Journal

NEW ISSUE—BOOK-ENTRY ONLY RATING: S&P: “BBB+”

See “RATING” herein.

In the opinion of Quint & Thimmig LLP, San Francisco, California, Bond Counsel, interest on the Bonds is exempt from personal income taxation imposed by the State of California. However, interest on the Bond is subject to all applicable federal income taxation. See “TAX MATTERS” herein.

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

Proceeds from the sale by the Redevelopment Agency of the City of Long Beach (the “Agency”) of its Taxable Recovery Zone Economic Development Bonds, 2010 Series A (North Long Beach Redevelopment Project) (the “2010 Series A Bonds”) and its Taxable Build America Bonds, 2010 Series B (North Long Beach Redevelopment Project) (the “2010 Series B Bonds” and, together with the 2010 Series A Bonds, the “Bonds”), will be used to: (a) finance redevelopment activities of the Agency within or of benefit to the Agency’s North Long Beach Redevelopment Project, (b) make a deposit to a reserve account for the Bonds and certain parity bonds, and (c) pay the costs of issuing the Bonds. See “FINANCING PLAN” herein.

The Bonds will be issued under and pursuant to an Indenture, dated as of May 1, 2002 (the “Original Indenture”), as amended and supplemented by a First Supplemental Indenture of Trust, dated as of February 1, 2005, by a Second Supplemental Indenture of Trust, dated as of February 1, 2006, and by a Third Supplemental Indenture of Trust, dated as of May 1, 2010 (the Original Indenture, as so amended and supplemented, is referred to herein as the “Indenture”), each by and between the Agency and The Bank of New York Mellon Trust Company, N.A., as trustee (the “Trustee”). The Bonds initially will be sold by the Agency to the Long Beach Bond Finance Authority (the “Authority”) for concurrent resale to the Underwriter. The Bonds are special obligations of the Agency and are payable solely from and secured by a pledge of the Tax Increment Revenues (as defined herein), and by a pledge of amounts in certain funds and accounts established under the Indenture, as further described herein. The pledge of the Tax Increment Revenues and other funds under the Indenture will be on a parity with the pledge thereof with respect to the Agency’s outstanding 2002 Bonds and 2005 Bonds, and with respect to any future Parity Debt (as such capitalized terms are defined in the Indenture). See “SECURITY FOR THE BONDS—Pledge Under the Indenture” herein.

Interest on the Bonds will be payable semi-annually on each February 1 and August 1, commencing August 1, 2010. 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 representing their interests in the Bonds. Payment of principal of, interest and premium, if any, on the Bonds will be made directly to DTC or its nominee, Cede & Co., so long as DTC or Cede & Co. is the registered owner of the Bonds. Disbursement of such payments to the DTC Participants (as defined herein) is the responsibility of DTC and disbursement of such payments to the Beneficial Owners (as defined herein) is the responsibility of the DTC Participants, as more fully described herein. See “THE BONDS—Book-Entry System” herein.

The Bonds are subject to optional and mandatory sinking account redemption prior to maturity. See “THE BONDS— Optional Redemption” and “THE BONDS—Sinking Account Redemption” herein.

THE BONDS ARE SPECIAL OBLIGATIONS OF THE AGENCY PAYABLE SOLELY FROM THE TAX INCREMENT REVENUES, AS DESCRIBED HEREIN, AND AMOUNTS IN CERTAIN FUNDS AND ACCOUNTS MAINTAINED UNDER THE INDENTURE, AND ARE NOT A DEBT OF THE AUTHORITY, THE CITY OF LONG BEACH, CALIFORNIA (THE “CITY”), OR THE STATE OF CALIFORNIA (THE “STATE”) OR ANY POLITICAL SUBDIVISION OF THE STATE (OTHER THAN THE AGENCY, TO THE LIMITED EXTENT SET FORTH IN THE INDENTURE), AND NONE OF THE AUTHORITY, THE CITY OR THE STATE OR ANY POLITICAL SUBDIVISION THEREOF (OTHER THAN THE AGENCY) IS LIABLE THEREFOR. THE BONDS ARE NOT PAYABLE FROM, AND ARE NOT SECURED BY, ANY FUNDS OF THE AGENCY, OTHER THAN THE TAX INCREMENT REVENUES AND OTHER MONEYS EXPRESSLY PLEDGED PURSUANT TO THE INDENTURE. NEITHER THE MEMBERS OF THE GOVERNING BOARD OF THE AGENCY NOR ANY PERSONS RESPONSIBLE FOR THE EXECUTION OF THE BONDS ARE LIABLE PERSONALLY FOR THE PAYMENT OF THE BONDS.

MATURITY SCHEDULE (see inside cover page)

This cover page is not intended to be a summary of the Bonds or the security therefore. Investors are advised to read this Official Statement in its entirety to obtain information essential to the making of an informed investment decision with respect to the Bonds.

The Bonds are offered when, as and if issued and accepted by the Underwriter, subject to the approval as to their legality by Quint & Thimmig LLP, San Francisco, California, Bond Counsel. Certain legal matters related to this offering will be passed upon for the Agency by the City Attorney of the City of Long Beach, acting as Counsel to the Agency, and by Quint & Thimmig LLP, San Francisco, California, which also is acting as Disclosure Counsel to the Agency for the Bonds. It is expected that the Bonds in book- entry form will be available for delivery to DTC in New York, New York on or about May 12, 2010.

STONE & YOUNGBERG

The date of this Official Statement is April 28, 2010.

$22,235,000 REDEVELOPMENT AGENCY OF THE

CITY OF LONG BEACH TAXABLE RECOVERY ZONE ECONOMIC DEVELOPMENT BONDS, 2010 SERIES A

(NORTH LONG BEACH REDEVELOPMENT PROJECT)

$10,745,000 REDEVELOPMENT AGENCY OF THE

CITY OF LONG BEACH TAXABLE BUILD AMERICA BONDS,

2010 SERIES B (NORTH LONG BEACH

REDEVELOPMENT PROJECT)

† Copyright 2010, American Bankers Association. CUSIP® is a registered trademark of the American Bankers

Association. CUSIP data herein is provided by the CUSIP Service Bureau, operated by Standard & Poor’s, a division of The McGraw-Hill Companies, Inc. This data is not intended to create a database and does not serve in any way as a substitute for the CUSIP Services Bureau. CUSIP numbers have been assigned by an independent company not affiliated with the Agency and are included solely for the convenience of the registered owners of the Bonds. Neither the Agency nor the Underwriter is responsible for the selection or uses of these CUSIP numbers, and no representation is made as to their correctness on the Bonds or as included herein. The CUSIP number for a specific maturity is subject to being changed after the delivery of the Bonds as a result of various subsequent actions including, but not limited to, a refunding in whole or in part or as a result of the procurement of secondary market portfolio insurance or other similar enhancement by investors that is applicable to all or a portion of certain maturities of the Bonds.

$22,235,000

REDEVELOPMENT AGENCY OF THE CITY OF LONG BEACH TAXABLE RECOVERY ZONE ECONOMIC DEVELOPMENT BONDS, 2010 SERIES A

(NORTH LONG BEACH REDEVELOPMENT PROJECT)

$480,000 7.903% Serial Bonds due August 1, 2025 Yield 7.903% CUSIP: 542430 FV0† $5,710,000 8.110% Term Bonds due August 1, 2030 Yield 8.110% CUSIP: 542430 FW8† $16,045,000 8.360% Term Bonds due August 1, 2040 Yield 8.360% CUSIP: 542430 FX6†

$10,745,000 REDEVELOPMENT AGENCY OF THE CITY OF LONG BEACH

TAXABLE BUILD AMERICA BONDS, 2010 SERIES B (NORTH LONG BEACH REDEVELOPMENT PROJECT)

$10,745,000 Serial Bonds CUSIP Prefix: 542430†

Maturity Principal Interest CUSIP

(August 1) Amount Rate Yield Suffix† 2011 $590,000 2.386% 2.386% FY4 2012 595,000 3.259 3.259 FZ1 2013 610,000 4.003 4.003 GA5 2014 625,000 4.800 4.800 GB3 2015 645,000 5.250 5.250 GC1 2016 665,000 5.836 5.836 GD9 2017 690,000 6.386 6.386 GE7 2018 720,000 6.703 6.703 GF4 2019 755,000 6.953 6.953 GG2 2020 785,000 7.153 7.153 GH0 2021 825,000 7.353 7.353 GJ6 2022 865,000 7.503 7.503 GK3 2023 905,000 7.653 7.653 GL1 2024 950,000 7.803 7.803 GM9 2025 520,000 7.903 7.903 GN7

-i-

REDEVELOPMENT AGENCY OF THE CITY OF LONG BEACH

MEMBERS OF THE AGENCY

William Baker, Chair Diane L. Arnold, Vice Chair

John Cross, Member Teer L. Strickland, Member

John Thomas, Member Vivian Tobias, Member

Vacant, Member

AGENCY STAFF

Amy Bodek, Executive Director/Redevelopment Bureau Manager Lisa Fall, Assistant Executive Director/Redevelopment Administrator

David S. Nakamoto, Treasurer Larry G. Herrera, Secretary

SPECIAL SERVICES

Keyser Marston Associates, Inc. Los Angeles, California

Fiscal Consultant

Fieldman Rolapp & Associates Irvine, California Financial Advisor

Quint & Thimmig LLP,

San Francisco, California Bond Counsel and Disclosure Counsel

The Bank of New York Mellon Trust Company, N.A.

Los Angeles, California Trustee

-ii-

GENERAL INFORMATION ABOUT THIS OFFICIAL STATEMENT No dealer, broker, salesperson or other person has been authorized by the Agency to

give any information or to make any representations in connection with the offer or sale of the 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 the Agency. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the Bonds by a person in any jurisdiction in which it is unlawful for such person to make such an offer, solicitation or sale.

This Official Statement is not to be construed as a contract with the purchasers of the

Bonds. Statements contained in this 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 summaries and references to documents, statutes and constitutional provisions referred to herein do not purport to be comprehensive or definitive and are qualified in their entireties by reference to each such document, statute and constitutional provision.

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. The information and expressions of opinions herein are subject to change without notice and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the Agency since the date hereof.

The Underwriters have provided the following sentence for inclusion in this Official

Statement: The Underwriters have reviewed the information in this Official Statement in accordance with, and as part of, their responsibility to investors under the federal securities law as applied to the facts and circumstances of this transaction, but the Underwriters do not guarantee the accuracy or completeness of such information.

While the Agency and the City of Long Beach maintain internet websites for various

purposes, none of the information on such websites is incorporated by reference herein or intended to assist investors in making any investment decision or to provide any continuing information with respect to the Bonds.

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER-

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

THE BONDS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF

1933, AS AMENDED, IN RELIANCE UPON AN EXCEPTION FROM THE REGISTRATION REQUIREMENTS CONTAINED IN SECTION 3(a)(2) OF SUCH ACT. THE BONDS HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATE. THE INDENTURE HAS NOT BEEN QUALIFIED UNDER THE TRUST INDENTURE ACT OF 1939, AS AMENDED, IN RELIANCE UPON AN EXEMPTION CONTAINED IN SUCH ACT.

-iii-

TABLE OF CONTENTS

INTRODUCTION..................................................................... 1 General .................................................................................... 1 Purpose of Issuance............................................................. 1 The City, the Agency and the Authority...................... 2 The Redevelopment Project .............................................. 2 Tax Allocation Financing ................................................ 3 The Bonds .............................................................................. 3 Source of Payment for the Bonds; Parity Obligations ............................................................................ 4 Reserve Account ................................................................... 4 Additional Parity Debt..................................................... 5 Fiscal Consultant’s Report................................................ 5 Risk Factors ........................................................................... 5 Continuing Disclosure....................................................... 5 Professionals Involved in the Offering........................ 6 Forward-Looking Statements ........................................ 6 Other Matters ....................................................................... 6 Other Information............................................................... 6

FINANCING PLAN................................................................. 6 ESTIMATED SOURCES AND USES OF FUNDS........ 7 DEBT SERVICE SCHEDULE .............................................. 8 THE BONDS .............................................................................. 8

General Provisions ............................................................. 8 Book-Entry System ............................................................. 9 Designation of Bonds as Recovery Zone Economic Development Bonds and Build America Bonds ..................................................................10 Optional Redemption ......................................................10 Sinking Account Redemption .......................................11 Purchase In Lieu of Redemption ..................................12 Notice of Redemption ......................................................12 Selection of Bonds for Redemption ............................12 Effect of Redemption........................................................13

SECURITY FOR THE BONDS...........................................13 Limited Obligations ........................................................13 Tax Increment Revenues .................................................13 Pledge Under the Indenture...........................................15 Parity Lien on Tax Increment Revenues ....................16 Special Fund; Deposit of Tax Increment Revenues ...............................................................................17 Debt Service Fund .............................................................17 Reserve Account .................................................................19 Issuance of Parity Debt ....................................................20 Issuance of Subordinate Debt .......................................20 Investments ..........................................................................21

THE AGENCY.........................................................................21 General ..................................................................................21 Agency Financial Statements ........................................22

THE PROJECT AREA...........................................................22 General ..................................................................................22 Redevelopment Plan Limitations ................................25 Outstanding Indebtedness .............................................25 Recent Activity ...................................................................26 Assessed Valuation ..........................................................27 Possessory Interests ..........................................................31

Annual Tax Receipts to Tax Levy ...............................32 Appeals of Assessed Values ..........................................32 Proposition 13 Inflationary Adjustments ................33 Proposition 8 Reassessments ........................................33 Pass-Through Payments .................................................34 Tax Revenue Projections and Debt Service Coverage...............................................................................35

BONDOWNERS’ RISKS......................................................39 Limited Obligations ........................................................39 Reduction in Assessed Value ........................................39 Concentration of Ownership.........................................40 Reduction in Inflationary Rate.....................................40 Real Estate and General Economic Risks ................40 Assessment Appeals .........................................................41 Investment of Tax Increment Revenues and Other Funds ................................................................41 Certain Bankruptcy Risks ..............................................42 Risk of Earthquake or Other Disaster .......................42 Hazardous Substances ....................................................42 Property Tax Payment Delinquencies ........................43 Change in Law ...................................................................43 Additional Obligations ..................................................43 Proposition 8 Adjustments ............................................43 Levy and Collection of Taxes .......................................43 State Budget; ERAF & SERAF Shifts ..........................44 Secondary Market ............................................................46

CONSTITUTIONAL AND STATUTORY PROVISIONS AFFECTING TAX REVENUES.............46

Property Tax Limitations-Article XIIIA...................46 Challenges to Article XIIIA............................................47 Implementing Legislation..............................................47 Property Tax Collection Procedures ..........................47 Appropriations Limitations-Article XIIIB ..............49 State Board of Equalization and Property Assessment Practices .......................................................49 Exclusion of Tax Increment Revenues for General Obligation Bonds Debt Service...................49 Proposition 218 ..................................................................49 AB 1290 ................................................................................50 AB 1389 Payments ............................................................50 Future Initiatives ...............................................................50 Low and Moderate Income Housing.........................50 Statement of Indebtedness .............................................51

CERTAIN LEGAL MATTERS..........................................51 Legal Opinions ...................................................................51 Enforceability of Remedies ...........................................52

RATING.....................................................................................52 CONTINUING DISCLOSURE...........................................52 ABSENCE OF LITIGATION..............................................52 TAX MATTERS......................................................................53 FISCAL CONSULTANT......................................................53 FINANCIAL ADVISOR........................................................53 UNDERWRITING..................................................................53 MISCELLANEOUS...............................................................54

APPENDIX A SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE APPENDIX B GENERAL INFORMATION REGARDING THE CITY OF LONG BEACH APPENDIX C AUDITED FINANCIAL REPORT OF THE AGENCY FOR THE

FISCAL YEAR ENDED SEPTEMBER 30, 2009 APPENDIX D FISCAL CONSULTANT’S REPORT APPENDIX E FORM OF OPINION OF BOND COUNSEL APPENDIX F FORM OF CONTINUING DISCLOSURE AGREEMENT APPENDIX G BOOK-ENTRY ONLY SYSTEM

-iv-

This page intentionally left blank

-1-

OFFICIAL STATEMENT

$22,235,000

REDEVELOPMENT AGENCY OF THE CITY OF LONG BEACH

TAXABLE RECOVERY ZONE ECONOMIC DEVELOPMENT BONDS, 2010 SERIES A

(NORTH LONG BEACH REDEVELOPMENT PROJECT)

$10,745,000 REDEVELOPMENT AGENCY OF THE

CITY OF LONG BEACH TAXABLE BUILD AMERICA BONDS,

2010 SERIES B (NORTH LONG BEACH

REDEVELOPMENT PROJECT)

INTRODUCTION The purpose of this Official Statement, including the cover page and the appendices

hereto, is to provide information regarding the issuance by the Redevelopment Agency of the City of Long Beach (the “Agency”) of its Taxable Recovery Zone Economic Development Bonds, 2010 Series A (North Long Beach Redevelopment Project) (the “2010 Series A Bonds”) and its Taxable Build America Bonds, 2010 Series B (North Long Beach Redevelopment Project) (the “2010 Series B Bonds” and, together with the 2010 Series A Bonds, the “Bonds”). Definitions of certain capitalized terms used in this Official Statement and not otherwise defined in the text hereof are set forth in APPENDIX A—SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE.

General

This introduction is not a summary of this Official Statement. It is only a brief

description of and guide to, and is qualified by, more complete and detailed information contained in the entire Official Statement, including the cover page and appendices hereto, and the documents summarized or described herein. A full review should be made of the entire Official Statement. The offering of the Bonds to potential investors is made only by means of the entire Official Statement.

This Official Statement contains brief descriptions of the Bonds, the Indenture, the

Agency and the Agency’s North Long Beach Redevelopment Project (the “Redevelopment Project”). Such descriptions do not purport to be comprehensive or definitive. All references in this Official Statement to specific documents are qualified in their entirety by reference to such documents and references to the Bonds are qualified in their entirety by reference to the form of the Bonds included in the Indenture (as defined below). Copies of the Indenture and other documents described in this Official Statement may be obtained from the Agency as described under “INTRODUCTION—Other Information.”

Purpose of Issuance

Proceeds from the sale of the Bonds will be used to (a) finance redevelopment activities

of the Agency within or of benefit to the North Long Beach Redevelopment Project area (the “Project Area”), which activities funded with proceeds of the 2010 Series A Bonds will promote development or other economic activity in the Long Beach Recovery Zone designated by the Agency, (b) make a deposit to the Reserve Account for the Bonds and certain parity bonds described herein in an amount necessary to increase the amount on deposit in the Reserve Account to the amount of the Reserve Requirement in effect following the issuance of the Bonds, and (c) pay the costs of issuing the Bonds. The Agency has designated the 2010 Series A Bonds as “Recovery Zone Economic Development Bonds” and the 2010 Series B

-2-

Bonds as “Build America Bonds” for purposes of the Internal Revenue Code of 1986, as amended (the “Tax Code”). See “THE BONDS—Designation of Bonds as Recovery Zone Economic Development Bonds and Build America Bonds.” The Bonds initially will be sold by the Agency to the Long Beach Bond Finance Authority (the “Authority”), for concurrent resale to Stone & Youngberg LLC, the underwriter for the Bonds. See “ESTIMATED SOURCES AND USES OF FUNDS” and “FINANCING PLAN.”

The City, the Agency and the Authority

The City is located in Los Angeles County, California (the “County”), approximately

25 miles southwest of the City of Los Angeles. The City was originally incorporated in 1888, and after a short period of disincorporation, was reincorporated on December 13, 1897. Since 1907, the City has been governed as a charter city. The City operates under the council- manager form of government with a Mayor and a nine-member City Council. City Council members are nominated and elected by district to serve four-year terms, with a maximum of two such terms. The Mayor is nominated and elected by the City at large. The City Manager is appointed by and serves at the discretion of the City Council. The Bonds are not obligations of the City, and no assets or property of the City are pledged as security for the payment of the Bonds. For general information regarding the City, see APPENDIX B—GENERAL INFORMATION REGARDING THE CITY OF LONG BEACH.

In 1961, the City, acting pursuant to the Redevelopment Law, activated the Agency by

an ordinance of the City Council of the City. Seven persons comprising the Agency’s governing body (the “Agency Board”) are appointed by the Mayor and affirmed by the City Council of the City. Although the Agency is an entity distinct from the City, the City provides staff support for the Agency pursuant to a cooperation agreement between the City and the Agency. See “THE AGENCY.” The Bonds are limited obligations of the Agency, payable solely from the Tax Increment Revenues and amounts in the funds and accounts pledged therefor under the Indenture. See “SECURITY FOR THE BONDS—Limited Obligations.”

The Authority was established pursuant to a Joint Exercise of Powers Agreement,

dated June 26, 1997 (as amended, the “Agreement”), between the City and the Agency. The Agreement was entered into pursuant to the provisions of Articles 1 through 4 of Chapter 5 of Division 7 of Title 1 of the California Government Code. The members of the governing board of the Authority consist of the City Manager (who also serves as the Chair of the Authority), the City Treasurer and the Director of Financial Management of the City. The Authority has no independent staff and consequently is dependent upon the City’s officers and employees to administer the day-to-day activities of the Authority on its behalf. The Bonds are not obligations of the Authority and no assets or property of the Authority are pledged as security for the payment of the Bonds.

The Redevelopment Project

The City Council adopted the Redevelopment Plan for the North Long Beach

Redevelopment Project (the “Redevelopment Project”) on July 16, 1996, pursuant to its Ordinance No. C-7412. The area that is subject to the Redevelopment Plan (the “Project Area”) consists of ten noncontiguous areas totaling approximately 7,540 acres of land and 4,967 acres of water. The majority of the Project Area consists of a residential area bordered by the cities of Compton and Paramount to the north, the City of Lakewood to the east and the City of Carson to the west; and approximately one-half of the Port of Long Beach (the “Port”). See “THE PROJECT AREA—General.”

The total secured and unsecured assessed valuation of taxable property in the Project

Area in Fiscal Year 2009-10, based upon information obtained by the Agency’s Fiscal

-3-

Consultant for the Redevelopment Project from the Los Angeles County Assessor’s Office, is $7,505,997,656, and is $4,409,602,329 greater than the $3,096,395,327 adjusted assessed valuation in the base year (1995-96). See “THE PROJECT AREA—Assessed Valuation.” Assessed valuations in the Project Area are subject to numerous risks which could result in decreases from the assessed valuations reported for Fiscal Year 2009-10. See “BONDOWNERS’ RISKS.” Also see “THE PROJECT AREA” and APPENDIX D—FISCAL CONSULTANT’S REPORT.

Tax Allocation Financing

The Redevelopment Law provides a means for financing redevelopment projects based

upon an allocation of taxes collected within a designated redevelopment project area. The redevelopment agency establishes the taxable valuation of a project area based on the last equalized County assessment roll before the adoption of the redevelopment plan, or base roll (the “Base Year Valuation”). Subsequently, the taxing agencies receive the taxes produced by the levy of the then-current tax rate upon the Base Year Valuation (except for any period during which the taxable valuation drops below the Base Year Valuation).

Taxes collected upon any increase in taxable valuation over the Base Year Valuation are

allocated to a redevelopment agency and may be pledged by a redevelopment agency to the repayment of any indebtedness incurred in financing or refinancing a redevelopment project. Twenty percent of taxes allocated to a redevelopment agency are set aside in a separate fund to develop and maintain low and moderate income housing in the city in which the redevelopment project area is located, and redevelopment agencies are required to make payments from taxes allocated to them to other Taxing Agencies. The Tax Increment Revenues pledged to secure the repayment of the Bonds do not include any of such housing funds or any amounts required to be paid to other Taxing Agencies. Redevelopment agencies themselves have no taxing power. See “SECURITY FOR THE BONDS—Tax Increment Revenues.”

The Bonds

The Bonds are being issued pursuant to the Redevelopment Law, a resolution adopted

by the Agency on April 5, 2010, and an Indenture of Trust, dated as of May 1, 2002 (the “Original Indenture”), as amended and supplemented by a First Supplemental Indenture of Trust, dated as of February 1, 2005 (the “First Supplemental Indenture”), by a Second Supplemental Indenture of Trust, dated as of February 1, 2006 (the “Second Supplemental Indenture”), and by a Third Supplemental Indenture of Trust, dated as of May 1, 2010, each by and between the Agency and The Bank of New York Mellon Trust Company, N.A., as trustee (the “Trustee”). The Original Indenture, as amended and supplemented by the First Supplemental Indenture, the Second Supplemental Indenture and such Third Supplemental Indenture of Trust, is referred to in this Official Statement as the “Indenture.” See “THE BONDS” and APPENDIX A—SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE.

The Bonds will be issued in denominations of $5,000 each or integral multiples thereof.

Interest on the Bonds will be payable on February 1 and August 1, commencing August 1, 2010. Principal of and interest on the Bonds will be payable by the Trustee to The Depository Trust Company (“DTC”) which will be responsible for remitting such principal and interest to the DTC participants which will in turn be responsible for remitting such principal and interest to the beneficial owners of the Bonds. No physical distribution of the Bonds will be made to the public. See “THE BONDS—Book-Entry System.”

-4-

Source of Payment for the Bonds; Parity Obligations The Bonds are special obligations of the Agency and are payable from and secured by a

pledge of Tax Increment Revenues and amounts in certain funds and accounts held by the Trustee under the Indenture. The term “Tax Increment Revenues” is defined in the Indenture as all taxes annually allocated and paid to the Agency with respect to the Project Area pursuant to Article 6 of Chapter 6 (commencing with Section 33670) of the Redevelopment Law and Section 16 of Article XVI of the Constitution of the State, 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 (a) 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, (b) the Business Inventory Tax Subvention, and (c) amounts required by the Redevelopment Law to be paid to other taxing agencies to the extent the obligation to pay such amounts is not subordinate to the Agency’s obligation to repay the Bonds. See “SECURITY FOR THE BONDS—Tax Increment Revenues.”

The Agency currently has certain outstanding bonds previously issued under the

Indenture that have a lien on Tax Increment Revenues and amounts in certain funds and accounts established under the Indenture on a parity with the lien securing the Bonds. Outstanding parity lien debt includes the Agency’s 2002 Tax Allocation Bonds (North Long Beach Redevelopment Project), issued on June 25, 2002 in the initial principal amount of $40,290,000 (the “2002 Bonds”), of which $35,971,000 is currently outstanding, and the Agency’s 2005 Tax Allocation Bonds (North Long Beach Redevelopment Project), issued on March 2, 2005 in the initial principal amount of $64,080,000 (the “2005 Bonds” and, collectively with the 2002 Bonds, the “Outstanding Parity Bonds”), of which $59,725,000 is currently outstanding. The Outstanding Parity Bonds are pledged as security for certain outstanding revenue bonds issued by the Authority. See “SECURITY FOR THE BONDS— Parity Lien on Tax Increment Revenues.”

Except with respect to the Outstanding Parity Bonds, current Tax Increment Revenues

are not subject to the pledge and lien of any indebtedness of the Agency other than the Bonds and any Parity Debt hereafter issued in accordance with the Indenture, and certain other obligations which are made or are by their terms subordinate to the payment of the Bonds. See “CONSTITUTIONAL AND STATUTORY PROVISIONS AFFECTING TAX REVENUES” and “THE PROJECT AREA—Outstanding Indebtedness.” Certain possible future Tax Increment Revenues that may arise from development in a portion of the Port located in the Project Area are, however, pledged to the repayment of an Agency obligation on a basis senior to the pledge thereof with respect to the Bonds and any future Parity Debt, but subordinate to the pledge thereof with respect to the Outstanding Parity Bonds. See “SECURITY FOR THE BONDS— Pledge Under the Indenture” and “THE PROJECT AREA—Outstanding Indebtedness.” The Bonds are not payable from, and are not secured by, any funds of the Agency other than the Tax Increment Revenues and amounts in certain funds and accounts held by the Trustee and pledged therefore under the Indenture. See “SECURITY FOR THE BONDS.”

Reserve Account

A reserve account (the “Reserve Account”) has been established and is held under the

Indenture in order to secure the payment of principal of and interest on the Bonds, the Outstanding Parity Bonds and any additional Parity Debt that may be issued by the Agency in the future (the Bonds, the Outstanding Parity Bonds and any such additional Parity Debt are sometimes collectively referred to in this Official Statement as the “Outstanding Agency Bonds”). On the Closing Date, a portion of the proceeds of the Bonds will be deposited to the Reserve Account in order to increase the amount on deposit therein, taking into account the

-5-

funds currently on deposit in the Reserve Account, to an amount equal to the Reserve Requirement in effect immediately following the issuance of the Bonds. Amounts in the Reserve Account are to be used and withdrawn (i) for the purpose of making transfers to the trustee for the 2002 Authority Bonds (as hereafter defined) in the event and to the extent of a delinquency in payment of the scheduled debt service on the 2002 Bonds, (ii) for the purpose of paying debt service due on the 2005 Bonds, the Bonds and any future Parity Debt to the extent amounts in the Interest Account or the Principal Account are not sufficient for that purpose, or (iii) to retire all of the Outstanding Agency Bonds.

The Indenture permits the Agency at any time to substitute a Qualified Reserve

Account Credit Instrument for funds on deposit in the Reserve Account. Any such substitute Qualified Reserve Account Credit Instrument must be provided by a commercial bank or insurance company which, at the time the instrument is delivered to the Trustee, has a long term credit rating or claims paying ability, respectively, within one of the three highest rating categories of Moody’s and S&P. See “SECURITY FOR THE BONDS—Reserve Account,” “SECURITY FOR THE BONDS—Issuance of Parity Debt” and APPENDIX A—SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE for additional information regarding the Reserve Account.

Additional Parity Debt

The Indenture provides that in addition to the Bonds and the Outstanding Parity

Bonds, the Agency may provide for the issuance of Parity Debt secured by a lien on Tax Increment Revenues on a parity with the lien under the Indenture securing the repayment of the Bonds and the Outstanding Parity Bonds, to finance or refinance redevelopment activities within or of benefit to the Redevelopment Project in such principal amount as shall be determined by the Agency. The Agency may deliver Parity Debt subject to certain specific conditions set forth in the Indenture. See “SECURITY FOR THE BONDS—Issuance of Parity Debt.”

Fiscal Consultant’s Report

Keyser Marston Associates, Inc., Los Angeles, California (the “Fiscal Consultant”) has

been retained to prepare a report (the “Fiscal Consultant’s Report”) in connection with the issuance of the Bonds. See APPENDIX D—FISCAL CONSULTANT’S REPORT.

Risk Factors

Prospective investors should review this Official Statement and the appendices hereto

in their entirety and should consider certain risk factors associated with the purchase of the Bonds, some of which have been summarized in the section herein entitled “BONDOWNERS’ RISKS.”

Continuing Disclosure

The Agency will covenant in a Continuing Disclosure Agreement to prepare and deliver

an annual report to the Municipal Securities Rulemaking Board’s Electronic Municipal Market Access (EMMA) system, and to provide notice of the occurrence of certain events. See “CONTINUING DISCLOSURE” and APPENDIX F—FORM OF CONTINUING DISCLOSURE AGREEMENT.

-6-

Professionals Involved in the Offering The proceedings of the Agency in connection with the issuance of the Bonds are subject

to the approval as to their legality of Quint & Thimmig LLP, San Francisco, California, Bond Counsel. Certain legal matters will be passed upon for the Agency by the City Attorney of the City, acting as General Counsel to the Agency, and by Quint & Thimmig LLP, San Francisco, California, as Disclosure Counsel to the Agency for the Bonds. Keyser Marston Associates, Inc., Los Angeles, California has been retained by the Agency to prepare a Fiscal Consultant’s report for the Bonds. Fieldman Rolapp & Associates, Irvine, California is serving as financial advisor to the Agency for the Bonds. Payment of the fees of Quint & Thimmig LLP, and of Fieldman Rolapp & Associates, is contingent upon the sale and delivery of the Bonds.

Forward-Looking Statements

Certain statements included or incorporated by reference in this Official Statement

constitute “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 2000. When used in this Official Statement, the words “estimate,” “forecast,” “intend,” “expect” and similar expressions identify forward-looking statements. Such statements are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated in such forward-looking statements. Any forecast is subject to such uncertainties. Inevitably, some assumptions used to develop the forecasts will not be realized and unanticipated events and circumstances may occur. Therefore, there are likely to be differences between forecasts and actual results, and those differences may be material. The Agency is not obligated to issue any updates or revisions to the forward-looking statements if or when its expectations, or events, conditions or circumstances on which such statements are based occur.

Other Matters

There follows in this Official Statement brief descriptions of the Bonds, the security for

the Bonds, the Agency, the Project Area, and certain other information relevant to the issuance of the Bonds. The descriptions and summaries of documents herein do not purport to be comprehensive or definitive, and reference is made to each such document for the complete details of all its respective terms and conditions. All statements herein with respect to certain rights and remedies are qualified by reference to laws and principles of equity relating to or affecting creditors’ rights generally.

The information and expressions of opinion herein speak only as of the date of this

Official Statement and are subject to change without notice. Neither delivery of this Official Statement nor any sale made hereunder nor any future use of this Official Statement shall, under any circumstances, create any implication that there has been no change in the affairs of the Agency since the date hereof.

Other Information

Copies of the Indenture are available for inspection during business hours at the

corporate trust office of the Trustee.

FINANCING PLAN The net proceeds of the Bonds will be used to finance capital improvements within or of

benefit to the Project Area. A portion of the net proceeds of the Bonds (approximately $8,000,000) are expected to be used to pay costs of the construction of a new fire station

-7-

located near the Project Area, including an emergency resource center and related traffic and offsite improvements. The Agency awarded a contract for construction of the fire station on March 15, 2010, construction work has commenced and the facility is expected to be completed by the Summer of 2011. Bond proceeds are also expected to be used to pay a portion of the costs of the following: (i) the renovation of an existing building adjacent to the Project Area for use as a police station, (ii) improvements to Long Beach Boulevard in and near the Project Area, (iii) median improvements to various other roadways within or in the vicinity of the Project Area, (iv) planning, design and construction of a new library and community center in the vicinity of the Project Area, (v) the construction of a new 3.3 acre public park, including soccer fields, restrooms, a parking lot and other related improvements; and (vi) other capital improvements within or of benefit to the Project Area.

Projects funded with proceeds of the 2010 Series A Bonds will promote development or

other economic activity in the Long Beach Recovery Zone (the area within the City limits) designated by the Agency. See “THE BONDS—Designation of Bonds as Recovery Zone Economic Development Bonds and Build America Bonds.” None of the improvements financed with proceeds of the Bonds will in any way be pledged as security for the Bonds. In any event, the obligation of the Agency to use the Tax Increment Revenues to repay the Bonds is not in any way dependent upon the completion of the any of the improvements that may be financed with proceeds of the Bonds.

In addition to the foregoing, the Agency expects to use a portion of the proceeds of the

Bonds to make a deposit to the Reserve Account held by the Trustee under the Indenture in order to increase the amount in the Reserve Account to the amount of the Reserve Account Requirement in effect immediately following the issuance of the Bonds (see “SECURITY FOR THE BONDS—Reserve Account”); and to make a deposit to the Costs of Issuance Fund to be held by the Trustee under the Indenture in an amount sufficient to pay the costs of issuance of the Bonds.

ESTIMATED SOURCES AND USES OF FUNDS

The following table sets forth a summary of the estimated sources and uses of funds

associated with the issuance and sale of the Bonds.

2010 Series A Bonds

2010 Series B Bonds Total

Sources of Funds Principal Amount of Bonds $22,235,000.00 $10,745,000.00 $32,980,000.00 Less: Underwriters’ Discount (85,182.28) (41,164.10) (126,346.38) Total Sources $22,149,817.72 $10,703,835.90 $32,853,653.62 Uses of Funds Deposit to Redevelopment Fund(1) $20,224,687.17 $9,775,312.83 $30,000,000.00 Deposit to Reserve Account(2) 1,752,875.78 847,072.19 2,599,947.97 Deposit to Costs of Issuance Fund(3) 172,254.77 81,450.88 253,705.65 Total Uses $22,149,817.72 $10,703,835.90 $32,853,653.62

(1) Expected to be used to pay costs of improvements within or of benefit to the Project Area. See “FINANCING

PLAN.” (2) The amounts necessary, together with funds on deposit in the Reserve Account, to increase the amount on deposit

in the Reserve Account to the amount of the Reserve Requirement in effect immediately following the issuance of the Bonds. See “SECURITY FOR THE BONDS—Reserve Account.”

(3) To be used to pay the fees and expenses of the Trustee, the Fiscal Consultant, the Financial Advisor, Bond Counsel and Disclosure Counsel, printing expenses, rating agency fees and other costs incurred in connection with the issuance of the Bonds.

-8-

DEBT SERVICE SCHEDULE The following table sets forth the scheduled annual debt service for the Bonds,

assuming no redemption of the Bonds other than mandatory sinking payment redemptions.

Bond Year 2010 Series A Bonds 2010 Series B Bonds Total Annual Ending August 1 Bond Principal Bond Interest(2) Bond Principal Bond Interest(3) Debt Service

2010 $ 404,299.49 $ 147,373.80 $ 551,673.29 2011 1,842,377.40 $ 590,000.00 671,576.80 3,103,954.20 2012 1,842,377.40 595,000.00 657,499.40 3,094,876.80 2013 1,842,377.40 610,000.00 638,108.36 3,090,485.76 2014 1,842,377.40 625,000.00 613,690.06 3,081,067.46 2015 1,842,377.40 645,000.00 583,690.06 3,071,067.46 2016 1,842,377.40 665,000.00 549,827.56 3,057,204.96 2017 1,842,377.40 690,000.00 511,018.16 3,043,395.56 2018 1,842,377.40 720,000.00 466,954.76 3,029,332.16 2019 1,842,377.40 755,000.00 418,693.16 3,016,070.56 2020 1,842,377.40 785,000.00 366,198.00 2,993,575.40 2021 1,842,377.40 825,000.00 310,046.96 2,977,424.36 2022 1,842,377.40 865,000.00 249,384.70 2,956,762.10 2023 1,842,377.40 905,000.00 184,483.76 2,931,861.16 2024 1,842,377.40 950,000.00 115,224.10 2,907,601.50 2025 $ 480,000.00 1,842,377.40 520,000.00 41,095.60 2,883,473.00 2026 1,045,000.00(1) 1,804,443.00 2,849,443.00 2027 1,090,000.00(1) 1,719,693.50 2,809,693.50 2028 1,140,000.00(1) 1,631,294.50 2,771,294.50 2029 1,190,000.00(1) 1,538,840.50 2,728,840.50 2030 1,245,000.00(1) 1,442,331.50 2,687,331.50 2031 1,300,000.00(1) 1,341,362.00 2,641,362.00 2032 1,360,000.00(1) 1,232,682.00 2,592,682.00 2033 1,420,000.00(1) 1,118,986.00 2,538,986.00 2034 1,490,000.00(1) 1,000,274.00 2,490,274.00 2035 1,555,000.00(1) 875,710.00 2,430,710.00 2036 1,630,000.00(1) 745,712.00 2,375,712.00 2037 1,700,000.00(1) 609,444.00 2,309,444.00 2038 1,780,000.00(1) 467,324.00 2,247,324.00 2039 1,860,000.00(1) 318,516.00 2,178,516.00 2040 1,950,000.00(1) 163,020.00 2,113,020.00

Totals $22,235,000.00 $44,049,593.49 $10,745,000.00 $6,524,865.24 $83,554,458.73 (1) Indicates mandatory sinking payment installments. (2) The Agency expects to receive a cash subsidy payment from the U.S. Treasury equal to 45% of the interest

payable on the 2010 Series A Bonds. No assurance can be given that any such subsidy will be received, and any subsidy that is received by the Agency is not pledged to the payment of the Bonds. See “THE BONDS— Designation of Bonds as Recovery Zone Economic Development Bonds and Build America Bonds” below.

(3) The Agency expects to receive a cash subsidy payment from the U.S. Treasury equal to 35% of the interest payable on the 2010 Series B Bonds. No assurance can be given that any such subsidy will be received, and any subsidy that is received by the Agency is not pledged to the payment of the Bonds. See “THE BONDS— Designation of Bonds as Recovery Zone Economic Development Bonds and Build America Bonds” below.

THE BONDS

General Provisions

The Bonds will be dated their date of delivery, and will bear interest (calculated on the

basis of a 360-day year comprised of twelve 30-day months) at the rates and mature in the amounts and on the dates set forth on the inside cover page of this Official Statement. The

-9-

Bonds will be issued as fully registered Bonds, without coupons, in the denomination of $5,000 each or any integral multiple thereof (except as required in connection with the redemption of Bonds of a maturity, as described under the heading “THE BONDS—Selection of Bonds for Redemption” below). The Trustee will maintain at its office books for the registration, exchange and transfer of the Bonds.

Interest on the Bonds is payable semiannually on each February 1 and August 1,

commencing August 1, 2010 (each, an “Interest Payment Date”), by check of the Trustee mailed on each Interest Payment Date to the registered owners whose names appear on the registration books of the Trustee as of the close of business on the fifteenth calendar day of the month preceding the applicable Interest Payment Date (each a “Record Date”) or, upon the written request filed with the Trustee prior to any Record Date by a registered owner of at least $1,000,000 in aggregate principal amount of Bonds, by wire transfer in immediately available funds to an account in the United States designated by such owner in such written request. Principal of and premium, if any, on the Bonds is payable by check of the Trustee at maturity or redemption upon presentation and surrender thereof at the corporate trust office of the Trustee described in the Indenture (the “Trust Office”).

Interest on any Bond 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 registered on the Registration Books of the Trustee at the close of business on a special record date for the payment of such defaulted interest to be fixed by the Trustee, notice of which shall be given to such Owner not less than ten days prior to such special record date.

The Bonds will bear interest from the Interest Payment Date next preceding the date of

authentication by the Trustee, 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 it will bear interest from such Interest Payment Date; or (ii) a Bond is authenticated on or prior to July 15, 2010, in which event it will bear interest from the Closing Date; or (iii) if, as of the time of authentication of any Bond, interest with respect thereto is in default, interest thereon will be payable from the date to which interest has been paid in full.

The Bonds may be transferred or exchanged upon presentation and surrender at the

Office of the Trustee in Los Angeles, California, provided that the Trustee will not be required to register the transfer or exchange of any Bonds during the fifteen days preceding any date established by the Trustee for the selection of the Bonds for redemption, or as to Bonds which have matured or been selected for redemption. The Trustee may require the payment by the registered owners of the Bonds requiring such transfer or exchange of any tax or other governmental charge required to be paid with respect to such transfer or exchange. The Trustee will, under certain circumstances, replace Bonds which have been mutilated, lost, destroyed or stolen. The Trustee may require posting of an adequate surety bond, cash, or other collateral and payment of a reasonable fee to cover the expenses which may be incurred by the Trustee for each new Bond issued to replace a Bond which has been mutilated, lost, destroyed or stolen.

Book-Entry System

The Bonds will be issued as one fully registered bond without coupons for each

maturity of each series of the Bonds and, when issued, will be registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York (“DTC”). DTC will act as securities depository of the Bonds. Individual purchases may be made in book-entry form only, in the principal amount of $5,000 and integral multiples thereof for each maturity. Purchasers will not receive certificates representing their interest in the Bonds purchased. Principal and interest will be paid to DTC, which will in turn remit such principal and interest

-10-

to its participants for subsequent dispersal to the beneficial owners of the Bonds as described herein. So long as Cede & Co., as the nominee of DTC, is the registered owner of all of the Bonds, references herein to the holders or owners of the Bonds will mean Cede & Co. and will not mean the Beneficial Owners of the Bonds. See APPENDIX G—“BOOK ENTRY ONLY SYSTEM.”

Designation of Bonds as Recovery Zone Economic Development Bonds and Build America Bonds

The 2010 Series A Bonds will be issued as “Recovery Zone Economic Development

Bonds,” and the 2010 Series B Bonds will be issued as “Direct Payment Build America Bonds,” in each case for purposes of the American Recovery and Reinvestment Act of 2009, signed into law by the President of the United States on February 17, 2009 (the “Recovery Act”). In that regard, the Agency has made an irrevocable designation in the Indenture of the 2010 Series A Bonds as “Recovery Zone Economic Development Bonds” pursuant to the provisions of section 1400 U-2(b)(1)(B) of the Tax Code, and has made an irrevocable designation in the Indenture of the 2010 Series A Bonds and of the 2010 Series B Bonds as “Direct Payment Build American Bonds” pursuant to the provisions of section 54AA(g) of the Tax Code. The Agency expects to receive a cash subsidy payment from the United States Treasury pursuant to the Recovery Act on or about each Interest Payment Date equal to 45% of the interest paid by it on 2010 Series A Bonds, and 35% of the interest paid by it on the 2010 Series B Bonds.

The cash payments to be made by the United States under the Recovery Act do not

constitute a full faith and credit obligation of the United States but are required to be paid by the Department of the Treasury under the current provisions of the Recovery Act if the Agency complies, and continues to comply, with the applicable requirements of the Tax Code. The cash subsidy payments if and when received by the Agency will be used by the Agency as permitted by law, and are not pledged to the payment of the debt service on the Bonds. The Agency is obligated to make all payments of principal of and interest on the Bonds whether or not it receives cash subsidy payments pursuant to the Recovery Act and the Tax Code. Neither failure by the Agency to comply with requirements of the Tax Code that must be satisfied for the Agency to receive the cash subsidy payments applicable to the Bonds, or in any event to receive any cash subsidy payments applicable to the Bonds, constitutes a default by the Agency under the Indenture.

Optional Redemption

The 2010 Series A Bonds are subject to redemption, at the option of the Agency, any

date on or after August 1, 2020, as a whole, or in part among such maturities and within any specific maturity as provided in the Indenture (see “THE BONDS—Selection of Bonds for Redemption”), from any available source of funds at a redemption price equal to the principal amount of the 2010 Series A Bonds to be redeemed, together with accrued interest thereon to the date fixed for redemption, without premium.

The 2010 Series B Bonds maturing on or after August 1, 2021, are subject to

redemption, at the option of the Agency, any date on or after August 1, 2020, as a whole, or in part among such maturities and within any specific maturity as provided in the Indenture (see “THE BONDS—Selection of Bonds for Redemption”), from any available source of funds at a redemption price equal to the principal amount of the 2010 Series B Bonds to be redeemed, together with accrued interest thereon to the date fixed for redemption, without premium.

-11-

In the case of any optional redemption of the Bonds, the notice of redemption shall state that the redemption is conditioned upon receipt by the Trustee of sufficient moneys to redeem the Bonds on the anticipated redemption date, and that the optional redemption shall not occur if by no later than the scheduled redemption date sufficient moneys to redeem the Bonds have not been deposited with the Trustee. In the event that the Trustee does not receive sufficient funds by the scheduled optional redemption date to so redeem the Bonds to be optionally redeemed, the Trustee shall send written notice to the owners of the Bonds, to the Securities Depositories and to one or more of the Information Services to the effect that the redemption did not occur as anticipated, and the Bonds for which notice of optional redemption was given shall remain Outstanding for all purposes of the Indenture.

Sinking Account Redemption

The 2010 Series A Bonds maturing on August 1, 2030 are subject to mandatory

redemption in part, as provided in the Indenture (see “THE BONDS—Selection of Bonds for Redemption”), prior to maturity from scheduled sinking fund payments on each August 1 of the years and in the principal amounts as follows, at a redemption price equal to the principal amount thereof to be redeemed, plus accrued interest to the date of redemption, without premium:

2010 Series A Bonds Maturing August 1, 2030

Sinking Account Redemption Date

(August 1) Principal Amount to be Redeemed

2026 $1,045,000 2027 1,090,000 2028 1,140,000 2029 1,190,000 2030 1,245,000†

† Final maturity.

The 2010 Series A Bonds maturing on August 1, 2040 are subject to mandatory

redemption in part, as provided in the Indenture (see “THE BONDS—Selection of Bonds for Redemption”), prior to maturity from scheduled sinking fund payments on each August 1 of the years and in the principal amounts as follows, at a redemption price equal to the principal amount thereof to be redeemed, plus accrued interest to the date of redemption, without premium:

2010 Series A Bonds Maturing August 1, 2040

Sinking Account Redemption Date

(August 1) Principal Amount to be Redeemed

2031 $1,300,000 2032 1,360,000 2033 1,420,000 2034 1,490,000 2035 1,555,000 2036 1,630,000 2037 1,700,000 2038 1,780,000 2039 1,860,000 2040 1,950,000†

† Final maturity.

-12-

Purchase In Lieu of Redemption In lieu of any redemption of any 2010 Series A Bonds or 2010 Series B Bonds

designated in the Indenture as 2010 Term Bonds, amounts on deposit in the Special Fund may also be used and withdrawn by the Agency at any time for the purchase of 2010 Term Bonds at public or private sale as and when and at such prices (including brokerage and other charges and including accrued interest) as the Agency may in its discretion determine. The principal amount of any 2010 Term Bonds of a series so purchased by the Agency in any twelve-month period ending on June 15 in any year shall be credited towards and shall reduce the principal amount of 2010 Term Bonds of such series required to be redeemed pursuant to the Indenture on August 1 in such year, upon the presentation of the respective purchased 2010 Bonds to the Trustee on or prior to June 15 in any year.

Notice of Redemption

Notice of redemption shall be mailed by the Trustee not less than thirty (30) days prior

to the redemption date to the registered owners of the Bonds to be redeemed at the address of such owner shown on the Bond registration books maintained by the Trustee and to the Securities Depositories and to one or more Information Services designated in writing by the Agency to the Trustee; provided, however, that neither failure of any Bondowner to receive any such notice nor any defect therein shall affect the validity of the proceedings for the redemption of such Bonds or the cessation of the accrual of interest thereon. Such notice shall state the redemption date and the redemption price, shall designate the CUSIP number of the Bonds to be redeemed, shall state the individual number of each Bond to be redeemed or state that all Bonds between two stated numbers (both inclusive) or shall state that all of the Bonds Outstanding of one or more maturities of a series are to be redeemed, and shall require that such Bonds be then surrendered at the Office of the Trustee for redemption at the said redemption price, giving notice also that further interest on the Bonds to be redeemed will not accrue from and after the date fixed for redemption.

Selection of Bonds for Redemption

Whenever provision is made in the Indenture for the redemption of less than all of the

Bonds, unless otherwise provided in the Indenture, the Agency shall determine the maturities to be redeemed by written notice to the Trustee.

In the case of partial redemption of less than all of the Bonds of a series of any

maturity, then if the Bonds are in book-entry form at the time of such redemption, the Trustee shall instruct the Securities Depository to instruct the Securities Depository Participants to select the Bonds of such series and maturity to be redeemed from the Bonds of such series and maturity owned by each Beneficial Owner pro rata on the basis of the principal amount of such Bonds owned. The process for selecting Bonds that are in book-entry form for redemption is contrary to DTC’s usual practice (see APPENDIX G – “BOOK ENTRY ONLY SYSTEM”), and neither the Agency nor the Trustee shall have any responsibility to ensure that the Securities Depository or the Securities Depository Participants properly select such Bonds for redemption in such manner. If the Bonds are not in book-entry form at the time of redemption, on each redemption date the Trustee shall select the specific Bonds of such series and maturity for redemption from such Bonds owned by each respective Owner pro rata on the basis of the principal amount of such Bond owned. To the extent practicable, the principal amount of any registered Bond of a denomination of more than $5,000 to be redeemed will be in the principal amount of $5,000 or any integral multiple thereof, provided that nothing shall prevent the principal amount of any Bond from being reduced below $5,000 if necessary to implement a pro rata reduction. The Trustee will promptly notify the Agency in writing of the Bonds so selected for redemption.

