Stone & Youngberg

NEW ISSUES- FULL HOOK-ENTRY ONLY RA TINGS: (see "Ratings" herein)

In the opinion of Kutak Rock LLP, Bond Counsel, interest on the Series J-Taxable Bond;· and the Series K-Taxable Bonds is includoble, under existing statutes and court decisions, in the gross income of the recipients thereof.for federal income ta.., purposes pursuant to Section 103 of the internal Revenue Code of l 986, as amended (the "Code"). In the opinion ofBond Counsel, under existing laws, regulations, rulings andjudicial decisions and assuming the accuracy ofcertain representations and continuing compliance with certain covenants, interest on the Series J-Tax Exempl Bond;· is excluded from gross income for federal income tax purposes and is not a specific preference item for purposes of the federal alternative minimum tax. Bond Counsel is of the opinion that interest on the Bond~ is exempt from the State of California personal income taxes. Bond Counsel expresses no opinion regarding other tax consequences related to the ownership or disposition of, or accrual or receipt ofinterest on, the Bonds. For a more complete description see "TAX MATTERS" herein.

COMMUNITY REDEVELOPMENT FINANCING AUTHORITY OF THE COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF LOS ANGELES, CALIFORNIA $ POOLED FINANCING BONDS CRAILA ..... ,.... $17,970,000 $4,500,000 -- SERIES J-TAXABLE SERIES J-TAX EXEMPT (Council District 9, Pacoima!Panorama City and Rcseda/Canoga Park (Reseda/Canoga Park Project) Projects) $4,645~000 SERIES K-TAXABLE (Laurel Canyon and East Hollywood/Beverly-Normandie Projects)

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

The Community Redevelopment Financing Authority of The Community Redevelopment Agency of the City of Los Angeles, California is issuing three series of its Pooled Financing Bonds: Series J-Taxable (Council District 9, Pacoima/Panorama City and Reseda/Canoga Park Projects) (the "Series J-Taxable Bonds"), Series J-Tax Exempt (Reseda/Canoga Park Project) (the "Series J-Tax Exempt Bonds" and together with the Series J-Taxablc Bonds, the ''Series J Bonds"), and the Series KhTaxable (Laurel Canyon and East Hollywood/Beverly-Normandie Projects) (the "Series K Bonds,'' and together with the Series J Bonds, the "Bonds"). The Bonds are being issued pursuant to the Constitution and the laws of the State of California (the "State"), including the joint exercise of powers act constituting Articles I through 4, commencing with Section 6500 of Chapter 5, Division 7, Title J of the Ca1ifomia Government Code, and for the Series J Bonds, an Indenture of Trust, dated as of Septen1ber 1, 2003 (the "Series J Indenture"), by and between The Community Redevelopment Financing Authority of The Community Redevelopment Agency of the City of Los Angeles, California (the "Authority") and U.S. Bank National Association, as trustee (the "Trustee"), and for the Series K Bonds, an Indenture of Trust, dated as of September I, 2003 (the "Series K Indenture'' and coJlectively with the Series J Indenture, the "Indentures"), by and between the Authority and the Trustee. Proceeds of the Bonds will-be used to make loans (the "Loans") to The Community Redevelopment Agency of the City of Los Angeles, California (the "Agency") pursuant to five separate loan agreements, each dated as of September 1, 2003 (the "Loan Agreements"), and each by and among the Authority, the Tn1stee and the Agency. The Agency's obligations under each Loan Agreement are secured by a pledge of and lien upon certain separate Tax Revenues to be received by the Agency from the respective project areas (defined and described herein and co11ectively referred to herein as the "Project Areas"). See "SECURITY FOR THE BONDS" herein, and APPENDIX A ·"FISCAL CONSULTANT'S REPORT" hereto. The Agency is entering into the Loan Agreements to (i) separately fund and, as applicable, refund redevelopment in each Project Area, (ii) establish a separate reserve account under each L-Oan Agreement, and (iii) pay costs of issuance related to the Bonds and the making of the Loans. See "PLAN OF FINANCE" herein. All capitalized tenns not defined on this cover page shall have the meanings ascribed to them in this Official Statement.

Interest on the Bonds will be payable semiannually on September 1 and March l of each year, commencing on March I, 2004. Principal of the Bonds is payable in the amounts and on the dates described on the inside cover page, subject to prior optional and sinking fund redemption as described herein. See "THE BONDS-Optional Redemption" and "-Mandatory Sinking Fund Redemption" herein. The Bonds will be issued in book-entry fonn, without coupons, and will be initially registered in the name of Cede& Co., as nominee of The Depository Trust Company. New York. New York ("DTC"). The Bonds will be issued in denominations of $5,000 or any integral multiple thereof. Purchasers of Bonds wi11 not receive physical certificates from the Authority, the Agency or the Trustee representing their interests in the Bonds purchased. DTC will act as securities depository for the Bonds. The principal of and interest on the Bonds ·will be payable directly to DTC by the Trustee from the funds specified herein. Upon receipt of payments of such principal and interest, DTC is obligated to remit such principal and interest to the participants in OTC for subsequent disbursement to the beneficial owners of the Bonds.

The scheduled payments of principal of and interest on each series of the Series J Bonds will be guaranteed under a bond insurance policy (the "Policy") to be issued concurrently with the delivery of the Series J Bonds by XL Capital Assurance Inc. (the "Insurer"). See "DESCRIPTION OF THE INSURER" herein and APPENDIX G - "SPECIMEN BOND INSURANCE POLICY" hereto. }!~CAPITAL ASSURANCE

THE SCHEDULED PAYMENTS OF PRINCIPAL OF AND INTEREST ON THE SERIES K BONDS ARE NOT GUARANTEED UNDER TllE POLICY.

Neither the Bonds nor the Loans are a debt of the City of Los Angeles. the State of California or any of its political subdivisions (other than the Authority and the Agency to the extent set forth herein), and neither the Authority nor the Agency has taxing power. Principal of and interest on the Bonds and the Loans are payable solely from and s~ured separately by Tax Revenues (as described herein) allocated to the Agency from the applicable Project Areas described herein and from certain limited funds held by the Trustee under the applicable Loan Agreement. Tax Revenues from one Project Area are not pledged to repay Loans from other Project Areas, so a default under a Series J Loan Agreement may cause a default on the Series J-Taxable Bonds, and a default under a Series K Loan Agreement may cause a default on the Series K Bonds. The Bonds do not constitute an indebtedness of the Agency or the Authority within the meaning of any constitutional or statutory debt limitation or restriction.

This cover page contains certain infonnation for quick reference only, and is not intended as a summary of this financing. Investors must read the entire Official Statement, including the section on Bondowners' Risks, to obtain information essential to the making of an informed investment decision.

The Bonds are offered, when, as and !f issued and accepted by the Underwriters, subject to an opinion as to legality of the Bonds by Kutak Rock, LLP, Pasadena, California, Bond Counsel. Certain legal marrers wilf be passed upon for the Authority and the Agency by the City Allorne:v of the City of Los Angeles, California and by The Law Offices of Afarilyn L. Garcia, as Disclosure Counsel. It is anticipated that the Bonds wil! be available for delivery Jo DTC in book-enil}' form in New York, New York on or about September 17, 2003. Stone & Youngberg LLC Date: August 26, 2003 MATURITY SCHEDULES CO'.\fMUNITY REDEVELOPME'.'IT fINA'.'ICI'.'IG AUTHORITY Of THE COMMUNITY REDEVELOPMENT AGENCY Of THE CITY Of LOS ANGELES, CALIFORNIA POOLED FINANCING BONDS

(Base CUSIP Number: 54438E)

$17,970,000 SERIES J.TAXABLE (Council District 9l PacoimafPanorama City and Reseda/Canoga Park Projects)

Sl,305,000 4.18% Term Bonds due September 1, 2008: Yield-4.18% CUS!P: EV6 Sl,620,000 5.30% Tenn Bonds due September 1, 2013: Yield- 5.30% CUSIP: EW4 SS,050,000 6.23% Term Bonds due September 1, 2023: Yield - 6.23% CUS!P: EX2 S9,995,000 6.38% Term Bonds due September l, 2033: Yield - 6.38% CUSlP: EYO

$4,500,000 SERIES J-TAX EXEMPT (Reseda/Canoga Park Project)

$1,655,000 Serial Bonds

Maturi:,t Date Principal Interest (Se11tem er I) Amount Rate Price CUSIP

2004 S 90,000 2.00% l.05% EZ7 2005 85,000 2.00 l.45 FA! 2006 90,000 2.50 2.05 FB9 2007 85,000 3.50 2.60 FC7 2008 90,000 3.50 2.95 FD5 2009 85,000 3.50 3.30 FE3 2010 95,000 3.75 3.70 FFO 2011 100,000 4.00 3.95 FG8 2012 100,000 4.15 4.15 FH6 2013 100,000 4.25 4.30 FJ2 2014 I 10,000 4.25 4.40 FK9 2015 I 15,000 4.50 4.55 FL? 2016 120,000 4.50 4.65 FM5 2017 125,000 4.60 4.75 FN3 20!8 130,000 5.00 4.85 FPS 20!9 135,000 5.00 4.95 FQ6

$2,845,000 Tenn Bonds

$615,000 5.00% Term Bonds due September 1, 2023: Yield- 5.15% CUS!P: FR4 52,230.000 5.00% Term Bonds due September I, 2033: Yield- 5.25% CUSIP: FS2

$4,645,000 SERIES K·TAXABLE (Laurel Canyon and East Holly'\\'Ood!Beverly-Normandie Projects)

5280,000 6.98% Term Bonds due September l, 2008: Yield - 6.98% CUSIP: FTO $370,000 8.00% Term Bonds due September I, 2013: Yield-8.00% CUS!P: F\J7 Sl,430,000 9.18% Term Bonds due September 1, 2023: Yield- 9.18% C\JIP: FV5 S2,565,000 9.38% Tenn Bonds due September I, 2033: Yield -- 9.38% CUSIP: FW3 CITY OF LOS ANGELES

MAYOR James K. Hahn

CITY COUNCIL OF THE CITY OF LOS ANGELES Tony Cardenas Martin Ludlow EdP.Reyes Eric Garcetti Cindy Miscikowski Greig Smith Wendy Greuel Alex Padilla Antonio Villaraigosa Janice Hahn Bernard C. Parks Jack Weiss Tom La Bonge Jan Perry Dennis P. Zine CITY OFFICIALS Rockard J. Delgadillo, City Attorney Laura N. Chick, City Controller William T Fujioka, City Administrative Officer Antoinette Chistovale, Director, Office of Finance Joya C. DeFoor, City Treasurer J. Michael Carey, City Clerk

THE COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF LOS ANGELES, CALIFORNIA Board of Commissioners

THE COMMUNITY REDEVELOPMENT FINANCING AUTHORITY OF THE COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF LOS ANGELES, CALIFORNIA Board of Directors David Farrar, Chainnan ShuK. Woo, Vice Chairman Marva Smith Battle-Bey, Treasurer Madeline Janis-Aparicio Douglas R. Ring John A. Ornelas John Schafer Agency Management Robert R. Ovrom, Chief Executive Officer Richard L. Benbow, Chief Deputy Administrator Kenneth L. Clark, Deputy Administrator (Organizational Support Services) John McCoy, Deputy Administrator (Conununity Operations II) Edward Saulet, Deputy Administrator (Conununity Operations III) Donald R. Spivack, Deputy Administrator (Conununity Operations I) Randall K. Wilkins, Chief Financial Officer Raymond L. Fors, Finance Director Lillian Burkenheim, Project Manager (Laurel Canyon) Dick D'Amico, Project Manager (Pacoima/Panorama City) Donna De Bruhl-Hemer, Project Manager (East Hollywood/Beverly-Normandie) Leslie Lambert, Project Manager, (Reseda/Canoga Park)

SPECIAL SERVICES Bond Counsel Disclosure Counsel Agency General Counsel Kutak Rock LLP The Law Offices of Rockard J. Delgadillo, City Attorney Pasadena, California Marilyn L. Garcia Los Angeles, California Los Angeles, California Fiscal Consultant Fiscal Agent and Trustee Katz Hollis, Inc. U.S. Bank National Association Los Angeles, California Los Angeles, California ,-.:1

CRA/LA Projects

1. Reseda I Canoga Park (CD 3)

2. Pacoima/ Panorama City (CD 7)

3. Laurel Canyon Commercial Corridor {CD 2)

4. East Hollywood I Beverly Normandie (CD 4 & 13)

5. Council District 9 Corridors South of Santa Monica Frwy. (CD 9)

@ NORTH No dealer, broker, salesperson or other person has been authorized by the Agency or the Authority to give any infonnatiou or to make any representations other than those contained herein and, if given or made, such other infonnation or representation must not be relied upon as having been authorized by the Agency or the Authority. This Official Statement is not to be construed as a contract with the purchasers of the Bonds and 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.

The infonnation set forth herein is furnished by the Agency and the Authority and by other sources which are believed to be reliable. The Underwriters have provided the following sentence for inclusion in this Official Statement. The Underwriters have reviewed the infonnation in this Official Statement in accordance with, and as a part of, their responsibilities to investors under the federal securities laws as applied to the facts and circumstances, of this transaction, but the Underwriters do not guarantee the accuracy or completeness of such infonnation. Statements contained in the Official Statement which involves estimates, forecasts, or other matters of opinion, whether or not expressly so described herein, are intended solely as such and are not to be construed as representations of fact. Further, the infonnation and expressions of opinion herein are subject to change without notice and neither the deliveiy 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 parties described herein since the date hereof.

Certain statements included or incorporated by reference in the following infonnation constitute "forward-looking statements". Such statements are generally identifiable by the tenninology used such as "plan," "expect," "estimate," "budget" or other similar words. The achievement of certain results or other expectations contained in such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause actual results, perfonnance or achievements described to be materially different from any future results, perfonnance or achievements expressed or implied by such forward-looking statements. No assurance is given that actual results will meet the Agency's forecasts in any way, regardless of the level of optimism communicated in the infonnation. Except as set forth in the continuing disclosure agreement (see APPENDIX F hereto), neither the Agency nor the Authority plans to issue any updates or revisions to those forward-looking statements if or when its expectations, or events, conditions or circumstances on which such statements are based occur.

In connection with this offering, the Underwriters may over allot or effect transactions which stabilize or maintain the market price of the Bonds at a level above that which might otherwise prevail in the open market. Such stabilizing, if commenced, may be discontinned at any time. The Underwriters may offer and sell the Bonds to certain dealers and dealer banks and banks acting as agent at prices lower than the public offering prices stated on the cover page hereof and such public offering prices may be changed from time to time by the Underwriters.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or detennined if this Official Statement is truthful or complete. Any representation to the contraiy is a criminal offense. (THIS PAGE INTENTIONALLY LEFT BLANK) TABLE OF CONTENTS

INTRODUCTION ...... 1

ESTIMATED SOURCES AND USES OF FUNDS ...... 4

THE BONDS ...... 6 GENERAL ...... 6 REDEMPTION ...... 6 Optional Redemption for the Bonds ...... 6 Mandatory Sinking Fund Redemption ...... 6 NoticeofRedemption ...... 9 Effect ofRedemption ...... 10 SECURITY FOR THE BONDS ...... 10 GENERAL ...... 10 PLEDGE AND ALLOCATION OF TAXES ...... 11 LOANS PAYABLE FROM TAX REvENuES ...... 12 PAYMENT OF TIIB BONDS ...... 13 RESERVE ACCOUNTS ...... 13 ISSUANCE OF PARITY OBLIGATIONS ...... 14 DESCRIPTION OF THE INSURER ...... 16 GENERAL ...... 16 REINSURANCE ...... 17 FINANCIAL STRENGTI!AND FINANCIAL ENHANCEMENT RATINGS OF XLCA ...... 17 CAPITALIZATION OF TIIB INSURER ...... 18 REGULATION OF TIIB INSURER ...... 18 LIMITATIONS ON TAX REVENUES ...... 19

ARTICLEXIllA OF STATE CONSTITUTION ...... 19 COURT CHALLENGES TO ARTICLE)CT!IA ...... 20 LEGISLATION IMPLEMENTING ARTICLE XIIIA ...... 20 APPROPRIATION LIMITATION-ARTICLE XIllB ...... 21 UNJTARYPROPERTY ...... 22 Low AND MODERATE INCOME HOUSING ...... 22 SECTION 33607.5 PAYMENTS ...... 23 PROPOSITION 218 ...... 23 Fur!JREINlTIATIVES ...... 23 BONDOWNERS' RISKS ...... 24

REDUCTION OF TAX REVENUES ...... 24 ASSESSMENT APPEALS ...... , ...... 24 REsTORED VALUE (ARTICLE XIllA LITIGATION) ...... 25 AsSUMPTIONS AND PROJECTIONS ...... 25 REAL ESTATE AND GENERAL EcoNOMIC RlSKS ...... 26 REDUCTION IN INFLATIONARY RATE ...... 26 UNSECURED VALUE ...... 26 FuruRE LEGISLATION ...... 26 HAzARDOUS SUBSTANCES ...... 27 CERTAIN BANKRUPTCY RISKS ...... 27 RISK OF EARIBQUAKE AND OTI!ER DISASTERS ...... 27 TAX INCREMENT LIMITATION ...... 28

i THE AUTHORITY ...... 28

THE AGENCY ...... 28

PERSONNEL...... 29 AGENCY PROJECTS ...... 31 FACTORS AFFECTING REDEVELOPMENT AGENCIES GENERAI.L Y ...... 33 EARlHQUAKE DISASTER ASSISTANCE PROJECTS ...... 33 TAX REVENUES AND DEBT SERVICE ...... 33

TAX ALLOCATION FINANCING ...... 3 3 PROPERTY TAX COLLECTION PROCEDURES ...... 34 PROPERTY TAX ADMINISTRATIVE CoSTS ...... 35 FILING OF STATEMENT OF INDEBTEDNESS ...... 3 5 AGENCY FINANCIAL STATEMENTS ...... 35 INVES1MENT POLICY ...... 35 HISTORICAL AND CURRENT TAXABLE VALVES AND REvENUEs ...... 36 THE PROJECT AREAS ...... 37

COUNCIL DISTRICT 9 PROJECT AREA ...... 37 General Description...... 37 Development in Council District 9 Project Area ...... 37 Top JO Assessees...... 40 Estimated Tax Revenues...... 41 Assessment Appeals...... 43 Indebtedness ofthe Council District 9 Project...... 43 Debt Service Coverage...... 43 lHE EAST HOLLYWOOD/BEVERL Y·NORMANDIE PROJECT AREA ...... 44 General Description...... 44 Development in the East Hollywood!Beverly-Normandie Project Area...... 46 Assessed Valuation and Tax Revenues ...... 46 Top IO Assessees ...... 48 Estimated Tax Revenues...... 49 Assessment Appeals...... 51 Indebtedness ofthe East Ho/lywood!Beverly-Normandie Project...... 51 Debt Service Coverage...... 51 lHE LAUREL CANYON PROJECT AREA ...... 52 General Description...... 52 Development in the Laurel Canyon Project ...... 54 Assessed Valuation and Tax Revenues...... 54 Top 10 Assessees...... 56 Estimated Tax Revenues...... 57 Assessment Appeals ...... 59 Indebtedness ofthe Laurel Canyon Project ...... 59 Debt Service Coverage...... 59 lHE PACOIMA!PANORAMA CITY PROJECT AREA ...... 60 General Description...... 60 Development in the Pacoima/Panorama City Project Area ...... 62 Assessed Valuation and Tax Revenues ...... 63 Top IO Assessees ...... 64 Estimated Tax Revenues...... 65 Assessment Appeals ...... 67 Indebtedness ofthe Pacoima/Panorama City Project ...... 67 Debt Service Coverage...... 67 lHE RESEDAiCANOGA PARK PROJECT AREA ...... 68

ii General Description ...... 68 Development in the Reseda!Canoga Park Project Area ...... 70 Assessed Valuation and Tax Revenues ...... 70 Top IO Assessees ...... 72 Estimated Tax Revenues ...... 73 Assessment Appeals ...... 75 Indebtedness ofthe Reseda!Canoga Park Project ...... 7 5 Debt Service Coverage ...... 75 CERTAIN LEGAL MATTERS ...... 77

TAX MATTERS ...... 77

SERIES J-TAXEXEMPTBONDS ...... 77 Original Issue Premium ...... 78 Original Issue Discount ...... 78 SERIES J-TAXABLE BONDS AND SERIES K TAXABLE BoNDS ...... 79 Market Discount...... 79 Market Premium ...... 80 Sale or Redemption of Taxable Bonds ...... 80 Backup Withholding ...... 80 Foreign Bondowners ...... 80 ERISA ...... 81 Or!lER TAXMATIERS ...... 81 LITIGATION ...... 81

CONTINlJING DISCLOSURE ...... 81

UNDERWRITING ...... 82

RATINGS ...... 82

MISCELLANEOUS ...... 82

APPENDIXA FISCAL CONSULTANT'S REPORT ...... A-1 APPENDIXB- SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURES AND THE LOAN AGREEMENTS ...... B-1 APPENDIXC FORM OF BOND COUNSEL OPINION ...... C-1 APPENDIXD- THE COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF LOS ANGELES COMBINED FINANCIAL STATEMENTS AND SCHEDULES FOR THE FISCAL YEAR ENDED JUNE 30, 2002 ...... D-1 APPENDIXE BOOK-ENTRY ONLY SYSTEM ...... E-1 APPENDIXF FORM OF CONTINUING DISCLOSURE AGREEMENT ...... F-1 APPENDIXG- SPECIMEN BOND INSURANCE POLICY ...... G-1

iii (THIS PAGE INTENTIONALLY LEFT BLANK) COMMUNITY REDEVEWPMENT FINANCJNG AUTHORITY OF THE COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF LOS ANGELES, CALIFORNIA POOLED FINANCJNG BONDS $17,970,000 $4,500,000 SERIES J-TAXABLE SERIES J-TAX EXEMPT (Council District 9, Pacoima/Panorama City and (Reseda/Canoga Park Project) Reseda/Canoga Park Projects) $4,645,000 SERIES K-TAXABLE (Laurel Canyon and East Hollywood/Beverly-Normandie Projects)

INTRODUCTION

This Official Statement, including the cover page and appendices hereto, is provided to furnish information regarding the issuance by the Communily Redevelopment Financing Authority of The Community Redevelopment Agency of the City of Los Angeles, California (the "Authorily") of three series of its Pooled Financing Bonds: $17,970,000 aggregate principal amount of, Series J-Taxable (Council District 9, Pacoima/Panorama City and Reseda/Canoga Park Projects) (the "Series J.Taxable Bonds"), $4,500,000 aggregate principal amount of Series J.Tax Exempt (Reseda/Canoga Park Project) (the "Series J.Tax Exempt Bonds" and together with the Series J.Taxable Bonds, the "Series J Bonds"), and $4,645,000 aggregate principal amount of Series K-Taxable (Laurel Canyon and East Hollywood/Beverly-Normandie Projects) (the "Series K Bonds" and collectively with the Series J Bonds, the "Bonds").

The Bonds are being issued by the Authorily pursuant to the Constitution and the laws of the State, including the Act (defmed below) and, for the Series J Bonds, an Indenture of Trust dated as of September 1, 2003 (the "Indenture") by and between the Authority and U.S. Bank National Association, Los Angeles, California, as trustee (the "Trustee"), and for the Series K Bonds, an Indenture of Trust, dated as of September 1, 2003 (the "Series K Indenture" and collectively with the Series J Indenture, the "Indentures"), by and between the Authorily and the Trustee. Proceeds of the Series J-Taxable Bonds will be used to make loans (the "Series J-Taxable Loans") to The Community Redevelopment Agency of the City of Los Angeles, California (the "Agency") pursuant to three separate Loan Agreements, each dated as of September I, 2003 (collectively, the "Series J Loan Agreements"), each by and among the Authority, the Trustee and the Agency, for the Council District 9 Project Area (the "Council District 9 Loan Agreement"), the Pacoima/Panorama Cily Project Area (the "Pacoima/Panorama City Loan Agreement''), and the Reseda/Canoga Park Project Area (the "Reseda/Canoga Park Loan Agreement"), respectively. Proceeds of the Series J-Tax Exempt Bonds will be used to make a loan (the "Series J-Tax Exempt Loan" and together with the Series J-Taxable Loans, the "Series J Loans") to the Agency also pursuant to the Reseda/Canoga Park Loan Agreement. Proceeds of the Series K Bonds will be used to make loans (the "Series K Loans") to the Agency pursuant to two separate Loan Agreements, each dated as of September 1, 2003 (collectively, the "Series K Loan Agreements" and together with the Series J Loan Agreements, the "Loan Agreements"), each by and among the Authority, the Trustee and the Agency, for the Laurel Canyon Project Area (the "Laurel Canyon Loan Agreement") and the East Hollywood/Beverly-Normandie Project Area (the "East Hollywood/Beverly-Normandie Loan Agreement''), respectively. The full name of each of such Project Area is set forth below. All capitalized terms not otherwise defined herein shall have the meanings assigned to them in the Indentures and the Loan Agreements. See APPENDIX B-"SUMMARY OF CERTAIN PROVISIONS OF THE LOAN AGREEMENTS" hereto.

I The Loans will be undertaken by the Agency pursuant to the Constitution (the "Constitution") and laws of the State of California (the "State"), including the Community Redevelopment Law (Section 33000 et seq. of the Health and Safety Code of the State) (the "Community Redevelopment Law"), and the Loan Agreements. The proceeds of the Loans will be used by the Agency to fund or refund, as applicable, separate redevelopment activities in each of the applicable Project Areas ( described below), to fund a separate reserve account under each Loan Agreement, and to pay costs of issuance related to the Loans and the Bonds.

The Agency will make payments on each Loan solely from the Tax Revenues received by the Agency from the respective Project Area, so that payments under the Council District 9 Loan Agreement will be made solely from Tax Revenues received by the Agency from the Council District 9 Corridors South of the Santa Monica Freeway Recovery Redevelopment Project Area ("Council District 9 Project Area"), payments made under the Pacoima/Panorarna City Loan Agreement will be made solely from Tax Revenues received by the Agency from the Earthquake Disaster Assistance Project for Portions of Council District 7 Project Area ("Pacoima/Panorarna City Project Area"), payments made under the Reseda/Canoga Park Loan Agreement will be made solely from Tax Revenues received by the Agency from the Earthquake Disaster Assistance Project for Portions of Council District 3 Project Area ("Reseda/Canoga Park Project"), payments made under the Laurel Canyon Loan Agreement will be made solely from Tax Revenues received by the Agency from the Laurel Canyon Earthquake Disaster Assistance Project for Laurel Canyon Commercial Corridor ("Laurel Canyon Project Area") and payments made under the East Hollywood/Beverly-Norrnandie Loan Agreement will be made solely from Tax Revenues received by the Agency from the East Hollywood/Beverly-Norrnandie Earthquake Disaster Assistance Project Area ("East Hollywood/Beverly-Norrnandie Project Area").

The Agency will make payments pursuant to the Loan Agreements to the Trustee and the Trustee is obligated under the Indentures to use those payments to make principal and interest payments on the Bonds. Tax Revenues from one Project Area are not pledged to pay debt service on the Loans from other Project Areas so a default in payment on any of the J-Taxable Loans pursuant to the Series J Loan Agreements may cause a default on the Series J-Taxable Bonds, and a default under any of the Series K Loan Agreements may cause a default on the Series K Bonds. In addition, the Tax Revenues from the Reseda/Canoga Park Project Area are pledged to pay principal of and interest on both the Series J-Taxable Loan and the Series J Tax Exempt Loan on a parity basis so if Tax Revenues from the Reseda/Canoga Park Project are insufficient it is likely that the Agency would not be able to pay debt service on both the Series J-Taxable Loan and the Series J-Tax Exempt Loan, resulting in a default on both the Series J-Taxable Bonds and the Series J-Tax Exempt Bonds.

The Agency is a public body, corporate and politic, organized and existing under and pursuant to the Constitution and laws of the State. The Agency was activated in 1948 by resolution of the Council of the City of Los Angeles, California (the "City") pursuant to the Community Redevelopment Law. The Authority is a joint exercise of powers authority formed in June 1992 by and between The Industrial Development Authority of The Community Redevelopment Agency of the City of Los Angeles, California (the "IDA") and the Agency pursuant to the joint exercise of powers act constituting Articles I through 4, commencing with Section 6500 of Chapter S, Division 7, Title I, of the California Government Code (the "Act"). The IDA was formed by the Agency in August 1983 for the initial purpose of issuing industrial development bonds in the various project areas. The board of the Agency serves as the boards of the Authority and the IDA. The Council of the City (the "City Council") exercises certain oversight activities for both the Authority and the Agency. See "THE AUTHORITY" and "THE AGENCY" herein.

2 The Constitution and the Community Redevelopment Law provide for the financing of redevelopment projects through the issuance of tax allocation bonds, notes and other obligations. Such indebtedness is payable from a portion of the property taxes collected from within a project area upon the increase in taxable valuation of land, improvements, and personal and public utility property. The taxable valuation of a project area last equalized prior to the effective date of the ordinance adopting the redevelopment plan, or base roll, is established and, except for any period during which the taxable valuation drops below the base year level, the taxing agencies thereafter receive the taxes produced by the levy of the then current tax rate upon the base roll. With certain exceptions, taxes collected upon any increase in taxable valuation over the base roll are allocated to the applicable redevelopment agency and may be pledged by the redevelopment agency to the repayment of any indebtedness incurred in financing or refinancing a redevelopment project. See "TAX REVENUES AND DEBT SERVICE" herein.

The Authority is obligated to make payments of principal of and interest on the Bonds solely from the sources of funds described herein. Neither the Authority nor the Agency has any powers of taxation. See "SECURITY FOR 1HE BONDS" herein fur a discussion of the limited sources of funds available for payment of principal of and interest on the Bonds. For additional information regarding the provisions of the California Constitution and the Redevelopment Law relating to the financing of redevelopment projects through the issuance of tax allocation bonds, see "LIMITATIONS ON TAX REVENUES" herein. For certain financial and other information relating to the Project Areas, see "lHE PROJECT AREAS" herein. For certain additional risk factors relating to the Bonds which should be taken into consideration in connection with investment in the Bonds, see "BONDOWNERS' RISKS" herein. See "lHE BONDS" herein for a description of the terms of the Bonds.

This Official Statement speaks only as of its date and the information contained herein is subject to change. Brief descriptions of the Bonds, the Authority, the Agency and the Project Areas are included in this Official Statement, together with summaries of the Indentures and the Loan Agreements. Such descriptions do not purport to be comprehensive or defmitive. All references herein to the Bonds, the Indentures and the Loan Agreements are qualified in their entirety by reference to the actual documents, copies of all of which are available for inspection at the principal corporate trust office of the Trustee in Los Angeles, California. Capitalized terms used but not defined herein shall have the respective meanings ascribed to them in the Indentures. The Agency has covenanted to provide certain updated financial and other information concerning the Project Areas at the time and in the manner set forth under certain continuing disclosure agreements described under "CONTINUING DISCLOSURE" herein.

3 ESTIMATED SOURCES AND USES OF FUNDS

The proceeds from the Bonds are expected to be applied as follows:

Sources and Uses of the Series J-Taxable Bonds Proceeds Council Pacoima/ Reseda/ District 9 Panorama Ci!): Canoga Park Total Sources

Par Amount of Bonds $5,500,000.00 $4,265,000.00 $8,205,000.00 $17,970,000.00 Total Sources $5,500,000.00 $4,265,000.00 $8,205,000.00 $17,970,000.00

Uses

Program Fund to make $4,900,000.00 $3,780,000.00 $7,304,469.39 $15,984,469.39 Loans to Agency Reserve Accounts 384,522.08 319,448.50 580,687.97 1,284,658.55 Cost oflssuance* 215,477.92 165,551.50 319,842.84 700,872.06 Total Uses $5,500,000.00 $4,265,000.00 $8,205,000.00 $17,970,000.00

Sources and Uses of the Series J-Tax Exempt Bonds Proceeds Reseda/ Canoga Park Sources

Par Amount of Bonds $4,500,000.00 $4,500,000.00 Total Sources $4,500,000.00 $4,500,000.00

Program Fund to make $3,925,530.61 $3,925,530.61 Loan to Agency Reserve Account 318,476.03 318,476.03 Net Original Issue Discount 89,655.65 89,655.65 Cost oflssuance* 166,337.71 166,337.71 Total Uses $4,500,000.00 $4,500,000.00

• Includes underwriters• discount, bond insurance premium, if any, rating agency fees, bond counsel fees, disclosure counsel fees, fiscal consultant fees, printing cots and other miscellaneous expenses.

4 Sources and Uses of the Series K Bonds Proceeds East Hollywood/ Laurel Canyon Beverly-Normandie Sources

Par Amount of Bonds $2, 760,000.00 $1,885,000.00 $4,645,000.00 Prior Loan Reserve Fund 60,000.00 60 000.00 Total Sources $2,820,000.00 $1,885,000.00 $4,705,000.00

Program Fund to make $1,870,000.00 $1,650,000.00 $3,520,000.00 Loans to Agency Escrow Account 609,785.73 609,785.73 Reserve Accounts 281,429.00 189,086.09 470,515.09 Cost oflssuance• 58,785.27 45,913.91 104,699.18 Total Uses $2,820,000.00 $1,885,000.00 $4,705,000.00

• Includes underwriters' discount, bond insurance premium, if any,. rating agency fees, bond counsel fees, disclosure counsel fees, fiscal consultant fees, printing cots and other miscellaneous expenses.

5 THE BONDS General

Each Series of the Bonds will be issued in the principal amounts, will be dated and will bear interest at the respective rates and mature on the dates and in the amounts set forth on the inside cover page of this Official Statement. Interest on the Bonds is payable on March I, 2004, and semiannually thereafter on each March I and September 1, calculated on the basis of a 360-day year composed of twelve 30-day months. The Bonds will be issued as fully registered bonds, and when issued, will be registered in the name of Cede & Co., as nominee of OTC, as securities depository for the Bonds. Individual purchases of the Bonds will be made in book-entiy form only, in denominations of $5,000 or any integral multiple thereof. Principal and interest are payable by the Trustee to OTC, which is obligated in turn to remit such principal and interest to OTC Participants for subsequent disbursement to Beneficial Owners of the Bonds, as described in APPENDIX F - "BOOK-ENTRY SYSIBM" hereto.

Redemption

Optional Redemption. The Bonds maturing on or before September 1, 2013 are not subject to optional redemption. The Bonds maturing on or after September 1, 20 I 4 are subject to redemption prior to their respective maturity dates at the option of the Agency, as a whole, or in part by lot, by such maturity or maturities as shall be directed by the Agency ( or in absence of such direction, pro rata by maturity and by lot within a maturity), on any date on or after September 1, 2013, upon at least 30 days but not more than 60 days prior written notice to the Trustee (each Bond being deemed to be composed of $5,000 portions with any such portions being separately redeemable), at the redemption prices based on the principal amount of the Bonds or portions thereof to be redeemed, together with accrued interest to the date of redemption, without premium.

Mandatory Sinking Fund Redemption. The Series J-Taxable Bonds maturing on September I, 2008 shall be subject to redemption at a redemption price equal to the principal amount thereof to be redeemed together with accrued interest thereon to the redemption date, without premium, from mandatory sinking fund payments for the Bonds in the years and amounts as follows:

Year Amount 2004 $ 280,000 2005 240,000 2006 245,000 2007 265,000 2008 (final maturity) 275,000

The Series J-Taxable Bonds maturing on September 1, 2013 shall be subject to redemption at a redemption price equal to the principal amount thereof to be redeemed together with accrued interest thereon to the redemption date, without premium, from mandatory sinking fund payments for the Bonds in the years and amounts as follows:

Year Amount 2009 $ 290,000 2010 300,000 2011 320,000 2012 345,000 2013 (fmal maturity) 365,000

6 The Series J-Taxable Bonds maturing on September 1, 2023 shall be subject to redemption at a redemption price equal to the principal amount thereof to be redeemed together with accrued interest thereon to the redemption date, without premium, from mandatory sinking fund payments for the Bonds in the years and amounts as follows:

Year Amount 2014 $380,000 2015 400,000 2016 430,000 2017 450,000 2018 485,000 2019 515,000 2020 550,000 2021 580,000 2022 610,000 2023 (final maturity) 650,000

The Series J-Taxable Bonds maturing on September l, 2033 shall be subject to redemption at a redemption price equal to the principal amount thereof to be redeemed together with accrued interest thereon to the redemption date, without premium, from mandatory sinking fund payments for the Bonds in the years and amounts as follows:

Year Amount 2024 $ 695,000 2025 740,000 2026 790,000 2027 840,000 2028 895,000 2029 950,000 2030 1,005,000 2031 1,070,000 2032 1,455,000 2033 (final maturity) 1,555,000

The Series J-Tax Exempt Bonds matnring on September 1, 2023 shall be subject to redemption at a redemption price equal to the principal amount thereof to be redeemed together with accrued interest thereon to the redemption date, without premium, from mandatory sinking fund payments for the Bonds in the years and amounts as follows:

Year Amount 2020 $140,000 2021 150,000 2022 160,000 2023 (final maturity) 165,000

The Series J-Tax Exempt Bonds maturing on September 1, 2033 shall be subject to redemption at a redemption price equal to the principal amount thereof to be redeemed together with accrued interest thereon

7 to the redemption date, without premium, from mandatory sinking fund payments for the Bonds in the years and amounts as follows:

Year Amount 2024 $175,000 2025 185,000 2026 195,000 2027 205,000 2028 215,000 2029 225,000 2030 235,000 2031 250,000 2032 270,000 2033 275,000

The Series K Bonds maturing on September 1, 2008 shall be subject to redemption at a redemption price equal to the principal amount thereof to be redeemed together with accrued interest thereon to the redemption date, without premium, from mandatory sin.king fund payments for the Bonds in the years and amounts as follows:

Year Amount 2004 $ 65,000 2005 45,000 2006 55,000 2007 55,000 2008 (final maturity) 60,000

The Series K Bonds maturing on September I, 2013 shall be subject to redemption at a redemption price equal to the principal amount thereof to be redeemed together with accrued interest thereon to the redemption date, without premium, from mandatory sin.king fund payments for the Bonds in the years and amounts as follows:

Year Amount 2009 $ 60,000 2010 70,000 2011 75,000 2012 80,000 2013 (final maturity) 85,000

The Series K Bonds maturing on September I, 2023 shall be subject to redemption at a redemption price equal to the principal amount thereof to be redeemed together with accrued interest thereon to the

8 redemption date, without premium, from mandatoiy sinking fund payments for the Bonds in the years and amounts as follows:

Year Amount 2014 $ 90,000 2015 100,000 2016 110,000 2017 120,000 2018 135,000 2019 145,000 2020 160,000 2021 175,000 2022 190,000 2023 (final maturity) 205,000

The Series K Bonds maturing on September 1, 2033 shall be subject to redemption at a redemption price equal to the principal amount thereof to be redeemed together with accrued interest thereon to the redemption date, without premium, from mandatoiy sinking fund payments for the Bonds in the years and amounts as follows:

Year Amount 2024 $ 225,000 2025 245,000 2026 270,000 2027 295,000 2028 325,000 2029 355,000 2030 385,000 2031 140,000 2032 155,000 2033 (final maturity) 170,000

The principal amouut of the Bonds which have been previously redeemed pursuant to the optional redemption provisions described above or are purchased by the Agency pursuant the applicable Loan Agreement shall be credited against the minimum sinking fund payments in such manner as the Agency shall direct pursuant to the Loan Agreement.

Notice ofRedemption. The Trustee on behalf and at the expense of the Authority will mail (by first class mail) notice of any redemption to the respective Owners of any Bonds designated for redemption at their respective addresses appearing on the Registration Books, and to the Securities Depositories and to one or more Information Services, at least 30 days but not more than 60 days prior to the date fixed for redemption; provided, however, that neither failure to receive any such notice so mailed nor any defect therein shall affect the validity or the proceedings for the redemption of such Bonds or the cessation of the accrual of interest thereon. Such notice will state the date of the notice, the redemption date, the redemption place and the redemption price and shall designate the CU SIP numbers, of the Bonds to be redeemed, state the individual number of each Bond to be redeemed or state that all Bonds between two stated numbers (both inclusive) or all of the Bonds Outstanding ( or all Bonds of a maturity) are to be redeemed, and shall require that such Bonds be then surrendered at the Trust Office of the Trustee for redemption at the redemption price, giving notice also that further interest on such Bonds will not accrue from and after the redemption date. Neither the Authority nor the Trustee shall have any responsibility

9 for any defect in the CUSIP number that appears on any Bond or in any redemption notice with respect thereto, and any such redemption notice may contain a statement to the effect that CUSIP numbers have been assigned by an independent service for convenience of reference and that neither the Authority nor the Trustee shall be liable for an inaccuracy in such numbers.

Effect of Redemption. From and after the date fixed for redemption, if funds available for the payment of the principal of, and interest and premium, if any, on the Bonds so called for redemption will have been duly provided, such Bonds, so called shall cease to be entitled to any benefit under the applicable Indenture other than the right to receive payment of the redemption price, and no interest shall accrue thereon from and after the redemption date specified in such notice.

SECURITY FOR THE BONDS

General

Scheduled payments of principal and interest on the Series J-Taxable Bonds are structured to match the combined scheduled payments of principal of and interest on the respective Loans under the Council District 9 Loan Agreement, Pacoima/Panorama City Loan Agreement and the portion of the principal and interest payments allocable to the Series }-Taxable Bonds under the Reseda/Canoga Park Loan Agreement, made by the Agency; scheduled payments of principal of and interest on the Series J Tax Exempt Bonds are structured to match the portion of the principal and interest payments allocable to the Series J-Tax Exempt Bonds under the Reseda/Canoga Park Loan Agreement; and scheduled payments of principal and interest on the Series K Bonds are structured to match the combined scheduled payments of principal of and interest on the respective Loans under the Lanrel Canyon Loan Agreement and East Hollywood/Beverly-Normandie Loan Agreements. Debt service payments on each series of the Bonds are intended to be made by the Authority using the moneys received by the Authority as debt service payments from the Agency on the respective Loan or Loans, which payments are separately payable by the Agency from Tax Revenues received by the Agency from the applicable Project Area or Project Areas. See "THE PROJECT AREAS" herein.

The Bonds are secured by a first lien on and pledge of Revenues and a pledge of all moneys in the Interest Account and Principal Account under the applicable Indenture, including all amounts derived from the investment of such moneys. "Revenues" are defined in each Indenture and each Loan Agreement as (a) all amounts payable by the Agency to the Authority pursuant to the Loan Agreements for the Series J Bonds or the Series K Bonds, as applicable, other than administrative fees and expenses and indemnity against claims payable to the Authority and the Trustee; (b) any proceeds of the applicable Series of Bonds originally deposited with the Trustee and all moneys deposited and held from time to time by the Trustee in the funds and accounts established under such Indentnre; and (c) investment income with respect to any moneys held by the Trustee in the funds and accounts established under such Indenture. Tax Revenues from

10 one Project Area are not pledged to the payment of the principal of and interest on the Loans with respect to any other Project Area. A default in payments on any one of the J-Taxable Loans pursuant to the Series J Loan Agreements may cause a default on the Series J-Taxable Bonds, and a default on any one of the Series K Loans may cause a default on the Series K Bonds. In addition, the Tax Revenues from the Reseda/Canoga Park Project Area are pledged to pay both principal of and interest on the Series J-Taxable Loan and the Series J-Tax Exempt Loan on a parity basis so if Tax Revenues from the Reseda/Canoga Park Project are insufficient it is likely that the Agency would not be able to pay debt service on both the Series J-Taxable Loan and the Series J-Tax Exempt Loan, resulting in a default on both the Series J-Taxable Bonds and the Series J-Tax Exempt Bonds.

Pledge and Allocation of Taxes

Under provisions of the California Constitution, the Community Redevelopment Law and the respective redevelopment plans for the Project Areas, taxes on all taxable property in the respective Project Areas levied by any taxing agency when collected will be divided as follows:

(I) An amount each year equal to the amount which would have been produced by the then current tax rates applied to the assessed valuation of such property within the Redevelopment Project last equalized prior to the effective date of the ordinance approving the Redevelopment Plan will be paid into the funds of the respective taxing agencies; and

(2) With certain exceptions enumerated herein, taxes received over and above that amount modified by the tax increment limitations imposed pursuant to the Law constitute Tax Revenues and will be deposited into a special fund of the Agency and will be available to pay indebtedness incurred for that Project Area. See APPENDIX B - "SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURES AND THE LOAN AGREEMENTS" hereto.

The Law provides for certain mandatory and permissive deductions and payments from the Tax Revenues described in paragraph (2) above, some of which may have a lien on Tax Revenues ahead of the lien for payment of the Loans (and thus the Bonds). Those payments include i) fees payable to the County for administering the Tax Revenue flow and ii) unsubordinated payments to affected taxing entities under various tax-sharing agreements or Section 33607.5 of the Community Redevelopment Law. Following the procedure set forth in Section 33607.5, the Agency has requested that payments to affected taxing entities from Tax Revenues for each Project Area be subordinated to debt service payments on the applicable Loan (and thus the Bonds). Such payments to affected taxing entities have not yet been subordinated, but the Agency anticipates that it will successfully subordinate such payments. In the Official Statement, the Agency has excluded such amounts from the Tax Revenues available to pay debt service on the Loans. See "LIMITATIONS ON TAX REVENUES-Section 33607.5 Payments" herein. The Agency carmot predict whether future legislation will create additional mandatory or permissive deductions or payments from the Tax Revenues. See "BONDOWNER'S RISKS - Future Legislation" herein.

The Agency has no power to levy and collect taxes, and any legislative property tax de-emphasis 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 Revenues that would otherwise be available to pay the principal o:t; and interest on the Bonds. Likewise, broadened property tax exemptions could have a similar effect. See "BONDOWNERS' RISKS" herein.

11 Loans Payable from Tax Revennes

Each Loan is separately secured by and payable from an irrevocable pledge of, and charge and lien upon, applicable Tax Revenues (as defined in the applicable Loan Agreement), which includes amounts required to be placed into the Low and Moderate Income Housing Fund pursuant to Section 33334.6 of the Law, and certain limited moneys held in certain funds and accounts under the applicable Loan Agreement and the Indenture.

The Loan Agreements generally defme "Tax Revenues" to mean all taxes levied upon taxable property in the applicable Project Area annually allocated and paid into a special fund of the Agency pursuant to Article 6 of Chapter 6 ( commencing with Section 33670) of the Law and Section 16 Article XVI of the Constitution of the State of California, and as provided in the applicable Redevelopment Plan, including all subventions of payments in lieu of business inventory subventions received by the Agency. See APPENDIX A- "FISCAL CONSULTANT'S REPORT' hereto.

Each Loan Agreement provides that the applicable Loan and all Parity Debt shall be equally secured for the benefit of the Authority and the Owners of the applicable Series of the Bonds by a pledge of and lien on all of the Tax Revenues. The payment obligations of the Agency pursuant to any Qualified Credit Instrument ( defined below) shall be secured for the benefit of the provider thereof by a pledge and lien on all of the Tax Revenues which pledge and lien shall be subordinate to the pledge and lien securing the Loan and any Parity Debt. The Loan shall be additionally secured for the benefit of the Authority and the Owners of the applicable Series of the Bonds by a first pledge of and lien upon all of the moneys in the applicable Reserve Account, excluding Investment Earnings. The Tax Revenues are hereby allocated in their entirety to the payment of the principal of and interest on the Loan and all Parity Debt. Except for the Tax Revenues and the applicable Reserve Account, no funds or properties of the Agency shall be pledged to, or otherwise liable for, the payment of principal of or interest or premium, if any, on the applicable Loan.

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, would have the effect of reducing the amount of Tax Revenues that would otherwise be available to pay the principal of, and interest on the Bonds. Likewise, the reduction of assessed valuations of taxable property in the applicable project areas, any reduction in tax rates or tax collection rates and broadened property tax exemptions would have a similar effect. See "BONDOWNERS' RISKS" and "LIMITATIONS ON TAX REVENUES" herein.

The Agency has pledged to pay to the Authority the principal of and interest on the Loans solely from sources described herein, and the Authority has pledged to pay the Bonds solely from these same funds. See "SECUR1TY FOR TIIE BONDS" herein for a discussion of the limited sources of funds available for payment of principal of and interest on the Loans and the Bonds. For additional information regarding the provisions of the California Constitution and the Redevelopment Law relating to the financing of redevelopment projects through the issuance of tax allocation bonds, see "LIMITATIONS ON TAX REVENUES" herein. For certain financial and other information relating to the Project Areas, see "TIIE PROJECT AREAS" herein. For certain risk factors relating to the Bonds which should be taken into consideration in connection with investment in the bonds, see "BONDOWNERS' RISKS" herein. See "THE BONDS" herein for a description of the terms of the applicable Loan.

Neither the Bonds nor the Loans are debts of the City, the State or any of its political snbdivisions (other than the Authority and the Agency to the extent set forth herein), and neither the

12 City, nor the State nor any ofits political snbdivisions (other than the Authority and the Agency to the extent set forth herein) is liable thereon. Neither the Authority nor the Agency has taxing power. The interest on and principal of the Bonds and the Loans are payable solely from Tax Revenues allocated to the Agency from the applicable Project Areas described herein. Neither the Bonds nor the Loans constitute an indebtedness within the meaning of any constitutional or statutory debt limitation or restriction.

Payment of the Bonds

From and after the date of delivecy of each Loan, and, so long as such Loan shall be Outstanding, pledged Tax Revenues from the applicable Project Area shall be paid to the Trustee under the applicable Loan Agreement by the Agency when received, and paid to the Trustee under the applicable Indenture as Revenues. Under each Indenture, such Revenues shall be set aside by the Trustee in the following funds and accounts created under such Indenture for the Bonds in the following order of priority, the requirements of each such account at the time of setting aside to be satisfied before any money is set aside in any account subsequent in priority:

(a) Not later than three Business Days prior to each Interest Payment Date, the Trustee shall deposit in the Interest Account of the Revenue Fund an amount of money which, together with any money contained therein, is equal to the aggregate amount of the interest becoming due and payable on all Outstanding Bonds on the such Interest Payment Date. All money in the Interest Account shall be used and withdrawn by the Trustee solely for the purpose of paying the interest on the Bonds as the same becomes due and payable (including accrued interest and capitalized interest on any applicable Bonds purchased or redeemed prior to maturity).

(b) Not later than three Business Days prior to each Interest Payment Date on which principal payments on the Bonds shall be payable, the Trustee shall deposit in the Principal Account of the Revenue Fund an amount of money which, together with any money contained therein, is equal to the principal amount of the Bonds maturing or the redemption price of the Bonds (consisting of the principal amount thereof and any applicable redemption premiums). All money in the Principal Account shall be used and withdrawn by the Trustee solely for the purpose of (i) paying the principal at maturity of the Bonds at the respective maturities thereof; (ii) paying the principal of the Term Bonds upon the mandatocy sinking fund redemption thereof; or (iii) paying the principal of and premium, if any, on any Bonds upon the redemption thereof.

If the Trustee has not received sufficient moneys to pay the scheduled principal and interest on a Loan due on such Interest Payment Date, the Trustee shall draw on the applicable Reserve Account held under the applicable Loan Agreement for such insufficiency.

Reserve Accounts

Upon the issuance of the Bonds and the making of the Loans, the Agency is required to establish a reserve account under each Loan Agreement in an amount equal to the Reserve Requirement under each Loan Agreement. Under the Reseda/Canoga Park Loan Agreement, the Reserve Account is combined for the Series J-Taxable Loan and the Series J-Tax Exempt Loan for the Reseda/Canoga Park Project. Under each Loan Agreement, "Reserve Requirement" generally is the least of (a) 10% of the outstanding principal amount of the Loan(s) and any Parity Debt; (b) Maximum Annual Debt Service with respect to the Loan(s) and any Parity Debt; or (c) 125% of average Annual Debt Service on the Loan(s) and any Parity Debt. See APPENDIX B - "SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURES AND THE LOAN AGREEMENTS" hereto for the full definition of Reserve Requirement.

13 The Agency reserves the right, with respect to all or any portion of the Reserve Requirement to substitute, at any time and from time to time, one or more Qualified Credit Instruments for cash or any Qualified Credit Instrument then on deposit in or held by the applicable Reserve Account. Any such Qualified Credit Instrument shall provide that the Trustee is entitled to draw amounts thereunder when required by the provisions of the Indentnres to make transfers from the applicable Reserve Account to the Interest Account and the Principal Account in the event of a deficiency in any such account; provided that, in any such event, the Trustee shall first apply to any such deficiency the amount of cash (including cash represented by investments) then on deposit in the applicable Reserve Account. Upon deposit by the Agency with the Trustee of any such Qualified Credit Instrument, the Trustee shall withdraw from the applicable Reserve Account and transfer to the Agency for deposit in the Redevelopment Fund, an amount equal to the principal amount of such Qualified Credit Instrument.

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

"Qualified Credit Instrumenf' means any of the following: (a) a surety bond or insurance policy issued to the Trustee by a company licensed to issue an insurance policy guaranteeing the timely payment of debt service on the Bonds (a "municipal bond insurer") if the claims paying ability of the issuer thereof shall be rated "AAA", "AAA" and "Aaa" by Standard and Poor's Ratings Services, Fitch Ratings and Moody's Investors Service, respectively; (b) a surety bond or insurance policy issued to the Trustee by an entity other than a municipal bond insurer if the claims paying ability of the issuer thereof shall be rated "Aa", "AA" and "AA" or better by Moody's Investors Service, Fitch Ratings and Standard and Poor's Ratings Services; or (c) an unconditional irrevocable letter of credit issued to the Trustee by a bank, if the issuer thereof is rated at least "AA-" by Standard and Poor's Ratings Services and Fitch Ratings and "Aa3" by Moody's Investors Service.

Issuance of Parity Obligations

The Agency may issue or incur Parity Debt with respect to any Loan payable from the Tax Revenues of the applicable Project Area in such principal amount as shall be determined by the Agency, subject, among other things, to the following specific conditions:

(a) No Event of Default shall have occurred and be continuing with respect to such Loan, and the Agency shall otherwise be in compliance with all covenants set forth in the applicable Loan Agreement;

(b) The Parity Debt resolution or agreement shall require that there shall be deposited in the Reserve Account an amount sufficient to satisfy the Reserve Requirement.

14 (c) 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 (a) above the applicable tax revenue test set forth below have been satisfied.

In addition, the Agency shall provide the Trustee with a report of an Independent Redevelopment Consultant containing at least the following information:

(i) Tax Revenues projected to be collected in the then-current Bond Year;

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

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

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

(v) The different between Current Year Total Assessed Value and Base Year Value ("Incremental Value");

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

The report of the Independent Redevelopment Consultant shall show that Tax Revenues shall equal at least 250% of the Maximum Annual Debt Service on the Loan and Parity Debt that will be outstanding immediately following the issuance of such Parity Debt (the "Debt Service Coverage Ratio"); provided that such Debt Service Coverage Ratio shall be reduced to 175% if the report shows that each of the following conditions have been satisfied:

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

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

(iii) the Assessed Value of all taxable property in the Project Area owned by the Largest Owner is not more than twenty percent (20%) of the Incremental Value; provided further, however, that such Debt Service Coverage Ratio shall be reduced to 125% if that report shows that each of the following conditions have been satisfied:

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

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

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

In addition, the Agency must meet the following tax revenue test in order to issue Parity Debt on a parity with the Series K Bonds: The Tax Revenues to be collected in the then-current Bond Year shall be at least equal to I 75% of Maximum Annual Debt Service, on the applicable Loan and Parity Debt which will be outstanding immediately following the issuance of such Parity Debt; provided however that, in the event the Agency has provided the Trustee with a report of an Independent Redevelopment Consultant showing that: (i) the base year assessed value for the Project Area equaled at most seventy-five percent (75%) of the total assessed value for the most recent Fiscal Year for which such information is available, then Adjusted Tax Revenues shall be at least equal to 125% of Maximum Annual Debt Service on the Loan and Parity Debt which will be outstanding immediately following the issuance of such Parity Debt.

DESCRIPTION OF THE INSURER

The following information has been supplied by the Insurer for inclusion in this Official Statement. No representation is made by the Agency, the Authority or the Underwriters as to the accuracy or completeness of the information.

The Insurer accepts no responsibility for the accuracy or completeness of this Official Statement or any other information or disclosure contained herein, or omitted herefrom, other than with respect to the accuracy of the information regarding the Insurer and its affiliates set forth under this heading. In addition, the Insurer makes no representation regarding the Series J Bonds or the advisability of investing in the Series J Bonds.

General

XL Capital Assurance Inc. (the "Insurer" or "XLCA") is a monoline financial guaranty insurance company incorporated under the laws of the State of New York. The Insurer is currently licensed to do insurance business in, and is subject to the insurance regulation and supervision by, the State of New York, forty-seven other states, the District of Columbia, Puerto Rico, the U.S. Virgin Islands and Singapore. The Insurer has license applications pending, or intends to file an application, in each of those states in which it is not currently licensed. The Insurer is an indirect wholly owned subsidiary of XL Capital Ltd, a Cayman Islands corporation ("XL Capital Ltd"). Through its subsidiaries, XL Capital Ltd is a leading provider of insurance and reinsurance coverages and financial products to industrial, commercial and professional service firms, insurance companies and other enterprises on a worldwide basis. The common stock of XL Capital Ltd is publicly traded in the United States and listed on the New York Stock Exchange (NYSE: XL). XL Capital Ltd is not obligated to pay the debts of or claims against the Insurer. The Insurer was formerly known as The London Assurance of America Inc. ("London"}, which was incorporated on July 25, 1991 under the laws of the State of New York. On February 22, 2001, XL Reinsurance America Inc. ("XL Re") acquired 100% of the stock of London. XL Re merged its former financial guaranty subsidiary, known as XL Capital Assurance Inc. (formed September 13, 1999) with

16 and into London, with London as the surviving entity. London immediately changed its name to XL Capital Assurance Inc. All previous business of London was 100% reinsured to Royal Indemnity Company, the previous owner at the time of acquisition.

Reinsurance

The Insurer has entered into a facultative quota share reinsurance agreement with XL Financial Assurance Ltd ("XLFA''), an insurance company organized under the laws of Bermuda, and an affiliate of the Insurer. Pursuant to this reinsurance agreement, the Insurer expects to cede up to 90% of its business to XLFA. The Insurer may also cede reinsurance to third parties on a transaction-specific basis, which cessions may be any or a combination of quota share, first loss or excess of loss. Such reinsurance is used by the Insurer as a risk management device and to comply with statutory and rating agency requirements and does not alter or limit the Insurer's obligations under any financial guaranty insurance policy. With respect to any transaction insured by XLCA, the percentage of risk ceded to XLFA may be less than 90% depending on certain factors including, without limitation, whether XLCA has obtained third party reinsurance covering the risk. As a result, there can be no assurance as to the percentage reinsured by XLFA of any given financial guaranty insurance policy issued by XLCA, including the Policy.

Based on the audited financials of XLFA, as of December 31, 2002, XLFA had total assets, liabilities, redeemable preferred shares and shareholders' equity of $611,791,000, $245,750,000, $39,000,000 and $327,041,000, respectively, determined in accordance with generally accepted accounting principles in the United States. XLFA's insurance financial strength is rated "Aaa" by Moody's and "AAA" by S&P and Fitch Inc. In addition, XLFA has obtained a financial enhancement rating of"AAA" from S&P.

The obligations of XLFA to the Insurer under the reinsurance agreement described above are unconditionally guaranteed by XL Insurance (Bermuda) Ltd ("XLI"), a Bermuda company and one of the world's leading excess commercial insurers. XLI is a wholly owned indirect subsidiary of XL Capital Ltd. In addition to having an "A+" rating from A.M. Best, XLI's insurance financial strength rating is "Aa2"by Moody's and "AA" by Standard & Poor's and Fitch. The ratings of XLFA and XLI are not recommendations to buy, sell or hold securities, including the Series J Bonds, and are subject to revision or withdrawal at any time by Moody's, Standard & Poor's or Fitch.

Notwithstanding the capital support provided to the Insurer described in this section, the Owners of the Series J Bonds will have direct recourse against the Insurer only, and neither XLFA nor XLI will be directly liable to the Owners of the Series J Bonds.

Financial Strength and Financial Enhancement Ratings ofXLCA

The Insurer's insurance financial strength is rated "Aaa" by Moody's and "AAA" by Standard & Poor's and Fitch, Inc. ("Fitch"). In addition, XLCA has obtained a fmancial enhancement rating of "AAA" from Standard & Poor's. These ratings reflect Moody's, Standard & Poor's and Fitch's current assessment of the Insurer's creditworthiness and claims-paying ability as well as the reinsurance arrangement with XLF A described under "Reinsurance" above.

The above ratings are not recommendations to buy, sell or hold securities, including the Series J Bonds and are subject to revision or withdrawal at any time by Moody's, Standard & Poor's or Fitch. Any downward revision or withdrawal of these ratings may have an adverse effect on the market price of the Series J Bonds. The Insurer does not guaranty the market price of the Series J Bonds nor does it guaranty that the ratings on the Series J Bonds will not be revised or withdrawn.

17 Capitalization of the Insurer

Based on the audited statutory financial statements for XLCA as of December 31, 2001, XLCA had total admitted assets of$158,442,157, total liabilities of$48,899,461 and total capital and surplus of $109,542,696 determined in accordance with statutory accounting practices prescribed or permitted by insurance regulatory authorities ("SAP"). Based on the audited statutory fmancial statements for XLCA as of December 31, 2002 filed with the State of New York Insurance Department, XLCA has total admitted assets of $180,993,189, total liabilities of $58,685,217 and total capital and surplus of $122,307,972 determined in accordance with SAP.

For further information concerning XLCA and XLFA, see the financial statements ofXLCA and XLFA, and the notes thereto, incorporated by reference in this Official Statement. The financial statements of XLCA and XLFA are included as exhibits to the periodic reports filed with the Securities and Exchange Commission (the "Commission") by XL Capital Ltd and may be reviewed at the EDGAR website maintained by the Commission. All fmancial statements of XLCA and XLFA included in, or as exhibits to, documents filed by XL Capital Ltd pursuant to Section 13(a), 13(c), 14 or IS(d) of the Securities Exchange Act of I 934 on or prior to the date of this Official Statement, or after the date of this Official Statement but prior to termination of the offering of the Series J Bonds, shall be deemed incorporated by reference in this Official Statement. Except for the fmancial statements of XLCA and XLF A, no other information contained in XL Capital Ltd's reports filed with the Commission is incorporated by reference. Copies of the statutory quarterly and annual statements filed with the State of New York Insurance Department by XLCA are available upon request to the State of New York Insurance Department. Regulation of the Insurer

The Insurer is regulated by the Superintendent of Insurance of the State of New York. In addition, the Insurer is subject to regulation by the insurance laws and regulations of the other jurisdictions in which it is licensed. As a financial guaranty insurance company licensed in the State of New York, the Insurer is subject to Article 69 of the New York Insurance Law, which, among other things, limits the business of each insurer to financial guaranty insurance and related lines, prescribes minimum standards of solvency, including minimum capital requirements, establishes contingency, loss and unearned premium reserve requirements, requires the maintenance of minimum surplus to policyholders and limits the aggregate amount of insurance which may be written and the maximum size of any single risk exposure which may be assumed. The Insurer is also required to file detailed annual fmancial statements with the New York Insurance Department and similar supervisory agencies in each of the other jurisdictions in which it is licensed.

The extent of state insurance regulation and supervision varies by jurisdiction, but New York and most other jurisdictions have laws and regulations prescribing permitted investments and governing the payment of dividends, transactions with affiliates, mergers, consolidations, acquisitions or sales of assets and incurrence of liabilities for borrowings.

THE FINANCIAL GUARANTY INSURANCE POLICIES ISSUED BY THE INSURER, INCLUDING THE POLICY, ARE NOT COVERED BY THE PROPERTY/CASUALTY INSURANCE SECURITY FUND SPECIFIED IN ARTICLE 76 OF THE NEW YORK INSURANCE LAW.

The principal executive offices of the Insurer are located at 1221 Avenue of the Americas, New York, New York 10020 and its telephone number at this address is (212) 478-3400.

18 LIMITATIONS ON TAX REVENUES

Article XIIIA of State Constitution

On June 6, 1978, California voters approved Proposition 13, known as the Jarvis-Gann Initiative, which added Article XIlIA to the California Constitution, limiting the amount of any ad valorem tax on real property to one percent (I%) of the full cash value, except that additional ad valorem taxes may be levied to pay debt service on June I, 1978 and (as a result ofan amendment to Article XIlIA approved by State voters on June 3, 1986) on bonded indebtedness for the acquisition or improvement of real property which has been approved on or after July I, 1978, by two-thirds of the voters voting on such indebtedness. Article XIlIA defines full cash value to mean "the county assessor's valuation of real property as shown on the 1975-76 tax bill under 'full cash value,' or thereafter, the appraised value of real property when purchased, newly constructed, or a change in ownership has occurred after the 1975 assessment period." This full cash value may be increased at a rate not to exceed two percent (2%) a year to account for inflation or reduced to reflect a reduction in the consumer price index comparable local data at a rate not to exceed 2% a year.

Article XIlIA has subsequently been amended to permit reduction of the "full cash value" base in the event of declining property values caused by damage, destruction or other factors, to provide that there would be no increase in the "full cash value" base in the event of reconstruction of property damaged or destroyed in a disaster and in various other minor or technical ways.

ln the general elections of 1986, 1988, 1990 and 1996, the voters of the State approved various measures which further amended Article XIIl A. One such amendment generally provides that the purchase or transfer of(l) real property between spouses or (ii) the principal residence and the first $1,000,000 of the full cash value of other real property between parents and children, do not constitute a "purchase" or "change of ownership" triggering reassessment under Article XIIl A. Other amendments permitted the Legislature to allow persons over 55 who sell their residence and, on or after November 5, 1986, buy or build another of equal or lesser value within two years in the same county, to transfer the old residence's assessed value to the new residence, and permitted the Legislature to authorize each county under certain circumstances to adopt an ordinance making such transfers or assessed value applicable to situations in which the replacement dwelling purchased or constructed after November 8, 1988, is located within the county and the original property is located in another county within the State.

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

In the March 1996 primary election, the voters approved a further amendment to Article XIlIA which extended the above-described parent-child reassessment exemption to transfers from grandparents to grandchildren under certain circumstances.

ln addition, Proposition 1 was adopted by initiative in the November 1998 general election. Proposition 1 further amends Article XIlIA to allow the repair or replacement of environmentally contaminated property or structures without increasing the tax valuation of the original or replacement

19 property. The State's Legislative Analyst estimated the passage of Proposition I would result in "property tax revenue losses probably less than $1 million annually in the near term to schools, counties, cities, and special districts."

Neither the Authority nor the Agency has the power to levy and collect taxes. Any further reduction in the tax rate or the implementation of any constitutional or legislative property tax de-emphasis will reduce Tax Revenues and, accordingly, would have an adverse impact on the ability of the Agency to pay debt service on the Loans and thus, the Authority's ability to pay debt service on the Bonds.

Court Challenges to Article XIIIA

On September 22, 1978, the California Supreme Court upheld Article XIllA over challenges on several state and federal constitutional grounds (Amador Valley Joint Union High School District v. State Board of Equalization). The Court reserved certain constitutional issues and the validity of legislation implementing the amendment for future determination in proper cases.

The U. S. Supreme Court struck down as a violation of equal protection certain property tax assessment practices in West Virginia, which had resulted in vastly different assessments of similar properties. Since Proposition 13 provides that property may only be reassessed up to 2 percent per year, except upon change of ownership or new construction, recent purchasers may pay substantially higher property taxes than long-time owners of comparable property in a community. In reaching its decision in the West Virginia case, the Supreme Court expressly declined to comment in any way on the constitutionality of Proposition 13.

Based on the decision in the West Virginia case, property owners in the State brought three suits challenging the acquisition value assessment provisions of Article XIIIA. Two cases involved residential property, and one case involved commercial property. In all three cases, State trial and appellate courts have upheld the constitutionality of Article XIllA's assessment rules and concluded that the West Virginia case did not apply to State laws. On June 3, 1991, the U.S. Supreme Court agreed to hear the appeal in the challenge relating to commercial property. However, the plaintiff in that case subsequently withdrew the matter. On June 18, 1992, the U.S. Supreme Court affirmed the State appellate court's decision in Nordlinger v. Hahn, one of the challenges to Article XIllA relating to residential property, wherein the State appellate court had upheld the constitutionality of Article XIIIA.

The Agency cannot predict whether there will be any further challenges to the State's current system of property tax assessment or what impact any such developments might have on its revenues or on the State's financial obligations to local governments. See "BONDOWNERS' RISKS-Restored Value (Article XIIIA Litigation)" herein.

Legislation Implementing Article XIIIA

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

Increases of assessed valuation resulting from reappraisals of property due to new construction, change in ownership or from the 2% annual adjustment are allocated among the various jurisdictions in the "taxing area" based upon their respective "situs" except for certain utility property assessed by the State Board

20 of Education ("Unitary Property") which is allocated by a different method as described under "Unitary Property" below. Any such allocation made to a local agency continues as part of its allocation in future years.

Beginning in the 1981-82 Fiscal Year, assessors in the State no longer record property values on tax rolls at the assessed value of25% of market value which was taxed, per Article XIDA, at $4.00 per $100 of assessed value. All taxable property is now shown at full market value on the tax rolls. Consequently, the tax rate is expressed as $1 per $100 of taxable value. All taxable property value included in this Official Statement is shown at I 00% of market value as defined by the County of Los Angeles Assessor (unless noted differently) and all tax rates reflect the $1 per $100 oftaxable value.

Appropriation Limitation -Article XIIIB

On November 6, 1979, the voters approved Proposition 4, known as the Gann Initiative, which added Article XI1IB to the California Constitution. Under Article XIIlB, state and local government entities have an annual "appropriations limit" which limits the ability to spend certain moneys which are called "appropriations subject to limitation" ( consisting of tax revenues and certain state subventions together called "proceeds of taxes" and certain other funds) in an amount higher than the "appropriations limit." Article XIlIB does not affect the appropriation of moneys which are excluded from the defmition of "appropriations limit," including debt service on indebtedness existing or authorized as of January 1, 1979, or bonded indebtedness subsequently approved by two-thirds of the voters.

In general terms, the "appropriations limit" is to be based on certain fiscal year 1978-79 expenditures, and is to be adjusted annually to reflect changes in the consumer price index, population and services provided by these entities. Among other provisions of Article XIIlB, if the revenues of such entities in any year exceed the amounts permitted to be spent, the excess would have to be returned by revising tax rates or fee schedules over the subsequent two years. To the extent of any such revision in tax rates or fee schedules over the subsequent two years, Pledged Tax may be affected since tax allocations to the Agency are a product of the combination of tax rates levied by certain taxing agencies having jurisdiction within the Project Areas.

Statutes of 1980, Chapter 13.2 (Senate Bill 1972), enacted by the California Legislature and effective as an urgency measure of November 30, 1980, added Section 33678 to the Redevelopment Law. Section 33678 provides that the allocation and payment of taxes to the Agency for the purpose of paying the principal of or interest on loans, advances or indebtedness incurred for redevelopment activities, as defined therein, shall not be deemed the receipt by the Agency of proceeds of taxes levied by or on behalf of the Agency within the meaning or for the purposes of Article XIlIB of the California Constitution, nor shall such portion of taxes be deemed receipt of proceeds of taxes by, or an appropriation subject to the limitation of, any other public body within the meaning or for the purposes of Article XIIIB or any statutory provision enacted in implementation of Article XIIIB.

The California Court of Appeals, Fourth Appellate District, in Brown v. Community Agency of the City of Santa Ana, 168 Cal.App. 3d 101 (1985), and the California Court of Appeals, Second Appellate District, in Bell Community Redevelopment Agency v. Woolsey, 169 Cal.App.3d 24 (1985), have determined that the appropriation of tax increment revenues by a redevelopment agency is not subject to the limitations of Article XIlIB. The California Supreme Court denied a petition for hearing in the Brown case. No petition for review was filed in the Bell case. On the basis of these decisions, the Agency has not adopted an appropriations limit.

21 Unitary Property

AB 454 (Chapter 921, Statutes of 1987) provides that revenues derived from most utility property assessed by the State Board of Equalization ("Unitary Property"), commencing with the 1988-89 Fiscal Year, will be allocated as follows: (1) each jurisdiction, including the Project Areas, will receive up to I 02% of its prior year State-assessed revenue; and (2) if county-wide revenues generated from Unitary Property are less than the previous year's revenues or greater than I 02% of the previous year's revenues, each jurisdiction will share the burden of the shortfhll or excess revenues by a specified formula. This provision applies to all Unitary Property except railroads, whose valuation will continue to be allocated to individual tax rate areas.

The provisions of AB 454 do not constitute an elimination of the assessment of any State-assessed properties nor a revision of the method of assessing utilities by the State Board of Equalization. Generally, AB 454 allows valuation growth or decline of Unitary Property to be shared by all jurisdictions in a county.

Under current law, new taxing jurisdictions, including amendments to existing tax rate areas may receive a share of Unitary Property tax revenues only after jurisdictions in existence in the 1988-89 Fiscal Year have received 102% of their prior year's allocation of such revenues. Thus, while it is not entirely clear, current law seems to provide that only if the Unitary Property tax base increases may new jurisdictions or amendments thereto receive Unitary Property tax revenue, and then each jurisdiction (including previously existing jurisdictions) will receive a percentage of any increase over 2% equal to the percentage of the total ad valorem tax levies for the secured roll that the jurisdiction received in the prior year.

On February I, 1991, the Superior Court for the County of Sacramento issued a Statement of Decision in AT&T Communications of California, et al. v. State Board of Equalization, which reduced the valuation of certain unitary property owned by AT&T for property tax proposes. Under the decision, the valuation method used by the Board of Equalization to value unitary utility property was declared illegal and a new method of valuation, resulting in significantly lower values and therefore significantly lower property tax revenues, was imposed. The effect on AT&T's statewide-assessed value was to reduce it from approximately $1.75 billion to approximately $1.1 billion. The resulting refund ordered by the court exceeded $9 million. The Agency understands that, as a result of this case, the State Board of Equalization and several other utility companies whose unitary property valuations could be affected by the principles announced in the Superior Court decision have entered into a settlement agreement (the "Settlement Agreement''). On July 14, 1993, the Superior Court for the County of Sacramento entered a judgment validating the Settlement Agreement. The Settlement Agreement provides for a method of valuing unitary property for eight years, beginning in fiscal year 1991-92. This method of valuation will result in a reduction of unitary taxes collected by counties. The Agency cannot predict the effect of any future litigation or settlement agreements concerning these matters on the amount of tax increment revenues received or to be received by the Agency. Katz Hollis, Inc., the Agency's fiscal consultant ("Katz Hollis" or the "Fiscal Consultant") has estimated, based on figures provided by the County Auditor-Controller and the State Board of Equalization, that the Agency will not receive, during focal year 2002-2003, unitary property tax revenues for any of the five Project Areas. See APPENDIX A- "FISCAL CONSULTANT'S REPORT" hereto for additional information.

Low- and Moderate-Income Housing

Under Section 33334.2 of the Redevelopment Law, redevelopment agencies in California are generally required, unless certain annual findings are made, to set aside at least 20 percent of all tax increment allocation annually in a Low- and Moderate-Income Housing Fund to be used within the jurisdiction of the Agency to increase and improve the supply of low- and moderate-income housing (the "20% Set Aside Requirement"). All tax increment in each of the Project Areas is pledged to the repayment

22 of the respective Loan because either 20 percent or more of the proceeds thereof will be or were used for low and moderate-income housing purposes or the Agency has otherwise complied with applicable law relating to the 200/o Set Aside Requirement.

Section 33607.S Payments

Health & Safety Code Section 33607.5 requires that taxing entities affected by the adoption of a redevelopment plan or the amendment of a redevelopment plan after January I, 1994, receive an additional portion of tax revenues otherwise payable to the Agency for a project area. It requires, with certain exceptions, that commencing with the first :f1Scal year in which the Agency receives tax revenues for the affected project areas and continuing through the last fiscal year in which the Agency receives tax revenues, the Agency shall pay to the affected taxing entities an amount equal to 25 percent of the tax revenues received by the Agency after the amount required to be deposited in the Low- and Moderate-Income Housing Fund has been deducted. Commencing with the 11th fiscal year in which the Agency receives tax revenues for the affected project areas and continuing through the last :fJScal year in which the Agency receives tax revenues, the Agency shall pay to the affected taxing entities ( other than the City), in addition to the amounts paid pursuant to the preceding sentence and after deducting the amount allocated to the Low and Moderate-Income Housing Fund, an amount equal to 21 percent of the portion of tax revenues received by the Agency, which shall be calculated by applying the tax rate against the amount of assessed value by which the current year assessed value exceeds the first adjusted base year assessed value. The first adjusted base year assessed value is the assessed value of the project area in the 10th fiscal year in which the agency receives tax increment revenues. Additional amounts are payable commencing with the 31st year.

Proposition 218

On November 5, 1996, the voters of the State approved Proposition 218, the so-called "Right to Vote on Taxes Act." Proposition 218 added Articles XIIlC and XIIID to the State Constitution, which contain a number of provisions affecting the ability of the local governments to levy and collect both existing and future taxes, assessments, fees and charges, and extended the initiative power giving the voters the power to reduce or repeal local taxes, assessments, fees and charges. The scope of Proposition 218 has not been tested in the courts, but because the Bonds are not payable from or secured by any such sources of revenue, the Agency believes that Proposition 218 does not affect the issuance or sale of, or the security for, the Bonds.

Future Initiatives

Articles XIIIA, XIIIB, XIIIC and XIIID were each adopted as measures that qualified for the ballot pursuant to the State's initiative process. From time to time other initiative measures could be adopted, further affecting Agency revenues or the Agency's ability to expend revenues.

23 BONDOWNERS' RISKS

The following information, together with the information set forth elsewhere in this Official Statement, should be considered by prospective investors in evaluating the Bonds. However, the following does not purport to be an exhaustive listing of risks and other considerations which may be relevant to investing in the Bonds, and the order in which the following information presented is not intended to reflect the relative importance of any such risks. Other factors which could result in reduction of Tax Revenues available to the Agency and a corresponding reduction in Tax Revenues received by the Agency are discussed herein under the caption "LIMITA TIONS ONTAX REVENUES."

Reduction of Tax Revenues

Tax increment revenues allocated to the Agency (which constitute the source of payment of principal and interest on the Loans, which constitute the source of payment of principal of and interest on the Bonds as discussed herein) are determined by the amount of the incremental assessed value of property in the Project Areas, the current rate or rates at which property in the Project Areas is taxed and the percentage of taxes collected in the Project Areas. The Agency does not have taxing power, nor does the Agency have the power to affect the rate at which the property is taxed.

At least three types of events that are beyond the control of the Agency could occur and could cause a reduction in Tax Revenues, thereby impairing the ability of the Agency to make payments of principal, interest and premium (if any) when due on the Bonds.

First, a reduction of taxable values of property in the Project Areas caused by economic factors, such as relocation out of the Project Areas by one or more major property owners, successful appeals by property owners for a reduction in a property's assessed value or the destruction of property caused by natural disasters, civil unrest or other disasters could result in a reduction of Tax Revenues. The impact of appeals is discussed further under"- Assessment Appeals" below.

Second, substantial delinquencies in the payment of property taxes by the owners of taxable property within the Project Areas could impair the timely receipt by the Agency of Tax Revenues.

