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

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

$22,235,000 $10,745,000 REDEVELOPMENT AGENCY OF THE REDEVELOPMENT AGENCY OF THE CITY OF LONG BEACH CITY OF LONG BEACH TAXABLE RECOVERY ZONE ECONOMIC TAXABLE BUILD AMERICA BONDS, DEVELOPMENT BONDS, 2010 SERIES A 2010 SERIES B (NORTH LONG BEACH (NORTH LONG BEACH REDEVELOPMENT PROJECT) REDEVELOPMENT PROJECT)

Dated: Date of Delivery Due: August 1, as shown on the inside cover Proceeds from the sale by the Redevelopment Agency of the City of Long Beach (the “Agency”) of its Taxable Recovery Zone Economic Development Bonds, 2010 Series A (North Long Beach Redevelopment Project) (the “2010 Series A Bonds”) and its Taxable Build America Bonds, 2010 Series B (North Long Beach Redevelopment Project) (the “2010 Series B Bonds” and, together with the 2010 Series A Bonds, the “Bonds”), will be used to: (a) finance redevelopment activities of the Agency within or of benefit to the Agency’s North Long Beach Redevelopment Project, (b) make a deposit to a reserve account for the Bonds and certain parity bonds, and (c) pay the costs of issuing the Bonds. See “FINANCING PLAN” herein. The Bonds will be issued under and pursuant to an Indenture, dated as of May 1, 2002 (the “Original Indenture”), as amended and supplemented by a First Supplemental Indenture of Trust, dated as of February 1, 2005, by a Second Supplemental Indenture of Trust, dated as of February 1, 2006, and by a Third Supplemental Indenture of Trust, dated as of May 1, 2010 (the Original Indenture, as so amended and supplemented, is referred to herein as the “Indenture”), each by and between the Agency and The Bank of New York Mellon Trust Company, N.A., as trustee (the “Trustee”). The Bonds initially will be sold by the Agency to the Long Beach Bond Finance Authority (the “Authority”) for concurrent resale to the Underwriter. The Bonds are special obligations of the Agency and are payable solely from and secured by a pledge of the Tax Increment Revenues (as defined herein), and by a pledge of amounts in certain funds and accounts established under the Indenture, as further described herein. The pledge of the Tax Increment Revenues and other funds under the Indenture will be on a parity with the pledge thereof with respect to the Agency’s outstanding 2002 Bonds and 2005 Bonds, and with respect to any future Parity Debt (as such capitalized terms are defined in the Indenture). See “SECURITY FOR THE BONDS—Pledge Under the Indenture” herein. Interest on the Bonds will be payable semi-annually on each February 1 and August 1, commencing August 1, 2010. The Bonds will be issued in fully registered form without coupons and will be registered in the name of Cede & Co., as nominee for The Depository Trust Company, New York, New York (“DTC”). DTC will act as securities depository for the Bonds. Purchases of beneficial interests in the Bonds will be made in book-entry form only in denominations of $5,000 or any integral multiple thereof. Purchasers of such beneficial interests will not receive physical certificates representing their interests in the Bonds. Payment of principal of, interest and premium, if any, on the Bonds will be made directly to DTC or its nominee, Cede & Co., so long as DTC or Cede & Co. is the registered owner of the Bonds. Disbursement of such payments to the DTC Participants (as defined herein) is the responsibility of DTC and disbursement of such payments to the Beneficial Owners (as defined herein) is the responsibility of the DTC Participants, as more fully described herein. See “THE BONDS—Book-Entry System” herein. The Bonds are subject to optional and mandatory sinking account redemption prior to maturity. See “THE BONDS— Optional Redemption” and “THE BONDS—Sinking Account Redemption” herein. THE BONDS ARE SPECIAL OBLIGATIONS OF THE AGENCY PAYABLE SOLELY FROM THE TAX INCREMENT REVENUES, AS DESCRIBED HEREIN, AND AMOUNTS IN CERTAIN FUNDS AND ACCOUNTS MAINTAINED UNDER THE INDENTURE, AND ARE NOT A DEBT OF THE AUTHORITY, THE CITY OF LONG BEACH, CALIFORNIA (THE “CITY”), OR THE STATE OF CALIFORNIA (THE “STATE”) OR ANY POLITICAL SUBDIVISION OF THE STATE (OTHER THAN THE AGENCY, TO THE LIMITED EXTENT SET FORTH IN THE INDENTURE), AND NONE OF THE AUTHORITY, THE CITY OR THE STATE OR ANY POLITICAL SUBDIVISION THEREOF (OTHER THAN THE AGENCY) IS LIABLE THEREFOR. THE BONDS ARE NOT PAYABLE FROM, AND ARE NOT SECURED BY, ANY FUNDS OF THE AGENCY, OTHER THAN THE TAX INCREMENT REVENUES AND OTHER MONEYS EXPRESSLY PLEDGED PURSUANT TO THE INDENTURE. NEITHER THE MEMBERS OF THE GOVERNING BOARD OF THE AGENCY NOR ANY PERSONS RESPONSIBLE FOR THE EXECUTION OF THE BONDS ARE LIABLE PERSONALLY FOR THE PAYMENT OF THE BONDS. MATURITY SCHEDULE (see inside cover page) This cover page is not intended to be a summary of the Bonds or the security therefore. Investors are advised to read this Official Statement in its entirety to obtain information essential to the making of an informed investment decision with respect to the Bonds. The Bonds are offered when, as and if issued and accepted by the Underwriter, subject to the approval as to their legality by Quint & Thimmig LLP, San Francisco, California, Bond Counsel. Certain legal matters related to this offering will be passed upon for the Agency by the City Attorney of the City of Long Beach, acting as Counsel to the Agency, and by Quint & Thimmig LLP, San Francisco, California, which also is acting as Disclosure Counsel to the Agency for the Bonds. It is expected that the Bonds in book- entry form will be available for delivery to DTC in New York, New York on or about May 12, 2010.

STONE & YOUNGBERG

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

$22,235,000 REDEVELOPMENT AGENCY OF THE CITY OF LONG BEACH TAXABLE RECOVERY ZONE ECONOMIC DEVELOPMENT BONDS, 2010 SERIES A (NORTH LONG BEACH REDEVELOPMENT PROJECT)

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

$10,745,000 REDEVELOPMENT AGENCY OF THE CITY OF LONG BEACH TAXABLE BUILD AMERICA BONDS, 2010 SERIES B (NORTH LONG BEACH REDEVELOPMENT PROJECT)

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

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

† Copyright 2010, American Bankers Association. CUSIP® is a registered trademark of the American Bankers Association. CUSIP data herein is provided by the CUSIP Service Bureau, operated by Standard & Poor’s, a division of The McGraw-Hill Companies, Inc. This data is not intended to create a database and does not serve in any way as a substitute for the CUSIP Services Bureau. CUSIP numbers have been assigned by an independent company not affiliated with the Agency and are included solely for the convenience of the registered owners of the Bonds. Neither the Agency nor the Underwriter is responsible for the selection or uses of these CUSIP numbers, and no representation is made as to their correctness on the Bonds or as included herein. The CUSIP number for a specific maturity is subject to being changed after the delivery of the Bonds as a result of various subsequent actions including, but not limited to, a refunding in whole or in part or as a result of the procurement of secondary market portfolio insurance or other similar enhancement by investors that is applicable to all or a portion of certain maturities of the Bonds.

REDEVELOPMENT AGENCY OF THE CITY OF LONG BEACH

MEMBERS OF THE AGENCY

William Baker, Chair Diane L. Arnold, Vice Chair John Cross, Member Teer L. Strickland, Member John Thomas, Member Vivian Tobias, Member Vacant, Member

AGENCY STAFF

Amy Bodek, Executive Director/Redevelopment Bureau Manager Lisa Fall, Assistant Executive Director/Redevelopment Administrator David S. Nakamoto, Treasurer Larry G. Herrera, Secretary

SPECIAL SERVICES

Keyser Marston Associates, Inc. Los Angeles, California Fiscal Consultant

Fieldman Rolapp & Associates Irvine, California Financial Advisor

Quint & Thimmig LLP, San Francisco, California Bond Counsel and Disclosure Counsel

The Bank of New York Mellon Trust Company, N.A. Los Angeles, California Trustee

-i- GENERAL INFORMATION ABOUT THIS OFFICIAL STATEMENT

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

This Official Statement is not to be construed as a contract with the purchasers of the Bonds. Statements contained in this Official Statement which involve estimates, forecasts or matters of opinion, whether or not expressly so described herein, are intended solely as such and are not to be construed as representations of fact. The summaries and references to documents, statutes and constitutional provisions referred to herein do not purport to be comprehensive or definitive and are qualified in their entireties by reference to each such document, statute and constitutional provision.

The information set forth herein has been obtained from sources which are believed to be reliable but such information is not guaranteed as to accuracy or completeness. The information and expressions of opinions herein are subject to change without notice and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the Agency since the date hereof.

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

While the Agency and the City of Long Beach maintain internet websites for various purposes, none of the information on such websites is incorporated by reference herein or intended to assist investors in making any investment decision or to provide any continuing information with respect to the Bonds.

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

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

-ii- TABLE OF CONTENTS

INTRODUCTION...... 1 Annual Tax Receipts to Tax Levy ...... 32 General ...... 1 Appeals of Assessed Values ...... 32 Purpose of Issuance...... 1 Proposition 13 Inflationary Adjustments ...... 33 The City, the Agency and the Authority...... 2 Proposition 8 Reassessments ...... 33 The Redevelopment Project...... 2 Pass-Through Payments ...... 34 Tax Allocation Financing ...... 3 Tax Revenue Projections and Debt Service The Bonds ...... 3 Coverage...... 35 Source of Payment for the Bonds; Parity BONDOWNERS’ RISKS...... 39 Obligations...... 4 Limited Obligations ...... 39 Reserve Account...... 4 Reduction in Assessed Value ...... 39 Additional Parity Debt...... 5 Concentration of Ownership...... 40 Fiscal Consultant’s Report...... 5 Reduction in Inflationary Rate...... 40 Risk Factors...... 5 Real Estate and General Economic Risks ...... 40 Continuing Disclosure...... 5 Assessment Appeals...... 41 Professionals Involved in the Offering...... 6 Investment of Tax Increment Revenues Forward-Looking Statements...... 6 and Other Funds...... 41 Other Matters ...... 6 Certain Bankruptcy Risks ...... 42 Other Information...... 6 Risk of Earthquake or Other Disaster ...... 42 FINANCING PLAN...... 6 Hazardous Substances...... 42 ESTIMATED SOURCES AND USES OF FUNDS...... 7 Property Tax Payment Delinquencies...... 43 DEBT SERVICE SCHEDULE ...... 8 Change in Law ...... 43 THE BONDS ...... 8 Additional Obligations...... 43 General Provisions ...... 8 Proposition 8 Adjustments ...... 43 Book-Entry System...... 9 Levy and Collection of Taxes ...... 43 Designation of Bonds as Recovery Zone State Budget; ERAF & SERAF Shifts...... 44 Economic Development Bonds and Build Secondary Market ...... 46 America Bonds ...... 10 CONSTITUTIONAL AND STATUTORY Optional Redemption ...... 10 PROVISIONS AFFECTING TAX REVENUES...... 46 Sinking Account Redemption ...... 11 Property Tax Limitations-Article XIIIA...... 46 Purchase In Lieu of Redemption ...... 12 Challenges to Article XIIIA...... 47 Notice of Redemption ...... 12 Implementing Legislation...... 47 Selection of Bonds for Redemption ...... 12 Property Tax Collection Procedures ...... 47 Effect of Redemption...... 13 Appropriations Limitations-Article XIIIB ...... 49 SECURITY FOR THE BONDS...... 13 State Board of Equalization and Property Limited Obligations ...... 13 Assessment Practices ...... 49 Tax Increment Revenues ...... 13 Exclusion of Tax Increment Revenues for Pledge Under the Indenture...... 15 General Obligation Bonds Debt Service...... 49 Parity Lien on Tax Increment Revenues...... 16 Proposition 218 ...... 49 Special Fund; Deposit of Tax Increment AB 1290 ...... 50 Revenues ...... 17 AB 1389 Payments...... 50 Debt Service Fund ...... 17 Future Initiatives ...... 50 Reserve Account...... 19 Low and Moderate Income Housing...... 50 Issuance of Parity Debt...... 20 Statement of Indebtedness ...... 51 Issuance of Subordinate Debt ...... 20 CERTAIN LEGAL MATTERS...... 51 Investments...... 21 Legal Opinions...... 51 THE AGENCY...... 21 Enforceability of Remedies ...... 52 General ...... 21 RATING...... 52 Agency Financial Statements...... 22 CONTINUING DISCLOSURE...... 52 THE PROJECT AREA...... 22 ABSENCE OF LITIGATION...... 52 General ...... 22 TAX MATTERS...... 53 Redevelopment Plan Limitations...... 25 FISCAL CONSULTANT...... 53 Outstanding Indebtedness...... 25 FINANCIAL ADVISOR...... 53 Recent Activity ...... 26 UNDERWRITING...... 53 Assessed Valuation ...... 27 MISCELLANEOUS...... 54 Possessory Interests...... 31

APPENDIX A SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE APPENDIX B GENERAL INFORMATION REGARDING THE CITY OF LONG BEACH APPENDIX C AUDITED FINANCIAL REPORT OF THE AGENCY FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 APPENDIX D FISCAL CONSULTANT’S REPORT APPENDIX E FORM OF OPINION OF BOND COUNSEL APPENDIX F FORM OF CONTINUING DISCLOSURE AGREEMENT APPENDIX G BOOK-ENTRY ONLY SYSTEM

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-iv-

OFFICIAL STATEMENT

$22,235,000 $10,745,000 REDEVELOPMENT AGENCY OF THE REDEVELOPMENT AGENCY OF THE CITY OF LONG BEACH CITY OF LONG BEACH TAXABLE RECOVERY ZONE ECONOMIC TAXABLE BUILD AMERICA BONDS, DEVELOPMENT BONDS, 2010 SERIES A 2010 SERIES B (NORTH LONG BEACH (NORTH LONG BEACH REDEVELOPMENT PROJECT) REDEVELOPMENT PROJECT)

INTRODUCTION

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

General

This introduction is not a summary of this Official Statement. It is only a brief description of and guide to, and is qualified by, more complete and detailed information contained in the entire Official Statement, including the cover page and appendices hereto, and the documents summarized or described herein. A full review should be made of the entire Official Statement. The offering of the Bonds to potential investors is made only by means of the entire Official Statement.

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

Purpose of Issuance

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

-1- Bonds as “Build America Bonds” for purposes of the Internal Revenue Code of 1986, as amended (the “Tax Code”). See “THE BONDS—Designation of Bonds as Recovery Zone Economic Development Bonds and Build America Bonds.” The Bonds initially will be sold by the Agency to the Long Beach Bond Finance Authority (the “Authority”), for concurrent resale to Stone & Youngberg LLC, the underwriter for the Bonds. See “ESTIMATED SOURCES AND USES OF FUNDS” and “FINANCING PLAN.”

The City, the Agency and the Authority

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

In 1961, the City, acting pursuant to the Redevelopment Law, activated the Agency by an ordinance of the City Council of the City. Seven persons comprising the Agency’s governing body (the “Agency Board”) are appointed by the Mayor and affirmed by the City Council of the City. Although the Agency is an entity distinct from the City, the City provides staff support for the Agency pursuant to a cooperation agreement between the City and the Agency. See “THE AGENCY.” The Bonds are limited obligations of the Agency, payable solely from the Tax Increment Revenues and amounts in the funds and accounts pledged therefor under the Indenture. See “SECURITY FOR THE BONDS—Limited Obligations.”

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

The Redevelopment Project

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

The total secured and unsecured assessed valuation of taxable property in the Project Area in Fiscal Year 2009-10, based upon information obtained by the Agency’s Fiscal

-2- Consultant for the Redevelopment Project from the Los Angeles County Assessor’s Office, is $7,505,997,656, and is $4,409,602,329 greater than the $3,096,395,327 adjusted assessed valuation in the base year (1995-96). See “THE PROJECT AREA—Assessed Valuation.” Assessed valuations in the Project Area are subject to numerous risks which could result in decreases from the assessed valuations reported for Fiscal Year 2009-10. See “BONDOWNERS’ RISKS.” Also see “THE PROJECT AREA” and APPENDIX D—FISCAL CONSULTANT’S REPORT.

Tax Allocation Financing

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

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

The Bonds

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

The Bonds will be issued in denominations of $5,000 each or integral multiples thereof. Interest on the Bonds will be payable on February 1 and August 1, commencing August 1, 2010. Principal of and interest on the Bonds will be payable by the Trustee to The Depository Trust Company (“DTC”) which will be responsible for remitting such principal and interest to the DTC participants which will in turn be responsible for remitting such principal and interest to the beneficial owners of the Bonds. No physical distribution of the Bonds will be made to the public. See “THE BONDS—Book-Entry System.”

-3- Source of Payment for the Bonds; Parity Obligations

The Bonds are special obligations of the Agency and are payable from and secured by a pledge of Tax Increment Revenues and amounts in certain funds and accounts held by the Trustee under the Indenture. The term “Tax Increment Revenues” is defined in the Indenture as all taxes annually allocated and paid to the Agency with respect to the Project Area pursuant to Article 6 of Chapter 6 (commencing with Section 33670) of the Redevelopment Law and Section 16 of Article XVI of the Constitution of the State, including all payments, subventions and reimbursements (if any) to the Agency specifically attributable to ad valorem taxes lost by reason of tax exemptions and tax rate limitations; but excluding (a) amounts of such taxes required to be deposited into the Low and Moderate Income Housing Fund of the Agency in any Fiscal Year pursuant to Section 33334.3 of the Redevelopment Law, (b) the Business Inventory Tax Subvention, and (c) amounts required by the Redevelopment Law to be paid to other taxing agencies to the extent the obligation to pay such amounts is not subordinate to the Agency’s obligation to repay the Bonds. See “SECURITY FOR THE BONDS—Tax Increment Revenues.”

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

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

Reserve Account

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

-4- funds currently on deposit in the Reserve Account, to an amount equal to the Reserve Requirement in effect immediately following the issuance of the Bonds. Amounts in the Reserve Account are to be used and withdrawn (i) for the purpose of making transfers to the trustee for the 2002 Authority Bonds (as hereafter defined) in the event and to the extent of a delinquency in payment of the scheduled debt service on the 2002 Bonds, (ii) for the purpose of paying debt service due on the 2005 Bonds, the Bonds and any future Parity Debt to the extent amounts in the Interest Account or the Principal Account are not sufficient for that purpose, or (iii) to retire all of the Outstanding Agency Bonds.

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

Additional Parity Debt

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

Fiscal Consultant’s Report

Keyser Marston Associates, Inc., Los Angeles, California (the “Fiscal Consultant”) has been retained to prepare a report (the “Fiscal Consultant’s Report”) in connection with the issuance of the Bonds. See APPENDIX D—FISCAL CONSULTANT’S REPORT.

Risk Factors

Prospective investors should review this Official Statement and the appendices hereto in their entirety and should consider certain risk factors associated with the purchase of the Bonds, some of which have been summarized in the section herein entitled “BONDOWNERS’ RISKS.”

Continuing Disclosure

The Agency will covenant in a Continuing Disclosure Agreement to prepare and deliver an annual report to the Municipal Securities Rulemaking Board’s Electronic Municipal Market Access (EMMA) system, and to provide notice of the occurrence of certain events. See “CONTINUING DISCLOSURE” and APPENDIX F—FORM OF CONTINUING DISCLOSURE AGREEMENT.

-5- Professionals Involved in the Offering

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

Forward-Looking Statements

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

Other Matters

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

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

Other Information

Copies of the Indenture are available for inspection during business hours at the corporate trust office of the Trustee.

FINANCING PLAN

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

-6- located near the Project Area, including an emergency resource center and related traffic and offsite improvements. The Agency awarded a contract for construction of the fire station on March 15, 2010, construction work has commenced and the facility is expected to be completed by the Summer of 2011. Bond proceeds are also expected to be used to pay a portion of the costs of the following: (i) the renovation of an existing building adjacent to the Project Area for use as a police station, (ii) improvements to Long Beach Boulevard in and near the Project Area, (iii) median improvements to various other roadways within or in the vicinity of the Project Area, (iv) planning, design and construction of a new library and community center in the vicinity of the Project Area, (v) the construction of a new 3.3 acre public park, including soccer fields, restrooms, a parking lot and other related improvements; and (vi) other capital improvements within or of benefit to the Project Area.

Projects funded with proceeds of the 2010 Series A Bonds will promote development or other economic activity in the Long Beach Recovery Zone (the area within the City limits) designated by the Agency. See “THE BONDS—Designation of Bonds as Recovery Zone Economic Development Bonds and Build America Bonds.” None of the improvements financed with proceeds of the Bonds will in any way be pledged as security for the Bonds. In any event, the obligation of the Agency to use the Tax Increment Revenues to repay the Bonds is not in any way dependent upon the completion of the any of the improvements that may be financed with proceeds of the Bonds.

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

ESTIMATED SOURCES AND USES OF FUNDS

The following table sets forth a summary of the estimated sources and uses of funds associated with the issuance and sale of the Bonds.

2010 2010 Series A Bonds Series B Bonds Total Sources of Funds Principal Amount of Bonds $22,235,000.00 $10,745,000.00 $32,980,000.00 Less: Underwriters’ Discount (85,182.28) (41,164.10) (126,346.38) Total Sources $22,149,817.72 $10,703,835.90 $32,853,653.62

Uses of Funds Deposit to Redevelopment Fund(1) $20,224,687.17 $9,775,312.83 $30,000,000.00 Deposit to Reserve Account(2) 1,752,875.78 847,072.19 2,599,947.97 Deposit to Costs of Issuance Fund(3) 172,254.77 81,450.88 253,705.65 Total Uses $22,149,817.72 $10,703,835.90 $32,853,653.62

(1) Expected to be used to pay costs of improvements within or of benefit to the Project Area. See “FINANCING PLAN.” (2) The amounts necessary, together with funds on deposit in the Reserve Account, to increase the amount on deposit in the Reserve Account to the amount of the Reserve Requirement in effect immediately following the issuance of the Bonds. See “SECURITY FOR THE BONDS—Reserve Account.” (3) To be used to pay the fees and expenses of the Trustee, the Fiscal Consultant, the Financial Advisor, Bond Counsel and Disclosure Counsel, printing expenses, rating agency fees and other costs incurred in connection with the issuance of the Bonds.

-7- DEBT SERVICE SCHEDULE

The following table sets forth the scheduled annual debt service for the Bonds, assuming no redemption of the Bonds other than mandatory sinking payment redemptions.

Bond Year 2010 Series A Bonds 2010 Series B Bonds Total Annual Ending August 1 Bond Principal Bond Interest(2) Bond Principal Bond Interest(3) Debt Service 2010 $ 404,299.49 $ 147,373.80 $ 551,673.29 2011 1,842,377.40 $ 590,000.00 671,576.80 3,103,954.20 2012 1,842,377.40 595,000.00 657,499.40 3,094,876.80 2013 1,842,377.40 610,000.00 638,108.36 3,090,485.76 2014 1,842,377.40 625,000.00 613,690.06 3,081,067.46 2015 1,842,377.40 645,000.00 583,690.06 3,071,067.46 2016 1,842,377.40 665,000.00 549,827.56 3,057,204.96 2017 1,842,377.40 690,000.00 511,018.16 3,043,395.56 2018 1,842,377.40 720,000.00 466,954.76 3,029,332.16 2019 1,842,377.40 755,000.00 418,693.16 3,016,070.56 2020 1,842,377.40 785,000.00 366,198.00 2,993,575.40 2021 1,842,377.40 825,000.00 310,046.96 2,977,424.36 2022 1,842,377.40 865,000.00 249,384.70 2,956,762.10 2023 1,842,377.40 905,000.00 184,483.76 2,931,861.16 2024 1,842,377.40 950,000.00 115,224.10 2,907,601.50 2025 $ 480,000.00 1,842,377.40 520,000.00 41,095.60 2,883,473.00 2026 1,045,000.00(1) 1,804,443.00 2,849,443.00 2027 1,090,000.00(1) 1,719,693.50 2,809,693.50 2028 1,140,000.00(1) 1,631,294.50 2,771,294.50 2029 1,190,000.00(1) 1,538,840.50 2,728,840.50 2030 1,245,000.00(1) 1,442,331.50 2,687,331.50 2031 1,300,000.00(1) 1,341,362.00 2,641,362.00 2032 1,360,000.00(1) 1,232,682.00 2,592,682.00 2033 1,420,000.00(1) 1,118,986.00 2,538,986.00 2034 1,490,000.00(1) 1,000,274.00 2,490,274.00 2035 1,555,000.00(1) 875,710.00 2,430,710.00 2036 1,630,000.00(1) 745,712.00 2,375,712.00 2037 1,700,000.00(1) 609,444.00 2,309,444.00 2038 1,780,000.00(1) 467,324.00 2,247,324.00 2039 1,860,000.00(1) 318,516.00 2,178,516.00 2040 1,950,000.00(1) 163,020.00 2,113,020.00 Totals $22,235,000.00 $44,049,593.49 $10,745,000.00 $6,524,865.24 $83,554,458.73

(1) Indicates mandatory sinking payment installments. (2) The Agency expects to receive a cash subsidy payment from the U.S. Treasury equal to 45% of the interest payable on the 2010 Series A Bonds. No assurance can be given that any such subsidy will be received, and any subsidy that is received by the Agency is not pledged to the payment of the Bonds. See “THE BONDS— Designation of Bonds as Recovery Zone Economic Development Bonds and Build America Bonds” below. (3) The Agency expects to receive a cash subsidy payment from the U.S. Treasury equal to 35% of the interest payable on the 2010 Series B Bonds. No assurance can be given that any such subsidy will be received, and any subsidy that is received by the Agency is not pledged to the payment of the Bonds. See “THE BONDS— Designation of Bonds as Recovery Zone Economic Development Bonds and Build America Bonds” below.

THE BONDS

General Provisions

The Bonds will be dated their date of delivery, and will bear interest (calculated on the basis of a 360-day year comprised of twelve 30-day months) at the rates and mature in the amounts and on the dates set forth on the inside cover page of this Official Statement. The

-8- Bonds will be issued as fully registered Bonds, without coupons, in the denomination of $5,000 each or any integral multiple thereof (except as required in connection with the redemption of Bonds of a maturity, as described under the heading “THE BONDS—Selection of Bonds for Redemption” below). The Trustee will maintain at its office books for the registration, exchange and transfer of the Bonds.

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

Interest on any Bond which is not punctually paid or duly provided for on any Interest Payment Date shall be payable to the person in whose name the ownership of such Bond is registered on the Registration Books of the Trustee at the close of business on a special record date for the payment of such defaulted interest to be fixed by the Trustee, notice of which shall be given to such Owner not less than ten days prior to such special record date.

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

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

Book-Entry System

The Bonds will be issued as one fully registered bond without coupons for each maturity of each series of the Bonds and, when issued, will be registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York (“DTC”). DTC will act as securities depository of the Bonds. Individual purchases may be made in book-entry form only, in the principal amount of $5,000 and integral multiples thereof for each maturity. Purchasers will not receive certificates representing their interest in the Bonds purchased. Principal and interest will be paid to DTC, which will in turn remit such principal and interest

-9- to its participants for subsequent dispersal to the beneficial owners of the Bonds as described herein. So long as Cede & Co., as the nominee of DTC, is the registered owner of all of the Bonds, references herein to the holders or owners of the Bonds will mean Cede & Co. and will not mean the Beneficial Owners of the Bonds. See APPENDIX G—“BOOK ENTRY ONLY SYSTEM.”

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

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

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

Optional Redemption

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

The 2010 Series B Bonds maturing on or after August 1, 2021, are subject to redemption, at the option of the Agency, any date on or after August 1, 2020, as a whole, or in part among such maturities and within any specific maturity as provided in the Indenture (see “THE BONDS—Selection of Bonds for Redemption”), from any available source of funds at a redemption price equal to the principal amount of the 2010 Series B Bonds to be redeemed, together with accrued interest thereon to the date fixed for redemption, without premium.

-10- In the case of any optional redemption of the Bonds, the notice of redemption shall state that the redemption is conditioned upon receipt by the Trustee of sufficient moneys to redeem the Bonds on the anticipated redemption date, and that the optional redemption shall not occur if by no later than the scheduled redemption date sufficient moneys to redeem the Bonds have not been deposited with the Trustee. In the event that the Trustee does not receive sufficient funds by the scheduled optional redemption date to so redeem the Bonds to be optionally redeemed, the Trustee shall send written notice to the owners of the Bonds, to the Securities Depositories and to one or more of the Information Services to the effect that the redemption did not occur as anticipated, and the Bonds for which notice of optional redemption was given shall remain Outstanding for all purposes of the Indenture.

