The Redevelopment Project

NEW ISSUE –BOOK-ENTRY-ONLY RATING

S&P: A-

(See “CONCLUDING INFORMATION - Ratings on the Bonds” herein)

The Agency has determined that interest on the Bonds is not excluded from gross income for federal income tax purposes under the Internal Revenue Code of 1986. However, in the opinion of Jones Hall, A Professional Law Corporation, San Francisco, California, interest on the Bonds is exempt from State of California personal income tax. See “LEGAL MATTERS - Tax Matters” herein.

LOS ANGELES COUNTY STATE OF CALIFORNIA

$50,000,000 GLENDALE REDEVELOPMENT AGENCY CENTRAL GLENDALE REDEVELOPMENT PROJECT 2011 SUBORDINATE TAXABLE TAX ALLOCATION BONDS

Dated: Date of Delivery Due: December 1 as Shown on the Inside Front Cover

The cover page contains certain information for quick reference only. It is not a summary of the issue. Potential investors must read the entire Official Statement to obtain information essential to the making of an informed investment decision. See “RISK FACTORS” herein for a discussion of special risk factors that should be considered in evaluating the investment quality of the Bonds including a discussion of the California Governor’s proposed fiscal year 2011/12 budget, which, if enacted in its current form, would eliminate redevelopment agencies.

Proceeds from the sale of the Glendale Redevelopment Agency (the “Agency”), Central Glendale Redevelopment Project, 2011 Subordinate Taxable Tax Allocation Bonds (the “Bonds”) will be used to (i) finance redevelopment and low- and moderate-income housing activities of benefit to the Central Glendale Redevelopment Project, (ii) satisfy the reserve requirement for the Bonds and (iii) provide for the costs of issuing the Bonds.

The Bonds will be issued under an Indenture of Trust, dated as of April 1, 2011 (the “Indenture”), by and between the Agency and U.S. Bank National Association, as trustee (the “Trustee”). The Bonds are special obligations of the Agency and are payable solely from and secured by a pledge of certain tax increment revenues of the Agency’s Central Glendale Redevelopment Project (the “Redevelopment Project”) on a basis subordinate to certain other obligations of the Agency as described herein, and a pledge of amounts in certain funds and accounts established under the Indenture, as further discussed herein.

Interest on the Bonds is payable on December 1, 2011, and semiannually thereafter on December 1 and June 1 of each year until maturity or earlier sinking account payment, if applicable. The Bonds are not subject to optional redemption prior to maturity (see “THE BONDS - General Provisions” and “THE BONDS - Redemption” herein).

The Bonds are being offered when, as and if issued, subject to the approval as to their legality by Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel. Certain legal matters will be passed on for the Agency by Jones Hall, A Professional Law Corporation, San Francisco, California, as Disclosure Counsel and by Gillian van Muyden, as General Counsel - Redevelopment. It is anticipated that the Bonds will be available for delivery through the facilities of The Depository Trust Company on or about April 12, 2011 (see “APPENDIX F - DTC AND THE BOOK-ENTRY-ONLY SYSTEM” herein).

The date of the Official Statement is April 7, 2011.

$50,000,000 GLENDALE REDEVELOPMENT AGENCY CENTRAL GLENDALE REDEVELOPMENT PROJECT 2011 SUBORDINATE TAXABLE TAX ALLOCATION BONDS

MATURITY SCHEDULE $10,720,000 Serial Bonds Maturity Date Principal Interest Reoffering Reoffering CUSIP®† December 1 Amount Rate Yield Price 378452 2012 $1,730,000 3.50% 3.716% 99.656 EK8 2013 1,790,000 4.00 4.298 99.260 EL6 2014 1,865,000 5.00 5.291 99.042 EM4 2015 2,595,000 5.50 5.987 98.045 EN2 2016 2,740,000 6.00 6.537 97.492 EP7

$19,270,000 7.75% Term Bond maturing December 1, 2021, Yield 8.45%, Price 95.135 CUSIP®† 378452 EU6

$20,010,000 8.35% Term Bond maturing December 1, 2024, Yield 8.95%, Price 95.309 CUSIP®† 378452 EV4

† CUSIP® A registered trademark of the American Bankers Association. Copyright © 1999-2011 Standard & Poor’s, a Division of The McGraw-Hill Companies, Inc. CUSIP® data herein is provided by Standard & Poor’s CUSIP® Service Bureau. This data in not intended to create a database and does not serve in any way as a substitute for the CUSIP® Service Bureau. CUSIP® numbers are provided for convenience of reference only. Neither the Agency, the Financial Advisor nor the Underwriter takes any responsibility for the accuracy of such numbers.

GENERAL INFORMATION ABOUT THIS OFFICIAL STATEMENT

Use of Official Statement. This Official Statement is submitted in connection with the offer and sale of the Bonds referred to herein and may not be reproduced or used, in whole or in part, for any other purpose. This Official Statement is not to be construed as a contract with the purchasers of the Bonds.

Estimates and Forecasts. When used in this Official Statement and in any continuing disclosure by the Agency in any press release and in any oral statement made with the approval of an authorized officer of the Agency or any other entity described or referenced herein, the words or phrases “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimate,” “project,” “forecast,” “expect,” “intend” and similar expressions identify “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. 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.

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

Involvement of Underwriter. The Underwriter has provided the following sentence for inclusion in this Official Statement: The Underwriter has reviewed the information in this Official Statement in accordance with, and as a part of, its responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness of such information.

Information Subject to Change. The information and expressions of opinions herein are subject to change without notice and neither delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the Agency or any other entity described or referenced herein since the date hereof. All summaries of the documents referred to in this Official Statement are made subject to the provisions of such documents, respectively, and do not purport to be complete statements of any or all of such provisions.

Stabilization of Prices. In connection with this offering, the Underwriter may overallot 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 others at prices lower than the public offering prices set forth on the inside front cover page hereof and said public offering prices may be changed from time to time by the Underwriter.

THE BONDS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, IN RELIANCE UPON AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS CONTAINED IN SUCH ACT. THE BONDS HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATE.

GLENDALE REDEVELOPMENT AGENCY GLENDALE, CALIFORNIA

CITY COUNCIL AGENCY BOARD Ara Najarian, Mayor Laura Friedman, Chair John Drayman, Council Member John Drayman, Member Laura Friedman, Council Member Ara Najarian, Member Frank Quintero, Council Member Frank Quintero, Member Dave Weaver, Council Member Dave Weaver, Member ______

CITY AND AGENCY STAFF

James E. Starbird, City Manager and Executive Director Hassan Haghani, Director of Community Development Philip S. Lanzafame, Chief Assistant Director of Community Development Emil Tatevosian, Deputy Director of Policy and Innovation Robert P. Elliot, CPA, Director of Administrative Services - Finance and Agency Treasurer Mark Berry, Senior Redevelopment Project Manager Joseph Rodarte, Administrative Analyst Ronald Borucki, City Treasurer Scott H. Howard, City Attorney Gillian van Muyden, General Counsel - Redevelopment Ardashes Kassakhian, City Clerk and Agency Secretary ______

PROFESSIONAL SERVICES

Bond Counsel and Disclosure Counsel Jones Hall A Professional Law Corporation San Francisco, California

Financial Advisor Harrell & Company Advisors, LLC Orange, California

Trustee U.S. Bank National Association Los Angeles, California

TABLE OF CONTENTS

INTRODUCTION ...... 1 Agency Accounting Records and Financial The Agency ...... 1 Statements ...... 32 The City ...... 2 Tax Increment Revenues ...... 34 Security and Sources of Repayment ...... 2 Tax Sharing Agreements ...... 37 Purpose ...... 3 Tax Sharing Statutes ...... 37 Legal Matters ...... 3 Outstanding Indebtedness ...... 39 Professional Services ...... 3 Projected Subordinate Tax Revenues and Debt Offering of the Bonds ...... 4 Service Coverage ...... 40 Information Concerning this Official Statement ...... 4 RISK FACTORS ...... 44 THE BONDS ...... 5 Bonds are Subordinate Obligations ...... 44 General Provisions ...... 5 Factors Which May Affect Tax Revenues ...... 44 Redemption ...... 6 Real Estate and General Economic Risks ...... 49 Scheduled Debt Service on the Bonds ...... 7 State of California Fiscal Issues ...... 49 2011/12 Proposed State Budget ...... 51 THE FINANCING PLAN ...... 8 Secondary Market ...... 55 SOURCES OF PAYMENT FOR THE BONDS ..... 10 LEGAL MATTERS ...... 55 Tax Allocation Financing ...... 10 Enforceability of Remedies ...... 55 Tax Revenues ...... 10 Approval of Legal Proceedings ...... 55 Pledge of Tax Revenues ...... 11 Tax Matters ...... 56 Reserve Account ...... 11 Absence of Litigation ...... 56 Issuance of Additional Debt ...... 12 CONCLUDING INFORMATION ...... 56 THE AGENCY ...... 14 Rating on the Bonds ...... 56 Government Organization ...... 14 The Financial Advisor ...... 57 Agency Powers ...... 14 Continuing Disclosure ...... 57 Redevelopment Plan ...... 15 Underwriting ...... 57 Plan Limitations ...... 15 Additional Information ...... 57 Capital Projects ...... 17 References ...... 57 Low and Moderate Income Housing ...... 18 Execution ...... 58 THE REDEVELOPMENT PROJECT ...... 18 APPENDIX A – SUMMARY OF CERTAIN Commercial Development in the Redevelopment PROVISIONS OF THE INDENTURE Project ...... 20 Office Development in the Redevelopment APPENDIX B – CITY OF GLENDALE Project ...... 22 INFORMATION STATEMENT Future Development in the Redevelopment APPENDIX C – AGENCY AUDITED FINANCIAL Project ...... 24 STATEMENTS FOR THE FISCAL YEAR ENDED Assessed Valuations ...... 26 JUNE 30, 2010 Major Taxpayers ...... 27 Assessment Appeals ...... 28 APPENDIX D – FORM OF CONTINUING Tax Increment Revenues ...... 30 DISCLOSURE CERTIFICATE Tax Collections ...... 31 APPENDIX E – PROPOSED FORM OF BOND FINANCIAL INFORMATION ...... 32 COUNSEL OPINION Agency Budgetary Process and Administration ...... 32 APPENDIX F – DTC AND THE BOOK-ENTRY- ONLY SYSTEM [THIS PAGE INTENTIONALLY LEFT BLANK] OFFICIAL STATEMENT $50,000,000 GLENDALE REDEVELOPMENT AGENCY CENTRAL GLENDALE REDEVELOPMENT PROJECT 2011 SUBORDINATE TAXABLE TAX ALLOCATION BONDS

This Official Statement which includes the cover page and appendices (the “Official Statement”) is provided to furnish certain information concerning the sale of the Glendale Redevelopment Agency Central Glendale Redevelopment Project 2011 Subordinate Taxable Tax Allocation Bonds (the “Bonds”), in the aggregate principal amount of $50,000,000. INTRODUCTION

This Introduction contains only a brief description of this issue and does not purport to be complete. The Introduction is subject in all respects to more complete information in the entire Official Statement and the offering of the Bonds to potential investors is made only by means of the entire Official Statement and the documents summarized herein. Potential investors must read the entire Official Statement to obtain information essential to the making of an informed investment decision.

See the section of this Official Statement entitled “RISK FACTORS” herein for a discussion of certain factors which should be considered when investing in the Bonds, including a discussion of the California Governor’s proposed fiscal year 2011/12 budget, which, if enacted in its current form, would eliminate redevelopment agencies.

Draft legislation implementing the California Governor’s proposal was released by the Department of Finance of the State on February 23, 2011, and AB 101 and SB 77 (the “Budget Trailer Bills”) were released on March 16, 2011. See “RISK FACTORS - 2011/12 Proposed State Budget” herein for a discussion of the draft legislation and the Budget Trailer Bills. The Agency and the Underwriter have the right under the bond purchase agreement to not proceed with the issuance of bonds if (i) legislation is enacted adversely impacting the Agency’s receipt of tax increment revenues; (ii) legislation is enacted which would impose limitations or burdens on the Agency or the City by reason of the issuance of the Bonds; (iii) legislation is enacted which purports to prohibit the issuance of the Bonds; or (iv) legislation is enacted which prevents the expenditure of Bond proceeds.

The Agency

The Glendale Redevelopment Agency (the “Agency”) is a public body, corporate and politic, existing under and by virtue of the Community Redevelopment Law of the State, constituting Part 1 of Division 24 (commencing with Section 33000) of the Health and Safety Code of the State (the “Redevelopment Law”). The Agency was activated by the City Council of the City of Glendale on March 28, 1972 by the adoption of Ordinance No. 4017 and is governed by a five-member board consisting of the members of the City Council. The City Manager acts as the Agency’s Executive Director (see “THE AGENCY” herein).

1 The City

The City of Glendale (the “City”) was incorporated in 1906 and became a charter city in 1921. Glendale, located at the foot of the Verdugo Mountains, is the third largest city in Los Angeles County and spans over 30 square miles. Adjacent cities include Burbank and Pasadena. See “APPENDIX B - CITY OF GLENDALE INFORMATION STATEMENT.”

Security and Sources of Repayment

Senior Lien Debt. The Agency has previously issued its:

• Central Glendale Redevelopment Project 2002 Tax Allocation Bonds (the “2002 Bonds”), currently outstanding in the principal amount of $31,900,000;

• Central Glendale Redevelopment Project 2003 Tax Allocation Refunding Bonds, (the “2003 Bonds”), currently outstanding in the principal amount of $41,125,000; and

• Central Glendale Redevelopment Project 2010 Tax Allocation Bonds, (the “2010 Bonds”), currently outstanding in the principal amount of $26,970,000.

Collectively the 2002 Bonds, the 2003 Bonds and the 2010 Bonds are referred to herein as the “Senior Lien Bonds.” The Agency has pledged a first lien on the “Non-Housing Tax Revenues” to the payment of the Senior Lien Bonds. Non-Housing Tax Revenues means moneys allocated and paid to the Agency derived from (a) that portion of taxes levied upon assessable property within the Central Glendale Redevelopment Project allocated to the Agency pursuant to Article 6 of Chapter 6 of the Redevelopment Law and Section 16 of Article XVI of the Constitution of the State of California, or pursuant to other applicable State laws, and (b) reimbursements, subventions or other payments made by the State with respect to any property taxes that would otherwise be due on real or personal property but for an exemption of such property from such taxes; but excluding (a) the Housing Tax Revenues (as defined below), and (b) amounts of such taxes (if any) which are required to be paid to public agencies other than the City under Sections 33607.5 and 33607.7 of the Redevelopment Law.

In addition, the Agency has also entered into a loan agreement with Union Bank of California (the “Union Bank Loan”) and has pledged a first lien on that portion of Tax Increment Revenues otherwise required by Section 33334.3 of the Redevelopment Law to be deposited in the Low and Moderate Income Housing Fund (the “Housing Tax Revenues”).

The Bonds. The Bonds are issued and secured under an Indenture of Trust, dated as of April 1, 2011 (the “Indenture”), by and between the Agency and U.S. Bank National Association, as trustee (the “Trustee”), (see “APPENDIX A - SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE” herein).

A portion of the Bonds are being issued to fund housing activities (the “Housing Portion”) and a portion of the Bonds are being issued to fund redevelopment activities (the “Non Housing Portion”), as further described herein.

For the security of the Non-Housing Portion of the Bonds, the Agency grants a first pledge of and lien on all of the Subordinate Tax Revenues consisting of Non-Housing Tax Revenues, on a parity with the pledge and lien which secures any Parity Debt. For the security of the Housing Portion of the Bonds, the Agency grants a first pledge of and lien on all of the Subordinate Tax Revenues consisting of Housing Tax Revenues, on a parity with the pledge and lien which secures any Parity Debt. Subordinate Tax Revenues means (a) all of the Non-Housing Tax Revenues, which are released from the pledge and lien which secures the Senior Lien Bonds, and (b) all of the Housing Tax Revenues which are not required for payment of the Union Bank Loan.

2 See “THE AGENCY - Low and Moderate Income Housing,” “FINANCIAL INFORMATION – Outstanding Indebtedness,” “- Tax Increment Revenues,” “- Tax Sharing Statutes,” and “RISK FACTORS” herein.

The Agency may incur additional indebtedness secured by Tax Revenues on a parity with the Bonds. See “SOURCES OF PAYMENT FOR THE BONDS - Issuance of Additional Debt” herein. So long as the Bonds remain outstanding, the Agency covenants not to issue obligations on a parity with the Senior Lien Bonds.

The Redevelopment Project. The Central Glendale Redevelopment Project (the “Redevelopment Project”) is an area of approximately 263 acres. It is developed with a mix of office and commercial uses. See “THE REDEVELOPMENT PROJECT” herein.

The Bonds are special obligations of the Agency. The Bonds do not constitute a debt or liability of the City of Glendale, the County of Los Angeles, the State of California or of any political subdivision thereof, other than the Agency. The Agency shall only be obligated to pay the principal of the Bonds, or the interest thereon, from the funds described herein, and neither the faith and credit nor the taxing power of the City of Glendale, the County of Los Angeles, the State of California or any of its political subdivisions is pledged to the payment of the principal of or the interest on the Bonds. The Agency has no taxing power.

Purpose

The Bonds are being issued to (i) finance redevelopment and low- and moderate-income housing activities of benefit to the Redevelopment Project, (ii) satisfy the Reserve Requirement for the Bonds and (iii) provide for the costs of issuing the Bonds. See “THE FINANCING PLAN” herein.

Legal Matters

All legal proceedings in connection with the issuance of the Bonds are subject to the approving opinion of Jones Hall, A Professional Law Corporation, San Francisco, California, as Bond Counsel. Such opinion, and certain tax consequences incident to the ownership of the Bonds are described more fully under the heading “LEGAL MATTERS” herein. Certain legal matters will be passed on for the Agency by Jones Hall, A Professional Law Corporation, San Francisco, California, as Disclosure Counsel and by Gillian van Muyden, as General Counsel - Redevelopment.

Professional Services

U.S. Bank National Association serves as trustee (the “Trustee”) under the Indenture. The Trustee will act on behalf of the Bondholders for the purpose of receiving all moneys required to be paid to the Trustee, to allocate, use and apply the same, to hold, receive and disburse the Tax Revenues and other funds held under the Indenture, and otherwise to hold all the offices and perform all the functions and duties provided in the Indenture to be held and performed by the Trustee.

Harrell & Company Advisors, LLC, Orange, California, (the “Financial Advisor”), advised the Agency as to the financial structure and certain other financial matters relating to the Bonds and assisted the Agency with the preparation of this Official Statement.

Fees payable to Bond Counsel, Disclosure Counsel and the Financial Advisor are contingent upon the sale and delivery of the Bonds.

3 The Agency’s financial statements for the Fiscal Year ended June 30, 2010, attached hereto as “APPENDIX C” have been audited by McGladrey & Pullen, LLP, Certified Public Accountants, Pasadena, California. The Agency’s audited financial statements are public documents and are included within this Official Statement without the prior approval of the auditor. McGladrey & Pullen, LLP has not been engaged to perform, and has not performed, since the date of its report included herein, any procedures on the financial statements addressed in that report. McGladrey & Pullen, LLP also has not performed any procedures relating to this Official Statement.

Offering of the Bonds

Authority for Issuance. The Bonds are to be issued and secured pursuant to the Indenture, as authorized by Resolution No. R-893 of the Agency adopted on March 8, 2011 and the Redevelopment Law.

Offering and Delivery of the Bonds. The Bonds are being sold to Wedbush Securities Inc. (the “Underwriter”). The Bonds are offered, when, as and if issued, subject to the approval as to their legality by Jones Hall, A Professional Law Corporation, San Francisco, California, as Bond Counsel. It is anticipated that the Bonds, in book-entry form, will be available for delivery through the facilities of The Depository Trust Company on or about April 12, 2011.

Information Concerning this Official Statement This Official Statement speaks only as of its date. The information set forth herein has been obtained by the Agency with the assistance of the Financial Advisor, from sources which are believed to be reliable and such information is believed to be accurate and complete, but such information is not guaranteed as to accuracy or completeness, nor has it been independently verified and is not to be construed as a representation by the Financial Advisor, Underwriter or the Disclosure Counsel. Statements contained in this Official Statement which involve estimates, forecasts or matters of opinion, whether or not expressly so described herein, are intended as such and are not to be construed as representations of fact. The information and expressions of opinion herein are subject to change without notice and the delivery of this Official Statement shall not, under any circumstances, create any implication that there has been no change in the information or opinions set forth herein or in the affairs of the Agency since the date hereof.

Availability of Legal Documents. The summaries and references contained herein with respect to the Indenture, the Bonds and other statutes or documents do not purport to be comprehensive or definitive and are qualified by reference to each such document or statute, and references to the Bonds are qualified in their entirety by reference to the form thereof included in the Indenture. Copies of the documents described herein are available for inspection during the period of initial offering of the Bonds at the offices of the Financial Advisor, Harrell & Company Advisors, LLC, 333 City Boulevard West, Suite 1430, Orange, California 92868, telephone (714) 939-1464. Copies of these documents may be obtained after delivery of the Bonds from the Agency at 633 East Broadway, Room 201, Glendale, California 91206, telephone (818) 548-2005.

4 THE BONDS General Provisions Repayment of the Bonds. Interest on the Bonds is payable at the rates per annum set forth on the inside front cover page hereof. Interest on the Bonds will be computed on the basis of a year consisting of 360 days and twelve 30-day months.

Interest on the Bonds will be payable on June 1 and December 1 (each an “Interest Payment Date”), commencing December 1, 2011, and thereafter from the Interest Payment Date next preceding the date of authentication thereof, unless (a) a Bond is authenticated after the 15th calendar day of the month preceding an Interest Payment Date (each, a “Record Date”) and on or before such Interest Payment Date, in which event it shall bear interest from such Interest Payment Date; or (b) a Bond is authenticated on or before November 15, 2011 in which event it shall bear interest from the Delivery Date; provided, however, that if, as of the date of authentication of any Bond, interest with respect to such Bond is in default, such Bond will bear interest from the Interest Payment Date to which interest has previously been paid or made available for payment with respect to such Bond. The Bonds are authorized to be issued in denominations of $5,000 or any integral multiple of $5,000, and will be dated as of the date of their original delivery.

Transfer or Exchange of Bonds. Any Bond may, in accordance with its terms, be transferred or exchanged, pursuant to the provisions of the Indenture, upon surrender of such Bond for cancellation at the principal corporate trust office or agency of the Trustee. Whenever any Bond or Bonds shall be surrendered for transfer or exchange, the Trustee shall authenticate and deliver a new Bond or Bonds for like aggregate principal amount and of like maturity. The Trustee may require the payment by the Bondholder requesting such transfer or exchange of any tax or other governmental charge required to be paid with respect to such transfer or exchange. The Trustee is not permitted to transfer or exchange any Bonds or portions thereof during the period established by the Trustee for selection of Bonds for redemption, or any Bonds selected for redemption. The foregoing provisions regarding the transfer and exchange of the Bonds apply only if the book-entry only system is discontinued. So long as the Bonds are in the book-entry system of DTC as described below, the rules of DTC will apply for the transfer and exchange of Bonds.

Book-Entry-Only System. The Depository Trust Company, New York, New York, (“DTC”) will act as securities depository for the Bonds. The Bonds will be executed and delivered as fully-registered securities registered in the name of Cede & Co. (DTC’s partnership nominee). One fully-registered bond will be issued for the Bonds of each maturity, in the initial aggregate principal amount of such maturity, and will be deposited with DTC or its authorized agent. See “APPENDIX F - DTC AND THE BOOK- ENTRY-ONLY SYSTEM” for further information regarding DTC and its book-entry system. DTC may discontinue providing its services as securities depository with respect to the Bonds at any time by giving reasonable notice to the Agency or the Trustee. Under such circumstances, in the event that a successor securities depository is not obtained, Bonds are required to be printed and delivered as described in the Indenture. The Agency may decide to discontinue use of the system of book-entry transfers through DTC (or a successor securities depository). In that event, the Bonds will be printed and delivered as described in the Indenture. In addition, the following provisions shall apply: interest on the Bonds will be payable by check of the Trustee mailed by first class mail on the applicable Interest Payment Date to the Owners thereof provided that in the case of an Owner of $1,000,000 or greater in principal amount of Outstanding Bonds, such payment may, at such Owner’s option, be made by wire transfer in immediately available funds to an account in the United States of America in accordance with written instructions provided prior to the applicable Record Date to the Trustee by such Owner. The Owners of the Bonds shown on the Registration Books on the Record Date for the Interest Payment Date will be deemed to be the Owners of the Bonds on said Interest Payment Date for the purpose of the paying of interest. Principal of the Bonds

5 will be payable upon presentation and surrender thereof, at the principal corporate trust office or agency of the Trustee in St. Paul, Minnesota. Redemption

No Optional Redemption. The Bonds are not subject to optional redemption prior to maturity.

Mandatory Redemption From Sinking Account Payments. The Bonds maturing on December 1, 2021 and December 1, 2024 are Term Bonds which are subject to mandatory redemption within a maturity by lot, at a redemption price equal to 100% of the principal amount thereof to be redeemed, without premium, in the aggregate respective principal amounts and on December 1 in the respective years as set forth in the following table.

SINKING ACCOUNT PAYMENT SCHEDULE FOR TERM BOND MATURING DECEMBER 1, 2021

Redemption Date December 1 Principal Amount 2017 $3,300,000 2018 3,560,000 2019 3,835,000 2020 4,125,000 2021 (maturity) 4,450,000

SINKING ACCOUNT PAYMENT SCHEDULE FOR TERM BOND MATURING DECEMBER 1, 2024

Redemption Date December 1 Principal Amount 2022 $6,145,000 2023 6,655,000 2024 (maturity) 7,210,000

Notice of Redemption. When redemption is authorized or required, the Trustee is required to give written notice of the redemption of Bonds to the Bondholders designated for redemption at their addresses appearing on the bond registration books and to the Municipal Securities Rulemaking Board and to certain Securities Depositories, all as provided in the Indenture, by first class mail, postage prepaid, no less than thirty (30), nor more than sixty (60), days prior to the date fixed for redemption. Such mailing will not be a condition precedent to such redemption, and neither failure to receive such notice nor any defect in the notice so mailed will affect the validity of the proceedings for redemption of such Bonds or the cessation of accrual of interest on the redemption date.

Manner of Redemption. Whenever provision is made in the Indenture for the redemption of less than all of the Bonds of the same maturity, the Trustee shall select the Bonds to be redeemed by lot in any manner deemed fair by the Trustee. For purposes of such selection, all Bonds will be deemed to be comprised of separate $5,000 denominations and such separate denominations will be treated as separate Bonds which may be separately redeemed.

6 Effect of Redemption. The rights of an Owner to receive interest will terminate on the date, if any, on which the Owner’s Bond is to be redeemed pursuant to a call for redemption. The Indenture contains no provisions requiring any publication of notice of redemption, and Bondholders must maintain a current address on file with the Trustee to receive any notice of redemption. So long as the Bonds are maintained in the book-entry system of DTC, redemption notice will be given in accordance with DTC’s procedures which are discussed above.

Partial Redemption. In the event only a portion of any Bond is called for redemption, then upon surrender of such Bond the Agency will execute and the Trustee will authenticate and deliver to the Owner thereof, at the expense of the Agency, a new Bond or Bonds of the same interest rate and maturity, of authorized denominations in an aggregate principal amount equal to the unredeemed portion of the Bond to be redeemed.

Scheduled Debt Service on the Bonds The following is the scheduled annual Debt Service on the Bonds.

Bond Year Ending December 1 Principal Interest Annual Debt Service 2011 $ - $ 2,351,566.01 $ 2,351,566.01 2012 1,730,000.00 3,696,785.00 5,426,785.00 2013 1,790,000.00 3,636,235.00 5,426,235.00 2014 1,865,000.00 3,564,635.00 5,429,635.00 2015 2,595,000.00 3,471,385.00 6,066,385.00 2016 2,740,000.00 3,328,660.00 6,068,660.00 2017 3,300,000.00 3,164,260.00 6,464,260.00 2018 3,560,000.00 2,908,510.00 6,468,510.00 2019 3,835,000.00 2,632,610.00 6,467,610.00 2020 4,125,000.00 2,335,397.50 6,460,397.50 2021 4,450,000.00 2,015,710.00 6,465,710.00 2022 6,145,000.00 1,670,835.00 7,815,835.00 2023 6,655,000.00 1,157,727.50 7,812,727.50 2024 7,210,000.00 602,035.00 7,812,035.00 Total $50,000,000.00 $36,536,351.01 $86,536,351.01

7 THE FINANCING PLAN Under the provisions of the Indenture, the Trustee will receive the proceeds from the sale of the Bonds and will apply them as shown below.

Sources of Funds

Par Amount of Bonds $50,000,000.00 Original Issue Discount (2,032,669.95) Net Source of Funds $47,967,330.05

Uses of Funds

Redevelopment Fund $34,913,285.00 Housing Fund 7,469,045.05 Reserve Account 5,000,000.00 Underwriter’s Discount 400,000.00 Costs of Issuance Fund (1) 185,000.00 Total Use of Funds $47,967,330.05 ______(1) Expenses include fees and expenses of Bond Counsel, the Financial Advisor, Disclosure Counsel and the Trustee, costs of printing the Official Statement, rating fees, and other costs of issuance of the Bonds.

8 Deposit to the Redevelopment Fund. The proceeds deposited to the Redevelopment Fund are expected to be used by the Agency to fund programs, projects and activities relating to the Redevelopment Project, including but not limited to those which are described in that certain agreement entitled “Cooperation Agreement for Payment of Costs Associated with Certain Redevelopment Agency Funded Projects,” between the City and the Agency, dated January 21, 2011, and summarized below.

Project Estimate Project Estimate Citywide Marketing implementation $ 3,200,000 Museum of Neon Art (MONA) $ 8,400,000 Downtown wayfinding signs 800,000 Galleria (Mervyns) 1,000,000 Downtown Mobility implementation 10,300,000 Masonic Temple Site 1,000,000 Façade improvement programs 1,000,000 Borders Building 5,000,000 A&E District incentive programs 2,500,000 Alex Theatre CIP 3,800,000 Investment in Park Development & Library Improvements 7,400,000 ASLA garage opening/x-walk 100,000 Incentives for Business Attraction 500,000 Downtown Parking Structure 10,000,000 GATE 500,000 Civic Gallery 1,000,000 Outback Steakhouse Incentive (Parking) 540,000 200 Block S. Brand Alley & Paseo 4,424,000 Cinema Lofts 5,700,000 Paseo Phase II 500,000 Panda Inn Relocation 300,000 Central Avenue improvements 12,000,000 Golden Key Hotel litigation 13,000,000 SR 134 Central Ave- Off ramp 1,200,000 Backroom Entertainment litigation 2,000,000 Parking Replacement (Marriott Hotel) 2,000,000 Ongoing Consultants 125,000 Courthouse (assist in leasing space) 500,000 Property Acquisitions 100, 200, 300 N. Brand Blvd. 30,000,000 Administration 20,377,000 Total $149,166,000

Deposit to the Housing Fund. The proceeds deposited to the Housing Fund are expected to be used by the Agency to fund programs, projects and activities which increase, improve and preserve the City’s supply of low- and moderate-income housing available at affordable housing cost to persons and families of low or moderate income, which meet all applicable requirements of Sections 33334.2 and 33334.3 of the Redevelopment Law, including but not limited to those which are described in that certain agreement entitled “Cooperation Agreement for Payment of Costs Associated with Certain Redevelopment Agency Funded Low and Moderate Income Housing Projects,” between the City and the Agency, dated January 21, 2011 and summarized below.

Low interest rehabilitation loans $ 33,431,000 Down payment assistance for first time homebuyers 10,375,000 Rental assistance (low income, veterans rental and emergency) 27,206,000 Funding assistance for Emergency Shelter 2,306,000 Housing quality standards maintenance program 7,200,000 Fifth & Sonora Affordable Rental/Owner Project 8,700,000 Salem Affordable Rental Project 5,831,000 Neighborhood target projects 113,441,000 Preservation and affordability extension 21,351,000 Administration 53,601,000 Total $283,442,000

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

Tax Revenues As provided in the Redevelopment Plan for the Redevelopment Project, and pursuant to Article 6 of Chapter 6 of the Redevelopment Law, and Section 16 of Article XVI of the Constitution of the State, taxes levied upon taxable property in the Redevelopment Project each year by or for the benefit of the State, for cities, counties, districts or other public corporations (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 which would be produced by the rate upon which the tax is levied each year by or for each of said Taxing Agencies upon the total sum of the assessed value of the taxable property in the project area as shown upon the assessment roll used in connection with the taxation of such property by such Taxing Agency last equalized prior to the establishment of the project area will be allocated to, and when collected will be paid into, the funds of the respective Taxing Agencies as taxes by or for said Taxing Agencies; and

2. To the Agency: The portion of such levied taxes each year in excess of such amount 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 under the respective Indenture, to pay the principal of, prepayment premium (if any) and interest on the Bonds and to replenish the Reserve Account established under the respective Indenture.

Tax revenues generated as set forth under (2) above and allocated to the Agency constitute Tax Increment Revenues. Subordinate Tax Revenues which secure the Bonds are a portion of such Tax Increment Revenues.

Subordinate Tax Revenues means (a) all of the Non-Housing Tax Revenues which are released from the pledge and lien which secures the Senior Lien Bonds, and (b) all of the Housing Tax Revenues which are not required for payment of the Union Bank Loan.

Non-Housing Tax Revenues means Tax Increment Revenues excluding (a) the Housing Tax Revenues, and (b) amounts of such taxes (if any) which are required to be paid to public agencies other than the City under Sections 33607.5 and 33607.7 of the Redevelopment Law ( “Statutory Tax Sharing”) as described below.

Housing Tax Revenues means that portion of Tax Increment Revenues otherwise required by Section 33334.3 of the Redevelopment Law to be deposited in the Low and Moderate Income Housing Fund.

10 See “THE AGENCY - Low and Moderate Income Housing,” “FINANCIAL INFORMATION - Tax Increment Revenues,” “- Tax Sharing Statutes,” “- Outstanding Indebtedness” and “RISK FACTORS” herein.

As a result of certain amendments to the Redevelopment Plan for the Redevelopment Project, the Agency is required to make certain Statutory Tax Sharing Payments to the Taxing Agencies which are senior in right of payment to the Bonds and any future Parity Debt (except for required payments to the City, which are subordinate). See “FINANCIAL INFORMATION - Tax Sharing Statutes.” Such amounts are reflected in the Agency’s projections of Non-Housing Tax Revenues herein.

Further, the portion of debt service that can be paid from the Housing Revenues is limited to that portion of the Bonds relating to amounts deposited in the Housing Fund (the “Housing Portion”). See “THE AGENCY - Low and Moderate Income Housing.”

Pledge of Tax Revenues

For the security of the Non-Housing Portion of the Bonds, the Agency grants a first pledge of and lien on all of the Subordinate Tax Revenues consisting of Non-Housing Tax Revenues, on a parity with the pledge and lien which secures any Parity Debt. For the security of the Housing Portion of the Bonds, the Agency grants a first pledge of and lien on all of the Subordinate Tax Revenues consisting of Housing Tax Revenues, on a parity with the pledge and lien which secures any Parity Debt. The Subordinate Tax Revenues are pledged to the payment of principal of and interest on the Bonds pursuant to the Indenture until the Bonds have been paid, or until moneys have been set-aside irrevocably for that purpose. The Trustee will covenant to exercise such rights and remedies as may be necessary to enforce the payment of the Subordinate Tax Revenues when due under the Indenture, and otherwise to protect the interests of the Bondholders in the event of default by the Agency.

Reserve Account

A Reserve Account has been established under the Indenture to be held by the Trustee to further secure the timely payment of principal of and interest on the Bonds. The Agency must maintain an aggregate balance in the Reserve Account equal to 10% of the principal amount of the Bonds (the “Reserve Requirement”). In the event that the Agency fails to deposit with the Trustee the full amount required by the Indenture to pay principal and interest due on the Bonds when due on any date, the Trustee will withdraw from the Reserve Account, the difference between the amount required to be on deposit and the amount available on such date.

The Agency may establish a separate reserve account with respect to any series of Parity Bonds. The Reserve Account will secure only the Bonds and any reserve account established with respect to Parity Bonds will only secure such series of Parity Bonds and will not secure payment of the Bonds.

11 Issuance of Additional Debt

Parity Bonds. The Agency may issue or incur Parity Debt on a parity with the Bonds subject to the following specific conditions:

(a) No Event of Default. No Event of Default (or no event with respect to which notice has been given and which, once all notice of grace periods have passed, would constitute an Event of Default) has occurred and is continuing, and the Agency is otherwise in compliance with all covenants set forth in the Indenture.

(b) Coverage Test for Non-Housing Bonds. With respect to Parity Debt which is payable from and secured by a pledge of and lien on the Subordinate Tax Revenues consisting of Non-Housing Tax Revenues, the amount of such Subordinate Tax Revenues to be received in the current Fiscal Year based on the most recent assessed valuation of taxable property in the Project Area (as shown in the records of the County), plus the following –

(i) the amount of Maximum Annual Debt Service on all Senior Lien Bonds which will be Outstanding following the issuance of such Parity Debt, and

(ii) at the option of the Agency, any or all of the Additional Revenues –

shall for each future Bond Year be at least equal to 125% of the amount of Maximum Annual Debt Service on the Senior Lien Bonds the Non-Housing Portion of the Bonds and all outstanding Parity Debt which is payable from Non-Housing Tax Revenues and which will be Outstanding following the issuance of such Parity Debt

(c) Coverage Test for Housing Bonds. With respect to Parity Debt which is payable from and secured by a pledge of and lien on the Subordinate Tax Revenues consisting of Housing Tax Revenues, the amount of such Subordinate Tax Revenues to be received in the current Fiscal Year based on the most recent assessed valuation of taxable property in the Project Area (as shown in the records of the County), plus at the option of the Agency, any or all of the Additional Revenues, shall for each future Bond Year be at least equal to 125% of the amount of Maximum Annual Debt Service on the Housing Portion of the Bonds and all outstanding Parity Debt which is payable from Housing Tax Revenues and which will be Outstanding following the issuance of such Parity Debt.

(d) Compliance with Plan Limitations. The Agency shall certify to the Trustee that the aggregate amount of the principal of and interest on all Outstanding Bonds and Parity Debt coming due and payable following the issuance of such Parity Debt will not exceed the maximum amount of Subordinate Tax Revenues permitted under the Redevelopment Plan to be allocated and paid to the Agency following the issuance of such Parity Debt.

(e) Documentation Requirements. The documents providing for the issuance of such Parity Debt shall provide that:

(i) interest on said Parity Debt shall be calculated at a fixed interest rate, payable on June 1 and December 1 in each year of the term of such Parity Debt, except that interest during the first twelve month period may be payable on any June 1 or December 1; and

(ii) the principal of such Parity Debt is payable on December 1 in any year in which principal is payable.

12 (iii) a reserve fund may be established for such Parity Debt, provided that any such reserve fund will not secure payment of principal of or interest on the Bonds, and provided, further, that any such reserve fund may be maintained in the form of a Qualified Reserve Account Credit Instrument.

Certificate of Compliance. 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 the Indenture and in the documents authorizing the issuance of all other Parity Debt have been satisfied. So long as any of the Bonds are Outstanding, the Agency shall not issue any notes, bonds or other obligations which are on a parity with the Senior Lien Bonds, or which are otherwise secured by any interest in the Tax Revenues or any portion thereof which is senior to the pledge and lien which secure the Bonds.

Subordinate Debt. The Agency may from time to time issue its bonds, notes or other obligations which are unsecured or secured by a pledge and lien on the Tax Revenues or any portion thereof which is subordinate to the pledge and lien which secure the Bonds and Parity Debt, in such principal amount as the Agency may determine, provided that the issuance of such bonds, notes or other obligations does not cause the Agency to exceed any applicable Plan Limitations.

13 THE AGENCY Government Organization The Agency is a public body, corporate and politic, existing under and by virtue of the California Community Redevelopment Law, being Part 1 of Division 24 (commencing with Section 33000) of the Health and Safety Code of the State (the “Redevelopment Law”). The Agency was activated in 1972, and is governed by a five-member board which consists of all members of the City Council. The Chair and Vice Chair are appointed to a one-year term by the Agency Board from among its members.

AGENCY BOARD MEMBER TERM EXPIRES Laura Friedman, Chair April 2013 John Drayman, Vice Chair April 2011 Ara Najarian, Member April 2013 Frank Quintero, Member April 2013 Dave Weaver, Member April 2011

The City performs certain general administrative functions for the Agency. The City Manager serves as the Agency’s Executive Director and the City’s Director of Finance and Administrative Services serves as Agency Treasurer. The costs of such functions, as well as additional services performed by City staff are allocated annually to the Agency. The Agency reimburses the City for such allocated costs out of available Tax Increment Revenues. Such reimbursement is subordinate to any outstanding bonds, loans and other indebtedness of the Agency. Current City Staff assigned to administer the Agency include:

KEY ADMINISTRATIVE PERSONNEL James E. Starbird City Manager and Executive Director Hassan Haghani Director of Community Development Philip S. Lanzafame Chief Assistant Director of Community Development Emil Tatevosian Deputy Director of Policy and Innovation Robert P. Elliot, CPA Director of Administrative Services - Finance and Agency Treasurer Mark Berry Senior Redevelopment Project Manger Joseph Rodarte Administrative Analyst Ronald Borucki City Treasurer Scott H. Howard City Attorney Gillian van Muyden General Counsel - Redevelopment Ardashes Kassakhian City Clerk and Agency Secretary

Agency Powers

All powers of the Agency are vested in its members. Pursuant to the Redevelopment Law, the Agency is a separate public body and exercises governmental functions, including planning and implementing of the Redevelopment Project.

The Agency may exercise the right to issue or incur loans, advances or other indebtedness for authorized purposes and to expend their proceeds, and the right to acquire, sell, rehabilitate, develop, administer or lease property. The Agency may demolish buildings, clear land and cause to be constructed certain improvements, including streets, sidewalks and utilities, and can further prepare for use as a building site any real property which it owns or administers.

