E Bonds, as applicable, and such Parity Debt, as applicable; provided further that the CRA/LA may meet all of a portion of the Reserve Requirement for either or both of the Series D Bonds and the Series E Bonds, by depositing a Qualified Credit Instrument meeting the requirements of the Fiscal Agent Agreement. For purposes of calculating Maximum Annual Debt Service with respect to determining the Reserve Requirement, any variable rate Parity Debt will be deemed to bear interest rate at the maximum rate permitted by the Parity Debt Instrument.

“S&P” means Standard & Poor’s, a division of The McGraw-Hill Companies, Inc., a corporation organized and existing under the laws of the State of New York, its successors and assigns; and, if such corporation shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, S&P will be deemed to refer to any other nationally-recognized securities rating agency designated by the CRA/LA.

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“Securities Depository” means The Depository Trust Company, 55 Water Street, 50th Floor, New York, New York 10041-0004, Fax (212) 855-7232; or to such other addresses and/or such other securities depositories as the CRA/LA may designate to the Fiscal Agent in writing.

“Series 2010 Costs of Issuance Funds” means, collectively, the Reseda/Canoga Park Series D Costs of Issuance Fund and the Reseda/Canoga Park Series E Costs of Issuance Fund established pursuant to the Fiscal Agent Agreement.

“Series 2010 Project Funds” means, collectively, the Reseda/Canoga Park Series D Project Fund and the Reseda/Canoga Park Series E Project Fund established pursuant to the Fiscal Agent Agreement.

“Series A Loan” means, collectively, the taxable Loan and the tax-exempt Loan made by the Authority to the CRA/LA pursuant to the Series A Loan Agreement in connection with the issuance of the Series J Bonds.

“Series A Loan Agreement” means the Loan Agreement, Series A, dated as of September 1, 2003, by and among the CRA/LA, U.S. Bank National Association, as Trustee, and the Authority, as originally entered into or as amended or supplemented pursuant to the provisions thereof.

“Series B Loan” means the loan made by the Authority to the CRA/LA pursuant to the Series B Loan Agreement in connection with the issuance of the Series L Bonds.

“Series B Loan Agreement” means the Loan Agreement, Series B, dated as of June 1, 2006, by and among the CRA/LA, U.S. Bank National Association, as Trustee and the Authority, as originally entered into or as amended or supplemented pursuant to the provisions thereof.

“Series D Interest Account” means the Earthquake Disaster Assistance Project for Portions of Council District 3 Series D Interest Account established pursuant to the Fiscal Agent Agreement.

“Series D Principal Account” means the Earthquake Disaster Assistance Project for Portions of Council District 3 Series D Principal Account established pursuant to the Fiscal Agent Agreement.

“Series D Sinking Account” means the Earthquake Disaster Assistance Project for Portions of Council District 3 Series D Sinking Account established pursuant to the Fiscal Agent Agreement.

“Series E Interest Account” means the Earthquake Disaster Assistance Project for Portions of Council District 3 Series E Interest Account established pursuant to the Fiscal Agent Agreement.

“Series E Principal Account” means the Earthquake Disaster Assistance Project for Portions of Council District 3 Series E Principal Account established pursuant to the Fiscal Agent Agreement.

“Series E Sinking Account” means the Earthquake Disaster Assistance Project for Portions of Council District 3 Series E Principal Account established pursuant to the Fiscal Agent Agreement.

“Series J Bonds” means, collectively, the Authority’s Pooled Financing Bonds Series J - Tax-Exempt issued in the aggregate principal amount of $4,500,000 and its Pooled Financing Bonds Series J - Taxable issued in the aggregate principal amount of $17,970,000.

“Series L Bonds” means the Authority’s Pooled Financing Bonds, Series L (Taxable) (Reseda/Canoga Park, East Hollywood/Beverly-Normandie and Pacoima/Panorama City Project Area) issued in the aggregate principal amount of $32,000,000.

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“Sinking Account Installment” means the amount of money required by or pursuant to the Fiscal Agent Agreement to be paid by the CRA/LA on any single date toward the retirement of any particular Term Bonds of any particular Series on or prior to their respective stated maturities.

“Sinking Account Payment Date” means any date on which Sinking Account Installments on any Series of Bonds are scheduled to be paid.

“Special Fund” means the fund by that name established and held by the CRA/LA pursuant to the Series A Loan Agreement and continued pursuant to the Series B Loan Agreement and continued pursuant to the Fiscal Agent Agreement.

“Subordinate Debt” means any loans, advances or indebtedness issued or incurred by the CRA/LA pursuant to the Fiscal Agent Agreement, which are either: (a) payable from, but not secured by a pledge of or lien upon, the Tax Revenues; or (b) secured by a pledge of or lien upon the Tax Revenues which is subordinate to the pledge of and lien upon the Tax Revenues under the Fiscal Agent Agreement for the security of the Series 2010 Bonds and Parity Debt.

“Supplemental Fiscal Agent Agreement” means any agreement then in full force and effect which has been entered into by and between the CRA/LA and the Fiscal Agent, amendatory of or supplemental to the Fiscal Agent Agreement.

“Tax Certificate” means the Tax Certificate dated the date of the original delivery of each Series of Bonds (except any Series of Bonds which is not intended to meet the requirements for tax exemption under the Code) relating to the requirements of the Code, as each such certificate may from time to time be modified or supplemented in accordance with the terms thereof.

“Tax Revenues” means all taxes annually allocated within the Plan Limit and paid to the CRA/LA with respect to the Project Area following the Closing Date, pursuant to Article 6 of Chapter 6 (commencing with Section 33670) of the Redevelopment Law and Section 16 of Article XVI of the Constitution of the State and other applicable state laws and as provided in the Redevelopment Plan, including all payments, subventions and reimbursements, if any, to the CRA/LA specifically attributable to ad valorem taxes lost by reason of tax exemptions and tax rate limitations (but excluding payments to the CRA/LA with respect to personal property within the Project Area pursuant to Section 16110 et seq. of the California Government Code); and including that portion of such taxes, if any, otherwise required by Section 33334.2 of the Redevelopment Law to be deposited in the Low and Moderate Income Housing Fund, but only to the extent necessary to repay that portion of the proceeds of any Parity Debt (including applicable reserves and financing costs) used to finance or refinance the increasing or improving of the supply of low and moderate income housing within or of benefit to the Project Area, but excluding all other amounts of such taxes required to be deposited into the Low and Moderate Income Housing Fund and excluding Investment Earnings; provided however, that with respect to the Series 2010 Bonds, Tax Revenues will exclude that portion of such taxes, if any, otherwise required by Section 33334.2 of the Redevelopment Law to be deposited in the Low and Moderate Income Housing Fund.

“Term Bonds” means Series 2010 Bonds which are payable on or before their specified maturity dates from mandatory sinking account payments established for that purpose and calculated to retire such Series 2010 Bonds on or before their specified maturity dates.

“Written Request of the CRA/LA” means an instrument in writing signed by a Designated Officer.

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Series 2010 Costs of Issuance Funds

There is established a fund to be held by the CRA/LA known as the “Reseda/Canoga Park Series D Costs of Issuance Fund” into which will be transferred a portion of the proceeds of the Series D Bonds pursuant to the Fiscal Agent Agreement. The CRA/LA will use all or a portion of the proceeds of the Series D Bonds initially deposited into the Reseda/Canoga Park Series D Costs of Issuance Fund to pay costs of issuance related to the Series D Bonds. There is established a fund to be held by the CRA/LA known as the “Reseda/Canoga Park Series E Costs of Issuance Fund” into which will be transferred a portion of the proceeds of the Series E Bonds pursuant to the Fiscal Agent Agreement. The CRA/LA will use all or a portion of the proceeds of the Series E Bonds initially deposited into the Reseda/Canoga Park Series E Costs of Issuance Fund to pay costs of issuance related to the Series E Bonds. On the first anniversary date of the Closing Date, or upon the earlier date that all costs of issuance related to the Series D Bonds have been paid, the CRA/LA will transfer all remaining amounts in the Reseda/Canoga Park Series D Costs of Issuance Fund to the CRA/LA, to the Reseda/Canoga Park Series D Project Fund established pursuant to the Fiscal Agent Agreement. On the first anniversary date of the Closing Date, or upon the earlier date that all costs of issuance related to the Series E Bonds have been paid, the CRA/LA will transfer all remaining amounts in the Reseda/Canoga Park Series E Costs of Issuance Fund to the CRA/LA, to the Reseda/Canoga Park Series E Project Fund established pursuant to the Fiscal Agent Agreement.

Council District 3 Reserve Accounts

There is established a separate fund to be known as the “Earthquake Disaster Assistance Project for Portions of Council District 3 Series D Reserve Account” (the “Council District 3 Series D Reserve Account”) which will be held by the Fiscal Agent in trust for the benefit of the CRA/LA and the Owners of the Series D Bonds. There is established a separate fund to be known as the “Earthquake Disaster Assistance Project for Portions of Council District 3 Series E Reserve Account” (the “Council District 3 Series E Reserve Account”) which will be held by the Fiscal Agent in trust for the benefit of the CRA/LA and the Owners of the Series E Bonds. The amount on deposit in the Council District 3 Series D Reserve Account and the Council District 3 Series E Reserve Account will be equal to the Reserve Requirement. The Council District 3 Reserve Accounts will be maintained at their respective Reserve Requirement at all times prior to the payment of the Series D Bonds and the Series E Bonds, as applicable, and the Parity Debt in full pursuant to the Fiscal Agent Agreement and any Parity Debt Instrument, except to the extent required for the purposes set forth in the Fiscal Agent Agreement and any Parity Debt Instrument.

The CRA/LA reserves the right, with respect to all or any portion of the Reserve Requirement to substitute, at any time and from time to time, one or more Qualified Credit Instruments for cash or any Qualified Credit Instrument then on deposit in or held by the Council District 3 Series D Reserve Account or the Council District 3 Series E Reserve Account. Any such Qualified Credit Instrument will provide that the Fiscal Agent is entitled to draw amounts thereunder when required to make transfers from the Council District 3 Series D Reserve Account or the Council District 3 Series E Reserve Account, as applicable, to the Interest Account and the Principal Account in the event of a deficiency in any such account; provided that, in any such event, the Fiscal Agent will first apply to any such deficiency the amount of cash (including cash represented by investments) then on deposit in the Council District 3 Series D Reserve Account or the Council District 3 Series E Reserve Account, as applicable. Upon deposit by the CRA/LA with the Fiscal Agent of any such Qualified Credit Instrument, the Fiscal Agent will withdraw from the Council District 3 Series D Reserve Account or the Council District 3 Series E Reserve Account, as applicable, and transfer to the CRA/LA for deposit in the applicable Series 2010 Project Fund, an amount equal to the principal amount of such Qualified Credit Instrument.

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In the event that the CRA/LA fails to deposit with the Fiscal Agent the full amount required to be deposited pursuant to the Fiscal Agent Agreement on or before the third Business Day preceding any Interest Payment Date, on such Interest Payment Date the Fiscal Agent will withdraw from the Council District 3 Series D Reserve Account or the Council District 3 Series E Reserve Account, as applicable, and transfer to the Series D Interest Account and the Series E Interest Account, as applicable and the Series D Principal Account and the Series E Principal Account, as applicable, in such order, the difference between the amount required to be deposited pursuant to the Fiscal Agent Agreement and the amount actually deposited by the CRA/LA. In the event that there shall not then be sufficient cash available in the Council District 3 Series D Reserve Account or the Council District 3 Series E Reserve Account, as applicable, to transfer the full amount of the difference from the Council District 3 Series D Reserve Account or the Council District 3 Series E Reserve Account, respectively, before the end of the third Business Day preceding any Interest Payment Date, the Fiscal Agent will make a demand for payment on any applicable Qualified Credit Instrument for the amount of the deficiency, all in the manner and as provided in such Qualified Credit Instrument, and will deposit the amount received from the issuer of the Qualified Credit Instrument pursuant to such demand into the Interest Account and the Principal Account, in such order, the difference between the amount required to be deposited pursuant to the Fiscal Agent Agreement and the amount actually deposited by the CRA/LA and transferred from Council District 3 Series D Reserve Account or the Council District 3 Series E Reserve Account, as applicable, In the event the Council District 3 Series D Reserve Account or the Council District 3 Series E Reserve Account, as applicable, has on deposit more than one Qualified Credit Instrument, the Fiscal Agent will draw on such Qualified Credit Instruments on a pro-rata basis.

In the event that the amount on deposit in the Council District 3 Series D Reserve Account or the Council District 3 Series E Reserve Account, as applicable, on the third Business Day preceding any Interest Payment Date (other than the final Interest Payment Date) exceeds the Reserve Requirement (including in any such calculation the then principal amount of any applicable Qualified Credit Instrument, including any reinstatement of the principal thereof), the Fiscal Agent will, at the Request of the CRA/LA, withdraw from the Council District 3 Series D Reserve Account or the Council District 3 Series E Reserve Account, as applicable, and transfer to the CRA/LA the amount of Investment Earnings which are in excess of the Reserve Requirement for application pursuant to the Fiscal Agent Agreement. At the Request of the CRA/LA filed with the Fiscal Agent, all amounts in the Council District 3 Series D Reserve Account or the Council District 3 Series E Reserve Account, as applicable, will either (a) be credited, on the third Business Day preceding the final Interest Payment Date, to the deposit then required to be made by the CRA/LA pursuant to the Fiscal Agent Agreement; or (b) transferred, on the final Interest Payment Date, to the CRA/LA to be used for any lawful purpose relating to the Project Area. Notwithstanding the foregoing provisions of the Fiscal Agent Agreement, no amounts will be withdrawn from the Council District 3 Series D Reserve Account or the Council District 3 Series E Reserve Account and transferred to the CRA/LA pursuant to the applicable provisions of the Fiscal Agent Agreement during any period in which an Event of Default shall have occurred and be continuing under the Fiscal Agent Agreement.

The Fiscal Agent will maintain adequate records, verified with the provider of any Qualified Credit Instrument, as to the amount available to be drawn at any given time under such Qualified Credit Instrument, and as to amounts paid and owing to such provider under the terms of any applicable agreement.

Series 2010 Project Funds

There is established a fund to be held by the CRA/LA known as the “Earthquake Disaster Assistance Project for Portions of Council District 3 Series D Project Fund” (the “Series D Project Fund”) to be held and maintained by the CRA/LA. Amounts on deposit in the Series D Project Fund, if any, will

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be derived solely from the proceeds of the Series D Bonds and from the interest, profits and other income received from the investment of moneys in the Series D Project Fund pursuant to the applicable provisions of the Fiscal Agent Agreement. The moneys in the Series D Project Fund will be used solely in the manner provided by the Redevelopment Law and the Redevelopment Plan. The CRA/LA will pay moneys from the Series D Project Fund upon receipt of claims thereon and signed by at least one duly authorized officer or member of the CRA/LA. The CRA/LA warrants that no withdrawal will be made from the Series D Project Fund for any purpose not authorized by law and shall be for payment or reimbursement for costs incurred with respect to the Redevelopment Project.

There is established a fund to be held by the CRA/LA known as the “Earthquake Disaster Assistance Project for Portions of Council District 3 Series E Project Fund” (the “Series E Project Fund”) to be held and maintained by the CRA/LA. Amounts on deposit in the Series E Project Fund, if any, will be derived solely from the proceeds of the Series D Bonds and from the interest, profits and other income received from the investment of moneys in the Series E Project Fund pursuant to the Fiscal Agent Agreement. The moneys in the Series E Project Fund will be used solely in the manner provided by the Redevelopment Law and the Redevelopment Plan. The CRA/LA will pay moneys from the Series E Project Fund upon receipt of claims thereon and signed by at least one duly authorized officer or member of the CRA/LA. The CRA/LA warrants that no withdrawal will be made from the Series E Project Fund for any purpose not authorized by law and will be for payment or reimbursement for costs incurred with respect to the Redevelopment Project.

Parity Debt

In addition to the Series 2010 Bonds, Series A Loan and the Series B Loan, the CRA/LA may issue or incur Parity Debt in such principal amount as shall be determined by the CRA/LA. The CRA/LA may issue and deliver any Parity Debt subject to the following specific conditions which are made conditions precedent to the issuance and delivery of such Parity Debt issued under the applicable provisions of the Fiscal Agent Agreement:

(a) No Event of Default shall have occurred and be continuing, and the CRA/LA shall otherwise be in compliance with all covenants set forth in the Fiscal Agent Agreement.

(b) The CRA/LA will provide the Fiscal Agent with a report of an Independent Redevelopment Consultant containing at least the following information:

(i) Tax Revenues projected to be collected in the then-current Bond Year (for purposes of the applicable sections of the Fiscal Agent Agreement, Tax Revenues (1) will be based upon the most recent assessed valuation of taxable property in the Redevelopment Project Area as indicated in the applicable records of the County, which valuation may be adjusted to reflect the potential impact of assessment appeals and amounts attributable to any misplaced taxable value and (2) will not include amounts payable by the CRA/LA pursuant to Section 33607.5 of the Redevelopment Law unless said amounts are lawfully subordinated to the payment of Annual Debt Service on the Series 2010 Bonds and the Loans);

(ii) Maximum Annual Debt Service on the Series 2010 Bonds and Parity Debt that will be outstanding immediately following the issuance of such Parity Debt;

(iii) Total assessed value of taxable property in the Project Area based on the tax roll for the most recent Fiscal Year for which such information is available (“Current Year Total Assessed Value”);

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(iv) The total assessed value of property in the Project Area as shown on the assessment roll last equalized prior to the approval of the Redevelopment Plan, including any adjustments thereto as incorporated into the records of the County of Los Angeles (“Base Year Value”);

(v) The difference between Current Year Total Assessed Value and Base Year Value (“Incremental Value”); and

(vi) For each of the ten (10) assesses with the highest assessed value of taxable property in the Project Area based on the tax roll for the most recent Fiscal Year for which such information is available a) the total assessed value for each owner and b) the sum of the total assessed values for the top 10 owners (“Top 10 Total Assessed Value”). For the purpose of the Fiscal Agent Agreement, the property owner having the highest assessed value will be referred to as the “Largest Owner.”

The CRA/LA may incur Parity Debt for the purpose of refunding a portion of the Outstanding Parity Debt without complying with the requirements of this subsection 4.01(b) above, so long as Maximum Annual Debt Service on the Outstanding Parity Debt after the issuance of such Parity Debt is not greater than Maximum Annual Debt Service on the Outstanding Parity Debt prior to the issuance of such Parity Debt.

(c) The report of the Independent Redevelopment Consultant will show that Tax Revenues will equal at least 250% of the Maximum Annual Debt Service on the Series 2010 Bonds and Parity Debt that will be outstanding immediately following the issuance of such Parity Debt (the “Debt Service Coverage Ratio”);

provided such Debt Service Coverage Ratio will be reduced to 175% in the event that the report shows that each of the following conditions has been satisfied:

(i) the Base Year Value is not more than eighty percent (80%) of the Current Year Total Assessed Value;

(ii) the Top 10 Total Assessed Value is not more than thirty-five percent (35%) of the Incremental Value; and

(iii) the Assessed Value of all taxable property in the Project Area owned by the Largest Owner is not more than twenty percent (20%) of the Incremental Value

provided further however that such Debt Service Coverage Ratio will be reduced to 125% in the event that the report shows that each of the following conditions has been satisfied:

(iv) the Base Year Value is not more than seventy-five percent (75%) of the Current Year Total Assessed Value;

(v) the Top 10 Total Assessed Value is not more than twenty percent (20%) of the Incremental Value; and

(vi) the Assessed Value of all taxable property in the Project Area owned by the Largest Owner is not more than twenty percent (20%) of the Incremental Value

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(d) The CRA/LA will deliver to the Fiscal Agent a Certificate of the CRA/LA certifying that the conditions precedent to the issuance of such Parity Debt set forth in subsections (a), (b) and (c) above have been satisfied.

(e) The CRA/LA will fund a Council District 3 Reserve Account in an amount equal to the Reserve Requirement.

Subordinate Debt

Nothing in the Fiscal Agent Agreement will prohibit the CRA/LA from incurring Subordinate Debt, and the CRA/LA may issue or incur Subordinate Debt in such principal amount as determined by the CRA/LA.

Pledge of Tax Revenues

The Series 2010 Bonds and all Parity Debt will be equally secured for the benefit of the Owners of the Series 2010 Bonds and other Parity Debt, including the Series A Loan and the Series B Loan, by a pledge of and lien on all of the Pledged Tax Revenues, without preference or priority for series, issue, number, dated date, sale date, date of execution or date of delivery. The payment obligations of the CRA/LA pursuant to any Qualified Credit Instrument will be secured for the benefit of the provider thereof by a pledge and lien on all of the Pledged Tax Revenues which pledge and lien will be subordinate to the pledge and lien securing the Series 2010 Bonds and any Parity Debt. The Series 2010 Bonds will be additionally secured with by a first pledge of and lien upon all of the moneys in the Council District 3 Reserve Account, excluding Investment Earnings. The Pledged Tax Revenues are allocated in their entirety to the payment of the principal of and interest on the Series 2010 Bonds and all Parity Debt. Except for Tax Revenues and the Council District 3 Reserve Account, no funds or properties of the CRA/LA will be pledged to, or otherwise liable for, the payment of principal of or interest or premium, of any, on the Series 2010 Bonds.

Pledged Revenue Fund; Debt Service Fund; Deposit of Tax Revenues

There is established a special fund known as the “Earthquake Disaster Assistance Project for Portions of Council District 3 Pledged Revenue Fund” (the “Pledged Revenue Fund”) will be held by the CRA/LA. The CRA/LA will deposit all of the Pledged Tax Revenues received in any Bond Year in the Pledged Revenue Fund promptly upon the receipt thereof. Any Tax Revenues received during such Bond Year in excess of Pledged Tax Revenues for such Bond Year will be released from the pledge and lien under the Fiscal Agent Agreement and may be used for any lawful purpose of the CRA/LA. Prior to the payment in full of the principal of and interest and redemption premium, if any, on the Series 2010 Bonds and all Parity Debt and the payment in full of all other amounts payable under the Fiscal Agent Agreement and under any Parity Debt Instrument, the CRA/LA will not have any beneficial right or interest in the moneys on deposit in the Pledged Revenue Fund, except as provided in the Fiscal Agent Agreement and in any Parity Debt Instrument, and such moneys will be used and applied as set forth in the Fiscal Agent Agreement and in any Parity Debt Instrument.

There is hereby established a special fund known as the “Earthquake Disaster Assistance Project for Portions of Council District 3 Debt Service Fund” (the “Debt Service Fund”) will continue to be held by the CRA/LA. The CRA/LA will timely transfer from the Pledged Revenue Fund ratably to the Debt Service Fund and in any applicable debt service fund created by any Parity Debt Instrument promptly upon receipt thereof by the CRA/LA, until such time, if any, during such Bond Year as the amounts on deposit in such debt service funds equal the aggregate amounts required to be transferred to the Fiscal Agent pursuant to the Fiscal Agent Agreement for such Bond Year; and (except as may be otherwise

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provided in any Parity Debt Instrument). In the event that there are insufficient Pledged Tax Revenues to make all payments required into the Debt Service Fund and into any other applicable debt service funds created by Parity Debt Instruments, the CRA/LA will allocate Pledged Tax Revenues from the Pledged Revenue Fund among the Debt Service Fund and any applicable debt service funds created by Parity Debt Instruments on a proportionate basis based on the relative amount of Pledged Tax Revenues that would have been required to make all such deposits in full.

Interest Accounts, Principal Accounts and Sinking Accounts; Transfer of Pledged Tax Revenues to Fiscal Agent for Payment of the Series 2010 Bonds

The Fiscal Agent Agreement establishes the following accounts to be held by the Fiscal Agent: the “Earthquake Disaster Assistance Project for Portions of Council District 3 Series D Interest Account” (the “Series D Interest Account”), the “Earthquake Disaster Assistance Project for Portions of Council District 3 Series D Principal Account” (the “Series D Principal Account”), the “Earthquake Disaster Assistance Project for Portions of Council District 3 Series E Interest Account” (the “Series E Interest Account”), the “Earthquake Disaster Assistance Project for Portions of Council District 3 Series E Principal Account” (the “Series E Principal Account”), the “Earthquake Disaster Assistance Project for Portions of Council District 3 Series D Sinking Account” (the “Series D Interest Account”) and the “Earthquake Disaster Assistance Project for Portions of Council District 3 Series E Sinking Account” (the “Series E Sinking Account”). The CRA/LA will withdraw from the Debt Service Fund and transfer to the Fiscal Agent the following amounts at the following times and in the following order of priority:

Payment Amount. At such time as the CRA/LA deems appropriate, as moneys become available for such purpose, but not later than each February 20 and August 25 of each year, commencing February 20, 2011, the CRA/LA will withdraw from the Debt Service Fund and transfer to the Fiscal Agent for deposit into the Series D Interest Account and the Series E Interest Account an amount equal to the interest on the Series 2010D Bonds and the Series 2010E Bonds and any Parity Debt payable from the Debt Service Fund and will withdraw from the Debt Service Fund and transfer to the Fiscal Agent for deposit into the Series D Principal Account and Series E Principal Account an amount equal to the principal of the Series 2010D Bonds and the Series 2010E Bonds and any Parity Debt payable from the Debt Service Fund becoming due and payable on the applicable Interest Payment Date pursuant to the Fiscal Agent Agreement and any applicable Parity Debt Instrument.

On or before August 25 of each year beginning August 25, 2034, the CRA/LA shall withdraw from the Debt Service Fund and transfer to the Fiscal Agent for deposit into the Series D Sinking Account and the Series E Sinking Account, as applicable, an amount of money which, together with any money contained therein, is equal to the aggregate amount of the principal becoming due and payable on all outstanding Term Bonds on such Sinking Account Payment Date as provided in Sections 2.04(a)(ii) and 2.04(b)(ii) in respect of Sinking Account Installments becoming due and payable on such Series D Bonds and Series E Bonds.

Reserve Account Deposits. In the event that the Fiscal Agent will notify the CRA/LA pursuant to the Fiscal Agent Agreement that the amount on deposit in the Council District 3 Series D Reserve Account or the Council District 3 Series E Reserve Account is less than the Reserve Requirement, or the CRA/LA has withdrawn amounts on deposit in the Council District 3 Series D Reserve Account or the Council District 3 Series E Reserve Account to make payments on the Series D Bonds or the Series E Bonds, as applicable, the CRA/LA will immediately withdraw from the Debt Service Fund and transfer to the Fiscal Agent for deposit in the Council District 3 Series D Reserve Account or the Council District 3 Series E Reserve Account, as applicable, an amount of money necessary to maintain amounts on deposit therein at the Council District 3 Series D Reserve Requirement or the Council District 3 Series E Reserve Requirement, as applicable (on a pro rata basis with amounts withdrawn from any applicable debt service

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fund established under a Parity Debt Instrument); provided that amounts required to be transferred to the Council District 3 Series D Reserve Account or the Council District 3 Series E Reserve Account, as applicable, will, if necessary, first be used to reinstate the principal amount of any applicable Qualified Credit Instrument and will then be used to replenish any cash portion of the Reserve Requirement. No such transfer and deposit need be made to the Council District 3 Series D Reserve Account or the Council District 3 Series E Reserve Account so long as there will be on deposit therein a sum at least equal to the Council District 3 Series D Reserve Requirement or the Council District 3 Series E Reserve Requirement, as applicable.

Surplus. Except as may be otherwise provided in any Parity Debt Instrument, the CRA/LA will not be obligated to deposit in the Pledged Revenue Fund in any Bond Year an amount of Tax Revenues which, together with other available amounts in the Pledged Revenue Fund, exceeds Pledged Tax Revenues for the Outstanding Series A Loan, Series B Loan and Series 2010 Bonds for such Bond Year. In the event that for any reason whatsoever any amounts will remain on deposit in the Pledged Revenue Fund or the Debt Service Fund on any September 2 after making all of the transfers theretofore required to be made pursuant to the preceding clauses (a) and (b) and pursuant to any Parity Debt Instrument, the CRA/LA may withdraw such amounts from the Pledged Revenue Fund, the Special Fund and the Debt Service Fund for use for any lawful purposes of the CRA/LA.

Investment of Moneys; Valuation of Investments

All moneys in the Series 2010 Project Funds, the Pledged Revenue Fund, the Debt Service Fund and the Council District 3 Reserve Account will be invested by the CRA/LA solely in Permitted Investments maturing no later than the respective dates on which such moneys are estimated by the CRA/LA to be required for application to the Redevelopment Project or required to be deposited with the Fiscal Agent pursuant to the Fiscal Agent Agreement or any applicable Parity Debt Instrument, as applicable pursuant to the direction of the CRA/LA given to the Fiscal Agent (and promptly confirmed in writing by the CRA/LA) in advance of the making of such investments. Moneys in the Pledged Revenue Fund will be invested pursuant to the Fiscal Agent Agreement. In the absence of any such direction from the CRA/LA, the Fiscal Agent will invest any such moneys in Permitted Investments described in clause (h) of the definition thereof. Subject to the following sentence, Permitted Investments of moneys in the Council District 3 Reserve Account will have a maturity of no greater than five years. If a Permitted Investment may be liquidated or “put” at a price equal to the yield to maturity of such Permitted Investment with or to the provider thereof or such other entity rated at least “Aa3” by Moody’s and “AA-” by S&P at least semiannually in connection with the Interest Payment Dates on the Series 2010 Bonds, then such Permitted Investment may, notwithstanding any other maturity limitation set forth in the Fiscal Agent Agreement or in the definition of Permitted Investments in the Fiscal Agent Agreement, have a maturity of more than five years. The CRA/LA will not enter into any such liquidation or “put” agreement if such liquidation or “put” agreement would result in the ratings then in effect on the Series 2010 Bonds being lowered.

During the period beginning on the date of issuance of the Series 2010 Bonds and ending on the date on which all amounts in the Series D Project Fund have been expended in accordance with the Fiscal Agent Agreement, Investment Earnings on moneys in the Series D Project Fund will be deposited into the Series D Project Fund and, thereafter, such Investment Earnings will be transferred by the CRA/LA to the Debt Service Fund and used to pay debt service on the Series 2010 Bonds. During the period beginning on the date of issuance of the Series E Bonds and ending on the date on which all amounts in the Series E Project Fund have been expended in accordance with the Fiscal Agent Agreement, Investment Earnings on moneys in the Series E Project Fund will be deposited into the Series E Project Fund and, thereafter, such Investment Earnings will be transferred by the CRA/LA to the Debt Service Fund and used to pay debt service on the Series 2010 Bonds.

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Investment Earnings on amounts on deposit in each of the Council District 3 Reserve Accounts will first be retained therein to the extent necessary to maintain the amounts therein at the Reserve Requirement, and then will be transferred by the Fiscal Agent from each of the Council District 3 Reserve Accounts to the CRA/LA and deposited by the CRA/LA into the Debt Service Fund for the Series D Bonds or the Debt Service Fund for the Series E Bonds, as applicable, and used to pay debt service on the related Series D Bonds and the Series E Bonds, as applicable.

Permitted Investments acquired as an investment of moneys in any fund or account held under the Fiscal Agent Agreement will be credited to such fund or account. For the purpose of determining the amount in any fund, the value of Permitted Investments credited to such fund will be calculated at the market value thereof excluding accrued interest. Permitted Investments on deposit in the Council District 3 Reserve Account will be valued by the Fiscal Agent at least annually. In making any valuation of Permitted Investments under the Fiscal Agent Agreement, the Fiscal Agent may utilize computerized securities pricing services that may be available to it, including those available through its regular accounting system and rely thereon.

The CRA/LA acknowledges that to the extent regulations of the Comptroller of the Currency or other applicable regulatory entity grant the CRA/LA the right to receive brokerage confirmations of security transactions as they occur, the CRA/LA specifically waives receipt of such confirmations to the extent permitted by law. The Fiscal Agent will furnish the CRA/LA periodic cash transaction statements which will include detail for all investment transactions made by the Fiscal Agent under the Fiscal Agent Agreement.

Punctual Payment

The CRA/LA will punctually pay or cause to be paid the principal of and interest on the Series 2010 Bonds together with any prepayment premiums thereon in strict conformity with the terms of the Fiscal Agent Agreement, and it will faithfully observe and perform all of the conditions, covenants and requirements of the Series 2010 Bonds and the Fiscal Agent Agreement.

Limitation on Superior Debt

The CRA/LA covenants that, so long as the Series 2010 Bonds remain Outstanding, the CRA/LA will not issue any bonds, notes or other obligations, enter into any agreement or otherwise incur any loans, advances or indebtedness, which is in any case secured by a lien on all or any part of the Tax Revenues which is superior to or on a parity with the lien established under the Fiscal Agent Agreement for the security of the Series 2010 Bonds, excepting only Parity Debt issued pursuant to the Fiscal Agent Agreement.

Additionally, if and to the extent the Fiscal Agent is obligated to make a draw on the Council District 3 Reserve Account due to an insufficiency of Pledged Tax Revenues to make payments on the Series 2010 Bonds, the CRA/LA will transfer tax revenues attributable to the Project Area to the Fiscal Agent to replenish the Council District 3 Reserve Account to the extent and as permitted by the Fiscal Agent Agreement and any applicable Parity Debt Instrument.

