NEW ISSUE In tke opini.on of Jones Hall Hill & White, A Professi.onal Law Corporati.on, San Francisco, California, subie_ct, however, to cerlain 'fl!,O,lifi­

cations described herein, under existing law, the interest on tke Bonds is excluded from gross income for federal income tax pu_rpose~ arid such interest is not an item of tax preference for purposes of tke federal alternative minimum tax imposed on individuals and corpora_tions; it should _be noted, however, that such interest is taken into account in determining cerlain income and earnings for the purpose of c"!"-pu~ing the al~tive minimum tax imposed on cerlain corporations. In the further opinion of Bond Counsel, such interest is exempt from California personal income taxes. See "TAX MATl'ERS" herein.

PORT HUENEME REDEVELOPMENT AGENCY $23,410,000

Central Community Project $3,320,000

R-76 Project 1993 Tax Allocation Refunding Bonds 1993 Tax Allocation Refunding Bonds

Standard & Poor's Rating: "AAA" Standard & Poor's Rating: "BBB" Moody's Rating: "Aaa" Moody's Rating: "Baa"

AMBAC Insured Uninsured (See "RATINGS" herein) (See "RATINGS" herein)

Dated: May 1, 1993 Due: May 1, as shown below Proceeds from the sale of the Port Hueneme Redevelopment Agency Central Community Project 1993 'Tux Allocation Refunding Bonds (the

"Central Community Bonds") will be used to refund all or a portion of (i) the outstanding Port Hueneme Redevelopment Agency Central Community Redevelopment Project 'Tux Allocation Refunding Bonds, 1986 Series A (the "1986 Bonds") in accordance with the provisions of the Refunding Agreement (as defined herein), and (ii) those certain Installment Notes with Interest on Unpaid Balance, executed by the Port Hueneme Redevel­opment Agency (the "Agency") for the benefit of the City of Port Hueneme (the "City"), dated October 15, 1986, September 21, 1988, September 20, 1989 and September 191 .~990 (collectively, the "Central Community Notes"). Proceeds from the sale of the Port Hueneme Redevelopment Agency R-76 Project 1998 'Tux Allocation Refundmg Bonds (the "R-76 Bonds") will be used to refund all or portion of the Installment Note wtth Interest on Unpaid Balance, executed by the Agency for the benefit of the Cit1, dated December 18, 1985 (the "R-76 Note"). The Central Community Bonds and the R-76 Bonds are collectively referred to herein as the "Bonds' .

Interest on the Bonds will be payable on May 1 and November 1 of each year, commencing November 1, 1998 (each, an "Interest Payment Date"). The Bonds will be issued in fully registered form without coupons and will be registered in the name of Cede & Co., as nominee for The Depository Trust Company, New York, New York ("DTC"). DTC will act as securities depository for the Bonds. Purchases of beneficial interests in the Bonds will be made in book-entry form only in denominations of $5,000 or any integral multiple thereof. Purchasers of such beneficial interests will not receive physical certificates representini their interests in the Bonds. P~yment of principal, interest and premium.z if any, with respect to the Bonds will be made directly to DTC or its nommee, Cede & Co., so long as DTC or Cede & Co. is the registered owner 01 the Bonds. Disbursement of such payments to the DTC Participants (as defined herein) is the responsibility of DTC and disbursement of such payments to the Beneficial Owners (as defined herein) is the responsibility of the DTC Participants, as more fully described herein. See "fflE BONDS-Book-Entry-Only System" herein.

Interest on the Bonds will be paid by check or draft of First Interstate Bank of California, as trustee (the "Trustee"), mailed by first class mail, postage prepaid, on each Interest Payment Date to the registered owners of the Bonds at their respective addresses shown on the registration books for the Bonds as of the fifteenth (15th) day of the month prior to each Interest Paymant Date (each, a "Record Date"); provided, however, that at the written request of a registered owner of Bonds in an aggregate P,rincipal amount of at least $1,000,000, which written request is on file with the Trustee as of any Record Date, interest on such Bonds will be prud on each succeeding Interest Payment Date by wire transfer in immediately available funds to such account within the United States as shall be specified in such written request. Principal of and premium, if any, on the Bonds will be faid in lawful money of the United States by check or draft of the Trustee upon presentation and surrender thereof at the corporate trust office o the Trustee in Los Angeles, California.

The Bonds are subject to optional and mandatory redemption prior to maturity as described herein. See "fflE BONDS-Redemption" herein.

Payment of the principal of and interest on the Central Community Bonds when due will be insured by a municipal bond insurance policy to be issued by AMBAC Indemnity Corporation simultaneously with the issuance of the Bonds. See "MUNICIPAL BOND INSURANCE POLICY FOR fflE CENTRAL COMMUNITY BONDS" herein.. --

NDallll\llTY COAPOAATION

PAYMENT OF fflE PRINCIPAL OF AND INTEREST ON THE R-76 BONDS WILL NOT BE INSURED BY ANY MUNICIPAL BOND INSURANCE POLICY AND IS SECURED SOLELY BY THE REVENUES AND ASSETS PLEDGED fflEREFORE UNDER fflE R-76 INDENTURE (AS DEFINED HEREIN). SEE "SECURITY FOR fflE R-76 BONDS" HEREIN.

Payment of the principal of and interest and premium, if any, on the Central Community Bonds is secured by a first pledge and lien on (i) the Central Community Tax Revenues derived from the Central Community Project Area (as such terms are defined herein), and (ii) amounts on deposit in certain funds and accounts held by the Trustee under the Central Community Indenture (as defined herein). Payment of the principal of and interest and premium, if any, on the R-76 Bonds is secured by a first pledge and lien on (i) the R-76 Tax Revenues derived from the R-76 Project Area (as such terms are defined herein), and (ii) amounts on deposit in certain funds and accounts held by the Trustee under the R-76 Indenture.

fflE CENTRAL COMMUNITY TAX REVENUES AND MONEYS HELD BY THE TRUSTEE PURSUANT TO fflE CENTRAL COM­MUNITY INDENTURE DO NOT PROVIDE SECURITY FOR fflE R-76 BONDS. fflE R-76 TAX REVENUES AND MONEYS HELD BY THE TRUSTEE PURSUANT TO fflE R-76 INDENTURE DO NOT PROVIDE SECURITY FOR fflE CENTRAL COMMUNITY BONDS. fflE CENTRAL COMMUNITY BONDS AND fflE R-76 BONDS WILL BE ISSUED UNDER AND PURSUANT TO SEPARATE INDEN­TURES AND A DEFAULT UNDER THE CENTRAL COMMUNITY INDENTURE WILL NOT, IN ITSELF, CONSTITUTE A DEFAULT UNDER fflE R-76 INDENTURE.

THE BONDS ARE NOT A DEBT OF THE CITY OR THE STATE OF CALIFORNIA, OR ANY OF fflE STATE'S POLITICAL SUBDI­VISIONS, AND NEifflER mE CITY NOR mE STATE OF CALIFORNIA, OR ANY OF ITS POLITICAL SUBDIVISIONS, IS LIABLE mEREFORE. fflE BONDS DO NOT CONSTITUTE AN INDEBTEDNESS WlfflIN fflE MEANING OF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMITATION OR RESTRICTION. NEITHER THE MEMBERS OF fflE AGENCY NOR ANY PERSONS RESPONSI­BLE FOR fflE EXECUTION OF THE BONDS IS LIABLE PERSONALLY FOR PAYMENT OF fflE BONDS BY REASON OF fflEIR ISSUANCE. (A detailed maturity schedule is set forth on the inside front cover.)

The Bonds are offered when, as and if issued, subject to the approval as to their legality by Jones Hall Hill & White, A Professi.onal Law Corporation, San Francisco, California, Bond Counsel. Certain legal matters wi,ll be passed upon for the Underwriter by Cox, Castle & Nicholson, Los Angeles, California. It is anticipated that the Bonds will be available for delivery on or about May 13, 1993.

Dated: April 21, 1998

Donaldson, Lufkin & Jenrette Securities Corporation

MATURITY SCHEDULE CENTRAL COMMUNITY BONDS

Maturity Principal Interest Maturity Principal Interest (May 1) Amount Rate Price (Mayl) Amount Rate Price

1994 ........ $620,000 2.75% 100.000% 1999 ........ $420,000 4.50% 99.481% 1995 ........ 1996 ........ 1997 ........ 1998 ........

640,000 3.50 100.000 2000 ........ 440,000 660,000 3.80 99.721 2001.. ...... 460,000 385,000 4.10 99.636 2002 ........ 480,000 405,000 4.30 99.556 2003 ........ 505,000

$3,645,000, 5.40% Term Bonds due May 1, 2009, Price 99.250% $4,055,000, 5.50% Term Bonds due May 1, 2014, Price 99.260%

$10,695,000, 5.50% Term Bonds due May 1, 2023, Price 97.140%

MATURITY SCHEDULE R-76 BONDS

$3,320,000, 6.50% Term Bonds due May 1, 2023, Price 100%

OPPOSITE PAGE:

4.70 99.704 4.80 99.345 4.90 99.282 5.00 99.224

Aerial photograph of the City of Port Hueneme. City limits are noted with yellow border.

' ~

No dealer, broker, salesperson or other person has been authorized by the Agency or the Underwriter to give any information or to make any representations in connection with the offer or sale of the Bonds other than those contained herein and, if given or made, such other information or representations must not be relied upon as having been authorized by any of the foregoing. This Composite Official Statement does not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the Bonds by a person in any jurisdiction in which it is unlawful for such person to make such an offer, solicitation or sale.

This Composite Official Statement is not to be construed as a contract with the purchasers of the Bonds. Statements contained in this Composite Official Statement which 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 information set forth herein has been obtained from sources which are believed to be reliable but such information is not guaranteed as to accuracy or completeness, and is not to be construed as a representation by the Underwriter or the Agency. The information and expressions of opinions herein are subject to change without notice, and neither the delivery of this Composite Official Statement nor any sale made hereunder shall, under any circumstances, create any implications that there has been no change in the affairs of the Agency since the date hereof. All summaries of the Indentures and other documents are made subject to the provisions of such documents and do not purport to be complete statements of any or all such provisions.

This Composite Official Statement is submitted in connection with the sale of the Bonds referred to herein and may not be reproduced or used, in whole or in part, for any other purpose.

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVERALLOT OR EFFECT TRANSACTIONS WIDCH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE BONDS AT A LEVEL ABOVE THAT wmcH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. THE UNDERWRITER MAY OFFER AND SELL THE BONDS TO CERTAIN DEALERS AND DEALER BANKS AND BANKS ACTING AS AGENT AT PRICES LOWER THAN THE PUBLIC OFFERING PRICE STATED ON THE COVER PAGE HEREOF AND SAID PUBLIC OFFERING PRICE MAY BE CHANGED FROM TIME TO TIME BY THE UNDERWRITER.

PORT HUENEME REDEVELOPMENT AGENCY

City Council and Agency Board

Orvene S. Carpenter, Mayor/Chairman James F. Daniels, Mayor Pro Tempore/Vice Chairman

Kenneth M. Hess, Councilmember/Member Dorill B. Wright, Councilmember/Member

Toni Young, Councilmember/Member

City and Agency Staff

John R. Velthoen, City Manager/Executive Director Thomas E. Figg, Director of Community Development

James M. Hanks, Treasurer/Director of Finance Karen B. Jackson, City Clerk/Secretary

Burke, Williams & Sorensen, City Attorney/Agency Counsel

SPECIAL SERVICES

Bond Counsel

Jones Hall Hill & White, A Professional Law Corporation

San Francisco, California

Underwriter's Counsel

Cox Castle & Nicholson Los Angeles, California

Trustee

First Interstate Bank of California Los Angeles, California

TABLE OF CONTENTS

INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 The Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Insuran.ce . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Purpose of Issuance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Tax Increment Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 The Project Areas ............... , ................................. 3

THE BC>NDS . . . . . . . . . . . . ............................................ 3 General Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Book-Entry-Only System . . . . . . . . . . . . . . ............................. 4 Redemption . . . ,. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Notice of Redemption ............................................. 9 Effect of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Manner of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

ESTIMATED SOURCES AND USES OF PROCEEDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Central Community Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 R-76 Bonds . . . . . . . . . . . . . . . . ...................... 10

SECUR[TY FOR THE CENTRAL COMMUNITY BONDS . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Central Community Tax Revenues ..................................... 11 Limited Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Central Community Reserve Account ................................... 12 Issuance of Parity Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

SECURITY FOR THE R-76 BONDS R-76 Tax Revenues . Limited Obligations . . R-76 Reserve Account Issuance of Parity Debt

......................................... 14

. ........................................ 14 15 15

. . . . . . . . . . . . . . .......................... 16

MUNICIPAL BOND INSURANCE POLICY FOR THE CENTRAL COMMUNITY BONDS . . . . . . 17

RISK FACTORS ........ . Tax Revenues . . . . . . Estimated Tax Revenues State Legislative Actions

.......................................... 19 . . . . . . . . . . . . . . .......................... 19 ......................................... 19 ......................................... 20

LIMITATIONS ON TAX REVENUES ........................................ 20 Property Tax Rate Limitations - Article XIIIA .............................. 20 Legislation Implementing Article XIIIA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Appropriation Limitation - Article XIIIB . . . . . . .......................... 21 Ballot Initiatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Property Tax Collection Procedures . . . . . . . . . .......................... 22 Low and Moderate Income Housing . . . . . . . . , . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Redevelopment Plan Limitations . . . . . . . . . . . . .......................... 24

HISTORICAL AND ESTIMATED TAX REVENUES ......................... ~ .... 24 Central Community Tax Revenues . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . 24 R-76 Tax Revenues . . ......................................... 31

THE .~GENCY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 Organization and Powers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 Agency Projects . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 Agency Financial Statements ........................................ 35

THE PROJECTS . . . . . . . . .......................................... 36 Central Community Project . . . . . . . . . . . . . . . . . ....................... 36 R-76 Project . . . . . . . . . . . . . . . . . . . . ............................ 37

CERTAIN LEGAL MATTERS .......................................... 37

ABSENCE OF LITIGATION . . .. . . . . . . . . . . . . . . . . . . ........................ 37

TAX MA TIERS . . . . . . . . .......................................... 37

VERIFICATION OF MATHEMATICAL COMPUTATIONS ............................ 38

UNDERWRITING .... . . . . . . . . . . . . . . . . . . ......................... 38

RATINGS ............ . . ......................................... 39

MISCELLANEOUS . . . . . . .......................................... 39

APPENDIX A - Summary of Certain Provisions of the Indentures ...................... A-1

APPENDIX B - General Information Regarding the City . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1

APPENDIX C - Agency's Audited Financial Statements For Fiscal Year Ending June 30, 1992 ................................... C-1

APPENDIX D - Forms of Bond Counsel Opinions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D-1

APPENDIX E - Form of Municipal Bond Insurance Policy for the Central Community Bonds E-1

11

COMPOSITE OFFICIAL STATEMENT

$23,410,000 PORT HUENEME REDEVELOPMENT AGENCY

CENTRAL COMMUNITY PROJECT 1993 TAX ALLOCATION REFUNDING BONDS

and

$3,320,000 PORT HUENEME REDEVELOPMENT AGENCY

R-76 PROJECT 1993 TAX ALLOCATION REFUNDING BONDS

INTRODUCTION

This Composite Official Statement of the Port Hueneme Redevelopment Agency (the" Agency") provides information regarding the sale of (i) $23,410,000 aggregate principal amount of the Port Hueneme Redevelopment Agency Central Community Project 1993 Tax Allocation Refunding Bonds (the "Central Community Bonds"), and (ii) $3,320,000 aggregate principal amount of the Port Hueneme Redevelopment Agency R-76 Project 1993 Tax Allocation Refunding Bonds (the "R-76 Bonds"). The Central Community Bonds and the R-76 Bonds are collectively referred to herein as the "Bonds."

Definitions of certain terms used in this Composite Official Statement are set forth in "APPENDIX A -­Summary of Certain Provisions of the Indentures" hereto. This Composite Official Statement contains brief descriptions of the Bonds, the Indentures (as defined herein), the Agency and the Projects (as defined herein). Such descriptions do not purport to be comprehensive or definitive. All references in this Composite Official Statement to documents are qualified in their entirety by reference to such documents, and references to the Bonds are qualified in their entirety by reference to the forms of Bonds included in the Indentures. Copies of the Indentures and other documents described in this Composite Official Statement may be obtained from the Trustee at its corporate trust office in Los Angeles, California.

The Bonds

The Bonds are being issued pursuant to the laws of the State of California (the "State"), including the provisions of the California Community Redevelopment Law, constituting Part 1 of Division 24 ( commencing with Section 33000) of the California Health and Safety Code (the "Redevelopment Law") and Article 10 of Chapter 3 of Part 1 of Division 2 of Title 5 of the California Government Code, and pursuant to a resolution adopted by the Agency on February 17, 1993. The Central Community Bonds are being issued pursuant to an Indenture of Trust, dated as of April 1, 1993 (the "Central Community Indenture"), by and between the Agency and First Interstate Bank of California, as trustee (the "Trustee"). The R-76 Bonds are being issued pursuant to an Indenture of Trust, dated as of April 1, 1993 (the "R-76 Indenture"), by and between the Agency and the Trustee. The Central Community Indenture and the R-76 Indenture are collectively referred to herein as the "Indentures."

The Central Community Bonds will be secured by a pledge of (i) Central Community Tax Revenues (as defined herein), and (ii) amounts on deposit in certain funds and accounts held by the Trustee under the Central Community Indenture. See "SECURITY FOR THE CENTRAL COMl\fCJNITY BONDS" herein.

The R-76 Bonds will be secured by a pledge of (i) R-76 Tax Revenues (as defined herein), and (ii) amounts on deposit in certain funds and accounts held by the Trustee under the R-76 Indenture. See "SECURITY FOR THE R-76 BONDS" herein.

The Central Community Tax Revenues and moneys held by the Trustee pursuant to the Central Community Indenture do not provide security for the R-76 Bonds. The R-76 Tax Revenues and moneys held by the Trustee pursuant to the R-76 Indenture do not provide security for the Central Community Bonds. The Central Community Bonds and the R-76 Bonds will be issued under and pursuant to separate Indentures and a default under the Central Community Indenture will not, in itself, constitute a default under the R-76 Indenture.

Insurance

Payment of the principal of and interest only on the Central Community Bonds when due will be insured by a municipal bond insurance policy to be issued by AMBAC Indemnity Corporation simultaneously with the issuance of the Bonds. See "MUNICIPAL BOND INSURANCE POLICY FOR THE CENTRAL COMMUNITY BONDS" herein. Payment of the principal of an interest on the R-76 Bonds will not be insured by any municipal bond insurance policy and is secured solely by the revenues and assets pledged therefore under the R-76 Indenture. See "SECURITY FOR THE R-76 BONDS" herein.

Purpose of Issuance

Proceeds from the sale of the Central Community Bonds will be used to refund all or a portion of (i) the outstanding Port Hueneme Redevelopment Agency Central Community Redevelopment Project Tax Allocation Refunding Bonds, 1986 Series A (the "1986 Bonds") in accordance with the provisions of the Escrow Deposit and Trust Agreement, dated as of April 1, 1993 (the "Refunding Agreement"), by and between the Agency and the fiscal agent for the 1986 Bonds, as escrow bank (the "Escrow Bank"), and (ii) those certain Installment Notes with Interest on Unpaid Balance, executed by the Agency for the benefit of the City of Port Hueneme (the "City"), dated October 15, 1986, September 21, 1988, September 20, 1989 and September 19, 1990 (collectively, the "Central Community Notes'"). Proceeds from the sale of the R-76 Bonds will be used to refund all or a portion of the Installment Note with Interest on Unpaid Balance executed by the Agency for the benefit of the City, dated December 18, 1985 (the "R-76 Note"). See "ESTIMATED SOURCES AND USES OF PROCEEDS" herein.

The 1986 Bonds and the Central Community Notes were previously issued by the Agency pursuant to the Redevelopment Law to provide funds to finance redevelopment activities within the Central Community Project Area (as defined herein). The R-76 Note was previously issued pursuant to the Redevelopment Law to provide funds to finance redevelopment activities within the Agency's R-76 Project Area (as defined herein).

Tax Increment Financing

The Redevelopment Law authorizes the financing of redevelopment projects through the use of tax allocation revenues. Pursuant to Section 33328 of the Redevelopment Law, the taxable valuation of the property within a redevelopment project area on the assessment roll last equalized prior to the approval of the redevelopment plan may be designated by the redevelopment agency to become the base year assessment roll, and the increase in taxable valuation in subsequent years over such valuation in the base year to become the incremental taxable valuation upon which taxes are levied and allocated to a redevelopment agency. All taxes collected thereafter upon the incremental taxable valuation are allocated to the redevelopment agency, and may be pledged to the payment of debt service on obligations issued to finance redevelopment projects; provided, however, that the ability to pledge such tax increment to the payment of debt service is subject to (i) agreements with other taxing entities to allocate tax revenues to such entities, (ii) the requirement under the Redevelopment Law that a certain portion of tax revenues be deposited in the low- and moderate-income housing fund of the redevelopment agency, and (iii) the requirement that taxes attributable to any indebtedness of a taxing agency approved by voters after January 1, 1989,

2

must be paid to such taxing agency. The Agency has designated 1972/73 as the base year assessment roll for the original project area of the Central Community Project and 1975/76 as the base year assessment roll for the annexed project area of the Central Community Project. The Agency has designated 1966/67 as the base year assessment roll for the R-76 Project Area. See "SECURITY FOR THE CENTRAL CO:MMIJNlTY BONDS," "SECURITY FOR THE R-76 BONDS," "LIMITATIONS ON TAX REVENUES" and "THE PROJECTS" herein.

The Project Areas

The Redevelopment Plan for the Central Community Redevelopment Project (the "Central Community Redevelopment Plan"), which established the Central Community Redevelopment Project (the "Central Community Project") and delineated the Central Community Redevelopment Project Area (the "Central Community Project Area"), was adopted by the City Council of the City (the "City Council") on February 7, 1973 pursuant to Ordinance No. 351, as amended by (i) Ordinance No. 419, adopted on December 3, 1975, which annexed additional territory within the Central Community Project Area, (ii) Ordinance No. 444, adopted on May 4, 1977, which reconciled certain provisions of the Central Community Redevelopment Plan with the then-current public policy and land use provisions of the City's general plan, and (iii) Ordinance No·. 531, adopted on December 17, 1986, which set certain limitations in accordance with Section 33333 .4 of the California Health and Safety Code. See "LIMITATIONS ON TAX REVENUES -- Redevelopment Plan Limitations" and "THE PROJECTS -- The Central Community Project" herein.

The Redevelopment Plan for the R-76 Redevelopment Project (the "R-76 Redevelopment Plan"), which established the R-76 Redevelopment Project (the "R-76 Project") and delineated the R-76 Redevelopment Project Area (the "R-76 Project Area"), was adopted by the City Council pursuant to Ordinance No. 235, enacted on August 25, 1967, as amended by Ordinance No. 530, enacted on December 17, 1986, which set certain limitations in accordance with Section 33333.4 of the California Health and Safety Code. See "THE PROJECTS -- The R-76 Project" herein. The Central Community Project Area and the R-76 Project Area are collectively referred to herein as the "Project Areas," and the Central Community Project and the R-76 Project are collectively referred to herein as the "Projects."

THE BONDS

Except as otherwise noted, the provisions set forth below are identical with respect to the Central Community Bonds and the R-76 Bonds.

General Provisions

The Central Community Bonds will be issued and sold in the aggregate principal amount of $23,410,000. The R-76 Bonds will be issued and sold in the aggregate principal amount of $3,320,000. The Bonds will be delivered in registered form, without coupons, in authorized denominations of $5,000 or any integral multiples thereof. Interest on the Bonds is payable semiannually on May 1 and November 1 of each year, commencing November 1, 1993 (each an "Interest Payment Date"), to the registered owner thereof as of the close of business on the fifteenth (15th) calendar day of the month preceding each Interest Payment Date, whether or not such fifteenth (15th) calendar day is a business day (each, a "Record Date"). Principal of the Bonds will be payable on May 1 in each of the years and in the amounts shown on the cover page hereof.

Interest on the Bonds is payable by check or draft of the Trustee mailed by first class mail, postage prepaid, on each Interest Payment Date to the owners of the Bonds at their respective addresses shown on the registration books kept by the Trustee as of the applicable Record Date; provided, however, that payment of interest to each registered owner of $1,000,000 or more aggregate principal amount of Central Community Bonds or R-76 Bonds, as applicable, may be made by wire transfer to an account in the United States designated by such owner

3

in a written request filed with the Trustee prior to such Record Date. Principal of the Bonds is payable in lawful money of the United States by check or draft of the Trustee upon presentation and surrender thereof at the corporate trust office of the Trustee in Los Angeles, California.

The Bonds will be dated May 1, 1993 and will bear interest (calculated on the basis of a 360-day year comprised of twelve 30-day months) from the Interest Payment Date next preceding the date of authentication thereof, unless (i) a Bond is authenticated on or before an Interest Payment Date and after the close of business on the preceding Record Date, in which event such Bond will bear interest from such Interest Payment Date, or (ii) a Bond is authenticated on or before the first Record Date, in which event such Bond will bear interest from May 1, 1993, or (iii) interest on any Bond is in default as of the date of authentication thereof, in which event interest thereon will be payable on each Interest Payment Date from the date to which interest has been paid in full. Interest on any of the Bonds which is not punctually paid or duly provided for on any Interest Payment Date shall be payable to the person in whose name the ownership of such Bond is registere.d on the registration books of the Trustee at the close of business on a special record date for the payment of such defaulte.d interest to be fixe.d by the Trustee.

Book-Entry-Only System

The Depository Trust Company ("DTC"), New York, New York, will act as securities depository for the Bonds. Unless otherwise note.d, the following description of the procedures and record keeping with respect to beneficial ownership interests in the Bonds, payment of interest and other payments on the Bonds to Participants or Beneficial Owners (as such terms are defined below) of the Bonds, confirmation and transfer of beneficial ownership interests in the Bonds and other Bond-related transactions by and between DTC, Participants and Beneficial Owners of the Bonds is based solely on information furnished by DTC to the Agency for inclusion herein. Accordingly, the Agency and Donaldson, Lufkin & Jenrette Securities Corporation (the "Underwriter") do not and cannot make any independent representations concerning these matters.

When the Bonds are issued, ownership interests will be available to purchasers only through a book-­entry--only system maintained by DTC. Beneficial ownership in the Bonds may be acquired or transferred only through book entries made on the records of DTC and its Participants. If the Bonds are taken out of the book--entry--only system and delivered to owners in physical form, as described below, the following discussion will not apply.

The Bonds will be executed and delivered as fully registered securities registered solely in the name of Cede & Co. (DTC's partnership nominee). One fully registered Bond of each series will be issued for each maturity of the Bonds in the aggregate principal amount of each maturity of the Bonds, and will be deposited with DTC.