Third, the State electorate or Legislature could adopt further limitations with the effect of reducing the Tax Revenues. Such limitation already exists under Article XIIIA of the California Constitution, which was adopted pursuant to the initiative process. The State electorate could adopt additional similar limitations with the effect of reducing Tax Revenues. For a further description of Article XIIIA, see "LIMITATION ON TAX REVENUES - Article XIIIA of the State Constitution" herein.

Assessment Appeals

Property taxable values may be reduced as a result of a successful appeal of the taxable value determined by the County Assessor. An appeal may result in a reduction to the County Assessor's original taxable value and a tax refund to the applicant property owner. At the time of reassessment, after a change of ownership or completion of new construction, the assessee may appeal the base assessment value of the property. Under an appeal of a base assessment value, the assessee appeals the actual underlying market value of the sales transaction or the recently completed improvement. A successful appeal of the base assessment value of a parcel has significant future revenue impacts, because a reduced base year assessment will reduce the compounded future value of the property prospectively. Except for the two percent inflation factor, the value of the property cannot be increased until a change in ownership occurs or additional improvements are added.

24 There are few appeals currently pending in the Project Areas. However, the Agency cannot predict whether such appeals or any future appeals will be successful, or whether the nwnber of appeals may increase in any or all of the project Areas. Future reductions in taxable values in the Project Areas resulting from successful appeals by property owners will reduce the amount of Tax Revenues available to pay the principal of and interest on the Bonds. See "TAX REVENUES AND DEBT SERVICE - Assessment Appeals" herein and APPENDIX A- "FISCAL CONSULTANT'S REPORT' hereto.

Restored Value (Article XIIIA Litigation)

Properties that have been subject to downward valuation by the county assessors as a result of natural disasters, economic downturns or other factors, have often had that value restored by the assessors (up to the pre-decline value of the property) at rates higher than 2% per annum depending on the success of repairs following a disaster or the speed of a rebound from an economic downturn. All flfty-eight county assessors have followed this procedure, which is codified in Section 51 of the California Revenue and Taxation Code. In a ruling issued on December 27, 2001, in County of Orange v. Orange County Assessment Appeals Board No. 3, Case No. OOCC03385, the Orange County Superior Court held that the Orange County assessor violated the 2% annual inflation adjustment provision of Article XIIIA when the assessor tried to "recapture" the taxable value of a single family residential property by increasing its assessed value by approximately 4% in a single year. This ruling currently applies only to the particular taxpayer who filed the case; however, if the court's reasoning is applied generally, it could have the effect of reducing the amount of property tax revenues currently allocated to public agencies in the State, including the Agency. The assessor had not increased the assessed value of the property during a year when the market value of the property was determined by the assessor to have declined below its taxable value pursuant to Article XIIIA. In the following year, the assessor established the taxable value of the property by determining that its then current market value was greater than if the 2% annual inflation adjustment had been applied in the previous year. The assessor enrolled the property at a taxable value that recaptured the foregone 2% inflation adjustment from the previous year, resulting in a one-year increase of approximately 4%. The State Board of Equalization has approved this methodology from increasing assessed values in similar circumstances. In a ruling issued on December 12, 2002, the Orange County Superior Court held that any Orange County taxpayer whose property assessment rose more than 2% due to "recapturing" since 1979 is part of the certified class action lawsuit filed against the County of Orange in 2000. If upheld on appeal, the class action suit may result in $1 billion in illegally collected taxes being returned to Orange County taxpayers. On January 30, 2003, the Orange County Superior Court held a hearing and ruled on the motion to determine if the Orange County Tax Collector must notify such "recapture" taxpayers of their right to file tax refund claims. The Court granted the motion, but immediately put a hold on its implementation pending further review by the appellate courts on this entire case. Therefore, no notices will be issued by the Orange County Tax Collector at this time. The case is currently under review by the appellate court.

The Agency has done a cash flow analysis of the potential negative impact of a ruling adverse to the Agency from this case and has determined that the impact on the Project Areas would be insignificant.

Assumptions and Projections

To estimate the total Tax Revenues available to pay debt service on the Loans, the Agency's Fiscal Consultant has made certain asswnptions with regard to the assessed valuation in the Project Areas, future tax rates, the percentage of taxes collected, the likelihood of appeals, the amount of funds available for investment and the interest rate at which those funds will be invested. See APPENDIX A - "FISCAL CONSULTANT'S REPORT' for a full discussion of the asswnptions underlying the projections set forth

25 herein with respect to Tax Revenues. The Agency believes these assumptions to be reasonable, but to the extent that the payment of any revenues that constitute Tax Revenues is less than such assumptions, the total Tax Revenues available will, in all likelihood, be less than those projected herein. See "LIMJTATION ON TAX REVENUES - Pledge and Allocation of Taxes" herein.

Real Estate and General Economic Risks

The Agency's ability to make payments on the Bonds and the Loans will depend upon the economic strength of the Project Areas. The general economy of the Project Areas will be subject to all the risks generally associated with real estate and real estate development. Projected redevelopment of real property within the Project Areas by the Agency as well as private development in the Project Areas, may be adversely affected by changes in general economic conditions, fluctuations in the real estate market and interest rates, unexpected increases in development costs and by other similar factors. Further, real estate development within the Project Areas could be adversely affected by future governmental policies, including governmental policies to restrict or control certain kinds of development. If development and redevelopment activities in the Project Areas encounter significant obstacles of the kind described herein or other impediments, the economy of the Project Areas could be adversely affected, causing reduction of the Tax Revenues available to repay the Bonds and the Loans. In addition, if there is a decline in the general economy of the region, the City or the Project Areas, the owners of property within the Project Areas may be less able or less willing to make timely payments of property taxes, causing a delay or stoppage of Tax Revenues received by the Agency from the Project Areas.

Reduction in Inflationary Rate

Article XIIIA of the California Constitution provides that the full cash value basis of real property used in determining taxable value may be adjusted from year to year to reflect the inflationary rate, not to exceed a 2% increase for any given year, or may be reduced to reflect a reduction in the consumer price index or comparable local data. The measure is computed on a calendar year basis. See "LIMITATIONS ON TAX REVENUES - Article XIIIA of State Constitution" herein. The Agency has projected Tax Revenues to be received by it based, among other things, upon such 2% inflationary increases. Should the assessed valuation of taxable property in the Project Areas not increase at the allowed annual rate of 2%, the Agency's receipt of future Tax Revenues and thereby Pledged Tax Revenues available for payment of the Bonds may be adversely affected.

Unsecured Value

Because of the difficulty in precisely allocating the value of unsecured property such as cable TV lines to individual parcels, the County Assessor has historically aggregated the value of unsecured property in a particular area and placed that aggregate value on one or more specific parcels. Three of the ten largest assessees in the Council District 9 Project Area are owners of unsecured property assigned to one or more parcels within such Project Area If the Assessor were to select a parcel outside of the Project Area to aggregate such unsecured value, the Tax Revenues for such Project Area would be significantly reduced. The Agency believes that the Assessor is obligated by law to attribute the fair value of unsecured property in a Project Area to that Project Area.

Future Legislation

From time to time legislation has been introduced before the State Legislature, which, if enacted, could adversely impact redevelopment agencies and their ability to collect tax increment revenues on issued bonds. Certain legislative proposals have been made in connection with the State Legislature's efforts to

26 adopt a State budget for its 2003-04 ftscal year, including proposals that would require redevelopment agencies to transfer a certain amount of tax increment revenues to the Educational Revenue Augmentation Fund ("ERAF') established in each County pursuant to Section 97.03 of the California Revenue and Taxation Code. Arrangements for the 2002-03 fiscal year will cause redevelopment agencies in the State to transfer an aggregate of $75 million to ERAF. Certain proposals now being discussed by the State Legislature increase the aggregate amount transferred to ERAF to $135 million for the 2003-04 fiscal year, and other proposals seek to make further monelllry increases and/or continue such transfers in future years. Although under the California Constitution such legislative enactments cannot adversely impact existing debt obligations, such proposals, if enacted, could adversely affect the tax revenues received by redevelopment agencies. The Agency cannot predict whether any such proposals or any other legislation will be enacted that could adversely impact the ability of redevelopment agencies to collect tax increment revenues.

Hazardous Substances

An environmental condition that may result in the reduction in the assessed value of parcels would be the discovery of a hazardous substance that would limit the beneficial use of the property. fu general, the owners and operators of property may be required by law to remedy conditions of the property relating to releases or threatened releases of hazardous substances. The federal Comprehensive Environmental Response, Compensation and Liability Act of 1980, sometimes referred to as CERCLA or the Superfund Act, is the most well known and widely applicable of these laws and State laws with regard to hazardous substances are also stringent and similar. Under many of these laws, the owner ( or operator) is obligated 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 in the Project Areas be affected by a hazardous substance, would be to reduce the marketability and value of the parcel by the costs ofremedying the condition, since the purchaser, upon becoming owner, will become obligated to remedY the condition just as is the seller.

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 geuerally, now or hereafter in effect; usual equitable principles which may limit the specific enforcement under state law of certain remedies; the exercise by the United States of America of the powers delegated to it by the federal Constitution; and the reasonable and necessary exercise, in certain exceptional situations of the police power inherent in the sovereignty of the State and its governmental bodies in the interest of servicing a significant and legitimate public purpose. Bankruptcy proceedings, or the exercise of powers by the federal or state government, if initiated, could subject the owners of the Bonds to judicial discretion and interpretation of their rights in bankruptcy or otherwise and consequently may entail risks of delay, limitation, or modification oftheir rights.

Risk of Earthquake and Other Disasters

The State is subject to periodic earthquake activity. If an earthquake were to substantially damage or destroy taxable property within the Project Areas, the assessed valuation of such property would be reduced. Such a reduction of assessed valuations could result in a reduction of the Tax Revenues that secure the Bonds, thereby impairing ability of the Agency to make payments of principal of and/or interest on the Loans, and consequently, the ability of the Authority to make payments of principal of and/or interest on the

27 Bonds, when due. The Northridge earthquake that occurred on Januaty 17, 1994 caused significant damage to certain parts of the City. See "TIIE PROJECT AREAS" herein.

On September 11, 2001, terrorist attacks occurred in New York City and Washington, D.C. and resulted in significant damage and casualties. Future militmy conflicts and terrorists activities may adversely impact the property in or values of the Redevelopment Projects and, in turn, may adversely impact the Tax Revenues available to pay the Loans and the Bonds.

Tax Increment Limitation

As permitted by the Law, the Agency has not adopted a limit on the amount of tax increment the Agency may receive with respect to the Redevelopment Projects.

THE AUTHORITY

The Authority is a joint exercise of powers authority that has the IDA and the Agency as its members. The Authority was formed in June of 1992 pursuant to Section 6500 et seq. of the California Government Code. The Board of the Agency serves as the Board of the Authority. The City Council retains certain approval authority over actions taken by the Authority.

THE AGENCY

The Agency is a public body, corporate and politic, organized and existing under and pursuant to the Constitution and the Law. The Agency was activated in 1948 by the City Council. The City encompasses 469 square miles and is the second largest city by population in the United States. The mission of the Agency is to serve as the prime entity responsible for devising and implementing geographically based action strategies that serve to check and reverse deterioration in Los Angeles most troubled urban neighborhoods. The Agency will direct governmental and private sector investment, as necessary, to implement these strategies and will undertake the necessary steps required to engender new investment and growth in these areas.

The Agency is charged with the responsibility of eliminating blight through the process of redevelopment. All powers of the Agency are vested in its seven commissioners, although the City Council retains certain approval authority over the Agency. The Agency exercises governmental functions in carrying out projects and has sufficient broad authority to acquire, develop, administer and sell or lease property, including the right of eminent domain and the right to issue bonds and expend the proceeds, subject, however, to certain limitations set forth in the redevelopment plans for each Project Area Existing legislation permits the Agency to clear buildings and other improvements to develop as a building site any real property that it owns or has acquired, and to construct capital, infrastructure and improvements. Redevelopment is carried out pursuant to the Law, which defmes redevelopment as the plarming, development, replarming, redesign, clearance, reconstruction or rehabilitation, or any combination of these, of all or part of a survey area and the provisions of such residential, commercial, industrial, public or other structures or spaces as may be appropriate or necessary in the interests of the general welfare, including recreational and other facilities incidental or appurtenant to them.

The Agency may, out of the funds available to it for such purposes, pay for all or part of the value of land and the cost of buildings, facilities, structures or other improvements to be publicly owned and operated, to the extent that such improvements are of benefit to a project area and no other reasonable means of fmancing is available. The Agency must sell or lease remaining property within a project area for

28 redevelopment by others in strict confonnity with the redevelopment plan for such project area, and may specify a period within which such redevelopment must begin and be completed.

Funds to perfonn redevelopment activities come from several sources, which include property tax increment, bonds proceeds, grants and other revenues.

Currently, the Agency administers 34 redevelopment projects and one revitalization project. The 34 existing redevelopment projects cover over 22,000 acres of land located throughout the City.

Personnel

The Agency is governed by a board of seven Commissioners appointed to smggered four-year tenns by the Mayor and confinned by the City Council. The present Commissioners of the Agency, the dates of expiration of their tenns of office and their current principal occupations are as follows:

Commissioner Term Expires Occupation

David Farrar, Chairman November 4, 2006 Real Es1ate Attorney

Shu K. Woo, Vice Chairman November 4, 2005 CEO, ABC Toys

Marva Smith Battle-Bey, November 4, 2003 President and CEO Treasurer

Madeline Janis-Aparicio November 4, 2006 Executive Director

John A. Ornelas November 4, 2004 City Manager

Douglas R. Ring November 4, 2003 Businessman

John Schafer November 4, 2004 Union Business Represen1ative

Operations of the Agency are conducted under the direction of the Chief Executive Officer assisted by a staff of approximately 206 employees. Principal employees of the Agency s1aff are as follows:

Robert R. Ovrom. Chief Executive Officer of the Agency since March I, 2003; City Manager of the Cily of Burbank (17 years); Cily Manager of the Cily of Downey (2 years); Cily Manager for the Cily of Monrovia (6 years). Mr. Ovrom began his local government career in the City of Simi Valley in 1970 and became Assis1ant to the Cily Manager ofthat cily in 1973.

Richard L. Benbow. Chief Deputy Administrator of the Agency since January 1, 2003; Deputy Administrator (Technical Services) of the Agency (3 years); Deputy Administrator (Communily Development) of the Agency (1 year); Depuly Administrator (Equal Opportunily and Contract Services) of the Agency (10 years); Deputy Administrator (Equal Opportunity and Public Affairs of the Agency (5 months); Director of Equal Opportunily (6 years); Manager of Watts Redevelopment Project (2 years); Urban Planning Consul1ant (3 years); Senior Investigator of U.S. Equal Employment Opportunily Commission (2 years).

Kenneth L. Clark. Depuly Administrator (Organizational Support Services) of the Agency since August 2000; Interim Depuly Administrator (Organizational Support Services) of the Agency (6 months); Acting Director of Human Resources of the Agency (14 months); Acting Director of Procurement &

29 Compliance of the Agency (3 years); Purchasing Manager of the Agency (IO years); Contracts Specialist of the Agency (4 years); and Senior Buyer of the Agency (3 years).

John McCoy. Deputy Administrator (Community Operations II) of the Agency since August 2000; Deputy Administrator (Development Management) of the Agency (6 months); Deputy Administrator (Housing Services) of the Agency (3 years); Director of Housing of the Agency ( 4 years); President, Pacific Equities (3 years); Vice President, Housing Affiliates Inc. (8 years); Executive Director, Pennsylvania Housing Finance Agency (4 years); Development Administrator, Illinois Housing Development Authority (3 years); Regional Appraiser, The Prudential Insurance Company of America (5 years).

Edward 0. Saulet. Deputy Administrator (Community Operations ID) of the Agency since June 2001; Interim Deputy Administrator (Community Operations Ill) of the Agency (JO months); Project Manager (Adams Normandie, Mid-City, Normandie/5 and Wilshire Center/Koreatown) of the Agency (7 years); Construction Manager of the Agency (5 years); Construction Supervisor of the Agency (11 years).

Donald R. Spivack. Deputy Administrator (Community Operations I) of the Agency since February 2000; Deputy Administrator (Community Development) of the Agency (4 years); Director of Operations of the Agency (8 years); Senior Project Manager (Central Business District) of the Agency (4 Y, years) Transportation Manager of the Agency (8 months); Chief of Community Planning of Montgomery County, Maryland Planning Department, the Maryland-National Capital Park and Planning Commission ("MNCPPC") (9 Y, years); Transportation Coordinator, MNCPPC (I year); Director of Physical Planning of Southeastern Michigan Transportation Authority (2 years); Assistant Professor, Architecture and Planning, Ohio University (Athens, Ohio) (3 years).

Randall K Wilkins. Chief Financial Officer of the Agency since August 2000; Interim Chief Financial Officer of the Agency (6 months); Budget Manager of the Agency (IO years); Manager of Finance & Administration of Gould, Inc., Computer Systems Division (5 years); and Supervisor-Financial Planning & Analysis of Gould, Inc., Computer Systems Division (5 years).

Raymond L. Fors. Finance Director of the Agency since May 1988; Finance Officer of the Agency (3 years); Public Finance Consultant and Investment Banker (9 years); various positions with Security Pacific National Bank (7 years).

Lillian Burkenheim. Project Manager (Laurel Canyon Project) of the Agency since December 1994; Project Manager (North Hollywood) of the Agency since July 1993; Project Manager (Hollywood) of the Agency (1 1/2 years); Project Manager (Monterey Hills) of the Agency (3 years); Project Manager (Crenshaw) of the Agency (3 years); Project Manager (Central Library) of the Agency (I year); Assistant Project Manager (North Hollywood) of the Agency (10 years); Director of the Voluntary Action Center for West Los Angeles (I 1/2 years); Director of Summer Camp Operation for Camp Fire Girls (5 years).

Dick D'Amico. Project Manager (Central Business District, Pacoima/Panorarna City Projects) of the Agency since 2000; Principal Real Estate Officer of the Agency (Agency-wide), 5 years; Deputy Director Real Estate of the Agency (Agency-wide), 10 years; Senior Real Estate Agent of the Agency (Central Business District and Little Tokyo), 3 years.

Donna De Bruhl-Hemer. Project Manager (Hollywood and East Hollywood/Beverly-Normandie) of the Agency since 1997; Project Manager (Hollywood) of the Agency since 1996; Assistant Project Manager (Hollywood, Central Business District, Beacon Street and Los Angeles Harbor Industrial Center) of the Agency (6 years); Redevelopment Project Manager, County of Los Angeles, Willowbrook (4 years); Housing Development Specialist, Los Angeles County Community Development Commission (6 years).

30 Leslie Lambert. Project Manager (Reseda/Canoga Park Project) of the Agency since 1995; Agency Housing Manager for Policy and Development (5 years); Housing Manager/Administrator, Pasadena Community Development Commission (5 years); Housing Manager, California Department of Housing and Community Development (6 years).

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

The following table provides a brief comparative description of the Agency's current active projects:

31 AGENCY PROJECTS Base Year FY03 FY03 Date Size Assessed Assessed Incremental Redevelo(!ment Project Created (Acres} Value (l} Value Taxable Value Adams-Normandie (2) 5179 404 $42,441,528 $277,715,936 $235,274,408 Adelante Eastside 3/99 2,164 1,194,256,788 1,412,394,518 218,137,730 Beacon Street 4/69 60 6,763,528 88,948,025 82,184,497 Broadway/Manchester 12/94 189 78,897,280 89,321,311 10,424,031 Bunker Hill 3159 133 20,353,759 2,185,274,194 2, 164,920,435 Central Business District (2)(3) 7175 538 1,402,237,616 6,970,081,788 5,567,844,172 Central Industrial 11/02 738 772,252,011 (4) NIA Chinatown ( 5) 1/80 303 109,237,360 390,579,830 281,342,470 City Center (6) 5/02 880 2,163,716,363 (4) NIA Council District 9 Corridors 12/95 2,817 1,678,584, 138 1,969,448,200 290,864,062 Crenshaw (7) 5/84 204 106,211,545 216,954,606 110,743,061 Crenshaw/Slauson 10/95 262 125,153,766 159,302,839 34,149,073 East Hollywood/Beverly-Normandie 12/94 656 770,982,83 8 897,539,191 126,556,353 Hollywood 5/86 1,107 1,217,812,439 2,818,494,338 1,600,681,899 Hoover (8) 1/66 573 92,618,818 317,223,034 224,604,216 Laurel Canyon 12/94 248 228,109,639 299,270,301 71,160,662 Little Tokyo 2/70 67 29,596,759 254,939,258 225,342,499 Los Angeles Harbor 7/74 232 9,803,244 119,308,732 I 09,505,488 Mid-City 5/96 725 440,683,174 595,935,965 155,252,791 Monterey Hills 7/71 211 1,173,740 228,945, 739 227,771,999 Normandie/5 10/69 210 24,798,740 149,269,416 124,470,676 North Hollywood (9) 2/79 740 164,396,710 899 ,620, 190 735,223,480 Pacific Corridors 5/02 673 472,606,062 (4) NIA Pacoima/Panorama City 11/94 2,914 2,370,167,823 2,858,540,088 488,372,265 Pico Union I 2/70 155 34,680,989 127,816,419 93,135,430 Pico Union 2 (5) 11/76 227 52,047,000 233,387,269 181,340,269 Reseda/Canoga Paik 12/94 2,400 1,937,984,101 2,382,961,863 444,977,762 Rodeo/La Cienega 5/82 24 2,016,285 44,282,633 42,266,348 Vermont/Manchester 5/96 163 80,874,665 110,333,896 29,459,231 Watts 12/68 107 8,002,685 36,262,133 28,259,448 Watts Corridors 11195 245 46,218,304 71,973,240 25,754,936 Western/Slauson 5196 377 187,033,704 194,045, 703 7,0ll,999 Westlake 5199 638 705,133,413 856,681,806 151,548,393 Wilshire Center/Koreatown 12/95 1,207 2,515,955,183 2,554,890, 798 38,935,615

(1) As reported by the County. Upon passage of AB454, the County implemented the measure by reducing the base year assessed values of a11 redevelopment projects by the amount of unitary values existing in the base. (See Taxes in the Fiscal Consultant Report in APPENDIX A - "FISCAL CONSULTANT'S REPORT" hereto.) (2) Project has reached its cap for its receipt of tax increment revenue. (3) In accordance with a stipulated judgment filed in 1977, seven buildings within the Central Business District are not included in the calculation of the Agency's tax increment revenues. The value as shown and resulting tax revenues are therefore adjusted to reflect such Agreement. The stipulated judgment also limits annual Agency tax increment as lo those seven buildings to $7:5 million. (4) No information ftom County; first year to collect taxes will be in Fiscal Year 2003-04.. (5) Project was amended in 2001. (6) A California superior court recently ruled that this project area was invalid. The Agency is exploring its options to cause the project area to comply with State Law and become valid. (7) Project was expanded in 1994. (8) Project was expanded in 1983 and in 1989. (9) Project was amended in 1980, 1983, 1994 and 1995.

32 Factors Affecting Redevelopment Agencies Generally

Other features of State law which bear on redevelopment agencies include general provisions which require public agencies to let contracts for construction only after competitive bidding. The Law provides that construction in excess of $5,000 undertaken by a redevelopment agency shall be done only after competitive bidding. State statutes also provide for offenses punishable as felonies which involve direct or indirect interest of a public official in a contract made by such official in his or her official capacity. In addition, the Law prohibits a redevelopment agency or city official or employee who, in the course of his or her duties, is required to participate in the formulation or approval of plans or policies, from acquiring any interest in property in a redevelopment project.

The State also has strict laws regarding public meetings (known as the Ralph M. Brown Act) which require all redevelopment agency and city meetings to be open to the public, with certain exceptions not applicable here.

Article XIlIA of the California Constitution provides that full cash value of property used in determining taxable valuation may reflect from year to year the inflationary rate, not to exceed two percent for any given year, or such lesser amount as shown in the consumer price index. Such rate is computed on an April 1 year end.

Earthquake Disaster Assistance Projects

The Laurel Canyon Project, the Pacoima/Panorama City Project, the Reseda/Canoga Park Project and the East Hollywood/Beverly-Normandie Project were each adopted in late 1994 in order to provide for and facilitate the repair, restoration, demolition and/or replacement of property and facilities damaged as a result of the Northridge Earthquake, a devastating earthquake which caused extensive damage in the City of Los Angeles in January of 1994. Then existing redevelopment law permitted the Agency to more expeditiously adopt a redevelopment plan in response to certain disasters and to exercise the powers granted to redevelopment agencies by the Law to aid in the recovezy from such disasters.

TAX REVENUES AND DEBT SERVICE

Tax Allocation Financing

The Law provides a means for financing redevelopment projects based upon an allocation of taxes collected within a project area. The taxable valuation of a project area last equalized prior to adoption of the redevelopment plan, or base roll, is established and, except for any period during which the taxable valuation drops below the base year level, the taxing agencies thereafter receive the taxes produced by the levy of the then current tax rate upon the base roll. Taxes collected upon any increase in taxable valuation over the base roll are allocated to a redevelopment agency and may be pledged by a redevelopment agency to the repayment of any indebtedness incurred in financing or refmancing a redevelopment project. Redevelopment agencies themselves have no authority to levy property taxes and must look specifically to the allocation of taxes produced as above indicated. Accordingly, 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, would have the effect of reducing the amount of tax increment, and a portion of which would otherwise be deposited in the special fund to pay the principal of, and interest on, the Loans (and thus the Bonds). Likewise, the reduction of assessed valuations of taxable property in the Project Areas would have a similar effect. See "BONDOWNERS' RISKS" and "LIMITATIONS ON TAX REVENUES" herein.

33 Any property tax levied by the County on secured property becomes a lien on that property. A tax levied on unsecured property does not become a lien against the personal property, but may become a lien on certain real property owned by the owner of the personal property located within the County.

Every tax which becomes a lien on property has a priority over all other liens arising pursuant to State law on the property regardless of the time ofthe creations of other liens.

Property Tax Collection Procedures

In the State, 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 sufficient, in the opinion of the county assessor, to secure payment of the taxes. Every tax which becomes a lien on secured property has priority over all other liens arising pursuant to State law on such secured property, regardless of the time of the creation of other liens. 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 taxpayer.

Secured and unsecured property are entered separately on the assessment roll maintained by the county assessor. The method of collecting delinquent taxes is substantially different for the two classifications of property. The exclusive means of enforcing the payment of delinquent taxes with respect to property on the secured roll is the sale of the property securing the taxes to the State for the amount of delinquent taxes. The taxing authority has four ways of collecting overdue unsecured personal property taxes in the absence of timely payment of the taxpayer: (i) a civil action against the taxpayer, (ii) filing a certificate in the office of the county clerk specifying certain facts in order to obtain a judgment lien on certain property of the taxpayer, (iii) filing a certificate of delinquency for record in the county recorder's office in order to obtain a lien on certain property of the taxpayer, and (iv) seizure and sale of personal property, improvements or possessory interest belonging or taxable to the assessee.

A IO percent penalty is added to delinquent taxes which have been levied with respect to property on the secured roll. In addition, property on the secured roll on which taxes are delinquent is sold to the State on or about June 30 of the fiscal year. Such property may thereafter be redeemed by payment of the delinquent taxes and a delinquency penalty, plus a redemption penalty of one and one-half percent (1.5%) per month to the time ofredemption. If taxes are unpaid for a period of five ( 5) years or more, the property is deeded to the State and then is subject to sale by the county tax collector. A ten percent (10%) penalty also applies to delinquent taxes on property on the unsecured roll, and further, an additional penalty of one and one-half percent (1.5%) per month accrues with respect to such taxes beginning the first day of the third month following the delinquency date.

The valuation of property, including property assessed by the State, is determined as of January I each year and equal installments of taxes levied upon secured property are due on the following November I and February I and become delinquent on the following December JO and April I 0. Taxes on unsecured property are due November I and become delinquent August 31, and such taxes are levied at the prior year's secured tax rate.

Legislation enacted in 1983 (Statutes of 1983, Chapter 498) provides for the supplemental assessment and taxation of property upon the occurrence of a change of ownership or completion of new construction. Previously, State law enabled the assessment of such changes only as of the next March I tax lien date following the change and thus delayed the realization of increased property taxes from the new assessment for up to 14 months.

34 Chapter 498 provided increased revenue to redevelopment agencies to the extent that supplemental assessments of new construction or changes of ownership occur within the boundaries of redevelopment projects subsequent to the January 1 lien date. To the extent such supplemental assessments occur within the Project Areas, Tax Revenues may increase. To the extent properly becomes owned by public, religious or other Tax Exempt entities, Tax Revenues may decrease.

Property Tax 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 properly tax revenues to local government jurisdictions in proportion to the tax-derived revenues allocated to each. SB 1559 (Chapter 697, Statutes of 1992) explicitly includes redevelopment agencies among the jurisdictions which are subject to such charges. See APPENDIX A - "FISCAL CONSULTANT'S REPORT'' hereto for details of such charges paid by the Agency to the County with respect to the Project Areas.

Filing of Statement of Indebtedness

Section 33675 of the Law provides for the filing, not later than the first day of October of each year, with the County Auditor of a statement of indebtedness certified by the chief fiscal officer of the Agency for each redevelopment plan which provides for the allocation of taxes. The statement of indebtedness is required to contain the dates on which each bond issue was delivered, the principal amount, term, purposes and interest rate of the bonds and the outstanding balance and amount due on the bonds. Similar information must be given for each loan, advance or indebtedness that the Agency has incurred or entered into which is payable from tax increment.

Section 33675 also provides that payments of tax increment revenues from the County Auditor to the Agency may not exceed the amounts shown on the Agency's statement of indebtedness. The Section further provides that the statement of indebtedness is prima facie evidence of the indebtedness of the Agency, but that the County Auditor may dispute the amount of indebtedness shown on the statement in certain cases, and the disputed amount may be withheld from the allocation and payment to the Agency. Provision is made for time limits under which the dispute can be made by the County Auditor as well as provisions for determination by the California Supreme Court in a declaratory relief action of the properly disposition of the matter. The issue in any such action shall involve only the amount of the indebtedness and not the validity for any contract or debt instrument, or any expenditures pursuant thereto. Payments to a trustee under a bond resolution or indenture or payments to a public agency in connection with payments by such public agency pursuant to a bond issue shall not be disputed in any action under Section 33675.

Agency Financial Statements

The Agency accounts for its financial transactions through funds representing the Project Areas. The Agency's Combined Financial Statement and Schedules for the Fiscal Year ended June 30, 2002 were prepared by Agency staff and audited by the certified public accounting firm of Simpson & Simpson. The Agency's Combined Financial Statement and Schedule with Report on Audit by Independent Certified Public Accountants are attached hereto as APPENDIX D hereto. Copies of the Agency's audited financial statements can be obtained at the office of the Finance Director of the Agency.

Investment Policy

The proceeds of the Loans and other moneys required to be deposited by the Agency in the funds and accounts established under the Loan Agreements will be held and invested by the Agency and the

35 Trustee in Permitted Investments, as defined in the Indentures. See APPENDIX B-"SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURES AND THE LOAN AGREEMENTS" hereto.

The Agency's smplus funds and investment portfolio are invested in accordance with an adopted investment policy developed by the Agency in accordance with the provisions of State law. The fundamental considerations in making Agency investments are safety (i.e., preservation of invested capital), liquidity and yield. The investment portfolio is structured, taking into consideration diversification and risk limitations, prudent investment principles and cash flow requirements. The investment portfolio is rated "AANV-1 +" by Fitch Ratings, Inc. Credit ratings reflect the views of the rating agency and any explanation of the significance of the ratings should be obtained directly from such rating agency.

The Agency does not invest in leveraged products, structured loans or inverse floating rate loans or engage in borrowing to acquire securities.

Historical and Current Taxable Values and Revenues

The Agency's primary source of funds to pay debt service on the Loans (and consequently, the Bonds), is the Agency's share of ad valorem property tax increment revenues which result from the completion of new real estate developments and a general reassessment of properties within the Project Areas. The purpose of redevelopment is to revitalize deteriorated or underdeveloped areas within a community. As new construction progresses, property values normally increase and the ultimate result is a proportionate increase in ad valorem property tax revenues.

The total taxable value of all properties within each of the Project Areas on the property assessment roll last equalized prior to the effective date of the ordinance adopting the Redevelopment Plan established a base from which increases in taxable value are computed. Under the Redevelopment Law, property taxes levied based upon the amount shown on the base year assessment roll will continue to be paid to and retained by all taxing agencies levying property taxes in the Project Areas. Taxes levied by the respective taxing agencies on any increases in taxable value realized in the Project Areas will be allocated to the Agency.

This procedure does not involve the levy of any additional taxes, but provides that revenues produced by the tax rates in effect from year to year shall be apportioned to the taxing agencies levying the taxes and to the Agency on the basis described above. After all loans, advances and other indebtedness, including interest, incurred by the Agency in connection with the Project Areas have been paid, the tax revenues will be paid to and retained by the respective taxing agencies in the normal manner. 2002/03 Project Area 2002/03 Base Year Incremental % Valuation Taxable Value Taxable Value Value Growth Council District 9 $1,969,448,200 $1,678,584,138 $290,864,062 17.3% East Hollywood/Beverly- 897,539,191 770,982,838 126,556,353 16.4 Normandie Laurel Canyon 299,270,301 228,109,693 71,160,608 31.2 Pacoima/Panorama City 2,858,540,088 2,370,167 ,823 487,467,265 20.6 Reseda/Canoga Park 2,382,961,863 1,937,984,101 444,977, 762 23.0

Source: Katz Hollis/Underwriters

36 THE PROJECT AREAS

Following is a discussion of certam characteristics and data regarding each of the Project Areas. Unless noted otherwise, the source of this infonnation is the Agency, and the Underwriters make no representation as to its factual nature. Certain information has been prepared by the Agency's fiscal consultant, Katz Hollis and is believed to be reliable, subject to the disclauners noted in the fiscal consultant's report. The complete report prepared by Katz Hollis is attached hereto as APPENDIX A hereto. This report projects Net Estimated Revenues for the Project Areas based on the assumptions and qualifications described therein.

Council District 9 Project Area

General Description. The Council District 9 Project Area encompasses 2, &17 acres and covers commercial and industrial corridors within the area bounded by the Santa Monica Freeway on the north, Alameda Street on the east, Nonnandie Avenue on the west and &4th Street on the south. Within these boundaries, some residential uses exist along the major corridors. However, residentially-designated neighborhoods are excluded. A high priority for the plan is to develop job-producing programs and revitalize the major commercial and industrial corridors in the Project Area Project objectives include job retention and attracting new businesses to the area; industrial area expansion and stabilization; providing consumer retail, shopping and entertainment facilities; providing affordable housing; expanding job training programs; and providing improved transportation and city services.

Of 7,361 parcels, 92 percent needed assistance and were in some state of disrepair. Seventy-one percent of the parcels showed evidence of broken public sidewalks, curbs and gutters. Fifty-nine percent of the parcels demonstrated deferred maintenance in areas of driveways, walkways, ground covered parking/loading areas and fencing. Twenty-seven percent of the parcels had deficient on-site parking. Sixty-three percent of the parcels were served by a public alley and were severely deteriorated. Fifty-eight percent of the parcels had buildings with graffiti. The Council District 9 Redevelopment Project Area was plagued with building deterioration and lack of commercial facilities; lack of parking; the presence of incompatible uses; existence of subdivided lots of irregular form and shape and inadequate size for proper use and development. These lots were also in multiple ownership.

Development in the Council District 9 Project Area. Major accomplishments include approval of a U. S. Department of Commerce Economic Development Administration (EDA) grant in the amount of $550,000 for technical assistance activities and $2,600,000 to construct public improvements and revitalize the Goodyear Tract Industrial site. In addition, a $12, I 00,000 Brown fields Economic Development Initiative (BEDI) loan and grant was awarded for clean-up of toxic and hazardous waste sites and for expansion of existing businesses and new job creation within the industrial tract. An additional $3,000,000 in Targeted Neighborhood Initiative funds (1NI) was provided through Community Development Block Grant (CDBG) allocations for revitalization activities within the Central Avenue Historic District. These activities include the completion of the street lighting upgrades; installation of banners and signage; establishment of a Walk of Fame; Property acquisition for a Constituent Service Center; historic rehabilitation of the Ralph Bunche Peace and Heritage Center; housing rehabilitation; streetscape and tree planting. In addition, an Exclusive Negotiation Agreement was executed for the development of the Slauson/Central Shopping Center. The increase in the issuance of building permits by the Agency since the adoption of the Council District 9 Plan in 1995 has been substantial; an average of 45 permits are processed each month, a I 5-fold increase since adoption.

37 Council District 9 (South of Santa Monica Freeway)

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~ ~ ~ 1# > ~ ~ "' ..,~ ~ 0 I "' ii! I ""' ""' l1' I ;! " BOTH lT. Council District 9 Project

Historical Taxable Value

1998/99 1999/2000 2000/01 2001/02 2002/03 Secured Land $ 693,423,120 $719,510,728 $747,986,238 $789,111,999 $839,990,095 Improvements 825,943,035 868,565,141 897,893,410 938,401,625 981,194,705 Personal Property 21,274,728 13 276,659 10,544,576 9,409,521 II 673 110 Gross Secured 1,540,640,883 1,601,352,528 1,656,424,224 1,736,923,145 1,832,857,910 Less: Exemptions 108,871,973 78,762,540 100,760,688 84,285,140 125,304,209 Total Secured $ 1,431,768,910 $ 1,522,589,988 $ 1,555,663,536 $ 1,652,638,005 $ 1,707,553,701

Unsecured Land $ 0 $ 0 $ 0 $ 0 $ 0 Improvements 107,600,664 101,388,707 104,149,623 102,774,095 95,627,441 Personal Property 155,134,075 140,432,748 160,021,668 158,915,665 166,531,058 Gross Unsecured 262,734,739 241,821,455 264,171,291 261,689,760 262,158,499 Less: Exemptions 2,076,000 105,400 92 000 105 000 264,000 Total Unsecured $ 260,658,739 $ 241,716,055 $ 264,079,291 $ 261,584,760 $ 261,894,499

TOTAL PROJECT VALUE $ 1,692,427,649 $ 1,764,306,043 $ 1,819,742,827 $ 1,914,222,765 $1,969,448,200

Percentage Increase/Decrease 4.25% 3.14% 5.19% 2.89%

(I) Exemption adjustments are based on specific situations where exemptions were filed late and not included in the initial roll values.

39 Top 10 Assessees. Ten major property owners in the Council District 9 Project Area were identified by the Fiscal Consultant based upon a review of the 2002/03 locally assessed secured taxable valuations reported by the County Assessor. The aggregate total assessed value of the ten identified taxpayers amounted to $196,183,251 or 9.96% of the total taxable value of the Council District 9 Project Area.

Council District 9 Redevelopment Project

TEN MAJOR ASSESSEES FOR FISCAL YEAR 2002103'') <•l %of Major No.of 2002/03 Project Rank Assessees Parcels Use Value Value

LA Mart Owners LLC 5 Professional Offices $42,630,258 2.16%

2 2 3434 South Grand A venue < l 2 W arehouse!Distribution 30,600,306 1.55

Corporate Property'' Beverage Processing 29,689,390 I.SI

3 Matchmaster Dyeing & Finishing Unsecured 15,072,663 0.77

4 SF! I LLC Warehouse/Distribution 14,870,000 0.76

5 Alameda and 25th LLC 1 Warehouse/Distribution 14,728,573 0.75

6 Great Spring Waters 2 Unsecured 13,930,671 0.71

7 Dennis B Needleman 6 Shopping Center 13,299,893 0.68

8 Steven S Koh 9 vv arehouse/Office/Parking 11,206,526 0.58

10 Cereal Food Processors Inc 1 Manufacturing 10,154,971 0.52

TOTAL VALUE TOP 10 ASSESSEES $196,183,251 TOTAL 2002103 PROJECT VALUE $1,969,448,200

TOTAL % OF 2002103 PROJECT VALUE 9.96% TOTAL% OF 2002/03 INCREMENTAL VALUE 67.45%

( 1) Based on information provided by the County of Los Ange Jes. Includes secured and unsecured value located within the Project Area attributable to each assessee. (2) During fiscal year 2002-03, one of the two parcels became tax exempt. The second of the two parcels had been transferred to the University of Southern California ("USC"), therefore reducing this assessee's holdings in this Project Area for 2003-04 to approximately $19.9 million. It is uncertain if the USC Property will be tax exempt. (3) During fiscal year 2002-03, this property was purchased by the Los Angeles Unified School District and became tax exempt property. (4) Because some of the above parcels became tax exempt, the following assessees will probably be among the largest assesses in 2003~04:

Major No.of 2002/03 Project Assessees Parcels Use Value Value

Tenenblatt Partnership 22 Light Mfg./Warehouse $9,358,799 0.48% Somerville Apartments 7 Multi-Family Residential $8,543,857 0.43

40 Estimated Tax Revenues. The 2002-03 tax roll for the Council District 9 Project (as described in the Fiscal Consultant's Report) reflects an increase in assessed valuation of $55,225,435 (or 2.89 percent) from the 2001-02 reported assessed valuation. Net Estimated Revenues (comprised of total tax increment revenue for the Council District 9 Project less estimated appeal reductions, property tax administrative charges and tax sharing payments under Health and Safety Code Section 33607.5) of approximately $2,237,000 are projected to be received with respect to the Council District 9 Project for the 2002-03 fiscal year. For discussion of certain factors which might substantially reduce Tax Revenues, see "LIMITATIONS ON TAX REVENUES" herein. Included in APPENDIX A - "FISCAL CONSULTANT'S REPORT'' hereto is a projection of future Net Estimated Revenues for the Council District 9 Project based on the assumptions and qualifications described therein. In addition, see APPENDIX A - "FISCAL CONSULTANT'S REPORT'' hereto for a chart containing the base roll assessed valuation of the Council District 9 Project as compared to the assessed value, and the estimated incremental tax revenue for fiscal year 2002-03.

41 Council District 9 Project

Estimate of Tax Increment Revenues (1) 1995/96 2002/03 2002/03 Base Incremental Taxable Value Taxable Value Taxable Value Secured Land $839,990,095 $689,779,907 $150,210,188 Improvements 981,194,705 802,146,973 179,047,732 Personal Property 11,673,110 15,807,913 (4,134,803) Gross Secured $1,832,857,910 $1,507, 734,793 $325,123,117 Less: Exemptions 125,304,209 94,889,947 30,414,262 Total Secured $1,707,553,701 $1,412,844,846 $294,708,855

Unsecured Land 0 0 0 Improvements 95,627,441 97,306,492 (1,679,051) Personal Property 166,531,058 168,605,400 (2,074,342) Gross Unsecured $262,158,499 $265,911,892 ($3,753,393) Less: Exemptions 264 000 172,600 91 400 Total Unsecured $261,894,499 $265,739,292 ($3,844,793)

Total Secured and Unsecured $1,969,448,200 $1,678,584,138 $290,864,062

Resolved Appeal Valuation Reductions (2) 3,517,000 Pending Appeal Valuation Reductions (2) 4,566,000

Adjusted Incremental Secured and Unsecured $282,781,062

Tax Increment Revenue $2,988,000 Unitary Revenue (3) 0 Less: Property Tax Administrative Charge 57,000

Gross Estimated Revenue $2,931,000 Less: Resolved Appeal Refunds (2) 62,000 Pending Appeal Refunds (2) 73,000 AB 1290 Payments 559,000

NET ESTIMATED REVENUE ( 4) $2,237,000

42 Assessment Appeals. Appeals of the taxable value for assessments within the Council District 9 Project could potentially lower taxable values, as currently reported, thereby reducing Tax Revenues. Resolved assessment appeals reduced estimated property valuation within the Council District 9 Project by approximately $3,517,000 for fiscal year 2001/02, and refunds are estimated to reduce Project revenues in fiscal year 2002/03 by $62,000. In addition, a number of appeals are currently pending regarding assessed valuation within the Council District 9 Project that may result in significant reductions in estimated property valuation and refunds to property owners. The estimated valuation reduction for the Council District 9 Project for fiscal year 2002/03 is $4,566,000 and the estimated refund is $73,000. The potential impact of pending appeals is based on the applicant's opinion of the value of the contested parcels. Actual impacts to Tax Revenues are dependent upon the actual revised value, if any, of assessments resulting from values determined by the County Assessment Appeals Board or through litigation, and upon the timing of successful appeals. See APPENDIX A- "FISCAL CONSULTANT'S REPORT'' hereto.

Historically, the Agency has addressed resolved and pending refunds resulting from assessment appeals through its budgeting process. Each quarter, as new appeal information becomes available, the Agency reviews such information and makes appropriate budgeting adjustments so as to absorb significant impact (if any) from appeals out of cash on hand, program revenues, or other means necessary to meet its obligations to Bondholders. This policy is an internal management tool and is subject to change. While the Agency cannot guarantee the continuation of such policy, it currently has no plans to adjust or eliminate it.

There can be no assurance as to the outcome of any of the above pending appeals. It is possible that other owners of property in the Council District 9 Project will file appeals to lower their assessment values to comparable levels. See APPENDIX A - "FISCAL CONSULTANT'S REPORT'' hereto for the assumptions the Fiscal Consultant has made concerning the resolved and pending appeals in the Council District 9 Project. Successful appeals will result in reductions in the amount of Tax Revenues collected and could have an adverse effect on the Agency's ability to pay debt service on the Series K Bonds.

Indebtedness of the Council District 9 Project. The Agency has previously borrowed bonded indebtedness secured by Tax Revenues of the Council District 9 Project Area. The amount outstanding as of June 30, 2002, was $4,000,000. The Agency intends to borrow $5,500,000 under the Council District 9 Loan Agreement to fund redevelopment in the Council District 9 Redevelopment Project Area, to establish a reserve account for the Council District 9 Loan Agreement and to pay the costs of issuance related to the Council District 9 Loan and the Series J Taxable Bonds.

Debt Service Coverage. The following table projects the annual ratios between the Agency's total debt service ( comprised of payments required to be made by the Agency on the Council District 9 Loan Agreement) and its Net Estimated Revenues. The table is based upon the Net Estimated Revenues in the amounts projected by the Fiscal Consultant.

43 The Fiscal Consultant has made certain assumptions including, among other things, the assessed valuation in the Council District 9 Project, future tax rates, likelihood of appeals and future administrative charges in order to project Net Estimated Revenues. See APPENDIX A - "FISCAL CONSULTANT'S REPORT' hereto for a full discussion of the assumptions underlying the projections set forth herein with respect to Net Estimated Revenues. The Agency believes these assumptions to be reasonable, but to the extent that the actual components used in the determination of Net Estimated Revenues vary from such assumptions, the total Net Estimated Revenues available may be less than those projected herein.

COUNCIL DISTRICT 9 PROJECT

ESTIMATED TAX INCREMENT, DEBT SERVICE AND COVERAGE())

Bond Estimated Outstanding Loan Year Tax Increment21 Pari!Y Bonds Debt Service Coverage 2004 $2,634,000 $335,994 $ 396,399 360% 2005 2,930,000 332,169 398,213 401 2006 3,231,000 333,344 395,496 443 2007 3,538,000 334,094 397,779 483 2008 3,784,000 329,419 399,853 519 2009 4,034,000 334,744 396,718 551 2010 4,289,000 334,219 397,743 586 2011 4,548,000 328,269 403,503 622 2012 4,812,000 327,319 403,733 658

TOTAL $33,800,000 $2,989,569 $3,589,437 (]) Source: Underwriters. (2) Amounts are based on information set forth in the Fiscal Consultant's Report.

The East Hollywood/Beverly-Normandie Project Area

General Description. The East Hollywood/Beverly-Normandie Project is located approximately four miles west of Downtown and one block east of the Agency's Hollywood Redevelopment Project Area. It consists of two noncontiguous areas totaling 656 acres.

The East Hollywood portion is approximately 464 acres bounded by Hobart Boulevard on the west, Franklin and Finley Avenues on the north, Talmadge and Hillhurst Streets on the east, and both sides of Sunset Boulevard and Prospect Avenue on the south. It is a diverse community with an intense concentration of hospital facilities, notably Kaiser Permanente and Children's Hospital of Los Angeles, located along Sunset Boulevard. The 1 I .4-acre Barnsdall Park, situated on a hilltop site, is a focal point of the community. High-density apartments and neighborhood retail uses predominate along Hollywood Boulevard. This area includes a portion of the Los Feliz Village Commercial District, which contains neighboring middle-income residences, and a Metro Rail station at Vermont Avenue and Sunset Boulevard.

44 CRA/LA The Beverly/Normandie segment is approximately 192 acres in size bordered by Beverly Boulevard on the north, New Hampshire Avenue on the east, Third Street on the south and Nonnandie Avenue on the west. This portion of the Project area contains a mixture of neighborhood retail and various ethnic businesses and grocery stores, which serve the densely populated multi-family residential district.

The January 1994 Northridge Earthquake caused substantial property damage in the East Hollywood/Beverly-Nonnandie Project area. Over $10.9 million in structural damage to approximately 327 multi-family sites and $2.6 million in structural damage to 39 commercial sites occurred. In total, including public facilities, 509 buildings (commercial, multi-family residential and public facilities) were affected, resulting in an estimated $15.S million in total damages. Barnsdall Park, the only City-owned park serving the Project area, sustained significant earthquake damage. The National Register of Historic Places lists many of its structures and buildings including those designed by worldrenowned American architect, Frank Lloyd Wright.

The goals of the Redevelopment Plan are to aid in the repair, restoration and/or demolition of earthquake damaged residential and commercial buildings, support the reconstruction and re-occupancy of the damaged commercial centers, and encourage the return of consumer and resident confidence within these areas.

Development In the East Hollywood/Beverly-Normandle Project Area. In May 1997, the Agency received a Commercial Industrial Earthquake Recovery Loan Program (CIERLP) loan for $550,000 to assist in the acquisition and rehabilitation of the Don Carlos building located at Harvard and Hollywood Boulevard. The Don Carlos building provides newly-renovated space for 11 businesses on the ground level and 32 units rental units for seniors on the upper two floors. The total project, completed in the late 2001, cost $1,850,000.

In July 1999, the Los Angeles County Metropolitan Transportation Authority (the "MTA'') Board of Directors approved funding through its "Call for Projects" program for the Barnsdall Park Transit Oriented District streetscape project; but made this funding available in Fiscal Years 2002 and 2003. In September 1999, the MTA informed all agencies that these funds were "contingent" and could be reprogrammed for bus capital or operating purposes. Funding for this project was made available in Fiscal Year 2002. The Agency is processing and executing documents required for funding, design and construction.

Assessed Valuation and Tax Revenues. The following table lists the historical tax receipts for East Hollywood/Beverly-Nonnandie Project.

46 East Hollywood/Beverly-Normandie Project

Historical Taxable Value

2000/01 2001/02 2002/03 Secured 1998/99 1999/2000 Land $ 375,135,680 $ 388,277,737 $ 418,873,832 $ 444,414,813 $ 480,000,712 Improvements 686,474,492 705,355,704 734,893,466 764,524,935 806,759,672 Personal Property 111,085,169 101,405,429 99,526,300 102,638,311 I 04,976,825

Gross Secured 1, 172,695,341 1,195,038,870 1,253,293,598 1,311,578,059 1,391,737)09 Less: Exemptions 494,432,411 492,688,718 496,383,251 514,215,521 528,846,938 Total Secured $ 678,262,930 $ 702,350, 152 $ 756,910,347 $ 797,362,538 $ 862,890,271

Unsecured Land $ 0 $ 0 $ 0 $ 0 $ 0 Improvements 9,019,816 8,304,909 8,169,775 8,673,506 9,713,231 Personal Property 14)93,277 16,479,132 17,782,751 20,445,939 25,088,689 Gross Unsecured 23,313,093 24,784,041 25,952,526 29,119,445 34,801,920 Less: Exemptions 89,000 96,500 213,200 101,000 153,000 Total Unsecured $ 23,224,093 $ 24,687,541 $ 25,739,326 $ 29,018,445 $ 34,648,920

TOTAL PROJECT VALUE $ 701,487,023 s n1,037,693 $ 782,649,673 $ 826,380,983 $ 897,539,191

Percentage Increase/Decrease 3.64% 7.65% S.59% 8.61%

(1) Exemption adjustments are based on specific situations where exemptions were filed late and not included in the initial roll values.

47 Top 10 Assessees. Ten major property owners in the East Hollywood/Beverly-Normandie Project Area were identified by the Fiscal Consultant based upon a review of the 2002-03 locally assessed secured taxable valuations reported by the County Assessor. The aggregate total assessed value of the identified ten taxpayers amounted to $78,370,019, or 8.73% of the total taxable value of the East Hollywood/Beverly-Normandie Project Area.

East Hollywood/Beverly-Normandie Project Area

TEN MAJOR ASSESSEES FOR FISCAL YEAR 2002/03 (I) o/o of Major No.of 2002103 Project Rank Assessees Parcels Use Value Value

Kaiser Foundation Hospitals 21 Hospital/Parking $18,038,111 2.01%

2 Willie Wong Co TR 9 Multi. Fam. Res. 8,970,239 1.00%

3 1800 New Hampshire Assoc I Multi. Fam. Res. 8,714,526 0.97%

4 Safeway Inc 2 Supermarket 8,912,488 0.99%

5 Finley Real Estate LTD Partnership I Multi. Fam. Res. 6,255,850 0.70%

6 Henry and Anita Weiss TRS 9 Multi. Fam. Res. 6,153,494 0.69%

7 Epsteen Pomona Properties LLC 6 Bank/Parking 5,967,000 0.66%

8 Professional 5000 Sunset LLC Building 5,642,147 0.63%

9 Harvey J Muller TR ET AL Multi. Fam. Res. 5,042,738 0.56%

10 Wayne Griffin JR CO TR 5 Auto Service 4,673,426 0.52%

TOTAL VALUE TOP 10 ASSESSEES $78,370,019 TOTAL 2002103 PROJECT VALUE $897,539,191

TOTAL% OF 2002/03 PROJECT VALUE 8.73% TOTAL% OF 2002103 INCREMENTAL VALUE 61.92%

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

48 Estimated Tax Revenues. The 2002-03 tax roll for the East Hollywood/Beverly-Normandie Project (as described in the Fiscal Consultant's Report) reflects an increase in assessed valuation of $71,158,208 (or 8.61 percent) from the 2001-02 reported assessed valuation. Net Estimated Revenues (comprised of total tax increment revenue for the East Hollywood/Beverly-Normandie Project less estimated appeal reductions, property tax administrative charges and tax sharing payments under California Health and Safety Code Section 33607.5) of approximately $970,000 are projected to be received with respect to the East Hollywood/Beverly-Normandie Project for the 2002-03 fiscal year. For discussion of certain factors which might substantially reduce Tax Revenues, see "LIMITATIONS ON TAX REVENUES" herein. Included in APPENDIX A- "FISCAL CONSULTANT'S REPORT' hereto is a projection of future Net Estimated Revenues for the East Hollywood/Beverly-Normandie Project based on the assumptions and qualifications described therein. In addition, see APPENDIX A - "FISCAL CONSULTANT'S REPORT" hereto for a chart containing the base roll assessed valuation of the East Hollywood/Beverly-Normandie Project as compared to the 2001-02 assessed value, and the estimated incremental tax revenue for fiscal year 2002-03.

49 East Hollywood/Beverly-Normandie Redevelopment Project

Estimate of Tax Increment Revenues (l) 1994/95 2002/03 2002/03 Base Incremental Taxable Value Taxable Value Taxable Value Secured Land :&480,000,712 $378,209,351 $101,791,361 Improvements 806,759,672 649,300,377 157,459,295 Personal Property I 04,976,825 86,562 194 18,414,631 Gross Secured $1,391,737,209 $1,114,071,922 $277 ,665,287 Less: Exemptions 528,846,938 377,510,265 151,336,673 Total Secured $862,890,271 $736,561,657 $126,328,614

Unsecured Land 0 0 0 Improvements 9,713,231 7,163,004 2,550,227 Personal Property 25,088,689 27,344,177 (2,255,488) Gross Unsecured $34,801,920 $34,507,181 $294,739 Less: Exemptions 153 000 86,000 67,000 Total Unsecured $34,648,920 $34,421,181 $227,739

Total Secured and Unsecured $897,539,191 $770,982,838 $126,556,353

Resolved Appeal Valuation Reductions (2) 1,225,000 Pending Appeal Valuation Reductions (2) 3,191,000

Adjusted Incremental Secured and Unsecured $122,140,353

Tax Increment Revenue $1,290,000 Unitary Revenue (3) 0 Less: Property Tax Administrative Charge 25,000

Gross Estimated Revenue $1,265,000 Less: Resolved Appeal Refunds (2) 13,000 Pending Appeal Refunds (2) 39,000 AB 1290 Payments 243,000

NET ESTIMATED REVENUE (4) $970,000

50 Assessment Appeals. Appeals of the taxable value for assessments within the East Hollywood/Beverly-Normandie Project could potentially lower taxable values, as currently reported, thereby reducing Tax Revenues. Resolved assessment appeals reduced estimated property valuation within the East Hollywood/Beverly-Normandie Project by approximately $1,225,000 for fiscal year 2001/02, and refunds are estimated to reduce Project revenues in fiscal year 2002/03 by $13,000. In addition, a number of appeals are currently pending regarding assessed valuation within the East Hollywood/Beverly-Normandie Project that may result in significant reductions in estimated property valuation and refunds to property owners. The estimated valuation reduction for the East Hollywood/Beverly-Normandie Project for fiscal year 2002/03 is $3,191,000 and the estimated refund is $39,000. The potential impact of pending appeals is based on the applicant's opinion of the value of the contested parcels. Actual impacts to Tax Revenues are dependent upon the actual revised value, if any, of assessments resulting from values determined by the County Assessment Appeals Board or through litigation, and upon the timing of successful appeals. See APPENDIX A - "FISCAL CONSULTANT'S REPORT'' hereto.

There can be no assurance as to the outcome of any of the above pending appeals. It is possible that other owners of property in the East Hollywood/Beverly-Normandie Project will file appeals to lower their assessment values to comparable levels. See APPENDIX A - "FISCAL CONSULTANT'S REPORT'' hereto for the assumptions the Fiscal Consultant has made concerning the resolved and pending appeals in the East Hollywood/Beverly-Normandie Project. Successful appeals will result in reductions in the amount of Tax Revenues collected and could have an adverse effect on the Agency's ability to pay debt service on the Series K Bonds.

Indebtedness of the East Hollywood/Beverly-Normandie Project. The Agency has not previously issued bonded indebtedness or borrowed bonded indebtedness of the Authority payable from Tax Revenues of the East Hollywood/Beverly-Normandie Project Area. The Agency intends to borrow $1,885,000 under the East Hollywood/Beverly-Normandie Loan Agreement to fund further redevelopment in the East Hollywood/Beverly-Normandie Project Area, to establish a reserve account for the East Hollywood/Beverly-Normandie Loan and to pay the costs of issuance related to the East Hollywood/Beverly-Normandie Loan and the Series K Bonds.

Debt Service Coverage. The following table projects the annual ratios between the Agency's total debt service (comprised of payments required to be made by the Agency on the existing debt described above and the East Hollywood/Beverly-Normandie Loan Agreement) and its Net Estimated Revenues. The table is based upon the Net Estimated Revenues in the amounts projected by the Fiscal Consultant.

The Fiscal Consultant has made certain assumptions including, among other things, the assessed valuation in the East Hollywood/Beverly-Normandie Project, future tax rates, likelihood of appeals and future administrative charges in order to project Net Estimated Revenues. See APPENDIX A - "FISCAL CONSULTANT'S REPORT'' hereto for a full discussion of the assumptions underlying the projections set forth herein with respect to Net Estimated Revenues. The Agency believes these assumptions to be reasonable, but to the extent that the actual components used in the determination of Net Estimated

51 Revenues vary from such assumptions, the total Net Estimated Revenues available may be less than those projected herein.

EAST HOLLYWOOD/BEVERLY-NORMANDIE PROJECT

ESTIMATED TAX INCREMENT, DEBT SERVICE AND COVERAGE(!)

Bond Estimated Loan Year Tax Increment (2) Debt Service Coverage 2004 $1,136,000 $189,086 601% 2005 1,263,000 184,973 683 2006 1,392,000 188,926 737 2007 1,496,000 187,530 798 2008 1,601,000 186,134 860 2009 1,708,000 184,738 925 2010 1,817,000 188,138 966 2011 1,928,000 186,138 1036 2012 2,041,000 184,138 1108

TOTAL $14,382,000 $1,679,801 (I) Source: Underwriters. (2) Amounts are based on information set forth in the Fiscal Consultant's Report.

The Laurel Canyon Project Area

General Description. The Laurel Canyon Project is located northwest of the North Hollywood Redevelopment Project, in the south San Fernando Valley. The 248-acre project generally follows Laurel Canyon Boulevard from Burbank Boulevard to Vanowen Street. The Redevelopment Plan was adopted on December 6, 1994. The Plan sets forth a range of goals including the repair and economic recovery of the area from the devastating 1994 Northridge Earthquake.

The Laurel Canyon Corridor was hard hit by the Northridge Earthquake. Several apartment buildings were destroyed, Laurel Plaza was severely damaged and the mall shops were demolished. The SO-acre Valley Plaza Shopping Center experienced damage not only to its buildings, but to the infrastructure as well: gas lines, plumbing, electrical all needed to be repaired. Following the Northridge Earthquake, Sears rebuilt its store at Valley Plaza and another major anchor tenant, Robinson's-May Department Store, reopened, but there were no further improvements to the centers.

52 CRA/LA

OXNARD ST.

@ NORTH Development in the Laurel Canyon Project Area. The activities undertaken to implement the plan include the revitalization of Laurel Plaza and Valley Plaza Shopping Centers. The Plan also contemplates improvements and creation of housing in the immediate area including single family, home ownership and housing for older people.

Two apartment buildings have been rebuilt, one new apartment building has been completed and another one is under construction. Laurel Plaza has joint-ventured with Westfield for the development of the Plaza. The Agency has entered into an Exclusive Right to Negotiate with the John Snyder Company for the redevelopment of the Valley Plaza Shopping Center. The proposed development would include the development of 200,000 square feet of offices and 850,000 square feet of retail as well as approximately 5,000 parking spaces.

Agency staff has worked also with property owners and developers to construct additional housing in Council District 2. A senior housing project was completed in the third quarter of Fiscal Year 2001. The second phase of a senior housing development is currently under construction.

Assessed Valuation and Tax Revenues. The following table lists the historical tax receipts for the Laurel Canyon Project Area.

54 Laurel Canyon Project

Historical Taxable Value

1998/99 1999/2000 2000/01 2001/02 2002/03 Secured $ $ $ $ Land $ 94,881,605 97,809,147 103,808,375 110,897,503 116,294,160 Improvements 150,113,252 155,230,843 163,778,301 170,888,161 177,211,574 Personal Property 5,089,301 4 331,831 5,114,999 4 043,309 4,533,949 Gross Secured 250,084,158 257,371,821 272,701,675 285,828,973 298,039,683 Less: Exemptions 12,695,484 5,438,762 13,265,106 5,679,986 15,475,294 Less: Exemption Adjustments (I) . 6178451 . 6428 059 $ $ $ $ Total Secured $ 237,388,674 245,754,608 259,436,569 273,720,928 282,564,389

Unsecured Land $ 0 $ 0 $ 0 $ 0 $ 0 Improvements 7,858,440 7,563,501 7,839,519 7,680,796 6,939,099 Personal Property 9,743,178 9,684 319 10,925,803 10,986 260 9 766,813 $ $ $ $ Gross Unsecured $ 17,601,618 17,247,820 18,765,322 18,667,056 16,705,912 Less: Exemptions 33,000 21,000 21 000 71,000 $ $ $ $ Total Unsecured $ 17,568,618 17,226,820 18,744,322 18,596,056 16,705,912

TOTAL PROJECT VALUE $254,957,292 $262,981,428 $278,180,891 $292,316,984 $299,270,301

Percentage IncreaseIDecrease 3.15% 5.78% 5.08% 2.38%

(I) Exemption adjustments are based on specific situations where exemptions were filed late and not included in the initial roll values.

55 Top 10 Assessees. Ten major property owners in the Laurel Canyon Project Area were identified by the Fiscal Consultant based upon a review of the 2002/03 locally assessed secured taxable valuations reported by the County Assessor. The aggregate total assessed value of the identified ten taxpayers amounted to $104,378,465 or 34.88% of the total taxable value of the Laurel Canyon Project Area.

Laurel Canyon Project

TEN MAJOR ASSESSEES FOR FISCAL YEAR 2002/03 (I) %of Major No. of 2002/03 Project Rank Assessees ParceJs Use Value Value

Laurel Plaza Development 1 Shopping Ctr $30,237,424 10.10%

2 May Department Stores Co 2 Shopping Ctr 21,707,857 7.25%

3 Pacific Pointe LLC Multi. Fam. Res. 11,024,894 3.68%

4 Sears Roebuck and Co Department Store 8,040,332 2.69%

5 6400 Laurel Canyon Investors LLC 1 Bank 7,344,000 2.45%

6 CohyvlLLC Office Building 5,784,624 1.93%

7 Valley Plaza LLC 5 Shopping Ctr 5,550,530 1.85%

8 I 031 South Wooster Limited 2 Multi. Fam. Res. 5,435,900 1.82%

9 KW Limited Office Building 4,929,418 1.65%

IO Jean S Elkawass Shopping Ctr 4,323,486 1.44%

TOTAL VALUE TOP 10 ASSESSEES $104,378,465 TOTAL 2002/03 PROJECT VALUE $299,270,301

TOTAL% OF 2002/03 PROJECT VALUE 34.88% TOTAL% OF 2002/03 INCREMENTAL VALUE 146.68%

(l) Source: Katz Hollis based on information provided by the County of Los Angeles. Includes all secured and unsecured value located within the Project Area attributable to each assessee.

56 Estimated Tax Revenues. The 2002-03 tax roll for the Laurel Canyon Project (as described in the Fiscal Consultant's Report) reflects an increase in assessed valuation of$6,953,317 (or 2.38 percent) from the 2001-02 reported assessed valuation. Net Estimated Revenues (comprised of total tax increment revenue for the Laurel Canyon Project less estimated appeal reductions, property tax administrative charges and tax sharing payments under Health and Safety Code Section 33607.5) of approximately $554,000 are projected to be received with respect to the Laurel Canyon Project for the 2002-2003 fiscal year. For discussion of certain factors which might substantially reduce Tax Revenues, see "LIMITATIONS ON TAX REVENUES" herein. Included in APPENDIX A - "FISCAL CONSULTANT'S REPORT" hereto is a projection of future Net Estimated Revenues for the Laurel Canyon Project based on the assumptions and qualifications described therein. In addition, see APPENDIX A - "FISCAL CONSULTANT'S REPORT' hereto for a chart containing the base roll assessed valuation of the Laurel Canyon Project as compared to the 2001-02 assessed value, and the estimated incremental tax revenue for fiscal year 2002-03.

57 Laurel Canyon Project

Estimate of Tax Increment Revennes (1) 1994/95 2002/03 2002/03 Base Incremental Taxable Value Taxable Value Taxable Value Secured Land $116,294,160 $86,546,557 $29,747,603 Improvements 177,211,574 128,434,284 48,777,290 Personal Property 4,533,949 I 578,975 2,954,974 Gross Secured $298,039,683 $216,559,816 $81,479,867 Less: Exemptions 15,475,294 12,576,798 2,898,496 Total Secured $282,564,389 $203,983,018 $78,581,371

Unsecured Land 0 0 0 Improvements 6,939,099 10,555,002 (3,615,903) Personal Property 9,766,813 13,571,673 (3,804,860} Gross Unsecured $16,705,912 $24, 126,675 ($7,420,763) Less: Exemptions 0 0 0 Total Unsecured $16,705,912 $24,126,675 ($7,420,763)

Total Secured and Unsecured $299,270,301 $228,109,693 $71,160,608

Resolved Appeal Valuation Reductions (2) 975,000 Pending Appeal Valuation Reductions (2) 579,000

Adjusted Incremental Secured and Unsecured $69,606,608

Tax Increment Revenue $735,000 Unitary Revenue (3) 0 Less: Property Tax Administrative Charge 14,000

Gross Estimated Revenue $721,000 Less: Resolved Appeal Refunds (2) 21,000 Pending Appeal Refunds (2) 7,000 AB 1290 Payments 139,000

NET ESTIMATED REVENUE (4) $554,000

(I) Based on information provided by the County of Los Angeles. (2) Based on information reported by the County as of January 2003. (3) As reported by the County as of December 2002. (4) Total Estimated Revenue includes $147,000 of revenue designated for housing uses but available for debt service on the proposed bonds.

58 Assessment Appeals. Appeals of the taxable value for assessments within the Laurel Canyon Project could potentially lower taxable values, as currently reported, thereby reducing Tax Revenues. Resolved assessment appeals reduced estimated property valuation within the Laurel Canyon Project by approximately $975,000 for the fiscal year 2001/02, and refunds are estimated to reduce Project revenues in fiscal year 2002/03 by $21,000. In addition, a number of appeals are currently pending regarding assessed valuation within the Laurel Canyon Project that may result in significant reductions in estimated property valuation and refunds to property owners. The estimated valuation reduction for the Laurel Canyon Project for fiscal year 2002/03 is $578,700 and the estimated refund is $7,000. The potential impact of pending appeals is based on the applicant's opinion of the value of the contested parcels. Actual impacts to Tax Revenues are dependent upon the actual revised value, if any, of assessments resulting from values determined by the County Assessment Appeals Board or through litigation, and upon the timing of successful appeals. See APPENDIX A - "FISCAL CONSULTANT'S REPORT' hereto.

There can be no assurance as to the outcome of any ofthe above pending appeals. It is possible that other owners of property in the Laurel Canyon Project will file appeals to lower their assessment values to comparable levels. See APPENDIX A - "FISCAL CONSULTANT'S REPORT' hereto for the assumptions the Fiscal Consultant has made concerning the resolved and pending appeals in the Laurel Canyon Project. Successful appeals will result in reductions in the amount of Tax Revenues collected and could have an adverse effect on the Agency's ability to pay debt service on the Series J-Taxable Bonds.

Indebtedness of the Laurel Canyon ProjecL The Agency has previously borrowed the proceeds of bonded indebtedness of the Authority and entered into a loan agreement with the Authority to borrow funds (the "Previous Loan") secured by Tax Revenues from the Laurel Canyon Project. The amount outstanding as of June 30, 2002, was $595,000 aggregate principal amount of the Authority's Pooled Financing Bonds, Series G-Taxable (Mid-City and Laurel Canyon Redevelopment Projects) (the "Series G Bonds"). The Agency intends to borrow $2,760,000 under the Laurel Canyon Loan Agreement to repay the Previous Loan, by refunding the portion of the Series G Bonds related to the Previous Loan and to fund further redevelopment in the Laurel Canyon Project Area, to establish a reserve account for the Laurel Canyon Loan and to pay the costs of issuance related to the Laurel Canyon Loan and the Bonds.

Debt Ser,,ice Coverage. The following table projects the annual ratios between the Agency's total debt service comprised of payments required to be made by the Agency on the Laurel Canyon Loan Agreement and its Net Estimated Revenues. The table is based upon the Net Estimated Revenues in the amounts projected by the Fiscal Consultant.

59 The Fiscal Consultant has made certain assumptions including, among other things, the assessed valuation in the Laurel Canyon Project, future tax rates, likelihood of appeals and future administrative charges in order to project Net Estimated Revenues. See APPENDIX A - "FISCAL CONSULTANT'S REPORT' hereto for a full discussion of the assumptions underlying the projections set forth herein with respect to Net Estimated Revenues. The Agency believes these assumptions to be reasonable, but to the extent that the actual components used in the determination of Net Estimated Revenues vary from such assumptions, the total Net Estimated Revenues available may be less than those projected herein.

LAUREL CANYON PROJECT

ESTIMATED TAX INCREMENT, DEBT SERVICE AND COVERAGE<'>

Bond Estimated Loan Year Tax Incremenr2> Debt Service Coverage 2004 $602,000 $278,217 216% 2005 649,000 276,505 235 2006 696,000 279,411 249 2007 734,000 276,968 265 2008 772,000 279,525 276 2009 812,000 276,733 293 2010 852,000 278,533 306 2011 892,000 279,933 319 2012 933,000 280,933 332

TOTAL $6,942,000 $2,506,758 (I) Source: Underwriters. (2) Amounts are based on information set forth in the Fiscal Consultant's Report.

The PacoimaJPanorama City Project Area

General Description. Adopted on December 9, 1994, the Project is located in the northeast San Fernando Valley and includes portions of the communities of Arleta, Lakeview Terrace, Mission Hills, North Hills, North Hollywood, Pacoima, Panorama City, Sun Valley, Sylmar and Van Nuys. The project consists of approximately 2, 914 acres and is generally bounded by the San Diego Freeway on the west, Foothill Freeway on the north and east, and Victory Boulevard on the south.

The Pacoima/Panorama City Project was adopted to provide for and facilitate the repair, restoration, demolition and/or replacement of property or areas or facilities damaged as a result of the Northridge Earthquake and its subsequent aftershocks, and/or undertake, carry out or approve programs and perform specific actions necessary to prevent or mitigate an emergency pursuant to the Disaster Project Law. At the time of adoption of the project plan, the project area had the following characteristics: (i) numerous instances of structural damage and fascia damage as a result of the earthquake; (ii) lack of private investment in the area, leading to poor market conditions and disinvestments; (iii) high population and overcrowding, including families living in unimproved garages; (iv) defective design of physical construction combined with increasing age, obsolescence, deterioration and dilapidation; (v) inadequate public improvements and facilities; (vi) major streets requiring improvement, lack of street lighting, damage to the infrastructure due to the earthquake; and (vii) lack of adequate fire and police facilities to assist the community in times of crises, such as the earthquake.

60 CRA/LA

OEYOIISHtkE ST.

USSEN ST.

PLUMIIER H.

NO~OHOH 5L

PARTHENIA. ST.

ROSCOE BLVD.

STR.ATIIERH ST. I ~ 0 "'5 SHERMAN WAT ~ --!...----+--+- ~ .,,,11---c--+- VOSE ST. "'= "" UNOWfN SL KITTR!DGE SL

.; al ~ ~ a! 'le " i'l ;" i @ I " NORTH Development in the Pacoima!Panorama City Project Area. The Agency has facilitated the development of several programs to assist in the prevention of further deterioration of damaged structures, improve seismic safety and promote incentives to restore neighborhoods and encourage residents to return or relocate with the area. The seismic gas shut-off valve safety program was the first of its kind in Los Angeles, to assist residential owners through the purchase and installation of 100 gas shut off valves. The completion of a retail/industrial market study set the basis to evaluate the existing retail and commercial areas and the factors affecting the potential for revitalization of existing space as well as the development of new space. An economic development strategy was developed. The private sector development of the GM plant provided substantial improvement to the area.

The Commercial Industrial Earthquake Recovery Loan Program (CIERLP) has assisted Mission Medical Building ($1.06 million), Panorama Plaza ($90,000), Marcelo's Foods ($462,000), and Recreation Work iceskating in Panorama City ($350,000).

The project has also established Pacoima Partners and initiated the Targeted Neighborhood Initiative Program, including fa9ade improvements and the first merchant directory for Pacoima, the revitalization of the Chamber of Commerce and, the acceptance of Pacoima for the Main Street Program as a result of Pacoima Partners' application and training for community volunteers.

The project has also initiated street tree planting programs, and received an award from the County of Los Angeles for tree planting and the Metropolitan Transit Authority for streetscape improvements along Van Nuys Blvd., which support pedestrian and mass transit needs.

Two Brownsfields program grants and loans were recently awarded for projects in the Project Area. The first award was for Sunquest Industrial Park, a proposal for 375,000-500,000 square feet of industrial space with parking for development over a closed City landfill. The developer has accepted responsibility for gas mitigation measures of the closed landfill. A Section 108 loan of$9.8 million and a $800,000 grant was awarded to this project. The second award ofa $1.4 million grant and a $7.4 million Section I 08 loan is for Pacoirna Center. Price Pfister closed its manufacturing plant in 2001 and a retail center is now being proposed that will include a Lowe's Home Improvement Center and a neighborhood shopping center.

Van Nuys Blvd. between the 5 freeway and Glenoaks Blvd. was improved with street trees, new medians with landscaping and sidewalk improvements. Major building facade improvements were completed at: the Meet Each Need with Dignity Building, a local non-profit serving the needy in the area; two U.S. Post Offices; the Melinda Apartments; and the Valley Car Wash.

Thrity-five street lights were installed in an adjacent neighborhood in February 2003 and in March 2003 a pilot "Paint is Free" program was approved that will help beautify 20-25 residences in the Project Area.

62 Assessed Valuation and Tax Revenues. The following table lists the historical tax receipts for Pacoima/Panorama City Project. Pacoima/Panorama City Project

Historical Taxable Value

1998/99 1999/2000 2000/01 2001/02 2002/03 Secured Land $ 843,378,500 $ 883,207,497 $ 950,005,978 $ 1,024,597,183 $ 1,094,802,613 Improvements 1,170,024,541 1,234,152,100 1,350,896,605 1,434,807,598 1,533,503,111 Personal Property 59,035,408 37,503,533 39,765,853 36,061,691 33,096,805 Gross Secured 2,072,438,449 2,154,863,130 2,340,668,436 2,495,466,472 2,661,402,529 Less: Exemptions 93,051,931 113,313,547 108,003,706 89,131,907 124,747,252 Less: Exemption Adjustments (I) 2,064,956 6,768,608 20,230,421 31,401,808 905,000 Total Secured $ 1,977,321,562 $ 2,034,780,975 $ 2,212,434,309 $ 2,374,932,757 $ 2,535,750,277

Unsecured Land 0 0 0 1,671,581 0 Improvements 77,271,235 88,597,267 84,120,887 95,246,020 103,081,752 Personal Property 159,605,670 191,165,291 209,867,478 220,527,370 226,199,059 Gross Unsecured 236,876,905 279,762,558 293,988,365 317,444,971 329,280,811 Less: Exemptions 522,800 797,800 7,264,700 9,332,881 7,396,000

Total Unsecured $ 236,354,105 $ 278,964, 758 $ 286,723,665 $ 308, 112,090 $ 321,884,811

TOTAL PROJECT VALUE $ 2,213,675,667 $2,313,745,733 $2,499,157,974 $2,683,044,847 $2,857,635,088

Percentage Increase/Decrease 4.52% 8.01% 7.36% 6.51%

( 1) Exemption adjustments are based on specific situations where exemptions were filed late and not included in the initial roll values.

63 Top JO Assessees. Ten major property owners in the Pacoimll!Panorama City Project Area were identified by the Fiscal Consultant based upon a review of the 2002-03 locally assessed secured taxable valuations reported by the County Assessor. The aggregate total assessed value of the identified ten taxpayers amounted to $253,922,849, or 8.89% of the total taxable value of the Pacoimll!Panorama City Project Area.

