Official Statement

NEW ISSUE – Book-Entry Only S&P RATING: “A” In the opinion of Squire, Sanders & Dempsey L.L.P., Bond Counsel, under existing law: (i) assuming continuing compliance with certain covenants and the accuracy of certain representations, interest on the Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations, and (ii) interest on, and any profit made on the sale, exchange or other disposition of, the Bonds are exempt from the Ohio personal income tax, the Ohio commercial activity tax, the net income base of the Ohio corporate franchise tax, and municipal, school district and joint economic development district income taxes in Ohio. Interest on the Bonds may be subject to certain federal taxes imposed only on certain corporations, including the corporate alternative minimum tax on a portion of that amount. For a more complete discussion of the tax aspects, see “TAX MATTERS” herein. OFFICIAL STATEMENT $11,000,000 CLEVELAND-CUYAHOGA COUNTY PORT AUTHORITY CITY ANNUAL APPROPRIATION BONDS, SERIES 2010 (CITY OF CLEVELAND, OHIO – FLATS EAST PROJECT) Dated: December 21, 2010 Due: As shown on the inside cover. The $11,000,000 in principal amount of City Annual Appropriation Bonds, Series 2010 (City of Cleveland, Ohio – Flats East Project) (the “Bonds”) are being issued by the Cleveland-Cuyahoga County Port Authority (the “Authority”), pursuant to a Trust Indenture, dated as of December 1, 2010 (the “Indenture”), between the Authority and The Huntington National Bank, as Trustee (the “Trustee”), to provide the funds necessary to pay (i) the costs of certain public improvements and related infrastructure, including (a) the acquisition of land (the “Property”) located within the City of Cleveland, Ohio (the “City”) for public streets, and (b) the construction of certain improvements, including public boardwalk, walkway, park, open space, and related bulkhead improvements, to be made to City-owned property along the banks of the Cuyahoga River in the City (collectively, the “Project”), (ii) interest on the Bonds through May 15, 2011, and (iii) the costs of issuing the Bonds. The City is not a party to the Indenture but is a third-party beneficiary under the Indenture. Flats East Development LLC (“Flats East”) and FED/Main Street LLC (“FED/Main Street,” and together with Flats East, the “Developer”) will construct the Project on behalf of the Authority in accordance with the Cooperative Agreement, dated as of December 1, 2010 (the “Cooperative Agreement”), by and among the Authority, the City, the Developer, and the Trustee, and a Public Improvements Construction Agency Agreement, dated as of December 1, 2010 (the “Construction Agency Agreement”), by and among the Developer, the Authority, and the Trustee. The Developer, Scott A. Wolstein, Iris S. Wolstein, and the Iris S. Wolstein Trust (collectively, the “Guarantors”) will execute and deliver a project completion guaranty (the “Guaranty”) guaranteeing completion of the Project and payment of certain costs associated with the Project. See “THE PROJECT” herein. The City is obligated under the Cooperative Agreement to make annual appropriations in an amount sufficient to pay the Debt Service Charges and certain Administrative Expenses due on the Bonds. THE CITY’S OBLIGATION TO MAKE APPROPRIATION PAYMENTS AND ANY OTHER OBLIGATIONS OF THE CITY UNDER THE COOPERATIVE AGREEMENT ARE SUBJECT TO AND DEPENDENT UPON ANNUAL APPROPRIATIONS BEING MADE BY THE CITY FOR SUCH PURPOSE AND CERTIFICATION AS TO THE AVAILABILITY OF FUNDS FROM THOSE APPROPRIATIONS. See “BONDHOLDERS’ RISKS” herein. The Bonds are special obligations of the Authority, payable primarily from (i) Appropriation Payments to be made by the City under the Cooperative Agreement, (ii) certain Revenues received by the Authority, and (iii) moneys on deposit under the Indenture. See “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS” herein. THE BONDS ARE A SPECIAL OBLIGATION OF THE AUTHORITY AND DO NOT CONSTITUTE A GENERAL OBLIGATION, OR A PLEDGE OF THE FULL FAITH AND CREDIT, OF THE AUTHORITY, THE CITY, CUYAHOGA COUNTY OR THE STATE OF OHIO (THE “STATE”) AND DO NOT CONSTITUTE AN INDEBTEDNESS OF THE AUTHORITY, THE CITY OR THE STATE OR ANY POLITICAL SUBDIVISION THEREOF WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY PROVISION OR LIMITATION. THE CITY’S OBLIGATION UNDER THE COOPERATIVE AGREEMENT TO MAKE PAYMENTS IS SUBJECT TO ANNUAL APPROPRIATION BY CITY COUNCIL AND DOES NOT CONSTITUTE A DEBT OF THE CITY WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY PROVISION OR LIMITATION. NONE OF THE AUTHORITY, THE CITY, CUYAHOGA COUNTY, THE STATE OR ANY OF ITS POLITICAL SUBDIVISIONS ARE OBLIGATED TO LEVY A TAX OR TO MAKE ANY APPROPRIATION TO PAY DEBT SERVICE ON THE BONDS. The Bonds will bear interest at the rates set forth on the inside cover page of this Official Statement, payable semiannually on May 15 and November 15 in each year, beginning on May 15, 2011. The Bonds are subject to redemption prior to maturity as described herein. See “THE BONDS – Redemption Prior to Maturity.” The Bonds are issuable only as fully registered bonds and, when issued, will be registered in the name of Cede & Co., as nominee for The Depository Trust Company (“DTC”), New York, New York, which will act as securities depository for the Bonds. Purchases of beneficial interests in the Bonds will be made in book-entry-only form, in denominations of $5,000 or any integral multiple in excess thereof. So long as Cede & Co. is the registered owner of the Bonds, purchasers of beneficial interests (“Beneficial Owners”) will not receive certificates representing their interests in the Bonds, payments of the principal of, premium, if any, and interest on the Bonds will be made directly to DTC or Cede & Co., and references herein to the owners of the Bonds shall mean Cede & Co. See “THE BONDS” and “BOOK-ENTRY-ONLY SYSTEM.” The Bonds are offered when, as and if issued by the Port Authority and accepted by the Underwriter, subject to the approval of legality by Squire, Sanders & Dempsey L.L.P., Cleveland, Ohio, Bond Counsel, and certain other conditions. Certain legal matters will be passed upon for the Authority by Horton & Horton Co., LPA, Cleveland, Ohio; for the City by Robert J. Triozzi, Esq., Director of Law; for the Developer by Tucker Ellis & West LLP, Cleveland, Ohio and Jones Day LLP, Cleveland, Ohio; and for the Underwriter by Bricker & Eckler LLP, Columbus, Ohio, Underwriter’s Counsel. It is expected that the Bonds will be available for delivery through the facilities of DTC on or about December 21, 2010.

BAIRD The date of this Official Statement is December 13, 2010.

$11,000,000 CLEVELAND-CUYAHOGA COUNTY PORT AUTHORITY CITY ANNUAL APPROPRIATION BONDS, SERIES 2010 (CITY OF CLEVELAND – FLATS EAST PROJECT)

$475,000 SERIAL BONDS Maturity Date Principal (November 15) Amount Interest Rate Yield CUSIP+ 2012 $ 235,000 2.600% 2.600% 186103 FZ5 2013 240,000 2.850 2.850 186103 GA9

+ $2,050,000 5.750% TERM BONDS MATURING NOVEMBER 15, 2020, PRICE 105.794%, CUSIP 186103 FW2

$2,055,000 6.000% TERM BONDS MATURING NOVEMBER 15, 2025, PRICE 101.860%, CUSIP 186103 FX0+

$6,420,000 6.000% TERM BONDS MATURING NOVEMBER 15, 2035, PRICE 93.864%, CUSIP 186103 FY8+

+ Copyright © 2010, American Bankers Association. CUSIP data herein are provided by Standard & Poor’s CUSIP Service Bureau, a division of the McGraw-Hill Companies, Inc. The CUSIP numbers listed above are being provided solely for the convenience of the holders of the Bonds only at the time of issuance of the Bonds and the Authority does not make any representation with respect to such numbers or undertake any responsibility for their accuracy now or at any time in the future. The CUSIP Number for a specific maturity is subject to being changed after the issuance of the Bonds as a result of procurement of secondary market portfolio insurance or other similar enhancement by investors that is applicable to all or a portion of certain maturities of the Bonds.

REGARDING USE OF THIS OFFICIAL STATEMENT

THE BONDS HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, IN RELIANCE UPON THE EXEMPTION CONTAINED IN SECTION 3(a)(2) OF SUCH ACT. THE INDENTURE HAS NOT BEEN QUALIFIED UNDER THE TRUST INDENTURE ACT OF 1939, AS AMENDED, IN RELIANCE UPON AN EXEMPTION CONTAINED IN SUCH ACT.

The registration or qualification of the Bonds in accordance with applicable provisions of the securities laws of the states, if any, in which the Bonds have been registered or qualified and the exemption from registration or qualification in certain other states cannot be regarded as a recommendation thereof. Neither these states nor any of their agencies have passed upon the merits of the Bonds or the accuracy or completeness of this Official Statement. Any representation to the contrary may be a criminal offense.

The Information set forth herein has been obtained from the Developer, the City, and other sources that are deemed to be reliable, but is not guaranteed as to accuracy or completeness by, and is not to be construed as a representation by, the Authority or the City. The Underwriter has reviewed the information in this Official Statement in accordance with, and as part of, their responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness of such information.

No dealer, broker, salesperson or any other person has been authorized by the Authority or the City to give any information or make any representations, other than those contained in this Official Statement, in connection with the offering of the Bonds, and if given or made, such other information or representations must not be relied upon as having been authorized by the foregoing. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the Bonds by any person in any state in which it is unlawful for such person to make such offer, solicitation or sale. The information set forth herein has been obtained from the City and other sources which are believed to be reliable; and while not guaranteed as to completeness or accuracy, is believed to be correct as of this date. The information and the opinions expressed herein are subject to change without notice, and neither the delivery of this Official Statement nor the sale of any of the Bonds hereunder shall under any circumstances create any implication that there has been no change in the affairs of the Authority or the City or the other matters described herein since the date hereof.

IN CONNECTION WITH THE OFFERING OF THE BONDS, THE UNDERWRITER MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF SUCH BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

THIS OFFICIAL STATEMENT CONTAINS CERTAIN ªFORWARD-LOOKING STATEMENTSº CONCERNING THE CITY, ITS OPERATIONS, PERFORMANCE AND FINANCIAL CONDITION, INCLUDING FUTURE ECONOMIC PERFORMANCE PLANS AND OBJECTIVES. THESE STATEMENTS ARE BASED UPON A NUMBER OF ASSUMPTIONS AND ESTIMATES WHICH ARE SUBJECT TO SIGNIFICANT UNCERTAINTIES, MANY OF WHICH ARE BEYOND THE CONTROL OF THE CITY. THE WORDS ªMAY,º ªWOULD,º ªCOULD,º ªWILL,º ªEXPECT,º ªANTICIPATE,º ªBELIEVE,º ªINTEND,º ªPLAN,º ªESTIMATEº AND SIMILAR EXPRESSIONS ARE MEANT TO IDENTIFY THESE FORWARD-LOOKING STATEMENTS. ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE EXPRESSED OR IMPLIED BY THESE FORWARD-LOOKING STATEMENTS.

PARTICIPANTS OF THE FINANCING

THE CLEVELAND-CUYAHOGA COUNTY PORT AUTHORITY

THE CITY OF CLEVELAND, OHIO

Frank G. Jackson Robert J. Triozzi, Esq. Mayor Director of Law

THE DEVELOPER

Flats East Development LLC FED/Main Street LLC

PROFESSIONAL SERVICES

Robert W. Baird & Co. Incorporated Squire, Sanders & Dempsey L.L.P. Underwriter Bond Counsel

Bricker & Eckler LLP Horton & Horton Co., LPA Underwriter’s Counsel Issuer’s Counsel

Tucker Ellis & West LLP The Huntington National Bank And Trustee Jones Day LLP Developer’s Counsel

TABLE OF CONTENTS Page No.

REGARDING USE OF THIS OFFICIAL STATEMENT...... i PARTICIPANTS OF THE FINANCING...... ii TABLE OF CONTENTS...... iii SELECT SUMMARY STATEMENT...... iv INTRODUCTION ...... 1 THE AUTHORITY ...... 4 THE CITY ...... 4 THE PROJECT...... 5 SOURCES AND USES OF FUNDS...... 6 DEBT SERVICE FOR THE BONDS ...... 7 THE DEVELOPMENT ...... 7 THE DEVELOPER ...... 8 SECURITY AND SOURCES OF PAYMENT FOR THE BONDS ...... 9 THE BONDS ...... 13 BOOK-ENTRY-ONLY SYSTEM ...... 17 BONDHOLDERS’ RISKS ...... 19 LITIGATION...... 21 LEGAL MATTERS...... 22 TAX MATTERS...... 22 CONTINUING DISCLOSURE...... 24 RATINGS ...... 24 UNDERWRITING ...... 25 INDEPENDENT AUDITORS...... 25 CONCLUDING STATEMENT ...... 26

APPENDIX A – INFORMATION REGARDING THE CITY ...... A-1 APPENDIX B – SUMMARIES OF CERTAIN DOCUMENTS ...... B-1 APPENDIX C – DEFINITIONS OF CERTAIN TERMS...... C-1 APPENDIX D – FORM OF OPINION OF BOND COUNSEL ...... D-1 APPENDIX E – FORM OF CONTINUING DISCLOSURE AGREEMENT...... E-1

iii

OFFICIAL STATEMENT SELECT SUMMARY STATEMENT This summary is qualified in its entirety by reference to the detailed information appearing elsewhere in this Official Statement and in the Appendices attached hereto. The offering of the Bonds to potential investors is made only by means of the entire Official Statement. No person is authorized to detach this summary from this Official Statement or to otherwise use it without the entire Official Statement. Capitalized terms appearing in this summary are defined in this Official Statement. ISSUER ...... Cleveland-Cuyahoga County Port Authority, Cleveland, Ohio. THE CITY...... City of Cleveland, Ohio. THE DEVELOPER ...... Flats East Development LLC, an Ohio limited liability company and FED/Main Street LLC, an Ohio limited liability company. USE OF BOND PROCEEDS...... The Bonds are being issued by the Authority to pay (i) the costs of the Project (ii) interest on the Bonds through May 15, 2011, and (iii) the costs of issuing the Bonds. SECURITY FOR THE BONDS ...... The Bonds are special obligations of the Authority, payable primarily from: (i) Appropriation Payments to be made by the City under a Cooperative Agreement, (ii) certain Revenues received by the Authority, and (iii) moneys on deposit under the Indenture. THE PROJECT ...... The Project will consist of certain public improvements and related infrastructure, including (a) the acquisition of the Property for public streets, and (b) certain improvements, including public boardwalk, walkway, park, open space, and related bulkhead improvements, to be made to City-owned property along the banks of the Cuyahoga River in the City. THE DEVELOPMENT...... The Development will be undertaken in two or more phases, the first of which will consist of approximately $275 million of public and private improvements, including office, retail, hotel, and mixed-use development and related public infrastructure improvements, located on or adjacent to the Development Site. Development improvements include the construction of a mixed-use development that will include an approximately 470,000 square foot, 18-story office tower, an approximately 550-space public parking garage, an approximately 150-room hotel of a national hotel franchise, approximately 31,000 square feet of retail space, and public infrastructure improvements on and adjacent to Development Site, including land, streets, utility infrastructure, recreational space, and surface parking. TAX STATUS OF BONDS...... In the opinion of Bond Counsel, under existing law: (i) assuming continuing compliance with certain covenants and the accuracy of certain representations, interest on the Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations, and (ii) interest on, and any profit made on the sale, exchange or other disposition of, the Bonds are exempt from the Ohio personal income tax, the Ohio commercial activity tax, the net income base of the Ohio corporate franchise tax, and municipal, school district and joint economic development district income taxes in Ohio. (See ªTAX MATTERSº). REDEMPTION PROVISIONS...... The Bonds will be subject to certain redemptions prior to maturity, including (i) mandatory redemption at par pursuant to the mandatory sinking fund redemption schedule, (ii) optional redemption at par on or after November 15, 2020, and (iii) mandatory redemption at par upon the nonoccurrence of the Property Closing on or before the eighteen (18) month anniversary of the Bond Closing Date. (See ªTHE BONDS ± Redemption Prior to Maturityº).

INTEREST PAYABLE...... Interest on the Bonds will be payable semiannually on May 15 and November 15 of each year, commencing May 15, 2011, through final maturity of the Bonds. Bond proceeds will fund interest on the Bonds through May 15, 2011. INTEREST RATE...... Interest on the Bonds will be computed on the basis of a 360-day year consisting of twelve 30-day months, from the date of issuance, at the rate, and the Bonds shall mature on the dates (subject to mandatory sinking fund redemption), set forth on the cover page hereof. DENOMINATIONS ...... $5,000 and any integral multiple in excess thereof. TRUSTEE ...... The Huntington National Bank, Cleveland, Ohio. UNDERWRITER...... Robert W. Baird & Co. Incorporated. BOND COUNSEL ...... Squire, Sanders & Dempsey L.L.P. ADDITIONAL INFORMATION ...... For additional information please contact Timothy P. Long, at Robert W. Baird & Co. Incorporated at 614-629-6951 or [email protected].

[Balance of Page Intentionally Left Blank]

$11,000,000 CLEVELAND-CUYAHOGA COUNTY PORT AUTHORITY CITY ANNUAL APPROPRIATION BONDS, SERIES 2010 (CITY OF CLEVELAND, OHIO ± FLATS EAST PROJECT)

INTRODUCTION

The following introductory statement is subject in all respects to more complete information contained in this Official Statement, including the Cover Page and Appendices herein. The offering of the Bonds to potential investors is made only by means of the entire Official Statement and the order and placement of materials in this Official Statement are not to be deemed to be a determination of relevance, materiality or relative importance.

The purpose of this Official Statement is to furnish information relating to (i) the City Annual Appropriation Bonds, Series 2010 (City of Cleveland ± Flats East Project), in the principal amount of $11,000,000 (the ªBondsº) issued by the Cleveland-Cuyahoga County Port Authority (the ªAuthorityº) pursuant to the Trust Indenture (the ªIndentureº), dated as of December 1, 2010, between the Authority and The Huntington National Bank (the ªTrusteeº); (ii) the security and sources of payment for the Bonds; (iii) the use of the proceeds of the Bonds for the acquisition of land (the ªPropertyº) located within the City of Cleveland, Ohio (the ªCityº) for public streets, and the construction of certain improvements, including public boardwalk, walkway, park, open space, and related bulkhead improvements, to be made to City-owned property along the banks of the Cuyahoga River in the City (collectively, the ªProjectº), and (iv) the retail and commercial redevelopment project known as Flats East (the ªDevelopmentº) to be located on the banks of the Cuyahoga River in the City and within the jurisdiction of the Authority.

Purpose of the Bonds

The Authority will issue the Bonds pursuant to Ohio Revised Code Sections 4582.01 through 4582.20, as amended and revised (the ªActº), and the Indenture, for the purpose of funding (i) the costs of the Project, (ii) interest on the Bonds through May 15, 2011, and (iii) the costs of issuing the Bonds.

The Development and the Project

The Development will consist of a mixed-use redevelopment project, including certain private improvements and certain public improvements and related infrastructure on approximately eighteen (18) acres of land (the ªDevelopment Siteº) owned by Flats East Development LLC (ªFlats Eastº) and FED/Main Street LLC (ªFED/Main Street,º and together with Flats East, the ªDeveloperº). The first phase of the Development will consist of approximately $275 million of public and private improvements, including office, retail, hotel, and mixed-use development and related public infrastructure improvements, located on approximately three (3) acres of the Development Site. Development improvements include the construction of a mixed-use development that will include an approximately 476,000 square foot, 18-story office tower, an approximately 550-space public parking garage, an approximately 150-room hotel of a national hotel franchise, approximately 31,000 square feet of retail space, and public infrastructure improvements on and adjacent to the Development Site, including land, streets, utility infrastructure, recreational space, and surface parking. For additional information regarding the Development and each of its components, see ªTHE DEVELOPMENTº herein.

The Project consists of two main components, the Street Acquisition Project and the City Waterfront Project, all as described in ªTHE PROJECT ± Description of the Projectº herein.

The Authority, the City, and the Developer

The Authority. The Cleveland-Cuyahoga County Port Authority, Cleveland, Ohio, is a body corporate and politic and political subdivision of the State. For more information about the Authority, see ªTHE AUTHORITYº herein.

The City. The City of Cleveland, Ohio is a municipal corporation and political subdivision of the State located in Cuyahoga County, Ohio and within the jurisdiction of the Authority. For more information about the City, see ªTHE CITYº herein and ªAPPENDIX A ± INFORMATION REGARDING THE CITYº herein.

The Developer. The Developer consists of two entities, Flats East Development LLC (ªFlats Eastº), an Ohio limited liability company and FED/Main Street LLC (ªFED/Main Streetº), an Ohio limited liability company, together with their permitted successors and assigns.

Scott Wolstein and the Iris S. Wolstein Trust are the Class A Members of The Wolstein Group, LLC, which, along with Fairmount Flats LLC, is an equity owner of Flats East. The Wolstein Group, LLC is recognized nationally for its residential, commercial, and mixed-use development projects in the United States and abroad. The Fairmount Properties LLC, sole member of Fairmount Flats LLC, is a national, multi-disciplined real estate enterprise, specializing in the development of high-quality districts and neighborhoods accented by new residential, office, hospitality, and entertainment uses.

The equity ownership of FED/Main Street consists of Flats East and Main Street Parking LLC. Flats East is the managing member of FED/Main Street.

The Developer currently owns approximately eighteen (18) acres of real property located in the City, including the Property to be acquired by the City with the proceeds of the Bonds. The Developer will construct the City Waterfront Project on behalf of the Authority in accordance with the Cooperative Agreement, dated as of December 1, 2010 (the ªCooperative Agreementº), by and among the Authority, the City, the Developer, and the Trustee, and a Public Improvements Construction Agency Agreement, dated as of December 1, 2010 (the ªConstruction Agency Agreementº), by and among the Developer, the Authority, and the Trustee. The Developer's constituent entities are jointly and severally liable for their responsibilities under the Cooperative Agreement and the Construction Agency Agreement. See ªTHE PROJECTº herein.

For more information about the Developer, see ªTHE DEVELOPERº herein.

Security and Sources of Payment for the Bonds

The Bonds are special obligations of the Authority, payable primarily from (i) Appropriation Payments to be made by the City under the Cooperative Agreement, (ii) certain Revenues received by the Authority, and (iii) moneys on deposit under the Indenture. See ªSECURITY AND SOURCES OF PAYMENT FOR THE BONDSº herein.

Appropriation Payments. The City is obligated under the Cooperative Agreement to make payments, subject to annual appropriation, in an amount sufficient to pay the Debt Service Charges and certain Administrative Expenses due on the Bonds. The City's obligation to make Appropriation Payments and any other obligations of the City under the Cooperative Agreement are subject to and dependent upon annual appropriations being made by the City for such purpose and certification as to the availability of funds from those appropriations. See ªSECURITY AND SOURCES OF PAYMENT FOR THE BONDS ± Nonappropriationº and ªBONDHOLDERS' RISKSº herein.

The Indenture. Under the Indenture, the Authority pledges and assigns to the Holders of the Bonds as security for the payment of the Bonds and the interest thereon (i) substantially all of its rights, title and interest under the Cooperative Agreement, including its right to receive the Appropriation Payments but excluding the Unassigned Issuer's Rights, and (ii) certain moneys held under the Indenture, including amounts in the Bond Fund, the Project Fund, and the Revenue Fund. The City is not a party to the Indenture, but is a third-party beneficiary under the Indenture. See ªSECURITY AND SOURCES OF PAYMENT FOR THE BONDSº herein.

No Additional Bonds. No additional bonds, notes or other obligations of the Authority issued under and secured by the Indenture, on parity with the Bonds, may be issued. See ªTHE BONDS ± Additional Bondsº and ªAPPENDIX B ± SUMMARIES OF CERTAIN DOCUMENTS ± THE INDENTURE ± Additional Bondsº herein.

THE BONDS ARE A SPECIAL OBLIGATION OF THE AUTHORITY AND DO NOT CONSTITUTE A GENERAL OBLIGATION, OR A PLEDGE OF THE FULL FAITH AND CREDIT, OF THE AUTHORITY, THE CITY, CUYAHOGA COUNTY OR THE STATE, AND DO NOT CONSTITUTE AN INDEBTEDNESS OF THE AUTHORITY, THE CITY, THE STATE OR ANY POLITICAL SUBDIVISION THEREOF WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY PROVISION OR LIMITATION. THE CITY'S OBLIGATION UNDER THE COOPERATIVE AGREEMENT TO MAKE PAYMENTS IS SUBJECT TO ANNUAL APPROPRIATION BY CITY COUNCIL AND DOES NOT CONSTITUTE A DEBT OF THE CITY WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY PROVISION OR LIMITATION. NONE OF THE AUTHORITY, THE CITY, CUYAHOGA COUNTY, THE STATE OR ITS POLITICAL SUBDIVISIONS ARE OBLIGATED TO LEVY A TAX OR TO MAKE ANY APPROPRIATION TO PAY DEBT SERVICE ON THE BONDS.

Bondholders' Risks

The Bonds are subject to a number of risk factors and may not be a suitable investment for all persons. Prospective purchasers should carefully evaluate the risks and merits of an investment in the Bonds, confer with their own legal and financial advisors and be able to bear the risk of loss of their investment in the Bonds. See ªBONDHOLDERS' RISKSº herein.

Certain Documents Relating to the Project; Definitions

The Cooperative Agreement. Pursuant to the Cooperative Agreement, the Authority has agreed to issue the Bonds for the Project, the City has agreed to pay Appropriation Payments to the Authority for the payment of Debt Service Charges on the Bonds, and the Developer has agreed to construct the City Waterfront Project on behalf of the Authority and to convey the Property to the City.

The Construction Agency Agreement. The Developer, acting as agent for the Authority, will oversee and be responsible for the construction of the City Waterfront Project pursuant to the Construction Agency Agreement.

The Guaranty. The Developer, Scott A. Wolstein, Iris S. Wolstein, and the Iris S. Wolstein Trust (collectively, the ªGuarantorsº) will execute and deliver to the Trustee a project completion guaranty (the ªGuarantyº) for the benefit of the City, the Authority, and the Bondholders. Under the Guaranty, the Guarantors guarantee completion of the Project and the payment of cost overruns associated with the construction of the City Waterfront Project. Certain amounts received by the Authority or the City as

proceeds as the result of enforcement of the Guaranty constitute Revenues pledged under the Indenture to the Holders of the Bonds. See ªSECURITY AND SOURCES OF PAYMENTº herein.

Definitions of certain words and terms used in this Official Statement are included in this Official Statement in ªAPPENDIX C ± DEFINITIONS OF CERTAIN TERMSº and summaries of the Indenture and certain other documents are included in this Official Statement in ªAPPENDIX B ± SUMMARIES OF CERTAIN DOCUMENTS.º Such definitions and summaries do not purport to be comprehensive or definitive.

All references herein to documents are qualified in their entirety by reference to the definitive forms of such documents, copies of which may be viewed at the offices of, and will be provided to prospective purchasers upon request to, Robert W. Baird & Co. Incorporated, 10 West Broad Street, Columbus, Ohio 43215, telephone (614) 629-6951, e-mail: [email protected], Attention: Timothy P. Long.

THE AUTHORITY

The Authority is a body corporate and politic and a political subdivision of the State, created pursuant to the Act. The Authority was formed in 1968 by the City of Cleveland and the County of Cuyahoga (the ªCountyº) pursuant to legislation adopted by the legislative authorities of the City of Cleveland and the County and an agreement entered into between the County and the City of Cleveland. The Authority conducts its activities through a Board of Directors composed of nine members appointed by the City and the County and a staff, headed currently by its President, which is responsible for day-to- day operations of the Authority.

The Authority is organized into several operating groups, including Maritime and Real Estate and Development Finance. The Maritime Group of the Authority provides support to the manufacturing base of the region by supplying transportation services that positively impact the area's competitiveness. The responsibilities of the Maritime group includes operating an intermodal dock facility, which is either owned by the Authority or leased from the City to the Authority. The Real Estate and Development Finance Group manages and monitors the Authority's financing initiatives. The Group also works in cooperation with the Authority's public and private partners to identify, acquire, remediate and return to productive use those properties and facilities located throughout the County which have been abandoned, blighted and tainted by environmental concerns or otherwise underutilized.

THE CITY

The City is a municipal corporation and political subdivision of the State of Ohio. It is located on the southern shore of Lake Erie and is the county seat of Cuyahoga County in northeastern Ohio. The City was incorporated as a Village in 1836 and became a City in 1848. See ªAPPENDIX A ± INFORMATION REGARDING THE CITYº herein.

THE PROJECT Description of Project

The Project will consist of certain public improvements and related infrastructure. The Project consists of two main components, the Street Acquisition Project and the City Waterfront Project, as described below:

Street Acquisition Project. A portion of the Project will include the acquisition of land located within the City (the ªPropertyº), known as the Phase I Property (as identified in the Cooperative Agreement) and the Phase II Property (as identified in the Cooperative Agreement) (collectively, the ªStreet Acquisition Projectº). The Property will be acquired by the City using the proceeds of the Bonds. The public streets to be constructed on the Phase I Property (as identified in the Cooperative Agreement) will be constructed by the Developer using funds other than the proceeds of the Bonds. The public streets to be constructed on the Phase II Property (as identified in the Cooperative Agreement) are expected to be constructed in the future using funds other than the proceeds of the Bonds. The Developer has agreed in the Cooperative Agreement to convey the Property to the City upon satisfaction of certain conditions specified in the Cooperative Agreement. The Street Acquisition Project is expected to cost approximately $10,719,725.00, of which amount approximately $9,719,725.00 is expected to be paid for with the proceeds of the Bonds and approximately $1,000,000.00 is expected to be paid for with other funds of the City appropriated for such purpose.

City Waterfront Project. A portion of the Project will include the construction of certain public improvements, including public boardwalk, walkway, park, open space, and related bulkhead improvements, within and in support of City-owned property along the banks of the Cuyahoga River on and adjacent to the Development Site (collectively, the ªCity Waterfront Projectº).

Any cost overruns in connection with the construction of the City Waterfront Project will be paid for by the Guarantors pursuant to the Guaranty. See ªSECURITY AND SOURCES OF PAYMENT FOR THE BONDS ± Guarantyº herein.

A portion of the costs of the City Waterfront Project Certain are expected to be paid for with the proceeds of the Bonds, and a portion of the costs of the City Waterfront Project are expected to be funded with a federal Department of Transportation grant in the amount of $4,240,000, which has been appropriated through the State Department of Transportation for the City Waterfront Project. Under the Cooperative Agreement, if moneys on deposit in the Project Fund together with any grant funds to be received for the Project are at any time insufficient to pay all remaining costs of the Project, the Developer is required to deposit funds with the Trustee equal to such insufficiency. Payment of any such insufficiency is further secured by the Guaranty.

The Developer anticipates that the Project will be completed by March 1, 2013.

Authorization of the Project

The City Council of the City, by Ordinance No. 718-10, adopted on June 7, 2010, (i) approved the execution and delivery of the Cooperative Agreement and the undertaking of the Project as described therein, and (ii) approved the use of certain financial information of the City in this Official Statement.

The Board of Trustees of the Authority approved the issuance of the Bonds and the execution and delivery of the Indenture, the Cooperative Agreement, the Construction Agency Agreement, the Bond Purchase Agreement, and related documents and the use of this Official Statement by Resolution No. 2010-36, adopted on November 17, 2010.

The Cooperative Agreement

Pursuant to the Cooperative Agreement, the Authority has agreed to issue the Bonds for the Project, the City has agreed to pay Appropriation Payments to the Authority for the payment of Debt Service Charges on the Bonds, and the Developer has agreed to construct the City Waterfront Project on behalf of the Authority and to convey the Property to the City. In addition, pursuant to the Cooperative Agreement, the Authority has agreed to appoint the Developer to act on its behalf for the construction of the City Waterfront Project, and the Developer has agreed to serve as the Authority's Construction Agent with respect to the construction of the City Waterfront Project. The Developer has agreed in the Cooperative Agreement and the Guaranty that cost overruns on the City Waterfront Project will be paid by the Developer.

The Construction Agency Agreement

The Developer, acting as agent for the Authority, will oversee and be responsible for the construction of the City Waterfront Project pursuant to the Public Improvements Construction Agency Agreement (the ªConstruction Agency Agreementº), dated as of December 1, 2010, by and among the Developer, the Authority, and the Trustee.

SOURCES AND USES OF FUNDS

The Authority will issue the Bonds pursuant to the Act and the Indenture for the purpose of funding (1) a portion of the costs of the Project, (ii) interest on the Bonds through May 15, 2011, and (iii) the costs of issuing the Bonds.

The following table provides the estimated sources and uses in connection with the costs of the Project.

Sources of Funds

Par Amount of the Bonds $11,000,000.00 Federal Department of Transportation Grant 4,240,000.00 Other Funds of the City Appropriated for the Project 1,000,000.00 Developer Equity for the Project 510,186.20 Original Issue Discount (236,931.20)

Total Sources: $16,513,255.00

Uses of Funds

Costs of Street Acquisition Project $10,719,725.00 Costs of City Waterfront Project 5,300,000.00 Estimated Capitalized Interest 261,630.00 Estimated Transaction and Closing Costs, Including Underwriter's Discount 231,900.00

Total Uses: $16,513,255.00

DEBT SERVICE FOR THE BONDS

The following table provides the debt service schedule for the Bonds.