DTC is a limited-purpose trust company organized under the New Yark 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 17 A of the Securities Exchange Act of 1934. DTC holds securities that its participants (the "Participants") deposit with DTC. DTC also facilitates the settlement among Participants of securities transactions, such as transfers and pledges, in deposited securities through electronic computerized book--entry changes in Participants' accounts, thereby eliminating the need of physical movement of securities certificates. Direct Participants include securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is owned by a number of its Direct Participants and by the New York Stock Exchange, Inc., the American Stock Exchange, Inc., and the National Association of Securities Dealers, Inc. Access to the DTC system is also available to others such as securities brokers and dealers, banks and trust companies that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (the "Indirect Participants"). The Rules applicable to DTC and its Participants are on file with the Securities and Exchange Com.mission.

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Purchases of 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 (the "Beneficial Owner") is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase, but Beneficial Owners are 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 Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Bonds, except in the event that use of the book-entry system for the Bonds is discontinued.

To facilitate subsequent transfers, all Bonds deposited by Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co. The deposit of Bonds with DTC and their registration in the name of Cede & Co. effect no 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 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.

Redemption notices shall be sent by the Trustee solely to Cede & Co as registered owner of the Bonds. If less than all of the Bonds are being redeemed, DTC' s practice is to determine by lot the amount of the interest of each Direct Participant to be redeemed.

Neither DTC nor Cede & Co. will consent or vote with respect to the Bonds. Under its usual procedures, DTC mails an Omnibus Proxy to the Agency as soon as possible after the Record Date. The Omnibus Proxy assigns Cede & Co. 's consenting or voting rights to those Direct Participants to whose accounts the Bonds are credited on the Record Date (identified in a listing attached to the Omnibus Proxy).

Payment of the principal of and interest and premium, if any, on the Bonds will be made by the Trustee solely to DTC as registered owner of the Bonds. DTC's practice is to credit Direct Participants' accounts on a payment date in accordance with their respective holdings shown on DTC's records unless DTC has reason to believe that it will not receive payment on such payment date. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Participant and not of DTC, the Trustee or the Agency, subject to any statutory and regulatory requirements as may be in effect from time to time. Payment of principal, interest and any premium to DTC is the responsibility of the Trustee, disbursement of such payments to Direct Participants shall be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners shall be the responsibility of Direct and Indirect Participants.

DTC may discontinue providing its service as securities depository with respect to the Bonds at any time by giving reasonable notice to the Agency and the Trustee. Under such circumstances, in the event that a successor securities depository is not obtained, Bond certificates are required to be prepared and delivered as described in the Indentures.

The Agency may decide to discontinue use of the system of book-entry transfers through DTC (or a successor securities depository). In that event, Bond certificates will be prepared and delivered as described in the Indentures.

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Redemption

Optional Redemption

The Central Community Term Bonds (as defined herein) maturing on May 1, 2009 and May 1, 2014 are not subject to redemption prior to maturity except as described under the caption "Mandatory Sinking Account Redemption" below. The R-76 Bonds and the Central Community Term Bonds maturing on May 1, 2023 are subject to redemption, at the option of the Agency, in whole, or in part either on a pro rata basis among maturities or in inverse order of maturity, and in any case by lot within a maturity, on any date on or after May 1, 2003, from any available source of funds, at a redemption price equal to 100 % of the principal amount thereof to be redeemed together with accrued interest thereon to the redemption date, plus a redemption premium ( expressed as a percentage of the principal amount of the Bonds to be redeemed) as set forth in the following table:

Redemption Period

May 1, 2003 through April 30, 2004 May 1, 2004 through April 30, 2005 May 1, 2005 and thereafter

Mandatory Sinking Account Redemption

Redemption Price

102% 101 100

The Central Community Bonds maturing on May 1, 2009, are subject to mandatory redemption in part by lot on May 1 of each year, commencing May 1, 2004, from sinking account payments at a redemption price equal to the principal amount of the Central Community Bonds to be redeemed, plus accrued interest thereon to the redemption date, without premium, as follows:

Sinking Account Redemption Date

(May 1)

2004 2005 2006 2007 2008 2009 (maturity)

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Principal Amount

$530,000 560,000 590,000 620,000 655,000 690,000

The Central Comm.unity Bonds maturing on May 1, 2014, are subject to mandatory redemption in part by lot on May 1 of each year, commencing May 1, 2010, from sinking account payments at a redemption price equal to the principal amount of the Central Community Bonds to be redeemed, plus accrued interest thereon to the redemption date, without premium, as follows:

Sinking Account Redemption Date

(May 1)

2010 2011 2012 2013 2014 (maturity)

Principal Amount

$725,000 765,000 810,000 855,000 900,000

The Central Community Bonds maturing on May 1, 2023, are subject to mandatory redemption in part by lot on May 1 of each year, commencing May 1, 2015, from sinking account payments at a redemption price equal to the principal amount of the Central Community Bonds to be redeemed, plus accrued interest thereon to the redemption date, without premium, as follows:

Sinking Account Redemption Date

(May 1)

2015 2016 2017 2018 2019 2020 2021 2022 2023 (maturity)

Principal Amount

$ 950,000 1,005,000 1,060,000 1,115,000 1,175,000 1,240,000 1,310,000 1,380,000 1,460,000

The Central Community Bonds maturing on May 1, 2009, May 1, 2014 and May 1, 2023 are collectively referred to herein as the "Central Community Term Bonds."

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The R-76 Bonds are subject to mandatory redemption in part by lot on May 1 of each year, commencing May 1, 1994, from sinking account payments at a redemption price equal to the principal amount of the R-76 Bonds to be redeemed, plus accrued interest thereon to the redemption date, without premium, as follows:

Sinking Account Redemption Date Principal

(May 1) Amount

1994 $ 40,000 1995 40,000 1996 45,000 1997 45,000 1998 50,000 1999 55,000 2000 55,000 2001 60,000 2002 65,000 2003 70,000 2004 70,000 2005 75,000 2006 80,000 2007 85,000 2008 95,000 2009 100,000 2010 105,000 2011 110,000 2012 120,000 2013 125,000 2014 135,000 2015 145,000 2016 155,000 2017 165,000 2018 175,000 2019 185,000 2020 195,000 2021 210,000 2022 225,000 2023 (maturity) 240,000

If some but not all of the Central Community Term Bonds or the R-76 Bonds (collectively referred to herein as the "Term Bonds") have been redeemed by optional redemption (as described above), then the total amount of all future sinking account payments for the applicable maturity of such Central Community Term Bonds or R-76 Bonds, as applicable, shall be reduced by the aggregate principal amount of the Term Bonds so redeemed, to be allocated among such sinking account payments on a pro rata basis in integral multiples of $5,000 as determined by written notice of the Agency to the Trustee.

In lieu of redemption of Term Bonds as described above, amounts on deposit in the applicable Special Fund (as defined in the Indentures), to the extent not required for debt service on the applicable Bonds during the then current Bond Year (as defined in the Indentures), may be withdrawn and used by the Agency at any time to purchase applicable Term Bonds at public or private sale at such prices (including brokerage and other charges and including interest) as the Agency may in its discretion determine. The par amount of any such Term Bonds so

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purchased by the Agency in any twelve-month period ending on March 1 in any year will be credited toward, and will reduce the par amount of, Term Bonds required to be redeemed pursuant to the applicable Indenture on May 1 of such year.

Notice of Redemption

The Trustee will mail notice of redemption to the registered owners of Bonds designated for redemption not less than thirty (30) nor more than sixty (60) days prior to the redemption date. Neither failure to receive such notice nor any defect therein will affect the validity of the proceedings for the redemption of such Bonds or the cessation of the accrual of interest thereon. From and after the redemption date, if funds available for the payment of the redemption price of and the interest on the Bonds so called for redemption shall have been duly deposited with the Trustee, such Bonds so called will cease to be entitled to any benefit under the applicable Indenture other than the right to receive payment of the redemption price and accrued interest to the redemption date, and no interest will accrue thereon from and after the redemption date specified in the notice of redemption.

Effect of Redemption

From and after the date fixed for redemption, if funds available for the payment of the redemption price of and interest on the Bonds called for redemption shall have been duly deposited with the Trustee, such Bonds so called shall cease to be entitled to any benefit under the respective Indenture other than the right to receive payment of the redemption price and accrued interest to the redemption date, and no interest shall accrue thereon from and after the redemption date specified in such notice.

Manner of Redemption

Whenever provision is made in the Indentures for the redemption of less than all of the Bonds, unless otherwise provided therein, the Trustee will select the Bonds to be redeemed by lot in any manner which the Trustee in its sole discretion shall deem appropriate and fair. For purposes of such selection, all Bonds shall be deemed to be comprised of separate $5,000 denominations and such separate denominations shall be treated as separate Bonds which may be separately redeemed.

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ESTIMATED SOURCES AND USES OF PROCEEDS

The following tables set forth summaries of the estimate.d sources and uses of funds associate.d with the issuance and sale of the Bonds.

Central Community Bonds

Souret!s of Funds

Par Amount of Bonds Accrue.d Interest 1986 Reserve Fund 1986 Special Fund Less: Original Issue Discount Less: Underwriter's Discount

Total Sources

Uses of Funds

Transfer to Escrow Banlc for deposit in Escrow Fund Transfer to City Finance Director for Prepayment of Central Community Notes Interest Account of the Debt Service Fund (accrued interest) Reserve Account of Debt Service Fund Costs of Issuance Fund0 l

Total Uses

<1> Includes a bond insurance premium in an amount equal to $461,066.19.

R-76 Bonds

Sources of Funds

Par Amount of Bonds Accrue.d Interest Less: Underwriter's Discount

Total Sources

Uses of Funds

Transfer to City Finance Director for Prepayment of R-76 Note Interest Account of the Debt Service Fund (accrue.d interest) Reserve Account of the Debt Service Fund Costs of Issuance Fund

Total Uses

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$23,410,000.00 40,541.33

1,413,333.61 134,105.05

(382,122.90) (409,615.00)

$24,206,182.09

$14,786,180.13 6,950,000.00

40,541.33 1,839,190.00

590,270.63

$24,206,182.09

$3,320,000.00 7,193.33

(58,100.00)

$3,269,093.33

$2,970,000.00 7,193.33

256,525.00 35,375.00

$3,269,093.33

SECURITY FOR THE CENTRAL COMMUNITY BONDS

Central Community Tax Revenues

Pursuant to the Central Community Indenture, payment of the principal of and interest and premium, if any, on the Central Community Bonds is secured by a first pledge and lien on (i) the Central Community Tax Revenues derived from the Central Community Project Area, and (ii) amounts on deposit in certain funds and accounts held by the Trustee under the Central Community Indenture ..

As provided in the Central Community Redevelopment Plan, and pursuant to Article 6 of Chapter 6 of the Redevelopment Law and Section 16 of Article XVI of the State Constitution, taxes levied upon taxable property in the Central Community Project Area each year by or for the benefit of the State, cities, counties, districts or other public corporations (collectively, the "Taxing Agencies"), for fiscal years beginning after the effective date of the Central Community Redevelopment Plan. will be divided as follows:

1. To Taxing Agencies: The portion of the taxes which would be produced by the rate upon which the tax is levied each year by or for each of said Taxing Agencies upon the total sum of the assessed value of the taxable property in the Central Community Project Area as shown upon the assessment roll used in connection with the taxation of such property by such Taxing Agency last equalized prior to the establishment of the Central Community Project Area will be allocated to, and when collected will be paid into the funds of, the respective Taxing Agencies as taxes by or for said Taxing Agencies.

2. To the Agency: The portion of such levied taxes each year in excess of the amount described in paragraph 1 above will be allocated to the Agency and, when collected, will be paid into a special fund of the Agency to the extent necessary to pay indebtedness of the Agency, including, but not limited to, its obligation under the Central Community Indenture to pay the principal of, redemption premium, if any, and interest on the Central Community Bonds and to replenish the Reserve Account established thereunder.

3. To Taxing Agencies: The portion of the taxes identified in paragraph 2 above which are attributable to a tax rate levied by a Taxing Agency to pay indebtedness approved by the voters of that Taxing Agency on or after January 1, 1989, shall be allocated to, and when collected shall be paid into, the fund of the Taxing Agency.

The term "Central Community Tax Revenues" means all taxes annually allocated to the Agency with respect to the Central Community Project Area following the date of initial delivery of the Central Community Bonds, as described above, including all payments, subventions and reimbursements, if any, to the Agency specifically attributable to ad valorem taxes lost by reason of tax exemptions and tax rate limitations, but excluding (i) all amounts of such taxes required to be deposited into the Low and Moderate Income Housing Fund of the Agency in any fiscal year pursuant to Section 33334.3 of the Redevelopment Law, except to the extent permitted under the Redevelopment Law to be applied to the payment of the principal of and interest and premium, if any, on the Central Community Bonds, and (ii) amounts payable by the State to the Agency under and pursuant to the provisions of Chapter 1.5 of Part 1 of Division 4 of Title 2 (commencing with Section 16110) of the California Government Code.

Pursuant to the Indentures and as permitted under the Redevelopment Law, the Agency has agreed to allocate, starting in fiscal year 1996/97 and in each fiscal year thereafter so long as the Central Community Bonds are outstanding, R-76 Tax Revenues in an amount equal to $80,000 per fiscal year for deposit into the Agency's Low and Moderate Income Housing Fund, which amount will reduce the Agency's obligation to deposit tax incremtmt from the Central Community Redevelopment Project into such Fund in each such fiscal year. Such

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allocation will be subordinate to the payment of debt service with respect to the R-76 Bonds and any deposit to the Low and Moderate Income Housing Fund required under the Redevelopment Law to be made with respect to the R-76 Project. No assurance can be given that there will be sufficient R-76 Tax Revenues available in any year to make such allocation. See "SECURITY FOR THE R-76 BONDS," "LIMITATIONS ON TAX REVENUES -- Low and Moderate Income Housing" and Table 4 under "ffiSTORICAL AND ESTIMATED TAX REVENUES" herein.

The Agency has no power to levy and collect property taxes, and any property tax limitation, legislative measure, voter initiative or provisions of additional sources of income to taxing agencies having the effect of reducing the property tax rate, could reduce the amount of Central Community Tax Revenues that would otherwise be available to pay the principal of and interest and premium, if any, on the Central Community Bonds. Broadened property tax exemptions could have a similar effect. See "RISK FACTORS" and "LIMITATIONS ON TAX REVENUES" herein.

Limited Obligations

THE PRINCIPAL OF AND INTEREST AND PREMIUM, IF ANY, ON THE CENTRAL COMMUNITYBONDSAREPAYABLESOLELYFROMCENTRALCOMMUNITYTAXREVENUESAND FROM AMOUNTS IN CERTAIN FUNDS AND ACCOUNTS HELD BY THE TRUSTEE UNDER AND PURSUANT TO THE CENTRAL COMMUNITY INDENTURE. THE CENTRAL COMMUNITY BONDS ARE NOT A DEBT OF THE CITY, THE STATE OR ANY OF THE POLITICAL SUBDIVISIONS OF THE STATE, AND NEITHER THE CITY NOR THE STATE, OR ANY OF ITS POLITICAL SUBDMSIONS, IS LIABLE THEREFOR.

THE CENTRAL COMMUNITY BONDS DO NOT CONSTITUTE AN INDEBTEDNESS WITHIN THE MEANJNG OF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMIT OR RESTRICTION. NEITHER THE MEMBERS OF THE AGENCY NOR ANY PERSON RESPONSIBLE FOR THE EXECUTION OF THE CENTRAL COMMUNITY BONDS IS LIABLE PERSONALLY FOR THE CENTRAL COMMUNITY BONDS BY REASON OF THE ISSUANCE THEREOF.

THE R-76 TAX REVENUES AND THE MONEYS HELD BY THE TRUSTEE UNDER THE R-76 INDENTURE DO NOT PROVIDE SECURITY FOR THE CENTRAL COMMUNITY BONDS.

Central Community Reserve Account

Pursuant to the Central Community Indenture, a reserve account will be established and held by the Trustee in trust for the benefit of the Agency and the registered owners of the Central Community Bonds (the "Central Community Reserve Account"). The amount on deposit in the Central Community Reserve Account is required to be maintained at an amount equal to the Central Community Reserve Requirement (as defined below).

The term "Central Community Reserve Requirement" means, as of the date of any calculation, the lesser of (a) Maximum Annual Debt Service (as defined in the Central Community Indenture) on all outstanding Central Community Bonds and Parity Debt (as defined in the Central Community Indenture), or (b) the maximum amount permitted to be deposited in the Central Community Reserve Account under the Internal Revenue Code of 1986 (the "Tax Code"), as certified to the Trustee by the Agency. Toe amount to be deposited in the Central Community Reserve Account from the proceeds of the Central Community Bonds will be $1,839,190. Currently, the maximum amount permitted to be deposited in the Central Community Reserve Account under the Tax Code is the lesser of (i) maximum annual debt service with respect to the Central Community Bonds, (ii) 125 % of average annual debt service with respect to the Central Community Bonds, or (iii) 10 % of the proceeds of the Central Community Bonds.

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In the event that the amount on deposit in the Central Community Reserve Account at any time becomes less than the Central Community Reserve Requirement, the Trustee will promptly notify the Agency of such deficiency. Promptly upon receipt of any such notice, the Agency will transfer to the Trustee an amount of available Central Community Tax Revenues sufficient to maintain the Central Community Reserve Requirement on deposit in the Central Community Reserve Account.

Amounts in the Central Community Reserve Fund shall be used and withdrawn by the Trustee solely for the purpose of making transfers to the Interest Account, the Principal Account and the Sinking Account established under the Central Community Indenture, in such order of priority, on any Interest Payment Date in the event of any deficiency at any time in any of such accounts, or at any time for the retirement of all of the Central Community Bonds then outstanding. So long as no Event of Default (as defined in the Central Community Indenture) shall have occurred and be continuing, any amount in the Central Community Reserve Fund in excess of the Central Community Reserve Requirement on the sixth (6th) business day preceding each Interest Payment Date will be withdrawn from the Central Community Reserve Account by the Trustee and deposited in the Interest Account established under the Central Community Indenture.

Pursuant to the Central Community Indenture, the Agency has the right at any time to release funds from the Central Community Reserve Account, in whole or in part, by tendering to the Trustee (i) an irrevocable standby or direct-pay letter of credit or surety bond issued by a commercial bank or insurance company in accordance with the tenns set forth in the definition of "Qualified Reserve Account Credit Instrument" in the Central Community Indenture, and (ii) an opinion of Bond Counsel (as defined in the Central Community Indenture) stating that neither the release of such funds nor the acceptance of such letter of credit or surety bond will cause interest on the Central Community Bonds to become includable in gross income for purposes of federal income taxation. See "APPENDIX A -- Summary of Certain Provisions of the Indentures" hereto.

Issuance of Parity Debt

Pursuant to the Central Community Indenture, in addition to the Central Community Bonds, the Agency may, by supplemental indenture, issue or incur any bonds, notes, loans, advances or other indebtedness, in such principal amount as may be determined by the Agency, payable from Central Community Tax Revenues on a parity with the Central Coinmunity Bonds ("Central Community Parity Debt"). The Agency may issue or incur such Central Community Parity Debt subject to the following specific conditions precedent:

(i) The Agency is in compliance with all covenants set forth in the Central Community Indenture and all supplemental indentures related thereto.

(ii) The Central Community Tax Revenues estimated to be received for the then current Bond Year based on the most recent assessed valuation of property in the Central Community Project Area as evidenced in the written records of the County of Ventura (the "County") are at least equal to 125 % of Maximum Annual Debt Service on all Central Community Bonds and Central Community Parity Debt which will be outstanding immediately following the issuance of such Central Community Parity Debt.

(iii) The supplemental indenture providing for the issuance of such Central Community Parity Debt provides that interest thereon shall not be payable on any dates other than May 1 or November 1, and principal thereof shall be payable on May 1 in any year in which principal is payable.

(iv) The supplemental indenture providing for the issuance of such Central Community Parity Debt provides for the deposit into the Central Community Reserve Account of an amount required to cause the balance therein to equal the full amount of the Central Community Reserve Requirement (which may be maintained in whole or in part in the form of a Qualified Reserve Account Credit Instrument as provided in the Central Community Indenture).

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(v) The issuance of such Central Community Parity Debt will not cause the Agency to exceed any applicable limitations contained or incorporated in the Central Community Redevelopment Plan on ( a) the aggregate principal amount of indebtedness payable from Central Community Tax Revenues which may be outstanding at any time, (b) the aggregate amount of taxes which may be divided and allocated to the Agency pursuant to the Central Community Redevelopment Plan, and ( c) the period of time for establishing or incurring indebtedness payable from Central Community Tax Revenues.

(vi) The Agency delivers to the Trustee a certificate certifying, and an opinion of Bond Counsel stating, that the conditions precedent to the issuance of such Central Community Parity Debt set forth in the foregoing subsec:tions (i), (ii), (iii), (iv) and (v) have been satisfied.

SECURITY FOR THE R-76 BONDS

R-76 Tax Revenues

Pursuant to the R-76 Indenture, payment of the principal of and interest and premium, if any, on the R-76 Bonds is secured by a first pledge and lien on (i) the R-76 Tax Revenues derived from the R-76 Project Area, and (ii) amounts on deposit in certain funds and accounts held by the Trustee under the R-76 Indenture.

As provided in the R-76 Redevelopment Plan, and pursuant to Article 6 of Chapter 6 of the Redevelopment Law and Section 16 of Article XVI of the State Constitution, taxes levied upon taxable property in the R-76 Project Area t~ch year by or for the benefit of the State, cities, counties, districts or other public corporations (collectively, the "Taxing Agencies"), for fiscal years beginning after the effective date of the R-76 Redevelopment Plan, will be divided as follows:

1. To Taxing Agencies: The portion of the taxes which would be produced by the rate upon which the tax is levied each year by or for each of said Taxing Agencies upon the total sum of the assessed value of the taxable property in the R-76 Project Area as shown upon the assessment roll used in connection with the taxation of such property by such Taxing Agency last equalized prior to the establishment of the R-76 Project Area will be allocated to, and when collected will be paid into the funds of, the respective Taxing Agencies as taxes by or for said Taxing Agencies.

2. To the Agency: The portion of such levied taxes each year in excess of the amount described in paragraph 1 above will be allocated to the Agency and, when collected, will be paid into a special fund of the Agency to the extent necessary to pay indebtedness of the Agency, including, but not limited to, its obligation under the R-76 Indenture to pay the principal of, redemption premium, if any, and interest on the R-76 Bonds and to replenish the Reserve Account established thereunder.

3. To Taxing Agencies: The portion of the taxes identified in paragraph 2 above which are attributable to a tax rate levied by a Taxing Agency to pay indebtedness approved by the voters of that Taxing Agency on or after January 1, 1989, shall be allocated to, and when collected shall be paid into, the fund of the Taxing Agency.

The term "R-76 Tax Revenues" means all taxes annually allocated to the Agency with respect to the R-76 Project Area following the date of initial delivery of the R-76 Bonds as described above, including all payments, subventions and reimbursements, if any, to the Agency specifically attributable to ad valorem taxes lost by reason of tax exemptions and tax rate limitations, but excluding (i) all amounts of such taxes required to be deposited into the Low and Moderate Income Housing Fund of the Agency in any fiscal year pursuant to Section 33334.3 of the

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Redevelopment Law, except to the extent permitted under the Redevelopment Law to be applied to the payment of the principal of and interest and premium, if any, on the R-76 Bonds, and (ii) amounts payable by the State to the Agency under and pursuant to the provisions of Chapter 1.5 of Part 1 of Division 4 of Title 2 (commencing with Section 16110) of the California Government Code.

Pursuant to the R-76 Indenture and as permitted under the Redevelopment Law, the Agency has agreed to allocate, starting in fiscal year 1996/97 and in each fiscal year thereafter so long as the Central Community Bonds are outstanding, R-76 Tax Revenues in an amount equal to $80,000 per fiscal year for deposit into the Agency's Low and Moderate Income Housing Fund, which amount will reduce the Agency's obligation to deposit tax increment from the Central Community Redevelopment Project into such Fund in each such fiscal year. Such allocation will be subordinate to the payment of debt service with respect to the R-76 Bonds and any deposit to the Low and Moderate Income Housing Fund required under the Redevelopment Law to be made with respect to the R-76 Project. See "SECURITY FOR THE CENTRAL COMMUNITY BONDS" and Table 4 under 111IlSTORICAL AND ESTIMATED TAX REVENUES" herein.

The Agency has no power to levy and collect property taxes, and any property tax limitation, legislative measun~, voter initiative or provisions of additional sources of income to taxing agencies having the effect of reducing the property tax rate, could reduce the amount of R-76 Tax Revenues that would otherwise be available to pay the principal of and interest and premium, if any, on the R-76 Bonds. Broadened property tax exemptions could have a similar effect. See "RISK FACTORS" and "LIMlTATIONS ON TAX REVENUES" herein.

Limited Obligations

THE PRINCIPAL OF AND INTEREST AND PREMIUM, IF ANY, ON THE R-76 BONDS ARE PAYABLE SOLELY FROM R-76 TAX REVENUES AND FROM AMOUNTS IN CERTAIN FUNDS AND ACCOUNTS HELD BY THE TRUSTEE UNDER AND PURSUANT TO THE R-76 INDENTURE. THE R-76 BONDS ARE NOT A DEBT OF THE CITY, THE STATE OR ANY OF THE POLITICAL SUBDIVISIONS OF THE STATE, AND NEITHER THE CITY NOR THE STATE, OR ANY OF ITS POLITICAL SUBDIVISIONS, IS LIABLE THEREFOR.

THE R-76 BONDS DO NOT CONSTITUTE AN INDEBTEDNESS WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMlT OR RESTRICTION. NEITHER THE MEMBERS OF THE AGENCY NOR ANY PERSON RESPONSIBLE FOR THE EXECUTION OF THE R-76 BONDS IS LIABLE PERSONALLY FOR THE R-76 BONDS BY REASON OF THE ISSUANCE THEREOF.

THE CENTRAL COMMUNITY TAX REVENUES AND THE MONEYS HELD BY THE TRUSTEE UNDER THE CENTRAL COMMUNITY INDENTURE DO NOT PROVIDE SECURITY FOR THE R-76 BONDS.

R-76 Reserve Account

Pursuant to the R-76 Indenture, a reserve account will be established and held by the Trustee in trust for the benefit of the Agency and the registered owners of the R-76 Bonds (the "R-76 Reserve Account"). The amount on deposit in the R-76 Reserve Account is required to be maintained at an amount equal to the R-76 Reserve Requirement (as defined below)..