Pacoima!Panorama City Redevelopment Project Area

TEN MAJOR ASSESSEES FOR FISCAL YEAR 2002103 (1) %of Major No. of 2002103 Project Rank Assessees Parcels Use Value Value

Manufacturing Price Pfister Inc 6 (nonoperating) $47,513,423 1.66%

2 NF Plant Associates LLC 13 Shopping Ctr 44,737,191 1.57%

3 Restaurant/ Panorama City Associates 2 Shopping 26,884,025 0.94%

4 Spectrolab Inc I Unsecured 25,948,443 0.91%

5 G and S Partnership Warehouse 21,253,919 0.74%

6 Henry and Anita Weiss lRS 22 Multi Fam Res 20,645,815 0.72%

7 Pacifica of the Valley Corp 4 Hospital/Parking 19,712,502 0.69%

Manufacturing! 8 Valacal Co 9 Vacant Land 16,827,140 0.59%

Warehouse/Lt 9 Northeast Valley Industrial 6 Manufacturing. 15,350,743 0.54%

10 Advanced Bionics Corporation Unsecured 15,049,648 0.53%

TOTAL VALUE TOP 10 ASSESSEES $253,922,849 TOTAL 2002103 PROJECT VALUE $2,857,635,088

TOTAL % OF 2002103 PROJECT VALUE 8.89% TOTAL% OF 2002/03 INCREMENTAL VALUE 52.09%

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

64 Estimated Tax Revenues. The 2002-03 tax roll for the Pacoima/Panorama City Project (as described in the Fiscal Consultant's Report) reflects an increase in assessed valuation of$174,590,241 (or 6.51 percent) from the 2001-02 reported assessed valuation. Net Estimated Revenues (comprised of total tax increment revenue for the Pacoima/Panorama City Project less estimated appeal reductions, property tax administrative charges and tax sharing payments under California Health and Safety Code Section 33607.5) of approximately $3,634,000 are projected to be received with respect to the Pacoima/Panorama City Project for the 2002-03 fiscal year. For discussion of certain factors which might substantially reduce Tax Revenues, see "LIMITATIONS ON TAX REVENUES" herein. Included in APPENDIX A - "FISCAL CONSULTANT'S REPORT'' hereto is a projection of future Net Estimated Revenues for the Pacoima/Panorama City Project based on the assumptions and qualifications described therein. In addition, see APPENDIX A - "FISCAL CONSULTANT'S REPORT'' hereto for a chart containing the base roll assessed valuation of the Pacoima/Panorama City Project as compared to the 2001-02 assessed value, and the estimated incremental tax revenue for fiscal year 2002-03.

65 Pacoima/Panorama City Redevelopment Project

Estimate of Tax Increment Revenues (1) 1994/95 2002/03 2002/03 Base Incremental Taxable Value Taxable Value Taxable Value Secured Land $1,094,802,613 $840,862,636 $253,939,977 Improvements 1,533,503, 111 1,373,756,933 159,746,178 Personal Property 33,096,805 48,049,253 (14,952,448) Gross Secured $2,661,402,529 $2,262,668,822 $398,733,707 Less: Exemptions 124,747,252 88,903,733 35,843,519 Less: Exemption Adjustments (2) 905,000 0 905,000 Total Secured $2,535, 750,277 $2,173,765,089 $361,985,188

Unsecured Land 0 0 0 Improvements 103,081,752 78,804,606 24,277,146 Personal Property 226,199,059 117,629,128 108,569 931 Gross Unsecured $329,280,811 $196,433,734 $132,847,077 Less: Exemptions 7,396,000 31,000 7,365,000 Total Unsecured $321,884,811 $196,402, 734 $125,482,077

Total Secured and Unsecured $2,857,635,088 $2,370,167 ,823 $487,467,265

Resolved Appeal Valuation Reductions (3) 6,958,000 Pending Appeal Valuation Reductions (3) 7 577 000

Adjusted Incremental Secured and Unsecured $472,932,265

Tax Increment Revenue $4,997,000 Unitary Revenue ( 4) 0 Less: Property Tax Administrative Charge 95 000

Gross Estimated Revenue $4,902,000 Less: Resolved Appeal Refunds (3) 200,000 Pending Appeal Refunds (3) 160,000 AB 1290 Payments 908,000

NET ESTIMATED REVENUE (5) $3,634,000

(1) Based on information provided by the County of Los Angeles. (2) Values have been adjusted based on specific situations where exemptions were filed late and not included in the initial role values. (3) Based on information reported by the County as of January 2003. (4) As reported by the County as of December 2002. (5) Total Estimated Revenue includes $999,400 ofrevenue designated for housing uses but available for debt service on the proposed bonds.

66 Assessment Appeals. Appeals of the taxable value for assessments within the Pacoima/Panorama City Project could potentially lower taxable values, as currently reported, thereby reducing Tax Revenues. Resolved assessment appeals reduced estimated property valuation within the Pacoima/Panorama City Project by approximately $6,958,000 for fiscal year 2001/02, and refunds are estimated to reduce Project revenues in fiscal year 2002/03 by $199,800. In addition, a number of appeals are currently pending regarding assessed valuation within the Pacoima/Panorarna City Project that may result in significant reductions in estimated property valuation and refunds to property owners. The estimated valuation reduction for the Pacoima/Panorama City Project for fiscal year 2002/03 is $7,577,000 and the estimated refund is $160,000. The potential impact of pending appeals is based on the applicant's opinion of the value of the contested parcels. Actual impacts to Tax Revenues are dependent upon the actual revised value, if any, of assessments resulting from values determined by the County Assessment Appeals Board or through litigation, and upon the timing of successful appeals. See APPENDIX A - "FISCAL CONSULTANT'S REPORT'' hereto.

There can be no assurance as to the outcome of any of the above pending appeals. It is possible that other owners of property in the Pacoima/Panorama City Project will file appeals to lower their assessment values to comparable levels. See APPENDIX A - "FISCAL CONSULTANT'S REPORT'' hereto for the assumptions the Fiscal Consultant has made concerning the resolved and pending appeals in the Pacoima/Panorama City Project. Successful appeals will result in reductions in the amount of Tax Revenues collected and could have an adverse effect on the Agency's ability to pay debt service on the Series J. Taxable Bonds.

Indebtedness of the Pacoima!Panorama City Project. The Agency has not previously issued bonded indebtedness or borrowed bonded indebtedness of the Authority payable from Tax Revenues of the Pacoima/Panorama City Project Area. The Agency intends to borrow $4,265,000 under the Pacoima/Panorama City Loan Agreement to fund further redevelopment in the Pacoima/Panorama City Project Area, to establish a reserve account for the Pacoima/Panorarna City Loan and to pay the costs of issuance related to the Pacoima/Panorama City Loan and the Bonds.

Debt Service Coverage. The following table projects the annual ratios between the Agency's total debt service ( comprised of payments required to be made by the Agency on the existing debt described above and the Pacoima/Panorama City Loan Agreement) and its Net Estimated Revenues. The table is based upon the Net Estimated Revenues in the amounts projected by the Fiscal Consultant.

67 The Fiscal Consultant has made certain assumptions including, among other things, the assessed valuation in the Pacoima/Panorama City Project, futnre tax rates, likelihood of appeals and futnre administrative charges in order to project Net Estimated Revenues. See APPENDIX A - "FISCAL CONSULTANT'S REPORT'' hereto for a full discussion of the assumptions underlying the projections set forth herein with respect to Net Estimated Revenues. The Agency believes these assumptions to be reasonable, but to the extent that the actual components used in the determination of Net Estimated Revenues vary from such assumptions, the total Net Estimated Revenues available may be less than those projected herein.

PACOIMA/PANORAMA CITY PROJECT

ESTIMATED TAX INCREMENT, DEBT SERVICE AND COVERAGE<'>

Bond Estimated Loan Year Tax Increment<2> Debt Service Coverage 2004 $4,340,000 $317,164 1368% 2005 4,769,000 315,734 1510 2006 5,206,000 318,226 1636 2007 5,557,000 315,509 1761 2008 5,915,000 317,792 1861 2009 6,278,000 314,866 1994 2010 6,647,000 316,156 2102 2011 7,023,000 317,181 2214 2012 7,405,000 317,941 2329

TOTAL $53,140,000 $2,850,565 (I) Source: Underwriters. (2) Amounts are based on information set forth in the Fiscal Consultant's Report.

The Reseda/Canoga Park Project Area

General Description. The Plan for the Reseda/Canoga Park Project was adopted on December 13, 1994, in response to the economic and physical recovery needs resulting from the Northridge Earthquake. The 2,500-acre project area is located in the West San Fernando Valley communities of Canoga Park, Reseda and Winnetka and generally includes the Sherman Way commercial corridor from Topanga Canyon Boulevard on the west to Louise Avenue on the east and Saticoy Street from Mason Street on the west to Oakdale Avenue on the east. Portions of the residential communities of Canoga Park and Reseda are also included within the project area boundaries.

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

68 LOm AVE.

EMOND AVE. ~ 0 @z

REStDJ. BLVD.

CORBIN AYE. i3 ;."

iu The project area was found to contain the following conditions resulting from the Northridge Earthquake: (i) 286 (59%) of the sites in Council District 3 containing damaged commercial/industrial buildings; (ii) 930 of the sites containing damaged single family homes (10% of the Council District's damaged single family units), 434 of the District's damaged multiple family apartment sites (41% of the damaged apartment units), and 84 of the District's damaged condominium sites (12% of the damaged condominium units); and (iii) 350 or 76% of the residential units located in "red tagged" buildings within the Council District, 1,894 or 38% of the "yellow tagged" units, and 10,936 or 27% of the "green tagged" units with damage. A number of retail stores were destroyed, including those located in small strip centers, major centers and freestanding structures, and the decline in population in the inunediate market area reduced retail expenditures. Retail outlets located near (or in) the residential and commercial "ghost towns" had suffered a great deal from a loss of their customer base. The earthquake also caused a reorientation of personal expenditure patterns as a greater percentage of disposable income paid for repairs and replacement of items destroyed, thereby impacted discretionary expenditures. Retailers looking to repair their damaged shops and replace lost inventories faced an even weaker market than existed prior to January 1994. Those located in heavily damaged areas, such as the designated "ghost towns", face the dual burden of a poor economy and lack of a consumer base. Without a reliable revenue source, many of these businesses were being forced to close.

Development in the Reseda/Canoga Park Project Area. Completed development in the project area includes the new 499-seat Madrid Theater in Canoga Park eight blocks of streetscape improvements in Reseda/Canoga Park, fayade improvements on 32 storefronts in Canoga Park and Winnetka, and acquisition and rehabilitation of the eight-unit bungalow court at Alabama and Valerio Streets in Canoga Park by a community-based nonprofit and relocation of households into decent, safe and sanitary housing. The project also accomplished completion of design development and construction drawings for the Reseda Streetscape Project and phase 3 of the Canoga Park Streetscape Project, certification of Canoga Park as a California Main Street Community and provision of technical and funding assistance for administration of the Main Street Canoga Park nonprofit corporation, and completion of the Guadalupe Center Rehabilitation Project. Affordable housing initiatives include creation of a First Time Homebuyers Program, the Owensmouth Townhomes Project and the Tiera del Sol, which is a proposed 119-unit very low and low income rental housing development scheduled to start construction by January 2004.

The project completed a "Retail Market Study" which analyzed the market conditions of the two major retail districts of the project area and recommended actions to improve these conditions. The project also created and funded the Centralized Leasing Office, a nonprofit organization which provides a multiple listing service for rentable retail and industrial space in the Project Area, and assisted in the creation and startup of the Reseda and Canoga Park Business Improvement Districts. The Project undertook the development and administration of the Canoga Park Targeted Neighborhoods Initiative Program. The Project provided assistance in the formation and certification of the Reseda, Canoga Park, and Winnetka Neighborhood Councils.

Assessed Valuation and Tax Revenues. The following table lists the historical tax receipts for Reseda/Canoga Park Project.

70 Reseda/Canoga Park Project

Historical Taxable Value

1998/99 1999/2000 2000/01 2001/02 2002/03 Secured Land $ 728,699,967 $ 762,676,933 $ 830,849,179 $ 891,024,595 $ 948,233,660 Improvements 1,070,852,982 1,160,223,259 1,297,732,149 1,381,846,102 1,447,371,792 Personal Property 7,282,373 32,883,662 32,164,547 36,727,159 36,723,487 Gross Secured 1,806,835,322 1,955,783,854 2,160,745,875 2,309,597,856 2,432,328,939 Less: Exemptions 60,603,511 170,699,65 l 146,846,603 157,004,069 159,229,368 Less: Exemption Adjustments (I) Total Secured $ 1,746,231,811 $ 1,785,084,203 $ 2,013,899,272 $ 2,152,593,787 $ 2,273,099,571

Unsecured Land $ 0 $ 0 $ 0 $ 0 $ 0 Improvements 45,563,843 38,753,498 39,687,441 42,323,433 41,202,799 Personal Property 72,997,355 73,537,391 66,486,028 67,929,341 68,766,493 Gross Unsecured 118,561,198 112,290,889 106,173,469 110,252,774 109,969,292 Less: Exemptions 859 006 192,200 73,000 157,000 107,000

Total Unsecured $ 117,702,192 $ 112,098,689 $ 106,100,469 $ 110,095, 774 $ 109,862,292

TOTAL PROJECT VALUE $ l ,863,934,003 $1,897,182,892 $2,119,999,741 $2,262,689,561 $2,382,961,863

Percentage Increase/Decrease 1.78% 11.74% 6.73% 5.32%

(I) Exemption adjustments are based on specific situations where exemptions were filed late and not included in the initial roll values.

71 Top 10 A.s:fessees. Ten major property owners in the Reseda/Canoga Park Project Area were identified by the Fiscal Consultant based upon a review of the 2002-03 locally assessed secured taxable valuations reported by the County Assessor. The aggregate total assessed value of the identified ten taxpayers amounted to $377,680,777, or 15.85% of the total taxable value of the Reseda/Canoga Park Project Area.

Reseda/Canoga Park Project Area

TEN MAJOR ASSESSEES FOR FISCAL YEAR 2002/03 (l) %of Major No. of 2002/03 Project Rank Assessees Parcels Use Value Value

Topanga Plaza LLC 2 Shopping Ctr $153,664,353 6.45%

2 Tennis Club Apartments LLC 4 Multi. Fam. Res. 42,710,294 1.79%

3 Essex Portfolio L P Multi. Fam. Res. 37,787,000 1.59%

4 Sam Menlo TR 4 Multi. Fam. Res. 26,585,335 l.12%

5 Combined Properties Reseda 14 Shopping Ctr 22,454,864 0.94%

6 Topanga and Victory Partners L P I Dental Offices 21,626,893 0.91%

7 Woodland Hills 2 Multi. Fam. Res. 20,631,901 0.87%

8 Warner Center Summit LTD I Multi. Fam. Res. 18,361,961 0.77%

9 Cohasset Village Townhomes LLC 5 Multi. Fam. Res. 17,176,538 0.72%

10 Catellus Development Corp 2 Shopping Ctr 16,681,638 0.70%

TOTAL VALUE TOP 10 ASSESSEES $377,680, 777 TOTAL 2002/03 PROJECT VALUE $2,382,961,863

TOTAL % OF 2002103 PROJECT VALUE 15.85% TOTAL% OF 2002/03 INCREMENTAL VALUE 84.88%

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

72 Estimated Tax Revenues. The 2002-03 tax roll for the Reseda/Canoga Park Project (as described in the Fiscal Consultant's Report) reflects an increase in assessed valuation of $120,272,302 (or 5.32 percent) from the 2001-02 reported assessed valuation. Net Estimated Revenues (comprised of total tax increment revenue for the Reseda/Canoga Park Project less estimated appeal reductions, property tax administrative charges and tax sharing payments under California Health and Safety Code Section 33607.5) of approximately $2,820,000 are projected to be received with respect to the Reseda/Canoga Park Project for the 2002-03 fiscal year. For discussion of certain factors which might substantially reduce Tax Revenues, see "LIMITATIONS ON TAX REVENUES" herein. Included in APPENDIX A - "FISCAL CONSULTANT'S REPORT" hereto is a projection of future Net Estimated Revenues for the Reseda/Canoga Park I Project based on the assumptions and qualifications described therein. In addition, see APPENDIX A - "FISCAL CONSULTANT'S REPORT" hereto for a chart containing the base roll assessed valuation of the Reseda/Canoga Park Project as compared to the 2001-02 assessed value, and the estimated incremental tax revenue for fiscal year 2002-03.

73 Reseda/Canoga Park Project

Estimate of Tax Increment Revennes (1) 1994/95 2002/03 2002/03 Base Incremental Taxable Value Taxable Value Taxable Value Secured Land $948,23 3 ,660 $783 ,9 I 4,296 $164,319,364 Improvements 1,447,371,792 1,197,988,619 249,383,173 Personal Property 36,723,487 58,256,975 (21,533,488) Gross Secured $2,432,328,939 $2,040,159,890 $392,169,049 Less: Exemptions 159,229,368 190,979,346 (31,749,978) Total Secured $2,273,099,571 $1,849,180,544 $423,919,027

Unsecnred Land 0 0 0 Improvements 41,202,799 34,215,863 6,986,936 Personal Property 68 766,493 54,623,094 14,143,399 Gross Unsecured $109,969,292 $88,838,957 $21,130,335 Less: Exemptions 107 000 35,400 71,600 Total Unsecured $109 ,862,292 $88,803,557 $21,058,735

Total Secured and Unsecured $2,382,961,863 $1,937,984,101 $444,977 ,762

Resolved Appeal Valuation Reductions (2) 3,317,000 Pending Appeal Valuation Reductions (2) 31,297,000

Adjusted Incremental Secured and Unsecured $410,363,762

Tax Increment Revenue $4,336,000 Unitary Revenue (3) 0 Less: Property Tax Administrative Charge 86,000

Gross Estimated Revenue $4,250,000 Less: Resolved Appeal Refunds (2) 124,000 Pending Appeal Refunds (2) 601,000 AB 1290 Payments 705,000

NET ESTIMATED REVENUE (4) $2,820,000

74 Assessment Appeals. Appeals of the taxable value for assessments within the Reseda/Canoga Park Project could potentially lower taxable values, as currently reported, thereby reducing Tax Revenues. Resolved assessment appeals reduced estimated property valuation within the Reseda/Canoga Park Project by approximately $3,317,000 for fiscal year 2001/02, and refunds are estimated to reduce Project revenues in fiscal year 2002/03 by $123,600. In addition, a number of appeals are currently pending regarding assessed valuation within the R.eseda/Canoga Park Project that may result in significant reductions in estimated property valuation and refunds to property owners. The estimated valuation reduction for the Reseda/Canoga Park Project for fiscal year 2002/03 is $31,297,000 and the estimated refund is $601,000. The potential impactofpendmg appeals is based on the applicant's opinion of the value of the contested parcels. Actual impacts to Tax Revenues are dependent upon the actual revised value, if any, of assessments resulting from values determined by the County Assessment Appeals Board or through litigation, and upon the timing of successful appeals. See APPENDIX A - "FISCAL CONSULTANT'S REPORT" hereto.

There can be no assurance as to the outcome of any of the above pending appeals. It is possible that other owners of property in the Reseda/Canoga Park Project will file appeals to lower their assessment values to comparable levels. See APPENDIX A - "FISCAL CONSULTANT'S REPORT' hereto for the assumptions the Fiscal Consultant has made concerning the resolved and pending appeals in the Reseda/Canoga Park Project. Successful appeals will result in reductions in the amount of Tax Revenues collected and could have an adverse effect on the Agency's ability to pay debt service on the Series J Bonds.

Indebtedness of the Reseda/Canoga Park Project. The Agency has not previously issued bonded indebtedness or borrowed bonded indebtedness of the Authority payable from Tax Revenues of the Reseda/Canoga Park Project Area. The Agency intends to borrow $12,705,000 ($8,205,000 of which would be allocated to the Series J-Taxable Loan and $4,500,000 of which would be allocated to the Series J-Tax Exempt Loan) under the Reseda/Canoga Park Loan Agreement to fund further redevelopment in the Reseda/Canoga Park Project Area, to establish a reserve account for such Loans and to pay the costs of issuance related to such Loans.

Debt Service Coverage. The following table projects the annual ratios between the Agency's total debt service (comprised of payments required to be made by the Agency on the existing debt described above and the Reseda/Canoga Park Loan Agreement) and its Net Estimated Revenues. The table is based upon the Net Estimated Revenues in the amounts projected by the Fiscal Consultant.

75 The Fiscal Consultant has made certain assumptions including, among other things, the assessed valuation in the Reseda/Canoga Park Project, future tax rates, likelihood of appeals and future administrative charges in order to project Net Estimated Revenues. See APPENDIX A - "FISCAL CONSULTANT'S REPORT' hereto for a full discussion of the assumptions underlying the projections set forth herein with respect to Net Estimated Revenues. The Agency believes these assumptions to be reasonable, but to the extent that the actual components used in the determination of Net Estimated Revenues vary from such assumptions, the total Net Estimated Revenues available may be less than those projected herein.

RESEDA/CANOGA PARK PROJECT

ESTIMATED TAX INCREMENT, DEBT SERVICE AND COVERAGE('>

Bond Estimated Loan Year Tax Increment <2> Debt Service Coverage 2004 $3,765,000 $898,676 419% 2005 4,137,000 897,567 461 2006 4,515,000 896,060 504 2007 4,819,000 899,003 536 2008 5,128,000 895,594 573 2009 5,442,000 897,010 607 2010 5,762,000 896,350 643 2011 6,087,000 895,103 680 2012 6,418,000 898,153 715

TOTAL $46,073,000 $8,073,515 (I) Source: Underwriters. (2) Amounts are based on information set forth in the Fiscal Consultant's Report.

76 CERTAIN LEGAL MATTERS

Toe legal opinion ofKutak Rock, LLP, Pasadena, California, Bond Counsel, approving the validity of the Bonds and the Loan Agreements, will be made available to purchasers at the time of the origiual delivery of the Bonds and the form of such opinion is attached hereto as Appendix C. All or a portion of the fees of such counsel is dependent on the successful completion of the financing. Certain legal matters will be passed upou for the Authority and the Agency by The Law Offices of Marilyn L. Garcia, Los Angeles, California, as Disclosure Counsel and by the City Attorney of the City of Los Angeles, California, as General Counsel to the Agency and the Authority.

TAX MATTERS

The following is a summary of certain anticipated federal income tax consequences of the purchase, ownership and disposition of the Bonds. The summary is based upon the provisions of the Code, the regulations promulgated thereunder and the judicial and administrative rulings and decisions now in effect, all of which are subject to change or possible differing interpretations. The summary does not purport to address all aspects of federal income taxation that may affect particular investors in light of their individual circumstances or certain types of investors subject to special treatment under the federal income tax laws. Potential purchasers of the Bonds should consult their own tax advisors in determining the federal, state or local tax consequences to them of the purchase, holding and disposition of the Bonds.

Series J-Tax Exempt Bonds

In the opinion of Kutak Rock LLP, Bond Counsel, under existing laws, regulations, rulings and judicial decisions, interest on the Series J-Tax Exempt Bonds is excluded from gross income for federal income tax purposes and is not a specific preference item for purposes of the federal alternative minimum tax. The opinion described in the preceding sentence assumes the accuracy of certain representations and compliance by the Authority and the Agency with covenants designed to satisfy the requirements of the Internal Revenue Code of 1986, as amended (the "Code") that must be met subsequent to the issuance of the Series J-Tax Exempt Bonds. Failure to comply with such requirements could cause interest on the Series J-Tax Exempt Bonds to be included in gross income for federal income tax purposes retroactive to the date of issuance of the Series J-Tax Exempt Bonds. The Authority and the Agency have covenanted to comply with such requirements. Bond Counsel has expressed no opinion regarding other federal tax consequences arising with respect to the Series J-Tax Exempt Bonds. Additionally, in the opinion of Bond Counsel, interest on the Series J-Tax Exempt Bonds is exempt from current State of California personal income taxes.

Notwithstanding Bond Counsel's opinion that interest on the Series J-Tax Exempt Bonds is not a specific preference item for purposes of the federal alternative minimum tax, such interest will be included in adjusted current earnings of certain corporations, and such corporations are required to include in the calculation of alternative minimum taxable income 75% of the excess of such corporation's adjusted current earnings over its alternative minimum taxable income ( determined without regard to such adjustment and prior to reduction for certain net operating losses).

The accrual or receipt of interest on the Series J-Tax Exempt Bonds may otherwise affect the federal income tax liability of the owners of the Series J-Tax Exempt Bonds. The extent of these other tax consequences will depend upon such owner's particular tax status and other items of income or deduction. Bond Counsel has expressed no opinion regarding any such consequences. Purchasers of the

77 Series J-Tax Exempt Bonds, particularly purchasers that are corporations (including S corporations and foreign corporations operating branches in the United States), property or casualty insurance companies, banks, thrifts or other fmancial institutions, certain recipients of social security or railroad retirement benefits, taxpayers otherwise entitled to claim the earned income credit, or taxpayers who may be deemed to have incurred or continued indebtedness to purchase or carry tax-exempt obligations, should consult their tax advisors as to the tax consequences of purchasing or owning the Series J-Tax Exempt Bonds.

Certain agreements, requirements and procedures contained or referred to in the Loan Agreement and the Indenture for the Series J-Tax Exempt Bonds and other relevant documents may be changed, and certain actions (including, without limitation, the defeasance of the Series J-Tax Exempt Bonds) may be taken, under the circumstances and subject to the terms and conditions set forth in such documents. Bond Counsel expresses no opinion as to any Series J-Tax Exempt Bonds or the interest thereon if any such change occurs or action is taken upon the advice or approval of bond counsel other than Bond Counsel.

Original Issue Premium. The Series J-Tax Exempt Bonds maturing in 2004 through 2011, 2018 and 2019 (collectively, the "Series J-Tax Exempt Premium Bonds") are being sold at a premium. An amount equal to the excess of the issue price of a Series J-Tax Exempt Premium Bond over its stated redemption price at maturity constitutes premium on such Series J-Tax Exempt Premium Bond. An initial purchaser of a Series J-Tax Exempt Premium Bond must amortize any premium over such Series J-Tax Exempt Premium Bond's term using constant yield principles, based on the purchaser's yield to maturity ( or, in the case of Series J-Tax Exempt Premium Bonds callable prior to their maturity, by amortizing the premium to the call date, based on the purchaser's yield to the call date and giving effect to the call premium). As premium is amortized, the amount of the amortization offsets a corresponding amount of interest for the period and the purchaser's basis in such Series J-Tax Exempt Premium Bond is reduced by a corresponding amount resulting in an increase in the gain ( or decrease in the loss) to be recognized for federal income tax purposes upon a sale or disposition of such Series J-Tax Exempt Premium Bond prior to its maturity. Even though the purchaser's basis may be reduced, no federal income tax deduction is allowed. Purchasers of the Series J-Tax Exempt Premium Bonds should consult with their tax advisors with respect to the determination and treatment of amortizable premium for federal income tax purposes and with respect to the state and local tax consequences of owning a Series J-Tax Exempt Premium Bond.

Original Issue Discount. The Series J-Tax Exempt Bonds maturing in 2012 through 2017, 2023 and 2033 (collectively, the "Series J-Tax Exempt Discount Bonds") are being sold at an original issue discount. The difference between the initial public offering prices, as set forth on the cover page, of such Series J-Tax Exempt Discount Bonds and their stated amounts to be paid at maturity, constitutes original issue discount treated as interest which is excluded from gross income for federal income tax purposes, as described above. The amount of original issue discount which is treated as having accrued with respect to such Series J-Tax Exempt Discount Bond is added to the cost basis of the owner in determining, for federal income tax purposes, gain or loss upon disposition of such Series J-Tax Exempt Discount Bond (including its sale, redemption or payment at maturity). Amounts received upon disposition of such Series 1-Tax Exempt Discount Bond which are attributable to accrued original issue discount will be treated as tax exempt interest, rather than as taxable gain, for federal income tax purposes.

Original issue discount is treated as compounding semiannually, at a rate determined by reference to the yield to maturity of each individual Series J-Tax Exempt Discount Bond on days which are determined by reference to the maturity date of such Series J-Tax Exempt Discount Bond. The amount treated as original issue discount on such Series J-Tax Exempt Discount Bond for a particular semiannual accrual period is equal to the product of (i) the yield to maturity for such Series J-Tax Exempt Discount Bond ( determined by compounding at the close of each accrual period) and (ii) the amount which would have been the tax basis of such Series J-Tax Exempt Discount Bond at the beginning of the particular

78 accrual period if held by the original purchaser, less the amount of any interest payable for such Series J Tax Exempt Discount Bond during the accrual period. The tax basis is determined by adding to the initial public offering price on such Series J-Tax Exempt Discount Bond the sum of the amounts which have been treated as original issue discount for such purposes during all prior periods. If such Series J-Tax Exempt Discount Bond is sold between semiannual compounding dates, original issue discount which would have been accrued for that semiannual compounding period for federal income tax purposes is to be apportioned in equal amounts among the days in such compounding period.

Owners of Series J-Tax Exempt Discount Bonds should consult their tax advisors with respect to the determination and treatment of original issue discount accrued as of any date and with respect to the state and local tax consequences of owning a Series J-Tax Exempt Discount Bond.

Series J-Taxable Bonds and Series K Taxable Bonds

Although there are no regulations, published rulings or judicial decisions involving the characterization for federal income tax purposes of securities with terms substantially the same as the Series J-Taxable Bonds and the Series K-Taxable Bonds (collectively, the "Taxable Bonds"), the Authority and the Agency believe that the Taxable Bonds will be treated for federal income tax purposes as evidences of indebtedness of the Authority and not as an ownership interest in the trust estate securing the Taxable Bonds or as an equity interest in the Authority or any other party, or in a separate association taxable as a corporation. In general, interest paid on the Taxable Bonds and recovery of accrued market discount, if any, will be treated as ordinary income to a bondholder, and principal payments will be treated as a return of capital.

Market Discount. Any owner who purchases a Taxable Bond at a price which includes market discount in excess of a prescribed de minimis amount (i.e., at a purchase price that is less than its adjusted issue price in the hands of an original owner) will recognize gain upon receipt of each scheduled or unscheduled principal payment. In particular, such owner will generally be required (a) to allocate each such principal payment to accrued market discount not previously included in income and to recognize ordinary income to that extent and to treat any gain upon sale or other disposition of such a Taxable Bond as ordinary income to the extent of any remaining accrued market discount (under this caption) or (b) to elect to include such market discount in income currently as it accrues on all market discount instruments acquired by such an owner on or after the first day of the taxable year to which such election applies.

The Code authorizes the Treasury Department to issue regulations providing for the method for accruing market discount on debt instruments the principal of which is payable in more than one installment. Until such time as regulations are issued by the Treasury Department, certain rules described in the legislative history of the Tax Reform Act of 1986 will apply. Under those rules, market discount will be included in income either (a) on a constant interest basis or (b) in proportion to the accrual of stated interest. Pursuant to Revenue Procedure 92--67, an election to accrue market discount on a constant interest basis is irrevocable.

An owner of a Taxable Bond who acquires such Taxable Bond at a market discount also may be required to defer, until the maturity date of such Taxable Bond or its earlier disposition in a taxable transaction, the deduction of a portion of the amount of interest that the owner paid or accrued during the taxable year on indebtedness incurred or maintained to purchase or carry a Taxable Bond in excess of the aggregate amount of interest (including original issue discount) includable in such owner's gross income for the taxable year with respect to such Taxable Bond. The amount of such net interest expense deferred in a taxable year may not exceed the amount ofmarket discount accrued on the Taxable Bond for the days during the taxable year on which the owner held the Taxable Bond and, in general, would be deductible when such market discount is includable in income. The amount of any remaining deferred deduction is

79 to be taken into acconnt in the taxable year in which the Taxable Bond matures or is disposed of in a taxable transaction. In the case of a disposition in which gain or loss is not recognized in whole or in part, any remaining deferred deduction will be allowed to the extent gain is recognized on the disposition. This deferral rule does not apply if the bondowner elects to include such market discount in income currently as it accrues on all market discount obligations acquired by such bondowner in that taxable year or thereafter.

Market Premium. A subseqnent purchaser of a Taxable Bond who purchases such Taxable Bond at a cost greater than its then principal amount will be considered to have purchased such Taxable Bond at a market premium. Under Section 171 of the Code, such a purchaser must amortize the amount of such market premium using constant yield principles based on the purchaser's yield to maturity. Amortizable market premium is generally treated as an offset to interest income, and a reduction in basis under Code Section 1016( a) of the Taxable Bond is required for amortiz.able bond premium that is applied to reduce interest payments. Purchasers of any Taxable Bond who acquire such Taxable Bond at a premium should consult with their own tax advisors with respect to the determination and treatment of amortizable premium for federal income tax purposes and with respect to state and local tax consequences of owning such Taxable Bond.

Sale or Redemption of Taxable Bonds. A bond owner's tax basis for a Taxable Bond is the price such owner pays for the Taxable Bond plus amounts of any original issue discount included in income, reduced on account of any payments received (other than "qualified periodic interest" payments) and any amortized premium. Gain or loss recognized on a sale, exchange or redemption of a Taxable Bond, measured by the difference between the amount realized and the Taxable Bond's basis as so adjusted, will generally give rise to capital gain or loss if the Taxable Bond is held as a capital asset or ordinary income to the extent of accrued market discount that has not already been included in income.

Backup Withholding. A bond owner may, under certain circumstances, be subject to "backup withholding" with respect to interest or original issue discount on the Taxable Bonds. This withholding generally applies if the owner of a Taxable Bond (a) fails to furnish the Trustee or other payor with its taxpayer identification number; (b) furnishes the Trustee or other pay or an incorrect taxpayer identification number; ( c) fails to report properly interest, dividends or other "reportable payments" as defined in the Code; or ( d) under certain circumstances, fails to provide the Trustee or other pay or with a certified statement, signed under penalty of perjury, that the taxpayer identification number provided is its correct number and that the holder is not subject to backup withholding. Backup withholding will not apply, however, with respect to certain payments made to bondowners, including payments to certain exempt recipients (such as certain exempt organizations) and to certain Nonresidents (as defmed below). Owners of the Taxable Bonds should consult their tax advisors as to their qualification for exemption from backup withholding and the procedure for obtaining the exemption.

The amount of "reportable payments" for each calendar year and the amount of tax withheld, if any, with respect to payments on the Taxable Bonds will be reported to the bondowners and to the Internal Revenue Service.

Foreign Bondowners. Under the Code, interest and original issue discount income with respect to Taxable Bonds held by nonresident alien individuals, foreign corporations or other non-United States persons ("Nonresidents") generally will not be subject to the 30% United States withholding tax if the Trustee (or other person who would otherwise be required to withhold tax from such payments) is provided with an appropriate statement that the beneficial owner of the Taxable Bonds is a Nonresident. The withholding tax may be reduced or eliminated by an applicable tax treaty, if any. Notwithstanding the foregoing, if any such payments are effectively connected with a United States trade or business

80 conducted by a Nonresident bondowner, they will be subject to regular United States income tax, but will ordinarily be exempt from United States withholding tax.

ERISA. The Employees Retirement Income Securily Act of 1974, as amended ("ERISA"), and the Code generally prohibit certain transactions between a qualified employee benefit plan under ERISA or tax-qualified retirement plans and individual retirement accounts under the Code (collectively, the "Plans") and persons who, with respect to a Plan, are fiduciaries or other "parties in interest" within the meaning of ERISA or "disqualified persons" within the meaning of the Code. All fiduciaries of Plans, in consultation with their advisors, should carefully consider the impact of ERISA and the Code on an investment in any Taxable Bonds.

Other Tax Matters

From time to time, there are legislative proposals in the United States Congress that, if enacted, could alter or amend the federal tax matters referred to above or adversely affect the market value of the Bonds. It cannot be predicted whether or in what form any such proposal might be enacted or whether if enacted, it would apply to bonds issued prior to enactment. Each purchaser of the Bonds should consult his or her own tax advisor regarding any pending or proposed federal tax legislation. Bond Counsel expresses no opinion regarding any pending or proposed federal tax legislation.

The opinions expressed by Bond Counsel are as of the date of issuance and delivery of the Bonds and Bond Counsel expresses no opinion as of any date subsequent thereto.

LITIGATION

To the best knowledge of the Authority and the Agency, there is no action, suit, proceeding or investigation at law or in equily before or by any court or governmental agency or body pending or threatened against the Authorily or the Agency to restrain or enjoin the authorization, execution or delivery of the Bonds or the Loans or the pledge of the Tax Revenue with respect to any of the Project Areas or the collection of the payments to be made pursuant to the Indentures and the Loan Agreements, or in any way contesting or affecting the validily of the Bonds, the Loans, the Indentures or the Loan Agreements.

CONTINUING DISCLOSURE

The Authorily and the Agency have covenanted for the benefit of owners of the Bonds to provide certain fmancial information and operating data relating to the Agency by not later than 8 months after the end of the Agency's fiscal year (presently June 30) in each year commencing with its report for the fiscal year ending June 30, 2004 (the "Annual Reports") and to provide notices of the occurrence of certain enumerated events. The Annual Reports will be filed by the Authorily or U.S. Bank National Association, as dissemination agent (the "Dissemination Agent"), on behalf of the Authorily or the Agency with each Nationally Recognized Municipal Securities Information Repository. The notices of material events will be filed by the Dissemination Agent on behalf of the Authorily and the Agency with the Municipal Securities Rulemaking Board. These covenants have been made in order to assist the Underwriter in complying with Securities Exchange Commission Rule 15c2-12(bX5). The specific nature of the information to be contained in the Annual Report or the notices of material events by the Authorily or the Agency is summarized in APPENDIX G-"FORM OF CONTINUJNG DISCLOSURE AGREEMENT."

81 UNDERWRITING

The Bonds are to be purchased by Stone & Youngberg LLC (the "Undeiwriters"). The Undetwriters have agreed, subject to certain terms and conditions set forth in the Purchase Contract, dated August 26, 2003, by and among the Undetwriters, the Agency and the Authority, to purchase the Bonds at a price of$26,811,6!8.IO ($17,826,240.00 for the Series J-Taxable Bonds; $4,283,344.35 for the Series J-Tax Exempt Bonds; and $4,602,033. 75 for the Series K Bonds) (reflecting the par amount of the Bonds minus an original issue discount, if any, and an underwriter's discount). Compensation to the Undeiwriters is conditioned upon the Authority's issuance and delivery of the Bonds. The Undeiwriters will purchase all of the Bonds if any are purchased. The Bonds may be offered and sold to certain dealers (including dealers depositing said Bonds into investment trusts) and others at prices lower than the initial public offering price, and the public offering price may be changed from time to time by the Underwriters.

RATINGS

Standard & Poor's Ratings Services, a division of the McGraw Hill Companies Inc. and Fitch Ratings ("Fitch") have each assigned its municipal bond rating of"AAA" to the Series J Bonds, pursuant to the provisions of a municipal bond insurance policy to be issued by XL Capital Assurance Inc. Fitch has assigned its municipal bond rating of "BBB-" to the Series K Bonds. Credit ratings reflect the views of such rating agency and any explanation of the significance of the ratings should be obtained directly from such agency. There is no assurance that any rating will not subsequently be revised or withdrawn entirely if, in the judgment of the assigning agency, circumstances so warrant. Maintenance of ratings will require periodic review of current financial data and other updating information by the assigning agency.

MISCELLANEOUS

Any statements made in this Official Statement involving matters of opinion or of estimates, whether or not expressly stated, are set forth as such and not as representations of fact. No representation is made that any of such statements will be realized. Neither this Official Statement nor any statement which may have been made verbally or in writing is to be construed as a contract with the Owners.

82 The issuance ofthis Official Statement has been duly authorized by the Agency and the Authority.

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

By: /s/ Randall K. Wilkins Chief Financial Officer

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

By: Isl Donald R. Spivack Assistant Secretary

83 (THIS PAGE INTENTIONALLY LEFT BLANK) APPENDIX A

FISCAL CONSULTANT'S REPORT (THIS PAGE INTENTIONALLY LEFT BLANK) 1KatzHollls

REPORT OF THE FISCAL CONSULTANT

Prepared for

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

regarding the

POOLED FINANCING BONDS,

SERIES J-TAXABLE SERIES J-TAX EXEMPT SERIES K-TAXABLE

Council District 9 Redevelopment Project East Hollywood/Beverly-Normandie Earthquake Disaster Assistance Project Laurel Canyon Earthquake Disaster Assistance Project Pacoima/Panorama City Earthquake Disaster Assistance Project Reseda/Canoga Park Earthquake Disaster Assistance Project

Submitted by Katz Hollis Juoe2003 :Katz Hollis PART I

INTRODUCTION

The Los Angeles Community Redevelopment Agency, (the "Agency") is considering the pledge of tax increment revenues to be generated from the Council District 9 Redevelopment Project (the "CD 9 Project"), the East Hollywood/Beverly-Normandie Earthquake Disaster Assistance Project (the "East Hollywood Project"), the Laurel Canyon Earthquake Disaster Assistance Project (the "Laurel Canyon Project''), the Pacoima!Panorama City Earthquake Disaster Assistance Project (the "Pacoima Project") and the Reseda/Canoga Park Earthquake Disaster Assistance Project, (the "Reseda Project") to the payment of debt service on loans made to each of the Projects by the Los Angeles Public Financing Authority (the "Authority"). The loans will be funded by, and payment of debt service on the loans will support, bonds issued by the Authority. The redevelopment projects are referred to herein collectively as the "Projects". In connection with the proposed pledge of revenue, the Agency has requested that Katz Hollis review current and historical taxable values and property tax revenues, review currently pending and recently resolved assessment appeals and estimate future tax increment revenues for the Projects. Pursuant to that request, Katz Hollis has prepared this Fiscal Consultant's Report (the "Report"). The key data for the Projects is summarized in tabular format on Figures I-IA, I-!B and I-JC shown on the following pages. This Report is organized into the following four parts:

Part I, "Introduction," provides an outline of the Report, a summary of the Projects including Project Profiles, Figures I-IA through I-IE.

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

Part III, "Projection of Tax Increment Revenues," includes a projection of future levels of taxable value and resultant tax increment revenues. Additionally, Part Ill discusses and demonstrates the impact of recently resolved assessment appeals on tax increment revenue of the Projects. Part III also includes a discussion of the underlying assumptions of the projection.

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

It should be noted that the value estimates and tax increment revenue projection in this Report are based upon information believed to be reasonable and accurate as of the date of this analysis. To the extent that current information is modified, resulting tax increment revenue may be other than that projected. The discussion of allocation procedures for property taxes contained in this Report is based largely upon information provided by representatives of Los Angeles County (the "County"). These procedures are in some measure set administratively and are subject to change. No proposed changes to these procedures, other than those discussed herein, have been identified to date. Katz Hollis Figure I~tA Community Redevelopment Agency of the City of Los Angeles Council District 9 Redevelopment Project

PROJECT PROnLE ~$fflf!t1ffl'ffli : : uu mm:tDs w1111m Dilte of Adoption: De<:ember l J, 1995 Historical ResolVfll 2002/03 Estimated Am(,!ldmenis: None Incremental Original Lo,y Adjusted Historical Value Impact Refunds Ym Taxable Valuo Lo,y Adjll5tment Receivable Receipts (2) ""'""Secufed Ac~ 2,817 Acres Scott and Robi Venturelli 1,495,000 14,000 Tax T!lcrement Limit: None 1998/99 $13,843,511 $139,769 ($139,769) so $0 JongT. Hong NIA ,,ooo Tax Incremem Received Through 2001·02 $3,:565,108 ]99912000 85,721,905 868,599 (599,894) 268,705 207,582 KobbRcalty NIA 5,000 Bond Indebtedness Limit: $104,000,000 2000/01 141,158,689 l ,525.423 (211,757) 1,313,666 1,195,965 Ace Wholesale NIA J,000 Bond Indebtedness Outstanding as ofJune 2002 S4,000,000 2001102 235,638,627 2,419,152 (484,9S4) l,934,168 l ,893,459 Dan DLl' NIA J,000 Time Limit on Debt Incummce: December 13, 2015 Mendelson and Asso.:iates NIA 2,000 Time Limit on 1he Effectiveness of the (2) Includes all current tax:es and redemption payments collected. Yekun Lim NIA 2,000 Redevelopment Plan: °'3cember 13, 2025 l\.£iu$MFG. NIA 2,000 Time Limit to Receive TI/Repay Indebtedness: December 13 2040 AajacTrust 72,000 1,000 Percentage Collection (3) 2 Appeals Under $225,000 lnitial Va!uo filed for 2000 77,000 2,000 18 Appeals Under $710,000 lni1ial Value filed for 2001 1,873,000 19,000 Current Year Collections including 1995/96 v~, Collections (4) Pnor Year(5) Central Kitting Mills NIA 2,000 2002/03 Base Year lncrtmen!l!I Secun1d Value Value Value 1998/99 NIA NIA -Estimaffd 2002/03 Impaet S},517,000 $62,000 Land $839,990,095 $639, 779.907 $!50,210,188 1999/2000 77.3% 77.3% Improvements 981,194,705 802,146,973 179.047,732 2000'01 88.1% 9U)% Estimated Personal P1op1my 11,673,110 15,807,913 (4,134,803) 200!/02 90.6% 97.9% Pendin& 2002/03 Estimated OA!''> ,,,,.,

Total Major Asscssees $196,183,251 Total 2002/03 Project Value $1,969.448,200 Percttntaae oflOOl/03 Total Value 9.%% Percentage of2002/0J Incremental Value 67.45% Projeet Profile ~ Land use distribution based on the 2002/03 l.(}s Angeles County secured roll. Copyright 1992 Katz Hollb Katz Hollis Figure l~JB Community Redevelopment Agency of the Cuy of Los Angele$ East Hollywood/Beverly Normandie Earthquake Disaster Assistance Project

PROJECT PROFILE Gtr®~!l:!91'i2 . )'SSES8&0;·fA:tlJJ$1t~"?ESTuftf.tfffeltltiiltfsJ:'t~@0:{Yit4<::Jfi'z:~_;Y£,&Jrr2 &~§l?~~G~~~ His10rical Re11olved 2002/03 Est1ma1ed Value Impact Refund. Daw of Adopu0*1 Det:ember 14, 1994 Incremental Ongma! Lory AdJu~ted H1s1oncal Assessee ,,,_,_ l\mendmen!s, None Ym Taxable Value Lo,y AdJus1mem Receivable Receipts (2) Secured Dean Lewi~ 13,000 NIA M~ 464 Acres 1998!99 ($69,495.815) so so so Keum S Han 92,000 l,000 Ta,: Jncremem L.imit: None 1999/2000 (43,945,145} '°0 0 0 Andrew & Betty 0. Sit 138,000 1,000 Tax Increment Received Through 2001-02 $676.292 2000/01 11,666,835 137,667 (137,667) 0 Dr, l,L. Young Kim 116,000 1,000 Bond Indebtedness Limit: 54,050,000 2001/02 55.398.145 574,880 (160.250) 414,630 382,515 9 Appeals Under $680,000 Imtial Value filed for 2001 866,000 9,000 Bond ludebredness Outsta!'lding as of June 2002 None Unsecured Time Limit on Debt lncurrence· December 14, 2004 (2} Includes all current taxes and redemption payments collected. Safeway Store;;, Ine NIA !,000 Time Limit on the Effoct1vemiss of the Redevelopment Plan: December 14. 2009 Tnne L1mi110 ReC<:1ve Tl/Repay lndchtedn~s· Decen1ber I 4, 2039 Pereentage Collection (3) Eslimaled lOOl/03 Impact Si,225,000 SIJ,000

C1.1rrent Year Collections mcl1.1ding Estimated fo, Collections (4) Prior Year (5) Pendinx 2002/03 Estimated Asseswe Value Impact Refunds ~~~i~~~it]gtrJ,t~'l,tZ@:Ilif!~U~~lfs:I 1998199 NIA NIA :lisiiii!l 1999/2000 NIA NIA CTS & Associates 1911,000 2,000 1994!95 2000(01 Ni A NIA Kasparian Narine 276,000 3,000 2002103 Base Year Incremental 2001/02 92.3% 923% Pop Wamu Partners LLC 217,000 2,000 Seeured Value Value Val11e Average Collection, 92.3% 92.3% Safeway Inc. (Vons #2665) 1,326,000 !J,000 L,md $480,000, 712 $378.209.351 $10!.79L16T 14 Appeals Under !6630,000 lnitwl Value filed for 2001 1.174,000 12,000 Improvements 806,759,672 649,300,377 157,459,295 (3) Uncollected amounts due to a combma!ion of factors See rar1 II. ~ Personal Property I 04,976,325 86.562,194 18,414.631 "Prlil!lil!ltiilSilLUN I i!iWli'Jll!liil!OCITIIB81 Improvements 2,550,227 Estimaled 2001/03 hnput S.J,191,000 SJ?,000 Personal Property (2.255,488) None Le:n: Exemplions 67,000 (6) See Part II," A~w:nment Apfeals" for additional 1nformetion Total Unsecured $227,739 ,,,,,-MPIIMWz 1 r WMi&Ymee,efW¥¥d Value Per Land Use* Total Value $ 897,539,191 $ 770,982,838 ll6Ji56,353 U,ol %of Residential Common Project Value Less: Re~olved Appeal Valuation Redue1ions 1,225,000 76.62% Assessee Name Amount Pending Appeal Valuation Reduction, 3.J.2L..OOO Ka1ser Foundation Hospitals ·nosp1tal/Parking SJS,038,111 2.01% AdJuS!ed lncremen1al S<.'Cured and Unsecured S\22,140,353 Willie Wong Co TR Multi-Fam.Re$. 8,970,239 1.00% 1800 New Hampsh,re As.on Multi. Fant Res S,714,526 0.97o/o Tax Increment Revenue Sl.290.000 Safeway Inc Supennarket 8,912,488 0.99% Unuary Revenue 0 Finley Real Estate LTD Partnership Mul!i. Fam. Rw 6,255,850 070% Less Property Tax Administrn11ve Charge 2S}l00 Henry and Anita Weiss TRS Multi. Fam Res. 6,153,494 0.69% Epsteen Pomona Properties LLC Bank/Parking S,967,000 0.65% Gross Estimated Rtven11e $1,265,000 5000 Sunset LLC Professional Bui!, 5,642,147 0.63% Less Resolved Appeal Refonds 13,000 21.15% Harvey J Muller TR ET AL Multi. Fam Res S,042,738 056% Pem:hng Appeal Refunds 39,000 Wayne Gnffin JR CO TR Auto Service 4,673,426 0.5:?% AB 1290 Payments ------~- ,. 243,000 _ Revenue By Type Total Major Assessees $78,370,019 NET ESTIMATED REVENUE $970,000 Total 2002/0J Project Value $897,539,191 Percenta2e of 2002/03 Total Value 8.73% Percentai:e of 1001/03 Incremental V1due 61.92o/.. ( !) Add1t1onal 1!lformnt,on ,~ con tamed m F,gure ll-1 B

Project Profile • Land use d1s111bu1ion based on the ioD2103 Los Angeles County secured roll. Copyr~h11992 Katz Hollis ,l\atzHollis Fi&unl~lC Community Redevelopment Agency of the City of Los Angeles Laurel Canyon Earthquake Disaster Assistance Project

PROJECT PROFILE ~ijiif·~~~~ ~43] ! f i iilffll Historical RtlO!Yed 2002/0l Estimated Dale of Adoption: December 9, 1994 Incremental Original u,ry Adjusted Historical Assess~ Value Impact Refunds Amendments: !st: October 20, 1999 Ym Taxable Value wy Adjll$lment ReceiVllble Receipts (2) ~

Area· 248 Acres 1998199 S26,847,599 s213,o:zz $13,668 $286,691 $271,184 Nader R Zadeh NIA 4,000 Ta:;: Increment Limit: None ]99912000 34,871,735 417,397 (77,974) 339.422 341.161 Exxon Mobil Corporation NIA 2,000 Tax Imm:ment Received Through 2001 ·02 $2,188,365 2000/01 50,071.198 545,927 (35,013) 510,915 503,867 Galina Samuel 228,000 2,000 Bond Indeb1edoess Lim it $25,000,000 2001/02 64,207,291 727,180 4,427 731,607 727,592 Aron & Celia Kelman NIA 1,000 Bond Indebtedness Outstanding ns of June 2002 $595,000 I Appeal Under $300,000 lnitial Value filed for 1999 64,000 3,000 Time Limit oo Debt lneummce: Decmber 9, 2004 (2) Includes al! current taxes and redemption payments collected 3 Appeals Under $760,000 Initial Value filed for 2000 344,000 6,000 Time Limit on the Effecliveness of the 2 Appeals Under $995,000 Iuitial Value filed for 2001 339,000 3,000 Redwelopment Plan D~mber 9, 2006 Time Limit to Receive Tl!Repay !ndeb1edness· June JO, 2030 Pertentae:e Collection {3) Estimated 2002/0J Impact $97S,OOO $21,000 Current Year Co!lections including Y~, Collechons ( 4) Pnor Year(5) Estimated Pendine 2002/03 Estimated 1998199 94.6% 94.6% Assessee Value lm_E!ot Refunds 1999/2000 98.1% 100..5% Secured 1994195 2000101 96.8% 98.6% ~~~-1- 99.5% 480,000 5,000 2002/03 Base Year Jnoremen!al 2001102 972% Ralphs Grocery Compal>) Secured Value Value Value Average Colleetions 96.7% 98.3% Aron&: Celia Ke!man 96,000 NIA t,,d Sl !6,294,160 $86:546;$$1 $2'1;141:t)OJ Ghol&m Alamdari voo NIA Improvements 177,211.574 128,434,284 48,777,290 (3) Uncollected amounts due to a combination of factors. See Part II, Personal Property 4.533,949 1,578,975 2,954,974 "Project Tax Increment Receipts" for additional information. Less: Exemptions 15,475.294 12,576.!.798 2,898,496 (4) All current year taxes collected. Total Secured $282,564,389 $203,983,018 $78--;-S-1H-;J1Y (5) All current taxes and redemption payments collected. Ralph!I GroccJy Compan) NIA 2,000 Unsecqred - Cmd 0 0 0 lmprov~ts 6,939,099 10,555,002 (3,615,903) F.stimated 2002/03 Impact 5573,700 S7,000 Personal Property 9,766,813 U,571,673 (3,804,860) None. Less: E:;:emptloos 0 0 0 "(6fS~-Part U, "ASS¢5Smeut Appeals" for additional inf~ation. Tola! Unseemed $16.705,912 $24,126,675 ($7,420,763) Value Per Land Use* Tola! Value ' 299,2711,301 ll&,109,693 ' 71,160,608 fflli!llil!l!ll!li!i!llllill-illli!illl!llllii I I- Le,ss: Resolved Appeal Valuation Reductions 975,000 u,.i %of Pending Appeal Valuation Reductions 579,000 Common Pl'(ljecl Adjusted Jnwemental Serured and Urnecured $69,606,608 Assessw Name Amt'.mnt Value Laurel Piaia Development Shoppmg Ctr SJ0,237.424 10.10% Tax lner.an1em R.:n1enue $735,000 May Department Stores Co Shopping Ctr 21,707,857 7.25% Unitary Revenue 0 Pa1;ifio PoioteLLC Mul!i. Fam. R~ 11,024,&94 3.68% Less: Property Tax Adminislrntive Charge 14,000 Sears Roebuck and Co Depattmt:ml Store 8,040,332 2.69% 6400 Laurel Canyon Investors LLC Bank 7,344,000 2.45% Gross Estimaied Revenue $721,000 Cohyvl LLC Office Building 5,7S4,624 1.93% Less: Resolved Appeal Refunds 21,000 Valley Plaza LLC Shopping Ctr 5,550,530 1.85% Pending Appeal Refunds 7,000 103 l South Wooster Limited Multi Fam. Res 5,43.5,900 1.82% AB I 290 Payments 139,000 Revenue By Type KW Limited Office Building 4,929,418 1.65% Jean S Elkawass Shopping Ctr 4,323,486 1.44% NET ESTIMATED REVENUE SS54,000 TQ!lll Major Assessees $104,378,465 Total 2002/03 Project Value $299,270,301 (1) Additional information is contained in Figure ll·IC. Per.:entage of2002/0J T1.1tal Value 34,88% Per«ntaae of2002/03 lneremental V11lue 146.68%,

100.00%

Projwt ProfUe ~ Land use distribution based on the 2002/03 Los Angeles County secured roll. Copyright 1992 Kacz Hollis :Katz Hollis Figure I-ID Community Redevelopment Agency of the Cay of Los Angele; Pacoima/Panorama City Earthquake Disaster Assistance Project

PROJECT PROFILE ~~S:2i¥,i0'i~5,;Jx,L~ii.?:.1~~~8;;;1{~~~:~s~eis!;::f,;1i,J:?;J¢.':fili:fi~~;;:;;¥J ~~Y~~~_v~ ~~t.:N&~;:ae~~WWAtq;~

Histoncn! Resolved 2002/03 Estimated Date of Adop11on November 29, 1994 Incremental Original L<"Y AdJUS!ed Histoncal Assessw Value Impact Refunds Amendments None Y~, Taxable Value C.,y Adjustment Receivable Receipts (2) ~ Stor It 4 Less LLC NIA 65,000 Area: 2,914Acres 1998/99 ($156,492,156) $0 $0 $0 $0 Brnnford lnvtsun.::nr, NIA 10,000 Tax Increment Limit: None 1999/2000 (56,422,090) 0 0 0 0 Pens Plus Inc 464,000 4,300 Tax Increment Received Through 2001,02 $3,959,862 2000/0l 128,990,ISJ 1.551,973 (479,994) 1,071,980 1,021,839 Ojai Oil Company NIA 3,000 Bond Indebtedness Limir $200,000,000 2001/02 312.877,024 3.519,159 (114,134) 3,395,015 3,238,614 Roland d. Glaser NIA 2,700 Bond Indeb!edness Outstanding as of June 2002 None lraJ Siegal 113,000 ]JOO Time Limit on Debt Incurrence November 29, 2004 (1) Includes all current lllxes and redemption payments collected. Emmett G & Co Trust NIA J,000 Time Limit on the Effectiveness of the 6622, Lankeuhim Partmirship )64,000 1,000 Redevelopment Plan: Decembe1 31. 2014 5 Appeals Under $675,000 Initial Value filed for 2000 207,000 4,000 Time Limit to Receive Tl/Repay Indebtedness· November 29, 1039 Percentage Cellection (3) 7 Appeals Under $875,000 lmtial Value filed for 2001 5.810,000 5,700 Unsecured Current Year Collechons including Agency Speetrolab Inc NIA 98,000 Ym ··-- Collections (4) Prior Year(5) Rec,epts (6) Med1aone of Los Angeles NIA 4,000 ~!l~~~~~A~{E1.~;ti.:;;t~hl:i1~%Ji~1~:~ 1998/99 NIA NIA NIA Estimated 1001/03 Impact S6,95S.OOO $199,800 1999/2000 :"i/A NIA NIA !994/95 2000/01 95.3% 95.3% 95.3% Estimated 2002103 Base Year lncrement.1! 2001/02 93.9% 95.4% 62.6% Pendini: 2002/03 Es11mated Srrn~d Value Value Value Avu11ge Cnllecfions 94.6% 9!i,4% NIA Asses see Value ~mpact Refunds Cmd $1,094,802,613 $840,862,636 $253,939~77 ~ Improvements l ,533,503,111 1,373,756,933 159,746,178 (3) Uncolleckd amounts due to a combinahon of factors See Part !I, Price Pfister Inc 3,624,000 42,000 Personal Property )3,0%.805 48,049,253 (14,952,448) "Project Tax Increment Receipts" for addi11onal informac1-0n Ralphs Grocery Company 1,283,000 13,000 Less. Exemptions 124,747.252 l!&.903,733 3~.843,519 (4) All cumml year taxes collected Drabkm Sepulveda NIA 5,000 Less E~ Ar\juttmenls 905,000 {S) All current ta>1es and redemption payments collected. Tex11on Defense System~ 535,000 5.()00 Tomi S~ured s:iir1.98sJss {6) 2001-02 Agency rox.eipts were constrained by total mdebtedness existing for Prime-Telecom Communicntions 4&,000 5,000 Unsc~ured that fiscal year. See Part II, "ProJett Tax Receipts" for additional information. Bhupes Parikh 434,000 3,000 Land 0 0 W1l!lii'll!&-lil L2Uliffll!I Ojai Oil Company 356.000 NIA l mproveme01J. 103.()81,752 78,$04,6% 24,271,146 2 Appeals Under $580,000 Initial Value filed for 2000 225,000 4,000 Pernona1 Property 226,199,059 117,629.128 108,569,93! None. 14 Appeal$ Under $720,000 Initial Value filed for 200! 1,072,000 11,000 Les,: Exemptwns 7.396,000 Jl,000 7,365,000 ' Tn1al Unse.::ured $32(8&4,811 $'!%,402,734 Sl 25.482,077 Value Per Land Use'" Unsecured Price Pfisttal V11Jua $ 2,858,540,088 $ 2,370,167,823 487,467,Ui!i Textron Defense Systems NIA 12,SOO Ralph$ Grocery Company NIA 3,IOO Le:w Resolved Appeal Valuation Reductirms 6,958,000 S Other UnSi!!oured NIA 8,800 Pending Appeal Valuation Reduc1ions 7.577,000 Industrial Ad;ustcd Incremental Secured and UnH'leured $472,932.265 F.stlmAttd ?002/03 lmp;a~t $7,.<;:77,000 $160,000 2671% (7) See Part II, "Ao11C1;oment Appeals" for additional information Tax Increment Revenue $4.997,000 U ni1ary Reve11ue 0 ~- f ;;1g ! It Less· Property Tax Administrative Charge 9\.000 Ust/ % of Common Pl'(\jeet Commercial Gross Estimated Revenue $4,902,000 2.81% Assessee Name Amounl V11lue L~ss· Resolved Appeal Refunds 200,000 23.89%, Price Pfiscer Inc Manufacturing $47,513,423 1.66% Pending Appeal Refunds 160,000 Revenue By Type NF Plant Ass Cnrporahon Unsecured 15,049,648 O.S3%

Total Major Assessee,; $253,922,849 UaSi!!cured Total 2001/03 Projoct Value S2,SS8,540,088 25.74% PeITentai,, ofl002/03 Total Value 8.88% Percenl11~ of2002/03 lneremttntal V11!11e 52,09% Project Profile • Land use d1stnbut10n based on the 2002103 Los Angeles Couaty secured roll. Coprright 1992 Katz Holli!. ,KatzHollls Fif::ure 1-tE Community Redevelopment Agency of lhe City of Los Angeles Reseda/Canoga Park Earthquake Disaster Assistance Project

PROJECT PROF1LE jl!!!iflll!li!Ji!!iill!lllll!lmlllililll!"'ll!,11!.lilll!ll!ll!ll!ll!ll!illl!llll!ll'~~ ~l~JfftPib 2 llllf 'd&Mffl~ 'Mii J&J IIUDIIII il!!illffll\id I I Ii !I ! i I

Historical Rewlved 2002103 Estimated Date of Adoption· December 13, 1994 Incremental Original L

Mro 2.400 Acres 1998199 ($74,050,098) $0 so so MediQII Park Plaza Prop,mies Inc NIA 70,600 Tax fo(;remelll Limit None 1999/2000 (40,801,209) 0 138,338 I 38,338 !06,307"' JD Investments 3,076,000 30,000 Tax Increment Received Through 2001-02 $6,754,237 2000/0] 182,0IS,640 1,988,201 (337,457) 1.650,744 J,668.741 I Appeal Under $135,000 Initial Value filed for 2000 50,000 1,000 Bond Indebtedness Limit 190,000,000 200!/02 324,705,460 3.364,301 (133,870) 3.230,431 3.184,543 4 ApPeals Under $610,000 Initial Value filed for ZOOl 191,000 ~000 Bood fodebtedness Oulstandmg as ofJune 2002 None Time Limit on Debt ltwurrence: De.::ember 13, 2004 (2) Includes all current ta:o.es and redemption payments colle.::ted. ~ Time Limit 011 the Effectiveness of the Redevelopment Plan: December 13, 2014 Safeway Stores lnc. NIA 8,000 Time Limit lo Receive Tl/Repay Indebtedness: December l 3, 2039 Pei~entage Collection (3) The Vons Compauies Inc NIA 5,000 Rlldnet M!lllngemcnt Inc NIA 4,000 Current Year Collections ,nc!uding Mast(lr Gnlphies Printing Co. NIA 3,000 Yrn Collections (4) PriorYear(5) Pte?iwlWAAAAKffiEI &£ ttJ!!1!1ffltf~ 1998199 NIA NIA Estimated 2002/03 Impaec $3,317,000 $123,600 1999/2000 76.8% 76.8% l994f95 2000/01 97.2% 101.1% Estimated 2002/03 Base Year Incremental 2001/02 97.2% 98.6% Pen dine 2002/03 Estimated Seeured Value Value Value Avernee Collections 90.4% 92.2% Assessee Value Impa<;;t Refunds Land $948:233;660 $183;9}4;2% $164,319,364 Improvements 1,447,371,792 1,197,988,619 249,383,173 {3) Uncollected amounts due to a combination of factors. See Part JI, PefSOltal Property 36,.'723.487 58,256,.975 (21,533,488) •Project Tax Increment Receipts~ for additional information. Topa.ipPWI\UC 30,465,000 592,000 Less: Exemptions 159,229,368 $190,979,346 (31,749,978) (4) All current year taxes collected. William M. Stewart 185,000 2.000 Total Secured 2,273,099,571 1,849,180,544 s,rn--;-919--;-021 (5) All current taxes aod redemption payments collected 14 Appeals Under $650,000initial Value filed for 2001 647,000 MOO Unsecured L,md 0 0 0 Jffi!"r¢Vem<:llitS 41,;mz,199 34,215.863 6,986,936 &lrsonal Property 68,766,493 54,623,094 14,143,399 None. Ralphs Groeecy Company NIA 1,000 Less: Exemption~ 107,000 35,400 71~600 - Total Unsecured 109,862,292 88,803,557 21,058,735 Value Per Land Use"" Estimated :ZOOZ/03 Impact $31,197,000 $601,000 Total Value 2.382.%1.863 1.937,984,101 444,977,762 Residential (6) See Part JI," Assessment Appeala" for lldditional information Lcss: Resolved Appeal Vahmti.:m Redue1ions ),)17,000 65.00% Pending Appeal Valuation Reductions Jl 297 099 Adjusted lneremeutal Secured am! UnlWllred 410.)63,762 u,e %,f Tax Increment Revenue $4,)36,000 Common Projert Unitary Revenue 0 A1111UllU Name i\,111_ount Value Less: Pro])1lrty Tax Admmis1rative Charge 86.,_000 Other Topanga Plai.a LLC Shoppmg Ctr $153,664,353 6.45% Tennis Club ApartmentsLLC Multi. Fam. Res. 42,710,294 l.79"A, Gross Estimated Revenue $4,250,000 Essex Portfolio LP Multi. Fam. Res. 37,787,000 1.59% Commercial Sam Menlo Muhi. Fam. Res.. 26,585,335 Less: Resolved Appeal Refunds !24,000 1.94% TR J,12% Pending Appeal Refunds 601,000 30.93% Comhioed Propertie!> Res.eda Shopping Ctr 22,454,864 094% AB 1290 Payments 705.000 Revenue By Type Topanga,md Vie1ozy Partners LP Dental Offices 21,626,893 0.91% Woodland Hills Multi. Fam. Res. 20,631,901 0.87% NET ESTIMATED REVENUE $2,820,000 Secured Warner Center Summit LTD Multi. Fam. Res. I 8,36\,961 0.77% 95.27% Cohasset Vi!lase Townhomes LLC Multi. Fam. Res. 17,176,SJS 0.72% Cate!lus Development Corp Shopping Ctr \6,681,638 070%

(l) Additional information is contaioed io Figure 11-IE Total Major Assessees $377,680,777 Total 2002103 Projea Value $2,382,961,863 Per«nla&e of2002/03 Total Value 15.85% Percentaze of 2002/03 Incremental Value 84.8S%

Unsecured 4.73%

Project Profile • Land use distnbution based on the 2002/03 Los Angeles County secured roll. Copyrii:ht 1992 Katz Holli$ 1KatzHollls Community Redevelopment Agency of the City of Los Angeles 2003 Pooled Financing Part I - Introduction

Characteristics of the Projects

CD 9Project

The Recovery Redevelopment Plan for the Council District Nine Corridors South of the Santa Monica Freeway was adopted by the City Council on December 13, 1995. The Project Area encompasses 2,817 acres and covers commercial and industrial corridors within the area bounded by the Santa Monica Freeway on the north, Alameda Street on the east, Normandie Avenue on the west and 84th Street on the south. Within these boundaries, some residential uses exist along the major corridors. However, residentially designated neighborhoods are excluded.

East Hollywood Project

The East Hollywood/Beverly-Normandie Earthquake Disaster Assistance Project is located approximately four miles west of Downtown and one block east of the Hollywood Redevelopment Project Area. It consists of two noncontiguous areas totaling 656 acres. The East Hollywood portion is approximately 464 acres bounded by Hobart Boulevard on the west, Franklin and Finley Avenues on the north, Talmadge and Hillhurst Streets on the east, and both sides of Sunset Boulevard and Prospect Avenue on the south. It is a diverse community with an intense concentration of hospital facilities, notably Kaiser Permanente and Children's Hospital of Los Angeles, located along Sunset Boulevard. The Beverly/Normandie segment is approximately 192 acres in size bordered by Beverly Boulevard on the north, New Hampshire Avenue on the east, Third Street on the south and Normandie Avenue on the west. This portion of the Project area contains a mixture of neighborhood retail and various ethnic businesses and grocery stores, which serve the densely populated multi-family residential district.

Laurel Canyon Project

The Earthquake Disaster Assistance Redevelopment Project for the Laurel Canyon Corridor is located northwest of the North Hollywood Redevelopment Project, in the south San Fernando Valley. The 248-acre project generally follows Laurel Canyon Boulevard from Burbank Boulevard to V anowen Street. The Redevelopment Plan was adopted on December 6, 1994. The Plan sets forth a range of goals including the repair and economic recovery of the area from the devastating 1994 Northridge Earthquake.

Pacoima Project

Adopted on December 9, 1994, the Earthquake Disaster Assistance Project for Portions of Council District 7, 6 and 2 is located in the northeast San Fernando Valley and includes portions of the communities of Arleta, Lakeview Terrace, Mission Hills, North Hills, North Hollywood, Pacoima, Panorama City, Sun Valley, Sylmar and Van Nuys. The project consists of approximately 2, 914 acres and is generally bounded by the San Diego Freeway on the west, Foothill Freeway on the north and east, and Victory Boulevard on the south.

Reseda Project

The Disaster Assistance Project for Portions of Council District 3 was adopted on December 13, 1994 in response to the economic and physical recovery needs resulting from the Northridge Earthquake. The 2,500-

I-2 1KatzHollis Community Redevelopment Agency of the City of Los Angeles 2003 Pooled Financing Part I - Introduction

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

Pursuant to AB 1290, each of the Projects has time limits and dollar limits that constrain the activities of the Agency. These limits are summarized in the table below.

Plan Effectiveness/ Tax Increment Bonded Debt Incurrence Duration Receipt Indebtedness Time Limit Time Limit Time Limit Dollar Limit

CD 9 Project December 13, 2015 December 13, 2025 December 13, 2040 $104,000,000 East Hollywood Project December 14, 2004 December 14, 2009 December 14, 2039 $54,050,000 Laurel Canyon Project December 9, 2004 December 9, 2006 June 30, 2030 $25,000,000 Pacoima Project November 29 ,2004 December 31, 2014 November 29, 2039 $200,000,000 Reseda Project December 13, 2004 November 13, 2014 December 13, 2039 $190,000,000

l-3 1K.atzHollls PART II

PROJECT TAXABLE VALUE AND TAX INCREMENT REVENUE

INTRODUCTION

The following paragraphs provide summarized information regarding property tax valuation and revenues realized or to be realized for the Projects in the current and prior fiscal years. Much of the information regarding 2002-03 fiscal year values and resultant revenues is presented on Figures II-1 A through II-IE, "Estimate of Tax Increment Revenues". Additional specifics regarding the analyses and assumptions that underlie the information in this Part II can be found in Part IV, "Background Information."

PROJECT TAXABLE VALUE

Cnrrent and Historical Taxable Value

Project value is originally reported by the County in late September of each fiscal year and is based on the aggregation of parcel values in the Project equalized as of August 20th of such year. Preliminary fiscal year 2002-03 values for the Projects are shown on Figures II-IA through II-IE, "Estimate of Tax Increment Revenues." The amounts of and changes in taxable values for the Projects are shown on Figures II-2A through II-2E, "Historical Taxable Value." The average annual percentage change in value over the term of the analysis and the change between the two most recent fiscal years are summarized below.

4-Year Most Average Recent

CD 9Project 3.87% 2.89% East Hollywood Project 6.37% 8.61% Laurel Canyon Project 4.10% 2.38% Pacoima Project 6.60% 6.51% Reseda Project 6.39% 5.32%

Exemptions

Reports of assessed value for the Projects provided by the County early each fiscal year provide the basis for much of the information presented in this Report. The reports include the amounts of exemptions that are being granted properties comprising a Project. Such exemptions are granted on an annual basis subject to the filing of requests for exempt status by the various qualifying entities (religious institutions, non-profit organizations, etc.). Late filing and processing of the requests for exemption can result in the omission of exemptions from the early reports of Project value. The omission results in the overstatement of Project value (because of the understatement of the exemption offset) and estimates of revenue higher than may actually be received by the Agency.