Payment of Claims

The CRA/LA will pay and discharge, or cause to be paid and discharged, any and all lawful claims for labor, materials or supplies which, if unpaid, might become a lien or charge upon the properties owned by the CRA/LA or upon .the Tax Revenues or any part thereof, or upon any funds in the hands of the Fiscal Agent, or which might impair the security of the Series 2010 Bonds. Nothing contained in the

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Fiscal Agent Agreement will require the CRA/LA to make any such payment so long as the CRA/LA in good faith will contest the validity of said claims.

Protection of Security and Rights

The CRA/LA will preserve and protect the security of the Series 2010 Bonds and the rights of the Fiscal Agent and the Owners with respect to the Series 2010 Bonds. From and after the Closing Date, the Series 2010 Bonds will be incontestable by the CRA/LA.

Books and Accounts

The CRA/LA will keep, or cause to be kept, proper books of record and accounts, separate from all other records and accounts of the CRA/LA and the City, in which complete and correct entries will be made of all transactions relating to the Redevelopment Project, the Tax Revenues, the Pledged Revenue Fund, the Debt Service Fund, the Series 2010 Project Funds and the Council District 3 Reserve Account and the accounts therein as established under the Fiscal Agent Agreement. Such books of record and accounts will at all times during business hours be subject, upon prior written request, to the reasonable inspection of the Fiscal Agent (who will have no duty to inspect such books of record and accounts under the Fiscal Agent Agreement) and the Owners of any Bonds then Outstanding, or their representatives authorized in writing.

Payments of Taxes and Other Charges

The CRA/LA will pay and discharge, or cause to be paid and discharged, all taxes, service charges, assessments and other governmental charges which may hereafter be lawfully imposed upon the CRA/LA or the properties then owned by the CRA/LA in the Project Area, when the same will become due. Nothing contained will require the CRA/LA to make any such payment so long as the CRA/LA in good faith will contest the validity of said taxes, assessments or charges. The CRA/LA will duly observe and conform to all valid requirements of any governmental authority relative to the Redevelopment Project or any part thereof.

Management and Operation of Properties

The CRA/LA will manage and operate all properties owned by the CRA/LA and comprising any part of the Project Area in a sound and businesslike manner and will keep such properties insured at all times in conformity with sound business practice.

Taxation of Leased Property

All amounts derived by the CRA/LA pursuant to Section 33673 of the Redevelopment Law with respect to the lease of property for redevelopment will be treated as Tax Revenues for all purposes of the Fiscal Agent Agreement, and will be paid to the CRA/LA for deposit in the Pledged Revenue Fund.

Disposition of Property

The CRA/LA will not participate in the disposition of any land or real property in the Project Area to anyone which will result in such property becoming exempt from taxation because of public ownership or use or otherwise (except property dedicated for public right-of-way and except property planned for public ownership or use by the Redevelopment Plan in effect on the date of the Fiscal Agent Agreement) so that such disposition shall, when taken together with other such dispositions, aggregate more than 10% of the land area in the Project Area unless such disposition is permitted as hereinafter

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provided in the applicable sections of the Fiscal Agent Agreement. If the CRA/LA proposes to participate in such a disposition, it will thereupon appoint an Independent Redevelopment Consultant to report on the effect of said proposed disposition. If the Report of the Independent Redevelopment Consultant concludes that the security of the Series 2010 Bonds or the rights of the Bond Owners and the Fiscal Agent under the Fiscal Agent Agreement will not be materially impaired by said proposed disposition, the CRA/LA may thereafter make such disposition. If said Report of the Independent Redevelopment Consultant concludes that such security will be materially impaired by said proposed disposition, the CRA/LA will disapprove said proposed disposition.

Maintenance of Tax Revenues

The CRA/LA will comply with all requirements of the Redevelopment Law to insure the allocation and payment to it of the Tax Revenues, including without limitation the timely filing of any necessary statements of indebtedness with appropriate officials of the County and (in the case of supplemental revenues and other amounts payable by the State) appropriate officials of the State. The CRA/LA will not enter into any agreement with the County or any other governmental unit which would have the effect of reducing the amount of Tax Revenues available to the CRA/LA for payment of the Series 2010 Bonds. Nothing herein is intended or will be construed in any way to prohibit or impose any limitations on the entering into by the CRA/LA of any such agreement, amendment or supplement which by its terms is subordinate to the payment of the Series 2010 Bonds and all Parity Debt.

Compliance with Law, Completion of Project

The CRA/LA will comply with all applicable provisions of the Redevelopment Law in completing the Reseda/Canoga Park Project including, without limitation, duly noticing and holding any public hearing required by either Section 33445 or 33679 of the Redevelopment Law prior to application of proceeds of the Bonds to any portion of the Reseda/Canoga Park Project subject to either Section 33445 or 33679. In addition, the CRA/LA will comply timely with the public hearing and further requirements of Section 33334.6. The CRA/LA will also comply with the requirements of Section 33675, including filing any required “statements of indebtedness” with the County Auditor-Controller. The CRA/LA will commence, and will continue to completion, with all practicable dispatch, the Reseda/Canoga Park Project and the Reseda/Canoga Park Project will be accomplished and completed in a sound and economical manner and in conformity with the Redevelopment Plan and the Redevelopment Law.

Payment of Expenses; Indemnification

The CRA/LA will pay to the Fiscal Agent from time to time all reasonable compensation for all services rendered under the Fiscal Agent Agreement, including, but not limited to, all reasonable fees, expenses, charges, legal and consulting fees and other disbursements and those of its attorneys, agents and employees, incurred in and about the performance of its powers and duties under the Fiscal Agent Agreement and thereunder. Upon the occurrence of an Event of Default, the Fiscal Agent will have a first lien on the Tax Revenues and the Council District 3 Reserve Accounts to secure the payment to the Fiscal Agent of all reasonable fees, costs and expenses, including reasonable compensation to its experts, attorneys and counsel incurred in declaring such Event of Default and in exercising the rights andremedies set forth in the Fiscal Agent Agreement.

The CRA/LA further covenants and agrees to indemnify and save the Fiscal Agent and its officers, directors, agents and employees, harmless against any losses, expenses and liabilities which it may incur arising out of or in the exercise and performance of its powers and duties under the Fiscal Agent Agreement or under Fiscal Agent Agreement, including the costs and expenses of defending

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against any claim of liability, but excluding any and all losses, expenses and liabilities which are due to the negligence or intentional misconduct of the Fiscal Agent, its officers, directors, agents or employees. The obligations of the CRA/LA under this paragraph will survive the resignation or removal of U.S. Bank National Association as fiscal agent under the Fiscal Agent Agreement and payment of the Series 2010 Bonds and the discharge of the Fiscal Agent Agreement.

Redevelopment of Project Area

The CRA/LA will ensure that all activities undertaken by the CRA/LA with respect to theredevelopment of the Project Area are undertaken and accomplished in conformity with all applicable requirements of the Redevelopment Plan and the Redevelopment Law. Without limiting the generality of the foregoing, the CRA/LA covenants that it will deposit or cause to be deposited in the Low and Moderate Income Housing Fund all amounts when, as and if required to be deposited, therein pursuant to the Redevelopment Law, and will use such amounts as required by the Redevelopment Law.

Further Assurances

The CRA/LA will adopt, make, execute and deliver any and all such further resolutions, instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of the Fiscal Agent Agreement and for the better assuring and confirming unto the Fiscal Agent, the Authority and the Owners of the Series 2010 Bonds of the rights and benefits provided in the Fiscal Agent Agreement.

Continuing Disclosure

The CRA/LA covenants and agrees that it will comply with and carry out all of the provisions of the Continuing Disclosure Agreement. Notwithstanding any other provision of the Fiscal Agent Agreement, failure of the CRA/LA to comply with the Continuing Disclosure Agreement will not be considered an Event of Default; however, the Fiscal Agent at the request of any Participating Underwriter (as defined in the Continuing Disclosure Agreement) or the holders of at least 25% aggregate principal amount of Outstanding Series 2010 Bonds, will, but only to the extent the Fiscal Agent has been indemnified from and against any loss, liability, cost or expense, including, without limitation, fees and expenses of its attorneys and advisors and advisors and additional fees and expenses of the Fiscal Agent, take such actions as may be necessary and appropriate to compel performance, including seeking mandate or specific performance by court order.

Appointment of Fiscal Agent

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, is appointed Fiscal Agent by the CRA/LA for the purpose of receiving all moneys required to be deposited with the Fiscal Agent under the Fiscal Agent Agreement and to allocate, use and apply the same as provided in the Fiscal Agent Agreement. The CRA/LA agrees that it will maintain a Fiscal Agent having a corporate trust office in the State, with a combined capital and surplus, or a member of a bank holding company system the lead bank of which will have a combined capital and surplus, of at least $75,000,000, and subject to supervision or examination by Federal or State authority, so long as any Series 2010 Bonds are Outstanding. If such bank, national banking association or trust company publishes a report of condition at least annually pursuant to law or to the requirements of any supervising or examining authority above referred to, then for the purpose of the applicable provisions of the Fiscal Agent Agreement the combined capital and surplus of such bank, national banking association or trust company will be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published.

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The Fiscal Agent is authorized to pay the principal of and interest and redemption premium (if any) on the Series 2010 Bonds when duly presented for payment at maturity, or on redemption prior to maturity, and to cancel all Series 2010 Bonds upon payment thereof the Fiscal Agent will keep accurate records of all funds and accounts administered by it and of all Series 2010 Bonds paid and discharged.

Acceptance of Trusts

The Fiscal Agent accepts the duties imposed upon it by the Fiscal Agent Agreement, and agrees to perform said duties, but only upon and subject to the following express terms and conditions:

(a) The Fiscal Agent will not be liable for any error of judgment made in good faith by a responsible officer of the Fiscal Agent, unless it will be proved that the Fiscal Agent was negligent in ascertaining the pertinent facts.

(b) Whenever in the administration of the Fiscal Agent Agreement the Fiscal Agent will deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action under the Fiscal Agent Agreement, the Fiscal Agent (unless other evidence is specifically prescribed in the Fiscal Agent Agreement) may, in the absence of bad faith on its part, rely upon a Certificate of the CRA/LA.

(c) The Fiscal Agent will be under no obligation to exercise any of the rights or powers vested in it by the Fiscal Agent Agreement at the request or direction of any of the such Owners pursuant to the Fiscal Agent Agreement, unless such Owners will have offered to the Fiscal Agent security or indemnity satisfactory to the Fiscal Agent against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction.

(d) The Fiscal Agent will not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order bond or other paper or document, but, the Fiscal Agent, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit.

(e) The Fiscal Agent, prior to the occurrence of an Event of Default under the Fiscal Agent Agreement and after the curing or waiving of all such Events of Default that may have occurred, undertakes to perform such duties and only such duties as are specifically set forth in the Fiscal Agent Agreement and no covenants of or against the Fiscal Agent will be implied in the Fiscal Agent Agreement. In case an Event of Default under the Fiscal Agent Agreement has occurred (which has not been cured or waived), the Fiscal Agent may exercise such of the rights and powers vested in it by the Fiscal Agent Agreement, and will use the same degree of care and skill in the exercise of such rights and powers as a prudent person would exercise or use under the circumstances in the conduct of his own affairs.

(f) The Fiscal Agent may execute any of the trusts or powers under the Fiscal Agent Agreement and perform the duties required of it under the Fiscal Agent Agreement either directly or by or through attorneys or agents, will not be liable for the acts or omissions of such attorneys or agents appointed with due care, and will be entitled to advice of counsel concerning all matters of trust and its duty under the Fiscal Agent Agreement. The Fiscal Agent may conclusively rely on an opinion of counsel as full and complete authorization and protection for any action taken, suffered or omitted by it under the Fiscal Agent Agreement.

(g) The Fiscal Agent will not be responsible for any recital in the Fiscal Agent Agreement or in the Series 2010 Bonds, or for any of the supplements thereto or instruments of further assurance, or for

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the sufficiency of the security for the Series 2010 Bonds issued under the Fiscal Agent Agreement or intended to be secured and makes no representation as to the validity or sufficiency of the Series 2010 Bonds or the Fiscal Agent Agreement. The Fiscal Agent will not be bound to ascertain or inquire as to the observance or performance of any covenants, conditions or agreements on the part of the CRA/LA under the Fiscal Agent Agreement. The Fiscal Agent will not be responsible for the application by the CRA/LA of the proceeds of the Series 2010 Bonds.

(h) The Fiscal Agent may become the Owner or pledgee of Series 2010 Bonds secured with the same rights it would have if not the Fiscal Agent; may acquire and dispose of other bonds or evidences of indebtedness of the CRA/LA with the same rights it would have if it were not the Fiscal Agent; and may act as a depositary for and permit any of its officers or directors to act as a member of, or in the capacity with respect to, any committee formed to protect the rights of Owners of Series 2010 Bonds, whether or not such committee will represent the Owners of the majority in aggregate principal amount of the Series 2010 Bonds then Outstanding.

(i) The Fiscal Agent may rely and will be protected in acting or refraining from acting, in good faith and without negligence, upon any notice, resolution, opinion, report, direction, request, consent, certificate, order, affidavit, letter, telegram, facsimile or other paper or document believed by it to be genuine and to have been signed or presented by the proper person or persons. Any action taken or omitted to be taken by the Fiscal Agent in good faith and without negligence pursuant to the Fiscal Agent Agreement upon the request or authority or consent of any person who at the time of making such request or giving such authority or consent is the Owner of any Series 2010 Bond, will be conclusive and binding upon all future Owners of the same Series 2010 Bond and upon Series 2010 Bonds issued in exchange therefor or in place thereof. The Fiscal Agent will not be bound to recognize any person as an Owner of any Series 2010 Bond or to take any action at his request unless the ownership of Series 2010 Bond by such person will be reflected on the Registration Books.

(j) The permissive right of the Fiscal Agent to do things enumerated in the Fiscal Agent Agreement will not be construed as a duty and it will not be answerable for other than its negligence or willful misconduct. The immunities and exceptions from liability of the Fiscal Agent will extend to its officers, directors, employees and agents.

(k) The Fiscal Agent will not be required to take notice or to be deemed to have notice of any Event of Default under the Fiscal Agent Agreement except failure by the CRA/LA to make any of the payments to the Fiscal Agent required to be made by the CRA/LA pursuant hereto, unless the Fiscal Agent will be specifically notified in writing of such default by the CRA/LA or by the Owners of at least 25% in aggregate principal amount of the Series 2010 Bonds then Outstanding and all notice or other instruments required by the Fiscal Agent Agreement to be delivered to the Fiscal Agent must, in order to be effective, be delivered at the Principal Corporate Trust Office of the Fiscal Agent, and in the absence of such notice so delivered the Fiscal Agent may conclusively assume there is no Event of Default under the Fiscal Agent Agreement except as aforesaid.

(l) At any and all reasonable times the Fiscal Agent and its duly authorized agents, attorneys, experts, accountants and representatives, will have the right fully to inspect all books, papers and records of the CRA/LA pertaining to the Series 2010 Bonds, and to make copies of any of such books, papers and records which are not privileged by statute or by law.

(m) The Fiscal Agent will not be required to give any bond or surety in respect of the execution of the said trusts and powers or otherwise in respect of the premises of this Fiscal Agent Agreement.

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(n) Notwithstanding anything elsewhere in the Fiscal Agent Agreement with respect to the execution of any Series 2010 Bonds, the withdrawal of any cash, the release of any property, or any action whatsoever within the purview of the Fiscal Agent Agreement, the Fiscal Agent will have the right, but will not be required, to demand any showings, certificates, opinions, appraisals or other information, or corporate action or evidence thereof, as may be deemed desirable for the purpose of establishing the right of the CRA/LA to the execution of any Series 2010 Bonds, the withdrawal of any cash or the taking of any other action by the Fiscal Agent.

(o) All moneys received by the Fiscal Agent will, until used or applied or invested as provided in the Fiscal Agent Agreement, be held in trust for the purposes for which they were received but need not be segregated from other funds except to the extent required by law.

(p) Whether or not expressly provided therein, every provision of the Fiscal Agent Agreement relating to the conduct or affecting the liability of the Fiscal Agent will be subject to the provisions of the Fiscal Agent Agreement.

(q) No implied covenants or obligations will be read into the Fiscal Agent Agreement against the Fiscal Agent.

(r) The Fiscal Agent will have no responsibility with respect to any information, statement, or recital in any official statement, offering memorandum or any other disclosure material prepared or distributed with respect to the Series 2010 Bonds.

(s) The immunities extended to the Fiscal Agent also extend to its directors, officers, employees and agents.

(t) The Fiscal Agent agrees to accept and act upon facsimile transmission of written instructions and/or directions pursuant to the Fiscal Agent Agreement provided, however, that: (a) subsequent to such facsimile transmission of written instructions and/or directions the Fiscal Agent will forthwith receive the originally executed instructions and/or directions, (b) such originally executed instructions and/or directions will be signed by a person as may be designated and authorized to sign for the party signing such instructions and/or directions, and (c) the Fiscal Agent will have received a current incumbency certificate containing the specimen signature of such designated person.

(u) The Fiscal Agent will not be liable in connection with the performance of its duties under the Fiscal Agent Agreement, except for its own negligence or willful misconduct.

(v) The Fiscal Agent’s rights to immunities and protection from liability under the Fiscal Agent Agreement and its rights to payment of its fees and expenses will survive its resignation or removal and final payment or defeasance of the Series 2010 Bonds.

Fees, Charges and Expenses of the Fiscal Agent

The Fiscal Agent will be paid and reimbursed by the CRA/LA for reasonable fees for its services rendered under the Fiscal Agent Agreement and all advances, counsel fees (including expenses) and other expenses reasonably and necessarily made or incurred by the Fiscal Agent in connection with such services. Upon the occurrence of an Event of Default under the Fiscal Agent Agreement, but only upon any Event of Default, the Fiscal Agent will have a first lien with right of payment prior to payment of any Series 2010 Bond upon the amounts held under the Fiscal Agent Agreement for the foregoing fees, charges and expenses incurred by it. Any amounts advanced by the Fiscal Agent under the Fiscal Agent

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Agreement will be reimbursed, together with interest thereon accruing at a rate not in excess of the maximum rate allowed by law.

Notice to Series 2010 Bond Owners of Default

If an Event of Default under the Fiscal Agent Agreement occurs with respect to any Series 2010 Bonds of which the Fiscal Agent has been given or is deemed to have notice, as provided in the Fiscal Agent Agreement, then the Fiscal Agent will, in addition to any notice required under the Fiscal Agent Agreement, within 30 days of the receipt of such notice, give written notice thereof by first class mail to the Owner of each such Series 2010 Bond, unless such Event of Default will have been cured before the giving of such notice; provided, however, that unless such Event of Default consists of the failure by the CRA/LA to make any payment when due, the Fiscal Agent may elect not to give such notice to the Owners if and so long as the Fiscal Agent in good faith determines that it is in the best interests of the Bond Owners not to give such notice.

Intervention by Fiscal Agent

In any judicial proceeding to which the CRA/LA is a party that, in the opinion of the Fiscal Agent and its counsel, has a substantial bearing on the interests of Owners of any of the Series 2010 Bonds under the Fiscal Agent Agreement, the Fiscal Agent may intervene on behalf of such Bond Owners, and subject to the applicable provisions of the Fiscal Agent Agreement, will do so if requested in writing by the Owners of at least 25% in aggregate principal amount of such Series 2010 Bonds then Outstanding.

Removal of Fiscal Agent

The Fiscal Agent may be removed at any time by an instrument or concurrent instruments in writing, filed with the Fiscal Agent and signed by the Owners of a majority in aggregate principal amount of the Outstanding Series 2010 Bonds. The CRA/LA may also remove the Fiscal Agent at any time, except during the existence of an Event of Default. The Fiscal Agent may be removed at any time for any breach of the Fiscal Agent’s duties set forth herein.

Resignation of Fiscal Agent

The Fiscal Agent and any successor Fiscal Agent may at any time give prior written notice of its intention to resign as Fiscal Agent under the Fiscal Agent Agreement, such notice to be given to the CRA/LA by registered or certified mail. Upon receiving such notice of resignation, the CRA/LA will promptly appoint a successor Fiscal Agent. Any resignation or removal of the Fiscal Agent and appointment of a successor Fiscal Agent will become effective upon acceptance of appointment by the successor Fiscal Agent. Upon such acceptance, the CRA/LA will cause notice thereof to be given by first class mail, postage prepaid, to the Bond Owners at their respective addresses set forth on the Registration Books.

Appointment of Successor Fiscal Agent

In the event of the removal or resignation of the Fiscal Agent pursuant to the applicable provisions of the Fiscal Agent Agreement, the CRA/LA will promptly appoint a successor Fiscal Agent. In the event the CRA/LA will for any reason whatsoever fail to appoint a successor Fiscal Agent within thirty (30) days following the delivery to the Fiscal Agent of the instrument described the Fiscal Agent Agreement or within thirty (30) days following the receipt of notice by the CRA/LA pursuant to the applicable provisions of the Fiscal Agent Agreement, the Fiscal Agent may, at the expense of the CRA/LA, apply to a court of competent jurisdiction for the appointment of a successor Fiscal Agent

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meeting the requirements of the Fiscal Agent Agreement. Any such successor Fiscal Agent appointed by such court will become the successor Fiscal Agent under the Fiscal Agent Agreement notwithstanding any action by the CRA/LA purporting to appoint a successor Fiscal Agent following the expiration of such 30 day period.

Merger or Consolidations

Any company into which the Fiscal Agent may be merged or converted or with which it may be consolidated or any company resulting from any merger, conversion or consolidation to which it will be party or any company to which the Fiscal Agent may sell or transfer all or substantially all of its corporate trust business, provided that such company will meet the requirements set forth in the Fiscal Agent Agreement, will be the successor to the Fiscal Agent and vested with all of the title to the trust estate and all of the trusts, powers, discretion, immunities, privileges and all other matters as was its predecessor, without the execution or filing of any paper or further act, anything in the Fiscal Agent Agreement to the contrary notwithstanding.

Concerning any Successor Fiscal Agent

Every successor Fiscal Agent appointed under the Fiscal Agent Agreement will execute, acknowledge and deliver to its predecessor and also to the CRA/LA an instrument in writing accepting such appointment under the Fiscal Agent Agreement and thereupon such successor, without any further act, deed or conveyance, will become fully vested with all the estates, properties, rights, powers, trusts, duties and obligations of its predecessors; but such predecessor will, nevertheless, on the Written Request of the CRA/LA, or of the Fiscal Agent’s successor, execute and deliver an instrument transferring to such successor all the estates, properties, rights, powers and trusts of such predecessor under the Fiscal Agent Agreement; and every predecessor Fiscal Agent will deliver all securities and moneys held by it as the Fiscal Agent under the Fiscal Agent Agreement to its successor. Should any instrument in writing from the CRA/LA be required by any successor Fiscal Agent for more fully and certainly vesting in such successor the estate, rights, powers and duties vested or intended to be vested in the predecessor Fiscal Agent, any and all such instruments in writing will, on request, be executed, acknowledged and delivered by the CRA/LA.

Limited Liability of the Fiscal Agent

No provision in the Fiscal Agent Agreement will require the Fiscal Agent to risk or expend its own funds or otherwise incur any financial liability under the Fiscal Agent Agreement. The Fiscal Agent will not be liable for any action taken or omitted to be taken by it in accordance with the direction of the Owners of at least 25% in aggregate principal amount of Series 2010 Bonds Outstanding relating to the time, method and place of conducting any proceeding or remedy available to the Fiscal Agent under the Fiscal Agent Agreement or exercising any power conferred upon the Fiscal Agent under the Fiscal Agent Agreement. The CRA/LA will indemnify and save the Fiscal Agent, its officers, employees, directors and agents harmless from and against all claims, losses, costs, employees, directors and agents harmless from and against all claims, losses, costs, expenses, liability and damages, including legal fees and expenses, arising out of the Fiscal Agent’s exercise of performance of any of the Fiscal Agent’s powers and duties under the Fiscal Agent Agreement; provided, that the CRA/LA will not be liable for actions caused by the Fiscal Agent’s own negligence or willful misconduct. The CRA/LA agrees to indemnify and hold harmless the Fiscal Agent for any cost, expense, claim, loss or liability incurred by the Fiscal Agent, including, without limitation, fees and expenses of its attorneys, not relating to its own negligence or willful misconduct. The obligations of the CRA/LA under the applicable provisions of the Fiscal Agent Agreement will survive the resignation or removal of the Fiscal Agent under the Fiscal Agent Agreement and defeasance of the Series 2010 Bonds.

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Amendment by Consent of Owners

The Fiscal Agent Agreement and the rights and obligations of the CRA/LA and of the Owners may be amended at any time by a Supplemental Agreement which will become binding when the written consents of the Owners of at least sixty per cent (60%) in aggregate principal amount of the Series 2010 Bonds then Outstanding, exclusive of Series 2010 Bonds disqualified as provided the Fiscal Agent Agreement, are filed with the Fiscal Agent. No such amendment will (1) extend the maturity of or reduce the interest rate on, or otherwise alter or impair the obligation of the CRA/LA to pay the interest or principal or redemption premium, if any, at the time and place and at the rate and in the currency provided in the Fiscal Agent Agreement of any Series 2010 Bond, without the express written consent of the Owner of such Series 2010 Bond, or (2) permit the creation by the CRA/LA of any mortgage, pledge or lien upon the Tax Revenues superior to or on a parity with the pledge and lien created in the Fiscal Agent Agreement for the benefit of the Series 2010 Bonds, except as expressly permitted by the Fiscal Agent Agreement, or (3) reduce the percentage of Series 2010 Bonds required for the written consent to any such amendment, or (4) modify the rights or obligations of the Fiscal Agent without its prior written assent thereto.

The Fiscal Agent Agreement and the rights and obligations of the CRA/LA and of the Owners may also be amended at any time by a Supplemental Indenture which will become binding upon execution, without the consent of any Owners, but only to the extent permitted by law and only for any one or more of the following purposes:

(i) To add to the covenants and agreements of the CRA/LA in the Fiscal Agent Agreement contained, other covenants and agreements thereafter to be observed, or to surrender any right or power reserved in the Fiscal Agent Agreement to or conferred upon the CRA/LA;

(ii) To make such provisions for the purpose of curing any ambiguity, or of curing, correcting or supplementing any defective provision contained in the Fiscal Agent Agreement, or in regard to questions arising under the Fiscal Agent Agreement, as the CRA/LA may deem necessary or desirable and not inconsistent with the Fiscal Agent Agreement, and which will not adversely affect the interest of the Owners;

(iii) To provide for the issuance of Parity Debt;

(iv) To modify, amend or supplement the Fiscal Agent Agreement in such manner as to permit the qualification of the Fiscal Agent Agreement under the Trust Indenture Act of 1939, as amended, or any similar federal statute hereafter in effect, and to add such other terms, conditions and provisions as may be permitted by said act or similar federal statute, and which will not materially adversely affect the interests of the Owners of the Series 2010 Bonds;

(v) To the extent necessary to obtain a Bond Insurance Policy, to obtain a rating on the Series 2010 Bonds or in connection with satisfying all or a portion of the Reserve Account Requirement by crediting a letter of credit or Bond Insurance Policy to the Reserve Account; or

(vi) For any other purpose that does not materially adversely affect the interests of the Owners.

Each rating agency rating the Series 2010 Bonds will receive notice of each amendment to the Fiscal Agent Agreement and a copy thereof at least fifteen (15) Business Days in advance of its execution.

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Disqualified Series 2010 Bonds

The Series 2010 Bonds owned or held by or for the account of the CRA/LA or the City will not be deemed Outstanding for the purpose of any consent or other action or any calculation of Outstanding Series 2010 Bonds in the Fiscal Agent Agreement provided for, and will not be entitled to consent to, or take any other action in the Fiscal Agent Agreement provided for. Upon request of the Fiscal Agent, the CRA/LA and the City will specify in a certificate to the Fiscal Agent those Series 2010 Bonds disqualified pursuant to applicable provisions of the Fiscal Agent Agreement and the Fiscal Agent may conclusively rely on such certificate.

Endorsement or Replacement of Series 2010 Bonds After Amendment

After the effective date of any action taken as hereinabove provided, the CRA/LA may determine that the Series 2010 Bonds may bear a notation, by endorsement in form approved by the CRA/LA, as to such action, and in that case upon demand of the Owner of any Series 2010 Bond Outstanding at such effective date and presentation of his Series 2010 Bond for the purpose at the office of the Fiscal Agent or at such additional offices as the Fiscal Agent may select and designate for that purpose, a suitable notation as to such action will be made on such Series 2010 Bond. If the CRA/LA will so determine, new Series 2010 Bonds so modified as, in the opinion of the CRA/LA, will be necessary to conform to such action will be prepared and executed, and in that case upon demand of the Owner of any Series 2010 Bond Outstanding at such effective date such new Series 2010 Bonds will be exchanged at the office of the Fiscal Agent or at such additional offices as the Fiscal Agent may select and designate for that purpose, without cost to each Owner, for Series 2010 Bonds then Outstanding, upon surrender of such Outstanding Series 2010 Bonds.

Amendment by Mutual Consent

The provisions of this article will not prevent any Owner from accepting any amendment as to the particular Series 2010 Bonds held by him, provided that due notation thereof is made on such Series 2010 Bonds.

Opinion of Counsel

The Fiscal Agent may conclusively accept an opinion of counsel to the CRA/LA that an amendment of the Fiscal Agent Agreement is in conformity with the provisions of the applicable article of the Fiscal Agent Agreement.

Events of Default and Acceleration

The following events shall constitute Events of Default under the Fiscal Agent Agreement:

(a) failure by the CRA/LA to pay the principal of or interest or redemption premium, if any, on the Series 2010 Bonds or any Parity Debt when and as the same shall become due and payable;

(b) failure by the CRA/LA to observe and perform any of the covenants, agreements or conditions on its part contained in the Fiscal Agent Agreement, other than as referred to in the preceding clause (a), for a period of thirty (30) days after written notice specifying such failure and requesting that it be remedied has been given to the CRA/LA by the Fiscal Agent; provided, however, that if in the reasonable opinion of the CRA/LA the failure stated in such notice (other than a failure to pay the fees and expenses of the Fiscal Agent) can be corrected, but not within such 30 day period, the Fiscal Agent

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will not unreasonably withhold its consent to an extension of such time if corrective action is instituted by the CRA/LA within such thirty (30) day period and diligently pursued until such failure is corrected; and

(c) the CRA/LA commences a voluntary action under Title 11 of the United States Code or any substitute or successor statute.

If an Event of Default has occurred and is continuing, the Fiscal Agent will, upon the written direction of the Owners of a majority of the aggregate principal amount of Series 2010 Bonds Outstanding, (i) declare the principal of the Series 2010 Bonds, together with the accrued interest on all unpaid installment payments thereof, to be due and payable immediately, and upon any such declaration the same shall become immediately due and payable, anything in the Fiscal Agent Agreement to the contrary notwithstanding; and (ii) subject to receipt of indemnity satisfactory to the Fiscal Agent, exercise any other remedies available to the Fiscal Agent in law or at equity. Immediately upon becoming actually aware of the occurrence of an Event of Default, the Fiscal Agent will give notice of such Event of Default to the CRA/LA by telephone, facsimile or other telecommunication device, promptly confirmed in writing. This provision, however, is subject to the condition that if, at any time after the principal of the Series 2010 Bonds will have been so declared due and payable, and before any judgment or decree for the payment of the moneys due will have been obtained or entered, the CRA/LA will deposit with the Fiscal Agent a sum sufficient to pay all payments on the Series 2010 Bonds matured prior to such declaration, with interest on such overdue payments at the rate then borne by the Outstanding Series 2010 Bonds, and the reasonable expenses of the Fiscal Agent (including but not limited to attorneys fees), and any and all other defaults known to the Fiscal Agent will have been made good or cured to the satisfaction of the Fiscal Agent or provision deemed by the Fiscal Agent to be adequate will have been made therefor, then, and in every such case, the Owners of a majority in aggregate principal amount of the Outstanding Series 2010 Bonds may, by written notice to the Fiscal Agent and the CRA/LA rescind and annul such declaration and its consequences. However, no such rescission and annulment will extend to or will affect any subsequent default, or will impair or exhaust any right or power consequent thereon.

Application of Funds Upon Default

All amounts received by the Fiscal Agent pursuant to any right given or action taken by the Fiscal Agent under the provisions of the Fiscal Agent Agreement will be applied by the Fiscal Agent in the following order:

FIRST, to the payment of the fees, costs and expenses of the Fiscal Agent in carrying out the provisions of the applicable article of the Fiscal Agent Agreement, including reasonable compensation to its agents, attorneys and counsel; and

SECOND, to the payment of all payments on the Series 2010 Bonds then due and unpaid, with interest on overdue payments to the extent permitted by law at the rate of interest then borne by the Outstanding Series 2010 Bonds; provided, however, that in the event such amounts shall be insufficient to pay in full the full amount of such interest and principal, then such amounts will be applied in the order by which the overdue payments first became delinquent; and

THIRD, to the payment of all amounts then due and payable to or on behalf of the provider of the Qualified Credit Instrument by the CRA/LA under the terms of the Qualified Credit Instrument.