The term "R-76 Reserve Requirement" means, as of the date of any calculation, the lesser of (a) Maximum Annual Debt Service (as defined in the R-76 Indenture) on all outstanding R-76 Bonds and Parity Debt (as defined in the R-76 Indenture), or (b) the maximum amount permitted to be deposited in the R-76 Reserve Account under the Tax Code, as certified to the Trustee by the Agency. The amount to be deposited in the R-76 Reserve Account from th,e proceeds of the R-76 Bonds will be $256,525. Currently, the maximum amount permitted to be deposited

15

in the R-76 Reserve Account under the Tax Code is the lesser of (i) maximum annual debt service with respect to the R-76 Bonds, (ii) 125% of average annual debt service with respect to the R-76 Bonds, or (iii) 10% of the proceeds of the R-76 Bonds.

In the event that the amount on deposit in the R-76 Reserve Account at any time becomes less than the R-76 Reserve Requirement, the Trustee will promptly notify the Agency of such deficiency. Promptly upon receipt of any such notice, the Agency will transfer to the Trustee an amount of available R-76 Tax Revenues sufficient to maintain the R-76 Reserve Requirement on deposit in the R-76 Reserve Account.

Amounts in the R-76 Reserve Fund shall be used and withdrawn by the Trustee solely for the purpose of making transfers to the Interest Account, the Principal Account and the Sinking Account established under the R-76 Indenture, in such order of priority, on any Interest Payment Date in the event of any deficiency at any time in any of such accounts, or at any time for the retirement of all of the R-76 Bonds then outstanding. So long as no Event of Default (as defined in the R-76 Indenture) shall have occurred and be continuing, any amount in the R-76 Reserve Fund in excess of the R-76 Reserve Requirement on the sixth (6th) business day preceding each Interest Payment Date will be withdrawn from the R-76 Reserve Account by the Trustee and deposited in the Interest Account established under the R-76 Indenture.

Pursuant to the R-76 Indenture, the Agency has the right at any time to release funds from the R-76 Reserve Account, in whole or in part, by tendering to the Trustee (i) an irrevocable standby or direct-pay letter of credit or surety bond issued by a commercial bank or insurance company in accordance with the terms set forth in the definition of "Qualified Reserve Account Credit Instrument" in the R-76 Indenture, and (ii) an opinion of Bond Counsel (as defined in the R-76 Indenture) stating that neither the release of such funds nor the acceptance of such letter of credit or surety bond will cause interest on the R-76 Bonds to become includable in gross income for purposes of federal income taxation. See "APPENDIX A -- Summary of Certain Provisions of the Indentures" hereto.

Issuance of Parity Debt

Pursuant to the R-76 Indenture, in addition to the R-76 Bonds, the Agency may, by supplemental indenture, issue or incur any bonds, notes, loans, advances or other indebtedness ("R-76 Parity Debt"), in such principal amount as may be determined by the Agency, payable from R-76 Tax Revenues on a parity with the R-76 Bonds ("R-76 Parity Debt"). The Agency may issue or incur such R-76 Parity Debt subject to the following specific conditions precedent:

(i) The Agency is in compliance with all covenants set forth in the R-76 Indenture or any supplemental indentures related thereto.

(ii) The R-76 Tax Revenues estimated to be received for the then current Bond Year based on the most recent assessed valuation of property in the R-76 Project Area as evidenced in the written records of the County, plus (at the option of the Agency) the Additional Revenues (as defined in the R-76 Indenture), are at least equal to 125% of Maximum Annual Debt Service on all R-76 Bonds and R-76 Parity Debt which will be outstanding immediately following the issuance of such R-76 Parity Debt.

(iii) The supplemental indenture providing for the issuance of such R-76 Parity Debt provides that interest thereon shall not be payable on any dates other than May 1 or November 1, and principal thereof shall be payable on May 1 in any year in which principal is payable.

(iv) The supplemental indenture providing for the issuance of such R-76 Parity Debt provides for the deposit into the R-76 Reserve Account of an amount required to cause the balance therein to equal the full amount

16

of the R-76 Reserve Requirement (which may be maintained in whole or in part in the form of a Qualified Reserve Account Credit Instrument as provided in the R-76 Indenture).

(v) The issuance of such R-76 Parity Debt will not cause the Agency to exceed any applicable limitations contained or incorporated in the R-76 Redevelopment Plan on (a) the aggregate principal amount of indebtedness payable from R-76 Tax Revenues which may be outstanding at any time, (b) the aggregate amount of taxes which may be divided and allocated to the Agency pursuant to the R-76 Redevelopment Plan, and (c) the period of time for establishing or incurring indebtedness payable from R-76 Tax Revenues.

(vi) The Agency delivers to the Trustee a certificate certifying, and an opinion of Bond Counsel stating, that the conditions precedent to the issuance of such R-76 Parity Debt set forth in the foregoing paragraphs (i), (ii), (iii), (iv) and (v) have been satisfied.

MUNICIPAL BOND INSURANCE POLICY FOR THE CENTRAL COMMUNITY BONDS

THE MUNICIPAL BOND INSURANCE POLICY IS BEING ISSUED WITH RESPECT TO THE CENTRAL COMMUNITY BONDS ONLY, AND DOES NOT INSURE ANY PAYMENTS OR RISKS RELATED TO THE R-76 BONDS.

AMBAC Indemnity Corporation (" AMBAC Indemnity") has made a commitment to issue a municipal bond insurance policy (the "Municipal Bond Insurance Policy") relating solely to the Central Community Bonds effective as of the date of the issuance of the Central Community Bonds. Under the terms of the Municipal Bond Insurance Policy, AMBAC Indemnity will pay to the United States Trust Company of New York, in New York, New York or any successor thereto (the "Insurance Trustee") that portion of the principal of and interest on the Central Community Bonds which shall become Due for Payment but shall be unpaid by reason of Nonpayment (as defined in the Municipal Bond Insurance Policy) by the Agency. AMBAC Indemnity will make such payments to the Insurance Trustee on the later of the date on which such principal and interest becomes Due for Payment or within one business day following the date on which AMBAC Indemnity shall have received notice of Nonpayment from the Trustee. The insurance will extend for the term of the Central Community Bonds and, once issued, cannot be canceled by AMBAC Indemnity.

The Municipal Bond Insurance Policy will insure payment only on stated maturity dates and on mandatory sinking fund installment dates, in the case of principal, and on stated dates for payment, in the case of interest. If the Central Community Bonds become subject to mandatory redemption and insufficient funds are available for redemption of all outstanding Central Community Bonds, AMBAC Indemnity will remain obligated to pay principal of and interest on outstanding Central Community Bonds on the originally scheduled interest and principal payment dates including mandatory sinking fund redemption dates. In the event of any acceleration of the principal of the Central Community Bonds, the insured payments will be made at such times and in such amounts as would have been made had there not been an acceleration.

In the event the Trustee has notice that any payment of principal of or interest on a Central Community Bond which has become Due for Payment and which is made to an Central Community Bond owner by or on behalf of the Agency has been deemed. a preferential transfer and therefore recovered from its registered owner pursuant to the United States Bankruptcy Code in accordance with a final, nonappealable order of a court of competent jurisdiction, such registered owner will be entitled to payment from AMBAC Indemnity to the extent of such recovery if sufficient funds are not otherwise available.

The Municipal Bond Insurance Policy does not insure any risk other than Nonpayment, as defined in the Policy. Specifically, the Municipal Bond Insurance Policy does not cover:

17

1. payment on acceleration, as a result of a call for redemption ( other than mandatory sinking fund redemption) or as a result of any other advancement of maturity.

2. payment of any redemption, prepayment or acceleration premium.

3. nonpayment of principal or interest caused by the insolvency or negligence of any trustee or paying agent, if any.

If it becomes necessary to call upon the Municipal Bond Insurance Policy, payment of principal requires surrender of Central Community Bonds to the Insurance Trustee together with an appropriate instrument of assignment so as to permit ownership of such Central Community Bonds to be registered in the name of AMBAC Indemnity to the extent of the payment under the Municipal Bond Insurance Policy. Payment of interest pursuant to the Municipal Bond Insurance Policy requires proof of registered owner entitlement to interest payments and an appropriate assignment of the registered owner's right to payment to AMBAC Indemnity.

Upon payment of the insurance benefits, AMBAC Indemnity will become the owner of the Central Community Bond, appurtenant coupon, if any, or right to payment of principal of or interest on such Central Community Bond and will be fully subrogated to the surrendering owner's rights to payment.

In the event that AMBAC Indemnity were to become insolvent, any claims arising under the Municipal Bond Insurance Policy would be excluded from coverage by the California Insurance Guaranty Association, established pursuant to the laws of the State of California.

AMBAC Indemnity is a Wisconsin-domiciled stock insurance corporation regulated by the Office of the Commissioner of Insurance of the State of Wisconsin and licensed to do business in 50 states, the District of Columbia and the Commonwealth of Puerto Rico, with admitted assets of approximately $1,600,000,000 (unaudited) and statutory capital of approximately $926,500,000 (unaudited) as of December 31, 1992. Statutory capital consists of AMBAC Indemnity's policyholders' surplus and statutory contingency reserve. AMBAC Indemnity is a wholly­owned subsidiary of AMBAC Inc., a 100% publicly-held company. Moody's Investors Service and Standard & Poor's Corporation have both assigned a triple-A claims-paying ability rating to AMBAC Indemnity. See "RA11NGS" herein.

Copies of AMBAC Indemnity's financial statements prepared in accordance wiUi statutory accounting standards are available from AMBAC Indemnity. The address of AMBAC Indemnity's administrative offices and its telephone number are One State Street Plaza, 17th Floor, New York, New York 10004 and (212) 668-0340.

AMBAC Indemnity has entered into pro rata reinsurance agreements under which a percentage of the insurmce underwritten pursuant to certain municipal bond insurance programs of AMBAC Indemnity has been and will be assumed by a number of foreign and domestic unaffiliated reinsurers.

AMBAC Indemnity has obtained a ruling from the Internal Revenue Service to the effect that the insuring of an obligation by AMBAC Indemnity will not affect the treatment for federal income tax purposes of interest on such obligation and that insurance proceeds representing maturing interest paid by AMBAC Indemnity under policy provisions substantially identical to those contained in its municipal bond insurance policy shall be treated for federal income tax purposes in the same manner as if such payments were made by the issuer of the Central Community Bonds.

AMBAC Indemnity makes no representation regarding the Central Community Bonds or the advisability of investing in the Central Community Bonds and makes no representation regarding, nor has it participated in the preparation of, this Composite Official Statement other than the information supplied by AMBAC Indemnity and

18

presented under the heading "MUNICIPAL BOND INSURANCE POLICY FOR THE CENTRAL COMMUNITY BONDS."

RISK FACTORS

The following factors, along with all other information in this Composite Official Statement, should be considered by potential investors in evaluating the Bonds.

Tax Revenues

The Central Community Tax Revenues and R-76 Tax Revenues (collectively, the "Tax Revenues") allocated to the Agency, which constitute the primary security for the Bonds, are determined by the incremental assessed value of taxable property in the Project Areas, the current rate or rates at which property in the Project Areas is taxed, and the percentage of taxes collected in the Project Areas. Several types of events which are beyond the control of the Agency could occur and cause a reduction in available Tax Revenues. A reduction of taxable assessed values of property in a Project Area caused by economic or other factors beyond the Agency's control could occur (such as successful appeals by the property owner for a reduction in a property's assessed value, a reduction of the general inflationary rate, a reduction in transfers of property, construction activity or other events that permit reassessment of property at higher values, or the destruction of property caused by natural or other disasters), thereby causing a reduction in Tax Revenues. Such a reduction in Tax Revenues could have an adverse impact on the Agency's ability to make timely payment of principal of and interest on the Central Community Bonds or the R-76 Bonds, as applicable.

In addition to the other existing limitations on Tax Revenues described below under "LThDT ATIONS ON TAX REVENUES," the California electorate or Legislature could adopt a constitutional or legislative property tax

decrease with the effect of reducing Tax Revenues payable to the Agency. There is no assurance that the California electorate or Legislature will not at some future time approve additional limitations that could reduce the Tax Revenues and adversely affect the security of the Bonds.

The Agency has no power to levy and collect property taxes. Any substantial delinquencies in the payment of property taxes by property owners on land in either Project Area could have an adverse effect on the Agency's ability to make timely debt service payments on the Central Community Bonds or the R-76 Bonds, as applicable. Tax Revenues allocated to the Agency are distributed throughout the year in installments, with the first installment distributed in November and the last installment distributed in August of the succeeding fiscal year. The payments are adjusted to reflect actual collections.

Estimated Tax Revenues

The Agency has provided information regarding the historical tax increment revenues from the Central Community and R-76 Project Areas, and the Underwriter has projected the future tax increment revenues based solely on an estimated zero percent (0%) increase in assessed valuation. See "IIlSTORICAL AND ESTIMATED TAX REVENUES" and "LIMITATIONS ON TAX REVENUES -- Property Tax Rate Limitations - Article XIIIA" herein.

However, neither the Agency nor the Underwriter have made any inquiry, nor do they make any representations, as to the future Central Community Tax Revenues or R-76 Tax Revenues, nor do they represent that the estimated Central Community Tax Revenues or the estimated R-76 Tax Revenues will be realized.

19

State Legislative Actions

In response to the recent State budget crisis, the State Legislature recently redirected $205,000,000 in tax increment funds from California redevelopment agencies to schools and community colleges pursuant to Senate Bill 617, effective September 1, 1992. As a result of this one-time diversion of redevelopment funds, the Central Comm.unity Project and the R-76 Project lost $331,581 and $63,295, respectively, in tax increment.

Although the diversion of tax increment pursuant to Senate Bill 617 was for one fiscal year only, there can be no assurance that the State Legislature will not take similar action in the future.

LIMITATIONS ON TAX REVENUES

Property Tax Rate Limitations - Article XIlIA

On June 6, 1978, California voters approved Proposition 13, a statewide initiative relating to the taxation of real property, which added Article XIIIA to the California Constitution. Among other things, Article )CIIIA: (a) limited ad valorem property taxes on all real property to one percent (1 % ) of the full cash value of the property; (b) exempted existing voter-approved bonded indebtedness from the one percent limitation; ( c) defined "full cash value:" as the county assessor's appraised value of real property as of April 1, 1975, adjusted by changes in the Consumer Price Index at a rate not to exceed two percent (2 % ) per year; (d) permitted establishment of a new "full cash value" when there is new construction or a change in ownership; (e) permitted the reassessment, up to the Aprill 1, 1975 value, of property which was not current on the 1975-76 assessment roll; (t) required counties to collect the one percent property tax and to "apportion according to law to the districts within the counties"; (g) prohibited new ad valorem taxes on real property, or sales taxes, or transaction taxes on the sale of real property; (h) permitted the imposition of special taxes by local agencies, other than those prohibited, by a two-thirds vote of the "qualified electors" of such agencies; and (i) required a two-thirds vote of all members of both houses of the Legislature for any changes in State taxes which would result in increased revenues.

Article XIIIA has subsequently been amended to permit reduction of the "full cash value" base in the event of de,clining property values caused by damage, destruction or other factors and 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.

On June 18, 1992, in Nordlinger v. Hahn, (1992) 112 S.Ct. 2326, the United States Supreme Court held that the tax scheme imposed by Article XIIIA does not violate the Equal Protection Clause of the United States Constitution. The Court stated, among other things, that (i) the State has a legitimate interest in local neighborhood prest!rvation, continuity and stability, and consequently may decide to structure its tax system to discourage rapid turnover in ownership of homes and businesses, and (ii) the State may legitimately conclude that a new owner at the time of acquiring his or her property does not have the same reliance interest warranting protection against higher taxes as does an existing owner.

Notwithstanding the Nordlinger ruling, however, the Agency cannot predict whether future challenges to California's present system of property tax assessment will be successful, when the ultimate resolution of any such challenge will occur, or the ultimate effect any decision holding such property tax system unconstitutional, either in whole or in part, would have on the Agency's revenues.

Legislation Implementing Article XIIIA

Legislation has been enacted and amended a number of times since 1978 to implement Article XIIIA. Und,er current law, local agencies are no longer permitted to directly levy any ad valorem property tax. The one perc,ent property tax is automatically levied annually by the County and distributed according to a specific formula

20

among taxing agencies. The formula apportions the tax roughly in proportion to the relative shares of taxes levied prior to 1978. Any special tax to pay voter-approved indebtedness is levied in addition to the one percent property tax.

Increases of assessed valuation resulting from reappraisals of property due to new construction, c~ge in ownership or from the two percent 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.

Since the 1981-82 fiscal year, assessors in California no longer record property values on tax rolls at the assessed value of twenty-five percent (25 % ) of market value. All taxable property is now shown on the tax rolls at full market value as of the date of the last transfer (adjusted by the permitted 2 % increase per year). Consequently, the basic tax rate is expressed as $1 per $100 of taxable value.

Appropriation Limitation - Article XIIIB

On November 6, 1979, the voters of the State approved Proposition 4, known as the Gann Initiative, which added Article XIIIB to the California Constitution. On June 5, 1990, the voters approved Proposition 111, which amended Article XIIIB in certain respects. Under Article XIIIB, as amended, State and local governmental agencies in the State, as well as the State itself, are subject to annual "appropriation limits" that limits the ability to spend certain moneys which are called "appropriations subject to limitation" in excess of the appropriations limit imposed. "Appropriations subject to limitation" are authoriz.ations to spend "proceeds of taxes," which consist of tax revenues, certain state subventions and certain other funds, including proceeds from regulatory licenses, user charges or other fees to the extent that such proceeds exceed "the cost reasonably borne by such entity in providing the regulation, product: or service." No limit is imposed on appropriations of funds which are not "proceeds of taxes," such as appropriations for debt service on indebtedness existing or authorized before January 1, 1979, or subsequently authorized by the voters, appropriations required to comply with mandates of courts or the federal government, reasonable user charges or fees and certain other non-tax funds.

Generally, annual adjustments reflect changes in California per capita personal income (or, at the entity's option, changes in assessed value caused by local nonresidential new construction), population and services provided by these State and local governmental entities. Among other provisions of Article XIIIB, if the revenues of such entities in any fiscal year and the following fiscal year exceed the amounts permitted to be spent in such years, the excess would have to be returned by revising tax rates or fee schedules over the subsequent two years.

Statutes of 1980, Chapter 13 .2 (Senate Bill 1972), enacted by the California Legislature and effective as an urgency measure on September 30, 1980, added Section 33678 to the Redevelopment Law. Section 33678 provides that the allocation and payment of taxes to the Agency for the purpose of paying the principal of or interest on loans, advances or indebtedness incurred for redevelopment activities, as defined therein, shall not be deemed the recc~ipt by the Agency of proceeds of taxes levied by or on behalf of the Agency within the meaning or for the purposes of Article XIIIB of the California Constitution, nor shall such portion of taxes be deemed receipt of proceeds of taxes by, or an appropriation subject to the limitation of, any other public body within the meaning or for the purposes of Article XIIIB or any statutory provision enacted in implementation of Article XIIIB.

The California Court of Appeals, Fourth Appellate District, in Brown v. Community Redevelopment Agency of the City of Santa Ana 168 Cal.App.3d 101. (1985), and the California Court of Appeals, Second Appellate District, in Bell Community Redevelopment Agency v. Woolsey, 169 Cal.App.3d 24 (1985), have determined that the appropriation of tax increment revenues by a redevelopment agency is not subject to the limitations of Article XIIIB. The California Supreme Court denied a petition for hearing in the Brown case. On the basis of these decisions, the Agency has not adopted an appropriations limit with respect to property taxes.

21

Ballot Initiatives

Article XIIIA and Article XIlIB were adopted pursuant to measures qualified for the ballot pursuant to California's constitutional initiative process. From time to time, other initiative measures could be adopted by California voters. The adoption of any such initiative might place limitations on the Tax Revenues allocated to the Agency.

Property Tax Collection Procedures

In California, property which is subject to ad valorem taxes is classified as "secured" or "unsecured. " The secured classification includes property on which any property tax levied by a county becomes a lien on that property. A tax levied on unsecured property does not become a lien against such unsecured property, but may become a lien on certain other property owned by the taxpayer. Every tax which becomes a lien on secured property has priority over all other liens arising pursuant to State law on such secured property, regardless of the time of the creation of the other liens.

Secured arid unsecured property are entered separately on the assessment roll maintained by the county assessor. The method of collecting delinquent taxes is substantially different for the two classifications of property. The taxing authority has four ways of collecting unsecured personal property taxes: (i) a civil action against the taxpayer; (ii) 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; (iii) filing a certificate of delinquency for record in the county recorder's office, in order to obtain a lien on certain property of the taxpayer; and (iv) seizure and sale of 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.

Commencing in 1982, a ten percent (10%) penalty was added to delinquent taxes which have been levied with respect to property on the secured roll. In addition, property on the secured roll with respect to which taxes are delinquent is sold to the State 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 one and one-half percent ( 1. 5 % ) per month to the time of redemption. If taxes are unpaid for a period of five years or more, the property is dee.ded to the State and then is subject to sale by the county tax collector. A ten percent (10%) penalty also attaches to delinquent taxes with respect to property on the unsecured roll, and an additional penalty of one and one­half percent (1.5%) per month accrues with respect to such taxes beginning the first day of the third month following the delinquency date ..

The valuation of property is determined as of November 1 each year and installments of taxes levied upon secured property become delinquent on the following December 10 and April 10. Taxes on unsecured property are due November 1 and become delinquent August 31, and such taxes are levied at the prior year's secured tax rate.

Legislation enacted in 1983 (Statutes of 1983, Chapter 498) provides for the supplemental assessment and taxation of property upon the occurrence of a change of ownership or completion of new construction. Previously, statutes enabled the assessment of such changes only as of the next November 1 tax lien date following the change and cilms delayed the realization of increased property taxes from the new assessments for up to a year.

Collection of taxes based on supplemental assessments will occur throughout the year. Taxes due will be prorated according to the amount of time remaining in the tax year, with the exception of tax bills dated November 1 through May 31, which will be calculated on the basis of the remainder of the current fiscal year and the full twelve months of the next fiscal year ..

For supplemental tax bills mailed during the months of March through September, the first installment of taxes becomes delinquent on December 11 of the same year, the second installment becomes delinquent after the

22

last day of the month following the month in which the bill was mailed and the second installment becomes delinquent four months later.

Low and Moderate Income Housing

Tax Revenues, as defined herein and under the Indentures, do not include that portion of property tax increment derived from the Project Areas that may be required by law to be deposited into the Agency's Low and Moderate Income Housing Fund pursuant to the Redevelopment Law at some future date. See "lllSTORICAL AND ESTIMATED TAX REVENUES" herein.

Sections 33334.2 and 33334.3 of the Redevelopment Law require redevelopment agencies to set aside twenty percent (20 % ) of all tax increment derived from redevelopment project areas adopted after December 31, 1976 in a Low and Moderate Income Housing Fund. Section 33334.6 of the Redevelopment Law requires that, unless the Agency makes certain findings, redevelopment agencies must also set aside twenty percent (20 % ) of all tax increment revenues derived for the 1985-86 fiscal year and each succeeding fiscal year from project areas established prior to December 31, 1976. Section 33334.6(e) of the Redevelopment Law provides that a redevelopment agency may deposit less than twenty percent (20 % ) of its tax increment into its Low and Moderate Income Housing Fund in each fiscal year prior to July l, 1996, if the agency finds that the deposit of such lesser amount is necessary in order to provide for the orderly and timely completion of public and private projects, programs or activities approved by the agency prior to January l, 1986, which are contained on the statement of existing programs adopted by the agency pursuant to Section 33334.6(f) of the Redevelopment Law. Section 33334.6(d) of the Redevelopment Law provides that a redevelopment agency may deposit less than twenty percent (20 % ) of its tax increment into its Low and Moderate Income Housing Fund in each fiscal year if the agency finds that the: difference between the amount deposited and the amount required to meet the applicable set-aside requirement for the Low and Moderate Income Housing Fund is necessary to make payments under existing obligations for projects existing on or created prior to January 1, 1986 or obligations refinancing such obligations, which are contained on the statement of existing obligations adopted by the agency pursuant to Section 33334.6(f) of the Redevelopment Law.

No tax increment received by the Agency from the Project Areas has heretofore been set aside in its Low and Moderate Income Housing Fund pursuant to appropriate findings made by the Agency pursuant to Section 33334.6(d), (e) and (f). Pursuant to findings made in accordance with the provisions of Section 33334.6(d), the Agency's obligation to deposit tax increment revenues from the R-76 Project Area is subordinate to the payment of debt service on the R-76 Bonds. However, as described in the discussion of Section 33334.6(e) of the Redevelopment Law in the previous paragraph, the Agency's authority to make similar findings for the Central Community Project Area expires on July 1, 1996. Consequently, the pledge of tax revenues to pay the Central Community Bonds will be subordinate to the Agency's obligation to deposit tax increment revenues from the Central Community Project Area into its L.ow' and Moderate Income Housing Fund after such date.

Notwithstanding the foregoing, Section 33334.2(a) of the Redevelopment Law permits the Agency to deposit less than twenty percent (20%) of its tax increment revenues allocable to a project area in its Low and Moderate Income Housing Fund in any year 1f certain findings are made to the effect that (i) no need exists in the community to improve, increase or preserve the supply of low- and moderate-income housing, including housing for very low­income households, in a manner which would benefit the project area, and that this finding is consistent with the housing element of the community's general plan, including its share of the regional housing needs of very low­income households and persons and families of low- or moderate-income, or (ii) some stated percentage less than twenty percent (20%) of such tax mcrement will be sufficient to meet the community's need to improve, increase or preserve the supply of low- and moderate-income housing available at affordable housing cost to persons and families of low- or moderate-income and to very )ow-income households, and that this finding is consistent with the housing element of the community's general plan. The Agency does not expect to be able to make such findings with respect to the Central Community Project Are.a while the Central Community Bonds are outstanding.

23

In order to provide an additional source of revenue to satisfy the Agency's obligation to make deposits of tax increment revenues from the Central Community Project Area to its Low and Moderate Income Housing Fund after July 1, 1996, the Agency has covenanted in the Indentures to allocate $80,000 of tax revenues from the R-76 Project Area each fiscal year, commencing July 1, 1996, to satisfy a portion of such obligation. Such allocation is subordinate to the payment of debt service on the R-76 Bonds and to the Agency's obligation, if any, to make deposits of tax increment revenues from the R-76 Project Area to the Low and Moderate Income Housing Fund. The Agency has covenanted in the R-76 Indenture to make findings under Section 33334.2(a) of the Redevelopment Law each year, if appropriate, such that no tax increment revenue allocable to the R-76 Project Area will be required to be deposited into the Agency's Low and Moderate Income Housing Fund. However, no assurance can be given that the Agency will be able to make such findings each year that the R-76 Bonds are outstanding.