The review of recent years' values for the Projects disclosed that exemptions might have been understated in several fiscal years for the Laurel Canyon Project and for the Pacoima Project. The values provided on Figure II-2C and Figure II-2D for the Laurel Canyon Project and for the Pacoima Project include adjustments that represent the excluded exemptions. The adjustments are based on a review of roll data processed later in each fiscal year and on a review of properties that have consistently received tax exemption. ;Katz Hollis Figureil-lA Community Redevelopment Agency of the City of Los Angeles Council District 9 Redevelopment Project

Estimate of Tax Increment Revenues (1) 1995/96 2002/03 2002/03 Base Incremental Taxable V aloe Taxable Value Taxable V aloe Secured Land $839,990,095 $689,779,907 $150,210,188 Improvements 981,194,705 802, 146,973 179,047,732 Personal Property 11,673,110 15,807,913 (4,134,803) Gross Secured $1,832,857,910 $1,507,734,793 $325,123,117 Less: Exemptions 125,304,209 94,889,947 30,414,262 Total Secured $1,707,553,701 $1,412,844,846 $294,708,855

Unsecured Land 0 0 0 Improvements 95,627,441 97,306,492 (1,679,051) Personal Property 166,531,058 168,605,400 (2,074,342} Gross Unsecured $262,158,499 $265,911,892 ($3,753,393) Less: Exemptions 264000 172,600 91400 Total Unsecured $261,894,499 $265,739,292 ($3,844,793)

Total Secured and Unsecured $1,969,448,200 $1,678,584,138 $290,864,062

Resolved Appeal Valuation Reductions (2) 3,517,000 Pending Appeal Valuation Reductions (2) 4,566,000

Adjusted Incremental Secured and Unsecured $282,781,062

Tax Increment Revenue $2,988,000 Unitary Revenue (3) 0 Less: Property Tax Administrative Charge 57,000

Gross Estimated Revenue $2,931,000 Less: Resolved Appeal Refunds (2) 62,000 Pending Appeal Refunds (2) 73,000 AB 1290 Payments 559,000

NET ESTIMATED REVENUE ( 4) $2,237,000

(I) Based on infonnation provided by the County of Los Angeles. (2) Based on infonnation reported by the County as of January 2003. (3) As reported by the County as of December 2002. (4) Total Estimated Revenue includes $597,600 of revenue designated for housing uses but available for debt service on the proposed bonds. ,Katz Hollis Figure 11-lB Community Redevelopment Agency of the City of Los Angeles East Hollywood/Beverly Normandie Earthquake Disaster Assistance Project

Estimate of Tax Increment Revenues (1) 1994/95 2002/03 2002/03 Base Incremental Taxable Value Taxable V aloe Taxable Value Secured Land $480,000,712 $378,209,351 $101,791,361 Improvements 806, 759,672 649,300,377 157,459,295 Personal Property 104,976,825 86,562,194 18,414,631 Gross Secured $1,391,737,209 $1,114,071,922 $277 ,665,287 Less: Exemptions 528,846,938 377,510,265 151,336,673 Total Secured $862,890,271 $736,561,657 $126,328,614

Unsecured Land 0 0 0 Improvements 9,713,231 7,163,004 2,550,227 Personal Property 25,088,689 27,344,177 (2,255,488) Gross Unsecured $34,801,920 $34,507,181 $294,739 Less: Exemptions 153,000 86,000 67,000 Total Unsecured $34,648,920 $34,421,181 $227,739

Total Secured and Unsecured $897,539,191 $770,982,838 $126,556,353

Resolved Appeal Valuation Reductions (2) 1,225,000 Pending Appeal Valuation Reductions (2) 3,191,000

Adjusted Incremental Secured and Unsecured $122,140,353

Tax Increment Revenue $1,290,000 Unitary Revenue (3) 0 Less: Property Tax Administrative Charge 25,000

Gross Estimated Revenue $1,265,000 Less: Resolved Appeal Refunds (2) 13,000 Pending Appeal Refunds (2) 39,000 AB 1290 Payments 243,000

NET ESTIMATED REVENUE ( 4) $970,000

(I) Based on information provided by the County of Los Angeles. (2) Based on information reported by the County as of January 2003. (3) As reported by the County as of December 2002. ( 4) Total Estimated Revenue includes $258,000 of revenue designated for housing uses but available for debt service on the proposed bonds. ,Katz Hollis Figurell-lC Community Redevelopment Agency of the City of Los Angeles Laurel Canyon Earthquake Disaster Assistance Project

Estimate of Tax Increment Revenues (1) 1994/95 2002/03 2002/03 Base Incremental Taxable Value Taxable Value Taxable Value Secured Land $116,294,160 $86,546,557 $29,747,603 Improvements 177,211,574 128,434,284 48,777,290 Personal Property 4 533949 1,578,975 2 954,974 Gross Secured $298,039,683 $216,559,816 $81,479,867 Less: Exemptions 15,475,294 12,576,798 2 898 496 Total Secured $282,564,389 $203,983,018 $78,581,371

Unsecured Land 0 0 0 Improvements 6,939,099 10,555,002 (3,615,903) Personal Property 9,766,813 13,571,673 (3,804,860) Gross Unsecured $16,705,912 $24,126,675 ($7 ,420, 763) Less: Exemptions 0 0 0 Total Unsecured $16,705,912 $24,126,675 ($7,420,763)

Total Secured and Unsecured $299,270,301 $228,109,693 $71,160,608

Resolved Appeal Valuation Reductions (2) 975,000 Pending Appeal Valuation Reductions (2) 579,000

Adjusted Incremental Secured and Unsecured $69,606,608

Tax Increment Revenue $735,000 Unitary Revenue (3) 0 Less: Property Tax Administrative Charge 14,000

Gross Estimated Revenue $721,000 Less: Resolved Appeal Refunds (2) 21,000 Pending Appeal Refunds (2) 7,000 AB 1290 Payments 139,000

NET ESTIMATED REVENUE (4) $554,000

( 1) Based on information provided by the County of Los Angeles. (2) Based on information reported by the County as of January 2003. (3) As reported by the County as of December 2002. (4) Total Estimated Revenue includes $147,000 of revenue designated for housing uses but available for debt service on the proposed bonds. ,KatzHollis Figure 11-lD Community Redevelopment Agency of the City of Los Angeles Pacoima/Panorama City Earthquake Disaster Assistance Project

Estimate of Tax Increment Revenues (1) 1994/95 2002/03 2002/03 Base Incremental Taxable Value Taxable Value Taxable Value Secured Land $1,094,802,613 $840,862,636 $253,939,977 Improvements 1,533,503,111 1,373,756,933 159,746,178 Personal Property 33,096,805 48,049,253 (14,952,448) Gross Secured $2,661,402,529 $2,262,668,822 $398,733,707 Less: Exemptions 124,747,252 88,903,733 35,843,519 Less: Exemption Adjustments (2) 905,000 0 905,000 Total Secured $2,535,750,277 $2,173,765,089 $361,985,188

Unsecured Land 0 0 0 Improvements 103,081,752 78,804,606 24,277,146 Personal Property 226,199,059 117,629,128 I 08,569,931 Gross Unsecured $329,280,811 $196,433,734 $132,847,077 Less: Exemptions 7,396,000 31,000 7,365,000 Total Unsecured $321,884,811 $196,402,734 $125,482,077

Total Secured and Unsecured $2,857,635,088 $2,370,167,823 $487 ,467,265

Resolved Appeal Valuation Reductions (3) 6,958,000 Pending Appeal Valuation Reductions (3) 7,577,000

Adjusted Incremental Secured and Unsecured $472,932,265

Tax Increment Revenue $4,997,000 Unitary Revenue (4) 0 Less: Property Tax Administrative Charge 95,000

Gross Estimated Revenue $4,902,000 Less: Resolved Appeal Refunds (3) 200,000 Pending Appeal Refunds (3) 160,000 AB 1290 Payments 908,000

NET ESTIMATED REVENUE (5) $3,634,000

(]) Based on information provided by the County of Los Angeles. (2) Values have been adjusted based on specific situations where exemptions were filed late and not included in the initial role values. (3) Based on information reported by the County as of January 2003. (4) As reported by the County as of December 2002. (5) Total Estimated Revenue includes $999,400 of revenue designated for housing uses but available for debt service on the proposed bonds. ilatzHollis Figure 11-lE Community Redevelopment Agency of the City of Los Angeles Reseda/Canoga Park Earthquake Disaster Assistance Project

Estimate of Tax Increment Revenues (1) 1994/95 2002/03 2002/03 Base Incremental Taxable Value Taxable Value Taxable Value Secured Land $948,233,660 $783,914,296 $164,319,364 Improvements 1,447,371,792 1,197,988,619 249,383,173 Personal Property 36,723,487 58,256,975 (21,533,488) Gross Secured $2,432,328,939 $2,040,159,890 $392,169,049 Less: Exemptions 159,229,368 190,979,346 (31,749,978) Total Secured $2,273,099,571 $1 ,849,180,544 $423,919,027

Unsecured Land 0 0 0 Improvements 41,202,799 34,215,863 6,986,936 Personal Property 68,766493 54,623,094 14,143,399 Gross Unsecured $109,969,292 $88,838,957 $21,130,335 Less: Exemptions 107,000 35400 71,600 Total Unsecured $109,862,292 $88,803,557 $21,058,735

Total Secured and Unsecured $2,382,961,863 $1,937,984,101 $444,977,762

Resolved Appeal Valuation Reductions (2) 3,317,000 Pending Appeal Valnation Reductions (2) 31,297,000

Adjusted Incremental Secured and Unsecured $410,363, 762

Tax Increment Revenue $4,336,000 Unitary Revenue (3) 0 Less: Property Tax Administrative Charge 86,000

Gross Estimated Revenue $4,250,000 Less: Resolved Appeal Refunds (2) 124,000 Pending Appeal Refunds (2) 601,000 AB 1290 Payments 705,000

NET ESTIMATED REVENUE (4) $2,820,000

(1) Based on information provided by the County of Los Angeles. (2) Based on information reported by the County as of January 2003. (3) As reported by the County as of December 2002. (4) Total Estimated Revenue includes $867,200 of revenue designated for housing nses but available for debt service on the proposed bonds. Katz Hollis Figure II-2A Community Redevelopment Agency of the City of Los Angeles Council District 9 Redevelopment Project (1)

Historical Taxable Value

1998/99 1999/2000 2000/01 2001/02 2002/03 Secured Land $ 693,423, 120 $ 719,510,728 $ 747,986,238 $ 789,111,999 $ 839,990,095 Improvements 825,943,035 868,565,141 897,893,410 938,401,625 981,194,705 Personal Property 21,274,728 13,276,659 10,544,576 9,409,521 11,673,110 Gross Secured $ 1,540,640,883 $ 1,601,352,528 $ 1,656,424,224 $ 1,736,923,145 $ 1,832,857,910 Less: Exemptions 108,871,973 78,762,540 100,760,688 84,285 140 125,304,209 Total Secured $ 1,431,768,910 $ 1,522,589,988 $ 1,555,663,536 $ 1,652,638,005 $ 1,707,553,701

Unsecured Land 0 0 0 0 0 Improvements 107,600,664 101,388,707 104,149,623 102,774,095 95,627,441 Personal Property 155,134,075 140,432,748 160,021,668 158,915,665 166,531,058 Gross Unsecured $ 262,734,739 $ 241,821,455 $ 264,171,291 $ 261,689,760 $ 262,158,499 Less: Exemptions 2,076,000 105,400 92,000 105,000 264,000 Total Unsecured $ 260,658,739 $ 241,716,055 $ 264,079,291 $ 261,584,760 $ 261,894,499

TOTAL PROJECT VALUE $ 1,692,427 ,649 $ 1,764,306,043 $ 1,819,742,827 $ 1,914,222,765 $ 1,969,448,200

Percentage Increase/Decrease 4.25% 3.14% 5.19% 2.89%

(I) Values are as reported by the Los Angeles County Auditor-Controller. KatzHollis Figure II-2B Community Redevelopment Agency of the City of Los Angeles East Hollywood/Beverly Normandie Earthquake Disaster Assistance Project (1)

Historical Taxable Value

1998/99 1999/2000 2000/01 2001/02 2002/03 Secured Land $ 375,135,680 $ 388,277,737 $ 418,873,832 $ 444,414,813 $ 480,000,712 Improvements 686,474,492 705,355,704 734,893,466 764,524,935 806,759,672 Personal Property 111,085,169 101,405,429 99,526,300 102,638,311 104,976,825 Gross Secured $ 1,172,695,341 $ 1,195,038,870 $ 1,253,293,598 $ 1,311,578,059 $ 1,391,737,209 Less: Exemptions 494,432,411 492,688,718 496,383,251 514,215,521 528,846,938 Total Secured $ 678,262,930 $ 702,350,152 $ 756,910,347 $ 797,362,538 $ 862,890,271

Unsecured Land 0 0 0 0 0 Improvements 9,019,816 8,304,909 8,169,775 8,673,506 9,713,231 Personal Property 14,293,277 16,479,132 17,782,751 20445,939 25,088,689 Gross Unsecured $ 23,313,093 $ 24,784,041 $ 25,952,526 $ 29,119,445 $ 34,801,920 Less: Exemptions 89,000 96,500 213 200 101,000 153,000 Total Unsecured $ 23,224,093 $ 24,687,541 $ 25,739,326 $ 29,018,445 $ 34,648,920

TOTAL PROJECT VALUE $ 701,487 ,023 $ 727,037,693 $ 782,649,673 $ 826,380,983 $ 897,539,191

Percentage Increase/Decrease 3.64% 7.65% 5.59% 8.61%

(1) Values are as reported by the Los Angeles County Auditor-Controller. Katz Hollis Figure II-2C Community Redevelopment Agency of the City of Los Angeles Laurel Canyon Earthquake Disaster Assistance Project

Historical Taxable Value

1998/99 1999/2000 2000/01 2001/02 2002/03 Secured Land $ 94,881,605 $ 97,809,147 $ 103,808,375 $ 110,897,503 $ 116,294,160 Improvements 150,113,252 155,230,843 163, 778,301 170,888,161 177,211,574 Personal Property 5,089,301 4,331,831 5,114,999 4,043,309 4,533,949 Gross Secured $ 250,084,158 $ 257,371,821 $ 272,701,675 $ 285,828,973 $ 298,039,683 Less: Exemptions 12,695,484 5,438,762 13,265,106 5,679,986 15,475,294 Less: Exemption Adjustments (I) 6,178,451 6,428,059 Total Secured $ 237,388,674 $ 245,754,608 $ 259,436,569 $ 273,720,928 $ 282,564,389

Unsecured Land 0 0 0 0 0 Improvements 7,858,440 7,563,501 7,839,519 7,680,796 6,939,099 Personal Property 9,743,178 9684319 10,925,803 10,986,260 9,766,813 Gross Unsecured $ 17,601,618 $ 17,247,820 $ 18,765,322 $ 18,667,056 $ 16,705,912 Less: Exemptions 33,000 21,000 21,000 71 000 Total Unsecured $ 17,568,618 $ 17,226,820 $ 18,744,322 $ 18,596,056 $ 16,705,912

TOTAL PROJECT VALUE $ 254,957,292 $ 262,981,428 $ 278,180,891 $ 292,316,984 $ 299,270,301

Percentage Increase/Decrease 3.15% S.78% 5.08% 2.38%

(1) Exemption adjustments are based on specific situations where exemptions were filed late and not included in the initial roll values. KatzHollis Figure II-2D Community Redevelopment Agency of the City of Los Angeles Pacoima/Panorama City Earthquake Disaster Assistance Project

Historical Taxable Value

1998/99 1999/2000 2000/01 2001/02 2002/03 Secured Land $ 843,378,500 $ 883,207,497 $ 950,005,978 $ 1,024,597,183 $ 1,094,802,613 Improvements 1,170,024,541 1,234,152,100 1,350,896,605 1,434,807,598 1,533,503,111 Personal Property 59,035,408 37,503,533 39,765,853 36,061,691 33 096,805 Gross Secured $ 2,072,438,449 $ 2,154,863,130 $ 2,340,668,436 $ 2,495,466,472 $ 2,661,402,529 Less: Exemptions 93,051,931 113,313,547 108,003,706 89,131,907 124,747,252 Less: Exemption Adjustments (I) 2,064,956 6,768,608 20,230,421 31,401,808 905 000 Total Secured $ 1,977,321,562 $ 2,034, 780,975 $ 2,212,434,309 $ 2,374,932,757 $ 2,535,750,277

Unsecured Land 0 0 0 1671581 0 Improvements 77,271,235 88,597,267 84,120,887 95,246,020 103,081,752 Personal Property 159,605,670 191,165,291 209,867,478 220,527.;170 226,199,059 Gross Unsecured $ 236,876,905 $ 279,762,558 $ 293,988,365 $ 317,444,971 $ 329,280,811 Less: Exemptions 522,800 797 800 7264700 9,332,881 7 396000 Total Unsecured $ 236,354,105 $ 278,964,758 $ 286,723,665 $ 308,112,090 $ 321,884,811

TOTAL PROJECT VALUE $ 2,213,675,667 $ 2,313,745,733 $ 2,499,157,974 $ 2,683,044,847 $ 2,857,635,088

Percentage Increase/Decrease 4.52% 8.01% 7.36% 6.51%

(1) Exemption adjustments are based on specific situations where exemptions were filed late and not included in the initial roll values. Katz Holl ls Figure II-2E Community Redevelopment Agency of the City of Los Angeles Reseda/Canoga Park Earthquake Disaster Assistance Project (1)

Historical Taxable Value

1998/99 1999/2000 2000/01 2001/02 2002/03 Secured Land $ 728,699,967 $ 762,676,933 $ 830,849, 179 $ 891,024,595 $ 948,233,660 Improvements 1,070,852,982 1,160,223,259 1,297,732,149 1,381,846,102 1,447,371,792 Personal Property 7,282,373 32,883,662 32,164,547 36,727,159 36,723,487 Gross Secured $ 1,806,835,322 $ 1,955,783,854 $ 2,160,745,875 $ 2,309,597,856 $ 2,432,328,939 Less: Exemptions 60,603,511 170,699,651 146,846,603 157 004,069 159,229,368 Total Secured $ 1,746,231,811 $ 1,785,084,203 $ 2,013,899,272 $ 2,152,593,787 $ 2,273,099,571

Unsecured Land 0 0 0 0 0 Improvements 45,563,843 38,753,498 39,687,441 42,323,433 41,202,799 Personal Property 72,997,355 73,537,391 66,486,028 67,929,341 68,766,493 Gross Unsecured $ 118,561,198 $ 112,290,889 $ 106,173,469 $ 110,252,774 $ 109,969,292 Less: Exemptions 859,006 192,200 73,000 157,000 107,000 Total Unsecured $ 117,702,192 $ 112,098,689 $ 106,100,469 $ 110,095,774 $ 109,862,292

TOTAL PROJECT VALUE $ 1,863,934,003 $ 1,897,182,892 $ 2,119,999,741 $ 2,262,689,561 $ 2,382,961,863

Percentage Increase/Decrease 1.78% 11.74% 6.73% 5.32%

(I) Values are as reported by the Los Angeles County Auditor-Controller. Katz Hollis Community Redevelopment Agency of the City of Los Angeles 2003 Pooled Financing Part II Taxable Value

Assessment Appeals

Pending and recently resolved assessment appeals were reviewed in order to determine the potential impact on current and future value and on tax increment revenue for the Projects should appeals be resolved in favor of the respective assessees. The analysis disclosed that each of the Projects has recently resolved and pending assessment appeals that may impact the receipt of revenue. A summary of the findings of the analysis, including estimated impacts to Project assessed values and revenues, are shown on the following tables. Information as to the specific assessees is shown on Figures I-lA through I-lE. Impacts assumed applicable to fiscal year 2002-03 values and revenues are shown on Figures II-2A through II-2E. Impacts applicable to future years' revenues and values are incorporated into the tax revenue projections of Part III.

CD9Project Estimated Total Estimated 2002-03 Refunds Assessee Valuation Impact Through 2002-03 Resolved Assessment Appeals $1,873,000 $ 62,000 Pending Assessment Appeals 4 566 000 73 000 Total Estimated 2002-03 Impact $6,439,000 $135,000

East Hollmood Project Estimated Total Estimated 2002-03 Refunds Assessee Valuation Impact Through 2002-03 Resolved Assessment Appeals $1,255,000 $13,000 Pending Assessment Appeals 3,191,000 39,000 Total Estimated 2002-03 Impact $4,446,000 $52,000

Laurel Canyon Project Estimated Total Estimated 2002-03 Refunds Assessee Valuation Impact Through 2002-03 Resolved Assessment Appeals $ 975,000 $21,000 Pending Assessment Appeals 578,700 7,000 Total Estimated 2002-03 Impact $1,553,700 $28,000

II-2 KatzHollls Community Redevelopment Agency of the City of Los Angeles 2003 Pooled Financing Part II - Taxable Value

Pacoima Project Estimated Total Estimated 2002-03 Refunds Asses see Valuation Impact Through 2002-03 Resolved Assessment Appeals $ 6,958,000 $199,800 Pending Assessment Appeals 7,577,000 160 000 Total Estimated 2002-03 Impact $14,535,000 $359,800

Reseda Project Estimated Total Estimated 2002-03 Refunds Assessee Valuation Impact Through 2002-03 Resolved Assessment Appeals $ 3,317,000 $123,000 Pending Assessment Appeals 31,297,000 601,000 Total Estimated 2002-03 Impact $34,614,000 $724,000

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

2002-03 Major Assessees

Figures Il-3A through II-3E, the "2002-03 Ten Major Assessees," list the 2002-03 value for the ten major assessees in each Projects based on their value on the 2002-03 tax roll. The cumulative 2002-03 taxable value of the ten major assessees in each Project and their approximate percentage of the total taxable value and incremental value of each Project are summarized on the following table.

II-3 Katz Hollis Figureil-3A Community Redevelopment Agency of the City of Los Angeles Council District 9 Redevelopment Project

TEN MAJOR ASSESSEES FOR FISCAL YEAR 2002/03 (1)(4)

%of Major No.of 2002/03 Project Rank Assessees Assessments Use Value Value

I La Mart Properties LLC 5 Professional Offices $42,630,258 2.16%

2 3434 South Grand Avenue LLC (2) 2 Warehouse/Distribution 30,600,306 1.55%

3 Corporate Property (3) 1 Beverage Processing 29,689,390 1.51%

4 Matchmaster Dyeing & Finishing I Unsecured 15,072,663 0.77%

5 SF! ILLC I Warehouse/Distribution 14,870,000 0.76%

6 Alameda and 25th LLC 1 Warehouse/Distribution 14,728,573 0.75%

7 Great Spring Waters 2 Unsecured 13,930,671 0.71%

8 Dennis B Needleman TR 6 Neigbor Shopping Ctr 13,299,893 0.68%

9 Steven S Koh TR 9 Warehous/Office/Parking 11,206,526 0.57"/o

10 Cereal Food Processors Inc I Manufacturing 10,154,971 0.52%

TOTAL VALUE MAJOR ASSESSEES $196,183,251 TOTAL 2002/03 PROJECT VALUE $1,969,448,200

TOTAL% OF 2002/03 PROJECT VALUE 9.96% TOTAL% OF 2002/03 INCREMENTAL VALUE 67.45%

(I) Based on information provided by the County ofLos Angeles. Includes all secured and unsecured value located within the Project Area attributable to each assessee. (2) During fiscal year 2002-03, one of the two assessments for this property owner became tax exempt, the second of the assessments had been transferred to the University of Southern California, therefore reducing this assessee's holdings in this Project Area for 2003-04 to approxnnately $19.9 million. It is uncertain if the USC property will be tax ex, (3) During fiscal year 2002-03, this property was purchased by LAUSD and became tax exempt property. (4) Because of property becoming tax exempt, the following Assessees will probably be among the largest asses sees in 2003-0< o/oof Major No.of 2002/03 Project Assessees Assessments Use Value Value

Tenenblatt Partnership 22 Light Mfg./Warehouse 9,358,799 0.48% Somervillle Apartments 7 Multi-Family Residential 8,543,857 0.43% Katz Hollis Figure II-3B Community Redevelopment Agency of the City of Los Angeles East Hollywood/Beverly Normandie Earthquake Disaster Assistance Project

TEN MAJOR ASSESSEES FOR FISCAL YEAR 2002/03 (1)

%of Major No.of 2002/03 Project Rank Assessees Assessments Use Value Value

Kaiser Foundation Hospitals 21 Hospital/Parking $18,038,111 2.01%

2 Willie Wong Co TR 9 Multi. Fam. Res. 8,970,239 1.00%

3 1800 New Hampshire Assoc Multi. Fam. Res. 8,714,526 0.97%

4 Safeway Inc 2 Supermarket 8,912,488 0.99%

5 Finley Real Estate LTD Partnership Multi. Fam. Res. 6,255,850 0.70%

6 Henry and Anita Weiss TRS 9 Multi. Fam. Res. 6,153,494 0.69%

7 Epsteen Pomona Properties LLC 6 Bank/Parking 5,967,000 0.66%

8 5000 Sunset LLC 1 Professional Building 5,642,147 0.63%

9 Harvey J Muller TR ET AL Multi. Fam. Res. 5,042,738 0.56%

10 Wayne Griffin JR CO TR 5 Auto Service 4,673,426 0.52%

TOTAL VALUE MAJOR ASSESSEES $78,370,019 TOTAL 2002/03 PROJECT VALUE $897,539,191

TOTAL % OF 2002/ll3 PROJECT VALUE 8.73% TOTAL% OF 2002/03 INCREMENTAL VALUE 61.92%

(I) Based on information provided by the County of Los Angeles. Includes all secured and unsecured value 1ocated within the Project Area attributable to each assessee. KatzHollis Figure II-3C Community Redevelopment Agency of the City of Los Angeles Laurel Canyon Earthquake Disaster Assistance Project

TEN MAJOR ASSESSEES FOR FISCAL YEAR 2002/03 (1)

%of Major No.of 2002/03 Project Rank Assessees Assessments Use Value Value

Laurel Plaza Development I Shopping Ctr $30,237 ,424 10.10%

2 May Department Stores Co 2 Shopping Ctr 21,707,857 7.25%

3 Pacific Pointe LLC 1 Multi. Fam. Res. 11,024,894 3.68%

4 Sears Roebuck and Co I Department Store 8,040,332 2.69%

5 6400 Laurel Canyon Investors LLC 1 Bank 7,344,000 2.45%

6 CohyvlLLC 1 Office Building 5,784,624 1.93%

1 Valley Plaza LLC 5 Shopping Ctr 5,550,530 1.85%

8 1031 South Wooster Limited 2 Multi. Fam. Res. 5,435,900 1.82%

9 K WLimited 1 Office Building 4,929,418 1.65%

10 Jean S Elkawass l Shopping Ctr 4,323,486 1.44%

TOTAL VALUE MAJOR ASSESSEES $104,378,465 TOTAL 2002/03 PROJECT VALUE $299,270,301

TOTAL % OF 2002/03 PROJECT VALUE 34.88% TOTAL% OF 2002/03 INCREMENTAL VALUE 146.68°/o

(I) Based on information provided by the County of Los Angeles. Includes all secured and unsecured value located within the Project Area attributable to each assessee. Katz Hollis Figure II-3D Community Redevelopment Agency of the City of Los Angeles Paeoima/Panorama City Earthquake Disaster Assistance Project

TEN MAJOR ASSESSEES FOR FISCAL YEAR 2002103 (1)

%of Major No.of 2002/03 Project Rank Assessees Assessments Use Value Value

1 Price Pfister Inc 6 Manufacturing $47,513,423 1.66%

2 NF Plant Associates LLC 13 Shopping Ctr 44,737,191 1.57%

3 Panorama City Associates 2 Restauranl/Shopping 26,884,025 0.94%

4 Spectrolab Inc Unsecured 25,948,443 0.91%

5 G and S Partnership Warehouse 21,253,919 0.74%

6 Henry and Anita Weiss TRS 22 Multi Fam Res 20,645,815 0.72%

7 Pacifica of the Valley Corp 4 Hospital/Parking 19,712,502 0.69"A,

8 Valacal Co 9 Manuf.Nacant Land 16,827,140 0.59%

9 Northeast Valley Industrial 6 Warehouse/Lt Manuf. 15,350,743 0.54%

10 Advanced Bionics Corporation Unsecured 15,049,648 0.53%

TOTAL VALUE MAJOR ASSESSEES $253,922,849 TOTAL 2002103 PROJECT VALUE $2,857,635,088

TOTAL % OF 2002/03 PROJECT VALUE 8.89% TOTAL% OF 2002103 INCREMENTAL VALUE 52.09%

(!) Based on information provided by the County of Los Angeles. Includes all secured and unsecured value located within the Project Area attributable to each assessee. Katzffollis Figure 11-3E CommWlity Redevelopment Agency of the City of Los Angeles Reseda/Canoga Park Earthquake Disaster Assistance Project

TEN MAJOR ASSESSEES FOR FISCAL YEAR 2002/03 (1)

o/oof Major No.of 2002/03 Project Rank Assessees Assessments Use Value Value

l Topanga Plaza LLC 2 Shopping Ctr $153,664,353 6.45%

2 Tennis Club Apartments LLC 4 Multi. Fam. Res. 42,710,294 1.79%

3 Essex Portfolio L P 1 Multi. Fam. Res. 37,787,000 1.59%

4 Sam Menlo TR 4 Multi. Fam. Res. 26,585,335 1.12%

5 Combined Properties Reseda 14 Shopping Ctr 22,454,864 0.94%

6 Topanga and Vicrory Partners LP l Dental Offices 21,626,893 0.91%

7 Woodland Hills 2 Multi. Fam. Res. 20,631,901 0.87%

8 Warner Center Summit LTD l Multi. Fam. Res. 18,361,961 0.77%

9 Cohasset Village Townhomes LLC 5 Multi. Fam. Res. 17,176,538 0.72%

10 Catellus Development Corp 2 Shopping Ctr 16,681,638 0.70%

TOTAL VALUE MAJORASSESSEES $377,680,777 TOTAL 2002/03 PROJECT VALUE $2,382,961,863

TOTAL% OF 2002/03 PROJECT VALUE 1S.8S% TOTAL %0F2002/031NCREMENTAL VALUE 84.88%

(I) Based on information provided by the CoW1ty of Los Angeles. Includes all secured and unsecured value located within the Project Area attributable lo each assessee. 1KatzHollls Community Redevelopment Agency of the City of Los Angeles 2003 Pooled Financing Part II-Taxable Value

2002-03 Major Assessees as a Percentage of Project Values

2002-03 Percentage of Percentage of Major Assessee Value Total Project Value Incremental Value

CD 9 Project $196,183,251 9.96% 67.45% East Hollywood Project $78,370,019 8.73% 61.92% Laurel Canyon Project $104,378,465 34.88% 146.68% Pacoima Project $253,922,849 8.88% 52.09% Reseda Project $377,680,777 15.85% 84.88%

PROJECT TAX REVENUE

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

Tax Rates

For computing revenues of the Projects, the secured tax rate was assumed, which was applied to both secured and unsecured property. This secured tax rate is generally the same for all project areas in Los Angeles.

Portions of the override tax rate are levied by the Los Angeles Community College District (LACCD) and by the Los Angeles Unified School District (LAUSD) to fund debt service payments on bonds issued for the purpose constructing and renovating school facilities. Authority for the levy was provided through voter approval of the issuance of bonds. Pursuant to Constitutional and statutory provisions, the taxes generated by application of these levies to incremental value in a redevelopment project are to be paid to LACCD and to LAUSD and not included in tax increment paid to the Agency. As shown below, we have deducted a portion of the override rate to determine the applicable tax rate. For additional information regarding tax rates, please refer to "PROJECT AREA TAX REVENUE - Tax Increment and Tax Rates" in Part IV.

Secured Tax Rate

Full Tax Rate $ 1.074728 LAUSD Facility Levy (0.024749) LACCD (0.003338) Net Tax Rate $ 1.053317

Unitary Property Taxes

All of the Projects were adopted after the State Board of Equalization began to assess unitary property on a countywide basis. As a result, there was no unitary property specifically assigned to any of the Projects at the time of their adoption and no allocation of unitary revenue to the Projects. There continues to be no unitary

II-4 1K.atzHollls Community Redevelopment Agency of the City of Los Angeles 2003 Pooled Financing Part II - Taxable Value revenue paid to any of the Projects for the 2002-03 fiscal year. Because the formula for the allocation of unitary revenue is based on the growth of secured value in a jurisdiction (project area) relative to growth in other jurisdictions, the Projects may, at some time in the future, participate in unitary revenues. No estimate of the Projects' eventual participation in the allocation of unitary revenue has been included in the estimates of this Report. Please refer to "PROJECT AREA TAX REVENUE - Unitary Property Taxes" in Part IV.

Supplemental Property Taxes

The Agency typically receives supplemental revenues on an annual basis. Supplemental property taxes shown on the following table are a function of new construction activity and transfers of ownership occurring in the Projects after the tax lien date and can result in an increase in or an off-set to revenues of the Projects. The following are annual supplemental property tax receipts for the Projects over the period from 1998-99 through 2001-2002.

HISTORICAL PROJECT SUPPLEMENTAL RECEIPTS East CD9 Hollywood Laurel Canyon Pacoima Reseda 1998-99 $ 35,437 $ 37,362 $ 35,935 $ 85,541 $ 233,854 1999-2000 162,091 110,134 30,831 633,110 357,409 2000-01 209,952 135,562 39,825 601,731 782,869 2001-02 225,919 249,363 64,630 864,753 891,787

Please also refer to "PROJECT AREA TAX REVENUE- Supplemental Property Taxes" in Part IV.

ADJUSTMENTS TO TAX INCREMENT REVENUE

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

Property Tax Administrative Costs

The County currently reduces the amount of total tax increment revenue allocated to the Agency from the Projects to cover property tax administrative costs. The County administrative fees for fiscal year 2001-02 are shown in the table below for each Project. For fiscal year 2002-03 and thereafter the charges are estimated to be 2 percent of estimated Project revenue.

11-5 1K.atzHollls Community Redevelopment Agency of the City of Los Angeles 2003 Pooled Financing Part II - Taxable Value

2001-02 Administrative Cha:rge

CD9 Project $57,000 East Hollywood Project $25,000 Laurel Canyon Project $14,000 Pacoima Project $95,000 Reseda Project $86,000

Low and Moderate Income Housing

The Agency must set aside 20 percent of its allocated tax increment from each of the Projects for low and moderate income housing purposes, except under certain specified conditions (See discussion of Housing Set Aside in Part IV). It is our understanding that at least 20 percent of the proceeds of the proposed loan for each Project will be used for low and moderate income housing purposes specified in the Redevelopment Law. Revenues available to pay debt service on the loans do not need, therefore, to be offset by the required housing set-aside. Accordingly, estimates of tax revenue provided in this Report do not deduct the housing set-aside.

AB 1290 Tax Sharing Payments

AB 1290 eliminated the provision of Section 3340 I allowing redevelopment agencies to make payments from tax increment to affected taxing entities as a mitigation of fiscal impact caused by the adoption or amendment of redevelopment projects. The payments that might otherwise be made by projects under the former "pass through" agreements have been replaced with a statutory tax increment sharing formula. The statutory payments a:re triggered when a project is adopted or amended to add territory after January I, 1994 or when a redevelopment plan is amended to extend financial deadlines or to increase the amont of tax increment that may be received by an Agency. All of the Projects were adopted after January I, 1994. As a result, the Projects must make statutory payments to all affected taxing entities. An estimate of the amount due taxing entities from the Projects per the statutory formula is included on Table II-IA through II-IE and estimated for future yea:rs in the projections of Part III.

AB 1290 also provides for the subordination of the payments due taxing entities to debt service on redevelopment agency debt. The subordination must be requested by an agency prior to incurring the debt. Taxing entities must refuse the subordination (and substantiate the cause for refusal) within forty-five days of the agency's request or the subordination is granted.

The estimates of tax revenue available for debt service on the proposed obligations provided in this Report for the Projects have been reduced by the total amount of payments estimated to be due the taxing entities pursuant to AB 1290.

II-6 1KatzHollls Community Redevelopment Agency of the City of Los Angeles 2003 Pooled Financing Part II -Taxable Value

LOS ANGELES COUNTY ALLOCATION ADJUSTMENTS

The major component of the Los Angeles County allocation procedures that impacts the Agency's receipt of tax increment revenues from the Project is the County's policy of allocating tax increment revenues with offsets for delinquencies, taxable value adjustments and/or refunds of taxes as a result of successful assessment appeals.

Project Tax Increment Receipts

Tax receipts for the Project were reviewed in order to analyze collection trends. This review revealed the collection trends shown below for fiscal years 1998-99 through 2001-02 when compared to original levies. The effects on collection percentages of redemption payments received each year are also identified to indicate whether delinquencies in tax payments are being cured on a consistent basis.

PERCENTAGE COLLECTIONS

Current Year Collections Fiscal East Year CD9 Hollywood Laurel Canyon Pacoima Reseda

1998-99 NIA NIA 94.6% NIA NIA 1999-00 77.3% NIA 98.1% NIA 76.8% 2000-01 88.1% NIA 96.8% 95.3% 97.2% 2001-02 90.6% 92.3% 97.2% 93.9% 97.2%

Including Prior Year Collections Fiscal East Year CD9 Hollywood Laurel Canyon Pacoima Reseda

1998-99 NIA NIA 94.6% NIA NIA 1999-00 77.3% NIA 100.5% NIA 76.8% 2000-01 91.0% NIA 98.6% 95.3% 101.1% 2001-02 97.9% 92.3% 99.5% 95.4% 98.6%

II-7 1KatzHollis PART III

PROJECTIONS OF TAX INCREMENT REVENUES

INTRODUCTION

The estimates of future taxable values and revenues for the Projects presented as Figures III-IA through III-IE are provided as an indication of the effect of pending instances of assessment changes and as a model of the future effects of some of the factors discussed in this Report. The estimates of annual value and revenue are constructed through a method that attempts to include only existing or imminent instances of changes in values or revenues incorporating certain assumptions about their timing or impact. As such, the projections are an indication of the effects of less than the full universe of elements that can affect the generation of future revenues in the Projects.

PROJECTIONS OF PROJECT TAXABLE VALUES

Real property values included on Figures III-IA through III-lE are comprised of locally assessed secured and unsecured land and improvement values. The projections included in this Part III are based on the assumption that 2002-03 real property value will increase at an annual rate of two percent. This two percent is the inflation factor to be used by all county assessors per the direction of the State Board of Equalization. Two percent is the maximum percent inflation factor allowable by the State Board of Equalization for estimating future years' real property value. Taxable value growth that may occur as the result of changes in ownership or new construction are not included in the projection.

Other property values included on Figures III-IA through III-IE represent the taxable value of secured and unsecured personal property. No inflationary trend has been applied to Other Property value.

Project Tax Revenue

Tax increment revenues shown on Figures III-IA through III-IE have been calculated by applying applicable tax rates to the incremental taxable value of the respective Project. Applicable tax rates exclude the rate levied by the Los Angeles Unified School District to fund facilities and the Los Angeles Community College District, as discussed in Part II.

Total tax revenue does not include supplemental property taxes. Possible offsets to revenue resulting from delinquencies or other factors impacting collections of property tax revenues have not been assumed.

Available Tax Increment

Based on the current policy of the County, disbursement of total gross tax revenue may be offset by amounts of refunds due taxpayers as a result of the resolution of assessment appeals. Refunds included in the projections are based on the major resolved and pending appeals for the Projects as identified in Part II of this Report, and on the assumptions as to the timing of impact and resolution of appeals discussed in Part II. Katz Hollis Figure III-IA Community Redevelopment Agency of the City of Los Angeles Council District 9 Redevelopment Project

TAX REVENUE PROJECTION (OOO's Omitted) 2 3 4 5 6 7 8 9 10 Fiscal Year FY 02-03 FY 03-04 FY 04-05 FY05-06 FY06-07 FY07-08 FY08-09 FY 09-10 FY 10-11 FY 11·12

Adjusted Real Property (1) @ 2.00% $1,791,508 $1,819,094 $1,855,475 $1,892,585 $1,930,437 $1,969,045 $2,008,426 $2,048,595 $2,089,567 $2,131,358 New Development -Real (2) 0 0 0 0 0 0 0 0 0 0 Assumed Resolved Appeals Impact (3) (3,517) 0 0 0 0 0 0 0 0 0 Assumed Pending Appeals Impact (3) 4,566 0 0 0 0 0 0 0 0 0 Total Real Property $1,783,425 $1,819,094 $1,855,475 $1,892,585 $1,930,437 $1,969,045 $2,008,426 $2,048,595 $2,089,567 $2,131,358

Adjusted Other Property (4) 177,940 177,940 177,940 177,940 177,940 177,940 177,940 177,940 177,940 177,940 New Development ·Other 0 0 0 0 0 0 0 0 0 0 Total Other Property $177,940 $177,940 $177,940 $177,940 $177,940 $177,940 $177,940 $177,940 $177,940 $177,940

Total Value $1,961,365 $1,997,034 $2,033,416 $2,070,525 $2,108,377 $2,146,986 $2,186,366 $2,226,535 $2,267,507 $2,309,298

Incremental Value Over Base of: $1,678,584 $282,781 $318,450 $354,831 $391,941 $429,793 $468,401 $507,782 $547,951 $588,923 $630,714

Gross Tax Increment $2,988 $3,359 $3,737 $4,121 $4,512 $4,910 $5,314 $5,725 $6,144 $6,569 Unitary Revenue (5) 0 0 0 0 0 0 0 0 0 0 Properyty Tax Administrative Fee (6) (57) (67) (75) (82) (90) (98) (106) (115) (123) (131)

Total Adjusted Tax Increment Revenue $2,931 $3,292 $3,662 $4,039 $4,422 $4,812 $5,208 $5,611 $6,021 $6,438

Estimated Resolved Refunds (3) (62) 0 0 0 0 0 0 0 0 0 Estimated Pending Refunds (3) (73) 0 0 0 0 0 0 0 0 0 AB 1290 Payments (559) (658) (732) (808) (884) (1,028) (1,174) (1,322) (1,473) (1,626)

Net Tax Increment Revenue $2,237 $2,634 $2,930 $3,231 $3,538 $3,784 $4,034 $4,289 $4,548 $4,812

(1) Real property in the Project is assumed to increase by 2 percent annually. (2) Forthe purposes of this projection New Development is not included. (3) Represents the estimated impact from filed appeals as of January 200l (4) Other property in the Project is assumed to remain constant. (5) Unitary revenue is the actual amount as reported by the County as of December 2002. Unitary revenue in future years is assumed to remain constant. (6) The property tax administrative charge is based on actual charge for fiscal year 2002-03. Property tax administrative in future years is estimated at 2 percent of the estimated revenue. ;Katz Hollis Figure III-IB Community Redevelopment Agency of the City of Los Angeles East Hollywood/Beverly Normandie Earthquake Disaster Assistance Project

TAX REVENUE PROJECTION (OOO's Omitted} 2 3 4 5 6 7 8 9 10 Fiscal Year FY02-03 FY 03-04 FY 04-05 FY 05-06 FY06-07 FY 07-08 FY 08-09 FY 09-10 FY 10-11 FY 11-12

Adjusted Real Property (!} @ 2.00% $767,627 $778,475 $794,044 $809,925 $826,124 $842,646 $859,499 $876,689 $894,223 $912,107 New Development -Real (2) 0 0 0 0 0 0 0 0 0 0 Assumed Resolved Appeals Impact (3) (1,225) 0 0 0 0 0 0 0 0 0 Assumed Pending Appeals Impact (3) 3,191 0 0 0 0 0 0 0 0 0 Total Real Property $763,211 $778,475 $794,044 $809,925 $826,124 $842,646 $859,499 $876,689 $894,223 $912,107

Adjusted Other Property (4} 129,913 129,913 129,913 129,913 129,913 129,913 129,913 129,913 129,913 129,913 New Development -Other 0 0 0 0 0 0 0 0 0 0 Total Other Property $129,913 $129,913 $129,913 $129,913 $129,913 $129,913 $129,913 $129,913 $129,913 $129,913

Total Value $893,123 $908,387 $923,957 $939,838 $956,036 $972,559 $989,412 $1,006,602 $1,024,135 $1,042,020

incremental Value Over Base of: $770,983 $122,140 $137,405 $152,974 $168,855 $185,053 $201,576 $218,429 $235,619 $253,153 $271,037

Gross Tax Increment $1,290 $1,449 $1,611 $1,776 $1,943 $2,113 $2,286 $2,462 $2,641 $2,823 Unitary Revenue (5) 0 0 0 0 0 0 0 0 0 0 Properyty Tax Administrative Fee (6) (25) (29) (32) (36) (39) (42) (46) (49) (53) (56)

Total Adjusted Tax Increment Revenue $1,266 $1,420 $1,579 $1,740 $1,904 $2,071 $2,240 $2,413 $2,588 $2,767

Estimated Resolved Refunds (3} (13) 0 0 0 0 0 0 0 0 0 Estimated Pending Refunds (3) (39) 0 0 0 0 0 0 0 0 0 AB 1290 Payments (243) (284) (316) (348) (408) (470) (532) (596) (660) (726)

Net Tax Increment Reveooe $971 $1,136 $1,263 $1,392 $1,496 $1,601 $1,708 $1,817 $1,928 $2,041

(I) Real property in the Project is assumed to increase by 2 percent annually. (2) For the purposes of this projection New Development is not included. (3) Represents the estimated impact from filed appeals as of January 2001 (4) Other property in the Project is assumed to remain constant. (5) Unitary revenue is the actual amount as reported by the County as of December 2002. Unitary revenue in future years is assumed to remain constant. (6) The property tax administrative charge is based on actual charge for fiscal year 2002-03. Property tax administrative in future years is estimated at 2 percent of the estimated revenue. Katz Hollis Figure III-JC Community Redevelopment Agency of the City ofLos Angeles Laurel Canyon Earthquake Disaster Assistance Project

TAX REVENUE PROJECTION (OOO's Omitted) 2 3 4 5 6 7 8 9 10 Fiscal Year FY02-03 FY03-04 FY 04-05 FY05-06 FY06-07 FY07-08 FY08-09 FY09-10 FY 10-11 FY 11-12

Adjusted Real Property (1) @ 2.00% $284,970 $289,084 $292,379 $298,226 $304,191 $310,275 $316,480 $322,810 $329,266 $335,851 New Development -Real (2) 0 0 0 0 0 0 0 0 0 0 Assumed Resolved Appeals Impact (3) (975) 0 0 0 0 0 0 0 0 0 Assumed Pending Appeals Impact (3) (579) 0 0 0 0 0 0 0 0 0 LAUSD Acquired Property(4) 0 (2,438) 0 0 0 0 0 0 0 0 Total Real Property $283,416 $286,646 $292,379 $298,226 $304,191 $310,275 $316,480 $322,810 $329,266 $335,851

Adjusted Other Property (5) 14,301 14,301 14,301 14,301 14,301 14,301 14,301 14,301 14,301 14,301 New Development -Other 0 0 0 0 0 0 0 0 0 0 Total Other Property $14,301 $14,301 $14,301 $14,301 $14,301 $14,301 $14,301 $14,301 $14,301 $14,301

Total Value $297,716 $300,946 $306,679 $312,527 $318,491 $324,575 $330,781 $337,110 $343,567 $350,152

Incremental Value Over Base of: $228,110 $69,607 $72,837 $78,570 $84,417 $90,382 $96,466 $102,671 $109,001 $115,457 $122,042

Gross Tax Increment $735 $768 $827 $888 $949 $1,011 $1,074 $1,139 $1,204 $1,271 Unitary Revenue (6} 0 0 0 0 0 0 0 0 0 0 Propecyty Tax Administrative Fee (7} (14) (15) (17) (18) (19) (20) (21) (23) (24) (25)

Total Adjusted Tax Increment Revenue $721 $753 $811 $870 $930 $991 $1,053 $1,116 $1,180 $1,246

Estimated Resolved Refunds (3) (21) 0 0 0 0 0 0 0 0 0 Estimated Pending Refunds (3) (7) 0 0 0 0 0 0 0 0 0 AB 1290 Payments (139) (151) (162) (174) (196) (219) (241) (265) (288) (312)

Net Tax Increment Revenue $555 $602 $649 $696 $734 $772 $812 $852 $892 $933

(!) Real property in the Project is assumed to increase by 2 percent annually. (2) For the purposes of this projection New Development is not included. (3) Represents the estimated impact from filed appeals as of January 200:l. (4) Represents an estimate of value of property to be acquired by the Los Angeles Unified School District for a new campu• (5) Other property in the Project is assumed to remain constant. (6) Unitacy revenue is the actual amount as reported by the County as of December 2002. Unitary revenue in future years is assumed to remain constant. (7) The property tax administrative charge is based on actual charge for fiscal year 2002-03. Property tax administrative in future years is estimated at 2 percent of the estimated revenue. ;Katzffollls Figure 111-lD Community Redevelopment Agency of the City of Los Angeles Pacoima/Panorama City Earthquake Disaster Assistance Project

TAX REVENUE PROJECTION (OOO's Omitted) 2 3 4 5 6 7 8 9 10 Fiscal Year FY 02-03 FY03-04 FY 04-05 FY05-06 FY 06-07 FY 07-08 FY 08-09 FY 09-10 FY 10-11 FY 11-12

Adjusted Real Property (1) @ 2.00% $2,605,735 $2,643,024 $2,695,885 $2,749,802 $2,804,798 $2,860,894 $2,918,112 $2,976,475 $3,036,004 $3,096,724 New Development -Real (2) 0 0 0 0 0 0 0 0 0 0 Assumed Resolved Appeals Impact (3) (6,958) 0 0 0 0 0 0 0 0 0 Assumed Pending Appeals Impact (3) 7,577 0 0 0 0 0 0 0 0 0 Total Real Property $2,591,200 $2,643,024 $2,695,885 $2,749,802 $2,804,798 $2,860,894 $2,918,112 $2,976,475 $3,036,004 $3,096,724

Adjusted Other Property (4) 251,900 251,900 251,900 251,900 251,900 251,900 251,900 251,900 251,900 251,900 New Development -Other 0 0 0 0 0 0 0 0 0 0 Total Other Property $251,900 $251,900 $251,900 $251,900 $251,900 $251,900 $251,900 $251,900 $251,900 $251,900

Total Value $2,843,100 $2,894,924 $2,947,785 $3,001,702 $3,056,698 $3,112,794 $3,170,012 $3,228,374 $3,287,904 $3,348,624

Incremental Value Over Base of $2,370,168 $472,932 $524,756 $577,617 $631,534 $686,530 $742,626 $799,844 $858,207 $917,736 $978,456

Gross Tax Increment $4,997 $5,535 $6,083 $6,641 $7,208 $7,784 $8,371 $8,967 $9,574 $10,191 Unitary Revenue (5) 0 0 0 0 0 0 0 0 0 0 Properyty Tax Administrative Fee (6) (95) ( 111) (122) (133) (144) (156) (167) (179) (191) (204)

Total Adjusted Tax Increment Revenue $4,902 $5,425 $5,962 $6,508 $7,064 $7,629 $8,203 $8,788 $9,382 $9,987

Estimated Resolved Refunds (3) (200) 0 0 0 0 0 0 0 0 0 Estimated Pending Refunds (3) (160) 0 0 0 0 0 0 0 0 0 AB 1290 Payments (908) (l,085) (1,192) (1,302) (1,506) (1,714) (1,925) (2,141) (2,359) (2,582)

Net Tax Increment Revenue $3,634 $4,340 $4,769 $5,206 $5,557 $5,915 $6,278 $6,647 $7,023 $7,405

(!) Real property in the Project is assumed to increase by 2 percent annually. (2) For the purposes of this projection New Development is not included. (3) Represents the estimated impact from filed appeals as of January 2003. (4) Other property in the Project is assumed to remain constant. (5) Unitary revenue is the actual amount as reported by the County as of December 2002. Unitary revenue in future years is assumed to remain constant. (6) The property tax administrative charge is based on actual charge for fiscal year 2002-03. Property tax administrative in future years is estimated at 2 percent of the estimated revenue. ;Katz Hollis Figure Ill-IE Community Redevelopment Agency of the City of Los Angeles Reseda/Canoga Park Earthqnake Disaster Assistance Project

TAX REVENUE PROJECTION (OOO's Omitted) 1 2 3 4 5 6 7 8 9 10 Fiscal Year FY02-03 FY03-04 FY 04-05 FY05-06 FY 06-07 FY07-08 FY08-09 FY09-10 FY 10-11 FY 11-12

Adjusted Real Property (I) @ 2.00% $2,277,579 $2,287,824 $2,333,581 $2,380,252 $2,427,857 $2,476,414 $2,525,943 $2,576,462 $2,627,991 $2,680,551 New Development -Real (2) 0 0 0 0 0 0 0 0 0 0 Assumed Resolved Appeals Impact (3) (3,317) 0 0 0 0 0 0 0 0 0 Assumed Pending Appeals Impact (3) 31,297 0 0 0 0 0 0 0 0 0 Total Real Property $2,242,965 $2,287,824 $2,333,581 $2,380,252 $2,427,857 $2,476,414 $2,525,943 $2,576,462 $2,627,991 $2,680,551

Adjusted Other Property (4) 105,383 105,383 105,383 105,383 105,383 105,383 105,383 105,383 105,383 105,383 New Development -Other 0 0 0 0 0 0 0 0 0 0 Total Other Property $105,383 $105,383 $105,383 $105,383 $105,383 $105,383 $105,383 $105,383 $105,383 $105,383

Total Value $2,348,348 $2,393,207 $2,438,964 $2,485,635 $2,533,240 $2,581,797 $2,631,326 $2,681,845 $2,733,374 $2,785,934

Incremental Value Over Base of: $1,937,984 $410,364 $455,223 $500,980 $547,651 $595,256 $643,813 $693,342 $743,860 $795,390 $847,950

Gross Tax Increment $4,336 $4,802 $5,276 $5,759 $6,249 $6,748 $7,256 $7,772 $8,298 $8,832 Unitary Revenue (5) 0 0 0 0 0 0 0 0 0 0 Properyty Tax Administrative Fee (6) (86) (96) (106) (115) (125) (135) (145) (155) (166) (177)

Total Adjusted Tax Increment Revenue $4,249 $4,706 $5,171 $5,644 $6,124 $6,614 $7,111 $7,617 $8,132 $8,655

Estimated Resolved Refunds (3) (124) 0 0 0 0 0 0 0 0 0 Estimated Pending Refunds (3) (601) 0 0 0 0 0 0 0 0 0 AB 1290 Payments (705) (941) (1,034) (1,129) (l,306) (1,486) (1,669) (1,855) (2,044) (2,237)

Net Tax Increment Revenue $2,819 $3,765 $4,137 $4,515 $4,819 $5,128 $5,442 $5,762 $6,087 $6,418

( 1) Real property in the Project is assumed to increase by 2 percent annually. (2) For the purposes of this projection New Development is not included. (3) Represents the estimated impact from filed appeals as of January 2003. (4) Other property in the Project is assumed to remain constant. (5) Unitary revenue is the actual amount as reported by the County as of December 2002. Unitary revenue in future years is assumed to remain constant. ( 6) The property tax administrative charge is based on actual charge for fiscal year 2002-03. Property tax administrative in future years is estimated at 2 percent of the estimated revenue. rKatzHollis PART IV

BACKGROUND INFORMATION

INTRODUCTION

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

PROJECT AREA TAXABLE VALUE

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

Locally Assessed Values

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

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

State Board of Equalization ("SBE") Values

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

Following the passage of Proposition 13 adding Article XIIIA to the California Constitution, the SBE determined that the provisions of that Article requiring a "roll back" of real property values to their 1975-76 values and a constraint on inflationary growth of 2 percent per year did not apply to state-assessed property. This interpretation has been upheld by the California Supreme Court (ITT World Communications, Inc. vs. City and County of San Francisco, et al, 37 Cal. 3d 859 - January, 1985). Consequently, state-assessed KatzHollls Community Redevelopment Agency of the City of Los Angeles 2003 Pooled Financing Part IV - Background property may be re-valued annually, and such assessments are not subject to the annual 2 percent inflation limitation of Article XIIIA.

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

Assessment Appeals

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

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

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

Recent litigation found that value loss because of occurances other than a change of ownership or new construction may not be restored at a rate faster than two percent

IV-2 Katz Hollis Community Redevelopment Agency of the City of Los Angeles 2003 Pooled Financing Part IV - Background

Appeals of the taxable value for Project assessments could potentially lower taxable values, as currently reported, thereby reducing tax increment revenues. For this reason, currently pending and recently resolved assessment appeals filed by taxpayers in the Project were reviewed. The results of this review are discussed in Part II of this Report.

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

Utility companies and railroads may contest the taxable value of utility property to the SBE. Typically, the impact of utility appeals is on the statewide unitary value of a utility as determined by the SBE. As a result, the successful appeal of a utility may not impact the taxable value of the Project but could impact the Project's allocation of unitary property taxes (discussed below).

PROJECT AREA TAX REVENUE

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

Tax Increment and Tax Rates

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

The projected tax increment revenues shown on Figures III-I A through III-IE have been computed using tax rates comprised of a "basic" rate ($1.00 per $100 of taxable value) and of debt service tax rates levied for purposes of repaying voter-approved debt, as prescribed by Article XIIIA. Except for recently approved debt service levies, as discussed below, the revenues generated by the application of such rates to incremental assessed value in redevelopment projects accrue to redevelopment agencies instead of the levying entity. Debt service tax rates (rates in excess of $1.00 per $100 of taxable value) typically decline each year. A declining debt service tax rate is the result of several factors: an effective limit from July 1, 197& until June 3, 1986 established by Article XIIIA (and since amended, as discussed below) on the amount of property taxes that can be levied (equal to the annual obligations or indebtedness approved by the voters); rising taxable values within the jurisdictions of taxing entities levying the approved debt service tax rate (which reduces the tax rate needed to be levied by the taxing entity to meet debt service requirements); and the eventual retirement, over time, of the voter-approved indebtedness.

IV-3 :Katz Hollis Community Redevelopment Ageucy of the City of Los Angeles 2003 Pooled Financing Part IV - Background

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

For the purposes of estimating future tax rates for the Project, the tax rate has been divided into three categories: 1) the basic tax rate; 2) amounts levied by the Los Angeles Community College District ("LACCD") and by the Los Angeles Unified School District ("LAUSD") to repay voter-approved indebtedness; and 3) the remaining debt service tax rates.

The basic tax rate is assumed to remain constant over the period of the projections shown in III-IA through III ! E in Section III of this Report.

The tax rates levied by LACCD and by LAUSD are subject to the constitutional amendment discussed above that excludes any such rate from the determination of tax increment due redevelopment agencies. For this reason, the LACCD and LAUSD rates supporting the debt of the districts are excluded from the computation of tax increment revenue in this Report.

The remaining tax rates levied in the Project are assumed to decline over time as discussed earlier in this section.

Unitary Property Taxes

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

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

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

IV-4 1KatzHollis Community Redevelopment Agency of the City of Los Angeles 2003 Pooled Financing Part IV - Background

The provisions of AB 454 apply to all state-assessed property except railroads and non-unitary properties, whose valuation continues to be allocated to individual tax rate areas. The provisions of AB 454 do not constitute elimination or revision of the method of assessing utilities by the SBE. Generally, Chapter 921 allows valuation growth or decline of state-assessed unitary property to be shared by all jurisdictions within a county.

Supplemental Property Taxes

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

AVAILABLE TAX INCREMENT

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

Property Tax Administrative Charges

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

Low and Moderate Income Housing

Chapter 1337, Statutes of 1976, added Sections 33334.2 and 33334.3 to the Health and Safety Code, requiring redevelopment agencies to set aside 20 percent of all tax increment allocated to redevelopment project areas adopted after December 31, 1976, into a low- and moderate-income housing fund. As provided by Section 33334.2, the low- and moderate-income housing requirement can be reduced or eliminated if a redevelopment agency finds that: 1) no need exists in the community to improve or increase the supply of low- and moderate-

IV-5 KatzHollis Community Redevelopment Agency of the City of Los Angeles 2003 Pooled Financing Part N - Background income housing; 2) that some stated percentage less than 20 percent of the tax increment revenues is sufficient to meet the housing need; or 3) that other substantial or equivalent efforts, including the obligation of funds of equivalent impact from state, local and federal sources for low- and moderate-income housing are being provided for in the community.

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

The Projects were all adopted after January I, 1977, and are therefore subject to the requirements of Chapter 1337. The Agency deposits at least 20% of revenues received from the Projects into the housing fund.

AB 1290 Payments

Pursuant to Section 33607.7 of the Health and Safety Code, a redevelopment plan adopted on or after January I, 1994 ( as were all of the Projects) must contain provision for making statutory payments to affected taxing entities. AB 1290 payments are paid from revenues resulting from the growth project revenues, and are made per the following formulas:

(I) Commencing with the first fiscal year in which the Agency receives tax increment from the project and continuing through the last fiscal year in which the Agency receives tax increment, the Agency shall pay to the affected taxing entities an amount equal to 25 percent of the tax increment received by the Agency after the amount required to be deposited in the Low and Moderate Income Housing Fund has been deducted.

(2) Commencing with the 11th fiscal year in which the Agency receives tax increment and continuing through the last fiscal year in which the Agency receives tax increment, the Agency shall pay to the affected taxing entities, in addition to the amounts paid pursuant to item (I) above and after deducting the amount allocated to the Low and Moderate Income Housing Fund, an amount equal to 21 percent of the portion of tax increment received by the Agency, which shall be calculated by applying the tax rate against the amount of assessed value by which the current year assessed value exceeds the first adjusted base year assessed value. The first adjusted base year assessed value is the assessed value of the project in the I 0th fiscal year in which the Agency receives tax increment.

(3) Commencing with the 31st fiscal year in which the Agency receives tax increment and continuing through the last fiscal year in which the Agency receives tax increment, the Agency shall pay to the affected taxing entities, in addition to the amounts paid pursuant to items (I) and (2) above and after deducting the amount allocated to the Low and Moderate Income Housing Fund, an amount equal to 14 percent of the portion of tax increment received by the Agency, which shall be calculated by applying the tax rate against the amount of assessed value by which the current year assessed value exceeds the second adjusted base year assessed value. The second adjusted base year assessed value is the assessed value of the project in the 30th fiscal year in which the Agency receives tax increments. ·

Estimates of payments due pursuant to the requirements of AB 1290 are included in the estimates and projections of revenue included in Parts I, II and III of this Report.

IV-6 1KatzHollis Community Redevelopment Agency of the City of Los Angeles 2003 Pooled Financing Part N Background

TAX ALLOCATION PROCEDURES OF LOS ANGELES COUNTY

Tax Increment Revenue

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

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

Tax Receipts

Based upon the County's most recent tax allocation schedule, 35 percent of the secured tax increment revenues are paid in December, followed by a 5 percent payment in January and the estimated balance of first installment (December 10) tax collections in late February. By April, 75 percent of the total adjusted tax levy would have been allocated to the Agency. Taxes from the second installment (April I 0) tax collections are apportioned in May. After the close of the fiscal year, final tax revenues due to the Agency are determined and allocated in July and August.

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

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

LEGISLATION/COURT DECISIONS

Educational Revenue Augmentation Fund

The State of California has mandated that redevelopment agencies provide $75 million dollars during the 2002- 03 fiscal year in order to offset the State's cost of education and thereby ease the budget difficulties currently being experienced by state government. Contributions from each agency are to be deposited into the Educational Revenue Augmentation Fund (ERAF} established in each county. The amount to be contributed by each agency is based on tax increment revenues reported to the State Controller for the 2000-01 fiscal year. The determined amount must be paid to the county auditor prior to May I 0, 2004. Failure to do so will result in the auditor deducting any unpaid amount from the property tax apportioned to an agency's legislative body (the associated city or county).

IV-7 1KatzHollis Community Redevelopment Agency of the City of Los Angeles 2003 Pooled Financing Part IV Background

The Agency's contribution to the ERAF for 2002-03 is $2,109,398. The Agency this amount was paid from funds on hand and not deducted from the revenue to be received from the Projects for the 2002-03 fiscal year.

In March 2003, the Assembly Budget Committee introduced Assembly Bill 1755, which now contains a proposal to extend the ERAF shift for redevelopment agencies to the 2003-04 fiscal year. The statewide amount of the shift would be $250 million. The method for allocation of the shift among agencies would be the same as used for the 2002-03 shift. Given these parameters, the Agency's contribution to the ERAF in 2003-04 would be approximately $7.0 million.

In the course of final deliberations on the state's 2003-04 budget, the provisions of AB 1755 were adopted by the State Senate as a trailer bill to the main budget bill. The Assembly amended the provisions of AB 1755 into another trailer bill, SB 1045, and reduced the redevelopment shift to $135 million. Given this amount of shift, and use of the same allocation system used in 2002-03, the Agency's contribution to the ERAF in 2003- 04 would be approximately $3.8 million.

On September 19, 2003 the Senate voted to concur with the Assembly-passed version the ERAF shift for redevelopment agencies, setting the statewide shift at $135 million. The bill is now awaiting signature by the Governor.

Senate Bill 211

Senate Bill (SB) 211 has become Chapter 741 of the Statutes of 2001. SB 211 provides redevelopment agencies with the ability to amend the project effectiveness and tax increment receipt time limits imposed by AB 1290, the major redevelopment reform legislation passed in 1993. In order to accomplish the amendment of time limits for a given redevelopment project, agencies will need to substantiate the persistence of blight in the project area, follow specific procedures in the adoption of the amendments (including specific, timely notification of taxing entities and the state) and adopt f"mdings that the agency is in compliance with several regulatory and statutory requirements. Extension of a time limit will trigger the set aside of 30% of project tax increment to low and moderate income housing activities and will require that statutory pass-through payments be made to affected taxing entities.

The measure also allows agencies to eliminate AB 1290's time limit on the incurrence of debt. The removal of this limit will require only the adoption of an ordinance. Adoption of an ordinance eliminating the debt incurrence limit will, like the amendments to the other limits, initiate statutory tax sharing payments with taxing entities not having an agreement with an agency.

SB 211 became effective January I, 2002.

Bezaire Case

On November 2, 2001, the Orange County Superior Court ruled that the California Constitution and the Revenue and Taxation Code limit the year to year change in the value of property to 2% except in situations described in law but not including the instance described below. The court also found that the California Constitution does not authorize restoration of the value of property after a temporary decline at a rate higher than2%.

IV-8 :Katz Hollis Community Redevelopment Agency of the City of Los Angeles 2003 Pooled Financing Part IV - Background

The court issued a Statement of Decision in the case of County of Orange vs. Orange County Assessment Appeals Board No. 3 (the "Bezaire Case"). The Bezaire Case involved the assignment of assessed value to a property that exceeded the prior year's assessed value by more than 2%. The increase of a property's assessed value by more than 2% is a common practice among California assessors, and is consistent with the provisions of Section 51, Adjustments to base year values, (Stats. 1979, Ch. 242) of the California Revenue and Taxation Code. Such adjustments occur when: 1) the prior year value of the property is less than the base year value of the property (the value assigned upon change of ownership or new construction); and 2) the current year, market value of the property is equal to or higher than the base year value determined for the current year. These two conditions often exist when the prior year value of the property was determined by a Proposition 8 appeal and the condition causing the reduction has ceased to influence the value of the property.

Several occurrences in recent years, including natural disasters and economic downturns, have resulted in the downward valuation of taxable property. Following each of these occurrences, assessors restore value (up to the pre-decline value of a property) at whatever rate was appropriate (though, apparently, not necessarily legal) given the success of repairs following a disaster or the speed of a rebound from an economic downturn. Should the assessor's approach need to be modified as a result of the ultimate adjudication of the Bezaire Case, the impacts could be widespread and significant.

Should the courts determine that the return of value was unconstitutional, the impact to taxing jurisdictions generally and to the Project specifically could be chosen from a wide range of possibilities. Minimally, the value that had been erroneously added to the tax roll (the difference between the pre-decline base value and the base value at the nadir of the property's decline) would be removed. Additionally, there could be the refund of taxes paid on the erroneously enrolled value. The period of time that would be considered in implementing either of these adjustments is unknown.

The Bezaire case is awaiting a decision by the Orange County Assessor as to whether the decision should be appealed. Other, similar cases, some instigated by citizen groups opposed to excessive taxation, are, according to press reports, in preparation.

On December 5, 2001, Bezaire v. County of Los Angeles, Case No. BC263013, was filed in the Superior Court of the County of Los Angeles. Case No. BC263013 has the same plaintiffs and the same counsel as the Bezaire Case but in addition to the County of Los Angeles, names all California tax assessors and tax collectors as defendants in the action. The case ostensibly seeks similar relief as is discussed above. As of the filing of a First Amended Complaint & Petition for Writ of Mandate and Class Action Relief dated January 3, 2002, a trial date for the new case had not been set.

In addition, on August 30, 2002, a San Diego County Superior Court issued a final judgment to dismiss a similar class action litigation on the constitutionality of the "recapture" method and property tax refund request. In that final ruling, the San Diego County Superior Court determined that the Assessor's interpretation of the California Constitution Article XIIIA, Section 2(b) is "more reasonable, fair and harmonious with its manifest purpose .... "and that "California Revenue and Taxation Code and the Board of Equalization Rule 461 are in agreement."

On December 12, 2002, the Orange County Superior Court certified the case for class action status, with the class being all similarly affected owners of real property in Orange County. On January 30, 2003, the court ruled that the County's Treasurer-Tax Collector is required to send refund notices to all of the owners of real

IV-9 1K.atzHollis Community Redevelopment Agency of the City of Los Angeles 2003 Pooled Financing Part IV - Background

property within Orange County. However, the court's order has been put on hold pending appeal to the State 4th District Court of Appeal.

IV-10 (THIS PAGE JNTENTIONALL Y LEFT BLANK) APPENDIXB

SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURES AND THE LOAN AGREEMENTS (THIS PAGE INTENTJONALL Y LEFT BLANK) APPENDIXB

SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURES AND THE LOAN AGREEMENTS

DEFINITIONS OF CERTAIN TERMS

The Series J Bonds and the Series K Bonds are being issued pursuant to separate Indentures of Trust as described in this Official Statement. The Indentures of Trust contain substantially similar covenants, agreements and provisions. Readers of this Official Statement should note, however, that the summaries of such covenants, agreements and provisions provided herein are applicable separately to each Series of Bonds but have been consolidated herein for convenience only.

"Acf' means Articles 1 through 4 (commencing with Section 6500) of Chapter 5, Division 7, Title 1 of the Government Code of the State, as in existence on the Closing Date or as thereafter amended from time to time.

"Additional Bonds" means Bonds, in addition to the Series J Bonds and the Series K Bonds, which may be issued under any Supplemental Indenture.

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

"Agency" means The Community Redevelopment Agency of the City of Los Angeles, California, a public body corporate and politic duly created, established and authorized to transact business and exercise its powers, all under and pursuant to the Community Redevelopment Law (Part I of Division 24 of the Health and Safety Code of the State of California) organized under the laws of the State, and any successor thereto.

"Agreemenf' means that certain Joint Exercise of Powers Agreement, dated as of June 11, 1992, by and between the Agency and the IDA, together with any amendments thereof and supplements thereto.

"Annual Debt Service" means, for each Bond Year, the amount payable on the Loan or any Parity Debt in such Bond Year. For purposes of such calculation, variable rate Parity Debt shall be deemed to bear interest at the maximum rate permitted by the Parity Debt Instrument pursuant to which such Parity Debt is issued. For purposes of such calculation, there shall be

B-1 excluded payments with respect to the Loan or any Parity Debt to the extent that amounts due with respect to the Loan or such Parity Debt are prepaid or otherwise discharged in accordance with this Loan Agreement or the relevant Parity Debt Instrument or to the extent the proceeds thereof are then deposited in an escrow fund in which amounts are invested in Permitted Investments and from which moneys may not be released to the Agency unless the amount of Tax Revenues (as determined in accordance with the Constituent Loan Agreements) and Additional Revenues for each succeeding Fiscal Year at least equals 125% of the amount of Annual Debt Service for each applicable succeeding Bond Year which would result if any such moneys on deposit in such escrow fund were released and deposited in the Redevelopment Fund or the Low and Moderate Income Housing Fund.

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

"Board' means the Board of Directors of the Authority.

"Bond' or "Bonds" means, collectively the Series J Bonds and Series K Bonds authorized by and at any time Outstanding pursuant to the Bond Law and the Indenture and any Additional Bonds.

"Bond Law" means Article 4 of Chapter 5 of Division 7 of Title I of the Government Code of the State.

"Bond Year" means each 12-month period extending from September 2 in one calendar year to September I of the succeeding calendar year, both dates inclusive; provided that the first Bond Year with respect to the Series J Bonds and Series K Bonds shall commence on the Closing Date and end on September I, 2004.

"Business Day' means any day, other than a Saturday or Sunday or a day on which commercial banks in New York, New York, Los Angeles, California or any other city or cities where the Trust Office of the Trustee is located are required or authorized by law to close or a day on which the Federal Reserve System is closed.

"Certificate of the Agency" means a certificate in writing signed by the following officers of the Agency: the Chief Executive Officer, the Chief Deputy Administrator, the Chief Financial Officer, any Deputy Administrator, the Finance Director, any designee of the Chief Executive Officer, the Secretary or any Assistant Secretary, or by any other officer of the Agency duly authorized by the Agency for that purpose.

"Certificate of the Authority" means a certificate in writing signed by the Designated Officer, the Secretary or any Assistant Secretary, or the Chief Financial Officer of the Agency or by any other officer of the Agency duly authorized by the Agency for that purpose.

"City" means the City of Los Angeles, duly organized and existing under the laws of the State of California.

B-2 "Closing Date" means September 17, 2003, which is the date of original issuance of the Bonds.

"Code" means the Jnternal Revenue Code of 1986, as amended. Any reference to a provision of the Code shall include the applicable Regulations with respect to such provision.

"Constituent Loan Agreements" means, collectively (a) the three Loan Agreements, each dated as of September 1, 2003, by and among the Authority, the Trustee and the Agency relating to the loans to the Agency with respect to the Council District 9 Corridors South of the Santa Monica Freeway Recovery Redevelopment Project Area, the Earthquake Disaster Assistance Project for Portions of Council District 7 Project Area and the Earthquake Disaster Assistance Project for Portions of Council District 3 Project Area, which loans will be made from the proceeds of the Series J Bonds; and (b) the two Loan Agreements, each dated as of September 1, 2003, by and among the Authority, the Trustee and the Agency relating to the loans to the Agency with respect to the Laurel Canyon Earthquake Disaster Assistance Project for Laurel Canyon Commercial Corridor Area and the East Hollywood/Beverly-Normandie Earthquake Disaster Assistance Project Area, which loans will be made from the proceeds of the Series K Bonds;

"Constituent Project Areas" means, collectively, the Council District 9 Corridors South of the Santa Monica Freeway Recovery Redevelopment Project Area, the Earthquake Disaster Assistance Project for Portions of Council District 7 Project Area and the Earthquake Disaster Assistance Project for Portions of Council District 3 Project Area, the Laurel Canyon Earthquake Disaster Assistance Project for Laurel Canyon Commercial Corridor Area and the East Hollywood/Beverly-Normandie Earthquake Disaster Assistance Project Area.

"Continuing Disclosure Agreemenf' means that certain Continuing Disclosure Agreement by and among the Agency, the Authority and the Trustee, as dissemination agent and dated the date of issuance and delivery of the Series J Bonds and Series K Bonds, as originally executed and as it may be amended from time to time in accordance with the terms thereof.

"Debt Service" means, during any period of computation, the amount obtained for such period by totaling the following amounts:

(a) the principal amount of all outstanding Bonds coming due and payable by their terms in such period;

(b) the minimum principal amount of all Outstanding Term Bonds scheduled to be redeemed by operation of mandatory sinking fund deposits in such period, together with any premium thereon; and

(c) the interest which would be due during such period on the aggregate principal amount of Bonds which would be Outstanding in such period if the Bonds are retired as scheduled, but deducting and excluding from such aggregate amount the amount of Bonds no longer Outstanding.

"Depository' means (a) initially, DTC; and (b) any other Securities Depository acting as Depository pursuant to the Indenture.

B-3 "Depository System Participanf' means any participant in the Depository's book-entry system.

"Designated Officer" means the Chief Executive Officer of the Agency acting in his capacity as Secretary of the Authority, the Chief Deputy Administrator, the Chief Financial Officer, any Deputy Administrator, the Finance Director, any designee of the Chief Executive Officer, or any of them.

"Disaster Project Law" means the Community Redevelopment Financial Assistance and Disaster Project Law pursuant to Section 34000, et seq. of the Health and Safety Code of the State.

"DTC' means The Depository Trust Company, New York, New York, and its successors and assigns.

"Event of Defaulf' means any of the events described in the Indenture and Constituent Loan Agreements.

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

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

"!DA" means the Industrial Development Authority of the Community Redevelopment Agency of the City of Los Angeles, California.

"Indenture" means each of (a) the Indenture of Trust, dated as of September I, 2003, by and between the Authority and the Trustee with respect to the Series J Bonds and (b) the Indenture of Trust, dated as of September I, 2003, by and between the Authority and the Trustee with respect to the Series K Bonds, as each Indenture is originally executed or as it may from time to time be supplemented, modified or amended by any Supplemental Indenture pursuant to the provisions therein.

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

"Independent Certified Public Accountant' means any certified public accountant or firm of certified public accountants appointed and paid by the Authority, and who, or each of whom

B-4 (a) is in fact independent and not under domination of the Authority, the County or the Agency; (b) does not have any substantial interest, direct or indirect, in the Authority, the County or the Agency; and (c) is not connected with the Authority, the County or the Agency as an officer or employee of the Authority, the County or the Agency but who may be regularly retained to make annual or other audits of the books of or reports to the Authority, the County or the Agency.

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

"Information Services" means Financial Information, Inc.'s "Daily Called Bond Service," 30 Montgomery Street, 10th Floor, Jersey City, New Jersey 07302, Attention: Editor; Kenny Information Service's "Called Bond Service," 65 Broadway, 16th Floor, New York, New York 10006; Moody's Investors Service, 5250-77 Center Drive, Suite 150, Charlotte, North Carolina 28217, Attention: Called Bond Department; and First Data Services, Inc., 8 Station Square, Rutherford, New Jersey 07070; or, in accordance with then-current guidelines of the Securities and Exchange Commission, to such other addresses and/or such other services providing information with respect to called bonds, or no such services, as the Issuer may designate in a certificate of the Issuer delivered to the Trustee.

"Interest Accounf' means the account by that name established and held by the Trustee pursuant to the Indenture.

"Interest Payment Date" means September 1 and March 1 (or the next Business Day, if such date is not a Business Day), in each year, beginning March 1, 2004, and continuing thereafter so long as any Bonds remain Outstanding.

"Investment Earnings" means all interest earned and any gains and losses on the investment of moneys in any fund or account created by the Constituent Loan Agreements.

"Loan Fund'' means the fund by that name established and held by the Trustee pursuant to the Indenture.

"Loans" means the loans made by the Authority to the Agency under and pursuant to the Constituent Loan Agreements.

"Low and Moderate Income Housing Fund'' means the fund of the Agency by that name established pursuant to Section 33334.3 of the Redevelopment Law.

"Maximum Annual Debt Service" means, as of the date of calculation, the largest Annual Debt Service for the current or any future Bond Year payable on the Loan or any Parity Debt in such Bond Year. For purposes of such calculation, variable rate Parity Debt shall be deemed to bear interest at the maximum rate permitted by the Parity Debt Instrument pursuant to which

B-5 such Parity Debt is issued. For purposes of such calculation, there shall be excluded payments with respect to the Loan or any Parity Debt (a) to the extent that amounts due with respect to the Loan or such Parity Debt are prepaid or otherwise discharged in accordance with the Constituent Loan Agreements or the relevant Parity Debt Instrument; or (b) to the extent the proceeds thereof are then deposited in an escrow fund in which amounts are invested in Permitted Investments and from which moneys may not be released to the Agency unless the amount of Tax Revenues (determined in accordance with the Constituent Loan Agreements) and Additional Revenues for each succeeding Fiscal Year at least equals 125% of the amount of Annual Debt Service for each applicable succeeding Bond Year which would result if any such moneys on deposit in such escrow fund were released and deposited in the Redevelopment Fund or the Low and Moderate Income Housing Fund.

"Nominee" means (a) initially, Cede & Co. as nominee of DTC; and (b) any other nominee of the Depository designated pursuant to the Indenture.

"Nonpurpose lnvestmenf' means any Investment Property which is acquired with the Proceeds and is not acquired in order to carry out the governmental purpose of the Series J Bonds.

"Outstanding," when used as of any particular time with reference to Bonds, means ( subject to the provisions of the Indenture) all Bonds theretofore executed, issued and delivered by the Authority under the Indenture except:

(a) Bonds theretofore cancelled by the Trustee or surrendered to the Trustee for cancellation;

(b) Bonds paid or deemed to have been paid within the mearung of Section 9.03 of the Indenture; and

( c) Bonds in lieu of or in substitution for which other Bonds shall have been executed, issued and delivered pursuant to the Indenture or any Supplemental Indenture.

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

"Parity Debt" means any other indebtedness of the Agency relating to the Project Area meeting the requirements of the Constituent Loan Agreements, provided that the Agency may incur Parity Debt for the purpose of refunding a portion of the Outstanding Bonds without complying with the requirements of Constituent Loan Agreements, so long as Maximum Annual Debt Service on the Bonds after the issuance of such refunding bonds is not greater than Maximum Annual Debt Service on the Bonds prior to the issuance of such refunding bonds.

"Parity Debt Instrumenf' means any resolution, indenture of trust, loan agreement, trust agreement or other instrument authorizing the issuance of any Parity Debt.

"Participanf' means those broker-dealers, banks and other financial institutions from time to time for which the Depository holds Bonds as a securities depository.

B-6 "Permitted Investments" means any of the following which at the time of investment are legal investments under the laws of the State for the moneys proposed to be invested therein (provided that the Trustee shall have no duty to determine the legality of any investments):

(a) Federal Securities;

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

(c) direct obligations of any state of the United States of America or any subdivision or agency thereof whose unsecured, uninsured and unguaranteed general obligation debt is rated "Aa" or better by Moody's Investors Service and "AA" or better by Standard and Poor' s Ratings Services, or any obligation fully and unconditionally guaranteed by any state, subdivision or agency whose unsecured, uninsured and unguaranteed general obligation debt is rated "A~' or better by Moody's Investors Service and "AA:' or better by Standard and Poor's Ratings Services;

(d) commercial paper (having original maturities of not more than 270 days) rated "P-1" by Moody's Investors Service and "A-1" or better by Standard and Poor's Ratings Services;

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

(l) deposits, including certificates of deposit, of any bank, including the Trustee and its affiliates, or savings and loan association which has combined capital, surplus and undivided profits of not less than $3 million; provided such deposits are

B-7 continuously and fully insured by the Bank Insurance Fund or the Savings Association Insurance Fund of the Federal Deposit Insurance Corporation;

(g) the Local Agency Investment Fund of the State;

(h) investments in money-market funds (including funds of the Trustee and its affiliates) registered under the Federal Investment Company Act of 1940 rated "AAAm" or "AAAm-G" by Standard and Poor's Ratings Services and "Aaa" by Moody's Investors Service, including money market funds for which the Trustee and its affiliates provide investment advisory or other management services; and

(i) repurchase agreements collateralized by Federal Securities, GNMAs, FNMAs or FHLMCs with any registered broker/dealer or any commercial bank or any financial institution if such broker/dealer or financial institution has an uninsured, unsecured and unguaranteed obligation rated "P-1" or "A3" or better by Moody's Investors Service, and "A-1" or "A-" or better by Standard and Poor's Ratings Services; provided:

(i) a master repurchase agreement or specific written repurchase agreement governs the transaction;

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

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

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

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

( vi) the Trustee receives a legal opinion from the provider's counsel that the obligation is a legal, valid and binding obligation of the provider,

B-8 enforceable on its term, that the collateral is free and clear of any third party liens and that a perfected security interest can be created for the benefit of the Trustee.

"Person" means an individual, corporation, firm, association, partnership, trust or other legal entity or group of entities, including a governmental entity or any agency or political subdivision thereof.

"Plan Limif' means the limitation contained in the Redevelopment Plan on the number of dollars of taxes which may be divided and allocated to the Agency pursuant to the Redevelopment Plan, as such limitation is prescribed by Section 33333.2 of the Redevelopment Law.

"Principal Accounf' means the account by that name established and held by the Trustee pursuant to the Indenture.

"Private Business Use" means use directly or indirectly in a trade or business carried on by a natural person or in any activity carried on by a person other than a natural person, excluding use by a governmental unit and use by any person as a member of the general public.

"Proceeds" means the face amount of the Series J Bonds plus accrued interest and original issue premium, if any, less original issue discount, if any, and includes any other amounts which will be held under the Indenture or the Constituent Loan Agreements.

"Project Area" means each of the Constituent Project Areas described in the respective Redevelopment Plan.

"Proportionate Share" means the ( a) proportion of the proceeds of the Series J Bonds allocable to the Series J Loans and (b) proportion of the proceeds of the Series K Bonds allocable to the Series K Loans, as applicable.

"Qualified Credit Instrumenf' means any of the following:

(a) a surety bond or insurance policy issued to the Trustee by a company licensed to issue an insurance policy guaranteeing the timely payment of debt service on the Series J Bonds ( a "municipal bond insurer") if the claims paying ability of the issuer thereof shall be rated "AAA" and "Aaa" by Standard and Poor's Ratings Services and Moody's Investors Service, respectively;

(b) a surety bond or insurance policy issued to the Trustee by an entity other than a municipal bond insurer if the claims paying ability of the issuer thereof shall be rated "Aa" and "AA" or better by Moody's Investors Service and Standard and Poor's Ratings Services; or

(c) an unconditional irrevocable letter of credit issued to the Trustee by a bank, if the issuer thereof is rated at least"AA-" by Standard and Poor's Ratings Services and "Aa3" by Moody's Investors Service.