No Waiver

Nothing in the applicable article of the Fiscal Agent Agreement or in any other provision of the Fiscal Agent Agreement, will affect or impair the obligation of the CRA/LA, which is absolute and

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unconditional, to pay from the Tax Revenues and other amounts pledged under the Fiscal Agent Agreement, the payments and redemption premiums, if any, on the Series 2010 Bonds to the Fiscal Agent, as provided in the Fiscal Agent Agreement, or affect or impair the right of action, which is also absolute and unconditional, of the Fiscal Agent to institute suit to enforce such payment by virtue of the contract embodied in the Fiscal Agent Agreement.

A waiver of any default by the Fiscal Agent will not affect any subsequent default or impair any rights or remedies on the subsequent default. No delay or omission of the Fiscal Agent to exercise any right or power accruing upon any default will impair any such right or power or will be construed to be a waiver of any such default or an acquiescence therein, and every power and remedy conferred upon the Fiscal Agent by the Redevelopment Law or by this Article IX may be enforced and exercised from time to time and as often as will be deemed expedient by the Fiscal Agent.

If a suit, action or proceeding to enforce any right or exercise any remedy will be abandoned or determined adversely to the Fiscal Agent, the CRA/LA and the Fiscal Agent will be restored to their former positions, rights and remedies as if such suit, action or proceeding had not been brought or taken.

Remedies Not Exclusive

No remedy in the Fiscal Agent Agreement conferred upon or reserved to the Fiscal Agent is intended to be exclusive of any other remedy. Every such remedy will be cumulative and will be in addition to every other remedy given under the Fiscal Agent Agreement or now or hereafter existing, at law or in equity or by statute or otherwise, and may be exercised without exhausting and without regard to any other remedy conferred by the Redevelopment Law or any other law.

Discharge of Indebtedness

If the CRA/LA will pay and discharge all or a portion of the entire indebtedness on the Series 2010 Bonds in anyone or more of the following ways:

(a) by paying or causing to be paid the payments and redemption premiums, if any, on all or a portion of the Series 2010 Bonds, as and when the same become due and payable;

(b) by irrevocably depositing with the Fiscal Agent, in trust, at or before maturity, cash in an amount which, together with the available amounts then on deposit in any of the funds and accounts established pursuant to the Fiscal Agent Agreement, is fully sufficient to pay all or a portion of the payments and prepayment premiums, if any, on the Series 2010 Bonds; or

(c) by irrevocably depositing with the Fiscal Agent or any other fiduciary, in trust, Federal Securities in such amount as an Independent Accountant will determine will, together with the interest to accrue thereon and available moneys then on deposit in the funds and accounts established pursuant to the Fiscal Agent Agreement, be fully sufficient to pay and discharge all or a portion of the indebtedness on the Series 2010 Bonds (including all payments and prepayment premiums) at or before maturity; then, at the election of the CRA/LA but only if all other amounts then due and payable under the Fiscal Agent Agreement, including any amounts owed to the provider of a Qualified Credit Instrument, will have been paid or provision for their payment made, the pledge of and lien upon the Tax Revenues and other funds provided for in the Fiscal Agent Agreement and all other obligations of the Fiscal Agent and the CRA/LA under the Fiscal Agent Agreement with respect to that portion of the Series 2010 Bonds so prepaid and discharged will cease and terminate, except only the obligation of the CRA/LA to pay or cause to be paid to the Fiscal Agent, from the amounts so deposited with the Fiscal Agent or such other fiduciary, all sums

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due with respect to the Series 2010 Bonds and all expenses and costs of the Fiscal Agent and the provider of any Qualified Credit Instrument.

Notice of such election will be filed with the Fiscal Agent. Any funds thereafter held by the Fiscal Agent under the Fiscal Agent Agreement, which are not required for said purpose, will be paid over to the CRA/LA.

Unclaimed Moneys

Anything in the Fiscal Agent Agreement to the contrary notwithstanding to the extent permitted by law and subject to the escheat laws of the State, any money held by the Fiscal Agent in trust for the payment and discharge of any of the Series 2010 Bonds which remain unclaimed for two (2) years after the date when such Series 2010 Bonds have become due and payable, if such money was held by the Fiscal Agent at such date, or for two (2) years after the date of deposit of such money if deposited with the Fiscal Agent after the said date when such Series 2010 Bonds or interest thereon become due and payable, will be repaid by the Fiscal Agent to the CRA/LA, as its absolute property and free from trust, and the Fiscal Agent will thereupon be released and discharged with respect thereto and the Owners will look only to the CRA/LA for the payment of such Series 2010 Bonds; provided, however, that before being required to make any such payment to the CRA/LA, the Fiscal Agent will, at the expense of the CRA/LA, cause to be mailed to the Registered Owners of such Series 2010 Bonds at their addresses as they appear on the registration books of the Fiscal Agent a notice that said money remains unclaimed and that, after a date named in said notice, which date will not be less than thirty (30) days after the date of the mailing of such notice, the balance of such money then unclaimed will be returned to the CRA/LA.

Liability of CRA/LA Limited to Pledged Tax Revenues

Notwithstanding anything in the Fiscal Agent Agreement contained, the CRA/LA will not be required to advance any money derived from any source of income other than the Pledged Tax Revenues for the payment of the interest on or the principal of the Series 2010 Bonds or for the performance of any covenants contained in the Fiscal Agent Agreement, other than the covenants contained in the applicable provisions of the Fiscal Agent Agreement. The CRA/LA may, however, advance funds for any such purpose, provided that such funds are derived from a source legally available for such purpose.

The Series 2010 Bonds are limited obligations of the CRA/LA and are payable, as to interest thereon and principal thereof, exclusively from the Pledged Tax Revenues, and the CRA/LA is not obligated to pay them except from the Pledged Tax Revenues. All of the Series 2010 Bonds are equally secured by a pledge of, and charge and lien upon, all of the Pledged Tax Revenues, and the Pledged Tax Revenues constitute a trust fund for the security and payment of the principal of and interest on the Series 2010 Bonds. The Series 2010 Bonds are not a debt of the City of Los Angeles, the State of California or any of its political subdivisions, and neither said City, said State nor any of its political subdivisions is liable therefor, nor in any event will the Series 2010 Bonds be payable out of any funds or properties other than those of the CRA/LA. The Series 2010 Bonds do not constitute indebtedness within the meaning of any constitutional or statutory limitation or restriction, and neither the members of the CRA/LA nor any persons executing the Series 2010 Bonds are liable personally on the Series 2010 Bonds by reason of their issuance.

Benefits of the Fiscal Agent Agreement Limited to Parties

Nothing in the Fiscal Agent Agreement, expressed or implied, is intended to give to any person other than the CRA/LA, the Fiscal Agent and the Owners of the Series 2010 Bonds, any right, remedy or claim under or by reason of the Fiscal Agent Agreement. Any covenants, stipulations, promises or

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agreements in the Fiscal Agent Agreement contained by and on behalf of the CRA/LA will be for the sole and exclusive benefit of the Fiscal Agent and the Owners of the Series 2010 Bonds.

Acquisition of Series 2010 Bonds by CRA/LA

All Series 2010 Bonds acquired by the CRA/LA, whether by purchase or gift or otherwise, will be surrendered to the Fiscal Agent for cancellation.

APPENDIX C

EXCERPTS FROM THE AUDITED FINANCIAL STATEMENTS OF THE CRA/LA



Management’s Discussion and Analysis

June 30, 2009

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As management of The Community Redevelopment Agency of the City of Los Angeles (CRA/LA), we offer readers of the CRA/LA’s financial statements this narrative overview and analysis of the financial activities of CRA/LA for the fiscal year ended June 30, 2009. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal, which can be found on pages one through four of this report.

FINANCIAL HIGHLIGHTS

The net assets of CRA/LA exceeded its liabilities at the close of the fiscal year 2009 by $102,801,000.The net assets consisted of $53,903,000 invested in capital assets net of related debt; and $596,051,000 restricted for capital projects, low and moderate-income housing activities, and debt service (page 21).

The CRA/LA’s financial activities during the fiscal year resulted in a net change in total net assets of $42,850,000. Both governmental and business-type activities posted increases in net assets of $42,571,000 and $279,000, respectively (page 22).

As of the close of fiscal year 2009, the CRA/LA’s governmental funds reported combined ending fund balances of $588,013,000, a decrease of $22,268,000 in comparison with the prior year. Of this total amount, 51.8 percent or $304,485,000 has been appropriated in the CRA/LA’s fiscal year 2010 budget to meet current and future work programs (page 23).

The CRA/LA’s bonded debt and long-term notes payable at June 30, 2009 net of unamortized premiums/discounts and deferred amounts from refunding totaled $817,091,000, a net decrease of $19,832,000 from prior year’s balance of $836,923,000 (page 50).

OVERVIEW OF THE FINANCIAL STATEMENTS

This discussion and analysis are intended to serve as an introduction to the CRA/LA’s basic financial statements. The CRA/LA’s basic financial statements consist of three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to basic financial statements. This report also contains required and other supplementary information in addition to the basic financial statements.

Government-wide financial statements. The government-wide financial statements are designed to provide readers with a broad overview of the CRA/LA’s finances, in a manner similar to a private sector business.

The statement of net assets presents information on all of the CRA/LA’s assets and liabilities, with the difference between the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position of CRA/LA is improving or deteriorating.

The statement of activities presents information showing how the CRA/LA's net assets changed during the current fiscal year. All changes in net assets are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of the related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected revenues, and earned but unused vacation leave).


Management’s Discussion and Analysis - (Continued)

June 30, 2009

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The governmental activities of CRA/LA include housing, community and economic development, public improvement, project general, and debt service while the business-type activity of CRA/LA includes a CRA/LA-owned and operated public parking facility.

The government-wide financial statements can be found on pages 21 and 22 of this report.

Fund financial statements. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. CRA/LA, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of CRA/LA can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds.

Governmental funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable

resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government's near-term financing requirements.

Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government's near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. This reconciliation can be found on pages 24, 26, and 27.

CRA/LA maintains four individual governmental funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances for the capital projects fund, debt service fund, housing fund, and special revenue fund, which are all considered to be major funds.

The governmental fund financial statements can be found on pages 23 and 25 of this report.

CRA/LA adopts an annual appropriated budget for all governmental funds. To demonstrate compliance with this budget, a budgetary comparison statement has been provided for the housing and special revenue funds in the Required Supplementary Information on pages 72 and 73, and the capital projects and debt service funds in the Other Supplementary Information on pages 75 and 76.

Proprietary funds. CRA/LA maintains two different types of proprietary funds. An enterprise fund is used to report the same functions presented as business-type activities in the government-wide financial statements. CRA/LA uses an enterprise fund to account for the operation of a public parking garage financed by parking revenue bonds. Internal service funds are an accounting device used to accumulate and allocate costs and revenues internally among the CRA/LA’s various functions. CRA/LA uses internal service funds to account for its personnel and administrative costs, an investment pool, and the transactions of its financing authority. Because all of these functions predominantly benefit governmental rather than business-type functions, they have been included within governmental activities in the government-wide financial statements.



June 30, 2009

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Proprietary fund financial statements provide the same type of information as government-wide financial statements, only in more detail. The proprietary fund financial statements provide separate information for the above functions. Conversely, these internal service funds are combined into a single, aggregated presentation in the proprietary fund financial statements.

The proprietary fund financial statements can be found on pages 28 through 30 of this report.

Fiduciary funds. Fiduciary funds are used to account for resources held for the benefit of parties outside CRA/LA. Fiduciary funds are not reflected in the government-wide financial statements because the resources of those funds are not available to support the CRA/LA’s own programs. The accounting method used for fiduciary funds is much like that used for proprietary funds except that the fiduciary funds do not have a measurement focus.

The fiduciary fund financial statement can be found on page 31 of this report.

Notes to basic financial statements. The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to basic financial statements can be found on pages 32 through 70 of this report.

Other information. In addition to the basic financial statements and accompanying notes, this report also presents required supplementary information concerning the funding progress of the employees’ pension plan and other postemployment benefits of CRA/LA on page 71 of this report, and a budgetary comparison for the housing and special revenue funds on pages 72 and 73 of this report. Other supplementary information concerning the CRA/LA’s budgetary comparison for capital projects and debt service funds, financial statements of the internal service funds, financial statements of the fiduciary funds, financial statements of individual redevelopment project areas, and third-party indebtedness is presented on pages 75 through 96.

GOVERNMENT-WIDE FINANCIAL ANALYSIS

Net assets. As noted earlier, net assets may serve over time as a useful indicator of a government’s financial position. As of the close of fiscal year 2009, the CRA/LA’s net assets exceeded its liabilities by $102,801,000, $108,465,000 from governmental activities and a negative $5,664,000 from business activities. Of this total net asset amount, $53,903,000 is invested in capital assets net of related debt, and $596,051,000 represents restricted net assets for capital projects, low and moderate-income housing activities, and debt service. A negative balance of $547,153,000 was reported in unrestricted assets, which is not necessarily a sign of financial weakness. This is due mainly to outstanding long-term debt of $817,091,000 that will be paid out of future CRA/LA revenues, primarily tax increment revenues from various redevelopment projects which are pledged on approximately 86 percent of the CRA/LA’s long-term debt obligations.

The nature of redevelopment financing is such that CRA/LA issues bonds or incurs long-term debt to finance a substantial portion of its redevelopment activities which include infrastructure projects, housing, public parking, commercial and retail projects, community development activities, and others. Although infrastructure assets are transferred to the City of Los Angeles, the debt remains with CRA/LA.

CRA/LA also provides gap financing in other types of redevelopment activities and any equity assumed in these projects is usually significantly less than the underlying expenses. In addition to the public purpose of these redevelopment activities, they are designed to generate additional tax increment resources, to service the CRA/LA’s debt and finance additional projects.



June 30, 2009

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The following table summarizes the CRA/LA’s government-wide net assets (dollars in thousands):

CRA/LA’s Net Assets (Deficit)

June 30, 2009 June 30, 2008 Governmental Business-type Governmental Business-type Activities Activities Total Activities Activities Total

Current and other assets $ 643,451 $ 2,167 $ 645,618 $ 657,115 $ 2,924 $ 660,039Restricted assets 119,930 8,038 127,968 119,778 6,616 126,394Land held for redevelopment 138,364 - 138,364 96,200 - 96,200Capital assets, net of accumulated depreciation and amortization 65,385 31,396 96,781 66,479 32,039 98,518 Total assets 967,130 41,601 1,008,731 939,572 41,579 981,151

Current and other liabilities 75,185 4,387 79,572 74,637 3,897 78,534Long-term liabilities, net of unamortized premium, discount, and deferred amount on refunding 783,480 42,878 826,358 799,041 43,625 842,666 Total liabilities 858,665 47,265 905,930 873,678 47,522 921,200

Net assets: Invested in capital assets, net of related debt 65,385 (11,482) 53,903 66,479 (9,636) 56,843 Restricted net assets 588,013 8,038 596,051 610,281 6,616 616,897 Unrestricted (544,933) (2,220) (547,153) (610,866) (2,923) (613,789)

Total net assets (deficit) $ 108,465 $ (5,664) $ 102,801 $ 65,894 $ (5,943) $ 59,951

The CRA/LA’s net assets showed a net increase of $42,850,000 at the end of the current fiscal year, which is mainly due to the increase in land held for redevelopment of $42,164,000. Creation of the Land Acquisition Fund enabled CRA/LA to purchase strategic parcels for future development in project areas with limited resources. When developed, these projects will deliver more jobs, retail space, and new housing units.

It should be noted that although the net assets posted a net increase of $42,850,000 in the current year, this increase was substantially lower than the prior year’s net increase of $117,839,000. Current year’s tax increment revenue increased by $6,377,000 compared to prior year’s increase of $35,253,000 (net of the settlement amount received by Central Industrial and City Center Redevelopment Project areas of $14,938,000). This decline in the rate of increase of tax increment revenue may be felt in the future years as the economy will continue to show weakness in real estate market. In addition, a number of economic and municipal bond market factors were attributable to the non-issuance of tax allocation bonds during the year.



June 30, 2009

-15-

Governmental activities. During fiscal year 2009, governmental activities increased net assets by $42,571,000. Program revenues of $42,062,000 and general revenues of $237,231,000 generated by the governmental activities supported program expenses of $195,689,000 and interest on long-term debt of $41,033,000, leaving a positive change in net assets of $42,571,000 during the year. Of the $279,293,000 total revenues, $217,868,000 or 78.0 percent came from tax increment revenues.

The following table and charts provide a summary of the CRA/LA’s revenues and expenses for its governmental activities (dollars in thousands):

CRA/LA's Changes in Net Assets - Governmental Activities

Fiscal Year Ended June 30, 2009 June 30, 2008 Revenues: Program revenues: Capital grants and contributions $ 37,189 $ 44,990 Charges for services 4,873 4,988 Total program revenues 42,062 49,978 General revenues: Incremental property taxes 217,868 211,491 Interest income 13,457 24,188 Net change in loan valuation 4,802 12,282 Other 1,104 3,882 Total general revenues 237,231 251,843

Total revenues 279,293 301,821 Program expenses: Housing 82,853 58,057 Community and economic development 39,682 36,141 Public improvement 17,625 14,393 Project general 55,529 37,831 Total program expenses 195,689 146,422

Interest on long-term debt 41,033 37,610

Total expenses 236,722 184,032

Change in net assets 42,571 117,789 Net assets (deficit) - beginning of year 65,894 (51,895) Net assets (deficit) - end of year $ 108,465 $ 65,894



June 30, 2009

-16-

Expenses and Program Revenues - Governmental ActivitiesFiscal Year Ended June 30, 2009

$1,000

$11,000

$21,000

$31,000

$41,000

$51,000

$61,000

$71,000

$81,000

Housing Community andEconomic

Development

Public Improvement Project General Interest on Long-Term Debt

ExpensesRevenues

Revenues by Source - Governmental ActivitiesFiscal Year Ended June 30, 2009

Incremental Property Taxes

78.00%

Project General.72%

Public Improvements1.43%

Charges for Services 1.75%

Net Change in Loan Valuation

1.72%

Housing2.67%

Interest Income4.82%

Community Economic Development

8.50%

Other.39%



June 30, 2009

-17-

Business-type activities. A public parking garage financed with parking revenue bonds started operations in March 2002. At the end of the fiscal year, the garage showed a change in net assets of $279,000 reducing the deficit from $5,943,000 to $5,664,000 from the prior year. The positive net change can be accounted mainly from the increase in total revenues of the garage, primarily due to increased traffic. The following summarizes the operating results of the CRA/LA’s enterprise fund for the year ended June 30, 2009 (dollars in thousands):

CRA/LA's Changes in Net Assets - Business-type Activities

Fiscal Year Ended June 30, 2009 June 30, 2008 Revenues:

Parking receipts $ 5,214 $ 4,714 Interest income 212 271 Other 313 288

Total revenues 5,739 5,273 Expenses:

Parking activities 5,460 5,223

Change in net assets 279 50 Deficit - beginning of year (5,943) (5,993)

Deficit - end of year $ (5,664) $ (5,943)

Expenses and Program Revenues - Business-type ActivitiesFiscal Year Ended June 30, 2009

$0

$2,000

$4,000

$6,000

Parking Activities Interest Income Other Revenue

ExpensesRevenues

Revenues by Source - Business-type ActivitiesFiscal Year Ended June 30, 2009

Interest Income3.69%

Parking Receipts90.85%

Other Revenue5.46%



June 30, 2009

-18-

FINANCIAL ANALYSIS OF THE CRA/LA’S FUNDS

As noted earlier, CRA/LA uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements.

Governmental funds. The focus of the CRA/LA’s governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the CRA/LA’s financing requirements. In particular, the unreserved fund balance serves as a useful measure of the CRA/LA’s net resources available for spending at the end of the fiscal year. Individual fund information of governmental funds reported by CRA/LA include the capital projects fund, debt service fund, housing fund, and special revenue fund, which are all considered major funds.

As of June 30, 2009, the CRA/LA’s governmental funds reported a combined ending fund balance of $588,013,000, a decrease of $22,268,000 in comparison with the prior year. Of the $588,013,000, a total amount of $283,528,000 is reserved for debt service, low and moderate-income housing activities, advances to other funds, and encumbrances. The remaining $304,485,000, which is approximately 51.8 percent of the total fund balance, constitutes the unreserved fund balance. This amount is available for spending and has been appropriated in the CRA/LA’s fiscal year 2010 budget.

Capital Projects Fund. The capital projects fund is used to account for redevelopment expenditures from tax increment, bond proceeds, federal grants, and project program income. The balance of this fund at the end of the current fiscal year amounted to $340,356,000, a decrease of $4,300,000 from prior year’s fund balance. The decline of $13,610,000 in total revenues is offset primarily by the net proceeds from a limited recourse obligation involving Section 108 funds of $9,710,000 which are reflected in the other financing sources (uses) of the fund’s statement of revenues, expenditures, and changes in fund balances. Tax increment revenues showed an increase of $6,377,000 or three percent from last year’s tax increment revenues despite recent real estate weakness. This slight increase is likely due to the effect of the lag in assessed valuation adjustments. However, continued weakness in the real estate market may result in significant retroactive tax increment revenue adjustments in the future.

Interest income in the current year decreased by $4,086,000 from last year’s interest income due to the drop in the average interest yield on CRA/LA’s investments from 2.40 percent to 1.76 percent and the decrease in investments. Other factors contributing to the drop in fund balance were a net increase in expenditures of $16,412,000 of which $16,832,000 was incurred for real estate acquisition resulting from the CRA/LA’s proactive land acquisition program. In addition, transfers for the tax increment pledges for debt service came from the current year’s tax increment revenues.

Debt Service Fund. The debt service fund is used to accumulate resources to pay for principal, interest, and other related costs on the CRA/LA’s long-term debt. As of June 30, 2009, the debt service fund had a total balance of $92,209,000 all of which is reserved for debt service. This fund balance showed an increase of $9,180,000 from the prior year’s amount due to the added transfers into the trustee accounts to meet required pledges for debt service.

Housing Fund. The housing fund primarily accounts for the portion of tax increment and related revenue designated for low and moderate-income housing. State law requires redevelopment agencies to set aside at least 20 percent of tax increment for low and moderate-income housing projects. The entire fund balance is reserved for low and moderate-income housing projects. At the end of the fiscal year, the housing fund balance decreased by $25,855,000 to a total of $117,560,000. The decrease in the fund balance was due to a decrease in revenues by



June 30, 2009

-19-

$10,945,000 caused by lower loan repayments and lower interest income, increase in expenditures of $25,993,000 mainly from real estate acquisition and development loans, and a decrease in the housing set-asides because of non-issuance of tax allocation bonds during the year.

Special Revenue Fund. The special revenue fund is used to account for revenues and expenditures from specific sources such as developer contributions, City participation, art fund contributions, and local grants. In fiscal year 2009, the special revenue fund balance decreased by $1,293,000 to $37,888,000 as a result of lower developer participation revenues by $8,741,000. A decline in the fund’s total current year revenues resulted in the use of the fund’s available balance from prior years to fund increase in program expenditures of $5,887,000.

Proprietary funds. The CRA/LA’s proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail. As of June 30, 2009, the CRA/LA-owned parking garage showed a deficit of $5,664,000. Other factors concerning the operation of the CRA/LA-owned parking garage have already been addressed in the discussion of the CRA/LA’s business-type activities.

CAPITAL ASSETS

The CRA/LA’s investments in capital assets net of accumulated depreciation and amortization for its governmental and business-type activities as of June 30, 2009 totaled $65,385,000 and $31,396,000, respectively. The CRA/LA’s capital assets include land, building and improvements, equipment, and a multi-level public parking facility. This 1,725-car public parking facility located in the Hollywood Redevelopment Project area, which was financed by the issuance of $44,235,000 of parking revenue bonds, was opened for business in March 2002.

Additional information on the CRA/LA’s capital assets can be found in note 2-C on pages 45 and 46 of this report.

DEBT ADMINISTRATION

At June 30, 2009, the CRA/LA’s long-term debt of $817,091,000, net of unamortized bond premium/discount and deferred amounts on refunding is summarized as follows (dollars in thousands):

CRA/LA’s Long-Term Liabilities

Governmental Business-type Activities Activities Total Tax allocation bonds $ 667,683 $ - $ 667,683 Parking revenue bonds - 38,841 38,841 Notes payable 28,593 4,037 32,630 Payable to the City 77,937 - 77,937

Total $ 774,213 $ 42,878 $ 817,091

As of June 30, 2009, CRA/LA had 65 tax allocation bonds and one parking revenue bond outstanding, totaling $706,524,000, net of unamortized bond premiums, discounts, and related items of $1,491,000. Of the 65 tax allocation bond issues, 49 are insured. This equates to 88.08 percent of the original principal amount of bonds having been issued with insurance. Due to the current state of the economy, and its impact on financial markets, ratings of municipal bond insurers have fluctuated drastically. Investors with insured CRA/LA bonds are



June 30, 2009

-20-

encouraged to contact their respective investment advisor to obtain the latest rating(s) on their insured bonds. The remaining bonds are uninsured and have investment grade ratings.

Additional information on the CRA/LA’s long-term liabilities can be found in note 2-F on pages 49 through 58 of this report.

ECONOMIC FACTORS AND FUTURE YEARS’ BUDGET AND RATES

The following economic factors were considered in preparing the CRA/LA’s budget for fiscal year 2010 and will impact the CRA/LA’s assessment of its future resources and expenditures beyond 2010.

Employment. According to the Los Angeles County Economic Development Corporation (LAEDC), the 2008 average non-farm unemployment rate for Los Angeles County was at 7.5 percent. The County’s unemployment rate during 2009 moved up to 11.7 percent. The LAEDC is projecting non-farm unemployment rate to move up higher to 12.8 percent in 2010.

Personal income growth. LAEDC projected total personal income for Los Angeles County to decline by -1.6 percent in 2009, before regaining a little momentum in 2010 (+1.0 percent).

Inflation rate. The LAEDC estimated the inflation rate for the Southern California area, as measured by the consumer price index, will be down by -0.7 percent in calendar year 2009.

Given the overall slowdown in economic activity, CRA/LA may experience over the next two to three years, a double digit decline from its net tax increment revenues, which currently constitutes 78.0 percent of its total revenues.

As of June 30, 2009, the CRA/LA’s governmental funds showed an unreserved fund balance of $304,485,000. As part of the CRA/LA’s budget process as described in the note to required supplementary information on page 74, this amount was appropriated in the fiscal year 2010 budget.

OTHER MATTERS

School transfers. In July 2009, the California State legislature passed and the Governor signed AB 26 4X requiring California redevelopment agencies to participate proportionately in a shift of a total $2.05 billion in property tax increment revenues to the county Supplemental Educational Revenue Augmentation Fund (SERAF) in fiscal years 2010 and 2011. The California Redevelopment Association has filed a lawsuit challenging the constitutionality of AB 26 4X, however, until AB 26 4X has been judicially determined to be unconstitutional, it is the law and redevelopment agencies have to comply with its terms and deadlines set for SERAF payments. CRA/LA’s total contribution for deposit into the Los Angeles County’s SERAF is $85,081,125 with payments of $70,900,939 for fiscal year 2010 due on May 10, 2010 and $14,180,186 for fiscal year 2011 due on May 10, 2011.

REQUESTS FOR INFORMATION

This financial report is designed to provide a general overview of the CRA/LA’s finances for all those with an interest in such information. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the Office of the Chief Financial Officer, The Community Redevelopment Agency of the City of Los Angeles, 354 South Spring Street, Los Angeles, California 90013.

THE COMMUNITY REDEVELOPMENT AGENCYOF THE CITY OF LOS ANGELES, CALIFORNIA

Governmental Business-typeActivities Activities Total

ASSETS

Cash and cash equivalents 93,577$ 184$ 93,761$ Unrestricted investments 412,286 - 412,286 Receivables:Incremental property taxes 9,532 - 9,532 Grants 4,703 - 4,703 Accrued interest 1,517 - 1,517 Other, net of uncollectibles of $196 1,390 114 1,504

Loans receivable, net of allowance for market value write-downs and uncollectibles of $559,899 84,225 - 84,225

Restricted assets 119,930 8,038 127,968 Deferred charges 16,492 1,869 18,361 Court and other deposits for land acquisition 17,537 - 17,537 Land held for redevelopment 138,364 - 138,364 Capital assets, net of accumulated depreciationand amortization of $28,353:Land 57,080 10,428 67,508 Building and improvements 5,707 20,967 26,674 Equipment 2,598 1 2,599

Other assets 2,192 - 2,192

Total assets 967,130 41,601 1,008,731

LIABILITIES

Accounts payable and accrued liabilities 6,708 1,018 7,726 Interest payable 21,723 3,276 24,999 Deferred revenue 3,933 - 3,933 Deposits and other liabilities 42,821 93 42,914 Noncurrent liabilities: Due within one year 27,260 835 28,095 Due in more than one year 756,220 42,043 798,263

Total liabilities 858,665 47,265 905,930

NET ASSETS (DEFICIT)

Invested in capital assets, net of related debt 65,385 (11,482) 53,903 Restricted for:

Capital projects 378,244 - 378,244 Low and moderate-income housing activities 117,560 - 117,560 Debt service 92,209 8,038 100,247

Unrestricted (544,933) (2,220) (547,153)

Total net assets (deficit) 108,465$ (5,664)$ 102,801$

See accompanying notes to basic financial statements.

Statement of Net Assets

June 30, 2009(In Thousands)

-21-


Statement of Activities

For the Fiscal Year Ended June 30, 2009(In Thousands)

Program Revenues Net (Expenses) Revenues and Change in Net AssetsCharges Capital

for Grants and Governmental Business-typeFunctions/Programs Expenses Services Contributions Activities Activities Total

Governmental activities:Program expenses:

Housing 82,853$ -$ 7,456$ (75,397)$ -$ (75,397)$ Community and economic development 39,682 4,873 23,730 (11,079) - (11,079) Public improvement 17,625 - 3,982 (13,643) - (13,643) Project general 55,529 - 2,021 (53,508) - (53,508) Interest on long-term debt 41,033 - - (41,033) - (41,033)

Total governmental activities 236,722 4,873 37,189 (194,660) - (194,660)

Business-type activities:Parking activities 5,460 5,214 - - (246) (246)

Total business-type activities 5,460 5,214 - - (246) (246)

Total government-wide 242,182$ 10,087$ 37,189$ (194,660) (246) (194,906)

General revenues: Incremental property taxes 217,868 - 217,868 Interest income 13,457 212 13,669 Net change in loan valuation 4,802 - 4,802 Other 1,104 313 1,417

Total general revenues 237,231 525 237,756

Change in net assets 42,571 279 42,850 Net assets (deficit) - beginning of year 65,894 (5,943) 59,951

Net assets (deficit) - end of year 108,465$ (5,664)$ 102,801$


-22-


Balance Sheet Governmental Funds


TotalCapital Debt Special GovernmentalProjects Service Housing Revenue Funds

ASSETS

Cash and cash equivalents 2,084$ -$ 23$ 23$ 2,130$ Receivables:Incremental property taxes 9,532 - - - 9,532 Grants 3,130 - - 1,573 4,703 Accrued interest 11 - 1 1 13 Other, net of uncollectibles of $196 438 - 37 151 626

Due from other funds 321,019 11,949 114,606 38,257 485,831 Loans receivable, net of allowance for market value write-downs and uncollectibles of $559,899 27,477 - 55,420 1,328 84,225

Restricted assets 29,212 82,095 3,308 1,037 115,652 Advances to other funds 11,153 - - - 11,153 Other assets 907 - - 118 1,025

Total assets 404,963$ 94,044$ 173,395$ 42,488$ 714,890$

LIABILITIES AND FUND BALANCES

Liabilities:Accounts payable and accrued liabilities 2,320$ -$ 402$ 568$ 3,290$ Due to other funds 5,292 1,013 - 1,655 7,960 Advances from other funds 8,240 - - 315 8,555 Deferred revenue 31,142 - 55,433 1,583 88,158 Other liabilities 17,613 822 - 479 18,914

Total liabilities 64,607 1,835 55,835 4,600 126,877

Fund balances:Reserved for:Debt service - 92,209 - - 92,209 Low and moderate-income housing activities - - 111,806 - 111,806 Advances to other funds 11,153 - - - 11,153 Encumbrances 60,065 - 5,754 2,541 68,360

Unreserved, designated for continuingwork programs 269,138 - - 35,347 304,485

Total fund balances 340,356 92,209 117,560 37,888 588,013

Total liabilities and fund balances 404,963$ 94,044$ 173,395$ 42,488$ 714,890$


-23-

Amounts reported for governmental activities in the statement of net assets aredifferent because:

Fund balances of all governmental funds (page 23) 588,013$

Long-term receivables are not available to pay for current expendituresand are deferred on the modified accrual basis. Loans receivable 84,225

Deposits held by the Los Angeles County Court and other deposits for land acquisition are not spendable financial resources, therefore, are notreported in governmental funds. 17,537

Land held for redevelopment are not spendable financial resources,therefore, are not reported in governmental funds. 138,364

Land, building and improvements are not spendable financial resources,therefore, are not reported in governmental funds. 62,787

Interfund receivable/payable between the enterprise fund and the capitalprojects fund in governmental funds have been eliminated for financialstatement presentation. This interfund receivable/payable do not affectthe governmental activities. 7

Debt issuance costs are expended in governmental funds when paid,however, are capitalized and amortized over the life of the correspondingdebt for purposes of the statement of net assets. Unamortized debt issuance costs 16,492

Interest payable on long-term debt does not require the use of currentfinancial resources, therefore, is not accrued as a liability in the balancesheet of governmental funds. (21,723)

Long-term liabilities are not due and payable in the current period, therefore,are not reported in governmental funds. Long-term liabilities (777,609)$ Unamortized premiums, discounts, and deferred amounts on refunding 372 (777,237)

Net assets of governmental activities (page 21) 108,465$


Net Assets of Governmental Activities



Reconciliation of the Balance Sheet ofGovernmental Funds to the Statement of

-24-

TotalCapital Debt Special GovernmentalProjects Service Housing Revenue Funds

Revenues:Incremental property taxes 217,868$ -$ -$ -$ 217,868$Grants 8,754 - - 1,406 10,160Interest income 7,734 470 4,294 959 13,457Proceeds from sale of land - - - 2,360 2,360Loan repayments 774 - 946 8 1,728Rental income 4,733 - 100 40 4,873Developer participation 11 100 - 1,876 1,987City participation 320 - - 12,584 12,904Other 633 - 91 380 1,104

Total revenues 240,827 570 5,431 19,613 266,441

Expenditures:Current:

Program salaries and administrative costs,including technical and professional personnel 38,441 - 7,362 94 45,897

Real estate and other acquisition costs 52,004 - 11,028 3 63,035Housing 13,511 - 20,339 773 34,623Rehabilitation 2,360 - 111 - 2,471Public improvement 15,221 - - 9,899 25,120Relocation 873 - 2,176 330 3,379Development loans 8,906 - 26,378 6,473 41,757Community service 1,521 - 86 418 2,025Tax increment administrative fees 3,734 - 1,203 - 4,937Other 13,471 - 1,460 2,533 17,464

Debt service:Principal - 21,439 - - 21,439Interest expense - 38,193 - - 38,193

Total expenditures 150,042 59,632 70,143 20,523 300,340

Revenues over (under) expenditures 90,785 (59,062) (64,712) (910) (33,899)

Other financing sources (uses):Issuance of long-term debt - 1,921 - - 1,921Proceeds from limited recourse obligations 9,710 - - - 9,710Transfers in 60,581 76,517 55,012 335 192,445Transfers out (165,376) (10,196) (16,155) (718) (192,445)

Total other financing sources (uses) (95,085) 68,242 38,857 (383) 11,631

Net change in fund balances (4,300) 9,180 (25,855) (1,293) (22,268)

Fund balances, beginning of year 344,656 83,029 143,415 39,181 610,281

Fund balances, end of year 340,356$ 92,209$ 117,560$ 37,888$ 588,013$


(In Thousands)

OF THE CITY OF LOS ANGELES, CALIFORNIATHE COMMUNITY REDEVELOPMENT AGENCY

Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds

For the Fiscal Year Ended June 30, 2009

-25-

Amounts reported for governmental activities in the statement of activities aredifferent because:

Net change in fund balances - governmental funds (page 25) (22,268)$

New loans, loan repayments, and related items recognized in governmentalfunds are reported in the statement of net assets as increases (decreases)in the loans receivable.