Redevelopment Plan Limitations

Central Community Redevelopment Plan. The Central Community Redevelopment Plan was adopted by the City Council on February 7, 1973, pursuant to Ordinance No. 351. On December 17, 1986, in accordance with the provisions of California Health and Safety Code Section 33333.4, the City Council adopted Ordinance No. 531, amending the Central Community Redevelopment Plan and imposing a limitation on the maximum cumulative aggregate amount of tax increment revenues that can be allocated to the Agency from the Central Community Projec~t to an amount equal to $125,000,000. As of June 30, 1992, the Agency had received approximately $22,000,000 of said increment

In addition, pursuant to Ordinance No. 531, after December 31, 1998 the Agency may no longer (i) incur loans,. advances or indebtedness which are to be repaid from the allocation of tax increment revenues to finance redevelopment under the Central Community Redevelopment Plan after December 31, 1998, or (ii) commence eminent domain proceedings to acquire property pursuant to the Central Community Redevelopment Plan.

R-76 Redevelopment Plan. The R-76 Redevelopment Plan was adopted by the City Council on August 25, 1967 pursuant to Ordinance No. 235. On December 17, 1986, the City Council adopted Ordinance No. 530 amending the R-76 Redevelopment Plan and imposing a limitation on the maximum cumulative aggregate amount of tax increment revenues that can be allocated to the Agency from the R-76 Project to an amount equal to $30,000,000. As of June 30,. 1992, the Agency had received approximately $4,500,000 of said increment.

In addition, pursuant to Ordinance No. 530, after December 31, 1998 the Agency may no longer (i) incur loans:, advances or indebtedness which are to be repaid from the allocation of tax increment revenues to finance redevelopment under the R-76 Redevelopment Plan, or (ii) commence eminent domain proceedings to acquire property pursuant to the R-76 Redevelopment Plan.

IDSTORICAL AND ESTIMATED TAX REVENUES

Central Community Tax Revenues

The property tax rate applicable within the Central Community Project Area is limited by the California Constitution to one percent ( 1 % ) of taxable property value, plus the rate necessary to service certain indebtedness approved by the voters. See "LIMITATIONS ON TAX REVENUES -- Property Tax Rate Limitations - Article XIIIA" herein.

24

The following table presents a summary of the distribution of property tax collections per $100 of assessed valuation to the participating taxing entities within the Central Community Project Area.

TABLE 1

PORT HUENEME REDEVELOPMENT AGENCY Central Community Project Area Property Tax Levy Distribution

Fiscal Year 1992/93 Tax Rate Area 060oo<1l

Taxing Agency

General Levy: Elementary School General Port Hueneme Elementary School Physical Handicap Elementary School Severe Mental Retarded Institutional Child School Tax High School Severe Mental Retarded Oxnard High School Severe Mental Retarded School Capital Outlay Regional Occupational Center School Tax School Development Center High School General Oxnard Ventura Community College General Ventura College Child Center County General Fund County Superintendent of Schools County Library County Fire Protection District County Flood Zone Administration County Flood Zone #2 United Water Conservation District Ventura Regional County Sanitation City Port Hueneme

Total General Levy

Voter-Approved Indebtedness: Port Hueneme Sanitation Bond United Water Conservation Import United Water Conservation Bond

Total Tax Levy

Source: Ventura County Auditor-Controller.

.1630043914

.0089458678

.0011565238

.0017214706

.0010856076

.0003630266

. 0022114697

. 0010140145

.0010024501

.1167438236

.0474293292

.0002451761

.2716428658

.0038174704

.0613928420

.1406071163

.0024884551

.0253694304

.0086570531

.0050371155

.1810645004 1.000000000

. 0000370000

.0338110000

.0024090000 1.0362570000

(1) Tax Rate Area 06000 represents 98.2 % of the total 1992/93 local secured taxable value of property within the Central Community Project Area and is therefore representative and utilized in this analysis.

25

Table 2A sets forth the historical assessed valuation for the original project area of the Central Community Project, which constitutes approximately 75 % of the total Central Community Project Area, for fiscal years 1988/89 through 1992/93. Table 2B sets forth the historical assessed valuation for the project area annexed to the Central Community Project pursuant to Ordinance No. 419, enacted by the City on December 3, 1975, which constitutes approximately 25% of the total Central Community Project Area, for fiscal years 1988/89 through 1992/93. Table 2C sets forth the historical assessed valuation for the entire Central Community Project Area for fiscal years 1988/89 through 1992/93. The total assessed valuation for the Central Community Project Area for fiscal year 1992/93 is $234,646,819.

Local Secured Land & Improvements Personal Property Less Exemptions

Total Local Secured

Public Utilities Land & Improvements Personal Property

Total Utility

Unsecured Land & Improvements Personal Property

Total Unsecured

Total Assessed Value

Annual Percentage Growth

TABLE2A

PORT HUENEl\fE REDEVELOPl\fENT AGENCY Central Community Project Area - Original Area (Tax Rate Areas 06000, 06004, 06010, and 06014)

History of Assessed Valuation

Base Year 1972/73 1988/89 1989/90 1990/91 1991/92 1992/93

$10,798,748 $117,238,079$129,860,402 $145,483,403 $169,260,749 $166,737,994 375,279 639,021 1,370,242 610,950 538,091 334,712

(325,760) (1,532,000) (1,629,600) (1,568,000) (1,596,000) (1,677,200)

10,848,267 116,345,100 129,601,044 144,526,353 168,202,840 165,395,506

273,360 0 0 0 0 0 585,585 __ o __ o __ o __ o __ o

858,945 01 0 0 0 0

154,192 1,187,621 1,195,611 1,365,949 1,134,468 2,988,269 114,596 4,935,900 3,548,500 4,064,300 4,983,400 5,073,000

268,788 6,123,521 4,744,111 5,430,249 6,117,868 8,061,269

$11,976,000 $122,468,621 $134,345,155 $149,956,602 $174,320,708 $173,456,775

NIA 11.68% 9.70% 11.62% 16.25% (.50%)

Source: Port Hueneme Redevelopment Agency.

1 Beginning in fiscal year 1988/89, pursuant to Assembly Bill No. 454, which was signed into law on September 21, 1987, the assessed value of all property within the City owned by a public utility is no longer included in the total assessed valuation for the City. The assessed value of each utility-owned property is to be pooled by the County and reallocated to the City based on a unitary tax method of calculation.

26

TABLE2B

PORT HUENEME REDEVELOPMENT AGENCY Central Community Project Area - Annexed Area

(Tax Rate Areas 06020 and 06021) History of Assessed Valuation

Base Year 1975/76 1988/89 1989/90 1990/91 1991/92 1992/93

Local Secured Land & Improvements $3,878,796 $37,480,087 $41,326,162 $45,139,008 $49,825,843 $56,825,180 Personal Property 87,672 379,895 388,779 368,063 297,881 286,714 Less Exemptions (77,000) (341,600) (453,600) (474,600) (476,000) (434,000)

Total Local Secured 3,889,468 37,518,382 41,261,341 45,032,471 49,647,724 56,677,894

Public Utilities Land & Improvements 41,696 0 0 0 0 0 Personal Property 131,728 __ o __ o __ o __ o __ o

Total Utility 173,424 01 0 0 0 0

Unsecured Land & Improvements 397,600 1,867,900 1,943,500 2,851,899 2,148,190 2,028,710 Personal Property 337,564 2,761,700 2,600,200 3,039,400 3,257,700 2,483,440

Total Unsecured 735,164 4,629,600 4,543,700 5,891,299 5,405,890 4,512,150

Total Assessed Value $4,798,056 $42,147,982 $45,805,041 $50,923,770 $55,053,614 $61,190,044

Annual Percentage Growth NIA (4.28%) 8.68% 11.18 % 8.11 % 11.15%

Source: Port Hueneme Redevelopment Agency.

1 Beginning in fiscal year 1988/89, pursuant to Assembly Bill No. 454, which was signed into law on September 21, 1987, the assessed value of all property within the City owned by a public utility is no longer included in the total assessed valuation for the City. The assessed value of each utility-owned property is to be pooled by the County and reallocated to the City based on a unitary tax method of calculation.

27

TABLE2C

PORT HUENEME REDEVELOPMENT AGENCY Total Central Community Project Area

(Tax Rate Areas 06000, 06004, 06010, 06014, 06020 and 06021) History of Assessed Valuation

Local Secured Land & Improvements Personal Property Less Exemptions

Total Local Secured

Public Utilities Land & Improvements Personal Property

Total Utility

Unsecured Land & Improvements Personal Property

Total Unsecured

Total Assessed Value

Annual Percentage Growth

1988/89 1989/90 1990/91 1991/92 1992/93

$154,718,166 $171,186,564 $190,622,411 $219,086,592 $223,563,174 1,018,916 1,759,021 979,013 835,972 621,426

(1,873,600) (2,083,200) (2,042,600) (2,072,000) (2,111,200)

153,863,482 170,862,385 189,558,824 217,850,564 222,073,400

0 0 0 0 0 __ o __ o __ o __ o __ o

01 0 0 0 0

3,055,521 3,139,111 4,217,848 3,282,658 5,016,979 7,697,600 6,148,700 7,103,700 8,241,100 7,556,440

10,753,121 9,287,811 11,321,548 11,523,758 12,573i419

$164,616,603 $180,150,196 $200,880,372 $229,374,322 $234,646,819

7.11% 9.44% 11.51 % 14.18% 2.30%

Source: Port Hueneme Redevelopment Agency.

1 Beginning in fiscal year 1988/89, pursuant to Assembly Bill No. 454, which was signed into law on September 21, 1987, the assessed value of all property within the City owned by a public utility is no longer included in the total assessed valuation for the City. The assessed value of each utility-owned property is to be pooled by the County and reallocated to the City based on a unitary tax method of calculation.

28

The following table lists the ten largest taxpayers in the Central Comm.unity Project Area and the assessed value of their property for fiscal year 1992/93. The combined assessed valuation of these properties is $25,444,954, which represents approximately 10.83 % of the total assessed valuation of property within the Central Community Project Area.

TABLE3

PORT IHJENEME REDEVELOPMENT AGENCY Central Community Project Area

Ten Largest Taxpayers Fiscal Year 1992/93

Taxpayer Total Assessment Percentage of Total1

1. AA Milligan. Trust, Et Al $4,512,670 1.92% 2. Casa Pacifica Reilly Mtg Grp 4,004,185 1.71 3. Sunnyside Apartments 3,564,900 1.52 4. M VS Inc. 2,547,246 1.09 5. Port Hueneme Adventist Hospital 2,172,643 .93 6. Channel Islands Development Co. 1,982,886 .82 7. Venplum Inc., Et Al 1,900,903 .81 8. IDM Corp. 1,641,293 .70 9. Charles W. and Barnella R. Morris 1,560,738 .67 10. Balchand and Maya Patel 1,557,490 .66

Total $25,444.954 10.83 %

Source: Port Hueneme Redevelopment Agency.

1 The total assessed value of property within the Central Community Project Area for fiscal year 1992/93 is $234,646,819.

The following table sets forth the estimated tax increment revenues for the Central Community Project Area and the estimated debt service coverage for the Central Community Bonds to maturity.

29

Fiscal Year

Ending

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Tax Increment{l)

$2,300,000 2,300,000 2,300,000 2,300,000 2,300,000 2,300,000 2,300,000 2,300,000 2,300,000 2,300,000 2,300,000 2,300,000 2,300,000 2,300,000 2,300,000 2,300,000 2,300,000 2,300,000 2,300,000 2,300,000 2,300,000 2,300,000 2,300,000 2,300,000 2,300,000 2,300,000 2,300,000 2,300,000 2,300,000 2,300,000 2,300,000

Housing Set-Aside(2)

0 0 0 0

$460,000 460,000 460,000 460,000 460,000 460,000 460,000 460,000 460,000 460,000 460,000 460,000 460,000 460,000 460,000 460,000 460,000 460,000 460,000 460,000 460,000 460,000 460,000 460,000 460,000 460,000 460,000

Source: Port Hueneme Redevelopment Agency. (1) Assumes 0% annual increase.

TABLE 4 PORT HUENEME REDEVELOPMENT AGENCY

Central Community Project Area F~timated Incremental Tax Revenues and Debt Service Coverage

Increment Total Increment Available for Additional Available for Debt Service R-76 Increment(3) Debt Service Debt Service Coverage

$2,300,000 0 $2,300,000 0 NIA 2,300,000 0 2,300,000 $1,836,240 1.25 2,300,000 0 2,300,000 1,839,190 1.25 2,300,000 0 2,300,000 1,836,790 1.25 1,840,000 $80,000 1,920,000 1,536,710 1.25 1,840,000 80,000 1,920,000 1,540,925 1.25 1,840,000 80,000 1,920,000 1,538,510 1.25 1,840,000 80,000 1,920,000 1,539,610 1.25 1,840,000 80,000 1,920,000 1,538,930 1.25 1,840,000 80,000 1,920,000 1,536,850 1.25 1,840,000 80,000 1,920,000 1,538,330 1.25 1,840,000 80,000 1,920,000 1,538,080 1.25 1,840,000 80,000 1,920,000 1,539,460 1.25 1,840,000 80,000 1,920,000 1,539,220 1.25 1,840,000 80,000 1,920,000 1,537,360 1.25 1,840,000 80,000 1,920,000 1,538,880 1.25 1,840,000 80,000 1,920,000 1,538,510 1.25 1,840,000 80,000 1,920,000 1,536,250 1.25 1,840,000 80,000 1,920,000 1,536,375 1.25 1,840,000 80,000 1,920,000 1,539,300 1.25 1,840,000 80,000 i,920,000 1,539,750 1.25 1,840,000 80,000 1,920,000 1,537,725 1.25 1,840,000 80,000 1,920,000 1,538,225 1.25 1,840,000 80,000 1,920,000 1,540,975 1.25 1,840,000 80,000 1,920,000 1,540,700 1.25 1,840,000 80,000 1,920,000 1,537,400 1.25 1,840,000 80,000 1,920,000 1,536,075 1.25 1,840,000 80,000 1,920,000 1,536,450 1.25 1,840,000 80,000 1,920,000 1,538,250 1.25 1,840,000 80,000 1,920,000 1,536,200 1.25 1,840,000 80,000 1,920,000 1,540,300 1.25

(2) Pursuant to the Redevelopment Law, the Agency has deferred its obligation to set-aside 20% of its tax increment for deposit into its Low and Moderate Income Housing Fund until fiscal year 1996/97. (3) The Agency has agreed to allocate, in fiscal year 1996/97 and in each fiscal year thereafter so long as the Central Community Bonds are outstanding, R-76 Tax Revenues in an amount equal to $80,000

per fiscal year for deposit into the Agency's Low and Moderate Income Housing Fund, which amount will reduce the Agency's obligation to deposit tax increment from the Central Community Redevelopment Project into such Fund in each such fiscal year. Such allocation will be subordinate to the payment of debt service with respect to the R-76 Bonds and any deposit to the Low and Moderate Income Housing Fund required under the Redevelopment Law to be made with respect to the R-76 Project. See "SECURITY FOR THE CENTRAL COMMUNITY BONDS" and "LIMITATIONS ON TAX REVENUES - Low and Moderate Income Housing" herein.

30

R-76 Tax Revenues

The property tax rate applicable within the R-76 Project Area is limited by the California Constitution to one percent ( 1 % ) of taxable property value, plus the rate necessary to service certain indebtedness approved by the voters. See "LIMITATIONS ON TAXREVENUES--Property TaxRateLimitations-Article XlIIA" herein.

The table below presents a summary of the distribution of property tax collections per $100 of assessed valuation to the participating taxing entities within the R-76 Project Area.

TABLES

PORT HUENEME REDEVELOPMENT AGENCY R-76 Project Area

Property Tax Levy Distribution Fiscal Year 1992/93

Tax Rate Area 06006

Taxing Agency

General Levy: Elementary School General Port Hueneme Elementary School Physical Handicap Elementary School Severe Mental Retarded Institutional Child School Tax High School Severe Mental Retarded Oxnard High School Physical Handicap School Capital Outlay Regional Occupational Center School Tax School Development Center High School General Oxnard Ventura Community College General Ventura College Child Center County General Fund County Superintendent of Schools County Library County Fire Protection District County Flood Zone Administration County Flood Zone #2 United Water Conservation District Ventura Regional County Sanitation City Port Hueneme

Total General Levy

Voter-Approved Indebtedness: Port Hueneme Sanitation Bond United Water Conservation Import United Water Conservation Bond

Total Tax Levy

Source: Ventura County Auditor-Controller.

31

.1630038950

.0089458610

.0011565037

.0017214789

.0010856015

.0003629882

.0022114183

.0010139988

.0010024386

.1167433669

.0474290961

.0002451449

.2716430337

.0038174655

.0163928281

.1406082595

.0024884411

.0253694461

.0086570678

. 0050371350

.1810645313 1. 000000000

.0000370000

.0338110000

.0020490000 1. 0358970000

The following table sets forth the historical assessed valuation for the R-76 Project Area for fiscal years 1988/89 through 1992/93.

TABLE 6

PORT HUENEME REDEVELOPMENT AGENCY R-76 Project Area

(Tax Rate Area 06006) History of Assessed Valuation

Base Year 1966/67 1988/89 1989/90 1990/91 1991/92 1992/93

Local Secured Land & Improvements $943,880 $30,458,062 $32,834,979 $35,611,466 $36,393,717 $37,187,447 Personal Property 0 569,100 505,200 457,400 385,885 307,500 Less Exemptions ___ o (385,00()) (448,000) (427,000) (392,000) (420,000)

Total Local Secured 943,880 30,642,162 32,892,179 35,641,866 36,387,602 37,074,947

Public Utilities Land & Improvements 15,960 0 0 0 0 0 Personal Property 51.120 __ o ___ o __ o __ o __ o

Total Utility 67,080 01 0 0 0 0

Unsecured Land & Improvements 0 0 0 0 0 0 Personal Property 0 0 0 0 0 0

Total Unsecured __ o __ o __ o __ o __ o __ o

Total Assessed Value $1,010,960 $30,642,162 $32,892,179 $35,641,866 $36,387,602 $37,074,947

Annual Percentage Growth NIA 3.74% 7.34% 8.36% 2.09% 1.89%

Source: Port Hueneme Redevelopment Agency.

1 Beginning in fiscal year 1988/89, pursuant to Assembly Bill No. 454, which was signed into law on September 21, 1987, the assessed value of all property within the City owned by a public utility is no longer included in the total assessed valuation for the City. The assessed value of each utility-owned property is to be pooled by the County and reallocated to the City based on a unitary tax method of calculation.

32

The following table lists the ten largest taxpayers in the R-76 Project Area and the assessed value of their property for fiscal year 1992/93. The combined assessed valuation of these properties is $7,549,741, which represents approximately 20. 37 % of the total assessed valuation of property within the R-76 Project Area.

TABLE7

PORT HUENEME REDEVELOPMENT AGENCY R-76 Project Area

Ten Largest Taxpayers Fascal Year 1992/93

Taxpayer Total Assessment Percentage of Total1

1. Channel Islands Development Co. $4,963,311 13.39% 2. Frank and Jerry Patchett 338,130 .91 3. Roland J. and June Adler 311,000 .84 4. David J. and Mary B. De Paolo 306,223 .83 5. Bernard and Patricia I. Ratner 287,057 .77 6. Charles and Sharon Kloeris 286,000 .77 7. Michael A. and Rosemary Tobin 282,000 .76 8. Jan Blake 265,725 .72 9. Huang and Caroline Sung-Cheng 259,780 .70 10. Albert W. and Kathy Young 250,515 .68

Total $7,549,741 20.37% =

Source: Port Hueneme Redevelopment Agency.

1 The total assessed value of property within the R-76 Project Area for fiscal year 1992/93 is $37,074,947.

33

The following table sets forth the estimated tax increment revenues for the R-76 Project Area and the estimated debt service coverage for the R-76 Bonds to maturity.

TABLES PORT HUENE:ME REDEVELOPMENT AGENCY

R-76 Project Area &timated Incremental Tax Revenues and Debt Service Coverage

Fiscal Year Tax

Ending Increment( 1) Debt Service

1993 $382,000 0 1994 382,000 $255,800 1995 382,000 253,200 1996 382,000 255,600 1997 382,000 252,675 1998 382,000 254,750 1999 382,000 256,500 2000 382,000 252,925 2001 382,000 254,350 2002 382,000 255,450 2003 382,000 256,225 2004 382,000 251,675 2005 382,000 252,125 2006 382,000 252,250 2007 382,000 252,050 2008 382,000 256,525 2009 382,000 255,350 2010 382,000 253,850 2011 382,000 252,025 2012 382,000 254,875 2013 382,000 252,075 2014 382,000 253,950 2015 382,000 255,175 2016 382,000 255,750 2017 382,000 255,675 2018 382,000 254,950 2019 382,000 253,575 2020 382,000 251,550 2021 382,000 253,875 2022 382,000 255,225 2023 382,000 255,600

Source: Port Hueneme Redevelopment Agency. ( 1) Assumes O % annual increase.

34

Coverage

NIA 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.5

THE AGENCY

Organi.7.ation and Powers

In 1962, the City Council took action that formally recognized the need for redevelopment of portions of the City. The Agency was created under the provisions of the Redevelopment Law by an ordinance approved and adopted by the City Council on April 14, 1962. The City Council declared itself to be the Agency. The Agency appoints an Executive Director, who is also the City Manager, to implement Agency policies and to administer redevelopment activities.

The Agency's staff is organized within the City's Community Development Department and is comprised of full-time City employees. As such, these employees are under the State retirement system. City staff provides technical services connected with the redevelopment projects, including fiscal services, engineering, planning, legal assistance and other functions necessary for project implementation.

All powers of the Agency are vested in its five members. Under the Redevelopment Law, the Agency is a separate public body and exercises governmental functions in executing duly adopted redevelopment projects. As such, the Agency has the authority to acquire, develop, administer and sell or lease property, including the right of eminent domain, the right to accept financial assistance from any source, and to issue bonds, notes or other evidence of indebtedness, and expend their proceeds. The Agency itself does not have the power to levy taxes.

Agency Projects

In 1963, the City Council adopted an ordinance creating the Agency's first redevelopment project area known as the Port Hueneme Redevelopment Project No. R-70. Project No. R-70 was closed out by final federal audit in 1968.

The Central Community Project and the R-76 Project are the only other redevelopment projects established by the Agency. See "THE PROJECTS" herein.

Agency Financial Statements

The Agency is a public entity separate and apart from the City and is staffed by employees of the City. All accounting records of Agency operations are maintained by the City's Finance Department separately from the accounting records of the City.

The Agency's audited annual financial statements for the fiscal year ended June 30, 1992 are attached hereto as APPENDIX C.

35

THE PROJECTS

Central Community Project

The Redevelopment Plan for the Central Community Redevelopment Project was adopted by the City Council on February 7, 1973 pursuant to Ordinance No. 351, as amended by (i) Ordinance No. 419, adopted on December 3, 1975, which annexed additional territory within the Central Comm.unity Project Area, and (ii) Ordinance Nos. 444 and 531, adopted on May 4, 1977 and December 17, 1986, respectively. The Central Community Project Area presently encompasses approximately 415 acres located in the southeast quadrant of the City.

Prior to the adoption of the Central Community Redevelopment Plan, conditions in the Central Community Project Area met the statutory tests for blight, including (i) substandard, deteriorating and obsolete buildings, (ii) inadequate public improvements, facilities and utilities, (iii) a prevalence of depreciated values and economic maladjustment, and (iv) other conditions detrimental to public health, safety and welfare. The Central Community Project was created to eradicate blight within the Central Community Project Area through a coordinated program of new development and property revitalization. The primary goal of the Central Community Redevelopment Plan is to realize the City's full residential and commercial development potential by maximizing the use of its valuable beach-front property.

The Central Community Project Area includes the following four major sub-areas: (i) Surfside, a predominately residential and tourist area situated south of Hueneme Road; (ii) Market Street Landing, a commer'?ial corridor between Hueneme Road and Scott Street extending west from Ventura Road to Ponoma Street; (iii) Ventura West, the City's oldest residential neighborhood located west of Ventura Road between Scott Street and Pleasant Valley Road; and (iv) Ventura East, a predominantly residential area comprised of various housing types and densities situated east of Ventura Road between Hueneme Road and Pleasant Valley Road.

The Surfside area has been extensively redeveloped, including the replacement of dysfunctional residential, commercial and industrial sites with new beach-oriented residential, public recreational and visitor-serving commercial development. The City plans to revitalize the Market Street Landing, the commercial nucleus of the City's former downtown, with retail and professional office development. The Ventura West area is targeted for extensive residential redevelopment, including housing rehabilitation and building code enforcement. Additionally, the Agency has initiated a comprehensive program of housing rehabilitation assistance, commercial property revitalization and building code enforcement for the Ventura East area, which has been classified as a transitional neighborhood.

A wide variety of revitalization and building code enforcement has taken place in the Central Community Project Area since the adoption of the Central Community Redevelopment Plan, including (i) Hueneme Beach Park, the City's largest recreational facility encompassing approximately 60 acres, (ii) the Dorill B. Wright Cultural Center, a 20,000 square foot multipurpose building located along Surfside Drive between Hueneme Beach Park and Moranda Park, (iii) Surfside Village, a multifaceted project involving three private developers and encompassing residential, retail, commercial and visitor-serving components, (iv) Casa Pacifica, a 90-unit senior citizen complex located southwest of the intersection of Ventura Road and Pleasant Valley Road, (v) Harbor Plaza, a 65,000 square foot garden office complex located at the western terminus of Market Street Landing between Market Street and Ponoma Street, (vi) Port Harbor Homes, a 24-unit residential planned unit development located at the northeast comer of Scott Street and Ponoma Street, and (vii) the Herbert C. Templeman Educational Center, an 8,765-square foot professional office building which serves as the administrative headquarters for the Hueneme Elementary School District.

Projects currently under negotiation include (i) Harbor Landing, a 42-unit residential planned unit development on 1.95 acres of land Jocated at the southwest comer of Hueneme Road and Third Street, (ii) La Habra

36

Homes, a 12-unit townhouse project located at the southeast comer of Clara Street and Ponoma Street, and (iii) Hueneme Road Gateway, a 4-unit addition to the adjacent 37-unit Courtyard Villas condominium complex, which will involve the removal of an abandoned gas station located at the comer of Hueneme Road and "J" Street. Moreover, the Agency has identified 18 additional parcels within the Project Area as likely candidates for redevelopment prior to the expiration of the Central Community Redevelopment Plan in 2003.

R-76 Project

The R-76 Project Area encompasses approximately 50 acres within the City. Redevelopment activities within the R-76 Project Area have included the acquisition of 36 separate properties and the relocation of 76 households and businesses. After 20 years of redevelopment, this Project Area is now occupied by 90 units of City­owned affordable rental housing, 200 market-rate condominiums, 85 detached single family beach homes and a 135-room full service hotel.

CERTAIN LEGAL MATTERS

Jones Hall Hill & White, A Professional Law Corporation, San Francisco, California, Bond Counsel, will render opinions with respect to the validity of the Central Community Bonds and the R-76 Bonds. Copies of the forms of such approving opinions are attached hereto as APPENDIX D. Certain legal matters will be passed upon for the Agency by Burke, Williams & Sorensen, Los Angeles, California, and for the Underwriter by Cox, Castle & Nicholson, Los Angeles, California.