Year Principal Due Interest Due Total Debt Service 2011 $0.00 $575,392.50 $575,392.50 2012 235,000.00 639,325.00 874,325.00 2013 240,000.00 633,215.00 873,215.00 2014 245,000.00 626,375.00 871,375.00 2015 260,000.00 612,287.50 872,287.50 2016 275,000.00 597,337.50 872,337.50 2017 290,000.00 581,525.00 871,525.00 2018 310,000.00 564,850.00 874,850.00 2019 325,000.00 547,025.00 872,025.00 2020 345,000.00 528,337.50 873,337.50 2021 365,000.00 508,500.00 873,500.00 2022 385,000.00 486,600.00 871,600.00 2023 410,000.00 463,500.00 873,500.00 2024 435,000.00 438,900.00 873,900.00 2025 460,000.00 412,800.00 872,800.00 2026 485,000.00 385,200.00 870,200.00 2027 515,000.00 356,100.00 871,100.00 2028 550,000.00 325,200.00 875,200.00 2029 580,000.00 292,200.00 872,200.00 2030 615,000.00 257,400.00 872,400.00 2031 650,000.00 220,500.00 870,500.00 2032 690,000.00 181,500.00 871,500.00 2033 735,000.00 140,100.00 875,100.00 2034 775,000.00 96,000.00 871,000.00 2035 825,000.00 49,500.00 874,500.00 TOTAL $11,000,000.00 $10,519,670.00 $21,519,670.00

THE DEVELOPMENT

The following information is provided by the Developer as a means for the prospective purchasers of the Bonds to understand the development plan of the real estate surrounding and benefitted by the Project. No representation is made by the Authority, the City or the Underwriter as to the accuracy, completeness, or adequacy of this information or the absence of material changes in that information as of the date hereof.

The Development will be located in the City on approximately eighteen (18) acres of real property currently owned by the Developer. The first phase of the Development will consist of approximately $275 million of public and private improvements, including office, retail, hotel, and mixed-use development and related public infrastructure improvements, located on or adjacent to the Development Site. Development improvements include the construction of a mixed-use development that will include an approximately 476,000 square foot, 18-story office tower, an approximately 550-space public parking garage, an approximately 150-room hotel of a national hotel franchise, approximately 31,000 square feet of retail space, and public infrastructure improvements on and adjacent to the Development Site, including land, streets, utility infrastructure, recreational space, and surface parking.

The Development will be financed through public and private financing, including through the issuance of State of Ohio State Economic Development Revenue Bonds to finance a portion of the office tower project; the Authority's First Mortgage Bonds to finance a portion of the office tower project, a portion of the hotel project, and a portion of the retail project; the Authority's Bond Fund Program Development Revenue Bonds, Series 2010B to finance a portion of the office tower project; and the Summit County Port Authority's Recovery Zone Facility Bonds, Series 2010B to finance a portion of the office tower project. In addition, the State will provide an additional $14,929,023 in funding through loans and grants, the City will provide $30,000,000 in funding through a HUD 108 loan, Cleveland Development Advisors (an affiliate of the Greater Cleveland Partnership) will provide $3,500,000, and the Developer will contribute cash in the approximate amount of $10,700,000 and land valued at approximately $7,150,000. The prior or simultaneous closing of certain of the foregoing bond financings, loans, and grants is an express contingency for closing on the Bonds. There are conditions to the availability of funds and the disbursement of funds in each of the foregoing bond financings, loans, and grants, but such conditions do not relieve the City of its obligation to pay the Appropriation Payments subject to annual appropriation by City Council or the Developer of its obligation to cause the completion of the Project. For more information regarding such conditions, full reference should be made to the documentation of each of the foregoing bond financings, loans, and grants.

THE DEVELOPER

For purposes of this Official Statement, the Developer means, collectively, Flats East Development LLC (ªFlats Eastº), an Ohio limited liability company and FED/Main Street LLC (ªFED/Main Streetº), an Ohio limited liability company controlled by Flats East, each together with their permitted successors and assigns.

Flats East is a limited liability company formed under the laws of the State of Ohio. The equity ownership of Flats East consists of The Wolstein Group, LLC and Fairmount Flats LLC.

The Wolstein Group, LLC is the managing member of Flats East and Fairmount Flats LLC is a member of Flats East. Scott A. Wolstein and the Iris S. Wolstein Trust are the Class A Members of The Wolstein Group, LLC. The Wolstein Group, LLC is recognized nationally for its residential, commercial, and mixed-use development projects in the United States and abroad. Scott A. Wolstein is Chairman of Developers Diversified Realty (DDR), a self-administered and self-managed real estate investment trust operating as a fully-integrated real estate company which acquires, develops, leases, and manages shopping centers. Scott A. Wolstein serves as President of Flats East. Iris S. Wolstein is a trustee of the Iris S. Wolstein Trust. Iris S. Wolstein is CEO of Heritage Development Company I, LLC, a full service real estate firm involved in residential, industrial, and commercial real estate projects across the United States.

Fairmount Properties LLC, sole member of Fairmount Flats LLC, is a national, multi-disciplined real estate enterprise, specializing in the development of high-quality districts and neighborhoods accented by new residential, office, hospitality, and entertainment uses.

FED/Main Street is a limited liability company formed under the laws of the State of Ohio. The equity ownership of FED/Main Street consists of Flats East and Main Street Parking LLC, a limited liability company formed under the laws of the State of Ohio. Flats East is the managing member of FED/Main Street.

The Developer currently owns approximately eighteen (18) acres of real property located in the City, including the Property to be acquired by the City with the proceeds of the Bonds. Flats East and

FED/Main Street are jointly and severally liable for their responsibilities as Developer under the Cooperative Agreement and the Construction Agency Agreement. The Developer will construct the City Waterfront Project on behalf of the Authority in accordance with the Cooperative Agreement and the Construction Agency Agreement. See ªTHE PROJECTº herein. The Developer, along with the Guarantors, is guaranteeing completion of the Project in the Guaranty. See ªSECURITY AND SOURCES OF PAYMENT FOR THE BONDS ± Guarantyº and ªSECURITY AND SOURCES OF PAYMENT FOR THE BONDS ± Additional Information About the Guarantorsº herein.

SECURITY AND SOURCES OF PAYMENT FOR THE BONDS

General

Appropriation Payments

The City is obligated under the Cooperative Agreement to pay the Debt Service Charges and certain Administrative Expenses due on the Bonds, including the Issuer Annual Fee and the annual fee of the Trustee (collectively, the ªAppropriation Paymentsº), all subject to annual appropriation by City Council. The amount of any Appropriation Payment may be reduced to the extent of any moneys on deposit in the Bond Fund that the Trustee confirms are available to pay the next due principal or interest payment on the Bonds.

The City reasonably believes that legally available funds in an amount sufficient to make all Appropriation Payments can be appropriated and obtained. The Director of Finance of the City (the ªDirector of Financeº) intends to do all things lawfully within that officer's power to obtain, maintain, properly request, and pursue funds from which Appropriation Payments may be appropriated and made, including making provision for such payments in budgets submitted for the purpose of obtaining funding therefor. The Director of Finance has agreed in the Cooperative Agreement to include in the proposed annual operating budget and proposed appropriation ordinance submitted to City Council for each fiscal year a line item supporting the appropriation of sufficient funds to pay all Appropriation Payments required to be made by the City pursuant to the Cooperative Agreement during such fiscal year and any payments required to be made by the City pursuant to the Cooperative Agreement during the preceding fiscal year that remain unpaid at the end of that fiscal year. The City has agreed in the Cooperative Agreement, not later than April 15th of each year, to deliver to the Authority and the Trustee (i) a certified copy of the appropriation ordinance, (ii) an excerpt of the annual operating budget supporting that Appropriation Payment, and (iii) a statement of the Director of Finance certifying that the City has appropriated sufficient funds to enable the City to make all Appropriation Payments required by the City pursuant to the Cooperative Agreement during the applicable fiscal year.

If City Council appropriates sufficient funds to make Appropriation Payments during a fiscal year, the City's obligation to make those Appropriation Payments when due during that fiscal year will be absolute and unconditional in all events and will not be subject to any abatement, set-off, defense, counterclaim or recoupment for any reason whatsoever. Notwithstanding any dispute between the City and the Authority or the City and any other person, including but not limited to any failure to perform on the part of the Authority or such person, the City must pay all such Appropriation Payments required when due during that fiscal year and shall not withhold any such Appropriation Payments pending final

resolution of such dispute, nor may the City assert any right of set-off or counterclaim against its obligation to pay such Appropriation Payments.

THE CITY'S OBLIGATION TO MAKE APPROPRIATION PAYMENTS AND ANY OTHER OBLIGATIONS OF THE CITY UNDER THE COOPERATIVE AGREEMENT ARE SUBJECT TO AND DEPENDENT UPON ANNUAL APPROPRIATIONS BEING MADE BY CITY COUNCIL FOR SUCH PURPOSE AND CERTIFICATION AS TO THE AVAILABILITY OF FUNDS FROM THOSE APPROPRIATIONS. THE CITY'S OBLIGATION TO MAKE APPROPRIATION PAYMENTS DOES NOT CONSTITUTE A DEBT OF THE CITY WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY LIMITATION OR A PLEDGE OF THE FULL FAITH AND CREDIT OF THE CITY. See ªBONDHOLDERS' RISKSº herein.

Non-Appropriation

The City has agreed in the Cooperative Agreement to immediately notify the Authority and the Trustee in the event no appropriations or insufficient appropriations are made for any City fiscal year enabling the payment of Appropriation Payments due.

The Cooperative Agreement provides that the obligation of the City to make Appropriation Payments is subject to annual appropriation by the City Council and certification by the Director of Finance as to the availability of funds from those appropriations for such purpose. Such obligation is a current expense of the City, payable exclusively from appropriated money, and is not an indebtedness of the City. If the City Council fails to appropriate money to pay Appropriation Payments or the Director of Finance fails to certify the availability of funds, then the City is relieved of any subsequent obligation under the Cooperative Agreement. The Director of Finance agrees in the Cooperative Agreement to do all things lawfully within such officer's power to obtain and maintain funds to pay Appropriation Payments including requesting provision for such payments in the appropriation ordinance before City Council, but the Cooperative Agreement acknowledges that appropriating City money is a legislative act performed by City Council.

If the City fails to appropriate the Appropriation Payments or the Director of Finance fails to certify as to the availability of the Appropriation Payments, the City is under no obligation to make any future Appropriation Payments, the City shall not be in default under the Cooperative Agreement, and there is no remedy against the City under the Cooperative Agreement. In such circumstances, the Trustee may use any amounts available to pay Bond Service Charges and Administrative Expenses with respect to the Bonds.

The enforceability of the Cooperative Agreement and the Indenture is subject to bankruptcy laws and other laws affecting creditor's rights and to the exercise of judicial discretion. See ªBONDHOLDERS' RISKS ± Risks Associated with Enforceability of Remediesº herein. Therefore, it should not be assumed that the remedies available to the Authority and the Trustee will provide additional money to pay the Debt Service Charges and Administrative Expenses with respect to the Bonds.

The payment of Appropriation Payments by the City cannot be accelerated under the Cooperative Agreement or the Indenture.

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Revenues

Certain revenues (the ªRevenuesº) of the Authority and the City are pledged to the Holders of the Bonds to be used for payment of Debt Service Charges and Administrative Expenses on the Bonds. The Revenues include: (i) the Appropriation Payments, (ii) amounts received by the City or the Authority as proceeds received as the result of enforcement of remedies under the Indenture, the Cooperative Agreement, or the Guaranty or related to the obligations of the City, the Authority or the Developer thereunder, (iii) all moneys and investments in the Special Funds, except the Rebate Fund, to the extent provided in the Indenture, and (iv) all income and profit from the investment of the foregoing moneys.

Moneys on Deposit Under the Indenture

All moneys and investments held by the Trustee under the Indenture (except moneys and investments in the Rebate Fund) are irrevocably held in trust for the benefit of the Holders and for the purposes specified in the Indenture. Such money, and any income or interest earned thereon, will be expended only as provided in the Indenture and will not be subject to levy or attachment by lien by or for the benefit of any creditor of the Trustee, the Authority or any Holder.

Guaranty

The Developer, Scott A. Wolstein, and the Iris S. Wolstein Trust (collectively, the ªGuarantorsº) will execute and deliver to the Trustee a project completion guaranty (the ªGuarantyº) for the benefit of the City, the Authority, and the Bondholders.

Under the Guaranty, the Guarantors jointly and severally guarantee:

(i) the completion of construction of the Project on or before March 1, 2013;

(ii) the obligation of the Developer to make deposits in the Project Fund pursuant to the Cooperative Agreement in the event amounts on deposit in the Project Fund are insufficient to complete construction of the Project;

(iii) amounts due with respect to any redemption of the Bonds pursuant to the Indenture occurring upon the failure to close the purchase of the Property that are not paid from funds on deposit in the Bond Fund;

(iv) amounts necessary to reimburse the City for any amount the City has appropriated and paid out on or prior to the date of redemption of the Bonds pursuant to the Indenture as a result of the failure to close the purchase of the Property; and

(v) Administrative Expenses incurred pursuant to the Cooperative Agreement and the Indenture.

Amounts received by the Authority or the City as proceeds as the result of enforcement of the Guaranty constitute Revenues pledged under the Indenture to the Holders of the Bonds. See ªSECURITY AND SOURCES OF PAYMENTº herein.

However, neither the Developer, Scott A. Wolstein, the Iris S. Wolstein Trust or any affiliate thereof nor any member, partner, officer, director, agent, or representative thereof has pledged its credit or assets or has provided any guarantee, surety or undertaking of any kind, moral or otherwise, to pay the principal of, premium (if any) and interest on, the Bonds.

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Additional Information Regarding the Guarantors

For information about the Developer, see ªTHE DEVELOPERº herein.

Scott A. Wolstein and the Iris S. Wolstein Trust are the Class A Members of The Wolstein Group, LLC, which, along with Fairmount Flats LLC, is an equity owner of Flats East.

The Wolstein Group, LLC is recognized nationally for its residential, commercial, and mixed-use development projects in the United States and abroad. Scott A. Wolstein is Chairman of Developers Diversified Realty (DDR), a self-administered and self-managed real estate investment trust operating as a fully-integrated real estate company which acquires, develops, leases, and manages shopping centers. Scott A. Wolstein serves as President of Flats East. Iris S. Wolstein is a trustee of the Iris S. Wolstein Trust. Iris S. Wolstein is CEO of Heritage Development Company I, LLC, a full service real estate firm involved in residential, industrial, and commercial real estate projects across the United States.

The equity ownership of FED/Main Street consists of Flats East and Main Street Parking LLC, a limited liability company formed under the laws of the State of Ohio. Flats East is the managing member of FED/Main Street.

Special Obligations; Sources of Payment

THE BONDS ARE A SPECIAL OBLIGATION OF THE AUTHORITY AND DO NOT CONSTITUTE A GENERAL OBLIGATION, OR A PLEDGE OF THE FULL FAITH AND CREDIT, OF THE AUTHORITY, THE CITY OF CLEVELAND, CUYAHOGA COUNTY OR THE STATE, AND DO NOT CONSTITUTE AN INDEBTEDNESS OF THE AUTHORITY, THE CITY, THE STATE OR ANY POLITICAL SUBDIVISION THEREOF WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY PROVISION OR LIMITATION. THE CITY'S OBLIGATION UNDER THE COOPERATIVE AGREEMENT TO MAKE PAYMENTS IS SUBJECT TO ANNUAL APPROPRIATION BY CITY COUNCIL AND DOES NOT CONSTITUTE A DEBT OF THE CITY WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY PROVISION OR LIMITATION. NONE OF THE AUTHORITY, THE CITY, CUYAHOGA COUNTY, THE STATE OR ITS POLITICAL SUBDIVISIONS ARE OBLIGATED TO LEVY A TAX OR TO MAKE ANY APPROPRIATION FROM MONEYS RAISED BY TAXATION OR OTHER FUNDS TO PAY DEBT SERVICE ON THE BONDS.

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THE BONDS

The following is a summary of certain terms and provisions of the Bonds. Reference is hereby made to the Bonds and the provisions with respect the Bonds in the Indenture for the detailed terms and provisions thereof. Certain terms used within this section are defined in “APPENDIX C ± DEFINITIONS OF CERTAIN TERMS.”

General

The Bonds are being issued pursuant to and in compliance with the Constitution and statutes of the State, including particularly the Act. The Bonds will be issuable as fully registered bonds, without coupons, in denominations of $5,000 or any integral multiple in excess thereof (ªAuthorized Denominationsº). The Bonds will be dated the date of their delivery.

The Bonds shall become due in the amounts of the stated maturities, subject to redemption and payment prior to their stated maturities, and shall bear interest at the rates, set forth on the cover of this Official Statement (computed on the basis of a 360-day year of twelve 30-day months). Interest on the Bonds will be payable semiannually on May 15 and November 15 (each, an ªInterest Payment Dateº) of each year, beginning May 15, 2011, calculated from the date thereof or from the most recent Interest Payment Date to which interest has been paid or duly provided for. The final Interest Payment Date is the maturity date of the Bonds. Interest payable on any Interest Payment Date will be paid to the registered owner of the Bond on the Regular Record Date for such payment, which shall be the first day of the month in which an Interest Payment Date occurs.

The Bonds, when issued, will be registered in the name of Cede & Co., as nominee for DTC. Payment of the premium, if any, and interest on each Bond will be made, and notices and other communications to Bondholders will be given, directly to DTC or its nominee, Cede & Co., by the Trustee. In the event the Bonds are not in a book-entry-only system, payment of the principal of, premium, if any, and interest on the Bonds will be made and such notices and communications will be given as described in the Indenture. See ªTHE BONDSº and ªBOOK-ENTRY-ONLY SYSTEMº herein.

Registration, Transfer and Exchange Upon Discontinuance of Book-Entry System

Any Bond may be transferred only upon the Register upon surrender thereof to the Trustee duly endorsed for transfer or accompanied by an assignment duly executed by the Holder or his attorney or legal representative in such form as shall be satisfactory to the Trustee. Upon any such transfer, the Authority shall execute and the Trustee shall authenticate and deliver in exchange for such Bond a new fully registered Bond or Bonds of the same series, registered in the name of the transferee, of any Authorized Denomination. Any Bond, upon surrender thereof at the principal corporate trust office of the Trustee, together with an assignment duly executed by the Holder or the Holder's attorney or legal representative in such form as shall be satisfactory to the Trustee, may, at the option of the Holder thereof, be exchanged for Bonds of the same maturity and series, of any Authorized Denomination, bearing interest at the same rate, and registered in the name of the Holder.

The Authority or the Trustee may make a charge against each Holder requesting a transfer or exchange of Bonds for every such transfer or exchange of Bonds sufficient to reimburse it for any tax or excise required to be paid with respect to such transfer or exchange, and such charge shall be paid before any such new Bond shall be delivered.

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Redemption Prior to Maturity

The Bonds are subject to redemption prior to stated maturity pursuant to prior notice thereof, as follows:

Mandatory Sinking Fund Redemption. The Bonds maturing on November 15, 2020 are subject to mandatory sinking fund redemption at a redemption price of 100% of the principal amount to be redeemed, plus accrued interest to the date of redemption, on November 15 in the years and in the respective principal amounts as follows:

Year Principal Amount To Be Redeemed 2014 $245,000 2015 260,000 2016 275,000 2017 290,000 2018 310,000 2019 325,000 2020+ 345,000 +Maturity

The Bonds maturing on November 15, 2025 are subject to mandatory sinking fund redemption at a redemption price of 100% of the principal amount to be redeemed, plus accrued interest to the date of redemption, on November 15 in the years and in the respective principal amounts as follows:

Year Principal Amount To Be Redeemed 2021 $ 365,000 2022 385,000 2023 410,000 2024 435,000 2025+ 460,000 +Maturity

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The Bonds maturing on November 15, 2035 are subject to mandatory sinking fund redemption at a redemption price of 100% of the principal amount to be redeemed, plus accrued interest to the date of redemption, on November 15 in the years and in the respective principal amounts as follows:

Year Principal Amount To Be Redeemed 2026 $ 485,000 2027 515,000 2028 550,000 2029 580,000 2030 615,000 2031 650,000 2032 690,000 2033 735,000 2034 775,000 2035+ 825,000 +Maturity

Optional Redemption. The Bonds maturing on and after November 15, 2021 are subject to redemption in whole or in part on any date on or after November 15, 2020, at a redemption price of 100% of the principal amount redeemed plus accrued interest to the redemption date, at the option of the Authority, upon the direction of the City.

Mandatory Redemption Upon Failure to Close Purchase of Property. The Bonds are subject to redemption in whole on any date, at a redemption price of 100% of the principal amount redeemed, plus interest accrued to the redemption date, upon written notice from the Authority, at the direction of the City, pursuant to Section 4.1(f) of the Cooperative Agreement, stating that the Property Closing has not occurred on or before the eighteen (18) month anniversary of the Closing Date.

Selection of Bonds to be Redeemed. Bonds shall be redeemed only in Authorized Denominations. If fewer than all of the Outstanding Bonds are to be redeemed, the selection of Bonds to be redeemed shall be made as the Authority shall direct. When less than all of the Outstanding Bonds of a single maturity are to be redeemed and paid prior to maturity, such Bonds or portions of Bonds to be redeemed shall be selected by lot in Authorized Denominations by the Trustee in such manner as it may determine.

In the case of a partial redemption of Bonds by lot when Bonds of denominations greater than the lowest Authorized Denomination are then outstanding, each unit of face value of principal thereof equal to that lowest Authorized Denomination, shall be treated as though it were a separate Bond of a principal amount equal to that lowest Authorized Denomination. If it is determined that one or more, but not all of such units of face value represented by a Bond are to be called for redemption, then upon notice of redemption of one or more such units, the Holder of that Bond shall surrender the Bond to the Trustee (a) for payment on the redemption date of the redemption price of the unit or units of face value called for redemption (including without limitation, the interest accrued to the date fixed for redemption and any premium), and (b) for issuance, without charge to the Holder thereof, of a new Bond or Bonds, of any Authorized Denomination in an aggregate principal amount equal to the unmatured and unredeemed portion of, and bearing interest at the same rate and maturing on the same date as, the Bond surrendered.

Notice and Effect of Call for Redemption. Except in the case of mandatory sinking fund redemption, Bonds may be redeemed only pursuant to written notice from the Authority to the Trustee, which notice may be given by the Authority only upon written notice from the City. Notice by the

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Authority to the Trustee must specify the redemption date and the principal amount of Bonds to be redeemed, and must be given at least 45 days prior to the redemption date or such shorter period as shall be acceptable to the Trustee.

Unless waived by any Holder of Bonds to be redeemed, official notice of any redemption of any Bond shall be given by the Trustee on behalf of the Authority by mailing a copy of an official redemption notice by first class mail, postage prepaid, at least 30 days and not more than 60 days prior to the date fixed for redemption to the Holder of the Bond or Bonds to be redeemed at the address shown on the Register.

Upon the happening of the above conditions, and notice having been given as provided in the Indenture, the Bonds or the portions of the principal amount of Bonds thus called for redemption shall cease to bear interest on the specified redemption date, provided moneys sufficient for the payment of the redemption price are on deposit at the place of payment at the time, and shall no longer be entitled to the protection, benefit or security of the Indenture and shall not be deemed to be Outstanding under the provisions of the Indenture.

Additional Bonds

No additional bonds, notes or other obligations of the Authority issued under and secured by the Indenture, on parity with the Bonds, may be issued. See ªAPPENDIX B ± SUMMARIES OF CERTAIN DOCUMENTS ± THE INDENTUREº herein.

Payment and Discharge

When the principal of and interest on all the Bonds have been paid in accordance with their terms or provision has been made for such payment, as provided in the Indenture, and provision also is made for paying all other sums payable under the Indenture, including the fees and expenses of the Trustee and the Paying Agents under the Indenture and under the Cooperative Agreement, then the Indenture shall cease and determine (except for those provisions expressly stated to survive that termination) and thereupon the Trustee shall cancel, discharge and release the Indenture and execute, acknowledge and deliver to the Authority and the City such instruments of satisfaction and discharge or release as shall be required to evidence such release and the satisfaction and discharge of the Indenture, and shall assign and deliver to the City any property at the time subject to the Indenture which may then be in the Trustee's possession, except amounts in the Bond Fund required to be held by the Trustee for the payment of the principal of and interest on the Bonds.

Bonds shall be deemed to be paid within the meaning of the Indenture when payment of the principal on such Bonds, plus premium, if any, plus interest thereon to the due date thereof (whether such due date is by reason of maturity or upon redemption as provided in the Indenture, or otherwise), either (1) has been made or caused to be made in accordance with the terms of the Indenture, or (2) provision therefor has been made by depositing with the Trustee, in trust and irrevocably setting aside exclusively for such payment, (i) moneys sufficient to make such payment, or (ii) non-callable direct obligations of or obligations guaranteed as to full and timely payment by the United States of America which are certified by an independent public accounting firm of national reputation to be of such maturities or redemption dates or interest payment dates as will be sufficient, together with any moneys described in clause (i) to pay all Debt Service Charges on the Bonds, at their maturity or redemption dates as the case may be, provided that the Trustee shall have received an Opinion of Bond Counsel to the effect that such arrangement will not adversely affect the tax-exempt status of the Bonds for federal income tax purposes, unless waived by the City, and that all conditions precedent to the satisfaction of the Indenture have been met.

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At such time as a Bond is deemed to be paid under the Indenture, such Bond shall no longer be secured by or be entitled to the benefits of the Indenture, except for the purposes of any such payment from such moneys.

BOOK-ENTRY-ONLY SYSTEM

The information in this section concerning DTC and DTC’s book-entry-only system has been obtained from DTC and the Authority takes no responsibility for the completeness or accuracy thereof. The Authority cannot and does not give any assurances that DTC, Direct Participants or Indirect Participants will distribute to the Beneficial Owners (each as hereinafter defined) (a) payments of interest, principal, or premium, if any, with respect to the Bonds, (b) certificates representing ownership interest in or other confirmation or ownership interest in the Bonds, or (c) redemption or other notices sent to DTC or Cede & Co., its partnership nominee, as the registered owner of the Bonds, or that they will so do on a timely basis or that DTC, Direct Participants or Indirect Participants will act in the manner described in this Official Statement. The current “Rules” applicable to DTC are on file with the Securities and Exchange Commission and the current “Procedures” of DTC to be followed in dealing with DTC Participants are on file with DTC.

DTC will act as securities depository for the Bonds. The Bonds will be issued as fully-registered Bonds registered in the name of Cede & Co. (DTC's partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered Bond certificate will be issued for each issue of the Bonds, each in the aggregate principal amount of such issue, and will be deposited with DTC. If, however, the aggregate principal amount of any issue exceeds $500 million, one certificate will be issued with respect to each $500 million of principal amount, and an additional certificate will be issued with respect to any remaining principal amount of such issue.

DTC, the world's largest depository, is a limited-purpose trust company organized under the New York Banking Law, a ªbanking organizationº within the meaning of the New York Banking Law, a member of the Federal Reserve System, a ªclearing corporationº within the meaning of the New York Uniform Commercial Code, and a ªclearing agencyº registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments from over 100 countries that DTC's participants (ªDirect Participantsº) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants' accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (ªDTCCº). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (ªIndirect Participantsº). DTC has Standard & Poor's highest rating: AAA. The DTC rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com and www.dtc.org.

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Purchases of Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Bonds on DTC's records. The ownership interest of each actual purchaser of each Bond (ªBeneficial Ownerº) is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the 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 DTC are registered in the name of DTC's partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC's records reflect only the identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers.

Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of 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. For example, Beneficial Owners of 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 Bond Registrar and request that copies of the notices be provided directly to them.

Redemption notices shall be sent to DTC. If less than all of the Bonds within an issue are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed.

Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Bonds unless authorized by a Direct Participant in accordance with DTC's MMI procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the Authority as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts the Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy).

Redemption proceeds, distributions and dividend payments on the Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC's practice is to credit Direct Participants' accounts, upon DTC's receipt of funds and corresponding detail information from the Authority or the Bond Registrar, 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 ªstreet nameº, and will be the responsibility of such Participant and not of DTC, the Bond Registrar, or the Authority, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions and dividend

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payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Authority or the Bond Registrar, 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.

Revision of Book-Entry-Only System ± Replacement Bonds

The Indenture provides for issuance of fully registered Bonds (the ªReplacement Bondsº) directly to owners other than DTC or its nominee only if DTC determines not to continue to act as security depository of the Bonds. In such event, the Authority may in its discretion establish a securities depository/book-entry relationship with another qualified securities depository. If the Authority does not or is unable to do so, and after appropriate notice to DTC, the Trustee will authenticate and deliver fully registered Replacement Bonds, in the denominations of $5,000 or any integral multiple thereof, to or at the direction of and, if the event is not the result of Authority action or inaction, at the expense (including printing costs) of, any persons requesting such issuance. Replacement Bonds may be transferred, registered and assigned only in the registration books of the Trustee.

BONDHOLDERS' RISKS

An investment in the Bonds is subject to a number of significant risk factors. The following is a discussion of certain risks that could affect payments to be made with respect to the Bonds. Such discussion is not, and is not intended to be, exhaustive and should be read in conjunction with all other parts of this Official Statement and should not be considered as a complete description of all risks that could affect such payments. Prospective purchasers of the Bonds should analyze carefully the information contained in this Official Statement, including the Appendices hereto, and additional information in the form of the complete documents summarized herein, copies of which are available as described in this Official Statement.

Nature of the Obligations

The Bonds are a special obligation of the Authority and do not constitute a general obligation, or a pledge of the full faith and credit, of the Authority, the City, Cuyahoga County or the State and do not constitute an indebtedness of the Authority, the City, the State or any political subdivision thereof within the meaning of any constitutional or statutory provision or limitation. The City's obligation under the Cooperative Agreement to make payments is subject to annual appropriation by City Council and does not constitute a debt of the City within the meaning of any constitutional or statutory provision or limitation. None of the Authority, the City, Cuyahoga County, the State or any of its political subdivisions are obligated to levy a tax or to make any appropriation to pay debt service on the Bonds.

Risks Associated with Nonappropriation of Appropriation Payments

As set forth under ªSECURITY AND SOURCES OF PAYMENTº herein, the Bonds are payable from Appropriation Payments made by the City to the Authority under the Cooperative Agreement. Under the Cooperative Agreement, the City's obligation to make the Appropriation Payments each year is subject to and dependent upon annual appropriations by City Council sufficient to pay Appropriation Payments and certification by the Director of Finance as to the availability of the appropriated funds. While the City's Director of Finance is required under the Cooperative Agreement to include in the annual budget requests to the City Council sufficient money for the City to make Appropriation Payments, there is no assurance that City Council will approve such budget appropriations. A failure by the City to appropriate the Appropriation Payments or by the Director of Finance to certify as

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to the availability of the Appropriation Payments does not constitute an Event of Default by the City under the Cooperative Agreement, and there is no remedy against the City under the Cooperative Agreement for such failure.

Holders have no right to accelerate the Appropriation Payments or the maturity of the Bonds in the event of nonappropriation of Appropriation Payments by the City or a failure of the Director of Finance to certify as to the availability of appropriated funds. Bondholders would be left without an adequate remedy in such an event.

Failure of Developer and Guarantors to Complete the Project

The portion of the Project to be paid using proceeds of the Bonds costs approximately $11,000,000 and is part of a larger Development that costs approximately $275,000,000. The Development is a mixed-use redevelopment project scheduled to occur over several years and in phases. Although there can be no assurance that the Project and the Development will be completed on schedule and in a timely manner, it is expected that the Project and the Development will be completed and will benefit the City by creating new office, retail, and hotel uses within the City and expanding the City's ownership of park property along the East bank of the Cuyahoga River.

The Developer has covenanted in the Cooperative Agreement and in the Construction Agency Agreement to cause the completion of the Project. If moneys available to the Authority from the Project Fund pursuant to the Indenture and the Cooperative Agreement, together with other grant funds received by the Authority for the Project, are insufficient to pay all costs of the Project, the Developer has agreed in the Cooperative Agreement to pay all costs to complete the Project in accordance with the plans and specifications and shall pay all such additional Project Costs into the appropriate account of the Project Fund under the Indenture.

In the event the Project is not completed by the Developer, in addition to the other remedies available under the Cooperative Agreement and the Construction Agency Agreement, the City, the Authority, and the Trustee may enforce the Guaranty and pursue the Guarantors for the costs associated with the completion of the Project. In addition to the Guaranty, there are other guarantees securing obligations to complete different portions of the overall Development, including guaranteed maximum price contracts for the construction of the office tower, hotel, and retail portions of the Development and completion guarantees on portions of the Development. Moreover, the availability of multiple sources of funding for the Development is an express condition for closing on the Bonds. While the availability of guarantees and multiple sources of funding for the Development and the availability of the Guaranty for the Project mitigate the risk that funds are not available to complete the Development and the Project, there can be no assurance that the Development and the Project will be completed.

Risks Associated with Enforceability of Remedies

The remedies available upon a default under the Indenture, the Cooperative Agreement, the Construction Agency Agreement, and other legal documents relating to the Bonds will, in many respects, be dependent upon judicial actions, which are often subject to discretion and delay. Under existing constitutional and statutory laws and judicial decisions, the remedies specified in the Indenture, the Cooperative Agreement, and other legal documents may not be readily available or may be limited. Examples of possible limitations on enforceability and a possible subordination of prior claims include (i) statutory liens, (ii) rights arising in favor of the United States of America or any agency thereof, (iii) present or future prohibitions against assignment, (iv) constructive trusts, equitable liens or other rights impressed or conferred by any state or federal court in exercise of its equitable jurisdiction, (v) claims that might arise with respect to certain property if appropriate financing or continuation statements are not

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filed in accordance with the Ohio Uniform Commercial Code (the ªUCCº) from time to time in effect or as a result of the UCC not providing for perfection of a security interest in those elements of Revenues that can be perfected under UCC only by taking possession of such collateral, and (vi) federal bankruptcy laws, including, without limitation, those relating to limitations on the payment of future rentals under leases of real property and those affecting payments made after and within 90 days prior to any institution of bankruptcy proceedings by or against the obligor. The various legal opinions to be delivered in connection with the issuance of the Bonds will be expressly subject to the qualification that the enforceability of the Indenture, the Cooperative Agreement, and other legal documents is limited by bankruptcy, reorganization, insolvency, moratorium and other similar laws affecting the rights of creditors generally and by the exercise of judicial discretion in appropriate cases.

Lack of Market for the Bonds

No assurance can be given that a secondary market for the Bonds will develop following the completion of the offering of the Bonds.