B-9 "Record Date" means, with respect to any Interest Payment Date, the fifteenth calendar day of the month (whether or not such day is a Business Day) immediately preceding such Interest Payment Date.

"Redevelopment Fund" means the fund described in the Constituent Loan Agreements.

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

"Redevelopment Project" means the undertaking of the Agency pursuant to the Redevelopment Plan and the Redevelopment Law for the redevelopment of the Project Area.

"Registration Books" means the records maintained by the Trustee pursuant to the Indenture for the registration and transfer of ownership of the Series J Bonds and Series K Bonds.

"Regulations" means temporary and permanent regulations promulgated under or with respect to Sections 103 and 141 through 150, inclusive, of the Code.

"Report" means a document in writing signed by an Independent Redevelopment Consultant and including (a) a statement that the person or firm making or giving such Report has read the pertinent provisions of this Loan Agreement to which such Report relates; (b) a brief statement as to the nature and scope of the examination or investigation upon which the Report is based; and ( c) a statement that, in the opinion of such person or firm, sufficient examination or investigation was made as is necessary to enable said consultant to express an informed opinion with respect to the subject matter referred to in the Report.

"Representation Letter" means the Representation Letter described in the Indenture.

"Request of the Agency" means a request in writing signed by the Administrator, any Deputy Administrator, the Secretary or any Assistant Secretary, or the Chief Financial Officer of the Agency or by any other officer of the Agency duly authorized by the Agency for that purpose.

"Request of the Authority" means a request in writing signed by a Designated Officer or by any other officer of the Agency duly authorized by the Agency for that purpose.

"Reserve Account" or "Reserve Accounts" means the account by that name established pursuant to the Indenture of each of the Constituent Loan Agreement and held by the Trustee.

"Reserve Requirement" means (i) with respect to any Loan or any Taxable Parity Debt, as of any calculation date, Maximum Annual Debt Service with respect to the Loan or such Taxable Parity Debt, as applicable; and (ii) with respect to any Tax-Exempt Parity Debt, as of any calculation date, the least of (a) 10% of the outstanding principal amount of such Tax-Exempt Parity Debt, as applicable; provided that if the original issue discount of such Tax-Exempt Parity Debt exceeds 2% of such original principal amount, then initially 10% of the original principal amount of, less original issue discount on, such Tax-Exempt Parity Debt, but excluding from

B-10 such calculation any proceeds of such Tax-Exempt Parity Debt deposited in an escrow described in the definitions of Annual Debt Service and Maximum Annual Debt Service; (b) Maximum Annual Debt Service with respect to such Tax-Exempt Parity Debt, as applicable; or (c) 125% of average Annual Debt Service on such Tax-Exempt Parity Debt, as applicable; provided further that the Agency may meet all of a portion of the Reserve Requirement by depositing a Qualified Credit Instrument meeting the requirements of the Constituent Loan Agreements. For purposes of calculating Maximum Annual Debt Service with respect to determining the Reserve Requirement, variable rate Parity Debt shall be deemed to bear interest rate at the maximum rate permitted by the Parity Debt Instrument.

In the event proceeds of the Loan or Parity Debt are deposited in an escrow described in the definitions of Annual Debt Service and Maximum Annual Debt Service, each such time that moneys are released from such escrow, other than to prepay a portion of the Loan or Panty Debt, an amount of such released moneys shall be deposited in the applicable Reserve Account as is necessary to ensure that the amount on deposit therein at least equals the Reserve Requirement for the Loan or Parity Debt after such release.

"Responsible Officer" means any vice president, assistant vice president or trust officer of the Trustee within its Corporate Trust Department who routinely administer its duties under the Indenture.

"Revenue Fund' means the fund by that name established pursuant to the Indenture.

"Revenues" means (a) all amounts payable by the Agency to the Authority pursuant to the Constituent Loan Agreements other than administrative fees and expenses and indemnity against claims payable to the Authority and the Trustee; (b) any proceeds of the Series J Bonds and Series K Bonds originally deposited with the Trustee and all moneys deposited and held from time to time by the Trustee in the funds and accounts established under the Indenture; and (c) investment income with respect to any moneys held by the Trustee in the funds and accounts established thereunder.

"Securities Depositories" means The Depository Trust Company, 711 Stewart Avenue, Garden City, New York 11630, Facsimile (616) 227-4039 or 4190, or, in accordance with then current guidelines of the Securities and Exchange Commission, such other addresses and/or such other securities depositories as the Authority may designate in a Certificate of the Authority delivered to the Trustee.

"Series J Bonds" means the bonds designated as the "The Community Redevelopment Financing Authority of The Community Redevelopment Agency of the City of Los Angeles, California Pooled Financing Bonds Series J - Taxable" authorized in the Indenture in the original aggregate principal amount of $17,970,000 and "The Community Redevelopment Financing Authority of The Community Redevelopment Agency of the City of Los Angeles, California Pooled Financing Bonds Series J Tax-Exempt" authorized in the Indenture in the original aggregate principal amount of$4,SOO,OOO.

"Series J Loans" means the loans made by the Authority to the Agency pursuant to the Series J Loan Agreements.

B-11 "Series J Loan Agreements" means the three Loan Agreements, each dated as of September 1, 2003, by and among the Authority, the Trustee and the Agency relating to the loans to the Agency from the proceeds of the Series J Bonds, as each Loan Agreement is originally entered into or as amended or supplemented pursuant to the provisions thereof.

"Series K Bonds" means the bonds designated as the "The Community Redevelopment Financing Authority of The Community Redevelopment Agency of the City of Los Angeles, California Pooled Financing Bonds Series K Taxable."

"Series K Loans" means the two Loan Agreements, each dated as of September 1, 2003, by and among the Authority, the Trustee and the Agency relating to the loans to the Agency from the proceeds of the Series K Bonds.

"Series J Loan Agreements" means the two Loan Agreements, each dated as of September 1, 2003, by and among the Authority, the Trustee and the Agency relating to the loans to the Agency from the proceeds of the Series K Bonds, as each Loan Agreement is originally entered into or as amended or supplemented pursuant to the provisions thereof.

"Special Funcf' means the fund by that name established and held under the Constituent Loan Agreements by the Agency pursuant to the Constituent Loan Agreements.

"State" means the State of California.

"Subordinate Debf' means any loans, advances or indebtedness issued or incurred by the Agency pursuant to the Constituent Loan Agreements, which are either: (a) payable from, but not secured by a pledge of or lien upon, the Tax Revennes; or (b) secured by a pledge of or lien upon the Tax Revenues which is subordinate to the pledge of and lien upon the Tax Revenues under the Constituent Loan Agreements for the security of the Loan.

"Supplemental Indenture" means any indenture, agreement or other instrument hereafter duly executed by the Authority and the Trustee in accordance with the provisions of the Indenture.

"Taxable Parity Debf' means Parity Debt the interest on which is included in gross income for federal income tax purposes.

"Tax-Exempt Parity Debf' means Parity Debt the interest on which is excluded from gross income for federal income tax purposes.

"Tax Revenues" means all taxes annually allocated within the Plan Limit and paid to the Agency with respect to the Project Area following the Closing Date, pursuant to Article 6 of Chapter 6 (commencing with Section 33670) of the Redevelopment Law and Section 16 of Article XVI of the Constitution of the State and other applicable state laws and as provided in the Redevelopment Plan, including all payments, subventions and reimbursements, if any, to the Agency specifically attributable to ad valorem taxes lost by reason of tax exemptions and tax rate limitations (but excluding payments to the Agency with respect to personal property within the Project Area pursuant to Section 16110 et seq. of the California Government Code); and including that portion of such taxes, if any, otherwise required by Section 33334.2 of the

B-12 Redevelopment Law to be deposited in the Low and Moderate fucome Housing Fund, but only to the extent necessary to repay that portion of the proceeds of the Loan and any Parity Debt (including applicable reserves and financing costs) used to fmance or refinance the increasing or improving of the supply of low and moderate income housing within or of benefit to the Project Area, but excluding all other amounts of such taxes required to be deposited into the Low and Moderate fucome Housing Fund and excluding fuvestment Earnings.

"Term Bonds" means the Series ]-Taxable Bonds maturing September I, 2008, September 1, 2013, September 1, 2023 and September 1, 2033, the Series J-Tax-Exempt Bonds maturing September 1, 2023 and September l, 2033 and the Series K Bonds maturing September 1, 2008, September 1, 2013, September 1, 2023 and September 1, 2033.

"Trust Office" means the corporate trust office of the Trustee at 550 South Hope Street, Suite 500, Los Angeles, California 90071, provided that for registration, transfer, exchange, payment and surrender of Bonds means the corporate trust office of Trustee in St. Paul, Minnesota or such other office designated by the Trustee.

"Trustee" means U.S. Bank National Association, in its capacity as trustee, and its successors and assigns, and any other corporation or association which may at any time be substituted in its place as provided in the fudenture.

THE INDENTURE

Establishment of Funds and Accounts; Flow of Funds

Loan Fund. The Trustee shall establish and maintain a separate fund to be known as the "Loan Fund" into which shall be deposited a portion of the proceeds of sale of the Bonds pursuant to the fudenture. The Trustee shall disburse all amounts in the Loan Fund on the Closing Date pursuant to each of the Constituent Loan Agreements and thereupon shall close the Loan Fund.

Receipt, Deposit and Application ofRevenues. All Revenues described in the fudenture shall be promptly deposited by the Trustee upon receipt thereof in a special fund designated as the "Revenue Fund" which the Trustee shall establish, maintain and hold in trust thereunder.

No later than three (3) Business Days prior to each Interest Payment Date, the Trustee shall transfer from the Revenue Fund and deposit into the following respective accounts (each of which the Trustee shall establish and maintain within the Revenue Fund), the following amounts in the following order of priority, the requirements of each such account (including the making up of any deficiencies in any such account resulting from lack of Revenues sufficient to make any earlier required deposit) at the time of deposit to be satisfied before any transfer is made to any account subsequent in priority:

(a) Interest Account. No later than three (3) Business Days prior to each futerest Payment Date, the Trustee shall deposit in the futerest Account an amount required to cause the aggregate amount on deposit in the futerest Account to equal the amount of interest becoming due and payable on such Interest Payment Date on all Outstanding Bonds. No deposit need be made into the Interest Account if the amount

B-13 contained therein is at least equal to the interest becoming due and payable upon all Outstanding Bonds on the next succeeding Interest Payment Date. All moneys in the Interest Account shall be used and withdrawn by the Trustee solely for the purpose of paying the interest on the Series J Bonds and the Series K Bonds as it shall become due and payable (including accrued interest on any Bonds redeemed prior to maturity). All amounts on deposit in the Interest Account on the first day of any Bond Year, to the extent not required to pay any interest then having come due and payable on the Outstanding Bonds, shall be withdrawn therefrom by the Trustee and transferred to the Agency to be used for any lawful purposes of the Agency.

(b) Principal Account. No later than three (3) Business Days prior to each Interest Payment Date on which the principal of the Series J Bonds and the Series K Bonds shall be payable, the Trustee shall deposit in the Principal Account an amount required to cause the aggregate amount on deposit in the Principal Account to equal the principal of the Series J Bonds and the Series K Bonds corning due and payable on such Interest Payment Date pursuant to the Indenture, or the redemption price of the Series J Bonds and the Series K Bonds ( consisting of the principal amount thereof and any applicable redemption premiwns) required to be redeemed on such Interest Payment Date pursuant to the Indenture. All moneys in the Principal Account shall be used and withdrawn by the Trustee solely for the purpose of (i) paying the principal at maturity of the Series J Bonds and the Series K Bonds at the respective maturities thereof; (ii) paying the principal of the Term Bonds upon the mandatory sinking fund redemption thereof pursuant to the Indenture; or (iii) paying the principal of and premiwn, if any, on any Bonds upon the redemption thereof pursuant to the Indenture. All amounts on deposit in the Principal Account on the first day of any Bond Year, to the extent not required to pay the principal of any Outstanding Bonds then having come due and payable, shall be withdrawn therefrom and transferred to the Agency to be used for any lawful purposes of the Agency.

(c) Reserve Accounts. If on any date deposits are to be made pursuant to (a) and (b) above, and amounts on deposit in the Revenue Fund under the Indenture shall be insufficient to enable the Trustee to make such deposits, the Trustee shall withdraw the amount of such insufficiency from the applicable Reserve Account established pursuant to the applicable Constituent Loan Agreement and transfer such amount to the Revenue Fund, as described in the applicable Loan Agreement.

Investments. All moneys in any of the funds or accounts established with the Trustee pursuant to the Indenture shall be invested by the Trustee solely in Permitted Investments, as directed in writing by either the Authority or the Agency and filed with the Trustee at least two Business Days in advance of the making of such investments. In the absence of any such direction from the Authority or the Agency, the Trustee shall invest any such moneys in certain Permitted Investments described in the Indenture. Obligations purchased as an investment of moneys in any fund shall be deemed to be part of such fund or account.

Subject to the following sentence, Permitted Investments of moneys in the Reserve Accounts shall have a maturity of no greater than five years. If a Permitted Investment may be liquidated or "put" at a price equal to the yield to maturity of such Permitted Investment with or

B-14 to the provider thereof or such other entity rated at least "Aa3" by Moody's Investors Service and "AA-" by Standard and Poor's at least semiannually in connection with the Interest Payment Dates on the Series J Bonds, then such Permitted Investment may, notwithstanding any other maturity limitation set forth in the Indenture or in the defmition of Permitted Investments in the Indenture, have a maturity of more than five years. The Authority shall not enter into any such liquidation or "put" agreement if such liquidation or "put" agreement would result in the ratings then in effect on the Series J Bonds being lowered.

All interest or gain derived from the investment of amounts in any of the funds or accounts established under the Indenture shall be deposited in the fund or account from which such investment was made. For purposes of acquiring any investments thereunder, the Trustee may commingle funds held by it thereunder as directed by either the Authority or the Agency. The Trustee may act as sponsor, advisor, depository, principal or agent in the acquisition or disposition of any investment. The Trustee shall incur no liability for losses arising from any investments made pursuant to this section. The Authority acknowledges that regulations of the Comptroller of the Currency grant the Authority the right to receive brokerage confirmations of security transactions to be effected by the Trustee under the Indenture as they occur. The Authority specifically waives the right to receive such notification to the extent permitted by applicable law and agrees that it will instead receive periodic cash transaction statements which include detail for the investment transactions effected by the Trustee under the Indenture; provided, however, that the Authority retains its right to receive brokerage confirmation on any investment transaction requested by the Authority.

Valuation and Disposition of Investments. For the purpose of determining the amount in any fund or account, the value of Permitted Investments credited to such fund shall be valued at the market value thereof (excluding any accrued interest). In making any valuation of Permitted Investments under the Indenture, the Trustee may utilize computerized securities pricing services that may be available to it, including those available through its regular accounting system and rely thereon.

Covenants

Against Encumbrances. The Authority shall not create, or permit the creation of, any pledge, lien, charge or other encumbrance upon the Revenues and other assets pledged or assigned under the Indenture while any of the Series J Bonds or the Series K Bonds are Outstanding, except the pledge and assignment created by the Indenture. Subject to this limitation, the Authority expressly reserves the right to enter into one or more other indentures for any of its corporate purposes, including other programs under the Act, and reserves the right to issue other obligations for such purposes.

Power to Issue Bonds and Make Pledge and Assignment. The Authority is duly authorized pursuant to law to issue the Series J Bonds and the Series K Bonds and to enter into the Indenture and to pledge and assign the Revenues, the Constituent Loan Agreements and other assets purported to be pledged and assigned, respectively, under the Indenture in the manner and to the extent provided in the Indenture. The Bonds and the provisions thereunder are and will be the legal, valid and binding special obligations of the Authority in accordance with their terms, and the Authority and the Trustee, subject to the provisions of the Indenture, shall at all times, to

B-15 the extent permitted by law, defend, preserve and protect said pledge and assignment of Revenues and other assets and all the rights of the Bond Owners thereunder against all claims and demands of all persons whomsoever.

Accounting Records and Financial Statement. The Trustee shall at all times keep, or cause to be kept, proper books of record and account, prepared in accordance with corporate trust industry standards, in which complete and accurate entries shall be made of all transactions made by the Trustee relating to the proceeds of the Series J Bonds, the Series K Bonds, the Revenues, the Constituent Loan Agreements and all funds and accounts established pursuant to the Indenture. Such books of record and account shall be available for inspection by the Authority and the Agency during regular business hours with reasonable prior notice.

No Additional Obligations. The Authority covenants that no additional bonds, notes or other indebtedness shall be issued or incurred which are payable out of the Revenues in whole or in part.

Constituent Loan Agreements. The Trustee, as assignee of the Authority's rights pursuant to the Indenture, subject to the provisions therein, shall promptly use reasonable efforts to collect all amounts due from the Agency pursuant to the Constituent Loan Agreements and, subject to the provisions of the Indenture, shall enforce, and take all steps, actions and proceedings reasonably necessary for the enforcement of all of the rights of the Authority thereunder and for the enforcement of all of the obligations of the Agency thereunder.

The Authority, the Trustee and the Agency may at any time amend or modify the Constituent Loan Agreements pursuant to Section 6.04 thereof, (i) but only if the Trustee first obtains the written consent of the Owners of a majority of aggregate principal amount of the Series J Bonds or the Series K Bonds, as applicable, then Outstanding to such amendment or modification; or (ii) without the written consent of any of the Bond Owners, if such amendment or modification is for any one or more of the following purposes:

(a) to add to the covenants and agreements of the Agency contained in the Constituent Loan Agreements, other covenants and agreements thereafter to be observed, or to limit or surrender any rights or power therein reserved to or conferred upon the Agency so long as such limitation or surrender of such rights or powers shall not materially adversely affect the Owners of the Series J Bonds or the Series K Bonds, as applicable;

(b) to make such provisions for the purpose of curing any ambiguity, or of curing, correcting or supplementing any defective provision contained in the Constituent Loan Agreements, or in any other respect whatsoever as the Agency may deem necessary or desirable; provided, under any circumstances, that such modifications or amendments shall not materially adversely affect the interests of the Owners of the Series J Bonds or the Series K Bonds, as applicable.

The Authority shall notify each rating agency rating the Series J Bonds or the Series K Bonds at the time of such amendment or modification of such amendment or modification at

B-16 least 15 days in advance of the effective date of such amendment or modification, by giving written notice with a copy of the proposed amendment or modification included.

Modification and Amendment of the Indenture

Amendment. The Indenture and the rights and obligations of the Authority and of the Owners of the Series J Bonds or the Series K Bonds may be modified or amended at any time by a Supplemental Indenture which shall become binding upon adoption, without consent of any Bond Owners, to the extent permitted by law but only for any one or more of the following purposes:

(a) to add to the covenants and agreements of the Authority contained in this Indenture, other covenants and agreements thereafter to be observed, or to limit or surrender any rights or powers in the Indenture reserved to or conferred upon the Authority so long as such limitation or surrender of such rights or powers shall not materially adversely affect the Owners of the Series J Bonds or the Series K Bonds;

(b) to make such provisions for the purpose of curing any ambiguity, or of curing, correcting or supplementing any defective provision contained in the Indenture, or in any other respect whatsoever as the Authority may deem necessary or desirable; provided that under any circumstances such modifications or amendments shall not materially adversely affect the interests of the Owners of the Series J Bonds or the Series K Bonds.

Except as set forth in the preceding paragraph of this Section, the Indenture and the rights and obligations of the Authority and of the Owners of the Series J Bonds or the Series K Bonds may only be modified or amended at any time by a Supplemental Indenture which shall become binding when the written consent of the Owners of a majority of the aggregate principal amount of the Series J Bonds Outstanding and the Series K Bonds Outstanding are filed with the Trustee. No such modification or amendment shall (i) extend the maturity of or reduce the interest or compounding rate on any Bond or otherwise alter or impair the obligation of the Authority to pay the principal, and interest or redemption premiums 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; (ii) reduce the percentage of the aggregate principal amount of the Series J Bonds Outstanding and the Series K Bonds Outstanding required for the written consent to any such amendment or modification; or (iii) without its written consent thereto, modify any of the rights or obligations of the Trustee.

Events of Default and Remedies of Bond Owners

Events ofDefault. The following events shall be Events of Default under the Indenture:

(a) Default by the Authority in the due and punctual payment of the principal amount or redemption premium, if any, of any Bond pursuant to the Indenture, whether at maturity as therein expressed, by proceedings for redemption, by declaration or otherwise;

B-17 (b) Default by the Authority in the due and punctual payment of any installment of interest on any Bond pursuant to the Indenture;

(c) Default by the Authority in the observance of any of the other covenants, agreements or conditions on its part in the Indenture or in the Series J Bonds or the Series K Bonds contained, if such default shall have continued for a period of 30 days after written notice thereof, specifying such default and requiring the same to be remedied, shall have been given to the Authority by the Trustee, or to the Authority and the Trustee by the Owners of not less than 25% of the aggregate principal amount of the Series J Bonds Outstanding and the Series K Bonds Outstanding; provided that such default shall not constitute an Event of Default thereunder if the Authority shall commence to cure such default within said 30-day period and thereafter diligently and in good faith shall cure such default within a reasonable period of time; and

( d) the filing by the Authority of a petition or answer seeking reorganization or arrangement under the federal bankruptcy laws or any other applicable law of the United States of America, or if a court of competent jurisdiction shall approve a petition, filed with or without the consent of the Authority, seeking reorganization under the federal bankruptcy laws or any other applicable law of the United States of America, or if, under the provisions of any other law for the relief or aid of debtors, any court of competent jurisdiction shall assume custody or control of the Authority or of the whole or any substantial part of its property.

Remedies and Rights ofBond Owners. Upon the occurrence of an Event of Default, the Trustee may pursue any available remedy at law or in equity to enforce the payment of the principal of and interest and premium, if any, on the Outstanding Bonds, and to enforce any rights of the Trustee under or with respect to the Indenture.

If an Event of Default shall have occurred and be continuing, and if the Trustee has been indemnified as provided thereunder, the Trustee shall, upon the request of the Owners of at least 25% in aggregate principal amount of the Series J Bonds Outstanding and the Series K Bonds Outstanding, be obligated to exercise such one or more of the rights and powers conferred by the Indenture, as the Trustee, being advised by counsel, shall deem most expedient in the interests of the Bond Owners.

No remedy conferred upon or reserved to the Trustee or the Bond Owners by the terms of the Indenture is intended to be exclusive of any other remedy, but each and every such remedy shall be cumulative and shall be in addition to any other remedy given to the Trustee or the Bond Owners thereunder or now or hereafter existing at law or in equity.

No delay or omission to exercise any right or power accruing upon any Event of Default shall impair any such right or power or shall be construed to be a waiver of any such Event of Default or acquiescence therein; such right or power may be exercised from time to time as often as may be deemed expedient.

Application of Revenues and Other Fund After Default. All amounts received by the Trustee pursuant to any right given or action taken by the Trustee under the provisions of the

B-18 Indenture shall be applied by the Trustee in the following order, upon presentation of the several Bonds and the stamping thereon of the amount of the payment if only partially paid, or upon the surrender thereof if fully paid:

FIRST, to the payment of the fees, costs and expenses of the Trustee, including reasonable compensation to its agents, attorneys and counsel; and

SECOND, to the payment of the whole amount of principal of and interest on, the Series J Bonds and the Series K Bonds then due and unpaid, with interest on overdue installments of principal and interest to the extent permitted by law at the rate of interest then home by the Outstanding Bonds; provided, however, that in the event such amounts shall be insufficient to pay in full the amount of such interest and principal, then such amounts shall be applied in the following order of priority:

(a) to the payment of all installments of interest on the Series J Bonds and the Series K Bonds then due and unpaid, on a pro rata basis in the event that the available amounts are insufficient to pay all such interest in full;

(b) to the payment of principal of all installments of the Series J Bonds and the Series K Bonds then due and unpaid, on a pro rata basis in the event that the available amounts are insufficient to pay all such principal in full; and

(c) to the payment of interest on overdue installments of principal and interest, on a pro rata basis in the event that the available amounts are insufficient to pay all such interest in full.

Power of Trustee to Control Proceedings. In the event that the Trustee, upon the happening of an Event of Default, shall have taken any action, by judicial proceedings or otherwise, pursuant to its duties under the Indenture, whether upon its own discretion or upon the request of the Owners of a majority of the aggregate principal amount of the Series J Bonds Outstanding and the Series K Bonds Outstanding, it shall have full power, in the exercise of its discretion for the best interest of the Owners of the Series J Bonds and the Series K Bonds with respect to the continuance, discontinuance, withdrawal, compromise, settlement or other disposal of such action; provided, however, that the Trustee shall not, unless there no longer continues an Event of Default, discontinue, withdraw, compromise or settle, or otherwise dispose of any litigation pending at law or in equity, if at the time there has been filed with it a written request signed by the Owners of a majority of the aggregate principal amount of the Series J Bonds Outstanding and the Series K Bonds Outstanding under the Indenture opposing such discontinuance, withdrawal, compromise, settlement or other disposal of such litigation. Any suit, action or proceeding which any Owner of Bonds shall have the right to bring to enforce any right or remedy under the Indenture may be brought by the Trustee for the equal benefit and protection of all Owners of Bonds similarly situated and the Trustee is hereby appointed (and the successive respective Owners of the Series J Bonds and the Series K Bonds issued under the Indenture, by taking and holding the same, shall be conclusively deemed so to have appointed it) the true and lawful attorney-in-fact of the respective Owners of the Series J Bonds and the Series K Bonds for the purpose of bringing any such suit, action or proceeding and to do and perform any and all acts and things for and on behalf of the respective Owners of the Series J Bonds and

B-19 the Series K Bonds as a class or classes, as may be necessary or advisable in the opinion of the Trustee as such attorney-in-fact.

Appointment of Receivers. Upon the occurrence of an Event of Default under the Indenture, and upon the filing of a suit or other commencement of judicial proceedings to enforce the rights of the Trustee and of the Bond Owners under the Indenture, the Trustee shall be entitled, as a matter of right, to the appointment of a receiver or receivers of the Revenues and other amounts pledged under the Indenture, pending such proceedings, with such powers as the court malting such appointment shall confer.

Non-Waiver. Nothing in the Indenture or in the Series J Bonds and the Series K Bonds shall affect or impair the obligation of the Authority, which is absolute and unconditional, to pay the interest on and principal of the Series J Bonds and the Series K Bonds to the respective Owners of the Series J Bonds and the Series K Bonds at the respective dates of maturity, as provided in the Indenture, out of the Revenues and other moneys therein pledged for such payment.

A waiver of any default or breach of duty or contract by the Trustee or any Bond Owner shall not affect any subsequent default or breach of duty or contract, or impair any rights or remedies on any such subsequent default or breach. No delay or omission of the Trustee or any Owner of any of the Series J Bonds and the Series K Bonds to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a waiver of any such default or an acquiescence therein; and every power and remedy conferred upon the Trustee or Bond Owners by the Bond Law or by the Indenture may be enforced and exercised from time to time and as often as shall be deemed expedient by the Trustee or the Bond Owners, as the case may be.

Rights and Remedies of Bond Owners. No Owner of any Bond issued under the Indenture shall have the right to institute any suit, action or proceeding at law or in equity, for any remedy under or upon the Indenture, unless (a) such Owner shall have previously given to the Trustee written notice of the occurrence of an Event of Default; (b) the Owners of a majority of the aggregate principal amount of the Series J Bonds Outstanding and the Series K Bonds Outstanding shall have made a written request upon the Trustee to exercise the powers granted therein or to institute such action, suit or proceeding in its own name; ( c) said Owners shall have tendered to the Trustee indemnity reasonably acceptable to the Trustee against the costs, expenses and liabilities to be incurred in compliance with such request; and ( d) the Trustee shall have refused or omitted to comply with such request for a period of 30 days after such written request shall have been received by, and said tender of indemnity shall have been made to, the Trustee.

Such notification, request, tender of indemnity and refusal or 0D11ss1on are hereby declared, in every case, to be conditions precedent to the exercise by any Owner of Bonds of any remedy under the Indenture; it being understood and intended that no one or more Owners of Bonds shall have any right in any manner whatsoever, by his or their action, to enforce any right under the Indenture, except in the manner therein provided, and that all proceedings at law or in equity to enforce any provision of the Indenture shall be instituted, held and maintained in the manner therein provided and for the equal benefit of all Owners of the Outstanding Bonds.

B-20 The right of any Owner of any Bond to receive payment of the principal of and interest and premium, if any, on such Bond as provided in the Indenture or to institute suit for the enforcement of any such payment, shall not be impaired or affected without the written consent of such Owner, notwithstanding the foregoing provisions of this Section or any other provision of the Indenture.

Termination of Proceedings. In case the Trustee shall have proceeded to enforce any right under the Indenture by the appointment of a receiver or otherwise, and such proceedings shall have been discontinued or abandoned for any reason, or shall have been determined adversely, then and in every such case, the Authority, the Trustee and the Bond Owners shall be restored to their former positions and rights thereunder, respectively, with regard to the property subject to the Indenture, and all rights, remedies and powers of the Trustee shall continue as if no such proceedings had been taken.

Discharge of Indenture

If the Authority shall pay and discharge any or all of the Outstanding Bonds in any one or more of the following ways:

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

(b) by irrevocably depositing with the Trustee, in trust, at or before maturity, money which, together with the available amounts then on deposit in the funds and accounts established with the Trustee pursuant to the Indenture and the Constituent Loan Agreements, is fully sufficient to pay such Bonds, including all principal, interest and redemption premiums; or

(c) by complying with the requirements set forth in the Indenture and by irrevocably depositing with the Trustee or any other fiduciary, in trust in an escrow, noncallable Federal Securities, including, without limitation, State and Local Government Series issued by the United States Treasury ("SLGS"), United States Treasury bills, notes and bonds, as traded on the open market; and/or Zero Coupon Treasury Bonds ("STRIPS"), in such amount as an Independent Certified Public Accountant shall determine will, together with the interest to accrue thereon and available moneys then on deposit in the funds and accounts established with the Trustee pursuant to the Indenture and the Constituent Loan Agreements, be fully sufficient to pay and discharge the indebtedness on such Bonds (including all principal, interest and any redemption premiums) at or before their respective maturity dates;

( d) and if such Bonds are to be redeemed prior to the maturity thereof, notice of such redemption shall have been mailed pursuant to the Indenture or provision satisfactory to the Trustee shall have been made for the mailing of such notice, then, at the Request of the Authority, and notwithstanding that any of such Bonds shall not have been surrendered for payment, the pledge of the Revenues and other funds provided for in the Indenture with respect to such Bonds, and all other pecuniary obligations of the Authority thereunder with respect to all such Bonds, shall cease and terminate, except

B-21 only the obligation of the Authority to pay or cause to be paid to the Owners of such Bonds not so surrendered and paid all sums due thereon from amounts set aside for such purpose as aforesaid and all expenses and costs of the Trustee. Any funds thereafter held by the Trustee which are not required for said purposes, shall be paid over to the Authority.

Additionally, the Authority and the Agency shall have the right to discharge any Outstanding Bond by purchasing such Bond at public or private sale as and when, and at such prices (including brokerage commissions) not in excess of the par amount thereof plus accrued interest thereon to the date of such purchase, as the Authority or the Agency, as the case may be, in its sole discretion determine, and by tendering such Bond to the Trustee for cancellation. Further, in lieu of depositing any or all of the cash with the Trustee in connection with any sinking fund redemption pursuant to the Indenture, the Authority or the Agency shall have the right to tender to the Trustee for cancellation, no later than 15 days prior to the date set forth for the mailing of notice of redemption, a portion of the applicable Term Bonds in an amount less than or equal to the amount of such sinking fund redemption.

B-22 APPENDIXC

FORM OF BOND COUNSEL OPINION (THIS PAGE INTENTIONALLY LEFT BLANK) September 17, 2003

The Community Redevelopment Financing Authority of The Community Redevelopment Agency ofthe City of Los Angeles 345 South Spring Street, Suite 800 Los Angeles, California 90013

The Community Redevelopment Agency of the City of Los Angeles 345 South Spring Street, Suite 800 Los Angeles, California 90013

The Community Redevelopment Financing Authority of The Community Redevelopment Agency of the City of Los Angeles, California Pooled Financing Bonds Series J - Taxable (Council District 9, Pacoima/Panorama City and Reseda/Canoga Park Projects) and The Community Redevelopment Financing Authority of The Community Redevelopment Agency of the City of Los Angeles, California Pooled Financing Bonds, Series J Tax-Exempt (Reseda/Canoga Park Project} (Final Opinion)

Ladies and Gentlemen:

We have acted as bond counsel in connection with the issuance by the Community Redevelopment Financing Authority of The Community Redevelopment Agency of the City of Los Angeles, California (the "Authority") of $17,970,000 aggregate principal amount of its Pooled Financing Bonds Series J - Taxable (Council District 9, Pacoima/Panorama City and Reseda/Canoga Park Projects) (the "Series J -Taxable Bonds"), $4,500,000 aggregate principal amount of its Pooled Financing Bonds Series J - Tax-Exempt (Reseda/Canoga Park Project) (the "Series J - Tax-Exempt Bonds" and together with the Series J - Taxable Bonds, the "Bonds"). The Bonds are being issued pursuant to the Constitution and the laws of the State of California (the "State"), including the provisions of Articles I through 4 (commencing with Section 6500) of Chapter 5 of Division 7 of Title I of the Government Code of the State, and an Indenture of Trust, dated as of September 1, 2003 (the "Indenture"), by and between the Authority and U.S. Bank, N. A., as trustee (the "Trustee"). The Bonds are being issued to provide funds to make three loans to The Community Redevelopment Agency of the City of Los Angeles, California (the "Agency") pursuant to three separate Loan Agreements, all dated as of September 1, 2003 (the "Loan Agreements"), each of which are by and among the Authority, the Agency and the Trustee.

C-1 September 17, 2003 Page2

In that connection, we have examined certain proceedings of the Authority and the Agency with respect to the authorization and issuance of the Bonds, including but not limited to Resolution No. 03-03 adopted by the Authority on June 5, 2003, the Indenture, the Loan Agreements and such opinions, certificates and other documents as we deemed necessary or appropriate to render the opinions herein.

The opinions expressed herein are based on an analysis of existing laws, regulations, rulings and court decisions and cover certain matters not directly addressed by such authorities. Such opinions may be affected by actions taken or omitted or events occurring after the date hereof. We have not undertaken to determine or to inform any person, whether any such actions are taken or omitted or events do occur. Our engagement with respect to the Bonds has concluded with their issuance, and we disclaim any obligation to update this letter. We have assumed the genuineness of all documents and signatures presented to us (whether as originals or as copies) and the due and legal execution and delivery thereof by, and validity against, any parties other than the Authority and the Agency. We have not undertaken to verify independently, and have assumed, the accuracy of the factual matters represented, warranted or certified in the documents, and of the legal conclusions contained in the opinions, referred to in the second paragraph hereof. Furthermore, we have assumed compliance with all covenants and agreements contained in the Indenture, the Loan Agreements and other relevant documents.

Based on and subject to the foregoing, and in reliance thereon, as of the date hereof, we are of the opinion that:

1. The Authority is a joint exercise of powers authority duly organized and validly existing under the laws of the State with full power to enter into the Indenture and the Loan Agreements, to perform the agreements on its part contained therein, and to issue the Bonds.

2. The Indenture and the Loan Agreements have been duly approved by the Authority and constitute valid and binding obligations of the Authority enforceable against the Authority in accordance with their respective terms. The Indenture creates a valid pledge of the Revenues (as such term is defined in the Indenture), in accordance with terms of the Indenture.

3. The Bonds have been duly authorized, executed and delivered by the Authority and are valid and binding special obligations of the Authority.

4. The Loan Agreements have been duly approved by the Agency and constitute the valid and binding obligations of the Agency enforceable against the Agency in accordance with their respective terms. The Loan Agreements create a valid pledge of the Tax Revenues (as such term is defined in each Loan Agreement), in accordance with the terms of the Loan Agreements.

5. Under existing laws, regulations, rulings and judicial decisions, interest on the Series J Taxable Bonds is fully includable in the gross income of the recipients thereof for

C-2 September 17, 2003 Page3 federal income tax purposes. Interest on the Series J - Taxable Bonds (including original issue discount) is exempt from personal income taxes imposed by the State under current law.

6. Under existing laws, regulations, rnlings and judicial decisions and assuming the accuracy of certain representations and continuing compliance with certain covenants, interest on the Series J - Tax-Exempt Bonds is excluded from gross income for federal income tax purposes and is not a specific preference item for purposes of the federal alternative minimum tax. Interest on the Series J - Tax-Exempt Bonds is exempt from personal income taxes imposed by the State under current law.

We call attention to the fact that the rights and obligations under the Bonds, the Indenture and the Loan Agreements may be subject to bankruptcy, insolvency, reorganization, arrangement, fraudulent conveyance, moratorium and other laws relating to or affecting creditors' rights, to the application of equitable principles, to the exercise ofjudicial discretion in appropriate cases and to the limitations on legal remedies against local agencies in the State. We express no opinion with respect to any indemnification, contribution, choice of law, choice of forum or waiver provisions contained in the foregoing documents. Finally, we undertake no responsibility for the accuracy, completeness or fairness of the Official Statement or other offering material relating to the Bonds and express no opinion with respect thereto.

Very trnly yours,

C-3 September 17, 2003

The Community Redevelopment Financing Authority of The Community Redevelopment Agency of the City of Los Angeles 345 South Spring Street, Suite 800 Los Angeles, California 90013

The Community Redevelopment Agency of the City of Los Angeles 345 South Spring Street, Suite 800 Los Angeles, California 90013

The Community Redevelopment Financing Authority of The Community Redevelopment Agency of the City of Los Angeles, California Pooled Financing Bonds Series K Taxable (Laurel Canyon and East Hollywood/Beverly Normandie Projects) (Final Opinion)

Ladies and Gentlemen:

We have acted as bond counsel in connection with the issuance by the Community Redevelopment Financing Authority of The Community Redevelopment Agency of the City of Los Angeles, California (the "Authority") of $4,645,000 aggregate principal amount of its Pooled Financing Bonds Series K Taxable (Laurel Canyon and East Hollywood/Beverly Normandie Projects) (the "Bonds"). The Bonds are being issued pursuant to the Constitution and the laws of the State of California (the "State"), including the provisions of Articles 1 through 4 (commencing with Section 6500) of Chapter 5 of Division 7 of Title 1 of the Government Code of the State, and an Indenture of Trust, dated as of September I, 2003 (the "Indenture"), by and between the Authority and U.S. Bank National Association, as trustee (the "Trustee"). The Bonds are being issued to provide funds to make two loans to The Community Redevelopment Agency of the City of Los Angeles, California (the "Agency") pursuant to two separate Loan Agreements, each dated as of September 1, 2003 (the "Loan Agreements"), each of which are by and among the Authority, the Agency and the Trustee.

C-4 September 17, 2003 Page5

The opinions expressed herein are based on an analysis of existing laws, regulations, rulings and court decisions and cover certain matters not directly addressed by such authorities. Such opinions may be affected by actions taken or omitted or events occurring after the date hereof. We have not undertaken to determine or to inform any person, whether any such actions are taken or omitted or events do occur. Our engagement with respect to the Bonds has concluded with their issuance, and we disclaim any obligation to update this letter. We have assumed the genuineness of all documents and signatures presented to us (whether as originals or as copies) and the due and legal execution and delivery thereof by, and validity against, any parties other than the Authority and the Agency. We have not undertaken to verify independently, and have assumed, the accuracy of the fu.ctual matters represented, warranted or certified in the documents, and of the legal conclusions contained in the opinions, referred to in the second paragraph hereof. Furthermore, we have assumed compliance with all covenants and agreements contained in the Indenture, the Loan Agreements and other relevant documents.

Based on and subject to the foregoing, and in reliance thereon, as of the date hereof, we are of the opinion that:

3. The Bonds have been duly authorized, executed and delivered by the Authority and are valid and binding special obligations of the Authority.

5. Under existing laws, regulations, rulings and judicial decisions, interest on the Bonds is fully includable in the gross income of the recipients thereof for federal income tax purposes. Interest on the Bonds (including original issue discount) is exempt from personal income taxes imposed by the State under current law. The opinions expressed herein are as of the date of issuance and delivery of the Bonds and we express no opinion as of any date subsequent thereto.

We call attention to the fact that the rights and obligations under the Bonds, the Indenture and the Loan Agreements may be subject to bankruptcy, insolvency, reorganization, arrangement,

C-5 September 17, 2003 Page6

fraudulent conveyance, moratorium and other laws relating to or affecting creditors' rights, to the application of equitable principles, to the exercise of judicial discretion in appropriate cases and to the limitations on legal remedies against local agencies in the State. We express no opinion with respect to any indemnification, contribution, choice of law, choice of forum or waiver provisions contained in the foregoing documents. Finally, we undertake no responsibility for the accuracy, completeness or fairness of the Official Statement or other offering material relating to the Bonds and express no opinion with respect thereto.

Very truly yours,

C-6 APPENDIXD

THE COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF LOS ANGELES, CALIFORNIA COMBINED FINANCIAL STATEMENTS AND SCHEDULES FOR THE FISCAL YEAR ENDED JUNE 30, 2002 (THIS PAGE INTENTIONALLY LEFT BLANK) AIIIIIJAL f'llU.NCIAL Rtl'OU

_ __J

On the Cover

I) Childcare Center at the Ziegler Estate. 2) Newly Renovated Cinerama Dome and mixed-use retail and entertainment center in Hollywood. 3) [nterior lobby of Cinerama Dome. 4) First time homebuyer in front of newly renovated home in the Historic West Adams District. 5) Exterior treatment of the Walt Disney Concert Hall, 6) Selma Park in Hollywood. 7} Venice Hope Park in Downtown Los Angeles. 8) Cathedral of Our Lady of the Angels • statue of the Virgin by Robert Graham above the Great Bronze Doors. 9) Ca1hedral of Our Lady of the Angels - north facing facade. l 0) Cathedral of Our Lady of'the Angels • :interior view of ceiling and organ pipes. 11) Watts Cultural Crescent Drum Festival. 12) Artist designed gateway to 6th and Mesa parking lot in Beacon Street. 13) Composite ofa variety of Agency art projects. 14) Newly renovated shop facades on Main Street in Reseda/Canoga Park. 15) Old Bank District live/work loft conversions in Downtown Los Angeles. l 6) Central A venue Jazz Festival in Council District Nine. THE COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF LOS ANGELES, CALIFORNIA

Comprehensive Annual Financial Report For the Fiscal Year Ended June 30, 2002

Prepared by:

FINANCE ANO ACCOUNTING DIVISIOi',

Randall K. \Vilkins Chief Financial Officer

Ras Mallari Chief Accounting Officer

COORDINATION & CONTROL

Eleanor :v!emijc Accounting Manager

Sylvia Amaya Senior Accountant

PREPARATION AND ASSISTANCE

Betty Brassfield Teresita Carreon-De Leon Cesar Dela Cruz Jr. Administrative Analyst Accountant II Accountant II

Gerardo Gonzales Nonna Ruiz Ming Xu Accountant I Department Secretary Accountant II

Special Assistance

Accounts Payable Budget and Asset Management Finance Graphics Information Technology Payroll THE COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF LOS ANGELES, CALIFOIDilA

Con,prehensive Annual Financial Report For the Fiscal Year Ended June 30, 2002

TABLE OF CONTEXTS

INTRODUCTORY SECTJO;,.; Letter of Transmittal ...... 1 CRA Board of Commissioners ...... , ...... 5 Organizational Chart ...... -...... 6 List of Elected and Appointed Officials ...... ········ ·············· 7 Fl'-ANCIAL SECTION Independent Auditor's Report...... s Management's Disc~ssion and Analysis ...... ·············· .. ········· ...... 10 Basic Financial Statements: Government-v.,Jde Financial Statements: Statement of Net Assets ...... 20 Staten1ent of Activities ...... 21 Fund Financial Statements: Balance Sheet - Governmental Funds ...... 22 Reconciliation of the Balance Sheet of Governmental Funds·

to the Staten1ent of Net Assets of Govcrnn1ental Activities ... •• •············ ...... ········->0' Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds ...... 24 Reconciliation of the Statement of Revenues, Expenditures. and Changes in Fund Balances of Governmental Funds to the Statement of Activities of Governmental Activities ...... 25 Statement of Net Assets - Proprietary Funds ...... 26 Statement of Revenues, Expenses, and Changes in Fund Net Assets - Proprietary Funds ...... 27 Statement of Cash Flows - Proprietary Funds ...... 28 Statement of Fiduciary Net Assets- Fiduciary Funds ...... 29 Notes to Basic Financial Statements: Note I - Summary of Significant Accounting Policies ...... 30 Note 2 - Detailed Notes on All Funds ...... 40 Note 3 - Other Information ...... ·········· ...... 52 Required Supplementary Information: Schedules of Revenues, Expenditures~ and Changes in Fund Balances - Budget and Actual: Housing Fund ...... 59 Special Revenue Fund ...... 60 Note to Required Supplementary Information ...... 61 Other Supplementary Information: Schedule of Revenues, Expenditures, and Changes in Fund Balances- Budget and Actual-All Governmental Funds ...... 62 Combining Statement of Net Assets- lnterna1 Service Funds ...... 67 Combining Statement of Revenues~ Expenses, and Changes in Fund Net Assets- Intemal Service Funds ...... 68 Combining Statement of Cash Flows- lntemat Service Funds ...... 69 THE COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF LOS ANGELES, CALIFORNIA

Comprehensive Annual Financial Report For the Fiscal Year Ended June 30~ 2002

TABLE OF CONTENTS - (Continued)

FINANCIAL SECTIOJ\ (continued) Combining Balance Sheet By Redevelopment Project Arca ...... 70 Con1bining Staten1ent of Revenues, Expenditures, and Changes in Fund Balances - by Rf.'devclopment Project Area ...... 7u Schedule ofThird~Party Indebtedness ...... 81 STATISTICAL SECT!Ol\ Government-\\'idc Information: Expenses by Function - Governmental Activities ...... S·l Revenues by Source - Governmental Activities ...... 85 Fund Information: Expenditures by Function - Govem1nental Funds ...... 86 Revenues by Source Governmental Funds ...... 87 Analysis of Debt Service Coverage - Tax Allocation Bonds ...... 88 Ratio of Annu.:il Debt Service Expenditures to Total General Governrnent31 Expen

COMPLIANCE SECTIOJ\ Independent Auditor's Report on Compliance with Lav,:s. Regulations and Adrninistrative Requirements Governing California Redevelopment Agencies.. .. 103 Community Redevelopment Agency ofrheCttr 354 South Spnng Srreel 1Jf Los Angeles Sutte8lX, Los Angeles California 9001:J.12SS

213 977-1600

February 7. 2003

To 1he Tlonorablc Mayor, Mc1nbers of the C'ity Council. City Controller and th!! Board of Conu11issioncrs of'rhc Conununity Rcdc\·elopn1~nt Ag~ncy of thC' ('ity of Los :\ngclcs:

California rede,·elop1ncnt la,v requires redevelopment agencies to pub1ish and transn1it to tbo:ir governing bodies and the State Controller \vithin six months of the close of each li:.cal year a complete set of financial statements presented in conformity ,sith generally accepted accounting principles (GAAP) and audited in accordance \V'ith generally accepted auditing standards by a firm of licensed certified public accountants. Pursuant to that requirement. \\'e hereby issue the comprehensive annual financial report of The Communlty Redevelopn1ent ,Agency of the City of Los Angeles (Agency) for the fiscal year ended June 30, 2002.

This is the first year that !he Agency is implen1en1ing the n(!,v financial reporting requirement~ prescribed by (.io\·e-rnmental Accounting Standards Board {GASB) Staten1e11t :'.\o. 3-L This report consists of managcn1ent's representations concerning the finances of !he Agency. Consequently. managen1ent assun1cs full responsibility for the co1npletcness and reliability of all the information presented in this report. To proYide a reasonable basis for n1aking these representations. manage1nent of the Agency has established a comprehensive intcn1al control framework that is designed both to protect the Agency's assets from Joss, theft. or 1nisuse and to compile sufficient reliable information for the preparation of the Agency's financial statements in conformity ,vith GAAP. Because the cost of internal controls should not out\\:eigh their benefits, the Agency's comprehensive framev,:ork of internal controls has been designed to provide reasonable rather than absolute assurance that the financial statements ,v11I be free from material misstatement. As management, we assert that, to the best of our kno\vlcdge and belief, this financial report is complete and reliable in all material respects.

The Agency's financial staten1ents have been audited by Simpson and Simpson, Certified Publi~ Accountants. The goaJ of the independent audit was to provide reasonable assurance that the Agency's financial slatements for the fiscal year ended June 30, 2002 are free of material misstatement. The independent audit involved examining, o-n a test basis, evidence supporting the amounts and disclosures in the financial statements; assessing the accounting principles used and significant estimates made by management; and evaluating the overaJI financial statement presentation. The independent auditor concluded based upon the audit, that there \Vas a reasonable basis for rendering an unqualified opinion that the Agency's financial statements for the fiscal year ended June 30, 2002 are fairly presented in conformity with GAAP. The independent auditor's report is presented as the first component of the financial section of this report.

GAAP require that management provide a narrative introductlon, overview, and analysis to accompany the basic financial statements in the form of Management's Discussion and Analysis (MD&A). This Jetter 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 auditor.

·I· PROFILE OF THE AGE:-iCY

The Agency v,:as established by the Los Angeles City Couocll (City Council) in 1948 under State La\v to devise and in1plcn1ent geographically-based action strategies to check and reverse physical and cconon1ic blight in the City of Los .1\ngck:s· (City) n1ost Jistn.:ss,;-J urb;.ui neighborhoods. The Agency \viii direct govemn1cntal and priYate sector in\·csLn1~·n1s. as necessary, in1plement these strategies and u11dertakc the necessary steps required to engender new investn1ent and gr0\\1h in these areas. 'fov,:ard these ends. the Agency provides techn1ca\ and financial assistance to a variety of partners, including (a) neighborhood-based groups that pron1ote a n1ission of c1npo\\·enng the conununity by \vorking tO\'\.lrd the acbie\·en1ent of a healthy economic and social infrastructure: (b) residents \vho seek to take pan in the City's prosperity; (c) investors ,,:ho understand the imponance and the needs of the urban n1arkets; and (d) the urban labor pool. The Agency lends assistance 10 inYestors \villing to take a risk for a n1ore Yibrant City, to neighborhood residents exhibiting confidence in their con11nunities. and to those in need ,vho seek to take pan in the City·s prosperity.

As of June 30, 2002. the Agency operated 33 redevelopment project areas and 1 revitalization project area. T,,·o of the thirty-three projects, City Center and Pacific Corridor, ,,-ere adopted in April and May of this fiscal year. The Agency finances a variety of programs in each redevelopment project area, including creating and rehabilitating housing and con1mcrcial housing developn1cn1s; fa~adc in1pro\'en1ents and strectscapes: reconstructing deteriorated public facilities and improvements: public art; and grant programs. All Agency acti,·itics rnust be consistent \\'ith the goals and objcctiYes of each project·s redcvclopn1cnt plan and fiYe-year implen1entation plan.

Jiistorically, over fifty pcrccnl of the Agency revcnu.::s come fio1n incrc1ni.:ntal property taxes. Pursuant to stale la\v, the Agency is required to spend at least 20 pcrcenl of this re\·cnuc on IO\\ and moderate-income housing. Other revenue sources include grants. bond proceeds. leases. proceeds from sale of land. loan collections, and interest income.

Due to the nature of redevelopment financing, Agency liabilities normally exceed assets, thus resulting in a deficit in the statement of net assets. Redevelopn1ent activities, \\'hich benefit and increase property assessed values in the redevelopn1cnt project areas, are primarily financed through the issuance of tax allocation bonds. Proceeds from these tax allocation bonds are used for infrastructure projects, co1nmercial and housing loans, and project operations. The tax allocation bond issues, v.:hich are secured by future tax increment revenues, are earned as liabilities in the Agency books. I-Iowever, the uses of the bond proceeds do not result in equivalent Agency assets. Infrastructure projects are turned over to the City and loans receivable are carried in the Agency books at an1ounts. substantially lower than cost.

A Board of seven cornrnlssioners appointed by the Mayor and confirmed by the City Council oversees the Agency. An Administrator appointed by the Board directs the Agency staff and its operations. Under the "Oversight Ordinance" adopted in 1991, every action of the Agency is subject to City Council revie\\' and/or approvaL The "Oversight Ordlnance" also designated the City Controller and City Attorney as the Agency's controller and legal counsel, respectively.

The Agency's annual budget serves as the foundation for financia1 planning and control. The budget is prepared under the guidelines established by State redevelopment law and the City of Los Angeles budget ordinance. The budget is approved by the City Council and adopted by the Agency board prior to the start of the fiscal year. Jn addition, because the Agency's budget is prepared well in advance of the fiscal year to which it relates, the budget is regularly amended for changes in available resources and project objectives with the approval of the Agency Board and the City Council. The appropriated budget is prepared by fund, redevelopment project, cost center and objective.

-2- The City Budget Ordinance allows Agency management to increase or decrease an objective based on predefined limits. Beyond such limits, the Agency Board and the City Council n1ust approve increases and decreases in expenditures. An objective ls defined as a specific project or type of \vork being performed \vithin a redevelopment project area. A more detailed discussion of the Agency budget can be- found in 1he accompanying 1Vote 10 tire Required Suppft,n1e11ta1y !nfonnation on pagl.! 61.

The budget~to~actua1 con1parison for housing and special revenue funds is presented in the Required Supplenzentary Infor,nation of this report on pages 59 and 60, whereas. the budget-to actual comparison for all governmental funds is presented in the Other Supple111entary lnfonnation on pages 62 through 66.

FACTORS AFFECTING FINA1'CIAL C01'DITIO:',;

The inforn1ation presented in the financial statements is perhaps best understood \vhen it is considered from the broader perspective of the specific environment y.·ithin \\·hich the ..\gency operates.

Local economy. The economic slov,:down in the last three years at the state and national level has had a similar effect on the Southern California economy. White the inflation rate has been relatively lo\v, other econonUc indicators such as unemployment rate, personal incon1e grov,:th, and commercial real estate vacancy rates, have not been very favorable. Not\vithstanding these unfavorable economic indicators, the Agency has benefited from the relatively strong gro\vth in assessed valuation. \vhich detcrntincs the Agency·s tax increment revenues from- its various rcdcvctopn1cnt projecls. \\'ith the continued economic s]o\.\·do\vn, the Agency expects slO\\·cr gro\\'th not only in its tax incren1cnt revenues but in also grant revenues fron1 other governn1ental en1i1ies, as \veil.

Capital project funding. Three recent issues could have a significant in1pact on the fllnding of ongoing and future capital projects.

FY 2003 State budget deficit. To help alleviate California's FY 2003 budget deficit, the Governor has proposed that $500 million in "unencumbered" low and moderate-income housing funds kept by all redevelopment agencies be transferred to the State. The State Senate and Assembly, however, have approved a program of spending cuts that did not include any of the proposed housing sweep. Although it appears that the Governor's proposal is currently tabled, it is still possible for the final mid-year budget legislation to require the transfer of son1e Agency resources to the State.

FY 2004 and fiaure State budget deficits and pass-through to sclrools. To help alleviate California's FY 2004 and future budget deficits. the Governor proposed that school districts' shares of property tax revenue from the growth in assessed value in redevelopment project areas, which is currently retained by the redevelopment agencies, be passed through to school districts, beginning at the level of $250 million in FY 2004~ and increasing to the full amount of diverted property taxes over time. Since these pass-throughs are just proposals and no specific language has been written, the Agency cannot yet assess the dollar impact on future Agency revenues.

Orange County Case. Properties which have been subject to downward valuation by the county assessors as a result of natural disasters, economic do\Vtlturns, or other factors, have often had that value restored by the assessors (up to the pre-decline value of the property) at rates higher than 2 percent per annum depending on the success of repairs following a disaster or the speed of a rebound from an economic downturn. On November 20, 2001, the Orange County Superior Court ruled that such decreases create a new ubase year value" for purposes of Proposition 13 and that subsequent increases in assessed va]ue by more than 2 percent in a single year violated Article XIIIA of the California Constitution. ln a sin1i1ar case filed in Los Angeles County, the Superior Court dlsn1issed the plaintiffs action, stating that no support presently exists in the statute that upon decline in \·a\ue b~lO\\" its acquisition value, its Proposition 13 base value is pcrnianently reduced.

The OrJnge County Superior c... Hu1·s ruling is under appeal. A final judg1ncnt tbat uphu!J') th.: Supcrior Court's ruling rn~y be applicable to all counties, effectively re\·ersing the Los Angeles County Superior Coun·s action. If retroactively applied to the n1aximurn extent pennitted by la\'.', it \\·ould cause a significant decrease in tax increment revenues.

Cash managen1cnt policies and practices. In accordance \Vith the Agency lnve~tmerH Policy. cash tcrnporarily idle during the year '-Vas invested in obligations of the ll.S. Treasury or L.S. go,·crnmental agencies, certificates of deposits, bankers acceptances, repurchase agrcl'n1i::nts, commercial paper, the Local Agency lnvestJnent Fund administered by the State of California. and guaranteed in\·csuncnt contracts. The man1rities of the investments range from days to yi::.ns . . \vitb an average n1aturi1y of approximately seven months. For the fiscal year ended June 30, 2002, the average yield on in\"est1ncnts \,·as 3.46 percent.

Risk managen1ent. As part of its risk management program. the Agency carries conm1crcial and general insurance policies. 1l1e cost of the insurance is allocated to all the rede,elopn1ent projects. A schedule of the Agency's insurance policies is presented on page 103.

Pension and other postcmployment benefits. The Agency provides pension benefits to HS en1ployees. These benefits are provided through the California Public En1ployces Retir~n1ent System. an agent ,nultipk cn1ployer defined benefit pension plan.

J"he Agency also pro\·ides postretiren1ent health and dental care benefits for certain r~11n:o.:s and their de-pendents. As of the end of fiscal year 2002, there '\\"ere 71 retired en1ployc('.S rcco:1Ying these benefits, \Vhich are financed on a pay-as-you-go basis.

Additional information on the Agency's pension arrangements and postemployn1ent beni:fits can be found in noles 3-A and 3-B in the Nares to Basic Financial Statentents.

Respectfully submitted,

Randall K. Wilkins, Chief Financial Officer

Richard L. Benbow, Aeling Adn1inistrator

-4- THE COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF LOS ANGEi.ES. CALIFORNIA

BOARD OF CO:\l:\IISSIONERS

Da·dd •·arrar Chairman

' Q ' l.:i} . .. ~·

-I~Shu Kwan \Voo ?\1ar,·a Smith BattJe..Bey !\1adeline Janis~A parido Vice-Chairman Treasurer ~1cmlxr

John A. Ornelas Douglas R. Ring John Schafer Member Member Member

• 5. TIIE COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF LOS ANGELES. CALIFORNIA

Organizational Chart

CRAUoanl of Commissiom:rs

Administrator J,·rr} Scharhn

Al!(°ncy Cnunsel CitJ (City Acwmc~) Controller

Chief Depoty Administrator l{ichard L. Bcnhow

I I I I Deputy Deputy Deputy Deputy l>t'puty Administrator Administrator Administrator Administr,idor Administrator Organizational Chief Financial Community Commonity Community Support Oflker ()pcrations I Operations 11 Oper.11lions rll Kenneth L. Clark Randall K. Wilkins Do.maid R. Spivack John McCoy Edward Saulel

-6- CITY OFFICIALS City of Los Angeles, California

./;1m,·~ h,·nul'lh 11:ihn Rnd,anl ,I. l}d~atlilln aur., < h,d, ( II: \:;,,;·,.•:

CITY COUNCIL

\ll'\ Padill:, \lark Ridk~ - n1 .. rn;1~ l:d P. H.1:)t:" \\\•Jul~ Cn•ud lhnnh t•. /.im· -:-1!1 Dh1r1.-i l~t l)i-.lfKI ~;1,\ 1);~1:·1_-t ··,111,-:::,! I ,>U1l1,.1I Prl.'-.1d,:111

rum l..aBunl!t· Jack \\dss ltulh (;alantcr Jan Perr~ '\11,ll' ltoldl.'n 4th Dis1rict '.>1h Di:-.1n,:1 f>lh D1s1rict ~1!\ Histn..:t 10fh !)1slTKI

Cind}' Ylisciknwskl Hal lkm,;on Erk (;arct'td '.\irk Parhrco Jank<' Hahn I llh J)is1rkt !::'.th l>1stn.:1 l)1h Distri<.:t 14th t)i-:1n~·1 I ~th ()i-.1ric1

NON-ELECTED FISCAL OFFICERS

0 Dirt:i.:lnr of ( '1!} Admini-;1r;m\t' ( 1(\ 1'11r~·h,h1:it: \!!1,.'fll k (;cn... ·ral \!gr Fmant·c l n;, Ju:a-;urcr t)ff1.:i.'r lh:p.1nm... ·:11 ,,f c,~·1K'tal !-icn 1(1.'" Antoinette D. Chri11ovalc Jo~:a C. De Foor \\illiam T 1:ujioka Jon Kirk .\luli.ri

• 7 • 3600 WILSHIRE BOULEVARD, SUITE 1110 LOS ANGELES. CALIFORNIA OOCHO ltpJJSOn TELEPHONE (Z1 3) 736·6664 CERTIFIED PUBLIC ACCOUNTANTS FAX (213) 738·6592

The llonorahle L,1un.1 ,\' Chick Controller<~! 1he (~ity <:f Los Angeles und 711c ('on1111unit_1' Redcivlopn1en1 Agency of The Ciry (!f Los Angeles. California

The Board of C'ununissioners of The Co1n1n1111i~r Rnh·,·clop111cn1 ,{genc.:i· of Tfic, ('ity of Los Angc,Jcs. C'a/ifi;rnia

\Ve have audited the acco1npanying financial s1all'll1l'nts of the govcrnn1ental acti\·it!cs. the hu~incss·typc ac1iYitics, and c;ich n1ajor fund of The Comrnunity Rcdevclop1ncnt Agency of the City of Los Angeles, ('alifornia (Agency), as of and for the year ended June 30, 2002, v,hich collectively con1prisc the Agency's basic financial statements as listed in the 1.-iblc of ct,ntcnts. These financial statc1nl.'nts arc the responsibility of the Agency's 1nanage1ncnt. Our responsihi!ily i~ to express opinions on these fin;1nc.:ial :-:ta1cn1ents based on our audit.

\\'c ('onduc1cd our audit in accordance ,,·ith auditing standards generally accepted in 1hc Lnitcd St:Jll'!- of :\n1crica and lhc qandards applicable to fin,inL·ial audits contained in Gui·en1111l'!ll Auditing S111ndards, i:-!-ucd by the Cnn1p1roller General of the l 1nitcd States. Those standard5 require th.it ,, c p!an .ind po:rfonn the audit to ohtain reasonable assurance about ,\·hethcr the financial staten1cn1s are free of ,natcrial mi:-:.statc,nent. An audit includes cxa1nin1ng. on a test basis, evidence suppo11ing the a1nounts and disclosures in the financial $tatcn1cn1s. An audit ·Jlso includes assessing 1he accounting principles used and significant estimates rnade by managcn1cnt, as ;.vell as evaluating the overall financial statement p1csen1a1ion. \Ve believe thal our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all n1atcrial respects, the rcspecti\'e financiaJ position of the goven11nental activities, the business-type activities, .1nd each major fund of The Conununity Redevelopment Agency of the City of Los Angeles, California. as of June JO, 2002, and the respective changes in financial position and cush flo ... ·s of its proprietary funds for the ye,:ir then ended in confonnity ,.,·i1h accounting principles generally accepted in the United States of A1ncrica.

A.s dcscrihed in Note l-B to the basic financial statements, in fiscal year 2002, the Agency adopted Govem1nent Accounting Standards Board (GASB) Statement No. 34, Basic Financial Staren1ents - and A4anagernent 's Discussion and Analysis - for State and Local Goi·ern1nents: O,nnibus, GASB Statement No. 38, Ccrrain Financial Srace,nent Note Disclosures. and GASB lntcrpreta1ion No. 6, Recognition and ,'11casurenient o/Cerlain Liabiliries and Expenditures in Governnlenra1 }·und Financial SraternenJs.

In accordance v.·ith Govenunenr Auditing Standards, ;.vc have also issued a report dated December 20, 2002 on our consideration of the Agency's internal control over financial reporting and our tests of its compliance 1.vith certain provisions of laws, regulations, contracts and grants. That report is an integral part of an audit perfonned in accordance ,,vith Governn1ent Auditing Standards and should be read in conjunction ,vith this report in considering the results of our audiL

The management's discussion and analysis on pages JO through 19 and the budgetary comparison schedule for housing fund and special re\'enue fund on pages 59 and 60, are not a required part of the basic financial

-8- ltpJSOn@ zrppson

$tatcn1cnts. but arc supplementary infonnation required by the GoYcn1n1cntaI .\.:'-·l)Ullting Standards Board. \Ve ha\'C applied certain litnitcd procedures \\'hich consisted principally of inquiries of n1unagcn1cnt regarding 1hc n1cthods of mcasurcrncnt and prc:-cnta1ion of the required :-uppk1ncntary ir.f.Jrn1ation. HO\\'('\'CL \\'t' did not audit thl'" inf0nn;.ition and C'.\;pfC'!-!'> no opinion l>n it.

Our audit \,·us conduttcd for the purpose of fonning. l.Jpinions on the financial i-tati:1ne111:- that collcz-tivcly con1prisc 1hc Agt.•ncy·s basic financial sta1i:n1cnts. The 0thcr supplcnu.:ntary intOnnation identified in the acco1npanying table of contents as the budgetary l'nrnparison schedule for govcrnn1i.:nta 1 funds . .:ombinin_g financial statcn1ents of the lntcmal Service Funds. Cl1n1bining financiul :-tatcrncnb by rcdc\'clopn1cn1 area. and :,;t,;hedulc of third-purty indebtedness, is presented for purposes of additional analy~i.s and is not a required part of the ha.sic financial .sta1c.1ncn1.s of the :\gcn{·y. Such information bo\·c bc..:n .subje.:tc

The inforn1ation identified in the accompanying table of conterH!- as the introductory and .sta1is1kat ~cciions is presented for purposes of additional analysis and is not a required part of the ba~ic financial statements of the Agency. Such information has not been .subjec1ed to the auditing procedures applied in the audit of the Agency's basic financial statements and, accordingly, \\·e express no opinion on them.

Los Angeles, California December 20, 2002 (Except for Note 3-H-2, as to \\'hich the date is December 30, 2002)

-9- MANAGEMENT'S DISCUSSION AND ANALYSIS THE COMMUNITY REDEVELOPMENT AGE;,iCY OF THE CITY OF LOS ANGELES, CALIFORNIA

l\.1anagement's Discussion and .4nalysis

June 30. 2002

As n1anagcn1cnt of The Cornrnunity Redcvclop1nent Agency of the City of Los Angeli:-s (Agency}. \\'l' offcT readers of the Agency's financial statements this narrati\'e O\'crvicv• and analysis of the financial activities of the ,\gency for the fiscal year ended June 30, 2002. Vv' e encourage readers to consider the iniOrnrat~on presented here in conjunction \Vilh additional information that \Ve have furnished in our letter of transmittal \Vhlch can be found on pages one through four of this report.

Financial Highlights

• The liabilities of the Agency exceeded its assets at the close of the fiscal year 2002 by $235.864.000 (deficit). Of this a111ount, $296,532,000 is either net assets invested in capital assets or restricted for capital projects. IO\\' and moderate-incon1e housing activities. and debt service. The remaining deficit ofSS.32.~96.000 \vilt be paid out _of future Agency revenues, primarily tax increment.

• 1·hc Agency's total deficit decreased by $16,305,000. \Vhile the governmental activities net assets increased by $16,863,000, the business-type activities net assets decreased by $558,000.

• As of the close of fiscal year 2002, the Agency·s goven1n1enta1 funds reported combined ending fund balances of $239.445.000. an incri:'asc of $29,760.000 In comparison ,vith the prior year. :\pproxin1ately 23 percent of this lotal an10unt. S55.608.000. has been appropriated in the 2003 fiscal year budge! (unreserved fund balance).

• The Agency's total long-tcrn1 debt increased by $16.823.000 during the current fiscal year. The key factor in this increase \Yas the issuance of $26.338,000 tax allocation bonds. \,·hich \vas greater than principal repayments and adjustments of $9,515,000. o,·erview of the Financial Statements

This discussion and analysis are intended to scr\'e as an introductlon to the Agency's basic financial statements. The Agency's basic financiaJ statements comprise three components: I) government~wide financial statements, 2) fund financial statements, and 3) notes to basic financial statements. This report also contains required and other supplementary information in addition to the basic financial statements.

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

The statensent of net assets presents information on all of the Agency's assets and liabilities, \\'ith the difference between the t\vo reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financiaJ position of the Agency is improving or deteriorating.

The staten,ent ofactivfr;es presents information showing hov.' the Agency's net assets changed during the current fiscal year. All changes ln net assets are reported as soon as the underlying event giving rise to the change occurs, regardless ofthe Urning ofthe related cashj/olvs. Thus, revenues and expenses are reported in this statement for some items that will on1y result In cash flows in future fiscal periods (e.g., unco11ected revenues, and earned but unused vacation leave).

.JO. THE COMMUNITY REDEVELOPME:-IT AGE1'CY OF THE CITY OF LOS ANGELES, CAL!FORl'-IA

l\fanagen1cnt'.s Discussion and Anafysis-(Conlinucd)

June 30, 2002

The governmental activities of the Agency include housing, con1n1unity and cconon1ic tk\·~·ldpnii:nt. publi,: in1proven1ent. project general. and debt service ,vhile the business-type acti\·lly of the AgL'11<.:y in,."ludo:'> an :\~ctKy O\Vned and operated public parking facility ..

The go,·en1n1ent-,vide financial statcn1ents can be found on pages 20 and 2. t of this report.

Fund financial stat<'n1cnts. -~fun_d is a grouping of related accounts th:n is used to niaintain control o\·cr ro:soun.. ·cs that ho\·c been segregated for specific al'.:ti,·itics or objectJv~s. The ....\gency. like other state and l~)~· ..d ~ll\t.'rtun1..·nt:.. uses fund accoun1lng to ensure and den1onstrate con1pliance \Vith financ1>relatcd legal requir1..•1nenh ...\II of tht' funds of the .Agency can be di\·idc

6'overnn1ental funds. Go1·en11ne11tal jiurds are used to account for essentially the san1e functions reported as gol'r.?rnn1e11tal acth·itics in the go\'en1n1ent-\\'ide financia] staten1ents. Ho\',;cver, unlike the go\·en1n1e1H-wide financial staten1ents, governmental fund financial statements focus on near-1ern1 inflou·s and ou(flol1·s ofspl'ndahle rewJ11rc('S. as \VCll as on balances of spendahle resources available at the end of the fiscal year. Such inforn1a11on n1ay b1.; useful in evaluating a government's near-term financing requirements.

Recause 1he focus of governn1ental funds is narro,ver than thnt of the g0Yi.!Tnn1enc-,,-idc financial ~t:ll1..'n1t·n1s. it is useful lo con1parc th1.; infonnation pn:-sent1.;d for gorenu1H'11tal fun,b ,vitb sin1ilar infornK1tion pr,:::,,:nt,:d for g,n·er11111c11tal actil·aies u1 the g.o\·crnn1cnt-,vide financial staten1cnts. Ry doing so. read1..·rs n1ay bl'Her undl'rstand 1hc long-tt.":nn in1pact of th12 go,·ern1nent's near-tenn financing d1.;ci:,;ions. Both the governn1cnul fund b..1!::inc..: :,ht'<:! and the go,·emmental fund state1111..·n1 of rc,·e1n1('s. expcnditur1..~s. and changes in fund balnnces pro,·1lk .J. r<.:..:orKi!is1tion to facilitate this comparison bet,Yeen go\·er11t11e11111l.ftt1ul.~ and gol'enunenFal actin·ries. This n:conctlt::it1on can h,:, found on pages 23 and 25.

The Agency maintains four individual governmental funds. Information ts presented separately in 1hc go\'crnn1cn1al fund balance sheet and in the governmcn1al fund statement of revenues, expendi!ures, and changes in fund balances for the capital projects fund, debt scr\'ice fund. housing fund, and special revenue funJ. \\·hich arc all con<:;11.kred to be major funds.

The governmental fund financial statcn1ents c.:in be found on pages 22 and 24 of this repo11.

I"he Agency adopts an annual appropriated budget for all go\'emrnental funds. A budgetary con1parison staten1en1 has been provided for go\'emn1ental funds on pages 62 through 66 to demonstrate compliance \\·ith this. budget.

Proprietary funds. The Agency 1naintains t\VO different types of proprietary funds. An entc>rprise _fund is used to report the same functions presented as business-!Jpc actii·ities in the government-,vide financial staten1cnts. The Agency uses an enterprise fund to account for the operation of a public parking garage financed by a parking revenue bond. Internal service funds are an accounting device used to accumulate and aUocate costs and re\'enues internally among the Agency's various functions. The Agency uses internal servlcc funds to account for its personnel and administrative cosls, an investment pool, and the transactions of a financing authority. Because all of these functions predonl.inantly benefit governmental rather than business~type functions, they have been included y.'Jthin gover1111,ental activities in the govemment-,vide financial statements.

-11- THE COMMUNITY REDEVELOPME:',T AGENCY OF THE CITY OF LOS ANGELES, CALIFORNIA

l\lanagcrnent's Discussion .and Analysis - (Continued)

June 30. 2002

Proprietary fund financial statcn1ents provide the same type of infonnation as tht!' govemml!nt-\\·i

The proprietary fund financial statements can be found on pages 26 through 28 of this report.

Fitluciar)' funds. Fid11cfr11:1·ji1nds art!' used to account for resources held "for lhe benefit of parties outside !he Agency. fiduciary funds arc not reflected in the go\"ernment-\vide financial state1nent because the resources of those funds arc not a\·ailable to support the Agency's O\\·n programs. "Ibe accounting n1cthod used for fiduciary funds is much like that used for proprietary funds.

The fiduciary fund financial statement can be found on page 29 of this report.

Notes to basic financial statements. The notes provide additional information that is essential to a full understanding of the data provided in the goven1ment~\vide and fund financial statements. The notes to basic financial statements can be found on pages 30 through 58 of this report.

Other information. In addition to the basic financial statements and accon1panying notes. this r~port also presents required suppleinentary information concerning the Agency·s budgetary comparison for the housing and special reYenue funds on pages 59 and 60 of this report. Other supplen1entary infonnation concerning the Agency's budgl:"tary con1parison for all g0Yernn1cntal funds, financial slatements of the internal service funds" financial statements of individual redevelopment projects, and third-party indebtedness is presented on pages 62 through 83.

Government-,vide Financial Analysis

Since this is the initial year the Agency is presenting its financial staten1ents in accordance \.1..-ith GASB Statement No. 34, the focus of the analysis will be on the current fiscal year's net assets and changes in net assets. Con1parative analysis of future data ,•,,ill be included in the future years' reports.

As noted earlier, net assets may serve over time as Useful indicator of a government's financial position. As of the close of fiscal year 2002, the liabilities of the Agency exceeded its assets by $235,864,000 (deficit). Of this amount, $48,851,000 is invested in capital assets and $247,681,000 represents restricted net assets for capital projects. Jo,v and moderate-income housing activities, and debt service. The remaining balance of $532,396,000 represents a deficit, \vhich v.·ill be paid out of future Agency revenues. The largest portion of the Agency's deficit is caused by the outstanding long-term debt of $630,060,000. This is primarily due to the nature of redevelopment financing. whereby the Agency issues bonds or incurs long-term debt to finance a substantlal purtion ofi1s redevelopment activities ,~:hich include infrastructure projects, housing, public parking. commercia] and retail projects, community development activities, and others. Although infrastructure assets are transferred to the City of Los Angeles, the debt ren1ains ,vith the Agency. The Agency also provides gap financing in other types of redevelopment activities and any equity assumed in these projects is usually significantly less than the underlying expenses. In addition to the public purpose of these redevelopment activities, they are designed to generate additional tax increment to service the Agency's debt and finance additional projects.

-12- THE COMMUNITY REDEVELOPME!I.T AGE:'iCY OF THE CITY OF LOS ANGELES. CALIFORNIA

i\1anagcment's Discussion and Analysis - (Continued)

.June JO; 2002

The follo,ving tab!~ sun1n1arizl.:'s th~ .l\gi:ncy ·s net asst:ts: (in thousands of dollars1·

A!!!'ncy',;. ~ct ·\~.wts (r>efidl)

Gtl\Cmm,:nt.i! Bu~1n,;s~-1,p~'

.-\.:ti\ili,;:,; ..x~-u I i u~-~ r,,:J: ( "tincn! anJ ulht•r :iss<.:ts tS7.'>}" $ 2h').\ ' R.:strictc.! asst'ls ' 10.'. ';()•) :::.::.~,, l : .::.n~~ J ~llld hdJ for r,;J.:h:lop111L1JI 43.-11,.; .; .~ . ..\t,..1 Cap11al 0%<:b 5&. 7 }'} _1--l-.XS•I 'l:.t..:!'>

T t•t::i I ,.,~l·ts YH.9..tl ..l.' ~ .-~·i

Currl'nt hahilitil·:; 39.86(! 3.703 .;_:_°'(,.\ Long-tc-rrn liabili1io..>:; 587 .2~3 4'2,777 (,_:11.()(,fj rota! liab1li11t·, 627.1-l.< -H,...llsO r, -_i.1,2.'

Net asso:ts

lnn:~tcd m <:Opllal ass<.:h,. nL·t uf rdat<:d tkht 5(,.7:;<) 17 .xx:-: J -l's_"~!

Rcstri<:tL'tl nd asso.:ls 2.~9.-t-+5 :-:,::: ~() ~ ;-·_1,s I

D..:1ir11 !:'-.• I.Ji-1,) ( j JJ! II! I 5; _:_,:•1/,1 rn1;1lddk1t ' t2)5.2f('. l ' (bk":) ' !~_,.;_',/"11

Go,·crnmental Acth·ities. During fiscal year 2002, go\'Crnn1ental ai:ti\'ities n:JJOO or 6.-;" percent of the prior fiscal year's deficit. Key eten1ents of the go\·ernmenta! activities are os fo!lo\\'5

• lncren1ental propeny tax revenues are the biggest source of funding for rcscnts 59 percent of the total revenues of the go\'ernmcnt::il acti\'ities of S 106.84;:,;.ooo.

• Housing, and community and economic development expenses totaled 540.758.000 or -+5 percent of the total expenses of the governmental activities of$89,985,000.