14 The Agency may, from any funds made available to it for such purposes, and subject to certain conditions, pay for all or part of the value of land and the cost of buildings, facilities or other improvements to be publicly owned and operated. The Agency may not construct or develop buildings, with the exception of public buildings and housing, and must sell or lease cleared property which it acquires within a redevelopment project for redevelopment in conformity with a particular redevelopment plan, and may further specify a period within which such redevelopment must begin and be completed.

Redevelopment Plan

Under the Redevelopment Law the City Council is required to adopt, by ordinance, a redevelopment plan for each redevelopment project. A redevelopment agency may only undertake those activities within a redevelopment project specifically authorized in the adopted redevelopment plan. A redevelopment plan is a legal document, the content of which is largely prescribed in the Redevelopment Law rather than a “plan” in the customary sense of the word. The general objectives of the Agency’s Redevelopment Plan are to encourage investment in the Redevelopment Project by the private sector. The Redevelopment Plan provides for the acquisition of property, the demolition of buildings and improvements, the relocation of any displaced occupants, and the construction of streets, parking facilities, utilities and other public improvements. The Redevelopment Plan also allows the redevelopment of land by private enterprise, the rehabilitation of structures, the rehabilitation or construction of low and moderate income housing, and participation by owners and the tenants of properties in the Redevelopment Project.

The City Council approved and adopted the Redevelopment Plan for the Redevelopment Project on August 1, 1972, pursuant to Ordinance No. 4042. It was subsequently amended:

• on December 16, 1975 to add 42 acres of property to the Redevelopment Project; • on February 7, 1984 to amend and restate the Redevelopment Plan; • on December 9, 1986 to include certain financial limitations; • on December 13, 1994 to add limitations prescribed by AB 1290 (see “Plan Limitations” below); • on September 29, 1998, to extend the time period for exercising eminent domain powers; • on November 12, 2003 pursuant to SB 211 to eliminate the limitation on incurring debt contained in the Redevelopment Plan; • on November 12, 2003 to extend certain Redevelopment Plan limitations allowed by SB 1045; • on February 1, 2005 to extend certain Redevelopment Plan limitations allowed by SB 1096; and

• on August 10, 2010 to extend the time period for exercising eminent domain power.

As described below, amendments to the required plan limitations were allowed by AB 1290 so long as, among other things, agencies made payments to the Taxing Agencies pursuant to the Tax Sharing Statutes. See “FINANCIAL INFORMATION - Tax Sharing Statutes.” The Agency’s amendment to the Redevelopment Plan pursuant to SB 211 triggered required payments to the Taxing Agencies pursuant to the Tax Sharing Statutes commencing in Fiscal Year 2004/05. Such required payments (except for those payable to the City) are senior in right of payment to the Bonds and are reflected in the projections of Tax Revenues herein. See “FINANCIAL INFORMATION - Projected Subordinate Tax Revenues and Debt Service Coverage.”

Plan Limitations The Redevelopment Plan for the Redevelopment Project imposes certain limitations on the amount of Tax Increment Revenues that the Agency may be allocated from the Redevelopment Project. In 1993, the State Legislature adopted Assembly Bill 1290 (AB 1290), which imposed certain time limitations on (1)

15 the allocation of Tax Increment Revenues to a redevelopment project, (2) the effectiveness of a redevelopment plan and (3) the incurrence of debt. Prior to subsequent changes, Section 33333.6 of the Redevelopment Law provided that a redevelopment agency may not pay indebtedness or receive property taxes pursuant to Section 33670 of the Redevelopment Law after ten years from the termination of the effectiveness of a redevelopment plan (which was limited to the later of January 1, 2009 or 40 years after the adoption of such redevelopment plan). Subsequent changes to the Redevelopment Law affecting plan limitations are as follows:

• In 1998, the State Legislature adopted Assembly Bill 1342 (AB 1342), which allowed redevelopment agencies to extend plan limitations to such maximum terms without having to comply with the statutory plan amendment process if such agency’s existing plan limits were shorter.

• In 2001, the State Legislature adopted Senate Bill 211 (SB 211), allowing the elimination of an agency’s limitation on incurring debt.

• In 2003, the State legislature adopted Senate Bill 1045 (SB 1045), which provided that the governing body could adopt an ordinance to extend the limits on the termination of redevelopment plans approved prior to 1994 and the authority to collect Tax Increment Revenues by one additional year if the agency was required to make a payment to the Educational Revenue Augmentation Fund (“ERAF”) in 2003/04.

• In 2004, the State legislature adopted Senate Bill 1096 (SB 1096), which provided that the governing body could, with respect to redevelopment plans with less than 20 years remaining, adopt an ordinance to extend the limits on the termination of redevelopment plans and the authority to collect Tax Increment Revenues by one additional year for each ERAF payment if the agency was required to make a payment to ERAF in 2004/05 and 2005/06.

• In July 2009, the State legislature adopted Assembly Bill 26 (AB 26), which provided that the governing body could adopt an ordinance to extend the limits on the termination of redevelopment plans approved prior to 1994 and the authority to collect Tax Increment Revenues by one additional year if the agency makes a payment to the Supplemental Educational Revenue Augmentation Fund (“SERAF”) in 2009/10. The SERAF payment is described in detail under the caption “RISK FACTORS – State of California Fiscal Issues.”

The limitations imposed by the Redevelopment Plan are as follows. The Agency does not believe such limitations will impact its ability to pay the Bonds.

Maximum Tax Increment Revenues $2,213,500,000 Maximum Bonded Indebtedness (1) N/A Last Date to Incur Debt Eliminated Plan Expiration Date August 1, 2015 Last Date to Collect Tax Increment Revenues (2) August 1, 2025 (2) ______(1) Not required for Redevelopment Plans adopted prior to 1976. (2) The Agency may collect Tax Increment Revenues generated by the area added to the Redevelopment Project in 1975 until December 16, 2028. However, this area is not expected to generate a significant amount of Tax Increment Revenue.

As of August 2010, the Agency has collected approximately $400,407,000 in Tax Increment Revenue from the Redevelopment Project.

16 Capital Projects

Pursuant to the Redevelopment Law, the Agency may pay the costs of public buildings, facilities and improvements subject to certain restrictions. Pursuant to Section 33445 of the Redevelopment Law, for redevelopment plans and amendments to redevelopment plans which add territory to a redevelopment project, adopted after October 1, 1976, the acquisition of property for public improvements and the installation or construction of each public improvement must be provided for in the redevelopment plan.

In addition, pursuant to Section 33445(a) of the Redevelopment Law, for each public improvement, either within or contiguous to a project area, the Agency is required to obtain the consent of the City Council after a public hearing is held and the following is determined:

(1) That the acquisition of land or the installation or construction of buildings, facilities, structures, or other improvements are of benefit to the project area by helping to eliminate blight within the project area or providing housing for low- or moderate-income persons;

(2) That no other reasonable means of financing the acquisition of land or the installation or construction of such buildings, facilities, structures, or other improvements, are available to the community; and

(3) That the payment of funds for the acquisition of land or the cost of buildings, facilities, structures, or other improvements is consistent with the implementation plan adopted pursuant to Section 33490 of the Redevelopment Law.

Section 33445.1(a) of the Redevelopment Law provides that, for each public improvement located outside and not contiguous to a project area but located in the community, the Agency is also required to obtain the consent of the City Council after a public hearing is held and the following is determined based on substantial evidence in the record:

(1) That the acquisition of land or the installation or construction of buildings, facilities, structures, or other improvements are of primary benefit to the project area;

(2) That the acquisition of land or the installation or construction of buildings, facilities, structures, or other improvements benefits the project area by helping to eliminate blight within the project area or will directly assist in the provision of housing for low- or moderate-income persons;

(3) That no other reasonable means of financing the acquisition of land or the installation or construction of such buildings, facilities, structures, or other improvements, are available to the community, including, but not limited to, general obligation bonds, revenue bonds, special assessment bonds, or bonds issued pursuant to the Mello-Roos Community Facilities Act of 1982 (Chapter 2.5 (commencing with Section 53311) of Part 1 of Division 2 of Title 5 of the Government Code). In determining whether other means of financing are feasible, the legislative body may take into account any relevant factors, including, but not limited to:

(A) Legal factors, such as the eligibility of the improvements for funding under the governing statutes.

(B) Economic factors, such as prevailing interest rates and market conditions.

(C) Political factors, such as the priority of commitments of other public funding sources, the ability or willingness of property owners or taxpayers to bear the cost of any special assessments, taxes, or other charges, and the likelihood of obtaining voter approval, if required.

17 (4) That the payment of funds for the acquisition of land or the cost of buildings, facilities, structures, or other improvements is consistent with the implementation plan adopted pursuant to Section 33490 of the Redevelopment Law; and

(5) That the payment of funds for the acquisition of land or the cost of buildings, facilities, structures, or other improvements is provided for in the redevelopment plan.

Any action challenging the findings required by Section 33445.1 must be filed within 60 days of the date of the resolution containing the findings.

The Agency and the City have covenanted to comply with all provisions of Section 33445 and Section 33445.1 of the Redevelopment Law with respect to authorizing the use of Tax Increment Revenues, and proceeds of the Bonds if any, for the funding of the construction of public facilities.

Low and Moderate Income Housing

In 1976, the Redevelopment Law was amended to require that for every redevelopment plan adopted after January 1, 1977, or any area which is added to a redevelopment project by an amendment to a redevelopment plan after January 1, 1977, not less than twenty percent (20%) of Tax Increment Revenues must be set aside annually for the purpose of increasing and improving the community’s supply of low and moderate income housing available at affordable housing costs to persons and families of very low, low or moderate income households. In 1985, the Redevelopment Law was further amended to add substantially the same requirements with respect to plans adopted prior to January 1, 1977.

The Agency and the Redevelopment Plan are subject to this housing set-aside requirement. The Agency will deposit a portion of the Bond proceeds in the Agency’s Housing Fund to be used for the purposes of Section 33334.3 of the Redevelopment Law. Therefore, a portion of the Tax Increment Revenues required to be set aside for low and moderate income housing (i.e., the Housing Revenues) is available to pay debt service on the Bonds (the “Housing Portion”). See “SOURCES OF PAYMENT FOR THE BONDS - Tax Revenues” herein.

THE REDEVELOPMENT PROJECT The Redevelopment Project is an area of approximately 263 acres primarily developed with office and commercial/retail uses. The Central Glendale Redevelopment Project’s main commercial thoroughfare, Brand Boulevard, is a major north-south City arterial. The Redevelopment Project is also traversed by the Ventura Freeway (SR 134) which, along with nearby Golden State Freeway (I-5), Foothill Freeway (I- 210) and Glendale Freeway (SR 2), provides access to all destinations in the Southern California area.

There are a number of policies that help guide the day-to-day activities of the Agency. During the remaining time available to complete its redevelopment activities, the Agency will focus on the following policy directions:

• Retail attraction • Improving downtown mobility

• Hotel development • Urban art program

• Investment in park and • Green building efforts library improvements • Investment in civic, entertainment and • Downtown development cultural venues

18 Retail Attraction. One policy direction is the attraction of retail and entertainment uses to the downtown area. Desired uses are those that strengthen pedestrian and sidewalk activities, such as cinemas, restaurants, and those that contribute to the downtown’s night life. New cultural arts facilities, including public and private art and exhibit galleries and performance venues, will play an important part in establishing a broad base of attractions for the area. Facilities that encourage family-oriented activity and provide opportunities for youth will be strongly encouraged.

Hotel Development. The Agency recently attracted a new Embassy Suites Hotel to Glendale. There is still capacity in the tri-cities market (Burbank, Glendale, Pasadena) for more hotel rooms although the hotel market has been affected by current economic conditions. During the next five years, the Agency will encourage development of full and business class hotels. Due to the spin-off benefit to surrounding businesses that hotels create, these products are currently desirable, especially in the downtown area.

Investment in Park Development and Library Improvements. In November 2007, the Agency adopted a policy to set aside 75% of the tax increment generated by each new residential unit built in its two redevelopment project areas to finance park, open space, and library improvements serving the project areas. Furthermore, the Agency also voted to allocate 25% of the tax increment generated by commercial projects. This funding mechanism provides companion funding to leverage the City’s Parks and Libraries Development Impact Fee.

Downtown Specific Plan (DSP). Since its inception, the Agency has used its redevelopment authority to help guide desired development in the downtown area. The City’s Planning Department in conjunction with the Agency established development standards for the Central Business District and East Broadway Neighborhood through a specific plan. The Downtown Specific Plan (DSP) will maintain the long-term viability of the greater downtown area by providing a framework for orderly growth and development. These standards provide a framework for addressing specific issues including economic development and incentives, urban design, urban housing, adaptive reuse, mixed-use, and historic preservation. This guide to development will become especially important once the plan activities for the Redevelopment Project expire in 2015 and redevelopment tools will no longer be available to ensure well managed growth and economic vitality. The Agency sponsored the development of the DSP which was adopted in November 2006 with the goal of helping guide future development in the downtown area. The DSP continues to be evaluated and amended as necessary to reflect the economic market, development realities and urban design opportunities.

Downtown Mobility. The Downtown Mobility Plan was prepared in conjunction with the Downtown Specific Plan and was approved in March 2007. The Plan is a comprehensive mobility program integrating vehicular traffic, transit services, pedestrian amenities, and parking management policies to move people through the city in a safe and efficient manner. Implementation of the Mobility Plan will help transform the downtown’s area urban environment by providing a coordinated, multi-modal transportation system with higher use of alternative modes, such as walking and public transportation. The Mobility Plan works synergistically with the Downtown Specific Plan to create a vibrant and attractive 24-hour downtown in which to work, live and visit. It will be the goal of the Agency to put in place programs and encourage development projects that will reduce the number of automobiles and increase pedestrian activity.

Urban Art Program. The Urban Art Program was developed as part of the Downtown Specific Plan and establishes the requirements and procedures for providing public art in conjunction with new developments or tenant improvements in the DSP area. Public art helps to improve the physical environment, image, and character of Glendale’s downtown area. Public art has also proven to promote and enhance the general welfare of a community by allowing an experience and interaction with artworks in an environment that is open to all.

19 Green Buildings. In July 2008, the City Council/Agency directed staff to develop a set of “green” building codes for all future development. These requirements would mandate public and private buildings to meet varying levels of energy and environmental efficiency benchmarks intended to reduce development impacts on the environment. The standards developed by the nonprofit U.S. Green Building Council in a system known as Leadership in Energy and Environmental Design (LEED), assign a point value to aspects of construction, from site location to solar panels. Once the standards are adopted, the Agency will assure compliance with the standards in all redevelopment projects.

Civic and Cultural Investment. In 1992, the Agency made a large investment in the arts by purchasing and restoring the Alex Theatre to give Glendale residents and the region a grand venue to experience cultural activities and art performances. Over the next five years, the Agency will continue its investment in the Alex Theatre to maintain its marketability as an entertainment venue. One such improvement is a complete renovation of the forecourt to create a friendlier gathering and entertaining space for use before and after performances. Some of the other capital improvement projects planned for the Theatre include seat refurbishment, painting and restoration of the front façade, upgrading electrical wiring, replacement of the auditorium roof, replacement of the air conditioning system, installation of energy efficient lighting and upgrading the Theatre carpet.

The Agency is also investing funds derived from the 2010 Bonds to renovate the City’s Central Library and to build a new Adult Recreation Center, key anchors to the downtown area.

Commercial Development in the Redevelopment Project

The Agency has actively participated in a significant amount of development in the Redevelopment Project, expanding the City’s retail base.

The Glendale Galleria. The Glendale Galleria is one of Southern California’s premier shopping centers. The Glendale Galleria is anchored by Macy’s, Nordstrom, JC Penney, and Target department stores, and contains an additional 250 specialty retail shops. The mall was originally opened in 1975 and in 1983 was expanded to its current size of 1.5 million square feet with parking for 6,115 vehicles. Several tenant changes in the center have taken place in recent years. Target is currently located in space formerly occupied by Robinson’s-May department store. A Mervyn’s department store occupied 64,000 square feet of space in the center. With the closing of the Mervyn’s franchise in late 2008, the former Mervyn’s space in the center is now vacant. This store was the Galleria’s primary eastern anchor and with its large ground floor entrance on the corner of Broadway and Brand Boulevard, was the primary pedestrian connection between the Galleria and the Brand Boulevard commercial district. Specific plans have not been proposed for the Mervyn’s reuse. Options for reuse could range from re-occupancy of the building to a complete redevelopment of the site.

The Glendale Galleria is owned by GGP/Homart II L.L.C., the General Growth Properties (“GGP”) 50/50 joint venture with the New York State Common Retirement Fund. GGP is the second largest shopping mall owner in the United States. See “Major Taxpayers” below.

GGP/Homart II L.L.C. has filed an appeal of the 2009/10 and 2010/11 assessed value for a portion of this property (see “Assessment Appeals” below).

The Americana at Brand. Developed under a partnership with the Agency and Caruso Affiliated, the Americana at Brand development replaced 15.5 acres of underutilized and blighted properties with a mixed use “lifestyle center.”

20 The Americana at Brand successfully integrates retail, restaurant, cinema, and high-end residential uses in a series of mid-rise buildings located around three acres of public open space and pedestrian promenades. The development is helping to create the envisioned “18-hour downtown” with urban dwellers and patrons of cinemas, restaurants, and retails shops. The project incorporates 75 ground floor retail stores and restaurants with 100 condominiums and 238 luxury apartments, all surrounding a 3-acre public park with fountains.

Since its opening in May 2008, the Americana has achieved the myriad of goals set for the project:

• the project has quickly become Glendale’s new regional retail destination complementing the Glendale Galleria and the Brand Boulevard commercial district enhancing Glendale’s position as one of southern California’s premier shopping districts;

• the project has provided new employment opportunities, diversified the City’s retail base, and increased the City’s property and sales tax base;

• the project’s open space has created a central gathering place for the community which has been further highlighted by a number of special and recurring events including free concerts, holiday ceremonies, and recreational activities; and

• the high quality design has helped create a place of “singular distinction” and has set a new design standard for the downtown area.

Major retail uses include an 18-screen 3,500-seat Pacific Theatre cinema, Barneys Co-op, Tiffany’s, H&M, XXI, Sur La Table, Kitson, Anthropologie, Barnes & Noble Booksellers, BCBG Max Azria, Sony Style, and Lacoste. The list of popular restaurants include Katsuya, Trattoria Amici, Café Primo, Frida’s Mexican Cuisine, Granville Café and the very successful Cheesecake Factory.

The Americana at Brand also incorporates residential rental and ownership opportunities. 95 of the 100 condominiums have been sold to individuals. Sale prices averaged $618,000. The 238 rental apartments are approximately 95% occupied. See “Major Taxpayers” below. The property owner (Americana at Brand) has filed an appeal of the 2010/11 assessed value for a portion of this property (see “Assessment Appeals” below).

On March 16, 2011, the owner of the Americana at Brand announced that that Nordstrom will move from the Glendale Galleria to the Americana at Brand. The department store will be three-levels, 135,000 square-foot store and is expected to open in 2013 on the site of the Golden Key Hotel and the nearby brick building, both of which Caruso just purchased to expand the Americana at Brand. This owner also purchased the existing Nordstrom building. No adjustments have been made in the projections of Tax Revenues to reflect the sale or the potential new development.

The Marketplace. The Marketplace contains 180,000 square feet of specialty retail shops, restaurants and cinemas. The development incorporates a paseo connecting Brand Boulevard with Maryland Avenue, decorative sidewalks and median landscaping. The Marketplace is supported by a 1,200-space public parking structure. The property owner (Eagle Glendale Marketplace) has filed an appeal of the 2010/11 assessed value of this property (see “Assessment Appeals” below). This property was recently sold to the Festival Companies.

The Exchange. The Exchange development contains specialty retail, restaurants and cinemas, as well as 2nd floor office space above the retail uses. It is characterized with gas lamp style street lighting, fountains and palm trees. The Agency constructed a 675-space parking structure to serve the needs of the Exchange.

21 Hilton. This 350-room hotel was constructed in 1991 and acquired by Hilton in 1999 (see “Major Taxpayers” below). The 4-Star Hilton Los Angeles North/Glendale & Executive Meeting Center hotel is located in Glendale’s business district, adjacent to the Ventura Freeway with easy access to the Bob Hope Burbank Airport. The 19-story high-rise hotel has newly renovated contemporary guestroom accommodations. The property owner (EHP Glendale) has filed multi-year appeals of the assessed value of this property (see “Assessment Appeals” below).

Embassy Suites Hotel. The Embassy Suites Hotel was completed in November 2008. The 272-suite, 12-story hotel was developed with the goal of meeting the growing demands of the business community by offering area visitors with an additional corporate business hotel option. The hotel includes the signature Embassy Suites interior lobby with a glass atrium and approximately 7,000 square feet of conference space and lounge. Other amenities include a gym, swimming pool, Bistro 800 Restaurant and Starbucks. The property owner (Newage Glendale) has filed an appeal of the 2010/11 assessed value of this property (see “Assessment Appeals” below).

Brand Boulevard. The City’s “signature street” provides a pedestrian-friendly environment, connecting office and commercial uses in the Redevelopment Project. The Agency has invested significant funds for streetscape along Brand Boulevard as well as having constructed a 600-space parking structure to support uses in the area.

Office Development in the Redevelopment Project

Office development in the Redevelopment Project has provided Glendale with an unmistakable skyline. Glendale has nearly 7 million square feet of office space located in buildings throughout the City, and is home to numerous corporate headquarters. According to CoStar Group, the occupancy rate for office space in Glendale in the 3rd Quarter (for comparison purposes) of the last several years was:

3rd Quarter Occupancy 2007 85.8% 2008 85.1% 2009 80.1% 2010 77.0%

The occupancy rate for office space declined in the 3rd Quarter of 2009, primarily related to the addition of 189,000 square feet of new office space (see “207 W. Goode Avenue” below). Although occupancy rates declined further in 2010, the Agency reports that at least 21 new leases have been entered into in the last six months, totaling 96,624 square feet of office space. This includes the lease of 54,900 square feet in the Glendale City Center by LegalZoom.

The most significant office developments in the Redevelopment Project are located along Brand Boulevard and are typically referred to by their Brand Boulevard address.

800 North Brand. This 20-story building with 1,600-space parking garage is occupied by Nestle USA’s corporate headquarters. It contains 525,000 square feet of leasable space and is valued at $163 million. It was built in 1990, and it was purchased by Wells REIT Glendale California LLC in December 2002. Wells Real Estate Trust is an Atlanta-based real estate investment management firm (www.wells- realestate-funds.com) (see “Major Taxpayers” below). The building is currently 80.4% occupied. The property owner has filed multi-year appeals of the assessed value of this property (see “Assessment Appeals” below).

22 801 North Brand. Built in 1986, this facility contains 280,000 square feet of leasable space with parking for 1,000. The 13-story building has retail on the ground floor. It was purchased by the current owner, Maguire Properties, from FSP 801 North Brand in 2005 (see “Major Taxpayers” below). Tenants include Zurich North America, Sierra Land Group and American Realty Advisors, and the overall occupancy rate for this building is currently 82%.

701 North Brand. Located just north of the Ventura Freeway, these two 8-story office buildings have a total of 300,000 square feet of leasable space with a 1,350-space parking structure. The building was purchased by Maguire Properties in 2006. Tenants include California Credit Union, Mark Weiner and Associates and Salem Communications. The building is currently 97% occupied.

611 North Brand. This 364,000 square foot office building was built in 1972. It was acquired by Maguire Partners in 2000. Yellow Pages leases approximately 20% of the office space, and the building is currently 94% leased.

Maguire Properties has filed multi-year appeals of the assessed values of the 801 North Brand, 701 North Brand and 611 North Brand properties (see “Assessment Appeals” below).

550 North Brand. Built in 1986 and acquired by 550 North Brand Owners in 2000 (see “Major Taxpayers” below), this 20-story office building contains 310,000 square feet of leasable space with tenants such as Knapp, Peterson & Clarke Law Firm, Millennium Corporate Solutions and Smith Barney. The occupancy rate for this building is currently 81%. The property owner has filed multi-year appeals of the assessed value of this property (see “Assessment Appeals” below).

505 North Brand. This 16-story office building with 1,200-space parking garage was built in 1986. It contains 320,000 square feet of leasable space and tenants include United Health Care and America Imaging Management. The building was purchased by the current owner, NAPI Glendale I LLC in 2005 from SP Glendale LLC, who had owned the building since 2000 (see “Major Taxpayers” below). This building is currently 67% leased. The property owner has filed multi-year appeals of the assessed value of this property (see “Assessment Appeals” below).

500 North Brand. The building located at 500 North Brand is known as “The Lexington,” rises 22 stories and contains 550,000 square feet of leasable space and a 1,500-space parking garage. It was built in 1990 and purchased by SPUSV5 500 Brand in December 2008 from CPLF-500 Brand, who had owned the building since 2006 (see “Major Taxpayers” below). Current tenants include Zecco Trading, Employers Holdings Inc., Imperial Capital Bank, Inc., Principal Financial Group and Paychex North America and the overall occupancy rate for this building is 74%. The property owner filed an appeal of the 2009/10 assessed value of this property ($111,000,000) and the assessor reduced the assessed value to $96,500,000. The 2010/11 assessed value of this property is $110,736,930 and the property owner has filed an appeal of the 2010/11 assessed value (see “Assessment Appeals” below).

330 North Brand. Purchased in 2004 by 330 North Brand Inc. from ND Properties (see “Major Taxpayers” below), this 12-story office building was originally constructed in 1982 and contains 329,000 square feet of leasable space with a 900-space parking garage. Major tenants include Catholic Health Care West, TMP Worldwide Inc., Liberty Mutual Insurance, CT Lien Solutions and a U.S. Small Business Association agency. The building is currently 76% leased. The property owner has filed an appeal of the 2010/11 assessed value of this property (see “Assessment Appeals” below).

101 North Brand. Known as the Glendale City Center, this development was completed in 1991 and contains 350,000 square feet of leasable space with ground floor retail and restaurants and a 1,400-space parking structure. It was last sold in 2007 to Legacy Partners (see “Major Taxpayers” below). Tenants include LegalZoom, MSC Software, Hutchinson & Bloodgood, California Pizza Kitchen, Olive Garden, Chevy’s, BJ’s Restaurant and Islands Restaurant. The current occupancy rate for this building is 71%. The current owner is requesting a reduction in assessed value (see “Assessment Appeals” below). The

23 property owner filed an appeal of the 2009/10 assessed value of this property ($146,000,000) and the assessor reduced the assessed value to $113,000,000. The 2010/11 assessed value of this property is $103,800,000. The property owner has filed an appeal of the 2010/11 assessed values (see “Assessment Appeals” below).

400 North Brand and 450 North Brand. Metropolitan Life Insurance Company purchased these two buildings in 2004 (see “Major Taxpayers” below). These two adjacent office buildings were completed in 1998 and 1999, respectively. 400 North Brand is 8 stories and contains 175,000 square feet of leasable space. 450 North Brand is 8 stories and contains 220,000 square feet of leasable space. Major tenants include Cigna Health Care, Pacific Western Bank, IBM, Dine Equity Inc. and 24 Hour Fitness. The buildings were constructed with matching facades and are connected by an open courtyard. The buildings are 83% and 89% leased, respectively.

207 W. Goode Avenue. Maguire Properties completed construction in May 2009 of an eight-story, 189,000 square foot commercial office building at a prominent location overlooking the Ventura Freeway. To date, the owner has not yet leased any space in this building. In October 2010, the building was sold to Lincoln Properties for $23 million. The value of this property on the 2010/11 tax roll is $4.9 million

225 E. Broadway. In 2001, the Agency purchased an office building and parking lot from the County of Los Angeles Department of Public Social Services (DPSS). In December 2007, the Agency sold the properties to the Amidi Real Estate Group and approved their proposal to adaptively reuse the DPSS building for creative office space and develop a stand-alone 63-unit residential building project on the site. Phase I of the project, rehabilitation of the office building, was completed in early 2009 and the building is 100% occupied. During the next 5 years, the Agency anticipates that the Amidi Real Estate group will construct the 63-unit residential building.

Future Development in the Redevelopment Project

Several developments that have received entitlements are described below.

Hotel. Komar Investments LLC has proposed development of an 11-story, 173-room of a Courtyard by Marriott Hotel to be located at 225 West Wilson on the northeast corner of Central and Wilson Avenues. The 18,276 square foot site is owned by the Agency and is currently used for public parking. The hotel includes meeting rooms, a bistro/bar, garden decks, a fitness center with a pool, and housekeeping areas/laundry facilities. Parking for the hotel is provided within three subterranean levels with a total parking capacity of 174 vehicles to serve guests and visitors. The 110,000 square foot project will address the deficiency of business hotel rooms in the tri-city market. The project’s final entitlements and design were approved in December 2009. The final terms of the Disposition and Development Agreement and Ground Lease will be considered by the Agency in March 2011 and construction is anticipated to be complete in late 2013 or early 2014. This project is expected to add $40 million to the tax rolls in 2014/15.

Broadway Lofts. A 208-unit 165,000 square foot mixed-use development will occupy a prominent corner in the center of Downtown Glendale at 200 East Broadway and Maryland Avenue, located one block from the Glendale Galleria and The Americana at Brand. This entitled mix-use project will offer suites and loft apartments in a four-story, six level structure, above the ground floor retail. At street level, 26,000 square feet of stores will open to the boulevards of Glendale’s Art and Entertainment District. Construction has begun and is anticipated to be completed in late 2012. The project is expected to add $40 million to the tax rolls in 2013/14.

24 Laemmle Cinema Lofts. In February 2011, the Agency authorized an exclusive negotiating agreement with Mapleton/DDS Real Estate, LLC and Laemmle Theaters, LLC for the development of a mixed-use project featuring a five screen Laemmle Theatre, 6,300 square feet of ground floor retail space, and 42 residential loft style units. The project site is located the northwest corner of Maryland and Wilson Avenues. The project - with a mix of artist lofts, flexible commercial space that could house a variety of retail or restaurant uses, and a 5-screen art house movie theater - is an ideal northern anchor and draw for the proposed Art & Entertainment District. Construction is anticipated to be completed in early 2013. The project is expected to add $15 million to the tax rolls in 2014/15.

Nordstrom. As previously discussed above under “Commercial Development,” on March 16, 2011, the owner of the Americana at Brand announced that that Nordstrom will move from the Glendale Galleria to the Americana at Brand. The department store will be three-levels, 135,000 square-foot store and is expected to open in 2013 on the site of the Golden Key Hotel and the nearby brick building, both of which Caruso just purchased to expand the Americana at Brand. This owner also purchased the existing Nordstrom building. No adjustments have been made in the projections of Tax Revenues to reflect the sale or the potential new development.

Museum of Neon Art. The Agency is assisting the Museum of Neon Art with rehabilitations of a building to serve as museum space. The museum is intended to anchor the Arts & Entertainment District, with the Alex Theater being the other anchor. The City Council has approved various design elements and a sign variance. The museum expects to be open in the spring of 2012.

City Center Phase II. In January 2008, the Amidi Real Estate Group received entitlements for a mixed- use development on the southwest corner of Brand Boulevard and Wilson Avenue. The entitled project is comprised of two towers on a shared podium. The east tower would consist of an 18-story, 172-room hotel with 60 residential units on the upper floors and 4,000 square feet of ground level restaurant. The west tower would be 20 stories tall and includes 124 condominium units. Due to current market conditions, it is unlikely that the project, if built, would be built pursuant to the entitled design.

The Alexander. Intracorp Companies proposed to build a twin tower, 16-story, 201-unit mixed-use residential condominium development with approximately 2,500 square feet of ground floor commercial space on the southwest corner of Wilson Avenue and Orange Street. This project obtained its final design approval and all entitlements in August 2007. The developer is currently marketing the project.

Verdugo Gardens. The Verdugo Gardens project was fully entitled in February 2008 and would consist of a 24-story, 287-unit condominium tower with ground floor commercial/retail uses at the southeast corner of Central Avenue and Sanchez Drive. In order to ease traffic flow to the freeway, a proposal to widen and add one additional lane on Central Avenue and Sanchez Drive was included as part of the design of this project. Due to current market conditions, it is unlikely that the project, if built, would be built pursuant to the entitled design.

In addition, construction was recently completed on a 22,464 square foot mixed use project at 220 East Broadway. The development includes 34 condominiums and 9,300 square feet of ground floor commercial.

No Assurance Concerning Future Development. Although the Agency has a reasonable basis for the expectations that the above described future developments will be completed in the time period and at the market value forecasted, the Agency cannot provide specific assurance that such developments will actually be completed as described.

25 Assessed Valuations

New development has added over $479 million in assessed value to the tax rolls for the Redevelopment Project since fiscal year 2006/07 above the inflationary growth in the tax base. These factors together represent a 26% overall increase in total taxable value since 2006/07.

Residential development accounts for approximately 2.6% of the assessed value of the Redevelopment Project and commercial/office development comprises 90.5% of the assessed value of the Redevelopment Project. All other uses comprise 0.7% of assessed value and unsecured property accounts for 6.3% of assessed value.

TABLE NO. 1 GLENDALE REDEVELOPMENT AGENCY CENTRAL GLENDALE REDEVELOPMENT PROJECT HISTORICAL ASSESSED VALUATIONS 2006/07 THROUGH 2010/11

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

Secured $2,188,344,587 $2,281,393,946 $2,659,360,787 $2,684,067,279 $2,771,280,062 Unsecured 151,913,975 154,965,055 158,713,264 187,229,837 185,753,609 Total $2,340,258,562 $2,436,359,001 $2,818,074,051 $2,871,297,116 $2,957,033,671 Less: Base year (85,216,405) (86,322,426) (86,322,426) (133,567,500) * (85,421,451) Incremental Increase $2,255,042,157 $2,350,036,575 $2,731,751,625 $2,737,729,616 $2,871,612,220

Annual Change in Secured Value 4.3% 16.6% 0.9% 3.2% Annual Change in Unsecured Value 2.0% 2.4% 18.0% (0.8)% Annual Change in Total Value 4.1% 15.7% 1.9% 3.0%

______* The County of Los Angeles increased the base year of the Redevelopment Project in 2009/10 by $47,245,000 with no prior notice to the Agency. The County corrected the base year value during the fiscal year and adjusted the tax increment payable to the Agency. Source: Los Angeles County Auditor-Controller.

The significant increase in property values occurring in 2008/09 is a result of the completion of the Americana at Brand retail and residential mixed use project. The project added $271 million in assessed value to the 2008/09 tax roll. The retail component of the project was valued in 2009/10 at $204 million including the theater, and the retail component of the project was valued in 2009/10 at $111 million, an overall increase of $44 million from 2008/09 values.

In addition, the ownership of the office building at 101 North Brand changed, resulting in a $35 million increase in assessed value in 2008/09.

26 Major Taxpayers

The ten largest secured property taxpayers represent 61.0% of the 2010/11 assessed value of the Redevelopment Project.

TABLE NO. 2 CENTRAL GLENDALE REDEVELOPMENT PROJECT TEN LARGEST TAXPAYERS AS A PERCENT OF 2010/11 ASSESSED VALUE

2010/11 % of Assessed Assessed Taxpayer Value Value

GGP Homart II L.L.C. (1) $ 444,945,958 15.0% Americana at Brand (1)(2) 401,580,475 13.6 Maguire Properties (1) 220,237,712 7.4 Wells REIT Glendale California (1) 162,682,901 5.5 SPUSV5 500 Brand (1) 110,736,930 3.5 Metropolitan Life Insurance Company 110,300,000 3.7 Legacy Partners II Glendale (1) 103,800,000 3.7 EHP Glendale LLC (1) 90,377,204 3.1 NAPI Glendale I LLC (1) 86,900,000 2.9 550 North Brand Owners (1) 77,200,000 2.6 Total $1,808,761,180 61.0% ______(1) Property value appeals pending. (2) Some of this value was attributed by the County Assessor to Americana Housing LP in prior year due to parcel changes. Americana Housing LP now owns 238 apartments valued at $34,670,879. This value may also reflect some of the value of condominiums sold and not yet reflected in separate ownership. Source: Glendale Redevelopment Agency.

27 Assessment Appeals

As of January 2011, there were a total 89 pending appeals filed by property owners in the Redevelopment Project. 41 appeals relate to the 2010/11 assessed values, 30 appeals relate to the 2009/10 assessed values, 8 appeals related to the 2008/09 assessed values and 10 appeals relate to prior years. Nine of the ten property owners included in “TABLE NO. 2 - TEN LARGEST TAXPAYERS AS A PERCENT OF 2010/11 ASSESSED VALUE” have filed appeals. The total value of property under appeal is $3.86 billion, as shown below. Some appeals have been filed for multiple years for the same property and some appeals have also been filed in cases where current values already reflect a reduced value from a successful appeal in a prior year. Net appeals, adjusted for multiple years and successful prior appeals total $2.15 billion. A summary of all pending appeals is shown below:

Requested Property Owner Tax Roll Value Appeal Value Reduction 2010/11 Tax Roll: GGP Homart II LLC $ 209,728,404 $ 98,200,000 53% Maguire Properties 220,237,712 118,118,855 46% Wells Reit Glendale 162,682,901 80,992,000 50% Legacy Partners 103,800,000 51,900,000 50% Americana at Brand 366,852,975 200 100% SPUSV5 500 Brand LP 110,736,930 40,000,000 64% Eagle Glendale Marketplace 52,934,644 - 100% Napi Glendale I LLC 86,900,000 - 100% 550 N Brand Owners 77,200,000 39,000,000 49% EHP Glendale (Hilton) 90,377,204 30,000,000 67% Ca-700 North Brand LLC 45,300,000 30,000,000 34% 330 North Brand 67,056,026 62,184,000 7% Ag/Cambra 225 Broadway 22,800,000 11,999,000 47% Newage Glendale (Embassy Suites) 72,257,977 33,000,000 54% Glendale Mall Associates (Macy’s) 23,730,991 11,000,000 54% Wcot Glendale 18,000,000 - 100% All Others (25) 203,674,293 148,297,648 27% Appeals for 2009/10 $ 1,934,270,057 $ 754,691,703 61%

2009/10 Tax Roll: GGP Homart II LLC $ 280,170,663 $ 154,100,000 45% Maguire Properties 233,852,545 116,926,271 50% Wells Reit Glendale 163,069,377 89,986,000 45% Americana Housing LLP 111,234,060 55,617,030 50% Napi Glendale I LLC 101,000,000 - 100% 550 N Brand Owners 89,100,000 60,000,000 33% EHP Glendale (Hilton) 87,201,109 38,000,000 56% Ca-700 North Brand LLC 52,500,000 42,000,000 20% Pacific Theater Exhibition Corp 39,066,000 28,000,000 28% Nordstrom 38,176,990 18,350,000 52% Sears 27,060,792 18,942,747 30% Express LLC 21,577,896 300,000 99% Glendale Mall Associates (Macy’s) 3,107,335 2,078,431 33% All Others (17) 113,660,783 99,559,839 12% Appeals for 2009/10 $1,360,777,550 $ 723,860,318 47% (Continued on next page.)

28 Requested Property Owner Tax Roll Value Appeal Value Reduction Total from prior page $ 3,417,147,607 $ 1,539,602,021

2008/09 Tax Roll: EHP Glendale (Hilton) $ 79,447,000 $ 50,000,000 37% Americana Housing LP 58,322,000 29,161,000 50% All Others (6) 37,812,944 19,874,514 47% Appeals for 2008/09 $ 175,581,944 $ 99,035,514 44%

Prior Years: EHP Glendale (Hilton) - 2006 $ 77,889,240 $ 51,000,000 35% EHP Glendale (Hilton) - 2007 79,447,024 65,000,000 18% 101 N. Brand (former owner) - 2006 86,850,000 72,000,000 17% All Others (7) 20,003,233 5,576,536 72% Appeals for Prior Years $ 264,189,497 $ 193,576,536 27%

Total All Appeals $3,734,819,048 $1,771,164,071 53% Assessor Reduced Value Reflected on Current Roll (196,336,930) (79,000,000) Appeals for Multiple Years (1,388,848,958) (768,173,271) Net Appeals $ 2,149,633,160 $ 923,990,800 57%

Several significant appeals from prior years have either been heard by the County appeals board or withdrawn, as shown below:

2009/10 Tax Roll: Tax Roll Value Appeal Value Reduction Legacy Partners II Glendale $ 146,000,000 $113,000,000 23% Reduced by Assessor Americana at Brand LLC 165,857,100 93,544,800 44% Withdrawn Eagle Glendale Marketplace 53,060,398 - 100% Withdrawn Ab/Cambra 225 Broadway LLC 26,000,000 14,999,000 42% Withdrawn Wcot Glendale 22,000,000 19,400,000 12% Reduced by Assessor SPUSV5 500 Brand LP 111,000,000 96,500,000 13% Reduced by Assessor

2008/09 Tax Roll: CLPF 500 Brand (former owner) $ 144,095,400 $108,000,000 25% Reduced by Assessor Pacific Theater Exhibition Corp 138,946,400 69,473,200 50% Withdrawn Americana at Brand LLC 74,096,400 62,213,200 16% Withdrawn 700 North Central (Maguire) 55,080,000 50,000,000 9% Withdrawn LLP 500 Brand 144,095,400 108,000,000 25% Reduced by Assessor

Prior Years' Tax Rolls: Americana at Brand - 2007 94,640,000 9,500,000 90% Withdrawn Glendale Mall Associates (Macy’s) - 2007 22,863,678 10,447,700 54% Withdrawn $1,053,639,376 $647,077,900

The Agency cannot predict the outcome of any pending appeals.

For Fiscal Years 2005/06 to 2009/10, 25 of 40 (63%) of resolved appeals were successful, with an average reduction in assessed value of 13%. However, the average reduction associated with 9 successful appeals of 2009/10 assessed values was 17.2%

29 While the Agency expects some decline in total assessed valuation relating to pending or potential future appeals, no prediction can be made as to the amount of the decline in total assessed valuation, if any, within the Redevelopment Project, although if 63% of appeals are granted at the 2009/10 average rate of 17.2%, such reduction would reduce total 2010/11 assessed value by $233 million (7.9%) and Non- Housing Tax Revenues by approximately $1.45 million (6.9% of 2010/11 Non-Housing Tax Revenues). No reduction for pending appeals has been incorporated in the projections. Reductions in revenue for refunds resulting from successful appeals or current or prior year appeals have also not been incorporated into the projections. Further, the success rate of appeals, reductions granted and refunds may vary from historical averages.