Sinking Account Redemption

The 2010 Series A Bonds maturing on August 1, 2030 are subject to mandatory redemption in part, as provided in the Indenture (see “THE BONDS—Selection of Bonds for Redemption”), prior to maturity from scheduled sinking fund payments on each August 1 of the years and in the principal amounts as follows, at a redemption price equal to the principal amount thereof to be redeemed, plus accrued interest to the date of redemption, without premium:

2010 Series A Bonds Maturing August 1, 2030 Sinking Account Redemption Date Principal Amount (August 1) to be Redeemed 2026 $1,045,000 2027 1,090,000 2028 1,140,000 2029 1,190,000 2030 1,245,000†

† Final maturity.

The 2010 Series A Bonds maturing on August 1, 2040 are subject to mandatory redemption in part, as provided in the Indenture (see “THE BONDS—Selection of Bonds for Redemption”), prior to maturity from scheduled sinking fund payments on each August 1 of the years and in the principal amounts as follows, at a redemption price equal to the principal amount thereof to be redeemed, plus accrued interest to the date of redemption, without premium:

2010 Series A Bonds Maturing August 1, 2040 Sinking Account Redemption Date Principal Amount (August 1) to be Redeemed 2031 $1,300,000 2032 1,360,000 2033 1,420,000 2034 1,490,000 2035 1,555,000 2036 1,630,000 2037 1,700,000 2038 1,780,000 2039 1,860,000 2040 1,950,000†

† Final maturity.

-11- Purchase In Lieu of Redemption

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

Notice of Redemption

Notice of redemption shall be mailed by the Trustee not less than thirty (30) days prior to the redemption date to the registered owners of the Bonds to be redeemed at the address of such owner shown on the Bond registration books maintained by the Trustee and to the Securities Depositories and to one or more Information Services designated in writing by the Agency to the Trustee; provided, however, that neither failure of any Bondowner to receive any such notice nor any defect therein shall affect the validity of the proceedings for the redemption of such Bonds or the cessation of the accrual of interest thereon. Such notice shall state the redemption date and the redemption price, shall designate the CUSIP number of the Bonds to be redeemed, shall state the individual number of each Bond to be redeemed or state that all Bonds between two stated numbers (both inclusive) or shall state that all of the Bonds Outstanding of one or more maturities of a series are to be redeemed, and shall require that such Bonds be then surrendered at the Office of the Trustee for redemption at the said redemption price, giving notice also that further interest on the Bonds to be redeemed will not accrue from and after the date fixed for redemption.

Selection of Bonds for Redemption

Whenever provision is made in the Indenture for the redemption of less than all of the Bonds, unless otherwise provided in the Indenture, the Agency shall determine the maturities to be redeemed by written notice to the Trustee.

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

-12-

Effect of Redemption

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

SECURITY FOR THE BONDS

Limited Obligations

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

Tax Increment Revenues

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

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

(1) To Taxing Agencies: The portion of the taxes that would be produced by the rate upon which the tax is levied each year by or for each of the Taxing Agencies upon the total sum of the assessed value of the taxable property in the Project Area as shown

-13- upon the assessment roll used in connection with the taxation of such property by such Taxing Agency last equalized before the establishment of the Project Area will be allocated to, and when collected will be paid into the funds of, the respective Taxing Agencies as taxes by or for those Taxing Agencies.

(2) To the Agency: Except as provided in (3) below, the portion of such levied taxes each year in excess of the amount referred to in (1) above will be allocated to, and when collected will be paid into a special fund of, the Agency to the extent necessary to pay indebtedness of the Agency, including but not limited to its obligation to repay the Bonds, the Outstanding Parity Bonds and any Parity Debt that may be issued by the Agency.

(3) To Taxing Agencies: The portion of the taxes identified in (2) above that is attributable to a tax rate levied by a Taxing Agency for the purpose of producing revenues in an amount sufficient to make annual repayments of principal of, and the interest on, any bonded indebtedness for the acquisition or improvement of real property approved by the voters of the Taxing Agency on or after January 1, 1989, will be allocated to, and when collected shall be paid into, the fund of the Taxing Agency.

Housing Set-Aside Amounts. Sections 33334.2 and 33334.3 of the Redevelopment Law require each redevelopment agency to set aside not less than 20% of all tax increment revenues allocated to the redevelopment agency in a low and moderate income housing fund (the “Low and Moderate Income Housing Fund”) to be expended for authorized low and moderate income housing purposes. Amounts on deposit in the Low and Moderate Income Housing Fund may also be applied to pay debt service on bonds, loans or advances used to provide financing for such low and moderate income housing purposes. No portion of the proceeds of the Bonds is expected to be deposited in the Low and Moderate Income Housing Fund; and the Bonds and the Outstanding Parity Bonds are not secured by or payable from any amounts deposited in the Low and Moderate Income Housing Fund.

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

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

Possible Limitations on Tax Increment Revenues. The Agency has no power to levy and collect property taxes, and any property tax limitation, legislative measure, voter initiative or provisions of additional sources of income to Taxing Agencies that have the effect of reducing the property tax rate could reduce the amount of Tax Increment Revenues that would

-14- otherwise be available to pay the Agency's obligations including the principal of, premium (if any) and interest on the Bonds. Likewise, broadened property tax exemptions could have a similar effect. See “BONDOWNERS' RISKS” and “CONSTITUTIONAL AND STATUTORY PROVISIONS AFFECTING TAX REVENUES.”

Pledge Under the Indenture

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

The term “Tax Increment Revenues” is defined in the Indenture as all taxes annually allocated and paid to the Agency with respect to the Project Area pursuant to Article 6 of Chapter 6 (commencing with Section 33670) of the Redevelopment Law and Section 16 of Article XVI of the Constitution of the State, including all payments, subventions and reimbursements (if any) to the Agency specifically attributable to ad valorem taxes lost by reason of tax exemptions and tax rate limitations; but excluding (a) amounts of such taxes required to be deposited into the Low and Moderate Income Housing Fund of the Agency in any Fiscal Year pursuant to Section 33334.3 of the Redevelopment Law, (b) the Business Inventory Tax Subvention, and (c) amounts required by the Redevelopment Law to be paid to other taxing agencies to the extent the obligation to pay such amounts is not subordinate to the Agency’s obligation to repay the Outstanding Agency Bonds. As described above under the subheading “Tax Increment Revenues,” the Tax Increment Revenues do not include any amounts required to be deposited to the Low and Moderate Income Housing Fund, or any amounts to be paid by the Agency to other Taxing Agencies.

The current Tax Increment Revenues are not subject to the pledge and lien of any indebtedness of the Agency other than the Bonds, the Outstanding Parity Bonds and any Parity Debt that may hereafter be issued in accordance with the Indenture, and certain other obligations which are made or are by their terms subordinate to the payment of the Bonds. See “CONSTITUTIONAL AND STATUTORY PROVISIONS AFFECTING TAX REVENUES” and “THE PROJECT AREA—Outstanding Indebtedness.” However, the Agency has entered into an agreement with the Board of Harbor Commissioners with respect to development occurring in a portion of the Port located in the Project Area pursuant to which the Agency has pledged certain future tax increment revenues arising by reason of such development to the repayment of public improvement costs, which pledge is subordinate to the pledge of Tax Increment Revenues securing the Outstanding Parity Bonds, but is senior to the pledge of Tax Increment Revenues securing the repayment of the Bonds and any future Parity Debt. See the third paragraph under the heading “THE PROJECT AREA—Outstanding Indebtedness.”

-15- Parity Lien on Tax Increment Revenues

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

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

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

-16- The annual Additional 2005 Interest Amounts vary from as much as $595,782.40 in the Fiscal Year ending August 1, 2020, to only $142,935.00 in the Fiscal Years that end in 2021, 2022, 2023 and 2024, with no such amounts payable in years subsequent to 2024. No assurance can be given that any Additional 2005 Interest Amounts will be remitted to the Trustee for deposit to the Interest Account, although to date all Additional 2005 Interest Amounts paid by the Agency have been so remitted back to the Trustee, have been deposited to the Interest Account under the Indenture and have been used to pay a portion of the interest due on the outstanding Parity Bonds.

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

Special Fund; Deposit of Tax Increment Revenues

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

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

Debt Service Fund

There is established under the Indenture a fund known as the “Debt Service Fund,” to be held by the Trustee. All moneys in the Debt Service Fund are required to be set aside by the Trustee in the following respective special accounts within the Debt Service Fund (each of

-17- which is created under the Indenture and each of which the Trustee agrees in the Indenture to cause to be maintained), in the following order of priority: (i) Interest Account; (ii) Principal Account; (iii) Sinking Account; (iv) Reserve Account; and (v) Redemption Account. All moneys in each of such accounts shall be held in trust by the Trustee and shall be applied, used and withdrawn only for the purposes authorized in the Indenture and described below. So long as any Bonds are outstanding, the Agency shall not have any beneficial right or interest in the moneys on deposit in the Debt Service Fund, except as may be provided in the Indenture.

Interest Account. Five (5) days before each date on which interest on the Bonds becomes due and payable, the Agency shall withdraw from the Special Fund and transfer to the Trustee for deposit in the Interest Account an amount which, when added to the amount then on deposit in the Interest Account, will be equal to the aggregate amount of the interest becoming due and payable on the Bonds, the Outstanding Parity Bonds and on any Parity Debt theretofore issued (collectively, the “Outstanding Agency Bonds”) on such date. All moneys in the Interest Account shall be used and withdrawn by the Trustee solely for the purpose of paying the interest on the Outstanding Agency Bonds as it shall become due and payable (including accrued interest on any Outstanding Agency Bonds purchased or redeemed prior to maturity pursuant to the Indenture). In addition to the deposits and transfers referred to above, the Trustee shall deposit to the Interest Account (i) any amount received by it from the trustee for the 2005 Authority Bonds or the 2006 Authority Bonds as described under the heading “SECURITY FOR THE BONDS—Parity Lien on Tax Increment Revenues” above, and (ii) amounts transferred from the Reserve Account that are in excess of the then Reserve Requirement as described under the heading “SECURITY FOR THE BONDS—Reserve Account” below.

Principal Account. Five (5) days before each date on which principal of the Outstanding Agency Bonds becomes due and payable at maturity, the Agency shall withdraw from the Special Fund and transfer to the Trustee for deposit in the Principal Account an amount which, when added to the amount then on deposit in the Principal Account, will be equal to the amount of principal coming due and payable on such date on the Outstanding Agency Bonds. All moneys in the Principal Account shall be used and withdrawn by the Trustee solely for the purpose of paying the principal of the Outstanding Agency Bonds upon the maturity thereof.

Sinking Account. Five (5) days before each date on which any Outstanding Agency Bonds that are Term Bonds become subject to mandatory sinking account redemption, the Agency shall withdraw from the Special Fund and transfer to the Trustee for deposit in the Sinking Account an amount which, when added to the amount then contained in the Sinking Account, will be equal to the aggregate principal amount of the Outstanding Agency Bonds that are Term Bonds subject to mandatory sinking account redemption on such date. All moneys on deposit in the Sinking Account shall be used and withdrawn by the Trustee for the sole purpose of paying the principal of the Outstanding Agency Bonds that are Term Bonds as it shall become due and payable upon the mandatory sinking account redemption thereof.

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

-18- paying debt service due on any other Outstanding Agency Bonds to the extent that amounts in the Interest Account or the Principal Account are not sufficient for such purpose, or (iii) at any time for the retirement of all then Outstanding Agency Bonds consistent with the provisions of the Indenture. So long as no Event of Default shall have occurred and be continuing, any amount in the Reserve Account in excess of the Reserve Requirement three (3) Business Days preceding each Interest Payment Date shall be withdrawn from the Reserve Account by the Trustee and deposited in the Interest Account on or before the Interest Payment Date.

Redemption Account. Five (5) days before each date on which Outstanding Agency Bonds are subject to redemption, other than mandatory sinking account redemption of Outstanding Agency Bonds that are Term Bonds, the Agency shall withdraw from the Special Fund and transfer to the Trustee for deposit in the Redemption Account an amount required to pay the principal of and premium, if any, on the Outstanding Agency Bonds to be so redeemed on such date. All moneys in the Redemption Account shall be used and withdrawn by the Trustee solely for the purpose of paying the principal of and premium, if any, on the Outstanding Agency Bonds upon the redemption thereof, on the date set for such redemption, other than mandatory sinking account redemptions of Outstanding Agency Bonds that are Term Bonds.

Reserve Account

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

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

-19- At least fifteen (15) days prior to the expiration of any Qualified Reserve Account Credit Instrument, the Agency is obligated either (i) to replace such Qualified Reserve Account Credit Instrument with a new Qualified Reserve Account Credit Instrument, or (ii) to deposit or cause to be deposited with the Trustee an amount of funds such that the amount on deposit in the Reserve Account is equal to the Reserve Requirement (without taking into account such expiring Qualified Reserve Fund Credit Instrument). In the event that the Agency fails to take action as described in clause (i) or (ii) of the preceding sentence, the Trustee will, prior to the expiration thereof, draw upon the Qualified Reserve Account Credit Instrument in full and deposit the proceeds of such draw in the Reserve Account.

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

Issuance of Parity Debt

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

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

Issuance of Subordinate Debt

The Agency may incur subordinate debt in the form of tax allocation bonds, or other debt secured by a pledge of Tax Increment Revenues subordinate to the pledge thereof under

-20- the Indenture (the “Subordinated Debt”); however, the Indenture requires that the issuance of any Subordinate Debt (after taking into account the Outstanding Agency Bonds and all other obligations of the Agency payable from Tax Increment Revenues) shall not cause the Agency to exceed any applicable Plan Limitations and the Agency will at all times that the Bonds are outstanding have sufficient capacity to receive Tax Increment Revenues in an amount at least equal to the remaining Debt Service on the Outstanding Agency Bonds. See “THE REDEVELOPMENT PROJECT AREA—Plan Limitations” and APPENDIX A—SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE.

Investments

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

THE AGENCY

General

In 1961, pursuant to Ordinance No. C4184 of the City Council and California Health and Safety Code Section 33000 et seq., entitled “Community Redevelopment Law,” the City activated the Agency. The Agency is governed by a seven-member board (the “Agency Board”) appointed by the Mayor and confirmed by the City Council. Project Area Committees composed of local citizens, business people and civic organization representatives provide the Agency with advice on the various redevelopment projects in the City.

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

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

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

-21- structures or other improvements to be publicly owned and operated, to the extent that such improvements are of benefit to the applicable redevelopment project areas and no other reasonable means of financing is available.

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

Agency Financial Statements

The annual financial report of the Agency for the fiscal year ended September 30, 2009 is included as Appendix C to this Official Statement. The financial statements referred to above have been audited by KPMG LLP, Long Beach, California, independent certified public accountants, and by the City Auditor. The Agency has not requested nor did the Agency obtain permission from KPMG LLP to include the audited financial statements as an appendix to this Official Statement. In addition, KPMG LLP has not performed any post-audit review of the financial condition or operations of the Agency and has not reviewed this Official Statement.

THE PROJECT AREA

General

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

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

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

-22-

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

The heights of buildings, architectural controls, and other development and design controls necessary for proper development within the Project Area are established by the Redevelopment Plan and the City Municipal Code.

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

-23- NORTH LONG BEACH REDEVELOPMENT PROJECT AREA

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-24-

Redevelopment Plan Limitations

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

TABLE 1 NORTH LONG BEACH REDEVELOPMENT PROJECT REDEVELOPMENT PLAN LIMITATIONS

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

Source: Fiscal Consultant’s Report in Appendix D.

The Agency currently may not receive, and may not repay indebtedness with the proceeds from property taxes received pursuant to Section 33670 of the Redevelopment Law and the Redevelopment Plan, beyond the date indicated in the table above, except to repay debt to be paid from the Low and Moderate Income Housing Fund established pursuant to Section 33334.3 of the Redevelopment Law and the Redevelopment Plan, or debt established in order to fulfill the Agency’s obligations under Section 33413 of the Redevelopment Law and the Redevelopment Plan, or certain refunding debt. Immediately following the issuance of the Bonds, the Agency will have $128,676,000 of bonded indebtedness outstanding.

Outstanding Indebtedness

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

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

-25- City facilities and other services of the City in order for the Agency to accomplish the purposes of its various redevelopment plans. Under the Services Agreement, the Agency annually advances funds from tax increment revenues from its several project areas (including the Project Area) to pay for the City services, and the Agency’s obligation to make such payments are secured by a pledge of such tax increment revenues. On August 8, 2007, the Agency and the City entered into a Loan Agreement pursuant to which the City advanced $8,000,000 to the Agency for the purpose of acquiring and developing parks and open space in the Project Area (the “Parks Agreement”). Under the Parks Agreement, the Agency is obligated to repay the City loan from Agency funds not committed to other project activities, and the Agency’s repayment obligation is secured by a pledge of tax increment revenues generated from the Project Area. Each of the Public Works Agreement, the Services Agreement and the Parks Agreement contain provisions expressly subordinating the Agency’s obligations thereunder to all existing or future bonded indebtedness incurred by the Agency relating to the implementation of the Redevelopment Plan, and the Agency’s obligations under these three agreements are subordinate to the Agency’s pledge of the Tax Increment Revenues to the repayment of the Bonds and the Outstanding Parity Bonds.

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

Recent Activity

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

-26- building, a 3,500 square foot grinding canopy and a 1,000 square foot storage canopy on a ten acre lot located on Cherry Avenue in the Project Area. The building is expected to house a new titanium forging facility for Weber Metals. Permits for the construction of the project have been issued by the City, and construction of the building’s foundation has commenced. The estimated value of the project upon completion is approximately $4,086,000. No assurance can be given with respect to the date the project will be completed or the value of the project upon completion.

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

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

The projections of Tax Increment Revenues in Table 5 under the heading “THE PROJECT AREA—Tax Revenue Projections and Debt Service Coverage” below only include expected increases in Tax Increment Revenues as a consequence of the Weber Metals and ITS developments identified above. See “Tax Increment Revenue Projection—New Development Value Added” in Section 6 of the Fiscal Consultant’s Report in Appendix D.

Assessed Valuation

A breakdown of the fiscal year 2009-10 assessed valuation of $7,505,997,656 in the Project Area by category of land use is shown in the following table.

-27- TABLE 2 NORTH LONG BEACH REDEVELOPMENT PROJECT BREAKDOWN OF ASSESSED VALUATION BY CATEGORY OF LAND USE

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

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

The following table shows the actual assessed values for the Project Area for Fiscal Years 2005-06 to 2009-10, based upon the County Auditor-Controller equalized rolls and incremental values of property within the Project Area.

TABLE 3 NORTH LONG BEACH REDEVELOPMENT PROJECT HISTORICAL TAXABLE VALUES AND TOTAL INCREMENTAL VALUE (Fiscal Years Ended September 30)

FY 2005/06 FY 2006/07 FY 2007/08 FY 2008-09(1) FY 2009/10(2) Total Value Total Value Total Value Total Value Total Value Secured $5,354,365,384 $5,901,426,962 $6,452,450,454 $6,936,796,937 $6,616,352,244 Unsecured 964,047,071 981,692,808 1,068,214,533 912,229,781 885,865,930 State Utility 1,419,926 1,368,018 3,779,467 3,779,467 3,779,482 Total $6,319,832,381 $6,884,487,788 $7,524,444,454 $7,852,806,185 $7,505,997,656 Less: Base Year (3,104,508,715) (3,104,508,715) (3,130,192,950) (3,103,980,865) (3,096,395,327) Incremental Value $3,215,323,666 $3,779,979,073 $4,394,251,504 $4,748,825,320 $4,409,602,329

Source: Los Angeles County Auditor-Controller, as reported by Keyser Marston Associates, Inc. See APPENDIX D—FISCAL CONSULTANT’S REPORT. (1) Adjusted to remove overstated Possessory Interest value misplacement of $170,030,923 assessed to parcel 8940-759-594 (Chevron USA Inc). (2) Adjusted to remove overstated Possessory Interest value misplacement of $169,396,572 assessed to parcel 8940-759-594 (Chevron USA Inc).

-28- The aggregate total taxable assessed value for the ten largest taxpayers in the Project Area for Fiscal Year 2009-10 is $1,927,681,632. This amount is approximately 44% of the $4,409,602,329 Project Area incremental value and 26% of the $7,505,997,656 total Project Area assessed value. Information regarding the ten largest taxpayers in the Project Area is set forth in Table 4 below and the following paragraphs.

TABLE 4 NORTH LONG BEACH REDEVELOPMENT PROJECT FISCAL YEAR 2009-10 LARGEST PROPERTY TAXPAYERS BY ASSESSED VALUE

2009-10 Total AV 2009-10 2009-10 Possessory Percent of Secured Unsecured Interest 2009-10 Total Total % of Total No. of Assessed Assessed Assessed Assessed Project Increment Property Owner Parcels Values Values Values(1) Values Area(2) Value(3) Total Terminals(4) 2 $526,953,699 $526,953,699 7.02% 11.95% International Transportation 2 $116,596,200 344,376120 460,972,320 6.14 10.45 Services(4) Pacific Maritime Services LLC(4) 2 100,651,982 297,800,000 398,451,982 5.31 9.04 Hughes Aircraft Co 3 $120,774,533 120,774,533 1.61 2.74 Toyota Motors/TABC 10 21,920,031 94,306,252 116,226,283 1.55 2.64 Inc./Catalytic Component Products Inc. Long Beach Container Terminal 2 62,710,525 38,249,000 100,959,525 1.35 2.29 ARCO Terminal Services Corp 3 61,583,820 8,487 61,592,307 0.82 1.40 Oxbow Carbon and Minerals LLC 10 14,832,684 33,905,785 48,738,469 0.65 1.11 Carnival Corp 4 1,432,704 45,104,283 46,536,987 0.62 1.06 Metropolitan Stevedore(4) 4 5,150,749 41,324,778 46,475,527 0.62% 1.05 TOTALS $204,278,384 $395,689,583 $1,327,713,665 $1,927,681,632 25.68% 43.72%

Source: Los Angeles County Assessor’s 2009-2010 Assessment Roll, as reported by Keyser Marston Associates, Inc. See APPENDIX D—FISCAL CONSULTANT’S REPORT. (1) See “THE PROJECT AREA—Possessory Interests. (2) Based upon reported FY 2009-10 Project Area secured and unsecured assessed value of $7,505,997,656. County Assessor's $169.4 million possessory interest value error to Chevron USA Inc. removed from reported value. (3) Based upon reported FY 2009-10 Project Area incremental assessed value of $4,409,602,329. (4) These property owners have pending assessment appeals or have filed appeals in recent years. See the information regarding these taxpayers set forth below, and “THE PROJECT AREA—Appeals of Assessed Values.

The following information about some of the largest taxpayers in the Project Area has been gathered by the Agency from various sources believed to be reliable, but the accuracy or completeness of such information is not guaranteed by the Agency or the Underwriter.

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

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

International Transportation Services, Inc. – International Transportation Service Inc. operates a container terminal on Pier G at the Port. An approximately 246-acre facility, it

-29- includes five berths, a 6,100 foot-long wharf with a water depths ranging from 36 feet to 50 feet, seven gantry cranes, a storage area for approximately 12,800 on-ground containers, power outlets for 384 refrigerated containers, and an on-dock railyard, and handles general containerized cargo. International Transportation Services, Inc. has been a customer of the Port since 1971, and currently has a long term lease with the Port that expires in 2026. See “THE PROJECT AREA—Recent Activity” for a description of improvements that International Transportation Services, Inc. is constructing at the Port.

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

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

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

Hughes Aircraft Company – This 30 acre site contains offices and parking in an office and industrial park situated at the northwest corner confluence of the San Diego 405 Freeway and the Long Beach 710 Freeway.

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

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

-30-

ARCO Terminal Services Corporation – This 66 acre vacant parcel located northwest of the intersection of Paramount Boulevard and South Street contains 20 petroleum storage tanks.

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

Carnival Corporation – Its facilities consist of two leasehold interests, one with a City- owned parking site within the Project Area and the other with the Harbor Department for wharfage adjacent to the Spruce Goose Dome.

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

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

Possessory Interests

As set forth in Table 3 under the heading “THE PROJECT AREA—Assessed Valuation” $1,473,012,632 of the current $7,505,997,656 total current assessed valuation of the property in the Project Area (or approximately 20% of the total assessed valuation) is attributable to possessory interest valuations. Moreover, seven of the top ten largest taxpayers in the Project Area have significant possessory interest property valuations aggregating $1,327,713,665. See Table 4 under the heading “THE PROJECT AREA—Assessed Valuation. Most of the current possessory interest valuations relate to long-term leasehold interests of seven of the top ten largest taxpayers in container terminal facilities at the portion of the Port located in the Project Area. For a description of those leasehold interests, see the information in the paragraphs following Table 4 above.

As described in Section 3.5 of the Fiscal Consultant’s Report in Appendix D, possessory interest values are private property interests in publicly-owned real property. A possessory interest constitutes a private right to the possession and use of publicly-owned property for a period of time less than perpetuity, which, in the case of the Project Area, represents container terminal leases on property in the part of the Port that is in the Project Area. The Fiscal Consultant advises that, in appraising a possessory interest, the County Assessor seeks to value the present worth of the return a property will yield to the holder of the possessory interest over the effective term of their possession. The County Assessor appraises the possessory interest using one of more of the following appraisal techniques: the sales

-31- comparison, the income approach or the cost approach. The appraisals are initially triggered when a new lease is entered into and then reaudited by the County Assessor every three to five years thereafter.

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

Annual Tax Receipts to Tax Levy

The Agency received a total of $51,839,624 in tax increment revenue from the Redevelopment Project for fiscal year 2008-09. This total is approximately 108% of the expected tax increment revenues based upon reported assessed values for the Project Area for such Fiscal Year and the applicable tax rate. Actual receipts in excess of the expected levy based on assessed values are generally attributable to penalties and interest in connection with delinquent property tax payments subsequently collected by the County. See Table 4 in APPENDIX D—FISCAL CONSULTANT’S REPORT for information regarding historical receipts to the computed secured tax levy for the five most recent fiscal years.

Appeals of Assessed Values

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

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

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

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

-32- Section 5 of the Fiscal Consultant’s Report in Appendix D contains an extensive analysis of historical and pending assessment appeals for properties in the Project Area. The Fiscal Consultant advises that, for purposes of projecting future Tax Increment Revenues (see Table 5 under the subheading “Tax Revenue Projections and Debt Service Coverage” below), the Fiscal Consultant has, in most cases, estimated that pending appeals will be resolved at the historic average reduction rate in net secured or net unsecured values, as applicable, over the past five years, and that the pending appeals may result in projected tax refunds of $8,922,000 and a property value reduction of $637,622,000 for all open appeals. See Section 5 in the Fiscal Consultant’s Report in Appendix D.

Proposition 13 Inflationary Adjustments

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

Until now, in more than 30 years since the passage of Proposition 13, the annual inflationary adjustment has never resulted in a reduction to the prior year assessed valuation calculated from the Proposition 13 base year values adjusted for the CCPI annual inflationary rate. However, the California State Board of Equalization has announced that the CCPI inflation factor for Fiscal Year 2010-11 will be -0.237% (referred to as a “deflation factor”). The blanket application of the deflation factor will apply to all properties in the Project Area, will impact the assessed value growth rate of properties that are not sold or newly constructed, and will reduce the amount of property taxes received by the Agency. In its projections of Tax Increment Revenues, the Fiscal Consultant has taken into account the expected reduction in assessed valuation in the Project Area (and thereby reduced Tax Increment Revenues) in the next fiscal year due to the deflation factor. See Section 3.2 of the Fiscal Consultant’s Report in Appendix D.

Proposition 8 Reassessments

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

-33- maximum annual inflationary growth rate allowed on other properties under Article XIIIA of the State Constitution. Once the property has regained its prior value, adjusted for inflation it once again is subject to the annual inflationary factor growth rate allowed under Article XIIIA.

Section 3.3 in the Fiscal Consultant’s Report in Appendix D entitled “Proposition 8 Temporary Decline in Value” contains information provided by the County Assessor regarding Proposition 8 reductions for properties located throughout the County. The Fiscal Consultant reports that, in 2009, the County Assessor proactively reviewed over 473,000 residential parcels County-wide to determine if they qualified for a decline in assessed value, and of the properties reviewed, approximately 330,000 properties received reductions in their taxable value. As reported by the County Assessor, the average adjustment in assessed value was $120,000. There is no readily available information with respect to the number of parcels located in the Project Area with reduced assessed values as a result of the County Assessor’s actions.

For 2010, the County Assessor is expected to proactively review the value of single- family residences and condominiums purchased between July 1, 2003 and June 30, 2009 that were not previously reviewed and granted the temporary decline in value adjustment described above. Any possible future Proposition 8 reductions for properties in the Project Area as a result of such review have not been taken into account in the tax increment projections in the Fiscal Consultant’s Report in Appendix D or in Table 5 below.