LITIGATION

To the knowledge of the appropriate officials of the Authority and the City, no litigation or administrative action or proceeding is pending or threatened restraining or enjoining, or seeking to restrain or enjoin, the issuance and delivery of the Bonds, or the collection of Appropriation Payments to pay the Debt Service Charges on the Bonds, or contesting or questioning the proceedings and authority under which the Bonds are to be authorized and are to be issued, sold, executed or delivered, or the validity of the Bonds. A no-litigation certificate to such effect will be delivered to the Underwriter at the time of original delivery of the Bonds to such Underwriter.

In common with other political subdivisions, the Authority from time to time receives notices of claims for money damages. In the opinion of Authority officials, any such claims outstanding, regardless of their merit, are not in excess of the Authority's insurance coverage. The Authority is also a party to various legal proceedings seeking damages, condemnation, or injunctive relief and generally incidental to its operations. These proceedings are unrelated to the Bonds or the security therefor. The ultimate disposition of such proceedings is not presently determinable, but will not, in the opinion of Authority officials, have a material adverse effect on the Bonds or the security therefor.

The City is a party to various legal proceedings seeking damages or injunctive or other relief generally incidental to its operations. Such proceedings are unrelated to the Appropriation Payments, the City's obligations under the Cooperative Agreement, or the security for Bonds, and their ultimate disposition is not now determinable. It is the opinion of the City's Director of Law, based on his present understanding and knowledge of such proceedings, that their disposition, in the aggregate, will not result in liability of the City in an amount which, in the opinion of the City's Director of Finance, would have a material adverse effect on the Appropriation Payments, the City's obligations under the Cooperative Agreement, or the security for the Bonds.

There is no litigation pending, or to the knowledge of the Developer, threatened against the Developer that could in any way affect the construction and completion of the Development or the Project.

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LEGAL MATTERS

Legal matters incident to the authorization, issuance and sale of the Bonds by the Authority are subject to the approving legal opinion of Squire, Sanders & Dempsey L.L.P., Bond Counsel (see ªTAX MATTERSº herein). The signed legal opinion dated as of, and premised on the transcript of proceedings examined and the law in effect on, the date of original delivery of the Bonds, will be delivered to the Underwriters at the time of that original delivery. A copy of the proposed form of such opinion is attached hereto as APPENDIX D. Certain legal matters will be passed upon for the Authority by Horton & Horton Co., LPA, Cleveland, Ohio, for the City by Robert J. Triozzi, Esq., Director of Law, for the Developer by Tucker Ellis & West LLP, Cleveland, Ohio and Jones Day LLP, Cleveland, Ohio, and for the Underwriter by Bricker & Eckler LLP, Columbus, Ohio, Underwriter's Counsel.

The various legal opinions to be delivered on the Closing Date express the professional judgment of the attorneys rendering the opinions as to the legal issues explicitly addressed therein. In rendering a legal opinion, the attorney does not become an insurer or guarantor of the expression of professional judgment, of the transaction opined upon, or of the future performance of the parties to the transaction, nor does the rendering of an opinion guarantee the outcome of any legal dispute that may arise out of the transaction.

TAX MATTERS

In the opinion of Squire, Sanders & Dempsey L.L.P., Bond Counsel, under existing law: (i) interest on the Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986, as amended (the ªCodeº), and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations, and (ii) interest on, and any profit made on the sale, exchange or other disposition of, the Bonds are exempt from the Ohio personal income tax, the Ohio commercial activity tax, the net income base of the Ohio corporate franchise tax, and municipal, school district and joint economic development district income taxes in Ohio. Bond Counsel expresses no opinion as to any other tax consequences regarding the Bonds.

The opinion on tax matters will be based on and will assume the accuracy of certain representations and certifications, and continuing compliance with certain covenants, of the Authority and the City contained in the transcript of proceedings and that are intended to evidence and assure the foregoing, including that the Bonds are and will remain obligations the interest on which is excluded from gross income for federal income tax purposes. Bond Counsel will not independently verify the accuracy of those certifications and representations or the continuing compliance with those covenants.

The opinion of Bond Counsel is based on current legal authority and covers certain matters not directly addressed by such authority. It represents Bond Counsel's legal judgment as to exclusion of interest on the Bonds from gross income for federal income tax purposes but is not a guaranty of that conclusion. The opinion is not binding on the Internal Revenue Service (ªIRSº) or any court. Bond Counsel expresses no opinion about (i) the effect of future changes in the Code and the applicable regulations under the Code or (ii) the interpretation and the enforcement of the Code or those regulations by the IRS.

The Code prescribes a number of qualifications and conditions for the interest on state and local government obligations to be and to remain excluded from gross income for federal income tax purposes, some of which require future or continued compliance after issuance of the obligations. Noncompliance with these requirements by the Authority or the City may cause loss of such status and result in the interest on the Bonds being included in gross income for federal income tax purposes retroactively to the

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date of issuance of the Bonds. The Authority and the City have covenanted to take the actions required of it for the interest on the Bonds to be and to remain excluded from gross income for federal income tax purposes, and not to take any actions that would adversely affect that exclusion. After the date of issuance of the Bonds, Bond Counsel will not undertake to determine (or to so inform any person) whether any actions taken or not taken, or any events occurring or not occurring, or any other matters coming to Bond Counsel's attention, may adversely affect the exclusion from gross income for federal income tax purposes of interest on the Bonds or the market value of the Bonds.

A portion of the interest on the Bonds earned by certain corporations may be subject to a federal corporate alternative minimum tax. In addition, interest on the Bonds may be subject to a federal branch profits tax imposed on certain foreign corporations doing business in the United States and to a federal tax imposed on excess net passive income of certain S corporations. Under the Code, the exclusion of interest from gross income for federal income tax purposes may have certain adverse federal income tax consequences on items of income, deduction or credit for certain taxpayers, including financial institutions, certain insurance companies, recipients of Social Security and Railroad Retirement benefits, those that are deemed to incur or continue indebtedness to acquire or carry tax-exempt obligations, and individuals otherwise eligible for the earned income tax credit. The applicability and extent of these and other tax consequences will depend upon the particular tax status or other tax items of the owner of the Bonds. Bond Counsel will express no opinion regarding those consequences.

Payments of interest on tax-exempt obligations, including the Bonds, are generally subject to IRS Form 1099-INT information reporting requirements. If a Bond owner is subject to backup withholding under those requirements, then payments of interest will also be subject to backup withholding. Those requirements do not affect the exclusion of such interest from gross income for federal income tax purposes.

Legislation affecting tax-exempt obligations is regularly considered by the United States Congress and may also be considered by the State legislature. Court proceedings may also be filed, the outcome of which could modify the tax treatment of obligations such as the Bonds. There can be no assurance that legislation enacted or proposed, or actions by a court, after the date of issuance of the Bonds will not have an adverse effect on the tax status of interest or other income on the Bonds or the market value of the Bonds.

Prospective purchasers of the Bonds should consult their own tax advisers regarding pending or proposed federal and state tax legislation and court proceedings, and prospective purchasers of the Bonds at other than their original issuance at the respective prices indicated on the Cover should also consult their own tax advisers regarding other tax considerations such as the consequences of market discount, as to all of which Bond Counsel expresses no opinion.

Bond Counsel's engagement with respect to the Bonds ends with the issuance of the Bonds, and, unless separately engaged, Bond Counsel is not obligated to defend the Authority or the City or the owners of the Bonds regarding the tax status of interest thereon in the event of an audit examination by the IRS. The IRS has a program to audit tax-exempt obligations to determine whether the interest thereon is includible in gross income for federal income tax purposes. If the IRS does audit the Bonds, under current IRS procedures, the IRS will treat the Authority as the taxpayer and the Beneficial Owners of the Bonds will have only limited rights, if any, to obtain and participate in judicial review of such audit. Any action of the IRS, including but not limited to selection of the Bonds for audit, or the course or result of such audit, or an audit of other obligations presenting similar tax issues, may affect the market value of the Bonds.

Original Issue Discount and Original Issue Premium

Certain of the Bonds (ªDiscount Bondsº) may be offered and sold to the public at an original issue discount (ªOIDº). OID is the excess of the stated redemption price at maturity (the principal

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amount) over the ªissue priceº of a Discount Bond. The issue price of a Discount Bond is the initial offering price to the public (other than to bond houses, brokers or similar persons acting in the capacity of underwriters or wholesalers) at which a substantial amount of the Discount Bonds of the same maturity is sold pursuant to that offering. For federal income tax purposes, OID accrues to the owner of a Discount Bond over the period to maturity based on the constant yield method, compounded semiannually (or over a shorter permitted compounding interval selected by the owner). The portion of OID that accrues during the period of ownership of a Discount Bond (i) is interest excluded from the owner's gross income for federal income tax purposes to the same extent, and subject to the same considerations discussed above, as other interest on the Bonds, and (ii) is added to the owner's tax basis for purposes of determining gain or loss on the maturity, redemption, prior sale or other disposition of that Discount Bond. A purchaser of a Discount Bond in the initial public offering at the price for that Discount Bond stated on the Cover who holds that Discount Bond to maturity will realize no gain or loss upon the retirement of that Discount Bond.

Certain of the Bonds (ªPremium Bondsº) may be offered and sold to the public at a price in excess of their stated redemption price (the principal amount) at maturity. That excess constitutes bond premium. For federal income tax purposes, bond premium is amortized over the period to maturity of a Premium Bond, based on the yield to maturity of that Premium Bond (or, in the case of a Premium Bond callable prior to its stated maturity, the amortization period and yield may be required to be determined on the basis of an earlier call date that results in the lowest yield on that Premium Bond), compounded semiannually. No portion of that bond premium is deductible by the owner of a Premium Bond. For purposes of determining the owner's gain or loss on the sale, redemption (including redemption at maturity) or other disposition of a Premium Bond, the owner's tax basis in the Premium Bond is reduced by the amount of bond premium that is amortized during the period of ownership. As a result, an owner may realize taxable gain for federal income tax purposes from the sale or other disposition of a Premium Bond for an amount equal to or less than the amount paid by the owner for that Premium Bond. A purchaser of a Premium Bond in the initial public offering at the price for that Premium Bond stated on the Cover who holds that Premium Bond to maturity (or, in the case of a callable Premium Bond, to its earlier call date that results in the lowest yield on that Premium Bond) will realize no gain or loss upon the retirement of that Premium Bond.

Owners of Discount Bonds and Premium Bonds should consult their own tax advisers as to the determination for federal income tax purposes of the amount of OID or bond premium properly accruable or amortizable in any period with respect to the Discount Bonds or Premium Bonds and as to other federal tax consequences and the treatment of OID and bond premium for purposes of state and local taxes on, or based on, income.

CONTINUING DISCLOSURE

The City has agreed to provide financial information, operating data, and event disclosures in accordance with Rule 15c2-12 promulgated by the Securities and Exchange Commission in a continuing disclosure agreement by and among the City, the Authority, and the Trustee. See ªAPPENDIX E ± FORM OF CONTINUING DISCLOSURE AGREEMENTº for specific provisions regarding the City's obligations to provide continuing disclosure.

RATINGS

As noted on the cover page, the Authority has applied for a rating of the Bonds from Standard & Poor's Credit Market Services (ªS&Pº) which has rated the Bonds ªA.º No application for a rating has been made to any other rating agency.

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The rating reflects only the views of S&P. Any explanation of the significance of the rating may only be obtained from S&P.

The Authority furnished to S&P certain information and materials, some of which may not have been included in this Official Statement, relating to the Bonds, the Authority, and the City. Generally, rating agencies base their ratings on such information and materials, as well as investigation, studies and assumptions by the rating agency. Such ratings are not recommendations to buy, sell or hold the Bonds.

There can be no assurance that a rating, when assigned, will continue for any given period of time or that it will not be lowered or withdrawn entirely by a rating agency if, in its judgment, circumstances so warrant. In addition, the Authority currently expects to provide to S&P (but assumes no obligation to furnish to the Underwriter or the holders from time to time of the Bonds) further information and materials that it or they may request. The Authority does not, however, obligate itself hereby to furnish such information and materials, and may issue unrated bonds and notes from time to time. Failure by the Authority to furnish such information and materials, or the issuance of unrated bonds or notes, may result in the suspension or withdrawal of S&P's rating on the Bonds. Any lowering, suspension or withdrawal of such ratings may have an adverse effect on the marketability or market price of the Bonds. S&P has indicated that its rating will be withdrawn in the event that the Bonds are defeased. In addition, S&P does not rate the likelihood of purchasers of the Bonds receiving premiums associated with the Bonds.

UNDERWRITING

Robert W. Baird & Co. Incorporated (the ªUnderwriterº), has agreed pursuant to the Bond Purchase Agreement (the ªBond Purchase Agreementº) among the Underwriter, the Authority, the Developer, and approved by the City, dated December 13, 2010, to purchase all, but not less than all, of the Bonds at an aggregate purchase price of $10,711,068.80 (which takes into account Underwriter's discount of $52,000.00 and original issue discount of $236,931.20), plus accrued interest to the date of delivery. The Bond Purchase Agreement provides that the obligation of the Underwriter to purchase all of the Bonds is subject to certain terms and conditions set forth in the Bond Purchase Agreement, the approval of certain legal matters by counsel and certain other conditions.

The Underwriter intends to offer the Bonds to the public initially at the offering prices set forth on the inside cover page of this Official Statement, which may subsequently change without any requirement of prior notice. The Underwriter reserves the right to join with dealers and other underwriters in offering the Bonds to the public. The Underwriter may offer and sell Bonds to certain dealers (including dealers depositing Bonds into investment trusts) at prices lower than the public offering prices derived from the rates and yields for each maturity set forth on the cover of this Official Statement. Such initial public offering prices may be changed from time to time by the Underwriters.

INDEPENDENT AUDITORS

The general purpose financial statements of the City for the year ended December 31, 2009 have been audited by the State of Ohio Office of the Auditor (ªAuditorº) under authority granted by Ohio law. A complete copy of the December 31, 2009 Auditor's report may be obtained from the Director of Finance at the City of Cleveland City Hall, 601 Lakeside Avenue, Cleveland, Ohio 44114. A copy is also available at the Auditor's website: www.auditor.state.oh.us/AuditSearch/Search.aspx. The audited financial statements are public records, no consent to their inclusion is required, and no bring down procedures have been

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undertaken by the Auditor of the State since their date. The City continues to maintain an internal audit function and an active external audit committee.

CONCLUDING STATEMENT

The agreements of the Authority with the Holders of the Bonds are fully set forth in the Indenture, and neither any advertisement of the Bonds nor this Official Statement is to be construed as constituting a contract or agreement between the Authority, the Trustee, the Underwriter or the Purchaser or Owners of any Bonds with the purchasers of the Bonds.

The references herein to the Indenture, the Cooperative Agreement, and all references to other documents and materials not stated to be quoted in full are only brief outlines of some of the provisions thereof, do not purport to summarize or describe all of the provisions thereof, and are qualified in their entirety by reference to the complete provisions of the documents and other materials summarized or described. other documents are brief outlines of certain provisions of such documents and do not purport to be complete. Copies of the Indenture and the Cooperative Agreement may be obtained during the offering period upon request directed to the Underwriter and following delivery of the Bonds will be on file at the office of the Trustee.

Certain information in this Official Statement has been derived by the City from official and other sources and is believed by the City to be accurate and reliable. Information other than that obtained from official records of the City has not been independently confirmed or verified by the City and its accuracy is not guaranteed. Information pertaining to the City contained in this Official Statement, including APPENDIX A hereto, has been furnished by officials of the City. Such information is unaudited (unless otherwise indicated) and is not guaranteed as to accuracy or completeness by, and is not to be construed as a representation by the Authority.

Any statement made in this Official Statement involving matters of opinion or of estimates, whether or not expressly so stated, are set forth as such and not as representations of fact, and no representation is made that any of the estimates will be realized. The information and expressions of opinion herein are subject to change without notice and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the information presented herein since the date hereof.

The execution, delivery, and use of this Official Statement have been authorized by the Authority.

CLEVELAND-CUYAHOGA COUNTY PORT AUTHORITY

By: /s/ William D. Friedman William D. Friedman President and CEO Cleveland-Cuyahoga County Port Authority

And: /s/ Brent R. Leslie Brent R. Leslie Chief Financial Officer Cleveland-Cuyahoga County Port Authority

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APPENDIX A

INFORMATION REGARDING THE CITY

APPENDIX A TABLE OF CONTENTS

THE CITY ± GENERAL INFORMATION...... A-1 General Introduction...... A-1 City Government ...... A-1

THE CITY ± ECONOMIC AND DEMOGRAPHIC INFORMATION ...... A-1 Population...... A-2 Employment ...... A-2 Distribution of Employees by Sector...... A-3 Corporate Headquarters...... A-4 Home Values, Housing Units and Home Sales ...... A-4 Housing Sales Statistics 2005-2009 ...... A-5 Building Permits...... A-6 Utilities...... A-6 Transportation ...... A-6 Financial Services...... A-7 Education...... A-7 Health Care...... A-7 Recreation and Entertainment ...... A-8 Downtown and Other Economic Development...... A-8 Housing and Neighborhood Development ...... A-12 Brownfield Redevelopment...... A-13 Pension Obligations...... A-14 Employees ...... A-14 Police and Fire Overtime...... A-15

FINANCIAL MATTERS...... A-16 Budgeting, Tax Levy and Appropriations Procedures...... A-16 Financial Reports and Examinations of Accounts...... A-17 Summary of Major City Funds...... A-18 Summary of General Fund Cash Receipts and Expenditures ± Non-GAAP Budgetary Basis ...... A-19 2010 General Fund Budget...... A-20 Management Discussion of the City's General Fund for the Fiscal Year Ended December 31, 2009 ± Budget Basis...... A-21 General Fund Balances...... A-23 Management Discussion of General Fund GAAP Basis Results for the Fiscal Year Ended December 31, 2009 ...... A-23 Investment Policy...... A-24

THE CITY ± MAJOR GENERAL FUND REVENUE SOURCES...... A-25 Municipal Income Taxes ...... A-25 Local Government Fund/Local Government Revenue Assistance Fund...... A-26 Ad Valorem Property Taxes...... A-28 Overlapping Governmental Entities ...... A-33 Tax Incentive Programs...... A-34

CITY DEBT AND OTHER OBLIGATIONS...... A-35 Debt Limitations...... A-35 Direct Debt Limitations...... A-35 Indirect Debt Limitation...... A-36 Debt Outstanding...... A-38 Overlapping Subdivisions ± Millage Requirements ...... A-39 Leases and Other Obligations...... A-39 Derivative Transactions Payable from General Fund...... A-40 Other Financings ...... A-40

A - TABLE OF CONTENTS

THE CITY ± GENERAL INFORMATION

General Introduction

City Government

The City operates under and is governed by the Charter, which was first adopted by the voters in 1913 and has been and may be further amended by the voters from time to time. The City is also subject to certain general State laws that are applicable to all cities in the State. In addition, under Article XVIII, Section 3 of the Ohio Constitution, the City may exercise all powers of local self-government and may exercise police powers to the extent not in conflict with applicable general State laws. The Charter provides for a mayor-council form of government.

Legislative authority is currently vested in a 19-member City Council. The terms of City Council members and the Mayor are four years. All City Council members are elected from wards. The current terms of the Mayor and City Council members expire on January 5, 2014. City Council fixes compensation of City officials and employees and enacts ordinances and resolutions relating to City services, tax levies, appropriating and borrowing money, licensing and regulating businesses and trades, and other municipal functions. The presiding officer is the President of Council, who is elected by the City Council members. Martin J. Sweeney was elected as President of Council in January 2006 and was elected to a second term in January 2010. The Clerk of Council is appointed by City Council.

The City's chief executive and administrative officer is the Mayor who is elected by the voters for a four-year term. Frank G. Jackson was elected to his second term as Mayor of the City in November 2009 and began his current term on January 4, 2010. Prior to assuming office as Mayor, Mr. Jackson served as President of Council from January 2002 through December 2005 and as Ward 5 Council Member since 1989. The Mayor may veto any legislation passed by City Council. A veto may be overridden by a two-thirds vote of all members of City Council.

The Charter establishes certain administrative departments and City Council may establish divisions thereof or additional departments. The Mayor appoints all of the directors of the City's 14 departments.

THE CITY - ECONOMIC AND DEMOGRAPHIC INFORMATION

In the 2000 Census classifications, the City was in the Cleveland-Akron Consolidated Metropolitan Statistical Area (ªCMSAº), which consisted of eight northeast Ohio counties. In 2000, the CMSA had a population of 2,945,831, making it the 16th largest metropolitan area (out of 276) in the United States. The City was also in the Cleveland-Lorain-Elyria Primary Metropolitan Statistical Area (ªPMSAº), which consisted of the counties of Ashtabula, Cuyahoga, Geauga, Lake, Lorain and Medina. In June 2003, the U.S. Census Bureau ceased using the PMSA and CMSA distinctions. The former CMSA and PMSA including Cleveland is now the Cleveland-Elyria-Mentor Metropolitan Statistical Area (ªMSAº) and now consists of Cuyahoga, Geauga, Lake, Lorain and Medina counties.

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Population

Set forth below are population statistics from the U.S. Bureau of the Census for the City, the County, the PMSA, the CMSA and the State for each decade from 1950 to 2000 and for the City, the County, the MSA, and the State for 2006 through 2009.

Year City County PMSA CMSA State 1950 914,808 1,389,532 1,759,431 2,154,722 7,946,627 1960 876,050 1,647,895 2,220,050 2,732,350 9,706,397 1970 750,973 1,721,330 2,418,809 2,999,811 10,652,017 1980 573,822 1,498,400 2,277,949 2,834,412 10,797,630 1990 505,616 1,412,140 2,202,069 2,859,644 10,847,115 2000 478,403 1,393,978 2,250,871 2,945,831 11,353,140 2006 452,208 1,305,273 2,106,336(b) 2,929,617 11,470,685 2007 438,042 1,293,600 2,099,185(b) 2,896,968 11,477,641 2008 433,748 1,282,800 2,094,051(b) 2,887,492 11,485,910 2009(a) 431,363 1,275,709 2,091,286(b) 2,891,988 11,542,645

(a) Estimate as of July 2009. Source: U.S. Bureau of the Census. (b) Indicates population of MSA. Source: U.S. Bureau of the Census.

The following is a breakdown by age groups of the population for the City (according to 2000 Census figures):

Under 5 5-19 20-24 25-44 45-54 55-64 65+ Total 38,594 111,002 32,061 145,669 55,111 35,987 59,979 478,403

Employment

The following table compares estimated employment and unemployment statistics for the City, the County and the MSA, including comparisons with unemployment rates for the State and the United States.

Employment Statistics*

Employed Unemployment Unemployment Rate Year City County MSA City County MSA City County MSA Ohio U.S. y 2005 176,800 629,000 1,032,800 15,200 40,500 62,600 7.9% 6.1% 5.7% 5.9% 5.1% 2006 175,600 626,700 1,034,800 13,300 36,700 58,600 7.1% 5.5% 5.4% 5.5% 4.6% 2007 175,100 624,600 1,031,300 14,400 39,800 64,200 7.6% 6.0% 5.9% 5.6% 4.6% 2008 163,800 583,300 979,300 16,000 44,800 74,700 8.9% 7.1% 7.1% 7.7% 7.1% 2009 162,400 581,200 981,300 20,300 58,800 98,100 11.1% 9.2% 9.1% 10.2% 9.3% 2010(a) 165,300 591,400 998,600 22,800 66,800 106,600 12.1% 10.1% 9.6% 10.1% 9.6% (a) As of August 2010. *Rounded to the nearest hundred. Source: Ohio Department of Job & Family Services, Labor Market Information Division

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The following table indicates the distribution of employee classifications in the MSA for the years 2005 through August 2010:

Distribution of Employees by Sector (Amounts in 000's)

2005 2006 2007 2008 2009 August 2010

Goods Producing Industries Mining, Logging, Construction 42.9 41.6 41.0 38.4 32.8 31.8 Primary Metal 11.1 11.1 10.6 10.6 8.1 6.9 Fabricated Metal 31.2 31.8 32.0 31.3 26.0 25.5 Transportation Equipment 19.9 18.4 15.6 13.6 10.0 9.8 Other 87.0 86.2 84.6 83.3 74.0 77.8

Total Goods Producing Industries 192.1 189.1 183.8 177.2 150.9 151.8

Service Producing Industries Transportation & Public Utilities 32.9 33.8 34.3 33.6 30.7 29.6 Wholesale Trade 55.3 56.1 55.1 54.0 49.7 48.3 Retail Trade 110.5 109.7 109.4 107.6 102.7 106.2 Finance, Insurance & Real Estate 74.9 73.8 72.2 68.8 65.3 62.0 Health Services 140.9 143.8 146.9 149.8 153.2 161.0 Other Services 324.6 328.0 327.5 324.7 307.5 312.7 Federal Government 18.1 18.1 18.5 18.9 19.0 19.6 State Government 8.3 8.2 8.0 7.8 7.5 7.1 Local Government 114.5 114.1 116.5 116.2 114.6 105.6 Total Service Producing Industries 880.0 885.9 888.4 881.4 850.2 852.1

Total 1,072.1 1,075.0 1,072.2 1,058.6 1,001.1 1,003.9

Goods Producing Percentage 17.9% 17.6% 17.6% 16.5% 15.1% 15.1%

Service Producing Percentage 82.1% 82.4% 82.9% 82.2% 84.9% 84.9%

Source: Ohio Department of Job & Family Services, Labor Market Information Division.

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Corporate Headquarters

Listed below are 18 corporations (representing 15 different industries) among the Fortune 1000 largest corporations (ranked by worldwide revenues) which have headquarters in the greater Cleveland metropolitan area.

Largest Cleveland Area Corporations

Rank Company Revenues(a) Major Products

161 Progressive $14,563.6 Insurance 194 Eaton Corp.(b)(c) 11,873.0 Automotive & Electronics 230 Parker Hannifin Corp. 10,309.0 Hydraulic Components 319 Sherwin-Williams Corp.(b) 7,094.2 Paints, Chemicals 356 KeyCorp(b) 6,068.0 Financial Services 440 TravelCenters of America 4,699.8 Specialty Retailer 453 The Lubrizol Corp. 4,586.3 Chemicals 577 RPM, International 3,368.2 Rubber & Plastic Polymers 646 Aleris International 2,996.7 Metals 750 Cliffs Natural Resources(b) 2,342.0 Mining, Crude Oil Production 754 Nacco Industries, Inc. 2,328.4 Industrial and Farm Equipment 765 Medical Mutual of Ohio(b) 2,283.4 Health Care Insurance 811 PolyOne 2,060.7 Chemicals 859 Applied Industrial Technologies(b) 1,923.1 Industrial Components 920 Lincoln Electric Holdings 1,729.3 Industrial & Farm Equipment 937 Invacare Corporation 1,693.1 Medical Products and Equipment 938 American Greetings Corp. 1,690.7 Greeting Cards, Printing 949 Ferro(b) 1,657.6 Chemicals

(a) In millions of dollars. (b) Headquartered in the City. (c) Eaton Corp. has announced that it is moving to City-owned land located in Beachwood, Ohio, a suburb of the City. As a result of an existing joint economic development agreement, the City and the City of Beachwood will share in income tax receipts.

Source: Fortune, May 3, 2010.

Home Values, Housing Units and Home Sales

The 2005 median value of owner-occupied homes in the City, the County and the MSA were $86,900, $136,500 and $146,700, respectively, compared with $129,600 in the State and $167,500 in the United States. In 2000, 49.3% of all homes in the City were constructed prior to 1940, compared with 28.8% for the County and 22.5% for the State. The number of housing units within the City for the ten- year period from 1990 to 2000 decreased by 3.8%, from 224,311 to 215,844, compared with an increase of 2.1% for the County, from 604,538 to 616,903. (All figures in this paragraph are derived from the U.S. Bureau of the Census.) In recent years, as part of the City's community development initiatives, the City has provided financial assistance to nonprofit and for-profit developers to stimulate new housing construction in the City. See ªHousing and Neighborhood Developmentº below. In 2007, the average value of a home in the City and County was $70,439 and $144,772, respectively.

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Listed below are sale price summary statistics for the City and the County, respectively.

Housing Sales Statistics 2005-2009

City County Number Average Number Average Year of Sales Sales Price of Sales Sales Price

2005 7,323 $86,142 23,523 $155,420 2006 6,111 83,237 21,242 149,563 2007 5,476 57,230 15,287 139,522 2008 4,125 50,515 11,254 129,797 2009 2,584 57,075 11,278 129,358

Source: Cuyahoga County Auditor

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Building Permits

The following table shows information concerning the filing with the County Auditor of building permits for construction and demolition and the net assessed valuation (not the actual construction or demolition cost) of those building permits as determined by the County Auditor, for the City by class:

2005 2006 2007 2008 2009

# of Assessed # of Assessed # of Assessed # of Assessed # of Assessed Permits Value(a) Permits Value(a) Permits Value(a) Permits Value(a) Permits Value(a)

Commercial 1,581 $59,543 1,765 $55,308 1,186 $101,201 794 $104,200 637 $114,20 7 Industrial 156 5,434 244 2,605 187 6,904 105 1,766 85 3,814 Exempt 293 280 299 7,562 226 447 120 0 113 0 Public Utility 3 - - - 6 36 1 0 3 0 Residential 8,670 27,799 9,647 41,651 6,093 37,610 3,481 24,004 2,736 10,298

Total: 10,703 $93,056 11,955 $107,126 7,698 $146,198 4,501 $129,921 3,574 $128,319 (a) In thousands.

Source: Cuyahoga County Auditor

Utilities

The MSA is well served with adequate and reliable water and energy resources. The principal source of water in the MSA is Lake Erie, the twelfth largest lake in the world. The principal provider of potable water in the County is the City's Division of Water. A large amount of fresh water is available to the area for its foreseeable needs. The two principal providers of electric energy in the MSA are the City's Cleveland Public Power and The Cleveland Electric Illuminating Company, a wholly owned electric utility operating as a subsidiary of FirstEnergy Corp. Sewer services in the MSA are provided by the Northeast Ohio Regional Sewer District.

Transportation

The City is a major regional center for economic and commercial activity and is served by diversified transportation facilities. There is immediate access to six United States' highways and seven interstate highways.

Cleveland Hopkins International Airport (ªHopkinsº) is the primary commercial service airport for northeastern Ohio. Hopkins is situated approximately ten miles southwest of the downtown area and is accessible via highway from multiple directions. In addition, light rail rapid transit service to Hopkins is also provided from downtown by the Greater Cleveland Regional Transit Authority. Hopkins is owned by the City and operated by the City's Department of Port Control.

Hopkins is served by six national carriers, 20 regional and commuter airlines, one foreign-flag airline, nine charter passenger airlines and three all-cargo airlines. It serves as a connecting hub for Continental Airlines (ªContinentalº) and is the third largest hub in the Continental system. Effective October 1, 2010, Continental and United Airlines merged and will operate as United Continental Holdings Inc. In an agreement with the Ohio Attorney General's Office, Continental has agreed to maintain its Cleveland hub for at least five years. Hopkins' approximately 940,000 square foot terminal

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complex includes a multi-level terminal building and four Concourse Buildings (Concourses A, B, C and D). Concourse D, which opened in May 1999, was built to accommodate the expanding Continental Express regional jet operations.

The City has an on-going Capital Improvement Program that was initially developed as a result of the Master Plan Update prepared in March 1999. As part of this program, in early 2001 the City began a $530.6 million capital improvements project at Hopkins. This resulted in the construction of a new 9,000 foot parallel runway, other associated airfield projects needed to complete the runway construction, and certain terminal, parking and roadway improvements at and near Hopkins. The City has awarded a contract for a Master Plan Update to identify long term requirements to satisfy the requirements of FAA airport needs, and to develop a twenty year plan and vision for the airport.

Burke Lakefront Airport (ªBurkeº), which also is City-owned and operated, has two parallel runways on 480 acres adjacent to downtown Cleveland. Burke recorded more than 57,234 aircraft movements in 2009, the majority by air taxi operators serving business activity in downtown Cleveland, and the remainder almost entirely by corporate and private general aviation aircraft operators.

The Port of Cleveland (the ªPortº) is an interlake and international shipping center located on the shores of Lake Erie and the Cuyahoga River. The Port primarily handles steel and bulk commodities and is a heavy lift port which is favorable for such items as automobile manufacturing equipment, presses and raw and finished steel and factory components. The Port brings more than $572 million into the Greater Cleveland economy annually through payroll for the 11,000 jobs dependent upon maritime activities. Approximately $900 million in merchandise and material is shipped to and from the Port each year. The Port averages 13 to 15 million tons of cargo per year.

Norfolk Southern and CSX chose the City as their gateway to the Northeast and Midwest after the respective railroads restructured the rail systems following the acquisition of Conrail.

Financial Services

The City is a regional financial center and is the headquarters for the Fourth District Federal Reserve Bank, serving Ohio, the western portion of Pennsylvania and portions of Kentucky and West Virginia.

Education

Within the County are 13 public and private two-year and four-year colleges and universities, including, among others, Case Western Reserve University, John Carroll University, Cleveland State University, Cuyahoga Community College, Baldwin-Wallace College, Notre Dame College, Ursuline College, the Cleveland Institute of Music and the Cleveland Institute of Art.

Health Care

There are over 20 hospitals, including acute care and private psychiatric hospitals, in the County. Among these institutions are The Cleveland Clinic Foundation and University Hospitals Health System (affiliated with Case Western Reserve University School of Medicine) and The MetroHealth System, all headquartered in the City.

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Recreation and Entertainment

The City is noted for its many cultural institutions, including the internationally acclaimed Cleveland Orchestra and The Cleveland Museum of Art, the latter of which is expected to complete a $350 million renovation and expansion project to refurbish historic galleries and add 35,000 square feet of gallery space by 2011. Theaters and entertainment centers include Playhouse Square (a complex of six theaters with seating for over 10,000), The Cleveland Play House, Public Auditorium, Karamu House and Severance Hall. Other cultural institutions include Opera Cleveland, Great Lakes Theater Festival, Cleveland Public Theater, Apollo's Fire (the Cleveland Baroque Orchestra), Verb Ballet, and Dance Cleveland.

The Rock and Roll Hall of Fame and Museum, a 150,000 square-foot facility located at North Coast Harbor, opened in 1995 and has attracted more than 8,000,000 visitors to date.