ABSENCE OF LITIGATION

At the time the Bonds are delivered, counsel to the Agency will provide an opinion to the effect that, to the best knowledge of such counsel, there is no litigation pending or overtly threatened against the Agency in any court or other tribunal of competent jurisdiction, State or federal, which seeks to enjoin or challenges the authority of the Agency to participate in the transactions contemplated by this Composite Official Statement, the Bonds, the Indentures, the Refunding Agreement or the Purchase Agreement.

TAX MATTERS

In the opinion of Jones Hall Hill & White, A Professional Law Corporation, San Francisco, California, Bond Counsel, subject, however, to the qualifications set forth below, under existing law, the interest on the Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations; it should be noted, however, that, for the purpose of computing the alternative minimum tax imposed on such corporations (as defined for federal income tax purposes), such interest is taken into account in determining certain income and earnings.

The opinions set forth in the preceding paragraph are subject to the condition that the Agency comply with all requirements of the Tax Code that must be satisfied subsequent to the issuance of the Bonds in order that such interest be, or continue to be, excluded from gross income for federal income tax purposes. The Agency has covenanted to comply with each such requirement. Failure to comply with certain of such requirements may cause the inclusion of such interest in gross income for federal income tax purposes to be retroactive to the date of issuance of the Bonds. Bond Counsel expresses no opinion regarding other federal tax consequences arising with respect to the Bonds.

37

Prospective purchasers of the Bonds should be aware that, under existing law, for the purpose of computing the twenty percent (20 % ) federal alternative minimum tax imposed on corporations for a taxable year beginning in 1989, an amount equal to fifty percent (50 % ) of the amount by which adjusted net book income exceeds alternative minimum taxable income is added to alternative minimum taxable income, and for taxable years beginning after 1989, an amount equal to seventy-five percent (75%) of the amount by which adjusted current earnings exceed alternative minimum taxable income is added to alternative minimum taxable income. Interest otherwise excluded from gross income, such as interest on the Bonds, is included in adjusted net book income and in adjusted current earnings.

Prospective purchasers of the Bonds should also be aware that (i) Section 265 of the Code denies a deduction for interest on indebtedness incurred or continued to purchase or carry the Bonds or, in the case of a financial institution, that portion of the Bond owner's interest expense allocated to interest payable with respect to the Bonds, (ii) with respect to insurance companies subject to the tax imposed by Section 831 of the Code, section 832(b)(5)(B)(i) reduces the deduction for loss reserves by fifteen percent (15 %) of the sum of certain items, including interest on the Bonds, (iii) for taxable years beginning before January 1, 1996, interest on the Bonds earned by some corporations could be subject to the environmental tax imposed by section 59A of the Code, (iv) interest on the Bonds earned by certain foreign corporations doing business in the United States could be subject to a branch profits tax imposed by section 884 of the Code, (v) passive investment income, including interest on the Bonds, may be subject to federal income taxation under section 1375 of the Code for Subchapter S corporations that have Subchapter C earnings and profits at the close of the taxable year if greater than twenty-five percent (25 % ) of the gross receipts of such Subchapter S corporation is passive investment income and (vi) section 86 of the Code requires recipients of certain Social Security and certain Railroad Retirement benefits to take into account, in determining the tax.ability of such benefits, receipts or accruals of interest on the Bonds.

In the further opinion of Bond Counsel, interest on the Bonds is exempt from California personal income taxes.

VERIFICATION OF MATHEMATICAL CO:MPUTATIONS

Upon delivery of the Bonds, Ernst & Young will deliver a report verifying the mathematical accuracy of certain computations concerning (i) the adequacy of the maturing principal amounts of and interest on the Federal Securities (as defined in the Refunding Agreement) to redeem the 1986 Bonds on the designated redemption date pursuant to the terms of the Refunding Agreement, and (ii) the yield on the Bonds and on such Federal Securities considered by Bond Counsel in their determination that interest on the Bonds is excluded from gross income for federal income tax purposes.

UNDERWRITING

The Bonds will be purchased from the Agency by Donaldson, Lufkin & Jenrette Securities Corporation (the "Underwriter"). The Underwriter has agreed to purchase (i) the Central Community Bonds at a purchase price equal to the principal amount thereof, less an original issue discount of $382,122.90 and less an underwriter's discount of $409,675, and (ii) the R-76 Bonds at a purchase price equal to the principal amount thereof, less an underwriter's discount of $58,100. The Bond Purchase Agreement, dated April 21, 1993 (the "Purchase Agreement"), provides that the Underwriter will purchase all of the Bonds if any are purchased. The obligation to make such a purchase is subject to certain terms and conditions set forth in the Purchase Agreement. .

The initial public offering prices stated on the cover of this Composite Official Statement may be changed from time to time by the Underwriter. The Underwriter may offer and sell the Bonds to certain dealers, banks acting as agents and others at prices lower than said public offering prices.

38

RATINGS

Standard & Poor's Corporation and Moody's Investors Service have assigned their municipal bond ratings of "AAA" and "Aaa", respectively, to the Central Community Bonds with the understanding that upon delivery of the Central Community Bonds, a policy insuring the payment when due of the principal of and interest on the Central Community Bonds will be issued by AMBAC Indemnity. Standard & Poor's Corporation and Moody's Investors Service have assigned their municipal bond ratings of "BBB" and "Baa", respectively, to the R-76 Bonds.

The ratings described in the preceding paragraph reflect only the view of the rating organizations and an explanation of the significance of such ratings may be obtained from such organizations as follows: Standard & Poor's Corporation, 25 Broadway, New York, New York 10004 and Moody's Investors Service, 99 Church Street, New York, New York 10007. There is no assurance that such ratings will continue for any given period of time or that such ratings will not be revised downward or withdrawn entirely by such rating agencies, if in the judgment of such rating agencies circumstances so warrant. Any such downward revision or withdrawal of such ratings may have an adverse effect on the market price of the Bonds. The Agency has not covenanted to take any actions necessary to maintain any ratings on the Bonds.

:MISCELLANEOUS

The purpose of this Composite Official Statement is to supply information to prospective buyers of the Bonds. Quotations from, and summaries and explanations of, the Indentures and other documents and statutes contained herein do not purport to be complete, and reference is made to such documents, Indentures and statutes for full and complete statements of their provisions.

Unless otherwise noted, all information contained in this Composite Official Statement pertaining to the Agency, the City and the Project Areas has been furnished by the Agency and the City. Any statement in this Composite Official Statement involving matters of opinion, whether or not expressly so stated, are intended as such and not as representations of fact. This Composite Official Statement is not to be construed as a contract or agreement between the Agency and the purchasers or registered owners of any of the Bonds.

The execution and delivery of this Composite Official Statement has been duly authorized by the Agency.

PORT HUENEME REDEVELOPMENT AGENCY

By: Isl John R. Velthoen Executive Director

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( THIS PAGE INTENTIONALLY LEFf BLANK)

APPENDIXA

SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURES

The following is a brief summary of the provisions of the Central Community Indenture and R-76 Indenture. Such summary is not intended to be definitive, and reference is made to the actual documents ( copies of which may be obtained from the Trustee) for the complete terms thereof.

The Central Community Bonds will be issued under the Central Community Indenture and the R-76 Bonds will be issued under the R-76 Indenture. The provisions of the Indentures are substantially identical (except as otherwise specified below), and the following summary describes the provisions of each of the Indentures unless reference is made to a specific Indenture.

Definitions

Except as otherwise defined in this summary, the terms previously defined in this Official Statement have the respective meanings previously given. In addition, the following terms have the following meanings when used in this summary:

"Additional Revenues" means, a&; of the date of calculation, the amount of Tax Revenues which, as shown in the Report of an Independent Redevelopment Consultant, are estimated to be receivable by the Agency within the Fiscal Year following the Fiscal Year in which such calculation is made as a result of increases in the assessed valuation of taxable property in the Project Area due to the completion of construction which is not then reflected on the tax rolls, or due to 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) as of the date on which such calculation is made.

"AMBAC Indemnity" means AMBAC Indemnity Corporation, a Wisconsin -domiciled stock insurance company.

"Annual Debt Service" means, for each Bond Year, the sum of (a) the interest payable on the Outstanding Bonds in such Bond Year, and (b) the principal amount of the Outstanding Bonds scheduled to be paid in such Bond Year upon the maturity or mandatory Sinking Account redemption thereof.

"Bond Counsel" means ( a) '-Tones Hall Hill & White, A Professional Law Corporation, or (b) any other attorney or firm of attorneys appointed by or acceptable to the Agency, of nationally-recognized experience in the issuance of obligations the interest on which is excludable from gross income for federal income tax purposes under the Tax Code.

"Bond Year" means any twelve-month period beginning on August 2 in any year and extending to the next succeeding August 1, both dates inclusive; except that the first Bond Year begins on the Closing Date and end on August 1, 1993.

"Bonds" means, collectively, the 1993 Bonds and any Parity Debt.

"Business Day" means a day of the year ( other than a Saturday or Sunday) on which banks in California, are not required or permitted to be closed, and on which the New York Stock Exchange is open.

"Closing ~" means the date on which the 1993 Bonds are delivered by the Agency to the Original Purchaser.

"Federal Securities" means: (a) any direct general obligations of the United States of America (including obligations issued or held in book entry form on the books of the Department of the Treasury of the United States of America), the payment of principal of and interest on which are unconditionally and fully guaranteed by the United States of America; (b) obligations of any agency or department of the United States of America which represent the full faith and credit of the United States of America or the timely payment of the principal of and interest on which are secured or guaranteed by the full faith and credit of the United States of America; and (c) any obligations issued by the State or any political subdivision thereof the payment of the principal of and interest and premium (if any) on which are fully secured by Federal Securities described in the preceding clauses ( a) or (b ), as verified by an Independent Accountant.

"Fiscal Year" means any twelve-month period beginning on July 1 in any year and extending to the next succeeding June 30, both dates inclusive, or any other twelve­month period selected and designated by the Agency as its official fiscal year period pursuant to a Certificate of the Agency filed with the Trustee.

"Independent Accountant" means any accountant or firm of such accountants duly licensed or registered or entitled to practice and practicing as such under the laws of the State, appointed by or acceptable to the Agency, and who, or each of whom: (a) is in fact independent and not under domination of the Agency; (b) does not have any substantial interest, direct or indirect, with the Agency; and ( c) is not connected with the Agency as an officer or employee of the Agency .. , but who may be regularly retained to make reports to the Agenc~1

"Independent Redevelopment Consultant" means any consultant or firm of such consultants appointed by or acceptable to the Agency and who, or each of whom: (a) is judged by the Agency 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 domination of the Agency; (c) does not have any substantial interest, direct or indirect, with the Agency other than as the Original Purchaser of the Bonds or any Parity Debt; and ( d) is not connected with the Agency as an officer or employee of the Agency, but who may be regularly retained to make reports to the Agency.

"Maximum Annual Debt Service" means, as of the date of calculation, the largest amount of Annual Debt Service on all Outstanding Bonds for the current or any future Bond Year. For purposes of such calculation, there is excluded a pro rata portion of each installment of principal of any Parity Debt, together with the interest to accrue thereon, in the event and to the extent that the proceeds of such Parity Debt are deposited in an escrow fund from which amounts may not he released to the Agency unless the Tax

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Revenues for the current Fiscal Year (as evidenced in the written records of the County), plus at the option of the Agency the Additional Revenues, at least equal 125% of Maximum Annual Debt Service.

"Minimum Ratin&"" means, with respect to any Permitted Investment, a long­term rating of A or better from S&P and Moody's, or a short-term rating which is in the highest general rating category of S&P and Moody's, in any event determined without regard to any refinement or gradation of such rating by a numerical modifier, a plus or a minus sign, or otherwise.

"Moody's" means Moody's Investors Service Inc., of New York, New York, and its successors.

"Municipal Bond Insurance Policy" means the municipal bond insurance policy issued by AMBAC Indemnity insuring the payment when due of the principal of and interest on the Central Community Bonds as provided therein.

"1986 Bonds" means the $15,285,000 aggregate principal amount of Port Hueneme Redevelopment Agency Central Community Redevelopment Project Tax Allocation Refunding Bonds, 1986 Series A issued by the Agency under and pursuant to Resolution 708, adopted by the Agency on October 16, 1986.

" 1993 Bonds" means the 1993 Tax Allocation Refunding Bonds authorized by and at any time Outstanding pursuant to the Indenture.

"Outstandin~", when used as of any particular time with reference to Bonds, means (subject to the provisions of the Indenture) all Bonds except: (a) Bonds theretofore canceled by the Trustee or surrendered to the Trustee for cancellation; (b) Bonds paid or deemed to have been paid within the meaning of the defeasance section of the Indenture; and (c) Bonds in lieu of or in substitution for which other Bonds shall have been authorized, executed, issued and delivered by the Agency pursuant to the Indenture.

"Owner" means, with respect to any Bond, the person in whose name the ownership of such Bond shall be registered on the Registration Books.

"Parity Debt" means any bonds, notes, loans, advances or other indebtedness issued or incurred by the Agency on a parity with the 1993 Bonds pursuant to the Indenture.

"Permitted Investments" under the Central Community Indenture means any of the following which at the time of investment are legal investments under the laws of the State for the moneys proposed to be invested therein:

(a) Federal Securities;

(b) obligations of any of the following federal agencies which obligations represent full faith and credit of the United States of America, including: Export­Import Bank, Farmers Home Administration, General Services Administration, U.S. Maritime Administration, Small Business Administration, Government National Mortgage Association ("GNMA"), U.S. Department of Housing & Urban Development ("DHA's"), and Federal Housing Administration;

(c) bonds, notes or other evidences of indebtedness rated "AM" by S&P and "Aaa" by Moody's issued by the Federal National Mortgage Association or the

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Federal Home Loan Mortgage Corporation with remaining maturities not exceeding three years;

(d) U.S. dollar denominated deposit accounts, federal funds and banker's acceptances with domestic commercial banks which have a rating on their short term certificates of deposit on the date of purchase of "A-1" or "A" by S&P and "P­l" by Moody's and maturing no more than 360 days after the date of purchase (ratings on holding companies are not considered as the rating of the bank);

(e) commercial paper which is rated at the time of purchase in the single highest classification, "A-1 +" by S&P and "P-1" by Moody's and which matures not more than 270 days after the date of purchase;

(f) investments in a money market fund rated "MAm" or "MAm-G" or better by S&P;

(g) Pre-refunded "Municipal Obligations," defined as any bonds or other obligations of any state of the United States of America or of any agency, instrumentality or local governmental unit of any such state which are not callable at the option of the obligor prior to maturity or as to which irrevocable instructions have been given by the obligor to call on the date specified in the notice; and (i) which are rated, based on an irrevocable escrow account or fund (the "escrow"), in the highest rating category of S&P and Moody's or any successors thereto; or (ii) (A) which are fully secured as to principal and interest and redemption premium, if any, by an escrow consisting only of cash or obligations described in paragraph (a) above, which escrow may be applied only to the payment of such principal of and interest and redemption premium, if any, on such bonds or other obligations on the maturity date or dates thereof or the specified redemption date or dates pursuant to such irrevocable instructions, as appropriate, and (B) which escrow is sufficient, as verified by a nationally recognized independent certified public accountant, to pay principal of and interest and redemption premium, if any, on the bonds or other obligations described in this paragraph on the maturity date or dates specified in the irrevocable instructions referred to above, as appropriate;

(h) investment agreements approved in writing by AMBAC Indemnity with notice to S&P; and

(i) other forms of investments approved in writing by AMBAC Indemnity with notice to S&P.

"Permitted Investments" under the R-76 Indenture means any of the following which at the time of investment are legal investments under the laws of the State for the moneys proposed to be invested therein:

(a) Federal Securities;

(b) any obligations or indebtedness ( other than Federal Securities) issued or guaranteed by any federal agencies and entities which have a Minimum Rating;

(c) interest-bearing demand or time deposits (including certificates of deposit) in federal or state chartered savings and loan associations or in national or State banks (including the Trustee) provided that: (i) the long-term obligations

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of such association or bank or the long-term obligations of the holding company of such association or bank have a Minimum Rating; or (ii) such deposits are fully insured by the Federal Deposit Insurance Corporation; or (iii) collateralized in the manner required for the deposit of public funds;

(d) obligations issued by any corporation organized and operating within the United States of America, which obligations have a Minimum Rating;

(e) commercial paper which has a Minimum Rating or which is backed by a letter of credit or line of credit which has a Minimum Rating;

(f) money market funds, including funds for which First Interstate Bank Corp., its affiliates or subsidiaries provide investment advisory or other management services, with respect to which either (i) the policy is to invest solely in Permitted Investments, or (ii) have a Minimum Rating;

(g) bills of exchange or time drafts drawn on and accepted by a commercial bank (including the Trustee), otherwise known as bankers acceptances, which are eligible for purchase by the Federal Reserve System and the long-term obligations of which commercial bank or the long-term obligations of the holding company of which has a Minimum Rating;

(h) obligations the interest on which is excludable from gross income for federal income tax purposes, and which have a Minimum Rating;

(i) shares in a California common law trust established pursuant to Title 1, Division 7, Chapter 5 of the California Government Code which invests exclusively in investments permitted by Section 53635 of Title 5, Division 2, Chapter 4 of the Government Code of the State of California, provided the Trustee has access to, and control over withdrawals from and deposits to, such trust; and

(j) any guaranteed investment agreement or similar investment which is the obligation of, or which is secured or guaranteed by the obligations of, a financial institution whose long-term obligations at the time of such investment have a Minimum Rating, by the terms of which the Trustee is authorized to withdraw all amounts therefrom in the event such Minimum Rating ceases to be maintained.

11 Plan Limitations II means the limitations contained or incorporated in the Redevelopment Plan on (a) the aggregate principal amount of indebtedness payable from Tax Revenues which may be outstanding at any time, (b) the aggregate amount of taxes which may be divided and allocated to the Agency pursuant to the Redevelopment Plan, and (c) the period of time for establishing or incurring indebtedness payable from Tax Revenues.

11 Qualified Reserve Account Credit Instrument" means an irrevocable standby or direct-pay letter of credit or surety bond issued by a commercial bank or insurance company and deposited with the Trustee pursuant to the provisions of the Indenture, provided that all of the following requirements are met: (a) the long-term credit rating of such bank or insurance company is in the highest rating category by S&P and Moody's, or the claims paying ability of such insurance company is rated in the highest rating category by A.M. Best & Company; (b) such letter of credit or surety bond has a term of at least twelve ( 12) months; (c) such letter of credit or surety bond has a stated amount at least equal to the portion of the Reserve Requirement with respect to which funds are

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proposed to be releas,ed pursuant to the Reserve Account provisions of the Indenture; and (d) the Trustee is authorized pursuant to the terms of such letter of credit or surety bond to draw thereunder an amount equal to any deficiencies which may exist from time to time in the Interest Account, the Principal Account for the Sinking Account or the purpose of making payments required pursuant to the Indenture.

"Reserve Reqµirment" means~ as of the date of any calculation, the lesser of (a) Maximum Annual Debt Service on all Outstanding Bonds, or (b) the maximum amount permitted to be deposited in the Reserve Account under the Tax Code, as certified to the Trustee by the Agency.

"S,&£" means Standard & Poor's Corporation of New York, New York, and its successors.

"Subordinate Debt" means any loans, advances or indebtedness issued or incurred by the Agency in accordance with the requirements of the Indenture, which are either: (a) payable from, but not secured by a pledge of or lien upon, the Tax Revenues; or (b) secured by a pledge of or lien upon the Tax Revenues which is subordinate to the pledge of and lien upon the Tax Revenues under the Indenture for the security of the Bonds and any Parity Debt.

"Tax Revenues" means all taxes annually allocated to the Agency with respect to the Project Area following the Closing Date, pursuant to Article 6 of Chapter 6 (commencing with Section 33670) of the Redevelopment Law and Section 16 of Article XVI of the Constitution of the State and as provided in the Redevelopment Plan, including all payments, subventions and reimbursements (if any) to the Agency specifically attributable to ad valorem taxes lost by reason of tax exemptions and tax rate limitations; but excluding: (i) all amounts of such taxes required to be deposited into the Low and Moderate Income Housing Fund of the Agency in any Fiscal Year pursuant to Section 33334.3 of the Redevelopment Law, except to the extent permitted under the Redevelopment Law to be applied to the payment of the principal of and interest and premium (if any) on the Bonds, and (ii) amounts payable by the State to the Agency under and pursuant to the provisions of Chapter 1.5 of Part 1 of Division 4 of Title 2 (commencing with Section 16110) of the Government Code of the State.

Establishment of Funds and Accounts; Flow of Funds

Costs of Issuance Fund. A portion of the proceeds of the Bonds will be deposited by the Trustee in the Costs of Issuance Fund on the Closing Date. The moneys in the Costs of Issuance Fund will be disbursed to pay costs of issuing the Bonds and other related financing costs from time to time upon receipt of Requests of the Agency. On August 1, 1993, or upon the earlier Request of the Agency, all amounts remaining in the Costs of Issuance Fund will be traµ.sferred by the Trustee to the Interest Account.

Special Fund; Deposit of Tax Revenues. The Agency will hold the Special Fund, and will deposit into it all of the Tax Revenues received in any Bond Year promptly upon receipt thereof by the Agency, until such time during such Bond Year as the amounts on deposit in the Special Fund equal the aggregate amounts required to be transferred to the Trustee for deposit into the Interest Account, the Principal Account, the Sinking Account, the Reserve Account and the Redemption Account in such Bond Year as described below. All Tax Revenues received by the ·Agency during any Bond Year in excess of the amount required to be deposited in the Special Fund during such Bond Year as described in the preceding sentence are released from the pledge and lien of the

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Indenture for the security of the Bonds and may be applied by the Agency for any lawful purposes of the Agency.

Debt Seryice Fund. The Trustee will establish a Debt Service Fund, which is pledged to the security of the Bonds. The Agency will transfer moneys in the Special Fund to the Trustee in the following amounts at the following times, for deposit by the Trustee in the following respective special accounts within the Debt Service Fund, in the following order of priority:

(a) Interest Account. On or before the 5th Business Day preceding each date on which interest on the Bonds is due and payable, the Agency will withdraw from the Special Fund and transfer to the Trustee for deposit in the Interest Account an amount which, when added to the amount then on deposit in the Interest Account, will be equal to the aggregate amount of the interest becoming due and payable on the Outstanding Bonds on such date. All moneys in the Interest Account will be used and withdrawn by the Trustee solely for the purpose of paying the interest on the Bonds as it comes due and payable (including accrued interest on any Bonds purchased or redeemed prior to maturity pursuant to the Indenture).

(b) Principal Account. On or before the 5th Business Day preceding each date on which principal of the Bonds is due and payable at maturity, the Agency will withdraw from the Special Fund and transfer to the Trustee for deposit in the Principal Account an amount which, when added to the amount then on deposit in the Principal Account, will be equal to the amount of principal coming due and payable on such date on the outstanding Bonds. All moneys in the Principal Account will be used and withdrawn by the Trustee solely for the purpose of paying the principal of the Bonds upon the maturity thereof.

(c) Sinkin~ Account. On or before the 5th Business Day preceding each date on which any Outstanding Term Bonds are subject to mandatory Sinking Account redemption, the Agency will withdraw from the Special Fund and transfer to the Trustee for deposit in the Sinking Account an amount which, when added to the amount then contained in the Sinking Account, will be equal to the aggregate principal amount of the Term Bonds required subject to mandatory Sinking Account redemption on such date. All moneys on deposit in the Sinking Account will be used and withdrawn by the Trustee for the sole purpose of paying the principal of the Term Bonds as it comes due and payable upon the mandatory Sinking Account redemption thereof.

(d) Reserve Account. Amounts in the Reserve Account will be used and withdrawn by the Trustee solely for the purpose of making transfers to the Interest Account, the Principal Account and the Sinking Account, in such order of priority, on any date which the principal of or interest on the Bonds comes due and payable, in the event of any deficiency at any time in any of such accounts, or at any time for the retirement of all the Bonds then outstanding. So long as no Event of Default has occurred and is continuing, any amount in the Reserve Account in excess of the Reserve Requirement on the 6th Business Day preceding each Interest Payment Date will be withdrawn from the Reserve Account by the Trustee and deposited in the Interest Account.

The Agency has the right at any time to release funds from the Reserve Account, in whole or in part, by tendering to the Trustee: ( 1) a Qualified Reserve Account Credit Instrument, and (2) an opinion of Bond Counsel stating that

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neither the release of such funds nor the acceptance of such Qualified Reserve Account Credit Instrument will cause interest on the Bonds to become includable in gross income for purposes of federal income taxation. Upon tender of such items to the Trustee, and upon delivery by the Agency to the Trustee of written calculation of the amount permitted to be released from the Reserve Account, the Trustee will transfer such funds from the Reserve Account to the Agency free and clear of the lien of the Indenture. Upon the expiration of any Qualified Reserve Account Credit Instrument, the Agency is obligated either (i) to replace such Qualified Reserve Account Credit Instrument with a new Qualified Reserve Account Credit Instrument, or (ii) to deposit or cause to be deposited with the Trustee an amount of funds equal to the Reserve Requirement, to be derived from the first available Tax Revenues.

The Reserve Account may be maintained in the form of one or more separate sub-accounts which are established for the purpose of holding the proceeds of separate issues of the Bonds in conformity with applicable provisions of the Tax Code.

( e) Redemption Account. On or before the 5th Business Day preceding any date on which Bonds are subject to redemption (other than mandatory Sinking Account redemption of Term Bonds), the Agency will withdraw from the Special Fund and transfer to the Trustee for deposit in the Redemption Account an amount required to pay the principal of and premium, if any, on the Bonds to be so redeemed on such date. All moneys in the Red,emption Account will be used and withdrawn by the Trustee solely for the purpose of paying the principal of and premium, if any, on the Bonds upon the redemption thereof, on the date set for such redemption.

Investment of Funds

Moneys in the Debt Service Fund, the Interest Account, the Principal Account, the Reserve Account, the Sinking Account, the Redemption Account, the Costs of Issuance Fund, and the Rebate Fund will be invested by the Trustee in Permitted Investments specified in the Request of the Agency delivered to the Trustee at least two (2) Business Days in advance of the making of such investments; provided, however, that in the absence of any such direction from the Agency, the Trustee will invest any such moneys solely in Permitted Investments described in clause (f) of the definition thereof. Moneys in the Special Fund will be invested by the Agency in any obligations in which the Agency is legally authorized to invest funds within its control. All interest or gain derived from the investment of amounts in any fund or account will be retained therein; provided, however, that (i) all interest or gain from the investment of amounts in the Reserve Account will be deposited by the Trustee in the Interest Account to the extent not required to cause the balance in the Reserve Account to equal the Reserve Requirement, and (ii) so long as· no Event of Default has occurred and is continuing all interest or gain on investments of amounts in the Special Fund will be released from the pledge of the Indenture and used by the Agency for any lawful purposes. For purposes of acquiring any :investments under the Indenture, the Trustee may commingle funds held by it upon receipt by the Trustee of the Request of the Agency. The Trustee may act as principal or agent in the acquisition or disposition of any investment and may impose its customary charges therefor. The Trustee will incur no liability for losses arising from any investments made pursuant to the Indenture.