Pass-Through Payments

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

Under Section 33607.5, with certain exceptions, commencing with the first fiscal year in which the agency receives tax increment revenues for the affected project area (or the affected added territory) and continuing through the last fiscal year in which the agency receives tax increment revenues, the agency must pay to the affected Taxing Agencies an amount equal to 25 percent of the tax increment revenues received by the agency after the amount required to be deposited in the agency’s low and moderate income housing fund has been deducted (generally referred to as the “Tier 1 Payments”). See “SECURITY FOR THE BONDS—Tax Increment Revenues” and “CONSTITUTIONAL AND STATUTORY PROVISIONS AFFECTING TAX REVENUES—Low and Moderate Income Housing.” Commencing with the 11th fiscal year in which the agency receives tax increment revenues for the affected project area (or the affected added territory) and continuing through the last fiscal year in which the agency receives tax increment revenues, the agency shall pay to the affected Taxing Agencies (other than the city that established such redevelopment agency), in addition to the Tier 1 Payment amounts paid pursuant to the preceding sentence and after deducting the amount allocated to the agency’s low and moderate income housing fund, an amount equal to 21 percent of the portion of tax increment revenues received by the agency, which will be calculated by applying the tax rate against the amount of assessed value by which the current year assessed value exceeds the first adjusted base year assessed value. The first adjusted base year assessed value for the 21 percent additional pass-through (generally referred to as the “Tier 2 Payments”) is the assessed value of the project area (or the affected added territory) in the 10th fiscal year in which the agency receives tax increment revenues (in the case of the Project Area, the first adjusted base year is Fiscal Year 2007-08). An additional 14

-34- percent of the portion of tax increment revenues received by the agency calculated by applying the tax rate against the amount of assessed value by which the then current year assessed value exceeds the project area assessed value in the 30th fiscal year in which the Agency receives tax increment (generally referred to as the “Tier 3 Payments”), are payable commencing with the 31st year and continuing through the last fiscal year in which the agency receives tax increment revenues.

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

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

Tax Revenue Projections and Debt Service Coverage

The following table is derived from Table 6 in the Fiscal Consultant’s Report (the complete text of which is in Appendix D), and depicts the projected Tax Increment Revenues available to pay debt service on the Outstanding Parity Bonds and on the Bonds, as estimated by the Fiscal Consultant, based upon the assumptions described in the Fiscal Consultant’s Report, some of which are described in the paragraph following the Table.

-35- TABLE 5 NORTH LONG BEACH REDEVELOPMENT PROJECT PROJECTION OF TAX REVENUES (in thousands)

Reported 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 1 Real Property $5,108,159 $5,108,159 $4,818,886 $4,818,886 $4,822,972 $4,822,972 $4,822,972 $4,822,972 $4,822,972 $4,822,972 $4,822,972 2 Projected Appeal Value Loss(1) 0 (277,825) 0 0 0 0 0 0 0 0 0 3 CPI Adjustment(2) 0 (11,448) 0 0 0 0 0 0 0 0 0 4 New Development Value(3) 0 0 0 4,086 0 0 0 0 0 0 0 5 Total Real Property 5,108,159 4,818,886 4,818,886 4,822,972 4,822,972 4,822,972 4,822,972 4,822,972 4,822,972 4,822,972 4,822,972 6 Possessory Interest 1,473,013 1,473,013 1,152,805 1,152,805 1,191,305 1,207,805 1,207,805 1,207,805 1,207,805 1,207,805 1,207,805 7 Projected Appeal Value Loss(1) 0 (317,469) 0 0 0 0 0 0 0 0 0 8 CPI Adjustment(2) 0 (2,739) 0 0 0 0 0 0 0 0 0 9 New Development Value(4) 0 0 0 38,500 16,500 0 0 0 0 0 0 10 Total Possessory Interest 1,473,013 1,152,805 1,152,805 1,191,305 1,207,805 1,207,805 1,207,805 1,207,805 1,207,805 1,207,805 1,207,805 11 Personal Property & SBE 924,826 924,826 882,498 882,498 882,498 882,498 882,498 882,498 882,498 882,498 882,498 12 Projected Appeal Value Loss(1) 0 (42,328) 0 0 0 0 0 0 0 0 0 13 Total Personal Property 924,826 882,498 882,498 882,498 882,498 882,498 882,498 882,498 882,498 882,498 882,498 14 Total Project Value 7,505,998 6,854,189 6,854,189 6,896,775 6,913,275 6,913,275 6,913,275 6,913,275 6,913,275 6,913,275 6,913,275 15 Less Base Value (3,096,395) (3,096,395) (3,096,395) (3,096,395) (3,096,395) (3,096,395) (3,096,395) (3,096,395) (3,096,395) (3,096,395) (3,096,395) 16 Incremental Value Over Base 4,409,602 3,757,794 3,757,794 3,800,380 3,816,880 3,816,880 3,816,880 3,816,880 3,816,880 3,816,880 3,816,880 17 Gross Tax Revenue 44,285 37,739 37,739 38,167 38,333 38,333 38,333 38,333 38,333 38,333 38,333 18 Add Unitary Tax Revenue 49 49 49 49 49 49 49 49 49 49 49 19 Projected Appeal Tax Refund(1) (8,922) 0 0 0 0 0 0 0 0 0 0 20 Gross Tax Increment Revenue 35,412 37,788 37,788 38,216 38,382 38,382 38,382 38,382 38,382 38,382 38,382 21 Less County Admin Fees at -1.47% (654) (553) (554) (560) (563) (563) (563) (563) (563) (563) (563) 22 Subtotal 34,759 37,235 37,235 37,656 37,819 37,819 37,819 37,819 37,819 37,819 37,819 23 Less Housing Set Aside at -20%(5) (7,082) (7,558) (7,558) (7,643) (7,676) (7,676) (7,676) (7,676) (7,676) (7,676) (7,676) 24 Net Tax Increment Revenue 27,676 29,677 29,677 30,013 30,143 30,143 30,143 30,143 30,143 30,143 30,143 25 Less AB1290 Statutory Pass Through(5) (7,082) (7,558) (7,558) (7,643) (7,676) (7,676) (7,676) (7,676) (7,676) (7,676) (7,676) 26 Net Revenue after Pass Through 20,594 22,120 22,119 22,370 22,467 22,467 22,467 22,467 22,467 22,467 22,467 27 Less 2009-10 SERAF(6) (10,149) 0 0 0 0 0 0 0 0 0 0 28 Less 2010-11 SERAF(6) 0 (2,751) 0 0 0 0 29 Add Borrowed from Housing(6) 8,439 0 0 0 0 0 30 Less Repayment to Housing(6) 0 (1,688) (1,688) (1,688) (1,688) (1,688) 0 0 0 0 0 31 Net After SERAF $18,883 $17,681 $20,431 $20,682 $20,779 $20,779 $22,467 $22,467 $22,467 $22,467 $22,467

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

-36-

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

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

• there has been no assumed reduction in assessed values in future years that may arise by reason of possible decreases in Proposition 13 Inflationary Adjustments (see “THE PROJECT AREA—Proposition 13 Inflationary Adjustments” and Section 3.2 in the Fiscal Consultant’s Report in Appendix D), Proposition 8 Reassessments (see “THE PROJECT AREA—Proposition 8 Reassessments” and Section 3.3 in the Fiscal Consultant’s Report in Appendix D), or delinquencies in the payment of property taxes (see “THE PROJECT AREA—Annual Tax Receipts to Tax Levy” and Section 4.3 and Table 4 in the Fiscal Consultant’s Report in Appendix D);

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

• tax rates applicable to property in the Project Area will remain constant in future years at 1.004292% (see Section 4.1 of the Fiscal Consultant’s Report in Appendix D);

• County administrative charges will remain at a constant 1.47% of gross tax increment revenues (see Section 2.2c. in the Fiscal Consultant’s Report in Appendix D); and

• there will be no State legislation requiring additional ERAF, SERAF or other payments by California redevelopment agencies (beyond those currently required by AB26), or shifts of property tax increment (see “BONDOWNERS’ RISKS—State Budget; ERAF and SERAF Shifts” and Section 6.5 in the Fiscal Consultant’s Report in Appendix D).

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

-37- The following table sets forth the projected Tax Increment Revenues and debt service coverage, for the life of the Bonds.

TABLE 6 NORTH LONG BEACH REDEVELOPMENT PROJECT PROJECTION OF TAX REVENUES, DEBT SERVICE AND DEBT SERVICE COVERAGE (in thousands)

Bond Projected 2002 2005 Additional 2010 Total Year Tax Bonds Additional Bonds 2005 Bonds Outstanding Ending Increment Debt 2006 Debt Interest Debt Bonds Debt Debt Service August 1 Revenues(1) Service (2) Amounts(3) Service (2) Amounts(3) Service Service Coverage(4) 2010 $20,594 $3,015 $4,151 $125 $ 552 $ 7,844 263% 2011 22,120 3,011 4,150 149 3,104 10,414 212 2012 22,120 3,014 4,151 148 3,095 10,408 213 2013 22,120 2,783 $32 4,153 291 3,090 10,349 214 2014 22,120 2,785 43 4,150 291 3,081 10,351 214 2015 22,120 2,787 46 4,150 291 3,071 10,345 214 2016 22,120 2,800 46 4,150 291 3,057 10,344 214 2017 22,120 2,804 46 4,150 292 3,043 10,335 214 2018 22,120 2,813 46 4,150 291 3,029 10,329 214 2019 22,120 2,825 45 4,149 596 3,016 10,631 208 2020 22,120 2,839 43 4,153 596 2,994 10,624 208 2021 22,120 2,844 44 4,151 143 2,977 10,159 218 2022 22,120 2,851 45 4,153 143 2,957 10,149 218 2023 22,120 2,865 44 4,150 143 2,932 10,135 218 2024 22,120 2,876 44 4,150 143 2,908 10,120 219 2025 22,120 2,891 44 4,155 2,883 9,973 222 2026 22,120 2,899 48 4,153 2,849 9,950 222 2027 22,120 2,905 48 4,151 2,810 9,913 223 2028 22,120 2,922 47 4,152 2,771 9,892 224 2029 22,120 2,933 46 4,151 2,729 9,860 224 2030 22,120 2,943 46 4,154 2,687 9,829 225 2031 22,120 2,956 45 4,154 2,641 9,796 226 2032 22,120 4,151 2,593 6,744 328 2033 22,120 4,150 2,539 6,689 331 2034 22,120 4,151 2,490 6,641 333 2035 22,120 4,153 2,431 6,583 336 2036 22,120 2,376 2,376 931 2037 22,120 2,309 2,309 958 2038 22,120 2,247 2,247 984 2039 22,120 2,179 2,179 1015 2040 22,120 2,113 2,113 1047

Source: Fieldman Rolapp & Associates (1) Estimated, years ending 2010 through 2020 from line 26 (Net Revenue after Pass Through) in Table 5 above. Projected SERAF payments in Table 5 will be subordinate to the payment of debt service on the Bonds. See “RISK FACTORS—State Budget; ERAF & SERAF Shifts.” Does not include expected Recovery Act cash payments. See “THE BONDS—Designation of Bonds as Recovery Zone Economic Development Bonds and Build America Bonds.” (2) See “SECURITY FOR THE BONDS—Parity Lien on Tax Increment Revenues.” (3) Amounts in these columns represent additional obligations of the Agency related to the respective Outstanding Parity Bonds, and may be returned to the Agency under certain conditions. See “SECURITY FOR THE BONDS—Parity Lien on Tax Increment Revenues.” (4) Projected Tax Increment Revenues divided by Total Outstanding Bonds Debt Service.

No assurances are provided by the Agency as to the certainty of the projected Tax Increment Revenues shown on the foregoing tables. Actual revenues may be higher or lower than what has been projected and are subject to valuation changes resulting from new developments or transfers of ownership not specifically identified herein, actual resolution of outstanding appeals, future filing of appeals, or the non-payment of taxes due.

-38-

BONDOWNERS’ RISKS

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

Limited Obligations

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

Reduction in Assessed Value

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

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

-39- Risk of Earthquake or Other Disaster” herein. Further, the State electorate or legislature could adopt further limitations with the effect of reducing Tax Increment Revenues.

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

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

Concentration of Ownership

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

Reduction in Inflationary Rate

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

Real Estate and General Economic Risks

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

-40- Project Area (including planned development in the portion of the Port included in the Project Area) could be adversely affected by future governmental policies, including governmental policies to restrict or control certain kinds of development. If development and redevelopment activities in the Project Area encounter significant obstacles of the kind described herein or other impediments, the economy of the area in and around the Project Area could be adversely affected, causing reduction of the Tax Increment Revenues. In addition, if there is a decline in the general economy of the region, the City or the Project Area, the owners of property within the Project Area may be less able or less willing to make timely payments of property taxes, causing a delay or stoppage of tax revenues received by the Agency from the Project Area.

Assessment Appeals

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

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

Investment of Tax Increment Revenues and Other Funds

Tax Increment Revenues from the County are deposited in the City’s Investment Pool prior to their transfer to the Trustee for deposit by the Trustee in the accounts within the Debt Service Fund established under the Indenture. Under the Indenture, moneys in the Debt Service Fund, the Interest Account, the Principal Account, the Sinking Account, the Reserve Account and the Redemption Account must be invested by the Trustee in Permitted Investments (as defined in the Indenture), and moneys in the Special Fund and the Redevelopment Fund may

-41- be invested by the Agency in any lawful investment for Agency funds. See APPENDIX A— SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE—Definitions. The Agency cannot predict the impact on the investment of any Tax Increment Revenues by the Agency if the City experiences significant losses in its Investment Pool.

Certain Bankruptcy Risks

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

Risk of Earthquake or Other Disaster

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

Hazardous Substances

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

-42- Property Tax Payment Delinquencies

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

Change in Law

No assurance can be given that the State electorate will not adopt initiatives or that the Legislature will not enact legislation that will amend the Constitution of the State, the Redevelopment Law or other laws in a manner that results in a reduction of Tax Increment Revenues that could adversely affect the Agency’s ability to make debt service payments on the Bonds. In addition, tax legislation, administrative actions taken by tax authorities, and court decisions, whether at the federal or state level, may adversely affect the tax-exempt status of interest on the Bonds under federal or state law and could affect the market price for, or marketability of, the Bonds. Prospective purchasers of the Bonds should consult their own tax advisors regarding any pending or proposed federal or state tax legislation, regulations, rulings or litigation.

Additional Obligations

As described in “SECURITY FOR THE BONDS—Issuance of Parity Debt,” the Agency’s pledge of Tax Increment Revenues to payment of debt service on the Bonds will be on a parity with the Agency’s pledge of Tax Increment Revenues with respect to the payment of any Parity Debt. The potential for the issuance of Parity Debt increases the risks associated with the Agency’s payment of debt service on the Bonds in the event of a decrease in the Agency’s collection of Tax Increment Revenues.

Proposition 8 Adjustments

Proposition 8, approved in 1978 (section 51(b) of the California Revenue and Taxation Code), provides for the assessment of real property at the lesser of its originally determined (base year) full cash value compounded annually by the inflation factor, or its full cash value as of the lien date, taking into account reductions in value due to damage, destruction, obsolescence or other factors causing a decline in market value. Reductions based on Proposition 8 do not establish new base year values, and the property may be reassessed on a following lien date up to the lower of the then current fair market value or the factored base year value. Properties in the County, which may include properties in the Project Area, have been subject to Proposition 8 adjustments made by the County Assessor. See “THE PROJECT AREA—Proposition 8 Reassessments” and Section 3.3 in the Fiscal Consultant’s Report in Appendix D.

Levy and Collection of Taxes

The Agency has no independent power to levy and collect property taxes. Any reduction in the tax rate or the implementation of any constitutional or legislative property tax decrease could reduce the Tax Increment Revenues, and accordingly, could have an adverse impact on the ability of the Agency to repay the Bonds. Likewise, delinquencies in the payment

-43- of property taxes and the impact of bankruptcy proceedings on the legal ability of taxing agencies to collect property taxes could have an adverse effect on the Agency’s ability to make timely Bond payments. See “THE PROJECT AREA—Annual Tax Receipts to Tax Levy” and Section 4.3 in the Fiscal Consultant’s Report in Appendix D.

State Budget; ERAF & SERAF Shifts

In connection with its approval of the budget for the State for the 1992-93, 1993-94, 1994-95, 2002-03, 2003-04, and 2004-05 Fiscal Years, the State Legislature enacted legislation which, among other things, reallocated funds from redevelopment agencies to school districts by shifting a portion of each agency’s tax increment, net of amounts due to other taxing agencies, to school districts for such fiscal years for deposit in the Education Revenue Augmentation Fund (“ERAF”). The amount required to be paid by a redevelopment agency under such legislation was apportioned among all of its redevelopment project areas on a collective basis, and was not allocated separately to individual project areas. The Agency has made all of the foregoing ERAF payments as required by applicable law.

The State budgets for 2005-06, 2006-07 and 2007-08 had no new ERAF payment requirements. However, in connection with the State budget for Fiscal Year 2008-09, on September 30, 2008, the California Legislature enacted AB l389. AB 1389 required a one-time shift of $350 million from redevelopment agencies to their respective ERAF. Under the provisions of AB 1389, the Agency was obligated to make an ERAF payment for all of its project areas of $6,070,996 to its ERAF.

The validity of AB l389 was challenged in litigation in the Superior Court for Sacramento County, California Redevelopment Association et al v. Genest et a.l, Case No. 34-2008-00028334- CUWM-GDS (“CRA v. Genest”). This case alleged, among other things, that the duties of county auditors to deposit funds received from redevelopment agencies in County ERAFs are inconsistent with various state and federal constitutional provisions and are therefore unlawful and unenforceable. The lawsuit argued that the State raids of redevelopment funds to balance the State budget are unconstitutional, violating Article XVI, Section 16 of the California Constitution, which states that redevelopment funds can only be used to finance redevelopment projects. The lawsuit contended that taking redevelopment funds to balance the State’s budget does not qualify as a constitutionally permitted use of tax increment. On April 30, 2009, the Sacramento Superior Court ruled in favor of the petitioners, holding that petitioners are entitled to declaratory and injunctive relieve invalidating and enjoining Health and Safety Code Section 33685 as provided for in AB 1389. The court stated that the “distribution of contributions by RDAs to their county ERAFs ... can be expected to regularly result in the use of RDA’s tax increment revenues by schools and education programs unrelated to the RDA’s redevelopment projects.” A judgment was signed by the Sacramento Superior Court on May 7, 2009, forbidding any of the defendants from taking any actions to carry out or enforce any of the payment requirements in AB 1389. The State appealed the decision; however, on September 23, 2009, the State filed a notice of abandonment of its appeal with the Court, so that the Superior Court judgment became final and no longer subject to appeal on that date.

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

-44- redevelopment areas or in housing supported by redevelopment agency funds. The method for calculating each redevelopment agency’s payment and respective share of the 2009-10 and 2010-11 transfers is similar to that in prior ERAF legislation, except that instead of using the prior year’s tax increment figures for the basis of calculation, AB 26 requires the calculation to use the tax increment figures from fiscal year 2006-07 with respect to the SERAF payment required for both 2009-10 and 2010-11. The Agency’s 2009-10 SERAF payment is estimated by the California Redevelopment Association (the “CRA”) to be $29,487,696, and is due by May 10, 2010. The Agency’s 2010-11 SERAF payment is estimated by the CRA to be $6,070,996, and is due by May 10, 2011.

AB 26 provides that the Agency may suspend Housing Set-Aside contributions to its Low and Moderate Income Housing Fund for 2009-10 or borrow Housing Set-Aside funds in the Agency’s Low and Moderate Income Housing Fund, in order to make the SERAF payments - provided the funds are repaid by June 30 of the Fiscal Year occurring 5 years after the Fiscal Year of the commencement of suspension or borrowing. The Agency fully expects to fund the entire amount of its 2009-10 SERAF payment by the May 10, 2010 deadline and the entire amount of its 2010-11 SERAF payment by the May 10, 2011 deadline. The Agency expects to use accumulated tax increment funds on hand to make approximately $1,700,000 of the portion of the 2009-10 SERAF payment allocated by it to the Project Area (a total of $10,200,000), and to borrow $8,500,000 from the Agency’s Low and Moderate Income Housing Fund to make the remaining portion of the 2009-10 SERAF payment allocated by it to the Project Area. The Agency expects to use tax increment revenues or cash on hand to make the approximately $2,700,000 portion of the 2010-11 SERAF payment allocated by it to the Project Area. The Agency has covenanted in the Indenture to maintain sufficient funds on hand to make the Fiscal Year 2009-10 payments due to the Los Angeles County Supplemental Educational Revenue Augmentation Fund, and to set aside and maintain sufficient funds from tax increment revenues received by it in Fiscal Year 2010-11 or from other available sources to make any payment required to be made by the Agency for Fiscal Year 2010-11 to the Los Angeles County Supplemental Education Revenue Augmentation Fund, in each case until such time as such payments are made or a court of competent jurisdiction declares that the Agency is not required to make such payments.

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

There can be no assurance that the State Legislature will not require similar or other diversion of tax increment funds in future years to deal with its budget deficits, nor can there be any assurance that any obligation to make any future payments from tax increment funds will be made subordinate to a pledge of taxes to pay Bond debt service.

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

-45- shifts tax increment revenues away from redevelopment agencies to the State or to schools (whether through an arrangement similar to ERAF, SERAF or by any other arrangement), whether any future shifts in tax increment revenue would be limited or affected (such as by an offset of amounts required to be shifted) by pre-existing agreements between redevelopment agencies and school districts, community college districts and county superintendents of schools, or what impact such legislation may have on the Tax Increment Revenues pledged to pay debt service on the Bonds. Accordingly, the Agency is not able to predict the effect, if any, such a shift, if enacted, would have on future Tax Increment Revenues.

Information about the State budget and State spending is available at various State- maintained websites. None of such websites are in any way incorporated into this Official Statement, and the Agency makes no representation whatsoever as to the accuracy or completeness of any of the information on such websites.

Secondary Market

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

CONSTITUTIONAL AND STATUTORY PROVISIONS AFFECTING TAX REVENUES

Property Tax Limitations-Article XIIIA

California voters, on June 6, 1978, approved an amendment (commonly known as both Proposition 13 and the Jarvis-Gann Initiative) to the California Constitution. This amendment, which added Article XIII A to the California Constitution, among other things, affects the valuation of real property for the purpose of taxation in that it defines the full cash value of property to mean “the county assessor’s valuation of real property as shown on the fiscal year 1975-76 tax bill under full cash value, or thereafter, the appraised value of real property when purchased, newly constructed, or a change in ownership has occurred after the 1975 assessment.” The full cash value may be adjusted annually to reflect inflation at a rate not to exceed two percent per year, or any reduction in the consumer price index or comparable local data, or any reduction in the event of declining property value caused by damage, destruction or other factors. See “THE PROJECT AREA—Proposition 13 Inflationary Adjustments” for a discussion of the negative impact that a recent “deflation factor” will have on future Tax Increment Revenues.

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

In the general election held November 4, 1986, voters of the State of California approved two measures, Propositions 58 and 60, which further amend Article XIIIA. Proposition 58 amends Article XIIIA to provide that the terms “purchased” and “change of

-46- ownership,” for purposes of determining full cash value of property under Article XIIIA, do not include the purchase or transfer of (1) real property between spouses and (2) the principal residence and the first $1,000,000 of other property between parents and children.

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

Challenges to Article XIIIA

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

Implementing Legislation

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

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

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

Property Tax Collection Procedures

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

-47- property does not become a lien against unsecured property, but may become a lien on certain other property owned by the taxpayer.

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

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

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

Supplemental Assessments. Legislation enacted in 1983 (Chapter 498, Statutes of 1983) provides for the supplemental assessment and taxation of property as of the occurrence of a change of ownership or completion of new construction. Chapter 498 provided increased revenue to redevelopment agencies to the extent that supplemental assessments of new construction or changes of ownership occur within the boundaries of redevelopment projects subsequent to the January 1 lien date. To the extent such State supplemental assessments occur within the Redevelopment Project, the Tax Increment Revenues for the Project Area may increase.

Tax Collection Fees. In 1990, the State Legislature enacted Senate Bill 2557 (Chapter 466, Statutes of 1990) (“SB 2557”) which allows counties to charge for the cost of assessing, collecting and allocating property tax revenues to local government jurisdictions on a prorated basis. Two recent decisions have interpreted the provisions of SB 2557 and have upheld the inclusion of redevelopment agencies as a local government agency which must share the cost of property tax administration. The 1992 enactment of Senate Bill 1559 (Chapter 697) and the decision of the California Court of Appeal in Arcadia Redevelopment Agency v. Ikemoto have clarified that redevelopment agencies, such as the Agency, are to share in the cost of property tax administration charged by most California counties, including the County. During fiscal years 2008-09 and 2009-10, the County withheld approximately $678,000 and $653,000 respectively, from the Agency for such administrative costs with respect to the Project Area.

-48- Appropriations Limitations-Article XIIIB

On November 6, 1979, California voters approved Proposition 4, the so-called Gann Initiative, which added Article XIIIB to the California Constitution. The principal effect of Article XIIIB is to limit the annual appropriations of the State and any city, county, school district, authority or other political subdivision of the State to the level of appropriations for the prior fiscal year, as adjusted for changes in the cost of living, population and services rendered by the government entity.

Effective November 30, 1980, the California Legislature added Section 33678 to the Redevelopment Law which provided that the allocation of taxes to a redevelopment agency for the purpose of paying principal of, or interest on, loans, advances, or indebtedness will not be deemed the receipt by such agency of proceeds of taxes levied by or on behalf of the agency within the meaning of Article XIIIB, nor will such portion of taxes be deemed receipt of taxes by, or an appropriation subject to the limitation of, any other public body within the meaning or for the purpose of the Constitution and laws of the State, including Section 33678 of the Redevelopment Law.

State Board of Equalization and Property Assessment Practices

August 10, 1998, the State Board of Equalization (“SBOE”) approved revisions to its guidelines regarding the valuation of intangible business and commercial property for property tax purposes. The SBOE approved these revisions over the objections of the California Assessors Association (“CAA”), an organization representing all 58 County Assessors in California. The Agency is not able to predict whether the revised SBOE guidelines will cause any reductions in tax increment revenues and, hence, in the Tax Increment Revenues.

Exclusion of Tax Increment Revenues for General Obligation Bonds Debt Service

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

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

Proposition 218

On November 5, 1996, California voters approved Proposition 218-Voter Approval for Local Government Taxes-Limitation on Fees, Assessments, and Charges-Initiative Constitutional Amendment. Proposition 218 added Articles XIIIC and XIIID to the California Constitution, imposing certain vote requirements and other limitations on the imposition of new or increased taxes, assessments and property-related fees and charges. Tax Increment Revenues securing the Bonds are derived from property taxes which are outside the scope of taxes, assessments and property-related fees and charges which were limited by Proposition 218.

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AB 1290

In 1993, the California Legislature enacted Assembly Bill 1290 (“AB 1290”) which contained several significant changes in the Redevelopment Law. Among the changes made by AB 1290 was a provision that limits the period of time for incurring and repaying loans, advances and indebtedness payable from tax increment revenues. In general, a redevelopment plan may terminate not more than 40 years following the date of original adoption, and loans, advances and indebtedness may be repaid during a period extending not more than 10 years following the date of termination of the redevelopment plan. See “THE PROJECT AREA— Redevelopment Plan Limitations.”

AB 1389 Payments

On September 24, 2008, the State enacted a budget for Fiscal Year 2008-09 that includes, among other things, the provisions of a bill known as AB 1389. AB 1389 requires redevelopment agencies, under certain circumstances, to submit reports to the office of the county auditor in the county in which they are located. These reports are required to include calculations of the tax increment revenues that redevelopment agencies have received and payments that redevelopment agencies have made pursuant to pass-through agreements with taxing entities and statutory pass-through requirements. County auditors are required to review the reports and, if they concur, issue a finding of concurrence. The State Controller is required to review such reports and submit a report to the Legislative Analyst’s office and the Department of Finance identifying redevelopment agencies for which county auditors had not issued a finding of concurrence or are otherwise not in compliance with provisions of AB 1389. AB 1389 includes penalties for any redevelopment agency listed on the most recent State Controller’s report, including a prohibition on issuing bonds or other obligations until the listed agency is removed from the State Controller’s report.

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

Future Initiatives

Article XIIIA, Article XIIIB and certain other propositions affecting property tax levies were each adopted as measures which qualified for the ballot pursuant to California’s initiative process. From time to time other initiative measures could be adopted, further affecting Agency revenues or the Agency’s ability to expend revenues.