The Great Lakes Center for Science and Technology, located on North Coast Harbor next to the Rock and Roll Hall of Fame and Museum, opened in July 1996. With more than 400 hands-on exhibits and a six-story Omnimax theater, the Center gives visitors the chance to explore science, environment and technology and their relationships to the Great Lakes. Since its opening, the Center has attracted more than 550,000 visitors annually.

Other museums include Museum of Contemporary Art Cleveland, the Crawford Auto Aviation Museum, Cleveland Botanical Gardens, Cleveland Museum of Natural History, Dunham Tavern Museum, Cleveland Children's Museum and Western Reserve Historical Society. Recreational facilities in the County include the 18,800-acre Metropolitan Park System, Cleveland Metroparks Zoo, Wade Park, Rockefeller Park, Shakespeare and Cultural Gardens, Lakefront State Park and, outside the City, the Cuyahoga Valley National Park.

Professional sports are available to area residents at various facilities located in the City's downtown. Cleveland Browns Stadium, located on the lakefront in downtown Cleveland on the same site as the former Cleveland Municipal Stadium, was completed in August 1999 and is the home of the National Football League's Cleveland Browns. The facilities consist of an open-air stadium with approximately 72,000 seats. In addition to NFL football, the facilities are suitable for major league soccer and open-air concerts.

The Gateway Sports Complex, located in the central business district of the City, includes Progressive Field (formerly Jacobs Field), home of the American League's Cleveland Indians, and Quicken Loans Arena (formerly Gund Arena), home of the National Basketball Association's Cleveland Cavaliers. The Lake Erie Monsters of the American Hockey League started playing at the Arena in October 2007, and the Cleveland Gladiators of the Arena Football League began play in March 2008. The Gladiators suspended the 2009 season but resumed play in 2010.

The Gateway Sports Complex consists of a baseball stadium, multi-purpose arena and two parking garages. The stadium, which opened in April 1994, is an open air, natural turf baseball stadium with seating capacity for approximately 42,000 people. The arena, which opened in October 1994, is a multi-functional, indoor facility for sporting and entertainment events and seats approximately 20,000 people. The Gateway common areas consist of approximately 13 acres and include Gateway Square, an area for outdoor entertainment and activities.

Downtown and Other Economic Development

Current economic development efforts are focused on retaining and growing the City's and

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region's economic base. The emphasis is on healthcare, manufacturing, business services to clients outside the region, and travel and tourism.

One of the central focus areas is Euclid Avenue, a main artery running from downtown to University Circle on the east side. In November 2008, the Greater Cleveland Regional Transit Authority (ªRTAº) completed construction of the $168.4 million Euclid Corridor ªHealth Lineº Transportation Project (the ªHealth Lineº). The Health Line Project is designed to improve transit service and to support increased economic activity along Euclid Avenue by linking RTA services to work, home, medical, educational and cultural centers within the City. The increase in value for the vacant properties along the Health Line has been significant. Values prior to the project were about $70,000 per acre and appraisals done in the past six months are now showing values at $325,000 per acre due to the purchase of almost every available parcel along the Health Line. The area between Cleveland State University and University Hospitals, which includes Case Western Reserve University and the Cleveland Clinic, is now called the Cleveland Health-Tech Corridor. Approved projects include the new 300 bed State Behavioral Health Hospital, expansion of Pierre's Ice Cream and American Sugar, and a 112,000 square foot flex space post-incubator facility for technology companies including bio-technology firms. These projects represent over $120,000,000 in new investment. In addition, there are several smaller businesses which have purchased or are under option in the area. The State of Ohio has named the Cleveland Health-Tech Corridor a ªHub of Innovationº which provides a preference for State funding for projects in the area.

The Cleveland Clinic broke ground on the $25 million Global Cardio Vascular Innovation Center and recently purchased the Cleveland Play House compound to expand its operations center. Construction on University Hospitals' $212 million Cancer Center, the $42 million Center for Emergency Medicine and the $32 million neonatal intensive care unit, all located in the City, is well underway. These large medical institutions, along with Case Western Reserve University and BioEnterprise, have helped the City attract numerous bio-medical and medical technology businesses to the region. Companies that located in the Midtown Technology Corridor in 2009 include Proxy BioMed, an Irish company that has patented new technologies for synthetic tissue used in surgical applications; Aim Pharmakon, from New York, a company developing preservative-free natural products for the Japanese market; and Solar Systems Networking Inc, a female owned project management and technical design firm.

The Cleveland Play House, along with Cleveland State University's undergraduate drama department, is relocating to the historic Allen Theatre in downtown's PlayhouseSquare. The planned renovation will rework the existing stage and add a secondary stage and a lab theater, with combined seating for the Allen complex of over one thousand seats. This continued revitalization of PlayhouseSquare follows the renovation of the Hanna Theater to allow it to permanently house the Great Lakes Theater Festival.

The University Circle area continues to grow and prosper with new restaurants, retail and housing. The 158,000 square foot ªUptownº project, funded in part by New Market Tax Credits, will include restaurants, retail and market rate rental housing and has received funding approval from a variety of public, private and philanthropic partners. The Tudor Arms project includes a hotel and a new restaurant. The $20 million project to redevelop a historic property broke ground in 2009 and should be completed in 2010. University Circle Incorporated, a local community development corporation for the area, received a New Market Tax Credit allocation of $20 million to further its efforts on a variety of projects in the area. The Veterans Administration is constructing facilities to consolidate its operations to the Wade Park Campus in the City. Phase I of the project includes an office building, domiciliary and parking garage. Phase II of the project includes funding for the restoration and renovation of the 240 bed hospital. This $120 million project will create 1,200 new jobs. The project is currently underway.

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The Lower Euclid Avenue area continues to prosper. Despite the economy, all of the hospitality tenants remain open and viable and four new restaurants have opened, adding an additional 81 employees. Rosetta Marketing recently signed a lease for 77,000 square feet and will move 356 employees to Lower Euclid at Sixth Street. This move adds $500,000 in new income taxes annually to the City.

Elsewhere in the Downtown Central Business District, SP Data, a call center operation located in Toronto and California, has leased space in the MK Ferguson building and, as a result, will hire 400 people. To date, they have hired 123 people, using the City’s Employment Connection service to screen new hires. Two other companies moving to downtown include Howard Hanna Real Estate (back office operations) and Crowe Horwath, LLP, bringing more than 190 new jobs to the City. Recently, technology company MCPc announced that it will relocate its headquarters to downtown Cleveland, bringing 165 jobs into the City.

The Downtown Cleveland Improvement District is a special improvement district administered by the Downtown Cleveland Alliance and approved by the City that began services in 2006. Clean & Safe Ambassadors, dressed in distinctive gold and blue uniforms, work to improve downtown streets by sweeping sidewalks, picking up litter and removing graffiti and weeds. The Safety Ambassadors, who walk or ride mountain bikes, patrol the District up to eighteen hours each day. Surveys indicate businesses, residents and visitors appreciate the cleanliness of downtown and the additional visibility of safety patrols which makes the area more attractive to residents and businesses.

The Cleveland Flats East Development Project has received approval on a majority of the $270 million project funding. The project consists of an approximately 476,000 square foot, 18-story office tower, an approximately 550-space parking garage, a 150-room hotel of a national franchise, and approximately 31,000 square feet of restaurant and retail space. The housing portion of the development has been moved to a second phase of the project, in deference to the current housing market issues. Two large corporate tenants have agreed to lease more than fifty percent of the office tower.

Steelyard Commons, a $120 million retail redevelopment project on the site of a former steel mill, opened in early 2007. Unlike other area malls, Steelyard Commons has a 97% occupancy rate and has maintained all of its tenants which include Best Buy, Home Depot, Marshalls, Target, Walmart, Old Navy and restaurants Steak ‘n Shake, Applebee’s, I-Hop, Chipotle and Burger King. The stores have outperformed the nation, with many posting sales increases of 20% or more. Also, many of the stores are top ranked in the area for sales, drawing both from residents of the City and lunchtime workers.

Also along the Cuyahoga River, the Steel Warehouse Company invested over $16 million to create a steel processing facility near ArcelorMittal’s Cleveland Plant. The company has created over 40 jobs since opening in late 2009.

The Cleveland Cuyahoga County Port Authority has developed a plan to create an International Trade District on Cleveland’s east side. The Port has designated a 900-acre portion of downtown Cleveland as an International Trade District. This area is located along Lake Erie in the eastern side of the City. The former White Motors Facility was purchased by First Interstate Properties which received a $9.7 million grant to create a $15 million intermodal facility to be called the Shoreway Commerce Park. The project includes a brownfield clean-up funded by the City and County and is near completion. Infrastructure work is also underway and the project will open in phases, with the first phase being completed in 2010. The project is expected to create 45 new jobs in the next year and over 200 new jobs in the next three years. Also included in the area is the Ohio Technical College. This school provides technical training in all aspects of auto repair and customization, from NASCAR vehicles to being one of a few BMW certified training facilities in the nation. In 2009, the 200 employee company added the Lincoln Electric hi-tech welding school and an additional 10 new employees. Students from across the

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country and throughout the world attend a variety of programs at the school.

Cuyahoga County, Ohio is currently in the process of financing a portion of the costs necessary for an approximately $465,000,000 medical mart and convention facilities project, which is a complete renovation and expansion of the Cleveland Convention Center that was first built in the 1920's. It is expected to be completed in 2013. The project includes an integrated facility for (i) exhibition space and showrooms for medical devices and equipment and related functions (the Medical Mart), and (ii) exhibition, tradeshow and conference facilities, meeting rooms and related functions (the Convention Facilities). The project is located in the downtown area of the City of Cleveland, Ohio in close proximity to access ramps for Interstates I-90 and I-71 and I-77 and many public transportation bus routes. The Medical Mart and its showrooms and meeting rooms will also be used as the entrance to the renovated and expanded Convention Facilities. The Convention Facilities will be constructed in place of the existing convention center facilities located under the existing parkland mall near Lake Erie. When complete, the Convention Facilities will have an exposition hall, associated meeting rooms and other amenities, a ballroom, and a newly designed public mall plaza. Public funds, including non-tax revenues of Cuyahoga County and over $336,000,000 of bonds issued by Cuyahoga County, will be used to pay costs of the project.

In recent years, Cleveland State University (ªCSUº) has continued its commitment to investing in downtown Cleveland. The new building for the College of Education and Human Services opened in May of 2010, costing over $36 million. The new Student Center is scheduled to be completed by July of 2010 at a cost of over $50 million. Bids for additional housing and parking with total project costs of $57 million are being prepared for release in 2010. The new development at Cleveland State University has caused several investors to purchase and renovate buildings in the general area, now called ªCollegeTown.º The CollegeTown Lofts project includes a Barnes and Noble bookstore on two floors and apartments and condominiums above. Total project cost is $900,000. Allegro Realty purchased another building on Euclid Avenue, across from the University, in which to move its headquarters and to add first floor retail. Total project costs for the Allegro Realty project is over $1 million.

Other City projects include the Green City Growers project which will create a 5-acre greenhouse and employee-owned facility in a cooperative model. The City received $10 million in HUD grants and loans for the $15 million project that will create 43 new jobs. The Evergreen Cooperative Laundry was funded and opened as a cooperative. This project helps neighborhood residents earn equity as a true path out of poverty. These projects are in conjunction with the Cleveland Foundation's Evergreen Fund, established by the Foundation and local institutions such as Cleveland Clinic, Case Western Reserve University, University Hospitals and other stakeholders to fund neighborhood projects.

Twenty-five (25) companies took advantage of the City's Vacant Property Initiative program and purchased land or property that had been vacant for at least two years. The program will create more than 2,690 new jobs at these sites and retain 257 existing jobs. In many cases, companies were also looking at locations outside the City of Cleveland. In addition to keeping and increasing payroll taxes, the program increases real estate taxes through the investment in these vacant properties.

The Ohio State legislature approved House Bill 1 to allow local communities to create ªAlternative Energy Improvement Districts.º These districts will facilitate companies who wish to invest in solar panels, wind turbines, geo-thermal, and energy efficient improvements. Companies can volunteer to assess themselves to pay for the panels and the City will then group these companies into bond issuances through the Cleveland-Cuyahoga County Port Authority. The bonds will be eligible for an 80 ± 90 percent federal guarantee, reducing the interest rate to borrowers. The companies may also apply for a federal tax credit and a State of Ohio rebate on the cost of the panels.

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Housing and Neighborhood Development

In 2009, the City of Cleveland built upon its approach to make investments designed to strategically implement the City-wide plan and to attack adverse market conditions, particularly with respect to vacant houses. In 2010, the housing that will be developed will adhere to the City's strategies, particularly the city-wide plan and the neighborhood typology. Through the neighborhood market typology, Cleveland has identified areas (i) where significant needs must be addressed, (ii) where need and market potential overlap, (iii) where scattered site rehabilitation will be sustainable and (iv) where Cleveland can create new housing opportunities for very low income households.

The strategies positioned the City to successfully pursue funding totaling $62,951,869 from the Neighborhood Stabilization Program (NSP), NSP-2 and from the American Recovery and Reinvestment Act (ARRA or Stimulus) in order to implement specific program activity designed to encourage housing redevelopment or to strengthen housing markets. The funds will support neighborhood revitalization initiatives for housing renovation, weatherization, green building, deconstruction and expanding the use of vacant property for gardens, urban farming, pocket parks and other uses promoting sustainability.

Including the newly awarded funds, the City committed over $8.7 million to support housing development that will produce 1,056 units of housing as well as capital improvements to a 143-bed women's shelter. All housing production will reflect the City's goal for sustainability. Since 2007, the City has encouraged and provided incentives for ªGreen Building.º However, 2009 marked the first year that all housing development supported by City funding was required to comply with the City's Green Building Standards. Starting January 1, 2010, applications for residential tax abatement must also meet those standards.

In July 2009, the first LEED certified apartment building for income-eligible seniors was completed. The 50-unit building was leased by opening day. The project is an example of the City's commitment to green building and the ongoing development of housing for low and moderate-income families despite the housing crisis.

Other projects completed for low-income households include: Edgewood, a 70-unit permanent supportive housing project, Wade Chateau, a 42-unit apartment rehab project for seniors, Cogswell Hall, a 41 unit project for very low income single adults, Lakeshore Village, the rehabilitation of a 108 unit family project, and the 87 unit final phase of Tremont Pointe, which replaced the deteriorated Valleyview Homes with new housing, combining affordable low income units with market rate housing.

In addition, a number of development projects downtown made significant progress. Construction on the 668 Building is almost complete. At least 70 of the 220 apartments are occupied, and most of the 16,000 square feet of commercial space is leased. The parking garage is also complete. The conversion of the upper floors of two historic buildings across from Cleveland State University is complete. The project, University Lofts, resulted in 30 market rate rental housing units. The construction of an adjoining 8 unit condominium building will be completed in 2010. Also, the Park Building was converted to condominiums and 14 of the 27 units are sold and occupied.

The City's strategies also include aggressive demolition or renovation of distressed properties that have proliferated as a result of foreclosures. The foreclosure filings in Cleveland declined significantly in 2009, and demolition of vacant properties increased to over 1,700. The innovative agreement the City reached with the Department of Housing & Urban development (HUD) in December 2009 that modified the HUD disposition process for HUD's REO properties resulted in the acquisition of 306 vacant structures from HUD: 169 were acquired for demolition, and 137 were acquired for rehabilitation.

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The HUD agreement was the basis for a similarly unique agreement reached between the Cuyahoga County Land Reutilization Corp. (CCLRC) and Fannie Mae. The City and Fannie Mae began work on general terms for an agreement that began with guidelines for limiting bulk sales. In 2009, the terms for disposition were agreed to that will transfer ªlow-valueº properties in its REO portfolio for $1 plus transfer costs. In addition, Fannie Mae will contribute $3,500 toward demolition. The City initiated the negotiations with Fannie Mae, but after the creation of the CCLRC, the agreement was finalized by the CCLRC so that the entire county could benefit. The CCLRC has the potential to have more impact than the highly successful land bank operated by the City ± particularly because it can acquire and ªmothballº vacant houses.

Brownfield Redevelopment

The City is committed to the elimination of vacant and condemned houses and commercial structures and has identified seven priority areas for potential economic growth. Hundreds of structures have been demolished in these Economic Development Target areas in the last three years to clear and assemble sites for redevelopment. These priority areas were selected because of their proximity to highways and existing infrastructure and the opportunity for economic growth.

Since 2007, the City's Industrial-Commercial Land Bank facilitated the following reclamation efforts:

• Demolished the former Cleveland Asphalt Plant in the Industrial Flats. The City is in the final stages of sale of the property. • Demolished and commenced the environmental remediation of the 5.6-acre Trinity Building. The United States Environmental Protection Agency (ªEPAº) and the State of Ohio Clean Ohio Assistance Fund have provided funding to complete the project. • Created the Northcoast Brownfield Coalition with the County and Port Authority and applied for and received $1 million in USEPA Assessment grants. • Demolished and remediated the 22-acre Midland Steel property. The final site clean-up work has been completed and the property is being reviewed by several potential buyers. • Commenced the redevelopment of the Crescent Ave. property located along the old Cuyahoga River channel. Worked with The Great Lakes Towing Company, the largest tug boat operator on the Great Lakes, to expand their operation and include ship building using a $200,000 EPA Cleanup Grant for redeveloping additional space for their expansion. • Worked with a local Community Improvement Corporation to use beneficial re-use strategies to redevelop a 57 acre parcel of land that was the former coke plant owned by ArcelorMittal into 57 acres of ªshovel-readyº industrial land. • Acquired more than 14 acres of land and commenced a residential standard clean-up for a new state hospital in the center of Cleveland. • Acquired over 8 acres of land to be cleaned up under the HUD Brownfield Economic Development Initiative Grant for a cooperative greenhouse. • Completed 43 site assessments on over 400 acres of land with City and County funds to assist businesses in determining clean-up costs for the potential redevelopment of these sites. Eight projects were able to proceed immediately. • Began an Urban Setting Designation Study to review groundwater uses in the entire City. Once the study is completed and the designation granted by the Ohio EPA, costs to remediate property in the City will be significantly decreased. Approval is expected in 2010. • Feasibility analysis of dredge material and slag to cap an old landfill to support a solar

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field is underway.

Pension Obligations

Present and retired employees of the City are covered under two statewide public retirement (including disability retirement) systems. The Ohio Police and Fire Pension Fund (ªOP&FPFº) is applicable to uniformed members of the police and fire departments. All other City employees are covered by the Ohio Public Employees Retirement System (ªOPERSº). City employees are not currently covered under the federal Social Security Act.

As of December 31, 2009, OPERS reported 365,229 active contributing accounts statewide. The number of active members included in the plan for the City as of October 2010 is approximately 5,300. In 2009, the employees contributed at a statutory rate of 10.0% of earnable salary or compensation, and the City contributed 14.0% (actuarially established for OPERS) of the same base. The City's contribution to OPERS for the year ending December 31, 2009 was approximately $41,333,000.

OP&FPF covers approximately 2,400 full-time police and fire department employees and reported 29,062 active accounts statewide as of December 31, 2009. Police and fire employees contribute at a statutory rate of 10.0% of gross earnings. The City currently contributes 19.5% for police personnel and 24.0% for fire personnel. The City's contribution to OP&FPF for the year ending December 31, 2009 was approximately $34,036,000.

The City's current employer contributions to OPERS and OP&FPF have been treated as current expenses and are included in the City's operations expenditures, except to the extent that they are paid from the proceeds of a ªPolice and Fire Pensionº levy collected by the City.

Both OPERS and OP&FPF are created by and operated under Ohio law. The Ohio General Assembly could determine to amend the format of either fund and could revise the rates or methods of contributions to be made by the City into the pension funds and could also revise benefits or benefit levels. OPERS and OP&FPF are not now subject to the funding and vesting requirements of the federal Employment Retirement Income Security Act of 1974.

Employees

As of October 17, 2010, the City had approximately 7,500 full-time employees. Approximately 6,155 were represented by 31 bargaining units. The larger units, together with the approximate number of employees represented by those units, include the American Federation of State, County and Municipal Employees, Local 100 (1,410); Cleveland Police Patrolmen's Association (1,259); Municipal Foreman and Laborers Union, Local 1099 (529); the Association of Cleveland Firefighters (859); Teamsters, Local 244 (344); and the Fraternal Order of Police (291).

There have been no significant labor disputes or work stoppages within the City within the last twenty-five years. The City's three year agreement with its labor unions expired on March 31, 2010. A number of employee concessions were proposed in order to balance the 2010 budget. These included ten furlough days and the loss of longevity pay for 2010. For those unions not agreeing to the concessions, primarily the City's safety forces, the City imposed layoffs sufficient to equal the dollar amount that would have been saved by the furlough days (see ªFinancial Matters ± General Fund Budget.º), and negotiations are currently underway for a new three-year contract. Those unions accepting the concessions signed a Memorandum of Understanding with the City which covers 2010.

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City Council by ordinance establishes schedules of salaries, wages and other economic benefits for City employees. Generally, the terms of these ordinances have been the product of negotiations with representatives of the employees or bargaining units, and increases in economic benefits have normally been provided on an annual basis.

Chapter 4117 of the Revised Code (the ªCollective Bargaining Lawº), establishes procedures for, and regulates, public employer-employee collective bargaining and labor relations for the City and other state and local governmental units in Ohio. The Collective Bargaining Law creates a three member State Employment Relations Board (the ªSERBº), which administers and enforces the Collective bargaining Law. Among other things, the Collective Bargaining Law: (a) creates rights and obligations of public employers, public employees and public employee organizations with respect to labor relations: (b) defines the employees it covers; (c) establishes methods for (i) the recognition of employees and organizations as exclusive representatives for collective bargaining and (ii) the determination of bargaining units; (d) establishes matters for which collective bargaining is either required, prohibited, or optional; (e) establishes procedures for bargaining and the resolution of disputes, including (i) negotiation, (ii) mediation and (iii) fact finding; and (f) permits all covered employees to strike, except certain enumerated classes of employees, such as police and fire personnel.

Disputes with employees who are prohibited from striking are to be resolved by binding arbitration starting with best offer, on an issue-by-issue basis. In the event that a legal strike presents a clear and present danger to the public health or safety, the appropriate Ohio court of common pleas may issue a temporary restraining order against the strike for a period not to exceed 72 hours, and in such a case the employer may request authorization of the SERB to enjoin the strike beyond the period of the temporary restraining order. The SERB determines whether a clear and present danger to public health or safety exists, and if it so determines, the court of common pleas issuing the temporary restraining order has jurisdiction to enjoin the strike for a period of 60 days after the expiration of the temporary restraining order or when agreement is reached, whichever occurs first. Thereafter, no court has jurisdiction to issue injunctions or other orders, and a strike may be resumed at the end of the 60-day period. The new law established certain employers, employee and employee organization unfair labor practices and remedies for unfair labor practices.

Police and Fire Overtime

The City compensates the members of the City's police and fire departments at a rate of one and one-half times the regular rate of pay for overtime and holidays worked. It has been the City's practice that, for each one hour unit of overtime or holiday time worked, those employees receive one hour of pay at their regular rate and, at the discretion of the employee, one-half hour of pay at the regular rate or a credit of one-half hour of compensatory time for which they will be paid, to the extent that time is not used as vacation time, at their then current rate of pay upon termination of employment because of death, retirement, resignation, layoff or dismissal. A collective bargaining agreement between the City and the Cleveland Police Patrolmen's Association provides that employees may request payment of all or part of their compensatory time in money, and that if the requests exceed the total budgeted amount, the requests will be paid on a pro rata basis. Similar agreements have been reached with the Association of Cleveland Firefighters and the Fraternal Order of Police. The total estimated amount of the City's liability for accumulated compensatory time as of December 31, 2009 was $58,743,000, and that amount is unfunded. That amount was calculated based on the employees' then existing regular rate of pay. The rate of pay used to determine any cash payments made upon retirement or other termination or upon the request of the employee will be the rate of pay in effect at the time of such determination. The City has budgeted $5,547,428 for payment in 2010 of accrued overtime and other separation benefits anticipated to be payable in connection with retirements. The City has budgeted $583,997 in 2010 for payments which might be requested by employees.

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FINANCIAL MATTERS

The responsibilities for the City's major financial functions are vested in the Director of Finance. The Director of Finance is responsible for preparing and implementing the City's current Operating Budget and Capital Improvement Plan, collecting the City's revenues, and procuring the City's goods and services and making payments therefor. The Director of Finance is also responsible for maintaining an effective system of internal accounting control, which includes the maintenance of a centralized accounting system and the supervision of the City's internal audit staff. Preparation and issuance of the City's internal and external financial reports are supervised by the Director of Finance.

The Director of Finance for the City is Sharon A. Dumas. Ms. Dumas was appointed Director of Finance on March 29, 2006, after serving as Interim Director of Finance since January 2006. Ms. Dumas served as Assistant Director of Finance for Budget and Capital from October 13, 2003 until her appointment as Director of Finance on March 29, 2006. Prior to joining the City's Finance Department, Ms. Dumas served as Director of the Empowerment Zone and as Assistant Director of the Department of Community Development for the City. Ms. Dumas also served as Finance Director for the City of East Cleveland, Ohio from 1988 to 1994. Ms. Dumas holds a Masters of Accounting and Financial Information Systems from Cleveland State University and has over twenty-five years of experience in private and public sector accounting.

James T. Hartley was named an Assistant Finance Director in April 2007. Prior to accepting his current position, Mr. Hartley was the Chief Investment Officer for the Ohio Treasurer of State from 1999 until 2007. As a member of the Treasurer's senior staff, he was responsible for overseeing and directing the State's investment program, including the State Operating Fund, STAR Ohio Local Government Investment Pool, and the State Tobacco Settlement Funds.

James E. Gentile, CPA, returned to the City as Controller in February 2002. Prior to accepting the position, Mr. Gentile was Deputy Auditor for the Auditor of State's Office since 1995 where he planned and supervised audits of cities, school districts and other local government agencies. From 1991 through 1995, he was employed by the City as an accountant and, in his final year, as Acting City Controller.

Elizabeth C. Hruby, Assistant Secretary to the Sinking Fund Commission, has served as the City's debt manager since 1996. She has been employed by the City since 1982 when she began as a Budget Analyst in the Office of Budget and Management. She was promoted to Operating Budget Manager in 1987 and was responsible for the development and monitoring of the City's annual operating budget. From January 7, 2002 until April 1, 2002, Ms. Hruby served as interim Finance Director for the City.

Budgeting, Tax Levy and Appropriations Procedures

Detailed provisions for City budgeting, tax levies, and appropriations procedures are set forth in the Revised Code and in the Charter. The procedures involve review by County and State officials.

The City's fiscal year corresponds with the calendar year. The City's budgeting process formally begins with the preparation by the City's Office of Budget and Management, and then the adoption by City Council after a public hearing each year, of a tax budget for the following year. Pursuant to the General Bond Ordinance, the City has covenanted to maintain balanced budgets by estimating revenues no greater than, and expenses no less than, those for the previous year, except for variations justified on a specific basis as described in the General Bond Ordinance and certified by the City's Director of Finance.

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Unless an extension is obtained, the City is required to file by July 20 of each year certain information obtained during its budgeting process and set forth in a document entitled ªAlternative Tax Budget Information.º The County Budget Commission, composed of the Auditor, Treasurer and Prosecuting Attorney of the County, reviews the Alternative Tax Budget Information and, with particular attention to debt service, determines and approves levies for debt service outside and inside the ten-mill limitation. The Revised Code provides that ªif any debt charge is omitted from the budget, the County Budget Commission shall include it therein.º Upon approval of the tax budget, the County Budget Commission certifies to the City its action together with the estimate by the County Auditor of the property tax rates outside and inside the ten-mill limitation. Thereafter, and before the end of the then calendar year, City Council approves the tax levies and certifies them to the proper County officials. The approved and certified property tax rates are then reflected in the tax bills sent to property owners. Real property taxes are payable by property owners to the County in two installments, the first in January and the second in July. The County Treasurer distributes property tax receipts in periodic installments throughout the year.

City Council adopts by each December of the preceding year, a temporary appropriation measure for the following fiscal year. A permanent appropriation measure is adopted by City Council after the start of the current fiscal year but no later than April 1. Annual appropriations may not exceed the County Budget Commission's official estimate of resources, and the County Auditor must certify that the City's appropriation measures do not appropriate moneys in excess of the amounts set forth in those estimates.

Financial Reports and Examinations of Accounts

In accordance with the requirements of the General Bond Ordinance, the City's financial transactions are recorded and reported in conformity with GAAP. As required by the General Bond Ordinance, annual financial reports are prepared by the City and audited by a nationally recognized independent firm of certified public accountants or the State of Ohio Office of the Auditor, as required by Ohio law.

For financial statement purposes, all financial transactions for governmental and fiduciary funds are recorded on the modified accrual basis of accounting. Under this accounting method, revenues are recorded when received in cash, except for those revenues susceptible to accrual, which are recorded as revenues when measurable and available to finance current City operations. Revenues accrued at year end consist of reimbursements from other governments for grant expenditures, revenues from other governmental entities for services rendered and individual income tax receivables arising from payroll tax withholdings in December and received within 60 days after year end. Property taxes are recorded as revenue when distributed to the City after collection by the County. Governmental fund expenditures are accrued when the liability is incurred except for interest on long-term debt, which is recorded when due.

As required by State law, the City's budgetary process accounts for certain transactions on a basis other than GAAP. The major differences between the budget basis and the GAAP basis are the following:

(a) Revenues are recorded when received in cash (budget) as opposed to when susceptible to accrual (GAAP).

(b) Expenditures are recorded when paid in cash or encumbered (budget) as opposed to when susceptible to accrual (GAAP basis). Encumbrances are recorded as expenditures (budget) as opposed to reservations of fund balances (GAAP).

The City maintains budgetary control by not permitting expenditures to exceed appropriations for

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personnel costs, benefits, and other costs within a division of the City without the approval of City Council. The City's appropriation process does not include annual appropriation of revenues and expenditures for grant funds. Expenditures from grant funds are limited by the amount of the grant.

Under the City's General Bond Ordinance, moneys used to pay debt service on the City's general obligation bonds are derived from property tax revenues and a portion of the City's municipal income tax revenues specifically earmarked for the payment of debt service. A portion of the property tax revenues, up to the amount of millage available for debt service (4.35 mills), is deposited directly by the County Treasurer with the escrow agent designated under the City's General Bond Ordinance. A portion of the income tax receipts in an amount necessary to make principal and interest payments coming due is transferred directly by the Central Collection Agency to the escrow agent. Only after provision is made for debt service payments are income tax receipts available for other City purposes.

Summary of Major City Funds

The City's major funds are the General Fund, the Enterprise Funds and the Special Revenue Funds. The General Fund is the major operating fund of the City and accounts for the general operating revenues and expenditures of the City not recorded elsewhere. Enterprise Funds are used to account for operations that provide services which are financed in whole or in part by user charges. The four major Enterprise Funds consist of (a) the Port Control Fund (airports), (b) the Cleveland Public Power Fund, (c) the Water Fund, and (d) the Water Pollution Control Fund. The City also has separate funds for its minor enterprises, consisting of the Cemeteries Fund, the Convention Center Fund, the Municipal Golf Courses Fund, the West Side Market Fund, the Municipal Parking Facilities Fund and the Central Collection Agency. Special Revenue Funds are used to account for proceeds of certain specific revenue sources that are legally restricted to expenditures for specified purposes. Examples of the City's Special Revenue Funds are the Restricted Income Tax Fund, funds for federal grant programs such as the Community Development Block Grant program and funds for State program such as Workforce Investment Act program and, beginning in 2010, the Stadium Fund.

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Summary of General Fund Cash Receipts and Expenditures ± Non-GAAP Budgetary Basis

Set forth below is a comparative summary of General Fund actual cash receipts by source and expenditures by function for the years 2005 through 2009 (audited), and the budgeted amounts for 2010 based on the appropriation ordinance approved by City Council.

Summary of General Fund Cash Receipts by Source and Budgetary Expenditures by Function ± Non-GAAP Budgetary Basis (a) (000's Omitted) Audited Budgeted 2005 2006 2007 2008 2009 2010 RECEIPTS

Income Taxes (b) $262,897 $271,120 $280,233 $290,968 $268,053 $262,508 Property Taxes (c) 43,440 43,911 45,533 42,907 41,918 39,009 State Local Government Fund 55,887 55,922 56,178 53,226 46,558 45,730 Other Shared Revenues (d) (e) 39,057 39,144 44,604 45,251 46,868 43,340 Licenses & Permits (f) 11,760 11,785 11,650 11,718 11,575 11,265 Charges for Services (f) 19,413 19,978 19,967 20,780 18,060 28,024 Fines & Forfeitures (f) 16,133 20,838 25,340 26,842 27,827 25,588 Investment Earnings (f) 2,096 3,350 4,383 2,220 1,273 1,011 Miscellaneous (f) 27,839 25,004 28,663 30,832 29,695 50,944 Total Receipts $478,522 $491,052 $516,551 $524,744 $491,827 $507,419

(a) Table based upon budget basis of accounting. (b) Represents annual income tax receipts less receipts from the portion of the City's income tax restricted to use for capital improvements and debt service. (c) Reflects the continued phasing out of the tangible personal property tax and adjustments to assessed value following challenges to the 2006 and 2009 reappraisals. (d) Includes admission tax, exhibition tax, motor vehicle lessor tax, video games excise tax and parking tax. (e) Includes state cigarette and liquor taxes, estate taxes, electric excise taxes, property tax rollbacks and revenue from the commercial activity tax. See ªTHE CITY ± MAJOR GENERAL FUND REVENUE SOURCES ± Ad Valorem Property Taxes.º (f) Certain of these receipts are committed to City obligations payable from, or secured by, non-tax revenues of the City.