-13-

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 so 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 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.

SECURITY FOR THE BONDS

Limited Obligations

The Bonds and all payments required of the Agency under the Indenture are not general

obligations of the Agency but are limited, special obligations of the Agency and are secured by an irrevocable pledge of, and are payable solely from, Tax Increment Revenues and funds in certain accounts maintained by the Trustee under the Indenture, as described below. The Bonds and interest thereon are not a debt of the Authority, the City, or the State or any of its political subdivisions (other than the Agency to the limited extent set forth in the Indenture), and none of the Authority, the City, or the State or any of its political subdivisions (other than the Agency to the limited extent set forth in the Indenture) is liable for payment of the Bonds. In no event shall the Bonds or the interest thereon be payable out of any funds or properties other than those of the Agency pledged therefore under the Indenture. The Bonds do not constitute an indebtedness within the meaning of any constitutional or statutory debt limitation or restriction. Neither the Members of the Governing Board of the Agency nor any persons executing the Bonds are liable personally on the Bonds by reason of their issuance. Tax Increment Revenues

Allocation of Taxes. The Redevelopment Law provides a means for financing

redevelopment projects based upon an allocation of taxes collected within a project area. The taxable valuation of a project area last equalized prior to adoption of the redevelopment plan for the project area, or base roll, is established as of the adoption of the redevelopment plan. Thereafter, except for any period during which the taxable valuation drops below the base year level, the taxing bodies receive the taxes produced by the levy of the then current tax rate upon the base roll. Taxes collected upon any increase in taxable valuation over the base roll (with the exception of taxes derived from increases in the tax rate imposed by Taxing Agencies (defined below) to support new bonded indebtedness) are allocated to the redevelopment agency and may be pledged to the repayment of any indebtedness incurred in financing or refinancing redevelopment activities. Redevelopment agencies themselves have no authority to levy or collect property taxes and must look exclusively to such allocation of taxes.

As provided in the redevelopment plan for the Project Area, and pursuant to Article 6

of Chapter 6 of the Redevelopment Law and Section 16 of Article XVI of the State Constitution, taxes levied upon taxable property in the Project Area each year by or for the benefit of the State of California, the County, the City, any district or other public corporation (collectively, the “Taxing Agencies”), for fiscal years beginning after the effective date of the redevelopment plan, will be divided as follows:

(1) To Taxing Agencies: The portion of the taxes that would be produced by the

rate upon which the tax is levied each year by or for each of the Taxing Agencies upon the total sum of the assessed value of the taxable property in the Project Area as shown

-14-

upon the assessment roll used in connection with the taxation of such property by such Taxing Agency last equalized before the establishment of the Project Area will be allocated to, and when collected will be paid into the funds of, the respective Taxing Agencies as taxes by or for those Taxing Agencies.

(2) To the Agency: Except as provided in (3) below, the portion of such levied

taxes each year in excess of the amount referred to in (1) above will be allocated to, and when collected will be paid into a special fund of, the Agency to the extent necessary to pay indebtedness of the Agency, including but not limited to its obligation to repay the Bonds, the Outstanding Parity Bonds and any Parity Debt that may be issued by the Agency.

(3) To Taxing Agencies: The portion of the taxes identified in (2) above that is

attributable to a tax rate levied by a Taxing Agency for the purpose of producing revenues in an amount sufficient to make annual repayments of principal of, and the interest on, any bonded indebtedness for the acquisition or improvement of real property approved by the voters of the Taxing Agency on or after January 1, 1989, will be allocated to, and when collected shall be paid into, the fund of the Taxing Agency. Housing Set-Aside Amounts. Sections 33334.2 and 33334.3 of the Redevelopment Law

require each redevelopment agency to set aside not less than 20% of all tax increment revenues allocated to the redevelopment agency in a low and moderate income housing fund (the “Low and Moderate Income Housing Fund”) to be expended for authorized low and moderate income housing purposes. Amounts on deposit in the Low and Moderate Income Housing Fund may also be applied to pay debt service on bonds, loans or advances used to provide financing for such low and moderate income housing purposes. No portion of the proceeds of the Bonds is expected to be deposited in the Low and Moderate Income Housing Fund; and the Bonds and the Outstanding Parity Bonds are not secured by or payable from any amounts deposited in the Low and Moderate Income Housing Fund.

Tax Sharing Payments. Pursuant to the Redevelopment Law, the Agency is required to

make certain payments to affected Taxing Agencies, payable from tax increment revenues allocated to the Agency. The Agency has not taken any action to subordinate its obligations to make such payments to the affected Taxing Agencies to the payment of debt service on the Bonds or the Outstanding Parity Bonds, and the Tax Increment Revenues pledged to the repayment of the Bonds and the Outstanding Parity Bonds do not include any of such amounts due to other Taxing Agencies. See “THE PROJECT AREA—Pass-Through Payments.”

Possessory Interests. Of the current assessed value of the property in the Project Area,

$1,473,012,632, or approximately twenty percent (20%) of the total assessed value, represents private property interests in publicly-owned property, such as long-term (20 years or more) leases. See Table 3 under the heading “THE PROJECT AREA—Assessed Valuation.” Most of the possessory interest valuation is attributable to leasehold interests in the portion of the Port that is the Project Area, including leasehold interests of seven of the top ten largest taxpayers in the Project Area. See Table 4 under the heading “THE PROJECT AREA—Assessed Valuation.” Possessory interests are periodically appraised by the County Assessor’s Office to determine their valuation, at their respective full cash value, which value tends to fluctuate more than real property values. See “THE PROJECT AREA—Possessory Interests.”

Possible Limitations on Tax Increment Revenues. The Agency has no power to levy and

collect property taxes, and any property tax limitation, legislative measure, voter initiative or provisions of additional sources of income to Taxing Agencies that have the effect of reducing the property tax rate could reduce the amount of Tax Increment Revenues that would

-15-

otherwise be available to pay the Agency's obligations including the principal of, premium (if any) and interest on the Bonds. Likewise, broadened property tax exemptions could have a similar effect. See “BONDOWNERS' RISKS” and “CONSTITUTIONAL AND STATUTORY PROVISIONS AFFECTING TAX REVENUES.”

Pledge Under the Indenture

The Bonds, the Outstanding Parity Bonds and any future Parity Debt issued under the

Indenture (collectively, the “Outstanding Agency Bonds”) are secured by a pledge of and lien on all of the Tax Increment Revenues, without preference or priority for series, issue, number, dated date, sale date, date of execution or date of delivery (except that the pledge of certain possible future Tax Increment Revenues arising from development in a portion of the Port located in the Project Area is subordinate to the pledge of Tax Increment Revenues to the repayment of the Outstanding Parity Bonds, but is senior to the pledge of Tax Increment Revenues to the repayment of the Bonds and any future Parity Debt, as described in the third paragraph under the heading “THE PROJECT AREA—Outstanding Indebtedness”). The Outstanding Agency Bonds are additionally secured by a first and exclusive pledge of and lien upon all of the moneys in the Reserve Account, the Special Fund, the Debt Service Fund, the Interest Account, the Principal Account, the Sinking Account and the Redemption Account. Except for the Tax Increment Revenues and amounts in such funds and accounts created under the Indenture, no funds or properties of the Agency are pledged to, or otherwise liable for, the payment of principal of or interest or redemption premium (if any) on the Bonds. Amounts in the Costs of Issuance Fund and the Redevelopment Fund established pursuant to the Indenture are not pledged as security for the Bonds.

The term “Tax Increment Revenues” is defined in the Indenture as all taxes annually

allocated and paid to the Agency with respect to the Project Area pursuant to Article 6 of Chapter 6 (commencing with Section 33670) of the Redevelopment Law and Section 16 of Article XVI of the Constitution of the State, 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 (a) 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, (b) the Business Inventory Tax Subvention, and (c) amounts required by the Redevelopment Law to be paid to other taxing agencies to the extent the obligation to pay such amounts is not subordinate to the Agency’s obligation to repay the Outstanding Agency Bonds. As described above under the subheading “Tax Increment Revenues,” the Tax Increment Revenues do not include any amounts required to be deposited to the Low and Moderate Income Housing Fund, or any amounts to be paid by the Agency to other Taxing Agencies.

The current Tax Increment Revenues are not subject to the pledge and lien of any

indebtedness of the Agency other than the Bonds, the Outstanding Parity Bonds and any Parity Debt that may hereafter be issued in accordance with the Indenture, and certain other obligations which are made or are by their terms subordinate to the payment of the Bonds. See “CONSTITUTIONAL AND STATUTORY PROVISIONS AFFECTING TAX REVENUES” and “THE PROJECT AREA—Outstanding Indebtedness.” However, the Agency has entered into an agreement with the Board of Harbor Commissioners with respect to development occurring in a portion of the Port located in the Project Area pursuant to which the Agency has pledged certain future tax increment revenues arising by reason of such development to the repayment of public improvement costs, which pledge is subordinate to the pledge of Tax Increment Revenues securing the Outstanding Parity Bonds, but is senior to the pledge of Tax Increment Revenues securing the repayment of the Bonds and any future Parity Debt. See the third paragraph under the heading “THE PROJECT AREA—Outstanding Indebtedness.”

-16-

Parity Lien on Tax Increment Revenues The Agency currently has certain outstanding bonds previously issued under the

Indenture that have a lien on Tax Increment Revenues that is on a parity with the lien securing the Bonds. Outstanding parity lien debt includes the Agency’s 2002 Bonds issued in the initial principal amount of $40,290,000, of which $35,971,000 is currently outstanding, and the Agency’s 2005 Bonds issued in the initial principal amount of $64,080,000, of which $59,725,000 is currently outstanding. Under the Indenture, the Agency has covenanted not to issue any additional bonds payable from Tax Increment Revenues and secured by a lien and charge on the Tax Increment Revenues equal to and on a parity with the lien and charge securing the Bonds and the Outstanding Parity Bonds unless it complies with the Parity Debt requirements of the Indenture. See “SECURITY FOR THE BONDS—Issuance of Parity Debt.”

The 2002 Bonds were purchased by the Authority on the date they were issued with a

portion of the proceeds of the Authority’s Tax Allocation Revenue Bonds (Downtown, North Long Beach, Poly High and West Beach Redevelopment Project Areas), 2002 Series A (the “2002 Authority Bonds”), and the 2005 Bonds were purchased by the Authority on the date they were issued with a portion of the proceeds of the Authority’s Revenue Bonds (Redevelopment, Housing and Gas Utility Financings), 2005 Series A-1 and 2005 Series A-2 (collectively, the “2005 Authority Bonds”). On February 1, 2006, the Authority issued its Tax Allocation Revenue Bonds (Downtown and North Long Beach Redevelopment Project Areas), 2005 Series C (the “2006 Authority Bonds”), a portion of the proceeds of which were set aside in a purchase fund to be used to purchase $28,130,000 principal amount of the then outstanding 2002 Bonds (the “Purchased 2002 Bonds”) on August 1, 2012. Under the provisions of the indentures of trust for the 2002 Authority Bonds, the 2005 Authority Bonds and the 2006 Authority Bonds (collectively, the “Authority Bonds”), (a) until August 1, 2012, the 2002 Bonds are pledged as security for the payment of the 2002 Authority Bonds, (b) from and after August 1, 2012, the Purchased 2002 Bonds are pledged as security for the payment of the 2006 Authority Bonds and any other 2002 Bonds then outstanding will remain pledged as security for the payment of the 2002 Authority Bonds, and (c) the 2005 Bonds are pledged as security for the payment of the 2005 Authority Bonds. Each of the indentures for the Authority Bonds contains provisions that govern any optional redemption of or amendments to the applicable Outstanding Parity Bonds, as well as provisions allowing for the sale by the Authority in certain circumstances of all or a portion of the applicable Outstanding Parity Bonds.

Under the provisions of the Second Supplemental Indenture, the Agency is obligated to

pay certain interest on the 2005 Bonds in amounts specified in Exhibit C to the Indenture (the “Additional 2005 Interest Amounts”), which amounts are available to be used by the Authority to pay debt service on the 2005 Authority Bonds in the event that there is a shortfall in the scheduled payment of debt service on certain other bonds of the Agency that were purchased with proceeds of the 2005 Authority Bonds. In the event that all scheduled payments on such other bonds so purchased with proceeds of the 2005 Authority Bonds are timely made in full, the trustee for the 2005 Authority Bonds will, on each August 1, remit to the Trustee for deposit in the Interest Account established under the Indenture the Additional 2005 Interest Amounts then held by the trustee for the 2005 Authority Bonds. If, however, the Agency fails to pay the full amount due on the other Agency bonds purchased with proceeds of the 2005 Authority Bonds, some or all of the Additional 2005 Interest Amounts will be used to make scheduled debt service payments on the 2005 Authority Bonds, and when and if the project area that failed to have sufficient funds to pay the respective other Agency bonds makes up the deficiency, the payments in respect of the deficiency will be used to repay the Agency in the amount of the Additional 2005 Interest Amounts used to make payments on the 2005 Authority Bonds and will be deposited to the Interest Account under the Indenture.

-17-

The annual Additional 2005 Interest Amounts vary from as much as $595,782.40 in the Fiscal Year ending August 1, 2020, to only $142,935.00 in the Fiscal Years that end in 2021, 2022, 2023 and 2024, with no such amounts payable in years subsequent to 2024. No assurance can be given that any Additional 2005 Interest Amounts will be remitted to the Trustee for deposit to the Interest Account, although to date all Additional 2005 Interest Amounts paid by the Agency have been so remitted back to the Trustee, have been deposited to the Interest Account under the Indenture and have been used to pay a portion of the interest due on the outstanding Parity Bonds.

Under the provisions of the Second Supplemental Indenture and the indenture for the

2006 Authority Bonds, from and after August 1, 2012, the interest rate payable on the Purchased 2002 Bonds ($26,983,000 of the 2002 Bonds) will be reduced from 6.105% to 5.3812645%, and the interest rate on the then other outstanding 2002 Bonds (expected to be $11,816,000 of the 2002 Bonds) will remain at 6.105%. In addition to the foregoing, the indenture for the 2006 Authority Bonds contains provisions similar to the provisions of the indenture for the 2005 Authority Bonds in that it provides for certain payments of surplus funds (the “Additional 2006 Amounts”) to the Trustee for deposit to the Interest Account under the Indenture, if the Additional 2006 Amounts are not needed to pay interest on the 2006 Authority Bonds by reason of a failure by the Agency to pay the scheduled debt service on another series of Agency bonds purchased with proceeds of the 2006 Authority Bonds. The Additional 2006 Amounts vary from $32,652.84 on August 1, 2013, to $48,374.22 on August 1, 2026, with the first amount potentially payable on August 1, 2013 and the last such possible payment on August 1, 2031. As with the Additional 2005 Interest Amounts, no assurance can be given that any such Additional 2006 Amounts will be remitted to the Trustee for deposit to the Interest Account.

Special Fund; Deposit of Tax Increment Revenues

There has been established by the Indenture a special fund known as the “Special

Fund,” which is held by the Agency. Under the Indenture, the Agency has covenanted to deposit all of the Tax Increment Revenues received in any Bond Year in the Special Fund promptly upon receipt thereof by the Agency, until such time (if any) during such Bond Year as the amount on deposit in the Special Fund equals the aggregate amounts required to be transferred to the Trustee pursuant to the Special Fund and Debt Service Fund provisions of the Indenture for such Bond Year. So long as any Bonds are outstanding, the Agency shall not have any beneficial right or interest in the moneys on deposit in the Special Fund, except as may be provided in the Indenture and in any Parity Debt Instruments that may be executed in connection with the issuance of Parity Debt.

On or before the fifth Business Day immediately preceding any Interest Payment Date,

the Indenture provides that the Agency withdraw from the Special Fund and deposit with the Trustee the amount of money necessary to make the deposits described under the subheadings “Interest Account,” “Principal Account,” “Sinking Account,” “Reserve Account,” and “Redemption Account” under the subheading “Debt Service Fund” below. All Tax Increment Revenues received by the Agency at any time during any Bond Year in excess of the amount required to be transferred to the Trustee during such Bond Year as described in the preceding sentence are released from the pledge and lien under the Indenture and the Agency may use such excess Tax Increment Revenues for any lawful purpose of the Agency.

Debt Service Fund

There is established under the Indenture a fund known as the “Debt Service Fund,” to

be held by the Trustee. All moneys in the Debt Service Fund are required to be set aside by the Trustee in the following respective special accounts within the Debt Service Fund (each of

-18-

which is created under the Indenture and each of which the Trustee agrees in the Indenture to cause to be maintained), in the following order of priority: (i) Interest Account; (ii) Principal Account; (iii) Sinking Account; (iv) Reserve Account; and (v) Redemption Account. All moneys in each of such accounts shall be held in trust by the Trustee and shall be applied, used and withdrawn only for the purposes authorized in the Indenture and described below. So long as any Bonds are outstanding, the Agency shall not have any beneficial right or interest in the moneys on deposit in the Debt Service Fund, except as may be provided in the Indenture.

Interest Account. Five (5) days before each date on which interest on the Bonds

becomes due and payable, the Agency shall 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 Bonds, the Outstanding Parity Bonds and on any Parity Debt theretofore issued (collectively, the “Outstanding Agency Bonds”) on such date. All moneys in the Interest Account shall be used and withdrawn by the Trustee solely for the purpose of paying the interest on the Outstanding Agency Bonds as it shall become due and payable (including accrued interest on any Outstanding Agency Bonds purchased or redeemed prior to maturity pursuant to the Indenture). In addition to the deposits and transfers referred to above, the Trustee shall deposit to the Interest Account (i) any amount received by it from the trustee for the 2005 Authority Bonds or the 2006 Authority Bonds as described under the heading “SECURITY FOR THE BONDS—Parity Lien on Tax Increment Revenues” above, and (ii) amounts transferred from the Reserve Account that are in excess of the then Reserve Requirement as described under the heading “SECURITY FOR THE BONDS—Reserve Account” below.

Principal Account. Five (5) days before each date on which principal of the

Outstanding Agency Bonds becomes due and payable at maturity, the Agency shall 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 Agency Bonds. All moneys in the Principal Account shall be used and withdrawn by the Trustee solely for the purpose of paying the principal of the Outstanding Agency Bonds upon the maturity thereof.

Sinking Account. Five (5) days before each date on which any Outstanding Agency

Bonds that are Term Bonds become subject to mandatory sinking account redemption, the Agency shall 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 Outstanding Agency Bonds that are Term Bonds subject to mandatory sinking account redemption on such date. All moneys on deposit in the Sinking Account shall be used and withdrawn by the Trustee for the sole purpose of paying the principal of the Outstanding Agency Bonds that are Term Bonds as it shall become due and payable upon the mandatory sinking account redemption thereof.

Reserve Account. In the event that the amount on deposit in the Reserve Account at

any time becomes less than the Reserve Requirement, the Trustee (to the extent known to it) shall promptly notify the Agency of such fact. Promptly upon receipt of any such notice, the Agency shall transfer to the Trustee from the Special Fund an amount sufficient to maintain the Reserve Requirement on deposit in the Reserve Account. Amounts in the Reserve Account shall be used and withdrawn by the Trustee (i) for the purpose of making transfers to the trustee for the 2002 Authority Bonds (and the Agency shall receive a credit for debt service due on the 2002 Bonds in the amount of any transfer so made) to the extent the Agency has failed to pay the principal and interest then due on the 2002 Bonds in full, (ii) for the purpose of

-19-

paying debt service due on any other Outstanding Agency Bonds to the extent that amounts in the Interest Account or the Principal Account are not sufficient for such purpose, or (iii) at any time for the retirement of all then Outstanding Agency Bonds consistent with the provisions of the Indenture. So long as no Event of Default shall have occurred and be continuing, any amount in the Reserve Account in excess of the Reserve Requirement three (3) Business Days preceding each Interest Payment Date shall be withdrawn from the Reserve Account by the Trustee and deposited in the Interest Account on or before the Interest Payment Date.

Redemption Account. Five (5) days before each date on which Outstanding Agency

Bonds are subject to redemption, other than mandatory sinking account redemption of Outstanding Agency Bonds that are Term Bonds, the Agency shall 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 Outstanding Agency Bonds to be so redeemed on such date. All moneys in the Redemption Account shall be used and withdrawn by the Trustee solely for the purpose of paying the principal of and premium, if any, on the Outstanding Agency Bonds upon the redemption thereof, on the date set for such redemption, other than mandatory sinking account redemptions of Outstanding Agency Bonds that are Term Bonds.

Reserve Account

There is established under the Indenture a separate account known as the “Reserve

Account,” which is to be held by the Trustee in trust. The Indenture requires that an amount equal to the Reserve Requirement be maintained in the Reserve Account at all times, and any deficiency therein be replenished from available moneys in the Special Fund as described under the subheading “Reserve Account” under the subheading “Debt Service Fund” above. As defined in the Indenture, the term “Reserve Requirement” means, as of any date of calculation by the Agency, the least of (i) ten percent (10%) of the initial principal of the Outstanding Agency Bonds, (ii) 125% of Average Annual Debt Service with respect to the Outstanding Agency Bonds, or (iii) Maximum Annual Debt Service with respect to the Outstanding Agency Bonds. Immediately following the issuance of the Bonds, the Reserve Requirement will be $10,631,098.62. So long as no Event of Default shall have occurred and be continuing under the Indenture, any amount in the Reserve Account in excess of the Reserve Requirement three (3) Business Days preceding each Interest Payment Date for the Bonds shall be withdrawn from the Reserve Account by the Trustee and deposited in the Interest Account on or before the Interest Payment Date for use as described under the subheading “Debt Service Fund— Interest Account” above.

The Agency has the right at any time to release funds from the Reserve Account, in

whole or in part, by tendering to the Trustee a Qualified Reserve Account Credit Instrument and an opinion of Bond Counsel stating that neither the release of such funds nor the acceptance of such Qualified Reserve Account Credit Instrument will cause interest on the Outstanding Agency Bonds that are Tax-Exempt 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 (upon which calculation the Trustee may conclusively rely), the Trustee will transfer such funds from the Reserve Account to the Agency free and clear of the lien of the Indenture. The Indenture requires that the Trustee comply with all documentation relating to a Qualified Reserve Account Credit Instrument as may be required to maintain the Qualified Reserve Account Credit Instrument in full force and effect and as may be required to receive payments thereunder in the event and to the extent required to make any payment when and as required under the Reserve Account provisions of the Indenture.

-20-

At least fifteen (15) days prior to 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 such that the amount on deposit in the Reserve Account is equal to the Reserve Requirement (without taking into account such expiring Qualified Reserve Fund Credit Instrument). In the event that the Agency fails to take action as described in clause (i) or (ii) of the preceding sentence, the Trustee will, prior to the expiration thereof, draw upon the Qualified Reserve Account Credit Instrument in full and deposit the proceeds of such draw in the Reserve Account.

In the event that the Reserve Requirement is at any time be maintained in the Reserve

Account in the form of a combination of cash and a Qualified Reserve Account Credit Instrument, the Trustee will apply the amount of such cash to make any payment required to be made from the Reserve Account before the Trustee draws any moneys under the Qualified Reserve Account Credit Instrument for such purpose. In the event that the Trustee at any time draws funds under a Qualified Reserve Account Credit Instrument to make any payment then required to be made from the Reserve Account, the Tax Increment Revenues thereafter received by the Trustee, to the extent remaining after making the other deposits (if any) then required to be made pursuant to Debt Service Fund provisions of the Indenture, will be used to reinstate the Qualified Reserve Account Credit Instrument. See APPENDIX A—SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE—Definitions for the definition of Qualified Reserve Account Credit Instrument.

Issuance of Parity Debt

The Agency may at any time after the issuance and delivery of the Bonds issue Parity

Debt under the Indenture payable from the Tax Increment Revenues and secured by a lien and charge upon the Tax Increment Revenues equal to and on a parity with the lien and charge under the Indenture securing the Bonds and the Outstanding Parity Bonds, but only subject to specific conditions. Those conditions include the requirement that Tax Increment Revenues for the then current Fiscal Year, based on the assessed valuation of property in the Project Area as evidenced in a written document from an appropriate official of the County, plus at the option of the Agency the Additional Allowance, be at least equal to 130% of the Maximum Annual Debt Service on the Bonds, the Outstanding Parity Bonds, any indebtedness secured by a senior lien on Tax Increment Revenues and the new Parity Debt; provided, however, that the Indenture requires that said one hundred thirty percent (130%) must be increased to one hundred fifty percent (150%) until such time as the incremental assessed value in the Project Area is sixty percent (60%) or more of the total Project Area assessed value (the Agency anticipates that the sixty percent 60% threshold will be achieved sometime within the next several Fiscal Years).

For purposes of calculating Tax Increment Revenues, the Indenture requires that Tax

Increment Revenues be calculated by multiplying most recent assessed values certified by the County by the basic 1% tax rate (without regard to overrides). Additionally, the Indenture requires that Tax Increment Revenues be reduced by an amount equal to all pending assessment appeals as if they were determined to be in favor of the property owners in a proportionate amount equal to the average percent of reductions over the most recent five years of appeals history. See APPENDIX A—SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE—Issuance of Parity Debt.

Issuance of Subordinate Debt

The Agency may incur subordinate debt in the form of tax allocation bonds, or other

debt secured by a pledge of Tax Increment Revenues subordinate to the pledge thereof under

-21-

the Indenture (the “Subordinated Debt”); however, the Indenture requires that the issuance of any Subordinate Debt (after taking into account the Outstanding Agency Bonds and all other obligations of the Agency payable from Tax Increment Revenues) shall not cause the Agency to exceed any applicable Plan Limitations and the Agency will at all times that the Bonds are outstanding have sufficient capacity to receive Tax Increment Revenues in an amount at least equal to the remaining Debt Service on the Outstanding Agency Bonds. See “THE REDEVELOPMENT PROJECT AREA—Plan Limitations” and APPENDIX A—SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE.

Investments

The proceeds of the Bonds and other moneys required to be deposited in the funds and

accounts established by the Indenture and held by the Trustee or the Agency will be invested in Permitted Investments, as defined in the Indenture. See APPENDIX A—SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE—Definitions and “BONDOWNERS’ RISKS— Investment of Tax Increment Revenues and Other Funds.”

THE AGENCY

General

In 1961, pursuant to Ordinance No. C4184 of the City Council and California Health

and Safety Code Section 33000 et seq., entitled “Community Redevelopment Law,” the City activated the Agency. The Agency is governed by a seven-member board (the “Agency Board”) appointed by the Mayor and confirmed by the City Council. Project Area Committees composed of local citizens, business people and civic organization representatives provide the Agency with advice on the various redevelopment projects in the City.

The City provides all staff services to the Agency through a cooperation agreement,

including fiscal services, planning, engineering, legal assistance, property services, relocation and other functions necessary for project development. As City employees, staff assigned to Agency activities participate in all of the City’s employee benefit programs. In addition, the Agency retains the services of independent consultants and advisors to assist in legal and financing aspects, property appraisal and acquisition, relocation, land use studies and such other areas of competence deemed necessary by the Agency Board.

All legislative powers of the Agency are vested in the Agency Board. Under applicable

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 as a building site, administer and sell or lease property, and has the power of eminent domain, the right to accept financial assistance from any source, and the power to issue bonds, notes or other evidences of indebtedness, and to expend their proceeds. The Agency itself does not have the power to levy taxes.

The Agency can cause streets and highways to be laid out and graded, and pavements,

sidewalks and public utilities to be constructed and installed and can develop as a building site any real property owned or acquired. With the exception of publicly owned structures and facilities benefiting the Agency’s redevelopment project areas, the Agency itself cannot construct any buildings contemplated under the applicable redevelopment plans, but must convey property in the redevelopment project areas by sale or lease, for private development in conformity with the applicable redevelopment plans and within any time limit fixed by the Agency for the redevelopment to occur. The Agency may, out of any funds available to it for such purposes, pay for all or part of the value of land and the cost of buildings, facilities,

-22-

structures or other improvements to be publicly owned and operated, to the extent that such improvements are of benefit to the applicable redevelopment project areas and no other reasonable means of financing is available.

The Agency is a public entity separate and apart from the City. The Charter of the City

provides that the accounting and other financial records of the City will be audited by the City Auditor who is an elected official of the City and a certified public accountant. All accounting records of Agency operations are maintained separately from the accounting records of the City.

Agency Financial Statements

The annual financial report of the Agency for the fiscal year ended September 30, 2009

is included as Appendix C to this Official Statement. The financial statements referred to above have been audited by KPMG LLP, Long Beach, California, independent certified public accountants, and by the City Auditor. The Agency has not requested nor did the Agency obtain permission from KPMG LLP to include the audited financial statements as an appendix to this Official Statement. In addition, KPMG LLP has not performed any post-audit review of the financial condition or operations of the Agency and has not reviewed this Official Statement.

THE PROJECT AREA

General

The North Long Beach Project Area (the “Project Area”) was established with the

adoption of the North Long Beach Redevelopment Plan (the “Redevelopment Plan”) pursuant to Ordinance No. C-7412 adopted by the City Council on July 16, 1996. The Redevelopment Plan was amended by the City Council by Ordinance No. C-7912 on April 6, 2004 to extend certain limitations in the Redevelopment Plan. The Project Area consists of 10 non-contiguous areas totaling approximately 7,540 acres of land and 4,967 acres of water for a total size of 12,507 acres. The majority of the Project Area consists of: (a) a residential area bordered by the cities of Compton and Paramount to the north, the City of Lakewood to the east and the City of Carson to the west; and (b) a portion of the Port.

The Project Area is primarily made up of residential neighborhoods, retail uses along

the major street corridors, industrial areas, and half of the Port. The Agency is responsible for revitalization efforts outside of the Port, while the City’s Harbor Department is the lead agency inside of the Port. The Agency’s main goal in the Project Area is neighborhood improvement. The Agency has worked with the community to develop plans for improving neighborhoods by strengthening retail areas and improving public infrastructure. In the industrial areas, the Agency seeks to consolidate parcels for larger users and to return brownfields to productive use. In the Port, the Harbor Department is creating additional facilities that can be leased to international shipping concerns.

All real property in the Project Area is subject to the controls and restrictions of the

Redevelopment Plan. The Redevelopment Plan itself is in accordance with standards incorporated in the City General Plan. The Redevelopment Plan requires that construction will meet or exceed the standards set forth in the City’s building, electrical, plumbing, mechanical and other applicable construction codes. The Redevelopment Plan further provides that no new improvements will be constructed and that no existing improvements will be substantially modified, altered, repaired, or rehabilitated except in accordance with site plans submitted and approved by the City Planning Commission and the Agency.

-23-

The Redevelopment Plan allows for residential, commercial, industrial and public uses

within the North Long Beach Project Area but specifies the particular land use area in which each such use is permitted. The Agency may permit existing but nonconforming use to remain so long as the existing building is in good condition and is generally compatible with other surrounding developments and uses.

The heights of buildings, architectural controls, and other development and design

controls necessary for proper development within the Project Area are established by the Redevelopment Plan and the City Municipal Code.

A map highlighting the Project Area is shown on the following page.

-24-

-25-

Redevelopment Plan Limitations

Provisions of the Redevelopment Law and the Redevelopment Plan establish various

time limits for undertaking redevelopment activities and for repaying debt incurred to finance redevelopment projects. These time limits for the Project Area, as amended and currently in effect, are set forth in the table below.

TABLE 1

NORTH LONG BEACH REDEVELOPMENT PROJECT REDEVELOPMENT PLAN LIMITATIONS

Last Date to Incur Indebtedness: July 16, 2016 Plan Life: July 16, 2027 Last Date to Repay Indebtedness: July 16, 2042 Limit on Outstanding Bonded Indebtedness: $2,000,000,000

Source: Fiscal Consultant’s Report in Appendix D. The Agency currently may not receive, and may not repay indebtedness with the

proceeds from property taxes received pursuant to Section 33670 of the Redevelopment Law and the Redevelopment Plan, beyond the date indicated in the table above, except to repay debt to be paid from the Low and Moderate Income Housing Fund established pursuant to Section 33334.3 of the Redevelopment Law and the Redevelopment Plan, or debt established in order to fulfill the Agency’s obligations under Section 33413 of the Redevelopment Law and the Redevelopment Plan, or certain refunding debt. Immediately following the issuance of the Bonds, the Agency will have $128,676,000 of bonded indebtedness outstanding.

Outstanding Indebtedness

In addition to the Outstanding Parity Bonds (see “SECURITY FOR THE BONDS—

Parity Lien on Tax Increment Revenues”), the Agency has incurred several obligations payable from tax increment revenues arising from the Project Area. On July 31, 1997, the Agency, the City and The Vons Companies, Inc. entered into an agreement in connection with the redevelopment of a site located in the Project Area (the “Vons Agreement”), pursuant to which the City agreed to make certain rental payments and the Agency agreed to make payments to the City in the same amounts as the City payments. On December 1, 1997, the Agency, the City and Sears, Roebuck and Co. entered into an agreement in connection with the redevelopment of another site located in the Project Area (the “Sears Agreement”), pursuant to which the City agreed to make certain rental payments and the Agency agreed to make payments to the City in the same amounts as the City payments. The Agency’s obligations under the Vons Agreement and the Sears Agreement, which aggregate approximately $70,000 per year, are unsecured, special obligations of the Agency, and are not secured by any pledge of or lien on any of the Tax Increment Revenues.

The Agency and the City have entered into a Public Works Agreement (North Long

Beach Redevelopment Project) on October 1, 1998 (the “Public Works Agreement”), pursuant to which the City agreed to construct and install certain street, utility and other public improvements in the Project Area, and the Agency agreed to reimburse the City for the costs of the improvements. The Agency’s outstanding obligation under the Public Works Agreement is $24,418,300, and its obligation to pay such amount is secured by a pledge of tax increment revenue from the Project Area. On December 11, 2000, the Agency and the City entered into an Amended and Restated Agreement for Services (the “Services Agreement”) pursuant to which the City agreed to provide to the Agency all necessary services of the City’s employees,

-26-

City facilities and other services of the City in order for the Agency to accomplish the purposes of its various redevelopment plans. Under the Services Agreement, the Agency annually advances funds from tax increment revenues from its several project areas (including the Project Area) to pay for the City services, and the Agency’s obligation to make such payments are secured by a pledge of such tax increment revenues. On August 8, 2007, the Agency and the City entered into a Loan Agreement pursuant to which the City advanced $8,000,000 to the Agency for the purpose of acquiring and developing parks and open space in the Project Area (the “Parks Agreement”). Under the Parks Agreement, the Agency is obligated to repay the City loan from Agency funds not committed to other project activities, and the Agency’s repayment obligation is secured by a pledge of tax increment revenues generated from the Project Area. Each of the Public Works Agreement, the Services Agreement and the Parks Agreement contain provisions expressly subordinating the Agency’s obligations thereunder to all existing or future bonded indebtedness incurred by the Agency relating to the implementation of the Redevelopment Plan, and the Agency’s obligations under these three agreements are subordinate to the Agency’s pledge of the Tax Increment Revenues to the repayment of the Bonds and the Outstanding Parity Bonds.

On September 1, 2009, the Agency entered into a Public Improvement Reimbursement

Agreement (the “Harbor Agreement”) with the Board of Harbor Commissioners of the City of Long Beach (the “Harbor Board”), pursuant to which the Harbor Board expressed its intent to develop certain Port terminal and related facilities, including the installment of certain public improvements in connection therewith, and the Agency agreed to reimburse the Harbor Board up to $8,077,083 for the costs of construction of the public improvements. The Agency’s obligations under the Harbor Agreement are payable from “Middle Harbor Additional Tax Increment Revenues,” defined in the Harbor Agreement to be the increase in property taxes paid on taxable property (including possessory interests) within a portion of the Project Area located in the Port as a result of the improvements resulting from the development contemplated by the Harbor Agreement, that are annually allocated and paid to the Agency under the Redevelopment Law, less funds required to be deposited to the Low and Moderate Income Housing Fund, payments to Taxing Agencies, and allocable County administrative expenses. The Harbor Agreement contains provisions that expressly subordinate the Agency’s repayment obligations thereunder to any bonded indebtedness issued prior to September 1, 2009 (which includes the Outstanding Parity Bonds), and payments required to be made to the Taxing Agencies, but the pledge of the Middle Harbor Additional Tax Increment Revenues to secure the Agency’s repayment obligations under the Harbor Agreement is senior to the pledge of Tax Increment Revenues under the Indenture to the repayment of the Bonds and any future Parity Debt. The Agency anticipates that, under the provisions of the Harbor Agreement, and assuming completion of the improvements contemplated by the Harbor Agreement and increases in tax increment revenues as a result thereof, it will be obligated to pay the following amounts of Middle Harbor Additional Tax Increment Revenues in the following years to the Harbor Board: Fiscal Year 2015, $1,391,000; Fiscal Year 2016, $1,523,000; Fiscal Year 2017, $1,732,000; Fiscal Year 2018, $1,953,000 and Fiscal Year 2019, $2,249,000. Because the Agency’s obligations under the Harbor Agreement with respect to the use of Middle Harbor Additional Tax Increment Revenues are only payable from increases, if any, in tax increment revenues attributable to future development in the specific portion of the Port located in the Project Area, the Agency does not anticipate that its obligations thereunder will in any way adversely affect its obligations under the Indenture to repay the Bonds.

Recent Activity

There are several proposed developments in the Project Area of which the Agency is

aware that are expected to result in increases in the assessed value in the Project Area, and thereby result in increases in Tax Increment Revenues. These developments include the construction of a new industrial building for Weber Metals, including a 33,000 square foot

-27-

building, a 3,500 square foot grinding canopy and a 1,000 square foot storage canopy on a ten acre lot located on Cherry Avenue in the Project Area. The building is expected to house a new titanium forging facility for Weber Metals. Permits for the construction of the project have been issued by the City, and construction of the building’s foundation has commenced. The estimated value of the project upon completion is approximately $4,086,000. No assurance can be given with respect to the date the project will be completed or the value of the project upon completion.

In connection with various improvements to the Port being constructed under the

direction of the Harbor Board, International Transportation Services, Inc. (“ITS”) is undertaking the construction of new administration and operations buildings. The project has 18 phases to allow for continued operation of ITS’s facilities in the Port during construction. A new electrified wharf has been completed, and new administration and operation buildings, maintenance and repair buildings, the doubling of rail capacity and the repaving of over 200 acres of the terminal are expected to be completed by early 2012. Permits have been issued for the current phase of construction and construction has commenced. The estimated value of the administration and operations buildings currently under construction, when they are completed, is approximately $55,000,000. No assurance can be given with respect to the date on which this phase of the project will be completed or the value of the project upon completion.

The Agency also is aware of two mixed use developments (currently identified as

North Village West and North Village East), and a townhome development proposed by Golden Pacific Partners, proposed for the Project Area, that are in the planning stages and are not expected to be commenced in the current Fiscal Year. In addition, a new commercial development at the northeast corner of Atlantic Avenue and Artesia Boulevard in the Project Area is expected to start construction this summer and to be completed in early fall of 2011. The proposed development includes 15,800 square feet of auto-oriented retail space that includes a full-service sit-down restaurant. Construction of the center is estimated to result in an increase of $5.3 million of assessed valuation. No assurance can be given that the projects identified in this paragraph will be commenced or completed as currently expected.

The projections of Tax Increment Revenues in Table 5 under the heading “THE

PROJECT AREA—Tax Revenue Projections and Debt Service Coverage” below only include expected increases in Tax Increment Revenues as a consequence of the Weber Metals and ITS developments identified above. See “Tax Increment Revenue Projection—New Development Value Added” in Section 6 of the Fiscal Consultant’s Report in Appendix D.

Assessed Valuation

A breakdown of the fiscal year 2009-10 assessed valuation of $7,505,997,656 in the

Project Area by category of land use is shown in the following table.

-28-

TABLE 2 NORTH LONG BEACH REDEVELOPMENT PROJECT

BREAKDOWN OF ASSESSED VALUATION BY CATEGORY OF LAND USE

Land Use Category Number of

Parcels Total Assessed

Value(1) Percent of Total Assessed Value

Single Family 11,129 $2,174,089,507 28.96% Multi-Family 3,205 1,179,434,690 15.71 Condominiums 814 155,386,951 2.07 Mobile Home Parks 12 36,216,374 0.48 Vacant Residential 192 6,761,362 0.09 Commercial 1,278 803,736,648 10.71 Industrial 384 686,629,042 9.15 Agricultural 3 3,713,042 0.05 Recreational 16 43,004,114 0.57 Institutional 79 40,443,765 0.54 Miscellaneous Uses(1) 288 659,558 0.01 Possessory Interest(2) 70 1,473,012,632 19.62 Mineral Rights 2 1,519,347 0.02 Other Assessments(3) 509 11,745,212 0.16 State Public Utility -- 3,779,482 0.05 Unsecured -- 885,865,930 11.80 Totals 17,981 $7,505,997,656 100.0%

Source: Los Angeles County Assessor, as reported by Keyser Marston Associates, Inc. See APPENDIX D—FISCAL

CONSULTANT’S REPORT. (1 ) Miscellaneous Uses include rights-of-way and easements for mining, water rights, pipe lines or canals. (2 ) See “THE PROJECT AREA—Possessory Interests.” (3 ) Other Assessments include penalty assessments identified on the Los Angeles County Assessor's Cross Reference Tax Roll.

The following table shows the actual assessed values for the Project Area for Fiscal

Years 2005-06 to 2009-10, based upon the County Auditor-Controller equalized rolls and incremental values of property within the Project Area.

TABLE 3

NORTH LONG BEACH REDEVELOPMENT PROJECT HISTORICAL TAXABLE VALUES AND TOTAL INCREMENTAL VALUE

(Fiscal Years Ended September 30)

FY 2005/06 FY 2006/07 FY 2007/08 FY 2008-09(1 ) FY 2009/10(2 ) Total Value Total Value Total Value Total Value Total Value

Secured $5,354,365,384 $5,901,426,962 $6,452,450,454 $6,936,796,937 $6,616,352,244 Unsecured 964,047,071 981,692,808 1,068,214,533 912,229,781 885,865,930 State Utility 1,419,926 1,368,018 3,779,467 3,779,467 3,779,482 Total $6,319,832,381 $6,884,487,788 $7,524,444,454 $7,852,806,185 $7,505,997,656 Less: Base Year (3,104,508,715) (3,104,508,715) (3,130,192,950) (3,103,980,865) (3,096,395,327) Incremental Value $3,215,323,666 $3,779,979,073 $4,394,251,504 $4,748,825,320 $4,409,602,329

Source: Los Angeles County Auditor-Controller, as reported by Keyser Marston Associates, Inc. See APPENDIX D—FISCAL

CONSULTANT’S REPORT. (1 ) Adjusted to remove overstated Possessory Interest value misplacement of $170,030,923 assessed to parcel 8940-759-594 (Chevron

USA Inc). (2 ) Adjusted to remove overstated Possessory Interest value misplacement of $169,396,572 assessed to parcel 8940-759-594 (Chevron

USA Inc).

-29-

The aggregate total taxable assessed value for the ten largest taxpayers in the Project Area for Fiscal Year 2009-10 is $1,927,681,632. This amount is approximately 44% of the $4,409,602,329 Project Area incremental value and 26% of the $7,505,997,656 total Project Area assessed value. Information regarding the ten largest taxpayers in the Project Area is set forth in Table 4 below and the following paragraphs.

TABLE 4

NORTH LONG BEACH REDEVELOPMENT PROJECT FISCAL YEAR 2009-10 LARGEST PROPERTY TAXPAYERS BY ASSESSED VALUE

Property Owner No. of Parcels

2009-10 Secured Assessed Values

2009-10 Unsecured

Assessed Values

2009-10 Possessory

Interest Assessed Values(1 )

2009-10 Total Assessed Values

Total AV Percent of

Total Project Area(2 )

% of Total Increment

Value(3 ) Total Terminals(4 ) 2 $526,953,699 $526,953,699 7.02% 11.95% International Transportation

Services(4 ) 2 $116,596,200 344,376120 460,972,320 6.14 10.45

Pacific Maritime Services LLC(4 ) 2 100,651,982 297,800,000 398,451,982 5.31 9.04 Hughes Aircraft Co 3 $120,774,533 120,774,533 1.61 2.74 Toyota Motors/TABC

Inc./Catalytic Component Products Inc.

10 21,920,031 94,306,252 116,226,283 1.55 2.64

Long Beach Container Terminal 2 62,710,525 38,249,000 100,959,525 1.35 2.29 ARCO Terminal Services Corp 3 61,583,820 8,487 61,592,307 0.82 1.40 Oxbow Carbon and Minerals LLC 10 14,832,684 33,905,785 48,738,469 0.65 1.11 Carnival Corp 4 1,432,704 45,104,283 46,536,987 0.62 1.06 Metropolitan Stevedore(4 ) 4 5,150,749 41,324,778 46,475,527 0.62% 1.05 TOTALS $204,278,384 $395,689,583 $1,327,713,665 $1,927,681,632 25.68% 43.72%

Source: Los Angeles County Assessor’s 2009-2010 Assessment Roll, as reported by Keyser Marston Associates, Inc. See APPENDIX

D—FISCAL CONSULTANT’S REPORT. (1 ) See “THE PROJECT AREA—Possessory Interests. (2 ) Based upon reported FY 2009-10 Project Area secured and unsecured assessed value of $7,505,997,656. County Assessor's $169.4

million possessory interest value error to Chevron USA Inc. removed from reported value. (3 ) Based upon reported FY 2009-10 Project Area incremental assessed value of $4,409,602,329. (4 ) These property owners have pending assessment appeals or have filed appeals in recent years. See the information regarding

these taxpayers set forth below, and “THE PROJECT AREA—Appeals of Assessed Values. The following information about some of the largest taxpayers in the Project Area has been

gathered by the Agency from various sources believed to be reliable, but the accuracy or completeness of such information is not guaranteed by the Agency or the Underwriter.

Total Terminals International, LLC – Total Terminals International, LLC (a joint

venture between Hanjin Shipping Company, Ltd. and Marine Terminals Inc.) operates the largest container terminal at the Port on Pier T. An approximately 380-acre facility, it includes five berths, a 5,000 foot-long wharf with a water depth of 55 feet, fourteen 65-ton gantry cranes, a storage area for approximately 8,300 on-ground containers, power outlets for 1,850 refrigerated containers, and an on-dock railyard, and handles general containerized cargo. Total Terminals International has been a customer of the Port since 1989, and currently has a long term lease with the Port that expires in 2027.

According to the Fiscal Consultant, Total Terminals International, LLC has pending

appeals of its assessed value for Fiscal Years 2007-2008 and 2008-2009 that could result in tax refunds of $1.9 million and $2.1 million, respectively, if the company’s opinion of value prevails. To date, no known appeal has been filed for Fiscal Year 2009-2010 by the company. See Table 3 in the Fiscal Consultant’s Report in Appendix D.

International Transportation Services, Inc. – International Transportation Service Inc.

operates a container terminal on Pier G at the Port. An approximately 246-acre facility, it

-30-

includes five berths, a 6,100 foot-long wharf with a water depths ranging from 36 feet to 50 feet, seven gantry cranes, a storage area for approximately 12,800 on-ground containers, power outlets for 384 refrigerated containers, and an on-dock railyard, and handles general containerized cargo. International Transportation Services, Inc. has been a customer of the Port since 1971, and currently has a long term lease with the Port that expires in 2026. See “THE PROJECT AREA—Recent Activity” for a description of improvements that International Transportation Services, Inc. is constructing at the Port.

According to the Fiscal Consultant, International Transportation Services, Inc. has

pending appeals of its possessory interest and unsecured assessed values for Fiscal Years 2009-2010, 2008-2009 and 2007-2008, which could result in a reduced possessory interest valuation for 2009-2010 of $1,722,000, and tax refunds of $1.7 million and $957,000 for the two respective prior Fiscal Years, and a reduced unsecured assessed valuation for 2009-2010 of $583,000, and tax refunds of $600,000 and $506,000 for the two respective prior Fiscal Years, in each case if the company’s opinion of value prevails. See Table 3 in the Fiscal Consultant’s Report in Appendix D.

Pacific Maritime Services LLC – Pacific Maritime Services LLC (a joint venture between

SSA Terminals, LLC and China Overseas Shipping Company) operates from Pier J at the Port. Its facilities include approximately 256-acres with five berths, a 5,900 foot-long wharf with water depths ranging from 42 feet to 48 feet, sixteen gantry cranes, a storage area for approximately 12,320 on-ground containers, power outlets for 685 refrigerated containers, and an on-dock railyard, and handles general containerized cargo. Pacific Maritime Services LLC currently has a long term, 20-year lease with the Port that expires in 2022.

According to the Fiscal Consultant, Pacific Maritime Services LLC has pending appeals

of its possessory interest assessed valuation for Fiscal Years 2005-2006, 2006-2007, 2007-2008 and 2008-2009 of $1.9 million, $1.6 million, $1.6 million and $1.7 million, respectively, if the company’s opinion of value prevails. The date, no known appeal has been filed for Fiscal Year 2009-2010 by the company. See Table 3 in the Fiscal Consultant’s Report in Appendix D.

Hughes Aircraft Company – This 30 acre site contains offices and parking in an office

and industrial park situated at the northwest corner confluence of the San Diego 405 Freeway and the Long Beach 710 Freeway.

Toyota Motor Credit Corporation/TABC Inc./Catalytic Component Products Inc. –

Toyota operates its vehicle importing and processing facilities at the Port, located on Pier B (in the West Long Beach Industrial Redevelopment Project Area). However, two parcels totaling 28 acres are owned by Toyota Motor Credit Corp. and TABC Inc. and are located in the Project Area at the southwest corner of Artesia and Paramount. TABC Inc. and Catalytic Component Products Inc. are manufacturing subsidiaries of Toyota responsible for the processing of vehicle catalytic converters, steering columns and stamped parts. Toyota has been a customer of the Port since 1989 and currently has no long term lease with the Port.

Long Beach Container Terminal, Inc. – Long Beach Container Terminal, Inc. conducts a

ground and chassis operation at Pier F in the Port. Its Pier F operation involves an approximately 102-acre facility, which includes five berths, a 2,700 foot-long wharf with a water depth of 50 feet, seven gantry cranes, a storage area for approximately 10,000 on- ground containers, power outlets for 240 refrigerated containers and an on-dock railyard, and handles general containerized cargo. Long Beach Container Terminal, Inc. has been a customer of the Port since 1980 and currently has a long term lease with the Port that expires in 2011. Pier F is situated in the Port’s Middle Harbor expansion plan area. Several options are being considered by the Port to accommodate this tenant either in its present Pier F location or be relocated to another temporary pier.

-31-

ARCO Terminal Services Corporation – This 66 acre vacant parcel located northwest of

the intersection of Paramount Boulevard and South Street contains 20 petroleum storage tanks.