Low and Moderate Income Housing

Sections 33334.2 and 33334.3 of the Redevelopment Law require redevelopment agencies to set aside not less than twenty percent of all tax increment revenues from project

-50- areas adopted after December 31, 1976 into a low and moderate income housing fund (the “Housing Set-Aside Requirement”). An agency can reduce the Housing Set-Aside Requirement if the agency annually makes certain findings, consistent with the General Plan Housing Element. These findings are that: (1) no need exists in the community to improve or increase the supply of low and moderate income housing; or, (2) some stated percentage less than 20 percent of the tax increment is sufficient to meet the housing need. In order to make findings (1) or (2), the Agency’s finding must be consistent with the Housing Element of the community’s General Plan, including its share of the regional housing needs of very low income households and persons and families of low or moderate income. The Agency has not made such findings in the past, and the Tax Increment Revenues do not include any of the housing set aside revenues.

Statement of Indebtedness

Under the Redevelopment Law, the Agency must file with the County Auditor a statement of indebtedness for the Redevelopment Project by October 1 of each year. As described below, the statement of indebtedness controls the amount of tax increment revenue that will be paid to the Agency in each fiscal year.

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

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

The County Auditor may only pay tax increment revenue to the Agency in any fiscal year to the extent that the total remaining principal and interest on all Debt exceeds the amount of available revenues as shown on the statement of indebtedness.

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

CERTAIN LEGAL MATTERS

Legal Opinions

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

-51- Agency for the Bonds. Certain legal matters will be passed upon for the Agency by the City Attorney of the City in his capacity as General Counsel to the Agency.

Payment of the fees and expenses of Bond and Disclosure Counsel is contingent upon the sale and delivery of the Bonds.

Enforceability of Remedies

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

RATING

Standard & Poor’s Ratings Services (“S&P”) has assigned its rating of “BBB+” to the Bonds. Such rating reflects only the views of S&P and an explanation of the significance of such rating may be obtained from S&P. There is no assurance that such rating will continue for any given period of time or that it will not be revised downward or withdrawn entirely by S&P, if, in the judgment of S&P, circumstances so warrant. Any such downward revision or withdrawal of such rating may have an adverse effect on the market price of the Bonds.

CONTINUING DISCLOSURE

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

ABSENCE OF LITIGATION

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

-52- TAX MATTERS

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

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

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

The complete text of the final opinion that Bond Counsel expects to deliver upon the issuance of the Bonds is set forth in Appendix E.

FISCAL CONSULTANT

The Agency has retained the firm of Keyser Marston Associates, Inc. to prepare a Fiscal Consultant’s Report concerning to Project Area. The full text of the Fiscal Consultant’s Report is attached hereto as Appendix D.

FINANCIAL ADVISOR

The Agency has retained Fieldman Rolapp & Associates, Irvine, California, as Financial Advisor for the sale of the Bonds. The Financial Advisor is not obligated to undertake, and has not undertaken to make, an independent verification or to assume any responsibility for the accuracy, completeness or fairness of the information contained in this Official Statement.

Fieldman Rolapp & Associates is an independent advisory firm and is not engaged in the business of underwriting, trading or distributing municipal or other public securities.

UNDERWRITING

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

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

-53- MISCELLANEOUS

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

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

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

REDEVELOPMENT AGENCY OF THE CITY OF LONG BEACH

By: /s/ David S. Nakamoto Treasurer

-55- THIS PAGE INTENTIONALLY LEFT BLANK APPENDIX A

SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE

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

Definitions

“Additional Allowance” means, as of the date of calculation, the amount of Tax Increment Revenues which, as evidenced by a certification or supplemental tax roll of the County, are estimated to be receivable by the Agency in the next succeeding Fiscal Year as a result of increases in the assessed valuation of taxable property in the Project Area due to either (a) construction which has been completed but has not yet been reflected on the tax roll, or (b) transfer of ownership or any other interest in real property, which is not then reflected on the tax rolls.

For purposes of this definition, the term “increases in the assessed valuation” means the amount by which the assessed valuation of taxable property in the Project Area in the next succeeding Fiscal Year is estimated to exceed the assessed valuation of taxable property in the Project Area (as reported by the County Auditor-Controller) in the Fiscal Year in which such calculation is made.

“Ambac” means Ambac Assurance Corporation, a Wisconsin-domiciled stock insurance company.

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

“Authority” means the Long Beach Bond Finance Authority, a public body, corporate and politic, duly organized and existing under a joint exercise of powers agreement entered into by the City and the Agency pursuant to the Government Code of the State.

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

“Authority Indenture” means the Indenture of Trust, dated as of May 1, 2002, between the Authority and the Authority Trustee and, from and after the Purchase Date, the 2005C Authority Indenture.

“Authority Trustee” means The Bank of New York Mellon Trust Company, N.A., and any successor thereto acting in the capacity as trustee under the Authority Indenture; and, from and after the Purchase Date, the 2005C Authority Trustee.

“Bond Counsel” means (a) Quint & Thimmig LLP, or (b) any other attorney or firm of attorneys appointed by or acceptable to the Agency of nationally-recognized experience in the issuance of obligations the interest on which is excludable from gross income for federal income tax purposes under the Tax Code.

A-1

“Bond Year” means any twelve-month period beginning on August 2 in any year and extending to the next succeeding August 1, both dates inclusive.

“Bonds” means, collectively, the 2002 Bonds, the 2005 Bonds, the 2010 Bonds and any Parity Debt.

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

“Business Inventory Tax Subvention” means all amounts payable by the State to the Agency under and pursuant to the provisions of Chapter 1.5 of Part 1 of Division 4 of Title 2 (commencing with Section 16110) of the Government Code of the State.

“Certificate of the Agency” means a certificate in writing signed by the Chairman, Executive Director, Treasurer or Secretary of the Agency, or any other officer of the Agency duly authorized by the Agency for that purpose.

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

“County” means the County of Los Angeles, a county duly organized and existing under the Constitution and laws of the State.

“Debt Service Fund” means the fund by that name established and held by the Trustee pursuant to the Indenture.

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

“Direct Payment” means the semiannual federal subsidy payment from the United States Department of the Treasury equal to (a) forty-five percent (45%) of the amount of each interest payment on the 2010 Series A Bonds, and (b) thirty-five percent (35%) of the amount of each interest payment on the 2010 Series B Bonds.

“Event of Default” means any of the events described as such in the Indenture.

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

A-2 agreement with specifically negotiated withdrawal or reinvestment provisions and a specifically negotiated interest rate (for example, a guaranteed investment contract, a forward supply contract or other investment agreement) that is acquired in accordance with applicable regulations under the Tax Code, (iii) the investment is a United States Treasury Security--State and Local Government Series that is acquired in accordance with applicable regulations of the United States Bureau of Public Debt, or (iv) the investment is the Local Agency Investment Fund of the State of California but only if at all times during which the investment is held its yield is reasonably expected to be equal to or greater than the yield on a reasonably comparable direct obligation of the United States.

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

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

“Harbor Board” means the Board of Harbor Commissioners of the City of Long Beach.

“Indenture” means the Indenture of Trust, by and between the Agency and the Trustee, as amended or supplemented from time to time pursuant to any Supplemental Indenture entered into pursuant to the provisions thereof.

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

“Independent Redevelopment Consultant” means any consultant or firm of such consultants appointed by or acceptable to the Agency and who, or each of whom: (a) is judged by the Agency to have experience in matters relating to the collection of Tax Increment Revenues or otherwise with respect to the financing of redevelopment projects; (b) is in fact independent and not under domination of the Agency; (c) does not have any substantial interest, direct or indirect, with the Agency other than as the Original Purchaser; and (d) is not connected with the Agency as an officer or employee of the Agency, but who may be regularly retained to make reports to the Agency.

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

A-3 Exchange Commission, such other addresses and/or such other services providing information with respect to the redemption of bonds as the Agency may designate in a Request of the Agency delivered to the Trustee.

“Interest Account” means the account by that name established and held by the Trustee pursuant to the Indenture.

“Interest Payment Date” means each February 1 and August 1 until the earlier of the redemption or final maturity of the Bonds.

“IRS” means the United States Treasury, Internal Revenue Service.

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

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

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

“Middle Harbor Agreement” means the Public Improvement Reimbursement Agreement (North Long Beach Redevelopment Project Area) entered into on September 1, 2009, by the Agency and the Harbor Board.

“Minimum Rating” means, with respect to any Permitted Investment that requires a Minimum Rating, a long-term rating of “A” or better from S&P or a short-term rating which is in the highest general rating category of S&P, in any event determined without regard to any refinement or gradation of such rating by a numerical modifier, a plus or a minus sign, or otherwise.

“Moody’s” means Moody’s Investors Service, New York, New York, and its successors.

“Municipal Bond Insurer” means Ambac, as provider of the Bond Insurance Policy; and, from and after the Purchase Date, the 2005C Bond Insurer.

A-4 “North Long Beach Redevelopment Fund” means the fund by that name established and held by the Trustee pursuant to the Indenture.

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

“Original Purchaser” means the Stone & Youngberg LLC, being the first purchaser of the 2010 Bonds from the Agency upon their delivery by the Trustee on the Closing Date for such Bonds.

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

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

“Parity Debt” means, collectively (a) any loans, bonds, notes, advances or indebtedness payable from Tax Increment Revenues on a parity with the 2002 Bonds, the 2005 Bonds and the 2010 Bonds issued or incurred pursuant to and in accordance with the provisions of the Indenture, and (b) any Refunding Debt issued or incurred in accordance with the provisions of the Indenture.

“Parity Debt Instrument” means any resolution, indenture of trust, trust agreement or other instrument authorizing the issuance and/or execution and delivery of any Parity Debt.

“Participating Underwriter” shall have the meaning ascribed thereto in the Continuing Disclosure Agreement.

“Permitted Investments” means any of the following which at the time of investment are legal investments under the laws of the State for the moneys proposed to be invested therein, but only to the extent that the same are acquired at Fair Market Value:

(a) direct obligations of (including obligations issued or held in book entry form on the books of) the Department of the Treasury of the United States of America, and any Defeasance Obligations.

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

(c) senior debt obligations issued by the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation, the Resolution Funding Corporation

A-5 (REFCORP), and the Federal Home Loan Bank System, and senior debt obligations of other government-sponsored agencies approved by the Municipal Bond Insurer;

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

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

(f) investments in a money market fund rated “AAAm” or “AAAm-G” or better by S&P, including any money market fund for which the Trustee or an affiliate receives fees for investment advisory or other services to the fund;

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

(h) investment agreements approved in writing by the Municipal Bond Insurer, supported by appropriate opinions of counsel, with notice to S&P;

(i) the City’s investment pool maintained by the City Treasurer in accordance with the City’s adopted investment policy;

(j) the Local Agency Investment Fund of the State, created pursuant to section 16429.1 of the California Government Code, to the extent the Trustee is authorized to register such investment in its name;

(k) other forms of investments (including repurchase agreements) approved in writing by the Municipal Bond Insurer with notice to S&P; and

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

“Plan Limitations” means the limitations contained or incorporated in the Redevelopment Plan on (a) the aggregate principal amount of indebtedness payable from Tax

A-6 Increment Revenues which may be outstanding at any time, (b) the aggregate amount of taxes which may be divided and allocated to the Agency pursuant to the Redevelopment Plan, and (c) the period of time for establishing indebtedness payable from Tax Increment Revenues.

“Principal Account” means the account by that name established and held by the Trustee pursuant to the Indenture.

“Private Business Use” means use directly or indirectly in a trade or business carried on by a natural person or in any activity carried on by a person other than a natural person, excluding use by a governmental unit and use by any person as a member of the general public.

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

“Purchase Date” means August 1, 2012.

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

“Record Date” means, with respect to any Interest Payment Date, the close of business on the fifteenth (15th) calendar day of the month preceding such Interest Payment Date, whether or not such fifteenth (15th) calendar day is a Business Day.

“Redemption Account” means the account by that name established and held by the Trustee pursuant to the Indenture.

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

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

“Redevelopment Project” means the undertaking of the Agency pursuant to the Redevelopment Plan and the Redevelopment Law for the redevelopment of the project area described in the Redevelopment Plan.

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

A-7 the portion of the 2002 Bonds, the 2005 Bonds, the 2010 Bonds or the Parity Debt refunded with the proceeds of such Refunding Debt.

“Registration Books” means the records maintained by the Trustee pursuant to the Indenture for the registration and transfer of ownership of the Bonds.

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

“Request of the Agency” means a request in writing signed by the Chairman, Executive Director, Treasurer or Secretary of the Agency, or any other officer of the Agency duly authorized by the Agency for that purpose.

“Reserve Account” means the account by that name established and held by the Trustee pursuant to the Indenture.

“Reserve Requirement” means, (i) as of the Closing Date for the 2002 Bonds, $3,129,000.35; and (ii) until the amount on deposit in the Reserve Account is equal to the least of (a) Maximum Annual Debt Service, or (b) one hundred twenty-five percent (125%) of average Annual Debt Service, or (c) ten percent (10%) of the then outstanding principal amount of the Bonds, an amount equal to $3,129,000.35 plus any investment earnings on amounts in the Reserve Account. From and after the date on which the amount in the Reserve Account is first equal to the lesser of the three amounts specified in clauses (ii)(a), (b) and (c) of the preceding sentence, the “Reserve Requirement” means, as of the date of any calculation by the Agency, the least of (a) Maximum Annual Debt Service, (b) one hundred twenty-five percent (125%) of average Annual Debt Service, or (c) ten percent (10%) of the initial principal amount of the Bonds.

“Securities Depositories” means The Depository Trust Company, 55 Water Street, 50th Floor, New York, N.Y. 10041-0099 Attention: Call Notification Department, Fax (212) 855-7232; and, in accordance with then current guidelines of the Securities and Exchange Commission, such other addresses and/or such other securities depositories as the Agency may designate in a Request of the Agency delivered by the Agency to the Trustee.

“Sinking Account” means the account by that name established and held by the Trustee pursuant to the Indenture.

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

“S&P” means Standard & Poor’s Ratings Group, a division of The McGraw-Hill Companies, Inc., New York, New York, and its successors.

“State” means the State of California.

“Subordinate Debt” means any loans, advances or indebtedness issued or incurred by the Agency in accordance with the requirements of the Indenture, which are either: (i) payable from, but not secured by a pledge of or lien upon, the Tax Increment Revenues; or (ii) secured

A-8 by a pledge of or lien upon the Tax Increment Revenues which is subordinate to the pledge of and lien upon the Tax Increment Revenues hereunder for the security of the Bonds.

“Supplemental Indenture” means any resolution, agreement or other instrument which amends, supplements or modifies the Indenture and which has been duly adopted or entered into by the Agency; but only if and to the extent that such Supplemental Indenture is specifically authorized thereunder.

“Tax Code” means the Internal Revenue Code of 1986, as in effect on the date of issuance of the applicable series of the Bonds or (except as otherwise referenced herein) as it may be amended to apply to obligations issued on the date of issuance of the applicable series of the Bonds, together with applicable proposed, temporary and final regulations promulgated, and applicable official public guidance published, under the Code (including the Tax Regulations).

“Tax Increment Revenues” means all taxes annually allocated and paid to the Agency with respect to the Project Area pursuant to Article 6 of Chapter 6 (commencing with Section 33670) of the Redevelopment Law and Section 16 of Article XVI of the Constitution of the State including all payments, subventions and reimbursements (if any) to the Agency specifically attributable to ad valorem taxes lost by reason of tax exemptions and tax rate limitations; but excluding: (x) amounts of such taxes required to be deposited into the Low and Moderate Income Housing Fund of the Agency in any Fiscal Year pursuant to Section 33334.3 of the Redevelopment Law, (y) the Business Inventory Tax Subvention, and (z) amounts required by the Redevelopment Law to be paid to other taxing agencies to the extent the obligation to pay such amounts is not subordinate to the Agency’s obligation to repay the Bonds.

“Tax Regulations” means temporary and permanent regulations promulgated under Section 103 and all related provisions of the Tax Code.

“Tax Revenue Certificate” means a Certificate of the Agency identifying the amount of all Tax Increment Revenues received or to be received by the Agency in the then current Fiscal Year.

“Term Bonds” means, collectively, (a) the 2002 Bonds maturing on August 1, 2031, and (b) any maturity of Parity Debt which is subject to mandatory sinking account redemption pursuant to the Parity Debt Instrument authorizing the issuance thereof.

“Trustee” means BNY Western Trust Company, as Trustee thereunder, or any successor thereto appointed as Trustee in accordance with the provisions of the Indenture.

“2002 Bonds” means the Redevelopment Agency of the City of Long Beach 2002 Tax Allocation Bonds (North Long Beach Redevelopment Project) issued and Outstanding under the Indenture.

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

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

“2005C Authority Bonds” means the Authority’s Long Beach Bond Finance Authority Tax Allocation Revenue Bonds (Downtown and North Long Beach Redevelopment Project Areas), 2005 Series C, issued pursuant to the 2005C Authority Indenture.

A-9 “2005C Authority Indenture” means the Indenture of Trust, dated as of February 1, 2006, between the Authority and the 2005C Authority Trustee.

“2005C Authority Trustee” means The Bank of New York Trust Company, N.A., or any successor thereto acting as trustee under the 2005C Authority Indenture.

“2005C Bond Insurer” means Ambac Assurance Corporation, a Wisconsin-domiciled stock insurance company, as issuer of the 2005C Municipal Bond Insurance Policy.

“2005C Municipal Bond Insurance Policy” means the financial guaranty insurance policy with respect to the 2005C Authority Bonds issued by the 2005C Bond Insurer.

“2010 Bonds” means, collectively, the 2010 Series A Bonds and the 2010 Series B Bonds.

“2010 Series A Bonds” means the Agency’s Redevelopment Agency of the City of Long Beach Taxable Recovery Zone Economic Development Bonds, 2010 Series A (North Long Beach Redevelopment Project) authorized by and at any time Outstanding pursuant to the Indenture.

“2010 Series B Bonds” means the Agency’s Redevelopment Agency of the City of Long Beach Taxable Build America Bonds, 2010 Series B (North Long Beach Redevelopment Project) authorized by and at any time Outstanding pursuant to the Indenture.

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

“2010 Costs of Issuance Fund” means the fund by that name established and held by the Trustee pursuant to the Indenture.

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

Notwithstanding the foregoing, from and after the Purchase Date, all references in the Indenture to the terms listed below under the heading “Existing Terms” shall be deemed to instead refer to the corresponding terms listed below under the heading “New Terms”:

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

Security of Bonds

The Bonds and all Parity Debt shall be secured by a pledge of and lien on all of the Tax Increment Revenues, without preference or priority for series, issue, number, dated date, sale

A-10 date, date of execution or date of delivery; provided, however, that the pledge of and lien on that portion of the Tax Increment Revenues constituting Middle Harbor Additional Tax Increment with respect to the 2010 Bonds and any Parity Debt issued after the Closing Date for the 2010 Bonds shall be subordinate to the Agency’s payment obligations under Sections 2 and 6 of the Middle Harbor Agreement. The Bonds shall be additionally secured by a first and exclusive pledge of and lien upon all of the moneys in the Reserve Account, the Special Fund, the Debt Service Fund, the Interest Account, the Principal Account, the Sinking Account and the Redemption Account. Except for the Tax Increment Revenues and amounts in the funds and accounts created under the Indenture including amounts in the Reserve Account and the Special Fund, no funds or properties of the Agency shall be pledged to, or otherwise liable for, the payment of principal of or interest or premium (if any) on the Bonds.

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

Funds and Accounts; Application of Proceeds

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

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

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

A-11 Closing Date for the 2010 Bonds, and the Agency may apply the portion of the Tax Increment Revenues constituting the Middle Harbor Additional Tax Increment accordingly.

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

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

Principal Account. Five (5) days before each date on which principal of the Bonds becomes due and payable at maturity, the Agency shall withdraw from the Special Fund and transfer to the Trustee for deposit in the Principal Account an amount which, when added to the amount then on deposit in the Principal Account, will be equal to the amount of principal coming due and payable on such date on the Outstanding Bonds. All moneys in the Principal Account shall be used and withdrawn by the Trustee solely for the purpose of paying the principal of the Bonds upon the maturity thereof.

Sinking Account. Five (5) days before each date on which any Outstanding Term Bonds become subject to mandatory Sinking Account redemption, the Agency shall withdraw from the Special Fund and transfer to the Trustee for deposit in the Sinking Account an amount which, when added to the amount then contained in the Sinking Account, will be equal to the aggregate principal amount of the Term Bonds subject to mandatory Sinking Account redemption on such date. All moneys on deposit in the Sinking Account shall be used and withdrawn by the Trustee for the sole purpose of paying the principal of the Term Bonds as it shall become due and payable upon the mandatory Sinking Account redemption thereof.

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

A-12 preceding each Interest Payment Date shall be withdrawn from the Reserve Account by the Trustee and deposited in the Interest Account on or before the Interest Payment Date.

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

At least fifteen (15) days prior to the expiration of any Qualified Reserve Account Credit Instrument, the Agency shall be obligated either (i) to replace such Qualified Reserve Account Credit Instrument with a new Qualified Reserve Account Credit Instrument, or (ii) to deposit or cause to be deposited with the Trustee an amount of funds such that the amount on deposit in the Reserve Account is equal to the Reserve Requirement (without taking into account such expiring Qualified Reserve Fund Credit Instrument). In the event that the Agency shall fail to take action as specified in clause (i) or (ii) of the preceding sentence, the Trustee shall, prior to the expiration thereof, draw upon the Qualified Reserve Account Credit Instrument in full and deposit the proceeds of such draw in the Reserve Account.

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

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

Redemption Account. Five (5) days before each date on which Bonds are subject to redemption, other than mandatory Sinking Account redemption of Term Bonds, the Agency shall withdraw from the Special Fund and transfer to the Trustee for deposit in the Redemption Account an amount required to pay the principal of and premium, if any, on the Bonds to be so redeemed on such date. All moneys in the Redemption Account shall be used and withdrawn by the Trustee solely for the purpose of paying the principal of and premium, if any, on the Bonds upon the redemption thereof, on the

A-13 date set for such redemption, other than mandatory Sinking Account redemption of Term Bonds.

In addition to the deposits and transfers referred to above, the Trustee shall deposit to the Interest Account any amount received by it from the Authority Trustee and paid pursuant to the revenue fund provisions of the Authority Indenture.

Investment of Funds

Moneys in the Redevelopment Fund, the Debt Service Fund, the Interest Account, the Principal Account, the Sinking Account, the Reserve Account and the Redemption Account shall be invested by the Trustee in Permitted Investments specified in the Request of the Agency delivered to the Trustee at least two (2) Business Days in advance of the making of such investments; provided, however, that in the absence of any such direction from the Agency, the Trustee shall invest any such moneys solely in Permitted Investments described in clause (f) of the definition thereof. Moneys in each Special Fund shall be invested by the Agency in any obligations in which the Agency is legally authorized to invest funds within its control.

Obligations purchased as an investment of moneys in any fund shall be deemed to be part of such fund or account. Whenever in the Indenture any moneys are required to be transferred by the Agency to the Trustee, such transfer may be accomplished by transferring a like amount of Permitted Investments. All interest or gain derived from the investment of amounts in any of the funds or accounts held by the Trustee under the Indenture shall be retained in the respective fund or account from which such investment was made; provided, however, that (i) all interest or gain from the investment of amounts in the Reserve Account shall be deposited by the Trustee in the Interest Account to the extent not required to cause the balance in the Reserve Account to equal the Reserve Requirement, and (ii) so long as no Event of Default shall have occurred and be continuing, all interest or gain on investments of amounts in the Special Fund shall be released from the pledge hereof and used by the Agency for any lawful purposes. For purposes of acquiring any investments under the Indenture, the Trustee may commingle funds held by it thereunder upon receipt by the Trustee of the Request of the Agency. The Trustee may act as principal or agent in the acquisition or disposition of any investment and may impose its customary charges therefor. The Trustee shall incur no liability for losses arising from any investments made pursuant to the Indenture.

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

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

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

A-14 For purposes of computations required under the Code, investments in funds or accounts (or portions thereof) that are subject to a yield restriction under applicable provisions of the Tax Code and (unless valuation is undertaken at least annually) investments in the Reserve Account shall be valued by the Agency at their present value (within the meaning of section 148 of the Tax Code).

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

The Trustee shall have no responsibility to determine Fair Market Value or present value of any Permitted Investment, and may rely upon any determination made by or on behalf of the Agency.

Issuance of Parity Debt

The Agency may issue or incur Parity Debt under the Indenture in such principal amount as shall be determined by the Agency, subject only to the following conditions:

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

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

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

(i) the amount of subventions paid by the State of California or any other amount appropriated by the State for the Agency;

(ii) unless the “Teeter Plan” is currently in effect and the County has made no announcement that the Teeter Plan would terminate, the percentage derived by applying the average percentage by which the actual tax collections in the Project Area were less than the amount of the tax levy in the Project Area for the immediately preceding five fiscal years;

(iii) the amount by which Tax Increment Revenues would be decreased if all pending assessment appeals were to be determined in favor of the property

A-15 owners in a proportionate amount equal to the average percent of reductions over the most recent five years of appeals history; and

(iv) the percentage of Tax Increment Revenues which must be deposited to the Low and Moderate Income Housing Fund with the exception of amounts which, in the opinion of Bond Counsel, may be used to pay debt service on the Bonds.

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

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

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

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

(ii) The principal of such Parity Debt shall be payable on August 1 in any year in which principal is payable; and

(iii) Money (and/or a Qualified Reserve Fund Credit Instrument) shall be deposited in the Reserve Account in an amount such that the amount in the Reserve Account is equal to the Reserve Requirement in effect immediately following the issuance of the Parity Debt.

(f) The Agency shall deliver to the Trustee a Certificate of the Agency certifying that the conditions precedent to the issuance of such Parity Debt set forth in subsections (a), (b), (c) and (e) above have been satisfied.

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

A-16 Issuance of Subordinate Debt

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

Agency Covenants

Punctual Payment. The Agency will punctually pay or cause to be paid the principal of and interest on the Bonds, together with any redemption premiums thereon, in strict conformity with the terms of the Indenture, and it will faithfully observe and perform all of the conditions, covenants and requirements of the Indenture.

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

Payment of Claims. The Agency will pay and discharge, or cause to be paid and discharged, any and all lawful claims for labor, materials or supplies which, if unpaid, might become a lien or charge upon the properties owned by the Agency or upon the Tax Increment Revenues or any part thereof, or upon any funds in the hands of the Trustee, or which might impair the security of the Bonds. Nothing in the preceding statement shall require the Agency to make any such payment so long as the Agency in good faith shall contest the validity of said claims.

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

A-17 Protection of Security and Rights. The Agency will preserve and protect the security of the Bonds and the rights of the Trustee, the Municipal Bond Insurer and the Bond Owners. From and after the Closing Date, the Bonds shall be incontestable by the Agency.

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

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

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

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

Payment of Expenses; Indemnification. The Agency shall pay to the Trustee all compensation for all services rendered under the Indenture following the receipt of a statement therefor, including but not limited to all reasonable expenses, charges, legal and consulting fees

A-18 and other disbursements and those of its attorneys, agents and employees, incurred in and about the performance of its powers and duties thereunder.

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

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

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

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

A-19 a result of the investment of amounts on deposit in any fund or account established hereunder, together with all other amounts due and payable to the United States of America.

Payment of Authority Expenses. The Agency agrees to pay any and all expenses of the Authority incurred in connection with the administration of the Authority Bonds, including but not limited to Authority Trustee fees and expenses, from Tax Increment Revenues or other available funds.

Further Assurances. The Agency will adopt, make, execute and deliver any and all such further resolutions, instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of the Agency Indenture, and for the better assuring and confirming unto the Owners the rights and benefits provided in the Agency Indenture.

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

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

In furtherance of the foregoing provisions, the Agency agrees (i) to use 100 percent of the excess of (A) the sale proceeds of the 2010 Series A Bonds, less not more than two percent (2%) of such proceeds to pay issuance costs, plus investment proceeds thereon, over (B) the amount of such proceeds deposited to the Reserve Account, for capital expenditures for one or more qualified economic development purposes, as described in Section 1400U-2(c) of the Tax Code; and (ii) not to use more than two percent (2%) of the proceeds of the 2010 Series A Bonds to pay 2010 Costs of Issuance relating to the 2010 Series A Bonds.

The Agency acknowledges that, in the event of an examination by the Internal Revenue Service of the status of the 2010 Series A Bonds, under present rules, the Agency may be treated as a “taxpayer” in such examination and agrees that it will respond in a commercially reasonable manner to any inquiries from the Internal Revenue Service in connection with such an examination.