New loans given during the fiscal year 60,440$ Loan repayments received (3,038) Write-offs (9,363) Adjustments 3,844 Net change in fair market value (47,081) 4,802

The net effect of various transactions involving court and other depositsand land held for redevelopment is to increase (decrease) net assets.

Change in court and other deposits for land acquisition 6,207 Change in land held for redevelopment 42,164 48,371

The net effect of various transactions involving capital assets is to decreasenet assets.

Disposition (457)

Governmental funds report capital outlays as expenditures. However,in the statement of activities, the costs of these assets are allocatedover their estimated useful lives and reported as depreciation oramortization expense.

Amortization of leasehold improvements (474)

Governmental funds report the effect of issuance costs when debt is firstissued, whereas these amounts are deferred and amortized over the lifeof the debt in the statement of activities.

Amortization of debt issuance costs (1,057)

Continued…

to the Statement of Activities of Governmental Activities



Reconciliation of the Statement of Revenues, Expenditures,and Changes in Fund Balances of Governmental Funds

-26-

Governmental funds report the effect of premiums, discounts, and similaritems when debt is first issued, whereas these amounts are deferred andamortized over the life of the debt in the statement of activities.

Amortization of premiums, discounts, and deferredamounts on refunding (433)

Principal repayment of long-term debt is reported as an expenditure in thegovernmental funds, thus, has the effect of reducing fund balance becausecurrent financial resources have been used. However, the principalpayments reduce the liabilities in the statement of net assets and do notresult in an expense in the statement of activities.

Principal payment on long-term debt 21,439

Accrued interest expense on long-term debt is reported in the statement ofactivities, but does not require the use of current financial resources. Thisamount represents the increase in accrued interest expense not reported ingovernmental funds. (2,407)

Proceeds from issuance of debt are reported as other financing sources ingovernmental funds and, thus, contribute to the change in fund balances.However, issuing debt increases long-term liabilities in the statementof net assets and does not affect the statement of activities. Proceedswere received from issuance of notes payable. (1,921)

Amount represents other postemployment benefits cost for the year, which was accrued in the statement of activities but not in the governmentalfunds due to pending future funding. (3,024)

Change in net assets of governmental activities (page 22) 42,571$



OF THE CITY OF LOS ANGELES, CALIFORNIA

Reconciliation of the Statement of Revenues, Expenditures,and Changes in Fund Balances of Governmental Funds

to the Statement of Activities of Governmental Activities - (Continued)

THE COMMUNITY REDEVELOPMENT AGENCY

-27-

Governmental Business-typeActivities ActivitiesInternal EnterpriseService Fund

ASSETSCurrent assets:

Cash and cash equivalents 91,447$ 184$ Unrestricted investments 412,286 -Receivables:

Accrued interest 1,504 -Other 764 107

Due from other funds 7,395 7 Other assets 1,167 -

Total current assets 514,563 298 Noncurrent assets:

Restricted assets 4,278 8,038 Deferred charges - 1,869 Capital assets:

Land - 10,428 Building and improvements - 25,534 Equipment 16,197 69

Less accumulated depreciation (13,599) (4,635) Total capital assets, net of accumulated depreciation 2,598 31,396 Total noncurrent assets 6,876 41,303 Total assets 521,439 41,601

LIABILITIESCurrent liabilities:

Accounts payable and accrued liabilities 3,418 1,018 Interest payable - 3,276 Due to other funds 507,140 -Compensated absences 1,814 -Matured bonds payable - 835 Other liabilities 2,040 93

Total current liabilities 514,412 5,222 Noncurrent liabilities:

Advances from other funds 2,598 -Compensated absences 1,825 -Other postemployment benefits obligation 5,628 -Notes payable - 4,037 Bonds payable - 38,006

Total noncurrent liabilities 10,051 42,043 Total liabilities 524,463 47,265

NET ASSETS (DEFICIT)Invested in capital assets, net of related debt 2,598 (11,482) Restricted for:

Debt service - 8,038 Unrestricted (5,622) (2,220)

Total net assets (deficit) (3,024)$ (5,664)$




Proprietary Funds

Statement of Net Assets

-28-


Operating revenues:Parking receipts -$ 5,214$ Applied charges 45,897 -

Total operating revenues 45,897 5,214

Operating expenses:Personnel compensation 25,575 - Employee benefits 13,833 - Central office expenses 4,982 - Depreciation expense 1,174 643 Other administrative costs 3,357 2,014

Total operating expenses 48,921 2,657

Net income (loss) from operating activities (3,024) 2,557

Nonoperating revenues (expenses):Interest income 32,981 212 Other revenue - 313 Interest on long-term debt - (2,722) Amortization of bond issuance costs - (81) Interest income allocated to participating funds (32,981) -

Total nonoperating revenues (expenses) - (2,278)

Change in net assets (3,024) 279

Total deficit - beginning of year - (5,943)

Total deficit - end of year (3,024)$ (5,664)$




Proprietary Funds

Statement of Revenues, Expenses, and Changes in Fund Net Assets

-29-


Cash flows from operating activities:Reimbursements for applied charges 45,897$ -$Parking receipts - 5,163Payments to employees (36,384) -Payments to other vendors (8,308) (1,907)

Net cash provided by operating activities * 1,205 3,256Cash flows from capital and related financing activities:

Acquisition of capital assets (1,011) -Principal paid on capital debt - (795)Interest paid on capital debt - (2,290)Deposits from other funds for capital and financing activities 304,065 313Payments for capital and financing activities (364,138) -

Net cash provided (used) by capital and related financing activities (61,084) (2,772)

Cash flows from investing activities:Proceeds from sale of investments 1,382,878 8,166Purchase of investments (1,366,629) (9,588)Interest income 32,981 212Interest income allocated to other funds (32,981) -

Net cash used by investing activities 16,249 (1,210)

Net decrease in cash and cash equivalents (43,630) (726)Cash and cash equivalents, beginning of year 135,077 910Cash and cash equivalents, end of year 91,447$ 184$

* Reconciliation of operating income to net cash providedby operating activities:

Net income (loss) from operating activities (3,024)$ 2,557$Adjustments to reconcile operating income to net cash

provided by operating activities:Depreciation and amortization expenses 1,174 643Increase in other receivables (738) (51)Decrease in due from other funds 286 -(Increase) decrease in other assets (64) 1Increase in accounts payable and accrued liabilities 164 82Increase in compensated absences 500 -Increase in other liabilities 46 24Increase in other postemployment benefits obligation 3,024 -Decrease in advance from other funds (163) -

Net cash provided by operating activities 1,205$ 3,256$




Proprietary Funds

Statement of Cash Flows

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ASSETS

Due from other funds 21,867$ Restricted assets 1,386

Total assets 23,253$

LIABILITIES

Construction disbursements payable 20,190$ Other liabilities:

Good faith deposits payable 1,864 Unclaimed properties 251 Restitution of wages payable 658 Security deposits 290

Total liabilities 23,253$




Fiduciary Funds

Statement of Fiduciary Net Assets - Agency Funds

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Notes to Basic Financial Statements

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NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The financial statements of The Community Redevelopment Agency of the City of Los Angeles, California (CRA/LA) have been prepared in conformity with generally accepted accounting principles (GAAP) as applied to government units. The Governmental Accounting Standards Board (GASB) is responsible for establishing GAAP for state and local governments through its pronouncements. The significant accounting principles and policies utilized by CRA/LA are described below.

A. Reporting Entity

The CRA/LA was established by the Los Angeles City Council (City Council) in 1948 for the purpose of eliminating blight and promoting economic revitalization within designated project areas of the City of Los Angeles (City). As a quasi-governmental entity established pursuant to the Community Redevelopment Law of California as codified in the State of California Health and Safety Code, CRA/LA has no legislative authority. A Board of commissioners (CRA/LA Board) appointed by the Mayor and confirmed by City Council oversees CRA/LA. Under the “Oversight Ordinance” adopted in 1991, nearly every action of CRA/LA is subject to City Council review and/or approval.

Under GASB Statement No. 14, CRA/LA is considered a component unit of the City. The CRA/LA’s basic financial statements, which are discretely presented in the basic financial statements of the City, present an aggregation of 1) funds associated with 32 active redevelopment project areas; 2) funds associated with two inactive redevelopment project areas; 3) funds received by CRA/LA that are designated for specific feasibility studies and housing uses; and 4) other funds that may be used citywide for redevelopment purposes. The redevelopment project areas are separate, individual legal entities and are overseen by CRA/LA.

CRFA, Blended Component Unit

On June 5, 1992, based on a joint powers agreement, CRA/LA and the CRA/LA’s Industrial Development Authority created the Community Redevelopment Financing Authority (CRFA) for the purpose of issuing one or more pooled bond issues and other financings. By issuing bonds on a pooled basis, issuance costs can be reduced significantly, making previously uneconomic bond financings and refinancings feasible.

The CRFA is an entity legally separate from CRA/LA but is governed by a board comprised of the same members and officers as that of CRA/LA. For financial reporting purposes, the CRFA is blended into the CRA/LA’s basic financial statements as if it were part of the CRA/LA’s operations because its purpose is to provide bond financing services for CRA/LA. A separate stand-alone report for the CRFA may be obtained through the Office of the Chief Financial Officer of CRA/LA at 354 South Spring Street, Los Angeles, California 90013.

B. Government-Wide and Fund Financial Statements

The government-wide financial statements (i.e., the statement of net assets and the statement of activities) report information on all of the non-fiduciary activities of CRA/LA. Governmental activities, which are normally supported by incremental property taxes, intergovernmental revenues and grants, are reported separately from business-type activities, which rely to a significant extent on fees.



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NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

The statement of activities demonstrates the degree to which the direct expenses of a given function or identifiable activity are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or program. Direct expenses also include allocated indirect costs, such as staff salaries, rents, utilities, supplies, depreciation and amortization of capital assets, and other administrative costs. Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment, and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other revenue items not included among program revenues are reported instead as general revenues.

Separate financial statements are provided for governmental funds, proprietary funds, and fiduciary funds, even though the latter are excluded from the government-wide financial statements. Major individual governmental funds and major individual proprietary funds are reported as separate columns in the fund financial statements.

CRA/LA reports the following major funds:

Governmental Funds:

Capital Projects Fund – This fund accounts for all revenues and costs of funding redevelopment activities such as land acquisitions, public improvements, relocations, and other project costs in compliance with the California redevelopment law. Revenues deposited in this fund include incremental property taxes, federal grants, and various project program income.

Debt Service Fund – The debt service fund is used to account for the accumulation of resources for, and the payment of, general long-term debt principal, interest, and related costs.

Housing Fund – This fund represents primarily the statutorily required set-aside of at least 20 percent of each redevelopment project area’s incremental property tax revenue and tax allocation bond proceeds to support low and moderate-income housing as defined by state law.

Special Revenue Fund – This fund is used to account for the proceeds from specific revenue sources such as developer contributions, art fund contributions, and local grants. Expenditures on this fund are restricted to specific projects.

All of the above governmental funds have annual appropriated budgets. The budget-to-actual comparison of the governmental funds is shown in the Required Supplementary Information and Other Supplementary Information of this report. The CRA/LA’s budgetary process is discussed in the Note to Required Supplementary Information on page 74.

Proprietary Funds:

Enterprise Fund – The enterprise fund is used for operations that are financed and operated in a manner similar to private business enterprises. CRA/LA uses this fund to account for activities related to a public parking garage financed by tax-exempt parking revenue bonds with the intent of servicing the debt, and maintaining and operating the facility through revenues generated by the facility in accordance with the respective bond indenture.



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Internal Service Fund – CRA/LA reports the following funds within its internal service fund:

1) Operating Fund – CRA/LA uses an operating fund to account for costs of operating the CRA/LA which include staff salaries, rents, utilities, supplies, depreciation and amortization of capital assets, and other administrative costs. These costs are allocated to projects using defined allocation rules through an indirect cost allocation plan.

2) Investment Fund – CRA/LA uses an investment fund to combine and invest resources of those funds (participating funds) that do not have yield restrictions or other limitations on investments. By combining resources, CRA/LA is able to increase its investment yield by creating a larger “pool” from which to invest its resources. Interest earned from these pooled investments is allocated to participating funds based on each fund’s average daily equity balance during the fiscal year.

Within the investment fund is a revolving cash account where all cash transactions are made. Cash transactions for participating funds increase/decrease the equity of each fund in the investment fund while cash transactions for nonparticipating funds create a receivable/payable from/to the investment fund that are cleared periodically through fund transfers.

3) Financing Authority – This fund accounts for the transactions of the CRFA, which is considered a blended component unit in the accompanying basic financial statements.

Additionally, CRA/LA reports the following fiduciary fund type:

Agency Fund – The agency fund is used to account for assets held by CRA/LA in an agent capacity and is custodial in nature (assets equal liabilities).

C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation

The government-wide financial statements are reported using the economic resources measurement focus and accrual basis of accounting, as are the proprietary fund financial statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows.

The governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, CRA/LA considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Incremental property taxes, interest income, and certain loan repayments are susceptible to accrual. Expenditure-driven grants are recognized as revenues when the qualifying expenditures have been incurred and all other grant requirements have been met. Other revenues that are generally not measurable until actually received are not accrued. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures are recorded only when payments are due.

The fiduciary fund, which consists of the agency funds, uses the accrual basis of accounting, but does not have a measurement focus.



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Private-sector standards of accounting and financial reporting issued prior to December 1, 1989, generally are followed in both the government-wide and enterprise fund financial statements to the extent that those standards do not conflict with or contradict guidance of the Governmental Accounting Standards Board. CRA/LA also has the option of following subsequent private-sector guidance for its business-type activities and enterprise fund, subject to this same limitation. CRA/LA has elected not to follow subsequent private-sector guidance.

As a general rule, the effects of interfund activities have been eliminated from the government-wide financial statements. Exceptions to this general rule are interfund services provided and used which are not eliminated in the process of consolidation.

Amounts reported as program revenues include capital grants and contributions, and charges for services. Internally dedicated resources such as incremental property tax revenues are reported as general revenues rather than as program revenues.

Proprietary funds distinguish operating revenues and expenses from non-operating items. Operating revenues and expenses generally result from providing services in connection with a proprietary fund’s principal ongoing operations.

The principal operating revenues of the CRA/LA’s internal service and enterprise funds are applied charges, which are reimbursements from projects for operating costs, and parking receipts, respectively. Operating expenses for internal service and enterprise funds include administrative expenses, and depreciation and amortization on capital assets. All revenues and expenses not meeting this definition are reported as non-operating revenues and expenses.

When both restricted and unrestricted resources are available for use, it is the CRA/LA’s practice to use restricted resources first, then unrestricted resources, as they are needed.

D. Cash, Cash Equivalents, and Investments

Cash includes deposits maintained with various banks within redevelopment project areas or banks that benefit redevelopment activities while cash equivalents represent investments with original maturities of 90 days or less. These include investments in the State of California administered Local Agency Investment Fund (LAIF).

Money market investments that have a remaining maturity of one year or less at the time of purchase, including those shown as restricted assets (note 1-F) are carried at amortized cost, provided that the fair value is not significantly affected by the impairment of the credit standing of the issuer or other factors. Other investments are reported at fair value.

Under State Law and authority delegated to CRA/LA by City Council, CRA/LA is authorized to invest in a variety of securities and financial instruments including interest bearing bank accounts, U.S. Treasuries, Federal agency obligations, certificates of deposit, commercial paper, and the State of California administered LAIF, provided that cash deposits maintained with banks and savings and loan associations in excess of the Federally insured amount are fully collateralized in accordance with State law governing deposits of public funds. The primary investment considerations are safety, liquidity, and yield.



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E. Loans Receivable

To enhance the redevelopment process, CRA/LA grants below-market interest rate loans primarily for the rehabilitation and development of low and moderate-income housing and the development of commercial properties. Since these loans are generated to assist various redevelopment project areas, repayment terms are structured to meet requirements established by CRA/LA and the specific project area. Repayment terms on these loans can be classified in the following categories:

Amortizing loans – loans requiring monthly payments designed to payoff both the principal and interest over a specified period, usually 15-20 years. Included in this category are partially amortizing loans and interest only payment loans requiring balloon payments at maturity date.

Deferred loans – loans requiring repayments only on the earlier of loan due date or when the mortgaged properties are sold or refinanced.

Residual receipts loans – loans requiring repayments only when the project or mortgaged properties have positive cash flows as defined by a specific loan agreement.

As a condition for granting below-market interest rate loans, CRA/LA requires covenants on these projects including but not limited to defining development terms, income restrictions with respect to tenants and oversight ability on the projects' operations. These covenants, loan conditions, and repayment terms are monitored by CRA/LA to ensure compliance with redevelopment goals and objectives and specific loan agreements.

In the government-wide financial statements, the CRA/LA’s loans receivable are reported net of allowance for market value write-downs and uncollectibles. In the fund financial statements, the CRA/LA’s loans receivable are shown in the balance sheet with an offset to a deferred revenue account. Loans are not available spendable resources and are therefore, recorded as project costs in the year the loan is disbursed. Accordingly, repayments of principal and interest are recorded as revenue in the period received.

F. Restricted Assets

Restricted assets consist primarily of investments maintained by the CRA/LA’s bond fiscal agents and trustees, under provisions of the bond indentures/trust agreements/fiscal agent agreements/loan agreements, which are considered as pledged collateral for payment of principal and interest on the CRA/LA’s tax allocation and parking revenue bond obligations.

G. Land Held for Redevelopment

As part of its redevelopment activities, CRA/LA may acquire land for eventual disposition to housing or commercial real estate developers based on the reuse appraisal of the land. While CRA/LA may exercise the power of eminent domain to acquire land, the majority of land acquisitions were consummated by means other than eminent domain.



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In the government-wide financial statements, land acquired and subsequently conveyed for redevelopment activities are reported as assets or reduction from the assets, whereas, in the fund financial statements, land acquisitions and dispositions are recorded as project costs or revenues in the year acquired or conveyed.

H. Capital Assets

CRA/LA’s capital assets other than land, and building and improvements are acquired using funds advanced from the CRA Special Revenue Fund. When capital assets are acquired, “Advances to/from Other Funds” are recorded between the internal service fund and the CRA Special Revenue Fund. The balances on these accounts are reduced by the depreciation and amortization or sale of these capital assets (note 1-B, Internal Service Fund and note 1-I).

Assets purchased or acquired with original costs of $150 or more and estimated useful life of more than one year are capitalized at historical cost. Additions, improvements, and other capital outlays that significantly extend the useful life of an asset are capitalized. Other costs incurred for repairs and maintenance are expensed as incurred.

Depreciation of capital assets other than land is provided using the straight-line method over the following estimated useful lives:

Capital Assets Years

Building and improvements 30 to 40 Vehicles 5Office equipment 5Computer software 5Computer hardware 3

I. Interfund Receivable, Payable, and Transfers

Interfund transactions are made between funds for various reasons, some of which are statutory in nature. Generally, these interfund transactions only affect funds within a project area as State redevelopment law prohibits the transferring of funds between project areas without an approved finding of benefit.

Interfund receivable/payable between these funds are recorded as current and non-current interfunds and are subject to elimination upon consolidation. Current interfund transactions are reported in the fund financial statements as “Due to/from Other Funds” and long-term interfund transactions as “Advances to/from Other Funds”.

The CRA Special Revenue and the Bunker Hill Program Income funds, which are reported in the capital projects fund, may be used for eligible redevelopment expenditures without geographical restrictions. As authorized in the CRA/LA’s budgets, these funds are used to pay for expenditures in various projects, either because the projects do not have sufficient resources, or cannot pay for the expenditures due to use-restrictions on their available resources. The beneficiary projects are required to reimburse the CRA Special Revenue and Bunker Hill Program Income funds from future available project resources. Because the timing and amounts of these reimbursements are uncertain, the transactions are recorded as transfers, rather than advances.



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J. Compensated Absences

CRA/LA employees accumulate vacation pay in varying amounts as services are provided. All outstanding vacation time is payable upon termination of employment. CRA/LA employees accumulate sick leave hours with full pay at the rate of 96 hours per fiscal year to a maximum of 800 hours. CRA/LA pays employees for sick leave as it is used and is not obligated to pay sick leave upon termination of employment. However, CRA/LA pays 50 percent of the accumulated sick leave in excess of 800 hours as of the end of any fiscal year to active employees and 50 percent of the available sick leave to employees upon retirement.

The vacation earned and accumulated sick leave hours are liquidated in the internal service fund.

K. Pollution Remediation

Brownfields (abandoned, under-utilized, and/or blighted properties likely impacted by environmental contamination) exist throughout redevelopment project areas in the City of Los Angeles and CRA/LA desires to transform these brownfields into usable properties that contribute to the economic and/or cultural foundation of the project areas. During the last eight years, CRA/LA has acquired several parcels of brownfields sites. As part of the acquisition of these sites, CRA/LA ensures that the cleanup of any environmental contamination is undertaken by CRA/LA or as part of its redevelopment agreement with subsequent owners or developers.

Under the provisions of GASB Statement No. 49, CRA/LA will capitalize the cleanup costs of those brownfields sites where it has a legal obligation to cleanup based on a contract, court order, or regulatory order net of any cost recovery. Those cleanup costs will be capitalized when they are incurred rather than recorded as expenses and related liabilities potentially in earlier periods. Only those outlays that are expected to exceed the capitalization limit would be accrued as a liability (note 3-F, Pollution Remediation Obligations).

L. Long-term Obligations

In the government-wide financial statements and proprietary funds financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary funds statement of net assets. Bond premiums and/or discounts and deferred amounts on refundings are deferred and amortized over the life of the bonds using the straight-line method, as interest expense. Bonds payable are reported net of the applicable unamortized bond premium or discount and deferred amounts on refundings. Bond issuance costs are reported as deferred charges and amortized over the term of the related debt using the straight-line method.

In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the period issued. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources, while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures.



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M. Deferred Revenue

CRA/LA uses a deferred revenue account in the governmental funds to record revenues that do not meet both the “measurable” and “available” criteria for recognition in the current period. Deferred revenues also arise when resources are received before CRA/LA has a legal claim to them. In subsequent periods, when both revenue criteria are met, or when CRA/LA has a legal claim to the resources, the liability for deferred revenue is removed and revenue is recognized. In the government-wide financial statements, deferred revenue represents resources that have been received, but not yet earned.

N. Construction Disbursements Payable

CRA/LA uses a Construction Disbursements Payable (CDP) account within CRA/LA fund to handle “escrow like” functions formerly performed by an outside escrow company. The CDP account enhances control over construction disbursements and allows CRA/LA to benefit from interest earnings for monies held in the account.

Through the CDP account, CRA/LA provides a disbursement service for borrowers and grantees. Monies deposited to this account are considered loans receivable in the government-wide financial statements, whereas, in the fund financial statements, they are considered as project expenditures at the time of deposit. Interest earnings for the CDP account are returned to the original funding source, unless otherwise specified.

O. Incremental Property Tax Revenues

Incremental property tax revenues (also known as tax increment revenues) represent property taxes collected from the excess of taxes levied and collected each year on a redevelopment project area over the amount that is levied and collected on the base year property tax assessment (a property tax base year is determined to be the year prior to the establishment of a redevelopment project area).

The County of Los Angeles (County) assesses properties, bills, and collects property taxes, as follows:

Secured Unsecured Valuation/lien dates January 1 January 1 Levy dates July 1 July 1 Due dates (delinquent as of) 50% on November 1 (December 10) July 1 (August 31) 50% on February 1 (April 10)

Pursuant to provisions of the California Constitution and the California Revenue and Taxation Code, county assessors are directed to determine the full cash value of locally assessed real and personal property as of January 1 of each year. Locally assessed property is classified as either secured or unsecured. The secured classification includes property on which property tax levied becomes a lien on the property to secure payment of the taxes. Property taxes levied on unsecured property do not become a lien against the unsecured property, but may become a lien on other property owned by the taxpayer. The State Board of Equalization is charged with assessing the value of state-assessed properties as of January 1 of each year. (All state-assessed property is classified as secured property.) Taxable property is assessed at 100 percent of its full cash value as defined by the California Constitution.



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The County remits to CRA/LA its share of the property taxes levied and collected in ten monthly installments. Property taxes levied are recorded as receivable in the fiscal year of levy. Revenue is recognized in the fund financial statements when it is measurable and available, as discussed under Basis of Accounting (note 1-C).

P. Net Assets and Fund Equity

In the government-wide financial statements, net assets are classified in the following categories:

Invested in capital assets, net of related debt – This category groups all capital assets into one component of net assets. Accumulated depreciation and the outstanding balances of debt that are attributable to the acquisition, construction or improvement of these assets reduce this category.

Restricted net assets – This category presents external restrictions imposed by creditors, grantors, contributors or laws or regulations of other governments, and restrictions imposed by law through constitutional provisions or enabling legislation. Additionally, this category presents restrictions placed on the categories of debt service and specific projects and programs as established by the CRA/LA Board.

Unrestricted net assets – This category represents the net assets of CRA/LA, which are not restricted for any project or other purpose.

In the fund financial statements, governmental funds report reserves and designations of fund balance that are either not available or have been earmarked for specific purposes. The various reserves and designations are established by actions of the CRA/LA Board and management and can be increased, reduced or eliminated by similar actions.

Q. Use of Estimates

The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts in the financial statements and accompanying notes. Actual results could differ from the estimates.

R. Reclassifications

Certain reclassifications have been made in the 2008 financial statements in order to conform to the current year presentation.

S. Recent GASB Pronouncements

GASB Statement No. 49

In fiscal year 2009, CRA/LA adopted GASB Statement No. 49 – Accounting and Financial Reporting for Pollution Remediation Obligations. This pronouncement issued in November 2006 addresses accounting and financial reporting standards for pollution (including contamination) remediation obligations, which are obligations to address the current or potential detrimental effects of existing pollution by participating in pollution remediation activities such as site assessments and cleanups. The scope of the document excludes pollution prevention or control obligations with respect to current operations, and future pollution remediation activities that are required upon retirement of an asset, such as landfill closure and postclosure care and nuclear power plant decommissioning. Prior



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to the adoption of this statement, CRA/LA recorded brownfields pollution remediation expenditures when incurred. The remediated brownfields sites have either been conveyed or sold to developers prior to July 1, 2008; therefore, the adoption of the statement has no impact to net assets as of July 1, 2008.


In June 2007, the GASB issued Statement No. 51, Accounting and Financial Reporting for Intangible Assets.” This statement establishes accounting and financial reporting requirements for intangible assets including but not limited to, easements, water rights, timber rights, patents, trademarks, and computer software. The requirements of this statement are effective for financial statements for periods beginning after June 15, 2009. CRA/LA will determine the financial statement impact of adopting this new statement and will comply in fiscal year 2010.


In June 2008, the GASB issued Statement no. 53, Accounting and Financial Reporting for Derivative Instruments.

This statement establishes accounting and financial reporting requirements for derivative instruments entered into by state and local governments. The requirements of this new statement are effective for financial statements for periods beginning after June 15, 2009. If applicable, CRA/LA will implement in fiscal year 2010.



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NOTE 2 - DETAILED NOTES ON ALL FUNDS

A. Cash, Cash Equivalents, and Investments

Cash

Cash consists of cash deposits maintained with various banks within redevelopment project areas or banks that benefit redevelopment activities. At June 30, 2009, the carrying amount of the CRA/LA's cash deposits totaled $10,627,000 while the bank balances totaled $15,576,000. The difference of $4,949,000 represents primarily outstanding checks and other reconciling items. Of the total bank balances, $1,514,000 was covered by the Federal Deposit Insurance Corporation and $14,062,000 was fully collateralized as required by State law and reported to the State Administrator of Local Agency Security to ensure the safety of public deposits.

Under the California Government Code, a financial institution is required to secure deposits in excess of $250,000 made by state or local government units by pledging securities held in the form of an undivided collateral pool. The market value of the pledged securities in the collateral pool must equal at least 110 percent of the total amount deposited by the public agencies. California law also allows financial institutions to secure public deposits by pledging first trust deed mortgage notes having a value of 150 percent of those deposits. The collateral must be held at the pledging bank’s trust department or other bank, acting as the pledging bank’s agent, in the CRA/LA’s name.

Cash Equivalents

Cash equivalents totaling $83,134,000 represent investments with original maturities of 90 days or less. These include investments in the State of California administered LAIF in the amount of $67,970,000, and investments in Federal securities of $15,164,000.

Investments

At June 30, 2009, unrestricted investments consisted almost entirely of U.S. Treasury securities, Federal securities, and commercial paper deposited into CRA/LA safekeeping accounts, which have been established to ensure segregation of CRA/LA owned securities.

Restricted investments, shown as restricted assets consisted primarily of investments maintained with bond fiscal agents and trustees, which are considered as pledged collateral for payment of principal and interest on the CRA/LA’s tax allocation bond obligations. Also included in this category were investments by the enterprise fund representing funds held by the trustee for the Cinerama Dome public parking project.

At June 30, 2009, cash, cash equivalents, and investments are reflected in the statement of net assets of the accompanying basic financial statements with carrying values as follows (dollars in thousands):

Cash $ 10,627 Investments: Cash equivalents $ 83,134 Unrestricted investments 412,286 Restricted assets 127,968 623,388

Total $ 634,015



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NOTE 2 - DETAILED NOTES ON ALL FUNDS (continued)

CRA/LA’s cash equivalents and investments at June 30, 2009 consisted of the following investment types (dollars in thousands): Weighted Average Maturity

Investment Type Amortized Costs Fair Value (Years) Investments held by CRA/LA Treasury securities $ 118,499 $ 118,854 0.29 Federal securities 342,408 343,448 0.42 Local Agency Investment Fund 67,970 67,970 0.00 Certificates of deposit 100 100 0.22 Total investments held by CRA/LA 528,977 530,372 Investments held by fiscal agent or trustee: Treasury securities 79,180 79,180 0.13 Money market funds 12,123 12,123 0.09 Repurchase agreement 3,108 3,108 23.02 Total investments held by fiscal agent or trustee 94,411 94,411

Total investments $ 623,388 $ 624,783 Portfolio weighted average maturity for investments held by CRA/LA (excluding investments held by fiscal agent or trustee) 0.34

The CRA/LA’s general investment policy is to apply the prudent-person rule: Investments are made as a prudent person would exercise in the management of their own affairs, not for speculation, but for investment considering the general economic conditions and the anticipated needs of CRA/LA. The objective is to minimize the interest rate risk and credit risk of each investment. In addition, in order to minimize the total volatility of the portfolio, CRA/LA shall maintain a diversified portfolio of investments.