Tax Increment Revenues

Historical Tax Increment Revenues and collections are shown in the table below, together with estimated Tax Increment Revenues for 2010/11.

TABLE NO. 3 GLENDALE REDEVELOPMENT AGENCY CENTRAL GLENDALE REDEVELOPMENT PROJECT HISTORICAL TAX INCREMENT REVENUES 2006/07 THROUGH 2009/10 AND ESTIMATED 2010/11

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

Incremental Assessed Value $2,255,042,157 $2,350,036,575 $2,731,751,625 $2,737,729,616 (2) $2,871,612,220 Tax Rate 1.0054% 1.0045% 1.0043% 1.0043% 1.0037% Tax Increment Revenues $ 22,672,194 $ 23,606,117 $ 27,434,982 $ 27,495,019 $ 28,822,372 Unitary Revenues 277,774 303,434 313,547 321,732 305,529 Total Tax Revenues (1) $ 22,949,968 $ 23,909,551 $ 27,748,529 $ 27,816,751 $ 29,127,901

Actual Tax Revenues $ 24,840,228 $ 24,126,111 $ 26,950,130 $ 31,567,475

______(1) Total Tax Revenues are based on the August 20 Equalized Roll and do not reflect appeals, refunds, delinquencies or supplemental taxes or payments pursuant to Statutory Tax Sharing. (2) The County of Los Angeles increased the base year of the Redevelopment Project in 2009/10 by $47,245,000 with no prior notice to the Agency. Typically, county assessors may make adjustments to the base year values when privately owned parcels are taken into public use or vice versa. The County provided no detail or justification for the adjustment and the Agency protested the change. The County corrected the base year value during the fiscal year and adjusted the tax increment payable to the Agency. Source: Los Angeles County Auditor-Controller.

Actual Tax Revenues paid to the Agency vary from Total Tax Revenues because of supplemental taxes, appeals or refunds, redemption of prior year delinquencies and penalties and deductions for current year delinquencies. In 2006/07, the Agency received over $1.8 million in supplemental tax revenue, and in 2009/10, the Agency received approximately $4.5 million in supplemental tax revenue.

30 Tax Collections

The table below shows the percentage of Tax Increment Revenues actually collected by the Agency in the year levied. The County of Los Angeles does not participate in the Teeter Plan, which would guarantee 100% of tax collections to the Agency. As a result, the Agency bears the risk of delinquent tax payments, although the Agency does receive all interest and penalties levied and collected due to delinquencies.

TABLE NO. 4 CENTRAL GLENDALE REDEVELOPMENT PROJECT TAX COLLECTIONS

2004/05 2005/06 2006/07 2007/08 2008/09 2009/10

Secured 99.4% 99.2% 99.1% 99.1% 95.7% 98.3% Unsecured 69.0% 92.9% 95.5% 96.0% 97.1% 98.4%

Source: Los Angeles County Auditor-Controller.

31 FINANCIAL INFORMATION Agency Budgetary Process and Administration The Redevelopment Law requires redevelopment agencies to adopt an annual budget containing the following:

(1) The proposed expenditures of the agency.

(2) The proposed indebtedness to be incurred by the agency.

(3) The anticipated revenues of the agency.

(4) The work program for the coming year, including goals.

(5) An examination of the previous years’ achievements and a comparison of the achievements with the goals of the previous years’ work program.

All expenditures and indebtedness of the Agency are required to be in conformity with the adopted or amended budget.

The Executive Director of the Agency is responsible for preparing the proposed budget and submitting it to the Agency. After reviewing the proposed budget at a public meeting, the Agency holds a public hearing. The Agency adopts the budget prior to the start of each Fiscal Year. The Finance Director is responsible for controlling expenditures within budgeted appropriations.

Agency Accounting Records and Financial Statements

Every redevelopment agency is required to present an annual report to its legislative body (being the city council) within six months of the end of each Fiscal Year. The annual report is required, among other things, to include an independent financial “audit report” and a fiscal statement for the previous Fiscal Year. The California Health and Safety Code defines “audit report” to mean an examination of and opinion on the financial statements of the agency which presents the results of the operations and financial position of the agency. The independent financial audit is required to be conducted in accordance with generally accepted auditing standards and the rules governing audit reports promulgated by the Governmental Accounting Standards Board. The independent financial audit report is also required to include an opinion of the agency’s compliance with laws, regulations and administrative requirements governing activities of the agency. The Redevelopment Law requires the fiscal statement to contain the following information:

(1) The amount of outstanding indebtedness of the agency and each project area.

(2) The amount of tax increment revenues generated in the agency and in each project area.

(3) The amount of tax increment revenues paid to a taxing agency pursuant to a tax sharing agreement, other than school or community college district.

(4) The financial transactions report required to be submitted to the State Controller.

(5) The amount allotted to school or community college districts pursuant to the Redevelopment Law.

(6) The amount of existing indebtedness and the total amount of payments required to be paid on existing indebtedness for that Fiscal Year.

32 (7) Any other fiscal information which the agency believes is useful to describe its programs.

In addition, the annual report is required to include detailed information regarding the Agency’s housing program to assist low and moderate income households and deposits and expenditures from the Low and Moderate Income Housing Fund required pursuant to the Redevelopment Law.

On September 24, 2008, the State enacted a budget for Fiscal Year 2008/09 that included, among other things, the provisions of a bill known as AB 1389 (Chapter 571, Statutes of 2008). 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 Tax Sharing Agreements with taxing entities and Statutory Tax Sharing. 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 Los Angeles County Auditor-Controller has concurred with the Agency’s report for reporting period ending June 30, 2009. The Agency is not listed on the most recent State Controller’s report of agencies subject to sanctions, as of September 1, 2010.

The Indenture requires the Agency to keep, or cause to be kept, proper books and accounts separate from all other records and accounts of the Agency and the City in which complete and correct entries are made of all transactions relating to the Tax Revenues and the Special Fund. The Indenture requires the Agency to file with the Trustee annually, within 210 days after the close of each Fiscal Year, so long as any of the Bonds are Outstanding, its audited financial statements showing the Tax Revenues and all disbursements from the Special Fund as of the end of such Fiscal Year. The Agency covenants under the Indenture to furnish a copy of such statements upon reasonable request to any Bondholder.

Basis of Accounting and Financial Statement Presentation. The government-wide financial statements are reported using the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met.

Governmental fund financial statements are reported using the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures are recorded only when payment is due.

The Agency retained the firm of McGladrey & Pullen, LLP, Certified Public Accountants, Pasadena, California, to examine the component unit financial statements of the Agency as of and for the Fiscal Year ended June 30, 2010, the most recent Fiscal Year for which audited financial statements have been prepared, which are included as “APPENDIX C.” The firm’s examination was made in accordance with auditing standards generally accepted in the United States of America, the standards applicable to financial audits contained in Governmental Auditing Standards issued by the Comptroller General of the United States and the Guidelines for Compliance Audits of California Redevelopment Agencies issued by the State Controller and as interpreted in the Suggested Auditing Procedures for Accomplishing Compliance Audits of California Redevelopment Agencies issued by the Governmental Accounting and Auditing Committee of the California Society of Certified Public Accountants. The firm reported after their examination that the Agency’s financial statements present fairly its financial position and results of operations in conformity with generally accepted accounting principles and that they noted no instances

33 of non-compliance for the Fiscal Year ended June 30, 2010. The Agency’s audited financial statements are public documents and are included within this Official Statement without the prior approval of the auditor. McGladrey & Pullen, LLP has not been engaged to perform, and has not performed, since the date of its report included herein, any procedures on the financial statements addressed in that report. McGladrey & Pullen, LLP also has not performed any procedures relating to this Official Statement.

Tax Increment Revenues

Procedure for the Allocation and Payment of Tax Increment Revenues. The portion of taxes required to be allocated to the Agency is allocated and paid to the Agency by the County Auditor pursuant to the following procedure:

Not later than the first day of October of each year, the Agency is required to file with the County Auditor a statement of indebtedness certified to by the chief fiscal officer of the Agency for each project area.

The statement of indebtedness is required to contain for each such project area:

(a) The date on which each loan, advance, or indebtedness was incurred or entered into;

(b) The principal amount, term, purpose, and interest rate, of each loan, advance or indebtedness; and

At the same time or times as the payment of taxes into the funds of the respective taxing agencies of the County, the County Auditor-Controller is required to allocate and pay Tax Increment Revenues to the Agency in an amount not to exceed the amount of loans, advances and indebtedness as shown on the Agency’s Statement of Indebtedness.

Manner in Which Property Valuations and Assessments are Determined (Article XIIIA). On June 6, 1978, California voters approved an amendment (commonly known as both Proposition 13 and the Jarvis- Gann Initiative) to the State Constitution which imposes certain limitations on taxes that may be levied against real property. This amendment, which added Article XIIIA to the State Constitution, among other things, defines full cash value of property to mean “the county assessor’s valuation of real property as shown on the 1975/76 tax bill under ‘full cash value,’ or, thereafter, the appraised value of real property when purchased, newly constructed, or a change in ownership has occurred after the 1975 assessment.” This full cash value may be adjusted annually to reflect inflation at a rate not to exceed 2% 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 substantial damage, destruction or other factors. The amendment further limits the amount of any ad valorem tax on real property to 1% of the full cash value of that property, except that additional taxes may be levied to pay debt service on indebtedness approved by the voters prior to July 1, 1978 and on any bonded indebtedness for the acquisition or improvement of real property which is approved after July 1, 1978 by two-thirds of the votes cast by voters voting on such indebtedness. However, pursuant to an amendment to the California Constitution, redevelopment agencies are prohibited from receiving any of the tax increment revenue attributable to tax rates levied to finance bonds approved by the voters on or after January 1, 1989 (see “Property Tax Rate” below).

In the general election held November 4, 1986, voters of the State of California approved two measures, Propositions 58 and 60, which further amend the terms “purchase” and “change of ownership,” for purposes of determining full cash value of property under Article XIIIA, to 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 and buy or build another of equal or

34 lesser value within two years in the same county (or in certain cases, another county), to transfer the old residence’s assessed value to the new residence.

Because the Revenue and Taxation Code does not distinguish between positive and negative changes in the California Consumer Price Index used for purposes of the inflation factor, there was a decrease of 0.237% in 2009/10 – applied to the 2010/11 tax roll – reflecting the actual change in the California Consumer Price Index, as reported by the State Department of Finance. For each fiscal year since Article XIIIA has become effective (the 1978/79 fiscal year), the annual increase for inflation has been at least 2% except in seven fiscal years as shown below:

Tax Roll Percentage 1981/82 1.000% 1995/96 1.190 1996/97 1.110 1998/99 1.853 2004/05 1.867 2010/11 (0.237) 2011/12 0.753

Proposition 8 Adjustments. Proposition 8, approved in 1978, 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 as of the following lien date up to the lower of the then-current fair market value or the factored base year value. The State Board of Equalization has approved this reassessment formula and such formula has been used by county assessors statewide, and such methodology has been upheld by the California courts.

The Los Angeles County Assessor’s Office implemented certain blanket reductions in assessed value for residential property for the 2008/09 tax roll. The County Assessor examined the value of approximately 210,000 single family homes and condominiums sold between July 1, 2005 and June 30, 2007, some of which may have affected property values in the Redevelopment Project. The Los Angeles County Assessor also reported that they reviewed the market value of 473,000 homes and reduced the value of 334,000 single family residences and condominiums throughout the County in 2009, with an average reduction of $126,000 for a single family home. The properties reviewed by the Los Angeles County Assessor for the 2009/10 tax roll were single family homes and condominiums purchased between July 1, 2003 and June 30, 2008, and in certain areas since July 1, 2000 based on economic conditions. Adjustments in value resulting from these reviews affected property values in the Redevelopment Project. For the 2010/11 tax roll, the Los Angeles County Assessor reviewed 583,000 home and condominium values, resulting in lower assessments on some 426,000 residential properties purchased between July 1, 2003 and June 30, 2009. The average reduction County-wide was $162,000.

Nearly all of the property located in the Redevelopment Project is commercial or office space. There are not statistics to suggest what Proposition 8 adjustments the County Assessor may make with regard to non-residential properties.

Unsecured and Secured Property. In California, property which is subject to ad valorem taxes is classified as “secured” or “unsecured.” The secured classification includes property on which any property tax levied by a county becomes a lien on that property. A tax levied on unsecured property does not become a lien against the taxed unsecured property, but may become a lien on certain other property owned by the taxpayer. Every tax which becomes a lien on secured property, arising pursuant to State

35 law, has priority over all other liens on the secured property, regardless of the time of the creation of the other liens.

Property in the Redevelopment Project is assessed by the Los Angeles County Assessor except for public utility property which is assessed by the State Board of Equalization.

The valuation of secured property is determined as of January 1 each year for taxes owed with respect to the succeeding Fiscal Year. The tax rate is equalized during the following September of each year, at which time the tax rate is determined. Taxes are due in two equal installments. Installments of taxes levied upon secured property become delinquent on the following December 10 and April 10. Taxes on unsecured property are due January 1 and become delinquent August 31, and such taxes are levied at the prior year’s secured tax rate.

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

Currently, a 10% penalty is added to delinquent taxes which have been levied with respect to property on the secured roll. Property on the secured roll with respect to which taxes are delinquent is sold to the State on or about June 30 of the Fiscal Year. Under State law, from time of the sale of the property to the State for nonpayment of taxes, owners have five years to redeem, during which time legal title remains in the owners as taxpayers subject to a lien in favor of the County. The amount necessary to redeem the property is equal to the sum of the delinquent taxes, delinquency penalties and redemption penalties of 1½% per month. Five years after the property is in default of taxes, the tax collector has the authority to sell property which has not been redeemed.

A 10% penalty also attaches to delinquent taxes with respect to property on the unsecured roll, and further, an additional penalty of 1½% per month accrues with respect to such taxes beginning the first day of the third month following the delinquency date.

Supplemental Assessments. Legislation adopted in 1984 (Section 75, et seq. of the Revenue and Taxation Code of the State of California) provides for the supplemental assessment and taxation of property at its full cash value as of the date of a change of ownership or the date of completion of new construction (the “Supplemental Assessments”). To determine the amount of the Supplemental Assessment the County Auditor applies the current year’s tax rate to the supplemental assessment roll and computes the amount of taxes that would be due for the full year. The taxes due are then adjusted by a proration factor to reflect the portion of the tax year remaining as determined by the date on which the change in ownership occurred or the new construction was completed. Supplemental Assessments become a lien against the real property on the date of the change of ownership or completion of new construction.

Unitary Property. Commencing in the 1988/89 Fiscal Year, the Revenue and Taxation Code of the State of California changed the method of allocating property tax revenues derived from state assessed utility properties. It provides for the distribution of state assessed values to tax rate areas by a county-wide mathematical formula rather than assignment of state assessed value according to the location of those values in individual tax rate areas.

36 Commencing with the 1988/89 Fiscal Year, each county has established one county-wide tax rate area. The assessed value of all unitary property in the county has been assigned to this tax rate area and one tax rate is levied against all such property (“Unitary Revenues”).

The property tax revenue derived from the assessed value assigned to the county-wide tax rate area shall be allocated as follows: (1) each jurisdiction will be allocated up to 2% of the increase in Unitary Revenues on a pro rata basis county-wide; and (2) any decrease in Unitary Revenues or increases less than 2%, or any increase in Unitary Revenues above 2% will be allocated among jurisdictions in the same proportion of each jurisdiction’s Unitary Revenues received in the prior year to the total Unitary Revenues county-wide.

Legislation adopted in 2006 (SB 1317, Chapter 872) provides that, commencing with Fiscal Year 2007/08, certain property related to new electrical facilities shall be allocated entirely to the county in which such property is located and property tax revenues derived from such property shall be allocated to such county and certain taxing entities with such county.

Property Tax Rate. There are numerous tax rate areas within the Redevelopment Project. The differences between the $1.00 tax rate and those actually levied (referred to as the “tax override rate”) represents the tax levied by overlapping entities to pay debt service on bonded indebtedness approved by the voters.

Tax override rates typically decline each year. A declining tax override rate is the result of several factors: an effective limit, established by Article XIIIA of the California Constitution, on the amount of property taxes that can be levied; rising taxable values within the jurisdictions of taxing entities levying the approved override rate (which reduces the tax rate needed to be levied by the taxing entity to meet debt service requirements); and the eventual retirement, over time, of the voter-approved debt.

For Fiscal Year 2010/11 the effective tax rate, including the tax override rate, for the majority of the property in the Redevelopment Project is approximately $1.0037 per $100 of taxable value. Future Tax Increment Revenues have been projected in Table Nos. 5 and 6 by applying a tax rate that declines to $1.00 per $100 of taxable value general levy to incremental taxable values by 2013/14.

Administrative Costs. In 1990, the Legislature enacted SB 2557 (Chapter 466, Statutes of 1990) which allows counties to charge for the cost of assessing, collecting and allocating property tax revenues to local government jurisdictions on a prorated basis. For Fiscal Year 2010/11, the County administrative fees charged to the Redevelopment Project were $467,300 (approximately 1.6% of Tax Increment Revenues).

Tax Sharing Agreements

Pursuant to prior Section 33401(b) of the Redevelopment Law, a redevelopment agency was authorized to enter into an agreement to pay tax increment revenues to any taxing agency that has territory located within a redevelopment project to alleviate any financial burden or detriment caused by the redevelopment project. These agreements are commonly referred to as “tax sharing agreements” or “pass through agreements.” The Agency has not entered into any tax sharing agreements with respect to the Redevelopment Project.

Tax Sharing Statutes

Certain provisions were added to the Redevelopment Law by the adoption of AB 1290 in 1994. A discussion of these provisions as they relate to the Redevelopment Project follows. If new territory should be added to the Redevelopment Project under Section 33607.5 of the Redevelopment Law, any affected taxing entity would share in the Tax Increment Revenues generated by such added area pursuant to a statutory formula (“Statutory Tax Sharing”).

37 In addition, pursuant to Section 33333.6(e)(2) of the Redevelopment Law, if the Agency deletes the time limit to incur indebtedness in the Redevelopment Project (as amended pursuant to SB 211) or increases the total amount of Tax Increment Revenues to be allocated to the project area or increases the duration of the Redevelopment Plan and the period for receipt of Tax Increment Revenues, Statutory Tax Sharing will also be required under Section 33607.7 of the Redevelopment Law with all affected taxing entities not already a party to a tax sharing agreement, once the original limitations have been reached. In general, the amounts to be paid pursuant to Statutory Tax Sharing are as follows:

(a) commencing in the first Fiscal Year after the limitation has been reached, an amount equal to 25% of tax increment revenues generated by the incremental increase of the current year assessed valuation over the assessed valuation in the Fiscal Year that the limitation had been reached, after the amount required to be deposited in the Low and Moderate Income Housing Fund has been deducted;

(b) in addition to amounts payable as described in (a) above, commencing in the 11th Fiscal Year after the limitation has been reached, an amount equal to 21% of tax increment revenues generated by the incremental increase of the current year assessed valuation over the assessed valuation in the preceding 10th Fiscal Year that the limitation had been reached, after the amount required to be deposited in the Low and Moderate Income Housing Fund has been deducted; and

(c) in addition to amounts payable as described in (a) and (b) above, commencing in the 31st Fiscal Year after the limitation has been reached, an amount equal to 14% of tax increment revenues generated by the incremental increase of the current year assessed valuation over the assessed valuation in the preceding 30th Fiscal Year that the limitation had been reached, after the amount required to be deposited in the Low and Moderate Income Housing Fund has been deducted.

(d) The City may elect to receive a portion of the tax increment generated in (a) above, after the amount required to be deposited in the Low and Moderate Income Housing Fund has been deducted.

(e) The Agency may subordinate the amount required to be paid to an affected taxing entity to any indebtedness after receiving the consent of the taxing entity.

In 2004, the Agency amended the limitation contained in the Redevelopment Plan on incurring debt pursuant to SB 211. As a result, Statutory Tax Sharing is payable and commenced in 2004/05, using the 2003/04 tax roll as the Fiscal Year in which the limitation had been reached, as discussed in (a) above. The additional Statutory Tax Sharing calculation described in (b) above will begin in 2014/15. The City has elected to receive its portion of the tax increment revenue as described in (d) above.

As noted above, with the consent of the taxing entity, the Statutory Tax Sharing payments may be subordinated to certain Agency obligations. The City is the only taxing entity which has subordinated its Statutory Tax Sharing Payment to payment of debt service on the Bonds. The City’s share represents 18.12% of total Statutory Tax Sharing payments.

38 The Agency has paid the amounts required under Section 33607.7 based on a calculation of Statutory Tax Sharing amounts prepared by the County. The Agency has disputed the County’s methodology of implementing the provisions of Section 33607.7 and resulting calculation (which include supplemental assessments), however, no resolution of the dispute is likely to occur in the near future and the Agency has made all prior year payments using the County’s methodology.

The California Attorney General issued opinion No. 10-101 on September 16, 2010 regarding the proper calculation of statutory pass-through payments made pursuant to Sections 33607.5 and 33607.7. The opinion declares that: (1) Tier 2 and Tier 3 pass-through payments (paragraphs (b) and (c) above) made pursuant to Section 33607.5 (for post-AB 1290 redevelopment plans) should be calculated by comparing the project area’s assessed value in the adjusted base year to the assessed value in the current year, and should not be calculated based on the total tax increment received above the adjusted base year assessed value; (2) all tiers of pass-through payments made pursuant to Section 33607.7 (for pre-AB 1290 plans which must make statutory pass-through payments due to a plan amendment) (paragraphs (a), (b) and (c) above) should be calculated based on the difference between the assessed value in the adjusted base year and the assessed value in the current year; and (3) the assessed value, for purposes of making this calculation, should be based on the last equalized assessment roll, and should not include other revenues not included on the last equalized roll (e.g., escape assessments, penalties and supplemental revenues received after the roll is equalized).

The County continues to demand payment under their methodology. The projections of Tax Revenues herein are made in accordance with the method prescribed in the Redevelopment Law and the California Attorney General opinion No. 10-101.

Outstanding Indebtedness

The Agency had the following outstanding obligations with respect to the Redevelopment Project as of January 1, 2011:

Original Amount Final Description Issue Outstanding Maturity

(1) 2002 Tax Allocation Bonds $48,015,000 $31,900,000 2021 (2) 2003 Tax Allocation Refunding Bonds 58,880,000 41,125,000 2021 (3) 2010 Tax Allocation Bonds 26,970,000 26,970,000 2024 (4) Union Bank Loan 14,000,000 10,716,000 2014 (5) City Loan 9,271,273 62,191,000 N/A

(1) In December 2002, the Agency issued its 2002 Tax Allocation Bonds (the “2002 Bonds”). The pledge of Tax Revenues to repay the 2002 Bonds is senior to the pledge of Tax Revenues to repay the Bonds.

(2) In October 2003, the Agency issued its 2003 Tax Allocation Refunding Bonds (the “2003 Bonds”). The pledge of Tax Revenues to repay the 2003 Bonds is senior to the pledge of Tax Revenues to repay the Bonds.

(3) In March 2010, the Agency issued its 2010 Tax Allocation Bonds (the “2010 Bonds”). The pledge of Tax Revenues to repay the 2010 Bonds is senior to the pledge of Tax Revenues to repay the Bonds.

(4) In February 2009, the Glendale Housing Authority entered into a loan agreement with Union Bank of California (the “Union Bank Loan”) to fund development of affordable housing units. The Agency pledged a first lien on the Housing Revenues (as well as that portion of tax increment

39 revenues from the Agency’s San Fernando Road Redevelopment Project required to be used for low- and moderate- income housing purposes) to the payment of the Union Bank Loan. Interest on the Union Bank Loan is payable at 3.35%.

(5) The Agency has entered into various agreements with the City which provide for the reimbursement to the City for expenditures incurred by the City on behalf of the Agency. The amounts due are to be paid on a basis subordinate to the Bonds. Agreements currently accrue interest at 7%. ______Source: Agency Annual Financial Report and Statement of Indebtedness.

Projected Subordinate Tax Revenues and Debt Service Coverage Receipt of projected Subordinate Tax Revenues shown in Table No. 5 and Table No. 6 in the amounts and at the times projected by the Agency depends on the realization of certain assumptions relating to the Tax Increment Revenues. The projections of Tax Increment Revenues and the corresponding Non-Housing Tax Revenues and Housing Tax Revenues from the Redevelopment Project shown on the following table were based on the assumptions shown below. The Agency believes the assumptions upon which the projections are based are reasonable; however, some assumptions may not materialize and unanticipated events and circumstances may occur (see “RISK FACTORS”). To the extent that the assumptions are not actually realized, the Agency’s ability to timely pay principal of and interest on the Bonds may be adversely affected.

Following is a discussion of assumptions used in the projection of Subordinate Tax Revenues:

(a) The secured roll is assumed to increase 1% for inflation beginning with the 2013/14 tax roll, and to increase 2% annually for inflation thereafter (see “FINANCIAL INFORMATION - Tax Increment Revenues - Manner in Which Property Valuations and Assessments are Determined (Article XIIIA)” herein). No inflationary increase in the secured roll is projected for 2011/12 or 2012/13.

(b) The values of unsecured personal property and state assessed utility property and the amount of unitary revenues have been maintained throughout the projections at their 2010/11 levels (see “FINANCIAL INFORMATION - Tax Increment Revenues - Unsecured and Secured Property” and “Unitary Property” herein).

(c) For the purposes of the projections, it was assumed that additional assessed value would be added to the tax rolls as a result of new construction as follows:

Project 2013/14 2014/15 Total Broadway Lofts $40,000,000 $ - $40,000,000 Laemmle Lofts - 15,000,000 15,000,000 Marriott - 40,000,000 40,000,000 $40,000,000 $55,000,000 $95,000,000

See “THE REDEVELOPMENT PROJECT - Commercial Development in the Redevelopment Project” and “THE REDEVELOPMENT PROJECT - Office Development in the Redevelopment Project” herein for a description of new development.

(d) A tax rate of $1.0037 per $100 of assessed value applied to the taxable property in the Redevelopment Project has been used to determine Tax Increment Revenues in 2010/11, declining to a tax rate of $1.00 per $100 of assessed value by 2013/14 (see “FINANCIAL INFORMATION - Tax Increment Revenues - Property Tax Rate” herein).

40 (e) Projected Non-Housing Tax Revenues include a deduction for property tax collection administrative costs charged by Los Angeles County equal to 1.6% of Tax Increment Revenues.

(f) Projected Tax Increment Revenues do not reflect delinquencies (see “THE REDEVELOPMENT PROJECT - Tax Collections” herein).

(g) Projected Tax Increment Revenues do not reflect any potential future Proposition 8 adjustments (see “FINANCIAL INFORMATION - Tax Increment Revenues - Proposition 8 Adjustments” herein).

(h) Projected Tax Increment Revenues do not reflect any potential decreases resulting from pending assessment appeals (see “THE REDEVELOPMENT PROJECT - Assessment Appeals” and “FINANCIAL INFORMATION - Tax Increment Revenues - Proposition 8 Adjustments” herein).

(i) Projected Tax Increment Revenues do not include supplemental taxes which may be received by the Agency.

(j) Projected Non-Housing Tax Revenues include a deduction for Statutory Tax Sharing payments due to all taxing agencies except for the City. Because of current deposits of bond proceeds in the Housing Fund, the Housing Portion of debt service for the Bonds is payable from the Housing Revenues (see “SOURCES OF PAYMENT FOR THE BONDS - Low and Moderate Income Housing” herein). Housing Revenues have been deducted from the Tax Increment Revenues shown in Table No. 5 and, consequently, the Housing Portion (which represents approximately 18.5% of total debt service on the Bonds until 2016, declining to 17.5% through 2021, and 14.5% thereafter) has also been deducted from the debt service shown in Table No. 5 for the purpose of showing debt service coverage. Table No. 6 presents the projection of the Housing Revenues, together with the related debt service coverage of the Housing Portion.

41 TABLE NO. 5 GLENDALE REDEVELOPMENT AGENCY CENTRAL GLENDALE REDEVELOPMENT PROJECT PROJECTED NON-HOUSING TAX REVENUES AND DEBT SERVICE COVERAGE

Bond Year Gross Housing Statutory Non-Housing Debt Service Ending Tax Set Tax County Tax Senior 2011 Coverage December 1 Increment Aside Sharing Admin Revenues Lien Bonds Bonds(1) Total Ratio

2011 $29,128,000 $(5,825,600) $(1,919,000) $(466,000) $20,917,400 $10,151,703 $1,919,085 $12,070,788 173% 2012 29,079,000 (5,815,800) (1,911,000) (465,000) 20,887,200 10,152,353 4,746,903 14,899,256 140% 2013 29,022,000 (5,804,400) (1,901,000) (464,000) 20,852,600 10,301,353 4,746,353 15,047,706 139% 2014 29,699,000 (5,939,800) (2,012,000) (475,000) 21,272,200 10,307,603 4,749,753 15,057,356 141% 2015 30,817,000 (6,163,400) (2,383,000) (493,000) 21,777,600 10,306,203 4,746,503 15,052,706 145% 2016 31,407,000 (6,281,400) (2,579,000) (503,000) 22,043,600 10,307,803 4,748,978 15,056,781 146% 2017 32,009,000 (6,401,800) (2,779,000) (512,000) 22,316,200 10,304,928 5,145,078 15,450,006 144% 2018 32,623,000 (6,524,600) (2,982,000) (522,000) 22,594,400 10,299,578 5,149,740 15,449,318 146% 2019 33,249,000 (6,649,800) (3,190,000) (532,000) 22,877,200 10,306,200 5,148,515 15,454,715 148% 2020 33,888,000 (6,777,600) (3,402,000) (542,000) 23,166,400 10,309,325 5,145,628 15,454,953 150% 2021 34,539,000 (6,907,800) (3,618,000) (553,000) 23,460,200 10,313,138 5,149,915 15,463,053 152% 2022 35,204,000 (7,040,800) (3,839,000) (563,000) 23,761,200 8,977,375 6,499,440 15,476,815 154% 2023 35,881,000 (7,176,200) (4,064,000) (574,000) 24,066,800 8,981,900 6,497,755 15,479,655 155% 2024 36,573,000 (7,314,600) (4,293,000) (585,000) 24,380,400 8,978,050 6,495,583 15,473,633 158%

(1) Excludes the “Housing Portion. See “THE AGENCY - Low and Moderate Income Housing.” Coverage of the Housing Portion is shown in Table No. 5 ______Source: Financial Advisor. The projected Non-Housing Tax Revenues shown above are subject to several variables described herein (see “FINANCIAL INFORMATION - Tax Increment Revenues” herein). The Agency provides no assurance that the projected Non-Housing Tax Revenues will be achieved (see “RISK FACTORS” herein). The Agency has determined that, in the event assessed values remain at current Fiscal Year 2010/11 levels, pending appeals are successful at the historical average success rate of 63% and those properties are granted the average reduction granted in 2009/10 of 17.2% of value (see “THE REDEVELOPMENT PROJECT - Assessment Appeals”), and assuming no issuance of additional debt, Non-Housing Tax Revenues available to pay scheduled debt service on the Senior Lien Bonds and the Bonds would exceed 125% maximum annual debt service on the Senior Lien Bonds and the Bonds.

42 TABLE NO. 6 GLENDALE REDEVELOPMENT AGENCY CENTRAL GLENDALE REDEVELOPMENT PROJECT PROJECTED HOUSING TAX REVENUES AND DEBT SERVICE COVERAGE OF THE HOUSING PORTION

Bond Year Housing Debt Service Ending Set Union 2011 Coverage December 1 Aside Bank Loan Bonds(1) Total Ratio

2011 $5,825,600 $3,056,000 $ 432,481 $3,488,481 167% 2012 5,815,800 3,056,000 679,883 3,735,883 156% 2013 5,804,400 3,056,000 679,883 3,735,883 155% 2014 5,939,800 2,292,000 679,883 2,971,883 200% 2015 6,163,400 - 1,319,883 1,319,883 467% 2016 6,281,400 - 1,319,683 1,319,683 476% 2017 6,401,800 - 1,319,183 1,319,183 485% 2018 6,524,600 - 1,318,770 1,318,770 495% 2019 6,649,800 - 1,319,095 1,319,095 504% 2020 6,777,600 - 1,314,770 1,314,770 515% 2021 6,907,800 - 1,315,795 1,315,795 525% 2022 7,040,800 - 1,316,395 1,316,395 535% 2023 7,176,200 - 1,314,973 1,314,973 546% 2024 7,314,600 - 1,316,453 1,316,453 556%

(1) Represents the Housing Portion on the Bonds attributable to amounts payable from the Housing Revenues described in footnote (j) under the heading “Projected Subordinate Tax Revenues and Debt Service Coverage” herein. See “THE AGENCY - Low and Moderate Income Housing.” See Table No. 4 for a projection of Non-Housing Tax Revenues and related coverage ______Source: Financial Advisor.

The projected Housing Tax Revenues shown above are subject to several variables described herein (see “FINANCIAL INFORMATION - Tax Increment Revenues” herein). The Agency provides no assurance that the projected Housing Tax Revenues will be achieved (see “RISK FACTORS” herein).

43 RISK FACTORS The purchase of the Bonds involves investment risk. If a risk factor materializes to a sufficient degree, it could delay or prevent payment of principal of and/or interest on the Bonds. Such risk factors include, but are not limited to, the following matters and should be considered, along with other information in this Official Statement, by potential investors.

Bonds are Subordinate Obligations

Payment of the principal and interest on the Bonds is payable from Subordinate Tax Revenues. Subordinate Tax Revenues exclude the amount of Tax Revenues pledged to pay debt service on and other obligations relating to the Outstanding Senior Lien Bonds and the Union Bank Loan. Accordingly, amounts due for the Outstanding Senior Lien Bonds and the Union Bank Loan must be satisfied and the reserve requirement for the Outstanding Senior Lien Bonds must be maintained in each debt service year before any Tax Revenues may be set aside under the Outstanding Senior Lien Bonds indenture or the Union Bank Loan for payment of the Bonds. In addition, Tax Revenues exclude an amount equal to payments due under the Tax Sharing Statutes, except for amounts payable to the City.

Factors Which May Affect Tax Revenues

The ability of the Agency to pay principal of and interest on the Bonds depends on the timely receipt of Tax Revenues as projected herein (see “FINANCIAL INFORMATION - Projected Subordinate Tax Revenues and Debt Service Coverage” herein). Projections of Tax Revenues are based on the underlying assumptions relating to Tax Increment Revenues of the Redevelopment Project. Tax Revenues allocated to the Agency (which constitute the ultimate source of payment of principal of and interest on the Bonds, as discussed herein) are determined by the amount of incremental valuation of taxable property in the Redevelopment Project, the current rate or rates at which property in the Redevelopment Project is taxed and the percentage of taxes collected in the Redevelopment Project, adjusted to reflect prior claims on the Tax Increment Revenues. A number of factors which may affect Tax Increment Revenues, and consequently, Tax Revenues, are outlined below.

Reductions in Assessed Value. The projections of Tax Increment Revenues contained in this Official Statement are based on current assessed valuations within the Redevelopment Project, and certain assumed growth. A tax rate equal to $1.0037 per $100 of assessed value applied to the taxable property in the Redevelopment Project is assumed for 2010/11 along with certain projected increases in property values due to inflationary changes which may be allowed under Article XIIIA of the California Constitution. The Agency believes that the projections of Tax Increment Revenues and the assumptions upon which the projections are based are reasonable. However, substantial growth in assessed value has occurred in the Redevelopment Project in recent years, and correspondingly, the Agency expects assessment appeals to increase until property values stabilize. Any future decrease in the assessed valuation of the Redevelopment Project (or any increase at a rate less than assumed), any general decline in the economic stability of the area, a relocation out of a Redevelopment Project by one or more major property owners, successful appeals by property owners for a reduction in a property’s assessed value, or other events that permit reassessment of property at lower values, either on a case by case basis or as a blanket reduction due to a general decline in property values and any property tax refunds which may result therefrom, the destruction of property caused by natural disasters or any delinquencies in the payment of property taxes and any potential acquisition of property by the Agency or other public entities will reduce the Tax Increment Revenues allocated to, or received by, the Agency and correspondingly may have an adverse impact on the Tax Revenues and ability of the Agency to pay principal and interest on the Bonds.

44 Article XIIIA. Pursuant to the California voter initiative process, on June 6, 1978, California voters approved Proposition 13 which added Article XIIIA to the California Constitution. This amendment imposed certain limitations on taxes that may be levied against real property to 1% of the full cash value of the property, adjusted annually for inflation at a rate not exceeding 2% annually. Full cash value is determined as of the 1975/76 assessment year, upon change in ownership (acquisition) or when newly constructed (see “FINANCIAL INFORMATION – Tax Increment Revenues” herein for a more complete discussion of Article XIIIA). Article XIIIA has subsequently been amended to permit reduction of the “full cash value” base in the event of declining property values caused by substantial damage, destruction or other factors, and to provide that there would be no increase in the “full cash value” base in the event of reconstruction of property damaged or destroyed in a disaster and in other special circumstances.

Reduction in Inflationary Rate. The annual inflationary adjustment, while limited to 2%, is determined annually and may not exceed the percentage change in the California Consumer Price Index (CCPI).

Tax Roll Percentage 1981/82 1.000% 1995/96 1.190 1996/97 1.110 1998/99 1.853 2004/05 1.867 2010/11 (0.237) 2011/12 0.753

The Agency has projected Tax Increment Revenues based on a 1% inflationary increase in real property values for 2013/14 and a 2% annual inflationary increases in real property values beginning in 2014/15. No inflationary increase has been projected for 2011/12 or 2012/13. If the annual inflationary adjustments are less than these assumed amounts, Tax Revenues will be reduced from those projected.

Proposition 8 Adjustments. Proposition 8, approved in 1978, 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 as of the following lien date up to the lower of the then-current fair market value or the factored base year value. The State Board of Equalization has approved this reassessment formula and such formula has been used by county assessors statewide. This methodology has been approved by the Fourth District Court of Appeals in a case in which the California Supreme Court declined further review. See “FINANCIAL INFORMATION - Tax Increment Revenues - Proposition 8 Adjustments” herein.

The Agency’s ability to generate sufficient Subordinate Tax Revenues to pay debt service on the Bonds will be dependent on the economic strength of the Redevelopment Project. Since Proposition 8 adjustments are closely tied to the economics of an area, and primarily, real estate development, factors which adversely affect real estate development may adversely affect Tax Revenues. Such factors include general economic conditions, fluctuations in the real estate market, fluctuations in interest rates, unexpected increases in development costs and other factors such as unavailability of credit. The Los

45 Angeles County Assessor’s Office implemented certain blanket reductions in assessed value for residential property for the 2008/09 tax roll. The County Assessor examined the value of approximately 210,000 single family homes and condominiums sold between July 1, 2005 and June 30, 2007, some of which may have affected property values in the Redevelopment Project. The Los Angeles County Assessor also reported that they reviewed the market value of 473,000 homes and reduced the value of 334,000 single family residences and condominiums throughout the County in 2009, with an average reduction of $126,000 for a single family home. The properties reviewed by the Los Angeles County Assessor for the 2009/10 tax roll were single family homes and condominiums purchased between July 1, 2003 and June 30, 2008, and in certain areas since July 1, 2000 based on economic conditions. Adjustments in value resulting from these reviews affected property values in the Redevelopment Project. For the 2010/11 tax roll, the Los Angeles County Assessor reviewed 583,000 home and condominium values, resulting in lower assessments on some 426,000 residential properties purchased between July 1, 2003 and June 30, 2009. The average reduction County-wide was $162,000.

The County Assessor has not indicated that commercial properties will be evaluated on a widespread basis similar to residential properties. However, many assessment appeals are pending for property in the Redevelopment Project and the County Assessor will review those on a case by case basis.

If further Proposition 8 adjustments are made by the County Assessor in future years because of declines in the fair market value of properties caused by the lack of real estate development in the area generally, Tax Revenues may be adversely affected and as a possible consequence its ability to repay the Bonds may be adversely affected.

Assessment Appeals. Assessment appeals may be filed by property owners seeking a reduction in the assessed value of their property. After the property owner files an appeal, the County’s Appeals Board will hear the appeal and make a determination as to whether or not there should be a reduction in assessed value for a particular property and the amount of the reduction, if any. To the extent that any reductions are made to the assessed valuation of such properties with appeals currently pending, or appeals subsequently filed, Tax Increment Revenues, and correspondingly, Tax Revenues will be reduced. Such reductions may have an adverse affect on the Agency’s ability to pay debt service on the Bonds. As of January 2011, there were 89 pending appeals filed by property owners within the Redevelopment Project relating to $2.15 billion of assessed value (7.9%) of 2010/11 assessed value (see “THE REDEVELOPMENT PROJECT - Assessment Appeals” herein). The projections of Tax Revenues in the tables herein are not adjusted for these appeals. To the extent these appeals are resolved in favor of the property owner, Tax Revenues will be reduced.

Major Taxpayers and Concentration of Ownership. The risk of reduction in assessed value as a result of the factors described above may generally increase where the assessed value within the Redevelopment Project is concentrated among a relatively few number of property owners. Ownership of property in the Redevelopment Project is highly concentrated, with the top ten taxpayers accounting for 65% of the 2010/11 assessed valuation. See “THE REDEVELOPMENT PROJECT - Major Taxpayers.” Significant reductions in the assessed values of the other principal taxpayers, could, by itself or in combination with other factors, have a material adverse effect on the Tax Increment Revenues payable to the Agency, and therefore, the Agency’s ability to make timely principal and interest payments with respect to the Bonds.

GGP/Homart II L.L.C. purchased the Glendale Galleria Mall in November 2002. The property represents 16.1% of total 2010/11 assessed value of the Redevelopment Project. GGP/Homart II L.L.C., is a joint venture between General Growth Properties, Inc. (“GGP”) and the New York State Common Retirement Fund. General Growth Properties, Inc. (NYSE:GGP) is the second largest retail REIT in the U.S.

The Americana at Brand lifestyle center was developed under a partnership with the Agency and Caruso Affiliated and opened in 2009. The commercial property of the project owned by Americana at Brand LLC represents 14.5% of total 2010/11 assessed value of the Redevelopment Project.