The Agency authorizes the officials of the Agency responsible for issuing the 2010 Series A Bonds to make such further covenants and certifications regarding the specific use of the proceeds of the 2010 Series A Bonds as approved by the Agency and as may be necessary to

A-20 assure that the use thereof will not cause the 2010 Series A Bonds to be arbitrage bonds and to assure that the 2010 Series A Bonds will be “build America bonds” and “recovery zone economic development bonds.” In connection therewith, the Agency further agrees: (i) through its officers, to make such further specific covenants, representations as shall be truthful, and assurances as may be necessary or advisable; (ii) to consult with Bond Counsel approving the 2010 Series A Bonds and to comply with such advice as may be given; (iii) to pay to the United States, as necessary, such sums of money representing required rebates of excess arbitrage profits relating to the 2010 Bonds; (iv) to file such forms, statements, and supporting documents as may be required and in a timely manner; and (v) if deemed necessary or advisable by its officers, to employ and pay fiscal agents, financial advisors, attorneys, and other persons to assist the Agency in connection with such compliance.

Build America Bond Covenants. The Agency makes an irrevocable election to apply section 54AA of the Tax Code, including subsection 54AA(g) of the Tax Code, to the 2010 Series B Bonds and designates each of the 2010 Series B Bonds as a “build America bond” within the meaning of section 54AA(d) of the Tax Code, and as a “qualified bond” within the meaning of section 54AA(g) and Section 6431 of the Tax Code. The Agency acknowledges that as a result of these elections, interest on the 2010 Series B Bonds shall be includible in gross income of the owners of the 2010 Series B Bonds for federal income tax purposes and the owners of the 2010 Series B Bonds will not be entitled to any interest subsidy payments with respect to the 2010 Series B Bonds under section 54AA of the Tax Code.

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

In furtherance of the foregoing provisions, the Agency hereby agrees (i) to use 100 percent of the excess of (A) the available project proceeds (as defined in section 54A of the Tax Code) of the 2010 Series B Bonds, over (B) the amount of proceeds of the 2010 Series B Bonds deposited to the Reserve Account, for capital expenditures; and (ii) not to use more than two percent (2%) of the proceeds of the 2010 Series B Bonds to pay 2010 Costs of Issuance relating to the 2010 Series B Bonds.

The Agency acknowledges that, in the event of an examination by the Internal Revenue Service of the status of the 2010 Series B Bonds, under present rules, the Agency may be treated as a “taxpayer” in such examination and agrees that it will respond in a commercially reasonable manner to any inquiries from the Internal Revenue Service in connection with such an examination.

The Agency authorizes the officials of the Agency responsible for issuing the 2010 Series B Bonds to make such further covenants and certifications regarding the specific use of the proceeds of the 2010 Series B Bonds as approved by the Agency and as may be necessary to assure that the use thereof will not cause the 2010 Series B Bonds to be arbitrage bonds and to assure that the 2010 Series B Bonds will be “build America bonds.” In connection therewith, the Agency further agrees: (i) through its officers, to make such further specific covenants, representations as shall be truthful, and assurances as may be necessary or advisable; (ii) to consult with Bond Counsel approving the 2010 Series B Bonds and to comply with such advice

A-21 as may be given; (iii) to pay to the United States, as necessary, such sums of money representing required rebates of excess arbitrage profits relating to the 2010 Bonds; (iv) to file such forms, statements, and supporting documents as may be required and in a timely manner; and (v) if deemed necessary or advisable by its officers, to employ and pay fiscal agents, financial advisors, attorneys, and other persons to assist the Agency in connection with such compliance.

Obligations Related to Federal Subsidy Payments. The Agency agrees that, on each Interest Payment Date, the Agency will cause 100% of the interest and/or principal payment then due on the 2010 Bonds to be paid to the Trustee in the manner and from the sources of funds described in the Indenture, and the Agency acknowledges that any Direct Payment with respect to such Interest Payment Date will not be used as an offset to the amount due on the 2010 Bonds on any Interest Payment Date.

The Agency expects to enter into a Calculation Agency Agreement with The Bank of New York Mellon Trust Company, N.A., acting as “calculation agent” thereunder with respect to the Direct Payments for the 2010 Bonds. The terms and provisions of any such agreement shall in no way alter the obligations and duties of the Trustee or the Agency under the Indenture, and in the event of any conflict between the provisions of any such agreement and the provisions of the Indenture, the provisions of the Indenture shall prevail.

Reservation of Funds for SERAF Payments. The Agency shall maintain sufficient funds on hand to make any payment required to be made by the Agency for Fiscal Year 2009-10 to the Los Angeles County Supplemental Education Revenue Augmentation Fund. The Agency shall set aside and maintain sufficient funds from tax increment revenues received by it in Fiscal Year 2010-11 or from other available sources to make any payment required to be made by the Agency for Fiscal Year 2010-11 to the Los Angeles County Supplemental Education Revenue Augmentation Fund. The amounts described in the preceding two sentences shall be maintained or set aside and maintained, respectively, until such time as the respective payments to the Los Angeles County Supplemental Education Revenue Augmentation Fund are made by the Agency or a court of competent jurisdiction finds, in a final nonappealable judgment, that the Agency is not required to make such payments.

Amendment of the Indenture

The Indenture and the rights and obligations of the Agency and of the Owners thereunder may be modified or amended at any time by a Supplemental Indenture which shall become binding upon adoption, without the consent of any Owners, to the extent permitted by law and only for any one or more of the following purposes:

(a) to add to the covenants and agreements of the Agency contained in the Indenture, other covenants and agreements thereafter to be observed, or to limit or surrender any rights or power herein reserved to or conferred upon the Agency; or

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

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

A-22

(d) to make such additions, deletions or modifications as may be necessary or desirable (i) to assure exemption from federal income taxation of interest on the Bonds (other than the 2010 Bonds), and (ii) to assure that the 2010 Bonds satisfy any applicable requirements of Sections 54AA, 6431, 1400U-1 and 1400U-2 of the Tax Code and any related Tax Regulations.

Except as set forth in the preceding paragraph, the Indenture and the rights and obligations of the Agency and of the Owners may be modified or amended at any time by a Supplemental Indenture which shall become binding when the written consents of the Municipal Bond Insurer and the Owners of a majority in aggregate principal amount of the respective Bonds then Outstanding are delivered to the Trustee. No such modification or amendment shall (a) extend the maturity of or reduce the interest rate on any Bond or otherwise alter or impair the obligation of the Agency to pay the principal, interest or redemption premium (if any) at the time and place and at the rate and in the currency provided therein of any Bond without the express written consent of the Owner of such Bond, (b) reduce the percentage of Bonds required for the written consent to any such amendment or modification, or (c) without its written consent thereto, modify any of the rights or obligations of the Trustee.

From and after the time any Supplemental Indenture becomes effective pursuant to the Indenture, the Indenture shall be deemed to be modified and amended in accordance therewith, the respective rights, duties and obligations of the parties hereto or thereto and all Owners, as the case may be, shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modification and amendment, and all the terms and conditions of any Supplemental Indenture shall be deemed to be part of the terms and conditions of the Indenture for any and all purposes.

After the effective date of any amendment or modification of the Indenture as described therein, the Agency may determine that any or all of the Bonds shall bear a notation, by endorsement in form approved by the Agency, as to such amendment or modification and in that case upon demand of the Agency the Owners of such Bonds shall present such Bonds for that purpose at the Office of the Trustee and thereupon a suitable notation as to such action shall be made on such Bonds. In lieu of such notation, the Agency may determine that new Bonds shall be prepared and executed in exchange for any or all of the Bonds and in that case upon demand of the Agency the Owners of the Bonds shall present such Bonds for exchange at the Office of the Trustee without cost to such Owners.

The provisions of the Indenture shall not prevent any Owner from accepting any amendment as to the particular Bond held by such Owner, provided that due notation thereof is made on such Bond.

The Trustee may rely, and shall be protected in relying, upon a Certificate of the Agency and an opinion of counsel stating that all requirements of the Indenture relating to the amendment or modification thereof have been satisfied and that such amendments or modifications do not materially adversely affect the interests of the Owners.

Events of Default

The following events constitute Events of Default under the Indenture:

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

A-23 (b) Failure to pay any installment of interest on any Bonds when and as the same shall become due and payable.

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

(d) The Agency shall commence a voluntary case under Title 11 of the United States Code or any substitute or successor statute.

(e) The occurrence of an Event of Default under and as defined in any Parity Debt Instrument.

Notwithstanding the foregoing, there shall be no Event of Default as a consequence of failure to fully pay the principal and interest due on the 2002 Bonds, so long as debt service on the Authority Bonds is fully paid when due.

If an Event of Default has occurred and is continuing, the Trustee may with the consent of the Municipal Bond Insurer, and the Trustee shall if requested in writing by the Municipal Bond Insurer, or with the consent of the Municipal Bond Insurer by the Owners of a majority in aggregate principal amount of the Bonds then Outstanding, by written notice to the Agency, exercise any remedies available to the Trustee and the Owners in law or at equity.

Immediately upon becoming aware of the occurrence of an Event of Default, the Trustee shall give notice of such Event of Default to the Agency by telephone confirmed in writing. With respect to any Event of Default described in clauses (a) or (b) above the Trustee shall, and with respect to any Event of Default described in clause (c) above the Trustee in its sole discretion may, also give such notice to the Owners in the same manner as provided in the Indenture for notices of redemption of the Bonds.

Application of Funds Upon Default. So long as an Event of Default exists, all sums received by the Trustee hereunder shall be applied by the Trustee as follows and in the following order:

(a) To the payment of the reasonable fees, costs and expenses of the Trustee (including reasonable fees and expenses of its counsel) incurred in and about the performance of its powers and duties under the Indenture and the payment of all reasonable fees, costs and expenses owing to the Trustee pursuant to the Indenture; and

(b) To the payment of the whole amount of interest on and principal of the Bonds then due and unpaid, with interest on overdue installments of principal and interest to the extent permitted by law at the net effective rate of interest then borne by the Outstanding Bonds; provided, however, that in the event such amounts shall be insufficient to pay in full the full amount of such interest and principal, then such amounts shall be applied in the following order of priority:

A-24 first, to the payment of all installments of interest on the Bonds then due and unpaid, on a pro rata basis in the event that the available amounts are insufficient to pay all such interest in full,

second, to the payment of principal of all installments of the Bonds then due and unpaid, on a pro rata basis in the event that the available amounts are insufficient to pay all such principal in full, and

third, to the payment of interest on overdue installments of principal and interest, on a pro rata basis in the event that the available amounts are insufficient to pay all such interest in full.

In the event that the Trustee, upon the happening of an Event of Default, shall have taken any action, by judicial proceedings or otherwise, pursuant to its duties under the Indenture, whether upon its own discretion or upon the request of the Owners of a majority in principal amount of the Bonds then Outstanding it shall have full power, in the exercise of its discretion for the best interests of the Owners of the Bonds, with respect to the continuance, discontinuance, withdrawal, compromise, settlement or other disposal of such action; provided, however, that the Trustee shall not, unless there no longer continues an Event of Default, discontinue, withdraw, compromise or settle, or otherwise dispose of any litigation pending at law or in equity, if at the time there has been filed with it a written request signed by the Owners of a majority in principal amount of the Outstanding Bonds under the Indenture opposing such discontinuance, withdrawal, compromise, settlement or other disposal of such litigation.

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

Such notification, request, tender of indemnity and refusal or omission are declared, in every case, to be conditions precedent to the exercise by any Owner of any remedy under the Indenture; it being understood and intended that no one or more Owners shall have any right in any manner whatever by his or their action to enforce any right under the Indenture, except in the manner therein provided, and that all proceedings at law or in equity to enforce any provision of the Indenture shall be instituted, had and maintained in the manner in the Indenture provided and for the equal benefit of all Owners of the Outstanding Bonds.

The right of any Owner of any Bond to receive payment of the principal of and premium, if any, and interest on such Bond as in the Indenture provided, shall not be impaired or affected without the written consent of such Owner, notwithstanding the foregoing provisions or any other provision of the Indenture.

Nothing in any provision of the Indenture or in the Bonds shall affect or impair the obligation of the Agency, which is absolute and unconditional, to pay from the Tax Increment Revenues and other amounts pledged under the Indenture, the principal of and interest and redemption premium (if any) on the Bonds to the respective Owners when due and payable as

A-25 therein provided, or affect or impair the right of action, which is also absolute and unconditional, of the Owners to institute suit to enforce such payment by virtue of the contract embodied in the Bonds.

A waiver of any default by any Owner shall not affect any subsequent default or impair any rights or remedies on the subsequent default. No delay or omission of any Owner to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a waiver of any such default or an acquiescence therein, and every power and remedy conferred upon the Owners by the Redevelopment Law or by the Indenture may be enforced and exercised from time to time and as often as shall be deemed expedient by the Owners or the Insurer.

If a suit, action or proceeding to enforce any right or exercise any remedy shall be abandoned or determined adversely to the Owners, the Agency and the Owners shall be restored to their former positions, rights and remedies as if such suit, action or proceeding had not been brought or taken.

Any suit, action or proceeding which any Owner shall have the right to bring to enforce any right or remedy under the Indenture may be brought by the Trustee for the equal benefit and protection of all Owners similarly situated and the Trustee is appointed (and the successive respective Owners by taking and holding the Bonds shall be conclusively deemed so to have appointed it) the true and lawful attorney-in-fact of the respective Owners for the purpose of bringing any such suit, action or proceeding and to do and perform any and all acts and things for and on behalf of the respective Owners as a class or classes, as may be necessary or advisable in the opinion of the Trustee as such attorney-in-fact, subject to the provisions of the Indenture.

No remedy conferred in the Indenture upon or reserved to the Owners is intended to be exclusive of any other remedy. Every such remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing, at law or in equity or by statute or otherwise, and may be exercised without exhausting and without regard to any other remedy conferred by the Redevelopment Law or any other law.

Defeasance of Bonds

If the Agency shall pay and discharge the entire indebtedness on any Bonds in any one or more of the following ways:

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

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

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

A-26 (d) by purchasing such Bonds prior to maturity and tendering such Bonds to the Trustee for cancellation; and if such Bonds are to be redeemed prior to the maturity thereof notice of such redemption shall have been duly given or provision satisfactory to the Trustee shall have been made for the giving of such notice, then, at the election of the Agency, and notwithstanding that any such Bonds shall not have been surrendered for payment, the pledge of the Tax Increment Revenues and other funds provided for in the Indenture and all other obligations of the Trustee and the Agency under the Indenture with respect to such Bonds shall cease and terminate, except only (a) the obligations of the Agency under certain tax covenants in the Indenture, (b) the obligation of the Trustee to transfer and exchange Bonds under the Indenture, (c) the obligation of the Agency to pay or cause to be paid to the Owners of such Bonds, from the amounts so deposited with the Trustee, all sums due thereon, and (d) the obligations of the Agency to compensate and indemnify the Trustee pursuant to the Indenture. Any funds thereafter held by the Trustee, which are not required for said purpose, shall be paid over to the Agency, to be used for any lawful purpose of the Agency.

A-27 THIS PAGE INTENTIONALLY LEFT BLANK APPENDIX B

CERTAIN INFORMATION REGARDING THE CITY OF LONG BEACH

The Bonds are not obligations of the City of Long Beach (the “City”) or the County of Los Angeles (the “County”), and do not represent a lien or charge against any funds or property of the City or the County. The following information is provided only to give prospective investors an overview of certain background information concerning the City and the County.

General

The City of Long Beach (the “City”) is a municipal corporation and chartered city of the State and encompasses approximately 52 square miles of coastal area located on the southern edge of Los Angeles County (the “County”). With a current population of approximately 490,000, it is the second largest city in the County and the fifth largest city in the State of California. The City’s climate is mild, with temperatures ranging from an average of 54 degrees in January to 72 degrees in July. Precipitation averages 12.1 inches per year. The center of the City is 22 miles south of downtown Los Angeles, 450 miles south of San Francisco and 110 miles north of San Diego. The City has long been a major industrial center and popular beach resort area. The Port of Long Beach (the “Port”), along with its related commercial activities, imparts strength to the local economy. Further, the City has been successful in building a substantial tourist and convention business and is currently taking vigorous steps to augment tax revenues from these sources.

Municipal Government

The City was originally incorporated in 1888, and after a short period of disincorporation, was reincorporated on December 13, 1897. Since 1907, the City has been governed as a charter city. The present City charter was originally adopted in 1921 and has been amended from time to time.

The City operates under the council-manager form of government with a nine-member City Council. City Council members are nominated and elected by district to serve four-year terms, with a maximum of two such terms. The Mayor is nominated and elected by the City at large. The Vice-Mayor is elected by the Council from among its members. Other city-wide elected offices are City Attorney, City Auditor and City Prosecutor.

The City Manager is appointed by and serves at the discretion of the City Council. As head of the municipal government, the City Manager is responsible for the efficient administration of all departments, with the exception of the elective offices noted above and the following three semi-autonomous commissions: Civil Service Commission, Board of Water Commissioners and Board of Harbor Commissioners. The City currently employs approximately 5,600 persons within 22 departments.

In 1931, a Charter amendment was passed which created the Board of Water Commissioners and authorized the City to join the Metropolitan Water District of Southern California. These decisions sought to ensure an adequate water supply for the City.

Within the framework of the City’s General Plan, orderly growth and development of the community is controlled by a three-step planning and budgetary process utilizing the following instruments: the annual budget, the six-year Capital Improvement Program and the five-year Long Range Financial Plan.

Appendix B Page 1

Population

The City’s population as of January 1, 2009, was estimated to be 492,682 persons. This figure represents 4.7% of the corresponding County figure and 1.29% of the corresponding State figure. The City’s population increased 28.6% during the three decades between 1970 and 2000. The following table illustrates the City’s population growth relative to the population of the County and the State. Population data for 2005-2009 are as of January 1, while the census amounts for 1970, 1980, 1990 and 2000 are as of April 1.

TABLE B-1 City of Long Beach, County of Los Angeles and State of California Population Data

Year City of Long Beach County of Los Angeles State of California 1970 358,879 7,041,980 19,971,068 1980 361,355 7,477,421 23,667,836 1990 427,200 8,832,500 29,558,000 2000 459,900 9,487,400 33,753,000 2004 487,305 10,107,451 36,271,091 2005 491,564 10,226,506 36,810,358 2006 490,166 10,245,572 37,172,015 2007 492,921 10,331,939 37,662,518 2008 492,642 10,363,850 38,049,462 2009 492,682 10,409,035 38,487,889

Source: California State Department of Finance.

Appendix B Page 2 Employment

The following table sets forth the average employment for major industry types within the County:

TABLE B-2 County of Los Angeles Average Employment by Industry 2005-2009

Industry 2005 2006 2007 2008 2009 Agriculture 7,400 7,600 7,500 6,900 6,200 Natural Resources and Mining 3,700 4,000 4,400 4,400 4,100 Construction 148,700 157,500 157,600 145,200 116,500 Manufacturing 471,700 461,700 449,200 434,500 389,200 Wholesale Trade 219,300 225,700 227,000 223,700 204,100 Retail Trade 414,400 423,300 426,000 416,500 386,600 Transportation, Warehousing and 161,700 165,200 165,600 163,100 151,700 Utilities Information 207,600 205,600 209,800 210,300 193,700 Financial Activities 244,000 248,800 246,000 235,700 220,200 Professional and Business Services 576,100 598,900 605,400 582,600 528,100 Education and Health Services 471,300 478,700 490,500 503,400 513,900 Leisure and Hospitality 377,800 388,600 397,900 401,600 383,900 Other Services 144,300 145,200 147,100 146,100 137,900 Government 583,700 589,400 595,700 603,700 599,500 Total Wage and Salary 4,031,600 4,100,100 4,129,600 4,077,700 3,835,600

Source: State of California – Employment Development Department, Labor Market Division.

The California Employment Development Department compiles data monthly on the status of employment and unemployment in the Los Angeles-Long Beach labor market (Los Angeles County). As an integral part of the Los Angeles metropolitan area, Long Beach benefits from the wide variety of job opportunities available in neighboring communities throughout the County.

Appendix B Page 3 The following table summarizes labor force, employment and unemployment by industry since 2004 in the County, the State and the United States:

TABLE B-3 County of Los Angeles, State of California and United States Labor Force, Employment and Unemployment Annual Average

Civilian Unemployment Year Area Labor Force Employment Unemployment Rate (%) 2004 Long Beach(3) 230,200 213,700 16,600 7.2% County 4,770,800 4,460,500 310,300 6.5 California(3) 17,444,400 16,354,800 1,086,700 6.2 United States(2) 147,401,000 139,252,000 8,149,000 5.5 2005 Long Beach(3) 232,100 218,400 13,700 5.9 County 4,816,000 4,559,500 256,500 5.3 California(3) 17,629,200 16,671,900 957,200 5.4 United States(2) 149,320,000 141,730,000 7,591,000 5.1 2006 Long Beach(3) 233,600 221,300 12,300 5.3 County 4,850,700 4,620,800 229,900 4.7 California(3) 17,821,100 16,948,400 872,700 4.9 United States(2) 151,428,000 144,427,000 7,001,000 4.6 2007 Long Beach(3) 237,100 223,900 13,100 5.5 County 4,921,200 4,675,300 245,900 5.0 California(3) 18,078,000 17,108,700 969,300 5.4 United States(2) 153,124,000 146,047,000 7,078,000 4.6 2008 Long Beach(1) 240,200 220,300 19,900 8.3 County 4,972,000 4,598,300 373,800 7.5 California(1) 18,391,800 17,059,600 1,332,300 7.2 United States(2) 154,287,000 145,362,000 8,924,000 5.8 2009 Long Beach(1) 237,600 207,300 30,300 12.8 County 4,896,100 4,328,600 567,500 11.6 California1(1) 18,250,200 16,163,900 2,086,200 11.4 United States(2) 154,142,000 139,877,000 14,265,000 9.3

(1) 2009 updated with final non-preliminary annual figures for Long Beach City and CA State (2) U.S. Department of Labor – Bureau of Labor Statistics (3) Restated prior years. Unknown if Long Beach 2004-2008 figures restated not listed as of 03/25/2010. CA figures restated in years 2007 through 2004. Source: State of California – Employment Development Department and U.S. Department of Labor – Bureau of Labor Statistics

Major Employers

The largest employer in the City is the Long Beach Unified School District; employing approximately 8,304 people. The Long Beach Unified School District has 91 schools and serves approximately 86,207 students. The second largest employer in the City is The Boeing Company (“Boeing”), with facilities at the Long Beach Airport employing approximately 7,680 persons.

Other major employers in the City include government, education and health care providers, including the City, California State University (Long Beach), Long Beach Memorial Medical Center and the Veteran Affairs Medical Center.

Appendix B Page 4 The following table sets forth the City’s major employers:

TABLE B-4 City of Long Beach Major Employers As of September 30, 2009

Number of Employer Employees 1. Long Beach Unified School District 8,304 2. The Boeing Co 7,684 3. California State University Long Beach 6,690 4. Long Beach Memorial Medical Center 5,805 5. City of Long Beach 5,570 6. Veterans Affair Medical Center 2,332 7. Long Beach City College 2,276 8. Verizon 1,500 9. St. Mary Medical Center 1,479 10. U.S. Postal Service 1,434

Source: City of Long Beach – Comprehensive Annual Financial Report - FY 2009 Unaudited.

Industry

The City is an important component of the County industrial complex, the largest concentration of major industrial firms in the western United States. The aircraft/aerospace products group represents a very important single industrial category in the City. Boeing is the second largest employer in Long Beach. See “—Major Employers” above. Other important industries include petroleum and chemical production, metal fabrication and food and kindred product production.

Commercial Activity

Retail sales activity is located throughout the City, from the central business district to the updated Los Altos and Marina Pacifica “power” centers, both of which opened in 1996, and the Towne Center, a 100-acre retail development built on the site of the former Long Beach Naval Hospital, which opened in November 1998. The World Trade Center in the downtown area of the City contains more than two million square feet of office space and is an international focal point for shipping, finance and trade services.

North of the Port at the intersection of the San Diego (I-405) and Long Beach (I-710) freeways is the 55-acre Freeway Business Center, a high-technology office complex which includes Direct TV, Irvin Industries, Inc., Epson America, Inc., Mercedes Benz, Denso Sales California and Toyota. The 60-acre Long Beach Airport Business Park contains over 800,000 square feet of mid-rise office space and is the site for the Long Beach Business Park and the North Long Beach Business Center. Located in the northern part of the City, these facilities offer a combined total of more than 20.5 acres of office, commercial and industrial space near to the I-405 and I-710 Freeways, two major arteries in the Southern California freeway system. The 50-acre Kilroy Airport Center provides 800,000 square feet of office space.

Several hotels are located in the City, including the Westin Long Beach, Renaissance, Hilton, Hyatt Regency Long Beach, Holiday Inn, Golden Sails Hotel, Long Beach Airport Marriott and the Queen Mary Hotel. Within the past 18 months the West Coast Long Beach Hotel has undergone a significant renovation and has reopened as the Hotel Maya and a Marriott Residence Inn has been constructed on an adjacent parcel; both hotels are in the North Long Beach Project Area.

Appendix B Page 5

The following table illustrates the City’s annual volume of taxable transactions from 2005 through 2009:

TABLE B-5 City of Long Beach Taxable Sales, 2005-2009 ($000’s)

Type of Business 2005(1) 2006(1) 2007 2008 2009 Apparel Stores $ 150,716 $ 149,357 $ 150,119 $ 145,602 $ 130,464 General Merchandise Stores 295,790 302,746 319,674 314,243 305,002 Drug Stores 71,107 72,209 76,901 77,306 75,859 Food Stores 216,224 220,502 225,109 246,601 214,782 Packaged Liquor Stores 31,278 30,186 29,742 35,909 37,210 Eating/Drinking Places 608,402 647,951 685,944 684,793 661,528 Home Furnishings and Appliances 91,592 98,945 98,069 88,166 79,969 Building Materials and Farm Implements 693,867 822,589 950,450 859,638 938,501 Auto Dealers/Auto Supplies 333,508 309,628 313,617 264,373 279,669 Service Stations 411,695 485,523 507,833 586,069 491,491 Other Retail Stores 462,866 479,519 477,026 415,493 376,469 Retail Stores Totals $3,367,045 $3,619,155 $3,834,484 $3,718,193 $3,590,942 All Other Outlets 854,487 926,674 912,021 998,099 829,510 Total All Outlets $4,221,532 $4,545,829 $4,746,505 $4,716,292 $4,420,452

(1) Restated prior years. Recent consultant source modified methodology revising amounts among categories and totals. Source: MuniServices, State of California - Board of Equalization, (SBOE) and City Department of Financial Management.

Appendix B Page 6 Construction

The City issued building permits, valued at approximately $136 million during Fiscal Year 2009. Of this total approximately 54.0% consisted of residential construction and approximately 46.0% consisted of non-residential construction. The City’s annual permit values since Fiscal Year 2005 are set forth below:

TABLE B-6 City of Long Beach Building Permit Valuations, 2005-2009 ($000’s)

Type of Permit 2005 2006 2007 2008 2009 Residential New Single Dwelling $ 27,968,744 $ 41,568,987 $ 16,876,359 $ 12,366,364 $ 3,700,221 New Multi Dwelling 46,356,534 73,148,732 56,107,877 87,383,603 8,719,540 Additions/Alterations 134,878,539 130,081,723 117,410,616 84,226,735 60,475,475 Total Residential $209,203,817 $244,799,442 $190,394,852 $183,976,702 $72,895,236 Non-Residential New Commercial $ 13,384,839 $ 3,847,432 $ 22,734,702 $ 31,911,962 $ 9,091,990 New Industrial 2,525,000 166,950 259,443 297,480 - Other 8,055,962 12,777,673 1,635,980 2,061,439 1,010,173 Additions/Alterations 62,529,344 81,803,819 82,545,830 55,343,133 52,926,355 Total Non-Residential 86,495,145 98,595,874 107,175,955 89,614,014 63,028,518 Total Valuation $295,698,962 $343,395,316 $297,570,807 $273,590,716 $135,923,754

Source: City of Long Beach Summary Financial Information Statement for Fiscal Year 2008-09.

Visitor and Convention Business

Tourism has long been a significant factor in the City’s economy. Boating facilities, marinas, sport fishing, shops and eight miles of public beaches attract thousands of visitors to the City each year. Other recreational facilities and attractions include the Long Beach Aquarium of the Pacific, the Queen Mary, the Community Playhouse, a municipal band and symphony orchestra, the Sports Arena, the Terrace and Center Theaters, Belmont Plaza Pool, the Long Beach Grand Prix and the Long Beach Ice Dogs professional ice hockey team. The Long Beach Museum of Art and the Museum of Latin American Art are both located within the City.

In 1994, the City approved the Queensway Bay Development Plan to create a premier waterfront attraction in Southern California, now known as Pike at Rainbow Harbor, comprised of 300 acres of prime oceanfront land adjacent to the City’s commercial core. It includes the Long Beach Aquarium, Rainbow Harbor, the expanded Long Beach Convention Center and up to 500,000 square feet of entertainment/retail development. The Long Beach Aquarium and Rainbow Harbor opened to the public in June 1998.