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Summary of General Fund Cash Receipts by Source and Budgetary Expenditures by Function - Non-GAAP Budgetary Basis (a) (000's Omitted) Audited Unaudited Budget 2005 2006 2007 2008 2009 2010(c) EXPENDITURES Public Safety (d) $271,442 $280,899 $299,590 $308,560 $310,760 $303,690 General Government 64,644 67,730 73,805 78,443 79,214 79,322 Public Service 36,627 37,383 37,581 37,055 36,958 35,154 Parks, Recreation & Properties 35,626 36,639 37,332 38,815 37,988 36,889 Public Health (d) 11,937 12,259 5,817 5,583 5,813 5,621 Community Development 12,818 11,950 12,757 12,584 11,294 9,428 Economic Development 990 921 1,480 1,582 1,333 1,289 Other 17,239 17,381 17,048 18,502 18,398 21,586 Total Expenditures $451,323 $465,162 $485,410 $501,124 $501,758 $492,979 Excess of Cash Receipts Over Expenditures $27,199 $25,890 $31,141 $23,620 $(9,931) $14,440

OTHER FINANCING SOURCES (USES) Operating Transfers Out: Other (b) (19,582) (22,071) (26,157) (21,922) (18,278) (18,375) Excess (Deficiency) of Cash Receipts and other Financing Sources over Expenditures and Other Uses 7,617 3,819 4,984 1,698 (28,209) (3,935) Decertification(Recertification)of Prior Year Encumbrances 3,309 2,524 898 1,598 2,732 0

Fund Balances at Beginning of Year $2,998 $13,924 $20,267 $26,149 $29,445 $3,968 Fund Balances at End of Year $13,924 $20,267 $26,149 $29,445 $3,968 $33

(a) Table based upon budget basis of accounting. (b) Includes transfers to cover deficiencies in other funds and amounts as needed for various City financings and other obligations. (c) The 2010 Budget was passed by City Council on March 29, 2010. (d) The House of Correction was transferred from Public Health to Public Safety in 2007.

2010 General Fund Budget

City Council adopted the current 2010 budget on March 29, 2010 in accordance with state law. In preparing the budget, the City proposed several steps in order to deal with a projected $40 million 2010 General Fund deficit. On the revenue side, the City is instituting an $8.00 per month per household waste collection fee. This fee has been approved by City Council and went into effect January 1, 2010. It is expected to produce $7-$8 million in revenue for the General Fund in 2010. In addition, the City will transfer $7.5 million of the $8.5 million in the Rainy Day Fund to the General Fund to fund operations. The City will also be utilizing approximately $14 million from a fund which has collected proceeds from the sale of City-owned land. In total, revenues are budgeted at $507.4 million in 2010, an increase of 3.17% over 2009 levels. However, income tax collections, the largest source of General Fund revenue, are projected to drop by $5.6 million or 2.1%. Property tax receipts, as confirmed by the County Auditor, are projected to fall nearly 7% to $39.0 million. Local Government Fund receipts are expected to drop by approximately $820,000.

On the expenditure side of the budget, total General Fund expenditures are projected to drop by $8.7 million to $511.3 million. No salary increases are budgeted in 2010 and most employees, both union and non-union, will be taking ten furlough days throughout the year which amounts to a 4.1% salary

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decrease beginning February 1. Those unions which did not agree to these employee concessions experienced layoffs sufficient to equal the dollar amount that would have been saved by the furloughs. As a result, the layoff of approximately 140 employees, primarily among the safety forces, occurred on January 11, 2010. In addition, all employees entitled to a longevity payment in 2010 will forego that benefit. Additionally, the proposed budget includes no increase in hospitalization premiums and only the most critical of hires. Finally, the City is refunding some General Fund-related debt to deal with potential insurer problems and will use this opportunity to also restructure the debt service to produce savings for the General Fund from 2010 through 2013.

In general, the 2010 budget maintains city services and staffing levels within the limited resources available to fund operations. An entry level and promotional exam for firefighters will be conducted in order to fill vacancies caused by a large number of retirements expected in 2010. Operation Clean Cleveland will continue its focus on eliminating blight through maintenance, demolition and rehabilitation of vacant and abandoned properties. Additional operational efficiencies will be implemented during the course of the year based upon both internal and external efficiency studies conducted over the past three years in order to position the City for the future.

Consistent with other years, the General Fund budget assumes the use of the $3.9 million balance carried over from the prior year. However, strict controls over all spending and hiring throughout the year, a continuing emphasis on revenue collection and monthly budget monitoring are in place to ensure the budget remains balanced.

Management Discussion of the City's General Fund for the Fiscal Year Ended December 31, 2009 ± Budget Basis

Revenues. Due to the impacts of the severe economic downturn, General Fund revenues fell by $32.9 million or 6.3% in 2009 to a total of $491.8 million. While almost all revenue sources decreased somewhat, municipal income tax receipts decreased by over $22.9 million. Income taxes, the largest single source of General Fund revenue, accounted for $268 million or 55% of total receipts and declined by 7.8% over 2008 receipts. This decrease was the result of employee layoffs and wage reductions across all sectors of the local economy with some of the largest declines being seen in the financial services sector where National City Bank was purchased by PNC in late 2008. The City's income tax collections are divided between the General Fund (the ªunrestricted shareº) which receives eight-ninths of the receipts, and the Restricted Income Tax Fund which receives the remaining one-ninth. The Restricted Income Tax portion may only be used for capital improvements or for debt service on obligations issued to provide funds for capital improvements. See ªTHE CITY - MAJOR GENERAL FUND REVENUE SOURCES ± Municipal Income Taxes.º

The two other major components of General Fund revenues were ad valorem property taxes and the State and Local Government Fund (ªLGFº). Together these two sources accounted for 18.0% of total receipts. Ad valorem property taxes decreased by $1.0 million in 2009 to $41.9 million as a result of the continued phasing out of tangible personal property taxes by the State and the significant increase in the foreclosure rate throughout the City. The true value of taxable real property is adjusted by the County Auditor every three years to reflect current market values. The last complete reappraisal for all properties occurred in 2006 for collections beginning in 2007. The triennial reappraisal took place in 2009 and will be reflected in 2010 collections. See ªTHE CITY - MAJOR GENERAL FUND REVENUE SOURCES - Ad Valorem Property Taxes.º

Local Government Fund receipts averaged $56.0 million from 2005 to 2007 but began to fall as the economic conditions in the State worsened. Receipts fell to $53.2 million in 2008 and were further reduced in 2009 to $46.5 million. The biennial budget bill provided for a new funding mechanism

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beginning in calendar year 2008 when the Local Government Revenue Assistance Fund (ªLGRAFº) was consolidated into the LGF. As a result of this change and continued declining revenue at the State level, revenue from this source dropped in 2009. See ªTHE CITY - MAJOR GENERAL FUND REVENUE SOURCES - Local Government Fund/Local Government Revenue Assistance Fund.º

Other Shared Revenue includes locally imposed taxes such as the 8% admission tax, the 8% parking tax and $6 per lease motor vehicle lessor tax and such items as estate taxes, cigarette and liquor taxes, commercial activity taxes, electric excise taxes and the State's reimbursement of Homestead and Rollback taxes. The local taxes, excluding the income tax, experienced a 9.0% decline from 2008 levels. This stemmed primarily from the fact that attendance at Cleveland Indians baseball and Cleveland Browns football games was down significantly in 2009 due to both the performance of the teams and the general state of the economy.

The portion of Other Shared Revenue which is distributed from the State to the City increased by $3.9 million in 2009 primarily because of a larger than normal amount of estate taxes and an expected increase in the Commercial Activity Tax (the ªCATº). The State uses a portion of the proceeds of the CAT to reimburse cities, such as the City, other local taxing units, and school districts for property taxes lost due to the phasing out of the tangible personal property tax, which reimbursement is gradually subject to phaseout through 2017. See ªªTHE CITY - MAJOR GENERAL FUND REVENUE SOURCES - Ad Valorem Property Taxes ± Assessed Valuations.º

Revenues from licenses and permits remained relatively constant in 2009 at $11.6 million while Charges for Services fell by $2.7 million or 13% primarily in the areas of EMS charges and waste collection fees. Fines and forfeitures grew by $1.0 million or 3.7%. Investment earnings on the City's funds dropped sharply as interest rates reached record lows for most of the year. Revenue from interest dropped to $1.2 million in 2009 after dropping nearly 50% in 2008. Miscellaneous Revenue includes a wide variety of revenues such as expenditure recoveries from grants, indirect cost reimbursements, reimbursements for police officers stationed at the Airport and transfers from other funds. Revenue from this source fell by $1.0 million in 2009.

Expenditures. Total General Fund expenditures, including operating transfers needed to meet debt service requirements on various City financings, decreased by $3.0 million in 2009 to $520.0 million. Operating department expenditures grew only $630,000 in 2009 while operating transfers fell by $3.6 million. The largest increase in expenditures occurred in the Public Safety Department where expenditures increased by $2.2 million because of negotiated salary increases. Public Safety, which includes police, fire and emergency medical services, utilizes 58% of the General Fund budget. Most other departments in the City operated at a lower expenditure level than in 2008 as a result of a hiring freeze and no salary increase for non-union employees.

Operating Transfers, which includes subsidies and transfers to other funds, decreased by $3.6 million or 16.6% in 2009. The General Fund subsidy for the Division of Streets dropped as a result of a mild winter and reduced staffing levels. In addition, there was no deposit to the Rainy Day Fund in 2009 in contrast to 2008 when the City transferred $1 million to the Fund.

In anticipation of a downturn in revenues due to the on-going recession, the City continued its strict control over all expenditures and hiring. Additionally, employees were hired to concentrate on revenue collection. However, as a result of the severity of the cuts in employment, expenditures exceeded cash receipts and other financing sources by $25.5 million. As a result, the unaudited budget basis balance declined from $29.4 million at the beginning of the year to $3.9 million at the end of the year.

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General Fund Balances

The following presents a summary of General Fund balances on a GAAP basis, rather than a non-GAAP budgetary basis.

2005 2006 2007 2008 2009

Fund Balance at Beginning of Year $34,634 $36,213 $35,531 $31,854 $31,545

Excess (Deficiency) of Revenues and Other Financing Sources Over Expenditures and Other Uses 1,579 (682) (3,677) (309) (25,680)

Fund Balance at End of Year $36,213 $35,531 $31,854 $31,545 $5,865

Management Discussion of General Fund GAAP Basis Results for the Fiscal Year Ended December 31, 2009

On a GAAP basis, the City's audited General Fund revenues and other financing sources totaled $476,133,000 in 2009, a decrease of $36.0 million from 2008. Expenditures and other uses totaled $501,813,000, representing a decrease of $10.7 million from the previous year. Expenditures and other uses exceeded revenues and other sources by $25,680,000 which reduced the General Fund GAAP basis balance to $5.9 million at the end of 2009. Although no funds were added to the Rainy Day Reserve Fund in 2009, the fund was not used during the year and its balance of $8.5 million remained intact. The unreserved fund balance in the General Fund fell by $9,648,000.

In 2009, income tax receipts, the largest General Fund revenue source, decreased by $24.8 million or 8.6% from 2008. In addition, property tax receipts fell by $989,000 as a result of the continued phasing out of the tangible personal property tax and the increase in housing foreclosures locally. State Local Government Fund receipts fell by $6.7 million or 12.8% due to cuts imposed by the State on the fund's distributions. Other shared revenue, which includes such items as the admission tax, parking tax and motor vehicle lessor tax, rose by $2.2 million. Slight decreases in, Parking and Motor Vehicle Lessor Taxes due to the slowing economy and a disappointing season for the Cleveland Indians baseball team were offset by increases of $1.6 million in the commercial activity tax and $2.6 million in the electric excise tax due to the General Fund retaining the full collection of this source. In prior years, legislation was passed with transferred a portion of these funds to Cleveland Public Power. Licenses and Permits remained largely unchanged from 2008 levels while Charges for Services decreased by $4.9 million, primarily in the areas of EMS Transport Fees (a decrease of $2.9 million) and Commercial Waste Collection Fees (a decrease of $1.6 million). Revenue from Fines, Forfeitures and Settlements remained at 2008 levels. Investment earnings fell by $1.1 million or 42% because of the continued decrease in interest rates in 2009. Operating Transfers In totaled $3.9 million and included grant reimbursements to the Health and Safety Departments and amounts received under Joint Development Agreements.

General Fund expenditures and other uses fell to $501,813,000 in 2009, a decrease of $10.7 million or 2.1% from 2008. The largest decreases occurred in Public Safety and Parks, Recreation and Properties where expenditures fell by $3.4 million and $1.7 million respectively. The primary factors contributing to the lower expenditures in Public Safety were a reduction in overtime at the House of Correction and decreases in workers compensation charges for EMS, District Operations and the House of Correction. For Parks, Recreation and Properties, expenditure decreases were realized in interdepartmental charges for Parks Maintenance and in utilities for the Recreation Centers. Expenditure levels for most other departments remained at or slightly below 2008 levels as did Other current

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expenditures. Additionally, there was a decrease of $2.5 million in Operating Transfers Out due to a smaller subsidy required for Division of Streets operations.

Total General Fund assets decreased by $36.2 million in 2009. This resulted primarily from decreases of $28.4 million in Cash and Cash Equivalents and $4.8 million in Taxes Receivable stemming from the weak economy.

General Fund liabilities decreased by $10.5 million from 2008 levels. The most significant changes in liabilities were a decrease of $5.7 million in Due to Other Funds and a decrease of $4.9 million in Deferred Revenue. The former is largely due to funds due to the Internal Service Funds, specifically the Workers Compensation Reserve. The amount was based on the Ohio BWC MIRA Reserving Formula and revised by new consultants in 2009. The latter represents a decrease in income and property taxes receivables as well as a decrease in local government receivables. Accrued wages and benefits rose by $700,000 due to accrued payroll being increased by one extra day from the previous year.

(For a further discussion regarding the results of operations for Fiscal Year 2009, see Basic Financial Statements section of the City's 2009 Comprehensive Annual Financial Report which can be found at http://www.city.cleveland.oh.us/clnd_images/finance/FRC/2009CAFR.pdf.

Investment Policy

Investments and deposits of City funds are made by the City's Treasurer and are governed by the Charter, Chapter 178 of the Codified Ordinances of the City and the City's Cash Management and Investment Policy promulgated and annually reviewed by the Director of Finance. Chapter 178 provides that investments of City funds under trust agreements securing outstanding bonds are governed by those agreements.

Eligible investments under Chapter 178 include obligations issued by the United States and its agencies, bonds and notes of the State, the State Treasurer's investment pool (ªSTAR Ohioº), full faith and credit bonds and notes of Ohio political subdivisions, repurchase agreements with a term not to exceed one year for the purchase of obligations issued by the United States or its agencies that have a market value in excess of the purchase price and that are held by a custodial bank, fully insured or fully collateralized certificates of deposit of eligible depositories and certain money market mutual funds. The City's Cash Management and Investment Policy provides that safety of principal is the foremost objective, that the City's investment portfolio will remain sufficiently liquid to enable the City to meet reasonably anticipated operating requirements and the City's investment portfolio will be designated with the objective of achieving a rate of return that will provide the maximum level of income without subjecting the City to undue risk. The Policy currently provides that five years is the maximum maturity of any investment instrument or asset purchased by the City. However, investments for construction funds raised through bond issues are governed by the applicable trust indenture or bond legislation and can be invested longer than five years to meet construction cash flows.

The City biennially selects commercial banks to be designated as eligible depositories of the City's funds based on the creditworthiness, capitalization and liquidity of the bank, and also on the bank's policies and practices regarding housing and economic development in the City and compliance with other public purpose policies of the City. Under the current Cash Management and Investment Policy, a bank (or its corporate holding company parent) must have a credit rating of at least ªAº from Moody's Investors Service, Standard & Poor's Ratings Services, or Fitch Ratings. Eligible depositories are required to pledge and deposit with the City or a custodian, as security for the repayment of money of the City so deposited, eligible securities that have an aggregate market value equal to 110% of the City's money at any time on deposit. As of October 20, 2010 the City's General Fund related portfolio had an

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average life of approximately one day and a weighted average yield of 0.32%. The portfolio generally consists of Money Market Funds, U.S. Treasury bills, and United States agency obligations.

THE CITY ± MAJOR GENERAL FUND REVENUE SOURCES

Municipal Income Taxes

Ohio law authorizes a municipal income tax on both corporate income (net profits from the operation of a business or profession) and employee wages, salaries, and other compensation at a rate of up to 1% without voter authorization and at a rate above 1% with voter authorization. In 1979 and in 1981, the voters in the City approved increases of one-half of one percent to the rate of the income tax, bringing it to the current 2% rate. By the terms of the 1981 voter approval as amended in 1985, the Restricted Income Tax (one-ninth of the receipts of the total 2% tax) must be used only for capital improvements or debt service on obligations issued for capital improvements or the payment of past deficits. The remaining eight-ninths of the receipts of the municipal income tax is pledged to, and may also be used for, debt service on the Unvoted Tax Supported Obligations to the extent required.

The income tax is imposed on gross salaries and wages earned in the City by non-residents of the City and on salaries, wages and other compensation of City residents earned within or outside the City. The income tax liability of a City resident employed outside the City is reduced by a credit equal to 50% of the tax paid to the municipality in which the City resident is employed. The tax on business profits is imposed on that part of profits attributable to business conducted within the City. In 2009, approximately 87% of the total income taxes paid to the City was derived from non-residents employed in the City and from business profits.

All employers doing business in the City are required to withhold the income tax from their employees and remit it to the City on a monthly or quarterly basis depending on the amount being withheld. Individuals who do not have the tax withheld are required to file an estimated declaration each year and pay the income tax on a quarterly basis to avoid any penalties. At the end of each year, all employers must file a reconciliation document along with all W-2 forms issued to any employee and must remit any additional tax due at that time. Any resident 18 years of age or older who fails to file a tax return, regardless of income, is in violation of the municipal income tax ordinance and, as such, will be subject to fines and penalties as prescribed by law.

The Ohio Constitution provides that the General Assembly may enact laws restricting the power of municipalities to levy taxes, including municipal income taxes. Current Ohio law permits the reduction or elimination of a municipal income tax by action of the city council, or by vote of the electors initiated by petition of 10% of the number of electors of the city who voted at the last regular municipal election for president of council, following initiated ordinance procedures, or 10% of the electors of the city, following charter amendment procedures. Under current law, a city council could, unless restricted by a charter provision, reimpose a 1% tax without authorization by the electors. The City has covenanted in the General Bond Ordinance not to repeal or amend any ordinance for the levy or collection of its income taxes in any manner or to such extent that the City would not be able to meet its obligations under the General Bond Ordinance.

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The total annual income tax receipts, including the restricted portion (on a budget basis), for the last five calendar years are shown in the following table:

Year Amount Tax Rate+ 2005 $295,759,000 2.00% 2006 305,010,000 2.00 2007 315,262,000 2.00 2008 327,338,000 2.00 2009 301,560,000 2.00

+ reduced by a credit equal to 50% of the tax paid by City residents to the other municipality in which the City resident is employed.

The City has budgeted collections amounting to $295,322,000 from income taxes in calendar year 2010.

The City projects income tax receipts on the basis of historical collections and does not include any projection of delinquent income tax collections in its budget. The City does, however, have procedures for identifying and collecting delinquent income taxes. Delinquent taxes collected in 2009 were approximately $4,100,000.

The ten largest employers based on payroll tax withholdings are alphabetized by nature of business:

Name of Employer Nature of Business Case Western Reserve University Education Cleveland Metropolitan School District Education KeyBank Financial Services PNC Bank (formerly National City Bank) Financial Services City of Cleveland Government Cuyahoga County Government DFAS (Defense Finance & Accounting Service) Government The Cleveland Clinic Foundation Health care The MetroHealth System Health care University Hospitals of Cleveland Health care

Local Government Fund/Local Government Revenue Assistance Fund

Since 1993, the State and Local Government Fund (ªLGFº) and Local Government Revenue Assistance Fund (ªLGRAFº) have been the City's second largest source of General Fund revenue. Through these funds, Ohio subdivisions shared in a portion of the State's collection of the sales tax, use tax, personal income tax, corporate franchise tax and public utilities excise tax (referred to hereinafter as the ªpercentage shareº). A kilowatt tax was added as a source of funding to replace revenue lost as a result of electric deregulation. Periodically, the amounts of and formula for distribution of LGF and LGRAF funds were considered by the State legislature for revision. The State appropriations act for the period July 1, 2005 through June 30, 2007 (the 2006-2007 biennium) enacted a freeze on deposits to and distributions from these funds. Generally, distributions were capped at the monthly levels received during the period July 1, 2004 through June 30, 2005. The freeze was extended to December 31, 2007 and calendar year 2007 distributions from the LGF and LGRAF equaled the calendar year 2006 distributions.

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Pursuant to statutory law in Ohio, LGF revenues are divided into county and State portions. The county portion, the larger of the two, is distributed to each of the State's 88 counties and is allocated based upon a statutory formula utilizing county population and county municipal property values. Once received by a county, the funds can either be distributed to all subdivisions using the statutory formula or the county and its subdivisions may agree upon an alternate method for allocating the funds. Cuyahoga County and its recipient communities have chosen the latter method, which is comprised of a base allocation and an excess allocation. The excess allocation takes into account such factors as assessed value per capita, per capita income, population density and the number of individuals receiving public assistance.

The State portion of the LGF is distributed directly by the State to those municipalities which impose an income tax. A municipality receives its share of the funds based upon its percentage of total municipal income taxes collected throughout the State in a given year.

The LGRAF, which was created in 1989, was distributed to all counties based upon population. Either the statutory allocation method or an agreed upon alternative allocation is used to apportion the funds. Cuyahoga County allocated LGRAF funds using the same method as used to distribute LGF moneys.

Amended Substitute H.B. 119 which established the State's operating budget for the 2008-2009 biennium made significant changes to the LGF and LGRAF. In addition to extending the freeze on distributions through the end of 2007, the budget bill provided for a new funding mechanism beginning in calendar year 2008. In January 2008 the freeze was lifted, the LGRAF was consolidated into the LGF and a ªpercentage of revenueº funding method was restored. However, rather than receiving a percentage of revenues from certain designated tax sources, the LGF now receives 3.68% of all General Revenue Fund tax sources.

H.B. 119 also created a new distribution formula for the expanded LGF (LGF plus LGRAF). Each of the State's 88 counties will receive what it received in combined LGF and LGRAF distributions during calendar year 2007, subject to available resources. Any remaining funds will be distributed to each county's undivided local government fund based upon the county's proportionate share of population. Each county's own alternative formula for distribution will remain in effect. Municipalities that receive a direct distribution (the State portion that is distributed to municipalities collecting an income tax) will continue to receive a distribution equal to the amount received in calendar year 2007. However, there will be no growth in these distributions.

Listed below are the actual distributions to the City of these funds for the five fiscal years ending December 31, 2009, and the budgeted amounts for 2010.

Budgeted 2005 2006 2007 2008 2009 2010 Local Govt. $46,203,632 $46,238,284 $46,492,134 $47,939,840 $41,891,142 $41,146,597 Fund-County Portion Local Govt. Fund- 5,285,674 5,285,674 5,285,674 5,285,702 4,666,507 4,583,567 State Portion Local Govt. Revenue 4,398,168 4,397,620 4,400,318 ----* ----* ----* Assistance Fund $55,887,474 $55,921,578 $56,178,126 $53,225,542 $46,557,649 $45,730,164 TOTAL

*As of January 1, 2008, the LGRAF was consolidated into the LGF. As a result, the City no longer receives any funds from the LGRAF, but will continue to receive funding from the LGF.

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Ad Valorem Property Taxes

Assessed Valuation

The following table shows the assessed valuation in thousands, for the most recent five tax collection years, of property subject to ad valorem property taxes levied by the City:

Tangible Personal Tax Collection (Other than Public Utility Total Assessed Year Real Property Public Utility)(c) Tangible Personal Valuation 2006 $4,947,987 $677,333 $314,385 $5,939,705 2007(a) 5,589,053 551,296 316,899 6,457,248 2008 5,480,592 422,770 210,970 6,114,332 2009 5,496,719 219,920 220,820 5,937,459 2010(b) 5,279,349 --- 233,870(d) 5,513,219

(a) Reflects impact of sexennial reappraisal in 2006 for collection year 2007. (b) Reflects impact on triennial reappraisal in 2009 for collection year 2010. (c) The State (i) has reduced the valuation of tangible personal property of general businesses and railroads in increments beginning in 2006 to zero in 2009 and (ii) is reducing the valuation of tangible personal property of telephone and telecommunications companies in increments beginning in 2007 to zero in 2011. See the discussion of those reductions and related State makeup payments below. (d) Reflects, in part, the reclassification of tangible personal property of telephone and telecommunications companies from Public Utility to Tangible Personal.

Taxes collected from real property in one calendar year are levied in the preceding calendar year on assessed values as of January 1 of that preceding year. Taxes collected from tangible personal property in one calendar year are levied in the same calendar year on assessed values during and at the close of the most recent fiscal year of the taxpayer that ended on or before December 31 of the preceding calendar year, and at the tax rates determined in the preceding year. Public utility real and tangible personal property taxes collected in one calendar year are levied in the preceding calendar year on assessed values determined as of December 31 of the second year preceding the tax collection year.

Pursuant to requirements for sexennial reappraisals, the County Auditor adjusted the true value of taxable real property to reflect current fair market values in 2006. These adjustments were reflected in the 2006 tax duplicate (collection year 2007) and in collections distributed to the City in 2007 and thereafter. The County Auditor is required to adjust (but without individual appraisal of properties except in the sexennial reappraisal) and has adjusted taxable real property values triennially to reflect true values. The true value of taxable real property was adjusted in 2009 for collection year 2010 and thereafter.

The ªassessed valuationº of real property is fixed at 35% of true value and is determined pursuant to rules of the State Tax Commissioner. An exception is that real property devoted exclusively to agricultural use is to be assessed at not more than 35% of its current agricultural use value. Real property devoted exclusively to forestry or timber growing is taxed at 50% of the local tax rate upon its assessed value.

The taxation of all tangible personal property used in general businesses (excluding certain public utility tangible personal property) has been phased out over four years, from tax year 2006 to tax year 2009. Previously, machinery and equipment and furniture and fixtures were generally taxed at 25% of true value, and inventory was taxed at 23%. The taxation of all tangible personal property used by telephone, telegraph or interexchange telecommunications companies (ªtelecommunications propertyº) is

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also being phased out over tax years 2007 to 2011. Previously, telecommunications property was taxed at 25% or 46% of true value (depending on the type of equipment and when it was placed into service). The percentages of true value of such property taxed have been, and are being, reduced to those set forth in the following table.

General Business Telecommunications Tax Year Property Property

2006 18.75% (a) 2007 12.50 20.00% 2008 6.25 15.00 2009 0.00 10.00 2010 0.00 5.00 2011 0.00 0.00

(a) 25% or 46%; see discussion above.

Certain new tangible personal property not previously used in business in Ohio is not subject to tangible personal property taxation.

To compensate for decreased revenue as the tangible personal property tax is phased out, the State in 2006 commenced making distributions to taxing subdivisions (such as the City) from revenue generated by the CAT, which is levied annually on all persons or entities doing business in the State with taxable gross receipts from their business activities greater than $150,000. Generally, these distributions are expected to fully compensate taxing subdivisions (such as the City) for such tax revenue losses through 2010, with gradual reductions in the reimbursement amount from 2011 through 2017. Reimbursements for tax losses relating to levies for voted debt service are generally to continue at 100% until the debt is retired, subject to a ½-mill threshold adjustment (for all fixed-sum levies). That adjustment basically requires real property taxpayers to absorb up to ½ mill of increased property taxes (in order to continue to generate a fixed dollar amount) due to the phase out of tangible personal property taxes. The State is to provide any necessary reimbursement above that amount.

On September 17, 2009, the Ohio Supreme Court held that the CAT is not an excise tax “upon the sale or purchase of food” and does not violate the State’s constitutional prohibitions against such a tax. Additionally, on May 19, 2010, an Ohio trial court ruled that the application of the CAT to gross receipts from sales of motor fuels is permissible under the State’s constitution. When fully phased in, the CAT has been projected to produce approximately $1.68 billion annually with approximately 8.28% of that amount attributable to its application to motor fuels.

Public utility tangible personal property (with some exceptions) is currently assessed (depending on the type of property) from 25% to 88% of true value. Effective for collection year 2002, the assessed valuation of electric utility production equipment was reduced from 100% and natural gas utility property from 88% of true value, both to 25% of true value. Makeup payments in varying and declining amounts are to be made through 2016 to taxing subdivisions such as the City by the State from State resources.

Commencing in tax year 2006, the assessment rate for electric utility transmission and distribution equipment was reduced from 88% to 85%, and a reduction in the 25% assessment rate for all electric company taxable property was reduced from 25% to 24%.

The General Assembly has from time to time exercised its power to revise the laws applicable to the determination of assessed valuation of taxable property and the amount of receipts to be produced by ad valorem taxes levied on that property, and may continue to make similar revisions.

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Ohio law grants tax credits to offset increases in taxes resulting from increases in the true value of real property. Legislation classifies real property as between residential and agricultural property and all other real property, and provides for tax reduction factors to be separately computed for and applied to each class.

These tax credits apply only to certain voted levies on real property, and do not apply to unvoted levies, or to voted levies to pay debt service on general obligation debt, or to levies within rate limitations provided by a municipal charter. Accordingly, none of the City's tax levies, all of which fall within the exceptions previously noted, are affected by these credits.

The following table lists the largest property taxpayers with respect to property located in the City, based on assessed valuation of property for the 2010 tax collection year. State law permits, and in the past the City has granted, exemptions from real property taxation for up to 100% of assessed valuation by reason of tax abatement or tax increment financings. The amounts shown in the following table are adjusted to reflect reductions in valuations resulting from abatements:

Largest Property Taxpayers Tax Collection Year 2010 Percentage of Assessed Valuation Assessed Valuation by Category Name of Taxpayer Nature of Business Real Property Cleveland Clinic Foundation Hospital System $231,940,760 4.39% Cleveland Electric Illuminating Utilities ± Electric 177,990,330 3.37% Co. City of Cleveland, Ohio(a) Government 124,014,280 2.35% Key Center Properties LLC Commercial Real Estate 83,619,320 1.58% Holdings Cleveland Financial Associates Commercial Real Estate 46,967,070 0.89% Holdings East Ohio Gas Utilities ± Natural Gas 41,173,240 0.78% Case Western Reserve University University 39,954,700 0.76% National City Bank Commercial Real Estate 36,498,330 0.69% Holdings Hub North Point Properties LLC Commercial Real Estate 33,309,480 0.63% ISG Cleveland Inc. Steel Manufacturing 26,790,930 0.51% TOTAL 842,258,440 15.95% Total Assessed Valuation-Real 5,279,349,650 95.76% Public Utilities (Tangible Personal Property) Ohio Bell Telephone Communication $14,583,780 6.24% New Cingular Wireless Communication 6,261,930 2.68% Sprintcom Communication 5,054,670 2.16% Level 3 Communication Communication 1,775,600 0.76% New Par Communication 1,645,870 0.70% TOTAL $29,321,850.00 12.54% Total Assessed Valuation ± Public Utilities $233,869,750 4.24% Total Assessed Valuation ± All Categories $5,513,219,400 100.00%

(a) Includes, among other things, the following properties which are subject to ad valorem taxation: land comprising the site of Cleveland Browns Stadium, various municipal parking lots and areas of Cleveland Hopkins International Airport and Burke Lakefront Airport which are leased to third parties.

Source: Cuyahoga County Auditor's Office

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Ad Valorem Property Tax Rates

All references to tax rates under this caption are in terms of stated rates in mills per $1.00 of assessed valuation.

The Charter provides that the maximum total tax rate that may be levied without a further vote of the electors for current operating expenses is 8.35 mills. The Charter further provides that City Council may authorize an additional levy in any year not to exceed 0.2 mills and within the ten-mill limitation imposed by Ohio law, for the purpose of financing specific public improvements and equipment having an estimated useful life of five years or longer.

The following are the rates in mills per $1.00 of assessed valuation (35% of true value), for the years indicated at which the City and the taxing subdivisions overlapping the City levied ad valorem property taxes (in that area of the City having the highest percentage of total assessed valuation):

TAX TABLE A Overlapping Tax Rates

Library & Cleveland County and Metropolitan School Collection Year City Others District Total 2006 12.70 18.30 71.60 102.60 2007 12.70 18.20 71.60 102.50 2008 12.70 18.20 71.60 102.50 2009 12.70 18.10 71.60 102.40 2010 12.70 18.10 71.60 102.40

Source: Cuyahoga County Auditor

The following are the rates at which the City levied ad valorem property taxes for the purposes and in the years indicated:

TAX TABLE B City Tax Rates

Police and Fire Unvoted Debt Collection Year Operating Pension Retirement (a) Total 2006 7.75 0.60 4.35 12.70 2007 7.75 0.60 4.35 12.70 2008 7.75 0.60 4.35 12.70 2009 7.75 0.60 4.35 12.70 2010 7.75 0.60 4.35 12.70

(a) The City has no outstanding Voted General Obligation Bonds

Source: Cuyahoga County Auditor

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Collection of Ad Valorem Property Taxes The following are the amounts billed and collected for City ad valorem property taxes on real property, utility property and tangible personal property for the indicated tax collection years: (000's Omitted) Total Collections As Collection Current Delinquent Total Current Current Levy Delinquent Total Percent Of Accumulated Year Levy Levy (a) Levy Collection Collected Collection Collection Current Levy Delinquency 2005 $77,235 $23,518 $100,843 $67,759 87.70% $5,428 $73,187 94.8% $26,331 2006 74,561 25,892 100,453 65,617 88.00 5,524 71,141 95.4 21,063 2007 79,578 28,584 108,162 68,824 86.50 5,676 74,500 93.6 22,771 2008 77,142 29,929 107,071 66,211 85.83 6,416 72,627 94.15 31,984 2009 76,072 31,802 107,874 63,707 83.75 5,352 69,059 90.78 36,999

(a) Levy includes adjustments, abatements, additions and penalties against current delinquent levy.

Source: Cuyahoga County Auditor.

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The current and delinquent taxes are billed and collected by County officials for all taxing or assessing subdivisions in the County, including the City. There is no one taxpayer that accounts for more than five percent of any of the delinquencies identified above. The County Prosecuting Attorney, the County Treasurer and the County Auditor's office employ procedures for collection of delinquent taxes, including the initiation of foreclosure proceedings.