The following table and charts provide a sutnmary of the Agency's revenues and expenses (in 1hou:,:.i.nJs of doll::ir~):

Revenues: Program f:xpens('s_ Program revenues: Housmg I ..l.793 Capilal gr.ants and contributions s 28,740 Commumly and ('Cononll<:: dt\dopmcnt :?).965 Charges for :.crv1ccs 4,330 Public impro\·emcnt 6.50-1 General revenues· Project gt'Ucr;:i! 15.666 Incremental property taxes 62,719 ln!er('st on !,mg-term dcht 27.057 Interest income 9,461 Total expcn5<-'S 89.985 Other l ,59& C'hange in ne! a_.;scts 16,8()3 Tolal rc\•cnucs \0{,,848 Dcfici! - bcg-innmg of year {:?5:?,06)) fkficit - c--nd of ;Tar S (235,202)

-13- THE COMMUMTY REDEVELOPMENT AGE~CY O•' TIIE CITY OF LOS ANGELES, CAUFOR~IA

'.\lanagcment"s Discussion and (\nalysis. (Continued>

June 30, 21Hl2

Expt•n:i.t•s and J•rogram Re,e1u1t'S. Gjnernmt·ntal Acthitit•..,,

820.000

$15,000

510.000

$5,000

so_,,_

(\,mrnuni1y l\lhli,.: Pro1~·d lnt~·rl'"t , •n and 1:c1mnmi1..· hnrrrn:~·nu.-.11 (;l·n~·ral l.,111g-·1·.._.rm l\•\·dnpllk.'111 l)..:t>1

Re,·enues by Source· Go,·ernn1cntal Aelh'ities

Community& l'l..'l\fl!lfflic di.:vdnpmcm 16'4·

lnkn..~t in\.'.nlTh: t)'.I

CJmrgcs lur 'l'r\ it·c, 4r; PuMil' impr1iv~·nk·n1 l11..:wn1cmal prnp,:rty y;; taxes :'iX'A I'(; Pn1jc~t gc-rn.'ral 1•;1

-14- This page intentionally left blank. THE CO\IMF'slTY REDEVELOP\JE:>;T AGE:>;CY OF THE CITY OF LOS AlliGELES. CALIFOR:>;IA

\lana:?cn1cnt~s Discussion and Anal}sis - (Continued)

June .,o, 2002

Husincss-'l\1>e Acti\'ities ...\ puhlic parking garage- linant·L~ ,vlth parking rt'venue hnnds started operatinn ... in \lan.:h 2002. ·rh1...• ni.!t loss on tht.> garagt.' of $5.58.000 incn:ased thl.! dcfi..:lt to $66~.000. The follnwing sununaril"cs 1h1...• opera1!ng results of the Ag~ncy"i. enterprise fund for its first thn.·c ,nnnths of operati0n:s 1.'tldr...•U June 30. :!OO:! 1in thousands of dollars):

RL'\l'llUL':-.: P.1rking r,,:,: ...•ipb '.l.~O hll\'r'l.':-.1 rnnllll<.' ' .!.!H T,Jt;1l rt'\L'ilUL~ ."'.'8

l'.xp,:n~s: Parking facilith.'l,. I. I Io Change in nc1 assets tddidl) 1558; lktici1 -tx-ginnin,g nfy1..•ar I 1114!

lklidl ·t'll1i,1fycar 16621

""''"'! ,,.,.,pl, <•J'j

-15- This page i nlentionally lefl blank. THE COMMUNITY REDEVELOPMENT AGE;,iCY OF THE CITY OF LOS ANGELES, CALIFORNIA

Management's Discussion and Anal}·sis - (Continued)

June 30, 200?

financial Anal}·sis of the A.gency's Funds

As noted earlier. the Agency uses fund accounting to ensure and demonstrate con1pliance \Vllh finance-n:latcd legal requirements.

Govcrnn1ental funds. The focus of the Agency's governmental funds is to provide infonnation on near-ti:rn1 intlO\YS. outflo\'VS, and balances of spendable resources. Such information is useful in assessing the Agency's financing rcquiren1ents. In particular, the unreserved fund balance serves as a useful n-1casurc of tht!' Agency's net resources a\·ailable for spending at the end of the fiscal year. Individual fund inforn1ation of go\'ernmental funds reported by the .A.gency includes the capital projects fund, debt service fund, housing fund, and special revenue fund, \\·hich are all considered major funds.

As of June 30, 2002, the Agency's governmental funds reported a con1bined ending fund balance ofS239.445,000. an increase of$29,760,000 in comparison with the prior year. Of this amount, 5183,837,000 is reserved for debt service. 101.,., and moderate-income housing activities, advances to other funds, and encumbrances. The remaining $55.608.000. \,·hich is approximately 23 percent of the total fund balance constitutes the unreserved fund balance. This amount is a\·ailablc for spending and has been appropriated in fiscal year 2003.

Capiral Projects Fund. The capital projects fund is used to account for rede\'elopincnt expenditures fron1 tax incren1ent, bond proceeds. federal grants and project program incorne. The capital projects fund is the A.gency·s n1ost significant fund. 111e fund balance of this fund at the end of the fiscal y~ar an1nunced to 577.S-+0.000 of \\hich $48,134,000 (62 percent) represents the unrcsen·ed balance. The capita] projects fund balance increased by 58.739.000 as a result of Jo\\·er than projected expenditures primarily due to delays in a nun1ber of capiral projects.

Debt Service Fund. The debt service fund is used to accumulate resources to pay principal and interest and other re]ated costs on the Agency's Jong-term debt. As of June 30, 2002, the debt service fund bas a total balance of $107,200,000 all of which is reserved for debt service. The increase in the fund balance of $.10,952,000 is prin1arily due to the 100 percent pledge of Bunker 1"1111 tax incren1ent to bond debt scrvlce, whereby $6,000.000 of tax increment revenues was transferred to debt service fund in excess of current debt service requirement. In addition, $5,433,000 of accrued interest payable as of June 30, 2002 was reversed due to a change in debt service accounting from accrual basis to modified accrual basis.

Housing Fund. The housing fund prin1arily accounts for the portion of tax increment and related revenue designated for tow and moderate-income housing. State ]a\.\· requires redevelopment agencies to set aside at least 20 percent of tax increrilent for low and moderate-income housing projects. At the end of the fiscal year, the housing fund balance increased by $11,625,000 to a total of $41,866,000. The increase is primarily due to delays in \'arious housing projects. The entire fund balance is reserved for low and moderate-income houslng projects.

Special Revenue Fund. The special revenue fund is used to account for revenues and expenditures from specific sources such as developer contributions, city participation, art fund contributions, and local grants. In fiscal year 2002, the fund balance of this fund decreased by $1,556,000 to $12,539,000.

Proprietary funds. The Agency's proprietary funds provide the same type of information found in the government v,,ide financial statements, but in more detail. As of June 30, 2002, the Agency-owned parking garage shO\\'ed a deficit of $662,000. Other factors concerning the operation of the Agency-owned parking garage have already been addressed in the discussion of the Agency's business-type activities.

-16· THE CO~J;IIU:>iITY REDEYELOPME'.liT AGENCY OF THE CITY OF LOS ANGELES, CALIFORNIA

:llanagcntcnt's Discussion and Analysis - (Continul"d}

.June JO. 2002

<_;o,·ernn1cntal Fund Budgetary Highlights

/\ con1pnrison bct\,·een the initial budget ilnd rhe final an1ended hudgct for all governn1t..'ntal fund~ sho\\S a nc:1 decrease of S l 8.024,000 {8.5 percent) in appropriations. 1l1e reduction in appropriations \vas du,: to Jo,ycr rcsoun.. 'l'S froin grants and de,·cloper contributions. In addition, the interest expense budget ,vns reduced by 59.250.000 to r,:llc,:t lower intt:rest rates 011 the \·ariablc-rate SS0 .. 000.000 Bunker Hill Subnrdinate Tax Alloca1ion Refunding Bonds and 10 adjust !ht.' original budgct fron1 full accrual to a n1o

A.ctual expenditures of S 113.205.000 ,\·ere S81.831.000 f42 percent) Io\\·er than thl' S 19\036.000 fin;:d hudg..:L L"nspent budget in n1any project areas \\·ere causo.:d prnnarily by O\·crly optin1istic objt:cti\·e schedules that in turn \\'Cr(.' 1:":-;acerba1ed by the i.·conon1ic sl(n\'dO\\·n. Project objectives in Yarious r(.'dcvelop1nent project areas with significant 1 \·.:ni.111ces include the 9-+ 1, and Bnxid,vay Childcare ('enter. Broad,\ay Sidc,va!ks rcconstnicuon. Bunker Hill Streelscape. Chinato,,·n Cultural and C'on1nnu1ity Center, Goodyear 1'ract. Harbor Ga1e,,·ay acquisition. Holly,,·ood/Highland En!ertainn1ent ).:luseu1n. NoHo Arts District, North tlolly,vood Con1n1ercial Core. O\\ensmouth Apart1nents, Shrine Auditorium, de\·elopn1ent of Valley Shopping Center, v·erntont ;\1anchester Shopping Center. ;.ind \Vashington Boule\·ard Perforn1ing Arts (:enter.

'l'hl' bud_!::L't Y.Jriances.hy project arcJ arc sun1111arized as folknYs (in thousands of dollars)·

\'an,mcc Projc,:t (),·er i L. ndcr)

l\'orth Hollywood s 11-1.000, Hollywood (12.500) Bunker Hill (8.300) Central Business District (6.800) Mid-City· (4.900) Council District 9 (4.000) Hoover ~. (3.600) Rcscda/Canoga Park (3.000) City\vidc :'-Jon-Housing (2.9001 Laurel Canyon I 1.600 J V.i atts CorT1dors (1.600) Chinatown (1,400) Broadwa y/~1 an chester ( 1,300) Walts ( 1.000) Other (14.931)

Total $ (81.831)

-17- THE COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF LOS ANGELES, CALIFORNIA

t\1anagemenCs Discussion and Analysis - (Continued)

,June 30. 2002

Capital Assels

The Agency's lnvestn1ents in capital assets net of accumulated deprecia1ionian1ortization for its governn1en1al and for lts business-type activities as of June 30, 2002 total $56,739,000 and 534,889.000. respectively. The A.gency·s capital assets include land, leasehold irnproven1ents, equipment and a n1ulti-lcveJ public parking facility (note 2-C on pages 42 and 43). During fiscal year 2002. the Agency completed the construction and opened for business a 1700 car parking facility in the Ciolly\vood Redevelopment Project. l"his public parking fi:tcility \vas financed by a 544.235.000 parking revenue bonds.

Debt Administration

At June 30. 2002, the Agency·s long-tenn liabilities of $630,060,000. net of unan1ortizcd bond discount is summarized as follO\\'S (in thousands of dollars):

Agency's Long Term Debt

Governmental Business-type Activities Act1vitics Total

Tax allocation bonds s 511,364 s s 51 l.~6-1- Parking rc\·cnur..' bonds -l'!.,777 J.'2,777 >Jotcs payable S,05-1 S.05-+ Payable to the City 67.665 67,865

Total s 587,283 s 42:.777 s 630.0GO

During fiscal year 2002, the Agency issued new bonds \:\'ith an aggregate face value of $26,370,000 to finance redevelopn1ent activities in the Adelante Eastside, Monterey Hills, and North HollY'-1,·ood redevelopment project areas. As of June 30, 2002, the Agency has t\venty-eight (28) tax allocation bonds and one ( 1) parking revenue bond outstanding, totaling $556,031,000, net of unamortized bond discounts of $1,890,000. Of the 29 bond issues, 22 are insured. Twenty-one (21) insured bond issues are rated "Aaa/AAA~', and one (1) bond issue is rated",.\". This equates to 93.6 percent of the principal a111ount of bonds issued as insured. The remaining bonds are uninsured and arc generally rated "Baa/BBB" 10 "BBB".

Additional information on the Agency's long-term debt can be found in note 2-F on pages 46 through 49 of this report.

Economic Factors and Next Year's Budgets and Rates

• Unemployrnent rate. The unemployment rate in Los Angeles County, which averaged at 5.5 percent in calendar years 2000 and 2001, is projected to approximate 7.0 percent in 2003 by the Los Angeles. County Economic Developmenl Corporation (LAEDC) and the UCLA Andersen Business School (UCLA), an increase of 1.5 percent. The unemployment rate in Los Angeles County at the end ofNoven1ber 2002 was at 6.0 percent. This compares favorably to the California unemployment rate of 6.4 percent

-18- THE COJ\IJ\IUNITY REDEVEI.OP:lclEXT AGE1'CY OF THE CITY OF LOS ANGELES. CALIFORNIA

:\1anagen1cnCs Discussion and Analysis - (Continued)

June 30. 2002

• Personal i11con1e gro.i·th. l__.\[DC proj..:ct..:d personal incon,e grO\\'lh for Los Anfcks Cnunty 1.)f 2 p,:rl'1.."11l and 5 percent in 2002 and 200.>. rcspectiYely

• /1(fla1irn1 rate. Doth l)C'LA and LAEDC projected the inflation rate for Los Angeles County :is n1casurcd by thi: consun11..'r price index, in thc 2 percent range for 2003 .

.-\11 of the abo,·e econon1ic f.ictors \\·ere considered in preparing the Agency·s budget for fiscal ~car 2003.

As of June 30. 2002. the Agency's g0Yernn1cntal funds shO\Yed an unrcsc1Ycd fund balance- ofS5:'.(1DS.O()(J. .-\s p.:ut of the .-\gcncy's budget process as described in the note to required supplen1en1ary infonnation on pag1.· 61. this an1011nt \\'US appropriated in the fiscal ycar 2003 budget

Other ,1attcrs

School rrans{ers. On Septen1bcr 20, 2002. a Swte L:l\v \Vas passed requiring the transfer of an aggregate ofS75 n1illion 1n fiscal }'L'ar 2003 fron1 all C::ilifornia rcde\'e]opn1cnt agencies to the Educational Revenue :\ugn,cntation fund (ERAF). The State Dcpartn1ent ofFin:1nce has dererrnint:d the Agency·s share to be 52.109.000.

Requests for lnforn1:.1tion

This financial report is dt:"signcd to provide a general o\·er\·jc\\" of the Agcncy·s finance<., for all 1hn,;;,1.· with Jll llllL'rest in thl." Agency's finances. Qucs1ions concerning any of the infOrn1atinn pro\·idcd in this rc>port or r... ·qucsl:'i for additional financial inforn1ation should be addressed to Office of the Chief fin.incial Ofticcr. The Con11nunity

Rede\"elopn1ent Agency of the City of Los Angc-lt>s, 35-t South Spring Street Los Ange ks. (:1!iforni::i 9001 s~.

-19- TIIE C0~1MUNITY REDEVELOPMENT AGENCY OF THE CITY OF LOS A:'iGELES, CALIFORNIA

Statement of ~et Assets

June 30~ 2002 (In Thousands}

Go\·crnn1cnt;;I Bu:-.in..:::.:-~1~-pt' Acti\"itic.s :\Ctl\'illt':S Tn1,d ASSETS Cash and cash cquiv:Jlcn1s s 112.148 s .n s I ! 2.195 L:nrcstrictt•d invcs1111cnts 36.St>/ ::.r1.:>•1: Recci\·ablt·~: Jncrcmcnwl property ta,cs I !) Land held for rcdc,·clopmcnt 43,464 -tJ.464 Capital assets, net ofaccun1u!otcd depreciation and atnortifation of5 l6 ..J..t0: Land .t6.(19 1J l(J,42f.: 57.!27 11uilding and !caschold improv~nicnts 9Jl'.!2 2-lA4"? .;3Af)IJ Equipment 1.n1 s i.J l .n32 Other asset<; L11n5 l.fllJ)

Total assc1s 39LtJ41 .45.$1 l:I .l]".",75'1

LIABILITIES Accounts payable and accrued liabilities 3.678 2AG5 6J.l3 Accrued vacation and sick lca\·c payable 2,305 2J05 lntercs1 puyablc 11,1::.2 .23(i ! 2.358 Deferred revenue S.21 f S.:!11 Deposits and other liabilities 14,544 2 l-l.54(, Noneurrcnt liabilities: Due within one year 40,027 635 40,662 Due in more than one year 547,256 -4:?.142 589.J98

Total liabilities 627J43 46.480 673,623

NET ASSETS Invested in capital assets, net of related debt 56,739 (7,SSSI 48.851 Restricted for: Capital projects 90,379 8.236 98,615 Low and modcratc~incomc housing activities 41,866 41,866 Debt service 107,200 107,200 Deficit (531,386) (1,010) (532.)96)

Total deficit s (235,202) s (662) s (235.864)

See accompanying notes to basic financial statements. THE COMMUNITY REDEVELOPME);T AGENCY OF THE CITY OF LOS ASGELES, CALIFORNIA

Statement of Acth itics

For the Fiscal Year Ended June 30. 2002 (In Thousands)

Prol!ram Rcn:nm:s '.\er !Expense~,! Kcvcnm;,; ,md Ch,rn::c in \.,:t .·\:-.:-.t. .'b Charges C:.ip11al for Grant~ and Governn1cntal l3usinc:-'--tY{k' f unct1ons/Prourams E.\ecnscs Sen ICCS Contributions Activities Act1\·iucs Total G1)\Crnnicntal activilics: Progra1n 1.-·xpcnses.: !lousing. s ]..J,79.3 s s 8.1&1 s {6.612) s s ( (1Jil 2) Crnnmunily and cconom1c

dc\·clopn1cn1 25.965 ...I._J.~!J 16562 i5.D7JJ ( )Jf:' :~ ! Public in1pro\Tn1cnt 650-t J,159 (3J..J5) (> •.\-1.5) l'rojccl ,general 15.(,6(, S38 ! 14,828) ! 1-LS28> lntcresl on long-tcrn1 debt 27.057 {27.057) (27,IJ57)

Total governmental activities 89.985 28,7-l-(l (56.91 SJ (56.915)

Business-type activities: Parking fac1h1ics LIJ6 3_1,0 (786) (7S6i

T ot.il business-type activities 1.116 .,30 ('"86) 1786)

Tot..il idc govcrnn1cnt-\, s 9 J. JOI s .f,()60 s 28. 7-tO i 7!'16) (57. -;"OJ)

General rC\Cnucs Incremental propcrt> !J.\.CS 62, 7 jl) 62.719 Interest income 9.461 228 9.6S1J Other ! .598

Total general revenues 228 7-1..006

Change in net assets 16,863 (558) 16305 Deficit - beginning ofyc.ir, as restated (104) (252.169)

Dcficir - end of year s (235,202) s (662) s (235.864)

See nccompanying notes to basic financial st:Hcmcnts.

-21- TIIE COMMUNITY REDEVELOPMENT AGENCY OF TIIE CITY OF LOS ANGELES. CALIFORNIA

Balance Sheet Go\·ernn1cn1aJ Funds

June 30. 2002 (In Thou:s.lntls)

Tot;il Capital Debt Spc-c1al Go\·crnnlt'nt..il Projects Housinl? RC\'t'OUC Funds ASSETS

(\1sh and cash cquiYalents s S.824 s s -1.(;J s 1 \ "'\ s 9.4JtJ Lnrcstrictcd in\·cstmcnrs 7~5 -I.HI f JIU! 2. Jl)6 Rcccn ;..iblcs: lncrcn1cnt.il property taXL':-. l.'J(iS 1.96}; Grants 7,669 >~() S.0.25 Accrued inlcrcsl 77 IS 7 109 Other, net ofuncollcrtiblcs ofS293 399 to l)! 2.0~2 257':. Due from other funds 69.3% 25,799 40.826 9,4-l-J 145.462 Loans receivable, net of allowance for market value 3,717 14.167 :'.S67 23.751 ,•.:ritc-dov.•ns and uncollcctiblcs ofS460.403 Restricted assets 16.281 82.JSG 1.59"7 100,26-t AdYanccs to other funds 7,019 3S9 7,408 Other assets 3 (lO 152

Total assets s 116.DS s IO~."t7--+ s 56351 s 205(i.1 s JOJ.326 LIABILITIES AND FUND llALA~CES

Llab11ities.: Accounts payable and accrued liabilities s 1,758 s s 56 s 21 i s 2.025 Due to other funds 15,320 (162 232 62:> 16.837 Advances from olher funds 6,133 121 6.25.4 Deferred revenue 10,320 14,197 6.11 () 30,627 Other liabilities 4,767 412 6,138

Total liabilities 38,298 1.074 14,485 8,024

Fund balances: Reserved for: Debi service !07.200 [07,200 Lo\01 and modcratc~incomc housing ;,ctivitics 40.003 40,003 Advances to other funds 1,154 I .)54 Encumbrances 28,552 1,86) 5,065 35.480 Unreserved, designated for continuing work programs 48.134 7,474 55,608

Total fund batances 77,840 107,200 41.866 239,445

Total fiabilitics and fund balances s 116,138 s 108.274 s 56,351 s 20,563 s 301.326

Sec accompanying notes to basic financiat statements.

-22- THE COMMUNITY REDEVELOPMENT AGENCY OF TUE CITY OF LOS ANGELES, CALIFORNIA

Reconciliation of the Balance Shet't of Governmental funds to the Statement of Net Assels of Go, crnmental Attivitics

June 30.1002 (lu Thousands)

Amounts reported for go\·crnmcnt:11 activities in the st.itl'n1cnt ofne1 as:>cts ;uc different because·

Fund b;:ilanccs of all go\·crnn1cnt:.1! funds

Land held for rcdc\ c\opmcnt arc not spcnd.ibk finannal rcsour,:cs :.i.nJ arc not rl'poncd in govcrnn1cntal funds.

Land, building and !ca~chold irnpron:n1cn1s arc not spendable linam.:1al resources and arc not rcpor1cd in go\ crnmcnta! funds.

Long*tcrm receivables included in loans rccci\ablc. arc nor an1ilabk to pay for current expenditures and arc deferred on 1he modified accrual

basis. 2.~. 7~ J

Bond issuance costs .ire c\pcndcd in goYcrnmcnta! funds \\·hen p::ud, hO\\'C\"Cr. arc cap1t.Jli;,cd and arnorti;,ed over the hfo ofthc correspont!tng bonds for purposes of the statcn1cnt of net asset5 Deferred chargi.·s s $..+! An1ortii'alion of bond issuance cosls ( !

Interest payable on long~tcrrn debt dol's not require the use of current financial resources, therefore is not accrued as a liability in the balance sheet of go\'cmn1ental funds. l ! 1. i 22)

Long-tenn debt is not due and p.Jyablc m the current pcnod and. therefore, is not reported in govcrnmenlal funds. !5l:i7,2S3)

Deficit of govemmcntai activilics (sec page 21) S i235,202)

Sec accon1panying notes to basic financial statements.

-23- THE CO~IMUNITY REl>EVELOPME:'iT AGENCY OF THE CIT\' OF I.OS A:-GEI.ES, CALIFORNIA

Statement of Revenues. Expenditures, and Changes in Fund Balances~ Go,·ernmental Funds

For the Fiscal \"ear Ended June 30, 2002 (In Thousands)

Total Capital Debt Special GO\ crnmcntal Projects Scrvic1: llouslni! Rcn:nuc Funds Revenues: fncrcn1cnta! property ta\cs s 62,719 s s s s 62.719 Grants :!7J)l)9 J3() 27.429 Interest incon1c 3.868 2.9.tf, 2.17.'t J2J 9.3111 I .oan rcpa:,.111cn1s 6.!97 2.35.\ 67 8.(117 Rental incon1c ,.11.; 2•) IS? .4.330 Dc\·clopc-r panicipa11on l,..l(1.t 1.4().4 Cit}.. participation 400 400 Other l.062 39~ St.JS .2.358 Total revenues {05.059 2.9-Hi 4.953 3.669 116.627 Expenditures: Current: Program salaries and ad1ninistrati\·c costs, including technical and professional personnel 21.2..1.9 1.947 726 2.,.922 K<.'a! estate acqui$ition 1 ),9()7 JJ 832 I0.772 Housing: 7.t63 ,2.54_; 752 I 0.458 Rehabilitation K015 6 I 1332 9AOS Pub! ic improvcn1ent 6.405 795 7.200 Dcn:lopmcnt loans 3.9SS ] 21) 4,tt: Debt retirement 9,56-f 9.56• Interest expense 21,605 21,605 Bond issuance costs 841

Total expenditures 68,813 32,451 5,288 6.653 113,205

Revenues over (under) expenditures 36.246 (29.505) (3]5 J (2.984) 3.422 Other financing sources (uses): Proceeds from issuance of debt 26,3.'8 26,JJS Transfers in (out) (53,845) 40.457 11,960 1,428

Total other financing sources (uses) (27,507) 40.457 11,960 1.428 26,338 Revenues and other sources over (under) expenditures and other uses 8,739 10.952 11,625 (1,556) 29,760

Fund balances, beginning of year 157,883 96,248 41.535 14,105 309,771 Adjust prior year reserve for land held for redevelopment (88,782! {11,294) (I 0) (100,086) Fund balances, end of year $ 77,840 s 107,200 $ 41,866 s 12.539 s 239.445

See accon1panying notes to basic financial statements.

-24- THE COMMUNITY REDEVELOPMENT AGENCY OF TIIE CITY OF LOS ANGELES, CAU FORNIA

Reconciliation of the Statement of Re\'enues, Expenditurcs, and Changes in Fund Balances of Go,·ernn1ental Funds lo the Statement of ActiYities of Co,·ernmentaf Activities

For the Fiscal Year Ended June 30, 2002 (In Thousands)

Anlounts reported for g(n·crnn1cnlal act1\·11ies in the s!atcrn1..·nt ofacll\ilics arc different because:

Net change in fund bal:::inccs - total gO\"L'rnmcntal funds

Governmental funds rcpon capit;.il outlays as expenditures. flowcn:r. m the statcn1cn1 ofac!1\"il1cs. the costs of these assets arc allocated on:r !heir ('Stimatcd useful Jn·cs and rcporlc

New loans and loan ,cpayrnents recogni7ed in governmental funds arc reported in the statement of net assets as mcreascs.'dccrcases in rhc loans receivable. Loan rcpay111cnts received S (SJil7l New loans gi\·cn durmg the fiscal year S.JO...J. (3 I.' f

The net effect of ,·arious transac1ions In\ ol\·mg c1pital assets is to mcn:a,;c · net assets. L.ind acqu1snion S 9Ji5 l Sale of land r 2....J.S) Loss on s,tlc ofl...md

Governmental funds report 1he effect of issuance costs, prcmiun1s, discounts, and similar itcn1s when debt ts first issued. whereas these amounts arc deferred and amoMizcd over the life of the debt in the statement ofac1ivitics. £3ood issuance costs s SOI Amortization of bond issuance costs ( 19) S22

Repayment oflong-tcnn debt principal is repoMcd as an expenditure in the governmental funds, thus, has the effect of reducing fund balance because current financial resources have been used. However. the pnnc-ipal payments reduce the liabilities in the statement of net assets and do not result in an expense in the statement of activities. 9,564

Accrued interest expense on long-tenn debt is reported in the s1atcmcn1 of activities, but docs not require the use of current financial resources. This amount represents the accrued interest expense not reported in governmental funds. (5,433)

Proceeds from issuance of debt are reported as other financing sources in governmental funds and, thus, contribute 10 the change in fund balances However, issuing debt increases long-term liabilities in the statement of net assets and docs not affect the statement of activities. Proceeds were received from: Tax: allocation bonds. net of discount S (25,938) Notes payable (400) (26,338)

Change in net assets of governmental activi1tcs (see page 21) S 16,863

See accompanying notes to basic financial statements.

-25- THE CO~l~IUNIT\' REDE\'ELOPMElff AGENCY OF THE CIT\' o~· LOS ANGELES. CALIFORNIA

Proprietary Funds

Stalcrncnt of :\et Assets

JunL' 30~ 2002 (In Thous..'lnds)

Go\ cm1ncntaJ E3u;;1ncss-1yp"2" Acti\·ities A..:ti\·irics. Internal Enterprise ScrYicc Fund ASSETS Current assets: Cash and cash cqui\·aknii; s 102.729 s 47 Unrestricted invcstn1cn1s '.l-L4!H Receivables: Accrued intcrcM 781 Other 161 205 Due from other funds ),061 Other assets 853 Total current asscb 141.986 252 Noncurrcnt assc1s: Restricted assets 3.535 8,236 Deferred charge,; 2.4-4 I C'api1al asset~: Land ]11.-428 lluildint; 2-1.5-ll) Equipment I0.551 I 5 Less a<:cumula1cd dcprcci,111on (9.533• Total capital assets (net of accun1ulatcd dcprcc1auon) 1.018 J-t,889 Total noncurrcnt assets 4,553 45,566 Total assets 146,539 45.818 LIABILITIES Current liabilities: Accounts payable and accrued liabilities 1,653 2,465 Accrued vacation and sick leave payable 2,305 lnlcrcst payable 1,236 Due to other funds 141,123 Matured bonds payable 635 Othcr liabilities 304 2 Total current liabilities 145,385 4,))8 Noncurrcnt fiabilitics: Advances from other funds 1,154 Bonds payable 42,142 Total noncurrent liabilities 1,154 42,142 Total liabilities 146.539 46,480 NET ASSETS Invested in capital assets, net of related deb! (7,888) Restricted for: Capital projects 8,236 Unrestricted (deficit) ( 1,010) Total deficit s (662)

See accompanying notes to basic financial statements.

-26- THE COMMUNITY REDEVELOPMENT AGENCY OF TIIE CITY OF LOS ANGELES. CALIFORNIA

Proprietary Funds

Statement of Revenues, Expenses. and Changes in Fuotl '.\iet Assets

For the Fiscal Year Ended June JO~ 2002 (In Thousa?ul,;)

Go,·crnn1cn1al Bus1ncss-typi.· Activities Ac11v1t1cs ln!crnai F.n1erpnsC' Scrncc Fund

Operating rc\'cnu1.·s: Parking n:i:c1pts s s 33!1 :\pplicd ch,.irges 2.\9'..:2

Total operating rC\ cnucs 23.922

Operating expenses: Personnel con1pcnsa11on 15,571 Employee benefits 2.830 Ccn1rnl office expenses 2.739 Dcprcci;.ition expense 459 Other atrat1vc costs 2.32>

Tut.ii opcr;Jtmg cxp<.'nscs 23.922 5 7-1

I\t't !oss fron1 opcr;.iting :1Ct1\'it1cs ['..:-1-1)

Nonopcrahng rC\'Cnucs lntcrcst income 228

Total nonopcrat1ng revenues 5.279 228

Nonopcrnting expenses· Interest on long-term debt 461 Amortization of bond issuance costs 81 (ntcrest income allocated to participating funds 5.279

Total nonopcrating expenses 542

Net loss from nonopcniting activities (314)

Total deficit - beginning of year as restated (104)

Total deficit - end of year s s (662)

Sec accompanying notes to basic financial statements.

-27- THE COMMUNITY REDE\'F.LOPME:,;T AGENCY OF THE CITY OF LOS A:'

Proprietary Funds

Statement of Cash Fto,\·s

For lhe Fiscal Year Ended June 30, 2002 (In Thousands}

Govcrnmcn1:1l l!u:;inL"~"'--typc ActiYitics ,\,:t1\·1tic~ lntemaJ Enterprise Scr\'kc Fund Cash flowi: from operating acti\'itics: Rein1burscn1cnts for applied charges s ?.3.737 s Parking rcctip1s 331) Pa)111cnrs of opcraung expenses ! 23J)3(1 l (-l'; I I :\cl cash provided (used) by operating ..ictivitics * (l'IJ Cash nows from capital and related financing acih·ities: Purchase of capital assets (()6<)) lnlcrcst income J,170 Interest allocalcd lo other funds ( 1.170) Payment for construction costs (SA92l Capitalized interest expense f 1.655) Interest expense not capitah;,cd <-'12) Payment of additional bond issuuncc costs ( 130)

~ct cash used by financing ,.u.:tivitics {6()9) I I0.6SlJ) Cash flows fron1 in\·csting activities: Proccc

* Reconciliation of operating income to net cash provided (used) by operating activities: N'cl loss fron1 operating activities s s (24..:1 Adjustments to reconcile operating income to net cash provided (used) by operating activities: Depreciation and amortization expenses 459 103 Increase in other receivables (!46) Increase in due from other funds (108) Jncrease in other assets (276) Increase in accounts payable and accrued liabili1ics 202 Increase in accrued vacation and sick leave 261 Decrease in other liabilities (}6) Increase in advances from other funds 345 Net cash provided (used) by operating activities s 701 s I 141)

Sec accompanying notes to basic financial stalcments.

-28- Tl!E COMMUNITY REDEVELOPMENT AGENCY OF Tl!E CITY OF LOS Ai\'GELES, CALIFORNIA

Fiduciary Funds

Statement of Fiduciary '.\et Assets - A~ency Funds

June 30, 200! (In Thommnd<;}

Construction Dcposil5 Disbursements

ASSETS Due fron1 other funds s 2,253 7.!8-l s lJAY Rcstric1cd as'>c!s !_..I.SO lA~ll Other rccci\-abk·s " Tomi assets s 3.74) 5 7,184 s

LIABILITIES

Construction d1sbursen1cnts payable 5 s 7,184 s 7.IS> Deferred revenue 10 ]II Other liabili1ics: Good faith deposits payable 2.260 2.2(1{) Unt:lain1cd properties SJJ ;-;_1.1 Rcsti1ution ofw,igcs p.iyab[c 542 54-2 Security dcpos11s <)7 <)-:' OthL·r deposits pay.iblc J

Total liabilities s J.74) s 7,IS4 s t ()_<)2 7

Sec accompanying nolcs to basic financial slatcmcnts.

-29- NOTES TO BASIC FINANCIAL STATEMENTS THE COMMUNITY REDEVELOPMEXT AGENCY OF Tm: CITY OF LOS ANGELES, CALIFORNIA

Notes to Basic Financial Statements

.I une30. 2002

i\OTf: I -SliMMARY OF SIG:-.IFICA'.':T ACCOUNTI1'G POLICIES

The financial staten1cnts of The Con1n1unity Redevelopment Agency of the City of Los Angeles. California (Agency) have been prepared in confornlity \vith generaHy accepted accounting principles (G,'\APJ as applied 10 go\·crnn1cnt units. The Go\'ernn1ental Accounting Standards Board (GASB} is responsible for cst;:iblishing GA,\P for slate and local go,·ernn1ents through its pronouncements. The significant accounting principles and policies utilized by the Agency are described belo,v.

A. Reporting Entity

The Agency ,vas established by rhe Los Angeles City Council (City Council) in 1948 for the purpose of eliminating blight and promoting economic revitalization within designated project areas of the City of Los Angeles (City). As a quasi-governmental en1ity established pursuant to the Community Redevelopment La\\' of California as codified in the State ofCa?ifomia Health and Safety Code, the Agency has no legislati\·e authority. l)nder GASB State1nent 1

CRF A, Blended Component Unit

()n June 5, 1992, based on a joint pO\\'ers agreen1ent. the Agency and the Agency's IndustriJI l)evelopmcnt Authority created the Community Redevelopment Financing Authority (CRFA) for the purpose of issuing one or more pooled bond issues and other financings. By issuing bonds on a pooled basis, issuance cost:; can be reduced significantly, making previously uneconomic bond financings and refinancings feasible.

The CRFA is an entity legally separate from the Agency but is governed by the same board as the Agency. For financial reporting purposes, the CRF A is blended into the Agency's basic financial statements as if it \vere part of the Agency's operations because its purpose is to provide bond financing services for the Agency.

B~ In1ple1nentation of New Accounting Pronouncements

1) GASD Statement No. 34, "Basic Financial Staten1ents - and Manage,nent's Discussion and Analysis for State and Local Governnrents."

Jn fiscal year 2002, the Agency implemented GASB Statement No. 34, which established new financial reporting requirements for alJ state and local governments. Significant changes in the ne\v reporting model include the following:

• Management's Discussion and AnaJysJs (MI)&A) section providing an analysis of the Agency's overall financial position and results of operations. • Use of full accrual accounting for all of the Agency's activities.

-30- THE COMMUNITY REDEVELOPI\IE:s;T AGE:s;CY OF THE CITY OF LOS ANGELES, CALIFORNIA

Notes to Basic Financial Staten1ents

June 30, 2002

:-iOTE I - SUi\l~IARY OF SIGNIFICANT ACCOUNl'ING POLICIES (eontinuedl

• Elimination of the effects of internal service activities and the use of account groups. • A change in the g0Yernn1ental fund financial staten1ents to focus on the nmjor funds.

2) G.-\SB State1nent No. 38, "Certain Financial State111ent /1.'ote Disclosures ...

This statement n1odifies, establishes and ·rescinds certain financial statenlcnt disclosure n:quin:n1ents . .'.\1odifications to the note disclosures prin1arily focus on; (a) revenue rc.cog.nltlon policies; (b) actions taken in response to significant violations of legal or contractual pro\·islons: (c) debt sen:ice requiren1cnts: (d) lease obligations: (e) short~tcrn1 debt; ~nd (I) interfund balances.

3) GASB Interpretation No. 6, "Recognition and A1easurenU!IU o.f Certain liabiliries and Expenditures in Gor£'rnn1e11tal Fund Financial Srare,nents - an !11terpretatio11 of .NCGA S1a1e,nen1s I. 4. and j: ,'\'CGA !nre,pretation 8; and GASB Staten1ent No;. JO, 16, and /8." .

This interpretation clarifies the application of standards for n1odified accrual recognition of certain liabilitlcs and expenditures. Key points of clarification include the following:

• In the absence 9f an applicable accrual n1odification. gt)\·ern1n.:ntal fund Iiahilitks ;.ind c:xpenditurt~s that are paid in a tin1ely n1anner and in full fron1 expendable available fin.incial n.•soun:cs should be recognized \vhen incurred \vithout regard to the extent to \\·hich resources are currently available to liquidate the liability~· • Unmaturcd long-term indebtedness should be reported as long-term liabilities. rather than governn1cntal fund liabilities_ • Additional governmental fund liability and expenditure for debt service may be accn1ed beyond the matured amounts if financial resources have been pro\•ided to a debt service fund 10 pay for liabilities that \vill mature early in the follo\ving year. • Liabilities for compensated absences, claims and judgments, and landfill closure and postclosure costs that are norn1ally expected to be liquidated with expendable available financial resources should he recognized as governmental fund liabilities to the extent that they mature each period.

C. Govcrnment-\Vide and Fund Financial Statements

The govemment-\vide financial statements (i.e. the statement of net assets and the state1ncnt of acti\·ities) report information on all of the non-fiduciary activities of the Agency. For the most part, the effect of interfund activity has been removed from these statements. Governmental activities, which are normally supported by incremental property taxes, lntergovernmental revenues and grants., are reported separately fron1 business-type activities. ,vhich rely to a significant extent on fees.

The statement of activities deroonstrates the degree to which the direct expenses of a given function or identifiable activity are offset by program revenues. Direct expenses are those that are clearly identifiable \vith a specific function or program. Direct expenses also include allocated Indirect costs, such as staff salaries, rents, utilities. supplies, depreciation and amortization of capital assets, and other administrative costs. Program revenues include 1) charges to customers or applicants who purchase. use, or directly benefit from goods, scr\"lces, or privileges provided by a given function or segment, and 2) grants and contributions that arc restricted to meeting the operational or capital requiren1ents of a particular function or segment. Taxes .:ind other itcn1s not properly included among program revenues are reported instead as general revenues.

-31------··· ·--- ...

THE COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF LOS ANGELES, CALIFOR,'ilA

Notes to Basic Financiat State1nents

June 30~ 2002

MlTE I - SIIM~IARY OF SIG;,,ilFICANT ACCOUNTING POLICIES {continued)

Separate financial statements are provided for governmental funds. proprietary funds. and fiduciary funds, even though the latter are excluded from the govemment~\\'ide financial statements. Major individual governmental funds and major individual proprietary funds are reported as separate colunills in the fund financial staten1ents.

The Agency reports the follo\ving major funds:

G0Yernn1ental Funds:

Capital Projecls f~und - This fund Dccounts for all revenues and costs of funding redevt;Jopment activities such as land acquisitions, public improvements. relocations, and other project costs in compliance with the California redevelopment la\.V. Revenues deposited in this fund include incremenrnl property taxes. federal grants and various project program income.

In prior fiscal years. lhe Agency reported a genera] fund, \\·hich \\'as used to account for those financial resources \\'hich had been allocated for use \\'ithin specific project areas and \\·hich \\·ere not required to be accounted for in another fund. ln conjunction \\·ith the adoption of (I.ASI3 Statl'n1cnt '.\o. 3-t in fiscal year 2002, after e\·aluation of the nature of the transactions of tht" general fund. this fund is no\,. reported in the capital projcc1s fund.

Dehl Servil:e F1111d - The debt service fund is used to account for the accunnilation of resources for. and the payment of. general long~term debt principal, interest. and related costs.

Housing Fund These funds. represent primarily the 20 percent set-aside of eligible incremental property tax revenue, \vhich provides housing for JO\\. and moderatc~income persons in rcde\·elopmcnt project areas., as required by State la,v.

Special Re\'enue Fund - Tbis fund is used to account for the proceeds from specific re,-enue sources such as deve]opcr contributions., art fund contributions, and local grants. Expenditures on tlus fund are restricted to specific projects.

Proprietary .Funds:

£,rte,prise f'und - Tbe enterprise fund is used for operations that are financed and operated in a manner similar to private business enterprises. The Agency uses this fund to account for activities relaled to a public parking garage financed by tax-exen1pt parking revenue bonds \Vith the intent of servicing the debt, and maintaining and operating the facility through revenues generaled by the facility in accordance \\'ith the respective bond indenture.

Internal Sen·ice Fund - The Agency reports the fo!IO\\.'ing funds \\'ithin the internal service fund:

1) Operating Fund - The Agency uses an operating fund to account for cos.ts of operating the Agency which include staff salaries, rents, utilities, supplies, depreciation and amortization of capital assets, and other administratlve costs. These costs are a11ocatcd to projects through an indirect cost allocation plan based on the project dlfect labor charges.

-32- THE COMI\IUNITY REDEVELOP;\1ENT AGE:-.CY OF THE CITY OF LOS ANGELES, CALIFORNIA

Notes to Basic Financial Statcn1cnts

June 30. 2002

Non; I -SUMMARY OF SIGNIFICANT ACCOUNTING POLICH:S jcontinued)

2) lnvestn1ent Fund ~ The Agency uses an investn1ent fund to co,nbinc: and in\·e~t resources of those funds (participating funds) that do not have yieJd restrictions or other li1nilalions on investments. By combining resources. the Agency is able to increase its investment yield by creating a larger "pool" from v,hich to invest its resources. Interest earned frorn these pooled in\'cstrncnts is allocated to participating funds based on each fund's aYeragc daily equity balance during the fiscal year.

\Vithin the investn1ent fund is a rcvoh·ing cash account \\'here all cash transa1.:tions. arc n1ade. Cash transactions for each participating funds increase/decrease the equity of that fund in the investment fund \vhile cash transactions for nonparticipating funds create a recei,·abli: .. payable froni!to the investment fund that are cleared periodicaHy through fund transfers.

3) Financing Authority - This fund accounts for the transactions of the CRF A, \vhich is considered a blended con1ponent unit in the accompanying basic financial staten1ents.

Additionally, rhe .i\gency reports the follo,Ying fiduciary fund type:

Agcn,:r J-'und- The agency fund is used to account for assets held by the Agency in :.tn agent capacity and is custodial in nature (assets equal liabiliti~s).

D. :\teasuren1ent Focus, Basis of ..\ccounting. and Financial Staten1ent Presentation

The government-,vidc financial statements are reported using the economic resources measuren1cnt focus and accrual basis of accounting, as are the proprietary fund and fiduciary fund financial staten1cnts. Rc,·enucs arc recorded \vhcn earned and expenses arc recorded ,vhen a liability is incurred, regardless of the tin1ing of related cash flows. l'he 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 n1easurable and a\·ailable. Revenues arc considered available \vhen they are collectible \\·ithin the current pt:riod or soon enough thereafter lo pay liabilities. of the current period. For this purpose. the Agency considers revenues to be available if they are col1ected within 60 days of the end of the current fiscal period. Incremental property taxes, interest income and certain Joan repayments are susct!ptiblc to accrual. Expenditure-driven grants arc recognized as revenues when the qualifying expenditures have been incurred and all other grant requirements ha,·e been n1et. Other revenues that arc generally not n1easurab1e until actuaJly received are not accrued. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. Ho-..vever, debt service expenditures, as \vell as expenditures related to postemployn1ent benefits, arc recorded only \vhen pay1nent is due.

Private~sector standards of accounting and financial reporting issued prior to December I, 1989, generally are followed in both the government-wide and proprietary fund financial statements to the extent that those standards do not conflict with or contradict guidance of the Governmental Accounting Standards Board. The ..\gency also has the option of foUowing subsequent private-sector guidance for its business-type activities and enterprise fund, subject to this same limitation. 'fhe Agency has e1ected not to follow subsequent private~sector guidance .

..\s a general rule the effect of intcrfund activity has been eJiminated from the government*widc financial statements.

-33- THE COMMUNITY REDEVELOPMENT AGENCY Of THE CITY OF LOS ANGELES, CALIFORNIA

Notes to Basic Financial Statements

June 30, 2002

i'\OTE 1 - SUMMARY Of SIGNIFICANT ACCOUNTING POLICIES (continued)

Amounts reported as progran1 revenues include capital grants and contributions and charges for sen·1cl'\. lntern.:illy dedicated resources are reported as general revenues rather than as program revenues. Like\\·ist'. general revc~ue~ include all taxes.

Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating rc\·enucs and expenses generally result from providing services in connection \1;i1h a proprietary fund's principd ongoing operations.

The principal operating revenues of the Agency's internal service and enterprise funds arc applied charges. \\hich are reimbursements from projects for operating costs and parking receipts, respecti\'cly. Operating expenses for internal service and enterprise funds include administrative expenses, and depreciation and amortization on capital assets. All revenues and expenses not meeting this definition are reported as non-operating re\'enues and expcnst:"s.

\\'hen both restricted and unreslricted resources are available for use, it is the Agency s policy to use restricted resources first, then, unrestricted resources, as they arc needed.

E. Cash, Cash Equh:alcnts, and lnvcshucnts

Cash includes deposits maintained \\'ilh various banks \\"ithin redevelopn1ent project areas \\"hilc c:.J<,h equi\·olcnt:,, represent investments \Yilh original n1aturities of 90 days or less. These include investn1ents in 1he State of California adntinistcred Local Agency Investn1ent Fund (LAIF).

AH investments including those shov,.-n as restricted assets (note 1-G) are carried at amortiLed cost, \,·hich approximates fair value. lJnder State La VI-· and authority delegated to rhe Agency by City Council, 1he Agr;:ncy is authorized to invest in a variety of securities and financial instruments including interest beanng bank accounts, U.S. Treasuries, Federal agency obligations. certificates of deposit, commercial paper and the State of California administered LAIF, provided that deposits maintained with banks and savings and Joan associations in excess of the Federally insured amount are ful!y col\ateralized in accordance ,vith State La\\' governing deposits of public funds. The primary investn1ent considerations are safety, liquidity and yield.

F. Loans Receivable

To enhance the redevelopment process, the Agency grants belO\\'-markct interest rate loans primarily for the rehabilitation and development of low and moderate-incon1e housing and the development of corrunercial properties. Since these loans are generated ro assist various redeveiopn1ent project areas, repaJment terms arc structured to meet requirements established by the Agency and the specific project area. Repayn1ent terms on these loans can be classified in the follo\\•ing categories:

Amortizing loans - loans requiring n1onthly payments designed to payoff both the principal and interesl over a specified period, usually 15-20 years. Included in this category are partially amortizing loans and interest only payment Joans requiring balloon payments at maturity date.

-34- THE COI\IMU:-IITY REDEVELOPMEl'iT AGE:-ICY OF THE CITY OF LOS ANGELES, CALIFORl'ilA

i'i"otes to Basic Financial Staten1ents

June 30, 2002

:\UTE I - SUMMARY OF SIGi\lFICAi'iT ACCOUi'iTli'iG POLICIES (continued)

Deferred loans - loans requiring repayn1cnts only on the earlier of loan due date or \\·hen ihe n1ortgagtd properties are sold or refinanced.

Residual receipts loans - loans requiring rcpayrnents only \\"hen the project or 1nortgaged prop1..~rties have positive cash flo"·s as defined by a specific loan agreen1ent.

:\s a condition for granting belO\\'-n1,ukct interest rate Joans. thcc _,\gcncy requires covenants on these projects including but not lin1itcd to defining development tcrn1s, income restrictions \\·ith respect to tenants and oversight ability on the projects' operations. These covenants, loan conditions and repayment tcrn1s are n1onitored by the Agency to ensure compliance \\"ith redcvelop1ncnt goals and objectives and specific toan agrecn1ents. ln the govemmcnt-\\·ide financial statements, the Agency's loans receivable are reported net of allov,ance for market value \Vrite-do,vns and uncollectibles. In the fund financial staten1ents. the Agency's loans receivable arc shov..·n in the balance sheet \\"ith an offset to a deferred re,·enue account. loans are not available spendable resources and are therefore, recorded as project costs in the year the loan is disbursed rather than as Joans h.'ccivable. Accordingly, rcpayrncnts of principal and interest are recorded as revenue in the period received.

G. Restricted Assets

Restricted assets include invcstn1cnis n1aintaincd by the 1\gcncy \\"ith fiscal ag\!nts. undcr pro\·isions of the bond indentures/fiscal agent agreements, \Vhich are considered as pledged collateral for payn1ent of principal and lntcrest on the Agency's tax allocation bond and parking rcYcnue bond obligations.

H. Land Held for Rede'"·elopmcnt

As part of its rcdeYelopn1ent activities, the Agency may acquire land for eventual dispo~ition to housing or commercial real estate developers based on the reuse appraisal of the land. While the Agency may exercise the po\ver of eminent domain to acquire land, the majority of land acquisitions have been consummated by other than en1inent domain.

In the govcrnment-v.'idc financial statements, land acquired and subsequently disposed for redcvelopn1cnts arc reported as assets or reduction fron1 the assets, \\'hcrcas, in the fund financial Stiltt:1nents, land acqui~itions and dispositions are recorded as project costs or revenues in the year acquired or disposed.

I. Capital Assets

Assets purchased or acquired with original costs of $100 or more and esti1nated useful life of more than one year are capitalized at historical cost. Additions, in1provements and other capital outlays that significantly extend the useful life of an asset arc capitalized. Other costs incurred for repairs and maintenance are expensed as incurred.

-35- THE COMMUNITY REDEVELOl'MEl'iT AGEl'iCY OF THE CITY OF LOS Al'iGELES, CALIFORNIA

;'<,iotes to Basic Financial Staten1ents

June 30, 2002

;l;OTE 1 - SU~t:\IARY OF SIG:';IFICANT ACCOl'NTING POUCIES (continued)

Depreciation of capital. assets other than land is provided using the straight-line method O\t'r the f(11lc)\\"ing estimated useful lives:

Capital Assets

Building 40 Leasehold improvements 3() to 35 Vehicles 5 Office equipment 5 Con1putcr softv,:a'.c 5 Computer hardware 3

The business-type activities and proprietary fund capitalize interest costs net of interest 1ncon1e during construction. Interest of S 1,655,000 ,vas capitalized for the fiscal year ended June 30, 2002.

J. lntcrfund ReceiYab1e. Payable, and Transfers

lnterfund transactions arc n1adc bet\veen funds for various reasons. some of which arl' statutory in nature. Generally, these interfund transactions only affect funds \\ithin a project arl'a as State redevelopn1ent bw prohibits the transferring of funds bet\veen project areas \\'ithout an appro\·ed finding of benefit.

Interfund receivable/payable between these funds are recorded as current and non-current interfunds and are subject to elimination upon consolidation. Current interfund transactions arc reported in the fund financial statements as Due to/Due from Other Funds and long-tenn interfund transactions as Advances to 'Ad\'ances from Other Funds.

The CRA Special Revenue Fund and the Bunker llill Program Incon1e, \Vhich are reported in the capital projects fund, may be used for eligible redevelopment expenditures \,·ithout geographical restrictions. As authorized in the Agency's budgets, these funds are used to pay for expenditures in various projects, either because the projects do not have sufficient resources, or cannot pay for 1he expenditures due to use-restrictions on their a\'ailablc resources. The beneficiary projects \Vill reimburse the CRA Special Revenue Fund and Bunker Hill Program lncon1e fron1 future available project resources. Because the tin1ing and amounts of these reimbursen1ents are uncertain, the transactions are recorded as operating transfers, rather than advances.

K. Compensated Absences

Agency employees accumulate vacation pay in varying an10unts as services arc provided. All outstanding vacation time is payable upon termination of employment. Agency employees accumulate sick leave hours at the rate of 96 hours per fiscal year to a maximum of 800 hours. The Agency pays employees for sick leave as it is used and is not obligated to pay sick leave upon termination of employment. Ho1.vcvcr, the Agency pays 50 percent of the accumulated sick leave in excess of 800 hours to active employees and 50 percent of the available sick leave to retiring employees upon retirement

-36- THE C0:\1MUNITY REDEVELOP:\IEXT AGEl'iCY OF THE CITY OF LOS Al'iGELES, CALIFORMA

Notes to Basic Financial State1nents

June 30, 2002

:\OH: I - SUMMARY o•· SIGl'ilFICANT ACCOlil'iTING POLICIES (continued)

The vacation earned and accun1ulated sick leave hours are recognized as current liability in th,: govL·n,mcnt~\vidl..· activities and the governmental funds.

L. Long-tern1 Obligations

In the goven1n1cnt-\vi

In the fund financial statements, governmental fund types recognize bond premiun1s and discounts. as ,,·ell as bond issuance costs, during the period issued. The face an1ount of debt issued is reported as other financing sources. Premiun1s recei\'ed on debt issuances are reported as other financing sources, \\'hile discounts on debt issuance::; an: reported as other financing usr:s. IssuancC' costs, ,,·bt:tht:r or not ,vithhel

The Agency uses a deferred revenue account in the go\·ernmental funds to record revenues tba! do not n1cet both the "n1easurable" and "available" criteria for recognition in the current period. Deferred re\-enues also arisL' \\hen resources arc received before the Agency has a legal claim to then1. In subsequent periods. ,vbcn both revenue criteria are met, or \\'hen the Agency has a legal cfain1 to the resources, the liability for deferred re\"enue is removed and revenue is recognized. In the governmenl-\vlde financial statements, deferred re\"enue represents resources that have been received, but not yet earned.

N. Construction Disbursements Payable

The Agency uses a Construction Disbursen1ents Payable ((:DP) account \vithin the Agency Fund to handle "escro,v like'· functions formerly performed by an outside escro\\' conipany. The (:DP account enhances control over construction disbursements and allO\VS the Agency to benefit from interest earnings for monies held in !he account.

Through the CDP account, the Agency provides a disbursen1ent service for borro,vers and grantees. Monies deposited to this account are considered loans receivable in the government-,vide financial statcrnents, whereas, in the fund financial statements, they are considered as project expenditures at the time of deposit. Interest earnings for the CDP account are returned to the original funding source, unless other,vise specified.

-37- THE COMMUNITY REDEVELOPMENT AGE:'

Notes to Basic Financial Statements

.J unc 30. 200?

:,;on: 1 - SUJ\IJ\IARY OF SlGNIFICA1'T ACCOlJ:'

0. lncrcn1cnta] Property Tax Revenues lncrcn1cntal property ta:x revenues represent properly ta:xt:s collected frorn the cxo.;ess of taxes h::\·icd and collectL'd each year on n rede\'elopment project over the an1ount that is levied and col1ect..:d on the base year property t;;i.x_ assessment (a property tax base year is determined lo be the year prior to the establishment of a rede\'elopn1cnt project area).

The County of Los Angeles (County) assesses properties. bills and coliects property taxes, as follo\\'S:

---·------=~~---Secured Cn'Secured Valuation/lien dates January 1 January I Levy dates July 1 July l Due dates (delinquent as ot) 50°/o on November l (Dece1nber 10) July l (August 31) 50% on February I (April 10)

Pursuant to provisions of !he California Constitution and the California Revl.!nue and Taxation Code, county assessors are dirtctl.:'d to detern1ine the full cash value of locally assessed r(.."al and personal propt.Tty as of January 1 of each year. Locally assessed property is classified as either secured or unsecured. The secured cbssiftcation includes property on ,vhich properly tax levied becon1es a lien on the property to "iCCure pay1nent of the taxes. Property taxes le\·ied on unsecured property do not become a lien against the unsecured property. but n1ay becon1l;' a lien on other property O\\'ned by the taxpayer. The State Board of Equalization is charged \\'ith assessing the \'alue of state-assessed properties as of January l of each year. (All state-asst'ssed property is classified as secureJ property,) Taxable property is ass1:;ssed at 100 percent of its full cash value as defined by the Califomin Constitution.

The County rentits to the Agency its share of the property taxes levied. Property taxes leYied are recorded as receivable in the fiscal year of levy. Revenue is recognized in the fund financial s1aten1ents ,,·hen it is a\'ailable. as discussed under Basis of Accounting (nole 1-D).

P. Net Assets and Fund Equity

In the governn1cnt-\vide financial staten1ents, net assets are classified in the folk,,,·ing cutegories:

Invested in capi1a/ a:!>sets, net of related d('bt 'l'his category groups all capital assets into one component of net assets. Accun1ulated depreciation and the outstanding balances of debt that are attributable to the acquisition, construction or improvement of these assets reduce this category.

Restricted net assets This category presents external restnctions imposed by creditors, grantors, contributors or lav.'s or regulations of other governments and restrictions irnposed by law through constitutional provisions or enabling legislation. Additionally, this category presents restrictions placed on the categories of debt service and specific projects and programs as established by the Board of Commissioners.

-38- THE CO~IMUKITY REDEVELOPME:S.T AGE::,;cy OF THE CITY OF LOS ANGELES, CALIFOR'.'\IA

'.'iotcs to Basic Financial State1nents

June 30, 2002

:,;on: I. SUMMARY OF SIG'.'\IFICA'.'\T ACCOl;i'

llnrr!strictcd net assets - This category rt:prcscnts the net assets of the Agt:nc-y, \\·hich are not restricted for any project or other purpose.

In the fund financial statements, go\·ernmcntal funds report reserves and designations of fund balance that are either not available or have been earn1arkcd for specific purposes. The various reserves and designations are established by actions of tbc Board of Connntssioncrs and managernent iJnd can be increased. reduced or: chn1inated hy sin1ilar actions.

Q. Restaten1ent

Restatement of the beginning deficit for the Enterprise Fund is being n1ade to reflect the deferral of bond issuance costs and bond discount, and an1ortization of the same over the life of the revenue bonds.

Tht detail of the rcstaten1cnt is as follo\VS ( in thousands of dollars):

Deficit, beginnin; of year, as previously reported s i-1.003 J Rcdassificat1on of bond issuance costs to deferred char!:!cs 1:s-1; Reclassification of bond discount to una,nort11.cd bond discount 2.-156 Amortization of bond issuance costs (6-1) Amortization of bond discount 10 interest CXf)l.."llSc (-1.0)

Deficit, beginning of year, as restated s ( 1(I .. J)

R. {Js:e of Estin1ates

The preparation of the financial state1ncnts in conforn1ity \\·ith GAAP rcyuircs n1anagen1ent to nwke estin1atcs and assumptions that affect the amounts in the financial statements and acconlpanying notCs. Acn1al results could differ from the estimates.

.39. THE CO:\IMUNITY REDEVELOPMENT AGENCY OF THE CITY OF LOS ANGELES, CALIFORNIA

Notes to Basic Financial Statctnents

June 30. 2002

NOTE Z • DETAILED NOTES ON ALL FUNDS

.-\. Cash. Cash Equh·alents, and Investn1cnls

Cash

('ash consists of cash deposits maintained \Vith \·arious banks \.vithin rc

Cash Equi1·tdl!nts

Cash equivalents totaling $104,409,000 represent investments \\ ith original maturities of 90 dJys or less. These include investments in the State of California administered LAIF in the amount of $51.588.000 and in,·estn1en1s in Federal securities and commercial paper of$29,432,000 and $23,389,000. respectively

!,n·esflnenrs

The Agency's investments, \\·hich are classified into unrestricted and restricted investments, are carried at amortized cost, \vhich approximates fair value. At June 30, 2002, unrestricted in\·estments consisted aln1ost entirely of U.S. Treasury and Federal securities. Investments in Treasury, Federal securities and co1nn1erc1al paper are deposited inlo Agency safekeeping accounts. \1,.hich have been established to ensure segregation of Agency o\l,:ncd securities.

Of the limited portfolio of certificates of deposit, the Agency's initial deposit of 5100,000 \\·i1h each institution v.'aS covered by the Federal Depository Insurance (:orporation. All portions of such investn1ents in excess of $100,000 v.'ere collateralized as required by State !av"' as mentioned above.

Restricted investments, shovvn as restricted assets consisted primarily of invcstmenls n1aintained ,,·i1h fiscal agents, which are considered as pledged collateral for pay1nent of principal and interest on the Agency·s lax allocation bond obligations. Also included in this category \Vere investments by the enterprise fund representing funds held by the trustee for the Cinerama I)ome Public Parking Project_

-40- THE CO:l-11\!UNITY REDE\'ELOPME:>.T AGENCY OF THE CITY OF LOS Al'iGELES. CALIFOR:>.IA

Notes to Basic Financial Staten1euls

June 30, 2002

1'0n: Z - DETAILED 1\0 n;s Oi'i ALL FUNDS (continued!

'fhe Agency's cash. cash equivalents. and investn1cnts at June JO, 2002 are reflected in the s1a1t·n1r.:nt of net ass1."1s. of the accon1panying basic financial statements \Vith carrying values a.s fol1o,,:s {in thousands of Uollar:, i:

Cash S 7,786 Cash equivalents 104,409 Unrestricted invcstnlcnts 36.597 Rc~arictcd assets 112.{135

Total S :!60.827

As required by GASB Staten1ent No. 3, the Agency has categorized its investments to give an indication of 1J1c level of risk assumed by the Agency at June 30, 2002. Category 1 includes investn1ents. that are insured or registered or for ,vhich the securities are held by 1he Agency or its agent in the Agency's nan1e. Category 2 includes uninsured and unregistered investments for \\'hich the securities are held by the broker or dealer's trust department in the Agency's nan1e. Category 3 includes uninsured and unregistered investn1cnts for ,\·hk-h thl; sccuriti~s an:· l1eld by the broker or dealer's trust departn1cnt. but not in th1.~ .l\.gency·s nan1e.

The follo,,·ing ta hie sun1n1arizcs invest1ne11ts for g0Ycrnn1cntal and husincss~typc acti\·itics. ca!l.'gorizcd in accordance. \\"ith G.I\SB S1atcn1ent :-:o. 3 at June 30. 2002 (in thousands or dollars):

~ot RcquirtJ C,.ueeorv 10 bt 2 3 Catcgorl/,cd Total Cash Equivalents: Federal securities s 29,432 s s s s 21)A32 Commercial paper 23,389 23.389 Investment in Local Agency ln\"estmcnt Fund ---- 51.588 51.5SS Total cash equivalents 52,821 51,58~ 104.409

Unrcstricled Investments: Treasury securities 3,177 3,177 Federal securities 33,210 .13,210 Certificates of deposit 210 210 Total unrcs1rictcd investments 36.597 36.597

Restricted Investments: Treasury securities 44,f29 -l.l.,129 Federal securities 67,906 67.906 Total restricted investments 112,035 ----- 112,0JS Total cash equiva!cnts and investments S20t ,453 s s s 51588

-41- THE CO)IMUMTY REDEVELOPME:>T AGE7'CY OF Tiii,; CITY OF LOS A7'GELES, CALIFOR.'i!A

Notes to Basic Financial Staten1ents

June 30, 2002 r>OTE 2 - DETAILED i'iOTES O:'< ALL FCi\DS (continued)

B. Loans Receivable

A schedule of loans receivable at June 30. 2002 including. allo\vance for n1arket va!uc \\rtie-do\.\TI~ ::ind uncollectib!es is as follo,v.s (in thousands of dollars):

A1norti1ing -----Deferred·-- Receipts Total Outstanding at July I, 2001 s 34.807 s 76.233 s 376.()82 s 487,! 22

Additions: New loans 29 5.698 2,578 8.)05 Reductions: Principal repayments (2.854) (1,123) (5,976) (9.953) Others ___Jl.266}_ 876 (1.3~~)_

Ou1s1anding al June JO. 2002 -~ 1.052 79.5-L~ 373.560 484. r s..i LC'SS ol!owancc for n1arkc1 \'aluc wntc-downs and uncol!cctiblcs ( 17.179) __,J?.~-.:-~2.L (367.907) (460,403)

8akmcc at June 30. 2002 1.~.S73 5.65J ---s ~- s 4 ""' s

C. Capital Assets

As a result of implementing GASB Staten1ent No. 34, the Agency restated the capital assets as fol!o\vs (in tbousands of dollars):

Capital ;:issets, beginning of year, as previously reported S 2J,892

Rcclassi ficac1on of dc\·clopcd lnnd previously rcporred 35 46,699 lnnd held for redevelopment, ns of July L 2001

Rcclassificat1on of leasehold improvcnients previously r,:porh.·d as land held for redevcloprncnt, as of Ju!y l, 200 I !5,826

Accumuln!ed amortuation on the leasehold improvements as of July 1,2001 (6,330)

Capital assets, beginning of year, as restated S 80,087

-42- THE CO~IMUNITY REDEVELOJ>ME'ff AGE:\CY OF THE CITY OF LOS ANGELES, CALIFOR:\'IA

~otcs to Hasic Financial Staten1cnts

.June 30, 2002

MHE 2 - DETAILED i\OTES O:\' ALL HJNDS (continued)

Changes in capital assets for the y~ar endi.·d June 30, 2002 \vere as foflO\VS (in thousands of dollars):

Balance Juno: 30.1.fXIJ lkpn.:..:i.itit•n· Balan.::c Go,·ernme11tal ,\clivilies f.:i5 rci-t.itl·d) A~quisititm,;: ,\morti1"oti\1n June JO, 20112

(':ipiral usscts. no! being dcprcciatcd: Land s 46.699 s 46.699 Capital assc1s, being depreciated: Building and leasehold in1pro\"cmcn1s 15,8:!6 15.826 Less .iccun1ulatcd depreciation; an1011i:.::ation (6,330) (474) (6,80,l)

'."Jct building and leasehold in1provemcnts 9.496 (474) 9.022

Equipnrcnt 9,881 669 10.551 Li..'SS. accu,nulatcd ticprcciution (9.073 J (4(,0) [9.53-J)

i\1.'t eqmp1ncnt 809 (16!J (..f60) --~- '.'-:ct t:ap1t.1l assets. bcin~ dt•prcciatcd 10305 h(i9 (9J..t; 10.0..to '.'-:1.'l capital assets. go\·crnn1cn1af at·ti\·incs s 57,0(}4 s 66') s (93..tt s 56.:'.l.<)

11alancl! June 30, 2001 Acqu1s11ions/ Babnc,.· Husincss-tvpe Acth·ities (a$ resti'.ltcdJ R~·da~sitic.ni<,n,; 0.:prcciat!()n Jun~· 30, 200.'.!

Capiwl assets. not being depreciated: Land s 10,428 s s JO...t2S Capital assets, being depreciated Building 24,54;) 2-1.5-19 Construction in progress ( 12.655) 12,655 ------.. Sub~tot..il 12,655 l l,894 2-+ .. 5..t9 Less accumulated depreciation (102.) ( HJ:?.)

Net building 12,655 11,894 (102)

Equipment 15 15 l.css accumulated depreciation (I ;

Net equipment (I) 14

Net capital assets, being depreciated 12,655 11,90') (103), 24,461 Net capital assets, business-type activities s 23,083 s l 1,909 s 3..t.889

-43- THE COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF LOS A'.'iGELES, CALIFORNIA

Notes 10 Basic Financial Staten1ents

June 30. 2002

'.'iOTE 2 - DETAILED T'iOTES ON ALL FUNDS (continued)

Depreciation expense of $474,000 \vas charged to the con11nunity and econon1ic de\'elopn1~111 funciinns in th1...· governmental activities and $103,000 was charged to the parking facilities in the business-type acth·ities. The balance of depreciation expense of $460,000 ,.,.·as added to other indirect costs ,vhich \\·ere ;:i!locJted among all functions in the go\'ernn1en1al actiYitics through an indirect cost allocation plan based on direct labor ( note ! ~C')

1). Intcrfund Receivable. Payable, and Transfers

The con1position of interfund balances and transfers as of June 30, 2002 ,, as as follo\YS (in thousands or dollars): lnrerfund Rr:ceirable!Payahle:

Receivable Fund Pavable Fund Amount

Capital projects fund Internal sen ice fund s ~...IJ!-:'(t Debt scr\"icc fund Internal servici.: fund 25.L~".' I lousing fund Internal service fund -l.0.59-1 Special rc\·enue fund Internal service fund $.~ 1f. Agency fund lnkrnal servkc fund ').-1.J- Internal serncc fund Internal service fund

Total

Adranccs Fron1/To Other F1111ds.·

Reccivublc Fund Payabte Fund ------·--··-·---Amount Capital projects fund Internal scn·ic" fund s 5Y7 Housing fund Capital projects fund 3S9 Capital projects fund Internal service fund 6]7 Capital projects fund Capital projects fund 5.74-1. Capi1a! projects fund Special rcv<.'nue frmd

Total ------·-·---S 'AO, lntr:rfund Transfi•rs:

---c~~~----~D~,~.b-,__ Funds Transfe,,rr-'cd,,__,F_,_ro,cmec_~~--c------ funds Capita! Spccial Transferred To Projects ------Service Housin~ Revenue

Capital projec!s fund s 5,116 s 568 s s s 5.684 Debt service fund )),306 7,719 41.025 Special revenue fund 19,679 19,679 Housing fund 1.428 1,428

Total s 59,529 s 568 s 67.816

44- THE CO~l~lt;NITY REDEVELOPMENT AGE:,iC\' OF THE CITY OF LOS ANGELES, CALIFORNIA

i\'otes to Basic Finuncial Staten1cnts

June 30. 2002

:-.on; 2 - 1)1,;TAILED Non;s 01'( ALL FUNDS (continuedj

E. CRFA Bonds

The folfo\\'ing_ is a schedule of outstanding CRFA bonds at June 30, 2002 (in thousands of dollars):

Ihtc ,~f ~laturily !nt,;n:st o~:gmal [fal;J!h.:L• hnn D1.:scri (ssw: Oa1t· Ra!<: !"·.1~· ~1~-

!'a:,ablc hy ,\gem:~ R.::J~·\d0pn'll:nt Pro.1cc1s: f'ook:d Finandng Bnnds, Scncs B 8/!:'199.! 9 1·2014 5 OU'!i,·(1.6.!S'! .. '>1."<:-i2u l .:,.: ..i,5 Pooled Finam::ing Refunding Bond,;, Series E 8.fl.'1998 9 i'2Ul4 .l..MJ'!,,-5.00'% 21 ..-:0:: ' 20JJ5ll Pooled Financing Re-funding Bonds. Series F 8.1J/J998 9/l.'2014 4.05%,-5.00%, 12.:-;:::11 I l .:!(1/J Pookd Financing Bonds. Series G (taxable) 10/1(2000 9:1;20'.!..t 9.25"1, ]/)(}() I .SRO Grand Central Square ~ful1ifomily Housing Bonds, Series A 9/15/1993 12:t.-'1026 5 75'\;,-5.85'\'i, 12.:-:~1 !2.8.SI Total payable by Agency Redc\"d0pmi:m Prnjccts ..)7.916 l\iyab!c by MT:\: 5.75".,·5.85~;, •l.4'.' .. 'J...15-l ·r '>'>.~ -···-·- ·iota! ( 'RF:\ hnnd~

The source of all payn1ents of outstanding principal and inter-.:-~t 011 th~ CRF A Bonds, Series B and (j, and Refunding Bonds Series E and F consists of debt service payments on underlying tax allocation bonds and notes issued by the respective Agency redevelopment project areas. The Housing Bonds for the Gr.ind Central Square Project (Project) are special limited obligations of the CRFA ,•;ith different sources of pay1nenL As of con1pletion of the Proj1.;ct in \·fay 1995, the debt service pay1ncnts 011 the llousing Bonds are 57.67 pcn:ent frorn incre1ncn1al properly tax revenues of the Bunker Hill Project and 42.33 percent from Proposition A sales t::ix rc\·enues recei\·cd by the Los Angeles County Metropolitan Transportation Authority (~TA). During the year, the Grand Centr::il Square Qualified Redevelopment Bonds, 1993 Series A \Vere refunded by the Agency's issuance of the Grand Central Square Qualified Redevelopment Bonds. 2002 Refunding Series A in the amount of 520,825,000. CRfA bonds retired and defeased duri11g the year an1ou11ted to $22,850.000.

On the accon1panying balante sheel. $47.916,000 n.'CL'i\.·ab]c.'payahtc- bct\VL'Cll the- CRF.·\ and th1...· Agcnt.:y is elin1inatcd for financial reporting purposes. Also eliminated for financi;1l reporting purposes is thl! S9.454,000 receivable/payable bet\veen the CRFA and the MTA. ·rhese bonds. \\'hich are secured by Proposition A sales tax revenues received by the Ml'A, are reported under the Schedule of Third-Party Indebtedness on pages 82 and 83.

-45- THE COMMUNITY REDEVELOPME1'T AGE1'0' OF THE CITY OF I.OS ANGELES, CALIFORNIA

~oles to Rasic Financial Staten1cnts

.lune 30, 2002

:,;on: 2 - DETAILED '\OTES O'i ALL FUNDS (continued)

F. Long-·rern1 Oebt

During the fiscal year ended June 30, 2002, the Agency issued tax allocation bonds as follo\vs: Adclantc Easbidc Scril:'s ,\. S4,750,000; Monterey Hills Series l), S4.500.000~ and North Holly\vood Series F, Sl7.t20,000. Proceeds of these tax allocation bonds are being used nw.inly Io fund n:developn1cnt acti\'itit:s in the applic.:ible rtdc\·L:loprnent project areas, fund reserve accoun!s. pay related costs of issuance, and in the case of the ~·fonterey Hills Series D bonds. a portion \\·en.: usei:l to pay prior internal borro\\·ings of the f'v1onterey Hills RedeYclopn1ent Proj{'ct.

In addition to the tax allocation bonds, the Agency has recorded a prornissory note in the amount of S-+00.000 for the balance due on the purchase of land in the Central Business District Redevelopment Project.

"I'he payable to the City of Los Angeles ,vas increased by $36.000 due to a reclassification of last year·s repayment fron1 principal to interest expense.

The Agency's long-tern, debt transJctions for the year endtd June 30. 2002 ,ue sun1n1an7ed as fo!h.)\YS (in thousands of dollars):

Dui.: Baf;.mci.: Rcduc11ons 1 [Lilancc \\'11hin Dcscnp11on July l.2(J01 Additions AdJus1ments _June_ 30.2002 One Year

Governmental activiti~s: Tax al!ocation bonds payable S 494,291 S 26,370 S (8.865) S 511.796 S 39.292 Notes payable 8,389 400 !735) 8.054 7J5 Payable to the City 67-829 67.865 Sub-tot.ii before unan1ort1zcd discount 5 i0.509 26,770 {9.564) 587,715 -l0,027 Le:.:. urn.llnorti:tcd discount (432) Nc-t long-tcnn debt govemn,cntal activities 570509 26,338 19,564).

Business-t)·pe activities: Revenue bonds payable 4-1,235 44,235 Less unan1ortiLcd discount _JJ ,45SJ Net long-term debt business-type activities _ 42,777

Total long-tcnn debt net of unamortized discount S 613,237 S 26,338 S 630,060 S 40.662

-46- THE CO:\!Mll!'

;.\'otcs to Basic Financial Staten1cnts

June 30, 2002

:\OTE 2 - DETAILED l>OTES 01' ALL FU:\OS (continued)

Long-tcnn dept outstanding at June .30, 2002 ls con1prised of the fofh)\\'ing ( in thousands of dolbr~);

i)atc- of Maturity !merest Ong1~al Outstamling DcscriEtion lssu.: J>.uc _____I~~-1,_· --·· -----b'-t:,: B:ilam.:.: (;on:rnmcntal acth·i1ics: Ta~ allocation h,irHI~; ,\dams ;"l;ormani.Jtc. Series A 4,']/]991 7tl.'20Q.t -t5[J"t, . 6.4U'~., $ )J,1_11 I s 1.72::'i ,\d:im~ Normandie, Series B (13.\ohlc) 4.'l:191)1 7'1,'2U07 7 .::!'.'"" l}(j()'.',, :!AO() !335 ,\tlduntc l:astsidc, St:ri1.:s A (taxahkl 617:200:? 9'F'.!OJ2 ti.00'\, - IJ,25",. .i..-::o 4.750 lkai.:on Street. Refunding Sc-ric~ B * S lil998 9:u201..; -t05''.,. . 5.t'>·1. 199$ ?. L'2022 -4 10" .. . 5511",, 3:',:,S..Jo .~5)14ll I l,>11\'l:r. Refunding Scril·s C 11·1. 1995 <> !/21)1.j. -4 75" .. 5511" .. 5.'>..!IJ J.Xl-11) 11,)o\·er. Senes I) oaxahlc J -!I- 10()(i 9 1.201 h 7. 111",, 7.55" .. ..;51~1 -4Jt-i.5 l.aurd ( ·anyon ( ·ommen.:1:il C ·1\rriJor. Series:\ jla;'lahk) • HJ'L '.!Ol)U 9 l:'.!fJ:!4 •) 5-11'" /;1111 5•}.'\ L111lc Tokyo. Refunding Si:rics C -.J.·']..']99& 7 1:2010 5 00",, 5 (,()",, 15.i,t,." 13.-lJI) f.tlS Angdcs I !arbor, Refunding Series('* 8:]/1998 9:1:201-+ J.60",, . 5.(X)';., 5.3..:.5 -4.7')1) \1id-City Reccwcry, Scni:s A (taxah!e)* 1011/2000 91 11202-4 9.SO'h, !JOO 1.285 f-.hmtcrcy !!ills, Refunding Scnes C* 8:1/1998 l),'j/201-.J. 3.uO'!;, 5.IJO''.., ! ::.•no 12.175 !'.fontercy I lills. Scnes D ):');2002 9•1:2020 (t.60':,, -.J.,5(Jf) -45(){) Nnnnandie 5, Refunding Series('* 8il/1992 9.11/2014 5 0()"~. 6.625";, b.J~fl J.S~5 Nonnandie 5. Refunding Series D* 8/!/!998 9:11201-1 } ()()'!,, 5.fJQ" .. .l.5.~{) J. 085 North Hollywood. Refunding !il·ries D 2:[1[996 7!1/2015 -4.25'!,, 5.JO".-u l6.X~5 JJ,71X) :,...·,)rth lh,!Jyw\lo

Project notes payable: Central Busm~·:-s Di:-lrkt 12·19:2001 12 1'>'.!!JO{i XJJ(r·,, ._,:11 400 flul!ywooJ Vanous Until paid ! JS 50 Los Angch:s lforhnr 8/l )IJ 999 1/1/2009 8.75';,;, (,')S -49J. Various recovery projects Various 211/20():. \'anabl1; 10.0(11) 7.111 Total project notes payable 8.05-+ l'ayuble to the City {note 2·11) 67,865 Tol:ll govt•mmcnta! activities 587,715

Business-I:, pe actii·itic.s: Revenue bonds: Parking Sy$1cm Revenue Bonds. Serie~ A before unamorti1;ed discount X/18,'2000 711/2032 4.60'7.. .5.80'% -1-.J..2.~5 4,L2J5

Total long-K·nn debt s (1Jl .950

* l'urchascd by and payJblc lo the CKF/\.

-47- THE COMMUNITY REDEVELOPMENT AGEi'>C\' OF THE CITY OF LOS ANGELES, CALIFORNIA

Notes to Basic Financial Statcn1ents

June 30, 2002

NOTE 2 -DETAILED NOTES ON ALL Fll'.'IDS (continued)

r\djustable interest rate on tax a!!ocation bonds that ,vere issued as variable rate bonds are dt."tl-rn1incJ. by ilK' rcnmrketing agent pursuant to respective bond indenture agreements. These variable rates ..,-ill continui.: until such tin1e as the Agency elects to convert the interest rates on the bonds to a fixed rate. \',uiablc interest rate on tht' secured promissory note by the Agency with Bank of West (formerly Tokai Bank, then t;nited California Bank) is detern1ined annually or n1ore often using either the bank's prime rate plus 100 basis points or a Libor rate plus 225 basis points pursuant to the loan agreement.