Oxbow Carbon and Minerals LLC – Oxbow Carbon and Minerals LLC has been a

customer of the Port since 1975. Located on four pad locations leased from the Port, this company is responsible for the storage and exportation of petroleum coke, a by-product of petroleum refining used for fuel. Each pad location is subject to a long term lease with a term ranging from 20-years to 40-years. Oxbow Carbon and Materials has been a customer of the Port since 1975.

Carnival Corporation – Its facilities consist of two leasehold interests, one with a City-

owned parking site within the Project Area and the other with the Harbor Department for wharfage adjacent to the Spruce Goose Dome.

Metropolitan Stevedore Company – Located on Pier G at the Port, Metropolitan

Stevedore Company has been a customer of the Port since 1939, and operates on a 23 acre site with a long term lease with the Port that expires in 2016. The site is used for the loading of dry bulk cargo, including petroleum coke, coal, potash, borax, sodium sulfates, soda ash and prilled sulfur. Operating under the name Metro Ports, the pier contains 2 electric travelling bulk shiploaders and various conveyor systems.

According to the Fiscal Consultant’s Report, Metropolitan Stevedore Company has

pending appeals of its possessory interest and unsecured assessed values for Fiscal Years 2006-2007, 2007-2008 and 2008-2009, which could result in tax refunds attributable to its possessory interest of $333,000, $206,000 and $297,000 for the three respective prior Fiscal Years and tax refunds attributable to its unsecured property of $41,000, $38,000 and $137,000 for the three respective prior Fiscal Years, in each case if the company’s opinion of value prevails. To date, no known appeal has been filed for Fiscal Year 2009-2010 by the company. See Table 3 in the Fiscal Consultant’s Report in Appendix D.

Possessory Interests

As set forth in Table 3 under the heading “THE PROJECT AREA—Assessed

Valuation” $1,473,012,632 of the current $7,505,997,656 total current assessed valuation of the property in the Project Area (or approximately 20% of the total assessed valuation) is attributable to possessory interest valuations. Moreover, seven of the top ten largest taxpayers in the Project Area have significant possessory interest property valuations aggregating $1,327,713,665. See Table 4 under the heading “THE PROJECT AREA—Assessed Valuation. Most of the current possessory interest valuations relate to long-term leasehold interests of seven of the top ten largest taxpayers in container terminal facilities at the portion of the Port located in the Project Area. For a description of those leasehold interests, see the information in the paragraphs following Table 4 above.

As described in Section 3.5 of the Fiscal Consultant’s Report in Appendix D,

possessory interest values are private property interests in publicly-owned real property. A possessory interest constitutes a private right to the possession and use of publicly-owned property for a period of time less than perpetuity, which, in the case of the Project Area, represents container terminal leases on property in the part of the Port that is in the Project Area. The Fiscal Consultant advises that, in appraising a possessory interest, the County Assessor seeks to value the present worth of the return a property will yield to the holder of the possessory interest over the effective term of their possession. The County Assessor appraises the possessory interest using one of more of the following appraisal techniques: the sales

-32-

comparison, the income approach or the cost approach. The appraisals are initially triggered when a new lease is entered into and then reaudited by the County Assessor every three to five years thereafter.

Possessory interest valuations of the leasehold interests of seven of the ten largest

taxpayers in the Project Area can and have varied from year to year based upon the volume of their respective container operations in the Port. No assurance can be given that container traffic in the Port will continue at current levels, and that possessory interest valuations of property in the Project Area will remain at current levels or increase in the future.

Annual Tax Receipts to Tax Levy

The Agency received a total of $51,839,624 in tax increment revenue from the

Redevelopment Project for fiscal year 2008-09. This total is approximately 108% of the expected tax increment revenues based upon reported assessed values for the Project Area for such Fiscal Year and the applicable tax rate. Actual receipts in excess of the expected levy based on assessed values are generally attributable to penalties and interest in connection with delinquent property tax payments subsequently collected by the County. See Table 4 in APPENDIX D—FISCAL CONSULTANT’S REPORT for information regarding historical receipts to the computed secured tax levy for the five most recent fiscal years.

Appeals of Assessed Values

Pursuant to California law, property owners may apply for a reduction of their

property tax assessment by filing a written application, in the form prescribed by the State Board of Equalization, with the appropriate county board of equalization or assessment appeals board (the “Appeals Board”). After the applicant and the assessor have presented their arguments, the Appeals Board makes a final decision on the proper assessed value. The Appeals Board may rule in the assessor’s favor, in the applicant’s favor or the Appeals Board may set its own opinion of the proper assessed value, which may be more or less than either the assessor’s opinion or the applicant’s opinion.

Any reduction in the assessment ultimately granted applies to the year for which

application is made and during which the written application was filed. After a reduction is allowed, the property is reviewed on an annual basis to determine its full cash value and the valuation may be adjusted accordingly. This may result in further reductions or increases in value. Such increases are in accordance with the actual cash value of the property and may exceed the maximum annual inflationary growth rate allowed on other properties under Article XIIIA of the State Constitution. Once the property has regained its prior value, adjusted for inflation, it is once again subject to the annual inflationary growth rate allowed under Article XIIIA.

Appeals for reduction in the “base year” value of an assessment, if successful, reduce

the assessment for the year in which the appeal is taken and prospectively after that. The “base year” is determined by the completion date of new construction or the date of change of ownership. Any base year appeal must be made within four years of the change of ownership or new construction date.

Refunds for taxpayer overpayment of property taxes may include refunds for

overpayment of taxes in years after that which was appealed. Any taxpayer payment of property taxes that is based on a value that is subsequently adjusted downward will require a refund for overpayment.

-33-

Section 5 of the Fiscal Consultant’s Report in Appendix D contains an extensive analysis of historical and pending assessment appeals for properties in the Project Area. The Fiscal Consultant advises that, for purposes of projecting future Tax Increment Revenues (see Table 5 under the subheading “Tax Revenue Projections and Debt Service Coverage” below), the Fiscal Consultant has, in most cases, estimated that pending appeals will be resolved at the historic average reduction rate in net secured or net unsecured values, as applicable, over the past five years, and that the pending appeals may result in projected tax refunds of $8,922,000 and a property value reduction of $637,622,000 for all open appeals. See Section 5 in the Fiscal Consultant’s Report in Appendix D.

Proposition 13 Inflationary Adjustments

Article XIII A of the California Constitution (referred to below as “Proposition 13”) and

State Board of Equalization (“SBE”) Rule 460, subdivision (b)(5) provide that “the full value of real property shall be modified to reflect the percentage change in cost of living … provided that such value shall not reflect an increase in excess of 2 percent of the taxable value of the preceding lien date.” The California Consumer Price Index (“CCPI”) establishes the inflation rate used to determine the “percentage change in cost of living.” This annual inflationary rate is determined by the SBE and is based on the statewide consumer price index for the previous year (October to October). In most years, the CCPI has exceeded 2 percent and has been reflected in the 2% Proposition 13 limitation on upward valuation adjustments (described under the heading “CONSTITUTIONAL AND STATUTORY PROVISIONS AFFECTING TAX REVENUES—Property Tax Limitations – Article XIIIA”). Since 1978, there have been five occurrences when the inflationary adjustment rate was less than 2%; fiscal years 1983-84, 1995-96, 1996-97, 1999-00, and 2004- 05. The inflationary adjustments for these fiscal years were 1.01000%, 1.01194%, 1.0115%, 1.01853% and 1.01867%, respectively.

Until now, in more than 30 years since the passage of Proposition 13, the annual

inflationary adjustment has never resulted in a reduction to the prior year assessed valuation calculated from the Proposition 13 base year values adjusted for the CCPI annual inflationary rate. However, the California State Board of Equalization has announced that the CCPI inflation factor for Fiscal Year 2010-11 will be -0.237% (referred to as a “deflation factor”). The blanket application of the deflation factor will apply to all properties in the Project Area, will impact the assessed value growth rate of properties that are not sold or newly constructed, and will reduce the amount of property taxes received by the Agency. In its projections of Tax Increment Revenues, the Fiscal Consultant has taken into account the expected reduction in assessed valuation in the Project Area (and thereby reduced Tax Increment Revenues) in the next fiscal year due to the deflation factor. See Section 3.2 of the Fiscal Consultant’s Report in Appendix D.

Proposition 8 Reassessments

In addition to reductions in assessed valuations in the Project Area due to appeals and

inflationary adjustments, the County Assessor also may reduce assessed values pursuant to Section 51 of the California Revenue and Taxation Code (referred to as “Proposition 8” reductions). This code section requires that for each lien date the value of real property shall be the lesser of its base year value annually adjusted by the inflation factor pursuant to Article XIIIA of the State Constitution or its full cash value taking into account reductions in value due to damage, destruction, depreciation, obsolescence, removal of property or other factors causing a decline in value. Reductions made under this code section may be initiated by the County Assessor or requested by the property owner. After a roll reduction is granted under this section, the property is reviewed on an annual basis to determine its full cash value and the valuation is adjusted accordingly. This may result in further reductions or in value increases. Increases reflect the actual full cash value of the property and may exceed the

-34-

maximum annual inflationary growth rate allowed on other properties under Article XIIIA of the State Constitution. Once the property has regained its prior value, adjusted for inflation it once again is subject to the annual inflationary factor growth rate allowed under Article XIIIA.

Section 3.3 in the Fiscal Consultant’s Report in Appendix D entitled “Proposition 8

Temporary Decline in Value” contains information provided by the County Assessor regarding Proposition 8 reductions for properties located throughout the County. The Fiscal Consultant reports that, in 2009, the County Assessor proactively reviewed over 473,000 residential parcels County-wide to determine if they qualified for a decline in assessed value, and of the properties reviewed, approximately 330,000 properties received reductions in their taxable value. As reported by the County Assessor, the average adjustment in assessed value was $120,000. There is no readily available information with respect to the number of parcels located in the Project Area with reduced assessed values as a result of the County Assessor’s actions.

For 2010, the County Assessor is expected to proactively review the value of single-

family residences and condominiums purchased between July 1, 2003 and June 30, 2009 that were not previously reviewed and granted the temporary decline in value adjustment described above. Any possible future Proposition 8 reductions for properties in the Project Area as a result of such review have not been taken into account in the tax increment projections in the Fiscal Consultant’s Report in Appendix D or in Table 5 below.

Pass-Through Payments

Prior to the adoption of AB 1290, the Redevelopment Law authorized a redevelopment

agency to enter into “pass-through” or “tax-sharing” agreements with Taxing Agencies affected by the adoption of a redevelopment plan. AB 1290 repealed the provisions of the Redevelopment Law which authorized pass-through agreements, and replaced it with a system of statutorily mandated pass-throughs (the “Section 33607.5 Payments”). The Redevelopment Plan was adopted after the passage of AB 1290, so the Section 33607.5 Payments apply to the Project Area.

Under Section 33607.5, with certain exceptions, commencing with the first fiscal year in

which the agency receives tax increment revenues for the affected project area (or the affected added territory) and continuing through the last fiscal year in which the agency receives tax increment revenues, the agency must pay to the affected Taxing Agencies an amount equal to 25 percent of the tax increment revenues received by the agency after the amount required to be deposited in the agency’s low and moderate income housing fund has been deducted (generally referred to as the “Tier 1 Payments”). See “SECURITY FOR THE BONDS—Tax Increment Revenues” and “CONSTITUTIONAL AND STATUTORY PROVISIONS AFFECTING TAX REVENUES—Low and Moderate Income Housing.” Commencing with the 11th fiscal year in which the agency receives tax increment revenues for the affected project area (or the affected added territory) and continuing through the last fiscal year in which the agency receives tax increment revenues, the agency shall pay to the affected Taxing Agencies (other than the city that established such redevelopment agency), in addition to the Tier 1 Payment amounts paid pursuant to the preceding sentence and after deducting the amount allocated to the agency’s low and moderate income housing fund, an amount equal to 21 percent of the portion of tax increment revenues received by the agency, which will be calculated by applying the tax rate against the amount of assessed value by which the current year assessed value exceeds the first adjusted base year assessed value. The first adjusted base year assessed value for the 21 percent additional pass-through (generally referred to as the “Tier 2 Payments”) is the assessed value of the project area (or the affected added territory) in the 10th fiscal year in which the agency receives tax increment revenues (in the case of the Project Area, the first adjusted base year is Fiscal Year 2007-08). An additional 14

-35-

percent of the portion of tax increment revenues received by the agency calculated by applying the tax rate against the amount of assessed value by which the then current year assessed value exceeds the project area assessed value in the 30th fiscal year in which the Agency receives tax increment (generally referred to as the “Tier 3 Payments”), are payable commencing with the 31st year and continuing through the last fiscal year in which the agency receives tax increment revenues.

A redevelopment agency’s obligations to make Section 33607.5 Payments are not

subordinate to the redevelopment agency’s obligations with respect to the agency’s loans or bonds unless the incurrence of such debt satisfies certain conditions and the affected taxing entity does not object to the subordination on grounds permitted by Section 33607.5. The Agency has not taken any of the actions necessary under the Redevelopment Law and its agreements with other taxing agencies to subordinate its obligations to make Section 33607.5 Payments to its obligation to repay the Outstanding Parity Bonds or the Bonds, so that the Tax Increment Revenues pledged to the repayment of the Bonds and the Outstanding Parity Bonds do not include the Section 33607.5 Payments due to other Taxing Agencies.

The Fiscal Consultant, in its report in Appendix D, notes that, according to the County

Auditor-Controller, the obligation of the Agency to make the Tier 2 Payments applicable to the Project Area commenced in Fiscal Year 2008-09, with the first adjusted base year value based on the Project Area’s Fiscal Year 2007-08 assessed value. The tax increment revenue projection summarized on Table 6 in the Fiscal Consultant’s Report (and in Table 5 below) does not forecast Tier 2 Payments because the current Fiscal Year 2009-10 assessed value of the Project Area is less than the Fiscal Year 2007-08 first adjusted base year value and no increases in assessed value are forecast on Table 6 in the Fiscal Consultant’s Report (and in Table 5 below). To the extent that actual subsequent fiscal year assessed values exceed the Fiscal Year 2007-08 first adjusted base year value for the Project Area, then Tier 2 Payments will have to be paid by the Agency pursuant to the provisions of Section 33607.5 of the Redevelopment Law.

Tax Revenue Projections and Debt Service Coverage

The following table is derived from Table 6 in the Fiscal Consultant’s Report (the

complete text of which is in Appendix D), and depicts the projected Tax Increment Revenues available to pay debt service on the Outstanding Parity Bonds and on the Bonds, as estimated by the Fiscal Consultant, based upon the assumptions described in the Fiscal Consultant’s Report, some of which are described in the paragraph following the Table.

-36-

TABLE 5 NORTH LONG BEACH REDEVELOPMENT PROJECT

PROJECTION OF TAX REVENUES (in thousands)

Reported 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20

1 Real Property $5,108,159 $5,108,159 $4,818,886 $4,818,886 $4,822,972 $4,822,972 $4,822,972 $4,822,972 $4,822,972 $4,822,972 $4,822,972 2 Projected Appeal Value Loss(1) 0 (277,825) 0 0 0 0 0 0 0 0 0 3 CPI Adjustment(2) 0 (11,448) 0 0 0 0 0 0 0 0 0 4 New Development Value(3) 0 0 0 4,086 0 0 0 0 0 0 0 5 Total Real Property 5,108,159 4,818,886 4,818,886 4,822,972 4,822,972 4,822,972 4,822,972 4,822,972 4,822,972 4,822,972 4,822,972 6 Possessory Interest 1,473,013 1,473,013 1,152,805 1,152,805 1,191,305 1,207,805 1,207,805 1,207,805 1,207,805 1,207,805 1,207,805 7 Projected Appeal Value Loss(1) 0 (317,469) 0 0 0 0 0 0 0 0 0 8 CPI Adjustment(2) 0 (2,739) 0 0 0 0 0 0 0 0 0 9 New Development Value(4) 0 0 0 38,500 16,500 0 0 0 0 0 0

10 Total Possessory Interest 1,473,013 1,152,805 1,152,805 1,191,305 1,207,805 1,207,805 1,207,805 1,207,805 1,207,805 1,207,805 1,207,805 11 Personal Property & SBE 924,826 924,826 882,498 882,498 882,498 882,498 882,498 882,498 882,498 882,498 882,498 12 Projected Appeal Value Loss(1) 0 (42,328) 0 0 0 0 0 0 0 0 0 13 Total Personal Property 924,826 882,498 882,498 882,498 882,498 882,498 882,498 882,498 882,498 882,498 882,498 14 Total Project Value 7,505,998 6,854,189 6,854,189 6,896,775 6,913,275 6,913,275 6,913,275 6,913,275 6,913,275 6,913,275 6,913,275 15 Less Base Value (3,096,395) (3,096,395) (3,096,395) (3,096,395) (3,096,395) (3,096,395) (3,096,395) (3,096,395) (3,096,395) (3,096,395) (3,096,395) 16 Incremental Value Over Base 4,409,602 3,757,794 3,757,794 3,800,380 3,816,880 3,816,880 3,816,880 3,816,880 3,816,880 3,816,880 3,816,880 17 Gross Tax Revenue 44,285 37,739 37,739 38,167 38,333 38,333 38,333 38,333 38,333 38,333 38,333 18 Add Unitary Tax Revenue 49 49 49 49 49 49 49 49 49 49 49 19 Projected Appeal Tax Refund(1) (8,922) 0 0 0 0 0 0 0 0 0 0 20 Gross Tax Increment Revenue 35,412 37,788 37,788 38,216 38,382 38,382 38,382 38,382 38,382 38,382 38,382 21 Less County Admin Fees at -1.47% (654) (553) (554) (560) (563) (563) (563) (563) (563) (563) (563) 22 Subtotal 34,759 37,235 37,235 37,656 37,819 37,819 37,819 37,819 37,819 37,819 37,819 23 Less Housing Set Aside at -20%(5) (7,082) (7,558) (7,558) (7,643) (7,676) (7,676) (7,676) (7,676) (7,676) (7,676) (7,676) 24 Net Tax Increment Revenue 27,676 29,677 29,677 30,013 30,143 30,143 30,143 30,143 30,143 30,143 30,143 25 Less AB1290 Statutory Pass Through(5) (7,082) (7,558) (7,558) (7,643) (7,676) (7,676) (7,676) (7,676) (7,676) (7,676) (7,676) 26 Net Revenue after Pass Through 20,594 22,120 22,119 22,370 22,467 22,467 22,467 22,467 22,467 22,467 22,467 27 Less 2009-10 SERAF(6) (10,149) 0 0 0 0 0 0 0 0 0 0 28 Less 2010-11 SERAF(6) 0 (2,751) 0 0 0 0 29 Add Borrowed from Housing(6) 8,439 0 0 0 0 0 30 Less Repayment to Housing(6) 0 (1,688) (1,688) (1,688) (1,688) (1,688) 0 0 0 0 0 31 Net After SERAF $18,883 $17,681 $20,431 $20,682 $20,779 $20,779 $22,467 $22,467 $22,467 $22,467 $22,467

Source: Keyser Marston Associates, Inc. See Table 6 in APPENDIX D—FISCAL CONSULTANT’S REPORT. (1) See Table 5 in the Fiscal Consultant’s Report in Appendix D. (2) See “THE PROJECT AREA—Proposition 13 Inflationary Adjustments.” (3) Represents expected additional assessed value attributable to the Weber Metals project. See “THE PROJECT AREA—Recent Activity.” (4) Represents expected additional assessed value attributable to the ITS project. See “THE PROJECT AREA—Recent Activity.” (5) See “SECURITY FOR THE BONDS—Tax Increment Revenues.” (6) See “BONDOWNERS’ RISKS—State Budget; ERAF & SERAF Shifts.”

-37-

Receipt of projected Tax Increment Revenues in the amounts and at the times projected

by the Fiscal Consultant depends on the realization of certain assumptions relating to the net tax increment revenues. Although the Agency believes that the assumptions utilized by the Fiscal Consultant are reasonable, the Agency provides no assurance that the projected Tax Increment Revenues will be realized. To the extent that the assumptions are not actually realized, the Agency’s ability to timely pay principal and interest on the Bonds may be adversely affected. Key assumptions include:

• other than increases in assessed value attributable to two developments

occurring in the Project Area (see “THE PROJECT AREA—Recent Activity” and Section 6.1 in the Fiscal Consultant’s Report in Appendix D), there has been no assumed annual increase in assessed values in the Project Area;

• there has been no assumed reduction in assessed values in future years that

may arise by reason of possible decreases in Proposition 13 Inflationary Adjustments (see “THE PROJECT AREA—Proposition 13 Inflationary Adjustments” and Section 3.2 in the Fiscal Consultant’s Report in Appendix D), Proposition 8 Reassessments (see “THE PROJECT AREA—Proposition 8 Reassessments” and Section 3.3 in the Fiscal Consultant’s Report in Appendix D), or delinquencies in the payment of property taxes (see “THE PROJECT AREA—Annual Tax Receipts to Tax Levy” and Section 4.3 and Table 4 in the Fiscal Consultant’s Report in Appendix D);

• pending property owner appeals of assessed values in the Project Area will

result in decreases in assessed values at historical rates (see “THE PROJECT AREA—Appeals of Assessed Values” and Section 5 in the Fiscal Consultant’s Report in Appendix D), and no additional appeals filed for Fiscal Year 2009-10 will be processed by the County (see Section 5.1 in the Fiscal Consultant’s Report in Appendix D);

• tax rates applicable to property in the Project Area will remain constant in

future years at 1.004292% (see Section 4.1 of the Fiscal Consultant’s Report in Appendix D);

• County administrative charges will remain at a constant 1.47% of gross tax

increment revenues (see Section 2.2c. in the Fiscal Consultant’s Report in Appendix D); and

• there will be no State legislation requiring additional ERAF, SERAF or other

payments by California redevelopment agencies (beyond those currently required by AB26), or shifts of property tax increment (see “BONDOWNERS’ RISKS—State Budget; ERAF and SERAF Shifts” and Section 6.5 in the Fiscal Consultant’s Report in Appendix D).

In addition to the foregoing, see Section 7 (entitled “Caveats”) in the Fiscal Consultant’s Report in Appendix D and “BONDOWNERS’ RISKS.”

-38-

The following table sets forth the projected Tax Increment Revenues and debt service coverage, for the life of the Bonds.

TABLE 6 NORTH LONG BEACH REDEVELOPMENT PROJECT

PROJECTION OF TAX REVENUES, DEBT SERVICE AND DEBT SERVICE COVERAGE (in thousands)

Bond Year

Ending August 1

Projected Tax

Increment Revenues(1)

2002 Bonds Debt

Service (2)

Additional 2006

Amounts(3)

2005 Bonds Debt

Service (2)

Additional 2005

Interest Amounts(3)

2010 Bonds Debt

Service

Total Outstanding Bonds Debt

Service Debt Service Coverage(4)

2010 $20,594 $3,015 $4,151 $125 $ 552 $ 7,844 263% 2011 22,120 3,011 4,150 149 3,104 10,414 212 2012 22,120 3,014 4,151 148 3,095 10,408 213 2013 22,120 2,783 $32 4,153 291 3,090 10,349 214 2014 22,120 2,785 43 4,150 291 3,081 10,351 214 2015 22,120 2,787 46 4,150 291 3,071 10,345 214 2016 22,120 2,800 46 4,150 291 3,057 10,344 214 2017 22,120 2,804 46 4,150 292 3,043 10,335 214 2018 22,120 2,813 46 4,150 291 3,029 10,329 214 2019 22,120 2,825 45 4,149 596 3,016 10,631 208 2020 22,120 2,839 43 4,153 596 2,994 10,624 208 2021 22,120 2,844 44 4,151 143 2,977 10,159 218 2022 22,120 2,851 45 4,153 143 2,957 10,149 218 2023 22,120 2,865 44 4,150 143 2,932 10,135 218 2024 22,120 2,876 44 4,150 143 2,908 10,120 219 2025 22,120 2,891 44 4,155 2,883 9,973 222 2026 22,120 2,899 48 4,153 2,849 9,950 222 2027 22,120 2,905 48 4,151 2,810 9,913 223 2028 22,120 2,922 47 4,152 2,771 9,892 224 2029 22,120 2,933 46 4,151 2,729 9,860 224 2030 22,120 2,943 46 4,154 2,687 9,829 225 2031 22,120 2,956 45 4,154 2,641 9,796 226 2032 22,120 4,151 2,593 6,744 328 2033 22,120 4,150 2,539 6,689 331 2034 22,120 4,151 2,490 6,641 333 2035 22,120 4,153 2,431 6,583 336 2036 22,120 2,376 2,376 931 2037 22,120 2,309 2,309 958 2038 22,120 2,247 2,247 984 2039 22,120 2,179 2,179 1015 2040 22,120 2,113 2,113 1047

Source: Fieldman Rolapp & Associates (1 ) Estimated, years ending 2010 through 2020 from line 26 (Net Revenue after Pass Through) in Table 5 above. Projected SERAF

payments in Table 5 will be subordinate to the payment of debt service on the Bonds. See “RISK FACTORS—State Budget; ERAF & SERAF Shifts.” Does not include expected Recovery Act cash payments. See “THE BONDS—Designation of Bonds as Recovery Zone Economic Development Bonds and Build America Bonds.”

(2 ) See “SECURITY FOR THE BONDS—Parity Lien on Tax Increment Revenues.” (3 ) Amounts in these columns represent additional obligations of the Agency related to the respective Outstanding Parity Bonds,

and may be returned to the Agency under certain conditions. See “SECURITY FOR THE BONDS—Parity Lien on Tax Increment Revenues.”

(4 ) Projected Tax Increment Revenues divided by Total Outstanding Bonds Debt Service. No assurances are provided by the Agency as to the certainty of the projected Tax

Increment Revenues shown on the foregoing tables. Actual revenues may be higher or lower than what has been projected and are subject to valuation changes resulting from new developments or transfers of ownership not specifically identified herein, actual resolution of outstanding appeals, future filing of appeals, or the non-payment of taxes due.

-39-

BONDOWNERS’ RISKS

The following discussion of certain risk factors is not intended to be a complete list of

the risks associated with the purchase of the Bonds and does not purport to reflect the relative importance of the various risks. Potential investors in the Bonds are advised to consider the following factors, among others, and to review the other information in this Official Statement in evaluating an investment in the Bonds. In addition, there can be no assurance that other risk factors will not become material in the future.

Limited Obligations

THE BONDS ARE SPECIAL OBLIGATIONS OF THE AGENCY PAYABLE SOLELY

FROM THE TAX INCREMENT REVENUES, AS DESCRIBED HEREIN, AND AMOUNTS IN CERTAIN FUNDS AND ACCOUNTS MAINTAINED UNDER THE INDENTURE, AND ARE NOT A DEBT OF THE AUTHORITY, THE CITY OR THE STATE OR ANY POLITICAL SUBDIVISION OF THE STATE (OTHER THAN THE AGENCY, TO THE LIMITED EXTENT SET FORTH IN THE INDENTURE), AND NONE OF THE AUTHORITY, THE CITY OR THE STATE OR ANY POLITICAL SUBDIVISION THEREOF (OTHER THAN THE AGENCY), IS LIABLE THEREFOR. THE BONDS ARE NOT PAYABLE FROM, AND ARE NOT SECURED BY, ANY FUNDS OF THE AGENCY, OTHER THAN THE TAX INCREMENT REVENUES AND OTHER MONEYS EXPRESSLY PLEDGED THEREFOR PURSUANT TO THE INDENTURE. NEITHER THE MEMBERS OF THE GOVERNING BOARD OF THE AGENCY NOR ANY PERSONS RESPONSIBLE FOR THE EXECUTION OF THE BONDS ARE LIABLE PERSONALLY FOR PAYMENT OF THE BONDS.

Reduction in Assessed Value

Tax Increment Revenues allocated to the Agency and available for payment of debt

service on the Bonds are determined in part by the amount by which the assessed valuation of property in the Project Area exceeds the respective base year assessed valuation for such property, and by the current rate at which property in the Project Area is taxed. The Agency itself has no taxing power with respect to property, nor does it have the authority to affect the rate at which property is taxed. While substantial growth has occurred in the Redevelopment Project in prior years, recently property values in general have declined (see “THE PROJECT AREA—Proposition 8 Reassessments”) and there may be future negative adjustments to assessed values due to inflationary factors (see “THE PROJECT AREA—Proposition 13 Inflationary Adjustments”). These factors could cause a reduction of the assessed valuation of taxable property in the Project Area.

Economic or other factors beyond the Agency’s control, such as a downturn in the local

economy, relocation out of the Project Area by one or more major property owners or sale of property to a non-profit corporation exempt from property taxation, successful appeals by property owners for a reduction in a property’s assessed valuation, a reduction of the general inflationary rate, a reduction in transfers of property or construction activity, or the destruction of property caused by natural or other disasters, or other events that permit reassessment of property at lower values could also cause a reduction in the assessed valuation of taxable property in the Project Area which could result in a reduction of tax increment revenues. In addition, substantial delinquencies in the payment of property taxes by the owners of taxable property within the Project Area, could impair the timely receipt by the Agency of Tax Increment Revenues. See “BONDOWNERS RISKS’—Property Tax Payment Delinquencies”, “BONDOWNERS RISKS’—Reduction in Inflationary Rate” and “BONDOWNERS RISKS’—

-40-

Risk of Earthquake or Other Disaster” herein. Further, the State electorate or legislature could adopt further limitations with the effect of reducing Tax Increment Revenues.

Tax increment payments are also adjusted by refunds due to successful assessment

appeals. See “THE PROJECT AREA—Appeals of Assessed Values” herein. The Agency also receives revenues from paid delinquent taxes and penalties, which are allocated in part on an apportionment basis (one percent taxes) and in part on the basis of payments actually assignable to Project Area properties. See “THE PROJECT AREA—Annual Tax Receipts to Tax Levy.” Other events that are beyond the control of the Agency could occur and cause a reduction in Tax Increment Revenues, thereby impairing the ability of the Agency to make payments of principal and interest and premium (if any) when due on the Bonds on a timely basis. See the discussion following Table 5 under the heading “THE PROJECT AREA—Tax Revenue Projections and Debt Service Coverage.”

The Fiscal Consultant has made certain assumptions with regard to the availability of

tax increment revenues to estimate the total revenues available to pay debt service on the Bonds. The Agency believes these assumptions to be reasonable, but to the extent the Tax Increment Revenues are less than anticipated, including for any of the reasons described herein, the total revenues available to pay debt service on the Bonds may be less than those projected herein.

Concentration of Ownership

The top ten largest property taxpayers in the Project Area account for approximately

26% of the total secured and unsecured assessed value (and approximately 44% of the incremental increase in assessed value over the base year value) of the Project Area for fiscal year 2009-10. See Table 4 under the heading “THE PROJECT AREA—Assessed Valuation” herein. Concentration of ownership presents a risk in that if one or more of the largest property owners were to relocate their business out of the Project Area, or were to default in the payment of their property taxes, or were to successfully appeal the tax assessments on property within the Project Area, a substantial decline in Tax Increment Revenues could result.

Reduction in Inflationary Rate

Article XIIIA of the California Constitution provides that the full cash value base of

real property used in determining taxable value may be adjusted from year to year to reflect the inflation rate, not to exceed a two percent increase for any given year, or may be reduced to reflect a reduction in the consumer price index, comparable local data or any reduction in the event of declining property value caused by damage, destruction or other factors (as described herein). This measure is computed on a calendar year basis. Any resulting reduction in the full cash value base over the term of the Bonds could reduce Tax Increment Revenues. See “THE PROJECT AREA—Proposition 13 Inflationary Adjustments” for a discussion of a decrease in assessed values due to a negative inflationary adjustment for Fiscal Year 2010-11. See also “CONSTITUTIONAL AND STATUTORY PROVISIONS AFFECTING TAX REVENUES— Property Tax Limitations – Article XIIIA.”

Real Estate and General Economic Risks

The general economy of the area in and surrounding the Project Area is subject to all

the risks generally associated with real estate and real estate development. Projected redevelopment of real property within and around the Project Area by the Agency and private development may be adversely affected by changes in general economic conditions, fluctuations in the real estate market and interest rates, unexpected increases in development costs and by other similar factors. Further, real estate development within and around the

-41-

Project Area (including planned development in the portion of the Port included in the Project Area) could be adversely affected by future governmental policies, including governmental policies to restrict or control certain kinds of development. If development and redevelopment activities in the Project Area encounter significant obstacles of the kind described herein or other impediments, the economy of the area in and around the Project Area could be adversely affected, causing reduction of the Tax Increment Revenues. In addition, if there is a decline in the general economy of the region, the City or the Project Area, the owners of property within the Project Area may be less able or less willing to make timely payments of property taxes, causing a delay or stoppage of tax revenues received by the Agency from the Project Area.

Assessment Appeals

Property taxable values may be reduced as a result of a successful appeal of the

taxable value of property determined by the County Assessor. An appeal may result in a reduction to the County Assessor’s original taxable value and a tax refund to the applicant property owner. An assessee may contest either (i) the original determination of the “base assessment value” of a parcel (i.e., the value assigned after a change of ownership or completion of new construction), or (ii) the “current assessment value” (i.e., the value as determined by the County Assessor, which may be no more than the base assessment value plus the compounded 2% annual inflation factor) when specified factors have caused the market value of the parcel to drop below current assessment value. At the time of reassessment, after a change of ownership or completion of new construction, the assessee may appeal the base assessment value of the property. Under an appeal of a base assessment value, the assessee appeals the actual underlying market value of the sales transaction or the recently completed improvement. A successful appeal of the base assessment value of a parcel has significant future revenue impacts, because a reduced base year assessment will reduce the compounded future value of the taxable value of the property prospectively. Except for the two percent inflation factor, the value of the property cannot be increased until a change in ownership occurs or additional improvements are added. Reductions in taxable values in the Project Area resulting from successful appeals by property owners will reduce the amount of Tax Increment Revenues available to pay the principal of and interest on the Bonds.

The County Assessor’s Office has proactively reduced assessed values for thousands

of parcels in the County. See “THE PROJECT AREA—Proposition 8 Reassessments.” In addition, there are a number of pending property owner assessment appeals with respect to parcels in the Project Area. See “THE PROJECT AREA—Appeals of Assessed Values.” No assurance can be given that there will not be additional actions by the County Assessor to reduce assessed value of parcels in the County, some of which may be in the Project Area, or that there will not be additional property owner assessment appeals for parcels in the Project Area. Reductions in taxable values in the Project Area resulting from successful appeals by property owners and Proposition 8 reductions will reduce the amount of Tax Increment Revenues available to pay the principal of and interest on the Bonds. In its projection of Tax Increment Revenues, the Fiscal Consultant has assumed that the pending appeals filed by property owners will be resolved at historical rates. See Section 5 in the Fiscal Consultant’s Report in Appendix D.

Investment of Tax Increment Revenues and Other Funds

Tax Increment Revenues from the County are deposited in the City’s Investment Pool

prior to their transfer to the Trustee for deposit by the Trustee in the accounts within the Debt Service Fund established under the Indenture. Under the Indenture, moneys in the Debt Service Fund, the Interest Account, the Principal Account, the Sinking Account, the Reserve Account and the Redemption Account must be invested by the Trustee in Permitted Investments (as defined in the Indenture), and moneys in the Special Fund and the Redevelopment Fund may

-42-

be invested by the Agency in any lawful investment for Agency funds. See APPENDIX A— SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE—Definitions. The Agency cannot predict the impact on the investment of any Tax Increment Revenues by the Agency if the City experiences significant losses in its Investment Pool.

Certain Bankruptcy Risks

The enforceability of the rights and remedies of the owners of the Bonds and the

obligations of the Agency may become subject to the federal bankruptcy code and applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or affecting the enforcement of creditors’ rights generally, now or hereafter in effect; usual equitable principles which may limit the specific enforcement under state law of certain remedies; the exercise by the United States of America of the powers delegated to it by the federal Constitution; and the reasonable and necessary exercise, in certain exceptional situations of the police power inherent in the sovereignty of the State and its governmental bodies in the interest of servicing a significant and legitimate public purpose. Bankruptcy proceedings, or the exercise of powers by the federal or State government, if initiated, could subject the owners of the Bonds to judicial discretion and interpretation of their rights in bankruptcy or otherwise and consequently may entail risks of delay, limitation, or modification of their rights. A delay would increase the likelihood of a delay or default in payment of the principal of and interest on the Bonds and the possibility of delinquent tax installments not being paid in full.

Risk of Earthquake or Other Disaster

The State, including the City, is subject to periodic earthquake activity. In fact, the City

experienced a major earthquake in 1933. The land in the Project Area also is subject to flood risk. If an earthquake or other disaster were to substantially damage or destroy taxable property within the Project Area, the assessed valuation of such property could be reduced. There is no assurance that property owners within the Project Area maintain earthquake or disaster insurance or that any such insurance would be sufficient in the event of an earthquake or other disaster. Further, there is no assurance that federal, State or other emergency funds will be provided or would be sufficient for reconstruction in the Project Area in the event of an earthquake or other disaster. A reduction of assessed valuations in the Project Area could result in a reduction of Tax Increment Revenues, which could impair the ability of the Agency to make payments of principal of and interest on the Bonds when due.

Hazardous Substances

Owners and operators of real property may be required by law to remedy conditions of

the property relating to releases or threatened releases of hazardous substances. The federal Comprehensive Environmental Response, Compensation and Liability Act of 1980, sometimes referred to as “CERCLA” or “Superfund Act,” is the most well known and widely applicable of these laws. In addition, California laws impose particular requirements with regard to hazardous substances. Under many of these laws, the owner (or operator) is obligated to remedy a hazardous substances condition of property whether or not the owner (or operator) has anything to do with creating or handling the hazardous substance. Further, such liabilities may arise not simply from the existence of a hazardous substance but from the method of handling it. All of these possibilities could significantly affect the financial and legal ability of a property owner or operator in the Project Area to develop the affected property or other adjacent property and the value of such property.

-43-

Property Tax Payment Delinquencies Delinquencies in the payment of tax bills recently have increased throughout California.

While the Agency expects to receive revenues from paid delinquent taxes and penalties, which are allocated in part on an apportionment basis (one percent taxes) and in part on the basis of payments actually assignable to Project Area properties, but there is no guaranty that the Agency will receive property tax payment delinquencies in the Project Area in the future. See “CONSTITUTIONAL AND STATUTORY PROVISIONS AFFECTING TAX REVENUES— Property Tax Collection Procedures” herein. Further, a significant increase in delinquencies could result in a reduction of Tax Increment Revenues, which could impair the ability of the Agency to make payments of principal of and interest on the Bonds when due.

Change in Law

No assurance can be given that the State electorate will not adopt initiatives or that the

Legislature will not enact legislation that will amend the Constitution of the State, the Redevelopment Law or other laws in a manner that results in a reduction of Tax Increment Revenues that could adversely affect the Agency’s ability to make debt service payments on the Bonds. In addition, tax legislation, administrative actions taken by tax authorities, and court decisions, whether at the federal or state level, may adversely affect the tax-exempt status of interest on the Bonds under federal or state law and could affect the market price for, or marketability of, the Bonds. Prospective purchasers of the Bonds should consult their own tax advisors regarding any pending or proposed federal or state tax legislation, regulations, rulings or litigation.

Additional Obligations

As described in “SECURITY FOR THE BONDS—Issuance of Parity Debt,” the

Agency’s pledge of Tax Increment Revenues to payment of debt service on the Bonds will be on a parity with the Agency’s pledge of Tax Increment Revenues with respect to the payment of any Parity Debt. The potential for the issuance of Parity Debt increases the risks associated with the Agency’s payment of debt service on the Bonds in the event of a decrease in the Agency’s collection of Tax Increment Revenues.

Proposition 8 Adjustments

Proposition 8, approved in 1978 (section 51(b) of the California Revenue and Taxation

Code), provides for the assessment of real property at the lesser of its originally determined (base year) full cash value compounded annually by the inflation factor, or its full cash value as of the lien date, taking into account reductions in value due to damage, destruction, obsolescence or other factors causing a decline in market value. Reductions based on Proposition 8 do not establish new base year values, and the property may be reassessed on a following lien date up to the lower of the then current fair market value or the factored base year value. Properties in the County, which may include properties in the Project Area, have been subject to Proposition 8 adjustments made by the County Assessor. See “THE PROJECT AREA—Proposition 8 Reassessments” and Section 3.3 in the Fiscal Consultant’s Report in Appendix D.

Levy and Collection of Taxes

The Agency has no independent power to levy and collect property taxes. Any

reduction in the tax rate or the implementation of any constitutional or legislative property tax decrease could reduce the Tax Increment Revenues, and accordingly, could have an adverse impact on the ability of the Agency to repay the Bonds. Likewise, delinquencies in the payment

-44-

of property taxes and the impact of bankruptcy proceedings on the legal ability of taxing agencies to collect property taxes could have an adverse effect on the Agency’s ability to make timely Bond payments. See “THE PROJECT AREA—Annual Tax Receipts to Tax Levy” and Section 4.3 in the Fiscal Consultant’s Report in Appendix D.

State Budget; ERAF & SERAF Shifts

In connection with its approval of the budget for the State for the 1992-93, 1993-94,

1994-95, 2002-03, 2003-04, and 2004-05 Fiscal Years, the State Legislature enacted legislation which, among other things, reallocated funds from redevelopment agencies to school districts by shifting a portion of each agency’s tax increment, net of amounts due to other taxing agencies, to school districts for such fiscal years for deposit in the Education Revenue Augmentation Fund (“ERAF”). The amount required to be paid by a redevelopment agency under such legislation was apportioned among all of its redevelopment project areas on a collective basis, and was not allocated separately to individual project areas. The Agency has made all of the foregoing ERAF payments as required by applicable law.

The State budgets for 2005-06, 2006-07 and 2007-08 had no new ERAF payment

requirements. However, in connection with the State budget for Fiscal Year 2008-09, on September 30, 2008, the California Legislature enacted AB l389. AB 1389 required a one-time shift of $350 million from redevelopment agencies to their respective ERAF. Under the provisions of AB 1389, the Agency was obligated to make an ERAF payment for all of its project areas of $6,070,996 to its ERAF.

The validity of AB l389 was challenged in litigation in the Superior Court for Sacramento

County, California Redevelopment Association et al v. Genest et a.l, Case No. 34-2008-00028334- CUWM-GDS (“CRA v. Genest”). This case alleged, among other things, that the duties of county auditors to deposit funds received from redevelopment agencies in County ERAFs are inconsistent with various state and federal constitutional provisions and are therefore unlawful and unenforceable. The lawsuit argued that the State raids of redevelopment funds to balance the State budget are unconstitutional, violating Article XVI, Section 16 of the California Constitution, which states that redevelopment funds can only be used to finance redevelopment projects. The lawsuit contended that taking redevelopment funds to balance the State’s budget does not qualify as a constitutionally permitted use of tax increment. On April 30, 2009, the Sacramento Superior Court ruled in favor of the petitioners, holding that petitioners are entitled to declaratory and injunctive relieve invalidating and enjoining Health and Safety Code Section 33685 as provided for in AB 1389. The court stated that the “distribution of contributions by RDAs to their county ERAFs ... can be expected to regularly result in the use of RDA’s tax increment revenues by schools and education programs unrelated to the RDA’s redevelopment projects.” A judgment was signed by the Sacramento Superior Court on May 7, 2009, forbidding any of the defendants from taking any actions to carry out or enforce any of the payment requirements in AB 1389. The State appealed the decision; however, on September 23, 2009, the State filed a notice of abandonment of its appeal with the Court, so that the Superior Court judgment became final and no longer subject to appeal on that date.

In connection with legislation related to the budget for the State for Fiscal Year 2009-10,

on July 24, 2009 the State Legislature adopted AB 26, which was signed by the Governor and became law on July 28, 2009. AB 26 requires a $1.7 billion one-year transfer, in the aggregate, from redevelopment agencies to their respective County Supplemental Educational Revenue Augmentation Fund (“SERAF”) in 2009-10, plus another $350 million aggregate transfer in 2010-11. A SERAF is similar to an ERAF, except that there is an additional requirement for the SERAF (in response, in part, to the CRA v. Genest litigation) that moneys in the SERAFs must be used by school districts and county offices of education to serve pupils living in

-45-

redevelopment areas or in housing supported by redevelopment agency funds. The method for calculating each redevelopment agency’s payment and respective share of the 2009-10 and 2010-11 transfers is similar to that in prior ERAF legislation, except that instead of using the prior year’s tax increment figures for the basis of calculation, AB 26 requires the calculation to use the tax increment figures from fiscal year 2006-07 with respect to the SERAF payment required for both 2009-10 and 2010-11. The Agency’s 2009-10 SERAF payment is estimated by the California Redevelopment Association (the “CRA”) to be $29,487,696, and is due by May 10, 2010. The Agency’s 2010-11 SERAF payment is estimated by the CRA to be $6,070,996, and is due by May 10, 2011.

AB 26 provides that the Agency may suspend Housing Set-Aside contributions to its

Low and Moderate Income Housing Fund for 2009-10 or borrow Housing Set-Aside funds in the Agency’s Low and Moderate Income Housing Fund, in order to make the SERAF payments - provided the funds are repaid by June 30 of the Fiscal Year occurring 5 years after the Fiscal Year of the commencement of suspension or borrowing. The Agency fully expects to fund the entire amount of its 2009-10 SERAF payment by the May 10, 2010 deadline and the entire amount of its 2010-11 SERAF payment by the May 10, 2011 deadline. The Agency expects to use accumulated tax increment funds on hand to make approximately $1,700,000 of the portion of the 2009-10 SERAF payment allocated by it to the Project Area (a total of $10,200,000), and to borrow $8,500,000 from the Agency’s Low and Moderate Income Housing Fund to make the remaining portion of the 2009-10 SERAF payment allocated by it to the Project Area. The Agency expects to use tax increment revenues or cash on hand to make the approximately $2,700,000 portion of the 2010-11 SERAF payment allocated by it to the Project Area. The Agency has covenanted in the Indenture to maintain sufficient funds on hand to make the Fiscal Year 2009-10 payments due to the Los Angeles County Supplemental Educational Revenue Augmentation Fund, and to set aside and maintain sufficient funds from tax increment revenues received by it in Fiscal Year 2010-11 or from other available sources to make any payment required to be made by the Agency for Fiscal Year 2010-11 to the Los Angeles County Supplemental Education Revenue Augmentation Fund, in each case until such time as such payments are made or a court of competent jurisdiction declares that the Agency is not required to make such payments.

AB 26 expressly provides that the obligation of any redevelopment agency to make the

SERAF payments for fiscal years 2009-10 and 2010-11 shall be subordinate to the lien of any pledge of collateral securing, directly or indirectly, the payment of the principal or interest on any bonds of the agency including, without limitation, bonds secured by a pledge of taxes allocated to the agency pursuant to Section 33670 of the California Health and Safety Code. Pursuant to AB 26, under a number of circumstances (e.g., failure to pay, or have paid on its behalf, any SERAF payment; failure to repay when due housing set-aside amounts borrowed or suspended, etc.), a sanction will be imposed on a redevelopment agency which would require the agency’s annual housing set-aside amount to be increased from 20% of its gross tax increment to 25% of its gross tax increment, for the balance of the time the sanctioned redevelopment agency receives tax increment. On October 20, 2009, the CRA filed a lawsuit to challenge AB 26. However, the Agency cannot determine whether any such challenge actually will be successful.

There can be no assurance that the State Legislature will not require similar or other

diversion of tax increment funds in future years to deal with its budget deficits, nor can there be any assurance that any obligation to make any future payments from tax increment funds will be made subordinate to a pledge of taxes to pay Bond debt service.

The potential impact of future legislation could be material to the Agency and its

ability to repay existing and future obligations and conduct its redevelopment activities. The Agency cannot predict whether the State Legislature will enact additional legislation which

-46-

shifts tax increment revenues away from redevelopment agencies to the State or to schools (whether through an arrangement similar to ERAF, SERAF or by any other arrangement), whether any future shifts in tax increment revenue would be limited or affected (such as by an offset of amounts required to be shifted) by pre-existing agreements between redevelopment agencies and school districts, community college districts and county superintendents of schools, or what impact such legislation may have on the Tax Increment Revenues pledged to pay debt service on the Bonds. Accordingly, the Agency is not able to predict the effect, if any, such a shift, if enacted, would have on future Tax Increment Revenues.

Information about the State budget and State spending is available at various State-

maintained websites. None of such websites are in any way incorporated into this Official Statement, and the Agency makes no representation whatsoever as to the accuracy or completeness of any of the information on such websites.

Secondary Market

There can be no guarantee that there will be a secondary market for the Bonds, or, if a

secondary market exists, that the Bonds can be sold for any particular price. Occasionally, because of general market conditions or because of adverse history or economic prospects connected with a particular issue, secondary marketing practices in connection with a particular issue are suspended or terminated. Additionally, prices of issues for which a market is being made will depend upon the then prevailing circumstances. Such prices could be substantially different from the face amount of the Bonds.

CONSTITUTIONAL AND STATUTORY PROVISIONS

AFFECTING TAX REVENUES

Property Tax Limitations-Article XIIIA California voters, on June 6, 1978, approved an amendment (commonly known as both

Proposition 13 and the Jarvis-Gann Initiative) to the California Constitution. This amendment, which added Article XIII A to the California Constitution, among other things, affects the valuation of real property for the purpose of taxation in that it defines the full cash value of property to mean “the county assessor’s valuation of real property as shown on the fiscal year 1975-76 tax bill under full cash value, or thereafter, the appraised value of real property when purchased, newly constructed, or a change in ownership has occurred after the 1975 assessment.” The full cash value may be adjusted annually to reflect inflation at a rate not to exceed two percent per year, or any reduction in the consumer price index or comparable local data, or any reduction in the event of declining property value caused by damage, destruction or other factors. See “THE PROJECT AREA—Proposition 13 Inflationary Adjustments” for a discussion of the negative impact that a recent “deflation factor” will have on future Tax Increment Revenues.

The amendment further limits the amount of any ad valorem tax on real property to one

percent of the full cash value except that additional taxes may be levied to pay debt service on indebtedness approved by the voters prior to July 1, 1978. In addition, an amendment to Article XIII was adopted in October 1986 by initiative which exempts any bonded indebtedness approved by two-thirds (55% in certain instances) of the votes cast by the voters for the acquisition or improvement of real property from the one percent limitation.

In the general election held November 4, 1986, voters of the State of California

approved two measures, Propositions 58 and 60, which further amend Article XIIIA. Proposition 58 amends Article XIIIA to provide that the terms “purchased” and “change of

-47-

ownership,” for purposes of determining full cash value of property under Article XIIIA, do not include the purchase or transfer of (1) real property between spouses and (2) the principal residence and the first $1,000,000 of other property between parents and children.

Proposition 60 amends Article XIIIA to permit the Legislature to allow persons over

age 55 who sell their residence to buy or build another of equal or lesser value within two years in the same county, to transfer the old residence’s assessed value to the new residence. Pursuant to Proposition 60, the Legislature has enacted legislation permitting counties to implement the provisions of Proposition 60.

Challenges to Article XIIIA

There have been many challenges to Article XIIIA of the California Constitution.