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For the purpose of determining the amount in any fund or account established under the Central Comm unity Indenture, the value of investments credited to such fund shall be calculated as follows: (a) as to investments the bid and asked prices of which are published on a regular basis in The Wall Street Journal (or, if not there, then in The New York Times): the average of the bid and asked prices for such investments so published on or most recently prior to such time of determination; (b) as to investments the bid and asked prices of which are not published on a regular basis in The Wall Street Journal or The New York Times: the average bid price at such time of determination for such investments by any two nationally recognized government securities dealers (selected by the Trustee in its absolute discretion) at the time making a market in such investments or the bid price published by a nationally recognized pricing service; (c) as to certificates of deposit and bankers acceptances: the face amount thereof, plus accrued interest; and ( d) as to any investment not specified above: the value thereof established. by prior agreement between the Trustee and AMBAC Indemnity.

For the purpose of determining the amount in any fund or account established under the R-76 Indenture, the value of investments credited to such fund shall be calculated at the lesser of (a) the par amount thereof or (b) the cost thereof, excluding accrued interest and brokerage commissions, if any; except that any investments having a maturity of more than five (5) years from the date of investment shall be valued at least annually (not later than May 1 in each year) at the market value thereof. Such valuation shall include the amount of accrued interest to the valuation date.

hBuan.ce of Subordinate Debt

In addition to the Bonds and any Parity Debt, from time to time the Agency may issue or incur Subordinate Debt in such principal amount as may be determined by the Agency, provided that the issuance of such Subordinate Debt does not cause the Agency to exceed any applicable Plan Limitations. In addition, with respect to the Central Community Indenture and the issuance of Subordinate Debt as defined therein, the Agency has covenanted that the issuance of such Subordinate Debt is subject to a requirement that the Tax Revenues for the Central Community Project estimated to be received for the then current Bond Year based on the most recent assessed valuation of property for the Central Community Project as evidenced in the written records of the County shall be at least equal to one hundred percent (100%) of maximum annual debt service on all obligations of the Agency payable from such Tax Revenues.

Other Covenants of the Agency

Retirement of 1986 Bonds. In the Central Community Indenture, the Agency agrees to cause a portion of the proceeds of the Central Community Bonds to be applied to the payment and redemption in full of the 1986 Bonds, and thereby to discharge fully and to defease the 1986 Bonds on the Closing Date.

Limitation on Additional Indebtedness; Compliance With Plan Limitations. The Agency agrees that it will not issue any bonds, notes or other obligations, enter into any agreement or otherwise incur any indebtedness, which is in any case payable from all or any part of the Tax Revenues, excepting only the 1993 Bonds, any Parity Debt, any Subordinate Debt, and any tax sharing agreements as hereinafter described. The Agency will take no action, including but not limited to the issuance of its bonds, notes or other obligations, which causes or which, with the passage of time, would cause any of the Plan Limitations to be exceeded or violated. The Agency agrees to manage its fiscal

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affairs in a manner which ensures that it will have sufficient Tax Revenues available under the Plan Limitations in the amounts and at the times required to enable the Agency to pay the principal of and interest and premium (if any) on the Bonds and any Parity Debt when due.

Extension of Payment of Bonds. The Agency will not directly or indirectly extend or assent to the extension of the maturity of any of the Bonds or the time of payment of any claims for interest by the purchase of such Bonds or by any other arrangement, and in case the maturity of any of the Bonds or the time of payment of any such claims for interest is extended, such Bonds or claims for interest will not be entitled, in case of any default under the Indenture, to the benefits of the Indenture, except subject to the prior payment in full of the principal of all of the Outstanding Bonds and of all claims for interest thereon which shall not have been so extended. Nothing in the Indenture will limit the right of the Agency to issue bonds for the purpose of refunding any Outstanding Bonds, and such issuance will not constitute an extension of maturity of the Bonds.

Payment of Claims. The Agency 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 Tax Revenues or any part thereof, or upon any funds held by the Trustee pursuant to the Indenture, or which might impair the security of the Bonds. Nothing in the Indenture will require the Agency to make any such payment so long as the Agency in good faith contests the validity of said claims.

Books and Accounts; Financial Statements. The Agency will keep, or cause to be kept, proper books of record and accounts, separate from all other records and accounts of the Agency and the City of Port Hueneme, in which complete and correct entries are made of all transactions relating to the Redevelopment Project, the Tax Revenues and the Special Fund. Such books of record and accounts will at all times during business hours be subject to the inspection of the Owners of not less than 10% in aggregate principal amount of the Bonds then outstanding, or their representatives authorized in writing.

The Agency will cause to be prepared and delivered to the Trustee annually, within 180 days after the close of each Fiscal Year so long as any of the Bonds are Outstanding, complete audited financial statements with respect to such Fiscal Year showing the Tax Revenues, all disbursements from the Special Fund and the financial condition of the Redevelopment Project, including the balances in all funds and accounts relating to the Redevelopment Project, as of the end of such Fiscal Year. The Agency will furnish a copy of such statements to any Bond Owner upon reasonable request and at the expense of such Owner.

Payments of Taxes and Other Charges. The Agency will pay and discharge, or cause to be paid and discharged, all taxes, service charges, assessments and other governmental charges which may be lawfully imposed upon the Agency or the properties then owned by the Agency in the Redevelopment Project, when the same become due.

Disposition of Property. The Agency will not participate in the disposition of any land or real property in the Redevelopment Project 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 Indenture) so that such disposition, when taken together with other such dispositions, aggregates more than 10% of the land area in the Redevelopment Project unless such disposition is permitted as hereinafter described. If the Agency proposes to participate in such a disposition, it will appoint an Independent Redevelopment Consultant to report on the

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effect of said proposed disposition. If the report of the Independent Redevelopment Consultant concludes that the security of the Bonds or the rights of the Bond Owners will not be materially adversely impaired by said proposed disposition (and, with respect to the Central Community Bonds, the Agency obtains the consent of AMBAC Indemnity), the Agency may thereafter make such disposition. If said Report concludes that such security will be materially adversely impaired by said proposed disposition, the Agency shall not participate in such proposed disposition.

Maintenm;i,ce of Tax Revenues. The Agency 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 the State of California. The Agency will not enter into any agreement with the County or any other governmental unit pursuant to the Redevelopment Law, or amend any existing such agreement, which would have the effect of reducing the amount of Tax Revenues unless the Agency shall first obtain the Report of an Independent Redevelopment Consultant stating that the Tax Revenues remaining after the entering into of such agreement, estimated to be received in each of the three (3) succeeding Bond Years, plus the Additional Allowance, are at least equal to one hundred twenty.:five percent (125%) of average Annual Debt Service on the Bonds during such three Bond Years (and, with respect to the Central Community Bonds, the Agency obtains the consent of AMBAC Indemnity).

Tax Covenants. The Agency will not take, nor permit nor suffer to be taken by the Trustee or otherwise, any action with respect to the proceeds of any of the Bonds which would cause any of the Bonds to be "arbitrage bonds" or "private activity bonds" within the meaning of the Tax Code. The Agency will cause to be calculated annually all excess investment earnings which are required to be rebated to the United States of America under the Tax Code, and will cause all required amounts to be rebated from available funds of the Agency.

Use of R-76 Project Tax Revenues. The Agency will allocate in Fiscal Year 1996-1997 and in each Fiscal Year thereafter so long as the Central Community Bonds are outstanding, tax increment revenues from the Agency's R-76 Project in an amount equal to $80,000.00 per Fiscal Year, for deposit in the Agency's Low and Moderate Income Housing Fund. Any such amount so allocated will be credited to any obligation of the Agency to deposit tax increment revenues derived from the Central Community Project into the Low and Moderate Income Housing Fund, all as permitted under Section 33334.3(i) of the Redevelopment Law.

The allocation described in the preceding paragraph shall be subordinate to the payment of the R-76 Bonds and any deposit to the Low and Moderate Income Housing Fund of R-76 tax increment revenues required under the Redevelopment Law.

Amendment of Indenture

The Indenture may be modified or amended at any time by a supplemental indenture with the written consent of the Owners of a majority in aggregate principal amount of the Bonds then outstanding. No such modification or amendment may (a) extend the maturity of or reduce the interest rate on any Bond or otherwise alter or impair the obligation of the Agency to pay the principal, interest or redemption premiums (if any) at the time and place and at the rate and in the currency provided therein of any Bond without the express written consent of the Owner of such Bond, (b) reduce the percentage of Bonds required for the written consent to any such amendment

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or modification, or (c) without its written consent thereto, modify any of the rights or obligations of the Trustee.

The Indenture may also be modified or amended at any time by a supplemental indenture, without the consent of any Bond Owners, to the extent permitted by law, but only for any one or more of the following purposes:

(a) to add additional covenants and agreements of the Agency or to limit or surrender any rights or power reserved to or conferred upon the Agency; or

(b) to make such provisions for the purpose of curing any ambiguity, or of curing, correcting or supplementing any defective provision contained in the Indenture, or in any other respect whatsoever as the Agency may deem necessary or desirable, provided under any circumstances that such modifications or amendments do not materially adversely affect the interests of the Owners in the opinion of Bond Counsel;

(c) to provide for the issuance of Parity Debt and to provide the terms and conditions under which such Parity Debt may be issued, including but not limited to the establishment of special funds and accounts relating thereto and any other provisions relating solely thereto, subject to and in accordance with the provisions of the Indenture relating to the issuance of Parity Debt; or

( d) to amend any provision relating to the requirements of or compliance with the Tax Code, to any extent whatsoever but only if and to the extent such amendment does not adversely affect the exclusion from gross income of interest on the Bonds for federal income tax purposes, in the opinion of Bond Counsel.

Notwithstanding the foregoing, the Central Community Indenture may only be amended with the consent of AMBAC Indemnity.

Events of Default and Remedies

Events of Default Defined. The following events constitute Events of Default under the Indenture:

(a) Failure to pay any installment of the principal of any Bonds or Parity Debt when and as the same become due and payable, whether at maturity as therein expressed, by proceedings for redemption, by acceleration, or otherwise.

(b) Failure to pay any installment of interest on any Bonds or Parity Debt when and as the same become due and payable.

(c) Failure by the Agency to observe and perform any of the other covenants, agreements or conditions contained in the Indenture or in the Bonds, if such failure continues for a period of 60 days after written notice thereof, specifying such failure and requiring the same to be remedied, has been given to the Agency by the Trustee; provided, however, if in the reasonable opinion of the Agency the failure stated in the notice can be corrected, but not within such 60 day period, such failure will not constitute an Event of Default if corrective action is instituted by the Agency within such 60 day period and the Agency thereafter diligently and in good faith cures such failure in a reasonable period of time.

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(d) Certain acts relating to the bankruptcy of the Agency.

Remedies. Upon the occurrence and during the continuance of any Event of Default, the Trustee may, at the written direction of the Owners of a majority in aggregate principal amount of the Bonds at the time outstanding shall, (a) declare the principal of all of the Bonds then outstanding, and the interest accrued thereon, to be due and payable immediately, of (b) enforce any rights of the Trustee under or with respect to the Indenture.

Notwithstanding the foregoing, all rights of the Bond Owners and the Trustee under the Central Community Indenture are subject to the rights of AMBAC Indemnity specified in the Central Community Indenture and the Municipal Bond Insurance Policy.

Immediately upon becoming aware of the occurrence of an Event of Default, the Trustee is required to give notice of such Event of Default to the Agency by telephone promptly confirmed in writing. Such notice is also required to state whether the principal of the Bonds has been declared to be or have immediately become due and payable. With respect to any Event of Default described in clauses (a) or (b) above the Trustee shall, and with respect to any Event of Default described in clause (c) above the Trustee in its sole discretion may, also give such notice to the Owners in the same manner as provided for notices of redemption of the Bonds, which is required to include the statement that interest on the Bonds will cease to accrue from and after the date, if any, on which the Trustee declared the Bonds to become due and payable pursuant to the preceding paragraph (but only to the extent that principal and any accrued, but unpaid, interest on the Bonds is actually paid on such date).

This provision, is subject to the condition that if, at any time after the principal of the Bonds has been so declared due and payable, and before any judgment or decree for the payment of the moneys due have been obtained or entered, the Agency deposits with the Trustee a sum sufficient to pay all principal on the Bonds matured prior to such declaration and all matured installments of interest (if any) upon all the Bonds, with interest on such overdue installments of principal and interest (to the extent permitted by law) at the net effective rate then borne by the Outstanding Bonds, and the fees and expenses of the Trustee, including any fees and expenses of its attorneys, and any and all other defaults known to the Trustee (other than in the payment of principal of and interest on the Bonds due and payable solely by reason of such declaration) have been made good or cured to the satisfaction of the Trustee or provision deemed by the Trustee to be adequate has been made therefor, then, and in every such case, the Owners of a majority in aggregate principal amount of the Bonds then Outstanding, by written notice to the Agency and to the Trustee, may, on behalf of the Owners of all of the Bonds, rescind and annul such declaration and its consequences. However, no such rescission and annulment extends to or affects any subsequent default, or impairs or exhausts any right or power consequent thereon.

Application of Revenues and Other Funds After Default. If an Event of Default has occurred and is continuing, all Tax Revenues and any other funds then held or thereafter received by the Trustee under any of the provisions of the Indenture will be applied by the Trustee as follows and in the following order:

(a) To the payment of any fees, costs and expenses incurred by the Trustee to protect the interests of the Owners of the Bonds and any Parity Debt; payment of the fees, costs and expenses of the Trustee (including fees and expenses of its

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counsel) incw-red in and about the performance of its powers and duties under the Indenture and the payment of all fees, costs and expenses owing to the Trustee;

(b) To the payment of the whole amount then owing and unpaid upon the Bonds for interest and principal with interest on such overdue amounts at the respective rates of interest borne by the Outstanding Bonds, and in case such moneys are insufficient to pay in full the whole amount so owing and unpaid upon the Bonds, then to the payment of such interest, principal and interest on overdue amounts without preference or priority among such interest, principal and interest on overdue amounts ratably to the aggregate of such interest, principal and interest on overdue amounts.

Limitation on Bond Owners' Rimt to Sue. No Owner of any Bond has the right to institute any suit, action or proceeding at law or in equity, for any remedy under the Indenture, unless (a) such Owner has previously given to the Trustee written notice of the occurrence of an Event of Default; (b) the Owners of a majority in aggregate principal amount of all the Bonds then Outstanding have requested the Trustee in writing to exercise its powers under the Indenture; (c) said Owners have tendered to the Trustee indemnity reasonably acceptable to the Trustee against the costs, expenses and liabilities to be incurred in compliance with such request; and (d) the Trustee has refused or failed to comply with such request for a period of 60 days after such written request has been received by the Trustee and said tender of indemnity is made to the Trustee.

Notwithstanding the foregoing, all rights of the Bond Owners and the Trustee under the Central Community Indenture are subject to the rights of AMBAC Indemnity specified in the Central Community Indenture and the Municipal Bond Insurance Policy.

Discharge of Indenture and Defeasance of. Bonds

The Agency may pay and discharge the indebtedness on any or all of the outstanding Bonds in any one or more of the following ways:

{a) by paying or causing to be paid the principal of and interest on such Bonds, as and when the same become due and payable;

{b) by irrevocably depositing with the Trustee or another fiduciary, in trust, at or before maturity, money which, together with the available amounts then on deposit in the funds and accounts established pursuant to the Indenture, in the opinion or report of an Independent Accountant or Bond Counsel is fully sufficient to pay such Bonds, including all principal, interest and redemption premium, if any;

(c) by irrevocably depositing with the Trustee or another fiduciary, in trust, Federal Securities in such amount as an Independent Accountant or Bond Counsel determines will, together with the interest to accrue thereon and available moneys then on deposit in any of the funds and accounts established pursuant to the Indenture, be fully sufficient to pay and discharge the indebtedness on such Bonds (including all principal, interest and redemption premium, if any) at or before maturity; or

(d) by purchasing such Bonds prior to maturity and tendering such Bonds to the Trustee for cancellation.

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Upon such payment, and notwithstanding that any Bonds have not been surrendered for payment, the pledge of the Tax Revenues and other funds provided for in the Indenture with respect to such Bonds, and all other obligations of the Agency under the Indenture with respect to such Bonds, will cease and terminate, except only the obligation of the Agency to pay or cause to be paid to the Owners of such Bonds not so surrendered and paid all sums due thereon from amounts set aside for such purpose, the obligations of the Agency and the Trustee under the rebate provisions of the Indenture, the obligation of the Trustee to transfer and exchange Bonds under the Indenture and to pay to the owners of such Bonds all sums due thereon, and the obligations of the· Agency to compensate and indemnify the Trustee pursuant to the Indenture. Any funds thereafter held by the Trustee, which are not required for said purposes, will be paid over to the Agency.

J0302

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APPENDIXB

GENERAL INFORMATION REGARDING THE CITY

The Bonds are not a debt of the City or the State, or any of the State's politi.cal subdivisions, and neither the City nor t'l,e State, or any of its political lfllN:l,isions, is liable t'l,ere/or. 77N foUllwinf b,/orm.ati.on is prond«l sol.Bly to gi,ve proqectlve in-,e_,., an o,envw of tlte 81TUctur, alltl pn,ral ,co'lll>'lllie co..,,_ of the City. Unleu otherwise 1IOt«l, 11N follawlltl u,f'orllllldo• has bee• proPitl«l iy 11,e City, wlddt is solely ,.,.,,..le for the accuracy and completeness thenof.

General Information

The City borders the Pacific Ocean, sixty miles northwest of Los Angeles and forty miles south of Santa Barbara. Located near Highway 101, the City encompasses an area of approximately four and one-half square miles. Port Hueneme is the only deepwater commercial harbor between Los Angeles and San Francisco, and serves as the headquarters of the United States Naval Construction Battalion Center.

The City's climate is typical of coastal southern California, with mild and pleasant temperatures and winds. The mean annual temperature is sixty-five degrees, and the average annual rainfall is between nine and fourteen inches.

While there is little land left to develop within the City, there is the potential for a limited amount of high quality development in desirable locations. As of January 1, 1993, the follow:iag development projects were underway in the City:

Project Name

Weston Pacific Collection

Beachport Cottages

USNCBC Family Housing

Cool Carriers

Project Description

134 detached single-family homes located on 21.23 acres near the northwest intersection of Channel Islands Boulevard and Patterson Road; models for third and last phase currently under construction and expected to be completed by the summer of 1993.

30-unit residential townhouse project located on 2.18 acres just north of the intersection of Ocean View Boulevard and Surfside Drive; first phase of 14 units currently under construction with 12 units in escrow; second phase of 16 units scheduled to commence construction in spring of 1993.

300-unit on base residential apartment project comprised of 250 two-bedroom and 50 one-bedroom units for enlisted personnel located at the United States Naval Construction Battalion Center north of Ponoma Street and Pleasant Valley Road; construction expected to be completed by spring of 1994.

97 ,000-square foot refrigerated warehouse terminal within the Port of Hueneme harbor complex to increase break-bulk cargo.throughput capacity; a contract has been awarded and construction is scheduled to commence in late winter of 1993.

Since the City has only a small amount of remaining developable land, it recognizes the importance of preserving existing amenities. This effort has been focused in three major areas: community beautification of public areas, housing rehabilitation and code enforcement. The City has provided an incentive to residents to take pride in their City, and has also provided a means by which they can improve their residences. In helping to achieve these goals, the City has upgraded the median island and street scenes on major thoroughfares, constructed a recreational greenbelt, made major improvements in the beach park area, constructed the Cultural Center and

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established a housing rehabilitation assistance pf01111111 to enable homeowners to obtain economic assistance in property improvements. More than 1,003 dwelling units have been improved since the program started in 1978.

City Government

The City was iacorporated on March 24, 1948. A five person City Council fuactions as the policy-making govermr.teatal body of the City. Members of the City Council are elected at large and serve terms of four years. The Mayor is selected by the Council members from among themselves every two years following municipal elections.

Labor Relatiom

The City Council has adopted a resolution which provides orderly procedures for the administration of employer-employee Jabor relatiouhips for the eiahty full-time employees of the City. In accordance with the resolution, unit determination elections were con.ducted, and all samdard ranae employee positions are represented by one of two formally recognized employee organizations. The two units are the Police Unit with twenty-six members and the Miscellaneous Employees with fifty-four members.

The City has not experienced any disruptions of municipal services as a result of labor contract disputes.

Population

The City bas estimated its population to be 19,889 u of January 1, 1992. This represents a decrease of 2.12 % from the 1990 census count, attributable primarily to the recent deployment of personnel from the United States Naval Construction Battalion Center. The following table sets forth census data for the City, the County and the State.

1970 1980 1984 1985 1986 1987 1988 1989 1990 1991 1992

POPULATION OF THE CITY OF PORT HUENEME, THE COUNTY OF VENTURA

AND THE STATE OF CALIFORNIA 1970 through 1992

City of Ventura

Port Hueneme ~

............ 14,182 378,496

............ 17,803 529,174

............ 20,094 579,770

............ 20,451 591,936

............ 20,340 605,432

............ 20,325 619,330

............ 20,620 637,407

............ 20,687 653,609

............ 20,319 669,016

............ 20,353 677,859

............ 19,889 686,868

State of

California

19,953,134 23,668,562 25,415,244 25,587,500 26,687,000 27 ,292,300 27,977,300 28,651,200 29,760,000 30,231,400 30~664,000

Source: U.S. Census figures were used for 1970, 1980 and 1990; 1988, 1989 and 1991 figures are State Department of Finance estimates as of January 1, 1992; 1992 figures are projections based on State Department of Finance estimates as of January 1, 1992.

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Retirement System

The City is a participant in the Public Employees Retirement System ("PERS") of the State covering all the City's permanent employees. Contributions to the system are based upon rates set by PERS based on certain actuarial assumptions, such as length of employment, estimated salary rates, mortality rates and projected retirement benefits. Pension costs are recorded as expenditures when paid by monthly contributions to PERS. The total pension expense for the year ended June 30, 1992 was $451,896. As of June 30, 1992, the plan net assets available for benefits totaled $7,263,702, and the present value of the City's unfunded obligation for prior service costs totaled $308,243, which amount will be funded through the year 2000 from established contribution rates. The actuarial present value of vested and non-vested accumulated plan benefits is not determined under the PERS system of accounting.

Housing and Income

The 1990 Census reported 7,481 housing units in the City, an increase of 10.14% since 1980. This compares with a population increase of 14.13 % from 1980 to 1990.

Multiple housing units accounted for approximately 67 % of total housing units in 1990 and approximately 67. 3 % of total housing units in 1992. The 1990 median housing value was $187,200.

According to the 1990 Census, the annual median household income in the City was $33,554~ which was 36 % below annual median household income reported in the County, 7 % below that reported in the State and 2 % below nationwide annual median household income. However, if the income of military personnel living in the City is excluded, the 1990 annual median household income in the City was slightly greater than $34,863.

Construction Activity

The following table contains building permit valuations for the City for the calendar years 1988 through 1992.

Valuation Residential

Non-residential

Total

New Dwelling Units: Single Family Multiple Family

Total

Source:: City of Port Hueneme.

CITY OF PORT HUENEME Building Permit Valuations

1988-1992

1988 1989 1990

$8,043,131 $18,974,268 $5,543,327 3,071.477 1,354,718 3,332,396

$11,114,608 $20,328,986 $8,875,723

97 29 91 _21 _:1 1

190 26 95

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1991 1992

$6,230,560 $3,487,695 4,497,243 289,788

$10,727,803 $3,777,483

5 19

1 61

~ 80

Employment

The following table lists the ten lar,est employen in the City as of December 31, 1992.

CITY OF POllT BIJENEME Ten Larsest Employers

Larmt Employers

United States Naval Construction Battalion Center Naval Ship Weapons Systems Longshoremen (at peak operation) Naval Civilian Engineering Laboratories Oxnard Harbor District/Tenants PAC Foundries Anacapa Adventist's Hospital City of Port Hueneme/Full Time Ralph's Grocery Company Marine Spill Response Corporation

Source: City of Port Hueneme.

Total Employees

8,269 1,463

350 308 283 278 105 95 80 70

The County is considered a single statistical area by the California Employment Development Department. Approximately 23.3 % of all wage and salary workers in the County are employed in retail and wholesale trade, with retail workers accounting for nearly 78. 9 % of all trade workers. Other leading sources of wage and salary are government (18.0%), services (24.3%) and manufacturing (12.6%). The following table summarizes historical employment trends for all industries in the Oxnard-Ventura Metropolitan Statistical Area, which includes the City for the years 1987 through 1991. The figures presented are annual averages.

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OXNARD-VENTURA MUNICIPAL STATISTICAL AREA Wage and Salary Employment

ltr7-l.991 Annual Averages

1987 1988 1989 1990 1991

Total (all industries) 220,900 233,300 244,200 253,600 248,700

Agriculture, Forest, Fish 17,100 5,800 6,100 6,000 5,700 Nonagricultural Total 203,800 216,900 228,000 236,800 233,200

Mining 2,600 2,600 2,400 2,400 2,300 Construction 12,700 14,300 16,900 16,200 12,400 Manufacturing 29,400 31,500 32,300 33,200 31,400

Nondurable Goods 7,300 6,900 7,500 8,000 8,300 Durable Goods 21,900 24,600 24,800 25,200 23,100

Transportation & Public Utilities 10,400 11,100 11,700 12,200 12,000

Wholesale Trade 7,900 10,300 10,800 11,600 12,300 Retail Trade 42,500 44,000 45,700 46,600 45,700 Financial, Insurance,

Real Estate 10,400 11,000 12,200 12,600 12,000 Services 47,800 51,000 53,800 57,900 60,400 Government 40,300 41,100 42,100 44,200 44,800

Federal 10,900 11,400 11,600 12,100 12,100 State and Local 29,400 29,700 30,500 32,100 32,600

Source: California Employment Development Department.

During 1992, the County's civilian work force averaged 376,000, an increase of 100, or .03 % , from the prior year. Together with this increase in the labor force, the total number of unemployed persons in the County increased from an average of 20,700 in 1990 to 26,500 in 1991, or 7%. The following table contains total employment data for the County for calendar years 1987 and 1991.

Civilian Labor Force Employment Unemployment Unemployment Rate

OXNAIID-VENTURA MUNICIPAL STATISTICAL AREA Civilian Labor Force, Employment and Nonemployment

1987-1991 Annual Averages

1987 1988 1989 1990

338,300 357,100 372,300 375,900 316,200 338,500 353,300 355,200 22,100 18,800 19,000 20,700

6.5 5.3 5.1 5.5

Source: California Employment Development Department.