46 Earthquake, Fire and Other Risks. Any natural disaster or other physical calamity, including earthquake, may have the effect of reducing Tax Increment Revenues through reduction in the aggregate assessed valuation within the boundaries of the Redevelopment Project.

Seismic Activity. According to the Safety Element of the City’s General Plan, the most important fault within the City is the active Sierra Madre Fault. The Sierra Madre Fault, located near the base of the San Gabriel Mountains in the extreme northern part of the City, is the eastward extension of the fault on which the 1971 San Fernando earthquake originated. Other faults of importance in Glendale are the Verdugo Fault located near the southwest edge of the Verdugo Mountains and its branches to the east (potentially active); the Sycamore Canyon Fault (potentially active); Verdugo Canyon Fault (inactive); Scholl Canyon Fault (inactive); Eagle Rock Fault (inactive); and San Rafael Fault (inactive).

The San Andreas Fault is located 29 miles northwest of the City, has the potential to cause strong to severe groundshaking and is interpreted as presenting a greater hazard than any of the faults located within the City’s corporate limits. In addition, strong to severe groundshaking is the primary seismic hazard from the Sierra Madre or Raymond Hill Faults. Potential surface rupture in the City is also a significant seismic risk along the Sierra Madre, Verdugo and Sycamore Canyon Faults.

Ground rupture occurred along the Northridge Thrust Fault as a result of a magnitude 6.7 earthquake on January 17, 1994. The epicenter of this earthquake was approximately 15 miles from the City. The fault is most likely connected with the Oak Ridge Fault system. Damage within the City was primarily limited to three existing parking structures, one of which was located in the Redevelopment Project. These three structures were originally constructed in the early 1970’s. One of the damaged parking structures has been retrofitted, while the other two were rebuilt.

Fire Hazards. Risk of wildfire is not a significant hazard within the boundaries of the Redevelopment Project due to the urbanized nature of the immediate area. Structure fire is a hazard within the Redevelopment Project. The City of Glendale has a Class I fire rating.

The occurrence of any natural or man-made disaster or hazard may significantly reduce Tax Increment Revenues received by the Agency and may adversely impact the Agency’s ability to pay debt service on the Bonds.

The City has adopted its Natural Hazards Mitigation Plan. This plan includes a hazard analysis for earthquake, flood, landslide and fire risk and is required to comply with FEMA requirements for disaster relief funding.

Hazardous Substances. An additional environmental condition that may result in the reduction in the assessed value of parcels would be the discovery of a hazardous substance that would limit the beneficial use of a property within the Redevelopment Project. In general, the owners and operators of a property may be required by law to remedy conditions of the property relating to releases or threatened releases of hazardous substances. The owner (or operator) may be required to remedy a hazardous substance condition of property whether or not the owner (or operator) has anything to do with creating or handling the hazardous substance. The effect, therefore, should any of the property within the Redevelopment Project be affected by a hazardous substance would be to reduce the marketability and value of the property, perhaps by an amount in excess of the costs of remedying the condition. The Agency can give no assurance that future development will not be limited by these conditions.

Additional Bonds. As referenced under the caption “SOURCES OF PAYMENTS FOR THE BONDS - Issuance of Additional Debt,” the Agency may issue or incur obligations payable from Tax Revenues on a parity with its pledge of Tax Revenues to payment of debt service on the Bonds. The existence of and the potential for such obligations increase the risks associated with the Agency’s payment of debt service on the Bonds in the event of a future decrease in the Agency’s collection of Tax Revenues.

47 Development Risks. The Agency’s collection of Tax Revenues is directly affected by the economic strength of the Redevelopment Project. Projected or potential development within the Redevelopment Project will be subject to all the risks generally associated with real estate development projects, including unexpected delays, disruptions and changes. Real estate development operations may be adversely affected by changes in general economic conditions, fluctuations in real estate market and interest rates, unexpected increases in development costs and other similar factors. Further, real estate development operations within the Redevelopment Project could be adversely affected by future governmental policies, including governmental policies to restrict or control development. If projected development in the Redevelopment Project is delayed or halted, the economy of the Redevelopment Project could be affected, causing a reduction in Tax Revenues available to pay debt service on the Bonds.

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 following: the federal bankruptcy code and applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or affecting the enforcement of creditors’ rights generally, now or hereafter in effect; usual equitable principles which may limit the specific enforcement under state law of certain remedies; the exercise by the United States of America of the powers delegated to it by the federal Constitution; and the reasonable and necessary exercise, in certain exceptional situations, of the police power inherent in the sovereignty of the State of California 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.

Limited Obligations. The Agency has no power to levy and collect property taxes, and any property tax limitation, legislative measure, voter initiative or provision of additional sources of income to taxing agencies having the effect of reducing the property tax rate must necessarily reduce the amount of Tax Increment Revenues, and consequently, Tax Revenues that would otherwise be available to pay the principal of, and interest on the Bonds.

Interpretation of and Future Changes in the Law; Voter Initiatives. The Redevelopment Law is a complex body of law and its application to the Agency, the Redevelopment Plan and the Redevelopment Project may be subject to different interpretations by the Agency, Taxing Entities and other interested parties, including with respect to Plan Limitations, Low and Moderate Income Housing Fund obligations, Tax Sharing Agreements and Statutory Tax Sharing obligations.

In addition to the existing limitations on Tax Increment Revenues described in this Official Statement under “FINANCIAL INFORMATION - Tax Increment Revenues,” the California electorate or Legislature could adopt future limitations with the effect of reducing Tax Increment Revenues payable to the Agency.

Factors Relating to Sub-Prime Loans. Between 2002 and 2007, many homeowners have financed the purchase of their homes using loans with little or no down-payment and with adjustable interest rates that are subject to being reset at higher rates on a specified date or on the occurrence of specified conditions. Many homeowners who purchased their homes with sub-prime loans have experienced difficulty in making their loan payments due to automatic rate increases on their adjustable loans and rising interest rates in the market. This could lead to increased delinquencies in property tax payments by homeowners.

Increased property tax delinquencies could have an adverse effect on the Agency’s ability to make timely payments of principal of and interest on the Bonds. Moreover, if mortgage loan defaults increase, bankruptcy filings by homeowners are also likely to increase. Bankruptcy filings by homeowners with delinquent property taxes would delay the commencement and completion of foreclosure proceedings to collect delinquent property taxes.

48 Finally, as a result of increasing defaults on “sub-prime loans” in recent years, credit has become more difficult and more expensive to obtain, not only in the residential market, but also in the commercial and industrial sectors. Unavailability of loans for the purchase and development of real property in the Redevelopment Project may adversely impact assessed value of property in the Redevelopment Project and, as a result, adversely impact Tax Revenues available to pay debt service on the Bonds.

Real Estate and General Economic Risks

Tax Increment Revenues as presented herein as available for payment of any indebtedness of the Agency are based upon the latest actual assessed values for the 2010/11 Fiscal Year. Redevelopment of real property within the Redevelopment Project by the Agency, as well as private development in the Redevelopment Project, may be adversely affected by changes in general economic conditions, fluctuations in the real estate markets and interest rates, unexpected increases in development costs, changes in or new governmental policies including governmental policies to restrict or control certain kinds of development and by other similar factors. If development and redevelopment activities in the Redevelopment Project encounter significant obstacles of the kind described herein or other impediments, the economy of the area in and around the Redevelopment Project could be adversely affected, causing reduced taxable valuation of property in the Redevelopment Project, a reduction of the Tax Increment Revenues and a consequent reduction in Tax Revenues available to repay the Bonds. Due to the decline in the general economy of the region, owners of property within the Redevelopment Project may be less able or less willing to make timely payments of property taxes, causing a delay or stoppage of Tax Increment Revenues received by the Agency from the Redevelopment Project.

State of California Fiscal Issues

ERAF. In connection with its approval of the budget for the 1992/93, 1993/94, 1994/95, 2002/03, 2003/04, 2004/05, 2005/06, and 2008/09 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.

In 2008, the State Legislature adopted, and the Governor of the State signed, legislation, Chapter 751, Statutes 2008 (AB 1389) (“AB 1389”), that among other things required redevelopment agencies to pay into ERAF in Fiscal Year 2008/09, prior to May 10, 2009, an aggregate amount of $350 million, of which the Agency was to pay $1.06 million. AB 1389 provided that part of the ERAF obligation of the Agency was calculated based on the gross tax increment received by the Agency and the other part of the ERAF obligation of the Agency was calculated based on net tax increment revenues (after any passthrough payments to other taxing entities). AB 1389 provided that required transfers to ERAF were subordinate to payments on bonds secured by tax increment revenues. On April 30, 2009, a California superior court in California Redevelopment Association v. Genest (County of Sacramento) (Case No. 34-2008-00028334) held that the required payment by redevelopment agencies into ERAF in Fiscal Year 2008/09 pursuant to AB 1389 violated the California constitution and invalidated and enjoined the operation of the California Health and Safety Code section requiring such payment. On May 26, 2009, the State filed a notice that it would appeal the decision of the superior court. On September 28, 2009, the State noticed its withdrawal of its appeal of California Redevelopment Association v. Genest.

SERAF. In connection with various legislation related to the budget for the State for its Fiscal Year 2009/10, in late July 2009, the State legislature adopted, and the Governor of the State signed, Assembly Bill No. 26 (the “2009 SERAF Legislation”).

49 The 2009 SERAF Legislation mandates that redevelopment agencies in the State make deposits to the Supplemental Educational Revenue Augmentation Fund (“SERAF”) that is established in each county treasury throughout the State, in the aggregate amounts of $1.7 billion for Fiscal Year 2009/10, which were due prior to May 10, 2010, and $350 million for Fiscal Year 2010/11, which are due prior to May 10, 2011.

The California Redevelopment Association, the Union City Redevelopment Agency and the Fountain Valley Redevelopment Agency filed a lawsuit in Sacramento Superior Court on October 20, 2009 challenging the constitutionality of the 2009 SERAF Legislation and seeking to prevent the State from taking redevelopment funds for non-redevelopment purposes. Subsequently, the Court certified all redevelopment agencies in the State as a class of plaintiffs in the lawsuit. The Court announced its ruling in the case on May 4, 2010, in which it upheld the constitutionality of the 2009 SERAF Legislation.

The Agency made the required $11,012,230 SERAF payment for Fiscal Year 2009/10 on May 10, 2010. The additional amount payable by it pursuant to the 2009 SERAF Legislation will be $2,267,224 for Fiscal Year 2010/11. Pursuant to the 2009 SERAF Legislation, redevelopment agencies may use any funds that are legally available and not legally obligated for other uses, including reserve funds, proceeds of land sales, proceeds of bonds or other indebtedness, lease revenues, interest and other earned income, as well as borrowing funds from the Low and Moderate Income Housing Fund.

The Agency did not borrow funds from the Low and Moderate Income Housing Fund to pay the 2009/10 SERAF payment. The Agency believes it will have sufficient funds to pay the full amount of the 2010/11 SERAF payment when due, without borrowing funds from the Low and Moderate Income Housing Fund. Potential sources of funds used to pay the 2010/11 SERAF include tax increment revenues from Fiscal Year 2010/11, and available moneys on deposit in Agency funds. Additionally, the Agency could, in the future, access the bond market to fund the tax shifts.

The 2009 SERAF Legislation contains provisions that subordinate the obligation of redevelopment agencies to make the SERAF payments specified therein to certain indebtedness. Health and Safety Code, §33690 (a) (3) states: “The obligation of any agency to make the payments required pursuant to this subdivision 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.”

The 2009 SERAF Legislation imposes various restrictions on redevelopment agencies that fail to timely make the required SERAF payments, including (i) a prohibition on adding or expanding project areas, (ii) a prohibition on the incurrence of additional debt, (iii) limitations on the encumbrance and expenditure of funds, including funds for operation and administration expenses, and (iv) commencing with the July 1 following the due date of a SERAF annual payment that is not timely made, a requirement that the applicable redevelopment agency allocate an additional five percent (5%) of all taxes that are allocated to the redevelopment agency under the Redevelopment Law for low- and moderate-income housing for the remainder of the time that the applicable redevelopment agency receives allocations of tax revenues under the Redevelopment Law.

The 5% additional housing set-aside penalty provision referred to in the 2009 SERAF Legislation (the “Penalty Set-Aside Requirement”) would be in addition to the 20% of such tax revenues already required to be used for low- and moderate-income housing purposes. A redevelopment agency that borrows from amounts required to be allocated to its housing set-aside funds to make required SERAF payments but does not timely repay the funds, will also be subject to the Penalty Set-Aside Requirement. If the Agency borrows funds from the Housing Fund to make the SERAF payment in Fiscal Year 2010/11, and does not repay the funds within the specified time frame, it would be subject to the Penalty Set-Aside Requirement. The Agency did not borrow funds from the Housing Fund to make the SERAF payment

50 due May 10, 2010 and does not expect to borrow funds from the Housing Fund to make the SERAF payment due May 10, 2011.

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

On August 30, 2010, the California Redevelopment Association and the other plaintiffs in the lawsuit challenging the 2009 SERAF Legislation have filed an appeal to the Court’s May 4, 2010 decision. The Agency cannot predict the ultimate outcome of any such appeal.

Further, the Agency cannot predict what actions will be taken in the future by the State Legislature and the Governor to deal with changing State revenues and expenditures and the repercussions they may have on the Fiscal Year 2010/11 State Budget and future State budgets. These developments at the State level may, in turn, affect local governments and agencies, including the Agency. The State Legislature may adopt other legislation requiring redevelopment agencies to make other payments to ERAF or SERAF or to make other payments. The impact that current and future State fiscal shortfalls will have on the Agency is unknown at this time. In prior years, the State has experienced budgetary difficulties and balanced its budget by requiring local political subdivisions, such as the County and the Agency, to fund certain costs theretofore borne by the State.

Information about the State budget and State spending is regularly available from various State offices, including the Department of Finance, the Office of the Legislative Analyst and the State Treasurer. However, none of such information is incorporated by such reference.

2011/12 Proposed State Budget On January 10, 2011 the Governor released his proposed budget for fiscal year 2011/12 (“Proposed Budget”). The Proposed Budget is designed to address an estimated budget shortfall of $25.4 billion in the fiscal year 2011/12 California State Budget. The budget shortfall consists of an $8.2 billion projected deficit for 2010/11 and a $17.2 billion gap between projected revenues and spending in 2011/12. The Governor’s proposal includes approximately $12.5 billion in budget cuts, $12 billion in tax extensions and changes, and $1.9 billion in other solutions. The Governor was calling for a statewide special election in June to extend for five more years tax measures currently set to expire but the timing of such special election is now uncertain.

The Proposed Budget included a provision that would eliminate all redevelopment agencies in California starting on July 1, 2011 and to redirect property tax dollars from redevelopment agencies to schools, fire districts and other local entities. Draft legislation implementing this proposal was released by the Department of Finance of the State on February 23, 2011 (the “Proposed Legislation”) and is further described herein. The Proposed Legislation establishes successor local agencies which would be required to use the property tax that the redevelopment agencies would otherwise have received to retire pre- existing agency debts and contractual obligations in accordance with existing payment schedules.

Under the Proposed Legislation, the amount remaining in fiscal year 2011/12 after the payment of pre- existing agency obligations would be distributed on a one-time basis in various ways, including to the affected local taxing entities (including cities) and to the State General Fund to offset the costs for Medi- Cal and trial courts. Beginning in fiscal year 2012/13, the amount remaining after the payment of pre- existing agency obligations generally would be distributed to cities, counties, special districts, and K-14 schools in amounts proportionate to their share of the countywide property tax. Amounts in Low and Moderate Income Housing Funds would be shifted to local housing authorities for low and moderate

51 income housing (however, under AB 101 and SB 77 (defined and described below), if the county or city that authorized the creation of the redevelopment agency elects to retain the housing assets and functions previously performed by the agency, the amounts in the Low and Moderate Income Housing Fund, along with all the rights, powers, duties and obligations, shall be shifted to such city or county). The Proposed Legislation also proposes that the Constitution be amended to provide for 55 percent voter approval for limited tax increases and bonding against local revenues for development projects such as those projects currently undertaken by redevelopment agencies.

On March 17, 2011, the California Senate and Assembly voted in favor of the Senate Bill 69, which was introduced on January 10, 2011 in a shell format and amended on March 7, 2011 to set forth the “Budget Act of 2011” (“SB 69” or the “2011 Budget Act”). The 2011 Budget Act is an extensive bill that, if signed by the Governor, will make California state government appropriations for the 2011/12 fiscal year. In the March 17, 2011 Senate and Assembly floor sessions, SB 69 generally was characterized by State legislators as representing a substantial portion of the Governor’s proposed budget for 2011/12. Moreover, the California Constitution allows the Governor to reduce or eliminate an item of appropriation (i.e., “line item veto”) in connection with approving the 2011 Budget Act.

As described by the State Department of Finance, in a proposed or approved State budget there are generally budget changes that necessitate changes to existing law in order to implement the budget changes. Separate bills are concurrently introduced to implement such changes. These budget implementation bills are called “trailer bills” (the “Budget Trailer Bills”) and are heard concurrently with the proposed budget bill.

To date, two Budget Trailer Bills have been introduced to set forth the legislation that would implement the Governor’s proposal to eliminate redevelopment: Assembly Bill 101 (“AB 101”) and Senate Bill 77 (“SB 77”). AB 101 and SB 77 contain essentially identical language; both were introduced on January 10, 2011 in a shell format and amended on March 15, 2011 to set forth the specific proposed legislation that would implement the Governor’s proposal to dissolve redevelopment agencies.

AB 101 and SB 77 are roughly similar to, but also contain a number of substantial differences from, the Proposed Legislation. The legislative process involves opportunities for amendment and refinement of bills under consideration. Accordingly, no assurance can be given regarding whether or not AB 101 or SB 77 will be enacted in their respective present forms, or at all.

Each of AB 101 and SB 77 is styled as a bill providing for appropriations related to the 2011/12 Budget Bill, which requires a two-thirds vote of each house of the Legislature for passage and which would become effective immediately upon the signature of the Governor. Under either AB 101 or SB 77, the Agency would be prohibited from entering into any new contracts with, or incurring obligations or making commitments to, any entity, individual or groups of individuals upon the effectiveness of the bill as law.

As of July 1, 2011, agencies would be dissolved and unless the City elects otherwise, the City would become the successor entity to the Agency (the “Successor Agency”) to settle the affairs of the Agency. The Successor Agency would be subject to the direction of an oversight board (the “Oversight Board”), to be composed of seven members, with a member appointed by the City, through its Mayor. The remaining members would be appointed by the County Board of Supervisors (2 members), by the County Superintendent or Board of Education (1 member), by the largest special district (by property tax share) with territory within the territorial jurisdiction of the former Agency (1 member), by the Chancellor of the California Community Colleges to represent community college districts in the County (1 member), and by the Mayor of the City but from the recognized employee organization representing the largest number of former Agency employees employed by the Successor Agency at the time of appointment, to represent employees of the former Agency (1 member). All assets, properties, contracts, leases, books and records, buildings and equipment of the former Agency would be transferred to the control of the Successor Agency on July 1, 2011. The Successor Agency would be charged with preparing “Recognized

52 Obligation Payment Schedules” which document the minimum payments and due dates of payments required by “enforceable obligations” for each half-year fiscal period. The establishment of the Recognized Obligation Payment Schedules would be subject to the Oversight Board’s approval, and actions of the Oversight Board would be subject to review by the State Department of Finance. “Enforceable obligations” include, among other things, bonds issued pursuant to the Redevelopment Law (including the required debt service, reserve set-asides and any other payments required under the indenture or similar documents governing the issuance of outstanding bonds of the former Agency). For the 2011/12 fiscal year, the draft of the Recognized Obligation Payment Schedule must be reviewed and certified, as to its accuracy, by an external auditor. AB 101 and SB 77 each provide that payments due before January 1, 2012 will be made from revenues received in the spring of 2011 property tax distribution and from other revenues and balances transferred to the Successor Agency. Commencing January 1, 2012, only those payments listed in the Recognized Obligation Payment Schedule may be made by the Successor Agency from funds specified in the Recognized Obligation Payment Schedule.

Under either AB 101 or SB 77, the Oversight Board will be required to direct the Successor Agency to dispose of, generally, all assets and properties of the former Agency, except for assets and properties deemed part of approved development projects, and cease performance in connection with and terminate all existing agreements that do not qualify as enforceable obligations. An “approved development project” is defined as a project where construction, site remediation, design, or environmental assessment work or property acquisition is required by the former Agency pursuant to an enforceable obligation entered into prior to January 1, 2011, between the former Agency and a party other than the entity that created the Agency (i.e., the City) and either (1) substantial performance under the applicable agreements had taken place prior to the effective date of AB 101 or SB 77, as applicable, or (2) the Oversight Board determines (subject to review by the State Controller, the State Treasurer, and the State Director of Finance) that (A) the completion of the project described or referenced in the enforceable obligation would generate significant economic benefits for the taxing entities, commensurate with their investment of funds, and also benefit the region, and (B) that such project presents a particularly advantageous opportunity to benefit the taxing entities and the region due to special or unique circumstances, including but not limited to the availability of uniquely suited properties, and the ability to leverage significant federal or other external funding, or the project is needed to make facilities, investments, or project phases that are already completed or are under construction economically practical, useful, or beneficial. The potential impact of AB 101 or SB 77, if adopted as currently proposed, would be material to the Agency and the ability of the Agency or any Successor Agency to conduct, or continue to completion, redevelopment activities currently being undertaken or proposed to be undertaken by the Agency with respect to the Redevelopment Project.

Pursuant to either AB 101 or SB 77, commencing on July 1, 2016, in each county where more than one Oversight Board was created by the enactment of such bill as law, the various Oversight Boards within a county would be replaced by a single Oversight Board. The members of this successor Oversight Board would be appointed by similar entities as those with the power to appoint the original Oversight Boards, as described above. However, instead of one member being appointed by the City that formed the Agency, such member would be appointed instead by the “city selection committee established pursuant to Section 50270 of the California Government Code.” Such a city selection committee consists of the mayor of each incorporated city within a county. Also, as to Oversight Board member previously representing the recognized employee organization of former Agency employees, such position for the replacement Oversight Board would be appointed by the recognized employee organization representing the largest number of successor agency employees in the county.

The Agency cannot predict what the final language of AB 101 or SB 77 will be, or whether AB 101 or SB 77 in any form will be adopted.

53 Each of AB 101 and SB 77 lengthens the statute of limitations (i) for the commencement of an action to review a determination or finding by the Agency or the City Council (acting as the legislative body of the Agency), from 90 days to two years after the determination or finding, if such determination or finding is made after January 1, 2011, and (ii) for any action that is brought on or after January 1, 2011, to determine the validity of bonds issued by the Agency, from 60 days to two years after the date of the triggering event. While the Agency does not believe there is any defect in the proceedings for the issuance of the Bonds that could give rise to a successful challenge and Bond Counsel is providing its opinions with respect to the Bonds as set forth in “APPENDIX D,” due to the heightened scrutiny that may occur with respect to redevelopment agency activities, there could be an increased risk of a challenge, which could also affect the market price of the Bonds.

The full text of SB 69, AB 101, and SB 77 may be obtained from the “Official California Legislative Information” website maintained by the Legislative Counsel of the State of California pursuant to State law, at the following web link: http://www.leginfo.ca.gov/bilinfo.html. The reference to this internet site is shown for reference and convenience only, and the information contained therein is not incorporated herein by reference and does not constitute part of this Official Statement.

No assurance can be given that the AB 101 or SB 77, if enacted, would not have an adverse impact on the price of the Bonds or the ability to sell the Bonds in the secondary market. Although, as described above, each of AB 101 and SB 77 provides that the Successor Agencies will be required to make payments for enforceable obligations listed in the Recognized Obligation Payment Schedules, both bills provide for a flow of revenues to repay Agency bonds in a manner and priority order different from the flow of tax increment currently provided in the Redevelopment Law and in the Indenture. The Agency cannot predict how this process will work.

Provisions of AB 101 and SB 77, such as the restriction on the Successor Agency’s ability to exercise an optional redemption of the Bonds and the altered flow of revenues mentioned in the preceding paragraph, may be subject to challenge in court on the basis of alleged violations of federal and state constitutional provisions or other bases. The Agency cannot predict whether or not a court would uphold the validity of the AB 101 or SB 77 as a whole, any particular provision of the AB 101 or SB 77, or any similar legislation based on an exception to the general federal or state constitutional prohibitions on the Legislature’s impairment of contracts, or otherwise. Protection of the rights of Bondholders and enforcement of the terms of the Indenture, if necessary, could involve significant expense and delay.

Information about the State budget and State spending is available at various State maintained websites. Text of AB 101, SB 77, the Governor’s proposed 2011/12 State budget, the current State budget, and other documents related to the State budget may be found at the website of the Department of Finance, www.dof.ca.gov. A nonpartisan analysis of the budget is posted by the Legislative Analyst’s Office at www.lao.ca.gov. In addition, various State official statements, many of which contain a summary of the current and past State budgets may be found at the website of the State Treasurer, www.treasurer.ca.gov. None of such websites is 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.

Potential investors should be aware that both the Agency and the Underwriter have the right not to proceed with the issuance of the Bonds if AB 101, SB 77, or legislation similar to such bills is signed into law after the sale date and prior to the closing date for the Bonds. Further if legislation similar to such bills is signed into law after the closing date for the Bonds, it could have an adverse impact on the Agency’s ability to spend the proceeds of the Bonds on the projects described herein, but will not impact the pledge of Subordinate Tax Revenues to repay the Bonds.

Further, on April 5, 2011, the Senate Transportation and Housing Committee unanimously passed SB 450 relating to reforms of the use of redevelopment housing funds. The bill is designed to address results from two reports by the Senate Office of Oversight and Outcomes and news media accounts on misuse and ineffective use of Low and Moderate Income Housing Funds. Among other things, the bill requires

54 at least 25% of total expenditures to directly assist rental housing for extremely low income households, and at least 25% of the total expenditures to directly assist rental housing for very low income households. The Agency believes that the bill, if enacted in its current form, could have any impact on its ability to expend Bond proceeds to finance some or all of the proposed low and moderate income housing projects as described under the caption “THE FINANCING PLAN – Deposit to the Housing Fund.”There is no certainty that SB 450 will be enacted in its current form, if at all. There continues to be discussions regarding the reform of redevelopment and the elimination of redevelopment as discussed above. The Agency can make no prediction as to the outcome of any particular legislation which is currently proposed, or which may hereafter be proposed, affecting redevelopment.

Secondary Market

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

LEGAL MATTERS Enforceability of Remedies

The remedies available to the Trustee and the Owners of the Bonds upon an event of default under the Indenture or 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 certain legal rights related to the Bonds and the Indenture 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.

Approval of Legal Proceedings

Jones Hall, A Professional Law Corporation, San Francisco, California, as Bond Counsel, will render an opinion which states that the Indenture is a valid and binding obligation of the Agency and enforceable in accordance with its terms. The legal opinion of Bond Counsel will be subject to the effect of bankruptcy, insolvency, moratorium and other similar laws affecting creditors’ rights and to the exercise of judicial discretion in accordance with general principles of equity. See “APPENDIX E” for the proposed form of Bond Counsel’s opinion.

The Agency has no knowledge of any fact or other information which would indicate that the Indenture is not so enforceable against the Agency, except to the extent such enforcement is limited by principles of equity and by state and federal laws relating to bankruptcy, reorganization, moratorium or creditors’ rights generally.

Certain legal matters will be passed on for the Agency by Gillian van Muyden, acting as General Counsel - Redevelopment. Jones Hall, A Professional Law Corporation, San Francisco, California, will also pass on certain legal matters for the Agency as Disclosure Counsel. Fees payable to Bond Counsel and Disclosure Counsel are contingent upon the sale and delivery of the Bonds.

55 Tax Matters

Federal Tax Status. The Agency has determined that interest on the Bonds is not excluded from gross income for federal income tax purposes under the Internal Revenue Code of 1986.

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

Other Tax Considerations. 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 other than as described above. Bond Counsel expresses no opinion regarding any federal or state tax consequences arising with respect to the Bonds other than as expressly described above.

Proposed Form of Tax Opinion. A copy of the proposed form of opinion of Bond Counsel is included as “APPENDIX E.”

Circular 230 Disclaimer. To ensure compliance with requirements imposed by the IRS, Bond Counsel informs owners of the Bonds that any U.S. federal tax advice contained in this Official Statement (including any attachments) (a) was not intended or written to be used and cannot be used by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer and (b) was written to support the promotion or marketing of the Bonds. Each taxpayer should seek advice based on that taxpayers’ particular circumstances from an independent tax advisor.

Absence of Litigation

The Agency will furnish a certificate dated as of the Delivery Date that there is not now known to be pending or threatened any litigation restraining or enjoining the execution or delivery of the Indenture or the sale or delivery of the Bonds or in any manner questioning the proceedings and authority under which the Indenture was executed and delivered or the Bonds are to be issued or affecting the validity thereof.

CONCLUDING INFORMATION Rating on the Bonds

Standard & Poor’s has assigned their rating of “A-”to the Bonds. Such rating reflects only the views of the rating agency and any desired explanation of the significance of such rating should be obtained from the rating agency. Generally, a rating agency bases its rating on the information and materials furnished to it and on investigations, studies and assumptions of its own. There is no assurance such rating will continue for any given period of time or that such rating will not be revised downward or withdrawn entirely by the rating agency, if in the judgment of such rating agency, circumstances so warrant. Except as otherwise required in the Continuing Disclosure Certificate, the Agency undertakes no responsibility either to bring to the attention of the owners of any Bonds any downward revision or withdrawal of any rating obtained or to oppose any such revision or withdrawal. Any such downward revision or withdrawal of such rating may have an adverse effect on the market price of the Bonds.

56 The Financial Advisor

The material contained in this Official Statement was prepared by the Agency with the assistance of Harrell & Company Advisors, LLC, Orange, California, an independent financial consulting firm, who advised the Agency as to the financial structure and certain other financial matters relating to the Bonds. The information set forth herein has been obtained by the Agency from sources which are believed to be reliable, but such information is not guaranteed by the Financial Advisor as to accuracy or completeness, nor has it been independently verified. Fees paid to the Financial Advisor are contingent upon the sale and delivery of the Bonds.

Continuing Disclosure

The Agency will covenant to provide annually certain financial information and operating data relating to the Redevelopment Project by not later than March 31 each year commencing March 31, 2012, to provide the audited Financial Statements of the Agency for the Fiscal Year ending June 30, 2011 and for each subsequent Fiscal Year when they are available (together, the “Annual Report”), and to provide notices of the occurrence of certain other enumerated events. The Annual Report will be filed by the Trustee on behalf of the Agency on the Electronic Municipal Market Access Website (“EMMA”) operated by the Municipal Securities Rulemaking Board (www.emma.msrb.org). The specific nature of the information to be contained in the Annual Report or the notices of material events and certain other terms of the continuing disclosure obligation are summarized in “APPENDIX D - FORM OF CONTINUING DISCLOSURE CERTIFICATE.” The Agency has never failed to comply, in all material respects, with its undertaking, to provide continuing disclosure under the Federal Securities laws.

Underwriting

The Bonds were sold to Wedbush Securities Inc., (the “Underwriter”), who is offering the Bonds at the prices set forth on the inside front cover page hereof. The initial offering prices may be changed from time to time and concessions from the offering prices may be allowed to dealers, banks and others. The Underwriter has purchased the Bonds at a price equal to $47,567,330.05 (95.13466%), which amount represents the principal amount of the Bonds ($50,000,000) less an original issue discount of $2,032,669.95, less an Underwriter’s discount of $400,000. The Underwriter will pay certain of its expenses relating to the offering.

Additional Information

The summaries and references contained herein with respect to the Indenture, the Bonds, statutes and other documents, do not purport to be comprehensive or definitive and are qualified by reference to each such document or statute and references to the Bonds are qualified in their entirety by reference to the form hereof included in the Indenture. Copies of the Indenture are available for inspection during the period of initial offering of the Bonds at the offices of the Financial Advisor, Harrell & Company Advisors, LLC, 333 City Boulevard West, Suite 1430, Orange, California 92868, telephone (714) 939- 1464. Copies of this document may be obtained after delivery of the Bonds from the Agency at 633 East Broadway, Room 201, Glendale, California 91206, telephone (818) 548-2005.

References

All statements 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.

57 Execution

The execution and delivery of this Official Statement by the Executive Director has been duly authorized by the Glendale Redevelopment Agency.

GLENDALE REDEVELOPMENT AGENCY

By: /s/ James E. Starbird Executive Director

58 APPENDIX A

SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE

The following is a summary of certain provisions of the Indenture of Trust authorizing the Bonds that are not otherwise described in the text of this Official Statement. Such summary is not intended to be definitive, and reference is hereby made to the complete documents for the complete terms thereof.

Definitions

As used in this Summary, the following terms have the following meanings. In addition, terms defined elsewhere in this Official Statement and not otherwise defined in this Summary have the meanings given them in this Official Statement.

“Bond Year” means any twelve-month period beginning on December 2 in any year and extending to the next succeeding December 1, both dates inclusive; except that the first Bond Year begins on the Closing Date and ends on December 1, 2011.

“Bonds” means the Glendale Redevelopment Project Central Glendale Redevelopment Project 2011 Subordinate Taxable Tax Allocation Bonds, issued by the Agency under the Indenture.

“Business Day” means a day of the year on which banks in New York, New York and Los Angeles, California, are not required or authorized to remain closed and on which the New York Stock Exchange is not closed.

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

“Costs of Issuance” means all items of expense directly or indirectly payable by or reimbursable to the Agency relating to the authorization, issuance, sale and delivery of the Bonds, including but not limited to: printing expenses; 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, financial advisors, accounting firms, consultants and other professionals; fees and charges for preparation, execution and safekeeping of the Bonds; and any other cost, charge or fee in connection with the original issuance of the Bonds.

“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), for which the full faith and credit of the United States of America are pledged; (b) obligations of any agency, department or instrumentality of the United States of America, the timely payment of principal and interest on which are directly or indirectly secured or guaranteed by the full faith and credit of the United States of America.

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

A-1

“Housing Portion” means, with respect to the Bonds, that portion of each maturity of the Bonds which is allocable to the deposit made into the Housing Fund, as set forth in the Indenture. With respect to any issue of Parity Debt, the term “Housing Portion” means that portion of each maturity of such issue of Parity Debt which is authorized to be paid from the Housing Tax Revenues under the Redevelopment Law.

“Housing Tax Revenues” means all of the Tax Revenues which the Agency is obligated to deposit into the Low and Moderate Income Housing Fund under Section 33334.3 of the Redevelopment Law.

“Independent Redevelopment Consultant” means any consultant or firm of such consultants appointed by or acceptable to the Agency and who, or each of whom: (a) is judged by the Agency to have experience in matters relating to the collection of Tax Revenues or otherwise with respect to the financing of redevelopment projects; (b) is in fact independent and not under domination of the Agency; (c) does not have any substantial interest, direct or indirect, with the Agency; 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.

“Low and Moderate Income Housing Fund” means the Low and Moderate Income Housing Fund by that name established and held by the Agency under Section 33334.3 of the Redevelopment Law for the receipt and deposit of Housing Tax Revenues.

“Maximum Annual Debt Service” means, with respect to the Senior Lien Bonds, the Bonds and any Parity Debt, the largest amount of principal (including principal coming due and payable by operation of mandatory sinking fund redemption) and interest coming due with respect to all outstanding Senior Lien Bonds, Bonds and Parity Debt during the current or any future Bond Year.

“Non-Housing Portion” means, with respect to the Bonds, that portion of each maturity of the Bonds which is allocable to the deposit made into the Redevelopment Fund, as set forth in the Indenture. With respect to any issue of Parity Debt, the term “Non-Housing Portion” means that portion of each maturity of such issue of Parity Debt which is not authorized to be paid from the Housing Tax Revenues under the Redevelopment Law.

“Non-Housing Tax Revenues” means moneys allocated and paid to the Agency derived from (a) that portion of taxes levied upon assessable property within the Project Area allocated to the Agency pursuant to Article 6 of Chapter 6 of the Redevelopment Law and Section 16 of Article XVI of the Constitution of the State of California, or pursuant to other applicable State laws, and (b) reimbursements, subventions or other payments made by the State with respect to any property taxes that would otherwise be due on real or personal property but for an exemption of such property from such taxes; but excluding: (i) the Housing Tax Revenues, and (ii) amounts of such taxes (if any) which are required to be paid to public agencies other than the City under Sections 33607.5 and 33607.7 of the Redevelopment Law.

“Owner” or “Bond Owner” means, with respect to any Bond, the person in whose name the ownership of that Bond is registered on the registration books maintained by the Trustee.

A-2

“Parity Debt” means any bonds, notes, loans, advances or other indebtedness issued or incurred by the Agency on a parity with the Bonds under the Indenture.

“Permitted Investments” means any of the following which at the time of investment are legal investments under the laws of the State of California for the moneys proposed to be invested therein:

(a) Federal Securities;

(b) Obligations of any agency, department or instrumentality of the United States of America, the timely payment of principal and interest on which are directly or indirectly secured or guaranteed by the full faith and credit of the United States of America.

(c) Obligations of any agency, department or instrumentality of the United States of America which are rated A or better by S&P.

(d) Interest-bearing deposit accounts (including certificates of deposit) in federal or State of California chartered savings and loan associations or in federal or State of California banks (including the Trustee and its affiliates), provided that: (i) the unsecured obligations of such commercial bank or savings and loan association are rated A or better by S&P; or (ii) such deposits are fully insured by the Federal Deposit Insurance Corporation.

(e) Commercial paper rated “A-1+” or better by S&P at the time of the purchase thereof.

(f) Federal funds or bankers acceptances with a maximum term of one year of any bank which an unsecured, uninsured and unguaranteed obligation rating of “A-1+” or better by S&P.

(g) Money market funds registered under the Federal Investment Company Act of 1940, whose shares are registered under the Federal Securities Act of 1933, and having a rating by S&P of at least AAAm-G, AAAm or AAm, which funds may include funds for which the Trustee, its affiliates, parent or subsidiaries provide investment advisory or other management services.

(h) Obligations the interest on which is excludable from gross income pursuant to Section 103 of the Internal Revenue Code of 1986, as amended, and which are either (a) rated A or better by S&P, or (b) fully secured as to the payment of principal and interest by Permitted Investments described in clauses (a) or (b).

(i) Obligations issued by any corporation organized and operating within the United States of America having assets in excess of $500,000,000, which obligations are rated A or better by S&P.

(j) Bonds or notes issued by any state or municipality which are rated A or better by S&P.

A-3

(k) Any investment agreement with, or guaranteed by, a financial institution the long-term unsecured obligations or the claims paying ability of which are rated A or better by S&P at the time of initial investment, by the terms of which all amounts invested thereunder are required to be withdrawn and paid to the Trustee in the event either of such ratings at any time falls below A.

(l) The Local Agency Investment Fund of the State of California, 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.

“Plan Limitations” means the limitations contained or incorporated in the Redevelopment Plan on (a) the aggregate amount of taxes which may be divided and allocated to the Agency under the Redevelopment Plan, (b) the period of time for establishing or incurring indebtedness payable from tax increment revenues, and (c) the period of time for collection of tax increment revenues and repayment of Agency indebtedness from tax increment revenues.

“Project Area” means the project area described in the Redevelopment Plan.

“Qualified Housing Projects” means programs, projects and activities which increase, improve and preserve the City’s supply of low- and moderate-income housing available at affordable housing cost to persons and families of low or moderate income, which meet all applicable requirements of Sections 33334.2 and 33334.3 of the Redevelopment Law, including but not limited to those which are described in that certain agreement entitled “Cooperation Agreement for Payment of Costs Associated with Certain Redevelopment Agency Funded Low and Moderate Income Housing Projects”, between the City and the Agency, dated January 21, 2011.

“Qualified Redevelopment Projects” means programs, projects and activities relating to the Redevelopment Project, including but not limited to those which are described in that certain agreement entitled “Cooperation Agreement for Payment of Costs Associated with Certain Redevelopment Agency Funded Projects”, between the City and the Agency, dated January 21, 2011.

“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 for any issue of Parity Debt, provided that all of the following requirements are met:

(a) at the time of issuance the long-term credit rating of such bank or insurance company is AA or better by S&P;

(b) such letter of credit or surety bond has a term of at least 12 months; and

(c) the Trustee is authorized under 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 for the payment of principal of and interest on such issue of Parity Debt.

A-4

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

“Redevelopment Plan” means the Redevelopment Plan for the Central Redevelopment Project of the Agency, approved by Ordinance No. 4042, adopted by the City Council of the City of Glendale on August 1, 1972, as amended December 16, 1975 by Ordinance No. 4247, February 7, 1984 by Ordinance No. 4647, and December 9, 1986 by Ordinance No. 4753, together with any amendments thereof duly authorized under the Redevelopment Law.

“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 Requirement” means the lesser of (a) amount of $5,000,000.00, being 10% of the aggregate original principal amount of the Bonds, or (b) Maximum Annual Debt Service on the Bonds..

“Senior Lien Bond Indenture” means the Indenture of Trust dated as of November 1, 1990, between the Agency and U.S. Bank National Association, as successor trustee, as amended and supplemented from time to time in accordance with its terms.

“Senior Lien Bonds” means, collectively, each of the following issues of tax allocation bonds which are outstanding under and within the meaning of the Senior Lien Bond Indenture:

(a) the Central Glendale Redevelopment Project 2002 Tax Allocation Bonds in the aggregate original principal amount of $48,015,000;

(b) the Central Glendale Redevelopment Project 2003 Tax Allocation Refunding Bonds in the aggregate principal amount of $58,880,000; and

(c) the Central Glendale Redevelopment Project 2010 Tax Allocation Refunding Bonds in the aggregate principal amount of $26,970,000.

“Subordinate Tax Revenues” means (a) all of the Non-Housing Tax Revenues which are released from the pledge and lien which secures the Senior Lien Bonds in accordance with the Senior Lien Bond Indenture, and (b) all of the Housing Tax Revenues which are not required for payment of the loan made pursuant to that certain Loan Agreement dated February 9, 2009, between the Housing Authority of the City of Glendale and Union Bank, N.A.