Included in the above figures for ad valorem property taxes under the columns headed ªTotal Levy,º ªTotal Collection,º and ªTotal Collections as Percent of Current Levyº are payments under two real property tax relief programs of the State made from State revenue sources. Ohio law currently requires that the County Auditor reduce the sum to be levied against each parcel of real property by ten percent (the ªten percent rollbackº). Ohio law also currently allows for additional reductions in the real property taxes on property owned and occupied by persons over 65 or handicapped who apply and meet certain criteria (the ªhomestead exemptionº). The State currently reimburses each taxing subdivision for the reductions in that subdivision's real property taxes resulting from the ten percent rollback and the homestead exemption. As an indication of the extent of the State assistance reflected in the City's tax collections (both for General Fund and debt service), in 2009, the homestead payment made by the State was $2,241,091 and the rollback payment totaled $4,474,034.

Overlapping Governmental Entities

The major political subdivisions or other governmental entities overlapping all or a portion of the territory of the City and, in most cases, the County are listed below along with a brief description of their functions.

The County performs the traditional functions allocated to counties by Ohio law, such as human services, elections, road maintenance, public hospitals and administration of a portion of the court system. Property located within the City constitutes 18.60% of the property assessed for valuation within the taxing jurisdiction of the County.

The Cleveland Metropolitan School District (the ªSchool Districtº) is charged with educational responsibilities for children from kindergarten through the twelfth grade. The School District is the principal school system in the City and the largest in the State. Property located within the City constitutes 96.95% of the property assessed for valuation within the taxing jurisdiction of the School District. Other property in the City is located in portions of two other school districts: (a) the Shaker Heights City School District and (b) the Berea City School District.

On September 9, 1998, the Mayor-appointed nine-member school board and Chief Executive Officer assumed control and management of the School District. The State legislation authorizing this assumption of control provided as follows: (a) the Mayor-appointed board of education has no interest in the funds or property of the City; (b) the budgets of the School District and the City are to be estimated, planned, and financed separately; and (c) at no time are any funds of the School District and the City to be commingled in any manner, and all School District funds and accounts shall be maintained and accounted for totally independently of any funds and accounts of the City. In November of 2002, the voters of the School District approved the continuance of the governance of the School District by the Mayor- appointed board of education.

The Greater Cleveland Regional Transit Authority (ªRTAº) owns and operates a public mass transit system. It was created in 1974 for the purpose of acquiring the Cleveland Transit System, the Shaker Rapid Transit System and other municipal transit systems in the County, and became operational in September 1975. Property located within the City constitutes 18.60% of the property assessed for valuation within the taxing jurisdiction of RTA.

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The Northeast Ohio Regional Sewer District (ªNEORSDº) was established in 1972 under Chapter 6119 of the Revised Code with the consent of the City, to implement a comprehensive wastewater treatment and control system in the Cleveland metropolitan area. NEORSD presently operates and maintains three wastewater treatment plants and the combined sewer outflow and interceptor sewer system which serves the City and all or part of 59 suburban communities.

The Cleveland Metropolitan Park District owns and operates park and recreation areas. Property located within the City constitutes 18.41% of the property assessed for valuation within the taxing jurisdiction of this district.

The Cuyahoga County District Library owns and operates library facilities. Property located within the City constitutes 0.4% of the property assessed for valuation within the taxing jurisdiction of this district.

The Cleveland-Cuyahoga County Port Authority owns and operates port facilities in the Port of Cleveland. Property located within the City constitutes 18.60% of the property assessed for valuation within the taxing jurisdiction of this authority.

The Cuyahoga Community College District operates a two-year public institution of higher education. Approximately 40,000 students enroll annually at its three main campuses. Property located within the City constitutes 18.60% of the property assessed for valuation within the taxing jurisdiction of this district.

Each of these entities operates independently under and is governed by Ohio law, with its own separate budget, taxing power and sources of revenue. Only the County, The Cleveland Metropolitan School District, the Shaker Heights City School District, the Berea City School District and RTA may, in addition to the City, levy ad valorem property taxes within the ten-mill limitation described under ªCITY DEBT AND OTHER OBLIGATIONS ± Indirect Debt Limitation.º

Tax Incentive Programs

To facilitate economic growth and development, the City primarily utilizes two tax incentive programs, including an Enterprise Zone Program and a Community Reinvestment Program.

The Enterprise Zone Program (as approved by the State Director of Development) provides real and personal property tax exemptions for certain businesses which locate or expand in designated qualified enterprise zones. Under the Enterprise Zone Program, agreements entered into between businesses and municipalities can grant exemptions, not to exceed 10 years, on up to 100% of tangible personal property and up to 100% of the value of real property improvements.

The State has approved several enterprise zones within the City under which the City provides tax exemptions up to 100% of tangible and real property to industrial and non-retail commercial businesses for up to 10 years.

Municipal corporations and counties are permitted to create community reinvestment areas (ªCRAsº) in which a real property tax exemption may be granted for the total or increased real property valuation that would result from new construction or remodeling of existing structures. The City's current policy is to provide 100% tax exemptions for 15 years on newly constructed market rate single/two family homes. The entire geographic area of the City is designated a CRA.

Municipal corporations are also authorized to enter into development agreements with owners

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and developers of property in urban redevelopment areas and to grant real property tax exemption for up to 30 years for certain improvements undertaken pursuant to such development agreements. The City is currently a party to a number of agreements with respect to large urban renewal projects in its downtown. In some cases the property owners make payments to the City and the School District in lieu of taxes.

Accordingly to the County Auditor’s Office, the approximate market value of property subject to tax abatements within the boundaries of the City as of December 31, 2009 is $1,122,956,600 and the approximate assessed value of property subject to tax abatements within the boundaries of the City is $393,034,810.

CITY DEBT AND OTHER OBLIGATIONS

The information set forth below summarizes provisions dealing with the debt limitations imposed by State law applicable to the City and its general obligations.

Debt Limitations

State laws restrict the ability of municipalities to incur debt. Unvoted general obligations of the City are subject to both the direct debt limitations in the Revised Code (except to the extent debt service on the unvoted general obligations of the City is to be paid from lawfully available municipal income taxes applied under ordinance covenants) and the indirect debt limitation imposed by a combination of the provisions of the Ohio Constitution and the Revised Code. The Series 2010 Bonds are not direct obligations of the City.

Direct Debt Limitations

The Revised Code provides that the net principal amount of both voted and unvoted debt of a city, excluding exempt debt described below, may not exceed 10 ½% of the total tax valuation of all property in a city as listed and assessed for taxation, and that the net principal amount of unvoted non- exempt debt may not exceed 5 ½% of that valuation. These two limitations are referred to as the direct debt limitations and may be amended from time to time by the Ohio General Assembly.

Certain debt the City may issue is exempt from the direct debt limitations (“exempt debt”). Exempt debt includes each of the following:

(a) General obligation debt that is:

(i) “self-supporting” (that is, non-tax revenues from the facility or category of facilities are sufficient to pay operating and maintenance expenses and related debt service and other requirements) issued for city utility systems or facilities; airports or landing fields; railroads and other mass transit systems; parking facilities; health care facilities; solid waste facilities; urban development; recreation, sports, convention, museum and other public attraction facilities; facilities for natural resource exploration, development, recovery, use or sale; correctional and other related rehabilitation facilities;

(ii) issued for highway improvements if the municipality has covenanted to pay debt service and financing costs from distributions of motor vehicle license and fuel taxes;

(iii) issued in anticipation of the levy or collection of special assessments;

(iv) issued to pay final judgments or court-approved settlements; or

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(v) voted for water or sanitary or storm water sewerage facilities to the extent that another subdivision has agreed to pay the municipality amounts equal to debt service.

(b) Unvoted general obligation bonds to the extent that debt service will be met from lawfully available municipal income taxes to be applied to that debt service under ordinance covenants.

(d) Revenue debt.

(e) Notes anticipating the collection of current revenues or the proceeds of a specific tax levy.

(f) Notes issued for certain emergency purposes.

(g) Debt issued in anticipation of the receipt of federal or state grants for permanent improvements.

(h) Debt issued to evidence loans from the State capital improvement fund.

(i) Voted debt for urban redevelopment purposes not in excess of 2% of the City's assessed valuation.

(j) Debt issued to pay obligations of the City under an agreement relating to the police and fireman's disability and pension fund.

(k) Debt issued for municipal, educational and cultural facilities.

(l) Debt for the acquisition of property for public use in excess of that needed for public improvements.

(m) Mortgage bonds issued to finance municipal utilities.

(n) Notes issued in anticipation of exempt bonds.

In the calculation of debt subject to the direct debt limitations, the amount in a city's bond retirement fund (in the case of a city, its Sinking Fund) allocable to the principal amount of non-exempt debt is deducted from gross non-exempt debt. See ªDebt Outstandingº below for a summary of the outstanding debt of the City and the City's current voted and unvoted non-exempt debt capacities, calculated without consideration of amounts in the City's Sinking Fund and based on the 2009 assessed valuation of property in the City for the 2010 tax collection year.

Indirect Debt Limitation

Voted general obligation debt may be issued by the City if authorized by the voters in the City. Ad valorem property taxes, without limitation as to amount or rate, to pay debt service on voted bonds are authorized by the voters at the same time they authorize the issuance of the bonds. The City currently has no outstanding voted bonds and no outstanding general obligation BANs.

General obligation debt also may be issued by the City without authorization from the voters.

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This unvoted debt may not be issued unless the ad valorem property tax for the payment of debt service on (a) those bonds (or the bonds in anticipation of which BANs are issued), and (b) all outstanding unvoted general obligation bonds (including bonds in anticipation of which BANs are issued) of the combination of overlapping taxing subdivisions, including the City, resulting in the highest tax required for such debt service in any year is ten mills or less per $1.00 of assessed valuation. This indirect debt limitation, the product of what is commonly referred to as the ªten-mill limitation,º is imposed by a combination of provisions of the Ohio Constitution and the Revised Code. In the case of BANs issued in anticipation of unvoted general obligation bonds, the highest annual debt service estimated for the anticipated bonds is used to calculate the millage required. The indirect debt limitation applies to all unvoted general obligation debt even if debt service on some of it is expected to be paid, in fact, from income tax revenues, special assessments, utility earnings or other resources. However, revenue bonds and notes, notes issued in anticipation of the collection of special assessments for City services in limited circumstances, certain urban renewal bonds and mortgage revenue bonds are not included in debt subject to the ten-mill limitation because they are not general obligations of the City and neither the general revenue nor the full faith and credit of the City is pledged for their payment.

The ten-mill limitation is the maximum aggregate millage for all purposes, in the absence of a charter tax rate limitation, that may be levied without voter approval on any single piece of property by a combination of all overlapping taxing subdivisions, with the 10 mills being allocated among certain overlapping taxing subdivisions pursuant to a statutory formula. The current allocation of the 10 mills (sometimes referred to as the ªinside millageº) in the City is as follows: 4.40 mills to the City, 4.00 mills to the Cleveland Metropolitan School District and 1.50 mills to Cuyahoga County. Of the 4.40 mills allocated to the City, 4.35 mills are levied for debt service on unvoted general obligation bonds and 0.05 mills is levied for fire pensions.

In lieu of the ten-mill limitation, the voters of a charter municipality such as the City may authorize the levy of a tax at a rate subject to a different limitation. The City voters in the City's Charter authorized City Council to levy each year for current operating expenses and for police and fire pensions a tax of up to 8.35 mills on all taxable property in the City without further voter authorization, but subject to change by further action of the voters. This 8.35 mills is in addition to the City's share of inside millage (i.e., the 4.35 mills levied in 2009).

Present Ohio law requires the inside millage allocated to a taxing subdivision to be used first for the payment of debt service on its unvoted general obligation debt, unless provision has been made for that payment from other sources, with the balance usable for other purposes. To the extent this inside millage is required for debt service of a taxing subdivision (which may exceed the formula allocation to that subdivision), the amount that would otherwise be available to that subdivision or other overlapping subdivisions for general fund purposes would be reduced. In the case of the City, however, a law applicable to all Ohio cities and villages requires that any lawfully available receipts from a municipal income tax or from voted property tax levies be allocated to pay debt service on City unvoted debt before the formula allocations of the inside millage to overlapping subdivisions can be invaded for that purpose.

In 2010, the City has levied 4.40 mills inside the ten-mill limitation, of which 4.35 mills is levied for debt service on its unvoted general obligation bonds and 0.05 mills is levied for fire pension obligations. The City has levied 8.30 mills outside that ten-mill limitation, pursuant to the Charter's 8.35 mill authorization, for current operating expenses and for police and fire pensions. Satisfying the City's pension obligations requires 0.55 mills of the 8.30 mills, leaving 7.75 mills for operations. If the City's allocated 4.35 mill levy within the ten-mill limitation is insufficient to cover the payment of debt service on its unvoted general obligation bonds, State law requires that the City must first exhaust its municipal income tax receipts and its 8.3 mill operating and pension levy receipts before a reallocation of any other political subdivision's share of the inside millage may be made to the City to provide for the payment of

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that debt service.

Debt Outstanding

The following table summarizes: (i) the principal amount of outstanding debt, revenue bonds and other obligations of the City as of November 1, 2010, excluding the issuance of the Series 2010 Bonds, and the portion of all obligations that is exempt from the 5 ½% and 10 ½% direct debt limitations discussed above; and (ii) the remaining leeway within those direct debt limitations. Currently, the City has no voted bonds outstanding; consequently, the amount of outstanding debt subject to the 5 ½% and 10 ½% limitations in the table below is the same.

A. Total Debt $2,457,068,880 B. Exempt Debt Category Self-Supporting Revenue Bonds and Notes Waterworks 764,710,000 Airport 849,260,000 Electric 274,357,880 Parking (a) 53,615,000 Urban Renewal Bonds 5,365,000 General Obligation Bonds with Income Tax Covenant (b) 306,215,000 Other Non-General Obligation Debt Series 2008 Police and Fire Pension Bonds 55,785,000 Subordinate Lien Income Tax Bonds (c) 83,025,000 Non Tax Revenue Bonds Series 2004 (Core City) 15,945,000 Non Tax Revenue Bonds Series 2004 (Stadium Project) 13,740,000 Non Tax Revenue Bonds Series 2008 (Core City) 27,135,000 Non Tax Revenue Bonds Lower Euclid Avenue Project 7,916,000 Total $2,457,068,880 C. Total Non-Exempt Debt (A minus B) 0 D. Assessed Valuation for the 2009 Tax Year (2010 collection year) $5,513,219,400 E. 5 ½% of Assessed Valuation $303,227,067 F. Debt Leeway within 5 ½% (E minus C) $303,227,067 G. 10 ½% of Assessed Valuation $578,888,037 H. Debt Leeway-10 ½% (G minus C) $578,888,037

(a) These bonds are payable from net parking revenues and certain non-tax revenues of the City.

(b) Debt leeway in this table is determined without considering the balance available in the Sinking Fund.

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Overlapping Subdivisions ± Millage Requirements

The following table shows the unvoted general obligation debt outstanding for the City and for the subdivisions overlapping the City and currently subject to the ten-mill limitation; debt service on that debt; and the millage required to pay that debt service in 2011, the year of the highest potential debt service for purposes of the table. The total millage theoretically required by the City, the County, the RTA, and the Berea City School District (those being the only taxing subdivisions overlapping the City with the highest potential debt service for purposes of the ten-mill limitation) for their outstanding unvoted obligations, is 10.2806 mills for 2011. Accordingly, there is currently no remaining capacity within the ten-mill limitation which has yet to be allocated to debt service by the City, the County, RTA, and the Berea City School District and which is available to any or all of those subdivisions or other overlapping subdivisions in connection with the issuance of additional unvoted general obligation debt.

Projected Outstanding Debt and Debt Service For Fiscal Year 2011

Current Required Unvoted Tax GO Debt Principal Interest Rate in Mills City $306,215,000 $29,715,000 $14,519,591 8.0234 County 316,270,000 16,170,000 15,151,705 1.0570 RTA 163,025,000 10,680,000 6,706,103 0.5867 Berea City School District 6,700,000 595,000 265,327 0.6135 Total Millage Required 10.2806 Margin Within Ten-Mill Limitation 0.00

Source: Cuyahoga County Auditor as of October 13, 2010.

Note: Calculation is performed for year which produces the highest annual aggregate debt charges for all overlapping jurisdictions.

Leases and Other Obligations

The City entered into a lease agreement dated as of June 1, 1997 in connection with the funding of the construction of an open-air municipal stadium for professional football. The City's obligation to make lease payments under that stadium lease, as supplemented and amended, is subject to the annual appropriation of funds sufficient for that purpose. The lease payments due during the current lease term ending December 31, 2010, amount to approximately $12,532,020.35 (including both the principal component and the interest component). Assuming renewal of the lease through December 31, 2028, the remaining aggregate of the principal components of the lease payments under that stadium lease amounts to $143,750,410.

The City also has current obligations under three leases for vehicles and equipment. As of November 1, 2010 the remaining lease payments due during the year ending December 31, 2010 under those leases amount to $599,723 (including the principal and interest components of those leases). Assuming renewal of all of those leases through all subsequent renewal terms, as of November 1, 2010, the aggregate of the principal components of the lease payments under all those equipment and vehicle leases amounted to $9,410,312.

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Derivative Transactions Payable from General Fund

The City is a party to various hedge agreements involving the exchange of interest payments on notional amounts related to certain outstanding bonds and lease obligations. The following is a brief summary of those hedge agreements currently in effect that do or may require payments from General Fund revenues. Under certain circumstances, each of these hedge agreements may be terminated prior to its stated termination date. Upon early termination, depending on prevailing economic circumstances, a payment may be owed by the City to the counterparty or a payment may be owed by the counterparty to the City.

In February 2003, the City sold an option to JPMorgan Chase Bank (ªJPMº) that gives JPM the right to enter into an interest rate swap with the City, at JPM's discretion, at any time before May 15, 2024 (the ªJPM Agreementº). At that time, the JPM Agreement related to the City's then-outstanding Subordinated Income Tax Variable Rate Refunding Bonds, Series 1994 (the ª1994 Bondsº) and a prior swap agreement between the City and Ambac Financial Services, LLC relating to the 1994 Bonds under which the City paid a fixed rate and received a floating rate on a notional amount equal to the 1994 Bonds. If JPM exercised its option, the City would pay JPM a floating rate of interest based on the SIFMA Municipal Swap Index, and JPM would pay the City a fixed rate of 4.88%, having the effect of reversing the swap with Ambac Financial Services, LLC. On August 6, 2008, the 1994 Bonds were retired from the proceeds of the City's $59,560,000 Subordinate Lien Unrestricted Income Tax Bonds, Series 2008 (previously defined as the ªPension Bondsº), and the swap with Ambac Financial Services, LLC was terminated. Consequently, the JPM Agreement now relates to a portion of the Subordinate Lien Unrestricted Income Tax Bonds, Series 2008. If the City becomes obligated to make any payments under the JPM Agreement, those periodic payments (but not any termination payment) will be payable from, and secured by a pledge of, the City's unrestricted income tax receipts remaining after the City's Central Collection Agency has withheld and paid to the Escrow Trustee under the General Bond Ordinance amounts required to pay debt service on the Bonds. The payment of any termination payment is subordinate to the payment of debt service on the Pension Bonds and subordinate to the periodic payments under the swap agreements. As of November 1, 2010, this transaction's mark to market value was negative to the City.

On August 3, 2006, the City entered into a basis swap with UBS AG (ªUBSº) as the counterparty with respect to its Parking Facilities Refunding Revenue Bonds, Series 2006, currently outstanding in the principal amount of $56,915000 (the ªParking Facilities Bondsº). The stated termination of this swap is September 15, 2022. The notional amount of this swap is equal to the principal amount of the Parking Facilities Bonds, declining in notional amount as the outstanding principal of the Parking Facilities Bonds is paid. Under the swap agreement the City pays floating rates of interest based on the BMA (now SIFMA) Municipal Swap Index, and UBS pays a rate equivalent to 67% of one-month LIBOR. The obligation of the City under the swap agreement to make the periodic variable payments (but not the termination payment) is secured by a pledge of the Parking Revenue and Additional Pledged Revenue as defined in the trust indenture securing the Parking Facilities Bonds. Any payment due by the City to UBS upon early termination of the agreement is subordinate to the payment of debt service on the Parking Facilities Bonds then outstanding and to the payment of periodic interest payments under the swap agreement. As of November 1, 2010, the this transaction's mark to market value was negative to the City.

Other Financings

The City expects to issue its annual amount of approximately $25 million to $30 million of general obligation bonds or subordinate lien income tax bonds in the first half of 2011.

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APPENDIX B

SUMMARIES OF CERTAIN DOCUMENTS

Certain material provisions of the Indenture and the Cooperative Agreement are discussed below. These brief descriptions do not purport to be complete or definitive and are qualified in their entireties by reference to the full terms of the documents described below.

THE INDENTURE

The following are summaries of certain provisions of the Indenture. These summaries to not purport to be complete or definitive and are qualified in their entireties by reference to the full terms of the Indenture.

Creation of Trust

In order to secure the payment of Debt Service Charges on the Bonds and to secure the other covenants of the Authority under the Indenture, the Authority executed and delivered the Indenture and assigned to the Trustee all right, title and interest of the Authority in and to (i) the Revenues, including, without limitation, all Appropriation Payments and all other moneys received or to be received by the Authority or Trustee in respect of repayment of the Bonds, including, without limitation, all moneys and investments in the Bond Fund, any moneys and investments in the Project Fund, and all income from the investment of the foregoing moneys, and (ii) the Cooperative Agreement (except for Unassigned Issuer's Rights) together with all permits, licenses, authorizations and certificates now or hereafter held or received by the Authority which are related to the Project.

Funds Established Under the Indenture

The following Funds and Accounts described below are established under the Indenture. Each Fund is to be maintained in the custody of the Trustee as a separate account (except when invested as hereinafter provided). The Funds and Accounts are:

(i) the Revenue Fund designated the ªCleveland-Cuyahoga County Port Authority ± City Appropriation Revenue Fundº and the ªAppropriation Payments Accountº therein;

(ii) the Bond Fund designated the ªCleveland-Cuyahoga County Port Authority ± City Appropriation Bond Fundº, including the ªInterest Account,º the ªPrincipal Accountº and the ªRedemption Accountº therein;

(iii) the Rebate Fund designated the ªCleveland-Cuyahoga County Port Authority ± City Appropriation Rebate Fundº;

(iv) the City Appropriation Project Fund designated the ªCleveland-Cuyahoga County Port Authority ± City Appropriation Project Fund,º including the ªCapitalized Interest Accountº, the ªConstruction Accountº and the ªCosts of Issuance Accountº; and

(v) the Administrative Expense Fund designated the ªCleveland-Cuyahoga County Port Authority ± City Appropriation Administrative Expense Fund.º

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Allocation of Proceeds of the Bonds

The proceeds of sale of the Bonds, including accrued interest from their date shall be allocated and deposited by the Trustee as follows:

(i) to the Interest Account in the Bond Fund, any accrued interest paid by the Original Purchaser with respect to the Bonds;

(ii) to the Capitalized Interest Account the amount of $261,630.00 to pay interest on the Bonds due on the first Interest Payment Date;

(iii) to the Costs of Issuance Account, the amount of $179,900.00; and

(iv) to the Construction Account of the Project Fund, the amount of $10,269,538.80.

Application of Appropriation Payments; Allocation of Moneys in Revenue Fund

Appropriation Payments shall be used to make the payments described below. Appropriation Payments shall be deposited upon receipt by the Trustee in the Appropriation Payments Account.

(A) So long as the Bonds shall be outstanding, moneys in the Appropriation Payments Account of the Revenue Fund shall be applied upon their receipt to make the following payments to the following Funds and accounts in the following order:

(i) To the Bond Fund: (a) into the Interest Account of the Bond Fund, after giving effect to any amounts on deposit in that Account, an amount sufficient to pay the interest due on all outstanding Bonds on the next Interest Payment Date; (b) into the Principal Account of the Bond Fund, after giving effect to any amounts on deposit in that account, an amount sufficient to pay the principal amount due on the Bonds on the next Principal Payment Date for the Bonds;

(ii) To the Administrative Expense Fund, after giving effect to amounts on deposit in that fund, an amount sufficient to pay the Administrative Expenses due on or before the next Interest Payment Date.

(B) Payments required under the Cooperative Agreement are to be remitted directly to the Trustee and deposited in the manner described in the Cooperative Agreement and in paragraphs (i) and (ii) of this section.

Bond Fund

Under the Indenture, there is established with the Trustee a Bond Fund, and within the Bond Fund three separate and segregated accounts to be designated ªInterest Account,º a ªPrincipal Accountº and a ªRedemption Account.º The moneys held in those accounts shall be made available by the Trustee to the Paying Agent or Agents to pay (A) the principal or redemption price of the Bonds as they mature, or become due, upon surrender thereof and (B) the interest on the Bonds as it becomes payable.

There shall be deposited from time to time into the Interest Account and Principal Account, (A) amounts to be transferred from the Appropriation Payments Account of the Revenue Fund as provided in this Appendix B under ªTHE INDENTURE ± Application of Appropriation Payments; Allocation of Moneys in Revenue Fundº and (B) all other moneys received by the Trustee under and pursuant to the

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provisions of the Indenture or any of the provisions of the Cooperative Agreement, when accompanied by directions from the person depositing such moneys that such moneys are to be paid into the Bond Fund.

Moneys in the Interest Account, the Principal Account and the Redemption Account of the Bond Fund shall be used solely for the payment of the Debt Service Charges on the Bonds from the following source or sources but only in the following order of priority:

(i) Interest: (a) moneys held in the Interest Account; (b) moneys transferred from the Administrative Expense Fund to the Interest Account, to the extent not needed to pay Administrative Expenses.

(ii) Principal: (a) moneys held in the Principal Account; (b) moneys transferred from the Administrative Expense Fund to the Principal Account to the extent not needed to pay Administrative Expenses.

(iii) Redemption price: (a) moneys held in the Redemption Account; (b) moneys transferred from the Administrative Expense Fund to the Redemption Account to the extent not needed to pay Administrative Expenses.

Any amounts remaining in the Bond Fund after payment in full of the principal or redemption price of and interest on the Bonds (or provision for payment thereof) shall be transferred to the Administrative Expense Fund to the extent required to pay Administrative Expenses, with any excess thereafter to be paid to the City.

Additional Deposits. In addition to the deposits to be made in the Bond Fund as contemplated otherwise herein, the Trustee shall deposit into the Bond Fund, including any accounts therein, as and when received, all other moneys received by the Trustee which are to be deposited in the Bond Fund as provided in the Cooperative Agreement, the Guaranty or any other instrument or document relating to the Project.

Project Fund

Amounts in the Project Fund, including the Accounts therein, which is held by the Trustee are to be used to pay the costs of construction of the Project. Moneys in the Construction Account will be disbursed in accordance with the provisions of the Cooperative Agreement except that the transfer from the Capitalized Interest Account to the Bond Fund by the Trustee is made as needed by the Trustee. At the written direction of the Authorized Official, the Trustee shall disburse moneys held in the Costs of Issuance Account to pay, or reimburse the Authority for the payment of, costs relating to the issuance of the Bonds. Prior to disbursement, moneys held by the Trustee in the Costs of Issuance Account shall be invested by the Trustee in Eligible Investments maturing or valued on a daily basis. Any moneys remaining in the Costs of Issuance Account on June 1, 2011 shall be transferred on such date to the Construction Account.

If an Event of Default occurs and is continuing, moneys in the Project Fund will, except to the extent otherwise directed or consented by the Majority Holder of then-Outstanding Bonds, be distributed as provided below under ªAPPENDIX B ± THE INDENTURE ± Events of Default and Remedies.º The Trustee will cause to be kept and maintained adequate records pertaining to the Project Fund and all disbursements from the Project Fund.

The completion of the Project and payment of all costs and expenses incident thereto will be evidenced by the Construction Agent's filing with the Trustee a certificate of completion. As soon as

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practicable after the filing of those certificates, any balance remaining in the Project Fund (other than the amounts required to be retained by the Trustee to pay remaining costs of the Project) may be deposited or applied for one or more of the following purposes, at the discretion of the Authority: (i) to the Interest Account of the Bond Fund and used for payment of interest as it becomes due on the Bonds or (ii) to the Principal Account of the Bond Fund and used for purchase of Bonds on the open market; or (iii) a combination of the foregoing; provided that (A) such use and the manner in which it is proposed to be made will not, in the opinion of nationally recognized bond counsel or under ruling of the Internal Revenue Service, adversely affect the tax-exempt status of the Bonds for federal income tax purposes, and (B) any money remaining in the Project Fund after completion of the Project and prior to the foregoing transfers shall be invested at the direction of the Authorized Official of the City, in accordance with and subject to the Code in such manner as shall not adversely affect the tax-exempt status of the Bonds for federal income tax purposes. Subject to the foregoing, such moneys shall be invested at the written direction of the Authorized Official of the City.

Administrative Expense Fund

At the written direction of the Authorized Official of the Authority, the Trustee shall disburse as required moneys held in the Administrative Expense Fund to pay, or reimburse the Authority or the Trustee for the payment of Administrative Expenses, including but not limited to the Issuer Annual Fee (one-half of which fee shall be due and payable on each Interest Payment Date), fees and reasonable expenses of the Trustee. Such amounts shall be paid to the party to whom those amounts are due. Any amounts remaining in the Administrative Expense Fund after payment of Administrative Expenses have been paid or provided for may be transferred to the Bond Fund to the extent needed to pay Debt Service Charges on the Bonds. Any amounts remaining in the Administrative Expense Fund after payment in full of the principal or redemption price of and interest on the Bonds (or provision for payment thereof) after all Administrative Expenses have been paid, shall be paid to the City. If at any time there are insufficient funds in the Administrative Expense Fund to pay Administrative Expenses, the Trustee shall request the amount of the shortfall from the Developer pursuant to the Cooperative Agreement or seek payment of that amount under the Project Completion Guaranty.

Rebate Fund

The Rebate Fund established by the Indenture is to be maintained by the Trustee as a separate deposit account in its custody. The Rebate Fund is not a Special Fund and does not secure the payment of Bond Service Charges on the Bonds and moneys and investments held therein are free and clear of any lien under the Indenture.

Amounts in the Rebate Fund are to be used to make any necessary payments of rebate to the United States in accordance with Section 148(f) of the Code. The Authority is responsible for obtaining the services of professionals to make calculations to determine the amount, if any, of such payments must be made to the United States. Such amounts are payable as an Administrative Expense.

Investment of Funds

Moneys in the Revenue Fund, the Project Fund, and the Administrative Expense Fund shall be invested and reinvested by the Trustee in Eligible Investments at the written direction of the authorized official of the Authority (at the direction of the Director of Finance of the City) so long as no Event of Default shall have occurred and be continuing. Moneys in the Bond Fund shall be invested at the written direction of the authorized official of the Authority, to the extent practicable, be invested and reinvested by the Trustee in Government Obligations (including, but not limited to any mutual fund for which the Trustee or an affiliate of the Trustee serves as investment manager, administrator, shareholder servicing

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agent, and/or custodian or subcustodian, notwithstanding that (a) the Trustee or an affiliate of the Trustee receives fees from such funds for services rendered, (b) the Trustee charges and collects fees for services rendered pursuant to the Indenture, which fees are separate from the fees received from such funds, and (c) services performed for such funds and pursuant to the Indenture may at times duplicate those provided to such funds by the Trustee or its affiliates) and maturing or redeemable at the option of the Trustee not later than the date on which the moneys invested are to be paid out of the Bond Fund, without the need for, and without limitation imposed by, any direction from the Authority or otherwise. Investments of moneys in the Bond Fund shall mature or be redeemable at the option of the Trustee at the times and in the amounts necessary to provide moneys to pay Debt Service Charges as they become due at stated maturity or by redemption. Each investment of moneys in the Project Fund shall mature or be redeemable at such time as may be necessary to make payments from the Project Fund. Each investment of moneys in the Revenue Fund, the Administrative Expense Fund, and the Rebate Fund shall mature or be redeemable at such time as may be necessary to make payments from the applicable Account of the Revenue Fund, the Administrative Expense Fund or the Rebate Fund, as applicable. In the absence of written direction as provided above with respect to investment of moneys held in the Funds, the Trustee shall invest funds, until such directions are received, pursuant to standing written instructions delivered to the Trustee by the authorized official of the Authority upon the original issuance of the Bonds, as such instructions may be amended from time to time. The Authority acknowledges that to the extent the regulations of the Comptroller of the Currency or other applicable regulatory agency grant the Authority the right to receive brokerage confirmations of security transactions, the Authority waives receipt of such confirmations.

Subject to any direction from the authorized official of the Authority with respect to investments in the Bond Fund, the Administrative Expense Fund, the Rebate Fund, and the Project Fund, so long as no Event of Default shall have occurred and be continuing, from time to time, the Trustee may sell those investments and reinvest the proceeds therefrom in qualifying Eligible Investments (subject to the preceding paragraph) maturing or redeemable as aforesaid. Any investments in a Fund may be purchased from or sold to the Trustee, the Registrar, an Authenticating Agent or a Paying Agent, or any bank, trust company or savings and loan association affiliated with any of the foregoing. The Trustee shall sell or redeem investments credited to the Bond Fund and to produce sufficient moneys applicable hereunder to and at the times required for the purposes of paying Debt Service Charges when due as aforesaid, and shall do so without necessity for any order on behalf of the Authority and without restriction by reason of any order. An investment made from moneys credited to the Bond Fund, the Rebate Fund, the Administrative Expense Fund or the Project Fund shall constitute part of that respective Fund, and each respective Fund (and each Account in each such Fund) shall be credited with all proceeds of sale and income from investment of moneys credited thereto (net of any profit, gain or income included therein).

The Trustee shall not be responsible for any depreciation in the value of any investments or for any loss arising from investments, provided that those investments are permitted investments hereunder. The value of investments to be calculated hereunder shall be market value, and market value shall be calculated as follows:

(a) as to investments the bid and asked prices of which are published on a regular basis in The Wall Street Journal (or, if not there, then in The New York Times): the average of the bid and asked prices for such investments so published on or most recently prior to such time of determination;

(b) as to investments the bid and asked prices of which are not published on a regular basis in The Wall Street Journal or The New York Times: the average bid price at such time of determination for such investments by any two nationally recognized government securities dealers (selected by the Trustee in its absolute discretion) at the time making a market in such investments or the bid price published by a nationally recognized pricing service;

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(c) as to certificates of deposit, trust deposits and bankers acceptances: the face amount thereof, plus accrued interest; and

(d) as to any investment not specified above: the method thereof established by prior agreement between the Authority and the Trustee.