The Queen Mary, a vintage ocean liner open to the public since 1971, provides the City with a unique and interesting tourist attraction. The six-deck “Living Sea Museum” is the only facility of its kind in the world. The Queen Mary features three major restaurants, three fast food service facilities and 40 specialty shops. The Queen Mary Hotel, with 365 rooms, is aboard the ship. In addition, a Russian submarine, the “Scorpion,” is currently docked adjacent to the Queen Mary and is open for visitors. The Scorpion is another premier waterfront attraction complementing the popular Aquarium of the Pacific and the Queen

Appendix B Page 7 Mary. Carnival Cruise Lines operates out of a Long Beach homeport for its cruises to Mexico, adjacent to the Queen Mary.

The West Coast Long Beach Hotel, located on 18.8 waterfront acres west of the Queen Mary, is a development designed to afford 85% of the rooms with ocean views. The hotel consists of 200 rooms and offers resort style amenities in close proximity to the Queen Mary and Downtown attractions.

Formula 500 cars first raced through city streets and along the shoreline during the Long Beach Grand Prix in September 1975. The race was the first to be run on city streets in this country in 50 years. The City has hosted the United States Grand Prix West, now featuring “Indy” cars, every year since 1977 in what is now commonly known as the Long Beach Grand Prix. This event attracts 200,000 visitors to the City each year.

Long Beach Convention Center

The City has fostered convention business by expanding convention facilities and encouraging private sector participation. Trade shows, conventions, athletic contests and other events are held regularly at the Long Beach Convention and Entertainment Center (the “Convention Center”), which is part of the Pike at Rainbow Harbor oceanfront development. The Convention Center was enlarged in 1994 to accommodate 318,000 square feet of exhibit space. This expansion increased the total number of conventions and meetings held at the Convention Center, which competes with convention centers in cities such as Albuquerque, San Jose, Denver and Phoenix, and larger facilities in Los Angeles, Anaheim and San Diego. Marketing of the Convention Center by the Long Beach Convention and Visitors Bureau has resulted in increased occupancy rates for hotels serving the Convention Center. Following the attacks in New York City and on the Pentagon in Washington D.C. on September 11, 2001, occupancy rates declined. However, the City expects occupancy rates to increase as the Convention Center attracts additional regional convention business.

A $2.8 million renovation of the Convention Center was substantially completed in the fall of 2001. The renovation was completed pursuant to an agreement between the City and the Jehovah’s Witness organization, under which the Jehovah’s Witness organization supplied materials and labor for the renovation in exchange for the City’s permission to use the facility for 12.6 years. The City expended $300,000 for permits, furniture and equipment in connection with the renovation. The following table sets forth convention and delegate attendance for the past five years:

TABLE B-7 City of Long Beach Convention and Delegate Attendance

Calendar Year Number of Conventions Number of Delegates 2005 235 440,083 2006 226 446,739 2007 201 475,769 2008(1) 217 485,406 2009 194 469,452

(1) Restated prior year due to updated figures. Source: City of Long Beach Summary Financial Information Statement for Fiscal Year 2008-09.

Appendix B Page 8 Pike at Rainbow Harbor Project

The $450 million Pike at Rainbow Harbor Project (previously known as the Queensway Bay Project) developed by Developers Diversified Realty Corporation is one of the largest shoreline developments in California history. The Pike at Rainbow Harbor Project includes approximately 500,000 square feet of waterfront retail and entertainment space. The Pike at Rainbow Harbor is a joint venture of public and private investment. The development converted 300 acres of prime oceanfront property at the edge of downtown Long Beach into a major resort. The Pike at Rainbow Harbor Project includes the Aquarium of the Pacific, Shoreline Park, Rainbow Harbor, the retail portion of the Pike Project and the condominium housing portion of the Pike Project.

The Rainbow Harbor, named after Long Beach’s famous Rainbow Pier from the early part of the twentieth century, offers visitors a wide variety of dinner cruises, fishing and diving charters, and water taxis that shuttle between the downtown entertainment district and the historic Queen Mary ocean liner. The Aquarium of the Pacific is located on a five-acre site within Rainbow Harbor. The Aquarium site is 156,735 square feet and contains exhibits with more than 12,000 ocean animals, representing over 550 species. The Aquarium also contains a theater, learning center, an indoor/outdoor restaurant and a large gift shop.

Petroleum Production

The Wilmington Oil Field, which is one of the largest oil fields in the United States, traverses Long Beach. Since 1939, the City has developed and managed the oil operations on its Upland and Tideland properties. The Upland properties are owned by the City and the revenues can be used for general-purpose activities. The Tideland properties are owned by the City in trust for the State. The revenues, by legislation, are shared between the City, State, Occidental Petroleum Corp., and Tidelands Oil Production Company and the City’s share can only be used in support of tidelands purposes.

Operation of the Wilmington Oil Field is managed by two contractors, Tidelands Oil Production Company and Occidental Petroleum Corp.

The City administers all City oil operations, contracts, leases and agreements and directs all subsidence control operations through its Department of Oil Properties. Recent increases in the price of oil have increased the amount of revenues transferred to the Tidelands Operating Fund and the General Fund.

Transportation

Industry, business and residents all benefit from the excellent transportation network available in the City. Water, rail, air and highway facilities are highly developed throughout the City.

The County’s 22-mile light rail line opened July 1, 1990, connecting the central business districts of Long Beach and Los Angeles. Ridership on the “Metro Blue Line” currently averages approximately 66,000 riders per average weekday.

The San Diego Freeway (I-405), the San Gabriel River Freeway (I-605), the Long Beach Freeway (I-710) and the Riverside Freeway (I-91) all traverse the City, as do State Highways 1, 19, 22 and 214. This highway grid places both the City of Los Angeles and Los Angeles International Airport within a 30-minute drive.

Appendix B Page 9 The Long Beach Public Transportation Company was incorporated in 1963 as a nonprofit corporation with all capital shares held by the City. Since that time, the company has provided transit service to the City and surrounding areas. The company’s operations are locally supported through the Transportation Fund of the City. Interurban bus service is provided by Long Beach Transit, Los Angeles County Metropolitan Transportation Authority and Orange County Regional Transportation District.

Rail transportation to Long Beach is provided by two major transcontinental railroads: the Burlington Northern Santa Fe Railroad Company and the Union Pacific Railroad Company. Reciprocal switching is available between the two lines.

Port of Long Beach

The Port is owned by the City and operated by the Harbor Department, which was created by amendment to the City Charter in 1931. Functioning primarily as a landlord, the Harbor Department leases or assigns most docks, wharves, transit sheds, and terminals to shipping or terminal companies and other private firms for actual operation of these facilities. This Port is one of the most versatile shipping installations in the nation.

The Port covers 11.9 square miles, of which 7.1 square miles is water, and includes all harbor facilities of the City. The Port has 22 miles of waterfront with 65 deep water cargo berths. Container terminals occupy 1,356 acres, auto terminals occupy 182 acres, breakbulk and general cargo occupy 108 acres, dry bulk terminals occupy 100 acres, and petroleum and liquid bulk occupy 52 acres. The Port has seven container terminals with 70 cranes (owned by the Harbor Department and tenants) and three container freight stations. Five container terminals are served by on-dock rail yards. Additional cargo handling facilities include five transit sheds and 12 warehouses. Transit sheds are of concrete and steel construction. Wharves are constructed of reinforced concrete supported by reinforced concrete pilings or sheet pile bulkhead. Wharf aprons at all transit shed berths average 50 feet in width. Rail tracks serve all major marine facilities. In total, the Port owns 82 miles of rail trackage. Current Harbor Department plans envision enlarging and consolidating several of the container terminals due to the demand for larger facilities.

The Port is the first Southern California port to offer dockside rail. Dockside rail helps to move cargo between ships and trains for efficient distribution to markets east of the Rocky Mountains, and removes unnecessary trucks from area freeways.

The Port is self-sufficient. Under the State’s Tidelands laws, the Port must earn its revenue from activities related to commerce, navigation, recreation and fisheries, and must spend its money only on the same. The Port receives no tax revenues for its operations or expansions. Although it receives no tax support, the Port generates billions of dollars in revenue for private businesses and government entities, including the City.

In addition to containers, the harbor complex handles crude and refined petroleum products, dry bulk such as coke, and cement; automobiles, lumber, paper and fruit; steel and scrap metal. A free trade zone, Foreign Trade Zone #50, is also operated by the Port.

In 1989, the Port, the Port of Los Angeles (collectively, the “Ports”), the City and the City of Los Angeles formed the Alameda Corridor Joint Powers Authority (“ACTA”) to develop and operate a 20-mile long, multiple-track consolidated rail transportation corridor (the “Alameda Corridor”) along Alameda Street between the railroad freight yards located in the City of Los Angeles and the Ports in order to efficiently deal with the anticipated increase in volume of international freight, cargo and other goods to and from the Ports. Construction was completed and the Alameda Corridor opened for service in April 2002, at a cost of

Appendix B Page 10 $2.4 billion. The Alameda Corridor consolidates 90 miles of existing rail lines (4 current rail lines will be diverted onto 1 line) into an integrated system separated from nonrail traffic.

Long Beach Airport

The City owns and operates the Long Beach Airport, which has five runways varying from 4,200 to 10,000 feet in length. Pursuant to a court-ordered settlement reached in 1989, the current daily flight limits are 41 commercial jet airline and 25 commuter landings and takeoffs (“slots”). Included in the 41 aircraft slots are five cargo flights, operated by Airborne Express, Fed Ex and United Parcel Service. Commercial airline service is provided by Alaska Airlines, American Airlines, America West Airlines, and jetBlue Airways (“jetBlue”).

The Long Beach Airport is jetBlue’s west coast hub. jetBlue operates 22 of the 41 commercial slots at Long Beach, with direct service to New York City, Washington, D.C., Boston, Ft. Lauderdale, Salt Lake City, Oakland and Las Vegas.

The movement of aircraft in and out of Long Beach Airport is controlled by the Federal Aviation Administration (the “FAA”). The FAA operates the airport’s tower and navigation facilities. Navigation aids at the airport include Medium Intensity Approach Lights, Runway Visual Range, Direction Finding, Instrument Landing System, VHF, UHF and other radio communications equipment.

Long Beach Airport is an important aircraft manufacturing and completion center, proudly hosting two industry giants, The Boeing Company and Gulfstream Aerospace Corporation. Between these two firms, thousands of jobs help fuel the local economy. Long Beach Airport is landlord to almost 150 other businesses, mainly in the aviation and aerospace industry.

Appendix B Page 11 The following table sets forth operations at the Long Beach Airport during Fiscal years 2004-05 through 2008-09.

TABLE B-8 Long Beach Airport Traffic

Fiscal Year Passengers Cargo (lbs.) Aircraft Operations 2005 3,027,871(1) 108,470,000 344,377 2006 2,815,015(2) 102,303,000 360,811 2007 2,880,583(3) 100,354,000 399,622 2008 2,878,005(3) 100,092,000 354,727 2009 2,930,911(5) 72,312,000 302,672

(1) In fiscal year 2005, all 41 air carrier flight slots were allocated: 36 flight slots to four commercial airlines - Alaska, America West, American and JetBlue; and five slots to cargo carriers - Airborne Express, Federal Express and United Parcel Service. In addition, America West operated three commuter flights, out of the approved 25 commuter carrier flight slots. (2) In fiscal year 2006, 41 air carrier flight slots were allocated: 37 flight slots to four commercial airlines - Alaska, America West, American Airlines and JetBlue; and four flight slots to cargo carriers - Airborne Express, Federal Express and United Parcel Service. In addition, America West operated one commuter flight, while Delta/SkyWest operated four commuter flight slots, out of the approved 25 commuter carrier flight slots. American Airlines left Long Beach Airport on April 2, 2006. (3) In fiscal year 2007, 41 air carrier flight slots were allocated: 37 flight slots to three passenger airlines - Alaska, JetBlue, and US Airways, and four flight slots to cargo carriers - Airborne Express/DHL, Federal Express and United Parcel Service. Of the 25 available commuter carrier flight slots, Delta/Skywest operated four and US Airways operated one. In late FY07, ExpressJet Airlines was allocated six commuter flight slots and commenced service in late 2007. (4) In fiscal year 2008, all 41 air carrier flight slots were allocated: 37 flight slots to three passenger airlines - Alaska, JetBlue, and US Airways, and four flight slots to cargo carriers - Airborne Express/DHL, Federal Express and United Parcel Service. Of the 25 available commuter carrier flight slots, Delta/Skywest operated five and US Airways operated one. In FY08, ExpressJet Airlines was allocated six commuter flight slots and was in operation from October 1, 2007, through September 1, 2008. (5) In fiscal year 2009 all 41 air carrier flight slots were allocated: 38 flight slots to three passenger airlines - Alaska, JetBlue, and US Airways, and three flight slots to cargo carriers - Federal Express and United Parcel Service. Of the 25 available commuter carrier flight slots, Delta/Skywest operated five and Horizon operated three. Source: City of Long Beach Summary Financial Information Statement for Fiscal Year 2008-09.

Utilities

In 1931, a Charter amendment was passed which created the Board of Water Commissioners and authorized the City to join the Metropolitan Water District of Southern California. These decisions sought to ensure an adequate water supply for the City. Water and sewer services are provided by the Long Beach Water Department.

There are a number of utilities service providers operating in the City. Local telephone service is provided by Verizon and SBC. Electricity is distributed to the residents, organizations and businesses of Long Beach by Edison International. Electricity can be purchased from a number of electricity providers. Natural gas is provided by the Energy Department.

Education

The City is served by the Long Beach Unified School District, which provides primary and secondary educational instruction for approximately 86,207 students through the operation of 49 elementary schools, 27 junior high schools, 12 high schools, including one adult school. There are additionally five charter schools. Post-secondary education is available at Long Beach City College, a tax-supported two-year institution administered by the Long Beach Community College District. In addition to the lower division college program,

Appendix B Page 12 extensive adult education and trade school facilities are offered at Long Beach City College. Current total enrollment exceeds 29,665 per semester. California State University – Long Beach is located on a 320-acre site in the eastern portion of the City on land donated by the City. Opened in 1949 as Los Angeles-Orange County State College, the institution has been given university status and has a current enrollment of approximately 35,957 per semester. The University’s distinguished educational program offers various undergraduate and graduate degree programs. Enrollment in the educational system serving the City and its residents for the past 5 years is set forth below:

TABLE B-9 City of Long Beach Educational Enrollment

California Long Beach Unified Long Beach State University Year School District City College* (Long Beach)* 2005 93,589 25,722 32,756 2006 90,663 26,308 33,344 2007 88,186 26,837 34,606 2008 87,499 28,372 35,850 2009 86,207 29,665 35,957

(1) Long Beach Unified School district Adopted Budget FY 2009-2010. 2009 is a projected number (2) LBCC - College Facts - Fall 2009 College Facts (3) CSULB - University Facts - Average Enrollment per Semester for 2008-2009 * Average enrollment per semester. Source: City of Long Beach Summary Financial Information Statement for Fiscal Year 2007-08.

The City also serves as the permanent headquarters for the 23-campus California State University and College System. The California University and College System’s headquarters is located on a 6.4-acre site in the western portion of the City on land donated by the City. California State University Long Beach continues to be one of the most popular institutions in California. It has built a successful student recruitment program that continues to attract high-achieving students, while maintaining their historical commitment to access.

Community Facilities

Long Beach has four major community based hospitals and a Veterans Affairs Medical Center. The City operates the Main Library in the downtown Civic Center and eleven other branch libraries throughout the City. Four newspapers, three radio stations and a cable television system are also located in the City.

The City’s Parks, Recreation and Marine Department oversees the operation and maintenance of all Long Beach public recreational facilities, including approximately 25 community centers, approximately 55 sports fields for soccer, softball, baseball and flag football, approximately 50 park playgrounds, approximately 70 tennis courts and approximately 5 golf courses. The Department also administers the Municipal Band, Leeway Sailing Center, El Dorado Nature Center, Long Beach Museum of Art, Rancho Los Cerritos and Rancho Los Alamitos, the Belmont Veterans Memorial Pier, Rainbow Harbor and Rainbow Lagoon. The City’s Parks, Recreation and Marine Department maintains approximately 100 parks, devoted to open space and recreation, and six miles of beaches. Additionally, the Department operates three marinas with a combined approximate 3,800 boat slips.

The Department provides free and fee-based recreational programs and leisure opportunities, both self-directed and organized, for people of all ages and cultures. Youth

Appendix B Page 13 programs include free youth sports for ages 5 to 18 serving nearly 10,000 participants annually, summer and vacation day camps, 800 recreational and educational classes, sailing and aquatics instruction, teen center activities, skateboarding opportunities, and supervised after-school and weekend activities at parks, schools, and mobile recreation sites.

Adult recreation opportunities include sports leagues, tennis and golf facilities and instruction, and more than 2,000 recreational and self-improvement classes annually. Recreation programs and social services for seniors are offered at community centers. Family recreation opportunities include Long Beach Municipal Band concerts, cultural arts programs, environmental programs, citywide and neighborhood special events, boating facilities, as well as general park and beach use.

The Long Beach Convention and Entertainment Center stages productions of the Long Beach Symphony Association, the Long Beach Grand Opera, the Long Beach Symphony Chorus, the Theater Festival and the Community Concert Association.

Appendix B Page 14 APPENDIX C

ANNUAL FINANCIAL REPORT OF THE AGENCY FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009

Appendix C

Redevelopment Agency of the City of Long Beach (A Component Financial Reporting Unit of the City of Long Beach, California)

Annual Financial Report

For the Fiscal Year Ended September 30, 2009

CITY OF LONG BEACH, CALIFORNIA Redevelopment Agency of the City of Long Beach (A Component Financial Reporting Unit of the City of Long Beach, California) September 30, 2009

TABLE OF CONTENTS

Page MEMBERS OF THE REDEVELOPMENT AGENCY BOARD AND MANAGEMENT ...... 1

INDEPENDENT AUDITORS' REPORT ...... 3

MANAGEMENT'S DISCUSSION AND ANALYSIS ...... 5

COMBINED FINANCIAL STATEMENTS

Government-wide Financial Statements: Combined Statement of Net Assets ...... 13 Combined Statement of Activities ...... 14

Fund Financial Statements:

Combined Balance Sheet - Governmental Funds ...... 15 Reconciliation of Combined Balance Sheet of Governmental Fund Balance to the Combined Statement of Net Assets (Deficit) ...... 16 Combined Statement of Revenues, Expenditures, and Changes in Fund Balance - Governmental Funds ...... 17 Reconciliation of Combined Statement of Revenues, Expenditures, and Changes in Fund Balance of Governmental Funds to the Combined Statement of Activities ...... 18

Notes to Combined Financial Statements:

Note 1 - Description of Entity, Funds, and Summary of Significant Accounting Policies ...... 19 Note 2 -Cash and Investments ...... 25 Note 3 - Reconciliation of Government-wide and Fund Financial Statements ...... 33 Note 4 - Receivables ...... 34 Note 5 - Capital Assets ...... 35 Note 6 - Due to/from and Advances from/to the City of Long Beach ...... 36 Note 7 -Long-Term Obligations ...... 38 Note 8 - Bonds Payable ...... 40 Note 9 - Notes and Interest Payable ...... 41 Note 10-0ther Assets ...... 42 Note 11 - Low- and Moderate-Income Housing Set-Aside ...... 42 Note 12 - Transfers from/to the City of Long Beach ...... 44 Note 13 - Land Held for Resale ...... 46 Note 14 -Eliminations and Reclassifications of lnterproject Loans ...... 46 Note 15 -Long-Term Receivables, Reserved Fund Balance, and Deferred Revenue ...... 48 Note 16-0ther Reserved Fund Balances ...... ,...... 48 Note 17 -Commitments and Contingencies ...... 48 Redevelopment Agency of the City of Long Beach {A Component Financial Reporting Unit of the City of Long Beach, California) September 30, 2009

TABLE OF CONTENTS (continued)

SUPPLEMENTARY FINANCIAL INFORMATION

Combining Balance Sheet - Governmental Funds: Capital Project Funds by Project Area ...... 52 Debt Service Funds by ProjectArea ...... 54 Low- and Moderate-Income Housing Fund by Project Area ...... 56

Combining Schedule of Revenues, Expenditures, and Changes in Fund Balance (Deficit): Capital Project Funds by Project Area ...... 58 Debt Service Funds by ProjectArea ...... 60 Low- and Moderate-Income Housing Funds by Project Area ...... 62

Schedule of Revenues, Expenditures, and Changes in Fund Balance (Deficit) Budget and Actual (Non-GAAP Budgetary Basis): Capital Projects Fund ...... 64 Debt Service Fund ...... 65 Low- and Moderate-Income Housing Fund ...... 66

Schedules of Revenues, Expenditures, and Changes in Fund Balance (Deficit) - Budget and Actual (Non-GAAP Budgetary Basis) by Project Area and Project Income: Downtown Project Area ...... 67 West Beach Project Area ...... 68 West Long Beach Industrial Project Area ...... 69 Poly. High Project Area ...... 70 Project Income Fund ...... 71 Los Altos Project Area ...... : ...... 72 Central Long Beach Project Area ...... 73 North Long Beach Project Area ...... 74 Housing Fund ...... 75

Supplementary Note: Reconciliation of Actual Revenues and Expenditures to the Non-GAAP Budgetary Basis ...... 76

Schedule of Changes in Long-Term Debt ...... 78

AUDITORS' REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENTAL ACCOUNTING STANDARDS ...... 79

GENERAL INFORMATION

Accomplishments and Goals by Redevelopment Project Area (Not covered by Auditors' Report): Downtown Project ...... 81 West Beach Project ...... 87 West Long Beach Industrial Project ...... 89 Poly High Redevelopment Project ...... 94 Los Altos Project ...... 96 Central Long Beach Redevelopment Project ...... 98 North Long Beach Redevelopment Project ...... 106 Redevelopment Agency of the City of Long Beach (A Component Financial Reporting Unit of the City of Long Beach, California) September 30, 2009

Members of the Redevelopment Agency Board

Term Expires

William E. Baker, Chair June 2011

Diane L. Arnold, Vice Ch~ir June 2011

John L. Cross June 2011

Teer L. Stricklan June 2012

John W. Thomas June 2011

Vivian M. Tobias June 2009*

"Vacant position"

Management

Craig Beck, Executive Director

Amy J. Sodek, Assistant Executive Director

* Term extended

1 Intentionally Left Blank

2 KPMG LLP Suite 700 20 Pacifica Irvine, CA 92618-3391

Independent Auditors' Report

The Honorable Mayor and City Council City of Long Beach, California

The Honorable Members of the Redevelopment Agency Board City of Long Beach, California:

We have audited the accompanying combined financial statements of the govermnental activities and each major fund of the Redevelopment Agency of the City of Long Beach (the Agency), a component financial reporting unit of the City of Long Beach, California (the City), and of the City of Long Beach Low- and Moderate-Income Housing Fund as of and for the year ended September 30, 2009, which collectively comprise the Agency's combined financial statements as listed in the table of contents. These combined financial statements are the responsibility of the Agency's management. Our responsibility is to express opinions on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the combined financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Agency's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the combined financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions.

As discussed more fully in note 1 to the combined financial statements, the Agency has prepared these combined financial statements using accounting practices required by the State of California Health and Safety Code Section 33080.1, which practices differ from U.S. generally accepted accounting principles. The funds included in the Low- and Moderate-Income Housing Fund columns presented in these combined the combined financial statements are not maintained by the Agency and, accordingly, are not ineluctable in financial statements prepared in accordance with U.S. generally accepted accounting principles. However, State of California Health and Safety Code Section 33080.1 requires the Agency to prepare the combined financial statements that include these funds. The effect on these combined financial statements of the inclusion of these funds is apparent in the columns labeled Low- and Moderate-Income Housing Fund.

In our opinion, because of the effects of including the Low- and Moderate-Income Housing Fund as a separate column in the Agency's combined financial statements, the combined financial statements referred to above do not present fairly, in conformity with U.S. generally accepted accounting principles, the financial position of the Agency as of September 30, 2009, or the changes in the Agency's financial position for the year then ended.

KPMG LLP, a U.S. limited liability partnership, is the U.S. member firm of KPMG International, a Swiss cooperative. 3 However, in our opinion, the combined financial statements referred to above do present fairly, in all material respects, the respective financial position of the govemmental activities and each major fund of the Agency and the Low- and Moderate-Income Housing Fund as of September 30, 2009, and the respective changes in financial position for the year then ended, on the basis of accounting described in note 1.

In accordance with Government Auditing Standards, we have also issued our report dated April 16, 2010 on our consideration of the Agency's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreer,nents and other matters. The purpose of that report is to describe the scope and our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of the audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit.

Management's discussion and analysis on pages 5 through 12 is not a required part of the combined financial statements but is supplementary information required by U.S. generally accepted accounting principles. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation or the required supplementary infornmtion. However, we did not audit the infom1ation and express no opinion on it.

Our audit was conducted for the purposes of fonning opinions on the combined financial statements that collectively comprise the combined financial statements of the Redevelopment Agency of the City of Long Beach and the Low- and Moderate-Income Housing Fund. The accompanying infom1ation identified in the table of contents as supplementary financial infonnation and general infonnation is presented for the purposes of additional analysis and is not a required part of the combined financial statements. The accompanying statements and schedules included in the supplementary financial infonnation section have been subjected to the auditing procedures applied in the audit of the combined financial statements and, in our opinion, except for the effects of including the Low- and Moderate-Income Housing Fund as a separate coh.mm in the Agency's combined financial statements, such infonnation is fairly stated in all material respects, in relation to the combined financial statements taken as a whole. The accompanying information in the general information section has not been subjected to the auditing procedures applied in the audit of the combined financial statements, and accordingly, we express no opinion on it.

This report is intended solely for the information and use of the City of Long Beach's Mayor and . City Council, the Members of the Redevelopment Agency Board, managements of the City and the Agency, the State of California's State Controller's Office, the Department of Housing and Conunun:ity Development, the County of Los Angeles and is not intended to be and should not be used by anyone other than these specified parties.

April 19, 2010

4 Management's Discussion and Analysis THIS PAGE INTENTIONALLY LEFT BLANK Redevelopment Agency of the City of Long Beach (A Component Financial Reporting Unit of the City of Long Beach, California) Management's Discussion and Analysis September 30, 2009

The information presented in the "Management's Discussion and Analysis" (MD&A) is intended to be a narrative overview and analysis of the Redevelopment Agency of the City of Long Beach's (Agency) financial activities for the fiscal year ended September 30, 2009. We encourage readers to consider this information in conjunction with the accompanying combined financial statements. The MD&A includes only the activity of the Agency and excludes the Low- and Moderate-Income Housing Fund.

Financial Highlights

Government-wide • The liabilities of the Agency exceeded its assets at September 30, 2009, by $140,251,000. Of this amount, $4,054,000 is invested in capital assets net of related debt and net assets totaling $101,537,000 are restricted for specific purposes. The Agency's accumulated net deficit of $140,251,000 resulted mainly from long-term debt due to the City of Long Beach and bonds payable, both intended to be relieved from future tax increment revenues, as well as any other available revenue sources.

• The Agency's total net deficit decreased by $22,277,000. This is the result of total revenues of $102,351,000 exceeding total expenses of $80,074,000. The increase in revenues was primarily due to the increase in tax increment revenue of the Downtown, West Long Beach Industrial, Poly High, Los Altos, Central Long Beach, and North Long Beach Project Areas, and the revenue recognition for the forgiven portion of the advance from Harbor, minus the decrease in interest income. The $2,328,000 in other expenses includes net operating transfers to the City of Long Beach of $4,256,000 and land transfers of $1,502,000, minus transfers from Low­ and 1\/loderate-lncome Housing Fund of $3,430,000.

• The Agency's current and other assets increased by $109,324,000 during the current fiscal year. The net increases are primarily due to taxes receivable of $92, 186,000, which was recorded beginning the current fiscal year, and the increase in pooled cash and investments of $16,801,000.

• The Agency's current and other liabilities increased by $94,428,000 during the current fiscal year. The increases are mainly due to an increase in deferred revenue related to the year-end accrual of tax increment receivable along with higher outstanding balances of accounts and vouchers payable.

Fund basis • As of September 30, 2009, the Agency's governmental funds reported an ending fund balance of $337,221,000, a $15,403,000 increase from the prior fiscal year's fund balance of $321,818,000. This is mainly due to the decrease in net transfers to the City of Long Beach of $7,779,000, a decrease in proceeds from long-term debt of $6,623,000, and an increase in tax increment revenues of $15,302,000.