“Securities Depositories” means The Depository Trust Company; 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 writing to the Trustee.

“S&P” means Standard & Poor’s Corporation, and its successors.

A-5

“Tax Revenues” means, collectively, the Non-Housing Tax Revenues and the Housing Tax Revenues.

Deposit and Application of Bond Proceeds

Costs of Issuance Fund. A portion of the proceeds of the Bonds will be deposited by the Trustee in the Costs of Issuance Fund on the Closing Date. Amounts in the Costs of Issuance Fund will be disbursed to pay Costs of Issuance from time to time upon receipt of Requests of the Agency. On July 1, 2011, the Trustee shall transfer any amounts remaining in the Costs of Issuance Fund to the Agency for deposit in the Redevelopment Fund and the Housing Fund on a pro rata basis, and the Trustee will thereupon close the Costs of Issuance Fund.

Redevelopment Fund. The Indenture establishes a separate fund to be held by the Agency, to be known as the “Redevelopment Fund” into which a portion of the proceeds of the Bonds will deposited therein on the Closing Date. All earnings on the investment and reinvestment of amounts in the Redevelopment Fund will be retained therein. Amounts in the Redevelopment Fund shall be used solely in the manner provided by the Redevelopment Law and the Redevelopment Plan to provide financing for Qualified Redevelopment Projects. Upon the completion by the Agency of the purposes for which moneys the Redevelopment Fund are intended to be applied, any remaining amounts in the Redevelopment Fund shall be applied by the Agency for any lawful purposes, including but not limited to the payment or redemption of Outstanding Bonds. The Agency shall invest amounts held by it in the Redevelopment Fund in any investments in which the Agency is authorized to invest funds under its control in accordance with applicable laws of the State of California.

Housing Fund. The Indenture establishes a separate fund to be held by the Agency, to be known as the “Housing Fund” into which a portion of the proceeds of the Bonds will deposited therein on the Closing Date. All earnings on the investment and reinvestment of amounts in the Housing Fund will be retained therein. Amounts in the Housing Fund shall be used solely in the manner provided by the Redevelopment Law and the Redevelopment Plan to provide financing for Qualified Housing Projects. Upon the completion by the Agency of the purposes for which moneys the Housing Fund are intended to be applied, any remaining amounts in the Housing Fund shall be applied by the Agency for any lawful purposes, including but not limited to the payment or redemption of Outstanding Bonds. The Agency shall invest amounts held by it in the Housing Fund in any investments in which the Agency is authorized to invest funds under its control in accordance with applicable laws of the State of California.

Deposit and Application of Subordinate Tax Revenues

Deposits in Special Fund. The Agency has previously established a special fund for the receipt and deposit of Non-Housing Tax Revenues in accordance with the Redevelopment Law. The Agency shall continue to hold such fund so long as any of the Bonds remain Outstanding. The Agency shall deposit all of the Non-Housing Tax Revenues received in any Bond Year in such special fund promptly upon receipt thereof by the Agency.

A-6 Deposits in Low and Moderate Income Housing Fund. The Agency has also previously established a Low and Moderate Income Housing Fund under Section 33334.3 of the Redevelopment Law. The Agency shall continue to hold the Low and Moderate Income Housing Fund so long as any of the Bonds remain Outstanding. The Agency shall deposit all of the Housing Tax Revenues received in any Bond Year in the Low and Moderate Income Housing Fund promptly upon receipt thereof by the Agency.

Debt Service Fund; Transfer of Amounts to Trustee. The Trustee shall establish the Debt Service Fund as a special trust fund. The Agency shall transfer amounts of Subordinate Tax Revenues to the Trustee in the following amounts at the following times, for deposit by the Trustee in the following respective special accounts within the Debt Service Fund, which accounts are established with the Trustee, in the following order of priority:

(a) Interest Account. On or before the 5th Business Day preceding each date on which interest on the Bonds is due and payable, the Agency shall transfer to the Trustee for deposit in the Interest Account an amount of Subordinate Tax Revenues which, when added to the amount then on deposit in the Interest Account, equals the aggregate amount of the interest coming due and payable on the Outstanding Bonds on such date. The Trustee shall apply amounts in the Interest Account solely for the purpose of paying the interest on the Bonds when due and payable.

(b) Principal Account. On or before the 5th Business Day preceding each date on which principal of the Bonds is due and payable at maturity, the Agency shall transfer to the Trustee for deposit in the Principal Account an amount of Subordinate Tax Revenues which, when added to the amount then on deposit in the Principal Account, equals the amount of principal coming due and payable on such date on the Outstanding Bonds, including the principal amount of any Term Bonds which are subject to mandatory sinking fund redemption on such date. The Trustee shall apply amounts in the Principal Account solely for the purpose of paying the principal of the Bonds at the maturity thereof or upon the mandatory sinking fund redemption thereof.

(c) Reserve Account. If the Trustee has actual knowledge that the amount on deposit in the Reserve Account at any time falls below the Reserve Requirement, the Trustee shall promptly notify the Agency of such fact. Upon receipt of any such notice, the Agency shall transfer to the Trustee an amount of available Subordinate Tax Revenues sufficient to maintain the Reserve Requirement on deposit in the Reserve Account. The Trustee shall apply amounts in the Reserve Account solely (i) for the purpose of making transfers to the Interest Account and the Principal Account, in that order of priority, on any date on which the principal of or interest on the Bonds are due and payable, if there is a deficiency at any time in any of such accounts, or (ii) at any time for the retirement of all the Bonds then Outstanding. So long as no Event of Default has occurred and is continuing, the Trustee shall withdraw any amount in the Reserve Account in excess of the Reserve Requirement on

A-7 the Business Day preceding each Interest Payment Date and deposit such amount in the Interest Account.

On the date on which all of the Outstanding Bonds mature or are scheduled to be redeemed, the Agency may (but is not required to) direct that the Trustee apply amounts in the Reserve Account to pay the principal or redemption price of the Bonds on that date. Any amounts remaining in the Reserve Account following payment or redemption of the Outstanding Bonds in full shall be withdrawn therefrom by the Trustee and paid to the Agency (or to the City, if so directed in writing by the Agency) to be used for any lawful purposes.

Notwithstanding the foregoing provisions, (a) the amount of Non-Housing Tax Revenues which are transferred by the Agency to the Trustee for deposit into the Interest Account, the Principal Account and the Reserve Account shall not exceed the amount required to pay principal of and interest on the Non-Housing Portion of the Bonds, and (b) the amount of Housing Tax Revenues which are transferred by the Agency to the Trustee for deposit into the Interest Account, the Principal Account and the Reserve Account shall not exceed the amount required to pay principal of and interest on the Housing Portion of the Bonds.

Release of Funds. Once the amount of Subordinate Tax Revenues received during such Bond Year become equal to the aggregate amounts required to be transferred by the Trustee for deposit into the Interest Account, the Principal Account and the Reserve Account in such Bond Year as described above, the Subordinate Tax Revenues thereafter received by the Agency in such Bond Year shall be released from the pledge and lien which secures the Bonds, and may be used for any lawful purposes of the Agency.

Investment of Funds

Amounts held by the Trustee in the funds and accounts established under the Indenture for the proceeds of the Bonds will be invested by the Trustee in Permitted Investments specified in the Request of the Agency. In the absence of any such direction from the Agency, the Trustee will invest any such moneys solely in Permitted Investments which constitute money market funds. All moneys in any fund or account held by the Agency under the Indenture will be invested by the Agency in any investments in which the Agency is legally authorized to invest funds within its control. All interest or gain derived from the investment of amounts in any fund or account will be retained therein; provided, that all interest or gain from the investment of amounts in the Reserve Account will be deposited by the Trustee in the Interest Account to the extent not required to cause the balance in the Reserve Account to equal the Reserve Requirement.

A-8 Closure of Senior Lien

So long as any of the Bonds are Outstanding, the Agency shall not issue any notes, bonds or other obligations which are on a parity with the Senior Lien Bonds, or which are otherwise secured by any interest in the Tax Revenues or any portion thereof which is senior to the pledge and lien which secure the Bonds.

Issuance of Subordinate Debt

The Agency may from time to time issue its bonds, notes or other obligations which are unsecured or secured by a pledge and lien on the Tax Revenues or any portion thereof which is subordinate to the pledge and lien which secure the Bonds and Parity Debt, in such principal amount as the Agency may determine, provided that the issuance of such bonds, notes or other obligations does not cause the Agency to exceed any applicable Plan Limitations.

Other Covenants of the Agency

Punctual Payment. The Agency shall punctually pay or cause to be paid the principal, premium (if any) and interest to become due in respect of all the Bonds in strict conformity with the terms of the Bonds and of the Indenture.

Compliance with Senior Lien Bond Indenture and Parity Debt Documents. The Agency shall punctually pay or cause to be paid the principal, premium (if any) and interest to become due in respect of all Senior Lien Debt, in strict conformity with the terms of the Senior Lien Bond Indenture. The Agency shall faithfully observe and perform all of the conditions, covenants and requirements of the Senior Lien Bond Indenture.

The Agency shall punctually pay or cause to be paid the principal, premium (if any) and interest to become due in respect of all Parity Debt, in strict conformity with the terms of the respective documents authorizing the issuance thereof. The Agency shall faithfully observe and perform all of the conditions, covenants and requirements of the respective documents authorizing the issuance of any Parity Debt.

Compliance with Plan Limitations. The Agency shall not take any action, including but not limited to the issuance of its bonds, notes or other obligations, which causes or which, with the passage of time, would cause any of the Plan Limitations to be exceeded or violated. The Agency shall manage its fiscal affairs in a manner which ensures that it will have sufficient Tax Revenues available under the Plan Limitations in the amounts and at the times required to enable the Agency to pay the principal of and interest on the Senior Lien Bonds, the Bonds and any Parity Debt when due.

The Agency shall calculate annually the aggregate amount of Tax Revenues which it remains entitled to receive under the Plan Limitations. If the aggregate amount of Tax Revenues which the Agency is permitted to receive under the Plan Limitations, plus the amount then held on deposit in any fund or account which is set aside by the Agency to make its payments under the Indenture and the earnings which are reasonably expected to accrue thereon, is at any time less than 105% of the aggregate amount of debt service on all outstanding Senior Lien Bonds, Bonds and any Parity

A-9 Debt, the Agency shall either (a) deposit with the Trustee an amount of Tax Revenues sufficient to redeem the Bonds in such aggregate principal amount as shall be required to cause the Agency to meet such requirements, or (b) set aside with the Trustee or into a dedicated fund or account to be held by the Agency an amount of Tax Revenues which, together with earnings to be derived from the investment thereof, will be sufficient to enable the Agency to meet such requirements, or (c) decline to accept Tax Revenues from the County in an amount sufficient to enable the Agency to meet such requirements.

Books and Accounts; Financial Statements; Additional Information. The Agency will keep, or cause to be kept, proper books of record and accounts, separate from all other records and accounts of the Agency and the City, in which complete and correct entries shall be made of all transactions relating to the Redevelopment Project, the Tax Revenues, the Redevelopment Fund and the Housing 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 (who has no duty to inspect) and the Owners of not less than 10% in aggregate principal amount of the Bonds then Outstanding, or their representatives authorized in writing.

The Agency will cause to be prepared annually, within 210 days after the close of each Fiscal Year so long as any of the Bonds are Outstanding, complete audited financial statements with respect to such Fiscal Year showing the Tax Revenues, all disbursements from the Redevelopment Fund and the Housing Fund and the financial condition of the Redevelopment Project, including the balances in all funds and accounts relating to the Redevelopment Project, as of the end of such Fiscal Year. The Agency will furnish a copy of such statements, upon reasonable request, to the Trustee and any Bond Owner. The Trustee has no duty to review any such financial statement.

Protection of Security and Rights of Bond Owners. The Agency will, to the extent it may legally do so, preserve and protect the security of the Bonds and the rights of the Bond Owners. From and after the sale and delivery of any of the Bonds by the Agency, the Bonds will 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 be lawfully imposed upon the Agency or the properties then owned by the Agency in the Project Area, when the same comes due. Nothing in this covenant requires the Agency to make any such payment so long as the Agency in good faith contests 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.

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 Indenture) so that such disposition shall, when taken together with other such dispositions, cause the amount of Tax Revenues to be received in the succeeding Fiscal Year to fall below 125% of Maximum Annual Debt Service on all outstanding Senior Lien Bonds, Bonds and Parity Debt in any Bond Year. If the Agency proposes to make such a disposition, it shall thereupon appoint a reputable Independent Redevelopment Consultant and direct

A-10 said consultant to report on the effect of said proposed disposition. If the Report of the Independent Redevelopment Consultant concludes that the amount of Tax Revenues (computed in accordance with the Indenture) following such disposition will meet the foregoing requirements.

Maintenance of Tax Revenues. The Agency will comply with all requirements of the Redevelopment Law to insure the allocation and payment to it of the Tax Revenues, including without limitation the timely filing of any necessary statements of indebtedness with appropriate officials of the County and the State of California. The Agency will not amend the Redevelopment Plan in any manner which would have the effect of reducing the amount of Tax Revenues unless the Agency shall first obtain the Report of an Independent Redevelopment Consultant stating that the amount of Tax Revenues to be received in the succeeding Fiscal Year will not fall below 125% of Maximum Annual Debt Service on all outstanding Senior Lien Bonds, Bonds and Parity Debt in any Bond Year.

Amendment of Indenture

The Indenture may be amended at any time with the written consents of the Owners of a majority in aggregate principal amount of the outstanding Bonds. No such amendment may (a) extend the maturity of or reduce the interest rate on any Bond or otherwise alter or impair the obligation of the Agency to pay the principal or interest 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 (c) without its written consent thereto, modify any of the rights or obligations of the Trustee.

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

• 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 reserved to or conferred upon the Agency,

• to cure any ambiguity, or to cure, correct or supplement any defective provision contained in the Indenture, or in any other respect whatsoever as the Agency deems necessary or desirable, provided under any circumstances that such modifications or amendments do not materially adversely affect the interests of the Owners in the opinion of Bond Counsel filed with the Agency and the Trustee, or

• 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 funds and accounts relating thereto and any other provisions relating solely thereto, subject to and in accordance with the provisions of the Indenture.

A-11 Events of Default and Remedies

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

• Failure to pay any installment of the principal of any Bonds when due, whether at maturity as therein expressed, by proceedings for redemption, by acceleration, or otherwise.

• Failure to pay any installment of interest on the Bonds when due.

• Failure by the Agency to observe and perform any of the other covenants, agreements or conditions on its part contained in the Indenture or in the Bonds, if such failure has continued for a period of 30 days after written notice thereof, specifying such failure and requiring the same to be remedied, has been given to the Agency by the Trustee; provided, however, if in the reasonable opinion of the Agency the failure stated in the notice can be corrected, but not within such 30-day period, such failure shall not constitute an Event of Default if the Agency institutes corrective action within such 30-day period and thereafter diligently and in good faith cures the failure in a reasonable period of time.

• The Agency commences a voluntary case under Title 11 of the United States Code or any substitute or successor statute.

• The failure by the Agency to pay the principal of and interest on any Senior Lien Bonds or Parity Debt when due, or the occurrence and continuation of an event of default under and as defined in the Senior Lien Bond Indenture or in any documents authorizing the issuance of Parity Debt.

Remedies. Upon the occurrence and during the continuance of any event of default, the Trustee may, and at the written direction of the Owners of a majority in aggregate principal amount of the Bonds at the time outstanding shall, (a) upon notice in writing to the Agency, declare the principal of all of the Bonds then outstanding, and the interest accrued thereon, to be due and payable immediately, of (b) enforce any rights of the Trustee under or with respect to the Indenture. The Trustee is irrevocably appointed as Trustee and lawful attorney-in-fact of the Owners of the Bonds for the purpose of exercising and prosecuting on their behalf such rights and remedies as may be available to such Owners under the provisions of the Bonds, the Indenture and applicable provisions of any law.

Application of Funds Upon Acceleration. All of the Subordinate Tax Revenues and all sums in the funds and accounts established and held by the Trustee under the Indenture upon the date of the declaration of acceleration, and all sums thereafter received by the Trustee under the Indenture, will be applied by the Trustee in the following order upon presentation of the Bonds and any Parity Bonds, and the stamping thereon of the payment if only partially paid, or upon the surrender thereof if fully paid:

First, to the payment of any fees, costs and expenses incurred by the Trustee to protect the interests of the Owners of the Bonds; payment

A-12 of the fees, costs and expenses of the Trustee (including fees and expenses of its counsel, including any allocated costs of internal counsel) incurred in and about the performance of its powers and duties under the Indenture and the payment of all fees, costs and expenses owing to the Trustee, together with interest on all such amounts advanced by the Trustee at the maximum rate permitted by law.

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

Limitation on Bond Owners’ Right to Sue. No Bond Owner has the right to institute any suit, action or proceeding at law or in equity, for any remedy under the Indenture, unless:

• said Owner has previously given to the Trustee written notice of the occurrence of an Event of Default;

• the Owners of a majority in aggregate principal amount of all the Bonds then Outstanding have requested the Trustee in writing to exercise the powers granted to it or to institute such action, suit or proceeding in its own name;

• said Owners have tendered to the Trustee indemnity reasonably acceptable to the Trustee against the costs, expenses and liabilities to be incurred in compliance with such request; and

• the Trustee has failed to comply with such request for a period of 60 days after such written request has been received by, and said tender of indemnity has been made to, the Trustee.

Defeasance of Bonds

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

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

• by irrevocably depositing with the Trustee or an escrow bank, in trust, at or before maturity, an amount of cash which, together with the available amounts then on deposit in the funds and accounts established under the Indenture, in the opinion or report of an Independent Accountant is fully sufficient to pay such Bonds, including all principal, interest and redemption premium, if any;

A-13

• by irrevocably depositing with the Trustee or an escrow bank, in trust, Federal Securities in such amount as an Independent Accountant determines will, together with the interest to accrue thereon and available moneys then on deposit in any of the funds and accounts established under 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

• by purchasing such Bonds prior to maturity and tendering such Bonds to the Trustee for cancellation.

Upon such payment, and notwithstanding that any Bonds have not been surrendered for payment, the pledge of the Subordinate Tax Revenues and other funds provided for in the Indenture and all other obligations of the Agency under the Indenture with respect to the Bonds so defeased will cease and terminate, except only the obligation of the Trustee to transfer and exchange such Bonds and to pay or cause to be paid to the Owners of such Bonds all sums due thereon.

A-14 APPENDIX B CITY OF GLENDALE INFORMATION STATEMENT The following information concerning the City of Glendale is presented as general background data. The Bonds are payable solely from Tax Revenues as described in the Official Statement. The Bonds are not an obligation of the City, and the taxing power of the City is not pledged to the payment of the Bonds.

General Information

The City of Glendale encompasses approximately 31 square miles at the foot of the Verdugo Mountains in Los Angeles County. It is bordered by the City of Los Angeles to the south, Pasadena to the east and Burbank to the north and northwest. The City is 7 miles from downtown Los Angeles, 15 miles from Los Angeles International Airport, 30 miles from Ontario International Airport and minutes from the Burbank- Glendale-Pasadena Airport. The City is home to over 200,000 people, making it the third largest city in Los Angeles County.

Government Organization

The City was incorporated as a general law city on February 16, 1906 and became a charter city in 1921. Glendale has a Council-Manager form of government. Five council members are elected at large to serve four year terms. Each year, the City Council selects one member to serve as mayor. The City Clerk and City Treasurer are also elected, while the City Manager and City Attorney are appointed by the City Council. The City government organization consists of approximately 1,904 full-time employees in 17 divisions, each led by a division manager.

Governmental Services

Public Safety and Welfare

Law enforcement and fire protection services are provided by the City. The Glendale Police Department currently employs 256 sworn officers and 108 civilian employees. In addition to the main police station, Glendale operates a satellite station in the Glendale Galleria shopping mall. The City’s Fire Department operates from a total of nine stations. The main station includes the Verdugo Communications Center which is co-operated with the cities of Burbank and Pasadena. The Fire Department also operates a hazardous waste facility where residents can dispose of their household hazardous wastes on designated days. The Fire Department holds a Class I Rating.

Public Services

Glendale is a full-service City that includes a water and electrical department. The City operates its own power plant capable of serving the electrical needs of the entire City, although the majority of power is currently imported from other areas for cost savings. Water comes primarily from the Metropolitan Water District, along with a small portion from local wells.

The City owns its own landfill, is half-owner of the area’s sewage treatment plant, and provides refuse collection for the City’s residents.

B-1 Leisure and Community Services

The City operates a Central Library, five branches and a bookmobile. The Central Library is 92,000 square feet and houses over 400,000 volumes, including a very comprehensive business collection. The Brand Library, the largest branch, located in the historic El Miradero mansion, includes an art gallery, retail hall and nationally recognized art and music collections.

Glendale’s residents enjoy a total of 32 City parks and nearly 4,800 acres of publicly owned open space. In addition to parks, other City maintained facilities and recreational activities are available for the public’s use and participation. Some of the most popular facilities include the Civic Auditorium and historical buildings such as the Casa Adobe, Verdugo Adobe, Tea House and the Doctor’s House. The City has received its Certified Local Government Status in historical preservation.

Additional City services include parkway and median maintenance and improvements, sewer and storm drain maintenance, zoning and development administration, environmental review, code enforcement and street tree maintenance.

Glendale provides a variety of transportation services. The City operates a Dial-A-Ride service for the elderly and handicapped. The City also has a city-wide and downtown shuttle known as the Beeline. The fare for the shuttle is 25 cents and is available for everyone.

The Glendale Railroad Depot was purchased by the City of Glendale in 1989 and has been preserved and listed on the National Historic Register. It was converted to the Glendale Transportation Center which serves as a connecting point for several modes of transportation. The City is also part owner of the Burbank-Glendale-Pasadena Airport, located in the City of Burbank.

Community Information

Public school education is available through the Glendale Unified School District, the fifth largest school district in Los Angeles County with an average daily attendance of 29,000 students. There are 20 elementary schools, 4 middle schools and 3 comprehensive high schools. The School District also operates one magnet high school, one continuation high school, a development center for disabled students and a preschool. Students are also served by 15 parochial and private schools. Area colleges and universities include Glendale Community College, Pasadena City College, Occidental College, California State Los Angeles, California State Northridge, University of California Los Angeles, and University of Southern California.

Health Care services available within the immediate area are provided by Glendale Memorial Hospital and Health Center, Verdugo Hills Hospital and Glendale Adventist Medical Center.

Glendale is home to the Glendale Symphony Orchestra, the Brand Library and Art Center, the Alex Theatre, the Centre Theatre and A Noise Within. Area attractions include Universal Studios, the Hollywood Bowl, the Los Angeles Zoo, Descanso Gardens, the Autry Museum of Western Heritage, the Norton Simon Museum, the Huntington Library & Gardens, Forest Lawn Art Collections, Dodger Stadium, Staples Center and the Rosebowl.

B-2 Population

Table No. B-1 summarizes population growth between 2006 and 2010 for the City, surrounding cities and Los Angeles County.

TABLE NO. B-1 CHANGE IN POPULATION CITY OF GLENDALE, SURROUNDING CITIES AND LOS ANGELES COUNTY 2006 – 2010

GLENDALE SURROUNDING CITIES LOS ANGELES COUNTY Year Percentage Percentage Percentage Population Change Population Change Population Change

2006 205,533 252,069 10,202,094 2007 205,180 (0.2)% 252,759 0.3% 10,231,000 0.3% 2008 205,651 0.2% 254,302 0.6% 12,285,296 20.1% 2009 206,540 0.4% 257,322 1.2% 10,355,053 (15.7)% 2010 207,902 0.7% 260,045 1.1% 10,441,080 0.8%

% Increase Between 2006 - 2010 1.2% 3.2% 2.3%

Surrounding cities include Burbank and Pasadena. Source: State of California, Department of Finance, “E-4 Population Estimates for Cities, Counties and the State, 2001–2010, with 2000 Benchmark.” Sacramento, California, May 2010.

Per Capita Income

Per capita income information for Glendale, Los Angeles County, the State of California and the United States are summarized in the following table.

TABLE NO. B-2 PER CAPITA INCOME GLENDALE, LOS ANGELES COUNTY, CALIFORNIA AND UNITED STATES 2005 – 2009

Year Glendale Los Angeles County State of California United States

2005 $34,481 $34,214 $38,767 $35,424 2006 36,434 36,196 41,567 37,698 2007 39,519 36,762 43,402 39,392 2008 41,307 39,657 43,852 40,166 2009 42,265 37,718 (1) (1)

Source: City of Glendale, County of Los Angeles, U.S. Department of Commerce, Bureau of Economic Analysis. ______(1) Not available.

B-3 Employment and Industry

The City is located in the Los Angeles-Long Beach-Glendale Metropolitan Division. Six major job categories constitute 78.3% of the work force. They are service producing (15.5%), government (15.2%), educational and health services (14.0%), professional and business services (13.7%), leisure and hospitality (10.2%), and manufacturing (9.7%). The December 2010 unemployment rate in the Los Angeles-Long Beach-Glendale Metropolitan Division was 12.7%. The State of California December 2010 unemployment rate (unadjusted) was 12.3%.

TABLE NO. B-3 LOS ANGELES-LONG BEACH-GLENDALE METROPOLITAN DIVISION WAGE AND SALARY WORKERS BY INDUSTRY (1) 2006 - 2010 (in thousands)

Industry 2006 2007 2008 2009 2010

Government 590.8 598.5 605.6 609.5 577.9 Other Services 143.9 146.3 148.0 143.4 132.9 Leisure and Hospitality 384.1 394.2 401.5 397.3 388.9 Educational and Health Services 481.3 488.9 503.8 516.9 532.3 Professional and Business Services 591.2 612.5 611.6 569.2 519.6 Financial Activities 248.7 250.5 243.0 230.5 218.2 Information 212.1 204.8 213.6 208.8 220.6 Transportation, Warehousing and Utilities 163.6 168.8 168.5 162.1 148.2 Service Producing Retail Trade 446.4 450.1 454.3 422.9 394.5 Wholesale Trade 223.9 229.4 229.4 217.6 195.7 Manufacturing Nondurable Goods 206.6 200.9 194.8 183.2 163.3 Durable Goods 261.7 253.8 247.5 235.6 203.8 Goods Producing Construction 154.3 158.3 154.4 135.5 97.9 Mining and Logging 3.7 4.1 4.4 4.4 4.1 Total Nonfarm 4,112.3 4,161.1 4,180.4 4,036.9 3,797.9 Farm 6.5 7.0 6.4 6.1 5.6 Total (all industries) 4,118.8 4,168.1 4,186.8 4,043.0 3,803.5

(1) Annually, as of December. Source: State of California Employment Development Department, Labor Market Information Division, “Industry Employment & Labor Force - by month March 2009 Benchmark.”

B-4 The largest employers operating within the City and their respective number of employees as of June 2010 are as follows:

TABLE NO. B-4 CITY OF GLENDALE LARGEST EMPLOYERS

Employer Number of Employees (1) Type of Business

City of Glendale 2,310 Government Glendale Adventist Med Center #262 2,023 Health Care Glendale Unified School District 1,894 Education Nestle Company 1,520 Food Services Glendale Memorial Medical Center 1,500 Health Care Disney Consumer & Interactive 1,400 Entertainment ACCO Engineered Systems 1,350 Mechanical Contractors Glendale Community College 1,169 Education Compensation Insurance Fund 850 Insurance Provider KABC 800 Television Station

(1) Both full-time and hourly employees are included. Source: City of Glendale.

B-5 Commercial Activity

Table No. B-5 summarizes the volume of retail sales and taxable transactions for the City of Glendale for 2005 through 2009 (the most recent year for which statistics are available). They City’s sales tax receipts for the fiscal year ending June 30, 2010 increased by 21% over the prior year as a result of the opening of the Americana at Brand.

TABLE NO. B-5 CITY OF GLENDALE TOTAL TAXABLE TRANSACTIONS (in thousands) 2005 – 2009

Retail and Retail and Total Taxable Food Services Food Services Transactions Issued Sales Year ($000’s) % Change Permits ($000’s) % Change Permits

2005 $2,251,666 2,909 $2,753,735 5,900 2006 2,211,798 (1.8)% 2,849 2,742,044 (0.4)% 5,690 2007 2,210,405 (0.1)% 2,736 2,756,364 0.5% 5,487 2008 2,101,905 (4.9)% 2,965 2,669,237 (3.2)% 5,660 2009 1,873,301 (10.9)% 3,382 2,346,683 (12.1)% 5,229

Source: California State Board of Equalization, “Taxable Sales in California.”

Table No. B-6 compares taxable transactions for the City of Glendale and surrounding cities for the five- year period from 2005 through 2009 (the most recent year for which statistics are available).

TABLE NO. B-6 CHANGE IN TOTAL TAXABLE TRANSACTIONS GLENDALE AND SURROUNDING CITIES (in thousands) 2005 – 2009

% Change from City 2005 2006 2007 2008 2009 2005 - 2009

GLENDALE $2,753,735 $2,742,044 $2,756,364 $2,669,237 $2,346,683 (14.8)% Burbank 2,570,255 2,737,374 2,931,259 2,856,024 2,438,623 (5.1)% Pasadena 3,022,270 3,084,279 3,153,605 2,973,214 2,625,180 (13.1)%

Source: California State Board of Equalization, “Taxable Sales in California.”

B-6 Taxable transactions by type of business for the City of Glendale for 2005 through 2009 are summarized in Table No. B-7 (the most recent year for which statistics are available).

TABLE NO. B-7 CITY OF GLENDALE TAXABLE TRANSACTIONS BY TYPE OF BUSINESS (in thousands) 2005 – 2009

2005 2006 2007 2008 2009

Retail and Food Services Clothing and Clothing Accessories Stores $ 186,712 $ 190,524 $ 187,468 $ 276,057 $ 358,123 General Merchandise Stores 320,411 305,363 338,767 297,371 202,732 Food and Beverage Stores 103,447 108,577 117,952 115,405 126,966 Food Services and Drinking Places 222,088 229,637 243,436 276,239 260,314 Home Furnishings and Appliance Stores 85,626 75,084 69,906 69,752 64,600 Building Materials and Garden Equipment and Supplies 141,505 135,328 130,753 117,086 91,495 Motor Vehicle and Parts Dealers 717,639 671,792 669,623 509,848 439,053 Gasoline Stations 143,256 157,334 170,240 183,080 143,029 Other Retail Group 330,982 338,159 282,260 257,068 186,990 Total Retail and Food Services 2,251,666 2,211,798 2,210,405 2,101,906 1,873,302

All Other Outlets 502,069 530,246 545,959 567,332 473,382

Total All Outlets $2,753,735 $2,742,044 $2,756,364 $2,669,238 $2,346,684

Note: Detail may not compute to total due to rounding. Source: California State Board of Equalization, “Taxable Sales in California.”

B-7 Building Activity

Table No. B-8 summarizes building activity valuations for the City for the five-year period from 2005/06 through 2009/10.

TABLE NO. B-8 CITY OF GLENDALE BUILDING ACTIVITY AND VALUATION (in thousands) 2005/06 – 2009/10

2005/06 2006/07 2007/08 2008/09 2009/10

Residential $ 9,997 $ 7,483 $ 7,860 $ 35,103 $ 5,040

Commercial 10,282 175,643 53,560 16,400 31,823

Total Valuation $ 20,279 $183,126 $ 61,420 $ 51,503 $ 36,863

Number of Units 32 34 35 39 26

Source: City of Glendale.

B-8 APPENDIX C AGENCY AUDITED FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED JUNE 30, 2010

C-1 Year Ended – June 30, 2010

Glendale

ANNUAL FINANCIAL REPORT Glendale Redevelopment Agency

Glendale

ANNUAL FINANCIAL REPORT Glendale Redevelopment Agency Year Ended - June 30, 2010

Chairperson Laura Friedman

Agency Members John Drayman Ara Najarian Frank Quintero Dave Weaver

Executive Director James E. Starbird

Director of Community Redevelopment and Housing Philip S. Lanzafame

Director of Administrative Services - Finance Robert P. Elliot, CPA

Table of Contents Glendale Exhibit Page INTRODUCTORY SECTION: Letter of Transmittal i

FINANCIAL SECTION: Independent Auditor’s Report 1 Management’s Discussion and Analysis 3 Basic Financial Statements: Government-Wide Financial Statements: Statement of Net Assets (Deficit) A 11 Statement of Activities B 13 Fund Financial Statements Balance Sheet – Governmental Funds C 15 Reconciliation of Balance Sheet of Governmental Funds to the Statement of Net Assets (Deficits) C.1 19 Statement of Revenues, Expenditures, and Changes in Fund Balances – Governmental Funds D 21 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement Of Activities D.1 25 Notes to the Basic Financial Statements 27

STATISTICAL SECTION: (Not Covered by Independent Auditors’ Report) Schedule

Supplemental Information: Computation of Low-Moderate Income Housing Excess/Surplus Funds 49 CIP Projects and Low and Moderate Housing Programs 50

Net Assets by Component 1 55 Changes in Net Assets, Governmental Activities 2 56 Fund Balances, Governmental Funds 3 57 Changes in Fund Balances, Governmental Funds 4 58 Assessed Value and Actual Value of Taxable Property 5 59 Direct and Overlapping Property Tax Rates 6 60 Property Tax Levies and Collections 7 61 Ratios of Outstanding Debt by Type 8 62 Pledged-Revenue Coverage 9 64 Principal Employers 10 65 Market Values of Taxable Properties 11 66 Credits 12 67

COMPLIANCE SECTION: Activities by Glendale Redevelopment Agency 69 (Not Covered by Independent Auditors’ Report) Activities Affecting Housing and Displacement 72

(Not Covered by Independent Auditors’ Report)

Glendale

INTRODUCTORY SECTION Year Ended - June 30, 2010

Honorable Chair and Members of the Glendale Redevelopment Agency City of Glendale Glendale, CA 91206

INTRODUCTION

State law requires that all general-purpose local governments publish within six months of the close of each fiscal year a complete set of fmancial statements presented in conformity with accounting principles generally accepted in the United States of America (GAAP) and audited by a firm of licensed certified public accountants in accordance with auditing standards generally accepted in the United States· of America and the standards applicable to fmancial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Pursuant to the requirement, we hereby issue the annual fmancial report of the Glendale Redevelopment Agency (Agency) for the fiscal year ended June 30,2010.

This report consists of management's representations concerning the fmances of the Agency. Consequently, management assumes full responsibility for the completeness and reliability- of all of the information presented in this report. To provide a reasonable basis for making these representations, management of the Agency has established a comprehensive internal control framework that is designed both to protect the Agency's assets from loss, theft, or misuse and to compile sufficient reliable information for the preparation of the Agency's fmancial statements in conformity with GAAP. Because the cost of internal controls should not outweigh their benefits, the Agency's · comprehensive framework of internal controls has been designed to provide reasonable rather· ··than absolute assurance that the fmancial statements will be free from material misstatement. As management, we assert that, to the best of our knowledge and belief, this financial report is complete ~nd reliable ill all material respects.

McGlad.rey & Pullen LLP, a firm of certified public accountants, has audited the Agency's fmancial statements, The goal of the independent audit was to provide reasonable assurance that the fmancial statements of the Agency_ for the fiscal year ended June 30, 2010, are free of material misstatement. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the fmancial statements; assessing the accounting principles used and significant estimates made by management; and evaluating the overall fmancial statement presentation. The independent auditor concluded, based upon the audit, that there was a reasonable basis for rendering an unqualified opinion that the Agency's financial statements for the fiscal year ended June 30, 2010, are fairly presented in conformity with GAAP. The independent auditor's report is presented as the first component of the fmancial section of this report.

GAAP requires that management provide a narrative introduction, overview, and analysis to accompany the basic fmancial statements in the form of Management's Discussion and Analysis (MD&A). This let;ter of transmittal is designed to complement the MD&A and should be read in conjunction with it. The Agency's MD&A can be found immediately following the report of the independent-auditors. PROFILE OF THE GLENDALE REDEVELOPMENT AGENCY

The Agency was created by the Glendale City Council Ordinance No. 4017, adopted March 28, 1972 and was established pursuant to the Community Redevelopment Law of California as modified in Part I of Division 24 of the State of California Health and Safety Code. As such, the Agency acts as a legal entity, separate and distinct from the City even though the City Council has the authority to appoint the Agency's Gove,ming Board.

At present, the Glendale City Council serves as the governing body of the Agency with the authority to carry out redevelopment activities. The City Manager serves as Executive Director; the Director of Administrative Services serves as the Treasurer ofthe Agency; the City Clerk serves as Secretary of the Agency; and the City Attorney serves as Agency Counsel.

The Agency currently has two project areas:

1. The Central Glendale Redevelopment Project was formally created by Ordinance No. 4042 dated August 1, 1972. Originally encompassing 221 acres located in the heart of the City of Glendale (the City), the project area has grown by annexation to encompass 263 acres. The project area consists principally of commercial, office, and retail uses.

2. The San Fernando Road Corridor Redevelopment Project was formally created by Ordinance No. 5003 dated December 15, 1992. The project area encompasses 750 acres, which is primarily used for industrial, manufacturing and entertainment related business.

The actions of the Agency are binding, and its appointed representatives routinely transact business, including the incurrence of long-term debt, in the Agency's name. The Agency is broadly empowered to engage in the general economic revitalization and redevelopment of the City through acquisition and development of property in those areas of the City determined to be in a blighted condition, as defmed under State law.

The California Community Redevelopment Law of California provides that, pursuant to the adoption of a redevelopment plan, the Agency is entitled to a proportional amount based on statutory tax-sharing arrangement for all future incremental propertY tax revenues attributable to increases in the property tax base within the Central Redevelopment Project Area and a proportional amount based on tax-sharing agreements in the San Fernando Corridor Project Area. Property taxes levied for the fiscal year ended on June 30 are payable in equal installments due on November 1 and February 1 and collectible December 10 and April 10, respectively.

FACTORS AFFECTING FINANCIAL CONDITION

The information presented in the fmancial statements is perhaps best understood when it is considered from the ' broader perspective of the specific environment within which the Agency operates.

LOCAL ECONOMY Economic growth in the City of Glendale is relatively flat. During the last year, there has been a slow growth in property tax revenue. The growth in sales tax revenue decreased due to declining sales activity, especially for general consumer goods and the retail auto sector.

LONG-TERM FINANCIAL PLANNING The Agency uses a cash-flow model in its long-term fmancial planning. This model is segregated by each project are·a {Centr~il & San Fernando} and projects tax increment and project expenses out for ten years or longer.

ii The following projects are significant to the Agency's current and future generation of revenue:

CENTRAL PROJECT

AMERICANA AT BRAND (TOWN CENTER) The Americana at Brand is a mixed-use pedestrian oriented, residential, retail and commercial center with major public open space elements anchoring the southern edge of the Project Area. The 15.5 acre site is generally bounded by Brand Boulevard, Central A venue, the Galleria II parking structure, and Colorado Street. This project opened in May 2008.

EMBASSY SUITES HOTEL The Embassy Suites Hotel project is an all-suites business class hotel located on Burchett Street adjacent to the Hilton Glendale. The 272 room hotel opened in November 2008.

HYATT PLACE GLENDALE Hyatt Place Glendale is an 11-story, 172-room hotel located at the northeast corner of Central and Wilson Avenues. The Agency has approved the design and ·the environmental analysis for the proposed project. The development team is currently negotiating the business terms for the Ground Lease Agreement. The construction is estimated to commence at the end of 2011.

SAN FERNANDO CORRIDOR PROJECT

DREAM WORKS EXPANSION Dream Works Animation, LLC completed a $40M addition of 128,700 SF to the existing Lakeside Building and the expansion of the existing parking structure in March 2010.

GRAND CENTRAL GLENDALE CREATIVE CAMPUS The Walt Disney Co. development project is continuing at the GC3 campus, bringing new construction and more jobs to the area, along with increased tax increment revenue. The first phase consisting of two 3-story, Hollywood Art Deco buildings (each 125,000 SF) was completed in December 2006. This $30 million first phase is located at the corner of Grandview and Flower Street. A 23,000 SF childcare, licensed for over 200 children is now complete and awaits state licensure prior to opening. The second phase of development at GC3 is now underway with an anticipated completion date of October 2012. This is a 338,000 SF project to be used for office space.

AGENCY LOANS As of June 30,2010, the Agency's loan's receivable total is $3,343,606. The Agency's loan to the Glendale Unified School District (GUSD) in the amount of $1,743,606 was to fund the Moyse Field improvement project of the school district and $1,600,000 was to fund the purchase of the Embassy Suites Hotel property. i

CASH MANAGEMENT POLICIES AND PRACTICES Cash temporarily idle during the year was invested in the City Treasurer's portfolio. The average yield was 1.89 percent for the fiscal year. Investment income includes appreciation in the fair value of investments. Increases in fair value during the current year, however, do not necessarily represent trends that will continue; nor is it always · possible to realize such amounts, especially in the case of temporary changes in the.Jair value of investments that the government intends to hold to maturity.

RISK MANAGEMENT The Agency participates in the City of Glendale's self-insurance programs for workers' compensation and general liability, which affect the Agency. These insurance activities are accounted for in the City of Glendale's Liability Insurance Fund, an in_ternal service fund. As a component unit of the City of Glen dale, the Agency is also covered under the City's policies for property insurance and excess liability coverage.

Additional information on the Agency's risk management can be found in Note IX of the fmancial statements.

iii SUMMARY

I would like to take this opportunity to express my appreciation to the staff of the Administrative Services - Finance and Community Redevelopment and Housing, led by the efforts of Accounting Services Administrator, Lily Fang and Senior Accountant, Zinda Jimenez whose hard work and dedication have made the preparation of this report possible. I would like to express my appreciation to the Agency Members and the Director of Community Redevelopment and Housing, Philip S. Lanzafame, for their support and responsible planning of the Agency's fmancial affairs.

Respectfully submitted, RobeL0:;{ Director of Administrative Services- Finance

Glendale

FINANCIAL SECTION Year Ended - June 30, 2010

Independent Auditor's Report

To the Honorable Chair and Members Glendale Redevelopment Agency Glendale, CA

We have audited the accompanying financial statements of the governmental activities and each major fund of the Glendale Redevelopment Agency (the Agency), a component unit of the City of Glendale, California, as of and for the year ended June 30, 2010, which collectively comprise the Agency's basic financial statements as listed in the table of contents. These financial statements are the responsibility of the Agency's management. Our responsibility is to express opinions on these financial statements based on our audit.