Al June 30, 2002, the interest rates on the $80 million variable rat¢ Bunker fiill Tax Allocation Refunding Bonds and the Bank of West promissory note were 1.95 percent and 4.7775 percent. respectiYely. These r.:ites in eflt:'ct .:it June 30, 2002 \\'ere used in projecting the annual interest requirements sho\\n belo\\' for the abo,·e ,·ariable rate bonds and note. Annual requirements to amortize all long-term debt outstanding as of June 30. 2002 are renected in the folto\ving lable (in thousands of dollars). The C"RFA bonds are not included in the .:in1orozat1on table (note 2-E).

Governmental activities:

Year Tax Allocation PJy:ibk tu tht' f:nJin~ 01mtl~ Pavabk l\ntt·~ Payahk ( ·11y !!l!\ll' 2-11) ------Jun,: )fl Princi£:l ·1n~ l'rincip:.il ln\~·r.·;:.t 1 20U.' s .'9,2 J2 s 2:'>.38-1- s ·: _>) 426 ) -i11JJ2"" ~ 2:'.~J() 200-1- I OJl! 7 2).()()4 750 ' .\:>l:! 1,1."'1, 2:'..<;:t, 200.'- 10,711 24,405 7 ;I;', 3)1- j 1.-i.!h 24.74; 200(, J0,670 2).802 1.135 293 1).3'/0 2.754 l S.~lil 2U.~49 2007 11,288 23,166 735 249 l 2.U2.' 23.415 2008·2012 72,269 104,440 3.471 609 (,.J 27 3,07() :S:!.867 !OX.128 2013-2017 79,362 81,005 4·l3 7 4.<,71 J.652 84,47!.> 84.6~ 2018-2022 140,547 52,76-1 !-~{J.5-P 5~,7(>..l 202~-2(C7 ')3,800 2:'>.482 0).S{)() 2~.482 2028-20)2 43,405 3.0()4 -i>.·H!'.' 3.094 2033-20)7 435 20 -· - ---· ---- 50.b7! '.'!.1 '.'(> Sub-total 511,7')6 388,566 67,:·165 :'S7. 715 4()()..'55 llnarnoni..:cd discount (432)

Tot.il S 511.364 $ 3~/:.,506 ) ..J(l0.355

Business-type acti\'itics:

Yt.>ar Parking Rcv,:nut• Ending. Bonds Payable June JU Princieal ln1crcst 2003 s 635 s 2,472 2004 665 2,442 2005 695 2,412 2(X)(i 725 2,379 2007 760 2,345 2008-2012 4,410 J LI II 2013-2017 5,735 9,787 2018-2022 7,525 8,013 2023-2027 9,930 5,598 2028-2032 13,155 2,375 Sub-10101 44,235 4X.9J4 Un:1mortizcd diSC()UOt (l,4581

Tota! $ 42,777 s 48,934

-48- THE CO:\IMUNITY REDEVELOPME:',T AGE:,fCY OF THE CITY OF LOS A;\'GELES, CALIFOIL'il..\

Notes to Basic Financial Statctnenls

June 30. 2002

The bond indentures/fiscal agent agreen1cnts contain various ]imitations and n:strictions ,Yhkh require tht: r\gt:ncy to perform its duties in accordance \Vith redevelopment la\v and the redevclopn1ent plan for th1..~ rcspl,.·cJivc proj.c1..·t and to not invest, reinvest, or expend the proceeds from any tax cxe1npt bond issue in such a n1anncr as to result in the Joss of exen1ption from federal income taxation of bond interest. The 1\gcncy is in co1npliani.:1.· ,,·tth all covenants, restrictions and limitations of these bond issues.

Pursuant to Rule 15c2~12(b)(5) adopted by the Securities· and Exchange fon1n1ission under the Securities Exchange Act of 1934 (Continuing Disclosure Rule), the Agency. or its authorized Disst:n1ination Agent. is required to file annually a financial report for all fixed interest rate bonds issued on or after July L 1995. The Dissen1ination Agent shall file copies Qf the annual report(s.) \\·ith each Nationally Recognized '.i\,1unicipal Securities Information Repository approved by the Securicies and Exchange Con1mission. and the appropriate state information depository, if any.

In the case of Agency tax aflocation bonds. the annual reports consist of. but are not lin1ir1?d to. a copy of the Agency's most recent audited financial statements and infonnatlon updating particular tables in each bond issue's Official Statement. Other types of infonna1ion arc required for third~party supported bond issues (no!l..' 3-(i ). such as housing revenue bonds. Furthcrn1ore. if any of elc,·en enumerated ..:,·ents occur. the' :\gency is requircd to· pron1plly notify and instn1ct thi.:- Dissemination Ag.cnt to report the occurn.·ncc.

G. Prior Years· Defeasance of Debt

In prior years, the Agency defcased various bond issues by creating separate irn:vocable trust funds. ~-.."e\v d-:bt \Vas issued and the proceeds v.-ere used to purchase LT.S. government securities. ,,·hich ,,·ere placed in the tn1st funds held by the respective escro,v agents. The investments and fixed earnings fron1 the investments arc sufficient to fully service the defeased debt until the debt is called for redemption or 1natures.

The trust accot1nt assets and corresponding liabilities for the defcased bonds are not reflected on the accon1panying basic financial staten1cnts. Al June 30, 2002, bonds outstanding in the an1ount of $268.505,000 \Vere considered defeased.

H. Payable to the City of Los Angeles

The Agency's block .i;rant allocations fro1n the City have been structured as eilht.:r gr'ants or non~intercst bearing loans with no definite due dates, or deferred loans. Under various contracts ,vith the City, the ,\gency has recorded a non·intercst bearing loan of $50,671,000 and 20-year loans totaling Sl 7.194,000. These loans arc to be repaid from certain sources such as tax incre1nent re,·cnues of the respective rcde..-elopn1ent projects as they beco1ne a\'ailabfc as defined in the contracts. In addition to the tax lncre1nent revenues, the prog.ran1 income earned on the 20-year loan funds is applied as repayn1ents to the 20-year loans.

ln December 2001, the City Council authOrized the amendnrent of the 20-year loans from amortizing notes to deferred notes to cure a technical default by the Agency on these notes. ·rhese notes \viii continue to accrue

-49- THE COMMUNITY REDEVELOP!\lE:>;T AGE!'iCY OF THE CITY OF LOS ANGELES, L\LffOR:',IA

]'i;otcs to Basic Financial Staten1ents

.June 30, 2002

!'iOTE 2 - DETAILED :"OTES ON ALL FU!'iDS (continued) interest at the existing ra~e and any principal and interest due under the exiSting notes \Yill be deferred u11t1I n1aturity, >w'ith an option to extend loan ma[urity dates for another five years for each respecth·e note. At June 30, 2002, interest accrued on these notes in the amount of $6.276.000 ,vas reported as interest payable in the govemment-\vide financial statements.

The Agency's obligation to the City for funds utilized has been recorded as long:-tl."nn debt. Annual debt scrvicl;." requirements for the payable to the City are contained in note 2-F.

The follo,ving is a schedule of an1ounts payable to the City at June 30, 2002 (in thous.1nds of dollars)"

t,.1aturity Interest Balance Description Date Rate Outstanding

Com1nuni1y Development Block Grant Prograin. 20-ycar loan 6.'30 200(1 5~(> s 6.395 C'on1munity Dc\'clopn1cn1 Block Grant Progran1, 20-ycar loan 9/JQ:2010 50 i, 2,98J Community Devclopn1cn1 Block.Grnnt Program, 20-ycar loan 3,'31 12012 5,;., 3.1-l-l Cornn1unity De\·clopmcn! Block Grunt Prograrn. 20-yc:ir loan 6JO 2(>1-l ~,., u I J)9CJ Con1n1unuy Devclopn1cnt Block Grant Program, 20-ycar loan ri.:30·201.i 50 ;, lJS) Comn1unity Devclopn1cnt Bloc!,; Grant Prog.ran1, 20-ycur loan 6·.l,(I 201-l )",, 1.590 Con1munity Devctopmc-nt Block Grant Progran1 :,.Jone 50Ji7!

Total payable 10 the City s 67,865

I. Net Assets and Fund Equity

The- follo\ving is a schedule of fund bal:inces at June >O. 2002 (in 1housands of dollars)·

Caplial Debt Special Projects SL'fVlCC ~sing_ RC\'COUL' Total -·· ·-- Reserved: Debt service s s 107,200 s s s ! 07 .100 Advance to other funds 1.154 1.1 '.i-l Low and n1odcratc-incornc housmg activities -lO.flOJ -lO,ClO) Encumbrances 18,551 t,863 5.()65 ------·· --·- 35.480._

Total resc-rvcd 29,706 107,200 41,866 _ 5,065 183.837

Unreserved, designated ~~ ---~----- ... J.47.f . 55,(108 Tota! fund balances s 77,840 s !07,200 s 4L866 -~?~2=. s 239,445

-50- THE COMMUNITY REDE\'ELOP)IE'.'iT AGE:-iCY OF THE CITY OF LOS ANGELES, CALIFORNIA

Notes to Basic Financial Statcn:ients

J unc 30, 2002

:-OTE 2 - DETAILED NOTES ON ALL FUi'iDS (continued)

The specific reservations an

Debt service- represents amounts set aside for payn1ent of principal and interest on lon£~tern1 ohligations and an1<,unts established to satisfy debt service requirements in1poscd by various bond agrcen1ents.

A.dYance to other funds - represents a portion of the fund balance for advances by the (RA. Sp~cial Re\·cnur Fund .:ind projects to the Internal Sen·ice Fund mainly for the acquisition of capital assets ( note l ~J}.

Encun1branccs - represents a portion of the fund balance set aside for comn1itnu:nts outs1anding at the end of the fiscal year arising from approved purchase orders, \\'Ork orders, loans and contracts.

Lo\\' and moderate-income housing activities ·· amounts set aside fron1 tax Jncren1ent re,·enues 10 be used for lo\\' an

Cnreservcd. designated - a portion of the fund balance appropriated for fiscal year 2003 ,\·ork progran1.

J. Dcfi<.·it Net ;\ssets

The enterprise fund had a deficit net assets at June 30. 2002 of S662.000. This deficit \,·ii! he funJ,.:d through future parking receipts.

-51- THE COMi\lUNITY REDE\'ELOl'i\lEYf AGE:',CY OF THE CITY OF LOS ANGELES. CALIFORNIA

J'\otcs to Basic Financial Statctncnts

J unc 30. 2002 l\OTE 3 - OTHER ll\FORMATIO.'i

A. En1pJoyces Retircn1ent Systen1

The Agency contributes to the California Public En1ployees' Rctin:1nen1 Systen1 (CalPERS). an il.!:,'cnt n1u!tiplc~ en1ployer public cn1ploycc defined benefit pension plan. CalPERS proYides rctiren1ent and dis::ibiltcy benefits, annual cost-of-Ji\·i11g adjustn1ents, and death benefits to plan n1e1nbers and beneficiaries. ('alPERS acts as a con1rnon invcstn1ent and adn1inistrative agent for participating public entities \vithin the S1atc of ('alifornia. Benefit pro\·isions and all other requirements are established by state statute and authorized by the ('ity Council Copies of CalPERS' annual financial report n1ay be obtained fron1 their Executive Office JI -!00 P StrCl..!t, Sacramento, California 95814.

The pension plan covers all full-time cn1ployees of the Agency. Under the pro\·ision of Cal PERS. pension benefits fully vest after five years of service. An employee may retire at age 50 and receive annual pension bo.:ncfits equal to a predetennined percentage of the en1ployee's salary earned during the highest 12 consecuii\·e n1onths of employn1ent nlultiplied by the number of years of service. Effective July I. 1997, the Agency an1ended its contract \\·ith CalPERS changing the retirement forn1ulacion fron1 2 percent at age 60 to 2 percent ;:it age 55 in order co provide a retirement incenti\e 10 en1ployecs. As a result, under the an1ended plan. the service rcqu1rcn1ent benefits HO\\. vary from 1.426 percent to 2.418 percent nniltiplied by the nun1ber of years of service .11 ages 2'0 to 63 and over.

The contribution requiren1cn1s ofpb.n n1cmbers and 1he 1\gency are establisht..•d and n1ay be an1t.•nded by C'olPERS Panicipants are required lo contribute 7 percent of their annual co\·ered salary. The Agency n1.ikes the contributions required of Agency en1ployees on their behalf and for their account. The Agency is r<-·quired to contribute at an actuarially determined rate; the current rate is O percent of annual covered payroll.

For fiscal year 2002, the actuarial value of the assets exceeded the present value of the projected actuarial value of future benefits. As a result, the Agency's annual pension costs and required contribution ,vas zero. The required contribution was determined as part of !he June 30. 2000 actuarial \·a)uation using the entry age norn1a! actuarial cost method. The actuarial assun1ptions included (a) 8.25 percent investment rate of return (net of adn1inistrative expenses), (b) projected annual salary increases that vary by duration of service, and (c) 2 percent per year cost-of living adjustment. Both (a) and (b) included an inflation con1ponent of 3.5 percent The actuarial value of Cal PERS assets ,vas dctern1ined using 1edu11ques that s1nooth the effects of short-ti:rn1 volat1!i1y in the market Yalu..: of invesin1t'nts ovl'r a three-year period (sn1oothcd n1arkct \·aluc). Ca1PERS unfunded a<.'lt:ari:.11 accni!..'"d liobility (surplus} is being a1norti1.ed as a levc-1 pcrcenla~c ofpn~iected payroll on a closed hasis.

Three-year Trend Information forCalPERS (Dollar Amount in Thousands)

Annual Pension Percentage of Net Fiscal Cost APC Pension Yc.:ir _ lA~P~C~i __ Contributed Obligation

6/30/00 s s 6130/ll ! 6/3()102

-52- THE COMMlJNITY REDE\'ELOP.\1£'.'iT AGE'.'iCY OF TIIE CITY OF LOS ANGELES, C..\LIFORNIA

~otes to Basit: Financial Scatcn1cnts

June 30, 2002

'.'iOTE 3 - OTHER INFOIUIATIO,'i (continued)

Schedule of 1-·unding Pro~rcs.'i (Dollar Amount in Thousands)

.,\cluarial Q\·erfundcd Actuarial Actuarial Accrued AA Las a \'aluation Asset Liability Ovcrfundcd Funded Con!rt•d PcrccntJg.c of Date \'aluc ( ,ALI AAL __fi;illp_ P:l\TO!I C'o\·crcd Pavro!I

1 6!J0!98 s 8-1,65() s 68,636 s 16.l)~f) 12.~.3~~ s 13,54 ) I !S.2J7~:1 6!30/99 95,066 76,131 18.935 12-t.lJ~o I 2,832 !'47.560'!0 6/30100 IO.f,616 80,994 23,622 129.2'\1 12,/3-t lS.5.503°0

B. Other Postcmp1oymcnt Benefits

In addition to the pc-nsion b1..;11efits described in the En1ployel~s. Retircn1en1 Systen1. the Agency pro\ ides postretirenient health care benefits to ~di e111ployecs \\"ho n:tircd on or after January l. 199.>. and \\·ho had at least 10 years service prior to retircn1enl. In accordance \\"ith en1ployn1cn1 agrccn1ents \Vith \"Jrious en1ploycc groups. the Agency suhsidizes health care hL·nclits starting a1 .JO percent or the n1aximun1 current sub~idy to :\g.1,;ncy cn1ployees for the first 10 years of service and increases at th!! rate of -t percent for each additional year of scr:1cc. Expenditures for postrctirc111ent bcncflts are recognized in the year incurred. During rhe fi:-:.cal yL·ar. the ;\gency recognized $266.000 in postretirernent healthcare costs for 71 cligib]e retirees.

C. Deferred Compcnsiltion

'f'he Agency offers its e1nployces a deferred compensation plan (Plan) created in accordance \\·i1h lnlernal Revenue (~o

The Plan is adn1inistcred by independent financial institutions (Plan .1\dmlnistrators) 1h:1t ha\"e- fiduciary responsibilities O\"er th~ plan as.sets. They invest 1hc dcli:rri:tl an1ntu1ts as dircclt:d by participants, n1;tintain detailed accounting records of individual participant's deferrals and earnings. and

Since the Plan assets arc no longer considered the properly and rights of the Agency, such assets are not reflected in the accompanying basic financial statcrnenls.

-53- THE COMMUNITY REDEVELOPME;>;T AGENCY OF THE CITY OF LOS ANGELES, CAUFOR;>;IA

Notes to Basic Financial Statcrncnts

June 30. 2002

:\OTE 3-0THER INFORMATIO:\ (continued) n. Bunker l!ill Project

()n December 30. !997. the Agency issued S80,000.000 of variable rate Bunker Hill Subordinate Tax Allocation Refunding I3onds, insured by Financial Security Assurance, [nc, (FSA). The FSA insurance agreement requires tbat all future Bunker Hill tax increment revenues in excess of current debt service requirements. be used to pay debt sen·ice on the subordinate bonds. Since tax increment revenues nov,' exceed current debt service, excess tax incren1ent is deposited in the debt service fund as required. After the subordinate bonds nrc fully retired, 1h1.• release of tax increment revenues to the Agency after payment of senior bond debt service \\·ill be conditioned upon n1eeting coverage tests in1posed by the FSA insurance. Therefore, ,.,.hiJe the subordinate bonds are outstanding and thereafter under certain possible conditions ,.,..hile the senior bonds are outstanding, the Bunker Hill budget and ,vork program ,viii be funded by the availability ofnon~tax increment resources such as progran1 incon1e, special revenues, and grants.

E. ('.entral Business District (CBD) Redevclopn1ent Project

.-\ 1977 stipulated judgn1cnt resuhing fron1 litigation challenging: the CBD rede\·clopmcnt plnn provided that during the.' life oflhc CBD Rcdcvelopn1ent Project (Project), the ,\gency could recei\·,.;- no n1ore than )750.000.000 of1ax inercrnenl revenues (lifctin1c cap) for use in connection \Vith the Project. nor niore 1hnn 575,000,000 in any one fiscal year. The Project reached its lifetin1e cap i11 fiscal year 2000. Since no n1ore lax increnll'nt re,·enues \,:ill be received for the Project, rcdevelopn1ent acti\·i1ies in C'BD \\·ill be funded by non-tax incren1ent sources 1hrough the Project's end date on July 18, 20 I 0.

The Project was amended in April 2002. The an1endment detached certain areas of the Projec!. Some of the detached areas were incorporated in the newly adopted City Center Redevelopn1ent Project (April 2002) and City Industrial Redcvelopn1ent Project (August 2002). This amend111cnt allO\\·s the Agency to continue funding and \VOrking in vilal areas of Do\vnto\vn Los Angeles that still require intervention. The County of Los Angeles and another pany subsequently filed separate la\vsuits \Vith the Superior (~ourt challenging the adoption of 1he City (~enter Redevelopment Project and an1endn1cnt of the Project.

F. Risk :\lanage1nent

Tiu.: Ag.ency is exposed to various risks related to torts: theft oL d.:in1a,gc to. and dl'struction of assets: errors ond on1issions; and naturnl disasters for ,vhich the Agency carrlcs con1n1ercial insurance policies. The prcn1iun1s are paid from the inten1al service fund and allocated to various functions of the Agency. Potential clain1s against the Agency not covered by comn1ercial insurance arc disclosed in note 3-G.

-54- THE CO~t:\Wi'ilTY REDE\'ELOP:\IE:">T AGE:">CY OF THE CITY OF LOS A:'iGELES, C..\LIFOR:">IA

Notes to Basic Financial Staternents

J unc_ 30, 2002

~OTE 3 - OTHER 11\FO&\IATIO~ (continued)

G. Conunitrnents and Contingent Liabilities

Conu11ihne11ts

At June 30, 2002, the Agency had approxin1ately $73.027.000 in outstanding con1n1itn1ents. These con1n1itmcnts consisted of unencumbered obligations under various agreements and incJude co11struction, public in1pro\·en1ents, housing loans. professional services, and other costs related to the in1plen1cntation of the .-\gcncy's various rl.'dt\"elopment plans.

A.dditionally. 1he Agency has ScYeral operating leases for office space, \\·hich are not included in capital assets. These leases invof:\:e the central office facilities and site offices. The total rent expense for operating leases for the year ended June 30, 2002 \Vas approximately Sl.313.000. The Agency has the foll0\11:ing contractual agreements for future rental payments at June .30, 2002 ( in thousands of dollars):

Fiscal Year Ending June 30 An1ount

20!t,~ s !5S6 100--1- 1..4.31 2005 1.-110 ::oori i.:!hS 2007 1.:!hS 200.S-2012 3.SSo 201~-2017 6)3 2018-2020 25--1-

Total s I l.7J6

Cpntingent Liabilitf£'S

I) 1-lolly\,·ood and Highland Pro_j ....·c1

The Agency facilitated public itnproYctnent financing for the Jlolly ...,ood and Highland conunercial dcvclop111ent by the TrircL"l[ahn Corporation. Public financing consists of taX-l..'.\.en1pL parking n...... -..._·nul..' bonds issued by the City for a subtL'lTJnean parking stn1cturc and taxable certificates of participation iSSlll'Li by the Municipal Jn1provement C'orporation of Los Angeles ('.'v11CLA) and the City tOr the live broadcast theater.

'fhc- parking revenue- bonds arc secured by the City's Special Parking Revenue Fund, \\·hich nccount!:> for all City parking Jot and n1etcr n1onics. The financing plan envisions that the structure should generate revenues sufficient lo pay debt service. If City parking revenues generated outside Cou11cil District I> arc needed and are unable to be n.:i1nbursed by ('ouncil District 13 then, the Agency has agn:ed to rci1nburse the C'ity for that excess amount from Hol1yv.·ood Redevclop1ncnt Project Area (Holly,vood Project) tax incrcn1cnt rc\·enues. This ob1igation is subordinate to outstanding and future tax allocation bond debt service, pass-through obligations and housing set-aside rcquiren1ents. .

-55- TIIE CO~li\lUNITY REDEVELOPMENT AGE1"CY OF THE CITY OF LOS Ai'>'GELES, CALIFOR1"1A

:\otes to Basic Financial Staternents

June 30. 2002

1"0TE 3 - OTHER 11"FOR~IAT!Oi'i (continued)

Annual lease rental pay1nents on the tlieater ccrtifis:ates of participation are paid fron1 the City's General Fund. rrri2ec Properties has guaranteed a level of revenue generation, \\·hich is enough to pay the debt service on the bonds. Trizec Properties n1ay be rekased fro1n this guarantee if the theater generates enough revenues to pay the debt service on the bonds for three consec11tive years. Ho\vever. this. release cannot happen earlier than the end of the eleventh year.

Follo\ving such a release. the Agency has agreed to pro\·ide a back-up reimburscn1ent 1nechanism from subordinJte Holly\vood Project tax incremcnl re\·t'nucs, on the san1t' terms and conditions as the Trizcctfahn guarantee.

The obligation to pay Hollj'\\-OOd Project 1ax increment reyenues to the City under certain conditions is subject to prior and senior obligations to pay tax allocation bond debt service, housing set-Jsides as required by St.lie la,\·, and pass-through pay1nents arising from agreements \\-ith the County of Los Angeks, the Los Angeles Unified School District, and the Los Angeles Coinn1unlty College District.

2) Holly,,-ood ~1arke1placc

'!"be Agency e:-.:ei:uted on Augusr 31, 2000 Jn (),,·ncr Participation Agree111i.:nt (:\grcl'n1ent) \\ irh llolly,\·ood i\1arkctplace LL(' (l)c\·elopcr) for !he de\'c)op1uent of a con1tnt:rcial. residential projl'Ct (lJolly,\"ood ;\1Jrketplacc) Jt Sunset BouleYard and Vine Stre(,_~1 in the !iolly,vood Project. Under the :\grcen1enl. the Agency signed a $3.300.000 pron1issory note (l\otc) payable to the De,·eloper as the Agency·s parucipation and public investment in the project. The Note accrues interest at 10 percent annually upon con1n1cnce1nent of construction of the retail and parking improvements. '\.Vhich began in July 2002. P.lyments are due annually on September 30 follo,1.·ing con1pletion of the retail and parking components subject to the following:

• Payn1ents are limited to 1he addt!ional tax. incren1ent generated by the Holly,\·ood \!arketplace and subordinate to outstanding tax allocation bond debt scn·lce of the Holly,vood Project.

• If such re\"enucs arc insufficient to pay scheduled interest and principal bJscd on k\'c! an1ortization. the unpaid amount \Vill he added to the principal ho.Janee of the loan.

3) Cineran1a Don1e Public Parking

()n 1\ugus! 18. 2000. the Agency issued $44,235.000 of Parking Syste1n ReYenue Bonds Series 2000,\ (St'ries 2000A Bonds) ,vith interest rates ranging fron1 4.60 pcrcenl to 5.80 percent, to finance land acquisition and constn1ction of the Cinerama Don1e Public Parking Project located ln the Holly,vood Project. The primary source of payrnent on the Series 2000A Bonds ,Yill be the facility's parking re\'cnues net of operating and maintenance costs ,vith the payment or debt service aiso insured by ACA Financial Guaranty Corporation. lJnder circun1stances in \\·hich actual net revenues are insufficient to pay debt service, the shortfall could be covered by a $9.3 million letter of credit provided by the developer (note 3-l-12) and Agency's pledge of Hollywood tax incrcn1ent revenues in amounts up to Sl,000,000 annually. 1'he pledge of Holly1,.vood tax incrcn1ent revenues is subordinate to the project tax allocation bonds, pass-through payments, and the Agency promissory note on the Hollywood Marketplace. This pledge \.Vill be released upon the project reaching "stabilization", i.e. t\vo consecutive twelve-month periods during v.·hich net rc,·enucs equal 1.35 tin1cs maxin1um annual debt service on the bonds.

-56- THE CO~DH1:\'.ITY REDEYELOP~U::'\T AGE:\'.CY OF THE CITY OF LOS A:'\GEI.ES. CALIFOR:\'.IA

:"io!cs to Basic }tin:ancial Statetncnts

J unc 30. 2002

:-on: 3 - OTHER l'.\FOIUIAl!O'.\ lconliuucdl

4) Angels Flight

1'he Agency has been sued as a co-defendant in several la\\"Suits resulting fron1 the February I. 2001 :\ngc[s Flight funicular accident in which one death occurred and several pl'ople v;cre injured. In addition. there arc-~, number of cross-cornplaints arnong the \·arious defendants and their insurnnce carriers.

The Agency's pri1nary insurance carrier at the timi: of the ~.\ngcls F!ight accident (Reliance NatiOnal lnsurancl' Cotnpany) has been ordered liquidated. The ,\gency has excess insurance coverage but that carrier has rakt.•n the position that it has no responsibility to "drop do\,·n" to fill thL' gap in coverage created by ReliancL"'s liquidation. Accordingly, there is a risk that the Agency n1ay be responsible for filling that S4 n1illion gap in coverage.

"fhe Agency is also a n.1n1cd insured on several insuranc~ poJici(!"S, including those of the Angers Flight Foundation. v.·hich operates tht' funicular. and l1as be~n son1c\,·hat successful in having son1e of its legal expenses and sn1aller settle111cn1s covered by these insurers.

\Vhile it is in1possiblc to state \\"ith any ct:rtainty. the :\gcn{y's risk as set !Orth abO\"L" should b(' fL'dUCt.:tl by the fol1o\\'ing tilctors:

• It is an additional 11an1ed insured unck-r insurance policiL"s issued to co-det(.;'nJonts in th ...: actions. Those policies have con1bincd hn1i1s in t'xcess of S4 n1ilfion.

• Co-defendants .A..ngels Flight Raih,·ay Foundation, Pueblo ("ontracting Ser\·ices. Inc., and J larris & .,.\ssociatcs have all entered into \\Tilten indcn1nity agreements in fa\"or of the ,\gL·ncy for occurrcnccs of the type involved in the Angels Flight accident.

• The \\·Tongful death clai1n. \\ hich had thi; highcsl potential liability, has· been settled for the OlllSt part. 1"hL' :\gency·s contribution \\·as Si.000.0000. of \\·hich S125.000 \\·as paid for by one of 1h~· insur:.1111.:1.: carriers. 'fherc stilI exist. ho\\ c\"er. several open issues involving one defendant. sev('r:.il cross-con1plaints. and insurance coverage

The Agcnt.:y is participating in s1...·1tle1nent nh:diations ,,·ith respect to several other clain1ants. \\"here the colleclivc dcn1and is less than$-+ 111illion.

5) Other Litigation

In the nonnal course of business. the Agency has been nan1cd as a defendant or co-defendant in several kn,·suits and clain1s arising from its redevelopment activities. These claln1s against the ,\gcncy have been evaluated and, upon consultation \Vith the Los Angeles City Attorney, Agency n1anagen1cnt bclie\·es that the ultin1ale resolution of such claims \vilI not have a material adverse impact on the financial condition of the Agency.

-51- THE COM~IC1'.ITY REDE\'ELOPME''ff AGENCY OF THE CITY OF LOS AXGELES. CALIFORNIA

;",;'otcs to Basic Financial Statcn1ents

June JO. 2002

:\(HE 3 - OTHER l:\FORMATIOI\ (continued)

6) Other Contingenl Liabilities

It is the policy of the Agency to encourage rcdcvelop1nent acll\·hies on the part of the pri\"atc sc<.:tor. To this end, the Agency has aulhori7.cd the issuam.:e of tax exernpt long-tern1 financing for acti\"ities. 1.\·hicb pro1noti.' redevelopment \\'ithin the City. Such debt instrun1ents are collateralized by pri\·atc- sector assets and arc payable solely fron11he respective revenues generated thereon. Since this indebtedness is not a liability of the .>\gcncy it does not appear in the accontpanying basic financial staten1ents. As of June 30. 2002. rhc balance or Jong-t~nn tax-exempt third~party indebtedness \\·as 5346.134.000 as sho\vn on pages S1 ant! 83.

H. Subsequent E'"·ents

I) Bond Issuance

On July 17, 2002, the CRfA issued $9.765.000 of Series II. taxable fin.lncing bonds (S1.:nes JI Bonds) at interest rates ranging fro,n 8.25 percent to 9.75 percent \\·ith final maturiues of SeprL~r11ber I, 2032. The Series H Bonds ,vere issued for the purpose of funding loans (Loans) to the Agency pursuant to fOur separate lo.ln agreen1cnts as follo\vs: a) Crensha,\··Slauson Recovery Rcd.:\·.:Jopn1L~n1 Project :\rca in the an1ount of S l, 135,000; b) Mid-(~ity Reco\Try Redevelopn1ent Project Arca in the an1ount of 56.500.000: c) Vcrn1on1/Manchester Recovery Rede\·clopment Project :\rca in the amount of $1.130.000: and d) \\"atts Corridors Reco,·ery Rech:-,·eJopn1ent Project Area in the amount of S 1.000.000. Proceeds frorn these Loans \Vil! be used by the Agency to fund and refund rede\'elopment acti\"ities for the respc-cti\e projects, to fund a separate reserve account for each Loan, and to pay costs of issuance related to the Loans and the Series H Bonds.

2) Cinerama Dome Public P.lrking Project

On I)cccmber 30. 2002. the Agency direcled the hond tn1stee to dra\v 5688.000 frnn1 th1.· S9.3 million irrevocable letter of credit issued by Bank of America (Letter of Credit) as security for the bonds. The dra\.ving under the Lener of Credit \vas necessitJted because the net revenues of the parking garage, \\. hich i:; in its first year of operation. ,vcn~ insufficient to nice! the interest payment on bonds due January I. 2003.. The amount received by 1he bond trustce \\'as deposited in the ohl1~,Ht'd to rcin1bursc the de,·clopcr filr all drJ\\'S fron1 the Letter of Credi\ at 10 perL'L'n! interest frnrn any a\·.Jikihk cash flo\~· fron1 the parking garage operations anlt'or property tax increrncut gener:.iti.::tl by the project.

-58- THE COMMlll'ilT\' REDE\'ELOPMElff AGEl'iC\' OF THE CIT\' OF LOS A:'>GELES, CALIFORl'ilA

Housing Fund

Schedule of Revenues. Expenditures. and Changes in Fund Balances - BndRet and Actual

For the Fiscal Year Ended June 30. 200::? tin Thousands)

\\.1nan,1.· "·i1h Initial Final Final Budgct Budr:et Budget :\rtu:!I Over (l:ndcr) Rc\cnt11.:~: lntcrcs;f inco111c s :!.}SJ s 2,383 s I ~1 s 1210) Lo:Jn rcpay1ncnts 1.996 2.99(, '2J,53 (64.,J Rent.ii inco1nc 29 29 01hcr .1.9t 398

Tow.I rcv1..·n ues 4.Y'i'J -i.(J53 <-'26) Expenditures: Current: Progr.in1 salaries and ad1ninistn1tivc costs, including. technical and professional pcrsonnc-1 2.S-lS 2.918 1.')"" 7 971 Real estate acquisition 6fl-l 2.231 33 2.19~ Housing I2.S)3 8.160 2.5 ..L~ 5. ::;-:-0

Tota! c,pcnditurcs 21.191 16.442 5.2~~ 11.15-t.

Rc\'cnucs o\'cr (undt::rJ c-,;pcnditurcs t l6,l:>12J (11.063) 13_~5 l 10.12:-;

Other financing sources fuses): Tran~frrs in (out) 12.6 7{} 12.869 l l.9fi0 ! l)fll) I

Towt other financing ::,ourcc..>; (tiscs) 1:::.670 12.869 I l .'J(10 (\)l)\)J

R1..·n.'nl11.:s ;md o!hcr sources ovt:r (unJl'r) expenditures and other use<., 1.i.1...i.21 1,806 l l.<125 9.8l9 fund balances. bc~inning: of year 25.668 -ll,535 -11.5>:'i Adjust prior year rl'Sen e for land held f~)r rede\ dopnlent ( 11.29-1)

Fund balance:;. end or~c~ir s 2 L526 s -l) _i\()(i s 'J);j 9

Sec ucco1npanying note,;; to required supplcn1en1ary infornw.tion.

·59- TUE CO)IMU1'ITY REDEYELOP~IENT AGENCY OFTIIE CIT\' OF LOS A,.;GELES, C'ALIFORNIA

S1>ecial Revenue Fund

Schl'dulc of Revenues, Expenditures. and Changes in Fund Balances- Budget and Actual

1-'or the Fisc:d Year Endtd June 30, 2002 (In Thousant.ls)

\·:u::mcc \\·uh Ini11al Final !· in;il E3udft't Budt:Cl Bud!:!cl :\ctual Chtril;ndcrl Ric\ 1.:UUl'S Grants s 100 s 2J65 s .~JIJ I LS.'S) Jntcn:st incoint· l..t7 l-l-7 323 ' I 7h LlhHl rcp,iyrn,.:nb I, - (1/ Rent.ii ill(O!llC is- 1~'7 Di:\·clopcr p;.ini-:1p.it1on 36.3!_l!I 36.JOD l.-Hi-l 1.\-l..~J(i) City participauon 4110 -too Other JOO 400 SlJS .;11s

Total fl:'\"CDUCS 36.S-l-7 39,012 .l.6f19 ( 35.3-l.3 l Expcnd11urcs Current Program s..ibrics and ad1111nistra1ivc co<;ts-, inc!udin~ technical ,ind professional pcrsonnd 731 ~(,3 -.:ri I)- Rc,:il cst:1te :.u.:qui:.ition 18.02-1. 252-1. :-..\2 ! .(,()2 Hou.,;,mb! -too -1,1)5 -;;.::: c~-r:-l Rchab1!1ra1ion :!77 ;\.21'9 ~ \2 l .t)57 Public 1n1prt)V\"men1 J,501 -+JS<1 -,! 5 .\.5') ! Ocvelopinent loans 9.,1. 121) 121) Con1n1un1ty scn·icc 1.650 :!)f7h -,.:; .~-1 l Other 4.088 .~(d -l.7•;-;"

Total expenditures 18.82! 6.(1)) !2Jf1S

Rc\·enucs oYer (under) cxpcndaurcs 8,082 20.!9! ( 2.'J.:S-1.) (23.!"";'_5 J Oiht·r fm;.incing sources {uscsJ Transfers rn foul} :!76 275

Total other fin.mcing sources (uses) 27(, 1.-l2h 1.153 RcYctn1cs :rnd 01hcr sources O\Cr iuridcr}

c.\pend1turcs ..inrJ other uses S,358 20.,.l(i(, ( I .5 )(1 I 1.t!.022)

Fund b..ibncc<;, bt·ginriing of year 1-1..624 14. Ill:'> J -l-. 1()<; ft':-t"l\"1." :\d_111,( pn1)1 ~,.:,11 f1lr l:ind hdd fur rcdc\cll1pn1c111 1Ju1 ill!)

Fund h,ituH.:t'S • .:nd of year s 22.'1S2 s 34561 s 12.'.'3') ' t.22.1122)

Sec ;1ccon1p,:mymg no1cs 10 required supplementary information.

-60- NOTE TO REQUIRED SUPPLEMENTARY INFORMATION THE CO\IMUNITY REDEYELOPi\lE'.\'T AGENCY OF THE CITY OF LOS A:-iGELES, CALIFOR:-ilA

:\'otc to Required Supplc1nentarr [nforrnation

.June 30, 2002

STEWAIWSHJP, CO\IPLIANCE, AND ACCOUNT ABILITY

Budgetary ~\ccounting

The Agency's annual budget is prcpi.lred under guidelines established by State redevclopn1.:n1 Ll\\- :.ind the Cny of Los :\ngcles Budg1.:t Ordinance and is presented for reporting purposl..'s on a basis <:onsbtl'nt \\ i1h gener:.dly <.H.'l'.eph.'d accounting principles. The budget is approved by the City Council and adopted by the :\g.cncy BuJrd before th(" beginning of the nc,v fiscal year. In adl in advance or the fiscal yei.lr to \\·bich it relates. the budget is regularly an1ended for changes in uvailahle re:-,,)urt::<.'":5 .ind proj,:ct objl'cti\·es, wilh thl' approval of the Agency Board and Clty C~uncil.

The Agency's annual budget is n1ore con1parable 10 a capital in1pro\·cn1ent budge!, \\·hereby pro_1ect~ arc not tyµically proposed. started and con1plcted in one fiscal year. Therefore. funds available in a fi~cal year rnay h<..' allocated for expenditure over a n1t1lti-year period. Certain funds are therefore allocated to "carryo,-cr" into future years beyond the fiscal yeor of the budget. These furure year allocations along \1,·ith any unexpended rc\-<..'11Ue fron1 pnor years arc analyzed JI year-end as part of1he annual budget procl!ss called the carryo,·~r a1n..:ndn1tnt. rJi._, ca!T)'O\"<..'r anK·nd111 ...·n1 amc1.1d.s the nc,v year budget for any une:xpl'ndcd n;-\·l'n111.:-s fro1n pnor ~-,:,1r;; tha1 h.1,- .... not heen pn.•\·iously cstin,ated in the nc,,· year budget. The process occurs as of Jun<..' .~O. aft ...·r 1h,.: tradi1ion:il accounling close. Once the prior yl'ar is clo.st'd. an analysis of l'n--:un1hrances. con1racts, co1n1111t111 ...·nb :.ind olhi:r existing activities is pcrfonnl'd and C\·aluated against original progra1n ohjt:Cll\-<..'S and r<..'snuri.:e-,_ -\ny c_,,._·._·:--s of rl"YL·nues o\·er e:-.:penditur--:s for 1hc prior ye~ir is credited to the fi.1nd balanc<..' or !hl' r<:spi:...:11\L' funds and is considered as part of the carryo\·er revenue in the ne,\· year.

:\fter carryover revenue 1s detern1incd. the ,\g:enc-y perforn1s a con1plcte re-e:xan1i11otion of th:: puq,uscs of t•ach project objective \\ithout any reference to \\"ha1 has gone hefore_ Prc\·iously appro\·ctl s;pendin'.:'- k\-L'IS. 1ncll1ding !i.tturc year allocations. arc re\·iewcd ln dl·t:::ii! 8lld ar,.: not auto1na1ically carried o\·er into 111<..' ne\.\ fi,<.11 Y'-':::tr. \\'1>ik prograrn objectives and conunit1nen1s n1ust be justified to \\"arrant allocation of carryoYer re\ L'IHk'

Tlus conct:pt of "zero hascd hudt:eting" has been succes$flllly applied to the Agt.•ncy's unique bus111s·~s stntctur<..' Jnd provides a ti,ncly opportunity to revil'w the st:itus of objecti,:es 111 each reth~,·clopincnt ar ...·a. By this 1ncthod. pnoi. yc,1r rL'\C!Hl<..'S arL' r<..':.dloc,11cd 10 t'lthcr p1<..·-c:ost1n_!;! or 11<..'\\ ohjl·..:11,·._.,_ in Ill'\\- .ind upd;1k'd :.1111,n1nh. thruu~:h lhL' carryover procc.;;s.

,61- THE CO~IMI ':'ilT\' REDE\'ELOPME'.\T AGE'.\('\' OFTIIE CIT\' OF LOS Ai'iGEU:S, CALIFOR'.\I.\

(;o,·crnmental Funds

Schrdnll' of Rc,·cnucs. Expendltun-s. and Ch:tnl'.!t:S in Fund Balances - Budiet and Actual

For the Fiscal \'ear Ended June 30.1002: tin Tbousandi>}

(.·,1 ,11a! l'n•ILY!· \'an:.mcc- \\llh Initial Fin~l Fin:11 nud~1-'I BuJ!!ct Bt1d:.!1..'I .\,-1•.:.d ( h"L'r t l"ndcr! Rc\,.:nul'..: lncre1n,:nt~1! property 1:1xc:5 s 5-t12h s 5-t_.17- 112. -I'! s :- .., .. t; (fr,mt-; 195)-t 5r~.tn- ' 2-.'I'}'! (2'i.211\) 1111>.·rc:-:1 ini.:01nc 253'7 25.~- .~.:--/,~ J.'.1J Lo,m ri:payment: 21>5 211:- (,_ I,,- '.' .')92 Rcn!al income 3,80~ J.:.;11:,, J li-1. J!)(I Dl·\·dopcr participotilin Cny par11cipution Other 325 (1h2 ))(12 ...j.()[l

Total revenues 80,5J5 117),9h 1115.115') l 12.~37J F,pcndi1urcs: ( ·urr... ·n1: Prog:rarn s:1l;1rics .ind a,!ministra!J\'1..' C(hl:S. 1ndudm~ tl'(hnica! and profi:~siona! pl'rs,11111d 2.,.~53 2.1.:-..-2 .:::: _2..;·, 2.(,23 Rea! l'Sta!c :.11.:qui-:ition 11.~69 1:-...3 In '1'111 :-..-1-113 lh)u..:1ng J-t.6}9 'J,o2"\ i {,_~ 1 _.,1,2 Rchab1!1tation J-t.)t,":' 1-:-_•)-ti, :,-_11]:" '}.').~ ! Public i1npro\·cn1c-nt 2J.76f> 2:'- .53•) li.--lH;:; l'J.!.',-4 l)c-,·c-lopn1cn! lo:ms IO.u1'- ...i..-:-.:: .,.'}':'-.'- ~·J--1- Com111unity service J,512 -!, I 1.1 7..t2 >..l.ll T;;:x incrcrncnt administra1in.t foes !,Ion i.ll)ll Other '.;Cl.;'\(1:t 2~/,.l.5 tn.2-t-l 12. l

Total expenditure~ 122.596 12! ..~22 f,':-)\ I:, 5S.)0'J

.Kc\·cnw::- ut·cr (t111

( nhcr fmanl·ing soun:L'" I USL's; L P: ,,,:L·l·,t., fron1 i.-..~1,:m-:L· ,,;· ,k\,; .~-l. t ,2- ; ; :,,,: 1•1J,2.l) I r.m~fcrs lll {oulJ j-flJ-.:-.--1-1 I 1--+).

12-.511-1 I I -.5J'>)

RcYCIH!L'S anJ other sources n, er {un,kn C\pcnditurcs and other ll'-L'S (57.775) (J!J ..\

J- und ha lances, bc~inning of year 117.ifi/'I 157J\~.\ is-.s:s.\ :\dJthl prior year rc:-cnc for land hdd for rl..'dc\clnpn1cnt 18;.::,!~2) Fund balances. end of year s 5:>3H3 , 49.7117 '5 7-:-_i-;40

-62- TUE C()i\Jl\llJNITY REDE\'El.OPl\1£'.\T AGE:\( ·y OF Tl!E CIT\' OF LOS ,\:s;GELES, C\UFORSIA

Schedule of Revenues. Expenditures, and Chun~t'S iu Fund Balances - Bud~ci and Actual - {Cuntinu('d)

For lht· Fiscal Yt"ar Ended .Jun(' JO. 2002 tin Thuus:1nds)

\";inanct.! wnh ln11ial Frn:.il Final BuJ~cl Bud1!'-"l O\·er I l. nJer) Rt'\,..'11UC:'.: lnL·rcn1cntal property 1.1,c; $ Gr:mts Interest !nL'Omc Loan rCJ)

Total revenues 7J-l

E"\pcnditurcs· Curr1;n1: Progra1n salaries ;.ind :.idn1m1~trati\'l: cos!~. HKl11d1n.c'. tcchn1ca! and prnfcs,<,ional personnel Real eSW!..: :.icqui~1t1on Housin~ R..:hub1!tt,J1fon Public 1mpro,emcn1 Dc\·c!op,ncnt li1ans Community servicc T,1.x incrcrncnt adtninistr:.iti\·e fees Other --l-JI -l---ll 1Jeb1: Debi ret1rcm..:n! IJ.6~.~ 'J.'.'(1--l l)_;=i()_J ln:crest c~pcnse .1!1.$55 21.hO~ _fill) BonJ 1s:'..uancc i.:o~t~ " ~-l j Tota! expenditures _,.:!,-151 _-;2.--l5 I

1 Revenues 11\ er l t1nlk1 J C\Pl'nd11u1 c~ L~'J.77-41 12 ) 51)5 l :'. ..!!.!

{)thcr lin:.incing soun.:c::, tusC$J· l')()~·~·,·d--. lh\fll h'-!l:l!lll' (lj (kh: l1;1n:,;fors :n (out l -:.2. -:-.,_~ - .(,-2

Total other fin;.rncm~'. sources (u:-.cs) 3(1,$95 40.457 7.(, 72

J{c\ ..:IHJC~ ..tmJ olhcr '.-liurcc~ o, l'r ! under) cxpcnd1tt1rcs .ind other uses (2._1)7!Jt I _!!(1~ /!1.952 9J,8.l.

Fund ti:1!anccs, beginning of year 87.! i') 'Hi.2-f\ 96,2-lS ,\JJu~1 prior year resenc fs1r l;.md held for r..:tkvdopn1et1t

Fund b:.ilanccs, end of year $ 84,240 $ ')7,3 i(> s !07,2UO $ 9.80-1-

Con1in11t·J.

Sec accon1panying rndcpen

-63- THE COMMUNITY REDEVELOPMENT AGENCY OF TIIE CITY OF LOS ANGELES. CALIFORNIA

Governmental Funds

Schedule of Re\'enues., Expenditures., and Chan~es in Fund Balances - Budget and Actual - (Continued}

F'or the Fiscal Year Ended June JO, 2002 (In Thousands)

Housing \'ananc1.: wi1h Initial Final Final Budget Budt!~t (h1..'r I t_:ndcr} Revenues: lncrcn1cntai property taxes s s s s Grams ln1crcs1 incon1c 2_383 2.383 2. i-> (210} {,oan rcpayn,cnt:; l.l)t;(, 2.9~6 2.)5.\ th-1-3) Rental i11comc 2') 29 Dc,·clopcr participation City part1cipat1on Other

Total TC\'COUCS 4.379 5,379 .+.953 (426)

[:-;pcnditurcs: Current: Progran1 s..rlarics and adn,inistr:.itivc costs. including lcchnical and professional personnel 2}:..t~ .2,91S l .'J-l- 971 Real cstalc acquisition 61l-t 2 •.231 .~.t 2.l9S Jiousing 12.SJJ SJ6o 2.)-i:; 5.617 Rehabilitation ~.9SI l.')07 61 I .~46 Public i1nprovcmcnt Dc\·clopn1cnt loans .20 .20 Community service 400 50 SU Tax incrc1ncnf adn1inistrativc fees 300 .276 24 Other l.525 856 >78 478 Debt: Debt retirement lntcrcsl expense Bond issuance costs

Total expenditures 21,191 16,442 5,288 11,J 54

Revenues over (under) expenditures (16,812) (11,0631 (335) 10.728

Other financing sources (uses): Proceeds from issuance of debt Transfers in (out) 12,670 12,869 11,960 (9091 Total other financing sources (uses) 12.670 12,869 11,960 (909) Revenues and other sources over (under) expenditures and other uses (4,142) 1,806 11,625 9,819

Fund balances, beginning of year 25,668 41,535 41,535 Adjust prior year reserve for land held for redevelopment (l 1,294) (11,294) Fund balances, end of year s 21,526 s 32,047 s 4 J ,8()6 s 9,819

Continued ..

See accompanying independent auditor's report THE COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF LOS ANGELES, CALIFORNIA

Co\ernmental Funds

Schedule of Re\-·enucs. t:xpenditures, and {~h:anges in Fund Balances - Budget and Actual - (Continued)

For lhc Fiscal Year Ended June 30. 200! (In Thousands)

S )CCiJ! Rcvcnui: \·ariancl..' \~1th Initial Final F mal 1311dgd Bud.!ct Bud'!;ct Actual Over ! l.'ndcr) R('\ Cnu<.·s: [ncrcmcntal properly l..t\C.S s s s s Grant;. J !)!) 2.165 :\>11 ( 1.:-::.1~ l lnrcrc::.! income 1-17 1-t 7 >~3 176 Lo:.in rcpaymcnb 67 (,- Rcnt:.il incon1c IS, 187 Dcn:Jopcr part1c1pa11un 36,.100 .16,.100 1.-164 (J4,!t16i City particip:.ition 40() 400 ()thcr 300 400 89S 498

Total revenues 36.847 39,012 3.6()9 fJ5.J4J)

Expenditures·. Currcn1 Progn.H11 s:.:d..trics :md adn1tmstra1 j\·c cu:>!.~. includin~ technical ;,ind professional personnel 7:1. I S6.1 12.() I.\" Real estate acquisition 18.11'.!4 '.!51-+ s:,2 l.692 I lousing 4(10 405 752 (.?.47) Rehabilitation -r-,, 3.281) .33 2 I .61 4.797 Debi: Debt retirement Interest expense Bond issu3nce costs

Total expenditures 28,765 18,821 MSJ 12,168

Revenues over (under) c.xpcnditurcs S,082 20,191 (2,984) (23,175)

O!hcr financing sources (uses) Proceeds fron1 issuance of dcbt Transfers in (out) 1,153

Total 01her financing sources (uses) 276 275 1.428

Revenues and other sources over (under) expenditures and other uses 8,358 20,466 (1.556) (22,022}

Fund balances, beginning of year 14,624 14,105 14,105 Adjust prior year reserve for land held for redevelopment (10) (10) Fund balances. end of year s 22,982 s 34,561 s 12,539 $ 122.0221

Continued ..

Sec accompanying independent auditor's report

,65- THE COMMUNITY REDEVELOPMENT AGENCY OF' THE CITY OF LOS A'.'iGELES, CALIFORNIA

Go,·ernmental Funds

Schedule of Re,'enues, Expenditures. and Chanees in Fund Balances - Budget and A£tnal - (Continued)

For the Fiscal \'ear F..nded .lune JO. 2002 tin Thousand~)

Initial Final Final Oudgct Budcet ,\rtual ()ver (l ·nden Revenues: lncrcn1cntal properly t.i.xcs s 54.1:::!(} s 5-t-377 .s 62.! It) s fi.~-l-2: Gran ls 19.G.'4 SS.471 .::7.-l2() t 31.ll.l.3 l Interest inco111c 5J:u1 5,SOI 1J.?, I u 3.509 Loan r\'paymcnts 2.201 3.201 ::i.r,1-: 5.--l-16 Rental inco,nc 3.SOS 3.SOS --J..)_~() 522 Developer participation 36,300 )6JOO I .46-l !J-LS36) City participation -too -l-00 Other 625 1.062 2.35S 1.296

Total revenues J22.495 163,021 (-1-6.394)

Expenditures: Current: Program salaries and adn1inis1n1tive costs, including 1cchnic1il o.nd professional personnel 27.-432 27.65~ 2.~.'J22 .1. C.11 Real estate acquisition _lO,..f.9'7 23Jl

Total expenditures 213,060 195,036 113.205

Revenues over (under) expenditures (90,565) (32,015) 3.-422 35.-437

Other financing sources (uses): Proceeds fron1 issuance of debt 34,l27 35,961 26 ..1.1.s (9,623) Transfers in (out)

Total other financing sources (uses) 34,127 35,961 26,))8

Revenues and other sources over (under) expenditures 1ind other uses (56,4381 3,946 2:9,760 25,814

Fund balances, beginning of year 244,489 309,771 309,771 Adjust prior year reserve for land held for redevclopn1ent (100,086) (100,086) Fund balances, end of year s 188,051 s 213,631 s 239,445 s 25.814

See accompanying independent auditor's report

-66- This page intentionally left blank. TUE COMMUNITY REDEVELOPME:

Internal Sen·ice Funds

Combining Statement of'."',;('{ Assets

June 30, 200l (In Thousands)

Operating lnvcstn1cnt FinanCl!lf Fund Authority ASSETS Current asst'ts'. Cash and cash cqui\'alcnis s 59 s l 0.";,670 s 10~."."~() Lnrcstrii:tcd in\'i::::;1mcn1.; 3..t,-101 ' )-j:,--1.()J Rccci,·abll'S: Accrued inh~rcst 670 111 ""SJ Other 161 I (iJ Due from other funds 3.!}61 3.06] Other assets 853 i,;-;-; Total current assets 4.134 137,74 I Ill 1.i 1.986 Noncurrcnt assets: Restricted assets :,.535 3535 Capital assCts: Equipn1Cnt J0,55l ]ll551 Less accumu!.11cd dcprlTIJlion (9.5J3) 1 ').5].') Total capital assets (net of accumulated dcpn::naiion) J.018 Total noncurrcnt assets 1.018 Total assets 5.152 137.741 3,6-t6 t ..j.(}.539

LIABILITIES Current liabilities: Accounts payable and accrued liabilities 1,653 1,653 Accrued vacation and sick leave payable 2,305 2.305 Due to other funds 137,741 3.382 I-l.Ll23 Other liabilities 40 30-t Total current liabilities 3,998 145.385 Noncurrcnt !iabili1ics: Advances from other funds 1.154 1.154 Total noncurren! liabilities 1,154 1.154 Total liabilities 5,152 137.74! 3.646 146.539

NET ASSETS Unrestricted Total net assets s s s

Sec accompanying independent auditor's report

-67- THE COMMUNITY REDEVELOPMEl'iT AGENCY OF TIIE CITY OF LOS ANGELES. CALIFORNIA

Internal Service Funds

Combining Statcnutnt of Revenues., Expenses, and Changes. in Fund ~ct Asset~

For th{' FisC'al \'car Ended June 30, 2002 (In Thousands)

Opcra!ing: ln,·esrmcnt rinancmg Fund Auchoncv Tota!

Op;:rattng n;:\·cnue, Arplicd chargcs s 23,922 s 5 .23.'J.22

Total operating r,:\·cnut'~ 23.922 2}.9.::::

Opcr;.i1ing expenses: Personnel con1pcnsarion 15.57 t I 5.57 l En1ployce benefits 2,830 2.8J(J Central office expenses 2,739 2.7YJ Dcprccia1 ion expense 459 459 Other administrath·c costs 2,323 2J23

Total operating C.\pcn::-.c'i

'.'\onopcrating rL',cnu~·-.; Interest mcom1.: -f. J !JI) I .17<1

Total nonopcrat1n!_! rc\·cnuc:, 4,10!) 1J70

Nonopcrating expenses: lnterest incon1c allocated to participating funds 4.109 5.279

Total nonopcrating expenses 4,109 1.170 5.279

Nc1 incon1c from nonopcrating activities

Total net assets- beginning or year

Total net assets end of year s s s

See accon1panying independent audi1or's repor1.

-158- THE COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF LOS ANGELES, CALIFORNIA

Internal Sen·icc Funds

Combinin~ Statement of Cash FIO'\\'S

For the Fiscal Year Ended .June JO. 2002 (In Thousands)

Operating Jnvi:stn1cnt F1nancin,; fund Fund :\uchoncy Total

Cash flows from operating acli\"itics: Rci1nbursc1ncnts for applied charges s .:?J.737 s s s 23.":'3'7 P:.1yrncnts of operating expenses (2J:.036i !23.t)}.6)

~ct cash pro\"idcd by operating ac1ivi1ii::s * 701 7nl

Cash flows from capi1al and related financing: activities: Purchase of capita! assets (6(19; (669) ln1crcst incon1c I !7n I. I 70 [ntcresl allocated 10 other funds II 170) (1.170)

Net cash used by financing activi1ics (669)

Cash flows fro,n in\·csting activities: Proceeds fron1 sale of in\·cs11ncn1s 672.35 l (172.351 Purchase of in\'cstn1Cnts (682.812) [(152.812) Jn1crcst incon1c -t.109 -Ll09 Deposits frrnn other funds IS-tR56 18-LS56 Payn1cnts to other funds (153.372) ! 15~.372)

~ct cash provided by in\'csting activiti<:s 25 .. 13::!

Ket increase in cash and cash equi\"alcnis 32 25,132 25.164 Cash and cash equivalents, beginning of year 27 77.538 77.565

Cash and cash equivalents, end of year s 59 s 102,i29

Reconciliation of operating incon1e to net cash provided by operating ucti\"itics: Net income from operating actl\"itics s s s s Adjustments to reconcile operating income to net cash provided by operating activities: Depreciation and amortization expenses 459 459 Increase in other receivables (146) (146) Increase in due from other funds (108) (108) Increase in capital assets (276) (276} Increase in accounts payable and accrued liabilities 202 202 Increase in accrued vacation and sick leave 261 261 Decrease in other liabilities (36) (36) Increase in advances from olher funds 345 345

Net cash provided by operating activities s 701 s s 701

See accompanying independent auditor's report.

-69- THE COMMUNITY REDEVELOPMENT AGENCY OF THE CITY Of LOS ANGELES, CALIFORNIA

Go,·ernmental Funds

Combinin2 Balance Sheet - By RcdeYelopment Pr:oject Area

June JO. 200! (In Thousands)

Ci.:ntral 1 Adan:s t\dcluntc Beacon 8ro.:idway Bunker f3U'.>)OCSS Nonn:.indic Strcci .\1anchcstc-r Hill Di;;rncl \SSEIS

CJ.sh and cash cqun :il('nts s s s s s 1.J11 .\!l Unrcstnctcd in\·cstmcnis 243 JO (i)>; ' l.llO\ RccciY.:ib!cs lncrcn1t·ntal property w:xcs 23 18 33 )1)! Gr.1nts .\54 Accrued interest 3 5 Other, net ofuncollcctiblcs ofS:?:9.1 8 256' 60() Due from other funds 751 ..t..155 l .696 4..J.6 42,99~ IS..17-1 Loans rccciYablc, net of allow.:incc for market \·aluc ,yritc-downs and uncollcct1blcs ofS-l-60,403 4!l3 1-1 S.r>

Tota! ;.isscts s 5.!0S s -l-.653 s 1.63S s .f/9 SI IS.52o s 27.932

LIABILITIES ANO fU~D BALMCCE

Liabilities: Accounts payable and accrued habllities s 14 s 8 s 2 s s 215 s [.j.(J Due to other funds 35 456 G, 124 289 Advances from other funds !23 500 437 107 Deferred revenue 40) 14 S,733 5,567 Other liabilities 296 -I 95)

Total liabilities 452 -1-1 J 6,949

Fund balances Reserved for: Debt service l.705 474 800 2 81.20[ Low and moderatc-incon1e housing activities 102 1,547 685 7,940 4,640 Advances 10 other funds 617 Encumbrances 33 I 436 32 2,034 1,121 2,569 Unreserved, dcsigna1cd for conllnuing work programs 1.769 149 (1,999) 12,421 1),774

Total fund balances 4,656 4,226 38 103,301

Total liabilities and fund balances s 5,108 s 4,653 s 2,638 s 479 SI 18,520 $ 27,932

Continued.

See accompanying independent auditor's report.

-70- THE COMMUNITY REDEVELOl'M[:'(T AGENCY OF TII E CITY OF LOS ANGELES, CAI.If ORN IA

Go,·ernmental Funds

c·on1hining Barance Sheet - By Redevelopment Project Arca -{(·ontinucd)

.June 30, :?002 (In Thousands)

f:.1M l[ol]~\\OoJ Council C'rcnsh::iw· Bc\·crly- Chinatown District tJ Crenshaw llolhwood ASSETS

Cash and c:Jsh cqui\·alcnts s l.5.3.l s 1.35..J s $ s s S l •J Lnrc'.>lflctcd 1n\·cst1ncnt:,; 3-lll Rccci\·ablcs: Jncrc1ncntal property taxes 53 !SI 2.\ _"),!) Grants 345 \:!II -l.69S Accrued interest 33 4 I Other, net ofuncollcctiblcs ofS293 41 Due from other funds 2.806 2,485 1.373 55-l 386 7.SS5 Loans rccci,·ablc. net of allowance for 1narkct \'atuc ,,Tile-downs ..ind uncollcc1ibks of $460.403 120 12 533 Restricted assets 6.\39 50-l 314 2.355 Ath anccs to otlu::r fund:. Other a:.scts

Total asst:ts s 11,02.5 s -t.Si3 s !,7UH s (I!)-;' s l A 16 s J(,_3_;:;

LIAlllLITIES AND FUl\D BALAl\CE

Liabilities: Accounts payable and accrued liabihties s 76 s 373 s 19 s 55 s s 148 Due to other funds l ..'.!44 603 66 474 Advances from o1her funds 673 413 456 Deferred revenue 120 12 4,811 Other liabilities 446 70 79 1,156

Tomi litibilities 1,4-10 2,095 136 60-t 6.569 fund balances Reserved for: Debt service 6,186 502 793 13 4 2)85 Lov.· and moderate-income housing activities 1,977 1,378 (>92 I 17 134 3,074 Advances to other funds Encumbrances 1,062 2,873 -t85 306 6 6,655 Unreserved, designated for continuing work programs 360 (1,975) ()43) 737 (2,)71)

Total fund balances 9.585 2,778 1.56-t 93 881

Total liabilities and fund balances s I 1,025 s 4,873 s 1,700 s 697 s 1.416 s 16,332

Continued ..

See accompanying independent auditor's report.

-71- THE COMMUNITY REDEVELOPMENT AGE1'CY OF THE CITY OF LOS A:',GELES, CAUfORl'ilA

Governmental Funds

CombininJ! Balance Sheer- B~· Rede\'e!Opnu:nt Project Arca - (Continued)

June 30. 2002 (In Thousands}

Laurel Liu le Los Angcks \lid*C1ty .\ 1ontcr~·y HOO\'t'f C~unon Harbor Rt'CO\l.:fY lllib ASSETS

Cash .ind cash c4uh·.1!cnt$ s !57 s s 136 s $ I l}nrcstric1cd [n\·cstn1cnts -lO') Rccci\ab!cs: Incremental property taxes SI 25 2') :; ...1.3 5- Grants :,..:3 Accrued in1crcs1 7 Other, ne! ofunco!lcct1blcs of $293 1,.213 90 15 bl Due from other funds 2,116 2.679 3,122 102 1.!J--:'(i -L66o Lonns receivable, net of allowance for n1arkct

\"alue writc-do,,·ns and uncotlcctiblcs of S46UA03 32(, 111 533 1- l(J() Restricted assets 7!,!J 9-1 3.277 -40"' 211•; 1.2:-1-; A(h·anccs to other funds Other assets

Tor::11 assets s --!.6J5 s 2.$1 I s 156(1 s ().!!))

LIABILITIES AC:D FUC:D HALA:S:CE

Liabilities: Accounts payable and accrued ti::.ib1litics s 3S s s 39 $ 5 s s 21 Due to other funds 437 11 2 5-17"' Advances from other funds 291 26.~ Deferred revenue J26 10 (ii s 32 100 Other liabilities 257 2 )•7 7)

Total liabilit1cs 558 670 l. lY9 ')-1

Fund balances Reserved for Debt service 750 99 ],277 425 216 2.669 Lo\\' and moderate-income housing activities 125 573 \,996 609 788 2.159 Advances lo other funds Encumbrances 2,930 41 347 :!61 1,11-1 171 Unreserved, dcsigna!ed for continuing work programs 1.540 197 (65) 911

Total fund balances 7,004 2.()5:_\ 5.911

Total liabilities and fund balances s 4,635 s 2.811 s 7,674 s 1.566 s 3.252 s 6,105

Con11nucd,._

See accompanying independent auditor's report.

-72- THE COMMUNITY REDEVELOP~IE!'iT AGENCY OF THE CITY OF LOS ANGELES, CALIFORNIA

Go,:ernmtntal Funds

Con1bining: Balance Shc~:t - By Rcdc\·eJopment Project Area - (Conlinucd)

.lune JO. 2002 (In Thous.ands)

P:u:oi1na '.\orth Panoran1a Pie,) PICO R1.:st:da '.\orn1~1ndic 5 Holl\'\\OOJ: Cmnn 2 Cano!.!a Par!-. ASSETS

Cash anJ cash cqui\'a!cnt::, s 3 s -L476 s s 15 s s Unr.:s1ru.:tt":d in\'cstmcnls 125 Rccci, ables: lncrcn1cntal property ta'\CS 35 261 1o.i 51 7i -I ()rants -I 3SCJ -12 Accrued interest 51 01hcr. net ofuncollcctiblcs ofS29J 2 39 2 Due from other funds 95J 14.970 ..J,023 1.786 1.988 5,S..J5 Loans rcccivabk:. net of allowance for n1arkct \·Jluc \\Titc-do,\·ns and uncollcctiblcs of S46DAit3 199 423 8 pc 132 Restricted asscls 751 17,767 ..io2 ·' A<.h :.mccs to other funds 01her asscH

Total assets s l.943 s J;.':.116 s ..J.1>5 s 2.~22 s 2.1 1)8 s 5.S9..J

LIABILITIES AKD FU'.\D BALA'.\CL

Liab1h11cs: Accounts payable and accrued liabilities s 34 s 216 s s 21 s s 14-1 Due to other funds 3.930 15 Ad\·ances from other funds 789 389 822. Deferred revenue 199 574 8 177 132 3 Other liabilities 4 146 440 J 25

Tot::i.l liabilitics 238 4.866 1,238 (i05 157 1.7.ll)

Fund balances Reserved for: Debt service 1,115 1.725 4 817 4 Lov.· and moderate-income housing activities 7.251 797 974 511 1,338 Advances to other funds Encumbrances 229 1.952 8 1.18 I 271) 1,217 Unreserved, designated for continuing work progran1s 361 22.322 2,088 (755) 1.251 1,586

Total fund balances 1,705 33.250 2,897 2.217 2,041 4.145

Total liabilities and fund balances s 1,943 s 38,116 s 4,135 s 2,822 s 2,198 s 5,894

Continued.

See accompanying independent auditor's report.

-73- THE COMMUNITY REDEVELOPMENT AGENCY OFTIIE CITY OF LOS A1'GELES, CALIFORNIA

Governmental Funds

Combining Balance Sheet ~ By Rede\•elopment Project Area - (Continued)

.June 30, 2002 (in Thousands)

Rodeo/ Vcnnone \V;:uts \\"estc:-n La Cienega t,.-tanchcstcr \\\Hts Corridor,;. Sb.tbun \\.c:-.!lakc ASSETS

Cash and cJsh cquivaknts s s s s...i s s s Unrestricted invcstn1cnts Rccci,·ab!cs: lncren1ental property laxes 24 14 Grants Accrued interest Other, net ofuncollectiblcs of$293 Due from other funds 827 35 1,670 803 342 292 Loans receivable, net of allowance for market value writc~do,vns and uncollcrt1b!cs ofS460A03 98 Restricted nssl.'.'.IS Ad,·anccs 10 01hcr fund:- Olhcr OSSCIS

Total assets s 827 s 35 s 1.876 s ,17 s ::...i.2 s 292

LIABILITIES ANO FUND BALA~CE

Liabilities: Accounts payable and accrued lrabilitics s s 7 s 7 s 2 s 2 s Due to other funds 455 828 Advances fron1 other funds 139 291 121 Deferred revenue 104 37 Other liabilities 97 22

Total liabilities 243 566 )15

Fund balances Reserved for: Debt service 15 12 LoVi.' and moderate-income housing activities 350 153 58 29 5 Advances to other funds Encumbrances 992 69 I ,!09 321 7 Unreserved, designated for continuing work programs 477 ( 1,368) 1,183 (1,228) (299) 126

Total fund balances 827 (208) 1,310 (78) 27 134

Total liabilities and fund balances s 827 s 35 s 1,876 $ 817 $ 342 s 292

Continued ..

See accompanying independent auditor's report.

-74- THE CO\IMUNITY REDEVELOPMENT AGENCY OF Tll£ CITY OF LOS ANGELES, CALIFORNIA

(;o,·ernmental Funds

Combining Balance Sh('et - B~· Rcde,·elopmcnt Projccl Area - ({'ontinucd)

,JUOl" JO. 2002 (In Thousands}

\\"ilshirc Korca!t)\\ n Othi.:1 T01. ..d ASSETS

Cash and t:ash cgul\·aknis s s 5(1;-, s t;Aft> UnrcstriclcJ inYcs1n1c111,:; 2. ! 1)(1 Receivables: Jncrc1ncn1al propeny t:J\cs I .'JflS Gr.inls 5 .522 ~Ji25 Accrued interest 109 Other, net ofuncollectib!cs ofS293 154 2.572 Due frorri other funds 649 10.516 145A62 Loans receivable. net of allowance for n1:.1.rkct value v,rilc~downs and uni.:olk•cub!cs of$460. ..io; 6.57 l 2.~.751 Restricted ussds \!HJ.:,'!64 Ad,·anCL'S 10 other timds 5.\/ -:-...;11~ Olhcr asscts <)

Toial assets s (15-1. 5 19.1)59 S.~OL.~2fi

LIABILITIES Al>:D FU;;D BAL\:'CE

Liabilities: Accounts payable and accrued liabilities 5 II 5 385 5 2.025 Due to other funds I 1.319 16.837 Advances from other funds 40() 6.254 Deferred revenue 140 S.507 30.627 Other liabilities 733 6.1)8

Total liabilities 10.944 61.SSI

Fund balances Reserved for: Debt service 4 2 107,200 Low and modcratc-incon1c housing activities 40.00) Advances lo other funds 537 1.154 Encumbrances 327 5,013 35.480 Unreserved, designated for continuing work programs (229) 3,463 55,608

Tota} fund balances 102 239,445

Total liabilities and fund balances s 654 $ 19,959 SJOl,326

See accompanying independent auditor's report.

.75. THE COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF LOS ANGEl.ES, CALIFORNIA

Go,·ernmental Funds

Combining Statement of Re,·enues, Expenditures, and Changes in Fund Balances - By Rede,'elopment Project Area

For the Fiscal \'t'ar Ended June 30, 2002 (In Thousands)

Ccntr,ll Adams Adelantc Be-aeon Broadw;.iy Uunki.::r Ousinc:;:e; Normandic Street .\f,mchcstcr 11111 Dic,trk1 RC\l'nuc:. JncrcnlL'ntal propcr1y 1ax:cs s s .117 s 81h s 2(1 5 ~3),51 s Cir:in1s 11 ~>5 .J,\;,: Jnii.::rL'S! 1nco1nc 14(1 12 94 2 3.25() 2.21.~ Loan rcp.iy,ncnts 147 135 -.:-,1.-; _;)() Rt..·ntal income I ·' _:,.,•;_~ :::!:,.:;; Dc\·ctopcr par11cipn11on !(i') City participation Other 3 3 267 3 '?')5 Total revenues 1,132 1.324 26(, 3i'i.135 -t.2~ I E>..pcnditurcs: Currcn1: Progr.1n1 salancs and ad1nin1<;trn11\·c co_.;[';, including technical ;Ind prolcs~itin:.il ptrsonnel 51 I lA-+S -l-:?5 7 ·'·2')~ 2 ..~92 Rea! estate acquisition .j 111 S.) I~ Housing 12:-: -1,-1 Rehabilitation -!OS 2 Jfl.\ Public 1mpr0Yen1cnt 20 5:-.-s De, clopment lo:.ins !(!() Community sen.-icc 25 I .S9 1J Tax increment administrati,c fees 29 15 2 -l2-l Other 58 97 143 -r 2.1-lO 967 Debt: ' Debt retirement 675 32 215 46 2.0-l5 Interest expense 114 24 120 34 16.920 Bond issuance costs

Total expenditures 25,552 15,518

Revenues over (under) expenditures ( 1,470) (623) 13, 183 (11,277) O!her financing sources (uses): Proceeds from issuance of debt 4,622 400 Transfers in (out} 134 203 (.128) 210 Total other financing sources (uses) 4,756 203 (328) 610 Revenues and other sources over (under} expendnures and other uses (1.470) 4.133 605 (2) l 2,855 (10.667)

Fund balances, beginning of year 6,613 93 2,834 40 105,210 85,384 Adjust prior year reserve for land held for redcvctopn1ent (487) (1,773) (14,764) (53,734) Fund balances, end of year s 4,656 s 4,226 $ 1,666 s 38 SIOJ,301 s 20,983

Conlinued, ..

See accompanying independent auditor's report.

-76- TIIE COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF LOS ANGELES, CALIFORNIA

Go,·ernmen1al Funds

Combinin~ Statement or Re,·cnues. Expenditures, :and Changes. in Fund Balances - B~· Redevelopment Project Area - (Continued)

For the Fiscal Year Ended June 30. 2002 ( In ·rhousands)

l::t~t J{l)]ly\~Ood Council Crenshaw· Bc,crly- Ch.inat0\1• n District 9 '.\l)rmandtt' llollywoo

Continued ..

See accompanying independent auditor's report.

-77- THE COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF LOS ANGELES, CALIFORNIA

Governmental Funds

(~ombining Statement of Revenues, Expenditures, and Changes in Fund Balances - By Redevelopment Project Area - (Continued)

For the Fis<:-al Year Ended June JO, 2002 (In Thousandsj

Lau rd Lin le Los An~t'les \lid-Clly \lontcrcy Canyon Tokyo l larbur ReCO\ Cf\ Hills Re\ cnucs: Jncrcn1cntat property !axe:. s 2.015 s (d-1- s 2.JJl3 s I .nS 1J s / JJ51 s 2.230 Grants 74 I'',. l.:'d1 5.5-1:'i ln!crcsl income ,, ,1 ]')O I'! ,. ! Ii'\ Loan rcpaJ111cnts 9 I 72 5-+ Rental income 8 12 Dc\·clopcr part1cipa11on 8J5 :5 City part1c1pation 401) Other 143 .'S 3 Total revenues 3.557 697 2,.t60 1,26-1- 2,465 Expcndi1ures: Current: Program salaries :ind ::idn1m1stratiYL' co<;ts, including 1c-chnlc:.. tl and professional personnel 817 47 5lJ'.I 2()(, 1.22() 198 Real estate acquisition 7 I Jlousin_g Rehab1lita1ion 56 J.+o 2.(J; l Pub!ic improvement 18.{ n41 Development loans Community servict· 4 4S Tax increment administrali\'c fees 45 14 45 19 ,.., 4~ Other 104 15 498 226 J.19 82 Debt: Debt retirement 390 51 1,155 JJS 44 715 Interest expense 335 71 353 175 103 391 Bond issuance costs I 249 Total expenditures 1,934 1,031 1,679 Revenues over (under) cxpendnures 1,623 233 786 Other financing sources (uses): Proceeds from issuance of deb! 4.453 Transfers in {out) (I) 81 429 280 (3.205) Total other financing sources (uses) (I) 429 280 359 1.248 Revenues and other sources over (under) expenditures and other uses 1,622 579 57 513 (7) 2,034 Fund balances, beginning of year 2,489 1,674 11,095 1,648 2.060 4,759 Adjust prior year reserve for land held for redevclopmenl (277) (4,148) (669) (882) Fund balances, end of year s 3,834 $ 2,253 s 7,004 $ 1,492 $ 2,053 s 5,911

Continued ..

See accompanying independent auditor's report.

-78- THE COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF LOS ANGELES, CALIFORNIA

Go,·ernmental Funds

Combining Statcn1ent of Rn·enues, Expenditures, and Changes in Fund Balances - By Rede\.'elopment Project Arca - (Continued)

For the Fiscal \'ear Ended June 30, 2002 (ln Thousands}

Pacoi1na. Korth Panorama Pico Pico Rescda l'\01n1andie 5 Hollvwood Citv Union l C'ano11.a Park Rc,·cnuc.:;: lncrc1ncntal property ta'\cs s 1.419 s 6J8') s 1.822 s l)(tJ s 1.809 s 2.6-f.3 Granls 195 225 73 5-+7 -Hi:! Interest 1ncornc ,_,. 57S 87 S4 3'} L\11 lo;.in repayments JS 6S JI, II Rental inconll' 51 Dcn:lopcr participation 350 C11y partfc1pa1ion Other ~

Total TC\"CTIUCS 1,705 7,4(?3 1,983 1,551 1,862 3.236 Expenditures: Current: Progran1 salaries and adn1inistrati\·c cost::.. including tcchmcal an Other 24 737 74 75 38 43-1. Debt: Debt retirement 295 660 94 220 113 Interest expense 182 481 69 124 83 Bond issuance costs 458 Total expenditures 1,893 6,580 544 1,327 404 1,845 Revenues over (under) expenditures ( 188) 883 1.439 224 1.391 Other financing sources (uses): Proceeds from issuance of debt 16,863 Transfers in (out) s 201 Total other financing sources (uses) 8 201 Revenues and other sources over (under) expenditures and other uses (188) 17,794 1,606 224 1.466 1.592 Fund balances, beginning of year 2,348 20,176 1,291 7,477 575 2,553 Adjust prior year reserve for land held for redevelopment (455) !4,720) (5,484) Fund balances, end of year $ 1,705 S 33,250 s 2,897 s 2,217 s 2,041 s 4,145

Continued ...

See accompanying independent auditor's repon.