Interest rate risk. In accordance with the CRA/LA’s investment policy, CRA/LA manages its exposure to declines in fair values by limiting the weighted average maturity of its investment portfolio to not more than two years, excluding investments held by a trustee, fiscal agent or escrow bank in connection with a CRA/LA bond, note or certificate of participation issue.

Credit rate risk. Investments held by fiscal agent or trustee were invested in accordance with each CRA/LA’s bond indenture or similar agreement, and the credit rating of the authorized investments were limited. These bond indenture agreements authorize investments in money market funds rated “AAAm” or “AAA-G by Standard & Poor’s. At June 30, 2009, the CRA/LA’s investments in money market funds at amortized costs of $12,123,000 were rated AAAm by Standard & Poor’s. The State of California administered LAIF is also an authorized investment, but is not subject to the ratings requirement and is not rated.



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During fiscal year 2008, CRA/LA recorded an allowance for a default on investments totaling $4,000,000 in principal and interest due on October 4, 2007. These investments, which were purchased from Wells Fargo Bank in Mainsail II LLC (Mainsail) commercial paper, were at the time of purchase in July 2007, rated A-1+ by Standard & Poor’s and P-1 by Moody’s Investors Service, Inc. However, repayment resources were subsequently frozen by the commercial paper trustee, Bank of New York, due to a failed key collateral test by Mainsail causing non-payment of principal and interest due to investors. Investors were informed that a restructuring/workout of the Mainsail debt was in process. In September and October 2008, CRA/LA received payments from the defaulted investments from Mainsail totaling $966,000. These amounts were reflected as recoveries from defaulted investments in fiscal year 2009.

B. Loans Receivable

A schedule of loans receivable at June 30, 2009 including allowance for market value write-downs and uncollectibles is as follows (dollars in thousands):

Principal Balance Residual Amortizing Deferred Receipts Total Outstanding at July 1, 2008 $ 33,872 $ 107,656 $ 450,713 $ 592,241

Additions: New loans - 37,845 22,595 60,440

Reductions: Principal repayments (1,751) (610) (677) (3,038)

Others * (1,200) (28,772) 24,453 (5,519)

Outstanding at June 30, 2009 30,921 116,119 497,084 644,124Less allowance for market value write-downs and uncollectibles (13,821) (108,402) (437,676) (559,899)

Balance at June 30, 2009 $ 17,100 $ 7,717 $ 59,408 $ 84,225

* Included in these amounts are loan amendments and service repayments on forgivable loans.



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C. Capital Assets

Changes in capital assets for the year ended June 30, 2009 were as follows (dollars in thousands):

Balance Depreciation/ Balance Description July 1, 2008 Acquisitions Dispositions Amortization June 30, 2009

Governmental Activities: Capital assets, not being depreciated: Land $ 57,537 $ - $ (457) $ - $ 57,080

Capital assets, being depreciated: Building and leasehold improvements 15,826 - - - 15,826 Less accumulated depreciation/amortization (9,645) - - (474) (10,119)

Net building and leasehold improvements 6,181 - - (474) 5,707

Equipment 15,252 1,011 (66) - 16,197 Less accumulated depreciation (12,491) - 66 (1,174) (13,599)

Net equipment 2,761 1,011 - (1,174) 2,598

Net capital assets, being depreciated 8,942 1,011 - (1,648) 8,305

Net capital assets, governmental activities $ 66,479 $ 1,011 $ (457) $ (1,648) $ 65,385 Business-type Activities: Capital assets, not being depreciated: Land $ 10,428 $ - $ - $ - $ 10,428

Capital assets, being depreciated: Building and improvements 25,534 - - - 25,534 Less accumulated depreciation (3,928) - - (639) (4,567)

Net building 21,606 - - (639) 20,967

Equipment 69 - - - 69 Less accumulated depreciation (64) - - (4) (68)

Net equipment 5 - - (4) 1

Net capital assets, being depreciated 21,611 - - (643) 20,968

Net capital assets, business-type activities $ 32,039 $ - $ - $ (643) $ 31,396



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Depreciation expense of $474,000 was charged to the community and economic development functions in the governmental activities while $643,000 was charged to the parking facilities in the business-type activities. The balance of depreciation expense of $1,174,000 was added to other indirect costs which were allocated among all functions in the governmental activities using defined allocation rules through an indirect cost allocation plan (note 1-B).

D. Interfund Receivable, Payable, and Transfers

The composition of interfund balances and transfers as of June 30, 2009 was as follows (dollars in thousands):

1) Due to/from Other Funds:

Receivable Fund Payable Fund Amount

Internal Service Internal Service $ (565) Capital Projects 5,292 Debt Service 1,013 Special Revenue 1,655

Sub-total 7,395

Capital Projects Internal Service 321,019 Debt Service Internal Service 11,949 Housing Internal Service 114,606 Special Revenue Internal Service 38,257 Agency Fund Internal Service 21,867 Enterprise Fund Internal Service 7

Sub-total 507,705

Total $ 515,100

The above interfund receivable/payable amounts represent equity in the CRA/LA investment pool for participating funds and cash transactions made within the investment fund for non-participating funds (note 1-B, Internal Service Fund).

2) Advances to/from Other Funds:

Receivable Fund Payable Fund Amount

Capital Projects Internal Service $ 2,598 Capital Projects Capital Projects 8,240 Capital Projects Special Revenue 315

Total $ 11,153



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The $2,598,000 represents amounts advanced by the CRA Special Revenue Fund to the internal service fund for capital asset acquisitions, while the remaining $8,555,000 represents amounts advanced by the Bunker Hill Program Income Fund on behalf of projects that do not have available current resources to pay for debt service.

3) Interfund Transfers:

Funds Transferred From Funds Capital Debt Special

Transferred To Projects Service Housing Revenue Total

Capital Projects $ 52,130 $ 8,233 $ - $ 218 $ 60,581 Debt Service 60,076 358 15,583 500 76,517 Housing 53,035 1,605 372 - 55,012 Special Revenue 135 - 200 - 335

Total $ 165,376 $ 10,196 $ 16,155 $ 718 $ 192,445

The $76,517,000 represents amounts transferred to the debt service fund for debt service, while the $55,012,000 consists of the housing set-asides from the redevelopment project areas’ respective tax increment and bond proceeds funds. The $60,581,000 and the $335,000 represent transfers from and repayments of such transfers to the CRA Special Revenue and the Bunker Hill Program Income funds for projects that do not have sufficient current resources to pay for eligible project expenditures (note 1-I).

E. CRFA Bonds

The following table summarizes the CRFA bond transactions for the fiscal year ended June 30, 2009 (dollars in thousands):

Balance, July 1, 2008 $ 407,815 Retirement, various pooled financing bond issues (11,895) Balance, June 30, 2009 $ 395,920



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CRFA bonds outstanding at June 30, 2009 were as follows (dollars in thousands):

Date of Maturity Interest Original Balance Description Issue Date Rate Issue Outstanding

Pooled bonds:

Pooled Financing Bonds, Series B 8/1/1992 9/1/2014 5.00% - 6.625% $ 15,820 $ 920 Pooled Financing Refunding Bonds, Series E 8/1/1998 9/1/2014 3.60% - 5.00% 21,805 9,995 Pooled Financing Refunding Bonds, Series F 8/1/1998 9/1/2014 4.05% - 5.00% 12,820 6,010 Pooled Financing Bonds, Series H (taxable) 6/15/2002 9/1/2032 8.25% - 9.75% 9,765 8,790 Pooled Financing Bonds, Series I (taxable) 6/1/2003 9/1/2019 2.625%-5.50% 14,890 11,400 Pooled Financing Bonds, Series J (taxable) 9/17/2003 9/1/2033 4.18% - 6.38% 17,970 16,665 Pooled Financing Bonds, Series J 9/17/2003 9/1/2033 2.00% - 5.00% 4,500 4,060 Pooled Financing Bonds, Series K (taxable) 9/17/2003 9/1/2033 6.98% - 9.38% 4,645 4,365 Pooled Financing Bonds, Series L (taxable) 6/28/2006 9/1/2026 5.74% - 6.15% 32,000 30,475 Pooled Financing Bonds, Series M (taxable) 6/29/2006 9/1/2036 6.10% - 6.70% 34,500 34,015 Pooled Financing Bonds, Series N 6/28/2006 9/1/2026 3.50% - 5.25% 8,000 7,535 Pooled Financing Bonds, Series O (taxable) 6/28/2007 9/1/2037 5.94% - 6.66% 8,000 7,935 Pooled Financing Bonds, Series P (taxable) 6/26/2008 9/1/2038 8.00% 14,250 14,250

Revenue bonds:

Bunker Hill Project Revenue Bonds, Series 2004A 5/19/2004 12/1/2028 3.00% - 5.50% 181,510 178,650 Bunker Hill Project Revenue Bonds, Series 2004B 5/19/2004 12/1/2017 1.49% - 5.83% 87,550 60,855

Total CRFA bonds $ 395,920

The source of all payments of outstanding principal and interest on the CRFA pooled financing bonds consists of debt service payments on underlying tax allocation bonds and notes issued by the respective CRA/LA redevelopment project areas.

The CRFA revenue bonds are payable exclusively from the revenues, principally comprised of payments to be made by CRA/LA on its Bunker Hill Tax Allocation Refunding Bonds, Series H and Bunker Hill Tax Allocation Refunding Bonds, Series K, and other funds as provided in the CRFA Indenture.

As a blended component unit, CRFA’s activities for financial reporting purposes are blended into the CRA/LA’s basic financial statements. Hence, in the accompanying statement of net assets, $395,920,000 receivable/payable between CRFA and CRA/LA is eliminated.



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F. Long-Term Debt

Additions to Long-Term Debt – Governmental Activities

Notes Payable, Crown Coach Development Site Project

CRA/LA currently carries a loan obligation with East West Bank for a maximum amount of $15,400,000 which it used in the acquisition of the Crown Coach Brownfields Demonstration Site located in the Central Industrial Redevelopment Project area.

The loan is secured by a first deed of trust on the subject property. The loan principal accrues interest at the Libor Based Rate, which is the one-month London Interbank Offered Rate (LIBOR) plus 250 basis points. The interest rate on the loan resets on the first business day of each month.

Through a Swap Transaction Agreement with Natixis Financial Products, Inc., CRA/LA purchased an interest rate cap of 4.50 percent for the loan. In the event that the one-month LIBOR rate exceeds 4.50 percent on any given interest reset date, the cap provider will pay to CRA/LA the interest cost difference between the cap rate of 4.50 percent and the actual one-month LIBOR rate, which effectively caps the total interest rate on the loan at 7.0 percent. On each interest due date, the principal balance accretes by an amount equal to the interest paid to the lender bank from the Interest Reserve established according to the loan agreement (note 2-I).

During the fiscal year, an additional draw of $1,438,000 was made on the loan account for acquisition of the remnant parcel on the property. Interest paid to East West Bank during the period, accreting to the principal balance, totaled $483,000 resulting in an outstanding loan balance of $12,379,000 at June 30, 2009. The loan will mature on May 1, 2011.



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Changes in Long-term Liabilities

Changes in the CRA/LA’s long-term liabilities for the year ended June 30, 2009 are summarized as follows (dollars in thousands):

Balance Due WithinDescription July 1, 2008 Additions Retirement June 30, 2009 One Year

Governmental Activities: Tax allocation bonds payable $ 687,545 $ - $ (19,490) $ 668,055 $ 23,470Notes payable 28,320 1,921 (1,648) 28,593 1,519Payable to the City 78,238 - (301) 77,937 457Sub-total before premiums/discounts, and deferred amounts on refunding 794,103 1,921 (21,439) 774,585 25,446Less unamortized premiums/discounts, and deferred amounts on refunding (805) - 433 (372) -

Total bonds and notes 793,298 1,921 (21,006) 774,213 25,446Compensated absences 3,139 2,494 (1,994) 3,639 1,814Other postemployment benefit obligations 2,604 3,024 - 5,628 -Net long-term liabilities, governmental activities $ 799,041 $ 7,439 $ (23,000) $ 783,480 $ 27,260

Business-type Activities: Revenue bonds payable $ 40,755 $ - $ (795) $ 39,960 $ 835Notes payable 4,037 - - 4,037 -

Sub-total before premium 44,792 - (795) 43,997 835Less unamortized premium (1,167) - 48 (1,119) -Net long-term liabilities, business-type activities $ 43,625 $ - $ (747) $ 42,878 $ 835

Total, net long-term liabilities $ 842,666 $ 7,439 $ (23,747) $ 826,358 $ 28,095



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Outstanding Long-term Debt

Long-term debt outstanding at June 30, 2009 is comprised of the following (dollars in thousands):

Date of Maturity Interest Original OutstandingDescription Issue Date Rate Issue Balance

Governmental Activities: Tax allocation bonds: Adelante Eastside, Series A (taxable) 6/27/2002 9/1/2032 8.00% - 9.25% $ 4,750 $ 4,520 Adelante Eastside, Series B (taxable) 7/1/2005 9/1/2035 5.625% - 5.90% 7,000 6,825 Adelante Eastside, Series C (taxable) 6/20/2007 9/1/2037 6.490% 10,040 10,040 Beacon Street, Refunding Series B * 8/1/1998 9/1/2014 4.05% - 5.00% 4,350 2,045 Beacon Street, Series C (taxable) 7/1/2005 9/1/2019 5.625% 2,680 2,620 Broadway/Manchester, Series A (taxable) * 6/28/2007 9/1/2037 5.940% - 6.660% 1,500 1,500 Bunker Hill, Grand Central Square Multifamily Housing, Refunding Series 2007A 6/21/2007 12/1/2026 4.00% - 5.00% 11,345 11,345 Bunker Hill, Refunding Series H * 12/1/1993 12/1/2028 5.60% - 6.50% 202,175 202,175 Bunker Hill, Refunding Series K * 5/19/2004 12/1/2013 1.49% - 4.990% 56,885 30,890 Bunker Hill, Refunding Subordinate Lien 2004L 5/19/2004 3/1/2019 3.50% - 5.10% 30,955 23,790 Chinatown, Refunding Series C 4/1/1998 7/1/2010 4.00% - 4.70% 13,205 2,205 CD 9 Corridors, Series A (taxable) 6/26/2001 9/1/2023 8.50% - 8.875% 2,000 1,705 CD 9 Corridors, Series B 6/26/2001 9/1/2031 5.875% - 6.00% 2,000 2,000 CD 9 Corridors, Series C (taxable) * 9/17/2003 9/1/2033 4.18% - 6.38% 5,500 5,150 CD 9 Corridors, Series D (taxable) 3/30/2005 9/1/2034 3.20% - 5.65% 6,500 6,070 CD 9 Corridors, Series E (taxable) 6/6/2007 9/1/2037 5.875% - 6.05% 12,500 12,345 Crenshaw, Refunding Series C * 8/1/1998 9/1/2014 4.05% - 5.00% 3,895 1,840 Crenshaw/Slauson, Series A (taxable) * 6/15/2002 9/1/2032 8.25% - 9.75% 1,135 1,075 Crenshaw/Slauson, Series B (taxable) * 6/28/2007 9/1/2037 5.94% - 6.66% 3,000 3,000 East Hollywood/Beverly-Normandie, Series A * 9/17/2003 9/1/2033 6.98% - 9.38% 1,885 1,785 East Hollywood/Beverly-Normandie, Series B (taxable) * 6/28/2006 9/1/2026 5.74% - 6.15% 8,000 7,619 Hollywood, Refunding Series C 3/1/1998 7/1/2022 4.10% - 5.50% 35,840 33,485 Hollywood, Refunding Series D (taxable) 11/25/2003 7/1/2022 1.50% - 6.00% 23,000 15,995 Hollywood, Series E (taxable) 5/9/2006 7/1/2036 6.25% 16,500 16,500 Hollywood, Series F 6/19/2008 7/1/2028 3.20% - 4.75% 15,565 15,565 Hoover, Refunding Series C 11/1/1995 9/1/2014 4.75% - 5.50% 5,040 1,895 Exposition/University Park, Refunding Series E (taxable) 6/7/2007 9/1/2032 5.45% - 6.00% 5,905 5,815 Laurel Canyon Commercial Corridor, Refunding Series B (taxable) * 9/17/2003 9/1/2030 6.98% - 9.38% 2,760 2,580 Laurel Canyon Commercial Corridor, Series C (taxable) * 6/28/2007 9/1/2037 5.94% - 6.66% 2,000 1,990 Little Tokyo, Refunding Series D 12/18/2003 7/1/2020 4.30% - 4.75% 11,430 11,430 Little Tokyo, Series E (taxable) 12/18/2003 7/1/2012 2.00% - 5.40% 8,140 3,455 Los Angeles Harbor, Refunding Series C * 8/1/1998 9/1/2014 3.60% - 5.00% 5,345 2,550



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Mid-City Recovery, Refunding Series B (taxable) * 6/15/2002 9/1/2032 8.25% - 9.75% 6,500 5,825 Mid-City Recovery, Series C (taxable)* 6/26/2008 9/1/2032 8.00% 6,500 6,500 Monterey Hills, Refunding Series C * 8/1/1998 9/1/2014 3.60% - 5.00% 12,930 5,995 Monterey Hills, Series D (taxable) 5/9/2002 9/1/2020 6.60% 4,500 4,500 Normandie 5, Refunding Series C * 8/1/1992 9/1/2014 5.00% - 6.625% 6,320 920 Normandie 5, Refunding Series D * 8/1/1998 9/1/2014 3.60% - 5.00% 3,530 1,450 Normandie 5, Series E (taxable) * 6/1/2003 9/1/2019 2.625% - 5.50% 4,330 3,315 North Hollywood, Refunding Series D 2/1/1996 7/1/2015 4.25% - 5.30% 16,825 2,035 North Hollywood, Series E 10/1/2000 7/1/2024 4.20% - 7.50% 5,800 5,065 North Hollywood, Series F 5/1/2002 7/1/2024 2.75% - 5.125% 17,120 16,335 North Hollywood, Refunding Series G 5/18/2006 7/1/2029 3.50% - 4.625% 11,340 11,090 North Hollywood, Series H 6/26/2008 7/1/2029 5.125% - 5.250% 5,815 5,815 Pacific Corridor, Series A (taxable) * 6/29/2006 9/1/2036 6.10% - 6.70% 5,000 4,925 Pacoima/Panorama City, Series A (taxable) * 9/17/2003 9/1/2033 4.18% - 6.38% 4,265 3,935 Pacoima/Panorama City, Series B (taxable) * 6/28/2006 9/1/2026 5.74% - 6.15% 8,000 7,619 Pacoima/Panorama City, Series C * 6/28/2006 9/1/2026 3.50% - 5.25% 8,000 7,535 Pico Union 1, Refunding Series B * 8/1/1998 9/1/2014 4.05% - 5.00% 4,575 2,125 Pico Union 1, Series C (taxable) * 6/1/2003 9/1/2019 2.625% - 5.50% 3,250 2,495 Pico Union 2, Series A (taxable) * 6/1/2003 9/1/2019 2.625% - 5.50% 7,310 5,590 Pico Union 2, Series B (taxable) * 6/26/2008 9/1/2026 8.00% 5,500 5,500 Reseda/Canoga Park, Series A * 9/17/2003 9/1/2033 2.00% - 5.00% 4,500 4,060 Reseda/Canoga Park, Series B (taxable) * 9/17/2003 9/1/2033 4.18% - 6.38% 8,205 7,580 Reseda/Canoga Park, Series C (taxable) * 6/28/2006 9/1/2026 5.74% - 6.15% 16,000 15,237 Vermont/Manchester, Series A (taxable) * 6/15/2002 9/1/2032 8.25% - 9.75% 1,130 1,070 Vermont/Manchester, Series B (taxable) * 6/26/2008 9/1/2038 8.00% 2,250 2,250 Watts, Series A (taxable) * 6/28/2007 9/1/2021 5.94% - 6.39% 1,500 1,445 Watts Corridors Recovery, Series A (taxable) * 6/15/2002 9/1/2032 8.25% - 9.75% 1,000 820 Western/Slauson, Series A (taxable) * 6/29/2006 9/1/2036 6.10% - 6.70% 2,500 2,465 Westlake, Series A (taxable) * 6/29/2006 9/1/2036 6.10% - 6.70% 11,000 10,845 Westlake, Series B (taxable) 6/26/2008 9/1/2038 5.49% - 7.75% 12,500 12,500 Wilshire/Koreatown, Series A (taxable) * 6/29/2006 9/1/2036 6.10% - 6.70% 16,000 15,780 Wilshire/Koreatown, Series B (taxable) 6/26/2008 9/1/2018 6.00% - 6.50% 22,580 22,580 Wilshire/Koreatown, Series C 6/26/2008 9/1/2040 5.10% - 5.50% 11,050 11,050 Total tax allocation bonds payable before unamortized discount and deferred charges 668,055

*Purchased by and payable to CRFA.



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Project notes payable: Beacon Street, Centre Street Lofts Project 4/25/2007 4/25/2012 6.50% - 9.00% 1,891 1,831 Central Industrial, Crown Coach Development Site Project 4/11/2008 5/1/2011 Variable ** 10,380 12,379 Crenshaw, Marlton Square Project 12/28/2005 12/28/2013 Variable *** 6,096 3,492 North Hollywood, NOHO Commons 8/27/2004 Until Paid 6.00% 9,043 8,493 Various recovery projects, Central Pacific Bank 7/26/2005 7/26/2012 6.814% 5,300 2,398

Total project notes payable 28,593

Payable to the City (note 2-H) 77,937

Total long-term debt, governmental activities $ 774,585

** The loan accrues interest at the Libor Based Rate, i.e., the one-month LIBOR plus 250 basis points, capped at a maximum of 7.0 percent. The interest rate resets on the first business day of each month. Interest rate of 2.816 percent at June 30, 2009 was used in projecting future debt service requirements for the loan.

*** The loan has variable interest rates of 2.25 percent plus LIBOR. Interest rate in effect as of May 28, 2009 at 3.7812 percent was used in projecting future debt service requirements for the loan.


Business-type Activities: Revenue bonds: Parking System Revenue Bonds, Series A before unamortized premium (discount) 8/18/2000 7/1/2032 4.60%-5.80% $ 44,235 $ 39,960 Notes payable: Developer letter of credit 12/30/2002 7/1/2032 10.00% 4,537 4,037 Total long-term debt, business-type activities $ 43,997

The bond indentures/fiscal agent agreements contain various limitations and restrictions which require CRA/LA to perform its duties in accordance with redevelopment law and the redevelopment plan for the respective project and to not invest, reinvest, or expend the proceeds from any tax exempt bond issue in such a manner as to result in the loss of exemption from Federal income taxation of bond interest. CRA/LA is in compliance with all covenants, restrictions, and limitations of these bond issues.



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NOTE 2 – DETAILED NOTES ON ALL FUNDS (continued)

Pursuant to Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934 (Continuing Disclosure Rule), CRA/LA, or its authorized Dissemination Agent, is required to file an annual financial report for all fixed interest rate bonds issued on or after July 1, 1995. The Dissemination Agent shall file copies of the annual report(s) with each Nationally Recognized Municipal Securities Information Repository approved by the Securities and Exchange Commission, and the appropriate state information depository, if any.

The annual reports on the CRA/LA tax allocation bonds, consist of, but are not limited to, a copy of the CRA/LA’s most recent audited financial statements and information updating particular tables in each bond issue’s Official Statement. Other types of information are required for third-party supported bond issues (note 3-G, Third-Party Indebtedness), such as housing revenue bonds. Furthermore, if any of eleven enumerated events occur, CRA/LA is required to promptly notify and instruct the Dissemination Agent to report the occurrence.

Annual Debt Service Requirements

Annual requirements to amortize all long-term debt outstanding as of June 30, 2009 are reflected in the following table (dollars in thousands).

Governmental Activities:

Year Tax Allocation Payable to the

Ending Bonds Payable Notes Payable City (note 2-H) Total June 30 Principal Interest Principal Interest Principal Interest Principal Interest

2010 $ 23,470 $ 37,806 $ 1,519 $ 1,635 $ 457 $ 1,126 $ 25,446 $ 40,5672011 24,910 36,589 13,898 869 13,878 6,066 52,686 43,5242012 24,680 35,336 3,350 769 4,843 3,656 32,873 39,7612013 25,565 34,076 889 551 1,383 1,429 27,837 36,0562014 26,886 32,745 444 523 - 341 27,330 33,6092015-2019 156,440 138,832 - 2,585 865 1,707 157,305 143,1242020-2024 148,285 94,332 - 2,586 5,840 2,278 154,125 99,1962025-2029 153,249 50,876 8,493 2,412 - - 161,742 53,2882030-2034 51,385 19,413 - - - - 51,385 19,4132035-2039 31,580 4,513 - - - - 31,580 4,5132040-2041 1,605 90 - - 50,671 - 52,276 90 Total $ 668,055 $ 484,608 $ 28,593 $ 11,930 $ 77,937 $ 16,603 $ 774,585 $ 513,141



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Business-type Activities:

Year Parking Revenue Ending Bonds Payable Notes Payable Total June 30 Principal Interest Principal Interest Principal Interest

2010 $ 835 $ 2,270 $ - $ 2,141 $ 835 $ 4,4112011 875 2,229 - 404 875 2,6332012 925 2,178 - 404 925 2,5822013 980 2,125 - 404 980 2,5292014 1,030 2,074 - 404 1,030 2,4782015-2019 6,050 9,476 - 2,018 6,050 11,4942020-2024 7,950 7,585 - 2,018 7,950 9,6032025-2029 10,505 5,025 - 2,018 10,505 7,0432030-2033 10,810 1,612 4,037 1,615 14,847 3,227 Total $ 39,960 $ 34,574 $ 4,037 $ 11,426 $ 43,997 $ 46,000

G. Prior Years Defeasance of Debt

In prior years, CRA/LA defeased various bond issues by creating separate irrevocable trust funds. New debt was issued and the proceeds were used to purchase U.S. government securities, which were placed in the trust funds held by the respective escrow agents. The investments and fixed earnings from the investments are sufficient to fully service the defeased debt until the debt is called for redemption or matures.

The trust account assets and corresponding liabilities for the defeased bonds are not reflected on the accompanying basic financial statements. At June 30, 2009, bonds outstanding in the amount of $29,080,000 were considered defeased.

H. Payable to the City of Los Angeles

CDBG Regular Program Year Allocations

The CRA/LA’s Community Development Block Grant (CDBG) allocations from the City have been structured as either grants or non-interest bearing loans with no definite due dates, or deferred loans. Under various contracts with the City, CRA/LA has recorded a non-interest bearing loan of $50,671,000 and 20-year loans totaling $17,194,000. These loans are to be repaid from certain sources such as tax increment revenues of the respective redevelopment projects as they become available as defined in the contracts. In addition to the tax increment revenues, the program income earned on the 20-year loan funds is applied as repayments to the 20-year loans.



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Pursuant to a City Council authorization, new promissory notes were issued in February 2003 amending the 20-year loans from amortizing notes to deferred notes to cure a technical default by CRA/LA on these notes. These notes as amended continue to accrue interest at the existing rate and any principal and interest due under the existing notes are deferred until maturity, with an option to extend loan maturity dates for another five years for each respective note.

Interest accrued at June 30, 2009 on these notes in the amount of $10,087,000 was reported as interest payable in the government-wide financial statements.

Hollywood BGIF Loan

CRA/LA recorded a $935,000 loan under the Block Grant Investment Funds (BGIF) Loan Program at 3.0 percent interest rate to finance the rehabilitation and expansion of the Gogerty Building component of the Capitol Records Campus development in the Hollywood Redevelopment Project area. Repayment of this loan is secured by a pledge of Hollywood site-specific tax increment revenues, which is subordinate to all existing Hollywood Project’s tax increment and existing and future senior-lien bond commitments (note 3-E).

The site-specific tax increment revenues pledged to the BGIF loan are currently sufficient to meet the required loan amortization. The outstanding loan balance of $362,000 plus accrued interest were fully liquidated by CRA/LA on September 17, 2009.

Hollywood UDAG Loan

On December 1, 2002, CRA/LA signed a promissory note at 5.50 percent interest rate involving receipt of $4,250,000 Urban Development Action Grant (UDAG) funds from the City, to pay a portion of the CRA/LA’s acquisition for the Live Broadcast Theater in the Hollywood Redevelopment Project area. These funds were provided to CRA/LA in the form of a cooperation agreement and loan that was to be paid out of “community improvement fees” from the developer in accordance with a disposition and development agreement. The cooperation agreement required the return of the CRA/LA’s loan repayments back to CRA/LA to finance qualifying block grant expenditures. On July 25, 2003, the City Council authorized the amendment of the repayment terms to allow CRA/LA to repay this loan by making City approved qualifying block grant expenditures in the Hollywood Redevelopment Project area. During the fiscal year, a total amount of qualifying block grant expenditures of $20,000 was applied towards interest on this loan. To date, $1,180,000 in interest payments have been made to service this loan.

Beacon Street LADOT Loan

On July 19, 2005, the Los Angeles Department of Transportation (LADOT) loaned CRA/LA $960,000 from the LADOT’s Special Parking Revenue funds for the design and construction of 40 public parking spaces that will be located in the Centre Street Lofts mixed-use project on the CRA/LA’s H2 lot in the Beacon Street Redevelopment Project area. Repayment of the loan will come from a combination of (a) CRA/LA/City participation in surplus profits as described in the subject disposition and development agreement and/or (b) the Beacon Street Project’s tax increment. In the event the CRA/LA’s share of surplus profits prove to be insufficient to repay the entire loan amount, the remaining balance will be amortized over a ten-year period from project completion at the City’s “average pooled fund” interest rate. The Certificate of Completion for the project was executed on September 15, 2009. This date marks the loan start date and sets the loan maturity on September 15, 2019.



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Central Industrial CDBG Float Loan

On February 14, 2008, CRA/LA secured a float funded loan from the Community Development Department (CDD) of the City of Los Angeles in the sum of $4,500,000 to act as a conduit to lend the CDBG Float Loan funds and provide assistance to Single Room Occupancy Housing Corporation (SRO), the developer in the acquisition of the Ford Hotel (Project) located in the Central Industrial Redevelopment Project area. The float loan is a 30-month non-interest bearing note due and payable in a single lump sum payment on August 14, 2010. The float loan is guaranteed by CRA/LA and will be repaid with a pledge of $4,500,000 of project area tax increment funds (note 3-E).

Under a separate acquisition loan agreement executed on February 15, 2008 (Loan Agreement) between CRA/LA and SRO, CRA/LA loaned $4,500,000 to SRO for the acquisition of the Project and for operation of the existing 293 units as affordable housing in the interim until plans for a proposed reconfiguration to approximately 120 to 150 efficiency units for use as affordable housing is prepared and considered for rehabilitation funding and/or entitlement applications by CRA/LA. This loan is covered by a promissory note for $4,500,000 secured by a deed of trust on the property. The note is non-interest bearing and is due and payable to CRA/LA in one lump sum payment on the earliest of: (a) April 15, 2010, which is twenty-six months from the date of the note; (b) the date the developer’s fee interest in the Project is sold or refinanced without prior written consent from CRA/LA; or, (c) an event of default by the developer as defined, and which has not been cured as provided for, in the Loan Agreement.

The following is a schedule of amounts payable to the City at June 30, 2009 (dollars in thousands).

Date of Maturity Interest Original Outstanding Description Issue Date Rate Issue Balance

CDBG, various projects Various dates None - $ 50,671 $ 50,671 CDBG 20-year loan, various projects 2/6/2003 6/30/2011 5.00% 7,200 6,395 CDBG 20-year loan, various projects 2/6/2003 9/30/2010 5.00% 3,294 2,983 CDBG 20-year loan, various projects 2/6/2003 3/31/2012 5.00% 3,294 3,144 CDBG 20-year loan, various projects 4/1/2003 5/15/2012 5.00% 1,699 1,699 CDBG 20-year loan, various projects 2/6/2003 6/30/2021 5.00% 1,590 1,590 CDBG 20-year loan, various projects 4/1/2003 4/26/2013 5.00% 1,383 1,383 BGIF loan, Hollywood 9/6/2001 4/30/2012 3.00% 935 362 UDAG loan, Hollywood 12/1/2002 12/1/2022 5.50% 4,250 4,250 LADOT loan, Beacon Street 7/19/2005 9/15/2019 * Variable** 960 960 CDBG float loan, Central Industrial 2/14/2008 8/14/2010 0.00% 4,500 4,500

Total payable to the City $ 77,937

* The Certificate of Completion for the project was executed on September 15, 2009. This date marks the loan start date and setsthe loan maturity on September 15, 2019, 10 years from the project completion date.

**Pursuant to the loan agreement with the LADOT, interest rate is determined based on the City’s pooled fund interest rate for theyear that the repayment is made. For purposes of projecting future annual debt service requirements for this loan, the City’s average pooled fund interest rate of 3.2675 percent at June 30, 2009 was used.