Recently, the United States Supreme Court heard the appeal in Nordlinger v. Hahn, a challenge relating to residential property. Based upon the facts presented in Nordlinger, the United States Supreme Court held that the method of property tax assessment under Article XIIIA did not violate the federal Constitution. The Agency cannot predict whether there will be any future challenges to California’s present system of property tax assessment and cannot evaluate the ultimate effect on the Agency’s receipt of tax increment revenues should a future decision hold unconstitutional the method of assessing property.

Implementing Legislation

Legislation enacted by the California Legislature to implement Article XIIIA (Statutes

of 1978, Chapter 292, as amended) provides that, notwithstanding any other law, local agencies may not levy any property tax, except to pay debt service on indebtedness approved by the voters prior to July 1, 1978, and that each county will levy the maximum tax permitted by Article XIIIA.

The apportionment of property taxes in fiscal years after 1978-79 has been revised

pursuant to Statutes of 1979, Chapter 282 which provides relief funds from State moneys beginning in fiscal year 1978-79 and is designed to provide a permanent system for sharing State taxes and budget surplus funds with local agencies. Under Chapter 282, cities and counties receive about one-third more of the remaining property tax revenues collected under Proposition 13 instead of direct State aid. School districts receive a correspondingly reduced amount of property taxes, but receive compensation directly from the State and are given additional relief.

Future assessed valuation growth allowed under Article XIIIA (new construction,

change of ownership, 2% annual value growth) will be allocated on the basis of “situs” among the jurisdictions that serve the tax rate area within which the growth occurs except for certain utility property assessed by the State Board of Equalization which is allocated by a different method discussed herein.

Property Tax Collection Procedures

Classifications. In California, property which is subject to ad valorem taxes is classified as

“secured” or “unsecured.” Secured and unsecured properties are entered on separate parts of the assessment roll maintained by the county assessor. The secured classification includes property on which any property tax levied by the County becomes a lien on that property sufficient, in the opinion of the county assessor, to secure payment of the taxes. Every tax which becomes a lien on secured property has priority over all other liens on the secured property, regardless of the time of the creation of other liens. A tax levied on unsecured

-48-

property does not become a lien against unsecured property, but may become a lien on certain other property owned by the taxpayer.

Collections. The method of collecting delinquent taxes is substantially different for the

two classifications of property. The taxing authority has four ways of collecting unsecured property taxes in the absence of timely payment by the taxpayer: (1) a civil action against the taxpayer; (2) filing a certificate in the office of the county clerk specifying certain facts in order to obtain a judgment lien on certain property of the taxpayer; (3) filing a certificate of delinquency for record in the county recorder’s office, in order to obtain a lien on certain property of the taxpayer; and (4) seizure and sale of the personal property, improvements or possessory interests belonging or assessed to the assessee. The exclusive means of enforcing the payment of delinquent taxes with respect to property on the secured roll is the sale of property securing the taxes to the State for the amount of taxes which are delinquent.

Penalties. A 10% penalty is added to delinquent taxes which have been levied with

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

Delinquencies. The valuation of property is determined as of January 1 each year and

equal installments of taxes levied upon secured property become delinquent on the following December 10 and April 10. Taxes on unsecured property are due January 1. Unsecured taxes enrolled by July 31, if unpaid, are delinquent August 31 at 5:00 p.m. and are subject to penalty; unsecured taxes added to the roll after July 31, if unpaid, are delinquent on the last day of the month succeeding the month of enrollment.

Supplemental Assessments. Legislation enacted in 1983 (Chapter 498, Statutes of 1983)

provides for the supplemental assessment and taxation of property as of the occurrence of a change of ownership or completion of new construction. Chapter 498 provided increased revenue to redevelopment agencies to the extent that supplemental assessments of new construction or changes of ownership occur within the boundaries of redevelopment projects subsequent to the January 1 lien date. To the extent such State supplemental assessments occur within the Redevelopment Project, the Tax Increment Revenues for the Project Area may increase.

Tax Collection Fees. In 1990, the State Legislature enacted Senate Bill 2557 (Chapter 466,

Statutes of 1990) (“SB 2557”) which allows counties to charge for the cost of assessing, collecting and allocating property tax revenues to local government jurisdictions on a prorated basis. Two recent decisions have interpreted the provisions of SB 2557 and have upheld the inclusion of redevelopment agencies as a local government agency which must share the cost of property tax administration. The 1992 enactment of Senate Bill 1559 (Chapter 697) and the decision of the California Court of Appeal in Arcadia Redevelopment Agency v. Ikemoto have clarified that redevelopment agencies, such as the Agency, are to share in the cost of property tax administration charged by most California counties, including the County. During fiscal years 2008-09 and 2009-10, the County withheld approximately $678,000 and $653,000 respectively, from the Agency for such administrative costs with respect to the Project Area.

-49-

Appropriations Limitations-Article XIIIB On November 6, 1979, California voters approved Proposition 4, the so-called Gann

Initiative, which added Article XIIIB to the California Constitution. The principal effect of Article XIIIB is to limit the annual appropriations of the State and any city, county, school district, authority or other political subdivision of the State to the level of appropriations for the prior fiscal year, as adjusted for changes in the cost of living, population and services rendered by the government entity.

Effective November 30, 1980, the California Legislature added Section 33678 to the

Redevelopment Law which provided that the allocation of taxes to a redevelopment agency for the purpose of paying principal of, or interest on, loans, advances, or indebtedness will not be deemed the receipt by such agency of proceeds of taxes levied by or on behalf of the agency within the meaning of Article XIIIB, nor will such portion of taxes be deemed receipt of taxes by, or an appropriation subject to the limitation of, any other public body within the meaning or for the purpose of the Constitution and laws of the State, including Section 33678 of the Redevelopment Law.

State Board of Equalization and Property Assessment Practices

August 10, 1998, the State Board of Equalization (“SBOE”) approved revisions to its

guidelines regarding the valuation of intangible business and commercial property for property tax purposes. The SBOE approved these revisions over the objections of the California Assessors Association (“CAA”), an organization representing all 58 County Assessors in California. The Agency is not able to predict whether the revised SBOE guidelines will cause any reductions in tax increment revenues and, hence, in the Tax Increment Revenues.

Exclusion of Tax Increment Revenues for General Obligation Bonds Debt Service

An initiative to amend the California Constitution entitled “Property Tax Increment

Revenues Redevelopment Agencies” was approved by California voters at the November 8, 1988 general election. Under prior law, a redevelopment agency using tax increment revenue received additional property tax revenue whenever a local government increased its property tax rate to pay off its general obligation bonds. This initiative amended the California Constitution to allow the California Legislature to prohibit redevelopment agencies from receiving any of the property tax revenues raised by increased property tax rates imposed by local governments to make payments on their bonded indebtedness.

The initiative only applies to tax rates levied to finance general obligation bonds

approved by the voters on or after January 1, 1989. Any revenue reduction to redevelopment agencies would depend on the number and value of the general obligation bonds approved by voters in prior years, which tax rate will reduce due to increased valuation subject to the tax or the retirement of the indebtedness.

Proposition 218

On November 5, 1996, California voters approved Proposition 218-Voter Approval for

Local Government Taxes-Limitation on Fees, Assessments, and Charges-Initiative Constitutional Amendment. Proposition 218 added Articles XIIIC and XIIID to the California Constitution, imposing certain vote requirements and other limitations on the imposition of new or increased taxes, assessments and property-related fees and charges. Tax Increment Revenues securing the Bonds are derived from property taxes which are outside the scope of taxes, assessments and property-related fees and charges which were limited by Proposition 218.

-50-

AB 1290

In 1993, the California Legislature enacted Assembly Bill 1290 (“AB 1290”) which

contained several significant changes in the Redevelopment Law. Among the changes made by AB 1290 was a provision that limits the period of time for incurring and repaying loans, advances and indebtedness payable from tax increment revenues. In general, a redevelopment plan may terminate not more than 40 years following the date of original adoption, and loans, advances and indebtedness may be repaid during a period extending not more than 10 years following the date of termination of the redevelopment plan. See “THE PROJECT AREA— Redevelopment Plan Limitations.”

AB 1389 Payments

On September 24, 2008, the State enacted a budget for Fiscal Year 2008-09 that

includes, among other things, the provisions of a bill known as AB 1389. AB 1389 requires redevelopment agencies, under certain circumstances, to submit reports to the office of the county auditor in the county in which they are located. These reports are required to include calculations of the tax increment revenues that redevelopment agencies have received and payments that redevelopment agencies have made pursuant to pass-through agreements with taxing entities and statutory pass-through requirements. County auditors are required to review the reports and, if they concur, issue a finding of concurrence. The State Controller is required to review such reports and submit a report to the Legislative Analyst’s office and the Department of Finance identifying redevelopment agencies for which county auditors had not issued a finding of concurrence or are otherwise not in compliance with provisions of AB 1389. AB 1389 includes penalties for any redevelopment agency listed on the most recent State Controller’s report, including a prohibition on issuing bonds or other obligations until the listed agency is removed from the State Controller’s report.

The Agency filed the required reports with the County Auditor-Controller, and the

Agency received notification from the Auditor-Controller at the County to the effect that the Auditor-Controller was in concurrence with the pass-through obligations on the Agency’s AB 1389 report, and acknowledging that the Agency made payments to the applicable local education agencies based on the County’s calculations and will pay the non-local agency education entities according to the Agency’s calculations. The Auditor-Controller stated in its December 28, 2009 letter, however, that “Whether your agency has made the payments our office’s worksheet requires is to be resolved between your Agency and the State Controller’s Office.” In June of 2009, the State Controller’s Office issued a report with respect to Fiscal Years 2003-04 through 2007-08 which included the Agency on the list of redevelopment agencies with respect to which the County Auditor had concurred with their reports for those Fiscal Years. The State Controller’s Office has not yet issued a report with respect to Fiscal Year 2008-09.

Future Initiatives

Article XIIIA, Article XIIIB and certain other propositions affecting property tax levies

were each adopted as measures which qualified for the ballot pursuant to California’s initiative process. From time to time other initiative measures could be adopted, further affecting Agency revenues or the Agency’s ability to expend revenues.

Low and Moderate Income Housing

Sections 33334.2 and 33334.3 of the Redevelopment Law require redevelopment

agencies to set aside not less than twenty percent of all tax increment revenues from project

-51-

areas adopted after December 31, 1976 into a low and moderate income housing fund (the “Housing Set-Aside Requirement”). An agency can reduce the Housing Set-Aside Requirement if the agency annually makes certain findings, consistent with the General Plan Housing Element. These findings are that: (1) no need exists in the community to improve or increase the supply of low and moderate income housing; or, (2) some stated percentage less than 20 percent of the tax increment is sufficient to meet the housing need. In order to make findings (1) or (2), the Agency’s finding must be consistent with the Housing Element of the community’s General Plan, including its share of the regional housing needs of very low income households and persons and families of low or moderate income. The Agency has not made such findings in the past, and the Tax Increment Revenues do not include any of the housing set aside revenues. Statement of Indebtedness

Under the Redevelopment Law, the Agency must file with the County Auditor a

statement of indebtedness for the Redevelopment Project by October 1 of each year. As described below, the statement of indebtedness controls the amount of tax increment revenue that will be paid to the Agency in each fiscal year.

Each statement of indebtedness is filed on a form prescribed by the State Controller and

specifies, among other things: (i) the total amount of principal and interest payable on all loans, advances or indebtedness (including the Outstanding Parity Bonds, the Bonds and all Parity Debt) (the “Debt”), both over the life of the Debt and for the current fiscal year, and (ii) the amount of “Available Revenue” as of the end of the previous fiscal year.

“Available Revenue” is calculated by subtracting the total payments on Debt during

the previous fiscal year from the total revenues (both tax increment revenues and other revenues) received during the previous fiscal year, plus any carry-forward from the prior fiscal year. Available Revenue include amounts held by the Agency and irrevocably pledged to the payment of Debt other than amounts set aside for low- and moderate-income housing.

The County Auditor may only pay tax increment revenue to the Agency in any fiscal

year to the extent that the total remaining principal and interest on all Debt exceeds the amount of available revenues as shown on the statement of indebtedness.

The statement of indebtedness constitutes prima facie evidence of the indebtedness of

the Agency; however, the County Auditor may dispute the statement of indebtedness in certain cases. section 33675 of the Redevelopment Law provides for certain time limits controlling any dispute of the statement of indebtedness, and allows for Superior Court determination of such dispute if it cannot be resolved by the Agency and the County. Any such action may only challenge the amount of the Debt as shown on the statement, and not the validity of any Debt or its related contract or expenditures. No challenge can be made to payments to a trustee in connection with a bond issue or payments to a public agency in connection with payments by that public agency with respect to a lease or bond issue.

CERTAIN LEGAL MATTERS

Legal Opinions

The legal opinion of Quint & Thimmig LLP, Los Angeles, California, as Bond Counsel,

approving the validity of the Bonds, will be made available to purchasers at the time of original delivery of the Bonds and the proposed form thereof appears in Appendix E hereto. Quint & Thimmig LLP, San Francisco, California, also is serving as Disclosure Counsel to the

-52-

Agency for the Bonds. Certain legal matters will be passed upon for the Agency by the City Attorney of the City in his capacity as General Counsel to the Agency.

Payment of the fees and expenses of Bond and Disclosure Counsel is contingent upon

the sale and delivery of the Bonds.

Enforceability of Remedies The remedies available to the Trustee and to the registered owners of the Bonds upon

an event of default under the Indenture and any other document described herein are in many respects dependent upon regulatory and judicial actions which are often subject to discretion and delay. Under existing law and judicial decisions, the remedies provided for under such documents may not be readily available or may be limited. The various legal opinions to be delivered concurrently with the delivery of the Bonds will be qualified to the extent that the enforceability of the legal documents with respect to the Bonds are subject to limitations imposed by bankruptcy, reorganization, insolvency or other similar laws affecting the rights of creditors generally and by equitable remedies and proceedings generally.

RATING

Standard & Poor’s Ratings Services (“S&P”) has assigned its rating of “BBB+” to the

Bonds. Such rating reflects only the views of S&P and an explanation of the significance of such rating may be obtained from S&P. There is no assurance that such rating will continue for any given period of time or that it will not be revised downward or withdrawn entirely by S&P, if, in the judgment of S&P, circumstances so warrant. Any such downward revision or withdrawal of such rating may have an adverse effect on the market price of the Bonds.

CONTINUING DISCLOSURE

The Agency will covenant, pursuant to a continuing disclosure agreement (the

“Continuing Disclosure Agreement”) to be executed on the date of delivery of the Bonds, for the benefit of owners and beneficial owners of the Bonds, to provide a report (the “Annual Report”) containing certain financial information and operating data related to the Agency and the Redevelopment Project, and to provide notices of the occurrence of certain enumerated events, if material. The Annual Report will be filed by the Agency with the Municipal Securities Rulemaking Board’s Electronic Municipal Market Access (EMMA) system. The notices of material events will be filed by the Agency with the Municipal Securities Rulemaking Board (and with the appropriate State information depository, if any). The specific nature of the information to be contained in the Annual Report or the notices of material events is set forth in the Form of Continuing Disclosure Agreement in Appendix F hereto. The covenants of the Agency in the Continuing Disclosure Agreement have been made in order to assist the Underwriter in complying with S.E.C. Rule 15c2-12(b)(5) (the “Rule”).

ABSENCE OF LITIGATION

At the time the Bonds are delivered, an officer of the Agency will certify that, to such

Officer’s knowledge, there is no litigation pending with respect to which the Agency has been served with process or know to be threatened against the Agency in any court or other tribunal of competent jurisdiction, State or federal, which seeks to enjoin or challenges the authority of the Agency to participate in the transactions contemplated by this Official Statement, the Bonds or the Indenture.

-53-

TAX MATTERS

The interest on the Bonds is not excluded from gross income for federal income tax purposes, and is subject to all applicable federal taxation.

In the opinion of Bond Counsel, however, interest on the Bonds is exempt from

California personal income taxes. Owners of the Bonds should also be aware that the ownership or disposition of, or the

accrual or receipt of interest on, the Bonds may have federal or state tax consequences. Bond Counsel expresses no opinion regarding any federal or state tax consequences arising with respect to the Bonds other than as expressly described above.

The complete text of the final opinion that Bond Counsel expects to deliver upon the

issuance of the Bonds is set forth in Appendix E.

FISCAL CONSULTANT The Agency has retained the firm of Keyser Marston Associates, Inc. to prepare a Fiscal

Consultant’s Report concerning to Project Area. The full text of the Fiscal Consultant’s Report is attached hereto as Appendix D.

FINANCIAL ADVISOR

The Agency has retained Fieldman Rolapp & Associates, Irvine, California, as Financial

Advisor for the sale of the Bonds. The Financial Advisor is not obligated to undertake, and has not undertaken to make, an independent verification or to assume any responsibility for the accuracy, completeness or fairness of the information contained in this Official Statement.

Fieldman Rolapp & Associates is an independent advisory firm and is not engaged in

the business of underwriting, trading or distributing municipal or other public securities.

UNDERWRITING The Bonds are being purchased for reoffering by Stone & Youngberg LLC (the

“Underwriter”). The Underwriter has entered into an agreement with the Authority and the Agency pursuant to which the Authority has agreed to purchase the Bonds from the Agency, and to immediately resell the Bonds to the Underwriter, at a price of $32,853,653.62 (representing the par amount of the Bonds, less an Underwriter’s discount of $126,346.38). The agreement pursuant to which the Underwriter will purchase the Bonds provides that the Underwriter will purchase all of the Bonds if any of the Bonds are purchased.

The Underwriter intends to reoffer the Bonds to the public initially at the prices or

yields set forth on the inside cover page of this Official Statement, which yield may subsequently change without any requirement of prior notice. The Underwriter reserves the right to join with dealers and other underwriters in reoffering the Bonds to the public. The Underwriter may reoffer and sell Bonds to certain dealers (including dealers depositing Bonds into investment trusts) at prices lower than the public offering prices, and such dealers may reallow any such discounts on sales to other dealers.

-54-

MISCELLANEOUS The purpose of this Official Statement is to supply information to prospective

purchasers of the Bonds. Quotations from, and summaries and explanations of, the Indenture and other documents and statutes contained herein do not purport to be complete, and reference is made to such documents, Indenture and statutes for full and complete statements of their provisions.

Unless otherwise noted, all information contained in this Official Statement pertaining

to the Agency and the Redevelopment Project has been furnished by the Agency. Any statement in this Official Statement involving matters of opinion, whether or not expressly so stated, are intended as such and not as representations of fact. This Official Statement is not to be construed as a contract or agreement between the Agency and the purchasers or owners of any of the Bonds.

-55-

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

Agency.

REDEVELOPMENT AGENCY OF THE CITY OF LONG BEACH By: /s/ David S. Nakamoto Treasurer

THIS PAGE INTENTIONALLY LEFT BLANK

A-1

APPENDIX A

SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE The following is a brief summary of the provisions of the Indenture not otherwise

summarized in the text of this Official Statement. This summary is not intended to be definitive, and reference is made to the full text of the Indenture for the complete terms thereof.

Definitions

“Additional Allowance” means, as of the date of calculation, the amount of Tax

Increment Revenues which, as evidenced by a certification or supplemental tax roll of the County, are estimated to be receivable by the Agency in the next succeeding Fiscal Year as a result of increases in the assessed valuation of taxable property in the Project Area due to either (a) construction which has been completed but has not yet been reflected on the tax roll, or (b) transfer of ownership or any other interest in real property, 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 in the next succeeding Fiscal Year is estimated to exceed the assessed valuation of taxable property in the Project Area (as reported by the County Auditor-Controller) in the Fiscal Year in which such calculation is made.

“Ambac” means Ambac Assurance 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.

“Authority” means the Long Beach Bond Finance Authority, a public body, corporate

and politic, duly organized and existing under a joint exercise of powers agreement entered into by the City and the Agency pursuant to the Government Code of the State.

“Authority Bonds” means the Authority’s Long Beach Bond Finance Authority Tax

Allocation Revenue Bonds (Downtown, North Long Beach, Poly High and West Beach Redevelopment Project Areas), 2002 Series A, issued pursuant to the Authority Indenture; and, from and after the Purchase Date, the 2005C Authority Bonds.

“Authority Indenture” means the Indenture of Trust, dated as of May 1, 2002, between

the Authority and the Authority Trustee and, from and after the Purchase Date, the 2005C Authority Indenture.

“Authority Trustee” means The Bank of New York Mellon Trust Company, N.A., and

any successor thereto acting in the capacity as trustee under the Authority Indenture; and, from and after the Purchase Date, the 2005C Authority Trustee.

“Bond Counsel” means (a) Quint & Thimmig LLP, 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.

A-2

“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. “Bonds” means, collectively, the 2002 Bonds, the 2005 Bonds, the 2010 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.

“Business Inventory Tax Subvention” means all 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.

“Certificate of the Agency” means a certificate in writing signed by the Chairman,

Executive Director, Treasurer or Secretary of the Agency, or any other officer of the Agency duly authorized by the Agency for that purpose.

“Continuing Disclosure Agreement” means that certain Continuing Disclosure

Agreement pertaining to the 2010 Bonds between the City and the Agency, dated as of May 1, 2010, as originally executed and as it may be amended from time to time in accordance with its terms.

“County” means the County of Los Angeles, a county duly organized and existing

under the Constitution and laws of the State. “Debt Service Fund” means the fund by that name established and held by the Trustee

pursuant to the Indenture. “Defeasance Securities” means (a) cash; (b) non-callable Federal Securities (including

State and Local Government Securities); (c) non-callable direct obligations of the United States of America which have been stripped by the Department of the Treasury of the United States of America; (d) non-callable bonds, debentures, notes or other evidence of indebtedness issued or guaranteed by any of the following federal agencies and provided such obligations are backed by the full faith and credit of the United States of America: (i) certificates of beneficial ownership of the Farmers Home Administration; (ii) participation certificates of the General Services Administration; and (iii) guaranteed Title XI financings of the U.S. Maritime Administration.

“Direct Payment” means the semiannual federal subsidy payment from the United

States Department of the Treasury equal to (a) forty-five percent (45%) of the amount of each interest payment on the 2010 Series A Bonds, and (b) thirty-five percent (35%) of the amount of each interest payment on the 2010 Series B Bonds.

“Event of Default” means any of the events described as such in the Indenture. “Fair Market Value” means the price at which a willing buyer would purchase the

investment from a willing seller in a bona fide, arm’s length transaction (determined as of the date the contract to purchase or sell the investment becomes binding) if the investment is traded on an established securities market (within the meaning of section 1273 of the Tax Code) and, otherwise, the term “Fair Market Value” means the acquisition price in a bona fide arm’s length transaction (as referenced above) if (i) the investment is a certificate of deposit that is acquired in accordance with applicable regulations under the Tax Code, (ii) the investment is an

A-3

agreement with specifically negotiated withdrawal or reinvestment provisions and a specifically negotiated interest rate (for example, a guaranteed investment contract, a forward supply contract or other investment agreement) that is acquired in accordance with applicable regulations under the Tax Code, (iii) the investment is a United States Treasury Security--State and Local Government Series that is acquired in accordance with applicable regulations of the United States Bureau of Public Debt, or (iv) the investment is the Local Agency Investment Fund of the State of California but only if at all times during which the investment is held its yield is reasonably expected to be equal to or greater than the yield on a reasonably comparable direct obligation of the United States.

“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).

“Fiscal Year” means any twelve-month period beginning on October 1 in any year and

extending to the next succeeding September 30, both dates inclusive, or any other twelve-month period selected and designated by the Agency as its official fiscal year period pursuant to a Certificate of the Agency filed with the Trustee.

“Harbor Board” means the Board of Harbor Commissioners of the City of Long Beach. “Indenture” means the Indenture of Trust, by and between the Agency and the Trustee,

as amended or supplemented from time to time pursuant to any Supplemental Indenture entered into pursuant to the provisions thereof.

“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 Agency.

“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 Increment 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; 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.

“Information Services” means Financial Information, Inc.’s “Daily Called Bond Service”,

30 Montgomery Street, 10th Floor, Jersey City, New Jersey 07302, Attention: Editor; Kenny S&P, 55 Water Street, 45th Floor, New York, New York 10041, Attention: Notification Department; Moody’s “Municipal and Government,” 5250 77 Center Drive, Suite 150, Charlotte, NC 28217, Attention: Municipal News Reports; S&P’s “Called Bond Record,” 25 Broadway, 3rd Floor, New York, New York 10004; and, in accordance with then current guidelines of the Securities and

A-4

Exchange Commission, such other addresses and/or such other services providing information with respect to the redemption of bonds as the Agency may designate in a Request of the Agency delivered to the Trustee.

“Interest Account” means the account by that name established and held by the Trustee

pursuant to the Indenture. “Interest Payment Date” means each February 1 and August 1 until the earlier of the

redemption or final maturity of the Bonds. “IRS” means the United States Treasury, Internal Revenue Service. “Maximum Annual Debt Service” means, as of the date of calculation, the largest

amount obtained by totaling, for the current or any future Bond Year, the sum of (a) the amount of interest payable on the Bonds in such Bond Year, assuming that principal thereof is paid as scheduled and that any mandatory sinking fund payments are made as scheduled, and (b) the amount of principal payable on the Bonds in such Bond Year, including any principal required to be prepaid by operation of mandatory sinking fund payments.

For purposes of such calculation there shall be excluded the principal of and interest on

any Parity Debt to the extent the proceeds thereof are then deposited in an escrow fund from which amounts may not be released to the Agency unless the amount of Tax Increment Revenues for the most recent Fiscal Year (as evidenced in a written document from an appropriate official of the Agency), plus at the option of the Agency the Additional Allowance, at least equals one hundred thirty percent (130%) of the sum of the amount of Maximum Annual Debt Service on the Bonds, and the Maximum Annual Debt Service on the Parity Debt (a portion of the proceeds of which were deposited to such escrow fund) assuming that the amount on deposit in the escrow fund was applied to redeem such Parity Debt; provided, however, that said one hundred thirty percent (130%) shall be increased to one hundred fifty percent (150%) until such time as the incremental assessed value in the Project Area is sixty percent (60%) or more of the total Project Area assessed value.

“Middle Harbor Additional Tax Increment” has the meaning given to such term in the

Middle Harbor Agreement. In general, the Middle Harbor Additional Tax Increment refers to the increase in property taxes paid on taxable property (including possessory interests) within the Middle Harbor Project identified in the Middle Harbor Agreement annually allocated and paid to the Agency pursuant to the Redevelopment Law, less certain deductions specified in the Middle Harbor Agreement.

“Middle Harbor Agreement” means the Public Improvement Reimbursement

Agreement (North Long Beach Redevelopment Project Area) entered into on September 1, 2009, by the Agency and the Harbor Board.

“Minimum Rating” means, with respect to any Permitted Investment that requires a

Minimum Rating, a long-term rating of “A” or better from S&P or a short-term rating which is in the highest general rating category of S&P, 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, New York, New York, and its successors. “Municipal Bond Insurer” means Ambac, as provider of the Bond Insurance Policy; and,

from and after the Purchase Date, the 2005C Bond Insurer.

A-5

“North Long Beach Redevelopment Fund” means the fund by that name established and held by the Trustee pursuant to the Indenture.

“Office” means the corporate trust office of the Trustee at the location identified in the

Indenture, except that with respect to presentation of Bonds for payment or for registration of transfer and exchange such term shall mean the office or agency of the Trustee at which, at any particular time, its corporate trust agency business shall be conducted, or at such other place or places as may be designated by the Trustee from time to time in written notice filed with the Agency.

“Original Purchaser” means the Stone & Youngberg LLC, being the first purchaser of

the 2010 Bonds from the Agency upon their delivery by the Trustee on the Closing Date for such Bonds.

“Outstanding”, 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 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 and authenticated by the Trustee 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, collectively (a) any loans, bonds, notes, advances or indebtedness

payable from Tax Increment Revenues on a parity with the 2002 Bonds, the 2005 Bonds and the 2010 Bonds issued or incurred pursuant to and in accordance with the provisions of the Indenture, and (b) any Refunding Debt issued or incurred in accordance with the provisions of the Indenture.

“Parity Debt Instrument” means any resolution, indenture of trust, trust agreement or

other instrument authorizing the issuance and/or execution and delivery of any Parity Debt. “Participating Underwriter” shall have the meaning ascribed thereto in the Continuing

Disclosure Agreement. “Permitted Investments” 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, but only to the extent that the same are acquired at Fair Market Value:

(a) direct obligations of (including obligations issued or held in book entry form

on the books of) the Department of the Treasury of the United States of America, and any Defeasance Obligations.

(b) obligations of any of the following federal agencies which obligations

represent full faith and credit of the United States of America, including: (i) Export- Import Bank; (ii) Rural Economic Community Development Administration; (iii) U.S. Maritime Administration; (iv) Small Business Administration; (v) U.S. Department of Housing & Urban Development (PHA’s); (vi) Federal Housing Administration; and (vii) Federal Financing Bank;

(c) senior debt obligations issued by the Federal National Mortgage Association,

the Federal Home Loan Mortgage Corporation, the Resolution Funding Corporation

A-6

(REFCORP), and the Federal Home Loan Bank System, and senior debt obligations of other government-sponsored agencies approved by the Municipal Bond Insurer;

(d) U.S. dollar denominated deposit accounts, federal funds and banker’s

acceptances with domestic commercial banks, including the Trustee and its affiliates, which have a rating on their short term certificates of deposit on the date of purchase of “P-1” by Moody’s and “A-1” or “A-1+” by S&P and maturing no more than 360 days after the date of purchase, provided that 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, “P-1” by Moody’s and “A-1+” by S&P, and which matures not more than 270 days after the date of purchase;

(f) investments in a money market fund rated “AAAm” or “AAAm-G” or better

by S&P, including any money market fund for which the Trustee or an affiliate receives fees for investment advisory or other services to the fund;

(g) pre-refunded municipal obligations defined as follows: 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 upon an irrevocable escrow account or fund (the “escrow”), in the highest rating category of Moody’s and S&P 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 thereof or on the redemption date or dates specified in the irrevocable instructions referred to above, as appropriate;

(h) investment agreements approved in writing by the Municipal Bond Insurer,

supported by appropriate opinions of counsel, with notice to S&P; (i) the City’s investment pool maintained by the City Treasurer in accordance

with the City’s adopted investment policy; (j) the Local Agency Investment Fund of the State, created pursuant to section

16429.1 of the California Government Code, to the extent the Trustee is authorized to register such investment in its name;

(k) other forms of investments (including repurchase agreements) approved in

writing by the Municipal Bond Insurer with notice to S&P; and (l) investment agreements approved in writing by the 2005 Bond Insurer, with

notice to S&P. “Plan Limitations” means the limitations contained or incorporated in the

Redevelopment Plan on (a) the aggregate principal amount of indebtedness payable from Tax

A-7

Increment 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 indebtedness payable from Tax Increment Revenues.

“Principal Account” means the account by that name established and held by the

Trustee pursuant to the Indenture. “Private Business Use” means use directly or indirectly in a trade or business carried on

by a natural person or in any activity carried on by a person other than a natural person, excluding use by a governmental unit and use by any person as a member of the general public.

“Project Area” means the Redevelopment Project area described in the applicable

Redevelopment Plan. “Purchase Date” means August 1, 2012. “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 Indenture, provided that all of the following requirements are met: (a) the long-term credit rating or claims paying ability of such bank or insurance company is in one of the three highest rating categories by S&P and Moody’s; (b) such letter of credit or surety bond has a term of at least twelve (12) months; (c) such letter of credit or surety bond has a stated amount at least equal to the portion of the Reserve Requirement with respect to which funds are proposed to be released pursuant to the Indenture; and (d) the Trustee is authorized pursuant to the terms of such letter of credit or surety bond to draw thereunder an amount equal to any deficiencies which may exist from time to time in the Interest Account, the Principal Account or the Sinking Account for the purpose of making payments required pursuant to the Indenture.

“Record Date” means, with respect to any Interest Payment Date, the close of business

on the fifteenth (15th) calendar day of the month preceding such Interest Payment Date, whether or not such fifteenth (15th) calendar day is a Business Day.

“Redemption Account” means the account by that name established and held by the

Trustee pursuant to the Indenture. “Redevelopment Law” means the Redevelopment Law of the State, constituting Part 1

of Division 24 of the Health and Safety Code of the State, and the acts amendatory thereof and supplemental thereto.

“Redevelopment Plan” means the Redevelopment Plan for the North Long Beach

Redevelopment Project of the Agency, approved by Ordinance No. C-7412 enacted by the City Council of the City on July 16, 1996, together with any amendments to such Redevelopment Plan duly authorized pursuant to the Redevelopment Law.

“Redevelopment Project” means the undertaking of the Agency pursuant to the

Redevelopment Plan and the Redevelopment Law for the redevelopment of the project area described in the Redevelopment Plan.

“Refunding Debt” means any loan, bond, note, advance or indebtedness the proceeds

thereof are used to refund all or a portion of the 2002 Bonds, the 2005 Bonds, the 2010 Bonds or any Parity Debt (and to pay costs of issuance of and fund a reserve fund for such Refunding Debt), and the debt service due on such Refunding Debt in any Bond Year in which the Refunding Debt is Outstanding is not greater than the debt service due in such Bond Year on

A-8

the portion of the 2002 Bonds, the 2005 Bonds, the 2010 Bonds or the Parity Debt refunded with the proceeds of such Refunding Debt.

“Registration Books” means the records maintained by the Trustee pursuant to the

Indenture for the registration and transfer of ownership of the Bonds. “Report” means a document in writing signed by an Independent Accountant or an

Independent Redevelopment Consultant and including: (a) a statement that the person or firm making or giving such Report has read the pertinent provisions of the Agency Indenture to which such Report relates; (b) a brief statement as to the nature and scope of the examination or investigation upon which the Report is based; and (c) a statement that, in the opinion of such person or firm, sufficient examination or investigation was made as is necessary to enable such person or firm to express an informed opinion with respect to the subject matter referred to in the Report.

“Request of the Agency” means a request in writing signed by the Chairman, Executive

Director, Treasurer or Secretary of the Agency, or any other officer of the Agency duly authorized by the Agency for that purpose.

“Reserve Account” means the account by that name established and held by the Trustee

pursuant to the Indenture. “Reserve Requirement” means, (i) as of the Closing Date for the 2002 Bonds,

$3,129,000.35; and (ii) until the amount on deposit in the Reserve Account is equal to the least of (a) Maximum Annual Debt Service, or (b) one hundred twenty-five percent (125%) of average Annual Debt Service, or (c) ten percent (10%) of the then outstanding principal amount of the Bonds, an amount equal to $3,129,000.35 plus any investment earnings on amounts in the Reserve Account. From and after the date on which the amount in the Reserve Account is first equal to the lesser of the three amounts specified in clauses (ii)(a), (b) and (c) of the preceding sentence, the “Reserve Requirement” means, as of the date of any calculation by the Agency, the least of (a) Maximum Annual Debt Service, (b) one hundred twenty-five percent (125%) of average Annual Debt Service, or (c) ten percent (10%) of the initial principal amount of the Bonds.

“Securities Depositories” means The Depository Trust Company, 55 Water Street, 50th

Floor, New York, N.Y. 10041-0099 Attention: Call Notification Department, Fax (212) 855-7232; and, in accordance with then current guidelines of the Securities and Exchange Commission, such other addresses and/or such other securities depositories as the Agency may designate in a Request of the Agency delivered by the Agency to the Trustee.

“Sinking Account” means the account by that name established and held by the Trustee

pursuant to the Indenture. “Special Fund” means the fund by that name established and held by the Agency

pursuant to the Indenture. “S&P” means Standard & Poor’s Ratings Group, a division of The McGraw-Hill

Companies, Inc., New York, New York, and its successors. “State” means the State of California. “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: (i) payable from, but not secured by a pledge of or lien upon, the Tax Increment Revenues; or (ii) secured

A-9

by a pledge of or lien upon the Tax Increment Revenues which is subordinate to the pledge of and lien upon the Tax Increment Revenues hereunder for the security of the Bonds.

“Supplemental Indenture” means any resolution, agreement or other instrument which

amends, supplements or modifies the Indenture and which has been duly adopted or entered into by the Agency; but only if and to the extent that such Supplemental Indenture is specifically authorized thereunder.

“Tax Code” means the Internal Revenue Code of 1986, as in effect on the date of

issuance of the applicable series of the Bonds or (except as otherwise referenced herein) as it may be amended to apply to obligations issued on the date of issuance of the applicable series of the Bonds, together with applicable proposed, temporary and final regulations promulgated, and applicable official public guidance published, under the Code (including the Tax Regulations).

“Tax Increment Revenues” means all taxes annually allocated and paid to the Agency

with respect to the Project Area pursuant to Article 6 of Chapter 6 (commencing with Section 33670) of the Redevelopment Law and Section 16 of Article XVI of the Constitution of the State 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: (x) 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, (y) the Business Inventory Tax Subvention, and (z) amounts required by the Redevelopment Law to be paid to other taxing agencies to the extent the obligation to pay such amounts is not subordinate to the Agency’s obligation to repay the Bonds.

“Tax Regulations” means temporary and permanent regulations promulgated under

Section 103 and all related provisions of the Tax Code. “Tax Revenue Certificate” means a Certificate of the Agency identifying the amount of

all Tax Increment Revenues received or to be received by the Agency in the then current Fiscal Year.

“Term Bonds” means, collectively, (a) the 2002 Bonds maturing on August 1, 2031, and

(b) any maturity of Parity Debt which is subject to mandatory sinking account redemption pursuant to the Parity Debt Instrument authorizing the issuance thereof.

“Trustee” means BNY Western Trust Company, as Trustee thereunder, or any successor

thereto appointed as Trustee in accordance with the provisions of the Indenture. “2002 Bonds” means the Redevelopment Agency of the City of Long Beach 2002 Tax

Allocation Bonds (North Long Beach Redevelopment Project) issued and Outstanding under the Indenture.

“2005 Bond Insurer” has the meaning given to such term in the Indenture. “2005 Municipal Bond Insurance Policy” has the meaning given to such term in the

Indenture. “2005C Authority Bonds” means the Authority’s Long Beach Bond Finance Authority

Tax Allocation Revenue Bonds (Downtown and North Long Beach Redevelopment Project Areas), 2005 Series C, issued pursuant to the 2005C Authority Indenture.

A-10

“2005C Authority Indenture” means the Indenture of Trust, dated as of February 1, 2006, between the Authority and the 2005C Authority Trustee.

“2005C Authority Trustee” means The Bank of New York Trust Company, N.A., or any

successor thereto acting as trustee under the 2005C Authority Indenture. “2005C Bond Insurer” means Ambac Assurance Corporation, a Wisconsin-domiciled

stock insurance company, as issuer of the 2005C Municipal Bond Insurance Policy. “2005C Municipal Bond Insurance Policy” means the financial guaranty insurance

policy with respect to the 2005C Authority Bonds issued by the 2005C Bond Insurer. “2010 Bonds” means, collectively, the 2010 Series A Bonds and the 2010 Series B Bonds. “2010 Series A Bonds” means the Agency’s Redevelopment Agency of the City of Long

Beach Taxable Recovery Zone Economic Development Bonds, 2010 Series A (North Long Beach Redevelopment Project) authorized by and at any time Outstanding pursuant to the Indenture.

“2010 Series B Bonds” means the Agency’s Redevelopment Agency of the City of Long

Beach Taxable Build America Bonds, 2010 Series B (North Long Beach Redevelopment Project) authorized by and at any time Outstanding pursuant to the Indenture.

“2010 Costs of Issuance” means all items of expense directly or indirectly payable by or

reimbursable to the Agency relating to the authorization, issuance, sale and delivery of the 2010 Bonds, including but not limited to printing expenses, premiums for any municipal bond insurance policy or reserve account surety bond that may be purchased, rating agency fees, filing and recording fees, initial fees, expenses and charges of the Trustee and its counsel (including the Trustee’s first annual administrative fee), fees, charges and disbursements of attorneys including bond counsel, Agency counsel and disclosure counsel, financial advisors, accounting firms, fiscal consultants and other professionals, fees and charges for preparation, execution and safekeeping of the 2010 Bonds and any other cost, charge or fee in connection with the original issuance of the 2010 Bonds.

“2010 Costs of Issuance Fund” means the fund by that name established and held by the

Trustee pursuant to the Indenture. “2010 North Long Beach Redevelopment Fund” means the fund by that name

established and held by the Trustee pursuant to the Indenture. Notwithstanding the foregoing, from and after the Purchase Date, all references in the

Indenture to the terms listed below under the heading “Existing Terms” shall be deemed to instead refer to the corresponding terms listed below under the heading “New Terms”:

Existing Terms New Terms Authority Bonds 2005C Authority Bonds Authority Indenture 2005C Authority Indenture Authority Trustee 2005C Authority Trustee Continuing Disclosure Agreement Agency 2005 Continuing Disclosure Agreement Municipal Bond Insurer 2005C Bond Insurer

Security of Bonds

The Bonds and all Parity Debt shall be secured by a pledge of and lien on all of the Tax

Increment Revenues, without preference or priority for series, issue, number, dated date, sale

A-11

date, date of execution or date of delivery; provided, however, that the pledge of and lien on that portion of the Tax Increment Revenues constituting Middle Harbor Additional Tax Increment with respect to the 2010 Bonds and any Parity Debt issued after the Closing Date for the 2010 Bonds shall be subordinate to the Agency’s payment obligations under Sections 2 and 6 of the Middle Harbor Agreement. The Bonds shall be additionally secured by a first and exclusive pledge of and lien upon all of the moneys in the Reserve Account, the Special Fund, the Debt Service Fund, the Interest Account, the Principal Account, the Sinking Account and the Redemption Account. Except for the Tax Increment Revenues and amounts in the funds and accounts created under the Indenture including amounts in the Reserve Account and the Special Fund, no funds or properties of the Agency shall be pledged to, or otherwise liable for, the payment of principal of or interest or premium (if any) on the Bonds.

In consideration of the acceptance of the Bonds by those who shall hold the same from

time to time, the Indenture shall be deemed to be and shall constitute a contract between the Agency and the Owners from time to time of the Bonds, and the covenants and agreements herein set forth to be performed on behalf of the Agency shall be for the equal and proportionate benefit, security and protection of all Owners of the Bonds without preference, priority or distinction as to security or otherwise of any of the Bonds over any of the others by reason of the number or date thereof or the time of sale, execution and delivery thereof, or otherwise for any cause whatsoever, except as expressly provided therein or in the Indenture.

Funds and Accounts; Application of Proceeds

Redevelopment Fund. The Indenture establishes a separate fund designated a “2010

North Long Beach Redevelopment Fund,” to be held by the Trustee. Amounts on deposit in the 2010 North Long Beach Redevelopment Fund will be derived from the proceeds of the 2010 Bonds. Amount in the 2010 North Long Beach Redevelopment Fund are not pledged as security for the payment of the Bonds. The Trustee shall disburse amounts on deposit in the 2010 North Long Beach Redevelopment Fund to the Agency upon receipt of a Request of the Agency which specifies the amount to be withdrawn. The Agency shall use amounts withdrawn from the 2010 North Long Beach Redevelopment Fund for the financing of the Redevelopment Project. The Agency shall maintain records as to the disposition of all amounts disbursed to it from the 2010 North Long Beach Redevelopment Fund as necessary to comply with any applicable requirements of the Redevelopment Law.

Special Fund; Deposit of Tax Revenues. There is established under the Indenture a

special fund to be known as the “Special Fund”, to be held by the Agency. The Agency shall deposit the Tax Increment Revenues received in such Bond Year in the Special Fund promptly upon receipt thereof by the Agency, until such time (if any) during any Bond Year as the amounts on deposit in the Special Fund equal the aggregate amounts required to be transferred pursuant to the Indenture in any such Bond Year; and (except as may be otherwise provided in any Parity Debt Instruments) any Tax Increment Revenues received during any such Bond Year in excess of such amounts shall be released from the pledge and lien under the Indenture and may be used for any lawful purposes of the Agency.

Prior to the payment in full of the principal of and interest and redemption premium (if

any) on the Bonds and the payment in full of all other amounts payable under the Indenture and under any Parity Debt Instruments, the Agency shall not have any beneficial right or interest in the moneys on deposit in the respective Special Fund, except only as provided in the Indenture and in any Parity Debt Instruments, and such moneys shall be used and applied as set forth herein and in any Parity Debt Instruments. Notwithstanding the preceding sentence, it is hereby acknowledged that the pledge of and lien on the Middle Harbor Additional Tax Increment under the Middle Harbor Agreement is senior to the pledge of and lien on such funds under the Indenture for the benefit of the 2010 Bonds and any Parity Debt issued after the

A-12

Closing Date for the 2010 Bonds, and the Agency may apply the portion of the Tax Increment Revenues constituting the Middle Harbor Additional Tax Increment accordingly.

Debt Service Fund; Transfer of Amounts to Trustee. There is established under the

Indenture a special trust fund to be known as the “Debt Service Fund”, which shall be held by the Trustee in trust. The Agency shall withdraw from the Special Fund and transfer to the Trustee amounts required to meet the Agency’s obligations under the Indenture described below. Moneys so transferred by the Agency to the Trustee shall be in the following amounts at the following times, for deposit by the Trustee in the following respective special accounts within the Debt Service Fund, which accounts are established by the Indenture with the Trustee, in the following order of priority:

Interest Account. Five (5) days before each date on which interest on the Bonds

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

Principal Account. Five (5) days before each date on which principal of the Bonds

becomes due and payable at maturity, the Agency shall 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 shall be used and withdrawn by the Trustee solely for the purpose of paying the principal of the Bonds upon the maturity thereof.

Sinking Account. Five (5) days before each date on which any Outstanding Term

Bonds become subject to mandatory Sinking Account redemption, the Agency shall withdraw from the Special Fund and transfer to the Trustee for deposit in the Sinking Account an amount which, when added to the amount then contained in the Sinking Account, will be equal to the aggregate principal amount of the Term Bonds subject to mandatory Sinking Account redemption on such date. All moneys on deposit in the Sinking Account shall be used and withdrawn by the Trustee for the sole purpose of paying the principal of the Term Bonds as it shall become due and payable upon the mandatory Sinking Account redemption thereof.

Reserve Account. In the event that the amount on deposit in the Reserve Account

at any time becomes less than the Reserve Requirement, the Trustee (to the extent known to it) shall promptly notify the Agency of such fact. Promptly upon receipt of any such notice, the Agency shall transfer to the Trustee from the Special Fund an amount sufficient to maintain the Reserve Requirement on deposit in the Reserve Account. Amounts in the Reserve Account shall be used and withdrawn by the Trustee (i) for the purpose of making transfers to the Authority Trustee pursuant to the Authority Indenture (and the Agency shall receive a credit for debt service due on the 2002 Bonds in the amount of any transfer so made), (ii) for the purpose of paying debt service due on any Parity Bonds to the extent that amounts in the Interest Account or the Principal Account are not sufficient for such purpose, or (iii) at any time for the retirement of all the Bonds then Outstanding consistent with the defeasance provisions of the Indenture. So long as no Event of Default shall have occurred and be continuing, any amount in the Reserve Account in excess of the Reserve Requirement three (3) Business Days

A-13

preceding each Interest Payment Date shall be withdrawn from the Reserve Account by the Trustee and deposited in the Interest Account on or before the Interest Payment Date.

The Agency shall have the right at any time to release any funds from the

Reserve Account, in whole or in part, by tendering to the Trustee: (i) a Qualified Reserve Account Credit Instrument, (ii) an opinion of Bond Counsel stating that neither the release of such funds nor the acceptance of such Qualified Reserve Account Credit Instrument will cause interest on the Bonds (other than the 2010 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 (upon which calculation the Trustee may conclusively rely), the Trustee shall transfer such funds from the Reserve Account to the Agency free and clear of the lien of the Indenture. The Trustee shall comply with all documentation relating to a Qualified Reserve Account Credit Instrument as shall be required to maintain such Qualified Reserve Account Credit Instrument in full force and effect and as shall be required to receive payments thereunder in the event and to the extent required to make any payment when and as required under this subsection (d).

At least fifteen (15) days prior to the expiration of any Qualified Reserve Account

Credit Instrument, the Agency shall be 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 such that the amount on deposit in the Reserve Account is equal to the Reserve Requirement (without taking into account such expiring Qualified Reserve Fund Credit Instrument). In the event that the Agency shall fail to take action as specified in clause (i) or (ii) of the preceding sentence, the Trustee shall, prior to the expiration thereof, draw upon the Qualified Reserve Account Credit Instrument in full and deposit the proceeds of such draw in the Reserve Account.

In the event that the Reserve Requirement shall at any time be maintained in the

Reserve Account in the form of a combination of cash and a Qualified Reserve Account Credit Instrument, the Trustee shall apply the amount of such cash to make any payment required to be made from the Reserve Account before the Trustee shall draw any moneys under such Qualified Reserve Account Credit Instrument for such purpose. In the event that the Trustee shall at any time draw funds under a Qualified Reserve Account Credit Instrument to make any payment then required to be made from the Reserve Account, the Tax Revenues thereafter received by the Trustee, to the extent remaining after making the other deposits (if any) then required to be made pursuant to the Agency Indenture, shall be used to reinstate the Qualified Reserve Account Credit Instrument.

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.

Redemption Account. Five (5) days before each date on which Bonds are subject to

redemption, other than mandatory Sinking Account redemption of Term Bonds, the Agency shall 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 Redemption Account shall be used and withdrawn by the Trustee solely for the purpose of paying the principal of and premium, if any, on the Bonds upon the redemption thereof, on the

A-14

date set for such redemption, other than mandatory Sinking Account redemption of Term Bonds.

In addition to the deposits and transfers referred to above, the Trustee shall deposit to

the Interest Account any amount received by it from the Authority Trustee and paid pursuant to the revenue fund provisions of the Authority Indenture.

Investment of Funds

Moneys in the Redevelopment Fund, the Debt Service Fund, the Interest Account, the

Principal Account, the Sinking Account, the Reserve Account and the Redemption Account shall 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 shall invest any such moneys solely in Permitted Investments described in clause (f) of the definition thereof. Moneys in each Special Fund shall be invested by the Agency in any obligations in which the Agency is legally authorized to invest funds within its control.

Obligations purchased as an investment of moneys in any fund shall be deemed to be

part of such fund or account. Whenever in the Indenture any moneys are required to be transferred by the Agency to the Trustee, such transfer may be accomplished by transferring a like amount of Permitted Investments. All interest or gain derived from the investment of amounts in any of the funds or accounts held by the Trustee under the Indenture shall be retained in the respective fund or account from which such investment was made; provided, however, that (i) all interest or gain from the investment of amounts in the Reserve Account shall 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 shall have occurred and be continuing, all interest or gain on investments of amounts in the Special Fund shall be released from the pledge hereof 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 thereunder 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 shall incur no liability for losses arising from any investments made pursuant to the Indenture.

The Trustee may make any investments under the Indenture through its own bond or

investment department or trust investment department, or those of its parent or any affiliate. The Trustee or any of its affiliates may act as sponsor, advisor or manager in connection with any investments made by the Trustee under the Indenture.