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

Governmental Funds

Combinin~ Statement of Re~·enues., Expenditures. and Changes in Fund Balances - By Redevelopment Project Arca - (Continued)

For the Fisc.al Year Ended Junt' JO. 2002 tin Thousands)

Rodeo/ Vcm1onti \\·aus \\'cstcm La Cienega ;\1anchcstcr \Vans Corridors Slauson \Vcstl::ikc RC\'COUCS'. lncrcn1cn1al properly !ax.cs s s 252 $ 21(, s 181 s "' s Grants 97-t 6S 2J)(j:_\ ..lJJ'7 S1 Jntcrcst incon1c 12 Ill (112 9 1 12 Loan repayments :' Rental income JO Dc\·clopcr participa[ion City participa1ion Other 6 Total revenues 12 1,237 933 2.25-l .432 100 Expenditures: Current; Program salaries and adn1ir11strat1\·c cos1s. _, rncludmg tcchnic;il and professional pcr'>onn(,.'l 495 517 -1-1-l 10 241 Real cs1atc acquisition SS9 / lousing 217 Rehabilitation l51) Public impro,·cmcnt (i5 211 c Dc\·elopment loans 39,.: 175 Con,munity scn·icc Tax increment administrative fees 5 6 6 Other 9 701 2,0..:7 JI) 56 Debt: Debt retirement 26 JI 13 · Interest expense 20 25 9 Bond issuance costs

Total expenditures s 1,838 2.562 484 328

Revenues over (under) expenditures 7 (601) (467) ()08) (52) Other financing sources (uses}: Proceeds from issuance of debt Transfers in (out) 246 816 59 244 Total other financing sources {uses) 246 816 59 Revenues and other sources over (under) expenditures and other uses 7 (355) 349 (308) 7 16 Fund balances, beginning of year 820 147 2,076 2JG 20 118 Adjust prior year reserve for land he-Id for rcdevelopnlent (I ,I I l) Fund balances, end of year s 827 s (208) $ 1,310 $ (78) $ 27 $ 1}4

Continued ..

Sec accompanying independent auditor's report.

·80- THE COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF LOS ANGELES.CALIFORNIA

Governmental Funds

Combining Statement of Re\·enucs, Expenditures, and Changes in Fund Balances - By Rede\'elopment Project ;\rea - {Continued)

For the Fiscal \'ear Ended June 30, .2002 (In Thousands)

\Vtlshiri:.' Tot..il RC\'C'OUCS: Incremental property taxes s s s 62.7!9 Grants 37 12...-!!Jh 2-•..i.29 Interest income 3 51)6 9 ..' !O Lo:1n rcpaytncnts I ~-I :-...r11: Rental income -L3.lO Developer panicipation 1.-164 City participation -l!)O Other 2.358 Total revenues I !6.627 Expenditures: Current: Program salaries and administrati\·c costs, including technical and professional personnel 515 ':()I) 23-. 1}22 Real estate acquisition I ri.?'72 Housmg 6.7.~.::! ]ll..458 Rehabilitation !.301 lJA<•8 Public impron.·nicnt 9 11.::! -.200 Development loans 3..t33 .t. l OS Community service 25 2.521 Tax increment administrative fees 1.376 Other 33 608 11.-124 Debt: Debt retirement 43 (J(J) 9.56-l Interest expense 33 36 21.605 Bond issuance costs 8.JI Total expenditures 633 Revenues over (under) expenditures (587) Other financing sources (uses): Proceeds from issuance of debt 26 .."\38 Transfers in (out} 581 (1.611) Total other financing sources (uses} 581 (1.611) Revenues and other sources over (under) expenditures and other uses (6) (l, 191) 29,760 Fund balances, beginning of year 108 12,429 309,771 Adjust prior year reserve for land held for redevelopment (2,223) (100,086) Fund balances, end of year s 102 $ 9,015 $239.445

See accompanying independent auditor's reporL

-81- THE COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF LOS ANGELES, CALIFORNIA

Schedule of Third-Pali),' lndebte-Oness

June 30, 2002. (In Thousands}

Date of t,.1aturity Interest On~mJ.I ft..11:Jncc Description Issue Date Rate 1:s.~uc Outs1.1nding

Demand Certificates of Participation Allnghi G::iragc PrOJCCI 11:l.J ·193.;. l l-'!-'2008 \'arl:lblc!fi"Xcd s 6.5UO s -l.100

Dcn,and Certificates of Part1cipu1ion Baldwin Hills Public Pnrkin1; f;.ic1!ttics Pr\)_jcd 12.·15 198.J l2 l 2!114 \-"ariah!c 3i).IIIHJ ~o.noo i1."1ultrfon1ily Housing Oc\·cJoptn{'nt Rc\cnuc l3onds LanC\\·ood Apartn1cnts Project 12-1 l9S5 12 I 2UOS Variable S.f!i'H.l s.oon

~1ultifamily Housing Revenue Demand Bonds Skyline at South Park Apartments Project, Phase I[ J2t3\/l985 12:1:2005 Variable 28 ..JOIJ 28.-1-()0

Demand Certificates of Participation Cf\1C Medical Pla;,-a Project 2]. 1986 12 ·1;2005 Variable '.'_'"'.'()() ~.1 OU

Dcm,md Ccr11fic:Jtcs of Partici pa110n Broadw:.ry-Spring Center Project 8 J !9S7 I J:20!2 Vuriabt...~ 1.i.-1)0 Jl).600 r-..1u1t1fumily Housing Rc\·cnuc l3ond'-. 19S 1J Series A Acade1ny \'illagc Apartn1cnts Pro3cc1 l{J"I "1969 10·1.:.'.:!0l9 Variable 23.110() 20.(_l()I)

Multifamily Housing Bonds, 1993 Scncs A Grand Central Square 911511993 12/l .'2026 5.75o/o • 5,85o/o 9.-45.J (I) 9..45-+

Housing Revenue Refunding Bonds 1994 Series A, Citywide 5/l!l994 J.11!2027 4.85°/o ~ 6.55°/o 20.600 19.905

Housing Revenue Refunding Bonds 1994 Series C, Citywide 9/1/1994 7/1/2014 5.65°/o - 6.75%> 8.000 .J.425 f\1ultifan1ily Housing Revenue Refunding Bonds 1995 Series A, Angelus Plaza Project 11/111995 6/15/2010 7.40o/o )3.020 24,925

Multifamily Housing Revenue Refunding Bonds 1995 Series D, Angelus Plaza Projccl (fcdcral!y 1.axable) I ll!!J995 71112002 6. 75o/o )00 JO

Multifan1i!y Housing Revenue Refunding Bonds 1996 Series A, Angelus Plaza Project 1/311996 7111202) 6.40°/o 15,470 14,145

Housing Revenue Refunding Bonds, 1996 Series A Monterey Hills Redevelopment Project 51111996 121112013 5.125°/o 8.200/o J,010 1,010

Continued ...

-82· THE COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF LOS ANGELES, CALIFORNIA

Schedule of Third-Party Indebtedness - (Continued)

June 30, 2002 (In Thousands)

Date of f\1aturity Interest ()nginal B:il;.1m:~ Description Issue Date Rate Issue Outs1::inding.

Housing Revenue Refunding Bonds, 1996 Series B f,,.1ontcrcy Hills Rcde\'ctopmcnt Project

Housing Revenue Refunding Bonds. 1996 Series D i\fonter.ey Hills Rcdcvclopn1cnt Projc:c! (Capital Appreciation Bonds) 5,J:J990 12 J:2022 12.IICJ'~u!approx) .)HJ -H/5 (21

lvtullifa1nily Housing Revenue Note. 1999 Series/\ \Vestcm!Slauson Amistad Plaza (increased note size by $500,000 in May 2002) 6.•111999 Jtl!20J I \'ariablc!fixed -l.989 ~.989

Multifamily Housing Revenue Note, 1999 Series A Grandview Nine Family Housing 6.1111999 l·'lf20Jl \'ariablc:fixcd -l.711 4.71 I

\1ultifan)ily Housing Revenue Refunding Bonds. Series 2000, Promenade To\vcrs Project -1-."1:2000 .t.· I 2o3o \·ariable fixed -17.550 -17.550

\.1ultifan1ity Housing Rc,'cnuc Bonds, Series 2000:\ RO\\ un Lofts Project l 2"6"2001> 12 l/2034 \"ariable 21.:,,sn 21.SSo

Muhifamily Housing Re\'cnue Bonds, Series 2000A-T Rowan Lofts Project 12/6/2000 12/1/2034 Variable 5.-170 5 ...J.70

Multifamily Housing Revenue Bonds, Series 2001 A Security Building Project .(tax-exempt) 8113/2001 12/15/2034 Variable 13,500 13,500

Multifamily Housing Revenue Bonds, Series 200 I A-T Security Building Project (taxable) 8/13/2001 12115/2034 Variable 4,545 4,545

Mult1fam1ly Housing Revenue Refunding Bonds, Series 2002 Grand.Promenade Project-Freddie Mac Credit Enhanced 4/17/2002 411/2032 Vanablc 43JJOO 43,000

Qualified Redevelopment Bonds, 2002 Refunding Series A Grand Central Square 411512002 12/l/2026 2.50%, 5-375% 20.825

Total third-party indebtedness 5379.239 S 346.134

( 1) This represents 42.33% of the $22,335,000 Housing Bonds issued by the CRFA and secured by Proposition A sales tax revenues received by the MTA (note 2-E, CRFA Bonds).

(2) Balance outstanding includes original principal amount plus accrued Interest, all of which, is payable at bond maturity_

-83- This page intentionally left blank. THE CO~IMU~ITY REDEVELOPMEST AGESCY OF THE CIT\' OF LOS ANGELES. CALIFORSL\

Exi>enses b)· Function • Gn,·ernn1enta! Acth·itics

For the Fis<.'al \'ear Ended June 30, 2002 tin Thousands) ( t' ni.u1ditts'4 h

{·,,,11nlUlii1y ;mdl..'t"t1JK1mk 1k\·d1,pnx:ut ~·)'~

Pr, •1,,~·1 ~1.'1k·r;tl 17'.;

1111..:r,·st un 1~hl ~J';f

H,,u-.ing Puhli..: impn)vl..'nL'fil 16'4 7'1r

Community FiSl·al and l(conomk Puhlk: Intl'r,.,·~t l1n>jl'cl Year Btnislng J)c\'L'lopmL'Ol Improvement on DL'ht (il'nL•ral To1al

2002 $ 1-t.793 $ 2.'i.965 s 65fl4 $ 27.fl57 $ 15.666 s 89.985

-84- This page intentionally left blank. TIIE CO~IMUNITY REDE\"ELOP)IEi',T AGE~CY OF TIIE CITY OF LOS A~GELES. CALIFOR~IA

Revenues by Source. Go,·ernntental Aeth·ities

For the FiSC'al Year Ended .lune JO. 2002 Hn Thousands! 11 ·nanrHtcd •

S?o.non

S61l.000

S:'\0.000

~0.(XJO

$.;1.0,()()(}

S.:'0.f)()() ••*

S.IOJlOIJ

Jn,:r,:ncmal prnfll.'Tly Capital grants anJ l111r:n.•st i111.·01n: Cliargcs fill' s1..-rvi1.:cs (}!lk'f nnnrihuti111t~

Im.:rcmcnta\ Capital Charges Fiscal Propc-rty Grants and Interest li.)f Y.:ar Tax~s C(1ntrihutinns lncom~ SL'rvkes Tnt.i!

2002 $ 62.719 $ 28.740 $ 9.461 $ 4.330 $ 1598 s 106.8-1.X

-85- This page intentionally left blank. TIIE COMMDIJT\' REDF:YF:l,OP~ff'>T AGE'\C\' OF THE CIT\' OF LOS A:-(GF:J,ES. CALffOR!',JA

Expenditures by Function~ GnYernmt'ntal Funds

l,a.,;f Ten Fist:al \'ears (In Thousandst I l · nuudih:d l

$711tUUl!I $650_«){1() $600.1100 $5)0.0110 .$)1HtJ)IHI S-t'ill,noo $40t).flll0 $3:'i!Ullltl

$31Hl.(HJII $2:'iOJH)CI $2:IKJ.flOO $150.4100 $1011.{KJO $51).f}(Jfj $1)

Cl I ),:ht s,:n·k,: tJ Pro.i.:r1 gt.'tlL'ral IJ Puhlk itnpn1\\:·1n... ·m DCom1nuni1y and .:cunoniic d\'\\'lnpnK'!lT •Hnusing

Cotnmunily Fiscal an

2(X)2 $ 14,814 $ 42.629 $ 8.()91 $ l:'i.220 $ 32,4.) l $ 113,20:'i 2001 18581 14549 41.614 11.934 l\7.295 17?i.973 2CX)O 21.367 16.762 24,612 11.490 62.9-19 137.IXO 1999 16.701 26,7U9 33.9()-! 1>.790 76.221 169325 1998 26.703 42.794 32.

Note: Since lhc new reporting tnodel {GASB 34) changes significantly both the recording and pn.:s.cntatinn of financial data, lhe prior fiscal years ha,·i..• not tx~n restated for lhe purpose of pnwiding the JO-year c1}mpara1ive inf1lrma1ilm for lhc above schedule.

( I) Large amount repn:.~ents the defcasancc of ccnain tax alloca1ion bonds issued hy the Bunker Hill and Central Busin,.,-ss J)istrkl rcde,·clopmenl projects.

-86- This page intentionally left blank. THE COMMl'NIT\' REDEVELOPME:ST AGE:S,Y OF THE CITY Of' LOS ANGELES. ('.AL!FOR~IA

Rc,·enues b~· Source· G,nernn1cnt:il fun;ls

Last T t:n Fisl·al Y tars I In Thou:•,andsl ll'nnudited•

S.2!11>.flOO

$175.000

Sl."i0.!1110

Sl.25.nOO

SllXl.000

S75JJOO

$50.000

s.::.s.ooo so l'J'P l')'J..f )')'>.'' I')')(, 1'}')1 l'J'}'J

a lm.:rcm~·ntal pn)p,..·ny taXL'' • (irants O lnh.·n:sl in..:-,)mt.:' 0 [ .~HIO fl'['laym._•111s • Rt•n1.1l incom(' i CCJty/dcvdopl'r participatinn CJOth,. .'r _J

Incrcmcnrnl City/ Fis1.:al Propl'rty lnc,:rcst l.oan R\.'ntal l)cvch)pl'r Year Taltcs Repayments 1ncomc Participath)n ()tht'f Total

200::! $ 62.719 $ 27 .429 $ 9.310 $ R.617 $ 4 .."t11l $ l.860 s 2.3.'iX $ 116.627 2001 5 J .433 19.121 15.224 0.817 4.il67 YI.585 I J.~tli.) 137.5.57 2Cl0() 82.300 17,(149 18349 4.610 43151 4.929 I 1J}2J. l-12.311 1999 85.647 2.1.042 1:1.286 3.482 U>-1 19516 l!l.920 151:1.637 1998 86.827 29.663 13 ..160 4.664 3.2'-Jl 5L<'i3l ~Jl.16 197.472 1997 90.095 22318 16.385 45c\8 3A.JS 25.i 19.432 156.499 1996 100.290 I 8.025 2.l.179 7.404 3.590 1323 S.67:'i 162.486 1995 128.97.i 11.949 20,406 8.205 3.923 4.1)44 14.980 192.480 1994 121.483 10.941 16.946 6.707 3.742 412 7.269 167,S!lll 199.i 13 l.826 8.400 36.679 .l.494 J52J 5,070 11.531 201.524

Nt,ti.:: Sinci.: !he new ri.:porting rnodel ((j/\SB 34) c.:hanyi.:s signilic.:antly both the recording: and pn.::si.:n1a1ion of finandal data. thi.: prior fiscal yi.:ars havi.: not tx."'t!n ri.:i;tatt'd for thc purpose of pro\'lding thi.: 10-year cumparativc inform,uit)n for 1h.: abovi.: schi.:duk.

-87- This page inlcntionally left blank. TIIE co~nn::-IT\' REDE\"ELOPME:\T AGE~C\' OF THE CIT\' OF LOS A'.'

Analysis or Debt Ser,·ice Co,·en\g<' .. Tax Allocation Bonds

For the Fisl'lll Year Ench.> I l 'nauditt'd)

s~:-.ooo

;·. ! , ' :::::::: +---f \--- $5.000

so t: - ~ ~=,;..~/:__:::----.,__,,c.=·-=a:=:,e~::::____:::,c,::·---="'-·'- AX H\ 1111 CII C'J CR H\\' llO IC J:I ].,\ ~ll) ~111 '.\5 :-.:!l 1•1 --, rJ.x i111:r,.·n ...-111

I ),.•ht S,.-r\'k.:i: for Tax Pro'et·t Allnc:ation Honds Tax lm.:rcrnL'nt ( I l CovL'ra~t.·

/\K Adams Nnrn1antlk' (2_1 $ 927 $ :\I1\ BS B~acon Strl'\..'l 398 816 211)•; BH Bunkl'r Hill 20• .1,14 23.851 117'1 CH Chimi1own t.450 2,606 1811';: C9 Couru..·il I )istrk:t 9 201 15Y5 79-4,;,: CR Crenshaw 360 538 149'/, HW Holl)'\\'Ood ,1,533 7.051 200',f HO HOO\"l'f 899 2J)15 224'{ LC Laurl'I Canyon 62 614 99nr::, LT Littfo Tokyo l.88Y 2.013 ]07'4 LA I ,os Angc:ks Harhor 50.t 1.089 2lh'i; Ml) Mid City 138 l.Cl)J 7h2'·'t MH Mon!L'n:y Hill:,; l.309 2.23ll l 70'.. ~ NS Nonnandil' 5 511 1.419 249'-~ NH Nnrth Hollywood 1.664 6.189 372':f Pl Plt'o Union 1 409 903 2211:'r

( I) Tax incrcml.!nt irn.:ludcs rdmhurscnlcnts and pass-throug:hs. (2) ProJ:c! an:a has stopped receiving tax im:n.·mcnl due to revenue limits. sufficient prior tax incrcmL'ni h.is hL'cn deposited with the Trustee for payment of t·urrcnt and future debt service.

-88- This page intentionally left blank. Tiff cm1~1u,1n· REDEYELOP~IE:,iT AGENCY OF TIIE CITY OF LOS ANGELES. CALIFOR:,;JA

Ri1tio of Annual Debt Scrvit.:c Expenditures lo Total (;eMral G(nenunenla) Expenilitur\'s

Last T1,.•n Fisc;ll Yenrs f In Tho11.~u1dsl i l" nauditt>d I

'S?00.111)()

.i,6()1).IIIHI

'S5rll)Jll)I)

$400.! II)(} · -·

S~OO.IXX)

$2DOJ){K)

i;]OOJK)f)

• llcht _~~J'\'h.·~e _____,.OTotal cxpi:n

';; nfT11la! Dehl Fiscal I )i:bt Si:r,oi1.:c Tutal S,:rviri: 111 T11tal Year Princieal lntcn.:~t Other costs Tt)tal Ex~nditures FxEcn

2Dll2 $ 9 •.50..t $ 21.60.i:; $ 1.2&2 ~ 32.4:'il $ 11.:;.205 18.7•;1 2001 .'i6360 .10.261 674 87.295 17_:;_97_1 50 2'/, 2000 '.-Hl.665 .11.727 551 62.949 1.17.180 4_.:;_l)'!, 1999 41.2.14 _'~2.664 .12.1 76,221 169325 4).()1/, 199R .15.:-t<;J .10.206 2.59.1 68.152 lX.5.673 .16.7 1ii 1997 77.084 .19.189 i 16.273 2l7.059 ::;.~.6'/, 1996 IX.JOO .19,9:'i(i 58.JIS6 173.9:'i:! 33.4'.if 1995 15.446 423.18 57.784 183.288 31.5'7, 1994 .190.725 ( IJ 6-4.964 455.689 636.613 7 l.6'k 199.1 41.672 59.08\J 100,761 .125.61.'i .1D.9'k

Nntl'· Sine!." thl' nl."w rcpnrting modi..•l ((iASB .14) changl's signilicantly hoth th1..• n:conling and presi.:niati1)n uf linandal data. !hi.: prh>r fiscal yi:ars have not hcl"n restatl."d f.)r the· purpos1..• nf providing the JO-year cnmparativ,: infunnatitm f,)r the ahovc schc

(I} 1.argi.: amllunt rcpn:sents the di.:foa,;an(:c of ci.:rtain tax. ano~;ation b,)nds issued hy the Bunkc-r Hill an

-89- This page in1cntionally left blank. THE COMMUNITY REDEVELOPMENT AGENCY OF TIIE CITY OF LOS ANGELES, CALIFORNIA

Top Ten Assessccs ·within Each Redevelopment Project Arca June 30. 2002

(In Thousands) (l;nauditcd)

~·-0 of Total Total Tora\ Project Total Project '' o of Project Top Ten Project Assessed lncrcmcntal !ncrcrncntal Arca :\sscsscd Value Assessed Value \'..ilm:s i\dan1s '.'-lonnandic s -i:2.685 s 277.716 15.3 70-0 s 2352:'-I. IS.141'."o Adch.intc Eastsidc 3/JJ,774 1.-111.395 21.51'\, 2!SJJ~ J JC).26°.0 13cacon Street 78.~90 SS.9-1.S ss.112~-n 82.184 95.~6'!·., 1 13roadway/i\1anchcs1l.!"r 16,535 89.321 18.51 \, 10.-l_l;-I, 158.470;, 13unkcr Hill J,4S4, 197 2,185.274 67.92\!{, 2-16../-.920 6S.56~;, Central Business District 1,664,974 6,970JJS.:! 26.76%, 5.567.844 33.5fl~O Chinatov,rn 83,260 390,580 21.320·() 289.0..JO 28.81°/o Council District 9 Corridors South of Santa Monica freeway 196.183 1.969,448 9.96°/o 290,864 67 ..45°;, Crenshaw 110,225 216,955 50.81°0 110,7-l:l. 99.53°0 Crt·nshaw'Slauson 25,093 I59.303 15.75~0 3-1.149 7.l..-18"0 East Hollywoodl8c\"crly- ~orn1andic 7~.370 897,5~() ~- "";'_l,O O 12(1.5)6 ()l.92°,, llollywood (18-1.167 2.8 I 8.49-J 2-l-.27°0 l,60!1.6:-:2 -!.2.-; ..JO(> 1 HOO\"Cr 136.3-42 317.2.:?3 -t~.98°0 22-L61l..f 60.70' .., Laurel Can yon 104,378 299.270 3-l.SS~,(I 71 .. 161 1-lh.6S0 o Little Tokyo 156,641 254,939 61.44o/o 225.342 69.5l~'(I Los Angeles Harbor 48,650 119,309 40.78~·0 109,505 -4..J ... t,3~o Mid-City 58,973 595,936 9.90~0 155,253 37.99°/(1 Monterey Hills 8,707 228,946 3.80% 227,772 3.82~0 Normandie 5 32,647 149,269 21.87% 124,471 26.23o/o North Hollywood l21,666 899,620 I 3.52o/o 735,223 16.55°/o Pacoima/Panorama City 253,923 2,858,540 8.88'Vi, 488,372 51.99~/o Pico Union l 27,124 127,816 2l.22°/o 93.135 29.12°10 Pico Union 2 44,476 233.387 !9.06°/o 181.340 2-t5J0;Q Reseda/Canoga Park )77,681 2,382,962 15.85% 444.978 84.88% Rodeo/La Cienega 2,123 44,283 4.79':l/o 42.2(16 5.02o/a V cnnont/M anchcstcr 34,075 110,334 30.88'l/o 29,459 115.67.:YO Watts 16,070 36,262 44.31 o/,:, 28,259 56.86°/o \Vatts Corridors 20,741 71,973 28.82%i 25,755 S0.53~0 Western/Slauson 43,905 194,046 22.63% 7,012 626.14% \Vest lake 152,0l l 856,682 17.74% 151,548 I00.3lo/l) Wilshire Ccnter/Korcatown 395,441 2,554,891 15.48% 38,936 l0l5.63o/o

Source: KatzHollis based on information provided by the County of Los Angeles as of August 2002 .

•90- This page intentionally left blank. THE CO\I\IUNIT\' REDEYELOP\IE:-.T AGEsn· OF THE CITY OF' LOS ASGELES, CALIFORi\lA

Assessed Valuation.~ - All Rede,·eto1,n1ent ProjN.'ts

Last Ten F1st·ul Years (In Thousands) ( l'nauditt•d i

)'.;'5iJl!l!l.lHH1

$2CIJHl!)JHJ1l

$JSJ>IIOJHHl

-S5J11Hl.!lllll 1493 ·199.J 1995 19% 1997 1998 1999 .!H!lll 2001

~1:ro:rcn Ba.<;e Ar.;..~ss,:d Valuation . ···---. ··1 -Current Year Ar.;Sc-.sscd Value --lm.'rcmcntal A,scs.....:d Valuation (ht'f Ba~ YL'ar · --Incremental A,scsscd Valuatio;: ()vcr Prcvinus_::".1..~

lm:·remenlal A"is.:'Ssc-d Valuation 1:rnzcn Currl'nl Y1,.•ar lncn:ast: (l)ccrL'aSCI 'A IncrcaM? ( DL'LTL'as...· 1 11scal Base- A"iSCS&"d A',se,.r.;:-;cd Over Hase (}v1..·r ( )vcr Base ()ver YC"ar Valuation Valuation Y1.·,u Prt'vious Year Year Pr1..•, ious Y1..·ar 2002 $ 1.5.684.230 $ 28,066553 $ 12382323 $ 1.284.717 78.9.5'4 .J.XO'/? 2001 J 5,684,231) 26.781.836 I Ul97,6<16 4.443.476 70.76'/r I

-91· This rage intentionally left blank. ,,,., ... ,_ [CRAILAj

·,-.J --

II Redevelopment Earthquake Disaste1 Project Areas Assistance Proiec1s

1. Adams Normandie 30. Reseda / Ca •31. Paooima noga Paik 2. Adelante Eastside _East H I P1morama City 3. BuconStteet 32 B ot,wood/ •. BrO&dway I Mant everty-Nournmdi I _5. Bunker Hill' httter 33. Laurel Canyon 6. CentratBusilfflO" . ·- · City-Center ISttict/AmendedJ 1 a ChinallMn II Revlti!lirallOn 9. Counci! Distrid:9- . Projecu South of Sa Comdor$ 10. CrtnShaw nta Monita hwy. 34. Boyle Heigf'lts 1 n. C..11Shaw/Slauum 35. Boyle He19hts 2 12. Hollywood 36. Uncolrl Heights l3. Hoover 14. Late liyo ...... l!i. LA. Harbor Iii Monterey Hil$ 11. Mid-Ciy~ 31• &tntrel lndl.lstrial - ta. Normandif 5 38. l.mle Tokyo . 19. Narth~ 39. Mid-City upa~ 2Q. Pacific Avenue . -- ti. Pic:ol.lnion I Conidor - 2122...... -· • 24. ~/.LIClentDa D -=- ~~:.-P~IIV -- ~·~::~.,. _.,..< . ·-- As. 01 June 30. 2002 This page intentionally left blank. THE C0~1~1UNITY REDEVELOPME:\'T AGENCY OF THE CITY OF LOS ANGELES.. CALIFORNIA

Redevelopment Projects

Project Area Statistical Sunnnaries

.June JO. 2002

Project Arca Adams Adclantc Broad\,·ay· Norn1andic Eastside Beacon Street \lanchcstcr Acreage 40-1- acres 2.164 acres 60 acres 1S9 acre"

Council District(s} 1&8 14 5 Dale of Adoption ~1ay 3, 1979 ~1,.uch 30. 1999 April 21, 1969 'Dc..:cmbcr 19. [99,4 Da1c(s) of an1endmcnt(s) December 20. 1994 None February 22, 19 1 I :,...:\}llC' Dcccnlbcr I J, 1999 August 29, 198\l December 17. 1956 December 22, 199-1-

Project end date June JO. 2000 ~1arch 30, 2029 April 21, 2009 December 19. 202.4

Eminent domain expires \1ay .\ llJ9l ~,tarch 24. :!011 Dcccn1bcr 17, 199~ DL·c ..·n1bcr IIJ. 2006

Tax increment cap $2 J .000.000 :,.;one S 130,000,00IJ \;nn~

Tax increment received throu!!h FY02 S2 I ,OOO,OOO SI,556,579 512,787,221 S37,291 Balance to reach cap so NIA $117,212,779 i\:.-:... Annual tax. increment cap NIA NIA N!A 1'-A Last year for receipt of tax increment 2029 20.t..4 2019 2039

Maximum bonded indebtedness SS,000,000 S 120,000,000 None SJ0,000,000

Debt establishment time limit May 3, 1991 March 24, 2019 January t, 200--l December 19, 20 14

Continued ..

Source: Redevelopment Plan Adoption Documents

.93. THE COM~IUNITY REDEVELOPMENT AGENCY OF THE CITY OF LOS ANGELES, CALIFORNIA

Rede,·clopment Projects - (Continued)

Project Area Statistical Summaries

June 30, 2002

PrOJCCl ,\rc.i Central Business ilunkcr Hirt District Chinatown Cny Center Acreage 133 acres l,549 acres 303 acres 879.5 acres

Council District(s) 9 9 and 14 1 and 9 9 Date of Adoption ~1arch 31, 1959 July 18, 1975 January 23. 1980 !\.1ay 2002 Datdsl of .1incndn1C.'nt(s) Janu;iry I 2, 196:S December 17. 1986 Dcccn1bcr 22, 1994 ~one J1ml' 25. l 97. 2001 Dcccntbcr 17. 198() Dcccn1bcr 22, 1994

Project end dote January 1. 2009 July 18, 2010 January 23. 2020 \1:iy 21)32

Etnincnt don1;:nn expires Dcccn1bcr 17, 1998 Dcccinbcr 17. 1998 January 23. J l}92 .\1a::,. 201..i

Tax incrcn1cnt cnp S2.5U0.000.(J0() 5750,000,000 S23U.OUD.U00 ") :--: _.\

Tax increment received through FY02 S546, 113,051 $750,000,000 $52,42),209 NIA Balance to reach cap S 1,953,886,949 so Sl 77,576.79 l ~!A Annual tax increment cap NIA $75,000,000 NIA Ni A Last year for receipt of tax incrcn1cnt 2019 2020 2030 2()-17

Maximum bonded indebtedness None None $82,000,000 S 1,099,000,000

Debt cs1ablishmcnt time limit January I, 2004 January l, 2004 January J, 2014 :V1::iy 2021

Continued ..

(I) Increase in tax increment cap from $53.000,000 to $230,000.000 pursuant to the an1cndcd plan for the Chinatown Rtxlcvdopmcnt Project, is currently uncle, litigaiion.

Source: Redevelopment Plan Adoption Documents

-94- THE CO)IMUNITY REDEVEI.Ol'MEl>T AGENCY OF THE CITY OF LOS ANGELES, CALIFORNIA

Rede\'elopment Projects- (Continued}

Project Area Statistical Summaries

June JO. 2002

Project Arca Crenshaw Council District 9 Crcnsha\\. S!auson !lolly,n,od Acreage .2.817 acres 54 acres {original) 2(r2 acres 1 I 07 acres 150 acres (an1cndcdt Council District(s) 9 8 r. ..t anJ 13 Date of Adootion December I 3, 1995 May 9. 1984 October 10. 1995 \fay 9. 1986 Date( s} of antcndmcnt( s I :-:one Dcccn1bcr Ct J 994 ~one DtccL·mbcr '.!'.!. 199-l Dccc1nbcr 21. 199..l

Project end date December I\ 2025 r..4ay 9. 2024 (original t October 10. 2025 \1ay 9. 2fJ26 December LL 2006 {amended> En1mcnl don1ain expire:; Dccc,nhcr 13. 2007 \1ay 9. 199h {original) October lo, 2HO/ \1.J: '), 1998 December 13. 2006 (umendcdl Ta:x increment cap None 595,000.000 None S':J22A52.2n'7

Tax increment received through FY02 S3,565.108 56,547,832 5639,351 573.578.406 Balance to reach cap NIA 588,452,!68 NIA SS48.873,801 Annual 1ax increment can NIA SS00,000 (orivinal only) NIA i\-A Last year for receipt of tax increment 2040 2004 2040 20~6

Maximum bonded indebtedness S 104,000,000 530,000,000 $20,000,000 5307,484.000

Debt establishment time limit December 13, 2015 May 9, 2004 October 10, 2015 \-1Jy 9, 2006

Continued ...

Source: Rcdcvclopn1ent Plan Adoption Documents

.95. THE COMMUNITY REDEVELOPMEl'iT AGENCY OF THE CITY OF LOS ANGELES, CALIFORNIA

Rede\·elopmcnl Projects - (Continued)

Projcet Area Statistical Sumn1artcs

June 30, 2002

ProJect :\rc~1 Los An~..:k:. lloo\·cr Little Tokyo Harbor \lid~Cit> Acrcugc 573 acres 67 acres 232 acres 725 :icrcs

Council District(s) S and :> 9 15 10 Date of Adoption January 27. 1966 (HO) February 24, 1970 July 18. 1974 .\f:1y Jo. 1996 Date( s i of anlcndn1cnt( s) February 4, 1971 December 17. 1986 Dccen1b1.'"T 17. l lJS6 \"one \:o\·cn1bcr9, 197S December 2~. 1994 Dccc1nbcr 22, l lJ9 (amended) En,incnt dom:.nn ex pir<:s Dcccn1ber 17. 1998 (HO} December 17. 1998 Dccl..'mbL'r I 7. l998 \b~ 10. 20l_l8 :-..1:ty 11, 1995 (HE)

Tax increment cap S75,000,000 !HO) S300,000,0UO 5125.000.0(Jl} '.\one $85,000,000 !HE) Tax increment received through FY02 528_150,678 544,092,468 $19,)58,777 $3.024.292 Balance to reach cao $140595,370 (HO & llE) $255,907532 $105,841,223 !'.IA Annual tax increment cap NIA NIA KIA ):!A Last yc:3r for recC'ipt of1ax incrc1ncn1 2019(110) 2020 202-1 2041 2033 (HE) 2039 (amended) 1\.1ax 1mum bonded indebtedness None (HO) None None 523,000,000 $45,000,000 (HE) Debt establishn1cnt time limit January 1. 2004 (HO) January I, 2004 January ! , 20(J4 \fay 10. 2016 January 1, 2004 (HE) May 12, 2009 (amended)

Continued ..

Source: Redevelopment Plan Adoption Docun1cnts

-96- TIIE COMMUNITY REDEVELOP)JE;>;T AGENCY OF TIIE CITY OF LOS ANGELES, CALIFORNIA

RedeYelopment Projects - (Continued}

Project Area Statistical Sumn1:arics

June JO. 200:?

Project Arca t,.1ontcrcy Hills Normandic 5 Nonh Hollywood Pacific Corridors Acreage 211acres 210 acres 740 ncrcs 6 "i.:t acres

Council District(s) 14 8 und J(> 2 and 4 I' Date of Adoption Julv 29, 1971 October 7, 1969 February 2:1. 1971) \b.~ 2002 Datc(s j of a1ncndn1cnl( s) f\1ay 9, 1984 January 27. 1982 No\·c1nhcr 19. 19~o :\nne Deccn1bcr 19, 1986 December 17. 1986 February 2, I 'JSJ Dcccn1bcr 22, 1994 December 22, 1994 Dcccn1ber 22. l 994 r...1arch 18, 1999 \.1arch 18. 1999 Novcn1bcr 6, 1995 October 2. J 997

Project end date July 29, 2011 October 7, 2009 F cbruary 2 l. 2019 \fay 20~2

En11ncnt don1~iin expires Dcccn1bcr 17, 1998 Dccc1nbcr 17, 1998 October 2. 2009 .\t~l\ 201-l.

Tax 111ercn1cnt cap S!SOJI00,000 S65.0!JO,UO(J $535.6(11(000 '\ ;\

Tax increment received through FY02 $33,495,392 S21.217,070 $94,220,653 :-u. Balance to reach cap SI 16,504,608 543,782,930 $441,379.347 :-I.A Annual tax increment can NIA NIA N/A :--1·A Last year for receipt of tax increment 202l 2019 2024 20..J.7

Maximum bonded indebtedness None None SI85,000,000 $191.000,00()

Debt cstablishmcn! 1imc- lin1it January I, 2004 January I, 2004 January I, 2014 i\lay :1022

Continued ..

Source: Rcdcvclopn1cnt Plan Adoption Documents

.97. THE COMMUNITY REDEVELOPMENT AGENCY 01' THE CITY 01' LOS ANGELES, CALIFORNIA

Redevelopment Projects - (Continued)

Project Arca Statistical Summaries

.June J:O, 2002

Project :\rc::i Rodco.1 \"cnn0111.· Pico Union I Pico Union 2 La Cicneb!a \l:ind1~'Slcr Acreage I 55 acres 227 acres 24 acres 163 acres Council Districl(s) I J s ' Date of Adoption February 27. 1970 Novc1nber 2·t 1976 ~ay 12, 1982 \la~- 1-L ]9!J(i Datc(sJ of :.in1cndrncnt{s) December I 7, 1986 Dcccn1bcr 22, 199.t December 22, l 994 \one Dcccn1bcr 22, J 99-.t ~1ay 9, .2001 March IS, 1999

PrOJCCt end date February 27, 2010 No\'cmbcr 24. 2016 ~lay 12. 2017 \lay )4, 2026

En1incnt Jon1aio expires December 17, 1998 '.\lo\.·cn1bcr 2--L 1988 f\.lay 12. 19(J4 \l;i~- 1-k 20111-

fax increment cap S85.UOO,(!OO SI l ..J.(100.001) S ! 2,000.f!()() \tine

Tax increment received through FY02 $15,070,847 $15,919,874 $4,558,634 S.S53A2 ! Balance to reach cap $69,929, 153 $98,080, 126 $7,441,366 ':\ Annual t.ix increment cap NIA NIA ~/A '.\ .-\ Last year for receipt of tax incrcn1cnt 2020 2026 2027 204 I

Maximum bonded indebtedness None S44,000,000 SI0,000,000 S 12.000,000

Debt es1ablishrncnt time limit January I, 200.t January I, 2014 Janunry I, 200.t \by 10, 2iJl6

Source: Redevelopment Plan Adoption Documents

-98- THE COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF LOS ANGEI.F.S, CALIFORNIA

Rede,;eJopment Projects-(Continucd)

Project Area Statistical Summaries

June 30. 2002

Project Arca \Vcsten1i \\'ilshtrL' \Vans \Vatts Corridors Slauson \\'~s1l~1i-.t' Korca!O\\·n Acreage 107 acres 245 acres 3 77 acres 6J8 3CTC$ I .2D7 acres

Council Districl(s} 15 15 8 I -L 10 and 1_-; Date of Adoption December 19. 1968 ~ovcmbcr 15. (995 ;\1ay 1-t 1996 !\tay JS. ! I)')') December I 3, 1995 Date( s) of an1cndmcn1( s} February 8. l 978 Kone ".\:on..: ;s.;ont' '.\onl' Dcccn1bcr 17, 1986 Dcccn,bcr 12, 1994

Project end date January I, 2009 No\·cmbcr i 5, 2025 ~1ay 14. 2026 ~1ay IS, 2029 Dcccrnbcr 13. 2025

En1mcnt domain expires Dccc1nbcr 17, 1998 Kovcn1bcr 1S. ::!007 .\1ay 1..i.2nus :\1ay IS_ 21)\ I Dcccinht'r J J_ ::!007

Tax increment cap S35.ooo,ooo None '.'Jone ~Onl..' \nne

Tax increment received through FY02 $2,638,227 S569,027 S27,IOO None Sone Balance 10 reach cap $32,361,773 NIA NIA NIA SA Annual tax increment cao NIA NIA fs;A ]\;!,\ :-;,A Last year for receipt of tax incren1en1 20!9 2040 2041 2044 .2(140

Maximum bonded indebtedness None Sl4,000,000 S 12,000,000 S 128,000.000 S427,000,000

Debt establishment time limit January l, 2004 Novcnlber 15, 2015 May 10, 2016 l\·1ay 18, 2Ul'J December 13.2015

Source: Rcdcvdopn1ent Plan Adoption Documents

.99. THE COMMUNITY REDEVELOPMENT AGE:S:CY OF THE CITY OF LOS ANGELES, CALIFORNIA

Earthquake Disaster Assistance Projects

Project Area Statistical Sun1m2ries

June 30, 2002

Project Arca East Hollywood: P

Council distric1(s) 4 and 13 2 7 Date of adoption Dcccn1bcr 14, 199..J. Deccn1bcr 9, t 994 N0Ycn1bcr 29, 199.t ·'Deccrnbcr 13. 199..J. Da!c(s) ofon1cnd1nenl{s) >Jone Octob.:r 20, 1999 '.'\one :\on<.:

Project end date December 14, 2009 Dcccn1ber 9, 20fJ6 Deccrnbcr 3 ! , 20 ! 4 Dcccrnbcr 13, 2014

£n1incnt domain expires Dcccnibcr 14, 21)06 ~o E1nincn1 Domain '.'Jo\·cn1bcr ::•J. 200(1 DL'Ccmhcr 1.1. !999

Tax incren1ent c..ip Non1..· :\one '.'ionc '.\one

Tax incrcn1ent received through FY02 $676.292 S.2.188365 $3.959.862 S6.754.2Y7 Balance to reach cap NIA NlA '.\J/A ~,A Annual tax increment cap NIA NIA ~IA ~'A Last year for receipt of lax increment 2039 2021) 2039 203')

~1ax1mum bonded indebtedness $54,050,000 $25,UOO,OOO 5200.(HlO.(J(JI) Sl9U,(JOIJ.UOO

Debt establishment time lin1it December 14, 200.t Dece1nbcr 9, 2004 November 29, 2004 December 13, 200-4

Source: Rcdevelopmenl Plan Adoption Documents

-100- THE COMMUNITY REDEVELOPME:S.T AGENCY OF THE CITY Of LOS ANGELES, CAUFORI\IA

Revitalization and Stud}' .-\,rea Projects

Project Area Statistical Sumniaries

.June 30. 2002

PrOJCCt Area Boyle I lc,ghts I Boyle Heig:hrs 2 Lincoln llcighb I Central lndustn:.il Rcntal1zu1ion Arca Rcvitali7ation Arca Rc\:itah7ation Ari.:,1 Study Arca Acreage 300 Acres 300 Acres 200 acres son acres

Council Dislnct(s) l-l J -l l ') ..irnJ 14 Date of Adoption August 1978 April 19811 Scptcn,bcr J 979 .'\dop1cd '.\!ovcn1bcr 2l)(JJ Datcts) of An1endn1t'.ot(sJ NA N,A j\.'.,\ ;\\lOC

PrOJl"Ct End Date Unknown Unknown Unkno\\"n '.\o\·cmbcr 2032

En1incnt Don1ain F.xpircs ,n N',\ !\.':\ \:V\Cnlbl·r 2014

Tax lncrcn1cnt Cap :-J.,\ ~·:\ '.\!.";\ N A

Tax lncrcn1cnt Received Through FY02 ~.:A ~.':\ '.'/!:\ N A Balance to Reach Cap NIA NIA N/A NIA Annual Tax Increment Cap NIA NIA NIA NIA Last year for Receipt of Tax lncremcnt l\JA f\'.!A Ni A 2{)47

Maximum Bonded Indebtedness. NIA NtA NIA Unknown

Debt Establishment Time Limit NIA ~IA NIA November 2022

( J J (J)

(l) for financial reporting purposes, the Boyle Heights l and Boyle Heights 2 Revitalization Areas have been folded into the Adclantc Eastsidc Redevelopment Project Arca.

Source: FY02 Budget Documents

-101- This page intentionally left blank. THE COMMUNITY REDE\'ELOPMEl'ff AGENCY OF THE CITY OF LOS A1'GELES., CALIFORNIA

Insurance Coverage .June 30, 2002

Coverage Carrier Lllnits Dcduct10k:- Policy Period

Fidelity Fidelity & Deposit Insurance ('on1pany s 250,000 s -: ,5!)() ---l. Ol.112-J JI 113 of Marykind

Property ($11.000,000 total co\·cragc) Lexington Insurance Company 5.000,0HO :'.lJIIU 4 Ol.!(!-J:,31.03 Fine an, damage. extra expenses Great Atncrican Custo1n Insurance 6.000,00!J - ..: O!-l/2-J JI 03 and F.lcctronic Data Processing e~ccs:- of underlying Equipment

Construction of \\'ashington Great An1crican Alliance Insuranc~ 7,t31,UO!J JO IJ') Ol-1 :J 5 OJ Boulc\'ard Pcrfornling Arts Center Con1pany (All risk)

Boiler and l\.1achine0· Chubb Group of Insurance Con\panics 4.000,000 ---1. (J[ 02-3-31 fl3

Automobile J ii! 1i::>.~ _-; 1 OJ Bodily injury ·property dan1agc I lartford Casually Jnsuranc~ Companr IJJOU_lll!U I_IH)I) Non~owncd 'husinC'ss~ L1Jbility l .!lOU.000 Collision Actual cash ,·aiuc ]Jl!Jll C 01nprchcnsi, ·c Actual cash ,·alue 1.1100

Commen:ial General Liability $70.000.000 total CO\"crngc l)nitcd J\ational lnde1nnity IJ)OO_OOO ,2),0ll{I ..J.OJ·(J2-3"31 03 .-\n1crican International Specialty Lines 25.000,000 ..in1.n2.JJ\'tl3 excess of underlying Gulf Insurance Co1npany 22.000,0(JO 401 02-3"31 OJ excess of underlying: Lexington Insurance Company 22,000,000 4 OJ.'02-J'JJ:03 excess of underlying

Public Officials American International Specialty f.incs 5,000_000 150,0()fl 4:01:02-3.'31 03

Source: Marsh Risk Insurance Scrvices/Cumhrc, Inc .. Broker of Record

-102- This page intentionally lcfl blank. 3600 WILSHIRE BOULEVARD. SUITE 1710 LOS ANGELES. CALIFORNIA 90l10 TELEPHONE (213) 736·6664 CERTIFIED PUBLIC ACCOUNTANTS FAX (2131136·6692

/he llonoruhh' Laura,\'. ("hick ( 'ontrollcr <~( the ('i() - r~(/.os :l n,',!.t'lt '.\ an,/ Tiu.• Co1111nuni(1· Redt·i·c/upnH'II{ Agt·niy 1:t Th(• ('i~r (~(Los Angeles. ('al(f<>rnia

The Board

\\'e ha\'C audited the ;H.:t·(11npanying finant·ial :-tak'llll'llt~ of the gnvcnnn1..:n1al a1.:ti, itH.:~. the bll'-ir:c:-,-1ypc ;;cti\ itic:-:. and e;.ich nu1jor fund (lf The Con1111uni1y RL~dc,:e1t,rn1l'nt A~enc:y tlf th{' City ,_,f L(1,,; :\ni:;clc:-. (~alifon1ia (:\!,!c·ncy) for the year ended June 30. :'(102 .!lld haYt: issued our rcpun th('n.'(111 d,!tcd l)cL·e,nber ~0. 2002. except for ".':otc 3-H-2, as to \,hich the date i:- Dcccrnbcr 30. 2002 ..A,$ des(rihcd iri "\"c!c l-B to the basic financial sta1cn1cnts. in fiscal year 2002. the Agency adopted Govc-rn1nent Accoui:ting Swndurd~ Board (GASB) S1atc1ncnt No. 34, Basic f'inanc;a/ Statc,nenrs - and A1unai,,nn'nt 's Discussion and Ana(rsis - .for State and Local Govenuncnts: ()n111ibus. G:\.SB State1ncnt ~o. 38, ('cr1ain Firran,·ia,' State111ent Note D1:sclosures, and GASB Interpretation ~o. 6, Recognition and ,tfeasuren1.::nt of Cer1ain liabilities and Etpenditures in Go\·('rnntcntal 1:11nd Financial Statcn1enrs. \\'c Cl)nduc:cd L)U!" ;.iudil in accordance \\'ith auditing standards gencr,1lly accepted in the llnited States of :\111crica :ind :-tand:1rds applicable to financial audits L'Ontaincd in (;o\·(•rnn1<'tll Auditing Standards. i:-sucd by the (\Hnptrollcr General of the United States. and a<.-cordingly. inL·ludcd such te:-ts <)f uccou.nting rc:-u,r,\.~ ;1:1J ::uch ()ther auditing procedures as \\'C C<)nsidcrcd nc<.'C5..<-ary in 1hc cin.:u1n:,:tancc:-.

\Ve perfonned the procedures contained in the publication entitled G"uid<·lin<'5 _!or Con:;J/:a,:ce Audits oj Cal!JOrnia Rede\·e/opn11..•11t Agencies as pron1ulga1cd by the controller of the St:'tlc of Califo1nia in connection ,,·ith a rc\'iC"'-' of the .&.gcncy·s C(1n1pliance \,·ith Jri\\'S, rcgula~ions and ;,iJn1ini~tra1i\'e requirements go\'erning acti\'ities of the Agency, as required by Section 33()80. l of the Hcal;h and Safety Code of the State of California. The proc.:cdurcs "'-·e pcrfonnc

During the performance of the aforcn1cnti0ncd proc.:cdurcs, nothing can1e to our attention that \vould lcu

Los Angeles. California December 20, 2002

·103- (THIS PAGE INTENTIONALLY LEFT BLANK) APPENDIXE

BOOK-ENTRY ONLY SYSTEM

The information below concerning The Depository Trust Company ("OTC"), New York, New York, and DTC's book-entry system has been obtained from OTC and the Issuer takes no responsibility for the completeness or accuracy thereof. The Issuer cannot and does not give any assurances that OTC, OTC 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 OTC or Cede & Co., its nominee, as the registered owner of the Bonds, or that they will so do on a timely basis, or that OTC, OTC Participants or OTC Indirect Participants will act in the manner described in this Appendix. The current "Rules" applicable to OTC are on file with the Securities and Exchange Commission and the current "Procedures" of OTC to be followed in dealing with OTC Participants are on file with OTC.

OTC will act as securities depository for the Bonds. The Bonds will be issued as fully-registered securities registered in the name of Cede & Co. (DTC's partnership nominee) or such other name as may be requested by an authorized representative of OTC. One fully-registered security certificate will be issued for each maturity of the Bonds, each in the aggregate principal amount of such maturity, and will be deposited with OTC.

OTC 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 17 A of the Securities Exchange Act of 1934. OTC holds and provides asset servicing for over 2 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments from over 85 countries that DTC's participants ("Direct Participants") deposit with OTC. OTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants' accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation ("DTCC"). DTCC, in turn, is owned by a number of Direct Participants of OTC and Members of the National Securities Clearing Corporation, Government Securities Clearing Corporation, MBS Clearing Corporation, and Emerging Markets Clearing Corporation, (respectively, "NSCC", "GSCC", "MBSCC", and "EMCC", also subsidiaries of DTCC), as well as by the New York Stock Exchange, Inc., the American Stock Exchange LLC, and the National Association of Securities Dealers, Inc. Access to the OTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ("Indirect Participants"). DTC has Standard & Poor's highest rating: AAA. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com.

Purchases of the Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Bonds on DTC's records. The ownership interest of each actual purchaser of each Security ("Beneficial Owner") is in tum to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from DIC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in the Bonds, except in the event that use of the book-entry system for the Bonds is discontinued.

To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DIC 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 DIC. The deposit of the Bonds with DIC and their registration in the name of Cede & Co. or such other DIC nominee do not effect any change in beneficial ownership. DIC has no knowledge of the actual Beneficial Owners of the Bonds; DTC's records reflect only the identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers.

Conveyance of notices and other communications by DIC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of the Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Bonds, such as redemptions, tenders, defaults, and proposed amendments to the Bonds documents. For example, Beneficial Owners of the Bonds may wish to ascertain that the nominee holding the Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them.

Redemption notices shall be sent to DIC. The conveyance of notices and other communications by DIC to DIC Participants, by DIC Participants to Indirect Participants and by DIC 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. Any failure of DIC to advise any DTC Participant, or of any DTC Participant or Indirect Participant to notify a Beneficial Owner, of any such notice and its content or effect will not affect the validity of the redemption of the Bonds called for redemption or of any other action premised on such notice. Redemption of portions of the Bonds will reduce the outstanding principal amount of Bonds held by DTC. In such event, DTC will implement, through its book-entry system, a redemption by lot of interests in the Bonds held for the account of DTC Participants in accordance with its own rules or other agreements with DTC Participants and then DTC Participants and Indirect Participants will implement a redemption of the Bonds for the Beneficial Owners. Any such selection of Bonds to be redeemed will not be governed by the Indenture and will not be conducted by the Agency, the Authority or the Trustee.

Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to the Bonds unless authorized by a Direct Participant in accordance with DTC's Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the issuer as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts the Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy).

Payments of principal of, premium, if any, and interest evidenced by the Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC' s practice is to credit Direct Participants' accounts upon DTC's receipt of funds and corresponding detail information from the Agency, the Authority or the Trustee, on payable date in accordance with their respective holdings shown on DTC's records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Participant and not of DTC (nor its nominee), the Trustee, the Agency or the Authority, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal of, premium, if any, and interest evidenced by the Bonds to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Agency, the Authority or the Trustee, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants.

NONE OF THE AGENCY, THE AUTHORITY OR THE TRUSTEE WILL HAVE ANY RESPONSIBILITY OR OBLIGATION TO DTC PARTICIPANTS, INDIRECT PARTICIPANTS OR BENEFICIAL OWNERS WITH RESPECT TO THE PAYMENTS OR THE PROVIDING OF NOTICE TO DTC PARTICIPANTS, INDIRECT PARTICIPANTS OR BENEFICIAL OWNERS OR THE SELECTION OF BONDS FOR PREPAYMENT.

None of the Agency, the Authority or the Trustee can give any assurances that DTC, DTC Participants, Indirect Participants or others will distribute payments of principal of, premium, if any, and interest on the Bonds paid to DTC or its nominee, as the registered Owner, or any redemption or other notice, to the Beneficial Owners or that they will do so on a timely basis or that DTC will serve and act in a manner described in this Official Statement. OTC may discontinue providing its services as depository with respect to the Bonds at any time by giving reasonable notice to the Issuer or the Trustee. Under such circumstances, in the event that a successor depository is not obtained, Security certificates are required to be printed and delivered.

The Authority may decide to discontinue use of the system of book-entry transfers through OTC (or a successor securities depository). In that event, Bond certificates will be printed and delivered.

In the event that the book-entry system is discontinued as described above, the requirements of the Indenture will apply. The foregoing information concerning OTC concerning and OTC's book-entry system has been provided by OTC, and none of the Agency, the Authority or the Trustee take any responsibility for the accuracy thereof.

Neither the Agency nor the Authority can, and neither give any assurances that OTC, the Participants or others will distribute payments of principal, interest or premium, if any, evidenced by the Bonds paid to OTC or its nominee as the registered owner, or will distribute any redemption notices or other notices, to the Beneficial Owners, or that they will do so on a timely basis or will serve and act in the manner described in this Official Statement. Neither the Agency nor the Authority is responsible or liable for the failure of OTC or any Participant to make any payment or give any notice to a Beneficial Owner with respect to the Bonds or an error or delay relating thereto. APPENDIXF

FORM OF CONTINUING DISCLOSURE AGREEMENT

This Continuing Disclosure Agreement is dated as of September 2003, by and among The Community Redevelopment Financing Authority of The Community Redevelopment Agency of the City of Los Angeles, California (the "Authority"), The Community Redevelopment Agency of the City of Los Angeles, California (the "Agency"), U.S. Bank National Association, as Dissemination Agent (the "Dissemination Agent") and U.S. Bank National Association, as Trustee (the "Trustee") under the below described Indenture. The Authority, the Agency, the Dissemination Agent and the Trustee hereby covenant and agree as follows:

Section 1. Definitions.

Capitalized terms used herein shall have the meanings designated above and set forth below unless the context clearly requires otherwise.

"Annual Report" shall mean any Annual Report provided by the agency pursuant to, and as described in, Sections 3 and 4 of this Disclosure Agreement.

"Beneficial Owner" shall mean any person which (a) has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Bonds (including persons holding Bonds through nominees, depositories or other intermediaries), or (b) is treated as the owner of any Bonds for federal income tax purposes.

"Bonds" shall mean collectively, the $ aggregate original principal amount of Pooled Financing Bonds, Series J-Taxable (Council District 9, Pacoima/Panorama City and Reseda/Canoga Park Projects), the$ aggregate original principal amount of Pooled Financing Bonds, Series J-Tax Exempt (Reseda/Canoga Park Project), and $ aggregate principal amount of Pooled Financing Bonds, Series K (Laurel Canyon and East Hollywood/Beverly-Normandie Projects) issued by the Authority under the Indenture.

"Disclosure Agreement" means this Continuing Disclosure Agreement dated as of September__, 2003, by and among the Authority, the Agency and the Dissemination Agent.

"Disclosure Representative" shall mean the Chief Financial Officer of the Agency or his or her designee, or such other officer or employee as the Agency shall designate in writing and which has filed with the Dissemination Agent a written acceptance of such designation.

"Dissemination Agent" shall initially mean U.S. Bank National Association, acting in its capacity as Dissemination Agent, or any successor Dissemination Agent designated in writing by the Agency and which has filed with the Trustee a written acceptance of such designation.

"indenture" shall mean the Indenture of Trust dated as of September I, 2003, by and among the Authority, the Agency and the Trustee.

"Listed Events" shall mean any of the events listed in Section 5(a) of this Disclosure Agreement as a Listed Events.

F-1 "National Repository" shall mean any Nationally Recognized Municipal Securities Information Repository for purposes of the Rule and of which the Authority notifies the Dissemination Agent in writing thereof.

"Official Statement" shall mean the Official Statement dated ____ 2003, prepared by the Agency and describing the Bonds.

"Owners" shall mean the person or persons listed in the bond registry books of the Trustee acting as the Registrar under the Indenture as the owners of the Bonds.

"Participating Underwriter" shall mean any of the original underwriters of the Bonds required to comply with the Rule in connection with offering of the Bonds.

"Project Areas" shall mean the Agency's Council District 9 Corridors South of the Santa Monica Freeway Recovery Redevelopment Project Area, the East Hollywood/Beverly Normandie Earthquake Disaster Assistance Project Area, the Laurel Canyon Earthquake Disaster Assistance Project for Laurel Canyon Commercial Corridor, the Earthquake Disaster Assistance Project for Portions of Council District 7 Project Area, and the Earthquake Disaster Assistance Project for Portions of Council District 3 Project Area.

"Repository" shall mean each National Repository and each State Repository.

"Rule" shall mean Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time.

"State" shall mean the State of California.

"State Repository" shall mean any public or private repository or entity designated by the State as a state repository for the purpose of the Rule and recognized as such by the Securities and Exchange Commission of the United States.

Section 2. Purpose of the Disclosure Agreement. This Disclosure Agreement is being executed and delivered by the Agency, the Dissemination Agent and the Trustee for the benefit of the Owners and Beneficial Owners of the Bonds and in order to assist the Participating Underwriters in complying with Securities and Exchange Commission Rule 15c2-12(b)(5).

Section 3. Provision ofAnnual Reports.

(a) The Agency shall, or shall by written direction to the Dissemination Agent cause the Dissemination Agent to, not later than eight months after the end of the Agency's fiscal year ( currently June 30), commencing with the report for the fiscal year ending June 30, 2004, provide to each Repository an Annual Report which is consistent with the requirements of Section 4 of this Disclosure Agreement. The Annual Report may be submitted as a single document or as separate comprising a package, and may include by reference other information as provided in Section 4 of this Disclosure Agreement; provided that the audited financial statements of the Agency may be submitted separately from the balance of the Annual Report and later than the date required above for the filing of the Annual Report if they are 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(e) of this Disclosure Agreement.

(b) Not later than five (5) Business Days prior to the date specified in subsection (a) for providing the Annual Report to Repositories, the Agency shall provide the Annual Report to the

F-2 Dissemination Agent and the Trustee (if the Trustee is not the Dissemination Agent) in a format suitable for reporting. The Agency shall provide a written certification with each Annual Report furnished to the Dissemination Agent and the Trustee to the effect that such Annual Report constitutes the Annual Report required to be furnished by the Agency hereunder. The Dissemination Agent and Trustee may conclusively rely upon such certification of the Agency and shall have no duty or obligation to review such Annual Report. If by such date, the Dissemination Agent 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 first sentence of this subsection (b ).

(c) If the Dissemination Agent requests, and the Agency fails to certify in writing that an Annual Report has been provided to Repositories by no later than eight months after the end of the Agency's fiscal year, the Dissemination Agent shall send a notice to each Repository in substantially the form attached as Exhibit A.

(d) The Dissemination Agent shall, to the extent the Agency has provided an Annual Report to the Dissemination Agent, file a report with the Agency and (if the Dissemination Agent is not the Trustee) the Trustee certifying that the Annual Report has been provided pursuant to this Disclosure Agreement, stating the date it was provided and listing all the Repositories to which it was provided.

Section 4. Content ofAnnual Reports. The Agency's Annual Report shall contain or include by reference the following:

I. The audited financial statements of the Agency for the prior fiscal year, 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 time the Annual Report is required to be filed pursuant to Section 3(a) hereof, 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.

2. The following information contained in the final Official Statement shall be revised to reflect the prior fiscal year's actual results: under the caption "THE PROJECT AREAS," the information in the tables entitled "Estimate of Tax Increment Revenue" for each of the Project Areas and the information in the tables entitled "Estimated Tax Increment, Debt Service and Coverage" for each of the Project Areas.

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 Authority and the Agency or related public entities, which have been submitted to each of the Repositories or the Securities and Exchange Commission. If the document included by reference is a final official statement, it must be available from the Municipal Securities Rulemaking Board. The Agency shall clearly identify each such other document so included by reference.

Section 5. Reporting ofSignificant Events.

(a) Pursuant to the provisions hereof, 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 (each of which is a "Listed Event"):

I. principal and interest payment delinquencies;

2. non-payment related defaults;

F-3 3. modifications to rights to Bondholders;

4. optional, contingent or unscheduled bond calls;

5. defeasances;

6. rating changes;

7. adverse tax opinions or events adversely affecting the tax-exempt status of the Bonds;

8. unscheduled draws on the debt service reserves reflecting financial difficulties;

9. unscheduled draws on credit enhancements reflecting financial difficulties;

I 0. substitution of credit or liquidity providers, or their failure to perform; and

11. release, substitution or sale of property securing repayment of the Bonds.

(b) The Trustee shall, promptly after obtaining actual knowledge of the occurrence of any of the Listed Events, contact the Disclosure Representative of the Agency, inform such person of the event, and request that the Authority promptly notify the Dissemination Agent in writing whether or not to report the event. For purposes of this Disclosure Agreement, "actual knowledge" of the occurrence of such Listed Events shall mean actual knowledge by a responsible officer at the corporate trust office of the Trustee with regular responsibility for providing trustee services for the Bonds.

(c) Whenever the Agency obtains knowledge of the occurrence of a Listed Event, whether because of a notice from the Trustee or otherwise, the Agency shall, within five (5) Business Days, determine if such event would be material under applicable federal securities laws.

(d) If the Agency has determined that knowledge of the occurrence ofa Listed Event would be material under applicable federal securities laws, the Agency shall promptly notify the Dissemination Agent in writing. Such notice shall instruct the Dissemination Agent to report the occurrence. If in response to a request from the Trustee, the Agency determines that the Listed Event would not be material under applicable federal securities laws, the Authority shall so notify the Dissemination Agent (and the Trustee if the Trustee is not the Dissemination Agent) in writing and instruct the Dissemination Agent not to report the occurrence.

(e) If the Dissemination Agent has been instructed by the Agency to report the occurrence of a Listed Event, the Dissemination Agent shall file a notice of such occurrence with the Municipal Securities Rulemaking Board and the State Repository. Notwithstanding the foregoing, notice of Listed Events described in clauses ( 4) and (5) need not be given any earlier than the notice (if any) of the underlying event is given to Owners of affected Bonds pursuant to the Indenture or Fiscal Agent Agreement.

(f) The Dissemination Agent may conclusively rely upon the determination of the Agency as to the materiality of an event (including a Listed Event).

F-4 Section 6. Termination ofReporting Obligation.

The Agency's obligations under the Disclosure Agreement shall terminate upon the legal defeasance, prior redemption or payment in full of all 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.

F-5 Section 7. Dissemination Agent.

The Agency may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under the Disclosure Agreement, and may discharge any such Dissemination Agent, with or without appointing a successor Dissemination Agent. The Dissemination Agent shall not be responsible in any manner for the content of any notice or report prepared by the Agency pursuant to the Disclosure Agreement. The Dissemination Agent may resign by providing thirtY days written notice to the Agency and the Trustee. The Dissemination Agent shall not be responsible for the content of any report or notice prepared by the Authority or the Agency. The Dissemination Agent shall have no duty to prepare any information report nor shall the Dissemination Agent be responsible for filing any report not provided to it by the Agency in a timely manner and in a form suitable for filing.

Section 8. Amendment; Waiver.

Notwithstanding any other provision of the Disclosure Agreement, the Authority, the Agency and the Trustee may amend the Disclosure Agreement (and the Trustee shall agree to any amendment so requested by the Authority), provided, neither the Trustee or the Dissemination Agent shall be obligated to enter into any such amendment that modifies or increases its duties or obligations hereunder and any provision of the Disclosure Agreement may be waived, provided that the following conditions are satisfied:

(a) If the amendment or waiver relates to the provisions relating to the filing ofan Annual Report or the giving of notice of a Listed Event as set forth in Sections 3(a), 4 or S(a) hereof, it may only be made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature or status of an obligated person with respect to the Bonds, or the type of business conducted;

(b) The undertaking, as amended or taking into account such waiver, would, in the opinion of nationally recognized bond counsel, have complied with the requirements of the Rule at the time of the original issuance of the Bonds, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and

(c) The amendment or waiver either (i) is approved by the Owners of the Bonds in the same manner as provided in the Agreement for amendments to the Agreement with the consent of Owners, or (ii) does not, in the opinion of nationally recognized bond counsel, materially impair the interests of the Owners or Beneficial Owners of the Bonds.

In the event of any amendment or waiver of a provision of this Disclosure Agreement, the Agency shall describe such amendment in the next Annual Report, and shall include, as applicable, a narrative explanation of the reason for the amendment or waiver and its impact on the type (or, in the case of a change of accounting principles, on the presentation) of financial information or operating data being presented by the Agency. In addition, if the amendment relates to the accounting principles to be followed in preparing financial statements, (i) notice of such change shall be given in the same manner as for a Listed Event under Section S(d) hereof, and (ii) the Annual Report for the year in which the change is made should present a comparison (in narrative form and also, if feasible, in quantitative form) between the financial statements as prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles.

F-6 Section 9. Additional Information.

Nothing in the Disclosure Agreement shall be deemed to prevent the Authority or the Agency from disseminating any other information, using the means of dissemination set forth in the Disclosure Agreement or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Listed Event, in addition to that which is required by the Disclosure Agreement. 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 the Disclosure Agreement, neither the Authority nor the Agency shall have an obligation under the Disclosure Agreement to update such information or include it in any future Annual Report or notice of occurrence of a Listed Event.

Section IO. Default.

In the event of a failure of the Agency, the Dissemination Agent or the Trustee to comply with any provision of the Disclosure Agreement, any Owner or Beneficial Owner of the Bonds or any Participating Underwriter may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the Agency, the Dissemination Agent or the Trustee, as the case may be, to comply with its obligations under this Disclosure Agreement. A default under this Disclosure Agreement shall not be deemed an Event of Default under the Agreement, and the sole remedy under the Disclosure Agreement in the event of any failure of the Agency, the Dissemination Agent or the Trustee to comply with the Disclosure Agreement shall be an action to compel performance. Such a failure must be reported in accordance with the Rule and must be considered by any broker, dealer or municipal securities dealer before recommending the purchase or sale of the Bonds in the secondary market. Consequently, such a failure may adversely affect the transferability and liquidity of the Bonds and their market price.

Section II. Duties, Immunities and Liabilities of Trustee and Dissemination Agent. The Dissemination Agent and the Trustee shall have only such duties as are specifically set forth in this Disclosure Agreement, and the Authority and the Agency agree to indemnify and save the Dissemination Agent and the Trustee, their officers, directors, employees and agents, harmless against any loss, expense and liabilities which they may incur arising out of or in the exercise or performance of their powers and duties hereunder, including the costs and expenses (including attorneys' fees) of defending against any claim of liability, but excluding liabilities due, as applicable, to the Dissemination Agent's or Trustee's negligence or willful misconduct. The obligations of the Authority and the Agency under this Section 11 shall survive resignation or removal of the Dissemination Agent and payment of the Bonds.

Section 12. Compensation. The Dissemination Agent and the Trustee shall be paid compensation by the Agency for its services provided hereunder in accordance with its schedule of fees as amended from time to time and all expenses, legal fees, costs, and advances incurred by the Dissemination Agent hereunder. The Dissemination Agent shall have no duty or obligation to review any information provided to it hereunder and shall not be deemed to be acting in any fiduciary capacity for the Authority, the Agency, the Bondholders or any other party.

Section 13. Notices. Any notices or communications to or among any of the parties to this Disclosure Agreement may be given as follows:

F-7 To the Authority:

The Community Redevelopment Authority of The Community Redevelopment Agency of the City of Los Angeles 354 South Spring Street, Suite 800 Los Angeles, California 90013 Attention: Raymond Fors, Finance Director Telephone: (213) 977-1889 FAX: (213) 617-0966

To the Agency:

The Community Redevelopment Agency of the City of Los Angeles, California 354 South Spring Street, Suite 800 Los Angeles, California 90013 Attention: Raymond Fors, Finance Director Telephone: (213) 977-1889 FAX: (213) 617-0966

To the Trustee and Dissemination Agent:

U.S. Bank National Association 550 South Hope Street, Suite 500 Los Angeles, California 90071 Attention: Corporate Trust Department Telephone: (213) 533-8707 FAX: (213) 533-8729

Any person may, by written notice to the other persons listed above, designate a different address or telephone number(s) to which subsequent notices of communications should be sent.

Section 14. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit of the Authority, the Agency, the Dissemination Agent, the Trustee, the Underwriter and the Owners and Beneficial Owners from time to time of the Bonds, and shall create no rights in any other person or entity.

Section 15. Merger. Any person succeeding to all or substantially all of the Dissemination Agent's corporate trust business shall be the successor Dissemination Agent without the filing or execution of any paper or further act.

F-8 Section 16. Counterparts. This Disclosure Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument.

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

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

Approved as to Form: Rockard J. Delgadillo, City Attorney

U.S. BANK NATIONAL ASSOCIATION as Dissemination Agent

U.S. BANK NATIONAL ASSOCIATION as Trustee

F-9 EXHIBIT A

NOTICE TO REPOSITORIES OF FAILURE TO FILE ANNUAL REPORT

Name of Agency: The Community Redevelopment Agency of the City of Los Angeles, California (the "Agency")

Name of Bond Issues: Community Redevelopment Financing Authority of the Community Redevelopment Agency of the City of Los Angeles, California Pooled Financing Bonds, Series J-Taxable (Counsel District 9, Pacoima/Panorama City and Reseda/Canoga Park Projects), the Pooled Financing Bonds, Series J-Tax-Exempt (Reseda/Canoga Park Project), and the Pooled Financing Bonds, Series K Taxable (Laurel Canyon and East Hollywood/Beverly-Normandie Projects)

Date of Issuance: ______

NOTICE IS HEREBY GIVEN that the Agency has not provided an Annual Report with respect to Series _ of the above-named Bonds as required by the Continuing Disclosure Agreement dated June 28, 2003, among the Agency, the Community Redevelopment Financing Authority of the Community Redevelopment Agency of the City of Los Angeles, California, U.S. Bank National Association, as Trustee, and U.S. Bank National Association, as the Dissemination Agent. [The Authority anticipates that the Annual Report will be filed by ------·J

Dated: ______

U.S. BANK NATIONAL ASSOCIATION, as Dissemination Agent

cc: Authority

F-10 APPENDIXG

FORM OF BOND INSURANCE POLICY JI. CAPITAL ASSURANCEW 250 Park Avenue ------New York, New York 10177 Telephone: (646) 658-5900 MUNICIPAL BOND /1 INSURANCE POLICY /; fl ISSUER: l Policy No:,,il , \ I] I / J' \ l-_· l BONDS: [ l Effecfv'e D~l'e: l': I I l :;{~::_ . l l \ t .J XL Capital Assurance Inc. (XLCA), a New York stock insurance co ·~y tl cprrtierat\J14r the payment of the premium and subject to the terms of this Policy (which includes each e · · att*hed\hefeto), hereby agrees unconditionally and irrevocably to pay to the trustee (the "Trustee") or th_. : the "ll__ ay_ in~!A~ent") (as set forth in the documentation providing for the issuance of and securing the Bonds ·· ...... fthJi OWJlerll ophe Bonds or, at the 1 :~c:~:~l ';;.:;ia1d ~; ::~: ~:~~~::1;:;:::n of the principal and il~ ~o ;'f: -J·a sfa\\ bJcoje Due for Payment 0 1 XLCA will pay such amounts to or for the benefit o ·:.l_a_:_r_t_·_L,r o_;_____._ _f_: __._._t._he a}• Jr_,\_whiJh such principal and interest becomes Due for Payment or one ( l) Business Day :_~._i_P.,Y_:"_•_-on ht~._-h- i:l\L_ c1 ~hall ha.ve received Notice of Nonpayment (provided that Notice will be de e Jittsi .. Day :if 1t 1s re~eived pnor to 10:00 a.m. New York time on such Business Day; otherw_ig€;i el);('n '" next Bu~i~essiDay), but only upon receipt by XLCA, in a form reasonably satisfac)!Jiy to i t)~: , r's ri,jht to\te) evid ~-·•_._f._._l:a .:_}_,_:___ •_ s__ Jne_ nJ__ s d,f aysignment, that all of the Owner's rights w!th respect to payment--ff_tuch p _,: !:) ;: Pr,:m':'nt thall thereupon vest in XLCA. Upo? such disbursement,. XLCA_,sha!, b[CCO!lj t _ .J'l.'1~ !Jl1.Uiten,a1,11 :ooupon.to the Bond or the nght t~ receipt of paY1'.'ent of pn~c1paVand 1~t1re~( on ,~ .., ,. 11*'!ffllf u~rogaf~-to the nghts of the Owner, mcludmg the Owner's nght to rece2ve 11ay~en11 ~n4er the :B nd, to _,~!'"it, tB{l'f\~ ,!XPlentJbY XLCA hereunder.. Pa~ment

7 by XLCA to th~ Trus:ee or Payn;ig )\ge?-t for tliejlb epefit;or e Own ••• ;,•. _·_-._·_.,:i' ,_--_-••_. __-. __ o__ -,_-.·-----··---.,Jh~:_,,·._· __ .• _.'f:-.,.·-_··_,~_' t,. tµereof, discharge the obhgat10n of XLCA under this Policy. / ' i , /\ I\ V-.-,J / • :,,:•::.,.J-., ,.,:.!"' f!·""•____ '''l '{"·"' ,I ...."''''

In the event the Trus!~e ot ~~iri,g :Je 1t has Joij~ ~: /fiat~e~tlfJnncipal or interest on a Bond which has become Due for Payment and f.vh,th ils ma!]~ toi ,yi OWn:Jr~y or Iii!, , .: lf!ojf t~ !!!suer of the Bonds has been recovered from the Owner pursuant to a final j:u4gnlent l,y ai ~rt 6f ~\ lll'lsdictfon that such payment constitutes an avoidable preference to such Owner wit\lin tile meaning, 7f z( appli~!i'. . . . l,'J!t~ law, such Owner will be entitled to payment from XLCA to the extent of such n;co"l'.R'. if suffici'f't fu;\ds arer~t ~~ ls,¢ available.

The following terms ~hall li!tve the JeJ'~~s,stilc,·;~lJr ari:urposes of this Policy, except to the extent such terms are expressly modified by an endorselnent to thi~1&ficy,l " W!!l)ess Day" means any day other than (a) a Saturday or Sunday or (b) a day on which banking institutioni in the State I:&' ork or the Insurer's Fiscal Agent are authorized or required by law or executive order to relp.ain cjose<). "~e for Pltyment", when referring to the principal of Bonds, is when the stated maturity date or a mandatory reilei/1ption ,)ate for the ilp~lication of a required sinking fund installment has been reached and does not refer to any earlier date on Jwhi*h payjnen,yfs" due by reason of call for redemption (other than by application of required sinking fund installrne11d), ~cceleratio l)'f other advancement of maturity, unless XLCA shall elect, in its sole discretion, to pay such princip'all d1e µijonj such ilcceleration; and, when referring to interest on the Bonds, is when the stated date for payment of interest has, !jeep rea:ched. "Nonpayment" means the failure of the Issuer to have provided sufficient funds to the T.rustee or Paylng pay~ent i~ full of all principal and interest. on the ~?nds whic? are D~e for 1 'A.~'111~ t

I registered or certified mail, from an Owner, the Trustee or the Paying Agent to XLCA which notice shall specify (a) the person or entity making the claim, (b) the Policy Number, (c) the claimed amount and (d) the date such claimed amount became Due for Payment. "Owner" means, in respect of a Bond, the person or entity who, at the time of Nonpayment, is entitled under the terms of such Bond to payment thereof, except that "Owner" shall not include the Issuer or any person or entity whose direct or indirect obligation constitutes the underlying security for the Bonds.

XLCAP-005 Form of Municipal Policy [Specimen] XLCA may, by giving written notice to the Trustee and the Paying Agent, appoint a fiscal a ent (the "Insurer's Fiscal Agent") for purposes of this Policy. From and after the date of receipt by the Trustee andJ:e , a ·ng Agent of such dehverednotice, which to XLCA shall specifypursuant the to name this Pohcy an~ notice shall addressbe simultaneously of the Insurer'~ dehvered Fiscal to Agen·t,·. the Insurps (a)···.c···o·.~·p··..•·i··· F ... c~I11'··.·.·tl/···I. A.gen *·"··· 'cesand requiredto XCLA to and be shall not he deemed received until received by both and (b) all payments required,,l(f1b~, mad qy XL. ·· under this Policy may be made directly by XLCA or by the Insurer's Fiscal Agent on behalf ofe··:c,¥; Tlje trl'sure{'sJ1i~f Agent is the agent of XLC~ only and the Insurer's :iscal Agent shall in n? event b~ Ii.ab. l.e I\Jc.•!l!'~ .. O.•·····. p.'.·. f,.i... rri!·~····.·.· ..·. ·..·.... ·.··.ct ... , 9.f.·Ji11• ..ln ... · .urer's Fiscal Agent or any failure ofXLCA to deposit or cause to be deposited sufficr-~rtr int., ft'' r~;f tit~!. Except to the _exten_t e":pressly modified by a~rr.ro;'pefneJJ!: hjrplj1, \l)JY).~l~W li~y lis notj-<:~n~el~ble by XLCA, and (b) the Prem mm ~n this Po hey 1s ?ot refundableJP~ apy rea~1, th~Pfhiyld«~~ij?t • .sutM!galps[ l<\iwof any preparment

n:rc:~::~~::a::'~:e~,~~... t· an.;~ .. »;. ;~: ..'.·!. ;;;·o·.···.;.···;~ •. '.••..• •.er.·.·.~.~s:··· .. n··.ts·•• .. •.r~.·.· .•. ·.··.·.•.:rl ...·.··.·.·.o ... -·~rn/·a···rj•.· (u1 J~~:~:!~~~L~lh:O~o~~:ir~~~ modified,~L~~~r altered or affected by any of~ ·ir,··y")'t f~ ms'fr11:'f ~ l'\~1i~r fnt t'.T~chr(o;; or amendment thereto. i: IN THE EVENT THAT ~Lt.:£\\IE1tli rd !(ico~.. · \Jft:vi:hA, ANY CLAIMS ARISING UNDER THE THIS POLICY ARE NOT COVE~ED B'( T!JE fA~ N!A,;'0131\RANTY INSURANCE FUND SPECIFIED IN ARTICLE 12119(b) OF THE CALIF()RNII\,. P'pURP{NCH(iO BY ~----, l: i i .,) \· i ! i I ,/,,.,. In witness whereof, XLCA ),a~ caujerl t)iis Polky to be executed on its behalf by its duly authorized officers. ; \_,! f : \_ / v SPECIM:E){ SPECIM:EN Name: Name: Title: Title:

XLCAP-005 Form of Municipal Policy [Specimen] 2