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The CRA/LA's obligation to the City for funds utilized has been recorded as long-term debt in the government-wide financial statements. Annual debt service requirements for the payable to the City are contained in note 2-F.

I. Interest Rate Cap

Objective. In April 2008, in order to protect against the potential rising of interest rates, CRA/LA entered into a Swap Transaction Agreement on the variable rate loan related to the Crown Coach Development Site project.

Terms. The terms, including the fair value and counterparty’s credit rating, of the interest rate cap agreement, as of June 30, 2009 is as follow (dollars in thousands):

NotionalAmount

Effective Date

Interest Rate Cap Fair Value

Termination Date

Counterparty Credit Rating *

$13,023 April 15, 2008 4.5% $12 May 1, 2011 Aaa/A+

* Moody’s Investors Service (Moody’s) and Standard & Poor’s (S&P), respectively.

The cost associated with the interest rate cap was limited to $65,000 upfront premium paid at the time of loan closing.

Fair value. The fair value was estimated based on the projected future cash flows related to the cap. Market interest rates and market volatility were used to determine forward rates and zero coupon rates were used as discount factors for determining present value of future cash flows.

Credit risk. The cap’s fair value of $12,000 represented the CRA/LA’s credit exposure to the counterparty as of June 30, 2009. To mitigate the credit risk, if at any time the rating of the long term debt, claims paying ability or financial strength of the counterparty falls below A+ or A1 as determined by S&P or by Moody’s, respectively, the counterparty shall procure, at the counterparty’s own expense, a replacement interest cap from a rate cap provider acceptable to S&P with the appropriate credit rating.

Termination risk. CRA/LA or the counterparty may terminate the interest rate cap if the other party fails to perform under the terms of the agreement. The cap may be terminated by CRA/LA if the counterparty’s credit quality rating falls below A- and A3 by S&P and Moody’s, respectively, and the counterparty is unable to procure, at its own expense, a replacement interest rate cap from a rate cap provider acceptable to S&P with the appropriate credit rating.



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J. Net Assets and Fund Equity

The following is a schedule of fund balances at June 30, 2009 (dollars in thousands):

Capital Debt Special Description Projects Service Housing Revenue Total

Reserved: Debt service $ - $ 92,209 $ - $ - $ 92,209 Advance to other funds 11,153 - - - 11,153 Low and moderate-income housing activities - - 111,806 - 111,806 Encumbrances 60,065 - 5,754 2,541 68,360

Total reserved 71,218 92,209 117,560 2,541 283,528

Unreserved, designated 269,138 - - 35,347 304,485

Total fund balances $ 340,356 $ 92,209 $ 117,560 $ 37,888 $ 588,013

The specific reservations and designations of the fund balances at June 30, 2009 are described below.

Debt service – amounts set aside for payment of principal and interest on long-term obligations and amounts established to satisfy debt service requirements imposed by various bond agreements.

Advance to other funds – included in this amount are non-current portion of long-term interfund receivables that do not constitute available financial resources, therefore, are not available for appropriation (notes 1-H and 1-I).

Low and moderate-income housing activities – amounts set aside from tax increment revenues and bond proceeds to be used for low and moderate-income housing projects.

Encumbrances – represents a portion of the fund balance set aside for commitments outstanding at the end of the fiscal year arising from approved purchase orders, work orders, loans, and contracts.

Unreserved, designated – a portion of the fund balance appropriated for the fiscal year 2010 work program.



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K. Deficit Net Assets

Enterprise Fund

The enterprise fund had deficit net assets of $5,664,000 at June 30, 2009. Funding for future deficits is discussed in note 3-E (Pledges of Future Revenues, Business-type activities).

Internal Service Fund

The deficit net assets of $3,024,000 at June 30, 2009 in the internal service fund, which represents an accrual of the CRA/LA’s net other postemployment benefit (OPEB) costs for the fiscal year, will be replenished with the approval of the OPEB plan funding in fiscal year 2011.



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NOTE 3 - OTHER INFORMATION

A. Employees’ Retirement System

Plan Description

CRA/LA contributes to the California Public Employees’ Retirement System (CalPERS), an agent multiple-employer public employee defined benefit pension plan. CalPERS provides retirement and disability benefits, annual cost-of-living adjustments, and death benefits to plan members and beneficiaries. CalPERS acts as a common investment and administrative agent for participating public entities within the State of California. Benefit provisions and all other requirements are established by state statute and authorized by the City Council. Copies of CalPERS’ annual financial report may be obtained from their Executive Office at 400 P Street, Sacramento, California 95814.

The pension plan covers all full-time employees of CRA/LA. Under the provision of CalPERS, pension benefits fully vest after five years of service. An employee may retire at age 50 and receive annual pension benefits equal to a predetermined percentage of the employee’s salary earned during the highest 12 consecutive months of employment multiplied by the number of years of service. Effective July 1, 1997, CRA/LA amended its contract with CalPERS changing the retirement formulation from two percent at age 60 to two percent at age 55 in order to provide a retirement incentive to employees. As a result, under the amended plan, the service requirement benefits now vary from 1.426 percent at age 50 to 2.418 percent at age 63 and over multiplied by the number of years of service.

Funding Policy

The contribution requirements of plan members and CRA/LA are established and may be amended by CalPERS. Plan members are required to contribute seven percent of their annual covered salary, which are made by CRA/LA on behalf and for the account of the plan members. CRA/LA is required to contribute at an actuarially determined rate; the rate for fiscal year 2009 was 14.119 percent of annual covered payroll.

Annual Pension Cost and Actuarial Methods and Assumptions

For fiscal year 2009, the CRA/LA’s annual pension cost of $3,461,000 was equal to the CRA/LA’s required and actual contribution. Below is a summary of principal assumptions and methods used to determine the annual required contribution for the fiscal year ended June 30, 2009.

Actuarial valuation date June 30, 2008 Actuarial cost method Entry age normal cost method Amortization method Level percent of payroll Average remaining period 21 years as of the valuation date Asset valuation method 15-year smoothed market Actuarial assumptions: Investment rate of return 7.75% (net of administrative expenses) Projected salary increases 3.25% to 14.45% depending on age, service, and type of employment Inflation 3.00% Payroll growth 3.25% Individual salary growth A merit scale varying by duration of employment coupled with an assumed annual inflation growth of 3.00% and an annual production growth of 0.25%



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NOTE 3 - OTHER INFORMATION (continued)

Three-year Trend Information (dollars in thousands)

Annual Pension Cost Percentage of APC Net Pension Fiscal Year (APC) Contributed Obligation

6/30/2007 $ 3,293 100% $ - 6/30/2008 3,148 100% - 6/30/2009 3,461 100% -

Funded Status and Funding Progress

As of June 30, 2008 (the most recent actuarial valuation date available), the plan was 90.0 percent funded. The actuarial accrued liability for benefits was $158,915,000, and the actuarial value of assets was $143,042,000, resulting in an unfunded actuarial accrued liability (UAAL) of $15,873,000. The covered payroll (annual payroll of active employees covered by the plan) was $22,920,000, and the ratio of the UAAL to the covered payroll was 69.3 percent.

The schedule of funding progress, presented as Required Supplementary Information on page 71 of this report presents multi-year trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liability for benefits.

B. Other Postemployment Benefits (OPEB)

Plan Description

CRA/LA provides medical and dental benefits to all employees who retired on or after January 1, 1993 and had at least 10 years of service. In accordance with agreements with various employee bargaining units, CRA/LA subsidizes health care benefits starting at 40 percent of maximum subsidy to retirees for the first 10 years of service and increases at the rate of four percent per year for each additional year of service. Eligible retirees pay premiums in excess of the CRA/LA subsidy. At 25 years of service and over 50 years of age, the retiree health care benefit is 100 percent subsidized by CRA/LA. The Plan is administered by CRA/LA.

The Plan is a single employer defined benefit plan that is not administered as a trust or equivalent arrangement and, therefore, does not have separate financial statements.

Funding Policy

CRA/LA currently funds the retiree health care benefits on a pay-as-you-go basis. For fiscal year 2009, CRA/LA contributed $716,000 for current health care subsidies. On June 16, 2005, CRA/LA obtained approval from the CRA/LA Board and City Council to negotiate and execute a cooperation agreement with the Los Angeles City Employees’ Retirement System (LACERS) or another qualified trustee to manage the postemployment health care benefits of CRA/LA retirees and to deposit up to $3,000,000 into a trust fund as its initial funding for the CRA/LA’s OPEB liability. This authorized amount was deposited in the CRA/LA’s internal service fund and will be transferred to a future OPEB trust fund. The proposed cooperation agreement with LACERS did not materialize and



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no funding policy has been established to fund future benefits to be provided under this plan. CRA/LA’s plan to establish an OPEB trust fund with CalPERS, which administers the CRA/LA’s defined benefit pension plan, is still in process. CRA/LA will request authorization from the CRA/LA Board and City Council for this purpose. As soon as approved, CRA/LA will work on amending its current contract with CalPERS.

Annual OPEB Cost and Net OPEB Obligation

The CRA/LA’s annual OPEB Cost is calculated based on the annual required contribution of the employer (ARC), an amount actuarially determined biennially in accordance with the parameters of GASB Statement No. 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities or surplus over a period not to exceed 30 years. The rate for fiscal year 2009 was 15.6 percent of annual covered payroll. The following table shows the components of the CRA/LA’s annual OPEB cost for the year, the amount actually contributed to the plan, and changes in the CRA/LA’s net OPEB obligation (dollars in thousands):

Annual required contribution (ARC) $ 3,817 Interest on net OPEB obligation 113 Adjustment to ARC (190) Annual OPEB cost (expense) 3,740 Contributions made (716) Increase in net OPEB obligation 3,024 Net OPEB obligation, July 1, 2008 2,604

Net OPEB obligation, June 30, 2009 $ 5,628

The CRA/LA’s annual OPEB cost, the percentage of annual OPEB cost contributed, and the net OPEB obligation for fiscal year ended June 30, 2009 and the preceding year were as follows (dollars in thousands):

Fiscal YearAnnual

OPEB Cost

Percentage of Annual OPEB

Cost Contributed

NetOPEB

Obligation

2008 $ 3,321 21.59% $ 2,604 2009 3,740 19.14% 5,628

Funded Status and Funding Progress

The funded status of the plan as of June 30, 2008 (the most recent actuarial valuation date available) was as follows (dollars in thousands):

Actuarial accrued liability $ 37,572 Actuarial value of plan assets - Unfunded actuarial accrued liability $ 37,572 Funded ratio 0.0% Covered payroll $ 21,835 Unfunded actuarial accrued liability as a percentage of covered payroll 172.1%



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Actuarial valuations involve estimates of the value of reported amounts and assumptions about the probability of events in the future. Amounts determined regarding the funded status of the plan and the annual required contribution of the employer are subjected to continual revision as actual results are compared to past expectations and new estimates are made about the future. The required schedule of funding progress presented as required supplementary information provides multiyear trend information that shows whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liability for benefits.

Actuarial Methods and Assumptions

Projections of benefits are based on the substantive plan (the plan as understood by CRA/LA and plan members) and include the types of benefits in force at the valuation date and the pattern of sharing benefit costs between CRA/LA and plan members to that point. Actuarial calculations reflect a long-term perspective and employ methods and assumptions that are designed to reduce short-term volatility in actuarial accrued liabilities and the actuarial value of assets. Significant methods and assumptions were as follows:

Actuarial valuation date January 1, 2008 Actuarial cost method Entry age normal cost method Amortization method Level percent of payroll Remaining amortization period 30 years as of the valuation date Asset valuation method 15-year smoothed market Actuarial assumptions: Investment rate of return 4.5% Projected salary increases 3.25% to 14.45% depending on age, service, and type of employment Healthcare inflation rate 5.00% Payroll growth 3.25%

Individual salary growth A merit scale varying by duration of employment coupled with an assumed annual inflation growth of 3.00% and an annual production growth of 0.25%

C. Deferred Compensation

CRA/LA offers its employees a deferred compensation plan (Plan) created in accordance with Internal Revenue Code Section 457. The Plan, which is available to all full-time employees, allows them to defer a portion of their compensation for income tax shelter purposes. The current maximum annual deferral, which is indexed to inflation, is $16,500 a year for the 2009 tax year, plus “catch up” amounts consistent with Internal Revenue Service regulations.

The Plan is administered by independent financial institutions (Plan Administrators) that have fiduciary responsibilities over the plan assets. They invest the deferred amounts as directed by participants, maintain detailed accounting records of individual participant’s deferrals and earnings, and disburse funds to the plan participants under the terms of the deferred compensation agreements.

The Plan assets are not considered the property and rights of CRA/LA; therefore, such assets are not reflected in the accompanying basic financial statements.



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D. Risk Management

CRA/LA is exposed to various risks related to torts; theft of, damage to, and destruction of assets; errors and omissions; and natural disasters for which CRA/LA carries commercial insurance policies. During the last three fiscal years, insurance claims have not exceeded commercial insurance coverages. The premiums are paid from the internal service fund and allocated to various functions of CRA/LA. Potential and actual claims, if any against CRA/LA not covered by commercial insurance are disclosed in note 3-G.

E. Pledges of Future Revenues

Governmental Activities

CRA/LA has pledged a portion of its future tax increment revenues to repay $668,055,000 in outstanding tax allocation bonds which had been issued to finance various redevelopment projects. These bonds are payable solely from individual redevelopment project’s tax increment. Total principal and interest remaining on these bonds is $1,152,663,000 payable through fiscal year 2041. For fiscal year 2009, CRA/LA realized a total tax increment revenue of $212,931,000 (net of county administrative fees and other pass-through payments) of which principal and interest paid were $19,490,000 and $37,080,000, respectively.

Project site-specific and area-wide tax increment revenues have also been pledged on various debt instruments to finance various redevelopment projects. These pledges are subordinate to senior-lien tax allocation bonds and CRA/LA liability limited to the amounts available. For fiscal year 2009, total payments on these various debt instruments amounted to $2,005,000.

In addition, Bunker Hill program income has been pledged on two interest-bearing bank notes with an aggregate outstanding principal balance of $5,890,000. Loan proceeds were used to finance various redevelopment projects. At the interest rates prevailing on June 30, 2009, total principal and interest remaining on these notes is $6,472,000, payable through fiscal year 2014. Program income realized during fiscal year 2009 totaled $4,429,000 of which principal and interest paid were $1,520,000 and $405,000, respectively.

Business-type Activities

Under the terms of the Parking System Revenue Bonds Series 2000A issued by CRA/LA on August 18, 2000, the primary source of payment for the bonds is the facility’s parking revenues net of operating and maintenance costs. However, in the event actual net revenues are insufficient to cover debt service, the shortfall could be drawn from a $9.325 million letter of credit provided by the developer and/or the Development Tax Increment account funded by a CRA/LA pledge of Hollywood tax increment revenues in amounts up to $1,000,000 annually. The pledge of Hollywood tax increment revenues is subordinate to CRA/LA’s obligation to pay debt service on Hollywood tax allocation bonds, housing set-aside, and pass-through payments. This pledge will be released upon the project reaching “stabilization”, which is defined as two consecutive twelve-month periods during which net revenues equal 1.35 times maximum annual debt service on the bonds.

In prior years, due to insufficient net revenues of the garage, CRA/LA had drawn against the developer’s letter of credit to meet the required debt service payments, starting with the January 1, 2003 until the July 1, 2006 payments. These amounts, net of a $500,000 settlement on a receivable litigation, brought the outstanding balance of



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these draws to $4,037,000 at June 30, 2007. During fiscal years 2008 and 2009, net parking revenues realized were sufficient to service respective bond maturities, therefore, the outstanding balance against the developer letter of credit remained the same at June 30, 2009.

F. Commitments

Operating Leases

CRA/LA has several operating leases for office space, which are not included in capital assets. These leases involve the central office facilities and site offices. The total rent expense for operating leases for the year ended June 30, 2009 was $2,293,000.

CRA/LA has the following contractual agreements for future rental payments at June 30, 2009 (dollars in thousands):

Fiscal Year Ending June 30 Amount 2010 $ 2,229 2011 215 2012 29 2013 29 2014 29 2015-2019 145

Total $ 2,676

Pollution Remediation Obligations

CRA/LA has estimated cleanup costs at six brownfields redevelopment sites with total costs of $3,653,000. The estimate is based on a reasonable range of potential outlay and their probability of occurring. The amount expected to be recovered from external sources is $3,274,000 leaving a net estimated cost to CRA/LA of $379,000. At June 30, 2009, the purchase price and expected remediation outlays did not exceed the fair value of these brownfields sites, therefore no pollution liability or expense was recorded. During fiscal year 2009, CRA/LA did not incur any cleanup costs at these sites, therefore no costs were capitalized (note 1-K).

Other Commitments

At June 30, 2009, as presented in its fiscal year 2010 Budget, CRA/LA had approximately $207,893,000 in outstanding commitments. These commitments include the $85.1 million payment to the State’s Supplemental Educational Revenue Augmentation Fund for fiscal years 2010 and 2011 to help alleviate the State of California’s budget deficits. Other commitments include projected fiscal year 2010 expenditures for work program pursuant to executed agreements like disposition and development agreements, loan agreements, and memoranda of understanding.



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G. Contingencies

Governmental Activities

Buckingham Place Senior Housing

CRA/LA provided the original developer of the Buckingham Place Senior Housing (Project) with a predevelopment loan of $8,500,000. The Project is a three-building 180-unit senior housing project within the Marlton Square mixed-use development in the Crenshaw Redevelopment Project area. The loan, which was used for acquisition, relocation, and pre-development costs of the Project, was in the form of federally funded HOME funds granted to CRA/LA through the Los Angeles Housing Department (LAHD). Terms of that grant required that the first 70 units of the Project be completed by December 31, 2008. Due to the original developer’s failure to complete the Project on schedule and subsequent Chapter 7 bankruptcy filing, the Project was put on hold until CRA/LA acquired title to the property at a trustee sale in May 2009.

An audit of the Project in 2009 conducted by the Department of Housing and Urban Development (HUD) recommended that CRA/LA reimburse LAHD for the $8,500,000 HOME funds in the event the first 70 units of the Project are not completed within 24 months by December 31, 2010. Based on the agreement with a new project developer, CRA/LA anticipates that the Project will be completed in time and no return of funds will have to be made to LAHD.

Hollywood and Highland Project

CRA/LA helped to facilitate public improvement financing for the Hollywood and Highland commercial development by the TrizecHahn Corporation (the developer). Public financing consisted of taxable certificates of participation issued by the Municipal Improvement Corporation of Los Angeles (MICLA) for the live broadcast theater and tax-exempt parking revenue bonds issued by the City for a subterranean parking structure.

The debt service requirements for the theater certificates of participation are paid from the annual lease rental payments from the City’s General Fund. To the extent that the transient occupancy tax generated by the hotel project at the site is less than the annual debt service requirement, the developer (or its successor) has guaranteed up to 74 percent of the shortfall. Under certain conditions, the developer may be released from the guarantee after the eleventh year (year 2010). In a cooperation agreement executed in February 2004, CRA/LA has agreed to guarantee the remaining 26 percent, net of certain exclusions, payable from tax increment revenues or other legally available funds from the Hollywood Redevelopment Project (Project area). CRA/LA will be released from this guaranty when the developer is released from its guaranty as described above. Unless subordination is approved by the City Council, the pledge of tax increment is senior to all future pledges of tax increment from the Project area (note 3-E).

The parking revenue bonds are payable from and secured by a pledge of the parking revenues deposited into the City’s Special Parking Revenue Fund. The February 2004 cooperation agreement does not require CRA/LA to provide a back-up reimbursement mechanism should parking revenues be insufficient to pay for the debt service on the parking bonds.

The obligation to pay Hollywood Project tax increment revenues to the City, under certain conditions, is subject to prior and senior obligations to pay tax allocation bond debt service, housing set-asides as required by State law, and pass-through payments arising from agreements with the County of Los Angeles, the Los Angeles Unified School District, and the Los Angeles Community College District.



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Marlton Square Limited Recourse Obligations

In September 2008, CRA/LA and the Community Development Department (CDD) entered into a funding agreement under which City of Los Angeles, through CDD agreed to provide Community Development Block Grant (CDBG) funds to CRA/LA in an aggregate amount of $19,175,000 for acquisition, relocation, and related hazardous materials remediation costs for the Marlton Square Retail Acquisition Project (Retail Project) in the Crenshaw Redevelopment Project area. The CDBG funds were in the form of Section 108 Loan Guarantee (Section 108) funds for $15,175,000, Brownfields Economic Development Initiative (BEDI) funds for $2,000,000, and Economic Development Initiative (EDI) funds for $2,000,000.

Until and unless Section 108 is assumed by a private developer, CDD shall pay debt service for the Section 108 for 16 years using up to $1,220,000 per year or a total of $19.52 million in future program year CDBG funds and Assembly Bill (AB) 1290 funds from a total of seven CRA/LA project areas in the South Los Angeles Region with the minimum amount of AB1290 funds pledged to be $228,769 per year (approximately $3.7 million) and the maximum to be $356,415 per year (up to $4.6 million), subject to the annual allocations by the Mayor and City Council, and the guarantees by CRA/LA. CDD retained $2,428,000 of the federal funds to service an Interest Reserve Account to pay the interest only on the Section 108 funds for a period of about four years and to pay for costs of issuance fees upon conversion of the Section 108 from currently variable interest rate to a fixed interest rate.

Pursuant to the agreement, CRA/LA has provided a first deed of trust in the acquired properties as collateral. CRA/LA has also agreed to replenish the Interest Reserve Account in the event the Interest Reserve Account balance is reduced below $242,800. At the request of CDD, CRA/LA shall deposit funds with CDD, within 30 days of CDD’s written request thereof, in the amount of four quarters of estimated interest payments calculated at the then current three-month LIBOR rate plus the pass-through of the HUD required spread. CRA/LA’s obligation to replenish the Interest Reserve Account shall terminate upon the earlier of CDD’s conversion of the Section 108 funds to a fixed rate loan or the repayment of the outstanding Section 108 funds.

Pursuant to the same agreement, CRA/LA guaranteed to make available Annual AB1290 Pledge in the event the South Los Angeles Project areas fail to generate sufficient AB1290 funds. CRA/LA shall pay CDD an amount equal to the difference between the Annual AB1290 Pledge amount and the AB1290 funds actually paid to CDD for such year. CRA/LA’s obligation to make payments under the agreement shall terminate upon the earlier of the repayment by CDD or private developer of the outstanding Section 108 funds or City Council’s approval of an alternative funding source to the AB1290 funds.

During the current fiscal year, a total of $9,710,000 was used by CRA/LA to acquire properties for the Retail Project. Since CRA/LA’s obligations are limited to the above guarantees and collateral, the Section 108 funds were not reflected as long-term debt in the Statement of Net Assets in the government-wide financial statements.

North Hollywood HUD Section 108 Loan

The City provided CRA/LA in fiscal year 2004, a $14,000,000 HUD (Housing and Urban Development) Section 108 loan to partially fund acquisition and relocation costs on the NOHO Commons in the North Hollywood Redevelopment Project area. The loan agreement allows CRA/LA to assign the loan to the developer.

Subsequently, the loan assignment was effected retroactively to August 27, 2004. As a condition of the developer’s assumption of the loan, CRA/LA conveyed Subarea B of the NOHO Commons and executed a note payable to the



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developer, at an interest rate of six percent. The note, which is secured by a pledge of the NOHO Commons’ site-specific tax increment revenues, was executed to reimburse certain project costs paid for in advance by the developer. In addition, CRA/LA has pledged to the developer the site-specific tax increment revenues on the NOHO Commons to the extent that the developer’s annual returns on investment rate are less than 10 percent. These pledges to the developer are subordinate to the North Hollywood Project’s existing and future senior-lien bonds and the area-wide tax increment pledge to the City.

Although there has been an assignment of the loan to the developer, CRA/LA will maintain its pledge to the City of area-wide tax increment revenues as security for the full $14,000,000 loan. However, this area-wide tax increment pledge is subordinate to the North Hollywood Project’s existing and future senior-lien bonds. The loan is further secured by an unconditional guaranty of payment not to exceed $12,307,000. J.H. Snyder Company, a company related to the developer issued the guaranty.

Slauson Shopping Center

The Disposition and Development Agreement for the development of the Slauson Shopping Center (Center) between Slauson Central LLC (the developer) and CRA/LA provides for the developer to enter into a loan agreement with the City in the amount of $2,005,000 as a condition of conveyance of the property to be acquired by CRA/LA and conveyed to the developer. This loan will be secured by deed of trust on the property from the developer to the City, subordinate only to the permanent financing on the property. CRA/LA has executed a cooperation agreement with the City for use of the Section 108 funds and has also pledged site-specific tax increment on the Center to the City for use in repayment of Section 108 Loan funds borrowed by the developer for the Center (note 3-E). This pledge is subordinate to the redevelopment project area’s existing and future senior-lien tax increment bonds. The developer will be responsible for the annual repayment of this loan if City site-specific tax revenue allocated to the Center and the CRA/LA’s pledged site-specific tax increment revenue are not adequate to service the loan.

Regency Billboard Litigation

Regency Outdoor Systems (Regency) alleged that CRA/LA violated its civil rights by denying two sign permit applications for the construction of billboard structures in the Hollywood and Exposition/University Park Redevelopment Project areas. The parties filed cross motions for summary judgment and the District Court ruled in 2003 that CRA/LA had violated Regency’s 1st Amendment rights in denying the applications.

In 2007, Regency filed motions to expand the scope of the litigation to include approximately 20 other sign applications that were allegedly denied by CRA/LA and for an award of lost profits related to the two denied sign applications. The District Court denied both motions. In December 2007, the parties reached agreement that Regency was entitled to compensatory damages of $14,000 for the two improperly denied sign applications.

In March 2008, the District Court entered the final judgment. Regency filed an appeal regarding the trial court’s rulings on the 20 sign applications and lost profits and CRA/LA filed a cross-appeal regarding the ruling on the two billboard applications.

In August 2008, the District Court granted Regency’s motion for attorney’s fees and awarded $73,361. Regency sought fees in the amount of $651,433. Regency also filed an appeal of the attorney’s fees ruling. The appeal of all issues is pending before the Ninth Circuit Court of Appeals.



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CRA/LA’s defense of this matter has been vigorous. CRA/LA and Regency discussed various settlement scenarios over several years, but were unable to come to an agreement.

Other Litigation

In the normal course of business, CRA/LA has been named as a defendant or co-defendant in several lawsuits and claims arising from its redevelopment activities. These claims against CRA/LA have been evaluated and, upon consultation with the Los Angeles City Attorney, CRA/LA management believes that the ultimate resolution of such claims will not have a material adverse impact on the financial condition of CRA/LA.

In addition, CRA/LA, as a result of its real estate acquisition activities, is involved in eminent domain, relocation, and other related litigation which may result either in judgment or settlement amounts significantly higher than its initial court deposits or anticipated payments.

Third-Party Indebtedness

It is the policy of CRA/LA to encourage redevelopment activities on the part of the private sector. To this end, CRA/LA has authorized the issuance of tax-exempt long-term financing for activities, which promote redevelopment within the City. Such debt instruments are collateralized by private sector assets and are payable solely from the respective revenues generated thereon. Since this indebtedness is not a liability of CRA/LA it does not appear in the accompanying basic financial statements. As of June 30, 2009, the balance of long-term tax-exempt third-party indebtedness was $815,673,000 as shown on pages 94 through 96.

Business-type Activities

Cinerama Dome Parking Garage

CRA/LA has been added as a named defendant in a class action complaint involving the garage’s alleged failure to comply with the Fair and Accurate Transaction Act (FACTA), which prohibits the inclusion of a credit card’s expiration date and/or more than five digits of a credit card’s number on the parking receipt. The alleged violations occurred between December 2006 and May 2009. CRA/LA’s General Counsel estimates the potential liability, if any, to be in excess of $1,000,000.

H. Subsequent Events

Bond Issuances

On November 4, 2009, CRA/LA issued its Pacoima/Panorama City Series D tax-exempt tax allocation bonds in the amount of $20,000,000 at interest rates ranging from 5.00 percent to 5.625 percent mainly to finance improvements in or benefitting the Earthquake Disaster Assistance Project for portions of Council District 7 (Pacoima/Panorama City).

On December 3, 2009, CRA/LA issued its Adelante Eastside Series D tax-exempt tax allocation bonds in the amount of $10,000,000 at interest rates ranging from 1.75 percent to 6.50 percent for the main purpose of financing improvements in or benefitting the Adelante Eastside Redevelopment Project.

Employees' Pension Plan

(Overfunded)Actuarial Unfunded

Actuarial Actuarial Accrued (Overfunded) AAL as aValuation Asset Liability Unfunded Funded Covered Percentage of

Date Value (AAL) AAL Ratio Payroll Covered Payroll

6/30/06 123,768$ 137,943$ 14,175$ 89.7% 17,498$ 81.0%6/30/07 135,101 149,785 14,684 90.2% 19,588 75.0%6/30/08 143,042 158,915 15,873 90.0% 22,920 69.3%

Other Postemployment Benefits

(Overfunded)Actuarial Unfunded

Actuarial Actuarial Accrued (Overfunded) AAL as aValuation Asset Liability Unfunded Funded Covered Percentage of

Date Value (AAL) AAL Ratio Payroll Covered Payroll

1/1/2008 -$ 37,572$ 37,572$ 0.0% 21,835$ 172.1%

See accompanying independent auditor's report.


(Unaudited)


Required Supplementary Information Schedule of Funding Progress

-71-

Variance withInitial Final Final BudgetBudget Budget Actual Positive (Negative)

Revenues:Interest income 5,022$ 5,022$ 4,294$ (728)$Loan repayments 2,200 2,200 946 (1,254)Rental income - 23 100 77Other - - 91 91

Total revenues 7,222 7,245 5,431 (1,814)


Program salaries and administrative costs, includingtechnical and professional personnel 15,132 15,614 7,362 8,252

Real estate and other acquisition costs 15,444 15,985 11,028 4,957Housing 60,931 61,519 20,339 41,180Rehabilitation 6,661 5,940 111 5,829Relocation 2,265 2,741 2,176 565Development loans 22,659 45,136 26,378 18,758Community service 3,448 918 86 832Tax increment administrative fees 1,104 1,144 1,203 (59)Other 2,619 4,648 1,460 3,188

Total expenditures 130,263 153,645 70,143 83,502

Revenues over (under) expenditures (123,041) (146,400) (64,712) 81,688

Other financing sources (uses):Transfers in 52,840 52,979 55,012 2,033Transfers out (14,700) (15,025) (16,155) (1,130)

Total other financing sources (uses) 38,140 37,954 38,857 903

Net change in fund balances (84,901) (108,446) (25,855) 82,591

Fund balances, beginning of year 127,373 143,415 143,415 -

Fund balances, end of year 42,472$ 34,969$ 117,560$ 82,591$

See accompanying independent auditor's report and note to required supplementary information.

Fund Balances - Budget and Actual


(Unaudited)


Housing Fund

Schedule of Revenues, Expenditures, and Changes in

-72-


Revenues:Grants -$ 169$ 1,406$ 1,237$Interest income 1,011 1,417 959 (458)Proceeds from sale of land - 1,000 2,360 1,360Loan repayments - - 8 8Rental income - - 40 40Developer participation 500 1,852 1,876 24City participation 9,408 10,113 12,584 2,471Other 300 2,800 380 (2,420)

Total revenues 11,219 17,351 19,613 2,262


Program salaries and administrative costs, includingtechnical and professional personnel - 94 94 -

Real estate and other acquisition costs 8 12 3 9Housing - 935 773 162Rehabilitation - 306 - 306Public improvement 1,761 13,864 9,899 3,965Relocation 3 334 330 4Development loans 258 5,390 6,473 (1,083)Community service 1,298 2,770 418 2,352Other 41,615 28,631 2,533 26,098


Revenues over (under) expenditures (33,724) (34,985) (910) 34,075

Other financing sources (uses):Transfers in 94 294 335 41Transfers out (663) (684) (718) (34)

Total other financing sources (uses) (569) (390) (383) 7




See accompanying independent auditor's report and note to required supplementary information.



(Unaudited)


Special Revenue Fund


-73-


Note to Required Supplementary Information

June 30, 2009

-74-

STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY

Budgetary Accounting

The CRA/LA's annual budget is prepared under guidelines established by State redevelopment law and the City of Los Angeles Budget Ordinance and is presented for reporting purposes on a basis consistent with generally accepted accounting principles. The budget is approved by the City Council and adopted by the CRA/LA Board before the beginning of the new fiscal year. In addition, because the CRA/LA's budget is prepared well in advance of the fiscal year to which it relates, the budget is regularly amended for changes in available resources and project objectives, with the approval of the CRA/LA Board and City Council.

The CRA/LA's annual budget is more comparable to a capital improvement budget, whereby projects are not typically proposed, started, and completed in one fiscal year. Therefore, funds available in a fiscal year may be allocated for expenditure over a multi-year period. Certain funds are therefore allocated to "carryover" into future years beyond the fiscal year of the budget. These future year allocations along with any unexpended revenue from prior years are analyzed at year-end as part of the annual budget process called the carryover amendment.