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1991

376,000 349,500 26,500

7.0

Insurance

Liability and Workers' Compensation Insurance Coverage. The City is a member of the Southern California Joint Powers Insurance Authority (the "Authority"), which is comprised of fifty-one members and is organized under a joint powers agreement pursuant to the California Government Code. The purpose of the Authority is to (i) arrange and administer programs of insurance for the pooling of self-insured losses, and (ii) purchase excess insurance coverage.

The liability self-insurance coverage arranged by the Authority for its members includes protection for personal injury, errors and omissions, property damage and bodily injury and covers losses up to $10,000,000 for each occurrence. The annual deposit paid by each member for the Joint Liability Protection Program is subject to retrospective adjustment to produce a cost for each policy year equal to a prescribed sum.

The Authority also provides workers' compensation insurance to its members. Periodic deposits paid by each member for the Workers' Compensation Joint Protection Program are subject to final retrospective adjustment to produce a cost for each policy year equal to a prescribed sum.

Comprehensive All Risk Property Damage Insurance Coverage. The City, through the Authority, has all-risk property damage coverage with Home Insurance Company that covers the City for losses due to occurrences enumerated in the policy up to $50,000,000 for any one occurrence, and for losses due to flood and earthquake up to $1,000,000 for any one occurrence. Additional flood and earthquake insurance is provided by Associated International Insurance Company for losses in excess of $1,000,000 and up to $10,034,768.

Long Tenn Borrowing

The following outstanding bonded indebtedness is payable from the various funds of the City as of June 30, 1992:

(i) General Obligation Sewer Bonds. The City issued its general obligation sewer bonds on July 1, 1955. The general obligations sewer bonds bear interest at 3.25-3.50% per annum, and principal matures annually through 1994. General obligation sewer bonds in the aggregate principal amount of $8,000 remained outstanding as of June 30, 1992.

(ii) Sewer Revenue Bonds. The City issued its sewer revenue bonds on June 15, 1964. The sewer revenue bonds bear interest at 3. 75 % per annum, and, as of June 30, 1992, sewer revenue bonds in the aggregate principal amount of $45,000 remained outstanding. Principal on the sewer revenue bonds matures annually through 1994.

(iii) 1968 Municipal Improvement General Obligation Bonds. The City issued municipal improvement general obligation bonds on April 1, 1968 that bear interest at 5.25 % per annum. Principal on the bonds matures annually through 1998. As of June 30, 1992, 1968 Municipal Improvement General Obligation Bonds in an aggregate principal amount of $24,000 remained outstanding.

(iv) 1988 Certificates of Participation. On May 10, 1988, the City issued $5,000,000 aggregate principal amount of its 1988 Certificates. The 1988 Certificates bear interest at 5.0% to 8.15% per annum and mature annually through 2018. As of June 1, 1992, 1988 Certificates in the aggregate principal amount of $4,830,000 remained outstanding. A portion of the proceeds of the Certificates will be used to advance refund and defease the $1,090,000 1988 Certificates maturing on April 1, 2008 and the $3,080,000 1988 Certificates due on April L 2018.

(v) Seaview Apartments Mortgage Note. The United States Department of Housing and Urban Development ("HUD") holds a six percent mortgage note (the "Mortgage Note") that is payable through July 2, 2017 in monthly installments of $5,488. As of June 30, 1992, the outstanding balance of the Mortgage Note was $851,838 of which $15,163 in principal is due within one fiscal year. Project revenues from

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property rentals deposited in the Seaview Apartment Enterprise Fund are the source of debt service on the Mortgage Note.

The following is a summary of changes in long-term debt (including current portions) for the fiscal year ending June 30, 1992:

CITY OF PORT HUENEME Reduction in Long Term Debt in Fiscal Year 1991/92

Long term debt outstanding 6/30/91

Debt retired and mortgage principal paid in the 1991/92 fiscal year

Long term debt outstanding 6/30/92

General Obligation

Bonds

$78,000

28.000

$50.000

Source: City of Port Hueneme.

Revenue Bonds

$135.000

40.000

$95,000

The City has no outstanding short-term obligations.

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Mortgage Note

$866,120

14.282

$851.838

1988 Certificates of Participation

$4,875,000

45.000

$4,830.000

Direct and Overlapping Bonded Debt

The following table contains information on the City's direct and overlapping bonded indebtedness as of February 18, 1993.

CITY OF PORT HUENEME Direct and Overlapping Bonded Debt

1992-93 Assessed Valuation: $506,805,694 (after deducting $257,208,739 redevelopment incremental valuation)

DIRECT AND OVERLAPPING BONDED DEBT:

Ventura County Building Authorities Ventura County Superintendent of Schools

Certificates of Participation Ventura County Library Authority Ventura County Community College District

Certificates of Participation Oxnard Union High School District Certificates of Participation Oxnard School District and Certificates of Participation Hueneme School District Certificates of Participation Calleguas Municipal Water District Port Hueneme Sanitary District Oxnard Harbor District City of Port Hueneme City of Port Hueneme Certificates of Participation United Water Conservation District United Water Conservation District 1915 Act Bonds

TOTAL DIRECT AND OVERLAPPING BONDED DEBT

(1) Excludes issue to be sold.

% Applicable

1.288 %

1.288 2.040

1.289 4.052 7.651

14.027 0.006

74.679 7.650

100. 100.

3.978 8.517

Debt 2/1/92

$1,005,155

65,247 7,038

9,487 915,669

2,666,025 23,728

92 5,974

133,110 24,000

6,265,000 (1) 32,580

242,309 $11,395,414 (2)

(2) Excludes tax and revenue anticipation notes, revenue, mortgage revenue and tax allocation bonds and non­bonded capital lease obligations.

Ratios to Assessed Valuation: Direct Debt ($6,289,000). 1.24% Total Debt. . . . . . . . . 2.25 %

ST ATE SCHOOL BUILDING AID REPAY ABLE AS OF 6/30/92: $0

Source: California Municipal Statistics, Inc.

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The City receives funds annually from the State based upon a percentage of property taxes collected within the County computed on the City's respective assessed valuation, and a statutory system of annual appropriations. The table below sets for the assessed valuation of property within the City for the fiscal years 1982-83 through 1992-93.

CITY OF PORT HUENEME Assessed Valuations

Fiscal Total Before Total After Year. Local Secured Utility Unsecured Rdv. Increment Rdv. Increment

1982-83 $324,175,876 $14,205,730 $73,061,783 $411,443,389 $276,400,619 1983-84 339,676,733 11,111,620 54,631,854 405,420,207 269,821,721 1984-85 358,564,561 10,887,110 49,858,671 419,310,342 280,333,473 1985-86 374,042,830 11,962,810 44,879,045 430,884,685 290,273,314 1986-87 407,511,875 14,325,400 54,205,818 476,043,093 320,595,635 1987-88 450,508,455 13,255,590 42,836,238 506,600,283 339,489,845 1988-89 495,349,500 181,810 41,019,770 536,551,080 356,121,922 1989-90 554,671,361 727,240 39,183,353 594,581,954 396,096,706 1990-91 631,268,696 752,691 41,178,110 673,199,497 449,390,971 1991-92 686,752,343 483,584 46,775,734 734,011,661 482,826,964 1992-93 712,608,289 672,899 50,733,245 764,014,433 506,805,694

Source: California Municipal Statistics, Inc.

The table below presents the City's property tax valuation and collection experience for the last ten fiscal years.

CITY OF PORT HUENEME Property Tax Levies and Collections

Last Ten Fiscal Years

Fiscal Secured Amt. Del. % Del. Year Tax Cbarge(l) June 30 June 30

1982-83 $3,549,816.66 $149,283.60 4.21% 1983-84 3,697,458.40 141,839.20 3.84 1984-85 3,788,032.32 107,067.61 2.83 1985-86 3,994,250.90 79,809.13 2.00 1986-87 4,449,561.32 86,458.91 1.94 1987-88 4,639,872.78 71,920.92 1.55 1988-89 5,453,860.32 102,731.34 1.88 1989-90 6,009,990.00 135,734.46 2.26 1990-91 6,628,836.28 216.824.22 3.27 1991-92 7,644,835.46 236,349.48 3.09

(1) All taxes collected by the County within the City.

Source: California Municipal Statistics, Inc.

B-9

The City has a 1992-93 gross assessed valuation of $764,014,433, accounting for approximately 1.75% of the total assessed valuation of the County (excluding the redevelopment tax increments). The following table shows historical trends of net assessed valuation for the City and the County.

Fiscal Year

1982-83 1983--84 1984-85 1985-86 1986-87 1987-88 1988-89 1989-90 1990--91 1991--92 1992--93

CITY OF PORT HUENEME Historical Ass~ed Valuations

(full market value)

City Assessed Valuations

$411,443,389 405,420,207 419,310,342 430,884,685 476,043,093 506,600,283 536,551,080 594,581,954 673,199,497 734,011,661 764,014,433

Source: California Municipal Statistics, Inc.

B-10

County Assessed Valuations

$18,085,877,416 19,337,921,825 21,186,687,607 23,264,998,601 25,361,519,647 28,308,435,831 31,259,404,057 35,142,793,501 39,788,872,934 41,731,927,770 43,557,286,818

Taxable Sales

According to the State Board of Equalization, during 1991 the value of taxable retail sales in the County fell to $5,397,738,000. The following table presents information on taxable retail sales in the County, adjusted for inflation, since 1980.

COUNTY OF VENTURA Taxable Retail Sales

1980-1990

Consumer Price Index (Los Angeles-Anaheim- Percentage Riverside Retail Sales Change From

Year Metro Area {000 omitted) Previous Year

1980 83.7 $3,894,461 7.33% 1981 91.9 3,979,387 2.18 1982 97.3 3,804,135 (4.40) 1983 99.1 4,188,188 10.10 1984 103.6 4,686,425 11.90 1985 108.4 4,872,726 3.98 1986 111.9 5,051,305 3.66 1987 116.7 5,425,796 7.41 1988 122. l 5,579,530 2.83 1989 128.3 5,765,782 3.34 1990 135.9 5,647,007 (2.06) 1991 143.1 5,397,738 (4.42)

Source:: Bureau of Labor Statistics, Consumer Price Index for all Urban Consumers for the Los Angeles-Anaheim­Riverside Metropolitan Area; State Board of Equalization.

B-11

(THIS PAGE INTENTIONALLY LEFT BLANK)

APPENDJX C

PORT HUENEME REDEVELOPMENT AGENCY

AUDITED FINANCIAL STATEMENTS

FOR THE FISCAL YEAR ENDING JUNE 30, 1992

C-1

PORT HUENEME REDEVELOPMENT AGENCY

TABLE OF CONTENTS

Auditors Opinions.......................... 1

- Auditor's Report Report on Internal Accounting Controls Report on Compliance

Combined Balance Sheet - All Funds ........ 7

Combined Statement of Revenues, Expenses and Changes in Fund Balance - All Funds .... 8

Combined Statement of Revenues, Expenditures and Changes in Fund Balance-Budget and Actual ........................ 9

Notes to the Financial Statements ........... 10

Supplemental Schedules:

Schedule of Long-term Indebtedness .......... 21

Schedule of Federal Financial Assistance .... 22

--~---

rporter & :J\(g,fson Cl!rtified Public Accountants /

INDEPENDENT AUDITORS' REPORT

Board of Directors and Executive Director Port Hueneme Redevelopment Agency Port Hueneme, CA 93041

(jary Ji.. Porter, CP .. ~ 'Donna L t}{g,fson, CP~

~1farfc_jt Poinde;r_ter, CP,.,1

We have audited the component unit financial statements of the Port Hueneme Redevelopment Agency, California as of and for the year ended June 3 o, 1992, as listed in the table of contents. These component unit financial statements are the responsibility of the Port Hueneme Redevelopment Agency, California, management. Our responsibility is to express an opinion on these component unit financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards and Government Auditing standards. These standards require that we plan and perform the audit to obtain reasonable assurance about whether the component unit financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the component unit financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall component unit financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the component unit financial statements referred to above present fairly, in all material respects, the financial position of the Port Hueneme Redevelopment Agency, California, as of June 30, 1992, and the results of its operations for the year then ended in conformity with generally accepted accounting principles.

2284 Soutft. 'Victoria Jilve., Suitt 2(j, 'Ventura, California 93003 (805) 644-7269 (805) 656-6197 :J.::V: (805) 644-2530 141 'I>u.e.sen6urg1>rive,Suitt 10, 'W~t~ 'Ilillage, Caiifomia91362 (818) 706-9037

1

INDEPENDENT AUDITORS' REPORT Page Two .................................................................

Our audit was made for the purpose of forming an opinion on the component unit financial statements taken as a whole. The accompanying Schedule of Federal Financial Assistance, and schedules listed in the table of contents as supplemental schedules are presented for the purpose of additional analysis and are not a required part of the component unit financial statements of the Port Hueneme Redevelopment Agency, California. This information has been subjected to the auditing procedures applied in the audit of the component unit financial statements and, in our opinion, is fairly presented in all material respects in relation to the component unit financial statements taken as a whole.

October 8, 1992

2

{jary .91.. Porter, CP~ 'Donna L. 'J{g,fson, CP~

:v[ark.~. Poinc£e;r__ter, CP~

REPORT ON INTERNAL CONTROL STRUCTURE IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS

Board of Directors and Executive Director Port Hueneme Redevelopment Agency Port Hueneme, CA 93041

We have audited the component unit financial statements of the Port Hueneme Redevelopment Agency, California as of and for the year ended June 30, 1992 and have issued our report thereon dated October 8, 1992.

We conducted our audit in accordance with generally accepted auditing standards and Goyarrpgent Auditing standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the component unit financial statements are free from material misstatement.

In planning and performing our audit of the component unit financial statements of the Port Hueneme Redevelopment Agency, California, for the year ended June 30, 1992, we considered its internal control structure in order to determine our auditing procedures for the purpose of expressing our opinion on the component unit financial statements and not to provide assurance on the internal control structure.

The management of the Port Hueneme Redevelopment Agency, California, is res,ponsible for establishing and maintaining an internal control structure. In fulfilling this responsibility, estimates and judgements by management are required to assess the expected benefits and related costs of internal control structure policies and procedures. The objectives of an internal control structure are to provide management with reasonable, but not absolute, assurance that assets are safeguarded against loss from unauthorized use or disposition, and that transactions are executed in accordance with management's authorization and recorded properly to permit the preparation of the component unit financial statements in accordance with generally accepted accounting principles. Because of inherent limitations in any internal control structure, errors or irregularities may nevertheless occur and not be detected. Also, projection of any evaluation of the structure to future periods is subject to the risk that procedures may become inadequate because of changes in conditions or that the effectiveness of the design and operation of policies and procedures may deteriorate.

2284Sou.tfr. 'Victoria~ve., Suite 2q, 'Ventura, California93003 (805) 644-7269 (805) 656-6197 J"!,U (805) 644-2530 141 '1Juesen.6urg'I>ri.ve,Suite 10, 'West~e 'Village, California91362 (818) 706-9037

3

REPORT ON THE INTERNAL ·CONTROL STRUCTURE IN ACCORDANCE WITH GOVERHKENT AUDITING STANDARDS Page Two . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

For the purpose of this report, we have classified the significant internal control structure policies and procedures in the_following categories:

• Revenues/receipts • Purchases/disbursements • Payroll • General ledger

For all of the internal control structure categories listed above, we obtained an understanding of the relevant policies and procedures and whether they have been placed in operation, and we assessed control risk.

Our consideration of the internal control structure would not necessarily disclose all matters in the internal control structure that might be material weaknesses under standards established by the American Institute of Certified Public Accountants. A material weakness is a reportable condition in which the design or operation of one or more of the specific internal control structure elements does not reduce to a relatively low level the risk that errors or irregularities in amounts that would be material in relation to the component unit financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. We noted no matters involving the internal control structure and its operation that we consider to be material weaknesses as defined above.

However, we noted certain matters involving the internal control structure and its operation that we have reported to the management of the Port Hueneme Redevelopment Agency, California, in a separate communication dated November 19, 1992.

This report is intended solely for the use of management and should not be used for any other purpose. This restriction is not intended to limit the distribution of this report, which is a matter of public record.

October 8, 1992

4

- - - , -~

Porter & '.J{g,fson (jary YI.. Porter, CPJl.

:Donna L. N!,Cson, CPJl.

Afarf;,5!1.. Poinae~ter, CP.'2l

COMPLIANCE REPORT BASED ON AN AUDIT OF THE COMPONENT UNIT FINANCIAL STATENEN'l'S OF THE PORT HUBHE11E REDEVELOPMENT AGENCY, CALIFORNIA PERFORMED IN ACCORDANCE WITH THE GOVERNMENT AUDITING STANDARDS AND STANDARDS FOR AUDIT ISSUED BY THE STATE OF CALIFORNIA

Board of Directors and Executive Director Port Hueneme Redevelopment Agency Port Hueneme, CA 93041

We have audited the component unit financial statements of the Port Hueneme Redevelopment Agency, California for the year ended June 30, 1992 and have issued our report thereon dated October 8, 1992.

We conducted our audit in accordance with generally accepted auditing standards and Government Auditing standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the component unit financial statements are free of material misstatement.

In addition, we conducted a compliance audit covering applicable rules and regulations outlined in Guidelines for compliance Audits of California Redevelopment Agencies, dated September, 1989, revised, by the Controller of the state of California.

Compliance with laws, regulations, contracts, and grants applicable to the Port Hueneme Redevelop~ent Agency, California, is the responsibility of the Port Hueneme Redevelopment Agency, California, management. As part of obtaining reasonable assurance about whether the component unit financial statements are free of material misstatement, we performed tests of the City's compliance with certain provisions of laws, regulations, contracts, and grants. However, our objective was not to provide an opinion on overall compliance with such provisions.

The results of our tests indicate that, with respect to the items tested, the Port Hueneme Redevelopment Agency, California complied, in all material respects, with the provisions referred to in the preceding paragraph. With respect to items not tested, nothing came to our attention that caused us to believe that the City had not complied, in all material respects, with those provisions.

2284 Soutli '1/i.t:.toria J.lve., Suitt 2(j, 'Ventura, California 93003 {805) 544-7269 {805) 656-6197 J'Af (805) 644-2530 141 'Duesen6u:rg '.Drive, Suitt 10, 'W~ '1/ilfatJe, California 91362 {818} 706-9037

5

COMPLIANCE REPORT BASED ON AN AUDIT OF THE COMPONENT UNIT FINANCIAL STATEMENTS OF THE PORT HUENEME REDEVELOPMENT AGENCY, CALIFORNIA PERFORMED IN ACCORDANCE WITH THE GOVERNMENT AUDITING STANDARPS AND STANDARDS FOR AUDIT ISSUED BY THE STATE OF CALIFORNIA Page Two

The results of our tests also indicate that for the items tested, the Agency has complied with the provisions of the Redevelopment Agency Compliance Guidelines. Further, based on our audit, nothing came to our attention that would indicate any non­compliance with the rules and regulations specified in the Compliance Guidelines.

This report is intended for the information of the management. This restriction is not intended to limit the distribution of this report, which is a matter of public record.

October 8, 1992

6

ASSETS

Cash & Investments Cash With Fiscal Agent - Note 6 Accounts Receivable Land - Note 2 Amount available in Debt Service

PQRT HU&NN REDEVELOPMENT AGENCY CCIIUNID BALANCE SHEET • ALL FUNDS

June 30, 1992 With Ccaiparative Totals for June 30, 1991

GOVERNMENTAL FUND TYPES

DEBT SERVICE FUNDS CAPITAL PROJECTS Central

FUND

$ 7,745 S

Cormu,ity

2,708,848 4,803

R-76

Project

---------s

616

Funds for Retireanent of Long-term debt Aalouit to be Provided for retirement of long-term debt

$

ACCOUNT GROUPS

Long-term General Debt Fixed Assets

--------- ---------0 s 0 $

1,970,153

2,708,848

11,151,152

TOTALS (Memorandum Only)

1992 1991

---------- ---------7,747 s ,,m

2,708,848 2,733,115 5,419 21,316

1,970,153 1,564,339

2,708,848 2,733,115

11,151,152 11,441,885

TOTAL ASSETS S 7,745 $2,713,652 S 617 $13,860,000 $1,970,153 $18,552,167 $18,495,547

========= ========== ===== ----------LIABILITIES & FUND EQUITY

Liabilities:

Accounts Payable Bank-Overdraft

$ 308 S 0 S 4,803

0 $

616 0 $ 0

Bonds Payable - Note 4 13,860,000

Total Liabilities $ 308 S 4,803 S 616 S13,860,000 $ 0

CCM4ITMENTS & CONTINGENCIES· Note 8,3

Fund Equity:

Investment In General Fixed Assets

fund Balance - Note 6: Reserved for Bond Debt Serv; ce Reserved For Note Debt Serv;ce Unreserved

Total Fund Balance

Total Fund Equity

TOTAL LIABILITIES & FUND EQUITY

7,437

----------7,437

----------7,437

----------$ 7,745 =

2,708,848 0

---------- ---------- ----------2,708,849 0

---------- -------- -----------2,708,849 0

---------- ---------- -----------$2,713,652 s 617 $13,860,000

========== ========== ===========

The accoa,panying notes are an integral part of these financial statements See Accountants• Audit Report.

7

1,970,153

----------0

----------1,970, 153

----------$1,970,153

---------

=========== ----------------------

$ 308 $ 1,467 5,419 11,288

13,860,000 14,175,000

--------··· -----------$13,865,727 $14,187,755

--------- ·-······---

1,970,153 1,564,339

2,708,848 2,733,115 0 0

7,439 10,338

--------- ----------2,716,287 2,743,453

--------- ----------4,686,440 4,307,792 --------- ----------

S18,552,167 $18,495,547

----------- -----------

PORT HUalNE REDIVILOPNINT AGENCY COMBINED STATEMENT Of REYBIJES, EXPENDITURES AND CHANGES

IN FUND BALANCE· ALL FUNDS

For The Fiscal Year Ended June 30, 1992 With Comparative Totals for the Fiscal Year

Ended June 30, 1991

GOVERNMENTAL FUND TYPES

------------------------·--------------- TOTALS CAPITAL DEBT SERVICE FUNDS (Meaoranclun Only) PROJECTS -----------------------

REVENUES:

Property Taxes Interest Miscellaneous ReveBJes Proceeds from Sale of Land

TOTAL REVENUES

EXPENDITURES:

Operating Expenditures Redevelopment Projects Bond Interest Expenditures - Note 4 Bond Principal Repayments - Note 4 Note Interest Expenditures Note Principal Repayments Repayment of City Advances· Note 3

TOTAL EXPENDITURES

EXCESS(DEFICIENCY) OF REVENUES OVER EXPENDITURES

OTHER FINANCING SOURCES & (USES):

Operating Transfers·in/Cout) Property Rehab Contributions· Note 5

OTHER FINANCING Sa.JRCES & (USES)

EXCESS CDEFICIENCY)/REVENUES & OTHER FINANCING SClJRCES OVER EXPENDITURES & OTHER uses

FUND BALANCE AT BEGINNING OF YEAR

FUND BALANCE AT END OF YEAR

FUND .. Redevelopment

-------------s 0

3,794 79,548

-----------83,342

-----------

220,448 442,910

0 0 0 0 0

------------663,358

------------

(580,016)

------------

577,116 0

------------577,116

------------

(2,900)

------------10,337

------------s 7,437

==========

Central Coimu,ity -----------

s 2,295,142 181,838

-----------2,476,980

-----------

13,182 0

982,022 315,000

0 0

502,140

-----------1,812,344

-----------

664,636

------------

(577,116) (111,787)

------·---·· (688,903)

------------

(24,267)

------------2,733,115

------------$ 2,708,848

The acc~ing notes are an integral part of these financial statements. See Accountants• Audit Report.

8

R-76 Project ---------

$ 375,890 1,782

---------377,672

---------

0 0 0

0 0 0

377,672

----------377,672

----------

0

----------

0

0

----·-----0

----------

0

----------

----------$

=========

--------- ------------

1992 1991 ----------- -----------

s 2,671,032 s 2,414,199 183,620 230,628

3,794 11,947 79,548 28,690

----------- -----------2,937,994 2,685,464

----------- -----------

233,630 224,022 442,910 655,554 982,022 998,523 315,000 300,000

0 20, 164 0 400,000

879,812 755,327

------------ ·----------2,853,374 3,353,590

------------' -----------

84,620 (668,126)

------------ -----------

0 0 (111,787) (97,873)

----------- ·--------·· (111,787) (97,873)

----------- -----------

(27,167) (765,999)

-----------· ----------2,743,453 3,509,452

------------ ------------$ 2,716,286 s 2,743,453

============ -----------------------

PORT HUEHEME REDEVELOPMENT AGENCY COMBINED STATEMENTS OF REVENUES, EXPENDITURES AND

CHANGES IN FUND BALANCES - BUDGET AND ACTUAL - ALL FUNDS For f;scal Year Ended June 30, 1992

w;th COl11)8rable Totals for Fiscal Year Ended June 30, 1991

1992 1991

Favorable Budget Actual (Unfavorable) Budget

Favorable Actual (Unfavorable)

REVENUES ANO OTHER SOURCES S 3,500,000 $2,937,994 $ (562,006) $ 5,000,000 S 2,685,464 (2,314,536)

EXPENDITURES ANO OTHER USES - Note 3, 4, 5

EXCESS CDEFICIENCY)/REVENUES & FINANCING SOURCES OVER EXPENDITURES & OTHER USES

FUND BALANCE AT BEGINNING OF YEAR

FUND BALANCE AT ENO OF YEAR $

3,500,000

0

---------

2,743,453

---------

2,743,453 $

=========

2,965,161 534,839

(27,167) (27,167) --------- ---------

2,743,453 0

--------- ---------

2,716,286 $ (27, 167) $

====--== -------

The acc~nying notes are an integral part of these financial statements. See Acc01.r1tants 1 audit report.

9

5,000,000 3,451,463 1,548,537

0 (765,999) (765,999) ----------- ----------- ---------

3,509,452 3,509,452 0

----------- ----------- ---------

3,509,452 $ 2,743,453 $ (765,999)

========= ========= --=-----

NOTE 1

PORT HUENEME REDEVELOPMENT AGENCY Notes To Financial Statements

June 30, 1992

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accompanying financial statements have been prepared inaccordance with generally accepted accounting principles (GAAP) as applied to government units. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial.reporting principles. The more significant of the Agency's accounting policies are described below.

A. Reporting Entity

Although the Redevelopment Agency is legally a separate en­tity from the City of Port Hueneme their financial operations are closely related and the Port Hueneme city council s·erves as the Port Hueneme Redevelopment Agency Board. Therefore, in accordance with GAAP, the Port Hueneme Redevelopment Agency is included within the City of Port Hueneme financial reporting entity. The Port Hueneme Housing Authority is also included within the City of Port Hueneme financial reporting entity. Financial results for the City of Port Hueneme and the Port Hueneme Housing Authority are not included in these financial statements.

B. Fund Accounting

The Agency uses funds and account groups to report on its financial position and the results of its operations. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain functions or activities.