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

In our opinion, the financial statements referred to previously present fairly, in all material respects, the respective financial position of the governmental activities and each major fund of the Agency as of June 30, 2010, and the respective changes in financial position thereof, for the year then ended, in conformity with accounting principles generally accepted in the United States of America.

In accordance with Government Auditing Standards, we have also issued our report dated November 29, 2010 on our consideration of the Agency's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit.

Management's Discussion and Analysis, as listed in the table of contents, is not a required part of the basic financial statements but is supplementary information required by accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Agency's basic financial statements. The accompanying introductory and statistical sections, including the Computation of Low-Moderate Income Housing Excess/Surplus Funds, as listed in the table of contents, are presented for purposes of additional analysis and are not a required part of the basic financial statements. This information has not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we express no opinion on it.

Pasadena, CA November 29, 2010

2 GLENDALE REDEVELOPMENT AGENCY Management's Discussion and Analysis June 30,2010 (in thousands)

As management of the Glendale Redevelopment Agency (Agency), we offer readers of the Agency's financial statements this narrative overview and analysis of the financial activities of the Agency for the fiscal year ended June 30, 2010. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal, which can be found on pages i to iv of this report. All amounts, unless otherwise indicated, are expressed in thousands.

Financial Highlights

• The liabilities of the Agency exceeded its assets at the close of the most recent fiscal year by $19,356 (net assets). Of this amount, a negative $101,341 (unrestricted net assets) exists. The deficit in unrestricted net assets is typical in redevelopment agencies. All redevelopment agencies leverage current tax increment revenues by issuing long term debt to raise capital to promote economic growth within the project area. • The Agency's total net assets increased by $2,022. This increase is attributable primarily to the increase in property tax increment revenue received this fiscal year. In addition, although the total expenditures increased by $10,454; due to the GRA payment to the Supplemental Education Relief Augmentation Fund (SERAF) of $11,200, however, the net revenue increased by $4,309 is primarily due to increase in the tax increment revenue by $4,804. • As of the close ofthe current fiscal year, the Agency's governmental funds reported combined ending fund balances of $113,726; an increase of $21,069 in comparison with the prior year's combined fund balance of $92,657. This increase is due primarily to 201 0 Tax Allocation Bond Proceeds received in the current fiscal year. At the end of the current fiscal year, the total unreserved fund balance for the Central Project, San Fernando Project, Low and Moderate Housing, and Town Center funds was a positive $55,963, $15,247, $24,790 and $6,344 respectively. • The Agency's total debt increased by $26,302 (15.87 percent) during the current fiscal year mainly due to the following: (1) $5,031 decrease in ongoing debt service; (2) net proceeds of 2010 Tax Allocation Bonds of $26,621; (3) a new loan {Residential Development Loan Program (RDLP)} by the Glendale Housing Authority, net increase of $4,643; (4) retirement of $2,636 of Low & Mod Loans Payable and; (5) a net increase of $2,705 to amounts owed to the City of Glendale.

Overview of the Financial Statements

This discussion and analysis is intended to serve as an introduction to the Agency's basic financial statements. The Agency's basic financial statements are comprised of three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves.

Government-wide financial statements. The government-wide financial statements are designed to provide readers with a broad overview of the Agency's finances, in a manner similar to a private-sector business.

The statement of net assets presents information on all of the Agency's assets and liabilities, with the difference between the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position of the Agency is improving or deteriorating.

The statement of activities presents information showing how the Agency's net assets changed during the recent fiscal year. All changes in net assets are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused vacation leave).

Both of the government-wide financial statements identify functions of the Agency that are principally supported by taxes and intergovernmental revenues (governmental activities). The governmental activities of the Agency include community development, education, housing assistance and interest and fiscal charges in bonds.

The government-wide financial statements can be found on pages 11-13 of this report.

3 GLENDALE REDEVELOPMENT AGENCY Management's Discussion and Analysis June 30,2010 (in thousands)

Fund financial statements. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The Agency, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the Agency are known as governmental funds.

Governmental funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating an Agency's near-term financing requirements.

Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the Agency's near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmentalfunds and governmental activities.

The Agency maintains eight individual governmental funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances for the Central Project, San Fernando Road Project, Low and Moderating Housing, Town Center, 2002 Tax Allocation Bonds, 2003 Tax Allocation Bonds, 2010 Tax Allocation Bonds Funds and Low and Mod Loans Payable.

The basic governmental fund financial statements can be found on pages 15-26 of this report.

Notes to the financial statements. The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements can be found on pages 2 7-46 of this report.

Government-wide Financial Analysis

As noted earlier, net assets may serve over time as a useful indicator of the Agency's financial position. The Agency's liabilities exceeded assets by $19,356 at the close of the fiscal year.

The Agency has a negative balance in unrestricted net assets ($1 01,341) due primarily to a significant amount of ($105,634) outstanding bonded debt. Restricted net assets are an additional portion of the Agency's net assets of $34,455 that represent resources that are subject to external restrictions on how they may be used.

4 GLENDALE REDEVELOPMENT AGENCY Management's Discussion and Analysis June 30,2010 (in thousands)

Glendale Redevelopment Agency's Net Assets Total Governmental Activities 2010 2009

Current assets and other assets $ 97,116 98,051 Capital assets 79,093 49,809 Total assets 176,209 147,860

Long term debt 181,107 156,298 Current liabilities 11,458 12,939 Total liabilities 195,565 169,237

Net assets (deficits): Investment in general FA 47,530 49,809 Restricted 34,455 34,131 Unrestricted (1 01,341) (105,317) Total net assets (deficits) $ (19,356) (21,377)

The Agency has a deficit in unrestricted net assets due to the nature of redevelopment financing. Redevelopment agencies typically leverage current tax increment revenues by issuing long-term debt (including loans from the City) in order to raise capital to conduct activities that eliminate blight and to promote economic development within the project area. The new projects constructed, in tum, generate additional tax increment revenues, which again, may only be captured to the extent that the Agency incurs indebtedness. Indebtedness includes bonded indebtedness, notes, loans, advances, payments due under development agreements, and City loans. The Agency incurs debt based on future tax increments to fund infrastructure projects. Once the infrastructure projects are completed, the asset is transferred to the City; however, the debt remains with the Agency resulting in deficit net assets.

5 GLENDALE REDEVELOPMENT AGENCY Management's Discussion and Analysis June 30,2010 (in thousands)

Governmental activities. Governmental activities increased the Agency's net assets by $2,022 thereby accounting for the total increase in the net assets of the Agency. Key elements of this increase are as follows:

Glendale Redevelopment Agency's Changes in Net Assets

Total Governmental Activities

2010 2009 Revenues: Program revenues: Charges for services $ 16 19 General revenues: Property taxes 40,086 35,282 Revenue from other sources 2,333 2,279 Investment earnings 2,146 2,521 Miscellaneous 529 703

Total revenues 45,110 40,804

Community development 11,491 13,793 Education 12,271 1,740 Housing assistance 9,718 11,151 Interest and fiscal charges on bonds 9,608 5,950

Total expenses 43,088 32,634

Change in net assets 2,022 8,170 Net assets - July 1 (21,377) (29,547)

Net assets- June 30 $ (19,356) (21,377)

• Property taxes increased by $4,804. • Investment earnings decreased by $375 largely due to decrease in the current year's investment yield. • Miscellaneous revenues consist primarily of rental revenue and First Time Home Buyer Program loan payoffs. • Community development related expenses decreased by $2,302 in the current year due to lesser development in both Central & San Fernando Project Areas. • Education related expenses net increase of $10,531 due to the Agency's payment to SERAF. • Interest and fiscal charges on bonds increased by $3,658 due to Low & Mod Loan payments.

6 GLENDALE REDEVELOPMENT AGENCY Management's Discussion and Analysis June 30, 2010 (in thousands)

Revenues By Source- Governmental Activities

Revenue from other . Investment eammgs sow-ces % 5 0 5% Miscellaneous

Property taxes 89%

Financial Analysis of the Agency's Funds

As noted earlier, the Agency uses fund accounting to ensw-e and demonstrate compliance w1th fmance-related legal requirements.

Governmental funds. The focus of the Agency's governmental funds is to provide infom1ation on near-tenn inflows, outflows, and balances of spending resources. Such infonnation is useful in assessing the Agency's financing requirements. In particular, unreserved fund balance may serve as a useful measure of an Agency's net resources available for speurung at the end of the fiscal year.

As of the end of the current fiscal year, the Agency's governmental funds reported combined ending fund balances of $ll3,726, an increase of $21,069 in comparison witb the prior year. The Agency bas $83,605 in unreserved fund balance and tbe remainder of fund balance is reserved to indicate that it is not available for new spending because it has already been committed (1) to liquidate contracts and purchase orders of the prior period $983, (2) to bold property for future development $15,884, (3) for principal and interest payments toward outstanding bond debt $9,665 , (4) for deposits $7, (5) for prepaid expenditw-es $238 and (6) for loans receivable $3,344.

7 GLENDALE REDEVELOPMENT AGENCY Managemenrs Discussion aod Analysis June 30, 20 I 0 (in thousands)

The combined fund balance of the Agency's Central Project., San Fernando Project, Town Center, and Low & Moderate Housing funds increased from $82,692 to $1 02,344, a net increase of $19,652 compared to the prior fiscaJ year. Tl1is change is primarily due to 20 LO Tax Allocation Bonds proceeds, decrease activities in the San Fernando project area and Low & Mod Housing and decrease in the encumbrances.

The debt service funds have a total fund balance of $1 1,383 of which $9,665 is reserved for debt Service payment.

Capital Asset and Debt Administration

Capital assets

The Agency's investment in capital assets for its govenunental activities as of June 30, 2010, amounts to $57,486 (net of accumulated depreciation). This investment in capital assets includes land, bttildings and improvements, machinery and equipment, and construction in progress. The total increase in the Agency's investment in capital assets for the current fiscal year was $7,677, which was primarily due to Housing moving under GRA.

Glendale Redevelopment Agency's Capital Assets

Total Governmental Activities

2010 2009 Land $ 28,982 28,918 Buildings and improvements 14,982 14,331 Machinery and Equipment 941 654 Construction in progress 16,819 9,616

Total capital assets 61,724 53,519

Less Accumulated Depreciation Building and improvements 3,594 3, 120 Machinery and Equipment 645 589

Total Accumulated Depreciation 4,239 3,709

Capital Assets Net of Depreciation $ 57,485 49,809

Additional information on U1e Agency's capital assets can be found in the notes on page 36 of lhis report.

8 GLENDALE REDEVELOPMENT AGENCY Management's Discussion and Analysis June 30,2010 (in thousands)

Long-term debt.

At the end of the current fiscal year, the Agency has total bonded debt outstanding of $105,634 all of which is backed by the Agency's revenue from property tax increment.

Glendale Redevelopment Agency's Outstanding Debt

Total Governmental Activities

2010 2009

GRA Tax allocation bonds $ 105,634 84,044 Long-term debt to City 71,086 68,380 Low & Mod Loan 10,716 13,352 Res. Dev. Loan Program(RDLP) 4,643

Total outstanding debt $ ====19=2,;,,0=79= 165,776

• The Agency's total debt increased by $26,302 (15.87 percent) during the current fiscal year mainly due to the following: (1) $5,031 decrease in ongoing debt service; (2) net proceeds of 2010 Tax Allocation Bonds of $26,621; (3) a new loan {Residential Development Loan Program (RDLP)} by the Glendale Housing Authority, net increase of$4,643; (4) retirement of $2,636 of Low & Mod Loans Payable and; (5) a net increase of $2,705 to amounts owed to the City of Glendale.

Additional information on the Agency's long-term debt can be found on pages 37 through 40 of this report.

The City's Debt Ratings (based on insurance purchased related to the issues): Standard& Debt Issue Moody's Poor's (S & P)

2002 GRA Tax Allocation Bonds Aaa AAA 2003 GRA Tax Allocation Bonds Aaa AAA

2010 GRA Tax Allocation Bonds Baa2 A-

Bonds 'Which arc rated 'AAA' & 'Aaa' arc judged to be of the best quality. They carry the smallest degree of investment risk. Interest payments are protected by a large or an exceptionally stable margin and principal is secure. While the various protective elements are likely to change, such changes as can be visualized are most unlikely to impair the fundamentally strong position of such issues. Bonds rated 'AAA' are generally known as investment grade bonds of which the issuer of the Bonds is judged to have a very strong capacity to meet its financial commitments.

9 GLENDALE REDEVELOPMENT AGENCY Management's Discussion and Analysis June 30,2010 (in thousands)

Economic Factors • 89 percent of the Agency's revenues come from tax increment

Requests for Information

This financial report is designed to provide a general overview of the Agency's finances for all those with an interest in the Agency's finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the Director of Administrative Services - Finance, City of Glendale, 141 North Glendale Avenue, Suite 346, Glendale, CA 91206.

Glendale

BASIC FINANCIAL STATEMENTS Year Ended - June 30, 2010

Exhibit A Glendale Redevelopment Agency Statement of Net Assets (Deficits) June 30, 2010 (in thousands)

Governmental Activities ASSET Cash and invested cash $ 79,691 Cash with fiscal agent 12,308 Interest receivable 510 Prepaid items 239 Due from Other Agency 4,368 Deferred charges 2,380 Loans receivable 3,344 Property held for resale 15,884 Capital assets, net 57,485

Total assets 176,209

LIABILITIES Due to Other Agency 2,548 Interest payable 868 Bonds payable, due in one year 5,246 Other 2,726 Deposits 70 Intergovernmental payable 71,086 Bonds payable, net of current 113,021

Total liabilities 195,565

NET ASSETS (DEFICIT) Invested in capital assets, net of related debt 47,530 Restricted Low and moderate housing 24,790 Debt service 9,665

Unrestricted ~101,3412

Total net assets, (deficit) $ (19,356)

The notes to the financial statement are intergral part of this statement.

11 This page is left blank intentionally.

12 Exhibit B Glendale Redevelopment Agency Statement of Activities For Fiscal Year Ended June 30, 2010 (in thousands)

Operating Grants Charges for and Contri- Expenses Services butions Governmental activities: Community development $ 11,491 16 (11,475) Education 12,271 (12,271) Housing assistance 9,718 (9,718) Interest and fiscal charges on bonds 9,608 (9,608)

Total government $ 43,088 16 (43,072)

Property taxes 40,086 Revenue from other sources 2,333 Investment earnings 2,146 Miscellaneous 529

Total general revenues 45,094

Change in net assets 2,022

Net assets (deficit)- July 1 ~21,377!

Net assets (deficit)- June 30 $ (19,356)

The notes to the financial statement are integral part of this statement.

13 This page is left blank intentionally.

14 Exhibit C Glendale Redevelopment Agency Balance Sheet Governmental Funds June 30, 2010 (in thousands)

Low and Central San Fernando Moderate Project Project Housing Town Center

Assets

Cash and invested cash $ 50,436 11,365 13,379 3,444 Cash with fiscal agent 1,995 Interest receivable 383 51 60 15 Prepaid items 222 17 Due from Other Agency 987 2,769 612 Loans receivable 3,344 Property held for resale 2,190 10,809 2,885

Total assets 57,340 16,402 24,877 6,344

Liabilities and Fund Balances

Liabilities:

Due to Other Agency 1,351 1,111 87 Due to other funds Unearned revenues Deposits 26 44

Total liabilities 1,377 1,155 87

Fund Balances: Reserved: Deposit 7 Prepaid 222 17 Debt service Encumbrances 983 Loans receivable 3,344 Property resale 2,190 10,809 2,885 Umeserved 50,429 15,018 12,981 3,459

Total fund balances 55,963 15,247 24,790 6,344

Total liabilities and fund balances $ ===5=7=,3=40= 16,402 24,877 6,344

The notes to the financial statement are integral part of the statement.

(Continued) 15 Exhibit C Glendale Redevelopment Agency Balance Sheet Governmental Funds June 30, 2010 (in thousands)

2002 Tax 2003 Tax 2010 Tax Allocation Allocation Allocation Low&Mod Bonds Bonds Bonds Loans Payable

Assets

Cash and invested cash $ 423 640 6 Cash with fiscal agent 3,849 4,841 1,624 Interest receivable Prepaid items Due from Other Agency Loans receivable Property held for resale

Total assets 4,272 5,481 1,624 6

Liabilities and Fund Balances

Liabilities:

Due to Other Agency Due to other funds Unearned revenues Deposits

Total liabilities

Fund Balances: Reserved: Deposit Prepaid Debt service 3,806 4,767 1,092 Encumbrances Loans receivable Property resale Umeserved 466 714 532 6

Total fund balances 4,272 5,481 1,624 6

Total liabilities and fund balances $ ===4=,2=72= 5,481 1,624 6

The notes to the financial statement are integral part of the statement.

(Continued) 16 Exhibit C Glendale Redevelopment Agency Balance Sheet Governmental Funds June 30, 2010 (in thousands)

Total Governmental Funds

Assets

Cash and invested cash $ 79,691 Cash with fiscal agent 12,308 Interest receivable 510 Prepaid items 239 Due from Other Agency 4,368 Loans receivable 3,344 Property held for resale 15,884

Total assets 116,344

Liabilities and Fund Balances

Liabilities:

Due to Other Agency 2,548 Due to other funds Unearned revenues Deposits 70

Total liabilities 2,618

Fund Balances: Reserved: Deposit 7 Prepaid 238 Debt service 9,665 Encumbrances 983 Loans receivable 3,344 Property resale 15,884 Umeserved 83,605

Total fund balances 113,726

Total liabilities and fund balances $====I:::::16='=,3=44=

The notes to the financial statement are integral part of the statement.

17 This page is left blank intentionally.

18 Exhibit C.l GLENDALE REDEVELOPMENT AGENCY Governmental Funds Reconciliation of Balance Sheet of Governmental Funds to the Statement of Net Assets (Deficits) June 30, 2010 (in thousands)

Fund balances of governmental funds $ 113,726 Amounts reported for governmental activities in the statement of net assets are different because: Capital assets are not included as financial resources in governmental fund activity. Cost of capital assets $ 61,724 Accumulated depreciation (4,239) 57,485 Costs of issuance of bonds were fully expended in the governmental funds. This is the amount to establish the unamortized deferred charges. 2002 Tax Allocation Bonds 663 2003 Tax Allocation Bonds 1,322 2010 Tax Allocation Bonds 347 Low & Mod Loan 48 2,380

Long-term debt are not included in the governmental fund activity: Due within one year: Principal: Due to the City of Glendale (3,081) 2002 Tax allocation bonds (2,240) 2003 Tax allocation bonds - net of deferred amount on refunding (2,755) Low & Mod Loan (2,726) Bond premium: 2002 Tax allocation bonds (106) 2003 Tax allocation bonds (145) (11,053) Due more than one year: Principal: Due to the City of Glendale (68,005) 2002 Tax allocation bonds (31,900) 2003 Tax Allocation Bonds - net of deferred amount on refunding (39,257) 20 10 Tax allocation bonds (26,970) RDLPLoan (4,643) Low & Mod Loan (7,990) Bond premium/discount: 2002 Tax allocation bonds premium (1,109) 2003 Tax allocation bonds premium (1,501) 2010 Tax allocation bonds discount 349 (181,026)

Interest on long-term debt is not accrued in governmental funds, but rather is recognized as an expenditure when due: 2002 Tax allocation bonds (135) 2003 Tax allocation bonds (157) 20 10 Tax allocation bonds (486) RDLP Loan (37) Low & Mod Loan (53) (868)

Net assets (deficits) of governmental activities $ (19,356)

See accompanying notes to financial statements. 19 This page is left blank intentionally.

20 Exhibit D Glendale Redevelopment Agency Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds For Fiscal Year Ended June 30, 2010 (in thousands)

San Low and Central Fernando Moderate Project Project Housing Town Center Revenues: Property taxes $ 17,062 6,815 4,961 Revenue from other agencies 2,332 Charges for services 16 Use of money and property 1,314 239 333 68 Sale of Property Miscellaneous revenue 130 399 Total Revenues 18,523 9,386 5,693 68 Expenditures: Current Community development County property tax administration 335 108 111 Pass through 1,959 3,919 Administration 3,302 438 1,182 Housing assistance 9,718 Education 11,570 701 Capital project 6,715 1,181 (96) Debt Service Principal retirement 165 Interest bonds 88 Interest on debt to City 2,081 Total expenditures 25,962 6,347 11,264 (96)

Excess of revenues over (under) expenditures (7,439) 3,039 (5,571) 164 Other financing sources (uses): Notes proceeds 24,650 4,808 Total other financing sources (uses) 24,650 4,808 Net change in fund balances 17,211 3,039 (763) 164 Fund balance, July 1 38,752 12,208 25,552 6,180 Fund Balance, June 30 $ 55,963 15,247 24,790 6,344

The notes to the financial statement are integral part of the statement.

(Continued) 21 Exhibit D Glendale Redevelopment Agency Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds For Fiscal Year Ended June 30, 2010 (in thousands)

2002 Tax 2003 Tax 2010 Tax Low&Mod Allocation Allocation Allocation Loans Bonds Bonds Bonds Payable Revenues: Property taxes $ 3,614 4,578 3,056 Revenue from other agencies Charges for services Use of money and property 78 112 Sale of Property Miscellaneous revenue Total Revenues 3,693 4,690 3,056 Expenditures: Current Community development County property tax administration Pass through Administration 5 5 Housing assistance Education Capital project Debt Service Principal retirement 2,165 2,815 2,636 Interest bonds 1,643 1,956 420 Interest on debt to City Total expenditures 3,813 4,776 3,056

Excess of revenues over (under) expenditures (120) (86) Other financing sources (uses): Notes proceeds 1,623 Total other financing sources (uses) 1,623 Net change in fund balances (120) (86) 1,624 Fund balance, July 1 4,392 5,567 6 Fund Balance, June 30 $ 4,272 5,481 1,624 6

The notes to the financial statement are integral part of the statement.

(Continued) 22 Exhibit D Glendale Redevelopment Agency Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds For Fiscal Year Ended June 30, 2010 (in thousands)

Total Governmental Funds Revenues: Property taxes $ 40,086 Revenue from other agencies 2,333 Charges for services 16 Use of money and property 2,146 Sale of Property Miscellaneous revenue 529 Total Revenues 45,110

Expenditures: Current Community development County property tax administration 554 Pass through 5,878 Administration 4,932 Housing assistance 9,718 Education 12,271 Capital project 7,800 Debt Service Principal retirement 7,781 Interest bonds 4,107 Interest on debt to City 2,081 Total expenditures 55,122

Excess of revenues over (under)

expenditures (10,012) Other financing sources (uses): Notes proceeds 31,081

Total other financing sources (uses) 31,081 Net change in fund balances 21,069 Fund balance, July 1 92,657 Fund Balance, June 30 $ 113,726

The notes to the financial statement are integral part of the statement.

23 This page is left blank intentionally.

24 Exhibit D.1 GLENDALE REDEVELOPMENT AGENCY Governmental Funds Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities For Fiscal Year Ended June 30,2010 (in thousands)

Net change in fund balances- total governmental funds $ 21,069

Amounts reported for governmental activities in the statement of activities are different because: Governmental funds report capital assets changes as expenditures 8,166 In the statement of activities, the cost of capital assets is allocated over their estimated useful lives as depreciation expense. (490) In the statement of activities, the cost of issuance of bonds is allocated over the life of bonds as an expense 2002 Tax Allocation Bonds $ (58) 2003 Tax Allocation Bonds (118) Low & Mod Housing Loan (16) (192) In the statement of activities, bond premium are allocated over the life but ofthe bonds as a component of interest expense 2002 Tax Allocation Bonds 106 2003 Tax Allocation Bonds 145 251 Repayment of bond principal is an expenditure in the governmental funds, the repayment reduces long-term liabilities in the statement of net assets. 2003 Tax Allocation Bonds 2,615 2002 Tax Allocation Bonds 2,165 Low & Mod Loan 2,636 RDLPLoan 165 7,581 In the statement of activities, interest is accrued on outstanding debt; whereas in the governmental fund, interest is recognized when matured. Due to the City of Glendale (2,706) 2002 Tax Allocation Bonds 6 2003 Tax Allocation Bonds 12 2010 Tax Allocation Bonds (486) Low & Mod Loan (70) RDLPLoan (37) (3,281) Issuance oflong-term debt provides current financial resources to the governmental but increases long-term liabilities in the statement of net assets (31,082)

Change in net assets of governmental activities $ ==2=,02=2=

See accompanying notes to financial statements.

25 This page is left blank intentionally.

26 GLENDALEREDEVELOPMENTAGENCY Notes to the Basic Financial Statements June 30,2010 (in thousands)

I. Summary of Significant Accounting Policies

A. Entity

The following is a summary of the significant accounting policies of the Glendale Redevelopment Agency (the Agency).

The Agency was created by the City Council Ordinance No. 4017, adopted on March 28, 1972 and was established pursuant to the Community Redevelopment Law of California as modified in Part I of Division 24 ofthe State of California Health and Safety Code. Although the Agency is a separate legal entity, it is subject to the oversight responsibility of the City Council of the City of Glendale (the City) and accordingly, is a component unit of the City for financial reporting purposes. The Agency's governing board is the City Council.

The Agency currently has two project areas as follows:

1. The Central Glendale Redevelopment Project was formally created by Ordinance No. 4042 dated August 1, 1972. Originally encompassing 221 acres located in the heart of the City, the project area has grown by annexation to encompass 263 acres. The project area consists principally of commercial, office and retail uses.

The actions of the Agency are binding, and its appointed representatives routinely transact business, including the incurrence of long term debt, in the Agency's name. The Agency is broadly empowered to engage in the general economic revitalization and redevelopment of the City through acquisition and development of property in those areas of the City determined to be in a declining condition.

B. Government-Wide Financial Statements

The government-wide financial statements (i.e. the statement of net assets and the statement of activities) report information on the Agency activities as a whole. For the most part, the effect of interfund activity has been removed from these statements. The Agency only uses governmental activities, which normally are supported by taxes and intergovernmental revenues.

The statement of activities demonstrates the degree to which the direct expenses of a given function are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function. Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues.

C. Fund Accounting

The accounts ofthe Agency are organized on the basis of funds, each of which is considered to be a separate accounting entity. The operations of each fund are accounted for by providing a separate set of self-balancing accounts which comprise its assets, liabilities, reserves, fund balance/net assets, revenues, and expenditures or expenses, as appropriate. The Agency records all of its transactions in governmental fund types.

Governmental fund types are those funds through which most governmental functions typically are financed. Governmental fund reporting focuses on the sources, uses, and balances of current financial resources. The Glendale Redevelopment Agency (the Agency) has categorized the Town Center Project Fund; the 2002 Tax Allocation Bonds; the Low and Mod Loans Payable and the 2010 Tax Allocation Bonds Funds as major funds for public interest reasons. The Agency believes that these judgmentally determined major funds are particularly important to the financial statement users. Expendable assets are assigned to the various governmental funds according to the purposes for which they may or must be used; current liabilities are assigned to the fund

27 GLENDALEREDEVELOPMENTAGENCY Notes to the Basic Financial Statements June 30, 2010 (in thousands)

from which they are paid; and the difference between governmental fund assets and liabilities, the fund equity, is referred to as "fund balance." The measurement focus is upon determination of changes in financial position, rather than upon net income determination. The following comprise the Agency's major governmental funds:

Special Revenue Funds -

• Central Project Fund- To account for monies received and expended within the Central Project area in accordance with the Redevelopment Plan of the Agency made pursuant to redevelopment laws of the State of California. Administrative expenditures for the project area are expended in this fund. • San Fernando Project Fund -To account for monies received and expended within the San Fernando Project area in accordance with the Redevelopment Plan of the Agency made pursuant to redevelopment laws of the State of California. Administrative expenditures for the project area are expended in this fund. • Low and Moderate Housing Fund- To account for housing set aside required under redevelopment laws of the State of California. Administrative expenditures for the Low and Mod projects or programs expended in this fund. • Town Center Fund- Development fund for the 2002 Tax Allocation Bonds proceeds.

Debt Service Funds -

• 2003 Tax Allocation Bond Fund -To accumulate monies for the payment of interest and principal of the 2003 Tax Allocation Refunding Bonds. Debt Service is financed via the 80% of the incremental property tax from the Glendale Redevelopment Agency. • 2002 Tax Allocation Bond Fund -To accumulate monies for the payment of interest and principal of the 2002 Tax Allocation bonds. Debt Service is financed via the 80% of the incremental property tax from the Glendale Redevelopment Agency. • 2010 Tax Allocation Bond Fund- To accumulate monies for the payment of interest and principal of the 2010 Tax Allocation bonds. Debt service is financed via the 80% of the incremental property tax from the Glendale Redevelopment Agency. • Low and Mod Loans Payable Fund -To accumulate monies for the payment of interest and principal of the Glendale Housing Authority Loan. Debt Service is financed via the 20% Housing set-aside of the incremental property tax from the Glendale Redevelopment Agency.

D. Measurement Focus, Basis of Accounting, and Financial Statement Presentation

The Agency adopted GASB Statement No. 34, Basic Financial Statements and Management's Discussion and Analvsis fOr State and Local Governments, during the fiscal year ended June 30, 2002. The adoption of this Statement is meant to present the information in a format more closely resembling that of the private sector and to provide the user with more managerial analysis regarding the financial results and the Agency's financial outlook.

The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met.

Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the Agency considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures are recorded only when payment is due.

28 GLENDALEREDEVELOPMENTAGENCY Notes to the Basic Financial Statements June 30, 2010 (in thousands)

Charges for services and intergovernmental revenue are recognized in the period they are susceptible to accrual when they become both measurable and available to finance the expenditures of the fiscal period. Intergovernmental revenue is considered available if it is expected to be collected within 120 days of fiscal year-end and all eligibility requirements are met.

Miscellaneous revenues are generally recorded as revenue when received in cash, because they are generally not measurable until actually received. In the category of use of money and property, property rentals are recorded as revenue when received in cash, but investment earnings are recorded as earned, since they are measurable and available.

All property taxes are collected and allocated by the County of Los Angeles to the various taxing entities. Property taxes are determined annually as of January 1 and attached as enforceable liens on real property as July 1. Taxes are due November 1 and February 1 and are delinquent if not paid by December 10 and April10, respectively. Secured property taxes become a lien on the property on March 1. Property taxes on the unsecured roll are due on the March 1lien date and become delinquent if unpaid on August 31. Property tax revenues are recognized in the fiscal period for which they are levied and collected, adjusted for any amounts deemed uncollectible and amounts expected to be collected more than 60 days after the fiscal year.

As a general rule the effect of interfund activity has been eliminated from the government-wide financial statements.

Amounts reported as program revenues include 1) charges to customers or applicants for goods, services, or privileges provided, 2) operating grants and contributions, and 3) capital grants and contributions. Internally dedicated resources are reported as general revenues rather than as program revenues. Likewise, general revenues include all taxes.

Net assets are reported as restricted when constraints placed on net assets use are either externally imposed by creditors (such as through debt covenants), grantors, contributors, or laws or regulations of other governments or imposed by law through enabling legislation.

E. Assets, Liabilities, and Net Assets or Equity

Cash and Investments

The Agency pools its cash with the City. The City values its cash and investments in accordance with the provisions of Government Accounting Standard Board (GASB) Statement No. 31, "Accounting and Financial Reporting for Certain Investments and External Investments Pools (GASB 31)," which requires governmental entities, including governmental external investment pools, to report certain investments at fair value in the statement of net assets/balance sheet and recognize the corresponding change in the fair value of investments in the year in which the change occurred. Fair value is determined using published market prices.

The City manages its pooled idle cash and investments under a formal investment policy that is reviewed by the Investment Committee and adopted by the City Council and that follow the guidelines of the State of California Government Code. Individual investments cannot be identified with any single fund because the City may be required to liquidate its investments at any time to cover large outlays required in excess of normal operating needs. Funds must request large outlays in advance in order that the City Treasurer will have the funding available. Interest income from the investment is allocated to all funds on a monthly basis based upon the prior month end cash balance of the fund as a percent of the month end total pooled cash balance. Accordingly, the Agency receives its portion of interest income. The City normally holds the investment to term.

Inter-fund Transactions

Transactions among the Agency funds that would be treated as revenues and expenditures if they involved organizations external to the Agency are accounted for as revenues and expenditures in the funds involved.

Due from Other Agency

The Agency records property taxes earned but not received from the County of Los Angeles. The California Community Redevelopment Law of California provides that, pursuant to the adoption of a redevelopment plan, the Agency is entitled to a

29 GLENDALEREDEVELOPMENTAGENCY Notes to the Basic Financial Statements June 30, 2010 (in thousands)

proportional amount based on statutory tax-sharing arrangement for all future incremental property tax revenues attributable to increases in the property tax base within the Central Redevelopment Project Area and a proportional amount based on tax-sharing agreements in the San Fernando Corridor Project Area.

Loans Receivable

Special Revenue Fund expenditures relating to long-term loans arising from loans subsidy programs are charged to operations upon funding and the loans are recorded, net of an estimated allowance for potentially uncollectible loans. As of June 30, 2010, the Agency's outstanding loans total is $3,344. The original amount of the Agency's loan to the Glendale Unified School District (GUSD) to fund the Moyse Field improvement project of the school district was $1,800. As of June 30, 2010, the loan balance was $1,744. The term of the loan is 20 years with an interest rate of 4% per annum. The loan will be fully paid by GUSD in fiscal year 2024. The Agency's loan to Embassy Suites Hotel in the amount of $1,600 was to fund the purchase of the Embassy Suites property. The term of the loan is twenty (20) years with an interest rate of 5.5% per annum, payable in forty (40) equal semi-annul installments.

Capital Assets

The Agency's capital assets include land, buildings, improvements and equipments that are reported in the Agency government-wide fmancial statements. As a component unit of the City, the Agency follows the City's asset capitalization policy. Capital assets are defined as assets with an initial, individual cost of $5 or more and an estimated useful life in excess of one year. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at the estimated fair market value at the date of donation. Capital outlays are recorded as expenditures of the Agency's Special Revenue and Capital Project Funds and as assets in the Agency's government-wide fmancial statements to the extent that the asset capitalization policy is met. The cost of normal maintenance and repairs that do not add to the value of the asset or materially extend assets lives are not capitalized.

Buildings improvements and equipment assets are depreciated using the straight-line depreciation at the beginning of the following fiscal year over the following estimated useful lives:

Assets Years Building and improvements 10-75 Machinery and equipment 4-10

Depreciation of capital assets is computed and recorded using the straight-line method. Estimated useful lives of the various classes of depreciable capital assets are forty years for buildings and improvements and four years for machinery and equipment.

Property Held for Resale

Land and buildings acquired for future sale to developers have been capitalized and are shown as real property held for resale in the accompanying combined financial statements. Real property held for resale is carried at the lower of cost or net realizable value (realizable value less cost to sell).

Due to Other Agency

Due to other agency consists of amounts owed as a result of statutory and negotiated tax increment pass through arrangements with the Glendale Unified School District, Glendale Community College, the County of Los Angeles and other County Taxing Entities.

Long-term Debt

In the Government-wide Financial Statements, long-term debt and other obligations are reported as liabilities in the governmental activities statement of net assets. Bond premiums and discounts are deferred and amortized over the life of the bonds using the

30 GLENDALEREDEVELOPMENTAGENCY Notes to the Basic Financial Statements June 30,2010 (in thousands)

effective interest method. Bonds payable are reported net of the applicable bond premium or discount. Bond issuance cost are reported as deferred charges and amortized over the term of the related debt. In the governmental funds statement of revenues, expenditures and changes in fund balances, issuance of debt is recorded as another financing source in the respective fund.

Due to City of Glendale

Due to City of Glendale represents amounts owed to the City as a result of expenditures incurred by the City on behalf of the Agency for improvements made by the City in the redevelopment project areas. These agreements are to be paid when funds are available. All of the agreements accrue interest at the fixed rate of7% per annum effective fiscal year 2009-2010.

Compensated Absences

As a component unit of the City, the Agency follows the City's policies on compensated absences. The City records and funds a liability for its employees' earned but unused accumulated vacation and overtime. The unused accumulated vacation and overtime are expensed in the Employee Benefits Fund, an Internal Service Fund, which incurs the liability. As of June 30, 2010, the total liability is $14,710, and the City has $7,025 available in the Internal Service Fund dedicated to this liability. The Agency's portion of the liabilities is included on these balances. The total City-wide payouts incurred during the fiscal year 2009-10 are $1,381.

The City compensated absences policies also provide sick leave conversion benefits through the Retiree Health Saving Plan (RHSP). Unused sick leave is converted to a dollar amount and deposited in the employee's RHSP account at retirement or termination with 20 years of City service for Glendale Police Officers Association (GPOA), Glendale City Employee Association (GCEA) and Glendale Management Association (GMA). The account is used to pay healthcare premiums for the retiree and beneficiaries. After the account is exhausted, the retirees can terminate coverage or elect to continue paying the healthcare premiums from personal funds. Total benefits paid by the City under the RHSP for the fiscal year ended June 30, 2010 is $1,529.

Based on the most recent actuarial valuation, the actuarial accrued liability for the RHSP as of June 30, 2009 is $17,074. The City has a reserve of $4,245 in the RHSP Benefits Fund, an Internal Service Fund, dedicated to provide benefits, so the unreserved actuarial accrued liability is $12,829 as of June 30, 2009. The City has $5,014 in reserve for RHSP as of June 30, 2010, and the unreserved actuarial accrued liability is $12,737. The actuarial accrued liability takes into account an estimate of future sick leave usage, additional sick leave accumulation for current active employees, and investment return of $4.5% and no increase for sick leave conversion hourly rate.

Encumbrances

Appropriations in the governmental funds are charged for encumbrances when commitments are made. Fund balances are reserved for outstanding encumbrances, which serve as authorizations for expenditures in the subsequent year.

Fund Equity

Reservations of fund balance represent amounts that are not appropriated or are legally segregated for a specific purpose. Designations of fund balance represent tentative management plans that are subject to change.

Net Assets

Net assets represent the difference between assets and liabilities. Net assets invested in capital assets, net of related debt are capital assets, less accumulated depreciation and any outstanding debt related to the acquisition, construction or improvement of those assets. Net assets are reported as restricted when there are legal limitations imposed on their use by Agency legislation or external restrictions by other governments, creditors or grantors.

31 GLENDALEREDEVELOPMENTAGENCY Notes to the Basic Financial Statements June 30,2010 (in thousands)

F. Expenditures

Pass-through expenditures are Other County Taxing Entities' share of the property tax incremental revenue from both Central and San Fernando Project Areas. Other County Taxing Entities are: County General, County Flood Control, County Fire Dept., County Vector Control and the City of Glendale.

Education expenditures are the Glendale Unified School District, Glendale Community College and Los Angeles County Office of Education share of the property tax incremental revenue from both Central and San Fernando Project Areas. Also included in this category is the State's "take-away" of $11.2 million of the Agency's fund in this fiscal year that was paid to the Supplemental Educational Relief Augmentation Fund (SERAF).

Housing assistance expenditures are expenditures to assist low and moderate income families such as first time home buyer program, housing rehabilitation program, rental assistance program, emergency assistance program, etc. Also, funds are awarded to developers to develop new construction of low and moderate income rental housing. Administrative expenditures for administering these programs are included in this category.

II. Compliance and Accountability

Budgetary control is an essential element in governmental accounting and reporting. The Agency's budget is prepared on a project basis. Therefore, no budget versus actual statements has been included in the accompanying basic financial statements as the completion of these projects may take more than one year. As part of its budgetary control, the Agency utilizes the encumbrance accounting method. Under this method, commitments such as purchase orders and uncompleted project expenditures are recorded as reservations of fund balance captioned "Fund Balances Reserved: Encumbrances". As ofJune 30, 2010, the Agency had $983 in outstanding encumbrances.

III. Cash and Investments

The Agency pools its cash and investments with the City. Of the amounts detailed below, $91,999 pertains to the Agency for fiscal year 2010 of which $12,308 is cash with fiscal agents. The remaining cash and investments of$79,691 cannot be identified with any single investment because the City may be required to liquidate its investment at any time to cover outlays required in excess of normal operating needs. Funds must request large outlays in advance in order that the City Treasurer will have the funding available.

Cash and investments for the City of Glendale at fiscal year end consist of the following:

Investments $ 460,332 Cash with fiscal agents 25,511 485,843 Cash held in financial institutions & imprest cash 27,582 Total $ 513,425

Authorized Investments

Under provisions of the City's investment policy, and in accordance with California Government Code Section 53601, the City Treasurer may invest or deposit in the following types of investments:

32 GLENDALEREDEVELOPMENTAGENCY Notes to the Basic Financial Statements June 30, 2010 (in thousands)

Maximum Maturity Maximum% of Portfolio U.S. Treasuries 5 years 100% Federal Agencies 5 years 100% Medium Term Corporate Notes 5 years 15% Commercial Paper (A1, P1 minimum rating) 180 days 15% Bankers Acceptance 180 Days 30% Negotiable Certificates of Deposit 1 year 30% Local Agency Investment Fund (State Pool) N/A LAIF maximum Money Market Mutual Funds 90 days 20% Time Deposits 1 year 10%

Investments in Medium Term Corporate Notes may be invested in Securities rated AA or better by Moody's or Standard and Poor's rating services and no more than 5% of the market value of the portfolio may be invested in one corporation. Maximum participation in Bankers Acceptance is limited to 10% per bank.

Investments Authorized by Debt Agreements

The Provisions of debt agreements, rather than the general provisions of the California Government Code or the City's investment policy, governs investments of debt proceeds held by bond fiscal agents. Permitted investments are specified in related trust agreements.

No maximum percentage of the related debt issue or maximum investment in one issuer is specified.

Disclosure Relating to Interest Rate Risk

Interest rate risk is the risk that fluctuations in market rates may adversely affect the fair value of an investment, generally, the longer the maturity of an investment the greater the sensitivity of its fair value to the changes in market interest rates. The City manages its exposure to interest rate risk by purchasing a combination of shorter term and longer term investments and by timing cash flows from maturities so that a portion of the portfolio is maturing or coming close to maturity evenly over time as necessary to provide the cash flow and liquidity needed for operation.