The carryover amendment amends the new year budget for any unexpended revenues from prior years that have not been previously estimated in the new year budget. The process occurs as of June 30, after the traditional accounting close. Once the prior year is closed, an analysis of encumbrances, contracts, commitments, and other existing activities is performed and evaluated against original program objectives and resources. Any excess of revenues over expenditures from the prior year is credited to the fund balance of the respective funds and is considered as part of the carryover revenue in the new year.

After carryover revenue is determined, the CRA/LA performs a complete re-examination of the purposes of each project objective without any reference to what has gone before. Previously approved spending levels, including future year allocations, are reviewed in detail and are not automatically carried over into the next fiscal year. Work program objectives and commitments must be justified to warrant allocation of carryover revenue.

This concept of "zero based budgeting" has been successfully applied to the CRA/LA's unique business structure and provides a timely opportunity to review the status of objectives in each redevelopment area. By this method, prior year revenues are reallocated to either pre-existing or new objectives, in new and updated amounts, through the carryover process.


Revenues:Incremental property taxes 191,523$ 194,527$ 217,868$ 23,341$Grants - 13,445 8,754 (4,691)Interest income 7,465 7,465 7,734 269Loan repayments - - 774 774Rental income 4,113 4,113 4,733 620Developer participation - 9 11 2City participation 500 500 320 (180)Other 500 504 633 129

Total revenues 204,101 220,563 240,827 20,264


Program salaries and administrative costs, includingtechnical and professional personnel 37,888 44,609 38,441 6,168

Real estate and other acquisition costs 95,843 113,054 52,004 61,050Housing 44,293 53,442 13,511 39,931Rehabilitation 24,921 30,351 2,360 27,991Public improvement 56,233 87,521 15,221 72,300Relocation 4,660 5,875 873 5,002Development loans 35,545 31,978 8,906 23,072Community service 8,870 6,742 1,521 5,221Tax increment administrative fees 3,422 3,734 3,734 -Other 45,525 73,783 13,471 60,312


Revenues over (under) expenditures (153,099) (230,526) 90,785 321,311

Other financing sources (uses):Proceeds from limited recourse obligations - 9,710 9,710 -Transfers in 34,231 35,622 60,581 24,959Transfers out (119,897) (119,032) (165,376) (46,344)

Total other financing sources (uses) (85,666) (73,700) (95,085) (21,385)







Capital Projects Fund

Fund Balances - Budget and Actual Schedule of Revenues, Expenditures, and Changes in

-75-


Revenues:Interest income -$ -$ 470$ 470$Developer participation - - 100 100

Total revenues - - 570 570

Expenditures:Debt service:

Principal 21,351 21,440 21,439 1Interest expense 41,777 38,631 38,193 438Debt issuance costs - 1 - 1

Total expenditures 63,128 60,072 59,632 440

Revenues over (under) expenditures (63,128) (60,072) (59,062) 1,010

Other financing sources (uses):Issuance of long-term debt 17,910 19,832 1,921 (17,911)Transfers in 71,406 71,076 76,517 5,441Transfers out (23,310) (25,232) (10,196) 15,036

Total other financing sources (uses) 66,006 65,676 68,242 2,566

Net change in fund balances 2,878 5,604 9,180 3,576







Debt Service Fund


-76-

Operating Investment FinancingFund Fund Authority Total

ASSETSCurrent assets:

Cash and cash equivalents 1,211$ 90,236$ -$ 91,447$ Unrestricted investments - 412,286 - 412,286 Receivables:

Accrued interest - 1,504 - 1,504 Other 764 - - 764

Due from other funds 7,395 - - 7,395 Other assets 1,167 - - 1,167

Total current assets 10,537 504,026 - 514,563 Noncurrent assets:

Restricted assets - - 4,278 4,278 Capital assets:

Equipment 16,197 - - 16,197 Less accumulated depreciation (13,599) - - (13,599) Total capital assets, net of accumulated depreciation 2,598 - - 2,598

Total noncurrent assets 2,598 - 4,278 6,876

Total assets 13,135 504,026 4,278 521,439

LIABILITIESCurrent liabilities:

Accounts payable and accrued liabilities 3,418 - - 3,418 Due to other funds - 504,026 3,114 507,140 Compensated absences 1,814 - - 1,814 Other liabilities 876 - 1,164 2,040

Total current liabilities 6,108 504,026 4,278 514,412

Noncurrent liabilities:Advances from other funds 2,598 - - 2,598 Compensated absences 1,825 - - 1,825 Other postemployment benefits obligation 5,628 - - 5,628

Total noncurrent liabilities 10,051 - - 10,051

Total liabilities 16,159 504,026 4,278 524,463

NET ASSETS (DEFICIT)Invested in capital assets, net of related debt 2,598 - - 2,598 Unrestricted (5,622) - - (5,622)

Total net assets (deficit) (3,024)$ -$ -$ (3,024)$




Internal Service Funds

Combining Statement of Net Assets

-77-


Operating revenues:Applied charges 45,897$ -$ -$ 45,897$

Total operating revenues 45,897 - - 45,897

Operating expenses:Personnel compensation 25,575 - - 25,575 Employee benefits 13,833 - - 13,833 Central office expenses 4,982 - - 4,982 Depreciation expense 1,174 - - 1,174 Other administrative costs 3,357 - - 3,357

Total operating expenses 48,921 - - 48,921

Net income (loss) from operating activities (3,024) - - (3,024)

Nonoperating revenues (expenses):Interest income - 9,903 23,078 32,981 Interest income allocated to participating funds - (9,903) (23,078) (32,981)

Total nonoperating revenues (expenses) - - - -

Change in net assets (3,024) - - (3,024)

Total net assets (deficit) - beginning of year - - - -

Total net assets (deficit) - end of year (3,024)$ -$ -$ (3,024)$





Combining Statement of Revenues, Expenses, and Changes in Fund Net Assets

-78-


Cash flows from operating activities:Reimbursements for applied charges 45,897$ -$ -$ 45,897$Payments to employees (36,384) - - (36,384)Payments to other vendors (8,308) - - (8,308)

Net cash provided by operating activities * 1,205 - - 1,205

Cash flows from capital and related financing activities:Acquisition of capital assets (1,011) - - (1,011)Deposits from other funds for capital and financing activities - 304,065 - 304,065Payments for capital and financing activities - (364,138) - (364,138)

Net cash provided (used) by capital and related financing activities (1,011) (60,073) - (61,084)

Cash flows from investing activities:Proceeds from sale of investments - 1,382,878 - 1,382,878Purchase of investments - (1,366,629) - (1,366,629)Interest income - 9,903 23,078 32,981Interest income allocated to other funds - (9,903) (23,078) (32,981)

Net cash used by investing activities - 16,249 - 16,249

Net increase (decrease) in cash and cash equivalents 194 (43,824) - (43,630)Cash and cash equivalents, beginning of year 1,017 134,060 - 135,077

Cash and cash equivalents, end of year 1,211$ 90,236$ -$ 91,447$

* Reconciliation of operating income to net cash providedby operating activities:

Net income (loss) from operating activities (3,024)$ -$ -$ (3,024)$Adjustments to reconcile operating income to net cash

provided by operating activities:Depreciation and amortization expenses 1,174 - - 1,174Increase in other receivables (738) - - (738)Decrease in due from other funds 286 - - 286Increase in other assets (64) - - (64)Increase in accounts payable and accrued liabilities 164 - - 164Increase in compensated absences 500 - - 500Increase in other liabilities 46 - - 46Increase in other postemployment benefits obligation 3,024 - - 3,024Decrease in advance from other funds (163) - - (163)

Net cash provided by operating activities 1,205$ -$ -$ 1,205$





Combining Statement of Cash Flows

-79-

ConstructionDeposits Disbursements Total

ASSETS

Due from other funds 1,677$ 20,190$ 21,867$ Restricted assets 1,386 - 1,386

Total assets 3,063$ 20,190$ 23,253$

LIABILITIES

Construction disbursements payable -$ 20,190$ 20,190$ Other liabilities:

Good faith deposits payable 1,864 - 1,864 Unclaimed properties 251 - 251 Restitution of wages payable 658 - 658 Security deposits 290 - 290

Total liabilities 3,063$ 20,190$ 23,253$




Fiduciary Funds

Combining Statement of Fiduciary Net Assets - Agency Funds

-80-

Balance BalanceJuly 1, 2008 Additions Deductions June 30, 2009

DepositsAssets

Due from other funds 1,924$ 138$ 385$ 1,677$Restricted assets 1,568 31 213 1,386

Total assets 3,492$ 169$ 598$ 3,063$

LiabilitiesGood faith deposits payable 2,378$ 59$ 573$ 1,864$Unclaimed properties 251 - - 251Restitution of wages payable 568 109 19 658Security deposits 295 1 6 290

Total liabilities 3,492$ 169$ 598$ 3,063$

Construction DisbursementsAssets

Due from other funds 22,533$ 57,465$ 59,808$ 20,190$

Total assets 22,533$ 57,465$ 59,808$ 20,190$

LiabilitiesConstruction disbursements payable 22,533$ 57,465$ 59,808$ 20,190$

Total liabilities 22,533$ 57,465$ 59,808$ 20,190$

Total Agency FundsAssets

Due from other funds 24,457$ 57,603$ 60,193$ 21,867$Restricted assets 1,568 31 213 1,386

Total assets 26,025$ 57,634$ 60,406$ 23,253$

LiabilitiesConstruction disbursements payable 22,533$ 57,465$ 59,808$ 20,190$Good faith deposits payable 2,378 59 573 1,864Unclaimed properties 251 - - 251Restitution of wages payable 568 109 19 658Security deposits 295 1 6 290

Total liabilities 26,025$ 57,634$ 60,406$ 23,253$




Fiduciary Funds

Combining Statement of Changes in Fiduciary Assets and Liabilities - Agency Funds

-81-

CentralAdelante Beacon Broadway/ Bunker Business CentralEastside Street Manchester Hill District Industrial

ASSETS

Cash and cash equivalents -$ -$ -$ -$ 1$ -$ Receivables:

Incremental property taxes 130 531 17 2,226 - - Grants - - - 1,567 39 - Accrued interest - - - - - - Other, net of uncollectibles of $196 - - - 5 42 74

Due from other funds 10,528 2,412 2,638 41,252 7,061 17,811 Loans receivable, net of allowance for market value write-downs and uncollectibles of $559,899 1,178 551 - 33,783 12,116 - Restricted assets 2,960 755 192 31,586 1,036 - Advances to other funds - 500 - - - - Other assets - - - 4 - -

Total assets 14,796$ 4,749$ 2,847$ 110,423$ 20,295$ 17,885$


Liabilities:Accounts payable and accrued liabilities 98$ 1$ 5$ 60$ 34$ 7$ Due to other funds 30 393 - 1,996 41 75 Advances from other funds 313 500 847 147 - - Deferred revenue 1,178 551 - 33,795 12,132 - Other liabilities 396 60 42 1,340 47 388

Total liabilities 2,015 1,505 894 37,338 12,254 470

Fund balances:Reserved for:

Debt service 2,930 1,162 192 31,937 - 4,500 Low and moderate-income housing activities 2,795 808 359 20,543 6,717 3,155 Advances to other funds - - - - - - Encumbrances 868 20 55 2,718 167 889

Unreserved, designated for continuingwork programs 6,188 1,254 1,347 17,887 1,157 8,871

Total fund balances 12,781 3,244 1,953 73,085 8,041 17,415

Total liabilities and fund balances 14,796$ 4,749$ 2,847$ 110,423$ 20,295$ 17,885$


By Redevelopment Project Area



Governmental Funds

Combined Balance Sheet -

-82-

EastHollywood/

City Council Crenshaw/ Beverly-Chinatown Center District 9 Crenshaw Slauson Normandie

ASSETS

Cash and cash equivalents -$ -$ 20$ -$ -$ -$ Receivables:

Incremental property taxes 86 54 808 47 83 225 Grants - 207 - 27 - 118 Accrued interest - - - - - - Other, net of uncollectibles of $196 - - - - - -

Due from other funds 10,948 11,773 16,933 4,538 4,026 20,484 Loans receivable, net of allowance for market value write-downs and uncollectibles of $559,899 1,055 - 948 146 114 302 Restricted assets 2,465 - 3,453 343 667 796 Advances to other funds - - - - - - Other assets - - - - - -

Total assets 14,554$ 12,034$ 22,162$ 5,101$ 4,890$ 21,925$


Liabilities:Accounts payable and accrued liabilities 68$ 485$ 245$ -$ -$ 9$ Due to other funds - 148 20 27 - 117 Advances from other funds - - 713 3,684 321 - Deferred revenue 1,061 - 948 146 114 302 Other liabilities - 257 882 114 120 358

Total liabilities 1,129 890 2,808 3,971 555 786


Debt service 2,528 - 3,444 825 660 796 Low and moderate-income housing activities 1,995 2,351 413 3 555 1,215 Advances to other funds - - - - - - Encumbrances 796 1,541 4,756 99 58 1,213

Unreserved, designated for continuingwork programs 8,106 7,252 10,741 203 3,062 17,915



Continued...


By Redevelopment Project Area - (Continued)



Governmental Funds


-83-

Exposition/University Laurel Little Los Angeles Mid-City

Park Hollywood Canyon Tokyo Harbor RecoveryASSETS

Cash and cash equivalents -$ 24$ -$ -$ -$ -$ Receivables:

Incremental property taxes 49 - 255 95 67 910 Grants 131 2 - - - 98 Accrued interest - 5 - - - - Other, net of uncollectibles of $196 2 26 - 17 15 75

Due from other funds 4,352 53,084 6,717 8,101 2,367 9,453 Loans receivable, net of allowance for market value write-downs and uncollectibles of $559,899 1,013 10,353 440 1,653 214 119 Restricted assets 957 16,081 837 3,153 440 2,122 Advances to other funds - - - - - - Other assets - 900 - - - -

Total assets 6,504$ 80,475$ 8,249$ 13,019$ 3,103$ 12,777$


Liabilities:Accounts payable and accrued liabilities 36$ 156$ 33$ 5$ 4$ 47$ Due to other funds 131 533 - - 21 103 Advances from other funds - - 164 - - 264 Deferred revenue 1,013 11,284 440 1,667 229 119 Other liabilities 78 4,348 216 88 29 424

Total liabilities 1,258 16,321 853 1,760 283 957


Debt service 956 6,237 835 3,248 440 2,105 Low and moderate-income housing activities 1,266 13,778 1,382 2,844 1,778 2,370 Advances to other funds - - - - - - Encumbrances 687 3,572 468 336 226 1,691

Unreserved, designated for continuingwork programs 2,337 40,567 4,711 4,831 376 5,654



Continued...



(In Thousands)June 30, 2009


Governmental Funds


-84-

Pacoima/Monterey North Pacific Panorama Pico

Hills Normandie 5 Hollywood Corridor City Union 1ASSETS

Cash and cash equivalents -$ 2$ 28$ -$ 2$ -$ Receivables:

Incremental property taxes 87 185 1,154 344 1,019 86 Grants - - 1 - - - Accrued interest - - 3 - 1 - Other, net of uncollectibles of $196 - 1 38 - - 2

Due from other funds 6,985 5,824 24,105 8,921 45,041 2,154 Loans receivable, net of allowance for market value write-downs and uncollectibles of $559,899 877 269 739 60 1,893 292 Restricted assets 1,445 1,526 9,766 667 7,589 946 Advances to other funds - - - - - - Other assets - - - - - -

Total assets 9,394$ 7,807$ 35,834$ 9,992$ 55,545$ 3,480$


Liabilities:Accounts payable and accrued liabilities -$ 47$ 180$ 8$ 423$ 1$ Due to other funds - - 276 - 3 - Advances from other funds - 1 - - - - Deferred revenue 877 269 774 60 1,906 292 Other liabilities 84 87 492 204 1,142 19

Total liabilities 961 404 1,722 272 3,474 312


Debt service 2,726 1,891 4,094 667 1,487 1,362 Low and moderate-income housing activities 1,754 817 9,340 3,166 2,197 128 Advances to other funds - - - - - - Encumbrances 1,083 1,541 6,513 1,291 18,607 423

Unreserved, designated for continuingwork programs 2,870 3,154 14,165 4,596 29,780 1,255



Continued...





Governmental Funds


-85-

Pico Reseda/ Rodeo/ Vermont/ WattsUnion 2 Canoga Park La Cienega Manchester Watts Corridors

ASSETS

Cash and cash equivalents -$ -$ -$ -$ -$ -$ Receivables:

Incremental property taxes 180 - - 70 21 58 Grants - 121 - - 230 - Accrued interest - 1 - - - - Other, net of uncollectibles of $196 - - - - - -

Due from other funds 11,005 46,186 426 2,873 3,297 1,424 Loans receivable, net of allowance for market value write-downs and uncollectibles of $559,899 723 856 - 74 439 - Restricted assets 2,184 4,190 - 540 294 174 Advances to other funds - - - - - - Other assets - - - - - -

Total assets 14,092$ 51,354$ 426$ 3,557$ 4,281$ 1,656$


Liabilities:Accounts payable and accrued liabilities 16$ 816$ -$ 20$ 63$ -$ Due to other funds - 378 - - 231 3 Advances from other funds - - - 329 - - Deferred revenue 723 856 - 74 439 - Other liabilities 126 4,000 - 67 13 65

Total liabilities 865 6,050 - 490 746 68


Debt service 2,184 2,547 - 533 294 172 Low and moderate-income housing activities 525 15,427 426 630 602 756 Advances to other funds - - - - - - Encumbrances 512 10,617 - 15 298 178

Unreserved, designated for continuingwork programs 10,006 16,713 - 1,889 2,341 482

Total fund balances 13,227 45,304 426 3,067 3,535 1,588

Total liabilities and fund balances 14,092$ 51,354$ 426$ 3,557$ 4,281$ 1,656$

Continued...





Governmental Funds


-86-

Western/ Wilshire/Slauson Westlake Koreatown Other Total

ASSETS

Cash and cash equivalents -$ -$ 1$ 2,052$ 2,130$ Receivables:

Incremental property taxes 119 181 445 - 9,532 Grants - 442 - 1,720 4,703 Accrued interest - - 3 - 13 Other, net of uncollectibles of $196 - - - 329 626

Due from other funds 5,255 17,501 58,840 11,516 485,831 Loans receivable, net of allowance for market value write-downs and uncollectibles of $559,899 18 871 1,177 11,952 84,225 Restricted assets 333 3,089 15,066 - 115,652 Advances to other funds - - - 10,653 11,153 Other assets - - - 121 1,025

Total assets 5,725$ 22,084$ 75,532$ 38,343$ 714,890$


Liabilities:Accounts payable and accrued liabilities 72$ 127$ 60$ 164$ 3,290 Due to other funds - 442 - 2,992 7,960 Advances from other funds 432 315 525 - 8,555

Deferred revenue 18 887 1,177 14,827 88,158 Other liabilities 87 338 1,291 1,712 18,914

Total liabilities 609 2,109 3,053 19,695 126,877


Debt service 334 3,089 8,034 - 92,209 Low and moderate-income housing activities 1,485 4,774 5,452 - 111,806 Advances to other funds - - - 11,153 11,153 Encumbrances 418 1,294 2,078 3,332 68,360

Unreserved, designated for continuingwork programs 2,879 10,818 56,915 4,163 304,485

Total fund balances 5,116 19,975 72,479 18,648 588,013

Total liabilities and fund balances 5,725$ 22,084$ 75,532$ 38,343$ 714,890$





Governmental Funds


-87-

CentralAdelante Beacon Broadway/ Bunker Business CentralEastside Street Manchester Hill District Industrial

Revenues:Incremental property taxes 6,267$ 1,742$ 638$ 33,791$ -$ 4,057$Grants - - - 1,664 71 -Interest income 244 43 42 2,649 400 736Proceeds from sale of land - - - - - -Loan repayments 2 - - 650 259 -Rental income 6 - - 12 26 -Developer participation - - - - - 100City participation 520 85 351 947 - 348Other - 12 - 3 - 88

Total revenues 7,039 1,882 1,031 39,716 756 5,329


Program salaries and administrative costs,including technical and professional personnel 3,403 236 337 1,968 377 1,178

Real estate and other acquisition costs 7,190 - - 30 6 1,464Housing 182 197 12 5,373 900 -Rehabilitation 6 - - - 41 -Public improvement 159 8 100 2,103 8,273 -Relocation - - - 65 12 -Development loans - - - 12,245 1,269 -Community service 14 82 - 10 40 -Tax increment administrative fees 170 31 16 502 - 119Other 498 17 8 561 598 846

Debt service:Principal 151 370 52 7,265 - -Interest expense 1,481 498 110 14,933 39 -

Total expenditures 13,254 1,439 635 45,055 11,555 3,607Revenues over (under) expenditures (6,215) 443 396 (5,339) (10,799) 1,722

Other financing sources (uses):Issuance of long-term debt - - - - - 1,921Proceeds from limited recourse obligations - - - - - -Transfers in 7,834 1,474 341 48,520 635 3,239Transfers out (3,814) (1,197) (607) (49,061) - (4,139)

Total other financing sources (uses) 4,020 277 (266) (541) 635 1,021Net change in fund balances (2,195) 720 130 (5,880) (10,164) 2,743Fund balances, beginning of year 14,976 2,524 1,823 78,965 18,205 14,672Fund balances, end of year 12,781$ 3,244$ 1,953$ 73,085$ 8,041$ 17,415$

Continued...


Fund Balances - By Redevelopment Project Area



Governmental Funds

Combined Schedule of Revenues, Expenditures, and Changes in

-88-

EastHollywood/

City Council Crenshaw/ Beverly-Chinatown Center District 9 Crenshaw Slauson Normandie

Revenues:Incremental property taxes 5,743$ 4,066$ 12,100$ 858$ 1,150$ 5,655$Grants - 216 981 2,000 - 224Interest income 229 192 711 19 69 367Proceeds from sale of land - - 2,360 - - -Loan repayments 15 - - - - -Rental income 1 - - - - -Developer participation - - - 529 - -City participation - 549 1,000 32 96 466Other 310 41 9 7 5 -

Total revenues 6,298 5,064 17,161 3,445 1,320 6,712Expenditures:

Current:Program salaries and administrative costs,

including technical and professional personnel 1,607 2,384 2,944 984 405 938Real estate and other acquisition costs 6 19 2,476 11,770 3 13Housing 203 - 2,264 - 6 199Rehabilitation 71 - 197 - 16 20Public improvement 10 345 992 - - 208Relocation - - 308 330 120 -Development loans 2,500 276 2,504 - - -Community service 10 388 250 - - -Tax increment administrative fees 100 462 256 45 26 188Other 727 731 3,135 494 6 199

Debt service:Principal 1,035 - 501 1,022 63 313Interest expense 126 - 1,700 306 314 642

Total expenditures 6,395 4,605 17,527 14,951 959 2,720Revenues over (under) expenditures (97) 459 (366) (11,506) 361 3,992

Other financing sources (uses):Issuance of long-term debt - - - - -Proceeds from limited recourse obligations - - - 9,710 - -Transfers in 2,554 1,793 6,043 2,426 820 2,728Transfers out (2,864) (2,005) (6,286) (615) (757) (3,115)

Total other financing sources (uses) (310) (212) (243) 11,521 63 (387)Net change in fund balances (407) 247 (609) 15 424 3,605Fund balances, beginning of year 13,832 10,897 19,963 1,115 3,911 17,534Fund balances, end of year 13,425$ 11,144$ 19,354$ 1,130$ 4,335$ 21,139$

Continued...


Fund Balances - By Redevelopment Project Area - (Continued)



Governmental Funds


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Exposition/University Laurel Little Los Angeles Mid-City

Park Hollywood Canyon Tokyo Harbor RecoveryRevenues:

Incremental property taxes 2,976$ 31,780$ 1,954$ 3,865$ 1,600$ 4,624$Grants 46 - - - - -Interest income 145 1,113 142 173 47 180Proceeds from sale of land - - - - - -Loan repayments - - 1 60 - -Rental income 8 345 - - 55 9Developer participation - 711 - - - -City participation 253 1,521 169 118 41 395Other - - - 92 - -



including technical and professional personnel 953 3,636 769 670 1,041 712Real estate and other acquisition costs 3,416 36 18 - 12 6,450Housing 254 20 2,246 - - 4Rehabilitation 401 695 - 279 - -Public improvement - 32 - 6 15 1,220Relocation - 28 - 2,000 25 90Development loans 43 7,545 - - - -Community service - 356 - 30 - -Tax increment administrative fees 75 768 41 73 26 100Other 144 2,346 132 7 186 406

Debt service:Principal 420 2,691 102 915 434 123Interest expense 442 4,106 383 701 137 931

Total expenditures 6,148 22,259 3,691 4,681 1,876 10,036Revenues over (under) expenditures (2,720) 13,211 (1,425) (373) (133) (4,828)

Other financing sources (uses):Issuance of long-term debt - - - - - -Proceeds from limited recourse obligations - - - - - -Transfers in 2,077 18,988 1,119 2,676 1,251 7,283Transfers out (2,470) (19,783) (1,223) (2,805) (1,059) (2,972)

Total other financing sources (uses) (393) (795) (104) (129) 192 4,311Net change in fund balances (3,113) 12,416 (1,529) (502) 59 (517)Fund balances, beginning of year 8,359 51,738 8,925 11,761 2,761 12,337Fund balances, end of year 5,246$ 64,154$ 7,396$ 11,259$ 2,820$ 11,820$

Continued...





Governmental Funds


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Pacoima/Monterey North Pacific Panorama Pico

Hills Normandie 5 Hollywood Corridor City Union 1Revenues:

Incremental property taxes 3,792$ 2,487$ 16,212$ 3,291$ 18,381$ 1,335$Grants - - 195 - 192 -Interest income 211 171 504 172 960 66Proceeds from sale of land - - - - - -Loan repayments 25 324 102 - - 21Rental income - - 111 - - -Developer participation - - 10 - 637 -City participation 115 124 - 272 1,521 30Other - - - - 6 -



including technical and professional personnel 798 695 2,699 1,128 3,600 400Real estate and other acquisition costs - 920 13 5 23 6Housing 2,309 374 3,587 101 7,192 -Rehabilitation - - 45 270 45 99Public improvement 692 - 6,858 310 1,059 311Relocation - - - - - -Development loans - - - - - 313Community service - - 1 - - 5Tax increment administrative fees 61 45 292 60 347 32Other 63 263 1,610 99 925 135

Debt service:Principal 1,025 655 1,325 65 682 460Interest expense 605 323 2,061 328 1,102 246

Total expenditures 5,553 3,275 18,491 2,366 14,975 2,007Revenues over (under) expenditures (1,410) (169) (1,357) 1,369 6,722 (555)

Other financing sources (uses):Issuance of long-term debt - - - - - -Proceeds from limited recourse obligations - - - - - -Transfers in 2,746 1,967 8,503 1,435 7,654 1,088Transfers out (2,889) (2,095) (8,791) (1,522) (8,367) (1,322)

Total other financing sources (uses) (143) (128) (288) (87) (713) (234)Net change in fund balances (1,553) (297) (1,645) 1,282 6,009 (789)Fund balances, beginning of year 9,986 7,700 35,757 8,438 46,062 3,957Fund balances, end of year 8,433$ 7,403$ 34,112$ 9,720$ 52,071$ 3,168$

Continued...





Governmental Funds


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Pico Reseda/ Rodeo/ Vermont/ WattsUnion 2 Canoga Park La Cienega Manchester Watts Corridors

Revenues:Incremental property taxes 2,943$ 18,402$ -$ 752$ 503$ 747$Grants - 260 - - 128 -Interest income 292 841 8 58 269 29Proceeds from sale of land - - - - - -Loan repayments 3 1 - - 175 -Rental income - - - - 323 -Developer participation - - - - - -City participation 121 1,530 - 64 14 59Other - 1 - 10 26 -

Total revenues 3,359 21,035 8 884 1,438 835Expenditures:


including technical and professional personnel 728 4,062 - 562 1,263 1,035Real estate and other acquisition costs - 12,080 - 8,873 - 178Housing - 1,366 - - 1 -Rehabilitation 5 251 - - - -Public improvement 60 1,196 - - 197 -Relocation - 17 - 10 - -Development loans 4,887 3,400 - - - -Community service 16 119 - - - -Tax increment administrative fees 57 401 - 20 9 19Other 166 496 - 231 469 183

Debt service:Principal 375 821 - 40 55 10Interest expense 605 1,629 - 234 90 80

Total expenditures 6,899 25,838 - 9,970 2,084 1,505Revenues over (under) expenditures (3,540) (4,803) 8 (9,086) (646) (670)

Other financing sources (uses):Issuance of long-term debt - - - - - -Proceeds from limited recourse obligations - - - - - -Transfers in 2,144 8,245 - 9,164 304 1,165Transfers out (2,551) (8,749) - (560) (535) (333)

Total other financing sources (uses) (407) (504) - 8,604 (231) 832Net change in fund balances (3,947) (5,307) 8 (482) (877) 162Fund balances, beginning of year 17,174 50,611 418 3,549 4,412 1,426Fund balances, end of year 13,227$ 45,304$ 426$ 3,067$ 3,535$ 1,588$

Continued...





Governmental Funds


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Western/ Wilshire/Slauson Westlake Koreatown Other Total

Revenues:Incremental property taxes 1,412$ 5,074$ 19,671$ -$ 217,868$Grants - 207 - 3,976 10,160Interest income 93 383 1,343 556 13,457Proceeds from sale of land - - - - 2,360Loan repayments - - - 90 1,728Rental income - - - 3,977 4,873Developer participation - - - - 1,987City participation 116 422 1,625 - 12,904Other - - - 494 1,104

Total revenues 1,621 6,086 22,639 9,093 266,441Expenditures:


including technical and professional personnel 372 1,394 2,490 129 45,897Real estate and other acquisition costs 340 7 7,667 14 63,035Housing 4 798 3,218 3,813 34,623Rehabilitation - 26 4 - 2,471Public improvement 4 838 100 24 25,120Relocation - 286 88 - 3,379Development loans - 2,300 4,475 - 41,757Community service - 4 - 700 2,025Tax increment administrative fees 35 125 436 - 4,937Other 247 457 866 213 17,464

Debt service:Principal 66 154 249 - 21,439Interest expense 173 1,371 2,402 95 38,193

Total expenditures 1,241 7,760 21,995 4,988 300,340Revenues over (under) expenditures 380 (1,674) 644 4,105 (33,899)

Other financing sources (uses):Issuance of long-term debt - - - - 1,921Proceeds from limited recourse obligations - - - - 9,710Transfers in 695 3,632 11,165 20,737 192,445Transfers out (778) (3,913) (12,089) (33,179) (192,445)

Total other financing sources (uses) (83) (281) (924) (12,442) 11,631Net change in fund balances 297 (1,955) (280) (8,337) (22,268)Fund balances, beginning of year 4,819 21,930 72,759 26,985 610,281Fund balances, end of year 5,116$ 19,975$ 72,479$ 18,648$ 588,013$





Governmental Funds


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Date of Maturity Interest Original BalanceIssue Date Rate Issue Outstanding

Demand Certificates of ParticipationBroadway-Spring Center Project 7/15/1987 7/1/2012 Variable 14,700$ 4,600$

Multifamily Housing Revenue Bonds, 1989 Series AAcademy Village Apartments Project 10/26/1989 10/1/2019 Variable 23,000 20,000

Multifamily Housing Revenue Note, 1999 Series AWestern/Slauson Amistad Plaza(note size increased by $500,000 in May 2002) 6/1/1999 1/1/2031 Variable/fixed 4,989 1,641

Multifamily Housing Revenue Note, 1999 Series AGrandview Nine Family Housing 6/1/1999 1/1/2031 Variable/fixed 4,711 1,984

Multifamily Housing Revenue Refunding Bonds,Series 2000, Promenade Towers Project 4/1/2000 4/1/2030 Variable/fixed 47,550 47,550

Multifamily Housing Revenue Bonds, Series 2001A 8/13/2001 12/15/2034Security Building Project (tax-exempt) Variable 13,500 10,245

Multifamily Housing Revenue Refunding BondsSeries 2002, Grand Promenade Project - (Freddie Mac Credit Enhanced) 4/17/2002 4/1/2032 Variable 43,000 43,000

Qualified Redevelopment Bonds, 2002 Refunding Series A - Grand Central Square 4/15/2002 12/1/2026 2.50% - 5.375% 20,825 17,805 1/

Multifamily Housing Revenue Bonds, Series 2002 12/20/2002 1/20/2045Pico Union Scattered-Site Preservation Apartments 4.75% - 5.10% 16,895 16,895

Multifamily Housing Revenue Bonds, 2003 Series AViews at 270 11/21/2003 9/1/2019 Variable 8,007 1,686

Multifamily Housing Revenue Bonds, Series 2003ASecond and Central Apartments Project 12/12/2003 12/1/2038 Variable 26,665 26,650

Multifamily Housing Revenue Bonds, Series 2003BSecond and Central Apartments Project 12/12/2003 12/1/2038 Variable 955 955

Continued…


(remarketed on 6/25/2002)

(remarketed on 2/27/2004)

(In Thousands)


Schedule of Third-Party Indebtedness

June 30, 2009

Description

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Multifamily Housing Revenue BondsWilshire Station ApartmentsSeries 2003A 11/1/2003 10/15/2038 1.15% 75,175 75,175 Series 2003B (taxable) 11/1/2003 10/15/2038 1.30% 9,825 9,825

Multifamily Housing Revenue Bonds, Series 2002-TPico Union Scattered-Site Preservation Apartments 2/27/2004 7/20/2019 5.39% 3,000 2,375

Multifamily Housing Revenue Bonds, Series 2004AWilshire Station Apartments 10/28/2004 10/15/2038 Variable 10,000 10,000

Multifamily Housing Revenue BondsMetropolitan Apartments (remarketed on 8/1/2005and renamed from Skyline 1985 to Metropolitan) 8/1/2005 12/15/2024 Variable 28,400 28,400

Multifamily Housing Revenue Bonds, 2005 Series AVilla del Sol Apartments 12/1/2005 5/1/2047 5.50% 8,782 8,649

Lease Revenue Bonds, Series 2005Vermont Manchester Social Services Project 7/28/2005 9/1/2037 5.00% 98,920 97,425

Multifamily Housing Revenue Bonds, 2006 Series AThe Alexandria 8/1/2006 5/1/2047 5.50% 35,000 25,900

Multifamily Housing Revenue Bonds, 2006 Series A-1Osborne Gardens Apartments 10/5/2006 4/1/2038 6.12% 1,050 1,039 2/

Multifamily Housing Revenue BondsWilshire Station ApartmentsSeries 2006A 12/22/2006 10/15/2038 Variable 27,000 27,000 Series 2006B (taxable) 12/22/2006 10/15/2038 Variable 9,500 9,500

Multifamily Housing Revenue Bonds2007 Series A-1Central Avenue Villa Apartments 4/30/2007 4/1/2010 Variable 494 489

Continued…


Description


(In Thousands)

Schedule of Third-Party Indebtedness - (Continued)

June 30, 2009

-95-


Variable Rate Demand Multifamily HousingRevenue Bonds 2007 Series AHollywood & Vine Apartments 5/3/2007 4/15/2042 Variable 180,000 180,000

Multifamily Housing Revenue Refunding Bonds2007 Series BGrand Central Square 6/21/2007 12/1/2026 4.00-5.00% 8,615 7,960 1/

Multifamily Housing Revenue Bonds2007 Series AWestminster Park Plaza Apartments 9/5/2007 8/1/2045 5.75% 10,990 10,990

Senior Multifamily Revenue BondsVan Nuys Apartments2007 Series A-1 12/20/2007 6/1/2038 Variable Rate 12,500 12,410 2007 Series A-2 6/1/2048 Variable Rate 12,500 12,500

Multifamily Housing Revenue Bonds, Series 2008AAngelus Plaza Phase I Apartments Project 10/17/2008 4/1/2042 6.45% 65,650 65,650

Multifamily Housing Revenue Bonds, Series 2008AAngelus Plaza North Apartments Project 10/17/2008 4/1/2042 6.45% 30,095 30,095

Multifamily Housing Revenue Bonds, Series 2008AHollywood Bungalow Courts Apartments 11/21/2008 8/31/2030 5.95-6.20% 12,549 4,523 2/

Multifamily Housing Revenue Bonds, Series 2008AAlexandria House Apartments 11/25/2008 6/1/2010 Variable 3,500 2,757 2/

868,342$ 815,673$

1/ Bonds are 100% secured by Proposition A sales tax revenues received by the MTA.