If more than one provision of this definition of market value shall apply at any time to any particular investment, the market value thereof at such time shall be determined in accordance with the provision establishing the lowest value for such investment.

Supplemental Indentures

Supplemental Indentures Without the Consent of the Holders. Without the consent of or notice to any of the Holders, the Authority and the Trustee, but with the consent of the City if required pursuant to the Indenture, may enter into indentures supplemental to the Indenture which shall not, in the opinion of the Authority and the Trustee, be inconsistent with the terms and provisions of the Indenture for any one or more of the following purposes:

(a) To cure any ambiguity, inconsistency or formal defect or omission in the Indenture;

(b) To grant to or confer upon the Trustee for the benefit of the Holders any additional rights, remedies, powers or authority that lawfully may be granted to or conferred upon the Holders of the Trustee;

(d) To accept additional security and instruments and documents of further assurance with respect to the Revenues or the Project;

(e) To add to the covenants, agreements and obligations of the Authority under the Indenture, other covenants, agreements and obligations to be observed for the protection of the Holders, or to surrender or limit any right, power or authority reserved to or conferred upon the Authority in the Indenture and which in the judgment of the Trustee is not to the prejudice of the Trustee or the Holders, including, without limitation, the rights of redemption;

(f) To make any amendments appropriate or necessary to provide for any interest rate swaps, caps, collars or similar devices which the Authority may determine to enter into in connection with payment of interest on the Bonds;

(g) To evidence any succession to the Authority and the assumption by its successor of the covenants, agreements and obligations of the Authority under the Indenture and the Bonds;

(h) To permit the exchange of Bonds, at the option of the Holder or Holders thereof, for coupon Bonds of the same series payable to bearer, in an aggregate principal amount not exceeding the unmatured and unredeemed principal amount of the Predecessor Bonds, bearing interest at the same rate or rates and maturing on the same date or dates, with coupons attached representing all unpaid interest due or to become due thereon, if, in the opinion of nationally recognized bond counsel selected by the Authority, that exchange would not adversely affect the tax-exempt status of the Bonds for federal income tax purposes;

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(i) To authorize different Authorized Denominations of the Bonds and to make correlative amendments and modifications to the Indenture regarding exchangeability of Bonds of different Authorized Denominations, redemptions of portions of Bonds of particular Authorized Denominations and similar amendments and modifications of a technical nature;

(j) To facilitate (i) the transfer of Bonds from one Depository to another, and the succession of Depositories, or (ii) the withdrawal of Bonds issued to a Depository for use in a book-entry-only system and the issuance of replacement Bonds in fully registered form to others than a Depository;

(k) To permit the Trustee to comply with any obligations imposed upon it by law;

(l) To specify further the duties and responsibilities of, and to define further the relationship among, the Administrator, the Trustee, the Registrar and any Authenticating Agents or Paying Agents;

(m) To achieve compliance of the Indenture with any applicable federal securities or tax law;

(n) To make amendments to the provisions of the Indenture relating to arbitrage matters under Section 148 of the Code, if an Opinion of Bond Counsel is provided to the Trustee to the effect that those amendments would not adversely affect the tax-exempt status of the Bonds for federal income tax purposes, which amendments may, among other things, change the responsibility for making the relevant calculations;

(o) To make any change in order to obtain or maintain a rating, or a rating in a particular rating category from any Rating Service;

(p) To permit any other amendment which, in the judgment of the Trustee, is not to the prejudice of the Trustee or the Holders; and

(q) To permit any Bonds to be issued as uncertificated securities.

The provisions of paragraphs (k), (m) and (n), above, shall not be deemed to constitute a waiver by the Trustee, the Registrar, the Authority or any Holder of any right which it may have in the absence of those provisions to contest the application of any change in law to the Indenture or the Bonds.

Supplemental Indentures Requiring Consent of Holders. Exclusive of Supplemental Indentures to which reference described immediately above, with the consent of the Majority Holders, and with the consent of the City, if required, the Authority and the Trustee may execute and deliver Supplemental Indentures adding any provisions to, changing in any manner or eliminating any of the provisions of the Indenture or any Supplemental Indenture or restricting in any manner the rights of the Holders. However, none of the following shall be permitted:

(a) without the consent of the Holder of each Bond so affected, (i) an extension of the maturity of the principal of or the interest on any Bond, (ii) a reduction in the principal amount of any Bond or the rate of interest or premium thereon, (iii) a reduction in the amount of, or an extension of the time for, payment of any Mandatory Sinking Fund Requirements or (iv) a change in the time or price of any applicable redemption, or

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(b) without the consent of the Holders of all Bonds then Outstanding, (i) the creation of a privilege or priority of any Bond or Bonds over any other Bond or Bonds, or (ii) a reduction in the aggregate principal amount of the Bonds Outstanding required for consent to a Supplemental Indenture or for consent to any amendment or supplement to the Cooperative Agreement.

Events of Default and Remedies

Events of Default. Each of the following constitutes an ªEvent of Defaultº under the Indenture:

(a) Payment of any interest on any Bond shall not be made when and as that interest shall become due and payable;

(b) Payment of the principal of or any premium on any Bond shall not be made when and as that principal or premium shall become due and payable, whether at stated maturity, by redemption, pursuant to any Mandatory Sinking Fund Requirements, by acceleration or otherwise;

(c) Failure by the Authority to observe or perform any other covenant, agreement or obligation on its part to be observed or performed contained in the Indenture or in the Bonds, which failure shall have continued for a period of 60 days after written notice, by registered or certified mail, to the Authority specifying the failure and requiring that it be remedied, which notice may be given by the Trustee in its discretion and shall be given by the Trustee at the written request of the Majority Holders, provided that if the failure is other than the payment of money and is of such nature that it can be corrected but not within the applicable period, that failure shall not constitute an Event of Default so long as the Authority institutes curative action within the applicable period and diligently pursues that action to completion;

(d) The occurrence and continuance of an Event of Default as defined in Section 8.1 of the Cooperative Agreement;

(e) The Authority shall: (i) admit in writing its inability to pay its debts generally as they become due; (ii) file a petition in bankruptcy or a petition to take advantage of any insolvency act; (iii) make an assignment for the benefit of creditors; or (iv) have a receiver or trustee appointed for it or for the whole or any substantial part of its property.

The term ªdefaultº or ªfailureº as used above means (i) a default or failure by the Authority in the observance or performance of any of the covenants, agreements or obligations on its part to be observed or performed contained in the Indenture, the Bonds, or the Cooperative Agreement, or (ii) a default or failure by the City under the Cooperative Agreement, in either case, exclusive of any period of grace or notice required to constitute a default or failure an Event of Default, as provided above or in the Cooperative Agreement.

Rights and Remedies Upon Default. Upon the occurrence and continuance of an Event of Default, the Trustee may pursue any available remedy at law or in equity to enforce the payment of Debt Service Charges or the observance and performance of any other covenant, agreement or obligation under the Indenture, the Cooperative Agreement or any other instrument providing security, directly or indirectly, for the Bonds; provided that neither the Trustee nor the Holders of the Bonds shall have any right to cause the acceleration of the payment of principal of or interest on the Bonds. If the Authority fails to make any payment of principal of or premium or interest on any Bond, the item in default shall

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continue to be an obligation of the Authority (payable only from Revenues) until such payment shall have been fully paid.

As the assignee of certain assigned rights of the Authority under the Cooperative Agreement (not including the Unassigned Issuer's Rights), the Trustee is empowered to enforce each remedy, right and power granted to the Authority under the Cooperative Agreement to the extent included in that assignment and otherwise as permitted by law or equity. In exercising any remedy, right or power thereunder or under the Indenture, the Trustee shall take any action which would best serve the interests of the Holders in the judgment of the Trustee.

Rights and Remedies of Holders. A Holder shall not have any right to institute any suit, action or proceeding for the enforcement of the Indenture, for the execution of any trust of the Indenture, or for the exercise of any other remedy under the Indenture, unless:

(a) there has occurred and is continuing an Event of Default of which the Trustee has been notified, or of which it is deemed to have notice,

(b) the Majority Holders shall have made written request to the Trustee and shall have afforded the Trustee reasonable opportunity to proceed to exercise the remedies, rights and powers granted in the Indenture or to institute the suit, action or proceeding in its own name, and shall have offered indemnity to the Trustee, and

(c) the Trustee for 30 days thereafter shall have failed or refused to exercise the remedies, rights and powers granted herein or to institute the suit, action or proceeding in its own name.

At the option of the Trustee, that notification (or notice), request, opportunity and offer of indemnity are conditions precedent in every case, to the institution of any suit, action or proceeding described above.

No one or more Holders of the Bonds shall have any right to affect, disturb or prejudice in any manner whatsoever the security or benefit of the Indenture by its or their action, or to enforce, except in the manner provided herein, any remedy, right or power under the Indenture. Any suit, action or proceedings shall be instituted, had and maintained in the manner provided herein for the benefit of the Holders of all Bonds then outstanding. Nothing in the Indenture shall affect or impair, however, the right of any Holder to enforce the payment of the Debt Service Charges on any Bond owned by that Holder at and after the maturity thereof, at the place, from the sources and in the manner expressed in that Bond.

Right of Holders to Direct Proceedings. The Majority Holders shall have the right at any time to direct, by an instrument or document or instruments or documents in writing executed and delivered to the Trustee, the method and place of conducting all proceedings to be taken in connection with the enforcement of the terms and conditions of the Indenture or any other proceedings under the Indenture; provided, that (i) any direction shall not be other than in accordance with the provisions of law and of the Indenture, (ii) the Trustee shall be indemnified, and (iii) the Trustee may take any other action which it deems to be proper and which is not inconsistent with the direction.

Application of Moneys. After payment of any fees, costs, expenses, liabilities and advances paid, incurred or made by the Trustee in the collection of moneys pursuant to any right given or action taken under the provisions of the Indenture, all moneys received by the Trustee, and any amounts on deposit in the Project Fund when an Event of Default is in existence, shall be applied as follows (subject to certain other provisions of the Indenture):

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(a) All of those moneys shall be deposited in the Bond Fund and shall be applied:

First -- To the payment to the Holders entitled thereto of all installments of interest then due on the Outstanding Bonds, in the order of the dates of maturity of the installments of that interest, beginning with the earliest date of maturity and, if the amount available is not sufficient to pay in full any particular installment, then to the payment thereof ratably, according to the amounts due on that installment, to the Holders entitled thereto, without any discrimination or privilege, except as to any difference in the respective rates of interest specified in the Bonds; and

Second -- To the payment to the Holders entitled thereto of the unpaid principal or redemption premium, if any, of any of the Outstanding Bonds which shall have become due (other than Bonds previously called for redemption for the payment of which moneys are held pursuant to the provisions of the Indenture), whether at stated maturity, by optional redemption, pursuant to any Mandatory Sinking Fund Requirements, in the order of their due dates, beginning with the earliest due date, with interest on those Bonds from the respective dates upon which they became due at the rates then borne by such Bonds, and if the amount available is not sufficient to pay in full all unpaid principal or redemption premium, if any, on Bonds due on any particular date, together with that interest, then to the payment thereof ratably, according to the amounts of principal or redemption premium, if any, due on that date, to the Holders entitled thereto, without any discrimination or privilege, except as to any difference in the respective rates of interest specified in the Bonds.

(b) Whenever moneys are to be applied pursuant to the provisions of this section, those moneys shall be applied at such times, and from time to time, as the Trustee shall determine, having due regard to the amount of moneys available for application and the likelihood of additional moneys becoming available for application in the future. Whenever the Trustee shall direct the application of those moneys, it shall fix the date upon which the application is to be made, and upon that date, interest shall cease to accrue on the amounts of principal, if any, to be paid on that date, provided the moneys are available therefor. The Trustee shall give notice of the deposit with it of any moneys and of the fixing of that date, all consistent with the requirements of the Indenture for the establishment of, and for giving notice with respect to, a Special Record Date for the payment of overdue interest. To the extent required under the Indenture, the Trustee shall not be required to make payment of principal of and any premium on a Bond to the Holder thereof, until such Bond shall be presented to the Trustee for appropriate endorsement or for cancellation if it is paid fully.

(c) In the event the Trustee receives moneys representing the payment of interest on the unpaid interest on Bonds, the Trustee, in accordance with law, shall pay such amounts to the Holders of Bonds as to which interest was not timely paid pro rata to the amount of unpaid interest and for the period of non-payment.

Termination of Proceedings. In case the Trustee shall have proceeded to enforce any remedy, right or power under the Indenture in any suit, action or proceedings, and the suit, action or proceedings shall have been discontinued or abandoned for any reason, or shall have been determined adversely to the Trustee, the Authority, the Trustee and the Holders shall be restored to their former positions and rights

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under the Indenture, respectively, and all rights, remedies and powers of the Trustee shall continue as if no suit, action or proceedings had been taken.

Waivers of Events of Default. The Trustee may waive any Event of Default under the Indenture and its consequences upon the written direction of the Holders of: (a) at least a majority in aggregate principal amount of all Bonds then outstanding in respect of which an Event of Default in the payment of Debt Service Charges exists, or (b) at least 25% in aggregate principal amount of all Bonds then outstanding, in the case of any other Event of Default.

In the case of the waiver or in case any suit, action or proceedings taken by the Trustee on account of any Event of Default shall have been discontinued, abandoned or determined adversely to it, the Authority, the Trustee, the City and the Holders shall be restored to their former positions and rights under the Indenture, respectively. No waiver shall extend to any subsequent or other Event of Default or impair any right consequent thereon.

Defeasance of Bonds

When the Authority shall pay all of the outstanding Bonds, or shall cause them to be paid and discharged, or if there otherwise shall be paid to the Holders of the outstanding Bonds, all Debt Service Charges due or to become due thereon, and provision also shall be made for the payment of all other sums payable under the Indenture or under the Cooperative Agreement, then, the Indenture shall cease, determine and become null and void (except for those provisions surviving as described therein), and the covenants, agreements and obligations of the Authority under the Indenture shall be released, discharged and satisfied.

Amendments to Cooperative Agreement

Amendments to the Cooperative Agreement Not Requiring Consent of Holders. Without the consent of or notice to the Holders, the Authority and the Trustee may consent to any amendment, change or modification of the Cooperative Agreement, which may be required (a) to comply with the provisions of the Cooperative Agreement or the Indenture; (b) to cure any ambiguity, inconsistency or formal defect or omission in the Cooperative Agreement; (c) in connection with any amendment or to effect any purpose for which there could be a supplemental indenture without the consent of or notice to the Holders; or (d) to make any other change which is not prejudicial to the Trustee or the Holders, in the judgment of the Trustee.

Amendments Requiring Consent of Holders. Exclusive of amendments, changes or modifications to which reference is made in the previous paragraph, and subject to the terms, provisions and limitations described in this paragraph, neither the Authority nor the Trustee shall enter into or consent to:

(a) any amendment, change or modification of the Cooperative Agreement which would change the amount or time as of which Appropriation Payments are required to be paid without the giving of notice of the proposed amendment, change or modification and receipt of the written consent thereto of the Holders of all of the then Outstanding Bonds, or

(b) any other amendment, change or modification of the Cooperative Agreement without the giving of notice of the proposed amendment, change or modification, receipt of the written consent thereto of the Majority Holders.

City as Third-Party Beneficiary

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To the extent that the Indenture confers upon or gives or grants to the City any right, remedy or claim under or by reason of the Indenture, the Authority and the Trustee recognize and agree that the City is a third-party beneficiary under the Indenture, and that the City may enforce any such right, remedy or claim conferred, given or granted under the Indenture.

THE COOPERATIVE AGREEMENT

The following are summaries of certain provisions of the Cooperative Agreement. These summaries do not purport to be complete or definitive and are qualified in their entireties by reference to the full terms of the Cooperative Agreement.

Authority to Act as Agent for the City

The City has heretofore requested the assistance of the Authority in the financing of the Project. The City, the Authority, the Developer and the Trustee have determined to cooperate with each other in the undertaking and financing of the Project, all in accordance with the Cooperative Agreement.

To the extent, if any, necessary, desirable or appropriate to implement the intent of the Cooperative Agreement and in accordance with the Act, the Authority may exercise any power, perform any function and render any service, on behalf of the City, together with all powers necessary or incidental thereto, to the extent that the City is authorized under the applicable laws of the State, its Charter and its ordinances to exercise, perform or render such power, function or service.

Appropriation Payments

In consideration of the undertaking by the Authority, the City agrees in the Cooperative Agreement, subject to annual appropriations as provided below, to make the Appropriation Payments to the Trustee in accordance with the payment schedule provided in the Final Terms Certificate signed by the Director of Finance of the City.

The obligations of the City to make Appropriation Payments are subject to annual appropriations made by the City Council. The Director of Finance shall include in the proposed annual operating budget and proposed appropriation ordinance submitted to City Council for each fiscal year a line item supporting the appropriation of sufficient funds to pay all payments required to be made by the City pursuant to the Cooperative Agreement during such fiscal year and any payments required to be made by the City pursuant to the Cooperative Agreement during the preceding fiscal year that remain unpaid at the end of that fiscal year.

The Director of Finance shall include in the proposed annual operating budget and proposed appropriation ordinance submitted to City Council for each fiscal year a line item supporting the appropriation of sufficient funds to pay all payments required to be made by the City pursuant to the Cooperative Agreement during such fiscal year and any payments required to be made by the City pursuant to the Cooperative Agreement during the preceding fiscal year that remain unpaid at the end of that fiscal year.

Except as provided under ªAppropriation Payment Abatementº below, if the City appropriates sufficient funds to make Appropriation Payments during a fiscal year, the City's obligation to make those Appropriation Payments when due during that fiscal year will be absolute and unconditional in all events and will not be subject to any abatement, set-off, defense, counterclaim or recoupment for any reason whatsoever.

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In the event no appropriations or insufficient appropriations are made for any City fiscal year enabling the payment of Appropriation Payments due, then the City will immediately notify the Authority and the Trustee of that fact.

Prepayment of Appropriation Payments. Any of the Cooperative Parties, from sources other than those described in the Cooperative Agreement, may prepay at any time (but shall have no obligation to prepay) all or any part of the Appropriation Payments.

Appropriation Payment Abatement. If at any time Appropriation Payments have been paid to the Trustee or the Trustee otherwise holds sufficient moneys available for the purpose of redeeming Bonds, in an aggregate amount sufficient to cause the redemption or defeasance of all of the Bonds in accordance with the Indenture, so that after such payment or defeasance none of the Bonds will be outstanding under the Indenture, and neither the City nor the Developer is in default under the Cooperative Agreement, then the Authority, at the request of the City, shall direct the Trustee to cause that redemption or defeasance in accordance with the Indenture.

Acquisition, Construction and Financing of the Project

Subject to all of the terms and conditions of the Cooperative Agreement, the Developer shall sell the Property to the City, and the City shall purchase or cause the purchase of the Property from the Developer to the extent that the City is able to draw the amount of the Purchase Price from the Project Fund.

The Authority, on behalf of the City and acting on behalf of the City pursuant to the City's Charter, agrees in the Cooperative Agreement to contract with the Developer, or its designee, to act as the Authority's agent for construction of the City Waterfront Project on terms and conditions satisfactory to the Authority and the Developer in accordance with the Construction Agency Agreement.

The Authority, solely from the proceeds of the Bonds and from grants received for the Project, or the Construction Agent, acting on behalf of the Authority, (a) shall pay when due all fees, costs and expenses incurred in connection with the development of the Project from funds made available therefor in accordance with the Cooperative Agreement or otherwise, and (b) shall ask, demand, sue for, levy, recover and receive all those sums of money, debts and other demands whatsoever which may be due, owing and payable under the terms of any contract, order, receipt, writing and instruction in connection with the acquisition, construction, installation, equipment and improvement of the Project, and shall use its best efforts to enforce the provisions of any contract, agreement, obligation, bond or other performance security with respect thereto. It is understood that the Project will be undertaken by the Authority and any contracts made by the Authority or the Construction Agent with respect thereto, whether acquisition contracts, construction contracts or otherwise, or any work to be done by the Authority or the Construction Agent on the Project are made or done by the Authority or the Construction Agent on behalf of the City in accordance with the Charter of the City and as agent or contractor for the City, and pursuant to the authority of the Authority under Section 4582.17 of the Revised Code and each such contract shall so state.

The City, the Authority and the Developer have agreed that prevailing wages will be paid in connection with the construction of the City Waterfront Project.

The Developer has agreed to construct certain streets on the Phase I Property (as identified in the Cooperative Agreement), which construction will be consistent with the plans and specifications for construction of the streets and consistent with the necessary City permits for that construction. The

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construction of streets on the Phase II Property (as identified in the Cooperative Agreement) is expected to occur in the future as part of the development of the property adjacent to the Development Site.

The Plans and Specifications with respect to the Project have been filed with the Authority and the City. The Developer, may revise the Plans and Specifications for the Project from time to time, provided that no revision shall be made which would (i) change the Project in any material respect, without the written consent of the Authority and the City or (ii) increase the cost of the Project without evidence reasonably satisfactory to the Authority and the City, that moneys are available to meet such increased costs. The Developer shall, prior to disbursement of any amounts from the Project Fund, provide to the Authority and the City evidence acceptable to the Authority, in its sole discretion, of the availability of all financing contemplated by the plan of financing for the Project and for the Development including, without limitation (and without regard to whether the immediate availability of such financing is a condition to undertaking the Project), the equity portion of the financing, any bank financing (including any bank financing required in the operation of the Project and the Development), all other public financing and any interim or bridge financing to be provided in anticipation of the closing of any of the foregoing aspects of the financing therefore. Any material changes in the plan of financing shall be communicated promptly to the Authority and the City and shall be satisfactory to the Authority and the City in their sole discretion.

Developer Required to Pay Costs in Event Project Fund is Insufficient; Guaranty

If moneys available to the Authority from the Project Fund pursuant to the Indenture and the Cooperative Agreement, together with other grant funds received by the Authority for the Project, are insufficient to pay all costs of the Project, the Developer will, nonetheless, pay all costs to complete the Project in accordance with the plans and specifications and shall pay all such additional Project Costs into the appropriate account of the Project Fund under the Indenture. If any disbursement request for Project Costs would result in a deficiency in the Project Fund or any account therein, the Trustee shall notify the Developer and the Developer shall immediately deliver sufficient monies to the appropriate account of the Project Fund to eliminate the deficiency upon notice from the Trustee. The payment of these amounts shall be secured by the Guaranty. The Developer shall not be entitled to reimbursement for any Project Costs or Costs of Issuance from the Authority, the City, the Trustee or any bondholder, other than as a Project Fund disbursement consistent with the Cooperative Agreement.

Payment of Certain Administrative Expenses

The Developer agrees to pay to the Trustee, upon written request, any Administrative Expenses not paid from Appropriation Payments or otherwise paid by the Authority or the City under the Indenture. The Developer's obligations under this paragraph shall be secured by the Guaranty and shall survive termination of the Cooperative Agreement.

Other Covenants

Indemnification. The Developer agrees in the Cooperative Agreement to indemnify the City, the Authority and the Trustee for certain losses in connection with the Project and the Bonds.

City, Authority and Developer Not to Adversely Affect Tax-Exempt Status. The City, the Authority and Developer represent in the Cooperative Agreement that they have taken and caused to be taken, and covenant that they will take and cause to be taken, all actions that may be required of them, alone or in conjunction with the Authority, to maintain the tax-exempt status of the Bonds for federal income tax purposes, and represent that they have not taken or permitted to be taken on their behalf, and covenant that they will not take or permit to be taken on their behalf, any actions that would adversely

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affect such status under the provisions of the Code; provided that compliance with such covenant shall not require the Authority or the City to expend its own funds, other than any moneys available under the Indenture for such purpose.

Developer to Maintain Its Existence; Sales of Assets or Mergers. The Developer shall do all things necessary to preserve and keep in full force and effect its existence, rights and franchises. In particular, the Developer agrees that prior to the Project Completion Date, it shall not (a) sell, transfer or otherwise dispose of all, or substantially all, of its assets; (b) consolidate with or merge into any other entity; or (c) permit one or more other entities to consolidate with or merge into it.

The parties acknowledge that the Developer may transfer to unaffiliated parties one or more separate tax parcels that are part of the Development Site for the construction of stand-alone retail or restaurant operations as long as consistent with the Development Agreement. The Developer agrees that prior to the Project Completion Date it will not transfer any other portion of the Development Site or its interest therein to any entity (other than an affiliate of the Developer, the Authority or the City) unless such transfer is permitted under or in furtherance of the Development Agreement.

Assignment by Developer. Prior to the Project Completion Date, the Cooperative Agreement may not be assigned by the Developer, except to an affiliate of the Developer.

Events of Default

Generally. The following constitute ªEvents of Defaultº under the Cooperative Agreement:

(a) The City shall fail to observe and perform any agreement, term or condition contained in the Cooperative Agreement, and the continuation of such failure for a period of thirty (30) days after notice thereof shall have been given to the City by the Authority or the Trustee, or for such longer period as the Authority and the Trustee may agree to in writing; provided, that if the failure is other than the payment of money and is of such nature that it can be corrected but not within the applicable period, that failure shall not constitute an Event of Default so long as the City institutes curative action within the applicable period and diligently pursues that action to completion;

(b) The City or the Developer shall: (i) admit in writing its inability to pay its debts generally as they become due; (ii) have an order for relief entered in any case commenced by or against it under federal bankruptcy laws, as in effect from time to time; (iii) file a petition in bankruptcy or a petition to take advantage of any insolvency act; (iv) make an assignment for the benefit of creditors; or (v) consent to the appointment of a receiver for itself or of the whole or any substantial part of its property or has a receiver or trustee appointed for it or for the whole or any substantial part of its property;

(c) Any representation or warranty made by the City or the Developer herein or any statement in any report, certificate, financial statement, in the Transaction Documents or any other instrument furnished in connection with the Cooperative Agreement or with the purchase of the Bonds shall at any time prove to have been materially false or misleading in any material respect when made or given;

(d) The Developer shall fail to observe and perform any other agreement, term or condition contained in the Cooperative Agreement or any other Transaction Document to which it is a party, and the continuation of such failure for a period of thirty (30) calendar days after notice thereof shall have been given to the Developer by the Authority or the Trustee, or for such longer period as the Authority and the Trustee may agree to in writing; provided, that if the failure is other than the payment of money and is of such nature that it can be corrected but not within the applicable period, that failure shall not constitute an

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Event of Default so long as the Developer institutes curative action within the applicable period and diligently pursues that action to completion.

Notwithstanding the foregoing, if, by reason of Force Majeure, the City or the Developer is unable to perform or observe any agreement, term or condition hereof which would give rise to an Event of Default under subsection (a) or (d) hereof, neither the Developer nor the City shall be deemed in default during the continuance of such inability. However, the City or the Developer, as applicable, shall promptly give notice to the Trustee and the Authority of the existence of an event of Force Majeure and shall use their best efforts to remove the effects thereof; provided that the settlement of strikes or other industrial disturbances shall be entirely within their discretion.

The declaration of an Event of Default under subsection (b) above, and the exercise of remedies upon any such declaration, shall be subject to any applicable limitations of federal bankruptcy law affecting or precluding that declaration or exercise during the pendency of or immediately following any bankruptcy, liquidation or reorganization proceedings.

Remedies on Default. Whenever an Event of Default shall have happened and be subsisting, any one or more of the following remedial steps may be taken:

(a) In the case of a default by the Developer, the Trustee or the City may refuse to honor requests and orders from the Authority for the disbursement of funds from the Project Fund pursuant to the Indenture;

(b) The Trustee may, subject to its right to be indemnified under the Indenture, exercise any or all or any combination of the remedies specified in the Indenture;

(c) The Authority or the Trustee may pursue all remedies now or hereafter existing at law or in equity to collect all amounts then due and thereafter to become due under the Cooperative Agreement or to enforce the performance and observance of any other obligation or agreement of the City and the Developer under those instruments, except that, consistent with the other provisions of the Cooperative Agreement and the Indenture, the Bonds and the Appropriation Payments cannot be accelerated without the prior written consent of the City.

Notwithstanding the foregoing, none of the Trustee, the Authority nor the City (other than with respect to Appropriation Payments) shall be obligated to take any step which in its opinion will or might cause it to expend time or money or otherwise incur liability unless and until a satisfactory indemnity bond has been furnished to the City, the Authority or the Trustee, as applicable, at no cost or expense to the Authority or the Trustee. Any amounts collected as Appropriation Payments or applicable to Appropriation Payments and any other amounts collected pursuant to action taken under this section shall be deposited and applied in accordance with the provisions of the Indenture.

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APPENDIX C

DEFINITIONS OF CERTAIN TERMS

When used in the Official Statement and in the Appendices thereto, the following terms shall have the meanings set forth below. Additional terms used herein are more fully defined in the Indenture and the Cooperative Agreement, copies of which are available from the Underwriters upon request.

ªActº means Ohio Revised Code Sections 4582.01 through 4582.20, as enacted and amended pursuant to Section 13 of Article VIII of the Ohio Constitution.

ªAdministrative Expensesº includes the fees and reasonable expenses of the Trustee, the Registrar, and any Paying Agents or Authenticating Agents, amounts required pursuant to the Indenture to be deposited in the Rebate Fund, the Authority Annual Fee, fees and expenses of the Authority to enforce any provisions of the Cooperative Agreement, and any amounts other than Debt Service Charges required to be paid under the Cooperative Agreement or under the Indenture in connection with the Bonds.

ªAdministrative Expense Fundº means the Administrative Expense Fund created in the Indenture.

ªAppropriation Paymentsº means the payment to be made by the City to the Trustee under the Cooperative Agreement and in accordance with the payment schedule attached to the Cooperative Agreement as Exhibit C, which payments are subject to annual appropriation by City Council.

ªAuthenticating Agentº means the Trustee and the Registrar for a series of Bonds and any bank, trust company or other Person designated as an Authenticating Agent for such series of Bonds by or in accordance with the Indenture, each of which shall be a transfer agent registered in accordance with Section 17A(c) of the Securities Exchange Act of 1934 as amended.

ªAuthorityº means the Cleveland-Cuyahoga County Port Authority, a port authority and political subdivision and body corporate and politic duly organized and validly existing under the laws of the State.

ªAuthority Annual Feeº means, subject to the Cooperative Agreement, the annual administrative fee of the Authority equal to 0.10% of the principal amount of the Bonds, which is payable to the Authority as part of the Appropriation Payments.

ªAuthority Closing Feesº means the administrative fee of the Authority to be paid on the Closing Date equal to $5,000.

ªAuthorized Denominationsº means with respect to the Bonds, $5,000 and any integral multiple of $5,000 in excess thereof.

ªBondº or ªBondsº means the $11,000,000 City Annual Appropriation Bonds, Series 2010 (City of Cleveland, Ohio ± Flats East Project) of the Authority offered pursuant to this Official Statement.

ªBond Fundº means the Bond Fund created by the Indenture, including the Principal Account and the Interest Account therein.

ªBondholderº or ªHolderº means the Person in whose name a Bond is registered on the Register.

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ªBond Legislationº means the resolution or resolutions of the Authority providing for the issuance of the Bonds and approving the Cooperative Agreement, the Indenture and related matters, as amended or supplemented from time to time, together with the Certificate of Award authorized pursuant to that Resolution.

ªBond Purchase Agreementº means, the Bond Purchase Agreement dated December 13, 2010 between the Authority, the Developer, and the Underwriter and approved by the City, relating to the original sale and purchase of the Bonds.

ªBook-entry formº or ªbook-entry-only systemº means a form or system, as applicable, under which (i) the ownership of beneficial interests in the Bonds, including the principal and redemption price thereof, and interest due thereon, may be transferred only through a book entry and (ii) physical Bond certificates in fully registered form are registered only in the name of a Depository or its nominee as holder of the Bonds, with the physical Bond certificates ªimmobilizedº in the custody of the Depository. The book-entry-only system is maintained by and is the responsibility of the Depository and not the Authority, the City, the Developer, the Trustee or any Paying Agent. The book entry is the record that identifies, and records the transfer of the interest of, the owners of beneficial (book-entry) interests in the Bonds.

ªBusiness Dayº means any day other than (i) a Saturday or Sunday or a day on which banking institutions in the city or cities in which the Designated Office of each of the Trustee, the Paying Agent, the Authority or the City are located are authorized by law or executive order to close or (ii) a day on which the New York Stock Exchange is closed.

ªCapitalized Interest Accountº means the Capitalized Interest Account established within the Project Fund.

ªCertificate of Awardº means the Certificate of Award executed by the Authority pursuant to the Bond Legislation.

ªCityº means the City of Cleveland, Ohio, a municipality and political subdivision organized and existing under the constitution of the State and its Charter.

ªCity Councilº means the City Council of the City.

ªClosing Dateº means December 21, 2010.

ªCodeº means the Internal Revenue Code of 1986, the regulations (whether proposed, temporary or final) under that Code or the statutory predecessor of the Code, and any amendments of, or successor provisions to, the foregoing and any official rulings, announcements, notices, procedures and judicial determinations regarding any of the foregoing, all as and to the extent applicable to the Bonds. Unless otherwise indicated, reference to a Section means that Section of the Code, including any applicable successor Section or provision and such applicable regulations, rulings, announcements, notices, procedures and determinations pertinent to that Section.

ªCompletion Dateº means the date of completion of the Project, evidenced in accordance with the requirements of the Cooperative Agreement.

ªConstruction Agency Agreementº means the Public Improvements Construction Agency Agreement, dated as of December 1, 2010, by and among the Developer, as Construction Agent relating to the Project, the Authority, and the Trustee.

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ªConstruction Agentº means the person serving in the capacity of construction agent under the Construction Agency Agreement, and initially shall be the Developer.

ªContinuing Disclosure Agreementº means the Continuing Disclosure Agreement dated as of December 1, 2010, between the Authority, the City, and the Trustee, as amended or supplemented from time to time.

ªCooperative Agreementº means the Cooperative Agreement among the Authority, the City, the Developer, and the Trustee, dated as of December 1, 2010, as the same may be duly amended, modified or supplemented in accordance with the provisions thereof.