A fund is a separate accounting entity with a self-balancing set of accounts. An account group, on the other hand, is a financial reporting device designed to provide accountability for certain assets and liabilities that are not recorded in the funds because they do not directly affect net expendable available financial resources.

10

PORT HUENEME REDEVELOPMENT AGENCY NOTES TO FINANCIAL STATEMENTS JUNE 30, 1992

Funds are generally classified into three categories:

Governmental, proprietary and fiduciary. The Agency only uses governmental fund types. Governmental funds are used to account for all of the Agencies general activities. These include the collection and disbursement of monies for acquisition and construction of redevelopment projects (capital projects fund) and the servicing of general long-term debt (debt service funds).

c. Basis of Accounting

The accounting and financial reporting treatment applied to a fund is determined by its measurement focus. All governmental funds are accounted for using a current financial resources measurement focus. With this measurement focus, only current assets and liabilities are included on the balance sheet. Operating statements of these funds present increases (i.e., revenues and other financing sources) and decreases (i.e., expenditures and other financing uses) in net current assets.

The modified accrual basis of accounting is used by all governmental fund types. Under this basis of accounting revenues are recognized when susceptible to accrual. (i.e., when they become both measurable and available). "Measurable" means the amount of the transaction can be determined. "Available" means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. Expenditures are recorded when the related fund liability is incurred. Principal and interest on general long-term debt are recorded as fund liabilities when due.

D. Budgets

Budgets are adopted annually for projected revenues, expenditures and debt pursuant to state law. The encumbrance accounting and reporting method is not used.

E. Cash and Investments

All Agency held cash and investments· at June 30, 1992 were in cash deposits except those held by the bond fiscal agent. The fiscal agent held U.S. government securities and a Crown Life Annuity as authorized or mandated by the terms of the bond

11

PORT HUENEME REDEVELOPMENT AGENCY NOTES TO FINANCIAL STATEMENTS JUNE 30, 1992

information on the composition of cash and investments held by the bond fiscal agent. Interest income is allocated monthly based on the weighted average cash balance in each fund.

F. Fixed Assets

General fixed assets are not capitalized in the funds used to acquire or construct them. Instead, capital acquisition and construction are reflected as expenditures in governmental funds, and the related assets are reported in the general fixed assets account group. The only type of general fixed assets carried by the Agency at June 30, 1992 was land inven­toried for redevelopment.

G. Long-term Obligations

Long-term debt is recognized as a liability of a governmental fund when due, or when resources have been accumulated in the debt service fund for payment early in the following year. For other long-term obligations, only that portion expected to be financed from expendable available financial resources is reported as a fund liability of a governmental fund. The remaining portion of such obligations is reported in the general long-term debt account group.

H. Memorandum Only - Total Columns

Total columns on the general purpose financial statements are captioned "memorandum only" to indicate they are presented only to facilitate financial analysis. Data in these columns do not present financial position, results of operations or changes in financial position in conformity with generally accepted accounting principles. Neither are such data comparable to a consolidation. Interfund eliminations have not been made in the aggregation of this data.

NOTE 2 LAND INVENTORY

Land inventory is valued at either its acquisition cost or appraised value at time of acquisition, $1,970,153 which is less than current market value by comparison to recent sales in the area. No depreciation is recorded.

Land Inventory at June 30, 1991 $1,564,339 Land Acquisitions 405.814 Land Inventory at June 30, 1992 $1,970,153

--------------------

12

PORT HUENEME REDEVELOPMENT AGENCY NOTES TO FINANCIAL STATEMENTS JUNE 30, 1992

NOTE 3 ADVANCES FROM THE CITY OF PORT HUENEME

The City of Port Hueneme has paid for various redevelopment projects which are treated as advances to the Agency under California Redevelopment Law. These advances to the Agency are to be repaid to the City from tax increment revenue, if and when available. Repayment is contingent upon the Agency actually receiving enough future tax increment revenues to repay the city. Accordingly, the liability is not included on the balance sheet.

The Agency was contingently liable for $14,088,815 at June 30, 1992. This is an increase of $226,634 over the previous fiscal year. The unpaid balance bears interest at 1.6% per annum.

NOTE 4 BOND DEBT

A. central community Project Tax Allocation Refunding Bonds of 1986, Series "A", dated October 15, 1986 were issued October 30, 1986 pursuant to Agency resolution no. 708. Bond proceeds were used for the following purposes:

Deposited into escrow to defease 1977 Tax Allocation bonds -- See Note 4.B below $3,584,496

Prepay 1983 Tax Allocation Note with interest and penalty 1,587,500

Pay principal on Tax Allocation Note due to the City of Port Hueneme 5,693,732 See Note 3 above.

Deposit into special escrow -- see note 6.A.1 below. 2,929,575

Fund bond reserve with Fiscal Agent 663,460 See Note 6.A.2 below~

Pay Bond Issuance Costs 826,237 $15,285,000 ===========

13

PORT HUENEME REDEVELOPMENT AGENCY NOTES TO FINANCIAL STATEMENTS JUNE 30, 1992

The balance of the $15,285,000 in serial and term bonds are scheduled to mature and bear interest thereon at rates as follows:

Maturity Date SERIAL: 5/1/93 5/1/94 5/1/95 5/1/96 TERM: 5/1/2010 5/1/2011

Total

Principal Amount

$ 330,000 350,000 375,000 395,000

9,495,000 2,915,000

$13,860,000

Interest Rate

5.90 6.10 6.25 6.40

7.00 7.20

The bonds maturing on May 1, 2010 and 2011 are subject to mandatory redemption. Because of this the debt service schedule shows principal payments in the years after 1996, but before 2010 despite the maturity schedule above.

Principal and interest are to be paid from Central Community tax increments with interest payable semiannually and principal payable on May 1 of each year. Debt Service requirements are as follows:

Year 1993 1994 1995 1996 1997 1998 - 2002 2003 - 2007 2008 - 2011

Totals

Amount representing interest

Bond outstanding

Total Debt service

$1,294,068 1,294,598 1,298,248 1,294,810 1,364,530 6,833,320 6,842,410 5,474,460

$25,696,444

(11,836,444)

$13,860,000 =======·------

B. central community Redevelopment Project Tax Allocation Bonds, Series A, dated August 1, 1977 consisted of 1200 $5,000 denomination bonds numbered A-1 to A-1200, inclusive.

14

PORT HUENEME REDEVELOPMENT AGENCY NOTES TO FINANCIAL STATEMENTS JUNE 30, 1992

The face value of the bonds issued was $6,000,000. This debt isn't shown on the financial statements because it has been in-substance defeased with $3,584,496 from the central community Project Tax Allocation Refunding Bonds of 1986, Series "A". The money was deposited into an escrow account with the fiscal agent for purposes of legally sat­isfying the debt so as to terminate the lien on agency tax increments (defeasance of the bonds).

Bond principal and interest payments through October 31, 1986 (prior to the advance refunding) were included on the Statement of Revenues, Expenditures and Changes in Fund Balance of the financial statements covering the period ending June 30, 1987.

The following summarizes changes in the debt for the fiscal year:

Bonds outstanding@ 6/30/91 Less: Principal retired

Bonds outstanding@ 6/30/92

$2,710,000 (325,000)

$2,385,000 ===========

The funds deposited, together with interest earned thereon shall be fully sufficient to pay principal and interest on the unretired bonds. At June 30, 1992 the escrow asset bal­ance was $1,724,091. The fiscal agent has purchased United States Government Securities timed to mature on debt service payment dates.

Because of mandatory call provision in resolution 603 prin­cipal on certain bonds maturing in 2003 will be paid prior to their maturity. The following table sets forth the debt schedule for the bonds to be paid from the funds escrowed and the interest thereon.

August 1, 1992 1993 1994 1995 1996 1997 1998 1999

Totals

Principal Amount 345,000 355,000 365,000 275,000 290,000 295,000 420,000

40,000

$2,385,000 --------------------

Interest Rate

15

5.6% 5.7% 5.7% 5.9% 5.9% 5.9% 5.9% 5.9%

Interest Amount 139,000 119,350

98,895 77,880 61,655 44,545 27,140

2,360

$ 570,825

PORT HUENEME REDEVELOPMENT AGENCY NOTES TO FINANCIAL STATEMENTS JUNE 30, 1992

NOTE 5 CENTRAL COMMUNITY REDEVELOPMENT PROJECT OBLIGATION PURSUANT TQ s1,;iioN 19(A) (3) OF THE PROPQTY REHABILITATION LOAN AGREEMENT DATED JANUARY 26. 1983 AND EXECUTED ON MAY 4, 1983

The Agency pledged five percent (5%) of the Central Community Project (Calif. A-38) annual tax increment revenues to an agreement between the Agency, City of Port Hueneme and the Bank of America.

NOTE 6 RESERVES

Reservations of fund balance reflect fund equity that is unavailable for appropriation. The equity has been restricted for the reasons stated below.

A. The Reserve for Debt Service in the Central Community Debt Service fund relates to the outstanding 1986 refunding Bonds (See note 4.A above). The following table analyzes the composition of the balance.

"Special Fund" (6.A.1) "Reserve Fund" (6.A.2)

Total Reserve for Debt Service

$1,303,976 1,404,872

$2,708,848 ----==----

1. Agency resolution no. 708 authorizing the 1986 refunding bond issue calls for the creation of a "Special Fund." The "Special Fund" is held by the fiscal agent and is for the purpose of paying debt service on the 1986 Refunding Bonds. Tax revenues, as received, are deposited into the Special Fund. The balance in the special fund at June 30, 1992 was $1,303,976 (valued at cost) comprised of:

Deposits $ 5,444 U.S. Treasury Bills 1,298,532

2. Resolution no. 708 provides for establishing a "Reserve Fund" also to be held by the fiscal agent. This reserve was funded at the time of the sale of the bond issue from bond proceeds and amount remaining in the 1977 Tax Allocation Bond Issue (See note 4.B above) "Special Fund." Except as mentioned below, no additional deposits are required to be made to the "Reserve Fund."

16

PORT HUENEME REDEVELOPMENT AGENCY NOTES TO FINANCIAL STATEMENTS JUNE 30, 1992

Its purpose is to replenish the "Special Fund" de­scribed in 6.A.l above.

The balance in the "Reserve Fund" at June 30, 1992 was $1,404,872 (valued at cost) comprised of:

Deposits U.S. Government Securities

$ -17,956 1,422,828

NOTE 7 - LEASE/SUBLEASE WITH THE CITY OF PORT HUENEME AND ASSIGNMENT OF RIGHTS UNDER THE SUBLEASE CITY OF PORT HUENEME CERTIFICATES OF PARTICIPATION

on May 10, 1988 the City of Port Hueneme issued Certificates of Participation (Certificates) dated April 1, 1988, in an aggregate amount of $5,000,000.

Concurrent with the closing, the Agency entered into the following agreements dated April 1, 1988:

A. Lease Agreement whereby the City of Port Hueneme leased its Cultural Center complex and Civic Center complex to the Agency for $1. The Lease terminates on the e.arlier of (i) April 1, 2018, or (ii) the date of termination of the Sublease (referenced below) at which time the buildings revert back to the City of Port Hueneme.

B. Sublease Agreement whereby the Agency leases back to the City the Cultural Center and civic Center under a triple net lease.

The term of the sublease ends on the earliest of (i) April 1, 2018, or (ii) at such earlier date as the Certificates have been paid or provision for their payment made, or (iii) the date of termination due to casualty or condemnation in accordance with the terms of Sections 5 or 6 of the sublease agreement.

The City's rental payments are made up of two compo­nents:

1. Base Rental: This represents amounts required to service the principal and interest payments due on the COP's.

17

PORT HUENEME REDEVELOPMENT AGENCY NOTES TO FINANCIAL STATEMENTS JUNE 30, 1992

2. Additional Rental: All of the following:

a. All taxes and assessments b. Insurance premiums c. All fees and expenses of the

Trustee (First Interstate Bank) not otherwise provided for out of the Certificate proceeds

d. Any other fee, cost or expense incurred by the Agency and Trustee in connection with the administration of the sublease and the trust agreement

c. Assignment Agreement whereby the Agency assigned all its rights under the sublease to the Trustee for the Certificate Holders. Accordingly, all rental payments are made by the City of Port Hueneme to the Trustee. Also, should the city default the Trustee has the right to bring suit to enforce the terms of the sublease.

The Certificates represent the proportionate interests of the registered owners thereof in the Base Rental payments ~o be made by the City. The payments will cover both principal and interest portions of the payments due under the Certificates. The Agency did not receive any proceeds from the issuance of the COP's nor is the Agency liable should the city fail to make rental payments under the terms of the sublease.

NOTE 8 - DEFFERED 20% LOW AND MOD SETASIDE

The Port Hueneme Redevelopment Agency made findings in accordance with Health and Safety Code Section 33·334.6 on December 17, 1986 to defer the 20% increment setaside re­quirement until all other debt is repaid. The amount de­ferred as of June 30, 1992 is $284,711 for the R-76 Project and $1,178,536 for the Central Community Project.

NOTE 9 - REFUNDING OF CERTIFICATES OF PARTICIPATION

On July 30, 1992 the City of Port Hueneme issued Certificates of Participation (Certificates) dated July 1, 1992, in an aggregate amount of $5,605,000. The proceeds of the sale of the Certificates, together with

18

PORT HUENEME REDEVELOPMENT AGENCY NOTES TO FINANCIAL STATEMENTS JUNE 30, 1992

other available moneys, will be used by the City of Port Hueneme (the "City") (i) to provide for the funding of a security deposit with respect to a portion of certain base rental payments (the "Prior Lease Payments") to be made by the City under and pursuant to a sublease, dated as of April 1, 1988 (the "Prior Lease Agreement") by and between the City, as lessee, and the Port Hueneme Redevelopment Agency (the "Agency"), as lessor, which, in turn, will provide for the defeasance of that portion of the City's $5,000,000 Certificates of Participation (Capital Improvement Program) (the "Prior Certificates") represented by the $1,090,000 Prior certificates due on April 1, 2008, and the $3,080,000 Prior Certificates due on April 1, 2018 (such portion hereinafter referred to as the "Refunded Prior Certificates"), (ii) to fund a reserve fund, and (iii) to pay delivery costs incurred in connection with the execution, delivery and sale of the Certificates.

19

SCHEDULE OF LONG-TERM INDEBTEDNESS

20

Description of Indebtedness

PORT HUENEME REDEVELOPMENT AGENCY

SCHEDULE OF LONG-TERM DEBT

JUNE 30, 1992

Outstanding Amount Balance at

Authorized June 30, 1991

Amount Matured &

Retired FY 191-92

Outstanding Balance June 30, 1992

Current Long-Term Total

Tax Allocation Refunding Bonds, 1986 Series A

$15,285,000$ 14,475,000 S 315,000 S 330,000$ 13,530,000 $ 13,860,000

TOTALS $15,285,000$ 14,475,000 $ 315,000 $330,000 S 13,530,000 S 13,860,000

========

The acc0111)8nying footnotes are an integral part of these financial statements. See Accountants' audit report.

Chief Fiscal Officer Certification: Pursuant to Section 33675 of the Health and Safety Code, I hereby certify that the above is a true and accurate Statement of Indebtedness.

21

James M. Hanks, Finance Director

p,'- ~ 1-7-f.J Date

Port Hueneme Redevelopment Agency

Schedule of Federal Financial Assistance

For Period Ending June 30, 1992

Cash/Accrued Cash/Accrued Federal or (Deferred) Receipts or or (Deferred)

CFDA Program Revenue at Period Revenues Disbursements Revenue at End Federal Program: Nt.mber Amounts Beginning Recognized Ex(;!!nditures of Period

NO FEDERAL FUNDS WERE RECEIVED BY THE AGENCY

22

APPENDIXD

FORMSOFBONDCOUNSELOPINIONS

May_, 1993

Port Hueneme Redevelopment Agency 250 North Ventura Road Port Hueneme, California 93041

OPINION: $23,410,000 Port Hueneme Redevelopment Agency Central Community Project 1993 Tax Allocation Refund.in~ Bonds

Members of the Agency:

We have acted as bond counsel to the Port Hueneme Redevelopment Agency (the "Agency") in connection with the issuance by the Agency of $23,410,000 aggregate principal amount of Port Hueneme Redevelopment Agency Central Community Project 1993 Tax Allocation Refunding Bonds (the "Bonds"), pursuant to the provisions of Article 10 of Chapter 3 of Part 1 of Division 2 of Title 5 of the California Government Code (the "Bond Law"), and an Indenture of Trust dated as of April 1, 1993 (the "Indenture"), by and between the Agency and First Interstate Bank of California, as trustee. We have examined the law and such certified proceedings and other papers as we deem necessary to render this opinion.

As to questions of fact material to our opinion, we have relied upon representations of the Agency contained in the Indenture and in certified proceedings and other certifications of public officials furnished to us, without undertaking to verify the same by independent investigation.

Based upon the foregoing, we are of the opinion, under existing law, as follows:

1. The Agency is a public body corporate and politic duly organized and validly existing under the laws of the State of California with the power to enter into the Indenture, perform the agreements on its part contained therein and issue the Bonds.

2. The Indenture has been duly approved by the Agency and constitutes a valid and binding obligation of the Agency enforceable against the Agency in accordance with its terms.

D-1

Port Hueneme Redevelopment Agency May __ , 1993 Page :2

3. Pursuant to the Bond Law, the Indenture establishes a valid lien on the funds pledged by the Indenture for the security of the Bonds.

4. The Bonds have been duly authorized, executed and delivered by the Agency and are valid and binding special obligations of the Agency, payable solely from the sources provided therefor in the Indenture.

5. Interest on the Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations; provided, however, that for the purpose of computing the alternative minimum tax imposed on such corporations (as defined for federal income tax purposes), such interest is required to be taken into account in determining certain income and earnings. The opinions set forth in the preceding sentence are subject to the condition that the Agency comply with all requirements of the Internal Revenue Code of 1986 which must be satisfied subsequent to the issuance of the Bonds in order that interest thereon be, or continue to be, excluded from gross income for federal income tax purposes. The Agency has covenanted to comply with each such requirement. Failure to comply with certain of such requirements may cause the inclusion of interest on the Bonds in gross income for federal income tax purposes to be retroactive to the date of issuance of the Bonds. We express no opinion regarding other federal tax consequences arising with respect to the Bonds.

6. Interest on the Bonds is exempt from personal income taxation imposed by the State of California.

The rights of the owners of the Bonds and the enforceability of the Bonds and the Indenture may be subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors' rights heretofore or hereafter enacted and may also be subject to the exercise of judicial discretion in appropriate cases.

Respectfully submitted,

A Professional Law Corporation

D-2

May_, 1993

Port Hueneme Redevelopment Agency 250 North Ventura Road Port Hueneme, California 93041

OPINION: $3,320,000 Port Hueneme Redevelopment Agency R-76 Project 1993 Tax Allocation Refundine: Bonds

Members of the Agency:

We have acted as bond counsel to the Port Hueneme Redevelopment Agency (the "Agency") in connection with the issuance by the Agency of $3,320,000 aggregate principal amount of Port Hueneme Redevelopment Agency R-76 Project 1993 Tax Allocation Refunding Bonds (the "Bonds"), pursuant to the provisions of Article 10 of Chapter 3 of Part 1 of Division 2 of Title 5 of the California Government Code ( the "Bond Law"), and an Indenture of Trust dated as of April 1, 1993 (the "Indenture"), by and between the Agency and First Interstate Bank of California, as trustee. We have examined the law and such certified proceedings and other papers as we deem necessary to render this opinion.

As to questions of fact material to our opinion, we have relied upon representations of the Agency contained in the Indenture and in certified proceedings and other certifications of public officials furnished to us, without undertaking to verify the same by independent investigation.

Based upon the foregoing, we are of the opinion, under existing law, as follows:

1. The Agency is a public body corporate and politic duly organized and validly existing under the laws of the State of California with the power to enter into the Indenture, perform the agreements on its part contained therein and issue the Bonds.

2. The Indenture has been duly approved by the Agency and constitutes a valid and binding obligation of the Agency enforceable against the Agency in accordance with its terms.

D-3

Port Hueneme Redevelopment Agency May_, 1993 Page2

3. Pursuant to the Bond Law, the Indenture establishes a valid lien on the funds pledged by the Indenture for the security of the Bonds.

4. The Bonds have been duly authorized, executed and delivered by the Agency and are valid and binding special obligations of the Agency, payable solely from the sources provided therefor in the Indenture.

5. Interest on the Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations; provided, however, that for the purpose of computing the alternative minimum tax imposed on such corporations (as defined for federal income tax purposes), such interest is required to be taken into account in determining certain income and earnings. The opinions set forth in the preceding sentence are subject to the condition that the Agency comply with all requirements of the Internal Revenue Code of 1986 which must be satisfied subsequent to the issuance of the Bonds in order that interest thereon be, or continue to be, excluded from gross income for federal income tax purposes. The Agency has covenanted to comply with each such requirement. Failure to comply with certain of such requirements may cause the inclusion of interest on the Bonds in gross income for federal income tax purposes to be retroactive to the date of issuance of the Bonds. We express no opinion regarding other federal tax consequences arising with respect to the Bonds.

6. Interest on the Bonds is exempt from personal income taxation imposed by the State of California.

The rights of the owners of the Bonds and the enforceability of the Bonds and the Indenture may be subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors' rights heretofore or hereafter enacted and may also be subject to the exercise of judicial discretion in appropriate cases.

Respectfully submitted,

A Professional Law Corporation

,J()449

D-4

APPENDIXE

FORM OF MUNICIPAL BOND INSURANCE POLICY FOR THE CENTRAL COMMUNITY BONDS

The following insurance policy will be provided solely with respect to the Central Community Bonds. Payments with respect to the R-76 Bonds are not insured under such policy, and are secured solely by the revenues and assets pledged therefore under the R-76 Indenture.

E-1

Municipal Bond Insurance Policy

Issuer:

Bonds:

AMBAC Indemnity Corporation c/o CT Corporation Systems 44 East Mifflin St., Madison, Wisconsin 53703 Administrative Office: One State Street Plaza, New York, NY 10004 Telephone: (212) 668-0340

Policy Number:

Premium:

AMBAC Indemnity Corporation (AMBAC) A Wisconsin Stock Insurance Company

in consideration of the payment of the premium and subject co the terms of this Policy, hereby agrees co pay r Company of New York, as trustee, or its successor (the "Insurance Trustee"), for the benefit of Bon Ide cipal of and interest on the above-described debt obligations (the "Bonds") which shall become Due fi reason of Nonpayment by the Issuer.

AMBAC will make such payments co the Insurance Trustee within one (1) business dav...-lf.711.,,.~11 AC of Nonpay-ment. Upon a Bondholder's presentation and surrender co the Insurance Trustee of sue canceled and in bearer form and free of anv adverse claim. the Insurance Trustee principal and interest which is then Due f~r Payment but is unpaid. Upon sue l become the owner of the surrendered Bonds and coupons and shall be fully subrogaced co all of c Bon

In cases where the Bonds are issuable only in a form whereby princi their assigns, che Insurance Trustee shall disburse principal co a Bondholder as afi "d 1'(11lWIIIWJ:>olle surrender co the Insurance Trustee of the unpaid Bond, uncanceled and free of any adverse claim, u of assignment. in form satisfactory co the Insurance Trustee, duly executed by the Bondholder or ,....,,..,....,..t'I~ a o ed representative, so as co permit ownership of such Bond co be registered in the name of AMBAC or it o e e onds are issuable only in a form whereby interest is payable co registered Bondholders or their assi ns, ch Insu ance s disburse interest co a Bondholder as aforesaid only upon presentation co the Insurance Trustee of P. a th laima on entitled to che payment of interest on the Bond and delivery to the Insurance Trustee of an ioSltlllmllillrr of satisfactory to the Insurance Trustee, duly executed by the claimant Bondholder or such Bondholder' ul aut a e, transferring co AMBAC all rights under such Bond co receive che interest in respect of which ch u -~P!bu,t!lt- "'111iii~;1«1ade. AMBAC shall be subrogated co all che Bondholders· rights co payment on registered Bonds t e ext e disbursements so made.

In the event the trustee or yi~t n as notice chat any payment of principal of or interest on a Bond which has become Due for Paym i~~ older by or on behalf of the Issuer of the Bonds has been deemed a preferential transfer and theret ve fr its regisce ed owner pursuant co the United Scares Bankruptcy Code in accordance with a final, nonappealable or tent jurisdiction, such registered owner will be entitled co payment from AMBAC to the extent of such recovery or otherwise available.

As used herein, the der means any person other than the Issuer who, at the time of Nonpayment, is the owner of a Bond or of a coupon appercai ond. As used herein, "Due for Payment", when referring to the principal of Bonds, is when the scared macuriry date or a ma edempcion date for the application of a required sinking fund installment has been reached and does not refer to any earlier dace on which payment is due by reason of call for redemption (other than by application of required sinking fund inscallmenrs), acceleration or other advancement of maturity; and, when referring co interest on the Bonds, is when the stated dace for payment of interest has been reached. As used herein, "Nonpayment'" means the failure of the Issuer co have provided sufficient funds to the paying agent for payment in full of all principal of and interest on the Bonds which are Due for Payment.

This Policy is noncancelable. The premium on this Policy is nor refundable for any reason, including payment of the Bonds prior to maturity. This Policy does not insure against loss of any prepayment or ocher acceleration payment which at any time may become due in respect of any Bond, ocher than at the sole option of AMBAC. nor against any risk other than Nonpayment.

In witness whereof, AMBAC has caused this Policy to be affixed with a facsimile of its corporate seal and co be signed by its duly authorized officers in facsimile to become effective as its original seal and signatures and binding upon AMBAC by virtue of the counter­signature of its duly authorized representative.

Effective Dace:

UNITED STATES TRUST COMPANY OF NEW YORK acknowledges that it has agreed to perform the duties of Insurance Trustee under this Policy.

Form# S66-0003 (8/92)

Secretary

Authorized Representative

Endorsement

Polin issued to:

In the event that AMBAC Indemnity Corporation were to become ins

AMBAC Indemnity Corporation c/o CT Corporation Systems 44 East Mifflin Street Madison, Wisconsin 53703 Administrative Office: One State Street Plaza New York, New York I 0004

Attached to and forming pan of

Effernve Date of Endorsement

the Policy would be excluded from coverage by the California Ins11 --=1 n.:.­

established pursuant to the laws of the State of California. Payme ts

ising under n.:,~~,d,tion,

olicy with respect obligor on, or any to the Bonds, as defined in the Policy, may not be accelerat

trustee or paying agent for .. the Bonds.

Nothmg herein contained shall be limitations of the above mentione

m ny has caused its Corporate Seal to be hereto affixed and these presents to be signed by its

President

form tt S2::3-00 I 5 (8/92)

to become effective as its original .'>ea! and signatures and binding on the Company bv ly authorized agent.

AMBAC Indemnity Corporation

Authorized Representative

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