2/ Bonds are "draw down" bonds - i.e., they operate like a regular construction loan and start with a zero balance that grows to the full amount of the bonds as funds are advanced.


Total

Description

(In Thousands)


Schedule of Third-Party Indebtedness - (Continued)

June 30, 2009

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D-1

APPENDIX D

FORM OF CONTINUING DISCLOSURE AGREEMENT

This Continuing Disclosure Agreement, dated as of ________, 2010 (the “Disclosure Agreement”) is executed and delivered by the Community Redevelopment Agency of the City of Los Angeles, California (the “CRA/LA”), in connection with the issuance of its $8,980,000 aggregate principal amount of (Reseda/Canoga Park Project Area) Tax Allocation Bonds, Series D (Taxable) (the “Series D Bonds”) and $11,020,000 aggregate principal amount of (Reseda/Canoga Park Project Area) Tax Allocation Bonds, Series E (Tax-Exempt) (the “Series E Bonds,” and together with the Series D Bonds, the “Bonds”). The Bonds are issued pursuant to a Fiscal Agent Agreement, dated as of October 1, 2010 (the “Fiscal Agent Agreement”), by and between the CRA/LA and U.S. Bank National Association, as fiscal agent (the “Fiscal Agent”). The Bonds are issued pursuant to the Constitution of the State of California (the “State”) and the Community Redevelopment Law (Part 1 of Division 24 of the Health and Safety Code of the State, as amended) (the “Redevelopment Law”). The proceeds of the Bonds are being used by the CRA/LA to provide funds to finance redevelopment activity within the Reseda/Canoga Park Project Area (the “Project Area”). In connection therewith, the CRA/LA, the Fiscal Agent and U.S. Bank National Association, as Dissemination Agent (the “Dissemination Agent”) covenant and agree as follows:

SECTION 1. Purpose of the Disclosure Agreement. This Disclosure Agreement is being executed and delivered by the CRA/LA, the Dissemination Agent and the Trustee for the benefit of the Holders and Beneficial Owners of the Bonds and in order to assist the Participating Underwriter in complying with Securities and Exchange Commission Rule 15c2-12(b)(5).

SECTION 2. Definitions. In addition to the definitions set forth in the Fiscal Agent Agreement, which apply to any capitalized term used in this Disclosure Agreement unless otherwise defined in this Section, the following capitalized terms shall have the following meanings:

“Annual Report” means any Annual Report provided by the CRA/LA pursuant to, and as described in, Sections 3 and 4 of this Disclosure Agreement.

“Beneficial Owner” shall mean any person that has the power, directly or indirectly, to vote or consent with respect to or to dispose of ownership of any Bonds (including persons holding Bonds through nominees, depositories or other intermediaries).

“Dissemination Agent” means U.S. Bank, National Association, or any successor Dissemination Agent designated in writing by the CRA/LA and which has filed with the CRA/LA and the Fiscal Agent a written acceptance of such designation.

“Holder” or “Holders” shall mean registered owners of the Bonds.

“Listed Events” means any of the events listed in Section 5(a) of this Disclosure Agreement.

“MSRB” shall mean the Municipal Securities Rulemaking Board, or any other entity designated or authorized by the Securities and Exchange Commission to receive reports pursuant to the Rule. Until otherwise designated by the MSRB or the Securities and Exchange Commission, filings with the MSRB are to be made through the Electronic Municipal Market Access (EMMA) website of the MSRB, currently located at http://emma.msrb.org.

“Official Statement” means the Official Statement, dated October 26, 2010, relating to the Bonds.

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“Participating Underwriter” means any of the original purchasers of the Bonds required to comply with the Rule in connection with the offering of the 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 CRA/LA shall provide or shall cause the Dissemination Agent to provide to MSRB an Annual Report which is consistent with the requirements of Section 4 of this Disclosure Agreement by not later than eight months after the end of the CRA/LA’s fiscal year in each year commencing with the report for 2010-11 fiscal year. Not later than fifteen (15) Business Days prior to said date, the CRA/LA shall provide the Annual Report to the Dissemination Agent (if other than the CRA/LA). 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 Agreement; provided that the audited financial statements of the CRA/LA 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 CRA/LA’s fiscal year changes, the CRA/LA, upon becoming aware of such change, shall give notice of such change in the same manner as for a Listed Event under Section 5(f). The CRA/LA shall provide written certification with each Annual Report furnished to the Dissemination Agent to the effect that such Annual Report constitutes the Annual Report required to be furnished by it hereunder. The Dissemination Agent may conclusively rely upon such certification of the CRA/LA and shall have no duty or obligation to review such Annual Report.

(b) If by fifteen (15) Business Days prior to the date specified in subsection (a) for providing the Annual Report to the MSRB, the Dissemination Agent has not received a copy of the Annual Report, the Dissemination Agent shall contact the CRA/LA to determine if the CRA/LA is in compliance with subsection (a).

(c) If the Dissemination Agent is unable to verify that an Annual Report has been provided to the MSRB by the date required in subsection (a), the Dissemination Agent shall provide to the MSRB (with a copy to the Fiscal Agent) a notice, in substantially the form attached as Exhibit A. In lieu of filing the notice as described in the proceeding sentence, the CRA/LA or the Dissemination Agent may file such notice solely with the MSRB.

(d) The Dissemination Agent shall (if the Dissemination Agent is other than the CRA/LA), file a report with the CRA/LA certifying that the Annual Report has been provided to the MSRB pursuant to this Disclosure Agreement.

SECTION 4. Content of Annual Reports. The CRA/LA’s Annual Report shall be in a format suitable for filing with the MSRB and shall contain or incorporate by reference historical quantitative date concerning the Project Area (as defined in the Official Statement), including the following:

(a) the CRA/LA’s audited financial statements prepared in accordance with generally accepted accounting principles as promulgated to apply to governmental entities from time to time by the Governmental Accounting Standards Board, and as further modified according the applicable State law; however, if the CRA/LA’s audited financial statements are not available by the time the Annual Report is required to be filed pursuant to Section 3(a), then the Annual Report shall contain unaudited financial statements in a format similar to the usual format utilized by the CRA/LA, and the audited financial statements shall be filed in the same manner as the Annual Report when they become available; and

D-3

(b) the information contained in the final Official Statement under the captions “THE PROJECT AREA” and “PROJECTED TAX REVENUES AND ANNUAL DEBT SERVICE FOR THE BONDS” shall be revised to reflect the prior fiscal year’s actual results for the Project Area.

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 CRA/LA or related public entities, which are available to the public from the MSRB website. If the document included by reference is a final official statement, it must be available from the MSRB. The CRA/LA shall clearly identify each such other document so included by reference.

Each Annual Report shall state on the cover that is being filed with respect to the Bonds.

SECTION 5. Reporting of Significant Events.

(a) Pursuant to the provisions of this Section 5, the CRA/LA shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Bonds, if material:

1. Principal and interest payment delinquencies.

2. Non-payment related defaults.

3. Unscheduled draws on debt service reserves reflecting financial difficulties.

4. Unscheduled draws on credit enhancements reflecting difficulties.

5. Substitution of credit or liquidity providers, or their failure to perform.

6. Adverse tax opinions or events affecting the tax-exempt status of the security.

7. Modifications to rights of security holders.

8. Bond calls.

9. Defeasances.

10. Release, substitution or sale of property securing repayment of the Bonds.

11. Rating changes.

(b) Promptly after obtaining actual knowledge of the occurrence of any of the Listed Events at the principal corporate trust office of the Fiscal Agent, the Fiscal Agent shall contact the CRA/LA at its notice address in this Disclosure Agreement, inform such person of the event, and request that the CRA/LA promptly notify the Fiscal Agent in writing whether or not to report the event pursuant to subsection (f). For purposes of this Disclosure Agreement, “actual knowledge” of the occurrence of such Listed Events shall mean actual knowledge by a responsible officer at the corporate trust office of the Fiscal Agent with regular responsibility for providing Fiscal Agent services for the Bonds.

(c) Whenever the CRA/LA obtains knowledge of the occurrence of a Listed Event, whether because of a notice from the Fiscal Agent pursuant to subsection (b) or otherwise, the CRA/LA shall,

D-4

within five (5) Business Days, determine if such event would constitute material information for Holders of Bonds within the meaning of the federal securities laws.

(d) If the CRA/LA determines that knowledge of the occurrence of a Listed Event would be material under applicable Federal securities law, the CRA/LA shall notify the Fiscal Agent promptly in writing. Such notice shall instruct the Fiscal Agent to report the occurrence pursuant to subsection (f). Notwithstanding the foregoing, notice of Listed Events described in subsections (a)(8) and (9) need not be given under this subsection any earlier than the notice (if any) of the underlying event is given to Holders of affected Bonds pursuant to the Fiscal Agent Agreement.

(e) If in response to a request under subsection (b), the CRA/LA determines that the Listed Event would not be material, the CRA/LA shall so notify the Fiscal Agent in writing and instruct the Fiscal Agent not to report the occurrence.

(f) If the Fiscal Agent has been instructed by the CRA/LA to report the occurrence of a Listed Event, the Fiscal Agent shall file or request the Dissemination Agent (if other than the Fiscal Agent) to file a notice of such occurrence with the MSRB. Notwithstanding the foregoing, notice of Listed Events described in subsections (a)(8) and (9) need not be given under this subsection any earlier than the notice (if any) of the underlying event is given to Holders of affected Bonds pursuant to the Fiscal Agent Agreement.

SECTION 6. Termination of Reporting Obligation. The CRA/LA’s, the Fiscal Agent’s and the Dissemination Agent’s obligations under this Disclosure Agreement shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Bonds. If such termination occurs prior to the final maturity of the Bonds, the CRA/LA shall give notice of such termination in the same manner as for a Listed Event under Section 5(f) hereof.

SECTION 7. Dissemination Agent. The CRA/LA may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Agreement, and may discharge any such Dissemination Agent, with or without appointing a successor Dissemination Agent. The initial Dissemination Agent shall be the Fiscal Agent. The Dissemination Agent may resign as Dissemination Agent by providing thirty days written notice to the CRA/LA and the Fiscal Agent. The Dissemination Agent shall not be responsible for the content of any report or notice prepared by the CRA/LA. 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 CRA/LA in a timely manner and in a form suitable for filing.

SECTION 8. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Agreement, the CRA/LA may amend this Disclosure Agreement, and any provision of this Disclosure Agreement may be waived, provided that the following conditions are satisfied:

(a) if the amendment or waiver relates to the provisions of Sections 3(a), 4 or 5(a), it may only be made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature or status of an obligated person with respect to the Bonds, or the type of business conducted;

(b) the undertakings herein, as proposed to be amended or waived, in the opinion of nationally recognized bond counsel, would have complied with the requirements of the Rule at the time of the primary offering of the Bonds, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and

D-5

(c) the proposed amendment or waiver either (i) is approved by the Holders of the Bonds in the manner provided in the Fiscal Agent Agreement for amendments to the Fiscal Agent Agreement with the consent of Holders, or (ii) in the opinion of the Fiscal Agent or nationally recognized bond counsel, does not materially impair the interests of the Holders or Beneficial Owners of the Bonds.

If the annual financial information or operating data to be provided in the Annual Report is amended pursuant to the provisions hereof, the first annual financial information filed pursuant hereto containing the amended operating data or financial information shall explain, in narrative form, the reasons for the amendment and the impact of the change in the type of operating data or financial information being provided.

If an amendment is made to the undertaking specifying the accounting principles to be followed in preparing financial statements, the annual financial information for the year in which the change is made shall present a comparison between the financial statements or information prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. The comparison shall include a qualitative discussion of the differences in the accounting principles and the impact of the change in the accounting principles on the presentation of the financial information, in order to provide information to investors to enable them to evaluate the ability of the CRA/LA 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(c).

SECTION 9. Additional Information. Nothing in this Disclosure Agreement shall be deemed to prevent the CRA/LA from disseminating any other information, using the means of dissemination set forth in this Disclosure Agreement or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Agreement. If the CRA/LA 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 Agreement, the CRA/LA shall have no obligation under this Disclosure Agreement 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 CRA/LA to comply with any provision of this Disclosure Agreement, any Holder or Beneficial Owner of the Bonds or the Fiscal Agent may (and, at the request of any Participating Underwriter or the Holders of at least 25% aggregate principal amount of Outstanding Bonds, the Fiscal Agent shall) take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the CRA/LA to comply with its obligations under this Disclosure Agreement. A default under this Disclosure Agreement shall not be deemed an Event of Default under the Fiscal Agent Agreement, and the sole remedy under this Disclosure Agreement in the event of any failure of the CRA/LA to comply with this Disclosure Agreement shall be an action to compel performance.

Such a failure must be reported in accordance with the Rule and must be considered by any broker, dealer or municipal securities dealer before recommending the purchase or sale of the Bonds in the secondary market. Consequently, such a failure may adversely affect the transferability and liquidity of the Bonds and their market price.

SECTION 11. Duties, Immunities and Liabilities of Dissemination Agent. The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Agreement, and the CRA/LA agrees to indemnify and hold harmless the Dissemination Agent, its officers, directors, employees and agents, against any loss, expense and liabilities which the

D-6

Dissemination Agent may incur arising out of or in the exercise or performance of its powers end duties hereunder, including the costs and expenses (including attorneys’ fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent’s negligence or willful misconduct. The Dissemination Agent shall be paid compensation by the CRA/LA for its services provided hereunder in accordance with its schedule of fees as amended from time to time and shall be reimbursed for all expenses, legal fees and advances made or incurred by the Dissemination Agent in the performance of its duties hereunder. The Dissemination Agent shall have no duty or obligation to review any information provided to it hereunder and shall not be deemed to be acting in any fiduciary capacity for the CRA/LA, the Holders, or any other party. Other than in the case of negligence or willful misconduct of the Dissemination Agent, the Dissemination Agent shall not have any liability to the Holders or any other party for any monetary damages or financial liability of any kind whatsoever related to or arising from any breach of any obligation of the Dissemination Agent. The obligations of the CRA/LA under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Bonds.

SECTION 12. Compensation.

The Dissemination Agent and the Fiscal Agent shall be paid compensation by the CRA/LA for its services provided hereunder in accordance with its schedule of fees as amended from time to time and all expenses, legal fees, costs, and advances incurred by the Dissemination Agent hereunder. The Dissemination Agent shall have no duty or obligation to review any information provided to it hereunder and shall not be deemed to be acting in any fiduciary capacity for the CRA/LA, the Holders or any other party.

SECTION 13. Notices. Any notices given hereunder shall be given in writing at the addresses (including the facsimile numbers set forth below):

If to the CRA/LA: The Community Redevelopment Agency of the City of Los Angeles, California 1200 West 7th Street, 5th Floor Los Angeles, California 90017 Attention: Chief Financial Officer

Fiscal Agent/ Dissemination Agent:

U.S. Bank National Association 633 West Fifth Street, 24th Fl. Los Angeles, California 90071 Attention: Corporate Trust Services

SECTION 14. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit of

the CRA/LA, the Fiscal Agent, the Dissemination Agent, the Participating Underwriter and Holders and Beneficial Owners from time to time of the Bonds, and shall create no rights in any other person or entity.

SECTION 15. Merger.

Any person succeeding to all or substantially all of the Dissemination Agent’s corporate trust business shall be the successor Dissemination Agent without the filing or execution of any paper or further act.

SECTION 16. Counterparts. This Disclosure 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.

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SECTION 17. Severability. In case anyone 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.

IN WITNESS WHEREOF, the parties hereto have caused this Disclosure Agreement to be executed on the day and year first above written.

THE COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF LOS ANGELES, CALIFORNIA By:________________________________________ Authorized Officer

Approved as to Form: CARMEN A TRUTANICH, City Attorney

Assistant City Attorney

U.S. BANK NATIONAL ASSOCIATION, as Dissemination Agent By:________________________________________ Authorized Officer

U.S. BANK NATIONAL ASSOCIATION, as Fiscal Agent By:________________________________________ Authorized Officer

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EXHIBIT A

NOTICE TO MSRB OF FAILURE TO FILE ANNUAL REPORT

Name of Issuer: Community Redevelopment Agency of the City of Los Angeles, California

Name of Bond Issues: $8,980,000 (Reseda/Canoga Park Project Area) Tax Allocation Bonds, Series D (Taxable)

$11,020,000 (Reseda/Canoga Park Project Area) Tax Allocation Bonds, Series E (Tax-Exempt)

Date of Issuance: _________, 2010

NOTICE IS HEREBY GIVEN to the MSRB that the CRA/LA has not provided an annual Disclosure Report with respect to the above-named Bonds as required by the Disclosure Agreement, dated as of ____________, 2010, by the CRA/LA and accepted by U.S. Bank National Association, as Dissemination Agent. The CRA/LA anticipates that the annual Disclosure Report will be filed by __________________.

Dated:_______________

U.S. BANK NATIONAL ASSOCIATION, as Dissemination Agent

By: _________________________________________

Its: _________________________________________

APPENDIX E

PROPOSED FORMS OF BOND COUNSEL OPINION

Upon the delivery of the Series D Bonds, Hawkins Delafield & Wood LLP, Bond Counsel to the CRA/LA, proposes to issue its approving opinion substantially in the following form:

_________, 2010

The Community Redevelopment Agency of the City of Los Angeles, California Los Angeles, California

Ladies and Gentlemen:

We have acted as Bond Counsel to The Community Redevelopment Agency of the City of Los Angeles, California (the “CRA/LA”) in connection with the issuance of its $8,980,000 aggregate principal amount (Reseda/Canoga Park Project Area) Tax Allocation Bonds Series D (Taxable) (the “Series D Bonds”). The Series D Bonds are issued pursuant to the Constitution and the laws of the State of California (the “State”), including the Community Redevelopment Law (Part 1 of Division 24 of the Health and Safety Code of the State) and pursuant a Fiscal Agent Agreement, dated as of October 1, 2010 (the “Fiscal Agent Agreement”) by and between the CRA/LA and U.S. Bank National Association, as fiscal agent (the “Fiscal Agent”). The Series D Bonds are being issued to (i) finance certain improvements in or benefiting the Reseda/Canoga Park Project Area of the CRA/LA (the “Project Area”), (ii) fund a portion of the Earthquake Disaster Assistance Project for Portions of Council District 3 Series D Reserve Account established under the Fiscal Agent Agreement and (iii) pay the costs of issuing the Series D Bonds. The CRA/LA will make payments of principal of and interest on the Series D Bonds solely from certain Pledged Tax Revenues to be received by the CRA/LA from the Project Area, as provided in the Fiscal Agent Agreement.

We have examined originals, or copies identified to our satisfaction as being true copies, of such records of the CRA/LA, certificates and other assurances from public officials and officers, and opinions of counsel to the CRA/LA and such other documents, opinions and matters as we have considered necessary or appropriate under the circumstances to render this opinion. In addition, we have assumed, with your approval, that all items submitted to us as originals are authentic and that all items submitted as copies conform to the originals.

We are of the opinion that:

1. The Fiscal Agent Agreement has been duly authorized, executed and delivered by the CRA/LA and, assuming the due authorization, execution and delivery by the Fiscal Agent, constitutes a legal, valid and binding limited obligation of the CRA/LA enforceable in accordance with its terms.

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2. The Series D Bonds are valid and legally binding limited obligations of the CRA/LA, payable solely in accordance with the terms of the Fiscal Agent Agreement.

3. The interest on the Series D Bonds is included in gross income for federal income tax purposes

4. The interest on the Series D Bonds is exempt from present State of California personal income taxes.

Except as stated in paragraphs 3 and 4 above, we express no opinion regarding any other federal or state tax consequences with respect to the Series D Bonds. Furthermore, we express no opinion as to the effect of any action hereafter taken or not taken in reliance upon an opinion of counsel other than ourselves on the federal income tax treatment of interest on the Series D Bonds, or under state, local and foreign tax law. This opinion is issued as of the date hereof, and we assume no obligation to update, revise or supplement this opinion to reflect any action hereafter taken or not taken, or any facts or circumstances, or any changes in law or in interpretations thereof, that may hereafter arise or occur, or for any other reason.

We undertake no responsibility for the accuracy, completeness or fairness of any official statement or other offering materials relating to the Series D Bonds and express herein no opinion relating thereto.

The foregoing opinions are qualified to the extent that the enforceability of the Series D Bonds and the Fiscal Agent Agreement may be limited by bankruptcy, moratorium, insolvency or other laws affecting creditors’ rights or remedies and are subject to general principals of equity (regardless of whether such enforceability is considered in equity or at law).

This opinion is not intended or provided by Bond Counsel to be used and cannot be used by an owner of the Series D Bonds for the purpose of avoiding penalties that may be imposed on the owner of such Series D Bonds. The opinion set forth in paragraph 3 is provided to support the promotion or marketing of the Series D Bonds. Each owner of Series D Bonds should seek advice based on its particular circumstances from an independent tax advisor.

Very truly yours,

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Upon the delivery of the Series E Bonds, Hawkins Delafield & Wood LLP, Bond Counsel to the CRA/LA, proposes to issue its approving opinion substantially in the following form:

_________, 2010

The Community Redevelopment Agency of the City of Los Angeles, California Los Angeles, California

Ladies and Gentlemen:

We have acted as Bond Counsel to The Community Redevelopment Agency of the City of Los Angeles, California (the “CRA/LA”) in connection with the issuance of its $11,020,000 aggregate principal amount (Reseda/Canoga Park Project Area) Tax Allocation Bonds Series E (Taxable) (the “Series E Bonds”). The Series E Bonds are issued pursuant to the Constitution and the laws of the State of California (the “State”), including the Community Redevelopment Law (Part 1 of Division 24 of the Health and Safety Code of the State) and pursuant a Fiscal Agent Agreement, dated as of October 1, 2010 (the “Fiscal Agent Agreement”) by and between the CRA/LA and U.S. Bank National Association, as fiscal agent (the “Fiscal Agent”). The Series E Bonds are being issued to (i) finance certain improvements in or benefiting the Reseda/Canoga Park Project Area of the CRA/LA (the “Project Area”), (ii) fund a portion of the Earthquake Disaster Assistance Project for Portions of Council District 3 Series E Reserve Account established under the Fiscal Agent Agreement and (iii) pay the costs of issuing the Series E Bonds. The CRA/LA will make payments of principal of and interest on the Series E Bonds solely from certain Pledged Tax Revenues to be received by the CRA/LA from the Project Area, as provided in the Fiscal Agent Agreement.

We have examined originals, or copies identified to our satisfaction as being true copies, of such records of the CRA/LA, certificates and other assurances from public officials and officers, and opinions of counsel to the CRA/LA and such other documents, opinions and matters as we have considered necessary or appropriate under the circumstances to render this opinion. In addition, we have assumed, with your approval, that all items submitted to us as originals are authentic and that all items submitted as copies conform to the originals.

We are of the opinion that:

1. The Fiscal Agent Agreement has been duly authorized, executed and delivered by the CRA/LA and, assuming the due authorization, execution and delivery by the Fiscal Agent, constitutes a legal, valid and binding limited obligation of the CRA/LA enforceable in accordance with its terms.

2. The Series E Bonds are valid and legally binding limited obligations of the CRA/LA, payable solely in accordance with the terms of the Fiscal Agent Agreement.

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3. Under existing statutes and court decisions and assuming continuing compliance with certain tax covenants, (i) interest on the Series E Bonds is excluded from gross income for federal income tax purposes pursuant to Section 103 of the Internal Revenue Code of 1986, as amended (the “Code”), and (ii) interest on the Series E Bonds is not treated as a preference item in calculating the alternative minimum tax imposed on individuals and corporations under the Code and is not included in the adjusted current earnings of corporations for purposes of calculating the alternative minimum tax. In rendering the opinion in this paragraph (3), we have relied upon and assumed (a) the material accuracy of the representations, statements of intention and reasonable expectations, and certifications of fact contained in the Tax Certificate delivered on the date hereof by CRA/LA (the “Tax Certificate”) with respect to the use of proceeds of the Series E Bonds and the investment of certain funds, and other matters affecting the non-inclusion of interest on the Series E Bonds in gross income for federal income tax purposes under Section 103 of the Code, and (b) compliance by CRA/LA with procedures and covenants set forth in the Tax Certificate. Under the Code, failure to comply with such procedures and covenants may cause the interest on the Series E Bonds to be included in gross income for Federal income tax purposes, retroactive to the date of issuance of the Series E Bonds, irrespective of the date on which such noncompliance occurs or is ascertained.

4. The interest on the Series E Bonds is exempt from present State of California personal income taxes.

Except as stated in paragraphs 3 and 4 above, we express no opinion regarding any other federal or state tax consequences with respect to the Series E Bonds. Furthermore, we express no opinion as to the effect of any action hereafter taken or not taken in reliance upon an opinion of counsel other than ourselves on the federal income tax treatment of interest on the Series E Bonds, or under state, local and foreign tax law. This opinion is issued as of the date hereof, and we assume no obligation to update, revise or supplement this opinion to reflect any action hereafter taken or not taken, or any facts or circumstances, or any changes in law or in interpretations thereof, that may hereafter arise or occur, or for any other reason.

We undertake no responsibility for the accuracy, completeness or fairness of any official statement or other offering materials relating to the Series E Bonds and express herein no opinion relating thereto.

The foregoing opinions are qualified to the extent that the enforceability of the Series E Bonds and the Fiscal Agent Agreement may be limited by bankruptcy, moratorium, insolvency or other laws affecting creditors’ rights or remedies and are subject to general principals of equity (regardless of whether such enforceability is considered in equity or at law).

Very truly yours,

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APPENDIX F

DTC AND BOOK-ENTRY ONLY

The information in this Appendix F concerning The Depository Trust Company, New York, New York (“DTC”) and DTC’s book-entry system has been obtained from DTC and the CRA/LA takes no responsibility for the completeness or accuracy thereof. The CRA/LA cannot and does not give any assurances that DTC, DTC Participants or Indirect Participants will distribute to the Beneficial Owners (a) payments of interest, principal or premium, if any, with respect to the Bonds, (b) certificates representing ownership interest in or other confirmation or ownership interest in the Bonds, or (c) redemption or other notices sent to DTC or Cede & Co., its nominee, as the registered owner of the Bonds, or that they will so do on a timely basis, or that DTC, DTC Participants or DTC Indirect Participants will act in the manner described in this Appendix. The current “Rules” applicable to DTC are on file with the Securities and Exchange Commission and the current “Procedures” of DTC to be followed in dealing with DTC Participants are on file with DTC.

The Depository Trust Company (“DTC”), New York, NY, will act as securities depository for The Community Redevelopment Agency of the City of Los Angeles, California (the “CRA/LA”), in connection with the issuance of the its (Reseda/Canoga Park Project Area) Tax Allocation Bonds, Series D (Taxable) (the “Series D Bonds”) and its (Reseda/Canoga Park Project Area) Tax Allocation Bonds, Series E (Tax-Exempt) (the “Series E Bonds,” and together with the Series D Bonds, the “Bonds”). The 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 each Series of the 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 (“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 the Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the 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

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Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in the Bonds, except in the event that the use of the book-entry system for the Bonds is discontinued.

To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of the Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC’s records reflect only the identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers.

Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of the Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Bonds, such as redemptions, tenders, defaults, and proposed amendments to the Bond documents. For example, Beneficial Owners of the Bonds may wish to ascertain that the nominee holding the Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them.

Redemption notices shall be sent to DTC. If less than all of the Bonds within an issue are being redeemed, DTC’s practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed.

Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to the Bonds unless authorized by a Direct Participant in accordance with DTC’s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the Issuer 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 Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy).

Redemption proceeds, distributions, and dividend payments on the Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit Direct Participants’ accounts upon DTC’s receipt of funds and corresponding detail information from the CRA/LA or the Fiscal Agent, on a 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 Fiscal Agent, or the CRA/LA, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the CRA/LA or the Fiscal Agent, disbursement of such payments to Direct

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Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants.

A Beneficial Owner shall give notice to elect to have its Bonds purchased or tendered, through its Participant, to a tender or remarketing agent, and shall effect delivery of such Bonds by causing the Direct Participant to transfer the Participant’s interest in the Bonds, on DTC’s records, to such tender or remarketing agent. The requirement for physical delivery of the Bonds in connection with an optional tender or a mandatory purchase will be deemed satisfied when the ownership rights in the Bonds are transferred by Direct Participants on DTC’s records and followed by a book-entry credit of tendered Bonds to such tender or remarketing agent’s DTC account.

DTC may discontinue providing its services as depository with respect to the Bonds at any time by giving reasonable notice to the CRA/LA or the Fiscal Agent. Under such circumstances, in the event that a successor depository is not obtained, replacement Bonds are required to be printed and delivered.

The CRA/LA may decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor securities depository). In that event, replacement Bonds 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 CRA/LA believes to be reliable, but the CRA/LA and the Original Purchaser take no responsibility for the accuracy thereof.

The CRA/LA and the Original Purchaser cannot and do not give any assurance that DTC will distribute to the Participants, or that the Participants or other will distribute to the Beneficial Owners, payment of principal, interest or purchase price, if any, on the Bonds paid or any other notices or that they will do so on a timely bases or will serve and act in the manner described in this Official Statement. The CRA/LA and the Original Purchaser are not responsible or liable for the failure of DTC or any Direct Participant or Indirect Participant to make any payments or give any notice to a Beneficial Owner with respect to the Bonds or any error or delay related thereto.

The foregoing description of DTC and the procedures and record keeping with respect to beneficial ownership interest in the Bonds, payment of principal, interest and purchase price, if any, on the Bonds to Direct Participants, Indirect Participants or Beneficial Owners, confirmation and transfer of beneficial ownership interest in such Bonds and other related transactions by and between DTC, the Direct Participants, the Indirect Participants and the Beneficial Owners is based solely on information provide by DTC, which source is believed to be reliable, but the CRA/LA and the Original Purchaser do not assume any responsibility therefor. Accordingly, no representations can be amended concerning these matters and the Direct Participants, the Indirect Participants and the Beneficial Owners should not rely on the following information with respect to such matters but should instead confirm the same with DTC or the Direct Participants or the Indirect Participants, as the case may be.




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