5 Redevelopment Agency of the City of Long Beach (A Component Financial Reporting Unit of the City of Long Beach, California) Management's Discussion and Analysis September 30, 2009

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

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

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

The combined statement of activities presents information showing how the Agency's net assets changed during the current fiscal year. Changes in net assets are reported as soon as the underlying event giving rise to change occurs, regardless of the timing of the related cash flows. Thus, revenues and expenses are reported in this combined statement for some items that will only result in cash flows for future fiscal periods. This combined statement shows the extent to which the various functions depend on general taxes and non-program revenues for support.

Governmental activities of the Agency include housing, community and economic development, public improvements, and debt service. The activities of the Agency are carried out in seven project areas.

The State of California Health and Safety Code Section 33080.1 requires every redevelopment agency to submit an annual audit of the financial statements of the agency, which presents the results of the operations and financial position of the agency, including all financial activities with moneys required to be held in a separate Low- and Moderate­ Income Housing Fund pursuant to Section 33334.3. As such, the Agency has included in the accompanying combined financial statements the Low- and Moderate-Income Housing Fund, which is recorded with the City of Long Beach and the Long Beach Housing Development Company pursuant to Agreement No. 20130. The State of California Health and Safety code Section 33334.2 requires the 20 percent set-aside to be used to increase, improve, and preserve the supply of low- and moderate-income housing within the Agency's territorial jurisdiction.

Fund Financial Statements A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The Agency, like other units of state and local government, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the Agency are classified as governmental funds. 6 Redevelopment Agency of the City of Long Beach (A Component Financial Reporting Unit of the City of Long Beach, California) Management's Discussion and Analysis September 30, 2009

Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, government fund financial statements focus on near­

I ' term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such 'information may be useful in evaluating the Agency's financial resources that are available in the near future to finance various activities.

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

The Agency maintains two individual governmental funds: capital projects and debt service. Information for these two funds is presented separately in the governmental fund balance sheet and in the governmental fund combined statement of revenues, expenditures, and changes in fund balance.

The Agency adopts an annual appropriated budget for all governmental funds. A budgetary comparison statement has been provided for governmental funds as supplementary information to demonstrate compliance with this budget.

Notes to Combined Financial Statements The notes provide narrative information that is essential to a full understanding of the data provided in the government-wide and fund financial statements.

Other information In addition to the combined financial statements and accompanying notes, this report also includes other supplementary information relating to the Agency's fund financial statements and budgetary comparison to actual expenditures for each of the redevelopment project areas. A schedule of changes in long-term debt has been included in this report.

Government-wide Financial Analysis The Agency presents its combined financial statements in accordance with Governmental Accounting Standards Board {GASB} guidance. The focus of the analysis is on the current fiscal year's net assets and changes in net assets.

Analysis of Net Assets Net assets may serve, over time, as a useful indicator of a government's financial position. At September 30, 2009, the Agency's liabilities exceeded its assets by $140,251,000. Of this amount, $4,054,000 is invested in capital assets, net of related debt 7 Redevelopment Agency of the City of Long Beach (A Component Financial Reporting Unit of the City of Long Beach, California) Management's Discussion and Analysis September 30, 2009 and $101,537 ,000 represents restricted net assets for capital projects, debt service, and other non-current receivables. The Agency's deficit is intended to be relieved using future Agency revenues. The Agency's deficit resulted from the issuance of long-term debt. This is primarily due to the nature of redevelopment financing, whereby the Agency issues bonds or incurs long-term debt to finance a substantial portion of its redevelopment activities. This activity includes land acquisition, housing, public parking, commercial and retail projects, community development, and other activities. In some cases, assets may be transferred to the City of Long Beach (the City); however, the debt remains with the Agency. The Agency also provides "gap" financing in other types of redevelopment activities; any equity assumed in these projects is usually significantly less than the underlying expenditures. Redevelopment activities are designed to alleviate urban blight. Redevelopment activities often improve property values and, as a result, generate additional tax increment to service the Agency's debt and finance additional projects.

The Agency's current and other liabilities increased by $94,428,000 during the current fiscal year. The increases are mainly due to an increase in deferred revenue related to the year­ end accrual of tax increment receivable along with the higher outstanding balances of accounts and vouchers payable. The Agency's current and other assets also increased, by $109,324,000. The net increases are primarily due to taxes receivable of $92, 186,000, which was recorded beginning the current 'fiscal year, and the increase in pooled cash and investments of $16,801,000.

The following table summarizes the Agency's net assets (deficit) as of September 30, 2009, with comparative figures for 2008 (in thousands):

Governmental Activities Change 2009 2008 Amount Percentage ASSETS Current and other assets $ 437,896 $ 328,572 $ 109,324 33.27 Capital assets 14,581 14,629 (0.33) Total assets 452,477 343,201 31.84 LIABILITIES Current and other liabilities 113,268 18,840 94,428 501.21 Non-current liabilities 479,460 486,889 {1.53} Total liabilities 592,728 505,729 17.20 NET ASSETS Invested in capital assets 4,054 2,383 1,671 70.12 Restricted net assets 101,537 103,988 (2,451) (2.36) Unrestricted deficit {245,842) 23,057 (8.57) Total deficit $(140,251) $ 22,277 (13.71)

Anal:isis of Changes in Net Assets During fiscal year 2009, the governmental activities deficit decreased by $22,277,000 from $162,528,000 to $140,251,000. Key elements of the governmental activities are as follows: Incremental property tax revenues are the Agency's major source of funding for redevelopment activities. For the year ended September 30, 2009, the Agency recognized

8 Redevelopment Agency of the City of Long Beach (A Component Financial Reporting Unit of the City of Long Beach, California) Management's Discussion and Analysis September 30, 2009

$92,762,000 in tax increment revenues. This represents 90.63 percent of the total revenues of $102,351,000. The increase in current year total revenues of $10,572,000 or 11.52 percent is due to increases in tax increment revenues of $15,302,000 offset by a decrease in unrestricted investment earnings of $5,056,000. The tax increment revenue increase of $15,302,000 is primarily due to the sale and improvements of properties within the project areas.

Community and cultural expenses totaled $56,979,000 or 71.16 percent of total governmental activity expenses of $80,074,000. The $2,728,000, or 4.57 percent, decrease in community and cultural expenses is mainly due to the decrease in operation of acquired property, relocation payments, project improvement/construction, administrative, acquisition costs, loss on sale of land held for resale, and rehabilitation grants and loans, minus the increase in pass-through charges. The $2,328,000 in other expenses includes net operating transfers to the City of Long Beach of $4,256,000 and land transfers of $1,502,000, less transfer from Low- and Moderate-Income Housing Fund of $3,430,000.

Other expenses also decreased in the current fiscal year. The $19,982,000, or 89.57 percent, decrease is mainly due to the decreases in land transfers of $11,044,000 and net transfers to the City of $7,779,000.

Changes in Net Assets Years Ended September 30 (In Thousands) Governmental Activities Change 2009 2008 Amount Percentage REVENUES Program revenues: Operating grants and contributions $ 757 $ 409 $ 348 85.09 Charges for services 2,833 2,286 547 23.93 General revenues: Incremental property taxes 92,762 77,460 15,302 19.75 Interest income 2,504 7,560 (5,056) (66.88) Other 3,495 4,064 (569) {14.00) Total revenues 102,351 91,779 10,572 11.52 EXPENSES Program expenses: General government 368 370 (2) (0.54) Community and cultural 56,979 59,707 (2,728) (4.57) Interest in long-term debt 20,399 21,770 (1,371) (6.30) Other 2,328 22,310 {19,982} (89.57) Total expenses 80,074 104,157 ~24,0832 (23.122

Change in net asset 22,277 (12,378) 34,655 (279.97) Deficit, October 1 {162,528} {150, 150} (12,378} Deficit, September 30 $ (140,251) $ (162,528) $ 22,277

Community and cultural expenses shown on the combined statement of activities relate to activities intended to relieve urban blight and payments to other government entities. These expenses include costs for the acquisition and development of sites for needed public improvements such as libraries, parks, and street improvements. Other activities to 9 Redevelopment Agency of the City of Long Beach (A Component Financial Reporting Unit of the City of Long Beach, California) Management's Discussion and Analysis September 30, 2009 remove blight include the assembly of sites for the private development of housing and commercial and retail facilities. The Agency is also required by Community Redevelopment Law to provide statutory pass-through payments to other government entities.

Financial Analysis of the Agency's Governmental Funds As noted earlier, the Agency uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements.

Governmental Funds The focus of the Agency's governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the Agency's financing requirements. In particular, the fund balance serves as a useful measure of the Agency's net resource available for spending at the end of the fiscal year.

At September 30, 2009, the Agency's governmental funds reported a combined accumulated ending fund balance of $337,221,000, an increase of $15,403,000 from the prior fiscal year total of $321,818,000. This amount consists of fund balance reserved for debt service, land held for resale, long-term receivables, and encumbrances; and fund balance designated for future projects. The portion of the fund balance that is available for spending has been appropriated in fiscal year 2010.

Capital Projects Fund - The Capital Projects Fund is used to account for redevelopment expenditures from tax increment, bond proceeds, federal grants and project area program income. The Capital Projects Fund is the Agency's principal fund. The accumulated fund balance at September 30, 2009 is $204,028,000. The Capital Projects Fund fund balance of $187,710,000 at September 30, 2008 increased by $16,318,000 due to property tax increment revenues transferred to this fund from the Agency's Debt Service Fund and proceeds from long-term debt of $1,616,000. The latter includes $311,000 Los Altos Project Area tax increment revenue allocation to the Los Angeles County and $1,305,000 of the City's Open Space Bonds Series 20068 proceeds advanced to the Agency for acquisition and design costs associated with the development of the open spaces such as Pacific Electric Right-of-Way, Craftsman Park, Drake Park, and Seaside Park.

Debt Service Fund - The Debt Service Fund is used to accumulate resources to pay principal and interest and other costs related to the Agency's long-term debt. At September 30, 2009, the Debt Service Fund had a total fund balance of $133, 193,000, of which $75,976,000 was reserved for debt service, $32,729,000 for redevelopment projects, and $24,488,000 for long-term receivables. The net decrease in fund balance over the prior year of $915,000 is primarily due to interfund transfers made to the Capital Projects Fund for redevelopment projects and the City.

Governmental Fund Budgetary Highlights A comparison between the initial budget and the final amended budget for the Agency's governmental funds shows a net increase in expenditures from $176,531,000 to $180,425,000 or $3,894,000. The increase is mainly due to antlcipated expenditures for land purchases and pass-through charges.

10 Redevelopment Agency of the City of Long Beach (A Component Financial Reporting Unit of the City of Long Beach, California) Management's Discussion and Analysis September 30, 2009

The Agency's governmental funds l1ad a net fund balance variance of $180,764,000. The entire amount is committed to be spent in various project areas in the next fiscal year. The budget variances by project area are summarized under the Supplementary Financial Information sections of this report.

Capital Assets and Debt Administration

Capital Assets The Agency's investments in capital assets for its governmental activities as of September 30, 2009 comprise of $13,802,000 for land and $779,000 for building, machinery and equipment, net of accumulated depreciation. Additional information on the Agency's capital assets can be found in note 5 to·the combined financial statements.

Capital Assets, Net of Depreciation Years Ended September 30

2009 2008 Land $ 13,802 $ 13,802 Buildings 419 451 Machinery and Equipment 360 376 Total Net Capital Assets $ 14,581 $ 14,629

Long-Term Liabilities At September 30, 2009, the Agency's long-term liabilities totaled $488,590,000. This amount includes the current portion of bond indebtedness and is net of unamortized bond discount and loss on defeasance. This is summarized as follows in the table below (in thousands). Agency's Long-Term Debt Years Ended September 30

2009 2008 Tax allocation bonds $ 323,092 $ 331,789 Notes payable 3,284 2,875 Advances from the City of Long Beach 144,893 143,604 Advances from Low- and Moderate-Income Housing Fund 17,321 1 Total $488,590

The Agency's total bonded indebtedness at September 30, 2009 was $323,092,000. The bonds are secured solely by property tax increment. During year ended September 30, 2009, Agency bonds were rated in a range BBB to A-. In the year ended September 30, 2008, Agency bonds were rated in a range BBB to AA.

Additional information on the long-term liabilities can be found in Notes 7, 8, and 9 of the combined financial statements.

11 Redevelopment Agency of the City of Long Beach (A Component Financial Reporting Unit of the City of Long Beach, California) Manag~ment's Discussion and Analysis September 30, 2009

The time limits for the project areas as of September 30, 2009 are summarized in the following table: Time Limit Time Limit for Incurring Termination for Repayment Project Area Date Adopted Indebtedness Date of Indebtedness

Central Long Beach 03/06/2001 03/06/2021 03/06/2032 03/06/2047 Downtown 06/17/1975 01/01/2004 06/17/2017 06/17/2027 Los Altos 12/10/1991 12/10/2011 12/10/2032 12/10/2042 Poly High 04/03/1973 None 04/03/2016 04/03/2026 West Beach 07/21/1964 None 01/01/2012 01/02/2022 West Long Beach Industrial 07/01/1975 None 07/01/2015 07/01/2025 North Long Beach 07/16/1996 07/16/2016 07/16/2027 07/16/2042

Future Outlook - Economic Factors and Next Year's Budget • Assessed property values reported by the Los Angeles County Assessor for fiscal year 2010 decreased within five of the Agency's seven project areas. The decreases range from -0.7% to -11.6%. It is anticipated that this trend will continue in fiscal "year 2011.

• In 2008, the California State Legislature passed a law requiring redevelopment agencies to make payments to the Educational Revenue Augmentation Fund (ERAF) in fiscal year 2009. The Department of Finance identified the Agency's share of the ERAF take as $6,070,966. In May 2009, the Sacramento· Supreme Court found the proposed ERAF take to be unconstitutional. In September 2009, the California Attorney General's office dropped its appeal of the May 2009 finding, ensuring that the Agency would not be obligated to pay nearly $6.1 million to ERAF.

• Despite the unconstitutionality of the 2008 ERAF payment, the State legislature has once again attempted to make redevelopment agencies contribute to ERAF. Legislation passed in July 2009 requires the Agency to pay $29,516, 137 to the Supplemental Educational Revenue Augmentation Fund (SERAF) by May 10, 2010. Like the ERAF take, the constitutionality of the SERAF payment has been challenged. If the lawsuit fails, the Agency will be required to pay SERAF and, unless a subsequent legal challenge succeeds, the Agency will be responsible for another legislatively mandated SERAF payment in FY11 of approximately $6.1 million.

All of the above economic factors were considered in preparing the Agency's budget for fiscal year 2010.

Request for Information This financial report is designed to provide a· general overview of the Agency's finances for all those with an interest in the Agency's finances. Questions concerning any of the information provided in this report or request for additional financial information should be addressed to:

City of Long Beach Department of Financial Management 333 W. Ocean Boulevard, 5th Floor Long Beach, California 90802 12 COMBINED FINANCIAL STATEMENTS Redevelopment Agency of the City of Long Beach (A Component Financial Reporting Unit of the City of Long Beach, California) Combined Statement of Net Assets September 30, 2009 (In Thousands)

Governmental

Low- and Governmental Moderate-Income Activities Housing Fund ASSETS Current assets: Pooled cash and investments $ 64,378 $ 43,065 $ 107,443 Non-pooled cash and investments 33,916 33,916 Short-term investments (non-performing) 111 84 195 Interest receivable 165 165 Taxes receivable 92,186 92,186 Accounts and loans receivables 1,077 6 1,083 Due from other governments 594 594 Other assets 2,278 2,279 Land held for resale 177,364 6,644 184,008 Non-current assets: Investments 38,095 38,095 Advances to the City of Long Beach 24,488 856 25,344 Advances to Housing Development Company 1,440 1,440 Advances to the Redevelopment Agency 17,321 17,321 Other non-current receivables 1,586 37,392 38,978 Other assets 1,658 1,658 Capital assets: Land and other assets not being depreciated 13,802 1,015 14,817 Buildings, improvements, and equipment, net of accumulated depreciation 779 1,787 Total assets 452,477 561,309

LIABILITIES Current liabilities: Accounts and vouchers payable 6,624 2,356 8,980 Accrued wages and other benefits 166 85 251 Accrued claims and judgments 750 750 Accrued interest payable 4,815 505 5,320 Due to the City of Long Beach 78 40 118 Deferred revenue, credits, and other payable 91,705 32 91,737 Bonds payable within one year 9,130 9,130 Other long-term obligations-current 13 13 Non-current liabilities: Advances from the City of Long Beach 144,893 144,893 Advances from Low- and Moderate-Income Housing Fund 17,321 17,321 Bonds payable 313,962 313,962 Other long-term obligations 3,284 1,052 Total liabilities 592,728 4,083

NET ASSETS (DEFICIT} Invested in capital assets, net of related debt 4,054 1,008 5,062 Restricted for: Debt service 65,834 65,834 Operations and maintenance 61 61 Capital/Housing projects 35,703 16 35,719 Unrestricted (deficit) (245,842) (142,178) Total net assets (deficit) $ (140,251) $ (35,502)

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

13 Redevelopment Agency of the City of Long Beach (A Component Financial Reporting Unit of the City of Long Beach, California) Combined Statement of Activities Year Ended September 30, 2009 (In Thousands)

Governmental Activities Net (Expense) and Changes Program Revenues in Net Assets Operating Capital Governmental Low- and Charges for Grants and Grants and Activities Moderate-Income Functions/Programs Expenses Services Contributions Contributions Housing Fund Primary Government: General government $ 368 $ $ $ $ (368) $ $ (368) Community and cultural 56,979 2,833 757 (53,389) (53,389) Interest on long-term debt 20,399 (20,399) Total governmental activities 77,746 2,833 (74,156)

Low-and moderate-income housing fund $ 5,438

General revenues: Taxes: Property tax increment 92,762 23, 191 115,953 Other 3,495 3,495 Unrestricted investment earnings 2,504 778 3,282 Land transfers (1,502) (1,003) (2,505) Transfers (to) from the Redevelopment Agency 3,430 (3,430) Transfers to the City (6,140) (90) (6,230) Transfers from the City 1,884 1,884 Total general revenues and transfers 96,433 19,446 115,879 Change in net assets 22,277 14,313 36,590 Net assets (deficit)-October 1 (162,528) 90,436 Net assets (deficit)-September 30 $ (140,251) $ 104,749

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

14 Redevelopment Agency of the City of Long Beach (A Component Financial Reporting Unit of the City of Long Beach, California) Combined Balance Sheet-Governmental Funds September 30, 2009 (In Thousands)

Low- and Capital Projects Debt Service Moderate-Income Sub-Total Housin9 Fund Total ASSETS Pooled cash and investments $ 28,805 $ 35,573 $ 64,378 $ 43,065 $ 107,443 Non-pooled cash and cash equivalents 33,916 33,916 33,916 Short-term investments non-performing 111 111 84 195 Interest receivable on investments 165 165 165 Taxes receivable 92,186 92,186 92,186 Accounts and loans receivable 610 467 1,077 6 1,083 Receivables from other governments 594 594 594 Non-pooled investments 38,095 38,095 38,095 Advances to Housing Development Co. 1,440 1,440 Advances to the City of Long Beach 24,488 24,488 856 25,344 Land held for resale 177,364 177,364 6,644 184,008 Other assets 3,936 3,936 1 3,937 Long-term receivables 1,586 37,392 38,978 TOTAL ASSETS $ 213,006 $ 224,890 $ 89,488 $ 527,384

LIABILITIES Vouchers payable $ 5,226 $ 9 $ 5,235 $ 907 $ 6,142 Accounts payable 391 998 1,389 1,449 2,838 Accrued wages payable 166 166 85 251 Accrued claims and judgments 750 750 750 Collections held in trust 459 459 17 476 Deferred revenue 1,908 90,690 92,598 37,407 130,005 Due to other funds 78 40 118 TOTAL LIABILITIES 100,675 39,905 140,580

FUND BALANCE Reserved: Land held for resale 177,364 177,364 6,644 184,008 Future projects 32,729 32,729 32,729 Encumbrances 4,913 4,913 4,914 Debt service 75,976 75,976 75,976 Long-term receivables 1,712 24,488 26,200 2,296 28,496 Other 61 61 Unreserved: Designated for future projects 20,039 60,620 TOTAL FUND BALANCE 133, 193 337,221 386,804 TOTAL LIABILITIES AND FUND BALANCE $ 213,006 $ 224,890 $ 437,896 $ 527,384

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

15 Redevelopment Agency of the City of Long Beach (A Component Financial Reporting Unit of the City of Long Beach, California) Reconciliation of Combined Balance Sheet of Governmental Fund Balance to the Combined Statement of Net Assets (Deficit) September 30, 2009 (In Thousands)

Capital Low- and Projects/Debt Moderate-Income Service Funds Housing Fund

Amounts reported for governmental activities in the statement of net assets (deficit) are different because:

Total governmental fund balance $ 337,221 $ 49,583

Capital assets used in the governmental activities are not financial resources and, therefore, are not reported in the funds. (note 5) 14,581 2,023

Advances due from/to the primary government is considered to be external activity that is reported only in the government-·wide financial statements. (note 6) (162,214) 17,321

Because the focus of governmental funds is short-term financing, some assets will not be available for current period expenditures. Those assets are offset by deferred revenue in the funds. (note 15) 1,352 37,392

Governmental long-term liabilities are not due and payable in the current period and, therefore, are not reported in the funds. (note 3) (331,191) (1,570)

Net assets (deficit) of governmental activities $ (140,251) $ 104,749

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

16 Redevelopment Agency of the City of Long Beach (A Component Financial Reporting Unit of the City of Long Beach, California) Combined Statement of Revenues, Expenditures, and Changes in Fund Balance - Governmental Funds Year Ended September 30, 2009 (In Thousands)

Low- and Capital Projects Debt Service Moderate-Income Funds REVENUES Property tax increment $ $ 92,762 $ 92,762 $ 23,191 $115,953 Transient occupancy tax 3,495 3,495 3,495 Interest income 857 1,647 2,504 740 3,244 Rental income 841 841 107 948 Gain on sale of land held for resale 25 25 Other income 1,952 362 2,314 TOTAL REVENUES 3,650 98,266 101,916

EXPENDITURES Administrative costs 8,416 1,739 10, 155 2,989 13,144 Professional services 760 14 774 389 1, 163 Planning, survey, and design 2,902 2,902 2,902 Acquisition expense 1,030 1,030 1 1,031 Operation of acquired property 1,967 1,967 421 2,388 Relocation costs 168 168 168 Relocation payments 2,218 2,218 2,218 Site clearance costs 700 700 700 Project improvement/construction costs 14,043 14,043 388 14,431 Disposal costs 807 807 4 811 Interdepartmental charges 922 922 Loss on sale of land held for resale 1,391 1,391 1,391 Rehabilitation grants and loans 2,028 2,028 6,717 8,745 Furniture, fixtures, and equipment 8 8 8 Pass-through charges 311 18,306 18,617 18,617 Debt service payments: Bonds and notes payable-principal 8,672 8,672 8,672 City/County advances and loans-principal 2,484 2,484 2,484 Interest 743 17,008 17,751 17,751 Fiscal agent fees 86 TOTAL EXPENDITURES 11,831 97,632

Excess (deficiency) of Revenues over (under) Expenditures (36,326) 28,594

OTHER FINANCING SOURCES AND(USES) Proceeds from issuance of long-term debt 1,616 1,616 1,616 Land transfers, net {1,502) (1,502) {1,003) (2,505) Transfers to Capital Projects from Debt Service 52,284 (52,284) Transfers from Low- and Moderate-Income Housing Fund 103 3,327 (3,430) Transfers from the City 1,884 Transfers to the City (1,741) (4,399} TOTAL OTHER FINANCING SOURCES (USES) 52,644 (53,356)

Net change in fund balances 16,318 (915} 15,403 7,956 23,359

Fund Balance-October 1 187,710 134, 108 321,818

FUND BALANCE-SEPTEMBER 30 $ 204,028 $ 133, 193 $337,221

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

17 Redevelopment Agency of the City of Long Beach (A Component Financial Reporting Unit of the City of Long Beach, California) Reconciliation of Combined Statement of Revenues, Expenditures, and Changes in Fund Balance of Governmental Funds to the Combined Statement of Activities Year Ended September 30, 2009 (In Thousands)

Capital Low- and Projects/Debt Moderate-Income Service Funds

Amounts reported for governmental activities in the combined statement of activities are different because:

Excess of revenue and other sources over expenditures and other uses-total governmental funds. $ 15,403 $ 7,956

Governmental funds report capital outlay as expenditures. However, in the statement of activities, the cost of those assets is allocated over their estimated useful life and reported as depreciation expense. This is the depreciation amount in the current period, net of additions. (note 5) (48) (63)

The Agency records advances from/to the primary government only in government-wide financial statements. Therefore, interest and principal thereon are eliminated in the governmental funds. (1,317) 27

Governmental funds report expenditures pertaining to the establishment of certain long-term loans made. Payments on these long-term receivables are recorded as revenue in the governmental funds. These deferred credits are not reported on the combined statement of net assets, and therefore, the corresponding net expense is not reported on the combined statement of activities. 6,473

The issuance of long-term debt (for example, bonds and leases) provides current financial resources to governmental funds, while the payment of the principal of long-term debt consumes the current financial resources of the governmental funds. Neither transaction, however, has any effect on net assets. Also, governmental funds report the effect of issuance costs, premiums, discounts, and similar items when debt is first issued, whereas these amounts are deferred and amortized in the combined statement of activities. This amount is the net effect of these differences in the treatment of long-term debt and related items. (note 3) 8,361

Some expenses reported in the combined statement of activities do not require the use of current financial resources and, therefore, are not reported as expenditures in i:iovernmental funds. (note 3) (122) (80)

Change in net assets in governmental activities. $ 22,277

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

18 Redevelopment Agency of the City of Long Beach (A Component Financial Reporting Unit of the City of Long Beach, California) Notes to Combined Financial Statements September 30, 2009

Note 1 - Description of Entity, Funds, and Summary of Significant Accounting Policies

Reporting Entity The Redevelopment Agency of the City of Long Beach (the Agency) was established by action of the City Council in 1961 under provisions of State Law. The Agency is an independent public c1gency governed by a board comprising seven citizens who are appointed by the Mayor of the City of Long Beach and confirmed by the City Council. The City Council approves the Agency's annual budget and subsequent changes for the year. The City Council also approves all decisions that impact the Agency's fiscal operations, such as the determination of the redevelopment project areas and changes thereto, issuance of bonds, and sale of properties. The City has financial oversight responsibility over the Agency and provides all staff, treasury management and investment analysis, facilities, and administrative services to conduct the Agency's daily operations.

The Agency is a component financial reporting unit of the City of Long Beach, California (City). In accordance with the Governmental Accounting Standards Board (GASB) Statement No. 14, The Financial Reporting Entity, the Agency's financial activities are included in the City's Comprehensive Annual Financial Report as a blended component unit.

The State of California Health and Safety Code Section 33080.1 requires every redevelopment agency to submit an annual audit of the combined financial statements of the agency, which presents the results of the operations and financial position of the agency, including all financial activities with moneys required to be held in a separate Lew­ and Moderate- Income Housing Fund pursuant to Section 33334.3. As such, the Agency has included in the accompanying combined financial statement the Low- and Moderate­ Income Housing Fund, which is recorded with the City of Long Beach and the Long Beach Housing Development Company pursuant to Agreement No. 20130. The State of California Health and Safety Code Section 33334.2 requires the 20 percent set-aside tax increment revenues to be used to increase, improve, and preserve the supply of low- and moderate­ income housing within the Agency's territorial jurisdiction.

Governmental Funds The accounts of the Agency are organized and operated on the basis of separate funds, each of which is defined as a separate fiscal and accounting entity with a self-balancing set of accounts that comprise its assets, liabilities, fund equity, revenues, and expenditures.

Capital Projects Fund - set up to account for financial resources to be used for land acquisition, relocation, demolition, public improvements, and sale of properties within the redevelopment project areas in accordance with the California Redevelopment Law. Redevelopment projects are financed with property tax increment funds, developers' contributions, grant funds, loans and operating transfers from the City, and bond proceeds.

Debt Service Fund - set up to account for the accumulation of resources for, and the payment of, long-term debt principal and interest and other related costs, primarily from property tax increment revenues. 19 Redevelopment Agency of the City of Long Beach (A Component Financial Reporting Unit of the City of Long Beach, California) Notes to Combined Financial Statements September 30, 2009

Low- and Moderate-Income Housing Fund Low- and Moderate-Income Housing Fund was set up by the City to account primarily for the 20 percent tax increment housing set-aside revenue, used to provide housing for low­ and moderate-income households, as required under California Redevelopment Law Section 33334.3.