Except as otherwise provided in the following paragraph and subject to the provisions

of the third paragraph below (which shall prevail in the event of a conflict with the provisions of this paragraph), all investments of amounts deposited in any fund or account created by or pursuant to the Indenture, or otherwise containing gross proceeds of the Bonds (within the meaning of section 148 of the Tax Code) shall be acquired, disposed of, and valued (as of the date that valuation is required by the Indenture or the Tax Code) at Fair Market Value.

Amounts in all funds and accounts shall be valued by the Trustee at least semi-annually

fifteen days prior to each Interest Payment Date, provided as to any such valuation made by the Trustee, such valuation shall be at the market value of such investments and the Trustee may utilize computerized securities pricing services that may be available to it, including those available through its regular accounting system.

A-15

For purposes of computations required under the Code, investments in funds or accounts (or portions thereof) that are subject to a yield restriction under applicable provisions of the Tax Code and (unless valuation is undertaken at least annually) investments in the Reserve Account shall be valued by the Agency at their present value (within the meaning of section 148 of the Tax Code).

For the purpose of determining the amount in any fund, all Permitted Investments

credited to such fund shall be valued at fair market value determined by the Trustee based on accepted industry standards and from accepted industry providers (accepted industry providers shall include but are not limited to pricing services provided by Financial Times Interactive Data Corporation, Merrill Lynch, Salomon Smith Barney, Bear Stearns, or Lehman Brothers); as to certificates of deposit and bankers’ acceptances, the face amount thereof plus accrued interest thereon; and as to any investment not specified above, the value thereof established by prior agreement among the Agency, the Trustee, and the Municipal Bond Insurer.

The Trustee shall have no responsibility to determine Fair Market Value or present value

of any Permitted Investment, and may rely upon any determination made by or on behalf of the Agency.

Issuance of Parity Debt

The Agency may issue or incur Parity Debt under the Indenture in such principal

amount as shall be determined by the Agency, subject only to the following conditions:

(a) No Event of Default shall have occurred and be continuing, the Agency shall otherwise be in compliance with all covenants set forth in the Indenture.

(b) Subject to paragraph (d) below, the Tax Increment Revenues for the then

current Fiscal Year (based on the assessed valuation of property in the Project Area as evidenced in a written document from an appropriate official of the County) plus at the option of the Agency the Additional Allowance, shall be at least equal to 130% of the Maximum Annual Debt Service on the Bonds, any indebtedness secured by a senior lien on Tax Increment Revenues and such new Parity Debt; provided, however, that said one hundred thirty percent (130%) shall be increased to one hundred fifty percent (150%) until such time as the incremental assessed value in the Project Area is sixty percent (60%) or more of the total Project Area assessed value.

Unless otherwise waived by the Municipal Bond Insurer, for purposes of the

issuance of Parity Debt, Tax Increment Revenues shall be calculated by multiplying most recent assessed values certified by the County by the basic 1% tax rate (without regard to overrides) and shall be further reduced by:

(i) the amount of subventions paid by the State of California or any other

amount appropriated by the State for the Agency; (ii) unless the “Teeter Plan” is currently in effect and the County has

made no announcement that the Teeter Plan would terminate, the percentage derived by applying the average percentage by which the actual tax collections in the Project Area were less than the amount of the tax levy in the Project Area for the immediately preceding five fiscal years;

(iii) the amount by which Tax Increment Revenues would be decreased if

all pending assessment appeals were to be determined in favor of the property

A-16

owners in a proportionate amount equal to the average percent of reductions over the most recent five years of appeals history; and

(iv) the percentage of Tax Increment Revenues which must be deposited

to the Low and Moderate Income Housing Fund with the exception of amounts which, in the opinion of Bond Counsel, may be used to pay debt service on the Bonds. (c) Subject to paragraph (d) below, the issuance of such Parity Debt shall not

cause the Agency to exceed any applicable Plan Limitations. Without limiting the generality of the foregoing, the Agency shall not issue or execute and deliver any Parity Debt in the event and to the extent that either (i) the sum of the aggregate amount of debt service on all outstanding obligations of the Agency payable from Tax Increment Revenues, including such Parity Debt, exceeds the aggregate amount of Tax Increment Revenues which are eligible to be allocated and paid to the Agency while such obligations remain outstanding, or (ii) the aggregate principal amount of all outstanding obligations of the Agency, including such Parity Debt, exceeds any applicable limit in the Redevelopment Plan on the aggregate principal amount of indebtedness which the Agency is permitted to have outstanding at any one time.

(d) In computing the Maximum Annual Debt Service on the Bonds for purposes

of paragraph (b) above, and the debt service for purposes of paragraph (c) above, if interest on any Bonds is payable at a variable rate the Agency shall assume that the interest rate on the variable rate debt is the maximum allowable rate under the Supplemental Indenture, and the Municipal Bond Insurer shall approve the financing documents and the assumptions used as described in this subsection (d).

(e) The related Parity Debt Instrument shall provide that:

(i) Interest on such Parity Debt shall be payable on February 1 and August 1 in each year in which interest is payable on such Parity Debt except the first twelve month period, during which interest may be payable on any February 1 or August 1 and provided that there shall be no requirement that such Parity Debt pay interest on a current basis;

(ii) The principal of such Parity Debt shall be payable on August 1 in any

year in which principal is payable; and (iii) Money (and/or a Qualified Reserve Fund Credit Instrument) shall be

deposited in the Reserve Account in an amount such that the amount in the Reserve Account is equal to the Reserve Requirement in effect immediately following the issuance of the Parity Debt. (f) The Agency shall deliver to the Trustee a Certificate of the Agency certifying

that the conditions precedent to the issuance of such Parity Debt set forth in subsections (a), (b), (c) and (e) above have been satisfied. Notwithstanding the foregoing, the Agency may issue or incur Refunding Debt in such

principal amount as shall be determined by the Agency so long as the conditions set forth in subsections (a), (c) and (e) above are met, and the Agency delivers to the Trustee a Certificate of the Agency certifying that such conditions precedent to the issuance of such Refunding Debt set forth in subsections (a), (c) and (e) above have been met and such Refunding Debt is otherwise in accordance with the definition of Refunding Debt.

A-17

Issuance of Subordinate Debt From time to time the Agency may issue or incur Subordinate Debt in such principal

amount as shall be determined by the Agency; provided that the issuance of such Subordinate Debt (after taking into account the Bonds and all other obligations of the Agency payable from Tax Increment Revenues) shall not cause the Agency to exceed any applicable Plan Limitations and the Agency will at all times that the Bonds are Outstanding have sufficient capacity to receive Tax Increment Revenues in an amount at least equal to the remaining Debt Service on the Bonds.

Agency Covenants

Punctual Payment. The Agency will punctually pay or cause to be paid the principal of

and interest on the Bonds, together with any redemption premiums thereon, in strict conformity with the terms of the Indenture, and it will faithfully observe and perform all of the conditions, covenants and requirements of the Indenture.

Limitation on Superior Debt. The Agency covenants that, so long as the Bonds remain

unpaid, the Agency shall not issue any bonds, notes or other obligations, enter into any agreement or otherwise incur any loans, advances or indebtedness, which is in any case secured by a lien on all or any part of the Tax Increment Revenues which is superior to the lien established under the Indenture for the security of the Bonds; provided, however, that the Agency may and has incurred an obligation under the Middle Harbor Agreement that has a lien on the Middle Harbor Additional Tax Increment that is senior to the lien thereon under the Indenture with respect to the 2010 Bonds and any Parity Debt issued after the Closing Date for the 2010 Bonds. The Agency covenants that, so long as the Bonds remain unpaid, the Agency shall not issue any bonds, notes or other obligations, enter into any agreement or otherwise incur any loans, advances or indebtedness, which is in any case secured by a lien on all or any part of the Tax Increment Revenues which is on a parity with the lien established under the Indenture for the security of the Bonds, excepting only Parity Debt. Nothing in the preceding statements is intended or shall be construed in any way to prohibit or impose any limitations upon the issuance by the Agency of loans, bonds, notes, advances or other indebtedness which are unsecured or which are secured by a junior lien on the Tax Increment Revenues, except as otherwise provided in the Indenture.

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 properties owned by the Agency or upon the Tax Increment Revenues or any part thereof, or upon any funds in the hands of the Trustee, or which might impair the security of the Bonds. Nothing in the preceding statement shall require the Agency to make any such payment so long as the Agency in good faith shall contest the validity of said claims.

Books and Accounts. 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, the Municipal Bond Insurer and the City, in which complete and correct entries shall be made of all transactions relating to the Redevelopment Project, the Tax Increment Revenues, and the Special Fund. Such books of record and accounts shall at all times during business hours be subject, upon prior written request, to the reasonable inspection of the Trustee and the Owners of any Bonds then Outstanding, or their representatives authorized in writing. The Trustee shall have no duty to review such books of record and account.

A-18

Protection of Security and Rights. The Agency will preserve and protect the security of the Bonds and the rights of the Trustee, the Municipal Bond Insurer and the Bond Owners. From and after the Closing Date, the Bonds shall be incontestable by the Agency.

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 hereafter be lawfully imposed upon the Agency or the properties then owned by the Agency in the project area created by the Redevelopment Plan, when the same shall become due. Nothing in the Indenture contained shall require the Agency to make any such payment so long as the Agency in good faith shall contest the validity of said taxes, assessments or charges. The Agency will duly observe and conform with all valid requirements of any governmental authority relative to the Redevelopment Project or any part thereof.

Extension of Payment. The Agency will not, directly or indirectly, extend or consent to

the extension of the time for the payment of any Bond or claim for interest on any of the Bonds and will not, directly or indirectly, be a party to or approve any such arrangement by purchasing or funding the Bonds or claims for interest in any other manner. In case the maturity of any such Bond or claim for interest shall be extended or funded, whether or not with the consent of the Agency, such Bond or claim for interest so extended or funded shall not be entitled, in case of default hereunder, to the benefits of the Indenture, except subject to the prior payment in full of the principal of all of the Bonds then Outstanding and of all claims for interest which shall not have been so extended or funded.

Disposition of Property. The Agency will not participate in the disposition of any land or

real property in the Project Area to anyone which will result in such property becoming exempt from taxation because of public ownership or use or otherwise (except property dedicated for public right-of-way and except property planned for public ownership or use by the Redevelopment Plan in effect on the date of the Agency Indenture) so that such disposition shall, when taken together with other such dispositions, aggregate more than ten percent (10%) of the land area in the Redevelopment Project (calculating such ten percent against land in the Project Area owned by private parties as of the Closing Date) unless such disposition is permitted as provided in the Indenture. If the Agency proposes to participate in such a disposition, it shall thereupon appoint an Independent Redevelopment Consultant to report on the effect of said proposed disposition. If the Report of the Independent Redevelopment Consultant concludes that the security of the Bonds and the rights of the Bond Owners and the Trustee under the Indenture will not be materially impaired by said proposed disposition, the Agency may thereafter make such disposition. If said Report concludes that such security will be materially impaired by said proposed disposition, the Agency shall disapprove said proposed disposition.

Maintenance of Tax Increment Revenues. The Agency shall comply with all

requirements of the Redevelopment Law to insure the allocation and payment to it of the Tax Increment Revenues, including without limitation the timely filing of any necessary statements of indebtedness with appropriate officials of the County and (in the case of supplemental revenues and other amounts payable by the State) appropriate officials of the State. The Agency shall not enter into any agreement with the County or any other governmental unit, or modify the Redevelopment Plan in any manner, unless, (i) consented to in writing by the Municipal Bond Insurer, or (ii) the Agency obtains a certification by an Independent Redevelopment Consultant to the effect that, following such amendment or modification, there will be no reduction in the Tax Increment Revenues as a result of such agreement or modifications.

Payment of Expenses; Indemnification. The Agency shall pay to the Trustee all

compensation for all services rendered under the Indenture following the receipt of a statement therefor, including but not limited to all reasonable expenses, charges, legal and consulting fees

A-19

and other disbursements and those of its attorneys, agents and employees, incurred in and about the performance of its powers and duties thereunder.

The Agency has further covenanted to indemnify and save the Trustee and its officers,

directors, agents and employees, harmless against any losses, expenses and liabilities which it may incur arising out of or in the exercise and performance of its powers and duties under the Indenture, including the costs and expenses of defending against any claim of liability, but excluding any and all losses, expenses and liabilities which are due to the negligence or intentional misconduct of the Trustee, its officers, directors, agents or employees. The obligations of the Agency shall survive the resignation or removal of the Trustee under the Indenture and payment of the Bonds and the discharge of the Indenture.

Annual Review of Tax Revenues. The Agency shall annually review the total amount of

Tax Increment Revenues remaining available to be received by the Agency under the Redevelopment Plan’s cumulative tax increment limitations, as well as future cumulative annual debt service. If remaining Tax Increment Revenues allocable within the Redevelopment Plan’s cumulative tax increment limit are less than one hundred five percent (105%) of all future debt service on the Bonds and any other obligations of the Agency payable from Tax Increment Revenues, the Agency shall immediately notify the Municipal Bond Insurer and all Tax Increment Revenues not needed to pay current or any past due debt service on any Agency obligations or to replenish the Reserve Account to the Reserve Requirement shall be deposited into a Trustee-held escrow account and invested in Defeasance Securities. Such fund must be used only to pay debt service on the Bonds and to pay any Parity Obligations or to redeem or prepay, as the case may be, the Bonds or such Parity Debt. The Agency shall include with its annual statement of indebtedness, a statement to the effect that the foregoing calculations have been made, along with the results of the calculations. Notwithstanding anything in the Indenture to the contrary, (a) it is acknowledged that, as of the Closing Date, the Redevelopment Plan has no limitation on the amount of Tax Increment Revenues receivable by the Agency; and (b) the provisions of this paragraph may be modified or waived with the consent of the Municipal Bond Insurer.

Continuing Disclosure. The Agency covenants and agrees that it will comply with and

carry out all of the obligations on its part under the Continuing Disclosure Agreement. Notwithstanding any other provision of the Agency Indenture, failure of the Agency to comply with the Continuing Disclosure Agreement shall not be considered an Event of Default; however, the Trustee, at the written request of any Participating Underwriter or the holders of at least 25% aggregate principal amount of Outstanding 2010 Bonds, shall (but only to the extent it has been indemnified to its satisfaction from any cost, claim, liability or expense, including, without limitation fees and expenses of its attorneys) or any 2010 Bondholder may, take such actions as may be necessary and appropriate to compel performance, including seeking mandate or specific performance by court order.

Payment of Rebatable Amounts. The Agency agrees to furnish all information to, and

cooperate fully with, the Authority, the Authority Trustee and their respective officers, employees, agents and attorneys, in order to assure compliance with the provisions of the Authority Indenture. In the event that the Authority shall determine, pursuant to the Authority Indenture, that any amounts are due and payable to the United States of America thereunder and that neither the Authority nor the Authority Trustee has on deposit an amount of available moneys (excluding moneys on deposit in the funds and accounts established for the payment of the principal of or interest or redemption premium, if any, on the Bonds) to make such payment, the Authority shall promptly notify the Agency of such fact. Upon receipt of any such notice, the Agency shall promptly pay to the Authority Trustee from available Tax Increment Revenues or any other source of legally available funds, for deposit into the Rebate Account, the amounts determined by the Authority to be due and payable to the United States of America as

A-20

a result of the investment of amounts on deposit in any fund or account established hereunder, together with all other amounts due and payable to the United States of America.

Payment of Authority Expenses. The Agency agrees to pay any and all expenses of the

Authority incurred in connection with the administration of the Authority Bonds, including but not limited to Authority Trustee fees and expenses, from Tax Increment Revenues or other available funds.

Further Assurances. The Agency will adopt, make, execute and deliver any and all such

further resolutions, instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of the Agency Indenture, and for the better assuring and confirming unto the Owners the rights and benefits provided in the Agency Indenture.

Recovery Zone Bond Covenants. The Agency makes an irrevocable election to apply

section 54AA of the Tax Code, including subsection 54AA(g) of the Tax Code, to the 2010 Series A Bonds and designates each of the 2010 Series A Bonds as a “build America bond” within the meaning of section 54AA(d) of the Tax Code, as a “qualified bond” within the meaning of section 54AA(g) and Section 6431 of the Tax Code, and as a “recovery zone economic development bond” under Section 1400U-2(b)(1)(B) of the Tax Code. The Agency acknowledges that as a result of these elections, interest on the 2010 Series A Bonds shall be includible in gross income of the owners of the 2010 Series A Bonds for federal income tax purposes and the owners of the 2010 Series A Bonds will not be entitled to any interest subsidy payments with respect to the 2010 Series A Bonds under section 54AA of the Tax Code.

The Agency recognizes that it must take certain future actions and omit other future

actions in order for the 2010 Series A Bonds to remain “build America bonds” and “recovery zone economic development bonds.” The Agency will only apply for interest subsidy payments under section 6431 of the Tax Code with respect to the 2010 Series A Bonds if the Agency has not taken and does not intend to take any action, and has not omitted to take and does not intend to omit to take any action or permit the taking or omission of any action within its control (including, without limitation, making or permitting any use of the proceeds of the 2010 Series A Bonds or facilities financed therewith) if taking, permitting or omitting to take such action would cause any of the 2010 Series A Bonds to be an arbitrage bond or a private activity bond within the meaning of the Tax Code, or would otherwise cause the 2010 Series A Bonds to not be “build America bonds” and “recovery zone economic development bonds.”

In furtherance of the foregoing provisions, the Agency agrees (i) to use 100 percent of

the excess of (A) the sale proceeds of the 2010 Series A Bonds, less not more than two percent (2%) of such proceeds to pay issuance costs, plus investment proceeds thereon, over (B) the amount of such proceeds deposited to the Reserve Account, for capital expenditures for one or more qualified economic development purposes, as described in Section 1400U-2(c) of the Tax Code; and (ii) not to use more than two percent (2%) of the proceeds of the 2010 Series A Bonds to pay 2010 Costs of Issuance relating to the 2010 Series A Bonds.

The Agency acknowledges that, in the event of an examination by the Internal Revenue

Service of the status of the 2010 Series A Bonds, under present rules, the Agency may be treated as a “taxpayer” in such examination and agrees that it will respond in a commercially reasonable manner to any inquiries from the Internal Revenue Service in connection with such an examination.

The Agency authorizes the officials of the Agency responsible for issuing the 2010 Series

A Bonds to make such further covenants and certifications regarding the specific use of the proceeds of the 2010 Series A Bonds as approved by the Agency and as may be necessary to

A-21

assure that the use thereof will not cause the 2010 Series A Bonds to be arbitrage bonds and to assure that the 2010 Series A Bonds will be “build America bonds” and “recovery zone economic development bonds.” In connection therewith, the Agency further agrees: (i) through its officers, to make such further specific covenants, representations as shall be truthful, and assurances as may be necessary or advisable; (ii) to consult with Bond Counsel approving the 2010 Series A Bonds and to comply with such advice as may be given; (iii) to pay to the United States, as necessary, such sums of money representing required rebates of excess arbitrage profits relating to the 2010 Bonds; (iv) to file such forms, statements, and supporting documents as may be required and in a timely manner; and (v) if deemed necessary or advisable by its officers, to employ and pay fiscal agents, financial advisors, attorneys, and other persons to assist the Agency in connection with such compliance.

Build America Bond Covenants. The Agency makes an irrevocable election to apply

section 54AA of the Tax Code, including subsection 54AA(g) of the Tax Code, to the 2010 Series B Bonds and designates each of the 2010 Series B Bonds as a “build America bond” within the meaning of section 54AA(d) of the Tax Code, and as a “qualified bond” within the meaning of section 54AA(g) and Section 6431 of the Tax Code. The Agency acknowledges that as a result of these elections, interest on the 2010 Series B Bonds shall be includible in gross income of the owners of the 2010 Series B Bonds for federal income tax purposes and the owners of the 2010 Series B Bonds will not be entitled to any interest subsidy payments with respect to the 2010 Series B Bonds under section 54AA of the Tax Code.

The Agency recognizes that it must take certain future actions and omit other future

actions in order for the 2010 Series B Bonds to remain “build America bonds.” The Agency will only apply for interest subsidy payments under section 6431 of the Tax Code with respect to the 2010 Series B Bonds if the Agency has not taken and does not intend to take any action, and has not omitted to take and does not intend to omit to take any action or permit the taking or omission of any action within its control (including, without limitation, making or permitting any use of the proceeds of the 2010 Series B Bonds or facilities financed therewith) if taking, permitting or omitting to take such action would cause any of the 2010 Series B Bonds to be an arbitrage bond or a private activity bond within the meaning of the Tax Code, or would otherwise cause the 2010 Series B Bonds to not be “build America bonds.”

In furtherance of the foregoing provisions, the Agency hereby agrees (i) to use 100

percent of the excess of (A) the available project proceeds (as defined in section 54A of the Tax Code) of the 2010 Series B Bonds, over (B) the amount of proceeds of the 2010 Series B Bonds deposited to the Reserve Account, for capital expenditures; and (ii) not to use more than two percent (2%) of the proceeds of the 2010 Series B Bonds to pay 2010 Costs of Issuance relating to the 2010 Series B Bonds.

The Agency acknowledges that, in the event of an examination by the Internal Revenue

Service of the status of the 2010 Series B Bonds, under present rules, the Agency may be treated as a “taxpayer” in such examination and agrees that it will respond in a commercially reasonable manner to any inquiries from the Internal Revenue Service in connection with such an examination.

The Agency authorizes the officials of the Agency responsible for issuing the 2010 Series

B Bonds to make such further covenants and certifications regarding the specific use of the proceeds of the 2010 Series B Bonds as approved by the Agency and as may be necessary to assure that the use thereof will not cause the 2010 Series B Bonds to be arbitrage bonds and to assure that the 2010 Series B Bonds will be “build America bonds.” In connection therewith, the Agency further agrees: (i) through its officers, to make such further specific covenants, representations as shall be truthful, and assurances as may be necessary or advisable; (ii) to consult with Bond Counsel approving the 2010 Series B Bonds and to comply with such advice

A-22

as may be given; (iii) to pay to the United States, as necessary, such sums of money representing required rebates of excess arbitrage profits relating to the 2010 Bonds; (iv) to file such forms, statements, and supporting documents as may be required and in a timely manner; and (v) if deemed necessary or advisable by its officers, to employ and pay fiscal agents, financial advisors, attorneys, and other persons to assist the Agency in connection with such compliance.

Obligations Related to Federal Subsidy Payments. The Agency agrees that, on each

Interest Payment Date, the Agency will cause 100% of the interest and/or principal payment then due on the 2010 Bonds to be paid to the Trustee in the manner and from the sources of funds described in the Indenture, and the Agency acknowledges that any Direct Payment with respect to such Interest Payment Date will not be used as an offset to the amount due on the 2010 Bonds on any Interest Payment Date.

The Agency expects to enter into a Calculation Agency Agreement with The Bank of

New York Mellon Trust Company, N.A., acting as “calculation agent” thereunder with respect to the Direct Payments for the 2010 Bonds. The terms and provisions of any such agreement shall in no way alter the obligations and duties of the Trustee or the Agency under the Indenture, and in the event of any conflict between the provisions of any such agreement and the provisions of the Indenture, the provisions of the Indenture shall prevail.

Reservation of Funds for SERAF Payments. The Agency shall maintain sufficient funds

on hand to make any payment required to be made by the Agency for Fiscal Year 2009-10 to the Los Angeles County Supplemental Education Revenue Augmentation Fund. The Agency shall set aside and maintain sufficient funds from tax increment revenues received by it in Fiscal Year 2010-11 or from other available sources to make any payment required to be made by the Agency for Fiscal Year 2010-11 to the Los Angeles County Supplemental Education Revenue Augmentation Fund. The amounts described in the preceding two sentences shall be maintained or set aside and maintained, respectively, until such time as the respective payments to the Los Angeles County Supplemental Education Revenue Augmentation Fund are made by the Agency or a court of competent jurisdiction finds, in a final nonappealable judgment, that the Agency is not required to make such payments.

Amendment of the Indenture

The Indenture and the rights and obligations of the Agency and of the Owners

thereunder may be modified or amended at any time by a Supplemental Indenture which shall become binding upon adoption, without the consent of any Owners, to the extent permitted by law and only for any one or more of the following purposes:

(a) to add to the covenants and agreements of the Agency contained in the

Indenture, other covenants and agreements thereafter to be observed, or to limit or surrender any rights or power herein 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 shall 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 Parity Debt provisions of the Indenture; or

A-23

(d) to make such additions, deletions or modifications as may be necessary or

desirable (i) to assure exemption from federal income taxation of interest on the Bonds (other than the 2010 Bonds), and (ii) to assure that the 2010 Bonds satisfy any applicable requirements of Sections 54AA, 6431, 1400U-1 and 1400U-2 of the Tax Code and any related Tax Regulations. Except as set forth in the preceding paragraph, the Indenture and the rights and

obligations of the Agency and of the Owners may be modified or amended at any time by a Supplemental Indenture which shall become binding when the written consents of the Municipal Bond Insurer and the Owners of a majority in aggregate principal amount of the respective Bonds then Outstanding are delivered to the Trustee. No such modification or amendment shall (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 premium (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 or modification, or (c) without its written consent thereto, modify any of the rights or obligations of the Trustee.

From and after the time any Supplemental Indenture becomes effective pursuant to the

Indenture, the Indenture shall be deemed to be modified and amended in accordance therewith, the respective rights, duties and obligations of the parties hereto or thereto and all Owners, as the case may be, shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modification and amendment, and all the terms and conditions of any Supplemental Indenture shall be deemed to be part of the terms and conditions of the Indenture for any and all purposes.

After the effective date of any amendment or modification of the Indenture as described

therein, the Agency may determine that any or all of the Bonds shall bear a notation, by endorsement in form approved by the Agency, as to such amendment or modification and in that case upon demand of the Agency the Owners of such Bonds shall present such Bonds for that purpose at the Office of the Trustee and thereupon a suitable notation as to such action shall be made on such Bonds. In lieu of such notation, the Agency may determine that new Bonds shall be prepared and executed in exchange for any or all of the Bonds and in that case upon demand of the Agency the Owners of the Bonds shall present such Bonds for exchange at the Office of the Trustee without cost to such Owners.

The provisions of the Indenture shall not prevent any Owner from accepting any

amendment as to the particular Bond held by such Owner, provided that due notation thereof is made on such Bond.

The Trustee may rely, and shall be protected in relying, upon a Certificate of the Agency

and an opinion of counsel stating that all requirements of the Indenture relating to the amendment or modification thereof have been satisfied and that such amendments or modifications do not materially adversely affect the interests of the Owners.

Events of Default

The following events constitute Events of Default under the Indenture:

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

A-24

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

(c) Failure by the Agency to observe and perform any of the other covenants,

agreements or conditions on its part in the Indenture or in the Bonds contained, if such failure shall have continued for a period of sixty (60) days after written notice thereof, specifying such failure and requiring the same to be remedied, shall have 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 sixty (60) day period, such failure shall not constitute an Event of Default if corrective action is instituted by the Agency within such sixty (60) day period and the Agency shall thereafter diligently and in good faith cure such failure in a reasonable period of time.

(d) The Agency shall commence a voluntary case under Title 11 of the United

States Code or any substitute or successor statute. (e) The occurrence of an Event of Default under and as defined in any Parity

Debt Instrument.

Notwithstanding the foregoing, there shall be no Event of Default as a consequence of failure to fully pay the principal and interest due on the 2002 Bonds, so long as debt service on the Authority Bonds is fully paid when due.

If an Event of Default has occurred and is continuing, the Trustee may with the consent

of the Municipal Bond Insurer, and the Trustee shall if requested in writing by the Municipal Bond Insurer, or with the consent of the Municipal Bond Insurer by the Owners of a majority in aggregate principal amount of the Bonds then Outstanding, by written notice to the Agency, exercise any remedies available to the Trustee and the Owners in law or at equity.

Immediately upon becoming aware of the occurrence of an Event of Default, the Trustee

shall give notice of such Event of Default to the Agency by telephone confirmed in writing. 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 in the Indenture for notices of redemption of the Bonds.

Application of Funds Upon Default. So long as an Event of Default exists, all sums

received by the Trustee hereunder shall be applied by the Trustee as follows and in the following order:

(a) To the payment of the reasonable fees, costs and expenses of the Trustee

(including reasonable fees and expenses of its counsel) incurred in and about the performance of its powers and duties under the Indenture and the payment of all reasonable fees, costs and expenses owing to the Trustee pursuant to the Indenture; and

(b) To the payment of the whole amount of interest on and principal of the Bonds

then due and unpaid, with interest on overdue installments of principal and interest to the extent permitted by law at the net effective rate of interest then borne by the Outstanding Bonds; provided, however, that in the event such amounts shall be insufficient to pay in full the full amount of such interest and principal, then such amounts shall be applied in the following order of priority:

A-25

first, to the payment of all installments of interest on the Bonds then due and unpaid, on a pro rata basis in the event that the available amounts are insufficient to pay all such interest in full,

second, to the payment of principal of all installments of the Bonds then

due and unpaid, on a pro rata basis in the event that the available amounts are insufficient to pay all such principal in full, and

third, to the payment of interest on overdue installments of principal and

interest, on a pro rata basis in the event that the available amounts are insufficient to pay all such interest in full.

In the event that the Trustee, upon the happening of an Event of Default, shall have

taken any action, by judicial proceedings or otherwise, pursuant to its duties under the Indenture, whether upon its own discretion or upon the request of the Owners of a majority in principal amount of the Bonds then Outstanding it shall have full power, in the exercise of its discretion for the best interests of the Owners of the Bonds, with respect to the continuance, discontinuance, withdrawal, compromise, settlement or other disposal of such action; provided, however, that the Trustee shall not, unless there no longer continues an Event of Default, discontinue, withdraw, compromise or settle, or otherwise dispose of any litigation pending at law or in equity, if at the time there has been filed with it a written request signed by the Owners of a majority in principal amount of the Outstanding Bonds under the Indenture opposing such discontinuance, withdrawal, compromise, settlement or other disposal of such litigation.

No Owner of any Bond issued hereunder shall have the right to institute any suit, action

or proceeding at law or in equity, for any remedy under or upon the Indenture, unless (a) such Owner shall have 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 shall have made written request upon the Trustee to exercise the powers hereinbefore granted or to institute such action, suit or proceeding in its own name; (c) said Owners shall 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 shall have refused or omitted to comply with such request for a period of sixty (60) days after such written request shall have been received by, and said tender of indemnity shall have been made to, the Trustee.

Such notification, request, tender of indemnity and refusal or omission are declared, in

every case, to be conditions precedent to the exercise by any Owner of any remedy under the Indenture; it being understood and intended that no one or more Owners shall have any right in any manner whatever by his or their action to enforce any right under the Indenture, except in the manner therein provided, and that all proceedings at law or in equity to enforce any provision of the Indenture shall be instituted, had and maintained in the manner in the Indenture provided and for the equal benefit of all Owners of the Outstanding Bonds.

The right of any Owner of any Bond to receive payment of the principal of and

premium, if any, and interest on such Bond as in the Indenture provided, shall not be impaired or affected without the written consent of such Owner, notwithstanding the foregoing provisions or any other provision of the Indenture.

Nothing in any provision of the Indenture or in the Bonds shall affect or impair the

obligation of the Agency, which is absolute and unconditional, to pay from the Tax Increment Revenues and other amounts pledged under the Indenture, the principal of and interest and redemption premium (if any) on the Bonds to the respective Owners when due and payable as

A-26

therein provided, or affect or impair the right of action, which is also absolute and unconditional, of the Owners to institute suit to enforce such payment by virtue of the contract embodied in the Bonds.

A waiver of any default by any Owner shall not affect any subsequent default or impair

any rights or remedies on the subsequent default. No delay or omission of any Owner to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a waiver of any such default or an acquiescence therein, and every power and remedy conferred upon the Owners by the Redevelopment Law or by the Indenture may be enforced and exercised from time to time and as often as shall be deemed expedient by the Owners or the Insurer.

If a suit, action or proceeding to enforce any right or exercise any remedy shall be

abandoned or determined adversely to the Owners, the Agency and the Owners shall be restored to their former positions, rights and remedies as if such suit, action or proceeding had not been brought or taken.

Any suit, action or proceeding which any Owner shall have the right to bring to enforce

any right or remedy under the Indenture may be brought by the Trustee for the equal benefit and protection of all Owners similarly situated and the Trustee is appointed (and the successive respective Owners by taking and holding the Bonds shall be conclusively deemed so to have appointed it) the true and lawful attorney-in-fact of the respective Owners for the purpose of bringing any such suit, action or proceeding and to do and perform any and all acts and things for and on behalf of the respective Owners as a class or classes, as may be necessary or advisable in the opinion of the Trustee as such attorney-in-fact, subject to the provisions of the Indenture.

No remedy conferred in the Indenture upon or reserved to the Owners is intended to be

exclusive of any other remedy. Every such remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing, at law or in equity or by statute or otherwise, and may be exercised without exhausting and without regard to any other remedy conferred by the Redevelopment Law or any other law.

Defeasance of Bonds

If the Agency shall pay and discharge the entire indebtedness on any 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 an escrow agent, 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 an escrow agent, in trust,

Defeasance Securities in such amount as an Independent Accountant or Bond Counsel shall determine will, together with the interest to accrue thereon and available moneys then on deposit in any of the funds and accounts established pursuant to 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

A-27

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

and if such Bonds are to be redeemed prior to the maturity thereof notice of such redemption shall have been duly given or provision satisfactory to the Trustee shall have been made for the giving of such notice, then, at the election of the Agency, and notwithstanding that any such Bonds shall not have been surrendered for payment, the pledge of the Tax Increment Revenues and other funds provided for in the Indenture and all other obligations of the Trustee and the Agency under the Indenture with respect to such Bonds shall cease and terminate, except only (a) the obligations of the Agency under certain tax covenants in the Indenture, (b) the obligation of the Trustee to transfer and exchange Bonds under the Indenture, (c) the obligation of the Agency to pay or cause to be paid to the Owners of such Bonds, from the amounts so deposited with the Trustee, all sums due thereon, and (d) 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 purpose, shall be paid over to the Agency, to be used for any lawful purpose of the Agency.

THIS PAGE INTENTIONALLY LEFT BLANK

Appendix B Page 1

APPENDIX B

CERTAIN INFORMATION REGARDING THE CITY OF LONG BEACH

The Bonds are not obligations of the City of Long Beach (the “City”) or the County of Los

Angeles (the “County”), and do not represent a lien or charge against any funds or property of the City or the County. The following information is provided only to give prospective investors an overview of certain background information concerning the City and the County.

General

The City of Long Beach (the “City”) is a municipal corporation and chartered city of

the State and encompasses approximately 52 square miles of coastal area located on the southern edge of Los Angeles County (the “County”). With a current population of approximately 490,000, it is the second largest city in the County and the fifth largest city in the State of California. The City’s climate is mild, with temperatures ranging from an average of 54 degrees in January to 72 degrees in July. Precipitation averages 12.1 inches per year. The center of the City is 22 miles south of downtown Los Angeles, 450 miles south of San Francisco and 110 miles north of San Diego. The City has long been a major industrial center and popular beach resort area. The Port of Long Beach (the “Port”), along with its related commercial activities, imparts strength to the local economy. Further, the City has been successful in building a substantial tourist and convention business and is currently taking vigorous steps to augment tax revenues from these sources.

Municipal Government

The City was originally incorporated in 1888, and after a short period of

disincorporation, was reincorporated on December 13, 1897. Since 1907, the City has been governed as a charter city. The present City charter was originally adopted in 1921 and has been amended from time to time.

The City operates under the council-manager form of government with a nine-member

City Council. City Council members are nominated and elected by district to serve four-year terms, with a maximum of two such terms. The Mayor is nominated and elected by the City at large. The Vice-Mayor is elected by the Council from among its members. Other city-wide elected offices are City Attorney, City Auditor and City Prosecutor.

The City Manager is appointed by and serves at the discretion of the City Council. As

head of the municipal government, the City Manager is responsible for the efficient administration of all departments, with the exception of the elective offices noted above and the following three semi-autonomous commissions: Civil Service Commission, Board of Water Commissioners and Board of Harbor Commissioners. The City currently employs approximately 5,600 persons within 22 departments.

In 1931, a Charter amendment was passed which created the Board of Water

Commissioners and authorized the City to join the Metropolitan Water District of Southern California. These decisions sought to ensure an adequate water supply for the City.

Within the framework of the City’s General Plan, orderly growth and development of

the community is controlled by a three-step planning and budgetary process utilizing the following instruments: the annual budget, the six-year Capital Improvement Program and the five-year Long Range Financial Plan.

Appendix B Page 2

Population

The City’s population as of January 1, 2009, was estimated to be 492,682 persons.

This figure represents 4.7% of the corresponding County figure and 1.29% of the corresponding State figure. The City’s population increased 28.6% during the three decades between 1970 and 2000. The following table illustrates the City’s population growth relative to the population of the County and the State. Population data for 2005-2009 are as of January 1, while the census amounts for 1970, 1980, 1990 and 2000 are as of April 1.

TABLE B-1

City of Long Beach, County of Los Angeles and State of California

Population Data

Year City of Long Beach County of Los Angeles State of California 1970 358,879 7,041,980 19,971,068 1980 361,355 7,477,421 23,667,836 1990 427,200 8,832,500 29,558,000 2000 459,900 9,487,400 33,753,000 2004 487,305 10,107,451 36,271,091 2005 491,564 10,226,506 36,810,358 2006 490,166 10,245,572 37,172,015 2007 492,921 10,331,939 37,662,518 2008 492,642 10,363,850 38,049,462 2009 492,682 10,409,035 38,487,889

Source: California State Department of Finance.

Appendix B Page 3

Employment The following table sets forth the average employment for major industry types within

the County:

TABLE B-2 County of Los Angeles

Average Employment by Industry 2005-2009

Industry 2005 2006 2007 2008 2009

Agriculture 7,400 7,600 7,500 6,900 6,200 Natural Resources and Mining 3,700 4,000 4,400 4,400 4,100 Construction 148,700 157,500 157,600 145,200 116,500 Manufacturing 471,700 461,700 449,200 434,500 389,200 Wholesale Trade 219,300 225,700 227,000 223,700 204,100 Retail Trade 414,400 423,300 426,000 416,500 386,600 Transportation, Warehousing and Utilities

161,700 165,200 165,600 163,100 151,700

Information 207,600 205,600 209,800 210,300 193,700 Financial Activities 244,000 248,800 246,000 235,700 220,200 Professional and Business Services 576,100 598,900 605,400 582,600 528,100 Education and Health Services 471,300 478,700 490,500 503,400 513,900 Leisure and Hospitality 377,800 388,600 397,900 401,600 383,900 Other Services 144,300 145,200 147,100 146,100 137,900 Government 583,700 589,400 595,700 603,700 599,500 Total Wage and Salary 4,031,600 4,100,100 4,129,600 4,077,700 3,835,600 Source: State of California – Employment Development Department, Labor Market Division.

The California Employment Development Department compiles data monthly on the

status of employment and unemployment in the Los Angeles-Long Beach labor market (Los Angeles County). As an integral part of the Los Angeles metropolitan area, Long Beach benefits from the wide variety of job opportunities available in neighboring communities throughout the County.

Appendix B Page 4

The following table summarizes labor force, employment and unemployment by industry since 2004 in the County, the State and the United States:

TABLE B-3

County of Los Angeles, State of California and United States Labor Force, Employment and Unemployment Annual Average

Year Area Civilian

Labor Force Employment Unemployment Unemployment

Rate (%) 2004 Long Beach(3) 230,200 213,700 16,600 7.2%

County 4,770,800 4,460,500 310,300 6.5 California(3) 17,444,400 16,354,800 1,086,700 6.2 United States(2) 147,401,000 139,252,000 8,149,000 5.5

2005 Long Beach(3) 232,100 218,400 13,700 5.9 County 4,816,000 4,559,500 256,500 5.3 California(3) 17,629,200 16,671,900 957,200 5.4 United States(2) 149,320,000 141,730,000 7,591,000 5.1

2006 Long Beach(3) 233,600 221,300 12,300 5.3 County 4,850,700 4,620,800 229,900 4.7 California(3) 17,821,100 16,948,400 872,700 4.9 United States(2) 151,428,000 144,427,000 7,001,000 4.6

2007 Long Beach(3) 237,100 223,900 13,100 5.5 County 4,921,200 4,675,300 245,900 5.0 California(3) 18,078,000 17,108,700 969,300 5.4 United States(2) 153,124,000 146,047,000 7,078,000 4.6

2008 Long Beach(1) 240,200 220,300 19,900 8.3 County 4,972,000 4,598,300 373,800 7.5 California(1) 18,391,800 17,059,600 1,332,300 7.2 United States(2) 154,287,000 145,362,000 8,924,000 5.8

2009 Long Beach(1) 237,600 207,300 30,300 12.8 County 4,896,100 4,328,600 567,500 11.6 California1(1) 18,250,200 16,163,900 2,086,200 11.4 United States(2) 154,142,000 139,877,000 14,265,000 9.3

(1) 2009 updated with final non-preliminary annual figures for Long Beach City and CA State (2) U.S. Department of Labor – Bureau of Labor Statistics (3) Restated prior years. Unknown if Long Beach 2004-2008 figures restated not listed as of 03/25/2010. CA figures

restated in years 2007 through 2004. Source: State of California – Employment Development Department and U.S. Department of Labor – Bureau of

Labor Statistics

Major Employers The largest employer in the City is the Long Beach Unified School District; employing

approximately 8,304 people. The Long Beach Unified School District has 91 schools and serves approximately 86,207 students. The second largest employer in the City is The Boeing Company (“Boeing”), with facilities at the Long Beach Airport employing approximately 7,680 persons.

Other major employers in the City include government, education and health care

providers, including the City, California State University (Long Beach), Long Beach Memorial Medical Center and the Veteran Affairs Medical Center.

Appendix B Page 5

The following table sets forth the City’s major employers:

TABLE B-4 City of Long Beach

Major Employers As of September 30, 2009

Employer Number of Employees

1. Long Beach Unified School District 8,304 2. The Boeing Co 7,684 3. California State University Long Beach 6,690 4. Long Beach Memorial Medical Center 5,805 5. City of Long Beach 5,570 6. Veterans Affair Medical Center 2,332 7. Long Beach City College 2,276 8. Verizon 1,500 9. St. Mary Medical Center 1,479

10. U.S. Postal Service 1,434 Source: City of Long Beach – Comprehensive Annual Financial Report - FY 2009 Unaudited.

Industry The City is an important component of the County industrial complex, the largest

concentration of major industrial firms in the western United States. The aircraft/aerospace products group represents a very important single industrial category in the City. Boeing is the second largest employer in Long Beach. See “—Major Employers” above. Other important industries include petroleum and chemical production, metal fabrication and food and kindred product production.

Commercial Activity

Retail sales activity is located throughout the City, from the central business district to

the updated Los Altos and Marina Pacifica “power” centers, both of which opened in 1996, and the Towne Center, a 100-acre retail development built on the site of the former Long Beach Naval Hospital, which opened in November 1998. The World Trade Center in the downtown area of the City contains more than two million square feet of office space and is an international focal point for shipping, finance and trade services.

North of the Port at the intersection of the San Diego (I-405) and Long Beach (I-710)

freeways is the 55-acre Freeway Business Center, a high-technology office complex which includes Direct TV, Irvin Industries, Inc., Epson America, Inc., Mercedes Benz, Denso Sales California and Toyota. The 60-acre Long Beach Airport Business Park contains over 800,000 square feet of mid-rise office space and is the site for the Long Beach Business Park and the North Long Beach Business Center. Located in the northern part of the City, these facilities offer a combined total of more than 20.5 acres of office, commercial and industrial space near to the I-405 and I-710 Freeways, two major arteries in the Southern California freeway system. The 50-acre Kilroy Airport Center provides 800,000 square feet of office space.

Several hotels are located in the City, including the Westin Long Beach, Renaissance,

Hilton, Hyatt Regency Long Beach, Holiday Inn, Golden Sails Hotel, Long Beach Airport Marriott and the Queen Mary Hotel. Within the past 18 months the West Coast Long Beach Hotel has undergone a significant renovation and has reopened as the Hotel Maya and a Marriott Residence Inn has been constructed on an adjacent parcel; both hotels are in the North Long Beach Project Area.

Appendix B Page 6

The following table illustrates the City’s annual volume of taxable transactions from

2005 through 2009:

TABLE B-5 City of Long Beach

Taxable Sales, 2005-2009 ($000’s)

Type of Business 2005(1) 2006(1) 2007 2008 2009

Apparel Stores $ 150,716 $ 149,357 $ 150,119 $ 145,602 $ 130,464 General Merchandise Stores 295,790 302,746 319,674 314,243 305,002 Drug Stores 71,107 72,209 76,901 77,306 75,859 Food Stores 216,224 220,502 225,109 246,601 214,782 Packaged Liquor Stores 31,278 30,186 29,742 35,909 37,210 Eating/Drinking Places 608,402 647,951 685,944 684,793 661,528 Home Furnishings and Appliances 91,592 98,945 98,069 88,166 79,969 Building Materials and Farm Implements 693,867 822,589 950,450 859,638 938,501 Auto Dealers/Auto Supplies 333,508 309,628 313,617 264,373 279,669 Service Stations 411,695 485,523 507,833 586,069 491,491 Other Retail Stores 462,866 479,519 477,026 415,493 376,469 Retail Stores Totals $3,367,045 $3,619,155 $3,834,484 $3,718,193 $3,590,942 All Other Outlets 854,487 926,674 912,021 998,099 829,510

Total All Outlets $4,221,532 $4,545,829 $4,746,505 $4,716,292 $4,420,452 (1) Restated prior years. Recent consultant source modified methodology revising amounts among categories and

totals. Source: MuniServices, State of California - Board of Equalization, (SBOE) and City Department of Financial

Management.

Appendix B Page 7

Construction The City issued building permits, valued at approximately $136 million during Fiscal

Year 2009. Of this total approximately 54.0% consisted of residential construction and approximately 46.0% consisted of non-residential construction. The City’s annual permit values since Fiscal Year 2005 are set forth below:

TABLE B-6

City of Long Beach Building Permit Valuations, 2005-2009

($000’s)

Type of Permit 2005 2006 2007 2008 2009 Residential

New Single Dwelling $ 27,968,744 $ 41,568,987 $ 16,876,359 $ 12,366,364 $ 3,700,221 New Multi Dwelling 46,356,534 73,148,732 56,107,877 87,383,603 8,719,540 Additions/Alterations 134,878,539 130,081,723 117,410,616 84,226,735 60,475,475

Total Residential $209,203,817 $244,799,442 $190,394,852 $183,976,702 $72,895,236 Non-Residential

New Commercial $ 13,384,839 $ 3,847,432 $ 22,734,702 $ 31,911,962 $ 9,091,990 New Industrial 2,525,000 166,950 259,443 297,480 - Other 8,055,962 12,777,673 1,635,980 2,061,439 1,010,173 Additions/Alterations 62,529,344 81,803,819 82,545,830 55,343,133 52,926,355

Total Non-Residential 86,495,145 98,595,874 107,175,955 89,614,014 63,028,518

Total Valuation $295,698,962 $343,395,316 $297,570,807 $273,590,716 $135,923,754 Source: City of Long Beach Summary Financial Information Statement for Fiscal Year 2008-09.

Visitor and Convention Business

Tourism has long been a significant factor in the City’s economy. Boating facilities,

marinas, sport fishing, shops and eight miles of public beaches attract thousands of visitors to the City each year. Other recreational facilities and attractions include the Long Beach Aquarium of the Pacific, the Queen Mary, the Community Playhouse, a municipal band and symphony orchestra, the Sports Arena, the Terrace and Center Theaters, Belmont Plaza Pool, the Long Beach Grand Prix and the Long Beach Ice Dogs professional ice hockey team. The Long Beach Museum of Art and the Museum of Latin American Art are both located within the City.

In 1994, the City approved the Queensway Bay Development Plan to create a premier

waterfront attraction in Southern California, now known as Pike at Rainbow Harbor, comprised of 300 acres of prime oceanfront land adjacent to the City’s commercial core. It includes the Long Beach Aquarium, Rainbow Harbor, the expanded Long Beach Convention Center and up to 500,000 square feet of entertainment/retail development. The Long Beach Aquarium and Rainbow Harbor opened to the public in June 1998.

The Queen Mary, a vintage ocean liner open to the public since 1971, provides the City

with a unique and interesting tourist attraction. The six-deck “Living Sea Museum” is the only facility of its kind in the world. The Queen Mary features three major restaurants, three fast food service facilities and 40 specialty shops. The Queen Mary Hotel, with 365 rooms, is aboard the ship. In addition, a Russian submarine, the “Scorpion,” is currently docked adjacent to the Queen Mary and is open for visitors. The Scorpion is another premier waterfront attraction complementing the popular Aquarium of the Pacific and the Queen

Appendix B Page 8

Mary. Carnival Cruise Lines operates out of a Long Beach homeport for its cruises to Mexico, adjacent to the Queen Mary.

The West Coast Long Beach Hotel, located on 18.8 waterfront acres west of the Queen

Mary, is a development designed to afford 85% of the rooms with ocean views. The hotel consists of 200 rooms and offers resort style amenities in close proximity to the Queen Mary and Downtown attractions.

Formula 500 cars first raced through city streets and along the shoreline during the

Long Beach Grand Prix in September 1975. The race was the first to be run on city streets in this country in 50 years. The City has hosted the United States Grand Prix West, now featuring “Indy” cars, every year since 1977 in what is now commonly known as the Long Beach Grand Prix. This event attracts 200,000 visitors to the City each year.

Long Beach Convention Center

The City has fostered convention business by expanding convention facilities and

encouraging private sector participation. Trade shows, conventions, athletic contests and other events are held regularly at the Long Beach Convention and Entertainment Center (the “Convention Center”), which is part of the Pike at Rainbow Harbor oceanfront development. The Convention Center was enlarged in 1994 to accommodate 318,000 square feet of exhibit space. This expansion increased the total number of conventions and meetings held at the Convention Center, which competes with convention centers in cities such as Albuquerque, San Jose, Denver and Phoenix, and larger facilities in Los Angeles, Anaheim and San Diego. Marketing of the Convention Center by the Long Beach Convention and Visitors Bureau has resulted in increased occupancy rates for hotels serving the Convention Center. Following the attacks in New York City and on the Pentagon in Washington D.C. on September 11, 2001, occupancy rates declined. However, the City expects occupancy rates to increase as the Convention Center attracts additional regional convention business.

A $2.8 million renovation of the Convention Center was substantially completed in the

fall of 2001. The renovation was completed pursuant to an agreement between the City and the Jehovah’s Witness organization, under which the Jehovah’s Witness organization supplied materials and labor for the renovation in exchange for the City’s permission to use the facility for 12.6 years. The City expended $300,000 for permits, furniture and equipment in connection with the renovation. The following table sets forth convention and delegate attendance for the past five years:

TABLE B-7

City of Long Beach Convention and Delegate Attendance

Calendar Year Number of Conventions Number of Delegates

2005 235 440,083 2006 226 446,739 2007 201 475,769 2008(1) 217 485,406 2009 194 469,452

(1) Restated prior year due to updated figures. Source: City of Long Beach Summary Financial Information Statement for Fiscal Year 2008-09.