Remaining Maturi!Y {in Months} 12 Months or 13 to 24 25 to 60 More than Less Months Months 60 Months Commercial Paper $ 19,498 19,498 Federal Agency Term Notes U.S. Government Agency Callable Bonds 226,296 8,113 15,498 202,685 Corporate Notes 26,373 9,127 2,644 14,602 Corporate Callable Notes Negotiable Certificates of Deposits 4,997 4,997 Banker's Acceptances 13,307 13,307 State Investment Pool 150,247 150,247 Money Market Funds 19,614 19,614 Held by Fiscal Agents Federal Agency Term Notes 9,853 9,853 Guaranteed Investment Contracts 6,313 6,313 Money Market Funds 9,344 9,344

$ 485,842 244,100 18,142 217,287 6,313

33 GLENDALEREDEVELOPMENTAGENCY Notes to the Basic Financial Statements June 30, 2010 (in thousands)

The City assumes that callable investments will not be called.

Disclosures Relating to Credit Risks

Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. The City invests only in the most risk-adverse instruments, such as AAA rated government securities, AAA or AA rated corporate securities, and A1,P1 rated commercial paper, negotiable certificates of deposit and banker's acceptance securities. The City's Investment Policy requires the City to sell any security with a credit rating below A.

Rating as ofYear End AAA AA Aa2 Al,Pl Unrated Commercial Paper $ 19,498 19,498 Federal Agency Term Notes U.S. Government Agency Callable Bonds 226,296 226,296 Corporate Notes 26,373 18,014 8,359 Corporate Callable Notes Negotiable Certificates of Deposits 4,997 4,997 Banker's Acceptances 13,307 13,307 State Investment Pool 150,247 150,247 Money Market Funds 19,614 19,614 Held by Fiscal Agents Federal Agency Term Notes 9,853 9,853 Guaranteed Investment Contracts 6,313 6,313 Money Market Funds 9,344 9,344 $ 485,842 265,107 18,014 6,313 46,161 150,247

Concentration on Credit Risk

The investment policy of the City contains no limitations on the amount that can be invested in any one issuer beyond that stated above. Investments in any one issuer that represent 5% or more of total City investments are as follows:

Issuer Investment Type Reported Amount

FFCB Federal Agency Callable Bonds

FHLB Federal Agency Term Notes FHLB Federal Agency Callable Bonds 74,&58 Total 74,&58

FHLMC Federal Agency Callable Bonds 65,859

FNMA Federal Agency Callable Bonds

34 GLENDALEREDEVELOPMENTAGENCY Notes to the Basic Financial Statements June 30,2010 (in thousands)

Custodial Credit Risk

Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, a government will not be able to recover its deposits or will not be able to recover collateral securities that are in the possession of an outside party. The custodial credit risk for investments is the risk that, in the event of the failure of the counterparty (e.g., broker-dealer) to a transaction, a government will not be able to recover the value of its investment or collateral securities that are in the possession of another party. The California Government Code and the City's investment policy do not contain legal or policy requirements that would limit the exposure to custodial credit risk for deposits or investments, other than the following provision for deposits: The California Government Code requires that a financial institution secure deposits made by state or local governmental units by pledging securities in an undivided collateral pool held by a depository regulated under state law (unless so waived by the governmental unit). The market value of the pledged securities in the collateral pool must equal at least 110% of the total amount deposited by the public agencies. California law also allows financial institutions to secure City deposits by pledging first trust deed mortgage notes having a value of 150% of the secured public deposits. As of June 30, 2010, in accordance with the City's investment policy, none of the City's investments were held with a counter-party. All of the City's investments were held with an independent third party custodian bank. The City uses Bank of America as a third party custody and safekeeping service for its investment securities. All City investments held in custody and safe-keeping by Bank of America are held in the name of the City and segregated from securities owned by the bank. This is the lowest level of custodial credit risk exposure.

At June 30, 2010, the carrying amount of the City's deposits was $27,582 and the corresponding bank balance was $4,984. The difference of $22,598 was principally due to outstanding warrants, wires and deposits in transit and some pending miscellaneous adjustments. Of the Bank balance, $250 was insured by the FDIC depository insurance and $4,734 was uncollateralized and not insured by FDIC depository insurance.

Investment in State Investment Pool

The City is a voluntary participant in the Local Agency Investment Fund (LAIF) that is regulated by California Government Code Section 16429 under the oversight of the Treasurer of the State of California. The fair market value of the City's investment in this pool is reported in the accompanying financial statements at amounts based upon the City's pro-rata share of the fair value provided by LAIF for the entire LAIF portfolio (in relation to the amortized cost of that portfolio).

35 GLENDALEREDEVELOPMENTAGENCY Notes to the Basic Financial Statements June 30,2010 (in thousands)

IV. Changes in Capital Assets

Activity in Capital Assets during the year ended June 30, 2010 is as follows:

Balance at Decreases/ Balance Juli: 1 Increases Reel ass at June 30 Governmental activities - Housing, health, and community development:

Capital assets not being depreciated Land $ 28,918 64 28,982 Construction in progress 9,616 7,203 16,819 Total assets not being depreciated 38,534 7,267 45,801

Other capital assets Building and improvements 14,331 651 14,982 Machinery and equipment 654 287 941 Total other capital assets at cost 14,985 938 15,923

Less accumulated depreciation: Building and improvements 3,120 474 3,594 Machinery and equipment 589 56 645 Total accumulated depreciation 3,709 530 4,239 Total assets being depreciated 11,276 408 11,684

Governmental activities capital assets, net $ 49,809 7,676 57,485

Depreciation expense of $490 has been allocated to community development and $40 has been allocated to housing assistance.

36 GLENDALEREDEVELOPMENTAGENCY Notes to the Basic Financial Statements June 30,2010 (in thousands)

V. Property Held for Resale

The following is a list of property held for resale at June 3 0, 2010:

Purpose Acquisition Date Location Carrying Value

North Central Dec-87 820 N. Central $ ------825 825

Other Aug-82 111 E. Wilson 352 Mar-86 225 W. Wilson 1,013 Jun-08 216-218 S. Brand 2,885 4,250

Housing Project Oct-07 331-335 Doran 4,802 Oct-08 Fifth & Sonora 6,007 10,809 Total $ 15,884

VI. Outstanding Indebtedness and Changes in Long-Term Debt

A summary of outstanding bonds payable at June 30, 2010 is as follows:

Outstanding at June 30, Outstanding at Due within 2009 Additions Retirements June 30,2010 one year Governmental Activities 2002 GRA Tax Allocation Bond $ 36,305 2,165 34,140 2,240 2003 GRA Tax Allocation Bond 44,627 2,615 42,012 2,755 2010 GRA Tax Allocation Bond 26,970 26,970 2002 GRA Bond Premium 1,320 106 1,214 106 2003 GRA Bond Premium 1,792 145 1,647 145 Net Original Bond Discount- 2010 GRA Tax Allocation Bonds (349) (349)

Total bonds payable 84,044 26,621 5,031 105,634 5,246 Low & Mod Loans Payable 13,352 2,636 10,716 2,726 Residential Dev. Loan Program (RDLP) 4,808 165 4,643 Due to the City of Glendale 68,380 4,786 2,081 71,086 3,081 Total long term liabilities $ 165,776 36,215 9,913 192,079 11,053

37 GLENDALEREDEVELOPMENTAGENCY Notes to the Basic Financial Statements June 30,2010 (in thousands)

The Agency's outstanding bonds payable carry certain provisions unique to each issue and are summarized as follows:

2002 GRA Tax Allocation Bonds

The Agency issued $48,015 in tax allocation bonds with an average rate of 4.5% to fund economic development activities of the Agency primarily relating to the Town Center development, to fund a reserve account for the Bonds, and to pay the expense of the Agency in connection with the issuance of the Bonds. The 2002 Bonds mature in regularly increasing principal amounts ranging from $2,240 to $3,655 from 2011 to 2022. The bond indebtedness is secured by a pledge of 80% of all incremental property taxes allocated to and received by the Agency for the Central Project Area. The bonds maturing on or before December 1, 2012, are not subject to redemption prior to their respective maturities. The bonds maturing on or after December 1, 2013, are subject to redemption at the option of the Agency on any interest payment date at a price ranging from 101% to 100% of the principal value.

2003 GRA Tax Allocation Bonds

The Agency issued $58,880 in 2003 tax allocation refunding bonds with an average rate of 4.18% to pay Agency's outstanding Central Glendale Redevelopment Project 1993 Tax Allocation Bonds (the "Prior Bonds") with an average interest rate of 5.5%, and to pay the cost of issuance of the 2003 Bonds. The 2003 Bonds mature in regularly increasing principal amounts ranging from $2,955 to $4,520 from 2011 to 2022. The bond indebtedness is secured by a pledge of 80% of all incremental property taxes allocated to and received by the Agency for the Central Project Area on a parity with the Agency's previously issued 2002 tax allocation bonds. The bonds maturing on or before December 1, 2013, are not subject to redemption prior to their respective maturities. The bonds maturing on or after December 1, 2014 are subject to redemption prior to maturity at the option of the Agency and by lot within a maturity, from any source of available funds at a redemption price equal to the principal amount of bonds to be redeemed, together with accrued interest thereon to the date fixed for redemption, without premium.

2010 GRA Tax Allocation Bonds

The agency issued $26,970 in 2010 tax allocation bonds with an average rate of 5% for 15 years to fund economic development activities of the Agency primarily relating to the Adult Recreation Center Improvement; Glendale Central Library Renovation and Columbus Soccer Field Project, to fund a reserve account for the Bonds, and to pay the expense of the Agency in connection with the issuance of the Bonds. The bond indebtedness is secured by a pledge of 80% of all incremental property taxes allocated to and received by the Agency for the Central Project Area on a parity with the Agency's previously issued 2002 tax allocation bonds and 2003 tax allocation refunding bonds. The bonds mature in amounts ranging from $150 to $8,510 from 2014 to 2025.

The annual requirements (including payments to sinking fund) to amortize all bonded indebtedness outstanding as of June 30, 2010:

Fiscal Year Interest Principal Total 2011 $ 5,201 4,995 10,196 2012 4,640 5,225 9,865 2013 4,424 5,400 9,824 2014 4,159 5,805 9,964 2015 3,897 6,085 9,982 2016-2020 14,986 34,724 49,710 2021-2025 6,818 40,888 47,706 $ 44,125 103,122 147,247

38 GLENDALEREDEVELOPMENTAGENCY Notes to the Basic Financial Statements June 30,2010 (in thousands)

Low & Mod Loans Payable

The Housing Authority obtained a $14,000 loan from Union Bank in February 2009 to fund the development of affordable rental and owner housing projects. The Housing Authority received $13,920 in February, net of cost of issuance of$80. The term of the loan is five years, and the interest rate is 3.35%. The total interest is $1,281. The loan is secured by the 20% set-aside funds of property tax increment received by the Housing Authority from Glendale Redevelopment Project areas.

The annual requirements to amortize the Loan outstanding as of June 30, 2010:

Fiscal Year Interest Principal Total 2011 $ 330 2,726 3,056 2012 237 2,820 3,057 2013 139 2,917 3,056 2014 39 2,253 2,292 $=====7=45======10=,7=1=6======11=,~==1===

Residential Development Loan Program (RDLP) Loan

The Glendale Redevelopment Agency is acting as "pass-through" capacity of this loan. This Loan is not secured by the 20% set-aside funds of property tax incremental revenue received by the Housing Authority from Glendale Redevelopment Agency project areas. The loan amount of$5,000 was approved by the California Housing Finance Authority to the Housing Authority of the City of Glendale, from proceeds of the Housing and Emergency Shelter Trust Fund of 2006 (Proposition 1C Housing Bond.) on November 5, 2008. The loan has a 5 year 9 month term (as amended) with a 3% simple annual interest rate. The Housing Authority drew $4,809 in August 2009, and returned $253 unused funds in March 2010, ofwhich $165 was applied to principal repayment, and $88 was applied to interest. The purpose of the loan is to provide land acquisition financing for a portion of the Doran Gardens' low and moderate income housing project. The Loan Agreement states that it is an unsecured loan, and repayment is a general obligation of the Housing Authority. The RDLP loan principal and interest will be repaid upon the sale of the affordable units for the Doran Gardens project.

The annual requirements to amortize the Loan outstanding as of June 30, 2010:

Fiscal Year Interest Principal Total 2011 2012 2013 2014 2015 571 4,643 5,214 $=====57=1======~4,64==3======5~,2=14====

39 GLENDALEREDEVELOPMENTAGENCY Notes to the Basic Financial Statements June 30, 2010 (in thousands)

Due to the City of Glendale

The Agency and the City have entered into various agreements, which provide for the reimbursement to the City from the Agency for expenditures incurred by the City on behalf of the Agency. The expenditures incurred by the City represent improvements made by the City to the Agency's redevelopment projects. These agreements are to be paid when funds are available. All of the agreements accrue interest at the rate of7% per annum effective fiscal tear 2009-2010.

The following table is a summary of changes in the amounts due to the City under these agreements:

Balance at Jul~ 1 Additions Balance at June 30 Date of Reductions/ Project AS!.:eement Princi_Qal Interest Total Princi_Qal Interest Reclass Princi_Qal Interest Total

Central Project South Brand Improvement May 1977 $ 2,727 2,727 191 2,918 2,918 Glenoaks Improvement Oct 1977 660 3,409 4,069 285 660 3,694 4,353 Parking lots transferred to the Agency Apr 1983 3,062 13,145 16,207 1,134 3,062 14,280 17,341 North Brand Improvement Apr 1983 80 4,287 4,367 306 80 4,593 4,673 Verdugo Utility Improvement Dec 1985 3,314 6,599 9,914 694 3,314 7,293 10,608 Block 24 Parking Structure Oct 1985 6,758 16,026 22,784 1,595 (2,081) 4,677 17,621 22,298

Sub-total 13,873 46,194 60,067 4,205 (2,081) 11,792 50,398 62,191

San Fernando Project San Fernando Project-Advance Dec 1996 1,272 1,468 2,740 192 1,272 1,659 2,931 New Business Incentive Dec 1996 16 14 29 2 16 16 32

Dreamworks Dec 1996 178 131 309 22 178 153 331 San Fernando Master Plan Dec 1996 602 351 952 67 602 417 1,019

Facade Program Dec 1996 184 38 223 16 184 54 238 Water Treatment Facilities Jul1997 1,600 859 2,459 172 1,600 1,032 2,632 Grand Central Business Nov 1997 50 25 75 5 50 30 80

Recycling Center Jul 1996 1,000 525 1,525 107 1,000 632 1,632

Subtotal 4,902 3,411 8,313 582 4,902 3,993 8,895 Grand Total for both Pro· ects $ 18 775 49 605 68 380 4 787 16,694 54 391 71086

40 GLENDALEREDEVELOPMENTAGENCY Notes to the Basic Financial Statements June 30, 2010 (in thousands)

VII. Employee Retirement System and Plans

Plan Description

As a component unit ofthe City, all Agency personnel are employees of the City of Glendale. The City contributes to the California Public Employees' Retirement System (CalPERS), an agent multiple-employer public employee retirement system that acts as a common investment and administrative agent for participating public entities within the state of California.

All full-time employees, which includes both safety and general employees, are required to participate in the single CalPERS plan, in which all related benefits vest after five years of service. Upon five years of service, employees who retire at age 50 or older are entitled to receive an annual retirement benefit. The benefit is payable monthly for life. The benefit is calculated as follows: years of credited service multiplied by their highest twelve consecutive months of salary multiplied by a percentage factor. This percentage factor is age-based- public safety employees use the 3% at age 50 factor and general employees use the 2.5% at age 55 factor. The system also provides death and disability benefits. CalPERS issues a publicly available financial report that includes financial statements and required supplemental information of participating public entities within the state of California. Copies of the CalPERS' annual financial report may be obtained from the CalPERS Executive Office- 400 P Street, Sacramento, CA 95814.

Funding Policy

CalPERS is a contributory plan deriving funds from employee and employer contributions as well as earnings from investments. According to the plan, the City's general employees are required to contribute 8% of their annual salary and the City's safety employees are required to contribute 9% of their annual salary. The City is also required to contribute at an actuarially determined rate. The City's contribution rate for safety members starting on July 1, 2009 was 24.000%. The City's contribution rate for general members starting on July 1, 2009 was 11.519%. The contribution requirements of plan members are established by State statute and the employer contribution rate is established and may be amended by CalPERS.

Based on the Memorandum of Understandings between the City and the various City Associations, all employees contribute part of the City's portion in fiscal year 2009-10, in addition to their required employees' contributions. Both Glendale City Employee Association (GCEA) and Glendale Management Association (GMA) contribute additional 0.5% of their persable earnings, Glendale Fire Fighter Association (GFFA) contribute additional 1.5% of their persable earnings, and Glendale Police Officers Association (GPOA) contribute additional1.5% of their annual salaries.

Annual Pension Cost

The Agency's portion of the contribution to CalPERS in fiscal year 2009-2010 was $352. The City's contributions to CalPERS totaling $23,852 were made during the fiscal year ended June 30, 2010 in accordance with actuarially determined contribution requirements through an actuarial valuation performed at June 30, 2005. The actuarial assumptions included (a) a rate of return on the investment of present and future assets of 7.75% a year compounded annually (net of administrative expenses), (b) projected salary increases that vary by duration of service ranging from 3.25% to 14.45%, (c) no additional projected salary increases attributable to seniority/merit and (d) no post retirement benefit increases. The actuarial value of the City's assets was determined using techniques that smooth the effects of short-term volatility in the market value of investments over a fifteen year period depending on the size of investment gains and/or losses. CalPERS uses the entry-age-normal-actuarial-cost method, which is a projected-benefit-cost method. That is, it takes into account those benefits that are expected to be earned in the future as well as those already accrued. According to this cost method, the normal cost for an employee is the level amount which would fund the projected benefit if it were paid annually from date of employment until retirement. In addition, the employer's total normal cost is expressed as a level percentage of payroll. CalPERS also uses the level-percentage-of-payroll method to amortize any unfunded actuarial liabilities. Initial unfunded liabilities are amortized over a closed period that depends on the plan's date of entry into CalPERS. Subsequent plan amendments are amortized as a level percent of pay over a closed 20 year period. Gains and losses that occur in the operation of the plan are amortized over a rolling 30 year period. If the plan's accrued liability exceeds the actuarial value of plan assets, then the amortization payment on the total unfunded liability may not be lower than the payment calculated over a 30 year amortization.

41 GLENDALEREDEVELOPMENTAGENCY Notes to the Basic Financial Statements June 30, 2010 (in thousands)

Three year Trend Information

Fiscal year Annual Pension Cost Percentage of APC ending (APC) Contributed Net Pension Obligation 6/30/2008: Misc. $ 10,691 100% 0 Safety 11,213 100% 0 Total 21,904

6/30/2009: 0 Misc. 12,004 100% 0 Safety 11,885 100% Total 23,889

6/30/2010: Misc. 11,829 100% 0 Safety 12,023 100% 0 Total $ ====.,.;2;;,;;3,;:,;;,8;;;,;52=

Schedule of Funding Progress (Unaudited) (Over-funded Actuarial AAL)/ Unfunded Accrued Liability (Over- AAL Actuarial Actuarial Value of - Entry funded AAL) I as a Percentage of Valuation Date Assets Age Unfunded AAL Funded Covered Covered Payroll Ratio Payroll <~b-al/c> 6/30/2007: Misc. $ 603,040 634,332 31,292 95.1% 95,082 32.9% Safety 386,561 447,885 61,324 86.3% 44,131 139.0% Total 989,601 1,082,217 92,616 91.4% 139,213 66.5%

6/30/2008: Misc. 641,356 678,218 36,862 94.6% 101,970 36.1% Safety 413,321 485,398 72,077 85.2% 46,911 153.6% Total 1,054,677 1,163,616 108,939 90.6% 148,881 73.2%

6/30/2009: Misc. 666,773 759,485 92,712 87.8% 104,075 89.1% Safety 430,823 533,851 103,028 80.7% 48,703 211.55% Total $ 1,097,596 1,293,336 195,740 84.9% 152,778 128.1%

42 GLENDALEREDEVELOPMENTAGENCY Notes to the Basic Financial Statements June 30,2010 (in thousands)

VIII. Risk Management

The Agency contracts with the City for unemployment and workers' compensation insurance. For purposes of general liability, the Agency is self-insured through the City's self-insurance program which is accounted for in the internal service fund of the City.

The City is exposed to various risks of loss related to torts, theft of, damage to and destruction of assets, errors and omissions, injuries to employees, and natural disasters. The City retains risks for the following types of liabilities: workers' compensation insurance, unemployment insurance, post employment benefits, general auto, dental, medical and vision as well as public liability through separate Internal Service Funds. The City purchased several commercial insurance policies from third-party insurance companies for errors and omissions of its officers and employees, and destruction of assets as well as excess workers' compensation and general public liability claims. The City also purchases property, aviation and employee dishonesty insurance. There were no significant settlements or reductions in insurance coverage from settlements for the past three years. The insurance schedule for fiscal year 2010-11 is as follows:

Insurance Type Program Limits Deductible /SIR (self insured retention)

Excess Liability Insurance $20,000 $2,000 SIR per occurrence D &0 Employment Practices $2,000 $250 SIR non-safety; $500 SIR safety Excess Workers' Comp Employer's Liability Insurance Statutory $2,000 SIR per occurrence Property Insurance (GWP) $250,000 Various deductibles up to $250 Property Insurance (Non-GWP) $400,000 $25 deductible all locations Aviation Insurance (Police Helicopter) $50,000 Various deductibles Employee Dishonesty- Crime Policy $1,000 $10

Operating funds are charged a premium and the Internal Service Funds recognize the corresponding revenue. Claims expenses are recorded in the Internal Service Funds. Premiums are evaluated periodically and increases are charged to the operating funds to reflect recent trends in actual claims experience and to provide sufficient reserve for catastrophic losses.

Claims payable liability has been established in these funds based on estimates of incurred but not reported and litigated claims. Management believes that provisions for claims at June 30, 2010 are adequate to cover the cost of claims incurred to date. However, such liabilities are, by necessity, based upon estimates and there can be no assurance that the ultimate cost will not exceed such estimates. A reconciliation of the changes in the aggregate liabilities for claims for the current fiscal and the prior fiscal year are as follows:

Beginning Claims and Claim Ending Fiscal Year Balance Changes Payments Balance 2008-09 $31,306 $33,329 $28,511 $36,124 2009-10 36,124 45,743 41,091 40,776

IX. Commitments and Contingencies

The Agency is involved in litigation in the normal course of business. In the opinion of management, based on consultation with the City Attorney, these cases, in the aggregate, are not expected to result in a material adverse financial impact to the Agency.

In December 2000, the Agency entered into an Owner Participation Agreement with Walt Disney World Co., a Florida corporation, for the Grand Central Creative Campus (GC3) project in the San Fernando Road Corridor Project Area. The purpose of this agreement is to effectuate the Redevelopment Plan for the project area by providing for the development of a landscaped, campus environment, consisting of a mix of media related/ entertainment use including media offices, high bay, sound stage production facilities and related auxiliary uses. The term of this project is 32 years. The Agency has committed to pay the Walt Disney World Co. approximately $128.7 million ratably for the duration of this agreement. The Agency shall reimburse Walt Disney Redevelopment Costs upon completion of any Phase containing Private Improvements totaling at least one million (1,000,000) square feet of Floor Area (at least 50% ofwhich Floor Area is

43 GLENDALEREDEVELOPMENTAGENCY Notes to the Basic Financial Statements June 30, 2010 (in thousands)

Net New). Redevelopment Costs are deemed to be Eight Dollars and Fifty Seven Cents ($8.57) per square foot of Floor Area of Private Improvements developed up to the date any Redevelopment Cost payment is made.

In July 2009, the State of California Legislature approved a $2.05 billion shift of Redevelopment Tax Increment funds to the Supplemental Educational Revenue Augmentation Fund (SERAF) for fiscal years 2009-10 and 2010-11. The State approved $1.7 billion in transfer for fiscal year 2009-10 and $350 million for fiscal year 2010-2011. The State Department of Finance will determine each Agency's SERAFpaymentbyNovember 15 of each year. Payments are due by May 10 of the applicable year.

The Glendale Redevelopment Agency (the "Agency") made payment to the "SERAF" in the amount of $11.2 million in May 2010. A portion of the property tax increment received by the Agency in fiscal year 2009-2010 was used to pay "SERAF". As of June 30,2010, the Agency's projected amount to pay "SERAF" for fiscal year 2010-11 is $2.3 million.

X. Subsequent Events

CalPERS Employer Contribution Rates

As is the case with most retirement systems, CalPERS is exposed to general market risk. This general market risk is reflected in asset valuations fluctuating with market volatility. Any impact from market volatility on the Retirement System depends in large measure on how deep the market downturn is, how long it lasts, and how it fits within fiscal year reporting periods. The resulting market risk and associated realized and unrealized gains and losses could impact the financial condition of the Retirement System and the City's required contribution to the Retirement System. The reader of these financial statements is advised that financial markets may continue to be volatile and are experiencing significant changes on almost a daily basis.

CalPERS rate stabilization policies now spread market gains and losses over 15 years, thus reducing the volatility of employee rates. Despite the rate stabilization, CalPERS's negative investment returns in fiscal year 2007-08 and 2008-09, caused by the unprecedented turmoil in the financial markets, will increase the City's employer contributions substantially starting fiscal year 2011- 2012.

The good news is that cushioning the impact of investment set backs is the fact that CalPERS experienced double digit gains in the four years leading up to the 2007-2008 fiscal year. In previous down markets, flat or negative investment returns contributed substantially to increases in employer contributions the following year. However, CalPERS rate stabilization policies now spread market gains and losses over 15 years, thus reducing the volatility of employer rates.

Based on CalPERS Annual Valuation Report as of June 30, 2009, which was issued in October 2010, the required and projected employer contributions for the next four fiscal years are as follows:

Miscellaneous Plan Covered Payroll- GRA Employer Rates portion (unaudited) FY2010-11 11.672% $2,273 FY2011-12 15.660% $2,273 FY2012-13 17.0%(projected) $2,273 FY2013-14 20.4%(projected) $2,273

44 GLENDALEREDEVELOPMENTAGENCY Notes to the Basic Financial Statements June 30,2010 (in thousands)

XII. Pronouncement Issued but Not yet Accepted

GASB issued pronouncements prior to June 30, 2010 that have an effective date that may impact future financial presentation. Management has not currently determined any impact on the implementation of the following statements may have on the financial statements of the City:

• Governmental Accounting Standards Board Statement No. 54 - Fund Balance Reporting and Governmental Fund Type Definitions.

• Governmental Accounting Standards Board Statement No. 57 - OPEB Measurements by Agent Employers and Agent Multiple Employer Plans,

• Governmental Accounting Standards Board Statement No. 59-Financial Instruments Omnibus

45 This page is left blank intentionally.

Glendale

STATISTICAL SECTION Year Ended - June 30, 2010

SUPPLEMENTAL INFORMATION

47 This page is left blank intentionally.

48 GLENDALE REDEVELOPMENT AGENCY Computation of Low-Moderate Income Housing Excess/Surplus Funds Year Ended June 30,2010 (in thousands)

Fund Balance - Beginning of Year $ 25,552 Adjustments (Note 1) 6 Less unavailable funds - included in beginning fund balance: Prepaid items (6) Encumbrances (9,886) Land held for resale (1 0,809) Total unavailable funds (20,701)

Available Fund Balance- Beginning ofYear 4,857 Current year proceeds/uses (actual plus changes in unavailable): Proceeds 13,559 Uses (14,321) Changes in unavailable amounts 4,249 Available Fund Balance- End of Year for Excess Surplus 8,344

Does available fund balance for excess/surplus exceed one-million dollars? If so, enter available fund balance and evaluate that amount against tax 8,344 increment. If less, enter zero.

Does available fund balance for excess/surplus exceed the greater of prior years' set aside deposits or one-million dollars?

Fiscal year 2005-06 $ 5,586 Fiscal year 2006-07 5,883 Fiscal year 2007-08 6,467 Fiscal year 2008-09 7,056 Total set-aside deposited into fund 24,992

Greater of the tax increment deposits or one-million dollars 24,992

Excess/surplus Funds Available fund balance for excess/surplus less prior four years' tax increment set aside deposits.

Reconciliation to Ending Fund Balance Ending GAAP fund balance 24,796

Available fund balance- end ofyear above 8,344 Add unavailable funds- end of year: Prepaid items 17 Encumbrances 983 Unspent debt proceeds 4,643 Land held for resale 10,809

Total unavailable funds 16,452 Computed Ending Fund Balance $ 24,796

Note 1 -The Low & Moderate Housing Fund's debt service fund balance was inadvertently omitted from FY08-09 calculation.

49 GLENDALE REDEVELOPMENT AGENCY CIP Projects and Low and Moderate Housing Programs June 30,2010 (in thousands)

The following are the on-going Capital Improvement Projects for both Central Project Area and San Fernando Project Area and the Low and Moderate Housing Programs:

A. Central Glendale RedeveloRment Projects

Project Current Year Expenditures Remaining Project Description Budget ExRenditures To Date Balance

Block 24/25 Rehab $ 7,774 7,702 72 800 North Central 4,951 4,901 50 Glendale City Center 451 2 415 36 DPSS Site 3,907 5 3,877 30 Block 29/30 4,831 4 4,818 13 Alex Theater Project 6,669 251 5,887 782 Downtown Green Space 470 372 98 Freeway Landscape 200 200 Town Center 2001 44,321 64 42,328 1,993 CA Central Office Project 32 7 25 Downtown Development Standards 1,133 36 1,050 83 Town Center/ARC East Brand Con 1,210 97 169 1,041 Central Glendale Area Facade 606 43 274 332 Galleria Expansion 175 21 154 Central Ave SR134 Off Ramp 1,200 1,200 Citywide Public Signage Program 50 40 10 Orange Street Garage 65 6 32 33 Verdugo Gardens-61 0 N. Central 20 3 17 Brand at 134 Fwy Mixed Use Project 25 25 Agency Development Site 120 20 100 Intracorp Orange/Wilson Mixed 10 (4) 2 8 Environmental Graphics 67 23 23 44 Milford & Orange Project 20 1 19 Armenian Society of LA 20 20 Brand Boulevard Capital Costs 312 113 199 Art Installation Program 83 83

Total (Central Projects) $ 78,722 527 72,055 6,667

50 GLENDALE REDEVELOPMENT AGENCY CIP Projects and Low and Moderate Housing Programs June 30,2010 (in thousands)

B. Town Center Projects

Project Current Year Expenditures Remaining Project Description Budget Expenditures To Date Balance

Town Center 2001 $ 40,590 (750) 39,803 787 Town Center/ARC East Brand Con 173 3 24 149 Total (Town Center Projects) $ 40,763 (747) 39,827 936

C. 2010 Tax Allocation Bonds Proceeds Projects

Project Current Year Expenditures Remaining Project Description Budget Expenditures To Date Balance

Adult Rec. Center Improvement $ 7,000 6,188 6,188 812 Renovate Existing Libraries 4,400 4,400 Town Center/ARC East Brand Con 4,500 4,500 Columbus Soccer Field 3,200 3,200 Total (Town Center Projects) $ 19,100 6,188 6,188 12,912

D. San Fernando Road Corridor Redevelopment Projects

Project Current Year Expenditures Remaining Project Description Budget Expenditures To Date Balance

DreamWorks $ 200 199 San Fernando Streetscape 6,562 144 5,639 923 Flower Street Rail Crossing 679 281 654 25 KABC7 288 3 285 San Fernando Rd. Facade Grant 921 166 796 125 Griffith Manor Park 3,000 302 441 2,559 Broadway & Doran Sts RR Improv. 2,000 31 1,969 Total (San Fernando Projects) $ 13,650 893 7,763 5,887

51 GLENDALE REDEVELOPMENT AGENCY CIP Projects and Low and Moderate Housing Programs June 30,2010 (in thousands)

E. Low and Moderate Housing Programs

FY2009-10 Program Current Year Programs Budget Expenditures

Housing Rehabilitations Program $ 843 456 First Time Home Buyer Program 225 63 New Construction of Ownership Housing Program 5,521 263 Rental Assistance Program 1,415 New Construction of Rental Housing Program 12,368 7,700 Code Enforcement Program 1,203 1,160 Section 8 HQS Repair Program 5 Section 8 Moving Assistance Program 13 2 Low Income Family Employment and Rent Assistance Program 914 273 Emergency Rental Assistance Program 20 8 Emergency Shelter-PATH Achieve Glendale Program 54 46 Total $======22,581 9,971

Note: The program budget include both the FY2009-1 0 budget and the carryover budget from prior fiscal years.

52 Statistical Section

This section of the Glendale Redevelopment Agency's (the Agency) annual financial report presents detail information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the Agency's overall financial health.

Contents Page

Financial Trends 55 These schedules contain trend information to help the reader understand how the Agency's financial performance and well-being have changed over time. have changed over time.

Revenue Capacity 59 These schedules contain information to help the reader assess the Agency's most significant local revenue sources, the property taxes.

Debt Capacity 62 These schedules present information to help the reader assess the affordability of the Agency's current levels of outstanding debt and the Agency's ability to issue additional debt in the future.

Demographic and Economic Information 65 These schedules offer demographic and economic indicators to help the reader understand the environment within which the Agency's financial activities take place.

Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial report for the relevant year.

The City implemented GASB Statement 34 in 2002; schedules presenting government-wide information include information beginning in that year.

53 This page is left blank intentionally.

54 Schedule 1 GLENDALEREDEVELOPMENTAGENCY Net Assets by Component Last Six Fiscal Years (in thousands) (accrual basis of accounting)

Fiscal Year 2010 2009 2008 2007 2006 2005

Governmental activities Invested in capital assets, net of related debt $ 47,530 49,809 44,545 38,768 11,726 11,190 Restricted 34,455 34,131 34,933 35,343 31,630 28,930 Unrestricted (101,341) (105,317) (109,024) (108,018) (62,103) (58,157) Total governmental activities net assets $ (19,356) (21,377) (29,547) (33,907) (18,747) (18,037)

Note: City of Glendale implemented GASB Statement 34 in fiscal year 2002.

Not covered by independent auditor's report

55 Schedule 2 GLENDALEREDEVELOPMENTAGENCY Changes in Net Assets, Governmental Activities Last Six Fiscal Years (in thousands) (accrual basis of accounting)

Fiscal Year 2,010 2009 2008 2007 2006 2005 Expenses Governmental activities:

Community Development $ 11,475 13,774 31,451 41,560 24,418 12,323 Education 12,271 1,740 675 762 2,173 2,665 Housing Assistance 9,718 11,151 2,252 2,365 6,841 3,666 Interest and fiscal charges on bonds 9,608 5,950 6,948 6,914 6,402 6,870

Total governmental activities expenses 43,073 32,615 41,326 51,601 39,833 25,525

General Revenues

Property Taxes 40,086 35,282 32,334 29,417 27,931 27,740 Revenue from other sources 2,333 2,279 2,244 1,249 1,416 1,458 Investment Earnings 2,146 2,521 3,332 3,982 1,904 3,315 Sale of Property 5,980 Miscellaneous 529 703 1,795 1,792 7,873 2,132

Total governmental activities revenues 45,094 40,785 45,686 36,441 39,123 34,645

Change in Net Assets $ 2,022 8,170 4,361 ~15,160) ~710) 9,120

Note: City of Glendale implemented GASB Statement 34 in fiscal year 2002.

Not covered by independent auditor's report

56 Schedule 3 GLENDALEREDEVELOPMENTAGENCY Fund Balances, Governmental Funds Last Six Fiscal Years (in thousands) (modified accrual basis of accounting)

Fiscal Year 2010 2009 2008 2007 2006 2005

All Governmental Funds

Reserved $ 30,122 40,167 31,713 27,839 86,696 104,991 Unserved, reported in: Special revenue funds 81,887 51,105 47,969 56,921 44,394 31,647 Debt service funds 1,718 1,385 1,462 1,446 1,008 537

Total all governmental funds $ 113,726 92,657 81,143 86,206 132,098 137,175

Note: City of Glendale implemented GASB Statement 34 in fiscal year 2002.

Not covered by independent auditor's report

57 Schedule 4 GLENDALEREDEVELOPMENTAGENCY Changes in Fund Balances, Governmental Funds, Last Six Fiscal Years (in thousands) (accrual basis of accounting) Fiscal Year 2010 2009 2008 2007 2006 2005 Revenues Property taxes $ 40,086 35,282 32,334 29,417 27,931 27,740 Revenue from other agencies 2,333 2,279 2,244 1,249 1,416 1,458 Charges for services 16 19 25 18 14 13 Use of money and property 2,146 2,499 3,332 3,982 1,904 3,315 Sale of Property 131 5,980 Miscellaneous revenue 529 725 1,795 1,792 7,742 2,132

Total Revenues 45,110 40,935 45,712 36,459 39,006 34,658

Expenditures Community development County property tax administration 554 601 575 534 446 429 Pass through 5,878 5,732 4,851 3,291 2,363 2,450 Lease Administration 4,932 4,043 4,048 3,616 4,148 3,526 Housing and community development 5,195 Housing assistance 9,718 11,151 7,712 8,032 12,813 4,905 Education 12,271 1,740 967 762 2,173 2,665 Capital outlay Capital projects 7,800 8,681 22,027 55,512 11,614 Debt service Principal retirement 7,781 5,428 4,590 4,415 4,235 3,865 Interest on bonds 4,107 3,925 4,004 4,189 4,366 4,511 Interest on debt to City 2,081 2,040 2,000 2,000 1,925 1,747 Bond issuance costs

Total Expenditures 55,122 43,341 50,774 82,351 44,083 29,293

Excess of revenues over (under) expenditures ~10,0122 ~2,4062 ~5,0622 ~45,8922 ~5,0772 5,365 Other Financing Sources (Uses) Notes Proceeds 31,081 14,000 Issuance of debt (80) Bond Premium Payment to refund bond escrow agent Total other financing sources (uses) 31,081 13,920 Net change in fund balances $ 21,069 11,514 ~5,0622 ~45,8922 ~5,0772 5,365

Debt service as a percentage of noncapital expenditures 21.6% 21.6% 16.9% 10.4% 19.5% 28.6%

Note: City of Glendale implemented GASB Statement 34 in fiscal year 2002.

Please note that the adminstration expenses, housing assistance expenses, capital project expenses do not exactly match Exhibit D because the report layout does not correctly categorize Fund 242's expenses, so manually adjust it on the statistical section.

Not covered by independent auditor's report. 58 Schedule 5 GLENDALEREDEVELOPMENTAGENCY Assessed Value and Actual Value of Taxable Property Last Ten Fiscal Years (In $thousands)

CENTRAL PROJECT

Fiscal Fiscal Year Less: Total Taxable Total Ended Residential Commercial Industrical Other Tax-Exempt Assessed Direct June 30, ProEerty ProEerty ProEerty ProEerty ProEerty Value Tax Rate

2001 24,212 1,097,337 505 511,721 17,883 1,615,892 0.96763% 2002 25,519 1,204,413 515 489,187 47,371 1,672,263 0.96750% 2003 26,494 1,199,414 389 486,471 19,696 1,693,072 0.96604% 2004 27,665 1,463,270 230 356,955 21,433 1,826,687 0.96817% 2005 29,878 1,446,991 446 332,276 25,736 1,783,855 0.96666% 2006 31,631 1,813,451 455 280,192 23,596 2,102,133 0.97197% 2007 35,234 2,063,043 464 265,800 24,282 2,340,259 0.97484% 2008 36,409 2,137,311 473 261,620 12,425 2,423,387 0.97477% 2009 37,534 2,249,908 483 542,574 12,425 2,818,074 0.97867% 2010 39,282 2,236,155 492 595,368 2,871,297 0.95752%

SAN FERNANDO PROJECT

2001 39,360 213,347 495,419 262,540 5,998 1,004,667 0.40519% 2002 41,218 253,274 521,580 272,607 7,033 1,081,647 0.44679% 2003 43,289 255,854 547,928 278,207 6,608 1,118,670 0.45562% 2004 47,992 269,460 569,884 273,000 7,257 1,153,079 0.47241% 2005 50,650 290,255 577,573 265,764 7,987 1,176,255 0.48331% 2006 50,274 335,263 563,159 258,064 10,236 1,196,523 0.49332% 2007 59,105 368,785 603,894 309,711 16,291 1,325,205 0.54376% 2008 61,694 447,241 623,365 309,040 16,713 1,424,628 0.57724% 2009 74,852 482,580 676,696 326,876 20,829 1,540,175 0.60858% 2010 77,421 483,880 680,086 329,235 1,570,621 0.53839%

Notes:

( 1) In 1978 the voters of the State of California passed Proposition 13 which limited property taxes to a total maximum rate of 1% based upon the 'assessed value of the property being taxed. Each year, the assessed value of property may be increased by an "inflation factor" (limited to a maximum increase of 2% ). With few exceptions, property is only re-assessed at the time that it is sold to a new owner. At that point, the new asssessed value is assessed at the puchased price of the property sold. The assessed valuation data shown above represents the only data currently available with respect the actual market value of taxable property and is subject to the limitations described above.

(2) Total direct tax rate is the weighted average of all individual direct rates, calculated by HdL Coren & Cone.

Not covered by independent auditor's report

59 Schedule 6 GLENDALE REDEVELOPMENT AGENCY Direct and Overlapping Property Tax Rates Last Five Fiscal Years

OverlaEJ2ing Rates Glendale Glendale City Redevelopment Total City of Flood Community Unified Fiscal Basic Agency Direct Glendale Control Detention College School Year Rate Rate Tax Rate Area District Facilities District District

2006 0.13687% 1.00600% 0.25043% 0.00520% 0.00005% 0.00080% 0.01858% 0.05220% 2007 0.13687% 1.00541% 0.25543% 0.00470% 0.00005% 0.00066% 0.02214% 0.05205% 2008 0.13687% 1.00450% 0.25637% 0.00450% 0.00000% 0.00000% 0.02408% 0.04742% 2009 0.13573% 1.00430% 0.26764% 0.00430% 0.00000% 0.00000% 0.02119% 0.04559% 2010 0.13573% 1.00430% 0.26915% 0.00430% 0.00000% 0.00000% 0.02366% 0.04603%

Note: In 1978, California voters passed Proposition 13 which sets the property tax rate at a 1.00% fixed amount. This 1.00% is shared by all taxing agencies for which the property resides within. Due to the passage of the Proposition 13, the City of Glendale levies no tax but receives a portion (0.13687%) of the County's 1% rate apportioned on a complex formula. In addition to the 1.00% fixed amount, property owners are charged taxes as a percentage of assessed property values for the payment of the various voter-approved bonds.