ªCooperative Partiesº means, collectively, the Authority, the City, the Developer and the Trustee.

ªCosts of Issuanceº means all costs and expenses relating to the authorizing, issuance, sale, delivery, authentication, deposit, custody, clearing, registration transfer, exchange, and servicing of the Bonds, including without limitation the Authority Closing Fee, costs and expenses for or relating to publication and printing, postage and express delivery, official statements, offering circulars, and informational statements, travel and transportation, paying agents, registrars, trustees, authenticating agents, custodians, clearing agencies or corporations, securities, depositories, financial advisory services, certifications, audits, federal or state regulatory agencies, accounting services, legal services and obtaining approving legal opinions and other legal opinions, and credit ratings.

ªCosts of Issuance Accountº means the Costs of Issuance Account created in the Indenture.

ªDebt Service Chargesº means, for any period or payable at any time, the principal of, premium, if any, and interest on the Bonds for that period or payable at that time whether due at maturity or upon redemption.

ªDepositoryº means The Depository Trust Company (a limited purpose trust company), New York, New York, until any successor Depository shall have become such pursuant to the applicable provisions of the Indenture and, thereafter, ªDepositoryº shall mean the successor Depository. Any Depository shall be a securities depository that is a clearing agency under federal law operating and maintaining, with its participants or otherwise, a book-entry-only system to record ownership of beneficial interests in Bonds, including the principal and redemption price thereof, and interest due thereon, and to effect transfers of Bonds, in a book-entry form.

ªDesignated Officeº means, in the case of the Trustee, the corporate trust office or offices, of the Trustee designated from time to time by the Trustee to the Authority to which notices are to be delivered under the Indenture and at which Bonds shall be paid, including the Notice Address specified by the Trustee and in the case of any other Person, the principal office of that person or such other office of that Person that shall be designated from time to time by such Person by notice delivered to the Trustee and the Authority.

ªDeveloperº means, jointly and severally, Flats East Development LLC, an Ohio limited liability company, and FED/Main Street LLC, an Ohio limited liability company, together with any of their respective successors or assigns.

ªDevelopmentº means Phase I of the commercial and residential development commonly known as the Flats East Bank Project to be developed consistent with the Development Agreement and as described on Exhibit A-3 of the Cooperative Agreement.

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ªDevelopment Agreementº means the Project Development Agreement dated May 22, 2006, as amended, among the City, the Authority and Flats East Development LLC.

ªDevelopment Siteº means the site depicted on Exhibit A-2 to the Cooperative Agreement.

ªEligible Investmentsº means, to the extent permitted and in the manner required by law:

(i) Government Obligations (as defined in the Indenture);

(ii) Direct and general long-term obligations (including stripped obligations the principal of and, so long as the principal obligations to which such interest relates is not subject to optional redemption or prepayment, interest on which have been separated and offered for sale separately from each other) of any state of the United States of America (including the District of Columbia) or any political subdivision of a state (hereinafter referred to in this definition of Eligible Investments as a ªStateº) to which the full faith and credit of such State is pledged, the interest on which is exempt from federal income taxation under Section 103 of the Code and rated in at least the second highest rating category by both Moody's and S&P;

(iii) commercial or finance paper rated at the time of purchase in at least the second highest rating category by both Moody's and S&P;

(iv) deposit accounts, including interest bearing money market accounts, trust deposits, bankers' acceptances, collateralized or uncollateralized certificates of deposit or bearer deposit notes in the Trustee or any bank affiliated with the Trustee and with a reported capital and surplus of not less than $100,000,000 and which has at the time of purchase of the Eligible Investment unsecured, uninsured and unguaranteed short-term debt rates in at least the second highest rating category by both Moody's and S&P;

(v) repurchase agreements with (a) financial institutions (including, but not limited to the Trustee and any of its affiliates), such as banks or trust companies organized under state law, or national banking associations, insurance companies, or government bond dealers reporting to, trading with and recognized as primary dealers by the Federal Reserve Bank of New York and members of the Securities Investors Protection Corporation, or (b) a dealer or parent holding company which is rated at the time of purchase in at least the second highest rating category (without regard to gradation within a category) by both Moody's and S&P, provided in any case: (a) the collateral for the repurchase agreement is described in paragraph (i) above, (b) the current market value of the collateral securing the repurchase agreement exclusive of accrued interest, is at least equal to 102% of the amount invested in the repurchase agreement and is determined not less frequently than monthly, (c) the Trustee, or an agent acting solely on its behalf, has possession of the collateral, (d) the Trustee has a first perfected security interest in the collateral, and (e) the collateral is free and clear of any third party claims; provided that, the Trustee may rely on the certificate of its agent as to possession, priority of the security interest and absence of third party claims;

(vi) Shares or interests in, an open-end or closed-end management-type investment company or investment trust registered under the Federal Investment Company Act of 1940, if (1) the portfolio of the investment company or investment trust is limited to obligations of the United States, federal agencies and

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repurchase agreements fully collateralized by such obligations, and (2) if the portfolio of such investment company or investment trust is rated in the highest rating category by both Standard & Poor's and Moody's; and

(vii) Shares of so-called ªmoney market mutual fundsº (including but not limited to a mutual fund for which the Trustee or an affiliate of the Trustee serves as an investment manager, administrator, shareholder, servicing agent and/or custodian or subcustodian, notwithstanding that (a) the Trustee or an affiliate receives fees from such funds for services rendered, (b) the Trustee charges and collects fees for services rendered pursuant to the Indenture, which fees are, separate from the fees received from such funds and (c) services performed for such funds and pursuant to this Indenture may at times duplicate those provided to such funds by the Trustee or its affiliates) consisting exclusively of obligations of the type described in clauses (i), and (ii) above and repurchase agreements secured by obligations of the type described in clauses (i) and (ii) above.

ªEnvironmental Lawsº means all applicable federal, state and local environmental, land use, zoning, health, chemical use, safety and sanitation laws, statutes, ordinances and codes relating to the protection of the environment and/or governing use, storage, treatment, generation, transportation, processing, handling, production or disposal of Hazardous Materials and the rules, regulations, policies, guidelines, interpretations, decisions, orders and directives of federal, state and local governmental agencies and authorities with respect thereto, including, without limitation, CERCLA and Chapter 3734 of the Ohio Revised Code.

ªEvent of Defaultº means any of the events described as an Event of Default in Section 8.1 of the Cooperative Agreement.

ªExchange Actº means the United States Securities Exchange Act of 1934, as amended.

ªFiscal Officerº means the Secretary of the Board of Directors of the Authority or, if the Secretary is unavailable, one of the Assistant Secretaries of the Board of Directors of the Authority.

ªForce Majeureº shall mean, without limitation, the following: acts of God; strikes, lockouts or other industrial disturbances; acts of public enemies; orders or restraints of any kind of the government of the United States of America or of the State or any of their departments, agencies, political subdivisions or officials, or any civil or military authority; insurrections; civil disturbances; terrorist acts; riots; epidemics; landslides; lightning; earthquakes; fires; hurricanes; tornadoes; storms; droughts; floods; arrests; restraint of government and people; explosions; breakage, malfunction or accident to facilities, machinery, transmission pipes or canals; partial or entire failure of utilities; shortages of labor, materials, supplies or transportation; or any cause, circumstance or event not reasonably within the control of the City, the Authority, or the Developer, provided that inability to obtain necessary financing shall not constitute an event of Force Majeure.

ªGuarantorsº means, collectively, the Developer, Scott A. Wolstein, Iris S. Wolstein, and the Iris S. Wolstein Trust and any successors thereto under the Guaranty.

ªGuarantyº means the Project Completion Guaranty (City Appropriation Bonds), dated December 1, 2010, between the Authority and the Guarantors, as the same may be amended relating to the completion of the Project.

ªHazardous Materialsº means, without limitation, any flammable explosives, radon, radioactive materials, asbestos, urea formaldehyde foam insulation, polychlorinated biphenyls, petroleum and

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petroleum products, methane, hazardous materials, hazardous wastes, hazardous or toxic substances or related materials as defined in CERCLA, the Hazardous Materials Transportation Act, as amended (49 U.S.C. §§1801, et seq.), RCRA, or any other applicable Environmental Law and in the regulations adopted pursuant thereto.

ªIndentureº means the Trust Indenture, dated as of December 1, 2010, between the Authority and the Trustee, as amended or supplemented from time to time.

ªInterest Payment Dateº or ªInterest Payment Datesº means, as to the Bonds, May 15 and November 15 of each year during which the Bonds are outstanding, commencing May 15, 2011, and any other dates on which interest is to be paid on any or all of the Bonds, including payments due at maturity or upon redemption prior to maturity.

ªMajority Holdersº means the holders of more than fifty percent (50%) of the principal amount of Outstanding Bonds.

ªMandatory Redemption Datesº means, as to the Bonds, the dates set forth as Mandatory Redemption Dates under ªTHE BONDS ± Redemption Prior to Maturity ± Mandatory Sinking Fund Redemptionº in the forepart of this Official Statement and as provided in the Indenture.

ªMandatory Sinking Fund Requirementsº means the amounts of the Bonds to be redeemed by mandatory redemption on the Mandatory Redemption Dates as set under ªTHE BONDS ± Redemption Prior to Maturity ± Mandatory Sinking Fund Redemptionº in the forepart of this Official Statement and as set forth in the Indenture.

ªMoody'sº means Moody's Investors Service, Inc. and any successor thereto.

ªNotice Addressº means:

As to the Authority: Cleveland-Cuyahoga County Port Authority 1375 E. Ninth Street, Suite 2300 Cleveland, Ohio 44114-1786 Attention: President

As to the City: City of Cleveland 601 Lakeside Avenue Cleveland, Ohio 44114 Attention: Mayor

As to the Trustee: The Huntington National Bank 917 Euclid Avenue Cleveland, Ohio 44115 Attention: Corporate Trust Services

As to the Developer: Flats East Development LLC c/o Developers Diversified 3300 Enterprise Parkway Beachwood, Ohio 44122 Attention: Scott A. Wolstein, President

With a Copy To:

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FED/Main Street LLC c/o Developers Diversified 3300 Enterprise Parkway Beachwood, Ohio 44122 Attention: Scott A. Wolstein, President

As to the Underwriter: Robert W. Baird & Co. Incorporated 10 West Broad Street, 25th Floor Columbus, OH 43215-3418 Attention: Timothy P. Long, Managing Director

ªOpinion of Bond Counselº means an opinion of counsel nationally recognized as having an expertise in connection with the exclusion of interest on obligations of states and local governmental units from the gross income of holders thereof for federal income tax purposes.

ªOutstanding Bonds,º ªBonds outstandingº or ªoutstandingº as applied to Bonds means, as of the applicable date, all Bonds that have been authenticated and delivered, or which are being delivered by the Trustee under the Indenture, except:

(i) Bonds cancelled upon surrender, exchange or transfer, or cancelled because of payment or redemption on or prior to that date;

(ii) Bonds, or the portion thereof, for the payment, redemption, or purchase for cancellation of which sufficient money has been deposited and credited with the Trustee or any Paying Agents on or prior to that date for that purpose (whether upon or prior to the maturity or redemption date of those Bonds); provided, that if any of those Bonds are to be redeemed prior to their maturity, notice of that redemption shall have been given or arrangements satisfactory to the Trustee shall have been made for giving notice of that redemption, or waiver by the affected Holders of that notice satisfactory in form to the Trustee shall have been filed with the Trustee;

(iii) Bonds, or the portion thereof, which are deemed to have been paid and discharged pursuant to the provisions of the Indenture; and

(iv) Bonds in lieu of which others have been authenticated under the Indenture.

ªPaying Agentº means any bank or trust company designated as a Paying Agent by or in accordance with the Indenture. The initial Paying Agent shall be the Trustee.

ªPersonº or words importing persons mean firms, associations, partnerships (including without limitation, general and limited partnerships), limited liability companies, joint ventures, societies, estates, trusts, corporations, public or governmental bodies, other legal entities and natural persons.

ªPlans and Specificationsº means the plans, specifications and profiles of the Project provided for in the Cooperative Agreement.

ªPredecessor Bondº of any particular Bond means every previous Bond evidencing all or a portion of the same debt as that evidenced by the particular Bond.

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ªPrincipal Payment Dateº means any date on which principal is payable with respect to the Bonds, whether at maturity, pursuant to Mandatory Sinking Fund Redemption or otherwise.

ªProjectº means collectively (a) the construction of public boardwalk, walkway, park and open space improvements along the Cuyahoga River, including related bulkhead improvements, all as set forth in the Plans and Specifications, and (b) the acquisition by the City of the Property for public streets.

ªProject Completion Certificateº means the Final Completion Certificate from the Construction Agent delivered pursuant to the Cooperative Agreement for the last segment of the Project to be completed.

ªProject Completion Dateº means the date on which each segment of the Project is complete, as certified in the final Project Completion Certificate under the Cooperative Agreement.

ªProject Costsº means the costs of the Project specified in the Cooperative Agreement.

ªProject Fundº means the Project Fund established under the Indenture.

ªPropertyº means the real property to be acquired by the City as depicted on Exhibit A to the Cooperative Agreement, including any additions or modifications thereto, which consists of the Phase I Property (as identified in the Cooperative Agreement) and the Phase II Property (as identified in the Cooperative Agreement).

ªProperty Closingº means the closing of the transaction by which the Property is conveyed to the City.

ªProperty Closing Dateº means the date the Deed is delivered to the City pursuant to the Property Closing.

ªPurchase Priceº means the purchase price of the Property, together with any amount owed by the City in connection with the purchase of the Property, all as described in the Cooperative Agreement.

ªRebate Fundº means the Rebate Fund created under the Indenture.

ªRegisterº means the books kept and maintained for the registration and transfer of Bonds pursuant to the Indenture.

ªRegistrarº means, as to the Bonds, the Trustee, until a successor Registrar shall have become such pursuant to applicable provisions of the Indenture; the Registrar shall be a transfer agent registered in accordance with Section 17A(c) of the Securities Exchange Act of 1934.

ªRegular Record Dateº means, as to any Bond, the close of business on the first day of the calendar month in which an Interest Payment Date occurs.

ªRevenue Fundº means the Revenue Fund created in the Indenture, together with such other accounts and subaccounts therein as may be created by the Indenture.

ªRevenuesº means (a) the Appropriation Payments, (b) amounts received by the City or the Authority as proceeds received as the result of enforcement of remedies under the Indenture, the Cooperative Agreement, or the Guaranty or related to the obligations of the City, the Developer or the

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Authority thereunder, (c) all moneys and investments in the Special Funds, except the Rebate Fund, to the extent provided herein, and (d) all income and profit from the investment of the foregoing moneys.

ªSecurities Actº means the United States Securities Act of 1933, as amended.

ªSpecial Fundsº means, with respect to the Bonds, collectively, the Administrative Expense Fund, the Bond Fund, the Project Fund, and the Revenue Fund; the Special Funds shall not include the Rebate Fund or the Cost of Issuance Account.

ªSpecial Record Dateº means, with respect to any Bond, the date established by the Trustee in connection with the payment of overdue interest on that Bond.

ªStateº means the State of Ohio.

ªS&Pº means Standard & Poor's Credit Market Services and any successor thereto.

ªTax Compliance Certificateº means the Tax Compliance Certificate and Agreement, dated the Closing Date, by and among the Authority, the City, and the Trustee.

ªTitle Companyº means Chicago Title Insurance Corp., or any successor acceptable to the City and the Developer.

ªTrusteeº means The Huntington National Bank, a national banking association organized under the laws of the United States, until a successor Trustee shall have become such pursuant to the applicable provisions of the Indenture, and thereafter ªTrusteeº shall mean the successor Trustee.

ªUnassigned Issuer's Rightsº means all rights of the Authority to receive payment of Administrative Expenses, to be held harmless and to be indemnified under Sections 3.5 and 6.1 of the Cooperative Agreement, to be reimbursed for reasonable attorneys' fees and expenses pursuant to Section 8.4 of the Cooperative Agreement, and to give or withhold consent to amendments, changes, modifications, alterations or termination of the Cooperative Agreement.

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APPENDIX D

FORM OF OPINION OF BOND COUNSEL

[______], 2010

To: Robert W. Baird & Co., Incorporated Columbus, Ohio

We have examined the transcript of proceedings (the ªTranscriptº) relating to the issuance by the Cleveland-Cuyahoga County Port Authority (the ªAuthorityº) of its $11,000,000 City Annual Appropriation Bonds, Series 2010 (City of Cleveland, Ohio ± Flats East Project) dated as of December [___], 2010 (the ªBondsº). The Bonds are being issued for the purpose of financing the costs of the acquisition, construction, equipping and improving of real and personal property comprising port authority facilities (the ªProjectº) for authorized purposes of the Authority, including enhancing transportation, economic development, recreation and governmental operations, all as more fully described in or pursuant to the Cooperative Agreement dated as of December 1, 2010 (the ªAgreementº) by and among the Authority, the City of Cleveland, Ohio (the ªCityº), Flats East Development LLC, FED/Main Street LLC (together, the ªDeveloperº) and The Huntington National Bank, as Trustee (the ªTrusteeº). The documents in the Transcript examined include signed counterparts of (i) the Agreement and (ii) the Trust Indenture dated as of December 1, 2010 between the Authority and the Trustee (the ªIndentureº). We have also examined a copy of a signed and authenticated Bond of the first maturity.

Based on this examination we are of the opinion that, under existing law:

1. The Bonds, the Agreement and the Indenture are legal, valid, binding and enforceable in accordance with their respective terms, subject to bankruptcy laws and other laws affecting creditors' rights and to the exercise of judicial discretion.

2. The Bonds constitute special obligations of the Authority, and the principal of and interest and any premium on the Bonds (collectively, ªdebt serviceº) are payable solely from the revenues and other moneys assigned by the Indenture to secure that payment, all as further described in the Agreement and the Indenture. The Bonds and the payment of debt service are not secured by an obligation or pledge of any moneys raised by taxation, and the Bonds do not represent or constitute a debt or pledge of the faith and credit of the Authority or the City.

3. The interest on the Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986, as amended (the Code), and is not an item of tax preference under Section 57 of the Code for purposes of the alternative minimum tax imposed on individuals and corporations. The interest on the Bonds, and any profit made on their sale, exchange or other disposition, are exempt from the Ohio personal income tax, the Ohio commercial activity tax, the net income base of the Ohio corporate franchise tax, and municipal, school district and joint economic development district income taxes in Ohio. We express no opinion as to any other tax consequences regarding the Bonds.

In giving the foregoing opinion with respect to the treatment of the interest on the Bonds and the status of the Bonds under the federal tax laws, we have assumed and relied upon compliance with the Authority's and the City's covenants and the accuracy, which we have not independently verified, of the Authority's and the City's representations and certifications, all as contained in the transcript. The accuracy of those representations and certifications, and compliance by the Authority and the City with those

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covenants, may be necessary for the interest to be and to remain excluded from gross income for federal income tax purposes and for the other federal tax effects stated above. Failure to comply with certain of those covenants subsequent to issuance could cause the interest on the Bonds to be included in gross income for federal income tax purposes retroactively to their date of issuance.

Under the Code, portions of the interest on the Bonds earned by certain corporations may be subject to a corporate alternative minimum tax, and interest on the Bonds may be subject to a branch profits tax imposed on certain foreign corporations doing business in the United States and to a tax imposed on excess net passive income of certain S corporations.

In giving the foregoing opinions, with your consent, we have (i) assumed the due authorization, execution and delivery by, and the binding effect and enforceability against, the Trustee of the Indenture and the Agreement, (ii) relied upon the legal opinion contained in the Transcript of a member of the Department of Law of the City as to all matters concerning the due authorization, execution and delivery by, and the binding effect on and enforceability against, the City of the Agreement and (iii) relied upon the legal opinions contained in the Transcript of the Developer's counsel as to all matters concerning the due authorization, execution and delivery by, and the binding effect on and enforceability against, the Developer of the Agreement. We express no opinion as to the status of title to the Project or any other real property or to any interest therein.

Respectfully submitted,

Squire, Sanders & Dempsey L.L.P.

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APPENDIX E

FORM OF CONTINUING DISCLOSURE AGREEMENT

THIS CONTINUING DISCLOSURE AGREEMENT (this ªAgreementº) by and among the CITY OF CLEVELAND, OHIO (the ªCityº), the CLEVELAND-CUYAHOGA COUNTY PORT AUTHORITY (the ªAuthorityº), and THE HUNTINGTON NATIONAL BANK (the ªTrusteeº) is being entered into in connection with the issuance of $11,000,000 in aggregate principal amount of Cleveland-Cuyahoga County Port Authority City Annual Appropriation Bonds, Series 2010 (City of Cleveland, Ohio ± Flats East Project) (the ªBondsº), which are being issued pursuant to a Trust Indenture, dated as of December 1, 2010 (the ªIndentureº), between the Authority and the Trustee, and a Cooperative Agreement (the ªCooperative Agreementº), dated as of December 1, 2010, by and among the Authority, the City, Flats East Development LLC (ªFlats Eastº), FED/Main Street LLC (ªFED/Main Street,º and, together with Flats East, the ªDeveloperº), and the Trustee.

A. The City, by adoption of Ordinance No. 718-10, duly adopted by the Council of the City on June 7, 2010 (the ªApproving Ordinanceº), has determined to pay Appropriation Payments to the Authority for the payment of Debt Service Charges on the Bonds and to enter into the Cooperative Agreement.

B. The City understands that (1) immediately upon issuance and delivery of the Bonds, the Original Purchaser will sell and deliver Bonds to other holders and beneficial owners; and (2) the Bonds will be transferred from time to time from holders and beneficial owners to other holders and beneficial owners who may rely upon the agreements made by the City under this Agreement.

C. As a condition to the purchase of the Bonds from the Authority and the sale of Bonds to holders and beneficial owners, the Original Purchaser is required to reasonably determine that the City, as an ªobligated personº as defined in paragraph (f)(10) of the Rule, has made an agreement for the benefit of the holders and beneficial owners of the Bonds in accordance with paragraph (b)(5)(i) of the Rule.

D. The City made an agreement in the Approving Ordinance, the terms of which were to be further described and specified in a continuing disclosure agreement, to provide or cause to be provided such financial information and operating data and notices, in such manner, as may be required for purposes of paragraph (b)(5)(i) of the Rule.

NOW THEREFORE, in consideration of the purchase of the Bonds to, and transfer of Bonds between, holders and beneficial owners from time to time, the City, the Authority, and the Trustee hereby agree, for the benefit of the holders and beneficial owners from time to time of the Bonds, as follows:

Section 1. Definitions. In addition to the words and terms defined elsewhere in this Agreement, the following words and terms as used in this Agreement have the following meanings unless another meaning is plainly intended.

ªAnnual Financial Informationº means annual financial information and operating data (historical only) of the type included in the Official Statement under the captions entitled ªFINANCIAL MATTERS,º ªSUMMARY OF GENERAL FUND ± FUND BALANCE ± GAAP BASIS,º ªTHE CITY ± MAJOR GENERAL FUND REVENUE SOURCES,º and ªCITY DEBT AND OTHER OBLIGATIONS.º

ªAnnual Reportº means the Annual Report described in and containing the information provided under Sections 3 and 4 of this Agreement.

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ªEMMAº means the MSRB's Electronic Municipal Market Access system.

ªFiscal Yearº means the twelve-month period at the end of which financial position and results of operation are determined, currently beginning January 1 and continuing through December 31, and commencing with the Fiscal Year ending December 31, 2010.

ªIndentureº means the Trust Indenture, dated as of December 1, 2010, between the Authority and the Trustee, as amended or supplemented from time to time.

ªListed Eventsº means any of the following events with respect to the Bonds:

(a) The occurrence of any the following events within the meaning of the Rule:

1. Principal and interest payment delinquencies;

2. Non-payment related defaults, if material;

3. Unscheduled draws on debt service reserves reflecting financial difficulties;

4. Unscheduled draws on credit enhancements reflecting financial difficulties;

5. Substitution of credit or liquidity providers, or their failure to perform;

6. Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status of the Bonds, or other material events affecting the tax status of the Bonds;

7. Modifications to rights of Bondholders, if material;

8. Bond calls, if material, and tender offers;

9. Defeasances;

10. Release, substitution or sale of property securing repayment of the Bonds, if material;

11. Rating changes;

12. Bankruptcy, insolvency, receivership or similar event of the obligated person, which event is considered to occur upon the occurrence of the appointment of a receiver, fiscal agent or similar officer for an obligated person in a proceeding under the U.S. Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the

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obligated person, or if such jurisdiction has been assumed by leaving the existing governing body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the obligated person;

13. The consummation of a merger, consolidation, or acquisition involving an obligated person or the sale of all or substantially all of the assets of the obligated person, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material; and

14. Appointment of a successor or additional trustee or the change of name of a trustee, if material; and

(b) Other Events:

1. The City's failure to provide the Annual Financial Information within the time specified in Section 3(a) of this Agreement, including a statement as to the date by which the City anticipates that the Annual Financial Information will be provided to the MSRB;

2. Any change in (A) the accounting principles applied in the preparation of the City's audited annual financial statements or (B) its Fiscal Year, in either case accompanied by an explanation of how to compare the financial information provided by the differing accounting standards or Fiscal Year;

3. Failure of any annual operating budget submitted to City Council to include provision for Appropriation Payments for the applicable Fiscal Year;

4. Failure by the City's fiscal officer to certify to the Authority and the Trustee by April 15 of each year that the City Council of the City has appropriated sufficient funds to enable the City to make all Appropriation Payments to be made in the applicable Fiscal Year by the City pursuant to the Cooperative Agreement;

5. The filing of any lawsuit, administrative or similar action or claim regarding the obligations of the City under the Cooperative Agreement or the Appropriation Payments;

6. The existence of any default by the City on obligations issued by or on behalf of the City, as to principal or interest, or the existence of any pending suits adversely affecting the validity of any outstanding obligations of the City; and

7. The Agreement's termination.

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ªMSRBº means the Municipal Securities Rulemaking Board.

ªOfficial Statementº means the Official Statement dated as of December 13, 2010 relating to the Bonds, including the cover page and any and all appendices, exhibits, reports, and summaries included therein or attached thereto.

ªOriginal Purchaserº means Robert W. Baird & Co., Incorporated, as original purchaser and underwriter of the Bonds, which is required to comply with the Rule in connection with its offering of the Bonds.

ªRuleº means Rule 15c2-12(b)(5) adopted by the SEC under the Securities Exchange Act of 1934, as amended from time to time.

ªSECº means the United States Securities and Exchange Commission.

Section 2. General Provisions. This Agreement is being executed and delivered by the City, the Authority, and the Trustee for the benefit of the holders and beneficial owners from time to time of the Bonds and in order to assist the Original Purchaser in complying with the Rule. Nothing herein shall limit the duties or obligations of the Trustee under the Indenture. In its actions under this Agreement, the Trustee shall be entitled to the same protection in so acting under this Agreement as it has in acting as Trustee under the Indenture.

Section 3. Provision of Annual Reports. The City shall, not later than 210 days following the end of each Fiscal Year, provide or cause to be provided to the MSRB, an Annual Report for the Fiscal Year of the City which ended on the previous December 31, which Annual Report is consistent with the requirements of Section 4 of this Agreement. The Annual Report may be submitted as a single document or as separate documents constituting a package, and may reference other information as provided in Section 4 of this Agreement. If the City fails to provide to the MSRB an Annual Report by the date set forth in subsection (a) of this Section 3, the City shall send a notice in a timely manner to the MSRB of such failure, which shall include a statement as to the date by which the City anticipates that the Annual Report will be provided.

Section 4. Content of the Annual Report. The Annual Report shall contain or incorporate by reference the Annual Financial Information and annual audited City financial statements for each Fiscal Year. If audited financial statements are not available within 210 days following the end of each such Fiscal Year, the City will provide unaudited financial statements not later than the 210th day following the end of each such Fiscal Year. This information may be included by specific reference from other documents which have previously been provided to the MSRB or to the SEC. If the document included by reference is a final Official Statement, it must be available from the MSRB.

The City expects that the audited annual financial statements will be prepared, any such statements will be available separately from the Annual Financial Information, and the accounting principles to be applied in the preparation of those financial statements will be as described in the Official Statement under ªFINANCIAL MATTERS ± Financial Reports and Examinations of Accounts.º

Section 5. Reporting of Listed Events. The City shall provide or cause to be provided in a timely manner not in excess of ten business days after the occurrence of the event, notice of any of the Listed Events to the MSRB.

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Section 6. Means of Reporting Information. Information provided by the City to the MSRB pursuant to Sections 3 and 5 shall be transmitted by in electronic format as prescribed by the MSRB, currently EMMA, and containing such identifying information as prescribed by the MSRB.

Section 7. Termination of Reporting Obligation; Sources of Payment. The obligations of the City under this Agreement shall remain in effect only for such period that (a) the Bonds are outstanding in accordance with their terms, and (b) the City remains an obligated person with respect to the Bonds within the meaning of the Rule. The obligation of the City to provide the Annual Financial Information and notices of the Listed Events shall terminate, if and when the City no longer remains an obligated person with respect to the Bonds, provided that the City shall provide notice of such termination to the MSRB and the Trustee. The performance of this Agreement shall be subject to the availability of funds and their annual appropriation to meet costs the City would be required to incur to perform it.

Section 8. Amendment; Waiver. This Agreement may be amended upon the written agreement of the City, the Authority, and the Trustee as may be necessary or appropriate to achieve its compliance with any applicable federal securities law or rule, to cure any ambiguity, inconsistency or formal defect or omission, and to address any change in circumstances arising from a change in legal requirements, change in law, or change in the identity, nature, or status of the City, or type of business conducted by the City. The City may obtain a waiver of noncompliance with any provision hereof upon the written agreement of the City, the Authority, and the Trustee. Any such amendment or waiver will not be effective unless the Agreement (as amended or taking into account such waiver) would have complied with requirements of the Rule at the time of the primary offering of the Bonds, after taking into account any applicable amendments to or official interpretations of the Rule, as well as any change in circumstances, and until the City shall have received either (a) a written opinion of bond or other qualified independent special counsel selected by the City, or determination by the Trustee, that the amendment or waiver would not materially impair the interests of holders or beneficial owners of the Bonds then outstanding, or (b) the written consent to the amendment or waiver of the holders or beneficial owners of at least a majority of the principal amount of the Bonds then outstanding. Any such amendment or waiver shall be described by the City in the next submission of Annual Financial Information following the effective date of such amendment or waiver.

Section 9. Additional Information. Nothing in this Agreement shall be deemed to prevent the City from disseminating any other information, using the means of dissemination set forth in this Agreement or any other means of communication, or including any other information in any Annual Report or providing notice of occurrence of events, in addition to that which is required by this Agreement. If the City chooses to include any information in any Annual Report or provide notice of occurrence of events which are not Listed Events in addition to that which is specifically required by this Agreement, the City shall have no obligation to update such information or include it in any future Annual Report or notice of occurrence of a Listed Event.

Section 10. Default; Remedies. This Agreement shall be solely for the benefit of the holders and beneficial owners from time to time of the Bonds. The exclusive remedy for any breach of the Agreement by the City shall be limited, to the extent permitted by law and as hereinafter provided, to a right of holders and beneficial owners or of the Trustee or the Authority to cause proceedings at law or in equity, including seeking mandamus, to be instituted and maintained to obtain the specific performance by the City of its obligations under this Agreement. Any individual holder or beneficial owner may institute and maintain, or cause to be instituted and maintained, such proceedings to require the City to provide or cause to be provided a pertinent filing if such a filing is due and has not been made. Any such proceedings to require the City to perform any other obligation under this Agreement (including any proceedings that contest the sufficiency of any pertinent filing) may be instituted and maintained by (a) a trustee appointed by the holders and beneficial owners of not less than twenty-five percent (25%) in

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principal amount of the Bonds then outstanding, which trustee may, and upon request of holders and beneficial owners of not less than twenty five percent (25%) in principal amount of the Bonds then outstanding would be required to, institute and maintain such proceedings or (b) holders and beneficial owners of not less than ten percent (10%) in principal amount of the Bonds then outstanding. Any failure of the City to comply with the provisions of this Agreement shall not be a default or failure, or an event of default under the Indenture.

Section 11. Beneficiaries. This Agreement shall inure to the benefit of the City, the Original Purchaser, the Trustee, the Authority, and the holders and beneficial owners of the Bonds, and shall create no rights in any other person or entity.

Section 12. Governing Law. This Agreement shall be governed by and interpreted in accordance with the laws of the State of Ohio; provided that, to the extent that the SEC, the MSRB or any other federal or state agency or regulatory body with jurisdiction over the Bonds shall have promulgated any rule or regulation governing the subject matter hereof, this Agreement shall be interpreted and construed in a manner consistent therewith.

Section 13. Notices. Any notices or communications to or among any of the beneficiaries to this agreement must be given as follows:

If to the City: City of Cleveland 601 Lakeside Avenue Room 104 Cleveland, Ohio 44114 Attention: Director of Finance

If to the Authority: Cleveland-Cuyahoga County Port Authority 1375 E. Ninth Street, Suite 2300 Cleveland, Ohio 44114-1786 Attention: President

If to the Trustee: The Huntington National Bank 917 Euclid Avenue, CM23 Cleveland, Ohio 44115 Attention: Corporate Trust Department

Section 14. Severability; Counterparts. If any provision hereof shall be held invalid or unenforceable by a court of competent jurisdiction, the remaining provisions hereof shall survive and continue in full force and effect. This Agreement may be executed in one or more counterparts, each and all of which shall constitute one and the same instrument.

[Balance of Page Intentionally Left Blank]

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly signed and delivered to the Original Purchaser, as part of the transcript of proceedings for the Bonds and in connection with the original delivery of the Bonds to the Original Purchaser as of December 21, 2010

CITY OF CLEVELAND, OHIO

By: Sharon Dumas Director of Finance

This Document Approved For Legal Form

Robert J. Triozzi Director of Law

By:

Debra D. Rosman Assistant Director of Law

Agreed to and Acknowledged By:

CLEVELAND-CUYAHOGA COUNTY PORT AUTHORITY

By: William D. Friedman President and CEO

Agreed to and Acknowledged By:

THE HUNTINGTON NATIONAL BANK, as Trustee

By:

Title:

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