Appendix B Page 9

Pike at Rainbow Harbor Project The $450 million Pike at Rainbow Harbor Project (previously known as the Queensway

Bay Project) developed by Developers Diversified Realty Corporation is one of the largest shoreline developments in California history. The Pike at Rainbow Harbor Project includes approximately 500,000 square feet of waterfront retail and entertainment space. The Pike at Rainbow Harbor is a joint venture of public and private investment. The development converted 300 acres of prime oceanfront property at the edge of downtown Long Beach into a major resort. The Pike at Rainbow Harbor Project includes the Aquarium of the Pacific, Shoreline Park, Rainbow Harbor, the retail portion of the Pike Project and the condominium housing portion of the Pike Project.

The Rainbow Harbor, named after Long Beach’s famous Rainbow Pier from the early

part of the twentieth century, offers visitors a wide variety of dinner cruises, fishing and diving charters, and water taxis that shuttle between the downtown entertainment district and the historic Queen Mary ocean liner. The Aquarium of the Pacific is located on a five-acre site within Rainbow Harbor. The Aquarium site is 156,735 square feet and contains exhibits with more than 12,000 ocean animals, representing over 550 species. The Aquarium also contains a theater, learning center, an indoor/outdoor restaurant and a large gift shop.

Petroleum Production

The Wilmington Oil Field, which is one of the largest oil fields in the United States,

traverses Long Beach. Since 1939, the City has developed and managed the oil operations on its Upland and Tideland properties. The Upland properties are owned by the City and the revenues can be used for general-purpose activities. The Tideland properties are owned by the City in trust for the State. The revenues, by legislation, are shared between the City, State, Occidental Petroleum Corp., and Tidelands Oil Production Company and the City’s share can only be used in support of tidelands purposes.

Operation of the Wilmington Oil Field is managed by two contractors, Tidelands Oil

Production Company and Occidental Petroleum Corp. The City administers all City oil operations, contracts, leases and agreements and

directs all subsidence control operations through its Department of Oil Properties. Recent increases in the price of oil have increased the amount of revenues transferred to the Tidelands Operating Fund and the General Fund.

Transportation

Industry, business and residents all benefit from the excellent transportation network

available in the City. Water, rail, air and highway facilities are highly developed throughout the City.

The County’s 22-mile light rail line opened July 1, 1990, connecting the central business

districts of Long Beach and Los Angeles. Ridership on the “Metro Blue Line” currently averages approximately 66,000 riders per average weekday.

The San Diego Freeway (I-405), the San Gabriel River Freeway (I-605), the Long Beach

Freeway (I-710) and the Riverside Freeway (I-91) all traverse the City, as do State Highways 1, 19, 22 and 214. This highway grid places both the City of Los Angeles and Los Angeles International Airport within a 30-minute drive.

Appendix B Page 10

The Long Beach Public Transportation Company was incorporated in 1963 as a nonprofit corporation with all capital shares held by the City. Since that time, the company has provided transit service to the City and surrounding areas. The company’s operations are locally supported through the Transportation Fund of the City. Interurban bus service is provided by Long Beach Transit, Los Angeles County Metropolitan Transportation Authority and Orange County Regional Transportation District.

Rail transportation to Long Beach is provided by two major transcontinental railroads:

the Burlington Northern Santa Fe Railroad Company and the Union Pacific Railroad Company. Reciprocal switching is available between the two lines.

Port of Long Beach

The Port is owned by the City and operated by the Harbor Department, which was

created by amendment to the City Charter in 1931. Functioning primarily as a landlord, the Harbor Department leases or assigns most docks, wharves, transit sheds, and terminals to shipping or terminal companies and other private firms for actual operation of these facilities. This Port is one of the most versatile shipping installations in the nation.

The Port covers 11.9 square miles, of which 7.1 square miles is water, and includes all

harbor facilities of the City. The Port has 22 miles of waterfront with 65 deep water cargo berths. Container terminals occupy 1,356 acres, auto terminals occupy 182 acres, breakbulk and general cargo occupy 108 acres, dry bulk terminals occupy 100 acres, and petroleum and liquid bulk occupy 52 acres. The Port has seven container terminals with 70 cranes (owned by the Harbor Department and tenants) and three container freight stations. Five container terminals are served by on-dock rail yards. Additional cargo handling facilities include five transit sheds and 12 warehouses. Transit sheds are of concrete and steel construction. Wharves are constructed of reinforced concrete supported by reinforced concrete pilings or sheet pile bulkhead. Wharf aprons at all transit shed berths average 50 feet in width. Rail tracks serve all major marine facilities. In total, the Port owns 82 miles of rail trackage. Current Harbor Department plans envision enlarging and consolidating several of the container terminals due to the demand for larger facilities.

The Port is the first Southern California port to offer dockside rail. Dockside rail helps

to move cargo between ships and trains for efficient distribution to markets east of the Rocky Mountains, and removes unnecessary trucks from area freeways.

The Port is self-sufficient. Under the State’s Tidelands laws, the Port must earn its

revenue from activities related to commerce, navigation, recreation and fisheries, and must spend its money only on the same. The Port receives no tax revenues for its operations or expansions. Although it receives no tax support, the Port generates billions of dollars in revenue for private businesses and government entities, including the City.

In addition to containers, the harbor complex handles crude and refined petroleum

products, dry bulk such as coke, and cement; automobiles, lumber, paper and fruit; steel and scrap metal. A free trade zone, Foreign Trade Zone #50, is also operated by the Port.

In 1989, the Port, the Port of Los Angeles (collectively, the “Ports”), the City and the

City of Los Angeles formed the Alameda Corridor Joint Powers Authority (“ACTA”) to develop and operate a 20-mile long, multiple-track consolidated rail transportation corridor (the “Alameda Corridor”) along Alameda Street between the railroad freight yards located in the City of Los Angeles and the Ports in order to efficiently deal with the anticipated increase in volume of international freight, cargo and other goods to and from the Ports. Construction was completed and the Alameda Corridor opened for service in April 2002, at a cost of

Appendix B Page 11

$2.4 billion. The Alameda Corridor consolidates 90 miles of existing rail lines (4 current rail lines will be diverted onto 1 line) into an integrated system separated from nonrail traffic.

Long Beach Airport

The City owns and operates the Long Beach Airport, which has five runways varying

from 4,200 to 10,000 feet in length. Pursuant to a court-ordered settlement reached in 1989, the current daily flight limits are 41 commercial jet airline and 25 commuter landings and takeoffs (“slots”). Included in the 41 aircraft slots are five cargo flights, operated by Airborne Express, Fed Ex and United Parcel Service. Commercial airline service is provided by Alaska Airlines, American Airlines, America West Airlines, and jetBlue Airways (“jetBlue”).

The Long Beach Airport is jetBlue’s west coast hub. jetBlue operates 22 of the 41

commercial slots at Long Beach, with direct service to New York City, Washington, D.C., Boston, Ft. Lauderdale, Salt Lake City, Oakland and Las Vegas.

The movement of aircraft in and out of Long Beach Airport is controlled by the Federal

Aviation Administration (the “FAA”). The FAA operates the airport’s tower and navigation facilities. Navigation aids at the airport include Medium Intensity Approach Lights, Runway Visual Range, Direction Finding, Instrument Landing System, VHF, UHF and other radio communications equipment.

Long Beach Airport is an important aircraft manufacturing and completion center,

proudly hosting two industry giants, The Boeing Company and Gulfstream Aerospace Corporation. Between these two firms, thousands of jobs help fuel the local economy. Long Beach Airport is landlord to almost 150 other businesses, mainly in the aviation and aerospace industry.

Appendix B Page 12

The following table sets forth operations at the Long Beach Airport during Fiscal years 2004-05 through 2008-09.

TABLE B-8

Long Beach Airport Traffic

Fiscal Year Passengers Cargo (lbs.) Aircraft Operations 2005 3,027,871(1) 108,470,000 344,377 2006 2,815,015(2) 102,303,000 360,811 2007 2,880,583(3) 100,354,000 399,622 2008 2,878,005(3) 100,092,000 354,727 2009 2,930,911(5) 72,312,000 302,672

(1) In fiscal year 2005, all 41 air carrier flight slots were allocated: 36 flight slots to four commercial airlines -

Alaska, America West, American and JetBlue; and five slots to cargo carriers - Airborne Express, Federal Express and United Parcel Service. In addition, America West operated three commuter flights, out of the approved 25 commuter carrier flight slots.

(2) In fiscal year 2006, 41 air carrier flight slots were allocated: 37 flight slots to four commercial airlines - Alaska, America West, American Airlines and JetBlue; and four flight slots to cargo carriers - Airborne Express, Federal Express and United Parcel Service. In addition, America West operated one commuter flight, while Delta/SkyWest operated four commuter flight slots, out of the approved 25 commuter carrier flight slots. American Airlines left Long Beach Airport on April 2, 2006.

(3) In fiscal year 2007, 41 air carrier flight slots were allocated: 37 flight slots to three passenger airlines - Alaska, JetBlue, and US Airways, and four flight slots to cargo carriers - Airborne Express/DHL, Federal Express and United Parcel Service. Of the 25 available commuter carrier flight slots, Delta/Skywest operated four and US Airways operated one. In late FY07, ExpressJet Airlines was allocated six commuter flight slots and commenced service in late 2007.

(4) In fiscal year 2008, all 41 air carrier flight slots were allocated: 37 flight slots to three passenger airlines - Alaska, JetBlue, and US Airways, and four flight slots to cargo carriers - Airborne Express/DHL, Federal Express and United Parcel Service. Of the 25 available commuter carrier flight slots, Delta/Skywest operated five and US Airways operated one. In FY08, ExpressJet Airlines was allocated six commuter flight slots and was in operation from October 1, 2007, through September 1, 2008.

(5) In fiscal year 2009 all 41 air carrier flight slots were allocated: 38 flight slots to three passenger airlines - Alaska, JetBlue, and US Airways, and three flight slots to cargo carriers - Federal Express and United Parcel Service. Of the 25 available commuter carrier flight slots, Delta/Skywest operated five and Horizon operated three.

Source: City of Long Beach Summary Financial Information Statement for Fiscal Year 2008-09.

Utilities In 1931, a Charter amendment was passed which created the Board of Water

Commissioners and authorized the City to join the Metropolitan Water District of Southern California. These decisions sought to ensure an adequate water supply for the City. Water and sewer services are provided by the Long Beach Water Department.

There are a number of utilities service providers operating in the City. Local telephone

service is provided by Verizon and SBC. Electricity is distributed to the residents, organizations and businesses of Long Beach by Edison International. Electricity can be purchased from a number of electricity providers. Natural gas is provided by the Energy Department.

Education

The City is served by the Long Beach Unified School District, which provides primary

and secondary educational instruction for approximately 86,207 students through the operation of 49 elementary schools, 27 junior high schools, 12 high schools, including one adult school. There are additionally five charter schools. Post-secondary education is available at Long Beach City College, a tax-supported two-year institution administered by the Long Beach Community College District. In addition to the lower division college program,

Appendix B Page 13

extensive adult education and trade school facilities are offered at Long Beach City College. Current total enrollment exceeds 29,665 per semester. California State University – Long Beach is located on a 320-acre site in the eastern portion of the City on land donated by the City. Opened in 1949 as Los Angeles-Orange County State College, the institution has been given university status and has a current enrollment of approximately 35,957 per semester. The University’s distinguished educational program offers various undergraduate and graduate degree programs. Enrollment in the educational system serving the City and its residents for the past 5 years is set forth below:

TABLE B-9

City of Long Beach Educational Enrollment

Year Long Beach Unified

School District Long Beach

City College*

California State University

(Long Beach)* 2005 93,589 25,722 32,756 2006 90,663 26,308 33,344 2007 88,186 26,837 34,606 2008 87,499 28,372 35,850 2009 86,207 29,665 35,957

(1) Long Beach Unified School district Adopted Budget FY 2009-2010. 2009 is a projected number (2) LBCC - College Facts - Fall 2009 College Facts (3) CSULB - University Facts - Average Enrollment per Semester for 2008-2009 * Average enrollment per semester. Source: City of Long Beach Summary Financial Information Statement for Fiscal Year 2007-08.

The City also serves as the permanent headquarters for the 23-campus California State

University and College System. The California University and College System’s headquarters is located on a 6.4-acre site in the western portion of the City on land donated by the City. California State University Long Beach continues to be one of the most popular institutions in California. It has built a successful student recruitment program that continues to attract high-achieving students, while maintaining their historical commitment to access.

Community Facilities

Long Beach has four major community based hospitals and a Veterans Affairs Medical

Center. The City operates the Main Library in the downtown Civic Center and eleven other branch libraries throughout the City. Four newspapers, three radio stations and a cable television system are also located in the City.

The City’s Parks, Recreation and Marine Department oversees the operation and

maintenance of all Long Beach public recreational facilities, including approximately 25 community centers, approximately 55 sports fields for soccer, softball, baseball and flag football, approximately 50 park playgrounds, approximately 70 tennis courts and approximately 5 golf courses. The Department also administers the Municipal Band, Leeway Sailing Center, El Dorado Nature Center, Long Beach Museum of Art, Rancho Los Cerritos and Rancho Los Alamitos, the Belmont Veterans Memorial Pier, Rainbow Harbor and Rainbow Lagoon. The City’s Parks, Recreation and Marine Department maintains approximately 100 parks, devoted to open space and recreation, and six miles of beaches. Additionally, the Department operates three marinas with a combined approximate 3,800 boat slips.

The Department provides free and fee-based recreational programs and leisure

opportunities, both self-directed and organized, for people of all ages and cultures. Youth

Appendix B Page 14

programs include free youth sports for ages 5 to 18 serving nearly 10,000 participants annually, summer and vacation day camps, 800 recreational and educational classes, sailing and aquatics instruction, teen center activities, skateboarding opportunities, and supervised after-school and weekend activities at parks, schools, and mobile recreation sites.

Adult recreation opportunities include sports leagues, tennis and golf facilities and

instruction, and more than 2,000 recreational and self-improvement classes annually. Recreation programs and social services for seniors are offered at community centers. Family recreation opportunities include Long Beach Municipal Band concerts, cultural arts programs, environmental programs, citywide and neighborhood special events, boating facilities, as well as general park and beach use.

The Long Beach Convention and Entertainment Center stages productions of the Long

Beach Symphony Association, the Long Beach Grand Opera, the Long Beach Symphony Chorus, the Theater Festival and the Community Concert Association.

Appendix C

APPENDIX C

ANNUAL FINANCIAL REPORT OF THE AGENCY FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009

THIS PAGE INTENTIONALLY LEFT BLANK

THIS PAGE INTENTIONALLY LEFT BLANK

Appendix D

APPENDIX D

FISCAL CONSULTANT’S REPORT

THIS PAGE INTENTIONALLY LEFT BLANK

FISCAL CONSULTANT REPORT NORTH LONG BEACH REDEVELOPMENT PROJECT AREA

Prepared for the:

REDEVELOPMENT AGENCY OF THE CITY OF LONG BEACH

Prepared by:

Keyser Marston Associates, Inc. 500 South Grand Avenue, Suite 1480

Los Angeles, California 90071

March 23, 2010

Long Beach Redevelopment Agency Keyser Marston Associates, Inc. Fiscal Consultant Report Page 1

1003022.LGB:GSH:gbd 15610.018.001//03/23/10

1. INTRODUCTION Keyser Marston Associates, Inc. (KMA) has been retained as Fiscal Consultant to the Redevelopment Agency of the City of Long Beach (the Agency) to prepare this Report of the Fiscal Consultant analyzing the tax increment revenues of the North Long Beach Redevelopment Project Area (the Project Area). The California Community Redevelopment Law (CRL) provides for the creation of a redevelopment agency for the purpose of eliminating blight. To achieve this purpose, the CRL, along with Article 16, Section 16 of the California Constitution, authorizes the Agency to receive that portion of property tax revenue generated from the increase of the current year taxable values over the base year taxable values that existed at the time of adoption of a redevelopment project. This portion of property tax revenue is referred to as tax increment revenue. The CRL provides that the tax increment revenue may be pledged by the Agency for the repayment of Agency indebtedness. This Fiscal Consultant Report has been prepared to reflect the tax increment revenues that would be allocable to the Agency beginning in the current 2009-10 fiscal year, based upon reported Project Area assessed values by the Los Angeles County Auditor-Controller. The projected taxable values and resulting tax increment revenues for the Project Area are based on assumptions determined by a review of the taxable value history of the Project Area and the property tax assessment and property tax apportionment procedures of Los Angeles County. This Report also includes a review of the Project Area’s redevelopment plan limits and a review of the Project Area’s historic assessed value trends, major property tax payers, distribution of assessed values by identified land use types, historic property tax allocations, and potential valuation impacts and tax refunds resulting from current assessment appeals. 2. REVIEW OF THE PROJECT AREA

2.1 Redevelopment Plan Time Limits Existing redevelopment law requires the Agency to impose specific time limitations on the incurrence of debt, the redevelopment plan effectiveness and the collection of tax increment revenue to repay debt. The Project Area was adopted July 16, 1996, establishing a base year of FY 1995-96. The current limitations set forth in the redevelopment plan for the Project Area are as follows: Bond Debt Limit Debt Incurrence

Plan Effectiveness 1 Debt Repayment 1

July 16, 2016 July 16, 2027 July 16, 2042

$2,000,000,000

1 The dates shown for the Redevelopment Plan effectiveness date and debt repayment date include a one-year extension allowed by SB 1045. The dates shown above may be extended by an additional year under AB 26-4x.

Long Beach Redevelopment Agency Keyser Marston Associates, Inc. Fiscal Consultant Report Page 2

1003022.LGB:GSH:gbd 15610.018.001//03/23/10

2.2 Review of Agency Obligations

a. Low and Moderate Income Housing Set Aside Requirement The CRL requires redevelopment agencies to annually set aside 20% of all tax increment revenues into a Low and Moderate Income Housing Set Aside Fund. The set aside requirement could be reduced or eliminated if the redevelopment agency finds that: (1) no need exists in the community to improve or increase the supply of low and moderate income housing; (2) that some stated percentage less than 20% of the tax increment is sufficient to meet the housing need; or (3) that other substantial efforts, including the obligation of funds from certain local, state or federal sources for low and moderate income housing, of equivalent impact are being provided for in the community. It is assumed that the Agency will not make any such findings and will continue to set aside 20% of annual tax increment.

b. Statutory Pass Through The North Project Area was adopted after the passage of AB 1290 and is therefore subject to the statutory pass through requirements of Health and Safety Code Section 33607.5 which provides for specific formulas for payments to be made by the Agency to affected taxing entities as follows:

(1) from the first fiscal year in which the Agency receives tax increment through the last fiscal year in which the Agency receives the tax increment, the Agency shall pay to the affected taxing entities, including the community if the community elects to receive a payment, an amount equal to 25% of the tax increments received by the Agency after the amount required to be deposited in the Low and Moderate Income Housing Fund (the payment is referred to as the Tier 1 Statutory Pass Through);

(2) commencing in the 11th fiscal year in which the Agency receives tax

increments and continuing through the last fiscal year in which the Agency receives tax increments, the Agency shall pay to the affected taxing entities, other than the community which has adopted the project, in addition to the Tier 1 Statutory Pass Through and after deducting the amount allocated to the Low and Moderate Income Housing Fund, an amount equal to 21% of the portion of tax increments received by the Agency which shall be calculated by applying the tax rate against the amount of assessed value by which the current year assessed value exceeds the first adjusted base year value. The first adjusted base year value is defined to be the Project Area assessed value in the 10th fiscal year in which the Agency receives tax increment (the payment is referred to as the Tier 2 Statutory Pass Through); and

Long Beach Redevelopment Agency Keyser Marston Associates, Inc. Fiscal Consultant Report Page 3

1003022.LGB:GSH:gbd 15610.018.001//03/23/10

(3) commencing in the 31st fiscal year in which the Agency receives tax increments and continuing through the last fiscal year in which the Agency receives tax increments, the Agency shall pay to the affected taxing entities, other than the community which has adopted the project, in addition to the Tier 1 and Tier 2 Statutory Pass Through payments and after deducting the amount allocated to the Low and Moderate Income Housing Fund, an amount equal to 14% of the portion of tax increments received by the Agency which shall be calculated by applying the tax rate against the amount of assessed value by which the current year assessed value exceeds the second adjusted base year value. The second adjusted base year value is defined to be the Project Area assessed value in the 30th fiscal year in which the Agency receives tax increment (the payment is referred to as the Tier 3 Statutory Pass Through).

According to the County Auditor-Controller, the Tier 2 Statutory Pass Through commences in FY 2008-09 with the first adjusted base year value based on FY 2007- 08 assessed value. The tax increment revenue projection summarized on Table 6 does not forecast a Tier 2 Statutory Pass Through because the current year FY 2009-10 assessed value is less than the FY 2007-08 first adjusted base year value and no increases in assessed value are forecast on Table 6. To the extent that actual subsequent fiscal year assessed values exceed the FY 2007-08 first adjusted base year value, then Tier 2 Statutory Pass Through payments will be paid by the Agency pursuant to the provisions of Section 33607.5. c. County Administrative Fees

Chapter 466, Statutes of 1990, (referred to as SB 2557) permits the County to withhold a portion of annual tax revenues for the recovery of County charges related to property tax administration services to cities in an amount equal to their property tax administration costs proportionately attributable to cities. SB 2557, and subsequent legislation under SB 1559 (Statutes of 1992), permitted counties to charge all jurisdictions, including redevelopment agencies, on a year-to-year basis. The County Auditor-Controller charged the Agency a Project Area fee of 1.47% of the gross tax increment revenue for FY 2009-10 (or approximately $653,000). The projection assumes that the County administrative charge will continue to debited against annual tax increment and be equal to 1.47% of gross tax increment. The County also charges a significantly smaller administrative fee allowed under AB 1924 in the amount of $480 per redevelopment project area.

Long Beach Redevelopment Agency Keyser Marston Associates, Inc. Fiscal Consultant Report Page 4

1003022.LGB:GSH:gbd 15610.018.001//03/23/10

3. REVIEW OF PROJECT ASSESSED VALUES 3.1 Current Year Assessed Values The Project assessed values are prepared by the County Assessor and, until the 1996-97 fiscal year, have reflected a lien date of March 1. Commencing with the 1997-98 fiscal year, the property tax lien date was changed to January 1. Each property assessment is assigned a unique Assessor Parcel Number (APN) which correlates to assessment maps prepared by the County. The corresponding assessed values for each parcel are then encoded to Tax Rate Areas (TRAs) which are geographic subareas with common distribution of taxes and which are contained within the Project Area boundaries. The County Auditor-Controller is responsible for the aggregation of the assessed values assigned by the Assessor for properties within the boundaries of the Project Area. This results in the reported total current year assessed value and becomes the basis for determining tax increment revenues due to the Agency. The reported values of the Project Areas for FY 2009-10 are as follows:

FY 2009-10 Value

% Total

Secured Property $5,141,820,265 68.51% Secured Possessory Interest 2 1,473,012,632 19.62% Secured Mineral Rights 1,519,347 0.02% Secured State Non-Unitary 3,779,482 0.05% Unsecured Property 885,865,930 11.80% Total North Project Area $7,505,997,656 100.00%

Secured Property (including Secured Possessory Interest, Secured Mineral Rights and Secured State Non-Unitary assessed values) includes property on which any property tax levied by the County becomes a lien on that property. Unsecured Property typically includes the value of tenant improvements, trade fixtures, personal property and possessory interest. Unsecured Property values reflect depreciation factors on the useful life of the tenant improvements, trade fixtures and personal property of the assessee. The taxes levied on Unsecured Property are levied at the previous year's Secured Property tax rate. 3.2 Real and Personal Property Real Property, as referred to in this Report, is defined to represent land and improvement assessed values on both the Secured and Unsecured property tax rolls of the County Assessor. Annual increases in the assessed value of Real Property are limited to an annual inflationary increase of up to 2%, as governed by Article XIIIA of the State Constitution (passed by voters as Proposition 13). Real Property values are also permitted to increase or decrease as a result of a property's change of ownership or new construction activity. The assessed value of

2 A suspected misplacement of $169,396,572 in Possessory Interest value assessed to Chevron USA Inc. has been excluded from the FY 2009-10 value. The Agency had indicated that the identified misplacement is outside of the Project Area.

Long Beach Redevelopment Agency Keyser Marston Associates, Inc. Fiscal Consultant Report Page 5

1003022.LGB:GSH:gbd 15610.018.001//03/23/10

Personal Property is not subject to the Proposition 13 inflation factor and is subject to annual appraisal, either upward or downward. State assessed Non-Unitary properties assessed by the State Board of Equalization (SBE) also may be revalued annually and such assessments are not subject to the annual 2% inflation limitation of Article XIIIA. As discussed below, the assessed value of taxable property is subject to reduction under certain conditions. For property tax purposes, the Proposition 13 inflation factor is subject to the State’s Consumer Price Index (CPI) inflation adjustment of up to 2% per year. The CPI adjustment is based on the change in the CPI from October to October. As of the January 1, 2010 property tax lien date for FY 2010-11, the Proposition 13 property tax assessments will be reduced due to a reported negative CPI inflation adjustment of -0.237%. This will be the first time since the passage of Proposition 13 that the CPI adjustment will be reported as a negative. The annual CPI factor has been less than 2% only five other times since the enactment of Proposition 13:

1983-84 1.000% 1995-96 1.194% 1996-97 1.115% 1999-00 1.853% 2004-05 1.867%

The County Auditor-Controller is responsible for the aggregation of the assessed values assigned by the Assessor for properties within the boundaries of the Project Area. This results in the reported total current year assessed value and becomes the basis for determining tax increment revenues due to the Agency. In FY 2009-10, secured properties account for over 88% of the total assessed value of the Project Area and unsecured properties account for approximately 12% of assessed value. 3.3 Proposition 8 Temporary Decline In Value In 1978 a Constitutional amendment was passed by the California voters (Proposition 8) that provides for a temporary reduction in assessed value when the Proposition 13 value of a property exceeds its actual market value. The property owner is entitled to the lower of two values: (1) the property’s existing Proposition 13 value, which is the purchase price and/or the cost of new construction, annually adjusted for inflation not to exceed 2% per year; or (2) the property’s market value as of the January 1 property tax lien date. Once this temporary reduction in assessed value has been granted by the County Assessor, the Assessor must review the property’s value annually until it is fully restored to its Proposition 13 value. Depending on the market value determined by such future reviews, the assessed value may be further adjusted, left unchanged, be partially increased or be fully restored to its Proposition 13 value. As a result of the declining market value of residential properties in the County, commencing in 2008 the Assessor’s office began a proactive review of single-family residences

Long Beach Redevelopment Agency Keyser Marston Associates, Inc. Fiscal Consultant Report Page 6

1003022.LGB:GSH:gbd 15610.018.001//03/23/10

and condominiums based on an analysis of residential market trends to determine whether or not such parcels qualified for the temporary decline in value adjustment. Single-family residences and condominiums purchased between July 1, 2004 and June 30, 2007 were included in this review in 2008. Then in 2009, the Assessor expanded its proactive review to include single-family residences and condominiums purchased between July 1, 2003 and June 30, 2008. The review included 473,000 residential parcels County-wide, resulting in a temporary decline in value involving approximately 333,000 parcels. According to the Assessor, the average adjustment in assessed value was $120,000. County database information as to how many residential parcels in the Project Area were involved in the adjustment was not available to KMA. For 2010, the Assessor’s office will proactively review the value of single- family residences and condominiums purchased between July 1, 2003 and June 30, 2009 that were not previously reviewed and granted the temporary decline in value adjustment. Beginning March 1, 2010, property owners will then be able to check with the Assessor’s office to determine whether or not their property was included in the review. By June 30, 2010, the Assessor anticipates that its review will be completed and the results will be posted for the FY 2010-11 secured tax roll. 3.4 Mineral Rights Mineral Rights values represent the assessment of oil and gas producing properties within a Project Area and constitute $1.5-million in assessed value. The County Assessor appraises Mineral Rights using the income approach to value in which the anticipated net income stream over the remaining productive life of the property is converted into a capital sum. Typically, the net income stream is a declining one since the economic life of the property is not perpetual. Economic life of an oil or gas producing property is determined when the operating expense curve and the income curve meet, so determining the life of the field being assessed. Economic life of Mineral Rights is also affected by other external factors including market price and demand, the costs of operation and extraction, and the investment of capital into new technologies to increase production, Mineral Rights values could increase from current year levels to the extent the productive life of the respective oil fields is extended as a result of the discovery of new deposits, improved extraction technology or the rising market price of oil. Similarly, declines in Mineral Rights values could occur if these factors are not present in future years. 3.5 Possessory Interest Possessory Interest values are private property interests in publicly-owned Real Property and constitute $1.47-billion or nearly 20% of the Project Area’s assessed value. A Possessory Interest constitutes a private right to the possession and use of publicly-owned property for a period of time less than perpetuity, in this case, all of the container terminal leases represented by the area of the Project Area in the Port of Long Beach. In appraising a Possessory Interest, the County Assessor seeks to value the present worth of the return a property will yield to the holder of the Possessory Interest over the effective term of their possession. The County Assessor appraises the Possessory Interest using one of more of the

Long Beach Redevelopment Agency Keyser Marston Associates, Inc. Fiscal Consultant Report Page 7

1003022.LGB:GSH:gbd 15610.018.001//03/23/10

following appraisal techniques: the sales comparison, the income approach or the cost approach. The appraisals are initially triggered when a new lease is entered into and then re- audited by the Assessor every three to five years thereafter. 3.6 Base Year Assessed Value Commencing with FY 2007-08, the Los Angeles County Auditor-Controller has adopted an internal administrative policy to annually review and revise the Base Year assessed values of redevelopment project areas to the extent that properties within a redevelopment project area are acquired for public uses by tax-exempt public taxing agencies. The precedent for this action stems from the 1963 case of Redevelopment Agency of the City of Sacramento vs. Malaki, 216 Cal.Appl.2d 480, and subsequent related cases. In the Project Area, the Base Year assessed value historically remained constant until FY 2007-08, from which point the County has annually adjusted the Base Year assessed values, resulting in an adjustment of $8,113,388 from the originally reported Base Year when the Project Area was adopted. This adjustment results in an $81,134 increase in annual gross tax increment revenues from the Project Area.

Total Base Value

FY 2006-07 $3,104,508,715 FY 2007-08 3,103,192,950 FY 2008-09 3,103,980,865 FY 2009-10 3,096,395,327

This Base Year value includes $57,665,527 in Homeowner’s Exemption (HOX) value reported for Project Area. In practice, the County reports the annual and base year values net of HOX and makes a single year-end revenue allocation to the Agency derived from the current and base year HOX value. Since the Agency is eligible to receive any tax increment derived from the HOX value, all of the values used to calculate tax increment revenues in this Report are values inclusive of the HOX value. 3.7 Historic Assessed Values

Aggregated historic to current year Project Area values are summarized on Table 1 covering fiscal years 2004-05 to 2009-10. The historic to current year taxable values reflect an average annual increase of 6.3% for the period as reported. The Secured values, which comprise 88% of the total reported value, reflected an average 6.9% annual increase for the period. The Unsecured values comprise a smaller share of the Project Area’s total assessed value (12%) and reflect declines in value as a result of depreciation factors or tenant relocations out of the Project Area, as well as increases in value as new tenants move into the Project Area. Unsecured values were observed to increase an average of 2.2% over the period.

Long Beach Redevelopment Agency Keyser Marston Associates, Inc. Fiscal Consultant Report Page 8

1003022.LGB:GSH:gbd 15610.018.001//03/23/10

3.8 Land Use Composition As shown on Table 2, KMA analyzed the composition of land uses vis-à-vis assessed value for the Project Area using the County Assessor’s tax roll classification system. The assessed values of the Project Area are generally spread between residential and commercial uses. Secured residential property uses represent 47% of the total Project Area value in FY 2009-10, with possessory interest values accounting for nearly 20%. Secured commercial uses represent 11% and industrial uses account for 9%. Unsecured values comprised 12% of the overall value.

3.9 Ten Largest Taxpayers The ten largest property owners in the Project Area were identified by KMA based upon a review of the FY 2009-10 locally assessed secured and unsecured valuations reported by the County Assessor. The aggregated secured, possessory interest and unsecured assessed values of the identified ten largest tax payers are shown on Table 3 and include the assessee name, parcel count, FY 2009-10 assessed value, percentage share of the Project Area value and percentage share of the incremental value, and an estimate of the tax refund exposure due either to an identified current year or prior year assessment appeal filing. The ten identified assessees represent 25.7%, or $1,927,681,632 of the total Project Area assessed value for FY 2009-10. The value of the top ten taxpayers is primarily represented by Possessory Interest values which account for $1,327,713,665 (69%) of the total top ten taxpayer assessed values, followed by $395,689,583 (21%) in Unsecured value and $204,278,384 (11%) in Secured value. When compared against the incremental assessed value, the ten assesses represent 43.7% of the Project Area incremental value. The ten largest property owners identified in this analysis are highlighted as follows:

1. Total Terminals - Located on Pier T, this 380-acre container terminal has a long- term 25-year lease with the Port of Long Beach (Port) that commenced in 2002. Operating under the name Total Terminals International, the pier contains fourteen 65-ton gantry cranes and handles general containerized cargo. No appeal to the assessed value of this Possessory Interest was reported for FY 2009-10, although appeals were filed in FY 2007-08 to FY 2008-09 (refer to Table 3 footnote for potential tax refund exposure on the prior year filings if the applicant’s opinion of value prevails).

2. International Transportation Services (ITS) - Located on Pier G, this 246-acre

container terminal has a long-term 20-year lease with the Port that commenced in 2006. Operating under the name International Transportation Service, Inc., the pier contains seven gantry cranes, with capacities ranging from 30-tons to 60-tons, and handles general containerized cargo. The Port is in the planning stage to invest $800-million in the redevelopment of the Pier G facilities. An appeal of the assessed value of this Possessory Interest was filed in FY 2009-10 and is pending a hearing

Long Beach Redevelopment Agency Keyser Marston Associates, Inc. Fiscal Consultant Report Page 9

1003022.LGB:GSH:gbd 15610.018.001//03/23/10

from the Assessment Appeals Board. If the applicant’s opinion of value prevails, then the potential tax refund exposure to the Project Area is estimated to be $2,305,000. In addition, the applicant has filed appeals in FY 2007-08 to FY 2008- 09 (refer to Table 3 footnote for potential tax refund exposure on the prior year filings if the applicant’s opinion of value prevails).

3. Pacific Maritime Services LLC - Located on Pier J, this 256-acre container terminal

has a long-term 20-year lease with the Port that commenced in 2002. Operating under the name Pacific Maritime Services, the pier contains sixteen gantry cranes, with capacities ranging from 40-tons to 60-tons, and handles general containerized cargo. No appeal to the assessed value of this Possessory Interest was reported for FY 2009-10, although appeals were filed in FY 2005-06 through FY 2008-09 (refer to Table 3 footnote for potential tax refund exposure on the prior year filings if the applicant’s opinion of value prevails).

4. Hughes Aircraft Company - This 30-acre site contains offices and parking in an

office and industrial park situated at the northwest corner confluence of the San Diego 405 Freeway and the Long Beach 710 Freeway. No appeal was reported for FY 2009-10.

5. Toyota Motor Credit Corporation/ TABC Inc./ Catalytic Component Products Inc. -

Toyota operates its vehicle importing and processing facilities at the Port, located on Pier B (in the West Long Beach Industrial Redevelopment Project Area). However, two parcels totaling 28 acres are owned by Toyota Motor Credit Corp. and TABC Inc. and are located in the Project Area at the southwest corner of Artesia and Paramount. TABC Inc. and Catalytic Component Products Inc. are manufacturing subsidiaries of Toyota responsible for the processing of vehicle catalytic converters, steering columns and stamped parts. No appeal was reported for FY 2009-10.

6. Long Beach Container Terminal - Located on Pier F, this 102-acre container

terminal has a long-term 25-year lease with the Port that commenced in 1986 and will end in 2011. Operating under the name Long Beach Container Terminal, Inc. (LBCT), the pier contains seven gantry cranes and handles general containerized cargo. Pier F is situated in the Port’s Middle Harbor expansion plan. Several options are being considered by the Port to accommodate LBCT either in its present Pier F location or be relocated to another temporary pier. No appeal was reported for FY 2009-10.

7. ARCO Terminal Services Corporation - This 66-acre vacant parcel located

northwest of the intersection of Paramount Boulevard and South Street contains twenty petroleum storage tanks. No appeal was reported for FY 2009-10.

8. Oxbow Carbon and Minerals LLC - Located on four pad locations leased from the

Port, this company is responsible for the storage and exportation of petroleum coke,

Long Beach Redevelopment Agency Keyser Marston Associates, Inc. Fiscal Consultant Report Page 10

1003022.LGB:GSH:gbd 15610.018.001//03/23/10

a by-product of petroleum refining used for fuel. Each pad location has long-term leases ranging from 20-years to 40-years. No appeal was reported for FY 2009-10.

9. Carnival Corporation - Represents two leasehold interests, one with a City-owned

parking site within the Project Area and the other with the Harbor Department for wharfage adjacent to the Spruce Goose Dome. No appeal was reported for FY 2009-10.

10. Metropolitan Stevedore Company, Inc. - Located on Pier G, this 23-acre site has a

long-term lease dating back to 1981 for the loading of dry bulk cargo, including petroleum coke, coal, potash, borax, sodium sulfates, soda ash and prilled sulfur. Operating under the name Metro Ports, the pier contains 2 electric travelling bulk shiploaders and various conveyor systems. No appeal to the assessed value of this Possessory Interest was reported for FY 2009-10, although appeals were filed in FY 2006-07 through FY 2008-09 (refer to Table 3 footnote for potential tax refund exposure on the prior year filings if the applicant’s opinion of value prevails).

4. TAX ALLOCATION AND DISBURSEMENT

4.1 Tax Rates The tax rates which are applied to incremental taxable values consist of two components: the General Tax Rate of $1.00 per $100 of taxable values and the Override Tax Rate which is levied to pay voter approved indebtedness. The basic levy tax rate may not exceed 1% ($1.00 of $100 taxable value) in accordance with Article XIIIA. An amendment to the Constitution prohibits redevelopment agencies from receiving taxes generated by new Override Tax Rates, which are reflective of debt approved after December 31, 1988. Based upon the anticipated FY 2009-10 tax increment revenue forecast by the County Auditor- Controller relative to the incremental assessed value of the Project Area, KMA estimates the tax override rate to be a relatively low at 1.004292% in FY 2009-10. Therefore, for purposes of this projection, this computed rate has been incorporated in the tax increment revenue forecast for subsequent fiscal years.

4.2 Allocation of Taxes Secured taxes are due in two equal installments. Installments of taxes levied upon secured property become delinquent on December 10 and April 10. Taxes on unsecured property are due March 1 and become delinquent August 31. The County Auditor-Controller is responsible for the aggregation of the taxable values assigned by the Assessor as of the lien date for property within the boundaries of the Project Area. This results in the reported total current year Project Area taxable value and becomes the basis for determining tax increment revenues due to the Agency. Tax increment revenue is disbursed to the Agency based upon actual collections within the Project TRAs. Although adjustments to taxable values for property

Long Beach Redevelopment Agency Keyser Marston Associates, Inc. Fiscal Consultant Report Page 11

1003022.LGB:GSH:gbd 15610.018.001//03/23/10

within the Project Area may occur throughout the fiscal year, such adjustments are not assumed in the tax increment projection prepared by KMA. The secured tax revenues are disbursed beginning in December with a 35% advance payment followed by a 5% advance in January. A reconciliation payment reflecting actual first installment collections is made in February. In April, 75% of the total levy is disbursed to the Agency, followed by a reconciliation payment in May reflecting actual second installment collections. Final payments are generally allocated in August. In prior years, over- allocations were deducted from the next year's allocation, although in August 2008 the County made a direct demand to the Agency for an Agency-wide overpayment rather than debit the subsequent year’s allocation. The unsecured tax increment revenues are advanced in November and March of each year with final reconciliation payments made in August. 4.3 Tax Receipts to Tax Levy Tax increment revenues are allocated to the Agency based upon actual tax collections received in the Project Area. To estimate the percentage of collected taxes in a given Project, a comparison of computed tax levy to actual tax receipts was conducted by KMA. This comparison, summarized on Table 4, was reviewed for FY 2004-05 to FY 2008-09. The annual tax collection rates include both secured and unsecured taxes and are shown in two comparisons:

1) Percent collected from only current year tax levies (i.e. tax increment generated in the current fiscal year based upon initially reported equalized assessed values).

2) Percent collected from all annual tax levies received by the Agency (including supplemental taxes, prior year redemptions, as well as tax refunds due to appeals, mid-year roll adjustments and administrative charges).

The collection of current year tax levies over the past five years for the Project Area averaged 96%. Over the course of a fiscal year, the Agency is allocated redemption payments from previously delinquent taxes and supplemental tax revenues. The Auditor- Controller also debits or credits the Agency with mid-year adjustments due to refunds on appeals, Assessor roll corrections and administrative charges. The resulting average collections rate based upon all annual tax allocations over the period was 7.6% greater than the computed levy for the Project Area. Given the foregoing, the Table 6 tax increment revenue projection does not reflect any adjustments for future collections being less than 100% of the computed levy. 5. ASSESSMENT APPEALS Property taxable values determined by the County Assessor may be subject to an appeal by the property owner. Assessment appeals are annually filed with the County

Long Beach Redevelopment Agency Keyser Marston Associates, Inc. Fiscal Consultant Report Page 12

1003022.LGB:GSH:gbd 15610.018.001//03/23/10

Assessment Appeals Board (AAB) for a hearing and resolution. The resolution of an appeal may result in a reduction to the Assessor's original taxable value and a tax refund to the property owner. The reduction in future Project taxable values and the refund of taxes affects all taxing entities, including the Agency. In prior years, the filing period for filing decline-in-value reviews was January 1 through December 31. However, effective January 1, 2010, the County Assessor has announced that decline-in-value requests will now begin on June 1 through November 30, which will mark the last day a property owner can file for an assessment appeal with the County. As stated in Section 3.3 above, beginning in 2008 and continuing in 2010, the County Assessor has proactively reviewed the value of single-family residences and condominiums purchased between July 1, 2003 and June 30, 2009. Beginning March 1, 2010, the Assessor will identify which parcels are under review and by June 30, 2010, the Assessor anticipates that its review will be completed and the results will be posted for the FY 2010-11 secured tax roll. These County-wide reviews and temporary decline in value reductions may result in fewer individual assessment appeal filings of single-family residential and condominium property assessments. 5.1 Estimated Value Reductions KMA researched the status of assessment appeals filed by property owners in the Project Area based upon the latest information available from the County AAB database as of January 19, 2010 representing appeal records as of the Fourth Quarter 2009. The County has informed KMA that this database does not include all appeals filed for FY 2009-10 due to a backlog of appeals being processed. A subsequent First Quarter 2010 release of the database will be issued in April 2010 and will likely include additional filings not appearing in the current database. The Table 5 summary contains the application number, secured parcel number or unsecured bill number, tax roll year, applicant name, contested value, applicant opinion of value, assumed resolved value, the projected value reduction and the resolution assumption incorporated by KMA. Unless a particular pattern from parcel-specific prior year filings is seen, it is difficult to project with any degree of certainty which appeal filings would ultimately be withdrawn, denied, invalidated or revoked due to non-appearance. Therefore, the projected tax refunds and valuation reductions shown on Table 5 assume that all outstanding appeals will be subject to a reduction based upon one of several methods listed below:

1. If the parcel assessment was reduced by prior stipulation or Appeals Board action, the contested value was reduced to the reported resolved value.

2. If the applicant, in prior fiscal year appeal filings, withdrew an appeal or failed to

appear for a scheduled hearing or was denied the appeal request by the Appeals

Long Beach Redevelopment Agency Keyser Marston Associates, Inc. Fiscal Consultant Report Page 13

1003022.LGB:GSH:gbd 15610.018.001//03/23/10

Board, it was assumed that the same would occur with respect to the open appeals being filed by the applicant.

For all other appeal records, the following assumptions listed below were incorporated in the analysis.

1. For contested Secured property values a reduction to the greater of either the

applicant’s opinion of value or 86% of the contested value was used (this 14% reduction was determined from the average percentage reduction experienced by a sampling of 425 stipulated secured appeals in the entire City from 2004 to 2008).

2. For contested Secured Possessory Interest property values a reduction to the

greater of either the applicant’s opinion of value or 68% of the contested value was used (this 32% reduction was determined from the average percentage reduction experienced by a sampling of 45 stipulated possessory interest appeals in the entire City from 2004 to 2008).

3. For contested Unsecured property values a reduction to the greater of either the

applicant’s opinion of value or 79% of the contested value was used (this 21% reduction was determined from the average percentage reduction experienced by a sampling of 161 stipulated unsecured appeals in the entire City from 2004 to 2008).

5.2 Estimated Fiscal Impact Tax refunds payable from resolved appeals (to the extent applicants are not delinquent in their property tax payments) are deducted by the County Auditor-Controller from current year tax increment allocations. As shown on Table 5, if all of the open appeals were stipulated to the assumed values reflected on Table 5 (after the adjustments described in Section 5.1 above), then the projected tax refunds debited against FY 2009-10 revenues is estimated to be $8,922,000. The subsequent assessed value reductions to the future FY 2010- 11 tax roll amounts to a value reduction of $637.6-million for all open appeals. However, actual resolution of appeals are determined by a number of factors including vacancy and rental rates, circumstances of hardship and other real estate comparables, all of which are unique to the individual assessment. Therefore, actual reductions, if any, may be higher or lower than the reductions incorporated in the projection. An appeal may be withdrawn by the applicant, the Appeals Board may deny or modify the appeal at hearing or by stipulation, or the final value may be adjusted to an amount other than the stated opinion of value. 5.3 Actual Appeal Filing Outcomes

The intentional decision to assume that every identified appeal shown on Table 5 will result in an assessed value reduction and tax refund is a very conservative approach, given

Long Beach Redevelopment Agency Keyser Marston Associates, Inc. Fiscal Consultant Report Page 14

1003022.LGB:GSH:gbd 15610.018.001//03/23/10

that, historically, not every filed appeal has resulted in an assessed value reduction. To measure the historic patterns of success rates from appeals filed in the Project Area, KMA conducted a database extraction of assessment appeal records for the Project Area. A total of 678 records for the period ranging from FY 2004-05 to FY 2008-09 3 were identified. Based upon the distribution of appeals shown on the table below, historic statistical patterns between FY 2004-05 and FY 2008-09 indicate that 18% of all appeal filings were reduced or stipulated, while 65% of all filed appeals subsequently were withdrawn, denied, deemed invalid or the applicant fails to appear.

Fiscal Year

Total Filings

Stipulated or

Reduced

Denied, Invalid, Withdrawn or

Non-appearance

Open

Appeals 2009-10

86 --- 5

5.8%

81 94.2%

2008-09 334 71 21.3%

198 59.3%

65 19.5%

2007-08 87 11 12.6%

58 66.7%

18 20.7%

2006-07 81 9 11.1%

57 70.4%

15 18.5%

2005-06 71 16 22.5%

49 69%

6 8.5%

2004-05 105 18 17.1%

82 78.1%

5 4.8%

Combined 2004-05 – 2008-09

678 125 18.4%

444 65.5%

109 16.1%

5.4 Actual Overall Net Value Impact A secondary historic analysis was conducted from the Project Area parcel extraction to determine the assessed valuation reduction impact experienced from all prior year secured and unsecured resolved filings (excluding any appeals with an “open” status designation, which therefore would exclude the FY 2009-10 filings). The average percentage reductions of assessed values resulting from stipulated appeals, combined with the unchanged assessed values from appeals withdrawn, denied, deemed invalid or not heard because of the non-appearance by the applicant, are reflected in the table below. The corresponding contested and resolved values 4 were then aggregated and the average percentage reductions were determined. The resulting historic percentage reductions experienced for the period analyzed are as follows:

3 For purposes of this statistical comparison, appeal records for FY 2009-10 are still in the midst of being reviewed and input by the County and therefore reflect an incomplete fiscal year of appeal comparables for inclusion in this statistical review. 4 The resolved value of appeals withdrawn, denied, invalid or a no show is the same as the value contested since no reduction was approved by the Assessment Appeals Board.

Long Beach Redevelopment Agency Keyser Marston Associates, Inc. Fiscal Consultant Report Page 15

1003022.LGB:GSH:gbd 15610.018.001//03/23/10

Fiscal Year

Resolved Records

Resolved & Closed Records

Contested

Value

Resolved

Value

%

Reduction

Secured 2008-09 70 249 252,574,151 237,434,444 6.0% 2007-08 3 46 228,166,123 224,106,782 1.8% 2006-07 2 42 593,844,068 590,111,333 0.6% 2005-06 4 32 1,193,072,816 1,138,303,246 4.6% 2004-05 6 57 1,338,241,347 1,323,787,911 1.1%

Combined 85 426 $3,605,898,505 $3,513,743,716 2.6%

Fiscal Year

Resolved Records

Resolved & Closed Records

Contested

Value

Resolved

Value

%

Reduction

Unsecured 2008-09 1 20 52,730,797 50,351,912 4.5% 2007-08 8 23 216,971,528 191,046,504 11.9% 2006-07 7 24 423,548,450 391,722,846 7.5% 2005-06 12 33 325,283,050 293,930,707 9.6% 2004-05 12 43 325,302,185 305,543,548 6.1%

Combined 40 143 $1,343,836,010 $1,232,595,517 8.3% For the historic period reviewed, properties that were the subject of assessment appeal filings in the Project Area only resulted in an overall average net secured value reduction of 2.6% and an overall average net unsecured value reduction of 8.3%. Therefore, the projected assessed value reductions and tax refunds estimated for this review and utilizing the approach discussed in Section 5.1 above, represents a worst case scenario for the Project Area. 6. TAX INCREMENT REVENUE PROJECTION

6.1 New Development Value Added New developments occurring in the Project Area have been identified by Agency staff for inclusion in the tax increment revenue projection. The estimate of assessed values added to the Secured tax roll as a result of the completion of the identified new developments are presented below. The amount of new assessed values is assumed to be as of the January 1st lien date. The assessed valuations are based on cost estimates provided by Agency staff and only reflect significant Agency-identified projects nearing completion. Additional new development value could be added for small scale projects and transfers of ownership that may occur throughout the Project Area, but these are not assumed in the Table 6 tax increment revenue projection.

Long Beach Redevelopment Agency Keyser Marston Associates, Inc. Fiscal Consultant Report Page 16

1003022.LGB:GSH:gbd 15610.018.001//03/23/10

Identified New Development

Projected Value Added

Tax Year Value May Appear

Weber Metals - Industrial Forge $4,086,000 FY 2012-13 ITS Rail Yard – Office 55,000,000 FY 2013-14 Secured Real Property Value Added $59,086,000

Weber Metals – The development of a 33,000-square-foot industrial building with an accompanying 3,500-square-foot grinding canopy and 1,000-square-foot storage canopy is underway at this 10-acre industrial site operated by Weber Metals. The construction of the foundation is underway and construction of the proposed improvements is pending approval by the City. KMA estimates that completion will occur in 2011. ITS Rail Yard – As discussed in Section 3.9 above, the Port of Long Beach is undertaking an $800-million renovation of the ITS terminal located at Pier G. Currently under construction is a $55-million development of new administration and operations buildings. The multi-phased expansion and redevelopment plan will eventually include not only the administration and operations buildings, but the development of maintenance and repair facilities, the doubling of rail capacity, the filling-in of the north end of the pier and the repaving of over 200 acres of the terminal site. Completion of the administration and operations buildings is anticipated in early 2012 and the value of the completed development is expected to be incorporated into the Port’s rent adjustment with ITS.