The rates are calculated by HdL Coren & Cone.

The data prior to FY2006 are not available.

Not covered by independent auditor's report

60 Schedule 7 GLENDALEREDEVELOPMENTAGENCY Property Tax Levies and Collections Last Nine Fiscal Years (in thousands)

RedeveloEment ABenc~ Fiscal Collected within the Year Taxes Levied Fiscal Year of the Levy Collections Total Collections to Date Ended for the Percentage in Subsequent Percentage June 30, Fiscal Year Amount of Levy Years Amount of Levy

2002 $ 20,012 17,532 87.6% 472 18,005 90.0% 2003 21,931 21,704 99.0% 510 22,215 101.3% 2004 23,474 21,406 91.2% 590 21,996 93.7% 2005 28,489 26,662 93.6% 1,078 27,740 97.4% 2006 26,505 25,798 97.3% 2,132 27,931 105.4% 2007 29,118 27,415 94.2% 2,002 29,417 101.0% 2008 31,205 30,982 99.3% 1,352 32,334 103.6% 2009 36,408 34,667 95.2% 615 35,282 96.9% 2010 41,442 39,884 96.2% 202 40,086 96.7%

Note: City of Glendale implemented GASB Statement 34 in fiscal year 2002.

Not covered by independent auditor's report

61 Schedule 8 GLENDALE REDEVELOPMENT AGENCY Ratios of Outstanding Debt by Type Last Nine Fiscal Years (in thousands)

Parking Refunding Parking Lease Lease 1993 2002 2003 2010 Revenue Revenue Tax Tax Tax Tax Fiscal Bonds Bonds Allocation Allocation Allocation Allocation Year Series A Series 1976 Bond Bond Bond Bond

2002 $ 440 1,025 61,250 2003 59,315 49,969 2004 48,053 58,129 2005 46,083 56,184 2006 44,057 53,924 2007 41,971 51,543 2008 39,831 49,043 2009 37,625 46,418 2010 35,355 43,658 26,970

Notes:

(1) Details regarding the City's outstanding debt can be found in the notes to the financial statements.

(2) Source: Sales and Marketing Management: Survey of Buying Power and Media Markets

(3) California State Department of Finance, January 1 of every year.

(4) City of Glendale implemented GASB Statement 34 in fiscal year 2002.

Not covered by independent auditor's report

(Continued) 62 Schedule 8 GLENDALE REDEVELOPMENT AGENCY Ratios of Outstanding Debt by Type Last Nine Fiscal Years (in thousands)

(1) (2) (3) Total Total Percentage Fiscal Primary Personal of Personal per Year Govermnent Income Income Po_Qulation Ca_Qita

2002 62,715 8,352,544 0.75% 200 313 2003 109,284 8,458,808 1.29% 203 539 2004 106,182 7,743,409 1.37% 205 517 2005 102,266 7,805,406 1.31% 207 494 2006 97,981 8,015,891 1.22% 206 475 2007 93,515 10,994,029 0.85% 207 451 2008 88,874 11,274,313 0.79% 207 429 2009 84,043 10,871,591 0.77% 207 405 2010 105,983 6,186,748 1.71% 208 510

Notes:

(1) Details regarding the City's outstanding debt can be found in the notes to the financial statements.

(2) Source: Sales and Marketing Management: Survey of Buying Power and Media Markets

(3) California State Department of Finance, January 1 of every year.

(4) City of Glendale implemented GASB Statement 34 in fiscal year 2002.

Not covered by independent auditor's report

63 Schedule 9 GLENDALEREDEVELOPMENTAGENCY Pledged-Revenue Coverage Last Nine Fiscal Years (in thousands)

Tax Allocation Bonds Property Less: Net Tax Operating Available Debt Service Fiscal Year Increment Expenses Revenue Principal Interest Coverage

2002 5,640 5,640 1,845 3,442 1.07 2003 5,926 5,926 1,935 4,366 0.94 2004 6,033 6,033 1,810 3,626 1.11 2005 8,376 8,376 3,865 4,511 1.00 2006 8,601 8,601 4,235 4,366 1.00 2007 8,607 8,607 4,415 4,189 1.00 2008 8,194 8,194 4,590 4,004 0.95 2009 8,199 8,199 4,780 3,808 0.95 2010 8,192 8,192 4,980 3,599 0.95

Note: City of Glendale implemented GASB Statement 34 in fiscal year 2002.

Not covered by independent auditor's report

64 Schedule 10 GLENDALEREDEVELOPMENTAGENCY Principal Employers Fiscal Year 2010

Percentage of Total City Employer Employees Rank Employment

CITY OF GLENDALE 2,310 (4) 2.90% (5) GLENDALE ADVENTIST MED CENTER #262 2,023 (2) 2 2.54% (5) GLENDALE UNIFIED SCHOOL DISTRICT 1,894 (2)(3) 3 2.38% (5) NESTLE COMPANY 1,520 (2)(6) 4 1.91% (5) GLENDALE MEMORIAL MEDICAL CENTER 1,500 (2) 5 1.88% (5) DISNEY CONSUMER & INTERACTIVE 1,400 (2) 6 1.76% (5) ACCO ENGINEERED SYSTEMS 1,350 (2) 7 1.70% (5) GLENDALE COMMUNITY COLLEGE 1,169 (2) 8 1.47% (5) COMPENSATION INSURANCE FUND 850 (2) 9 1.07% (5) KABC 800 (2) 10 1.00% (5)

Notes:

(1) Both full-time and hourly employees are included.

(2) Source: 2009-2010 HDL Report, Exception-City of Glendale Data. 2010 City of Glendale Data is from the City Finance Department.

(3) Does not include the individual schools only admin.

(4) City of Glendale Payroll Section, 1,776 full-time employees and 534 hourly employees.

(5)% of total employment is calculated using a baseline of79,628 workers in 2010 (per HDL report).

(6) Includes the three subsidiaries ofNestle in Glendale.

Not covered by independent auditor's report

65 Schedule II GLENDALE REVELOPMENT AGENCY Market Values of Taxable Properties Last Ten Fiscal Years (in thousands)

CENTRAL PROJECT Base year Fiscal ~ear Market value {1972) Net increment Secured Unsecured Total

1973-1974 30,235 24,659 5,576 5,212 363 5,576

2000-2001 1,615,892 85,370 1,530,522 1,376,061 154,462 1,530,522 2001-2002 1,672,263 85,370 1,586,893 1,416,463 170,430 1,586,893 2002-2003 1,693,072 85,370 1,607,702 1,421,359 186,343 1,607,702 2003-2004 1,826,687 85,370 1,741,318 1,556,323 184,995 1,741,318 2004-2005 1,783,855 85,370 1,698,485 1,547,948 150,537 1,698,485 2005-2006 2,102,133 85,370 2,016,763 1,870,512 146,251 2,016,763 2006-2007 2,340,259 85,370 2,254,889 2,122,309 132,580 2,254,889 2007-2008 2,436,359 85,370 2,350,989 2,215,358 135,631 2,350,989 2008-2009 2,818,074 85,370 2,732,704 2,593,325 139,379 2,732,704 2009-2010 2,871,297 85,370 2,785,927 2,618,032 167,896 2,785,927

SAN FERNANDO PROJECT Base year Fiscal ~ear Market value i1993~ Net increment Secured Unsecured Total

1994-1995 803,254 730,208 73,046 88,434 {15,389~ 73,046

2000-2001 1,004,694 730,208 274,486 249,104 25,382 274,486 2001-2002 1,081,647 730,208 351,439 319,079 32,360 351,439 2002-2003 1,118,670 730,208 388,461 350,487 37,974 388,461 2003-2004 1,153,079 730,208 422,870 391,488 31,383 422,870 2004-2005 1,176,255 730,208 446,047 417,272 28,775 446,047 2005-2006 1,196,523 730,208 466,314 456,956 9,358 466,314 2006-2007 1,325,205 730,208 594,996 545,734 49,262 594,996 2007-2008 1,424,628 730,208 694,420 649,292 45,128 694,420 2008-2009 1,540,175 730,208 809,967 743,384 66,583 809,967 2009-2010 1,570,621 730,208 840,413 754,134 86,275 840,410

Source: Taxpayer's Guide compiled under the supervision of the Los Angeles County Auditor-Controller's Office (Tax Division)

66 Schedule 12 GLENDALEREVELOPMENTAGENCY Schedule of Credits

Robert Elliot, CPA General Overview Director of Administrative Services-Finance Letter of Transmittal

PhilipS. Lanzafame General Overview Director of Community Redevelopment and Housing

Lily Fang, Accounting Services Administrator General Overview Management's discussion & analysis Combined Statements Overview Notes to Financial Statements

Zinda Jimenez, Senior Accountant Glendale Redevelopment Agency Rima Dagbashyan, Accountant I Glendale Redevelopment Agency Nan Chao, Accountant I Debt Reporting

Artak Khachatryan, Senior Accountant PeopleSoft Nvision Report Writing

Shu-Jun Li, Senior Accountant Glendale Housing Authority Anne Bockenkamp, Senior Administrative Analyst Low and Moderate Housing

Adriana Escutia, Office Services Supervisor Community Redevelopment & Housing Erica Gharibian Community Redevelopment & Housing Cover Design

Graphics Section Cover Design & Reprographics

67 This page is left blank intentionally.

Glendale

COMPLIANCE SECTION Year Ended - June 30, 2010

ACTIVITIES BY GLENDALE REDEVELOPMENT AGENCY (Not Covered by Independent Auditors' Report)

ACCOMPLISHMENTS-FISCAL YEAR 2009-10

Accomplishment Expenditures Blighting Conditions Corresponding Citywide Strategic FY 09-10 Alleviated Goals

CENTRAL GLENDALE REDEVELOPMENT PROJECT AREA

• Completed entitlement of a 26,000 SF, $0 Defective Design and Sense of Community, Economic four-story mixed use, retail and office Character; Age, Vitality, Community and Planning building at 610 W. Broadway (The Obsolescence, Character Broadway). Deterioration, Dilapidation, Mixed Character or Shifting of Uses • Completed entitlement of a 72,000 SF, 72- $0 Defective Design and Sense of Community, Economic unit mixed use residential and retail Character, Obsolescence, Vitality, Community and Planning building at 300 N. Central Avenue Deterioration, Character (Legendary Tower). Dilapidation, Mixed Character or Shifting of Uses • Completed Stage I Design for a $0 Defective Design and Sense of Community, Economic 163,000SF, mixed use retail and office Character, Obsolescence, Vitality, Community Planning and building at 435 Los Feliz Road (Mitaa Deterioration, Character Plaza), final entitlements underway. Dilapidation, Mixed Character or Shifting of Uses • Approved master plan for 200 S. Brand $96,698 Age, Obsolescence, Arts and Culture, Sense of Boulevard block, bordered by Harvard, Deterioration, Community, Economic Vitality, Colorado and Louise Streets, and began Dilapidation, Mixed Community Services and Facilities design work on a pedestrian passageway, Character or Shifting connecting the Americana at Brand to the Uses civic uses on the east side of Brand Boulevard that include the Central Library, Adult Recreation Center, Central Park, and Museum of Neon Art (MONA) for which the ground lease negotiations and design is currently underway.

• Provided ongoing management and $251,705 Defective Design and Safe Community, Arts and coordination of the Alex Theatre Character; Age, Culture, Sense of Community, operations. Completed seat refurbishment Obsolescence, Community Services and Facilities and began fas;ade restoration work. Deterioration, and Dilapidation • Completed one (1) storefront renovation $42,500 Defective Design and Economic Vitality through the Fas;ade Improvement Grant Character; Age, Program for the Central Redevelopment Obsolescence, Project Area. Deterioration, Dilapidation, Mixed Character or Shifting Uses

69 ACTIVITIES BY GLENDALE REDEVELOPMENT AGENCY (Not Covered by Independent Auditors' Report)

ACCOMPLISHMENTS-FISCAL YEAR 2009-10

Accomplishment Expenditures Blighting Conditions Corresponding Citywide Strategic FY 09-10 Alleviated Goals SAN FERNANDO ROAD CORRIDOR REDEVELOPMENT PROJECT AREA • Completed the final entitlements for the $0 Factors that Prevent or Economic Vitality, Community second phase of The Walt Disney Co. Substantially Hinder the Planning and Character Grand Central Creative Campus (GC3), Economically Viable Use consisting of331,000 SF of office space or Capacity of Buildings and 1,200 parking spaces. or Lots

• Began construction of a 25,000 SF state of $0 Factors that Prevent or Economic Vitality, Community the art, Childcare facility for 250 infants Substantially Hinder the Planning and Character and toddlers, serving the GC3 campus. Economically Viable Use or Capacity of Buildings or Lots • Began construction of a 9,000 SF $0 Factors that Prevent or Economic Vitality, Community simulation building for Disney. Substantially Hinder the Planning and Character Economically Viable Use or Capacity of Buildings or Lots • Completed construction of a 128,000 SF $0 Factors that Prevent or Economic Vitality, Community expansion and addition of 260 parking Substantially Hinder the Planning and Character spaces at the DreamWorks campus. Economically Viable Use or Capacity of Buildings or Lots • Completed four (4) storefront renovation $165,560 Defective Design and Economic Vitality through the Fa9ade Improvement Grant Character; Age, Program for the San Fernando Road Obsolescence, Corridor Redevelopment Project Area. Deterioration, Dilapidation, Mixed Character or Shifting Uses

70 WORK PROGRAM-FISCAL YEAR 2010-11 (Not Covered by the Independent Auditors' Report)

Goals Corresponding Citywide Strategic Goals

CENTRAL GLENDALE REDEVELOPMENT PROJECT AREA

• Complete design and commence construction of pedestrian passageway • Economic Vitality, Sense of from the Central Library & Adult Recreation Center to Brand Community, Parks and Open Boulevard. Space, Community Planning and Character, Community Services and Facility

• Complete construction of the Armenian Society of Los Angeles. • Economic Vitality

• Complete the entitlement approval for Hyatt Place Glendale. • Economic Vitality

• Provide ongoing staff assistance with the management and coordination • Arts and Culture, Sense of of the Alex Theatre operations and capital improvement projects. Community, Community Services and Facilities

• Complete the entitlement approval for the Museum of Neon Art for • Economic Vitality, Community property located at 212-216 S. Brand and complete design and Planning and Character, Arts and commence construction of the new museum facility. Culture, Community Services and Facilities

• Complete construction of mixed use project located at 220 E. Broadway, • Economic Vitality, Housing, with 34 dwelling units with ground floor retail. Community Planning and Character

SAN FERNANDO ROAD CORRIDOR REDEVELOPMENT PROJECT AREA

• Begin construction of the second phase of the Disney (GC3) project. • Economic Vitality, Community Planning and Character

• Begin construction of the ICIS multifamily housing project. • Housing, Sense of Community, Community Planning and Character

• Complete entitlement ofMitaa Plaza located at 435 W. Los Feliz • Economic Vitality, Community Boulevard. Planning and Character

• Complete restoration of Seeley Building and construction of the • Economic Vitality, Housing, Sense associated three live/work units at 1800 S. Brand Boulevard. of Community, Community Planning and Character

• Complete expansion of Gateway Animal Hospital located at 431 W. Los • Economic Vitality, Sense of Feliz Boulevard. Community, Community Planning and Character

71 ACTIVITIES AFFECTING HOUSING AND DISPLACEMENT (Not Covered by Independent Auditors' Report)

ACCOMPLISHMENTS-FISCAL YEAR 2009-10

Note: Activities are funded with Redevelopment Tax-Increment funds set aside for Affordable Housing (Redevelopment Set Aside) and administered by the Housing Authority of the City of Glendale. Projects funded with federal HOME funds through the Housing Authority are noted in accomplishments, but not in Expenditures section.

Accomplishment RDA Population Served Corresponding Expenditures Citywide 2009-10 Strategic Goals INCREASING AFFORDABLE HOME OWNERSHIP OPPORTUNITIES-NEW CONSTRUCTION • Completed: 711-717 N. Kenwood Townhomes $0 11 units Housing Developer: San Gabriel Valley Habitat for Large Low Income Families Economic Vitality Humanity $1.25 million (HOME) • Predevelopment: Doran Gardens $253,000 57 units Housing 331-353 W. Doran Street Homes Large and Small Moderate Economic Vitality Developer: Heritage Housing Partners Income Families Sense of $8.82 million Y2 acre Open Space Amenity Community

• Predevelopment: 624- 630 Geneva Street Homes $10,100 5 units Housing Developer: San Gabriel Valley Habitat for Large Low Income Families Economic Vitality Humanity (ENA) Sense of $2.62 million Community

INCREASING AFFORDABLE HOME OWNERSHIP OPPORTUNITIES- HOMEBUYER ASSISTANCE

• Downpayment and Closing Cost Assistance $63,000 1 household Housing Resale Homes Small Moderate Income Economic Vitality Family

• Homeownership Education Classes $4,800 230 persons Housing Targeted to Low and Moderate Income People Who 7 classes Education, Live and Work in Glendale Knowledge & Literacy

INCREASING AFFORDABLE RENTAL OPPORTUNITIES-NEW CONSTRUCTION

• Completed: Glendale City Lights $100,000 67 units Housing 3673 San Fernando Rd. Large and Small Economic Vitality Developer: Glendale City Lights, LP Low and Very Low Income $8.4 million RDA; $1.4 million HOME Families • Completed: Gardens on Garfield $196,700 29 units Housing 303 E. Garfield Street Large and Small Economic Vitality Developer: Thomas Safran and Associates Low and Very Low Income Sense of $0.5 million RDA; $3.7 million HOME Families Community

72 ACTIVITIES AFFECTING HOUSING AND DISPLACEMENT (Not Covered by Independent Auditors' Report)

ACCOMPLISHMENTS-FISCAL YEAR 2009-10

Accomplishment RDA Population Served Corresponding Expenditures Citywide 2009-10 Strategic Goals INCREASING AFFORDABLE RENTAL OPPORTUNITIES-NEW CONSTRUCTION (CONT.) • Completed: Casa De La Amistad $0 23 units Housing 6200 San Fernando Rd Very Low Income Economic Vitality Developer: Glendale Housing Corp. Developmentally Disabled Sense of $1.3 million RDA; $3.2 million HOME Persons Community

• Completed: Chester Village Apartments $0 4 units Housing 615 Chester Street Low Income Economic Vitality Developer: Salvation Army Small Families $660,000 HOME Formerly Homeless Households • In Construction: Vassar City Lights $8,262,000 70 units Housing 3685 San Fernando Rd Large and Small Economic Vitality Developer: Vassar City Lights, LP Low and Very Low Income $11.7 million RDA; $2.2 million HOME Families • Predevelopment: Central City Lights $1,054,000 35 units Housing 327-331 W Salem Street Large and Small Economic Vitality Developer: Central City Lights, LP Low and Very Low Income $3.9 million RDA; $2.3 million HOME Families (Anticipated)

INCREASING AFFORDABLE RENTAL OPPORTUNITIES- SPECIAL RENTAL ASSISTANCE PROGRAMS

• Special Rental Assistance Provided $282,800 30 households assisted Housing Low Income Family Employment Rental Assistance Low and Very Low Income Economic Vitality Program (LIFERAP) Families Emergency Rental Assistance Program (ERAP) Extremely Low Income Moving Assistance Grant Program Elderly

SUPPORT CONTINUUM OF CARE

• PATH Achieve Glendale Operations $46,600 NIA Housing Nonprofit Organization Support Economic Vitality (RDA Administrative funds)

73 ACTIVITIES AFFECTING HOUSING AND DISPLACEMENT (Not Covered by Independent Auditors' Report)

ACCOMPLISHMENTS-FISCAL YEAR 2009-10

Accomplishment RDA Population Served Corresponding Expenditures Citywide 2009-10 Strategic Goals PRESERVATION OF AFFORDABLE HOUSING- HOUSING REHABILITATION • Completed $341,500 30 SF units Housing Single Family Rehabilitation- Home Ownership 16 MF units Economic Vitality Multi Family Rehabilitation -Renter Very Low, Low and Sense of Housing Accessibility Assistance Grants Moderate Income Community Households • Completed $1,160,000 4,186 residential units Housing Housing Compliance Inspections Program compliance inspections Sense of Systematic Rental Housing Inspection Program 480 buildings - habitability Community cases resolved as compliant Housing Security Program 4 classes - Property Management Certification 5,881 residential units systematic inspections 433 buildings- deficiencies resolved Tenant/Landlord educational brochure updated - 4 languages - Korean, Armenian, Spanish and English Target Low and Moderate Income Neighborhoods

RESIDENTIAL DISPLACEMENTS, RELOCATIONS, OR DEMOLITIONS IN 2009-10- None

ADMINISTRATION PROGRAMS

• Overall Operations of Housing Development & $1,293,200 Program Delivery: see Housing Preservation Programs above. Trust in • Monitoring of Affordable Housing Covenants Residential units monitored Government annually: • Planning and Reporting per State, Federal and other funder requirements. 773 Rental New Construction • Professional Service Agreements - Legal, Financial 298 Single and MF Rehab 157 Homeownership Resale/NC

74 ACTIVITIES AFFECTING HOUSING AND DISPLACEMENT (Not Covered by Independent Auditors' Report)

WORK PROGRAM-FISCAL YEAR 2010-11

INCREASE AFFORDABLE OWNERSHIP OPPORTUNITIES Corresponding Goals Population To Be Served Citywide Strategic Goals • Start Construction: 624-630 Geneva Street 5 units Housing Homes Large Low Income Families Economic Vitality Developer: San Gabriel Valley Habitat for Sense of Community Humanity (ENA) • Start Construction: Doran Gardens 57 units Housing 331-353 W. Doran Street Homes Large and Small Moderate Income Families Economic Vitality Developer: Heritage Housing Partners Yz acre Open Space Amenity Sense of Community Provide Down Payment and Closing Cost 1 household Housing Assistance Loans for Resale Homes Small Moderate Income Families Economic Vitality • Provide Homeownership Education Classes 190 persons Housing Targeted to Low and Moderate Income People 6 classes Economic Vitality Who Live and Work in Glendale Target Low and Moderate Income Families Education, Knowledge & Literacy INCREASE AFFORDABLE RENTAL OPPORTUNITIES • Complete: Vassar City Lights 70 units Housing 3685 San Fernando Rd Large and Small Economic Vitality Developer: Vassar City Lights, LP Low and Very Low Income Families • Provide Special Rental Assistance 30 households assisted Housing Low Income Family Employment Rental Low and Very Low Income Families Economic Vitality Assistance Program (LIFERAP) Extremely Low Income Elderly Emergency Rental Assistance Program (ERAP) Moving Assistance Grant Program Veterans Rental Assistance Program • Design and Development Concepts: To be determined Housing Fifth & Sonora Site Economic Vitality Sense of Community SUPPORT GLENDALE CONTINUUM OF CARE • Support PATH Achieve Glendale Operations N/A Housing Nonprofit Organization Support Economic Vitality (RDA Administration Program funds)

75 ACTIVITIES AFFECTING HOUSING AND DISPLACEMENT (Not Covered by Independent Auditors' Report)

WORK PROGRAM-FISCAL YEAR 2010-11

Corresponding Goals Population To Be Served Citywide Strategic Goals PRESERVATION OF AFFORDABLE HOUSING- HOUSING REHABILITATION • Provide Housing Rehabilitation Grants and 30 SF units Housing Loans; 0 MF units Economic Vitality Housing Accessibility Assistance Grants Very Low, Low and Moderate Income Sense of Community Households Families with Physically Disabled Person • Provide 4,100 residential units compliance inspections Housing Housing Compliance Inspections Program 400 building habitability cases resolved as Sense of Community Systematic Rental Housing Inspection Program compliant Housing Security Program 4 classes - Property Management Certification 5,000 residential units systematic inspections 400 buildings - deficiencies resolved Tenant/Landlord educational brochure updated - 4 languages - Korean, Armenian, Spanish and English Target Low & Moderate Income Neighborhoods

RESIDENTIAL DISPLACEMENTS, RELOCATIONS, OR DEMOLITIONS IN 2010-11-None anticipated.

ADMINISTRATION PROGRAM • Overall Program Operations and Delivery Program Delivery: see above. Housing • Monitoring of Affordable Housing Covenants Residential units monitored annually: Trust in Government • Planning and Reporting per State, Federal and 773 Rental New Construction other funder requirements. 298 Single and MF Rehab • Professional Service Agreements -legal and 157 Homeownership-Resale/NC financial

76 [THIS PAGE INTENTIONALLY LEFT BLANK] APPENDIX D FORM OF CONTINUING DISCLOSURE CERTIFICATE

This Continuing Disclosure Certificate (the “Disclosure Certificate”) is executed and delivered by the Glendale Redevelopment Agency (the “Agency”) in connection with the issuance by the Agency of its $50,000,000 Glendale Redevelopment Agency, Central Glendale Redevelopment Project 2011 Subordinate Taxable Tax Allocation Bonds (the “Bonds”). The Bonds are being issued pursuant to an Indenture of Trust dated as of April 1, 2011 (the “Indenture”), between the Agency and U.S. Bank National Association as trustee (the “Trustee”). The Agency hereby covenants and agrees as follows:

Section 1. Purpose of the Disclosure Certificate. This Disclosure Certificate is being executed and delivered by the Agency for the benefit of the holders and beneficial owners of the Bonds and in order to assist the Participating Underwriters in complying with S.E.C. Rule 15c2-12(b)(5).

Section 2. Definitions. In addition to the definitions set forth in the Indenture, which apply to any capitalized term used in this Disclosure Certificate unless otherwise defined in this Section, the following capitalized terms shall have the following meanings:

“Annual Report” means any Annual Report provided by the Agency pursuant to, and as described in, Sections 3 and 4.

“Annual Report Date” means the date that is nine months after the end of the Agency’s Fiscal Year (currently March 31 based on the Agency’s Fiscal Year end of June 30).

“Dissemination Agent” means the Agency, or any successor Dissemination Agent designated in writing by the Agency and which has filed with the Agency a written acceptance of such designation.

“Listed Events” means any of the events listed in Section 5(a) or 5(b).

“MSRB” means the Municipal Securities Rulemaking Board, which has been designated by the Securities and Exchange Commission as the sole repository of disclosure information for purposes of the Rule.

“Official Statement” means the final Official Statement dated April 7, 2011, relating to the Bonds.

“Participating Underwriter” means any of the original underwriters of the Bonds required to comply with the Rule in connection with offering the Bonds.

“Rule” means 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.

D-1 Section 3. Provision of Annual Reports.

(a) The Agency shall, or shall cause the Dissemination Agent (if other than the Agency) to, not later than the Annual Report Date, commencing by March 31, 2012 with the report for the 2010/11 Fiscal Year, provide to the MSRB, in an electronic format as prescribed by the MSRB, an Annual Report which is consistent with the requirements of Section 4. Not later than five Business Days prior to the Annual Report Date, the Agency shall provide the Annual Report to the Dissemination Agent (if other than the Agency). If by five Business Days prior to the Annual Report Date the Dissemination Agent (if other than the Agency) has not received a copy of the Annual Report, the Dissemination Agent shall contact the Agency to determine if the Agency is in compliance with the previous sentence. The Annual Report may be submitted as a single document or as separate documents comprising a package, and may include by reference other information as provided in Section 4; provided that the audited financial statements of the Agency may be submitted separately from the balance of the Annual Report, and later than the Annual Report Date, if not available by that date. If the Agency’s fiscal year changes, it shall give notice of such change in the same manner as for a Listed Event under Section 5(b).

The Agency shall provide a written certification with each Annual Report furnished to the Dissemination Agent to the effect that such Annual Report constitutes the Annual Report required to be furnished by the Agency hereunder.

(b) If the Agency does not provide (or cause the Dissemination Agent to provide) an Annual Report by the Annual Report Date, the Agency shall provide (or cause the Dissemination Agent to provide) to the MSRB, in an electronic format as prescribed by the MSRB, a notice in substantially the form attached as Exhibit A, with a copy to the Trustee.

(c) With respect to each Annual Report, the Dissemination Agent shall:

(i) determine each year prior to the Annual Report Date the then-applicable rules and electronic format prescribed by the MSRB for the filing of annual continuing disclosure reports; and

(ii) if the Dissemination Agent is other than the Agency, file a report with the Agency, with a copy to the Trustee, certifying that the Annual Report has been provided under this Disclosure Certificate, and stating the date it was provided.

Section 4. Content of Annual Reports. The Agency’s Annual Report shall contain or incorporate by reference the following:

(a) The Agency’s audited financial statements prepared in accordance with generally accepted accounting principles as promulgated to apply to governmental entities from time to time by the Governmental Accounting Standards Board. If the Agency’s audited financial statements are not available by the Annual Report Date, the Annual Report shall contain unaudited financial statements in a format similar to the financial statements contained in the final Official Statement, and the audited financial statements shall be filed in the same manner as the Annual Report when they become available.

(b) information showing the total secured and unsecured assessed valuation of taxable properties in the Central Glendale Redevelopment Project (the “Project Area”) during the most recent completed fiscal year;

(c) information showing the total amount of tax increment revenues derived from the Project Area during the most recent completed fiscal year;

D-2 (d) the total amount by which pledged tax increment revenues derived from the Project Area during the most recent completed fiscal year provided coverage for annual debt service on the Senior Lien Bonds, the Bonds and all obligations issued on a parity with the Bonds;

(e) information showing the top 10 taxpayers in the Project Area during the most recent completed fiscal year, and the total assessed valuation represented thereby and the percent of the total taxable assessed value of all properties in the Project Area; and

(f) information on appeals by top ten taxpayers in the Project Area, to the extent information regarding such appeals is available to the Issuer from appropriate officials of the County of Los Angeles.

In addition to any of the information expressly required to be provided under paragraphs (a) and (b) of this Section, the Agency shall provide such further information, if any, as may be necessary to make the specifically required statements, in the light of the circumstances under which they are made, not misleading.

Any or all of the items listed above may be included by specific reference to other documents, including official statements of debt issues of the Agency or related public entities, which are available to the public on the MSRB’s Internet web site or filed with the Securities and Exchange Commission. If the document included by reference is a final official statement, it must be available from the Municipal Securities Rulemaking Board. The Agency shall clearly identify each such other document so included by reference.

Section 5. Reporting of Listed Events.

(a) Reportable Events. The Agency shall, or shall cause the Dissemination (if not the Agency) to, give notice of the occurrence of any of the following events with respect to the Bonds:

(1) Principal and interest payment delinquencies.

(2) Unscheduled draws on debt service reserves reflecting financial difficulties.

(3) Unscheduled draws on credit enhancements reflecting financial difficulties.

(4) Substitution of credit or liquidity providers, or their failure to perform.

(5) Defeasances.

(6) Rating changes.

(7) Tender offers.

(8) Bankruptcy, insolvency, receivership or similar event of the obligated person.

(9) Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701- TEB) or other material notices or determinations with respect to the tax status of the security, or other material events affecting the tax status of the security.

D-3 (b) Material Reportable Events. The Agency shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Bonds, if material:

(1) Non-payment related defaults.

(2) Modifications to rights of security holders.

(3) Bond calls.

(4) The release, substitution, or sale of property securing repayment of the securities.

(5) The consummation of a merger, consolidation, or acquisition involving an obligated person or the sale of all or substantially all of the assets of the obligated person, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms.

(6) Appointment of a successor or additional trustee, or the change of name of a trustee.

(c) Time to Disclose. Whenever the Agency obtains knowledge of the occurrence of a Listed Event, the Agency shall, or shall cause the Dissemination Agent (if not the Agency) to, file a notice of such occurrence with EMMA, in an electronic format as prescribed by the MSRB, in a timely manner not in excess of 10 business days after the occurrence of the Listed Event. Notwithstanding the foregoing, notice of Listed Events described in subsections (a)(5) and (b)(3) above need not be given under this subsection any earlier than the notice (if any) of the underlying event is given to owners of affected Bonds under the Indenture.

Section 6. Identifying Information for Filings with the MSRB. All documents provided to the MSRB under this Disclosure Certificate shall be accompanied by identifying information as prescribed by the MSRB.

Section 7. Termination of Reporting Obligation. The Agency’s obligations under this Disclosure Certificate shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Bonds. If such termination occurs prior to the final maturity of the Bonds, the Agency shall give notice of such termination in the same manner as for a Listed Event under Section 5(c.)

Section 8. Dissemination Agent. The Agency may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Certificate, and may discharge any such Dissemination Agent, with or without appointing a successor Dissemination Agent. The initial Dissemination Agent shall be the Agency. The Dissemination Agent shall have no duty or obligation to review any information provided to it by the Agency and shall not be deemed to be acting in any fiduciary capacity for the Agency, the Bondholders, or any other party.

Section 9. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Certificate, the Agency may amend this Disclosure Certificate, and any provision of this Disclosure Certificate may be waived, provided that the following conditions are satisfied (provided however, no amendment increasing or affecting the obligations or duties of the Dissemination Agent shall be made without the consent of the Dissemination Agent):

(a) if the amendment or waiver relates to the provisions of Sections 3(a), 4 or 5(a), it may only be made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature, or status of an obligated person with respect to the Bonds, or type of business conducted;

D-4 (b) the undertakings herein, as proposed to be amended or waived, would, in the opinion of nationally recognized bond counsel, have complied with the requirements of the Rule at the time of the primary offering of the Bonds, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and

(c) the proposed amendment or waiver either (i) is approved by holders of the Bonds in the manner provided in the Indenture for amendments to the Indenture with the consent of holders, or (ii) does not, in the opinion of nationally recognized bond counsel, materially impair the interests of the holders or beneficial owners of the Bonds.

If the annual financial information or operating data to be provided in the Annual Report is amended pursuant to the provisions hereof, the first annual financial information filed pursuant hereto containing the amended operating data or financial information shall explain, in narrative form, the reasons for the amendment and the impact of the change in the type of operating data or financial information being provided.

If an amendment is made to the undertaking specifying the accounting principles to be followed in preparing financial statements, the annual financial information for the year in which the change is made shall present a comparison between the financial statements or information prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. The comparison shall include a qualitative discussion of the differences in the accounting principles and the impact of the change in the accounting principles on the presentation of the financial information, in order to provide information to investors to enable them to evaluate the ability of the Agency to meet its obligations. To the extent reasonably feasible, the comparison shall be quantitative. A notice of the change in the accounting principles shall be sent to the Repositories in the same manner as for a Listed Event under Section 5(c.).

Section 10. Additional Information. Nothing in this Disclosure Certificate shall be deemed to prevent the Agency from disseminating any other information, using the means of dissemination set forth in this Disclosure Certificate or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Certificate. If the Agency chooses to include any information in any Annual Report or notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Certificate, the Agency shall have no obligation under this Disclosure Certificate to update such information or include it in any future Annual Report or notice of occurrence of a Listed Event.

Section 11. Default. In the event of a failure of the Agency to comply with any provision of this Disclosure Certificate, any Participating Underwriter or any holder or beneficial owner of the Bonds may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the Agency to comply with its obligations under this Disclosure Certificate. A default under this Disclosure Certificate shall not be deemed an Event of Default under the Indenture, and the sole remedy under this Disclosure Certificate in the event of any failure of the Agency to comply with this Disclosure Certificate shall be an action to compel performance.

Section 12. Duties, Immunities and Liabilities of Dissemination Agent. The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Certificate, and the Agency agrees to indemnify and save the Dissemination Agent (if other than the Agency), its officers, directors, employees and agents, harmless against any loss, expense and liabilities which it may incur arising out of or in the exercise or performance of its powers and duties hereunder, including the costs and expenses (including attorneys fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent’s negligence or willful misconduct. The obligations of the Agency under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Bonds.

D-5 Section 13. Counterpart. This Disclosure Certificate may be executed in counterpart, each of which shall constitute an original signature page thereof.

Section 14. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the Agency, the Dissemination Agent, any Participating Underwriter and holders and beneficial owners from time to time of the Bonds, and shall create no rights in any other person or entity.

Date: April 12, 2011 GLENDALE REDEVELOPMENT AGENCY

By:

Executive Director

D-6 EXHIBIT A

NOTICE OF FAILURE TO FILE ANNUAL REPORT

Name of Issuer: Glendale Redevelopment Agency

Name of Bond Issue: Glendale Redevelopment Agency Central Glendale Redevelopment Project 2011 Subordinate Taxable Tax Allocation Bonds

Date of Issuance: April 12, 2011

NOTICE IS HEREBY GIVEN that the Glendale Redevelopment Agency (the “Agency”) has not provided an Annual Report with respect to the above-named Bonds as required by the Continuing Disclosure Certificate, dated April 12, 2011. The Agency anticipates that the Annual Report will be filed by ______.

Dated: GLENDALE REDEVELOPMENT AGENCY

By:

Title

cc: Trustee

D-7 [THIS PAGE INTENTIONALLY LEFT BLANK] APPENDIX E

PROPOSED FORM OF BOND COUNSEL OPINION

April __, 2011

Glendale Redevelopment Agency 633 East Broadway, Room 201 Glendale, California 91206-4387

OPINION: $50,000,000 Glendale Redevelopment Agency Central Glendale Redevelopment Project 2011 Subordinate Taxable Tax Allocation Bonds

Members of the Agency:

We have acted as bond counsel to the Glendale Redevelopment Agency (the “Agency”) in connection with the issuance by the Agency of its $50,000,000 aggregate principal amount of Central Glendale Redevelopment Project 2011 Subordinate Taxable Tax Allocation Bonds (the “Bonds”), under the provisions of Part 1 of Division 24 of the Health and Safety Code of the State of California (the “Bond Law”), and under an Indenture of Trust dated as of April 1, 2011 (the “Indenture”), between the Agency and U.S. Bank National Association, as trustee.

We have examined the law and such certified proceedings and other papers as we deem necessary to render this opinion. As to questions of fact material to our opinion, we have relied upon representations of the Agency contained in the Indenture and in 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, as follows:

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

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

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

E-1

Glendale Redevelopment Agency Central Glendale Redevelopment Project 2011 Subordinate Taxable Tax Allocation Bonds April __, 2011 Page 2

4. The Bonds have been duly authorized, executed and issued 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 excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations. The opinions set forth in the preceding sentence are subject to the condition that the Agency comply with all requirements of the Internal Revenue Code of 1986 that must be satisfied subsequent to the issuance of the Bonds in order that interest thereon be, or continue to be, excluded from gross income for federal income tax purposes. The Agency has covenanted in the Indenture to comply with each such requirement. Failure to comply with certain of such requirements may cause the inclusion of interest on the Bonds in gross income for federal income tax purposes to be retroactive to the date of issuance of the Bonds. We express no opinion regarding other federal tax consequences arising with respect to the Bonds.

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

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

To ensure compliance with requirements imposed by the Internal Revenue Service, we inform you that any U.S. federal tax advice contained herein is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any transaction or matter addressed herein.

Respectfully submitted,

A Professional Law Corporation

E-2

APPENDIX F DTC AND THE BOOK-ENTRY-ONLY SYSTEM

The following description of the Depository Trust Company (“DTC”), the procedures and record keeping with respect to beneficial ownership interests in the Bonds, payment of principal, interest and other payments on the Bonds to DTC Participants or Beneficial Owners, confirmation and transfer of beneficial ownership interest in the Bonds and other related transactions by and between DTC, the DTC Participants and the Beneficial Owners is based solely on information provided by DTC. Accordingly, no representations can be made concerning these matters and neither the DTC Participants nor the Beneficial Owners should rely on the foregoing information with respect to such matters, but should instead confirm the same with DTC or the DTC Participants, as the case may be.

Neither the issuer of the Bonds (the “Issuer”) nor the trustee, fiscal agent or paying agent appointed with respect to the Bonds (the “Agent”) take any responsibility for the information contained in this Appendix.

No assurances can be given that DTC, DTC Participants or Indirect Participants will distribute to the Beneficial Owners (a) payments of interest, principal or premium, if any, with respect to the Bonds, (b) certificates representing ownership interest in or other confirmation or ownership interest in the Bonds, or (c) redemption or other notices sent to DTC or Cede & Co., its nominee, as the registered owner of the Bonds, or that they will so do on a timely basis, or that DTC, DTC Participants or DTC Indirect Participants will act in the manner described in this Appendix. The current “Rules” applicable to DTC are on file with the Securities and Exchange Commission and the current “Procedures” of DTC to be followed in dealing with DTC Participants are on file with DTC.

1. The Depository Trust Company (“DTC”), New York, NY, will act as securities depository for the securities (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 issue of the Securities, each in the aggregate principal amount of such issue, and will be deposited with DTC. If, however, the aggregate principal amount of any issue exceeds $500 million, one certificate will be issued with respect to each $500 million of principal amount, and an additional certificate will be issued with respect to any remaining principal amount of such issue.

2. DTC, the world’s largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book- entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect

F-1 Participants”). DTC has Standard & Poor’s highest rating: AAA. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com and www.dtc.org. The information contained on these Internet sites is not incorporated herein by reference.

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.

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. Beneficial Owners of Securities may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Securities, such as redemptions, tenders, defaults, and proposed amendments to the Security documents. For example, Beneficial Owners of Securities may wish to ascertain that the nominee holding the Securities for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them.

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 MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to 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 Issuer or Agent, on payable date in accordance with their respective holdings shown on DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in

F-2 bearer form or registered in “street name,” and will be the responsibility of such Participant and not of DTC, Agent, or 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 Issuer or Agent, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants.

9. DTC may discontinue providing its services as depository with respect to the Securities at any time by giving reasonable notice to Issuer or Agent. Under such circumstances, in the event that a successor depository is not obtained, Security certificates are required to be printed and delivered.

10. Issuer may decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor securities depository). In that event, Security certificates will be printed and delivered to DTC.

11. The information in this section concerning DTC and DTC’s book-entry system has been obtained from sources that Issuer believes to be reliable, but Issuer takes no responsibility for the accuracy thereof.

F-3