6.2 Unitary Tax Revenue Commencing in 1988-89, the reporting of public utility values assessed by the SBE was modified pursuant to legislation enacted in 1986 (Chapter 1457) and 1987 (Chapter 921). Previously, property assessed by the SBE was assessed State-wide and was allocated according to the location of individual components of a utility in a TRA. Hence, public utility values located within a project area were fully reflected in the Project Area’s annual taxable value. Since the County no longer included the taxable value of unitary properties as part of the reported taxable values in a redevelopment project, base year reductions were made equal to the amount of unitary taxable value that existed originally in the base year. The values of most public utility properties are now assessed as a single unit on a County-wide basis (referred to as unitary values). Railroad properties and utility owned parcels not included by SBE in the unitary assessment are referred to as Non-Unitary assessments. Unitary tax revenues are distributed by the County in the following manner: (1) each taxing entity will receive the same amount as in the previous year plus an increase for inflation of up to 2%; (2) if utility tax revenues are insufficient to provide the same amount of revenue as in the previous year, allocation of the taxes would be reduced pro-rata County-wide; and (3) any increase in revenue above 2% would be allocated in the same proportion as the taxing entity's local secured taxable values are distributed to the local secured taxable values of the County. According to the tax remittance advice ledger of the County Auditor-Controller, the

Long Beach Redevelopment Agency Keyser Marston Associates, Inc. Fiscal Consultant Report Page 17

1003022.LGB:GSH:gbd 15610.018.001//03/23/10

Agency is expected to be allocated $49,166 in Unitary tax revenues in FY 2009-10. For purposes of this projection, it is assumed that the Unitary tax revenues will stabilize at this amount thereafter.

6.3 Supplemental Assessments Supplemental assessments are authorized under Chapter 498 of the Statutes of 1983, which provides that property may be reassessed upon the occurrence of a change of ownership or completion of new construction. The supplemental assessment reflects the difference between the new value and old value. Prior to the enactment of Chapter 498, property reassessments occurred only on the lien date next following the change in ownership or new construction. The supplemental tax (if there is a resulting increase in value) or the supplemental refund (if there is a resulting decrease in value) is determined by applying the current year tax rate to the amount of supplemental assessment and prorating the resulting tax based upon the number of months remaining in the current fiscal year and, in certain instances, in the forthcoming fiscal year.5 The tax revenues or refunds derived from supplemental assessments are allocated to redevelopment agencies on a monthly basis and incorporated in the tax payments prepared by the County Auditor-Controller. Future new developments or property transfers occurring in the Project Area could likely result in supplemental tax revenues being allocated to the Agency. However, due to their nature as one-time occurring revenues, supplemental taxes can be a relatively minimal revenue source to the Agency to the extent no new developments or transfers of ownership are occurring in the Project Area. In addition, pursuant to conversations with County Tax Collector staff, the receipt of supplemental taxes by the Agency can be delayed by as much as six to nine months after a property transfer or construction. Supplemental taxes are prorated by the number of months that remain in the fiscal year. However, the City’s projection of future new developments occurring in the Project Area did not contain specific completion months, making an annual supplemental tax estimate difficult to project. Therefore, for purposes of the projection, KMA has not included any revenues in the tax increment projection resulting from future supplemental assessments. Supplemental tax revenues are subject to the annual tax increment revenue limits imposed by the Redevelopment Plan.

6.4 Tax Increment Revenue Projection Property tax revenues in excess of the amount resulting from the valuation shown on the assessment roll for the base year value of the Project Area are referred to as tax increment. The base year for a project area represents the fiscal year in which taxable property was last equalized prior to the effective date of the ordinance approving the redevelopment plans for the respective redevelopment projects. 5 Two supplemental assessments would occur in instances where a change in ownership or a new construction occurs between the January 1 lien date and May 31st.

Long Beach Redevelopment Agency Keyser Marston Associates, Inc. Fiscal Consultant Report Page 18

1003022.LGB:GSH:gbd 15610.018.001//03/23/10

The projections of tax increment revenues shown on Table 6 are based upon the FY 2009-10 assessed values and base year assessed values reported by the County Auditor- Controller. The projection is separated into Real Property value, Possessory Interest value and Personal Property value. No growth assumptions have been made to the projection on Table 6. Net tax increment revenue represents the gross tax increment revenue less the County's administrative fees, Housing Set Aside and statutory pass through payments.

6.5 SERAF The California State Legislature adopted Assembly Bill 26-4x to take $1.7-billion from local redevelopment funds in FY 2009-10 and an additional $350-million in FY 2010-11, and shift the tax increment funds to the Supplemental Education Revenue Augmentation Fund (SERAF) to offset State deficits to K-12 schools and community college districts. According to Agency staff estimates (pursuant to estimates provided by the California Director of Finance) the Agency’s FY 2009-10 SERAF exposure is $29,516,137, from which Agency staff estimate that the Project Area would contribute $10,149,308. For FY 2010-11, the Agency’s exposure is $6,070,996, from which it is estimated that the Project Area would contribute $2,750,824. The potential SERAF payment contributions from the Project Area are determined at the discretion of the Agency Board and subject to modification. For purposes of this analysis, the Project Area’s current SERAF exposure each year has been included in the Table 6 revenue projection. A lawsuit filed with the Sacramento Superior Court by the California Redevelopment Association has challenged the constitutionality of AB 26-4x and is awaiting a decision. Until a decision or injunction to AB 26-4x is handed down, the Agency has a potential exposure to the SERAF demand by the State. If the Agency is required to make the FY 2009- 10 SERAF payment, then the funding would come from a borrowing of the FY 2009-10 housing set aside and any balance may be funded from a borrowing against the Housing Fund itself. The amount borrowed from the FY 2009-10 housing set aside and any Housing Fund balance would have to be repaid, on a basis subordinate to Agency debt obligations, before FY 2014-15 as allowed under AB 26-4x. The borrowing and repayment assumptions anticipated under such a scenario are reflected on Table 6. Future year demands from the State are not assumed in the projection. 7. CAVEATS The projection reflects assumptions based on KMA's understanding of the assessment and tax apportionment procedures employed by the County. The County procedures are subject to change as a reflection of policy revisions or administrative, regulatory or legislative mandate. While we believe our estimates to be reasonable, taxable values resulting from actual appraisals may vary from the amounts assumed in the projections. Assumptions have also been made that Unitary tax revenues will continue to be allocated in the manner discussed herein and that legislatively-mandated payments to the State will not be required in future fiscal

Long Beach Redevelopment Agency Keyser Marston Associates, Inc. Fiscal Consultant Report Page 19

1003022.LGB:GSH:gbd 15610.018.001//03/23/10

years. These assumptions are based on existing State policies and are subject to future regulatory or legislative changes. No assurances are provided by KMA as to the certainty of the projected tax increment revenues shown on Table 6. Actual revenues may be higher or lower than what has been projected and are subject to valuation changes resulting from new developments or transfers of ownership not specifically identified herein, actual resolution of outstanding appeals, future filing of appeals, changes in assessor valuation standards, or the non-payment of taxes due. The accuracy or completeness of assessment appeals identified in the attached table are based solely upon information provided by the County Assessor’s office as of the date of the original review of said data by KMA. Attachment

Table 1 Historic Project Area Assessed Values North Long Beach Redevelopment Project Long Beach Redevelopment Agency

Average Annual

2004-05 2005-06 2006-07 2007-08 2008-09 (1) 2009-10 (2) Growth

I. Secured: Land 2,524,169,220 2,890,426,504 3,326,838,516 3,646,040,113 4,081,365,523 3,829,774,674 8.70% Improvements 2,300,450,158 2,542,941,693 2,656,723,391 2,880,962,435 2,955,067,946 2,881,715,262 4.61% Personal Property 34,465,843 33,324,556 36,521,522 37,027,528 30,120,743 35,180,424 0.41% Less Exemptions 112,835,950 112,327,369 118,656,467 111,579,622 129,757,275 130,318,116 2.92% Total Secured 4,746,249,271 5,354,365,384 5,901,426,962 6,452,450,454 6,936,796,937 6,616,352,244 6.87%

II. Utilities: Land 1,134,421 1,131,969 1,108,542 898,796 898,796 898,811 -4.55% Improvements 189,020 187,419 169,041 2,880,671 2,880,671 2,880,671 72.42% Personal Property 101,581 100,538 90,435 0 0 0 -100.00% Less Exemptions 0 0 0 0 0 0 0.00% Total Utilities 1,425,022 1,419,926 1,368,018 3,779,467 3,779,467 3,779,482 21.54%

III. Unsecured: Land 0 0 0 0 0 0 0.00% Improvements 373,634,635 492,408,281 484,266,496 562,867,299 444,675,175 429,843,553 2.84% Personal Property 422,272,574 476,160,722 501,312,718 509,428,294 483,596,204 478,001,782 2.51% Less Exemptions 3,086,150 4,521,932 3,886,406 4,081,060 16,041,598 21,979,405 48.09% Total Unsecured 792,821,059 964,047,071 981,692,808 1,068,214,533 912,229,781 885,865,930 2.24%

IV. Project Value: Land 2,525,303,641 2,891,558,473 3,327,947,058 3,646,938,909 4,082,264,319 3,830,673,485 8.69% Improvements 2,674,273,813 3,035,537,393 3,141,158,928 3,446,710,405 3,402,623,792 3,314,439,486 4.39% Personal Property 456,839,998 509,585,816 537,924,675 546,455,822 513,716,947 513,182,206 2.35% Less Exemptions 115,922,100 116,849,301 122,542,873 115,660,682 145,798,873 152,297,521 5.61% Total Project 5,540,495,352 6,319,832,381 6,884,487,788 7,524,444,454 7,852,806,185 7,505,997,656 6.26%

(1) Adjusted to remove overstated Possessory Interest value misplacement of $170,030,923 assessed to parcel 8940-759-594 (Chevron USA Inc). (2) Adjusted to remove overstated Possessory Interest value misplacement of $169,396,572 assessed to parcel 8940-759-594 (Chevron USA Inc).

Source: Los Angeles County Auditor Controller Prepared by Keyser Marston Associates, Inc. Filename: NO_Hist_2010-01-29.xls: HIST: 2/16/2010: GSH

Table 2 Values by Use North Redevelopment Project Area Long Beach Redevelopment Agency

Use Parcels Total AV Percentage

1 Single Family 11,129 2,174,089,507 28.96% 2 Multi-Family 3,205 1,179,434,690 15.71% 3 Condominiums 814 155,386,951 2.07% 4 Mobile Home Parks 12 36,216,374 0.48% 5 Vacant Residential 192 6,761,362 0.09% 6 Commercial 1,278 803,736,648 10.71% 7 Industrial 384 686,629,042 9.15% 8 Agricultural 3 3,713,042 0.05% 9 Recreational 16 43,004,114 0.57%

10 Institutional 79 40,443,765 0.54% 11 Miscellaneous Uses

1 288 659,558 0.01%

12 Possessory Interest 70 1,473,012,632 19.62% 13 Mineral Rights 2 1,519,347 0.02% 14 Other Assessments 2 509 11,745,212 0.16% 15 State Public Utility -- 3,779,482 0.05% 16 Unsecured -- 885,865,930 11.80%

17 Total AV 17,981 7,505,997,656 100.0%

County Assessor's $169.4 million possessory interest value error to Chevron USA Inc. removed from reported value.

(1) Miscellaneous Uses include rights-of-way and easements for mining, water rights, pipe lines or canals.

(2) Other Assessments include penalty assessments identified on the Assessor's Cross Reference Tax Roll.

Single Family 29.0%

Multi-Family 15.7%

Condominiums 2.1%

Mobile Home Parks 0.5%

Vacant Residential 0.1%

Commercial 10.7%

Industrial 9.1%

Other 1.2%All Cross Reference

19.8%

State Public Utility 0.1%

Unsecured 11.8%

Source: Los Angeles County Assessor Prepared by: Keyser Marston Associates, Inc. Filename: Ten_North_0910_2010-01-29.xls: T2 Use: 2/16/2010: nym

Table 3 Ten Largest Assessees - FY 2009-10 North Redevelopment Project Area Long Beach Redevelopment Agency

Aggregate % of Total % of Total No. of 2009-10 Project Increment

Assessee Name Tax Roll Parcels Value Value (1) Value (2)

1 Total Terminals Possessory Interest 2 526,953,699 7.02% 11.95% (2,270,000) No 2009-10 appeal reported (3)

2 International Transportation Services Possessory Interest 1 344,376,120 4.59% 7.81% (1,722,000) Based on 2009-10 opinion (4) Unsecured 1 116,596,200 1.55% 2.64% (583,000) Based on 2009-10 opinion (5) Subtotal 2 460,972,320 6.14% 10.45% (2,305,000)

3 Pacific Maritime Services LLC Possessory Interest 1 297,800,000 3.97% 6.75% (1,322,000) No 2009-10 appeal reported (6) Unsecured 1 100,651,982 1.34% 2.28% - Subtotal 3 398,451,982 5.31% 9.04% (1,322,000)

4 Hughes Aircraft Co Secured 3 120,774,533 1.61% 2.74% -

5 Secured 2 21,920,031 0.29% 0.50% - Unsecured 8 94,306,252 1.26% 2.14% Subtotal 5 116,226,283 1.55% 2.64%

6 Long Beach Container Terminal Possessory Interest 1 38,249,000 0.51% 0.87% - Unsecured 1 62,710,525 0.84% 1.42% Subtotal 6 100,959,525 1.35% 2.29%

7 ARCO Terminal Services Corp Secured 2 61,583,820 0.82% 1.40% - Unsecured 1 8,487 0.00% 0.00% Subtotal 7 61,592,307 0.82% 1.40%

8 Oxbow Carbon and Minerals LLC Possessory Interest 6 33,905,785 0.45% 0.77% - Unsecured 4 14,832,684 0.20% 0.34% Subtotal 8 48,738,469 0.65% 1.11%

9 Carnival Corp Possessory Interest 3 45,104,283 0.60% 1.02% - Unsecured 1 1,432,704 0.02% 0.03% Subtotal 9 46,536,987 0.62% 1.06%

10 Metropolitan Stevedore Co. Inc. Possessory Interest 3 41,324,778 0.55% 0.94% (283,000) No 2009-10 appeal reported (7) Unsecured 1 5,150,749 0.07% 0.12% (37,000) No 2009-10 appeal reported (8) Subtotal 10 46,475,527 0.62% 1.05% (320,000)

TOTALS 1,927,681,632 25.68% 43.72%

Toyota Motors/ TABC Inc./Catalytic Component Products Inc.

Based on Applicant 2009-10 Opinion of Value or Prior Year Opinion of Value

Potential Appeal Refund Exposure

Source: Los Angeles County Assessment Appeals Database as of 01-19-2010 Prepared by: Keyser Marston Associates, Inc. Filename: Ten_North_0910_2010-01-29.xls: T1 TT: 2/16/2010: nym: Page 1 of 2

Footnotes to Table 3:

(1) Based upon reported FY 2009-10 Project Area secured and unsecured assessed value of $7,505,997,656. County Assessor's $169.4 million possessory interest value error to Chevron USA Inc. removed from reported value.

(2) Based upon reported FY 2009-10 Project Area incremental assessed value of $4,409,602,329.

(3) No appeal reported for FY 2009-10 and refund amount is shown for comparative purposes only to the extent the AAB subsequently identifies a 2009-10 filing in the future. Estimated tax refund exposure from prior year filings on APN 8940-432-040 for FY 2007-08 is $1.9 million and FY 2008-09 is $2.1 million if applicant opinion of value prevails.

(4) Appeal filed for FY 2009-10 on APN 8940-432-002. Tax refund exposure for FY 2007-08 is $957,000 and for FY 2008-09 is $1.7 million if applicant opinion of value prevails.

(5) Appeal filed for FY 2009-10 Unsecured assessments. Tax refund exposure for FY 2007-08 is $506,000 and for FY 2008-09 is $600,000 if applicant opinion of value prevails.

(6) No appeal reported for FY 2009-10 and refund amount is shown for comparative purposes only to the extent the AAB subsequently identifies a 2009-10 filing in the future. Estimated tax refund exposure from prior year filings on APN 8940-432-031 for FY 2005-06 is $1.9 million, for FY 2006-07 is $1.6 million, for FY 2007-08 is $1.6 million, and for FY 2008-09 is $1.7 million if applicant opinion of value prevails.

(7) No appeal reported for FY 2009-10 and refund amount is shown for comparative purposes only to the extent the AAB subsequently identifies a 2009-10 filing in the future. Estimated tax refund exposure from prior year filings on APN 8940-432-003, et.al., for FY 2006-07 is $333,000, for FY 2007-08 is $206,000, for FY 2008-09 is $297,000 if applicant opinion of value prevails.

(8) No appeal reported for FY 2009-10 and refund amount is shown for comparative purposes only to the extent the AAB subsequently identifies a 2009-10 filing in the future. Estimated tax refund exposure from prior year filings for the Unsecured assessments for FY 2006-07 is $41,000, for FY 2007-08 is $38,000, and for FY 2008-09 is $137,000 if applicant opinion of value prevails.

Source: Los Angeles County Assessment Appeals Database as of 01-19-2010 Prepared by: Keyser Marston Associates, Inc. Filename: Ten_North_0910_2010-01-29.xls: T1 TT: 2/16/2010: nym: Page 2 of 2

Table 4 Historic Receipts to Levy Analysis North Long Beach Redevelopment Project Long Beach Redevelopment Agency

2008-09 (4) 2007-08 2006-07 2005-06 2004-05 I. Reported Assessed Value (1):

Secured 6,936,796,937 6,452,450,454 5,901,426,962 5,354,365,384 4,746,249,271 State Assessed 3,779,467 3,779,467 1,368,018 1,419,926 1,425,022 Unsecured 912,229,781 1,068,214,533 981,692,808 964,047,071 792,821,059

II. Total Project Value 7,852,806,185 7,524,444,454 6,884,487,788 6,319,832,381 5,540,495,352 Less Base Value (1) 3,103,980,865 3,130,192,950 3,104,508,715 3,104,508,715 3,104,508,715 Incremental Value 4,748,825,320 4,394,251,504 3,779,979,073 3,215,323,666 2,435,986,637

Averaged Tax Rate 1.0054066% 1.0054066% 1.0054066% 1.0060376% 1.0069661% III. Gross Tax Increment 47,745,005 44,180,096 38,004,161 32,347,364 24,529,560

Unitary Tax Revenue 46,888 0 0 0 0 Total Computed Levy 47,791,893 44,180,096 38,004,161 32,347,364 24,529,560

IV. Tax Allocation (2): Secured Tax Increment 42,268,629 35,313,129 30,623,803 25,902,799 20,156,141 Unsecured Tax Increment 4,786,065 6,470,374 4,561,491 5,503,477 3,765,507 Unitary Tax Revenue 46,888 0 0 0 0 Total Annual Tax Increment 47,101,582 41,783,503 35,185,294 31,406,277 23,921,648 Variance From Computed Levy (690,312) (2,396,593) (2,818,867) (941,087) (607,912)

V. % Collected (Current Levy Only) 98.56% 94.58% 92.58% 97.09% 97.52%

VI. Total Allocation per County (3): 51,839,624 40,450,589 40,118,177 38,104,748 30,615,305 % Collected (All Allocations) 108.47% 91.56% 105.56% 117.80% 124.81%

(1) Amounts shown are as reported by the Los Angeles County Auditor-Controller in August of each fiscal year. (2) Source: County Auditor-Controller year-end remittance advice summaries. Amounts represent the annual tax increment revenues allocable to the Agency and do not include administrative fees, supplemental taxes, prior year redemption payments, tax refunds, adjustments by the County Assessor and pass through payments. (3) Total Allocations reflect all tax increment revenues allocated for the close of each fiscal year, as reported by the County Auditor-Controller. Amounts include supplemental taxes, prior year redemptions payments, tax refunds, roll corrections and administrative charges and net of County-administered pass throughs. (4) Adjusted to remove overstated Possessory Interest value misplacement of $170,030,923 assessed to parcel 8940-759-594 (Chevron USA Inc).

Source: Los Angeles County Auditor Controller year-end Remittance Advice summaries Prepared by Keyser Marston Associates, Inc. Filename: NO_Hist_2010-01-29.xls: LEVY: 2/16/2010: GSH

Table 5 Projected Assessment Appeal Impact North Long Beach Project Area Long Beach Redevelopment Agency

Appeal Number

APN or Bill Number FY Applicant Name

Total Contested Value

Applicant Opinion of

Value Estimated

Resolved Value Projected Value

Variance KMA Assumption

SECURED APPEALS: 1 2008-018983 7101-023-010 08 LUIS H LICEA 613,836 - 450,000 (163,836) RESOLVED: Assessor reduced (1) 2 2008-016920 7113-001-027 08 CIVIGENICS, INC. 8,450,000 2,240,628 7,250,787 (1,199,213) Decreased per comparable reductions in past appeals. (1) 3 2009-004986 7113-005-050 09 ALFONSO REYES 450,000 449,955 449,955 (45) Decreased per comparable reductions in past appeals. (1) 4 2008-033974 7113-007-019 08 MASTER PROCESSING CENTER (BANDAG) 5,511,109 4,000,000 4,728,980 (782,129) Decreased per comparable reductions in past appeals. (1) 5 2008-033974 7113-007-020 08 MASTER PROCESSING CENTER (BANDAG) 16,320,000 12,000,000 14,003,888 (2,316,112) Decreased per comparable reductions in past appeals. (1) 6 2008-029242 7113-013-034 08 EL CAMINO REALTY INC. G& I GOODMAN PROP LLC 3,230,442 1,939,000 2,771,982 (458,460) Decreased per comparable reductions in past appeals. 7 2009-012747 7113-013-034 09 EL CAMINO REALTY INC./G&I GOODMAN PROP INC. 3,295,050 1,318,000 2,827,421 (467,629) Decreased per comparable reductions in past appeals. (1) 8 2008-029242 7113-013-038 08 EL CAMINO REALTY INC. G& I GOODMAN PROP LLC 1,477,368 886,000 1,267,702 (209,666) Decreased per comparable reductions in past appeals. 9 2009-012747 7113-013-038 09 EL CAMINO REALTY INC./G&I GOODMAN PROP INC. 1,506,915 603,000 1,293,056 (213,859) Decreased per comparable reductions in past appeals. (1)

10 2008-006874 7113-016-010 08 THEANY AND JASMINE INN 554,800 410,000 520,000 (34,800) RESOLVED: Assessor reduced (1) 11 2009-010308 7114-004-035 09 CATHERINE S. DICKERSON 208,914 170,000 179,265 (29,649) Decreased per comparable reductions in past appeals. (1) 12 2009-008022 7114-005-041 09 THERESA D. WOODS 288,000 83,100 247,127 (40,873) Decreased per comparable reductions in past appeals. (1) 13 2008-023557 7114-010-046 08 IRENE MADRIGAL 529,380 - 385,000 (144,380) RESOLVED: Assessor reduced (1) 14 2008-023556 7114-015-054 08 ELOY CABALLERO 391,700 - 340,000 (51,700) RESOLVED: Assessor reduced (1) 15 2008-013022 7114-015-057 08 ROSA GAYTAN 424,822 - 385,000 (39,822) RESOLVED: Assessor reduced (1) 16 2008-013023 7114-022-014 08 JUDITH BOWEN 387,500 - 295,000 (92,500) RESOLVED: Assessor reduced (1) 17 2009-005299 7115-006-032 09 PETER KIM 860,000 - 737,950 (122,050) Decreased per comparable reductions in past appeals. (1) 18 2009-005171 7115-007-017 09 VALENTINA A. & LEONCIO URBINA 316,095 - 271,235 (44,860) Decreased per comparable reductions in past appeals. (1) 19 2008-016849 7115-014-008 08 DORA MUNOZ RIVERA 551,412 492,452 410,000 (141,412) RESOLVED: Assessor reduced (1) 20 2008-023555 7115-017-022 08 ROATHSOPEARY RUN 395,298 - 360,000 (35,298) RESOLVED: Assessor reduced (1) 21 2008-023554 7115-020-044 08 JOSE L. & MARIA T. BRIONES 408,563 - 360,000 (48,563) RESOLVED: Assessor reduced (1) 22 2008-007545 7115-030-009 08 THERESA MORRISON 232,896 162,900 199,844 (33,052) Decreased per comparable reductions in past appeals. (1) 23 2008-036645 7115-030-025 08 BLANCA NAVA 445,300 300,000 382,104 (63,196) Decreased per comparable reductions in past appeals. (1) 24 2009-009635 7116-004-015 09 CRM INVESTMENT LLC 2,543,714 1,812,438 2,182,714 (361,000) Decreased per comparable reductions in past appeals. (1) 25 2008-026570 7116-013-046 08 PAUL MILLER 445,000 415,000 315,000 (130,000) RESOLVED: Assessor reduced 26 2009-013714 7116-013-046 09 PAUL MILLER 303,800 190,000 260,685 (43,115) Decreased per comparable reductions in past appeals. (1) 27 2008-014559 7118-003-022 08 ALFONSO & LINDA CAZARES 486,540 - 360,000 (126,540) RESOLVED: Assessor reduced (1) 28 2008-011792 7118-011-020 08 GRAHAM A. BEST 425,542 - 370,000 (55,542) RESOLVED: Assessor reduced (1) 29 2008-013012 7118-014-002 08 PEDRO OVIEDO 465,000 - 414,000 (51,000) RESOLVED: Assessor reduced (1) 30 2008-028687 7118-019-015 08 JOSE & ESCOBAR ROSARIO NAVARRO 383,600 - 364,000 (19,600) RESOLVED: Assessor reduced (1) 31 2009-008912 7118-021-025 09 SHERWIN VIGILANT 298,000 268,000 268,000 (30,000) Decreased per comparable reductions in past appeals. (1) 32 2009-005375 7119-001-011 09 PETER KIM 835,000 - 716,498 (118,502) Decreased per comparable reductions in past appeals. (1) 33 2009-000314 7119-001-016 09 SEO FAMILY TRUST 2,754,000 - 2,363,156 (390,844) Decreased per comparable reductions in past appeals. (1) 34 2008-023442 7119-008-008 08 VICTOR J. RODRIGUEZ 398,200 - 370,000 (28,200) RESOLVED: Assessor reduced (1) 35 2008-007307 7119-012-035 08 ROBERT & ISABELITA EDRALIN 432,600 - 330,000 (102,600) RESOLVED: Assessor reduced (1) 36 2008-023443 7119-014-012 08 MANOLO GONZALEZ 352,700 - 315,000 (37,700) RESOLVED: Assessor reduced (1) 37 2009-007926 7119-015-018 09 DAVID HOLSTEIN 400,463 283,000 343,630 (56,833) Decreased per comparable reductions in past appeals. (1) 38 2008-034432 7119-018-031 08 JDL SOUTH STREET LLC 11,444,400 8,500,000 8,300,000 (3,144,400) RESOLVED: Assessor reduced (1) 39 2009-012748 7119-019-005 09 STOR-IT LONG BEACH LLC 4,948,890 1,980,000 4,948,890 - Assumed withdrawn as in 2008. (1) 40 2008-013478 7120-006-005 08 PRITAM S. MATHARU 408,000 275,000 286,108 (121,892) RESOLVED: Reduced (1)

Source: Los Angeles County Assessment Appeals Board data as of 01-19-2010. Prepared by: Keyser Marston Associates, Inc. Filename: LB North 2009 Appeals 4Q 1-29-10.xls:Open:NYM: Page 1 of 7

Table 5 Projected Assessment Appeal Impact North Long Beach Project Area Long Beach Redevelopment Agency

Appeal Number

APN or Bill Number FY Applicant Name

Total Contested Value

Applicant Opinion of

Value Estimated

Resolved Value Projected Value

Variance KMA Assumption

41 2009-007206 7120-013-013 09 CHRISTOPHER M. GONZALEZ 258,673 200,000 221,962 (36,711) Decreased per comparable reductions in past appeals. (1) 42 2009-009958 7120-014-022 09 DEMESNE DEVELOPMENT CO. 75,914 - 65,140 (10,774) Decreased per comparable reductions in past appeals. (1) 43 2009-009958 7120-014-023 09 DEMESNE DEVELOPMENT CO. 686,948 - 589,457 (97,491) Decreased per comparable reductions in past appeals. (1) 44 2008-007308 7120-016-029 08 ELIAGH KINARD 411,322 - 335,000 (76,322) RESOLVED: Assessor reduced (1) 45 2008-009103 7120-018-033 08 RAMESH PATEL 2,366,910 - 1,800,000 (566,910) RESOLVED: Assessor reduced 46 2009-007072 7120-018-033 09 RAMESH PATEL 2,414,248 - 1,836,000 (578,248) Assumed 2% annual increase over 2008 reduced AV. (1) 47 2008-000938 7120-024-036 08 ERIC HAN 509,795 - 420,000 (89,795) RESOLVED: Assessor reduced (1) 48 2008-021981 7120-024-049 08 EDGAR A. CORDOVA 456,318 - 425,000 (31,318) RESOLVED: Assessor reduced (1) 49 2009-011143 7121-007-001 09 5901 DOWNEY AVENUE LLC. 2,207,312 1,500,000 2,207,312 - Assumed withdrawn as in 2007. (1) 50 2008-024654 7123-004-018 08 MARIO J. MARTINEZ 459,000 - 380,000 (79,000) RESOLVED: Assessor reduced (1) 51 2008-014561 7123-009-012 08 BUNTA OUN 469,200 - 390,000 (79,200) RESOLVED: Assessor reduced (1) 52 2009-010619 7123-013-024 09 MARIO MELBOURNE 245,603 198,000 210,747 (34,856) Decreased per comparable reductions in past appeals. (1) 53 2008-007309 7124-014-016 08 FILEMON CARDOSO 429,245 - 330,000 (99,245) RESOLVED: Assessor reduced (1) 54 2009-001692 7124-017-015 09 EUGENE RAWLS 703,579 - 603,728 (99,851) Decreased per comparable reductions in past appeals. (1) 55 2008-024648 7124-023-004 08 ALEJANDRO & REYNA JIMENEZ 429,500 - 332,000 (97,500) RESOLVED: Assessor reduced (1) 56 2008-030569 7124-031-021 08 MIGUEL BLASS 382,033 233,041 287,000 (95,033) RESOLVED: Assessor reduced (1) 57 2009-009283 7125-007-008 09 DONALD E. & GLORIA A. CABRAL 145,008 101,504 124,429 (20,579) Decreased per comparable reductions in past appeals. (1) 58 2008-040971 7125-013-018 08 GUADALUPE ROBLES 416,000 300,000 356,962 (59,038) Decreased per comparable reductions in past appeals. (1) 59 2008-024646 7125-027-006 08 RAFAEL & MARIA V. GOMEZ 408,000 - 386,000 (22,000) RESOLVED: Assessor reduced (1) 60 2009-000716 7125-030-040 09 SIMON R. KINGS 1,618,341 1,200,000 1,388,668 (229,673) Decreased per comparable reductions in past appeals. (1) 61 2008-007310 7125-032-002 08 PEDRO A. MARTINEZ 426,600 - 400,000 (26,600) RESOLVED: Assessor reduced (1) 62 2008-024645 7125-032-028 08 PERFECTO RODRIGUEZ 416,055 - 380,000 (36,055) RESOLVED: Assessor reduced (1) 63 2008-000257 7126-001-022 08 CHRIS HOLMES 472,236 - 390,000 (82,236) RESOLVED: Assessor reduced (1) 64 2008-024644 7126-016-041 08 LEOVIGILDO MACIAS 250,000 - 209,000 (41,000) RESOLVED: Assessor reduced (1) 65 2009-006037 7126-017-001 09 TAREK RAMANDAN 500,000 - 429,041 (70,959) Decreased per comparable reductions in past appeals. (1) 66 2009-006037 7126-017-002 09 TAREK RAMANDAN 100,000 - 85,808 (14,192) Decreased per comparable reductions in past appeals. (1) 67 2009-006037 7126-017-003 09 TAREK RAMANDAN 210,000 - 180,197 (29,803) Decreased per comparable reductions in past appeals. (1) 68 2009-006037 7126-017-004 09 TAREK RAMANDAN 90,000 - 77,227 (12,773) Decreased per comparable reductions in past appeals. (1) 69 2009-006037 7126-017-005 09 TAREK RAMANDAN 100,000 - 85,808 (14,192) Decreased per comparable reductions in past appeals. (1) 70 2009-003833 7126-018-022 09 NOV YOUNG 371,040 - 318,383 (52,657) Decreased per comparable reductions in past appeals. (1) 71 2008-033925 7126-034-008 08 EMILIA LARA 400,000 300,000 343,233 (56,767) Decreased per comparable reductions in past appeals. (1) 72 2009-004703 7126-034-023 09 MARCUS LYNCH 663,494 - 569,332 (94,162) Decreased per comparable reductions in past appeals. (1) 73 2008-007311 7127-004-031 08 JAIME & MARIA RODRIGUEZ 379,910 - 310,000 (69,910) RESOLVED: Assessor reduced (1) 74 2009-006074 7127-005-009 09 KIMSAN HIN 220,000 214,000 214,000 (6,000) Decreased per comparable reductions in past appeals. (1) 75 2009-010474 7127-009-028 09 THOMAS V. JONES 749,087 575,000 642,778 (106,309) Decreased per comparable reductions in past appeals. (1) 76 2008-037329 7127-016-011 08 LILEITH BROWN-SWABY 230,000 341,000 230,000 - Assumed withdrawn as in previous 2008 Appeal. (1) 77 2008-035940 7127-018-004 08 GRANDPOINT LLC 515,100 300,000 450,000 (65,100) RESOLVED: Assessor reduced (1) 78 2008-006557 7127-024-032 08 DANIEL H. DAHAN 757,701 520,000 710,000 (47,701) RESOLVED: Assessor reduced (1) 79 2008-027768 7127-028-025 08 SAMANTHA KHUTH 679,080 520,000 560,000 (119,080) RESOLVED: Assessor reduced (1) 80 2008-023445 7128-004-029 08 FREDDY BARBA 448,800 - 340,000 (108,800) RESOLVED: Assessor reduced (1) 81 2008-024643 7128-005-014 08 FRANCISCO PULIDO 359,000 - 320,000 (39,000) RESOLVED: Assessor reduced (1)

Source: Los Angeles County Assessment Appeals Board data as of 01-19-2010. Prepared by: Keyser Marston Associates, Inc. Filename: LB North 2009 Appeals 4Q 1-29-10.xls:Open:NYM: Page 2 of 7

Table 5 Projected Assessment Appeal Impact North Long Beach Project Area Long Beach Redevelopment Agency

Appeal Number

APN or Bill Number FY Applicant Name

Total Contested Value

Applicant Opinion of

Value Estimated

Resolved Value Projected Value

Variance KMA Assumption

82 2008-003889 7128-008-006 08 JACQUELINE M. LORD 436,968 - 374,954 (62,014) Decreased per comparable reductions in past appeals. 83 2009-000067 7128-008-006 09 JACQUELINE LORD 445,707 - 382,453 (63,254) Decreased per comparable reductions in past appeals. (1) 84 2008-003889 7128-008-007 08 JACQUELINE M. LORD 608,634 - 522,257 (86,377) Decreased per comparable reductions in past appeals. 85 2009-000067 7128-008-007 09 JACQUELINE LORD 620,806 - 532,702 (88,104) Decreased per comparable reductions in past appeals. (1) 86 2008-003889 7128-008-022 08 JACQUELINE M. LORD 297,840 - 255,571 (42,269) Decreased per comparable reductions in past appeals. 87 2009-000066 7128-008-022 09 JACQUELINE M. LORD 303,796 - 260,682 (43,114) Decreased per comparable reductions in past appeals. (1) 88 2008-023446 7128-013-026 08 MAURICE & TREDENA REYNOLDS 492,800 - 380,000 (112,800) RESOLVED: Assessor reduced (1) 89 2009-008830 7128-021-032 09 ANDREW KALMAN 474,751 308,590 407,375 (67,376) Decreased per comparable reductions in past appeals. (1) 90 2008-029021 7128-026-009 08 ROLAND DOON 487,100 - 400,000 (87,100) RESOLVED: Assessor reduced (1) 91 2008-013011 7128-028-004 08 BERNARDO S & CAROLINE CHAVEZ 399,400 - 350,000 (49,400) RESOLVED: Assessor reduced (1) 92 2008-000934 7128-028-007 08 TENORIO GRAGERA 560,030 - 450,000 (110,030) RESOLVED: Assessor reduced (1) 93 2008-021281 7128-029-035 08 PIONEER GROUP, LLC 11,376,149 6,825,000 10,000,000 (1,376,149) RESOLVED: Assessor reduced 94 2009-012749 7128-029-035 09 PIONEER GROUP LLC 11,614,771 4,642,000 10,200,000 (1,414,771) Assumed 2% annual increase over 2008 reduced AV. (1) 95 2008-000120 7129-006-012 08 CARLOS E. DIAZ 433,552 - 372,023 (61,529) Decreased per comparable reductions in past appeals. (1) 96 2008-008776 7129-013-010 08 KIN S. & PHI S. LAM 424,000 - 410,000 (14,000) RESOLVED: Assessor reduced (1) 97 2008-024311 7130-012-012 08 JORGE & JUANA CERVANTES 380,345 - 340,000 (40,345) RESOLVED: Assessor reduced (1) 98 2008-033930 7130-012-034 08 AYENI OSITA 488,987 340,006 419,591 (69,396) Decreased per comparable reductions in past appeals. (1) 99 2008-024310 7130-013-011 08 ANNA H. LAM 519,991 - 430,000 (89,991) RESOLVED: Assessor reduced (1)

100 2008-015213 7130-013-012 08 ANGELA & JESUS RUBIO 360,217 - 340,000 (20,217) RESOLVED: Assessor reduced (1) 101 2009-006849 7130-016-016 09 PLEASANTVILLE 27, LLC 791,622 600,000 679,276 (112,346) Decreased per comparable reductions in past appeals. (1) 102 2009-006850 7130-016-017 09 PLEASANTVILLE 27, LLC 791,622 600,000 679,276 (112,346) Decreased per comparable reductions in past appeals. (1) 103 2009-006875 7130-016-018 09 PLEASANTVILLE 27, LLC 790,519 600,000 678,330 (112,189) Decreased per comparable reductions in past appeals. (1) 104 2008-034084 7130-022-007 08 DOUGLAS D. SPAHR 327,910 171,453 210,000 (117,910) RESOLVED: Reduced (1) 105 2008-024309 7130-022-015 08 ARNEL E. MOVILLA 400,900 - 395,000 (5,900) RESOLVED: Reduced 106 2009-007232 7130-022-015 09 ARNEL E. MOVILLA 281,700 - 281,700 - Assumed denied. Value was reduced in 2008. (1) 107 2009-003048 7131-015-032 09 AFIMUAO T. LAFOLAVEA 279,600 - 239,920 (39,680) Decreased per comparable reductions in past appeals. (1) 108 2008-005976 7131-017-020 08 JACQUELINE TR THOMAS 388,100 - 350,000 (38,100) RESOLVED: Reduced (1) 109 2009-003834 7131-025-019 09 ROBERT L. & ALFIYA V. ALVIES 276,961 - 237,655 (39,306) Decreased per comparable reductions in past appeals. (1) 110 2008-012682 7132-009-016 08 LAURA CARRILLO 375,000 - 350,000 (25,000) RESOLVED: Assessor reduced (1) 111 2008-012684 7132-021-004 08 SALVADOR PONCE 390,000 - 375,000 (15,000) RESOLVED: Assessor reduced (1) 112 2008-024659 7133-007-003 08 ALISON L. WILLIAMS 331,200 - 310,000 (21,200) RESOLVED: Reduced (1) 113 2009-012750 7133-013-004 09 DIVERSIFIED INCOME PROPERTIES, L.P. 233,975 112,000 233,975 - Assumed withdrawn as in 2008. (1) 114 2009-012750 7133-013-023 09 DIVERSIFIED INCOME PROPERTIES, L.P. 1,429,169 572,000 1,429,169 - Assumed withdrawn as in 2008. (1) 115 2009-012751 7133-032-023 09 SATISH R. BHAGAT 128,993 51,000 128,993 - Assumed withdrawn as in 2008. (1) 116 2009-012751 7133-032-024 09 SATISH R. BHAGAT 322,502 129,000 322,502 - Assumed withdrawn as in 2008. (1) 117 2009-013678 7138-016-018 09 CARSON LB, LLC - - - - Decreased per comparable reductions in past appeals. (1) 118 2009-013678 7138-016-019 09 CARSON LB, LLC - - - - Decreased per comparable reductions in past appeals. (1) 119 2009-013678 7138-016-020 09 CARSON LB, LLC - - - - Decreased per comparable reductions in past appeals. (1) 120 2009-013678 7138-016-021 09 CARSON LB, LLC - - - - Decreased per comparable reductions in past appeals. (1) 121 2009-008315 7139-011-026 09 KNOLLS MEDICAL GROUP LLC 2,476,152 - 2,124,740 (351,412) Decreased per comparable reductions in past appeals. (1) 122 2009-013148 7145-014-016 09 SERVANDO OROZCO 1,040,400 - 892,748 (147,652) Decreased per comparable reductions in past appeals. (1)

Source: Los Angeles County Assessment Appeals Board data as of 01-19-2010. Prepared by: Keyser Marston Associates, Inc. Filename: LB North 2009 Appeals 4Q 1-29-10.xls:Open:NYM: Page 3 of 7

Table 5 Projected Assessment Appeal Impact North Long Beach Project Area Long Beach Redevelopment Agency

Appeal Number

APN or Bill Number FY Applicant Name

Total Contested Value

Applicant Opinion of

Value Estimated

Resolved Value Projected Value

Variance KMA Assumption

123 2008-035627 7152-001-016 08 RICH SIGNAL HILL LLC & CARSON PACIFIC LLC 8,037,090 7,732,262 8,037,090 - Assumed withdrawn as in prior 2008 duplicate filing. (1) 124 2008-029496 7157-012-210 08 ARON SCHIFMAN 1,836,000 - 1,560,000 (276,000) RESOLVED: Reduced (1) 125 2008-012670 7157-012-211 08 ANA BORICEAN 192,000 - 185,000 (7,000) RESOLVED: Reduced (1) 126 2008-025176 7157-015-024 08 FOUNTAIN VALLEY APTS I, LLC 19,530,167 - 17,600,000 (1,930,167) RESOLVED: Assessor reduced 127 2009-001515 7157-015-024 09 FOUNTAIN VALLEY APTS. I, LLC 19,530,167 - 17,952,000 (1,578,167) Assumed 2% annual increase over 2008 reduced AV. (1) 128 2008-007317 7160-007-059 08 MANALANG 484,000 - 450,000 (34,000) RESOLVED: Assessor reduced (1) 129 2009-013203 7160-007-062 09 TOLLIE R. HICKS 359,000 251,300 308,051 (50,949) Decreased per comparable reductions in past appeals. (1) 130 2008-002419 7160-012-040 08 FRANCISCO O. MELENA 431,700 306,600 360,000 (71,700) RESOLVED: Assessor reduced (1) 131 2008-028130 7160-015-008 08 ROBERT RENTERIA 457,500 401,000 425,000 (32,500) RESOLVED: Assessor reduced 132 2009-001889 7160-015-008 09 ROBERT RENTERIA 400,000 340,000 400,000 - Assumed denied. Value was reduced in 2008. (1) 133 2008-005919 7160-015-017 08 JEANNETTE R. MA 675,000 - 675,000 - Assumed withdrawn as in duplicate filing in 2008. (1) 134 2008-000496 7210-024-028 08 BICH N. NGUYEN 566,197 - 475,000 (91,197) RESOLVED: Assessor reduced (1) 135 2009-006298 7212-004-012 09 ROBERT AUTREY/ AUTREY FAMILY LLC 1,958,400 - 1,680,467 (277,933) Decreased per comparable reductions in past appeals. (1) 136 2008-001644 7212-004-018 08 STUART KLABIN 4,010,000 1,604,000 3,700,000 (310,000) RESOLVED: Reduced 137 2009-012764 7212-004-018 09 STUART KLABIN 3,700,000 1,604,000 3,700,000 - Assumed denied. Value was reduced in 2008. (1) 138 2008-019647 7246-024-051 08 JAMES D. AND CIELO YATES 1,300,500 910,000 1,075,000 (225,500) RESOLVED: Assessor reduced (1) 139 2009-003023 7303-005-042 09 NICANOR RUIZ 327,600 - 281,107 (46,493) Decreased per comparable reductions in past appeals. (1) 140 2008-024317 7303-014-001 08 ARTURO LOPEZ 323,667 - 290,000 (33,667) RESOLVED: Assessor reduced (1) 141 2008-035176 7303-014-012 08 JESUS & GRACIELA SALDANA 598,230 - 425,000 (173,230) RESOLVED: Assessor reduced (1) 142 2009-008246 7303-025-050 09 JESSE L. OWENS 175,134 168,000 168,000 (7,134) Decreased per comparable reductions in past appeals. (1) 143 2009-004794 7304-004-020 09 GEORGE AJRAB 259,358 - 222,550 (36,808) Decreased per comparable reductions in past appeals. (1) 144 2008-012935 7304-006-045 08 TERESA FLORES 330,000 - 315,000 (15,000) RESOLVED: Reduced (1) 145 2008-034905 7305-017-003 08 SHARAD C. PATEL 499,021 - 428,201 (70,820) Decreased per comparable reductions in past appeals. (1) 146 2008-024316 7307-001-036 08 CESAR MACIEL 436,400 - 375,000 (61,400) RESOLVED: Assessor reduced (1) 147 2006-000908 7310-016-065 06 RAYTHEON COMPANY 1,255,979 123,136 1,255,979 - Assumed withdrawn as in 2004 & 2005. (1) 148 2006-000907 7310-016-066 06 RAYTHEON COMPANY 16,400,000 1,640,000 16,400,000 - Assumed withdrawn as in 2004 & 2005. (1) 149 2006-000906 7310-016-072 06 RAYTHEON COMPANY 49,600,000 4,680,000 49,600,000 - Assumed withdrawn as in 2004 & 2005. (1) 150 2009-002066 7310-016-080 09 BRCP REALTY SO CAL PORTFOLIO, LLC 9,413,019 4,750,000 9,413,019 - Assumed withdrawn as in 2008. (1) 151 2008-000445 7310-016-081 08 BRCP REALTY SO CAL PORTFOLIO, LLC 3,366,000 627,000 3,100,000 (266,000) RESOLVED: Assessor reduced 152 2009-002064 7310-016-081 09 BRCP REALTY SO CAL PORTFOLIO, LLC 3,100,000 1,550,000 3,100,000 - Assumed denied. Value was reduced in 2008. (1) 153 2008-000444 7310-016-082 08 BRCP REALTY SO CAL PORTFOLIO, LLC 12,868,830 6,434,000 10,730,000 (2,138,830) RESOLVED: Assessor reduced 154 2009-002064 7310-016-082 09 BRCP REALTY SO CAL PORTFOLIO, LLC 10,730,000 5,365,000 10,730,000 - Assumed denied. Value was reduced in 2008. (1) 155 2008-016886 7310-016-083 08 CA BROADCAST CENTER, LLC. 16,664,018 1,416,442 14,299,083 (2,364,935) Decreased per comparable reductions in past appeals. (1) 156 2009-006363 7402-021-036 09 CALIFORNIA STATE UNIVERSITY 6,557,485 4,438,000 5,626,856 (930,629) Decreased per comparable reductions in past appeals. (1) 157 2009-006363 7402-021-039 09 CALIFORNIA STATE UNIVERSITY 3,823,846 2,587,000 3,281,171 (542,675) Decreased per comparable reductions in past appeals. (1) 158 2009-006363 7402-021-041 09 CALIFORNIA STATE UNIVERSITY 1,895,554 1,282,000 1,626,540 (269,014) Decreased per comparable reductions in past appeals. (1) 159 2009-006363 7402-021-043 09 CALIFORNIA STATE UNIVERSITY 1,022,473 692,000 877,365 (145,108) Decreased per comparable reductions in past appeals. (1) 160 2009-006364 7402-021-044 09 CALIFORNIA STATE UNIVERSITY 4,825,126 3,154,000 4,140,351 (684,775) Decreased per comparable reductions in past appeals. (1) 161 2009-006364 7402-021-045 09 CALIFORNIA STATE UNIVERSITY 2,821,935 1,845,000 2,421,450 (400,485) Decreased per comparable reductions in past appeals. (1) 162 2009-005283 7431-035-013 09 PETER KIM 654,000 - 561,185 (92,815) Decreased per comparable reductions in past appeals. (1)

Source: Los Angeles County Assessment Appeals Board data as of 01-19-2010. Prepared by: Keyser Marston Associates, Inc. Filename: LB North 2009 Appeals 4Q 1-29-10.xls:Open:NYM: Page 4 of 7

Table 5 Projected Assessment Appeal Impact North Long Beach Project Area Long Beach Redevelopment Agency

Appeal Number

APN or Bill Number FY Applicant Name

Total Contested Value

Applicant Opinion of

Value Estimated

Resolved Value Projected Value

Variance KMA Assumption

POSSESSORY INTEREST APPEALS: 163 2003-002711 8940-430-015 03 VALERO ENERGY CORPORATION/ULTAMAR, INC 3,155,880 600,000 3,155,880 - Assumed denied; appeal older than 5 years. 164 2004-001759 8940-430-015 04 ULTRAMAR, INC VALERO ENERGY CORPORATION 3,214,799 600,000 3,214,799 - Assumed denied; appeal older than 5 years. 165 2005-001332 8940-430-015 05 VALERO ENERGY CORPORATION/ULTRAMAR, INC. 3,279,094 - 2,233,333 (1,045,761) Decreased per comparable reductions in past appeals. 166 2006-003871 8940-430-015 06 ULTRAMAR, INC. VALERO ENERGY CORPORATION 3,344,675 600,000 2,277,999 (1,066,676) Decreased per comparable reductions in past appeals. 167 2007-004427 8940-430-015 07 VALERO ENERGY CORPORATION/ULTRAMAR, INC. 3,136,805 600,000 2,136,423 (1,000,382) Decreased per comparable reductions in past appeals. 168 2008-025398 8940-430-015 08 VALERO ENERGY CORP./ULTRAMAR, INC. 3,199,540 310,000 2,179,150 (1,020,390) Decreased per comparable reductions in past appeals. (2) 169 2008-020973 8940-430-065 08 THUMS LONG BEACH COMPANY PARTICIPANTS IN LB 1,156,083 102,000 1,156,083 - Assumed denied as in 2003 through 2007. (2) 170 2008-020973 8940-430-066 08 THUMS LONG BEACH COMPANY PARTICIPANTS IN LB 8,835,698 1,100,000 8,835,698 - Assumed denied as in 2003 through 2007. (2) 171 2008-020973 8940-430-067 08 THUMS LONG BEACH COMPANY PARTICIPANTS IN LB 2,981,685 450,000 2,981,685 - Assumed denied as in 2003 through 2007. (2) 172 2008-020973 8940-430-069 08 THUMS LONG BEACH COMPANY PARTICIPANTS IN LB 314,759 37,000 314,759 - Assumed denied as in 2003 through 2007. (2) 173 2008-020973 8940-430-072 08 THUMS LONG BEACH COMPANY PARTICIPANTS IN LB 1,358,517 130,000 1,358,517 - Assumed denied as in 2003 through 2007. (2) 174 2008-020973 8940-430-119 08 THUMS LONG BEACH COMPANY PARTICIPANTS IN LB 920,890 120,000 920,890 - Assumed denied as in 2003 through 2007. (2) 175 2007-003517 8940-431-007 07 TOTAL TERMINALS INTERNATIONAL, LLC 1,008,780 650,000 1,008,780 - Assumed withdrawn as in 2006. 176 2008-019243 8940-431-007 08 TOTAL TERMINALS INTERNATIONAL, LLC 1,028,955 650,000 1,028,955 - Assumed withdrawn as in 2006. (2) 177 2008-020973 8940-431-136 08 THUMS LONG BEACH COMPANY PARTICIPANTS IN LB 37,740 3,000 25,704 (12,036) Decreased per comparable reductions in past appeals. (2) 178 2008-026432 8940-431-225 08 MITSUBISHI CEMENT TERMINAL 33,000 1,000 22,476 (10,524) Decreased per comparable reductions in past appeals. (2) 179 2007-007789 8940-432-002 07 INTERNATIONAL TRANSPORTATION SERVICES 95,691,028 - 65,173,471 (30,517,557) Decreased per comparable reductions in past appeals. 180 2008-010803 8940-432-002 08 INTERNATIONAL TRANS SERVICE INC. 341,598,000 170,799,000 232,656,371 (108,941,629) Decreased per comparable reductions in past appeals. 181 2009-007098 8940-432-002 09 INTERNATIONAL TRANS. SERVICE INC. 344,376,120 172,188,060 234,548,500 (109,827,620) Decreased per comparable reductions in past appeals. (2) 182 2006-003595 8940-432-003 06 METROPOLITAN STEVEDORE COMPANY 22,221,000 6,000,000 22,221,000 - Assumed withdrawn as in 2003 through 2005. 183 2007-002924 8940-432-003 07 METROPOLITAN STEVEDORE COMPANY 22,533,000 18,000,000 22,533,000 - Assumed withdrawn as in 2003 through 2005. 184 2008-026443 8940-432-003 08 METROPOLITAN STEVEDORE COMPANY 21,546,000 11,000,000 21,546,000 - Assumed withdrawn as in 2003 through 2005. (2) 185 2008-026432 8940-432-012 08 MITSUBISHI CEMENT TERMINAL 9,068,515 1,600,000 6,176,406 (2,892,109) Decreased per comparable reductions in past appeals. (2) 186 2005-005804 8940-432-031 05 PACIFIC MARITIME SERVICES, LLC 317,825,482 126,800,000 216,465,328 (101,360,154) Decreased per comparable reductions in past appeals. 187 2006-005475 8940-432-031 06 PACIFIC MARITIME SERVICES LLC 324,181,990 162,100,000 220,794,634 (103,387,356) Decreased per comparable reductions in past appeals. 188 2007-004898 8940-432-031 07 PACIFIC MARITIME SERVICES LLC. 330,665,628 165,600,000 225,210,525 (105,455,103) Decreased per comparable reductions in past appeals. 189 2008-021342 8940-432-031 08 PACIFIC MARITIME SERVICES LLC 337,278,940 165,600,000 229,714,735 (107,564,205) Decreased per comparable reductions in past appeals. (2) 190 2007-003517 8940-432-040 07 TOTAL TERMINALS INTERNATIONAL, LLC 491,734,622 300,000,000 491,734,622 - Assumed withdrawn as in 2003 through 2006. 191 2008-019243 8940-432-040 08 TOTAL TERMINALS INTERNATIONAL, LLC 516,069,313 300,000,000 516,069,313 - Assumed withdrawn as in 2003 through 2006. (2) 192 2004-001759 8940-759-501 04 ULTRAMAR, INC VALERO ENERGY CORPORATION 272,906 50,000 272,906 - Assumed denied; appeal older than 5 years. 193 2007-004427 8940-759-501 07 VALERO ENERGY CORPORATION/ULTRAMAR, INC. 993,394 200,000 676,583 (316,811) Decreased per comparable reductions in past appeals. 194 2008-025398 8940-759-501 08 VALERO ENERGY CORP./ULTRAMAR, INC. 1,013,254 200,000 690,109 (323,145) Decreased per comparable reductions in past appeals. (2) 195 2008-016635 8940-759-547 08 CHEVRON U.S.A., INC. 1,272,054 929,968 929,968 (342,086) Decreased per comparable reductions in past appeals. (2) 196 2007-007054 8940-759-589 07 EDGINGTON OIL COMPANY, LLC. 18,754,000 10,100,000 12,773,019 (5,980,981) Decreased per comparable reductions in past appeals. 197 2008-031424 8940-759-589 08 EDGINGTON OIL COMPANY, LLC. 18,564,740 10,100,000 12,644,117 (5,920,623) Decreased per comparable reductions in past appeals. (2) 198 2008-016635 8940-759-594 08 CHEVRON U.S.A., INC. 170,030,923 - 115,805,062 (54,225,861) Decreased per comparable reductions in past appeals. (2) 199 2008-026443 8940-759-874 08 METROPOLITAN STEVEDORE COMPANY 11,204,887 2,000,000 7,631,451 (3,573,436) Decreased per comparable reductions in past appeals. (2) 200 2008-026443 8940-759-875 08 METROPOLITAN STEVEDORE COMPANY 9,970,022 10,000 6,790,406 (3,179,616) Decreased per comparable reductions in past appeals. (2) 201 2007-002924 8940-759-881 07 METROPOLITAN STEVEDORE COMPANY 5,342,550 1,000,000 3,638,717 (1,703,833) Decreased per comparable reductions in past appeals. (2) 202 2007-002924 8940-759-882 07 METROPOLITAN STEVEDORE COMPANY 11,792,852 100,000 8,031,903 (3,760,949) Decreased per comparable reductions in past appeals. (2)

Source: Los Angeles County Assessment Appeals Board data as of 01-19-2010. Prepared by: Keyser Marston Associates, Inc. Filename: LB North 2009 Appeals 4Q 1-29-10.xls:Open:NYM: Page 5 of 7

Table 5 Projected Assessment Appeal Impact North Long Beach Project Area Long Beach Redevelopment Agency

Appeal Number

APN or Bill Number FY Applicant Name

Total Contested Value

Applicant Opinion of

Value Estimated

Resolved Value Projected Value

Variance KMA Assumption

203 2008-026439 8940-759-884 08 CALIFORNIA UNITED TERMINALS 908,784 - - (908,784) RESOLVED: No change (2) 204 2006-003595 8940-759-897 06 METROPOLITAN STEVEDORE COMPANY 12,271,030 1,500,000 8,357,582 (3,913,448) Decreased per comparable reductions in past appeals. (2) 205 2006-003595 8940-759-898 06 METROPOLITAN STEVEDORE COMPANY 6,433,045 100,000 4,381,433 (2,051,612) Decreased per comparable reductions in past appeals. (2)

UNSECURED APPEALS: 206 2008-039540 0049-203-779 08 BRAND SERVICES #214 13,583,472 - 10,692,303 (2,891,169) Decreased per comparable reductions in past appeals. (3) 207 2008-039539 0049-917-731 08 BRAND SERVICES #214 5,195,571 - 4,089,722 (1,105,849) Decreased per comparable reductions in past appeals. (3) 208 2008-039538 0049-917-732 08 BRAND SERVICES #214 1,590,151 - 1,251,696 (338,455) Decreased per comparable reductions in past appeals. (3) 209 2008-039537 0049-917-733 08 BRAND SERVICES #214 6,660,069 - 5,242,509 (1,417,560) Decreased per comparable reductions in past appeals. (3) 210 2006-007565 0049-909-635 04 CALIFORNIA BROADCAST CENTER 922,803 - 922,803 - Assumed withdrawn as in 2002 & 2003. 211 2008-026439 0040-801-189 08 CALIFORNIA UNITED TERMINALS 23,315,143 1,500,000 20,936,258 (2,378,885) RESOLVED: Assessor reduced (3) 212 2006-001050 0040-769-604 06 CBS OUTDOOR INC. 835,311 278,000 657,520 (177,791) Decreased per comparable reductions in past appeals. 213 2006-001050 0040-769-618 06 CBS OUTDOOR INC. 1,781,773 594,000 1,402,532 (379,241) Decreased per comparable reductions in past appeals. 214 2007-000833 0040-802-811 07 CBS OUTDOOR INC. 852,015 250,000 670,668 (181,347) Decreased per comparable reductions in past appeals. 215 2007-000833 0040-802-825 07 CBS OUTDOOR INC. 1,817,403 600,000 1,430,579 (386,824) Decreased per comparable reductions in past appeals. 216 2008-012211 0040-805-782 08 CBS OUTDOOR INC. 1,853,746 925,000 1,459,186 (394,560) Decreased per comparable reductions in past appeals. 217 2009-010709 0040-805-863 09 CBS OUTDOOR INC. 803,899 530,573 632,793 (171,106) Decreased per comparable reductions in past appeals. (3) 218 2009-010709 0040-805-877 09 CBS OUTDOOR INC. 1,714,768 1,131,746 1,349,789 (364,979) Decreased per comparable reductions in past appeals. (3) 219 2009-007118 0047-003-221 08 CONNOLLY-PACIFIC COMPANY 1,088,355 - 856,705 (231,650) Decreased per comparable reductions in past appeals. (3) 220 2009-007118 0047-061-226 07 CONNOLLY-PACIFIC COMPANY 1,068,062 - 840,731 (227,331) Decreased per comparable reductions in past appeals. 221 2009-007118 0047-062-452 06 CONNOLLY-PACIFIC COMPANY 1,070,109 - 842,342 (227,767) Decreased per comparable reductions in past appeals. 222 2009-007118 0047-124-198 05 CONNOLLY-PACIFIC COMPANY 1,033,188 - 813,280 (219,908) Decreased per comparable reductions in past appeals. 223 2008-025851 0040-811-150 08 ENVISION HEALTHCARE INC. 1,060,000 530,000 834,385 (225,615) Decreased per comparable reductions in past appeals. (3) 224 2008-007573 0040-776-497 08 FAMU CORPORATION DBA DEL AMO PETROLEUM 250,000 - 196,789 (53,211) Decreased per comparable reductions in past appeals. 225 2009-006056 0040-799-147 09 FAMU CORPORATION DBA DEL AMO PETROLEUM 250,000 112,528 196,789 (53,211) Decreased per comparable reductions in past appeals. (3) 226 2009-004069 0047-058-343 09 HARBOR ISLAND YACHT CLUB, INC. 137,816 81,054 108,483 (29,333) Decreased per comparable reductions in past appeals. (3) 227 2009-010004 0040-817-707 09 HINO MOTORS MANUFACTURING USA INC. 12,494,897 500,000 9,835,426 (2,659,471) Decreased per comparable reductions in past appeals. (3) 228 2003-000361 0040-782-898 03 HUGHES COMMUNICATIONS SATELLITE SERVICES INC. 771,362 - 771,362 - Assumed denied; appeal older than 5 years. 229 2005-007070 0049-914-399 99 HUGHES COMMUNICATIONS SATELLITE SERVICES INC. 3,161,903 - 3,161,903 - Assumed denied; appeal older than 5 years. 230 2009-007099 0040-803-086 09 INTERNATIONAL TRANSPORTATION SERVICE INC. 116,596,200 58,298,100 91,779,330 (24,816,870) Decreased per comparable reductions in past appeals. (3) 231 2008-005159 0040-772-492 08 INTERNATIONAL TRANSPORTATION SERVICES 119,727,327 59,863,664 94,244,013 (25,483,314) Decreased per comparable reductions in past appeals. 232 2007-001743 0040-780-903 07 INTERNATIONAL TRANSPORTATION SERVICES 101,159,524 50,579,763 79,628,267 (21,531,257) Decreased per comparable reductions in past appeals. 233 2008-040653 0040-746-268 09 LINK LETTER SELF STORAGE COMPANY 15,000 5,000 11,807 (3,193) Decreased per comparable reductions in past appeals. (3) 234 2008-033602 0040-798-145 08 LONG BEACH ACQUISITION, LLC 31,785,055 16,000,000 31,785,055 - Assumed withdrawn as in 2007. (3) 235 2008-033974 0040-808-477 07 MASTER PROCESSING CENTER (BANDAG) 5,252,192 3,400,000 4,134,291 (1,117,901) Decreased per comparable reductions in past appeals. 236 2008-026443 0040-771-901 08 METROPOLITAN STEVEDORE COMPANY 5,404,775 1,500,000 4,254,398 (1,150,377) Decreased per comparable reductions in past appeals. (3) 237 2006-003594 0040-777-419 06 METROPOLITAN STEVEDORE COMPANY 5,105,358 1,000,000 4,018,710 (1,086,648) Decreased per comparable reductions in past appeals. 238 2007-002924 0040-793-025 07 METROPOLITAN STEVEDORE COMPANY 4,946,119 1,100,000 3,893,364 (1,052,755) Decreased per comparable reductions in past appeals. 239 2008-040961 0049-909-725 08 METROPOLITAN STEVEDORE COMPANY 4,788,741 - 3,769,483 (1,019,258) Decreased per comparable reductions in past appeals. (3) 240 2008-040961 0049-909-726 08 METROPOLITAN STEVEDORE COMPANY 5,018,411 - 3,950,269 (1,068,142) Decreased per comparable reductions in past appeals. (3) 241 2008-026432 0040-805-508 08 MITSUBISHI CEMENT TERMINAL 18,480,191 3,000,000 18,480,191 - Assumed withdrawn as in 2005, 2006, and 2007. (3)

Source: Los Angeles County Assessment Appeals Board data as of 01-19-2010. Prepared by: Keyser Marston Associates, Inc. Filename: LB North 2009 Appeals 4Q 1-29-10.xls:Open:NYM: Page 6 of 7

Table 5 Projected Assessment Appeal Impact North Long Beach Project Area Long Beach Redevelopment Agency

Appeal Number

APN or Bill Number FY Applicant Name

Total Contested Value

Applicant Opinion of

Value Estimated

Resolved Value Projected Value

Variance KMA Assumption

242 2006-000903 0040-779-029 06 RAYTHEON COMPANY 10,005,008 1,000,501 7,875,496 (2,129,512) Decreased per comparable reductions in past appeals. 243 2006-000902 0040-779-030 06 RAYTHEON COMPANY 2,714,938 271,494 2,714,938 - Assumed withdrawn as in 2004 & 2005. 244 2007-000873 0040-781-447 07 RAYTHEON COMPANY 1,562,644 156,265 1,230,044 (332,600) Decreased per comparable reductions in past appeals. 245 2007-000872 0040-781-448 07 RAYTHEON COMPANY 1,236,547 123,654 973,355 (263,192) Decreased per comparable reductions in past appeals. 246 2008-036408 0040-794-130 08 RAYTHEON TECHNICAL SERVICES LLC 801,695 - 631,059 (170,636) Decreased per comparable reductions in past appeals. (3) 247 2008-020973 0040-742-775 08 THUMS LONG BEACH COMPANY PARTICIPANTS IN LB 4,275,439 - 3,365,435 (910,004) Decreased per comparable reductions in past appeals. (3) 248 2008-020973 0047-003-194 08 THUMS LONG BEACH COMPANY PARTICIPANTS IN LB 152,868 15,000 120,331 (32,537) Decreased per comparable reductions in past appeals. (3) 249 2008-020973 0047-003-212 08 THUMS LONG BEACH COMPANY PARTICIPANTS IN LB 573,041 50,000 451,072 (121,969) Decreased per comparable reductions in past appeals. (3) 250 2008-020973 0047-003-213 08 THUMS LONG BEACH COMPANY PARTICIPANTS IN LB 74,132 7,500 58,353 (15,779) Decreased per comparable reductions in past appeals. (3) 251 2008-020973 0047-005-108 08 THUMS LONG BEACH COMPANY PARTICIPANTS IN LB 573,041 50,000 451,072 (121,969) Decreased per comparable reductions in past appeals. (3) 252 2008-026062 0040-797-815 08 UNITED RENTALS NORTHWEST, INC. 6,543,805 6,243,244 6,243,244 (300,561) Decreased per comparable reductions in past appeals. (3) 253 2008-026063 0040-797-817 08 UNITED RENTALS NORTHWEST, INC. 1,287,847 1,092,575 1,092,575 (195,272) Decreased per comparable reductions in past appeals. (3) 254 2003-004193 0040-785-310 03 VIACOM OUTDOOR INC 132,487 39,000 132,487 - Assumed denied; appeal older than 5 years. 255 2003-004193 0040-785-321 03 VIACOM OUTDOOR INC 438,863 128,000 438,863 - Assumed denied; appeal older than 5 years. 256 2005-000681 0040-759-848 05 VIACOM OUTDOOR, INC. 801,135 400,500 630,618 (170,517) Decreased per comparable reductions in past appeals. 257 2005-000681 0040-759-862 05 VIACOM OUTDOOR, INC. 1,708,873 854,500 1,345,149 (363,724) Decreased per comparable reductions in past appeals. 258 2004-001346 0040-772-720 04 VIACOM OUTDOOR, INC. 331,731 80,000 331,731 - Assumed denied; appeal older than 5 years. 259 2004-001346 0040-772-731 04 VIACOM OUTDOOR, INC. 468,845 110,000 468,845 - Assumed denied; appeal older than 5 years. 260 2009-007204 0040-821-823 09 VONS COMPANIES INC. 2,319,901 1,159,951 1,826,123 (493,778) Decreased per comparable reductions in past appeals. (3) 261 2008-006286 0040-791-720 08 VONS COMPANIES, INC. 2,432,388 1,216,194 1,914,667 (517,721) Decreased per comparable reductions in past appeals. 262 2009-000775 0040-773-066 09 WMZ, INC. 20,000 60,000 60,000 40,000 Decreased per comparable reductions in past appeals. (3) 263 2008-020028 0049-118-178 08 XEROX CORPORATION 122,110 94,093 96,120 (25,990) Decreased per comparable reductions in past appeals. (3) 264 2008-020028 0049-118-351 08 XEROX CORPORATION 253,521 186,680 199,560 (53,961) Decreased per comparable reductions in past appeals. (3)

PROJECTED ASSESSMENT APPEALS IMPACT - NORTH RP 265 Total Reductions for Tax Refund (892,176,000) 266 Projected Tax Refund at 1% (8,922,000)

267 (1) Secured Value Reduction (unique filings) (277,825,000) 268 (2) Possessory Interest Value Reduction (unique filings) (317,469,000) 269 (3) Unsecured Value Reduction (unique filings) (42,328,000) 270 Total Projected Value Reduction for FY 2010-11 (unique filings) (637,622,000)

Note: The assessment appeal records shown above represent County reported "open" appeal filings as of the Fourth Quarter 2009, as contained in the assessment appeals database of January 19, 2010. The County has informed KMA that the Fourth Quarter 2009 database may not include all appeal records filed for FY 2009-10 due to the number of filings and that a subsequent First Quarter 2010 database (to be released in April 2010) will likely include additional filings not reflected in this table. The table presented here is based on extracted records reported by the County to date. KMA cannot guarantee the completeness or accuracy of the County's data.

Source: Los Angeles County Assessment Appeals Board data as of 01-19-2010. Prepared by: Keyser Marston Associates, Inc. Filename: LB North 2009 Appeals 4Q 1-29-10.xls:Open:NYM: Page 7 of 7

Table 6 Tax Increment Revenue Projection North Long Beach Project Long Beach Redevelopment Agency (000's Omitted)

1 Real Property 2 Projected Appeal Value Loss (Table 5) 3 CPI Adjustment 4 New Development Value (Weber Metals) 5 Total Real Property

6 Possessory Interest 7 Projected Appeal Value Loss (Table 5) 8 CPI Adjustment 9 New Development Value (ITS Rail Yard)

10 Total Possessory Interest

11 Personal Property & SBE 12 Projected Appeal Value Loss (Table 5) 13 Total Personal Property

14 Total Project Value 15 Less Base Value 16 Incremental Value Over Base

17 Gross Tax Revenue 18 Add Unitary Tax Revenue 19 Projected Appeal Tax Refund (Table 5) 20 Gross Tax Increment Revenue 21 Less County Admin Fees at -1.47% 22 Subtotal

23 Less Housing Set Aside at -20% 24 Net Tax Increment Revenue 25 Less AB1290 Statutory Pass Through 26 Net Revenue after Pass Through

27 Less 2009-10 SERAF 28 Less 2010-11 SERAF 29 Add Borrowed from Housing 30 Less Repayment to Housing 31 Net After SERAF

N O I N F L A T I O N A R Y G R O W T H

Reported

Debt Incurrence Time Limit 7-16-2016

2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20

5,108,159 5,108,159 4,818,886 4,818,886 4,822,972 4,822,972 4,822,972 4,822,972 4,822,972 4,822,972 4,822,972 0 (277,825) 0 0 0 0 0 0 0 0 0 0 (11,448) 0 0 0 0 0 0 0 0 0 0 0 0 4,086 0 0 0 0 0 0 0

5,108,159 4,818,886 4,818,886 4,822,972 4,822,972 4,822,972 4,822,972 4,822,972 4,822,972 4,822,972 4,822,972

1,473,013 1,473,013 1,152,805 1,152,805 1,191,305 1,207,805 1,207,805 1,207,805 1,207,805 1,207,805 1,207,805 0 (317,469) 0 0 0 0 0 0 0 0 0 0 (2,739) 0 0 0 0 0 0 0 0 0 0 0 0 38,500 16,500 0 0 0 0 0 0

1,473,013 1,152,805 1,152,805 1,191,305 1,207,805 1,207,805 1,207,805 1,207,805 1,207,805 1,207,805 1,207,805

924,826 924,826 882,498 882,498 882,498 882,498 882,498 882,498 882,498 882,498 882,498 0 (42,328) 0 0 0 0 0 0 0 0 0

924,826 882,498 882,498 882,498 882,498 882,498 882,498 882,498 882,498 882,498 882,498

7,505,998 6,854,189 6,854,189 6,896,775 6,913,275 6,913,275 6,913,275 6,913,275 6,913,275 6,913,275 6,913,275 (3,096,395) (3,096,395) (3,096,395) (3,096,395) (3,096,395) (3,096,395) (3,096,395) (3,096,395) (3,096,395) (3,096,395) (3,096,395) 4,409,602 3,757,794 3,757,794 3,800,380 3,816,880 3,816,880 3,816,880 3,816,880 3,816,880 3,816,880 3,816,880

44,285 37,739 37,739 38,167 38,333 38,333 38,333 38,333 38,333 38,333 38,333 49 49 49 49 49 49 49 49 49 49 49

(8,922) 0 0 0 0 0 0 0 0 0 0 35,412 37,788 37,788 38,216 38,382 38,382 38,382 38,382 38,382 38,382 38,382

(654) (553) (554) (560) (563) (563) (563) (563) (563) (563) (563) 34,759 37,235 37,235 37,656 37,819 37,819 37,819 37,819 37,819 37,819 37,819

(7,082) (7,558) (7,558) (7,643) (7,676) (7,676) (7,676) (7,676) (7,676) (7,676) (7,676) 27,676 29,677 29,677 30,013 30,143 30,143 30,143 30,143 30,143 30,143 30,143

(7,082) (7,558) (7,558) (7,643) (7,676) (7,676) (7,676) (7,676) (7,676) (7,676) (7,676) 20,594 22,120 22,119 22,370 22,467 22,467 22,467 22,467 22,467 22,467 22,467

(10,149) 0 0 0 0 0 0 0 0 0 0 0 (2,751) 0 0 0 0

8,439 0 0 0 0 0 0 (1,688) (1,688) (1,688) (1,688) (1,688) 0 0 0 0 0

18,883 17,681 20,431 20,682 20,779 20,779 22,467 22,467 22,467 22,467 22,467

Prepared by KeyserMarston Associates, Inc. TI_Long_Beach_2010-01-29.xls:TI:2/16/2010: NYM: Page 1 of 1

Appendix E Page 1

APPENDIX E

FORM OF OPINION OF BOND COUNSEL

May __, 2010

Redevelopment Agency of the City of Long Beach 333 West Ocean Boulevard Long Beach, California 90802

OPINION: $22,235,000 Redevelopment Agency of the City of Long Beach Taxable Recovery Zone Economic Development Bonds, 2010 Series A (North Long Beach Redevelopment Project) and $10,745,000 Redevelopment Agency of the City of Long Beach Taxable Build America Bonds, 2010 Series B (North Long Beach Redevelopment Project)

Members of the Agency:

We have acted as bond counsel in connection with the issuance by the Redevelopment Agency of the City of Long Beach (the “Agency”) of its $22,235,000 Redevelopment Agency of the City of Long Beach Taxable Recovery Zone Economic Development Bonds, 2010 Series A (North Long Beach Redevelopment Project), and its $10,745,000 Redevelopment Agency of the City of Long Beach Taxable Build America Bonds, 2010 Series B (North Long Beach Redevelopment Project) (collectively, the “Bonds”), pursuant to the provisions of the Community Redevelopment Law of the State of California (the “Law”), Resolution No. R.A. 09-2010, adopted by the Agency on April 5, 2010, and an Indenture of Trust, dated as of May 1, 2002 (the “Original Indenture”), as amended and supplemented by a First Supplemental Indenture of Trust, dated as of February 1, 2005 (the “First Supplement”), by a Second Supplemental Indenture of Trust, dated as of February 1, 2006 (the “Second Supplement”), and by a Third Supplemental Indenture of Trust, dated as of May 1, 2010 (the “Third Supplement”), each between the Agency and The Bank of New York Mellon Trust Company, N.A. (successor to BNY Western Trust Company, and formerly known as The Bank of New York Trust Company, N.A.), as trustee. The Original Indenture, as amended and supplemented by the First Supplement, by the Second Supplement and by the Third Supplement, is referred to below as the “Indenture.”

In connection with this opinion, we have examined the law and such certified

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

Based upon the foregoing we are of the opinion, under existing law, that: 1. The Agency is duly created and validly existing as a public body, corporate and

politic, with the power to enter into the Indenture, perform the agreements on its part contained therein and issue the Bonds.

2. The Indenture has been duly approved by the Agency and constitutes a valid and

binding obligation of the Agency enforceable in accordance with its terms.

Appendix E Page 2

3. Pursuant to the Law, the Indenture creates a valid lien on the funds pledged by the Indenture for the security of the Bonds, on a parity with the lien thereon with respect to the 2002 Bonds, the 2005 Bonds and any future Parity Debt, as such terms are defined in the Indenture.

4. The Bonds have been duly authorized, executed and delivered by the Agency and

are valid and binding special obligations of the Agency, payable solely from the sources provided therefor in the Indenture.

5. The interest on the Bonds is subject to all applicable federal taxation. 6. The interest on the Bonds is exempt from personal income taxation imposed by the

State of California. Ownership of the Bonds may result in other tax consequences to certain taxpayers, and

we express no opinion regarding any such collateral consequences arising with respect to the Bonds.

The rights of the owners of the Bonds and the enforceability of the Bonds and the

Indenture may be subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors’ rights heretofore or hereafter enacted and also may be subject to the exercise of judicial discretion in accordance with general principles of equity.

In rendering this opinion, we have relied upon certifications of the Agency and others

with respect to certain material facts. Our opinion represents our legal judgment based upon such review of the law and the facts that we deem relevant to render our opinion and is not a guarantee of a result. This opinion is given as of the date hereof and we assume no obligation to revise or supplement this opinion to reflect any facts or circumstances that may hereafter come to our attention or any changes in law that may hereafter occur.

Respectfully submitted,

Appendix F Page 1

APPENDIX F

FORM OF CONTINUING DISCLOSURE AGREEMENT THIS CONTINUING DISCLOSURE AGREEMENT (this “Disclosure Agreement”)

dated for convenience as of May 1, 2010 (and entered into as of May 12, 2010), is executed and delivered by the Redevelopment Agency of the City of Long Beach (the “Issuer”) and the City of Long Beach (the “Dissemination Agent”), in connection with the issuance by the Issuer of its Redevelopment Agency of the City of Long Beach Taxable Recovery Zone Economic Development Bonds, 2010 Series A (North Long Beach Redevelopment Project) and its Redevelopment Agency of the City of Long Beach Taxable Build America Bonds, 2010 Series B (North Long Beach Redevelopment Project) (collectively, the “2010 Bonds”). The 2010 Bonds are being issued pursuant to an Indenture of Trust, dated as of May 1, 2002 (the “Original Indenture”), as amended and supplemented by a First Supplemental Indenture of Trust, dated as of February 1, 2005, by a Second Supplemental Indenture of Trust, dated as of February 1, 2006, and by a Third Supplemental Indenture of Trust, dated as of May 1, 2010 (the Original Indenture, as so amended and supplemented, is referred to below as the “Indenture”), each by and between the Issuer and The Bank of New York Mellon Trust Company, N.A. (successor to BNY Western Trust Company and formerly known as The Bank of New York Trust Company, N.A.), as trustee (the ”Trustee”).

The Issuer and the Dissemination Agent hereby agree as follows: SECTION 1. Purpose of the Disclosure Agreement. This Disclosure Agreement is

being executed and delivered by the Issuer and the Dissemination Agent for the benefit of the Owners and Beneficial Owners of the 2010 Bonds and in order to assist the Participating Underwriter in complying with the Rule.

SECTION 2. Definitions. In addition to the definitions set forth in the Indenture,

which apply to any capitalized term used in this Disclosure Agreement unless otherwise defined in this Section, the following capitalized terms shall have the following meanings:

“Annual Report” shall mean any Annual Report provided by the Issuer pursuant to,

and as described in, Sections 3 and 4 of this Disclosure Agreement. “Beneficial Owner” shall mean any person who (a) has the power, directly or indirectly,

to vote or consent with respect to, or to dispose of ownership of, any 2010 Bond (including a person holding a 2010 Bond through a nominee, depository or other intermediary), or (b) is treated as the owner of any 2010 Bond for federal income purposes.

“Dissemination Agent” shall mean the City of Long Beach, or any successor

Dissemination Agent designed in writing by the Issuer and which has filed with the Issuer a written acceptance of such designation.

“Listed Events” shall mean any of the events listed in Section 5(a) of this Disclosure

Agreement. “National Repository” shall mean the Municipal Securities Rulemaking Board’s

Electronic Municipal Market Access (EMMA) system, and any other Nationally Recognized Municipal Securities Information Repository for purposes of the Rule. The National Repositories currently recognized by the Securities and Exchange Commission are set forth in the SEC website located at http://www.sec.gov/info/municipal/nrmsir.htm.

Appendix F Page 2

“Official Statement” shall mean the Issuer’s official statement with respect to the 2010 Bonds.

“Participating Underwriter” shall mean the original underwriter of the 2010 Bonds

required to comply with the Rule in connection with the offer and sale of the 2010 Bonds. “Repository” shall mean the National Repository and each State Repository, if any. “Rule” shall mean Rule 15c2-12(b)(5) adopted by the Securities and Exchange

Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time.

“State Repository” shall mean any public or private repository or entity designated by

the State of California as a state repository for the purpose of the Rule and recognized as such by the Securities and Exchange Commission. As of the date of this Disclosure Agreement, there is no State Repository.

SECTION 3. Provision of Annual Reports. (a) Not later than 180 days after the end of the Issuer’s fiscal year (which currently

ends on September 30), commencing with the fiscal year ending September 30, 2010, the Issuer shall, or shall cause the Dissemination Agent to, provide to each Repository an Annual Report which is consistent with the requirements of Section 4 of this Disclosure Agreement. Not later than 15 business days prior to the date referred to in the prior sentence hereof, the Issuer shall provide the Annual Report (in a form suitable for filing with the Repositories) to the Dissemination Agent. The Annual Report may be submitted as a single document or as separate documents comprising a package and may include by reference other information as provided in Section 4 of this Disclosure Agreement. The Issuer shall provide a written certification with each Annual Report furnished to the Dissemination Agent to the effect that such Annual Report constitutes the Annual Report required to be furnished by it hereunder. The Dissemination Agent may conclusively rely upon such certification of the Issuer and shall have no duty or obligation to review such Annual Report.

(b) If by the date required in subsection (a) the Dissemination Agent has not

received a copy of the Annual Report, the Dissemination Agent shall contact the Issuer to determine if the Issuer will be filing the Annual Report in compliance with subsection (a).

(c) If the Dissemination Agent is unable to verify that an Annual Report has been

provided to the Repositories by the date required in subsection (a), the Dissemination Agent shall send a notice in substantially the form attached as Exhibit A to the Municipal Securities Rulemaking Board (“MSRB”) and each State Repository, if any.

(d) The Dissemination Agent shall:

(i) determine each year prior to the date for providing the Annual Report and the name and address of each Repository;

(ii) provide any Annual Report received by it to each Repository as provided

herein; and (iii) if it has provided the Annual Report pursuant to (ii) above, file a report

with the Issuer certifying that the Annual Report has been provided pursuant to this Disclosure Agreement, stating the date it was provided and listing all the Repositories to which it was provided.

Appendix F Page 3

SECTION 4. Content of Annual Reports. The Issuer’s Annual Report shall contain or

include by reference: (a) Financial Statements. The audited financial statements of the Issuer for the

most recent fiscal year of the Issuer then ended. If the audited financial statements are not available by the time the Annual Report is required to be filed, the Annual Report shall contain any unaudited financial statements of the Issuer in a format similar to the audited financial statements, and the audited financial statements shall be filed in the same manner as the Annual Report when they become available.

(b) Financial and Operating Data. The Annual Report shall contain or incorporate

by reference the following information:

(i) A description of any Parity Debt issued during such Fiscal Year. (ii) Updates to the following tables in the Official Statement (or the

provision of comparable information) using information for the most recent fiscal or calendar year for which information is available to the Issuer: (A) Table 4, indicating the ten largest taxpayers by assessed value in the Project Area; (B) Table 3, indicating historical taxable values and total incremental value for property in the Project Area; and (C) Table 6, indicating tax increment revenues, debt service on outstanding Bonds and debt service coverage, but only with regards to the information for the most recent Fiscal Year and including debt service on any Parity Debt issued after the 2010 Bonds.

(iii) Such further information, if any, as may be necessary to make the

statements specifically required pursuant to this Section 4(b), in the light of the circumstances under which they are made, not misleading.

(c) Any or all of the items listed in (a) or (b) above may be included by specific

reference to other documents, including official statements of debt issues of the Issuer or related public entities, which have been submitted to each of the Repositories or the Securities and Exchange Commission. If the document included by reference is a final official statement, it must be available from the MSRB. The Issuer shall clearly identify each such other document so included by reference.

SECTION 5. Reporting of Material Events. (a) Pursuant to the provisions of this Section 5, the Issuer shall give, or cause the

Dissemination Agent to give, notice of the occurrence of any of the following events with respect to the 2010 Bonds, if material:

(i) principal and interest payment delinquencies, (ii) non-payment related defaults, (iii) unscheduled draws on the Reserve Fund reflecting financial difficulties, (iv) unscheduled draws on any credit enhancements reflecting financial

difficulties, (v) substitution of credit or liquidity providers, or their failure to perform,

Appendix F Page 4

(vi) adverse tax opinions or events adversely affecting the Tax-Exempt status of the 2010 Bonds,

(vii) modifications to the rights of Bond Owners, (viii) contingent or unscheduled redemption of any Bond, (ix) defeasances, (x) any release, substitution, or sale of property securing repayment of the

2010 Bonds, and (xi) rating changes.

(b) Whenever the Issuer obtains knowledge of the occurrence of a Listed Event, the Issuer shall as soon as possible determine if such event would be material under applicable federal securities laws.

(c) If the Issuer has determined that the Listed Event would be material under

applicable federal securities laws, the Issuer shall promptly notify the Dissemination Agent in writing. Such notice shall instruct the Dissemination Agent to report the occurrence pursuant to subsection (d).

(d) If the Dissemination Agent has been instructed by the Issuer to report the

occurrence of a Listed Event, the Dissemination Agent shall file a notice of such occurrence with the MSRB and each State Repository. Notwithstanding the foregoing, notice of Listed Events described in subsections (a)(viii) and (ix) need not be given under this subsection any earlier than the notice (if any) of the underlying event is given to Owners of affected 2010 Bonds pursuant to the Indenture.

(e) In the event that the Issuer’s fiscal year changes, the Issuer shall give notice of

such change to the Dissemination Agent and shall instruct the Dissemination Agent to report such change in the same manner and to the same parties as a material Listed Event would be reported pursuant to this Section.

SECTION 6. Termination of Reporting Obligation. The obligations of the Issuer and

the Dissemination Agent under this Disclosure Agreement shall terminate upon the legal defeasance, prior redemption or payment in full of all of the 2010 Bonds. If such termination occurs prior to the final maturity of the 2010 Bonds, the Issuer shall give notice of such termination in the same manner as for a Listed Event under Section 5.

SECTION 7. Dissemination Agent. The Issuer may, from time to time, appoint or

engage a Dissemination Agent to assist it in carrying out its obligations under the Disclosure Agreement, and may discharge any such Dissemination Agent, with or without appointing a successor Dissemination Agent. The Dissemination Agent may resign by providing thirty days written notice to the Issuer.

SECTION 8. Amendment. (a) This Disclosure Amendment may be amended, by written agreement of the

parties, without the consent of the Owners, and any provision of this Dissemination Agreement may be waived, if all of the following conditions are satisfied: (i) such amendment or waiver is made in connection with a change in circumstances that arises from a change in legal (including regulatory) requirements, a change in law, or a change in the identity, nature or

Appendix F Page 5

status of the Issuer or the type of business conducted thereby, (ii) the undertakings in this Disclosure Agreement as so amended or waived would, in the opinion of a nationally recognized bond counsel, have complied with the requirements of the Rule as of the date of this Disclosure Agreement, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances, and (iii) the amendment or waiver either (A) is approved by the Owners of the 2010 Bonds in the same manner as provided in the Indenture for amendments to the Indenture with the consent of Owners of the 2010 Bonds or (B) does not, in the determination of the Issuer, materially impair the interests of the Owners or Beneficial Owners of the 2010 Bonds.

(b) To the extent any amendment to this Disclosure Agreement results in a change

in the type of financial information or operating data provided pursuant to this Disclosure Agreement, the first Annual Report provided thereafter shall include a narrative explanation of the reasons for the amendment and the impact of the change in the type of operating data or financial information being provided.

(c) If an amendment is made to the basis on which financial statements are

prepared, the Annual Report for the year in which the change is made shall present a comparison between the financial statements or information prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. Such comparison shall include a quantitative and, to the extent reasonably feasible, qualitative discussion of the differences in the accounting principles and the impact of the change in the accounting principles on the presentation of the financial information.

SECTION 9. Additional Information. Nothing in this Disclosure Agreement shall be

deemed to prevent the Issuer from disseminating any other information, using the means of dissemination set forth in this Disclosure Agreement or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Agreement. If the Issuer chooses to include any information in any Annual Report or notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Agreement, the Issuer shall have no obligation under this Disclosure Agreement to update such information or include it in any future Annual Report or notice of occurrence of a Listed Event.

SECTION 10. Default. In the event of a failure of the Issuer or the Dissemination

Agent to comply with any provision of this Disclosure Agreement, any Owner or Beneficial Owner of the 2010 Bonds may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the Issuer and/or the Dissemination Agent to comply with their respective obligations under this Disclosure Agreement. A default under this Disclosure Agreement shall not be deemed an Event of Default under the Indenture, and the sole remedy under this Disclosure Agreement in the event of any failure of the Issuer or the Dissemination Agent to comply with this Disclosure Agreement shall be an action to compel performance.

SECTION 11. Duties, Immunities and Liabilities of Dissemination Agent. The

Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Agreement, and the Issuer agrees to indemnify and save the Dissemination Agent and its officers, Councilmembers, employees and agents harmless against any loss, expense and liabilities which they may incur arising out of or in the exercise or performance of their powers and duties hereunder, including the costs and expenses (including attorneys fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent’s gross negligence or willful misconduct. The Dissemination Agent shall be paid compensation by the Issuer for its services provided hereunder as mutually agreed upon by the Executive Director of the Agency and the City Treasurer. The Dissemination Agent shall have no duty or

Appendix F Page 6

obligation to review any information provided to it by the Issuer pursuant to this Disclosure Agreement. The obligations of the Issuer under this Section shall survive resignation or removal of the Dissemination Agent and payment of the 2010 Bonds. No person shall have any right to commence any action against the Dissemination Agent seeking any remedy other than to compel specific performance of this Disclosure Agreement. The Dissemination Agent shall not be liable under any circumstances for monetary damages to any person for any breach under this Disclosure Agreement.

SECTION 12. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit

of the Issuer, the Dissemination Agent, the Participating Underwriter and Owners and Beneficial Owners from time to time of the 2010 Bonds; and it shall create no rights in any other person or entity.

Appendix F Page 7

SECTION 13. Counterparts. This Disclosure Agreement may be executed in several

counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument.

REDEVELOPMENT AGENCY OF THE CITY OF LONG BEACH By: David S. Nakamoto, Agency Treasurer CITY OF LONG BEACH, as Dissemination Agent By: David S. Nakamoto, City Treasurer

Appendix F Page 8

EXHIBIT A

NOTICE TO REPOSITORIES OF FAILURE TO FILE ANNUAL REPORT

Name of Issuer: Redevelopment Agency of the City of Long Beach Name of Bond Issue: Redevelopment Agency of the City of Long Beach Taxable Recovery

Zone Economic Development Bonds, 2010 Series A (North Long Beach Redevelopment Project) and Redevelopment Agency of the City of Long Beach Taxable Build America Bonds, 2010 Series B (North Long Beach Redevelopment Project)

Date of Issuance: May 12, 2009

NOTICE IS HEREBY GIVEN that the Redevelopment Agency of the City of Long Beach

(the “Issuer”) has not provided an Annual Report with respect to the above-named Bonds as required by Section 3 of the Continuing Disclosure Agreement, dated as of May 1, 2010. [The Issuer anticipates that the Annual Report will be filed by _____________.]

Dated:

City of Long Beach, as Dissemination Agent By:

Its:

Appendix G Page 1

APPENDIX G

BOOK-ENTRY ONLY SYSTEM THE INFORMATION IN THIS APPENDIX G HAS BEEN PROVIDED BY THE DEPOSITORY

TRUST COMPANY (“DTC”), NEW YORK, NEW YORK, FOR USE IN SECURITIES OFFERING DOCUMENTS, AND THE REDEVELOPMENT AGENCY OF THE CITY OF LONG BEACH (THE “AGENCY”) TAKES NO RESPONSIBILITY FOR THE ACCURACY OR COMPLETENESS THEREOF. THE AGENCY CANNOT GIVE ANY ASSURANCES THAT DTC, DTC PARTICIPANTS OR INDIRECT PARTICIPANTS WILL DISTRIBUTE THE BENEFICIAL OWNERS EITHER (A) PAYMENTS OF INTEREST, PRINCIPAL OR PREMIUM, IF ANY, WITH RESPECT TO THE BONDS OR (B) CERTIFICATES REPRESENTING OWNERSHIP INTEREST IN OR OTHER CONFIRMATION OF OWNERSHIP INTEREST IN THE BONDS, OR THAT THEY WILL SO DO ON A TIMELY BASIS OR THAT DTC, DTC DIRECT PARTICIPANTS OR DTC INDIRECT PARTICIPANTS WILL ACT IN THE MANNER DESCRIBED IN THIS OFFICIAL STATEMENT.

1. DTC will act as securities depository for the Bonds (the “Securities”). The Securities will be

issued as fully-registered securities registered in the name of Cede & Co. (DTC’s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered Security certificate will be issued for each maturity of the Securities, in the aggregate principal amount of such issue, and will be deposited with DTC.

2. DTC, the world’s largest depository, is a limited purpose trust company organized under

the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 2 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments from over 85 countries that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post- trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC, in turn, is owned by a number of Direct Participants of DTC and Members of the National Securities Clearing Corporation, Government Securities Clearing Corporation, MBS Clearing Corporation, and Emerging Markets Clearing Corporation, (NSCC, GSCC, MBSCC, and EMCC, also subsidiaries of DTCC), as well as by the New York Stock Exchange, Inc., the American Stock Exchange LLC, and the National Association of Securities Dealers, Inc. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). DTC has Standard & Poor’s highest rating: AAA. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Agency. More information about DTC can be found at www.dtcc.com.

3. Purchases of Securities under the DTC system must be made by or through Direct

Participants, which will receive a credit for the Securities on DTC’s records. The ownership interest of each actual purchaser of each Security (“Beneficial Owner”) is in turn to be recorded on the Direct and Indirect Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Securities are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Securities, except in the event that use of the book-entry system for the Securities is discontinued.

Appendix G Page 2

4. To facilitate subsequent transfers, all Securities deposited by Direct Participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Securities with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Securities; DTC’s records reflect only the identity of the Direct Participants to whose accounts such Securities are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers.

5. 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.

6. Redemption notices shall be sent to DTC. If less than all of the Securities within an issue are

being redeemed, DTC’s practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed.

7. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with

respect to Securities unless authorized by a Direct Participant in accordance with DTC’s Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the issuer as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to whose accounts Securities are credited on the record date (identified in a listing attached to the Omnibus Proxy).

8. Redemption proceeds, distributions, and dividend payments on the Securities will be

made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit Direct Participants’ accounts upon DTC’s receipt of funds and corresponding detail information from the issuer or the paying agent or bond trustee, on payable date in accordance with their respective holdings shown on DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of such Participant and not of DTC nor its nominee, the paying agent or bond trustee, or the issuer, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the issuer or the paying agent or bond trustee, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants.

NEITHER THE AGENCY NOR THE TRUSTEE WILL HAVE ANY RESPONSIBILITY OR

OBLIGATION TO DTC PARTICIPANTS, INDIRECT PARTICIPANTS FOR BENEFICIAL OWNERS WITH RESPECT TO THE PAYMENTS ON THE BONDS OR THE PROVIDING OF NOTICES TO DTC PARTICIPANTS, INDIRECT PARTICIPANTS OR BENEFICIAL OWNERS OR THE SELECTION OF BONDS FOR REDEMPTION.

9. DTC may discontinue providing its services as depository with respect to the Securities at

any time by giving reasonable notice to the issuer or the paying agent or bond trustee. Under such circumstances, in the event that a successor depository is not obtained, Security certificates are required to be printed and delivered.

10. The Agency may decide to discontinue use of the system of book-entry transfers through

DTC (or a successor securities depository). In that event, Security certificates will be printed and delivered.

THIS PAGE INTENTIONALLY LEFT BLANK

THIS PAGE INTENTIONALLY LEFT BLANK

R e

d e

v e

l o

p m

e n

t A g

e n

c y o

f t h

e c it

y o f l

o n

g B

e A

c h • t

A x

A B

l e R

e c

o v

e R

y Z o

n e e

c o

n o

m ic d

e v

e l

o p

m e

n t B

o n

d s, 2

0 1

0 s

e R

ie s A

A n

d t

A x

A B

l e B

u il

d A

m e

R ic

A B o

n d

s, 2 0

1 0

s e

R ie

s B (n

o R

t h l

o n

g B

e A

c h R

e d

e v

e l

o p

m e

n t p

R o

j e

c t)

HistoryItem_V1 AddMaskingTape Range: current page Mask co-ordinates: Horizontal, vertical offset 0.00, 193.60 Width 36.18 Height 592.54 points Origin: bottom left 1 0 BL Both CurrentPage CurrentAVDoc 0 193.596 36.178 592.5374 QITE_QuiteImposingPlus2 Quite Imposing Plus 2.9b Quite Imposing Plus 2 1 108 278 108 1 1 HistoryItem_V1 AddMaskingTape Range: current page Mask co-ordinates: Horizontal, vertical offset 5.87, 275.73 Width 17.60 Height 508.45 points Origin: bottom left 1 0 BL Both CurrentPage CurrentAVDoc 5.8667 275.7299 17.6001 508.4479 QITE_QuiteImposingPlus2 Quite Imposing Plus 2.9b Quite Imposing Plus 2 1 116 278 116 1 1 HistoryItem_V1 AddMaskingTape Range: current page Mask co-ordinates: Horizontal, vertical offset 6.84, 384.26 Width 34.22 Height 403.82 points Origin: bottom left 1 0 BL Both CurrentPage CurrentAVDoc 6.8445 384.2639 34.2225 403.825 QITE_QuiteImposingPlus2 Quite Imposing Plus 2.9b Quite Imposing Plus 2 1 123 278 123 1 1 HistoryItem_V1 AddMaskingTape Range: current page Mask co-ordinates: Horizontal, vertical offset 4.89, 88.00 Width 27.38 Height 471.29 points Origin: bottom left 1 0 BL Both CurrentPage CurrentAVDoc 4.8889 87.9953 27.378 471.2921 QITE_QuiteImposingPlus2 Quite Imposing Plus 2.9b Quite Imposing Plus 2 1 124 278 124 1 1 HistoryItem_V1 AddMaskingTape Range: current page Mask co-ordinates: Horizontal, vertical offset 2.93, 380.35 Width 20.53 Height 280.62 points Origin: bottom left 1 0 BL Both CurrentPage CurrentAVDoc 2.9333 380.3528 20.5335 280.6241 QITE_QuiteImposingPlus2 Quite Imposing Plus 2.9b Quite Imposing Plus 2 1 128 278 128 1 1 HistoryItem_V1 AddMaskingTape Range: current page Mask co-ordinates: Horizontal, vertical offset 6.84, 339.29 Width 40.09 Height 446.85 points Origin: bottom left 1 0 BL Both CurrentPage CurrentAVDoc 6.8445 339.2859 40.0892 446.8475 QITE_QuiteImposingPlus2 Quite Imposing Plus 2.9b Quite Imposing Plus 2 1 130 278 130 1 1 HistoryItem_V1 AddMaskingTape Range: current page Mask co-ordinates: Horizontal, vertical offset 0.98, 8.79 Width 16.62 Height 396.98 points Origin: bottom left 1 0 BL Both CurrentPage CurrentAVDoc 0.9778 8.7947 16.6223 396.9805 QITE_QuiteImposingPlus2 Quite Imposing Plus 2.9b Quite Imposing Plus 2 1 131 278 131 1 1 HistoryItem_V1 TrimAndShift Range: From page 233 to page 264 Trim: none Shift: move up by 2.88 points Normalise (advanced option): 'improved' 32 D:20090928101522 828.0000 Bleed Blank 648.0000 Tall 1 0 Full 568 227 Fixed Up 2.8800 0.0000 Both 233 SubDoc 264 CurrentAVDoc None 0.0000 Top QITE_QuiteImposingPlus2 Quite Imposing Plus 2.9b Quite Imposing Plus 2 1 232 278 263 32 1 HistoryList_V1 qi2base