Basis of Accounting and Measurement Focus and Financial Statement Presentation The government-wide financial statements (i.e., the combined statement of net assets and the combined statement of activities) are reported using the accrual basis of accounting and economic resources measurement focus. As a general rule, the effect of interfund activity has been eliminated from the government-wide financial statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied.

In the combined statement of net assets, the amounts paid to acquire capital assets are capitalized as assets, rather than reported as expenditures. Proceeds of long-term debt are recorded as liabilities, rather than as other financing sources. Amounts paid to reduce long­ term indebtedness are reported as reductions of the related liability, rather than as expenditures.

In the combined statement of activities, expenses are directly identified with a specific function or segment and are offset by program revenues. Taxes and other resources not appropriately included among program income are reported as general revenues.

The governmental fund financial statements are reported using the modified accrual basis of accounting and the current financial resources measurement focus. Under the modified accrual basis of accounting, revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. The Agency considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures are generally recorded when a liability is incurred, as under accrual accounting, other than debt service expenditures. The matured principal and accrued interest on long-term debt are recorded when payment is due.

Generally, only current assets and current liabilities are included on the governmental fund balance sheets. However, non-current portions of long-term receivables related to governmental funds are also reported on the balance sheets and are offset by deferred revenue or fund balance reserve accounts. Combined statements of revenues, expenditures, and changes in fund balances (deficit) for governmental funds generally present increases (revenues and other financing sources) and decreases (expenditures and other financing uses) in net current assets.

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

20 Redevelopment Agency of the City of Long Beach (A Component Financial Reporting Unit of the City of Long Beach, California) Notes to Combined Financial Statements September 30, 2009

Pooled Cash and Investments In order to enhance investment return, the Agency pools its available cash with that of the City for investment purposes except for the funds held by the outside fiscal agents under the provisions of bond indentures. The cash management pool is used essentially as a demand deposit account by various funds; accordingly, the City has defined Cash and Investments as demand deposits plus all investments maintained in the cash management pool, regardless of maturity period. Investment decisions are made by the City Treasurer in accordance with the City's investment policy. Interest is allocated to the Agency based on the relationship of its daily cash balances to the total pooled cash and investments. Pooled cash and investments are stated at fair value at September 30, 2009.

Long-Term Receivables In the government-wide combined financial statements, the Agency's loans or long-term receivables are reported net of an allowance for uncollectible accounts. In the fund financial statements, these loans are shown in the balance sheet with an offset to a deferred revenue account or a reservation of fund balance. In the fund financial statements, loans are not available spendable resources and have been recorded as expenditures when the loan was disbursed. Repayments of principal and interest were recorded as revenues in the period received.

Long-Term Obligations In the government-wide combined financial statements, long-term debt and other liabilities are reported as liabilities in the statement of net assets. Initial-issue bond premiums and discounts, as well as issuance costs, as a policy, are amortized using the straight-line interest method. Bonds payable are reported net of the unamortized portion of applicable premium, discount, or deferred amount on refunding. Amortization of bond premiums or discounts and deferred amounts on refunding are included in interest expense.

In the fund financial statements, governmental fund types recognize bond premiums, discounts, and issuance costs during the period issued. The face amount of the debt is reported as other financing sources. Premiums received are reported as other financing sources, while discounts are reported as other financing uses. Bond issuance costs are reported as debt service expenditures, whether or not withheld from the actual bond proceeds.

Land Held for Resale To aid in the elimination of blighted areas within the project areas, the Agency acquires selected parcels of land and makes such sites suitable for sale to recognized developers. The purchase price of the land acquired is capitalized as "Land Held for Resale" and the fund balance is reserved for the investment in the land.

Purchased land is recorded at the lower of cost or estimated fair market value excluding demolition and relocation costs, which are considered by the Agency to be expenditures in the year incurred.

21 Redevelopment Agency of the City of Long Beach (A Component Financial Reporting Unit of the City of Long Beach, California) Notes to Combined Financial Statements September 30, 2009

Capital Assets The Agency has adopted the City's policy regarding recordation of capital assets, which is defined as assets with initial individual costs of more than $5,000 and an estimated useful life in excess of one year. Such assets are recorded at historical cost.

Capital assets are depreciated on a straight-line basis over the estimated useful lives of the assets as follows:

Land Improvements 15-35 years Buildings 20-50 years Machinery and Equipment 5-20 years Office Furniture, Fixtures, and Equipment 3-20 years

Net Assets and Fund Equity In the government-wide financial statements, net assets are reported in three categories: net assets invested in capital assets, net of related debt; restricted net assets; and, unrestricted deficit. Restricted net assets represent net assets restricted by parties outside of the Agency (such as investors, granters, contributors, laws, and regulations of other governments) and include unspent proceeds of bonds issued to acquire or construct capital assets, to the extent that restricted net assets remain positive. The Agency's other restricted net assets are temporarily restricted (ultimately expendable assets). All other net assets are considered unrestricted.

In the fund financial statements, governmental funds report reservations of fund balance for amounts that are not readily available for appropriation or are legally restricted by outside parties for use for a specific purpose. Designations of fund balance represent Redevelopment Agency Board actions or policies that are subject to change.

Property Tax Increment Revenues Property tax increment represents the property taxes paid on the increase in assessed property values that result from redevelopment. Tax increment revenue up to the amount necessary to make Agency debt payments reverts to the Agency for the life of the redevelopment project area or until the time limit for repayment of indebtedness established by state law.

Property Tax Calendar Under the State Constitution, the property tax rate is limited to 1 percent of assessed value, but may be adjusted for specific voter-approved indebtedness. Property taxes are levied by the Los Angeles County (County) Tax Assessor and shared among all other local taxing authorities within the City. Accordingly, the County collects property taxes and distributes such taxes on the basis of the taxing authorities' tax rate percentages, allowing for such adjustments as may be authorized for voter-approved debt. Secured property taxes are levied during September of every year and become a lien on real property on January 1 preceding the fiscal year for which taxes are levied. These tax payments can be made in two equal installments; the first is due November 1 and delinquent with penalties after December 1O; the second is due February 1 and delinquent with penalties after April 10. 22 Redevelopment Agency of the City of Long Beach (A Component Financial Reporting Unit of the City of Long Beach, California) Notes to Combined Financial Statements September 30, 2009

The Agency recognizes property tax receivable when levied and defers the portion that is neither intended nor available to finance current year expenditures.

Budgetary Principles The Agency is required to adopt an annual budget on or before September 30 for the ensuing fiscal year for all funds. The legal level of the budgetary control is at the fund. During the fiscal year, the Board may amend its adopted budget by motion and subsequent approval by the City Council. The Agency's executive director may transfer appropriations from one program, activity, or object to another within the same fund type.

Budget information is presented on the budgetary basis of accounting for both the original and final amended budget.

Accounting for Encumbrances The Agency utilizes an encumbrance system of accounting wherein encumbrances outstanding at year-end are not reported as expenditures, but are reported as a reservation of fund balance available for subsequent year expenditures based on the encumbered appropriation authority carried over to the next fiscal year.

Implementation of New Accounting Pronouncements The following summarizes implemented GASB pronouncements and their impact, if any, on the combined financial statements: GASB Statement No. 49, Accounting and Financial Reporting for Pollution Remediation Obligations. The statement addresses accounting and financial reporting standards for pollution (including contamination) remediation obligations. The statement focuses on the current or potential detrimental effects of existing pollution through the participating in pollution remediation activities such as site assessments and cleanups. The scope of the statement excludes pollution prevention or control obligations with respect to current operations and future pollution remediation activities that are required upon retirement of an asset, such as landfill closure and postclosure care and nuclear power plant decommissioning. The requirements of this statement were effective for financial statements periods beginning after December 15, 2007 and include measurement of pollution remedial liabilities at the beginning of the fiscal period as to restate beginning net assets. Governments with sufficient objective verifiable information to apply expected cash flow techniques to determine prior period liabilities are required to do for all periods presented. The adoption did not have a material impact on the Agency's combined financial statements. GASB Statement No. 52, Land and Other Real Estate Held as Investments by Endowments. The statement establishes consistent standards for the reporting of land and other real estate held as investments by essentially similar entities. It requires endowments to report their land and other real estate investments at fair value. Governments also are required to report the changes in fair value as investment income and to disclose the methods and significant assumptions employed to determine fair value, and other information that they currently present for other investments reported at fair value. This statement more appropriately reports the resources available in endowments and more closely aligns financial reporting with the objectives of endowments. It results in property 23 Redevelopment Agency of the City of Long Beach (A Component Financial Reporting Unit of the City of Long Beach, California) Notes to Combined Financial Statements September 30, 2009 held for similar purposes by comparable entities being reported in the same manner. Reporting land and other real estate held as investments at fair value enhances users' ability to meaningfully evaluate an entity's investment decisions and performance. The adoption did not have a material impact on the Agency's combined financial statements.

GASB Statement No. 53, Accounting and Financial Reporting for Derivative Instruments. The statement specifically requires governments to measure and report most derivative instruments at fair value in their financial statements that are prepared using the economic resources measurement focus and the accrual basis of accounting. The requirement of reporting the derivative instruments at fair value on the face of financial statements gives the users of financial statements a clearer look into the risks their governments are sometimes exposed to when they enter into these transactions and how those risks are managed. The statement also addresses hedge accounting requirements and improves disclosures, providing a summary of the government's derivative instrument activity, its objectives for entering into derivative instruments, and their significant terms and risks. Application of this statement is effective for the Agency's fiscal year ending September 30, 2010. However, the Agency has, in conjunction with the City, adopted the statement early and the statement did not have a material impact on the combined financial statements.

GASS Statement No. 55, The Hierarchy of Generally Accepted Accounting Principles for State and Local Governments. The Statement incorporates the hierarchy of generally accepted accounting principles (GAAP) for state and local governments into the GASB's authoritative literature. Implementation of this statement is not expected to result in any changes in current practice. The adoption did not have a material impact on the Agency's combined financial statements.

GASS Statement No. 56, Codification of Accounting and Financial Reporting Guidance Contained in the A/CPA Statements on Auditing Standards. The Statement incorporates into the GASB's authoritative literature certain accounting and financial reporting guidance presented in the American Institute of Certified Public Accountants' Statements on Auditing Standards. This Statement addresses three issues not included in the authoritative literature that establishes accounting principles-related party transactions, going concern considerations, and subsequent events. The adoption did not have a material impact on the Agency's combined financial statements.

The Agency is currently analyzing its accounting practices to determine the potential impact on the combined financial statements for the following GASB Statements: GASS Statement No. 51, Accounting and Financial Reporting for Intangible Assets. The statement requires that all intangible assets not specifically excluded by its scope provisions be classified as capitql assets. Accordingly, existing authoritative guidance related to the accounting and financial reporting for capital assets should be applied to these intangible assets, as applicable. This statement also provides authoritative guidance that specifically addresses the nature of these intangible assets. Such guidance should be applied in addition to the existing authoritative guidance for capital assets. Application of this statement is effective for the Agency's fiscal year ending September 30, 2010.

24 Redevelopment Agency of the City of Long Beach (A Component Financial Reporting Unit of the City of Long Beach, California) Notes to Combined Financial Statements September 30, 2009

GASS Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions. The Statement is intended to enhance the usefulness of fund balance information by providing clearer fund balance classifications that can be more consistently applied and by clarifying the existing governmental fund type definitions. The Statement establishes fund balance classifications that comprise a hierarchy based primarily on the extent to which a government is bound to observe constraints imposed upon the use of the resources reported in governmental funds. The Statement also provides guidance for classifying stabilization amounts on the face of the balance sheet and requires disclosure of certain information about stabilization arrangements in the notes to the financial statements. Application of this statement is effective for the Agency's fiscal year ending September 30, 2011.

Personnel The Agency is supported by employees of the City and appropriate costs are then charged to the Agency. All employee-related costs are accounted for in the City's financial systems.

Estimates The preparation of the Agency's combined financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.

Note 2 - Cash and Investments The Agency pools its cash and investments with other City funds maintained by the City Treasurer. The Agency's individual cash deposits and investments within this pool are not specifically segregated. Interest income earned on pooled cash and investments is allocated monthly to the various pool participants based on their average daily cash balances.

As a component financial reporting unit of the City, the Agency is authorized to invest in obligations issued or guaranteed by the Federal Government and its agencies and instrumentalities, high quality commercial paper and medium term corporate notes rated by Standard and Poor's Corporation or Moody's, bankers' acceptances, repurchase agreements, reverse repurchase agreements, bank certificates of deposit, the State Treasurer's Local Agency Investment Fund, and shares of beneficial interest (mutual funds) issued by diversified investment management companies. The City's bank deposits are either covered by federal insurance or collateralized in accordance with the California Government Code. Pooled cash and investment detail is included in the City's CAFR.

Cash with Fiscal Agents Independent fiscal agents also hold the Agency's funds. These funds are pledged to the payment of outstanding bonds and project costs eligible under the bond indenture for each project area related to the Tax Allocation Bonds 1992, 2002 Series A and B, and 2005 Series A, B, and C issuance. These funds are reserved in the Debt Service Fund

25 Redevelopment Agency of the City of Long Beach (A Component Financial Reporting Unit of the City of Long Beach, California) Notes to Combined Financial Statements September 30, 2009 amounting to $62,011,000. Monies held by fiscal agents, unless otherwise required by statute, may be invested in accordance with the underlying bond indentures specifying the types of investments the Agency's fiscal agents may make. These underlying indentures are generally more restrictive than the City's general investment policy. Additional types of investments, not permitted by the City's general investment policy, are not authorized.

Cash and Investments as of September 30, 2009 are classified in the Agency's combined financial statements as follows (in thousands):

Combined statement of net assets: Cash and investments in City pool $ 107,443 Cash and investments held by bond trustee 62,011 Time Certificates of Deposit 10,000

Total cash and investments $ 179,454

26 Redevelopment Agency of the City of Long Beach (A Component Financial Reporting Unit of the City of Long Beach, California) Notes to Combined Financial Statements September 30, 2009

Investments Authorized by the California Government Code and the City's Investment Policy The table below identifies the investment types that are authorized for the City by the City's investment policy. The table also identifies certain provisions of the City's investment policy that address interest rate risk, credit risk, and concentration of credit risk. This table does not address debt proceeds held by bond trustee, which are governed by the provisions of debt agreements of the City, rather than the general provision of the California Government Code or the City's investment policy.

Maximum Maximum Maximum Percentage of Investment in Authorized Investment Type Maturity Portfolio One Issuer

Bonds issued by the City 5 years* 30% None U.S. Treasury notes, bonds, or bills 5 years* None None Registered state warrants or treasury notes or bonds of the State of California 5 years* 30% None Local agency bonds 5 years* 30% None Federal agency securities 5 years* 40% None Bankers acceptances 180 days 40% 30% Commercial paper 270 days 25% 10% Negotiable certificates of deposit 5 years* 30% 10% Time certificates of deposit 5 years* 100% 10% Repurchase agreements 90 days 100% None Reverse repurchase agreements 92 days 20% None Securities lending program 92 days 20% None Medium-term notes 5 years* 30% 10% Money market funds N/A 20% 10% Local agency investment fund (LAIF) N/A None $40 million per account Asset-backed securities 5 years 20% None Mortgage-backed securities 5 years 20% None

* Maximum maturity of five (5) years unless a longer maturity is approved by the City Council, either specifically or as part of an investment program, at least three (3) months prior to purchase.

Investments Authorized by Debt Agreements Investment of debt proceeds held by bond trustee is governed by provisions of the debt agreements.

Interest Rate Risk Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value to changes in market interest rates. One of the ways that the City manages its exposure to interest rate risk is by purchasing a combination of short-term and long-term investments, and by timing cash flows from maturities so that a portion of the

27 Redevelopment Agency of the City of Long Beach (A Component Financial Reporting Unit of the City of Long Beach, California) Notes to Combined Financial Statements September 30, 2009 portfolio is maturing or coming closer to maturity evenly over time as necessary to provide adequate cash flow and liquidity for operations. The following schedule indicates the interest rate risk of the City's investments, which include the amount the Agency has invested with the City as of September 30, 2009 (in thousands):

Weighted Average Investment Type Maturity (in years)

Cash and Investments in City Pool: lnterdepartment Loan (Health SAVRS) $ 2,654 10.60 U.S. Treasury Notes 930,125 0.41 Federal Agency Securities 592,312 1.96 Government Managed Rate Account 104,667 Subtotal City Pool 1,629,758 Cash and Deposits 80,099 Outstanding Checks (13,698) Total City Pool $1,696,159

Non-performing Short-term Investment $ 3,962

The Agency cash and investments amount of $107,443,000 is 6.33 percent of the City's pooled cash and investments of $1,696, 159,000.

The Agency's non-pooled cash and investments of $72,011,000 consist of bond proceeds with the trustee and a certificate of deposit for the North Long Beach Project Area.

Weighted Average Agency Non-pooled Investment Type Maturity (in years) Money Market Funds $ 33,916 Guaranteed Investment Contracts 13, 108 24.75 U.S. Treasury Notes 8,844 2.00 Federal Agency Securities 6,143 2.50 Time Certificates of Deposit 10,000 1.00

Total held by Bond Trustee

Investments with Fair Values Highly Sensitive to Interest Rate Risk Highly sensitive investments are investments whose sensitivity to market interest rate fluctuations are not fully addressed by the use of one of the five methods for reporting interest rate risk. The City had no investments with values that were highly sensitive to interest rate risk as of September 30, 2009.

28 Redevelopment Agency of the City of Long Beach (A Component Financial Reporting Unit of the City of Long Beach, California) Notes to Combined Financial Statements September 30, 2009

Risks and Uncertainties The City may invest in various types of investment securities. Investment securities are exposed to various risks, such as interest rate, market, and credit risks. Due to the lev~I of risk associated with certain investments securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect the amounts reported in the combined statement of net assets.

The City invests in securities with contractual cash flows, such as asset-backed securities and mortgage-backed securities. The value, liquidity, and related income of these securities are sensitive to change in economic conditions, including real estate value, delinquencies or defaults, or both, and may be adversely affected by s~1ifts in the market's perception of the issuers and changes in interest rates.

Disclosures Relating to Credit Risk Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. The minimum rating requirements for commercial paper, asset backed securities, and medium term notes is an A rating. Mortgage backed security issuers must have a minimum AAA rating. State warrants, state treasury notes, or bonds of the state of California are to be rated at a minimum of A1/Sp-1 for short-term investments and Aa/AA for long-term investments.

Presented below is the minimum rating required by the California Government Code, the City's investment policy, and the actual rating as of September 30, 2009 for each investment type (in thousands): Rating as of Year-end Minimum City's Pooled Investments Legal Not Required Investment Type Rating to Be Rated A-1 + A-1 AAA Unrated Cash and Investments in City Pool: lnterdepartment Loan (Health SAVRS) NIA 2,654 2,654 U.S. Treasury Notes NIA 930,125 930,125 Federal Agency Securities NIA 592,312 592,312 LAIF NIA Government Managed Rate Account NIA 104,667 104,667

Subtotal City Pool 1,629,758 . 1,037,446 592,312

Cash and Deposits 80,099 80,099 Outstanding Checks (13,698) (13,698) Total City Pool $ 1,696, 159 1,037,446 592,312 66,401

Non-perfonming Short-term Investment NIA $ 3,962 3,962

Rating as of Year-end Minimum Not Required Agency Non-pooled Investment Type Legal Rating To Be Rated A-1+ A-1 AAA AA- Unrated

Money Market Funds NIA 33,916 33,916 Guaranteed Investment Contracts NIA 13,108 13,108 U.S. Treasury Notes NIA 8,844 8,844 Federal Agency Securities NIA 6,143 6,143 Time Certificates of Deposit NIA 10,000 10,000

Total held by Bond Trustees 72,011 57,024 14,987

29 Redevelopment Agency of the City of Long Beach (A Component Financial Reporting Unit of the City of Long Beach, California) Notes to Combined Financial Statements September 30, 2009

Concentration of Credit Risk The investment policy of the City contains no limitations on the amount that can be invested in any one issuer beyond that stipulated by the California Government Code. Investments in any one issuer that represent 5 percent or more of the City's total pooled investments are as follows (in thousands):

Issuer Investment Type

Federal Farm Credit Bank Federal agency securities $ 28,232 Federal Home Loan Bank Federal agency securities 95,440 Federal Home Loan Mortgage Association Federal agency securities 91,865 Federal National Mortgage Association Federal agency securities 376,776 U.S. Treasury U.S. Treasury notes and bonds 930, 125

Custodial Credit Risk Custodial credit risk for deposits is the risk that, in the event of failure of a depository financial institution, a government will not be able to recover its deposits or will not be able to recover collateral securities that are in the possession of an outside party. The custodial credit risk for investments is the risk that, in the event of the failure of the counterparty (e.g., broker/dealer) to a transaction, a government will not be able to recover the value of its investment or collateral securities that are in the possession of another party. The California Government Code and the City's investment policy do not contain legal or policy requirements that would limit the exposure to custodial credit risk for deposits or investments, other than the following provision for deposits. The California Government Code requires that a financial institution secure deposits made by state or local governmental units by pledging securities in an undivided collateral pool held by a depository regulated under state law (unless so, waived by the governmental unit). The market value of the pledged securities in the collateral pool must equal at least 11 O percent of the total amount deposited by the public agencies. California law also allows financial institutions to secure City's deposits by pledging first trust deed mortgage notes having a value of 150 percent of the secured public deposits.

All securities owned by the City are deposited in trust for safekeeping with a custodial bank different from the City's primary bank.

As of September 30, 2009, the City reported deposits of $80,099,000 less $13,698,000 for checks outstanding.

Investment in State Investment Pool The City is a voluntary participant in the LAIF that is regulated by the California Government Code section 16429 under the oversight of the Treasurer of the State of California. The fair value of the City's investment in this pool is reported in the City's financial statements at amounts based upon the City's pro rata share of the fair value provided by LAIF for the entire LAIF portfolio (in relation to the amortized cost of that portfolio). The balance available for withdrawal is based on the accounting records

30 Redevelopment Agency of the City of Long Beach I (A Component Financial Reporting Unit of the City of Long Beach, California) 1 Notes to Combined Financial Statements September 30, 2009

maintained by LAIF, which are recorded on an amortized-cost basis. Included in LAIF's investment portfolio are mortgage-backed securities, loans to certain state funds, securities with interest rates that vary according to changes in rates greater than a one-for-one basis, and structured basis. At September 30, 2009, the City was not participating in the LAIF.

Reverse Repurchase Agreements There were no transactions involving reverse repurchase agreements during the fiscal year ended September 30, 2009.

GASB 31 GASB Statement No. 31, Certain Investments and External Investment Pools, requires that certain investments and external investment pools be reported at fair value. At September 30, 2009, the effect of recording the City's investments at fair value did not have a material impact on the City's and Agency's financial position.

Securities-Lending The City did not engage in any securities lending programs for the fiscal year ended September 30, 2009. However, from time to time, the City engages in limited securities lending activities. These activities are governed by formal agreement with the City's contract bank. This agreement limits the nature and amount of the transactions and provides for full collateralization of each transaction.

31 Redevelopment Agency of the City of Long Beach (A Component Financial Reporting Unit of the City of Long Beach, California) Notes to Combined Financial Statements September 30, 2009

Non-12ooled Restricted Cash and Investments Non-pooled restricted cash and investments stated at fair value, in accordance with GASB Statement No. 31, Certain Investments and External Investment Pools, including accrued interest thereon, consisted of the following at September 30, (in thousands):

Cash with Fiscal Agent Investments Total Tax Allocation Bonds: 1992 Multiple Series: West Long Beach Industrial Project $ 56 $ 2,528 $ 2,584 Downtown Project -Series A 122 5,625 5,747 2002 Multiple Series: 2002A Poly High Project 7 105 112 2002A West Beach Project 9 753 762 20028 West Long Beach Industrial Project 549 549 2002A Downtown Project 32 2,425 2,457 2002A North Long Beach Project 131 3,105 3,236 2005 Multiple Series: 2005A-2 Poly High Project 2 103 105 2005A-1 Los Altos Project 408 408 2005A-1 Central Long Beach Project 3,790 1,864 5,654 20058 Central Long Beach Project 35 2,145 2,180 2005A-1 North Long Beach Project 3,826 3,269 7,095 20058 North Long Beach Project 27 1,711 1,738 20058 Housing Fund 25,298 4,054 29,352 2005C Downtown Project 32 32 North Long Beach Project 10,000 10,000 Total $ 33,916 $ 38,095 $ 72,011

32 Redevelopment Agency of the City of Long Beach (A Component Financial Reporting Unit of the City of Long Beach, California) Notes to Combined Financial Statements September 30, 2009

Note 3 - Reconciliation of GovernmentNwide and Fund Combined Financial Statements Explanation of Certain Differences Between the Governmental Fund Balance Sheet and the Government-wide Combined Statement of Net Assets The governmental fund balance sheet includes reconciliation between fund balance - total governmental funds and net assets (deficit) - governmental activities as reported in the government-wide combined statement of net assets. One element of that reconciliation explains, "Long-term liabilities, including bonds payable, are not due and payable in the current period and, therefore, not reported in the funds." The details of the $331, 191,000 and $1,570,000 differences are as follows (in thousands): Low- and Capital Moderate­ Projects/Debt Income Service Funds Housing Fund Bonds Payable $ 323,890 $ Less: Deferred charge for issuance costs (to be amortized over life of debt) (6,575) Unamortized loss on defeasance (2,130) Issuance discount, net (to be amortized as an addition to interest expense) (566) Plus: Issuance premium, net (to be amortized as a reduction of interest expense) 8,473 Notes payable 3,284 1,052 Environmental remediation 13 Accrued interest payable 505 Net adjustment to reduce fund balance - total governmental funds to arrive at net assets (deficit) - governmental activities $ 1,570

Explanation of Certain Differences between the Governmental Fund Combined Statement of Revenues, Expenditures, and Changes in Fund Balance and the Government-wide Combined Statement of Activities Governmental funds report the effect of issuance costs, premiums, discounts, and similar items when debt is first issued, whereas these amounts are deferred and amortized in the combined statement of activities. The details of this $8,361,000 difference are as follows (in thousands): Capital Projects/Debt Service Funds Debt issued or incurred Issuance of notes, certificates of participation commercial paper, and other long-term obligations $ 311

Principal payments Tax Allocation Bonds obligation debt (8,672) Net adjustment to decrease net changes in fund balances total governmental funds to arrive at changes in net assets of governmental activities $ (8,361)

33 Redevelopment Agency of the City of Long Beach (A Component Financial Reporting Unit of the City of Long Beach, California) Notes to Combined Financial Statements September 30, 2009

Some expenses reported in the combined statement of activities do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds. The details of the $122,000 and $80,000 differences are as follows (in

Low- and Capital Moderate­ Projects/Debt Income Service Funds Housing Fund Accrued interest $ 147 $ 80 Amortization of premium (454) Amortization of discount 23 Amortization of issuance cost 303 Amortization of loss on defeasance 103 Net adjustment 122 $ $ =====80 thousands):

Note 4 - Receivables The following receivables are expected to be collected within one year. There are no allowances for uncollectable accounts. Current receivables at September 30, 2009 are as follows (in thousands):

Low- and Capital Moderate­ Projects/Debt Income Service Funds Housing Fund Interest $ 165 $ Property taxes 92,186 Accounts and loans receivable 1,077 6 Total $ 93,428 $ 6

34 Redevelopment Agency of the City of Long Beach (A Component Financial Reporting Unit of the City of Long Beach, California) Notes to Combined Financial Statements September 30, 2009

Note 5 - Capital Assets Capital asset activity for the year ended September 30, 2009 is as follows (in thousands):

Balance at Balance at Capital Project I Debt Service activites October 1, 2008 Increase September 30, 2009

Capital assets, not being depreciated: Land $ 13,802 $ 13,802 Total capital assets not being depreciated 13,802 13,802

Capital assets, being depreciated: Building 483 483 Machinery and equipment 448 Total capital assets being depreciated 931

Less accumulated depreciation for: Building (32) (32) Machinery and equipment (72) (53) Total accumulated depreciation (104) (85) Total capital assets being depreciated, net 827 Redevelopment Agency, governmental activities capital assets, net ==$======14,629 $

Depreciation was charged to functions/programs of governmental activities as follows (in thousands): Community and cultural/housing: Community development $ (85)

Balance at Balance at Low- and Moderate-Income Housing activities: Increase September 30, 2009

Capital assets, not being depreciated: Land $ $ 1,015 Total capital assets not being depreciated 1,015

Capital assets, being depreciated: Building 536 536 Improvements other than buildings 1,053 Total capital assets being depreciated 1,589

Less accumulated depreciation for: Building (112) (18) (130) Improvements other than buildings (406) (45) (451) Total accumulated depreciation (518) (63) (581)

Total capital assets being depreciated, net 1,071 (63) 1,008 Low- and Moderate-Income Housing Fund, Governmental activities capital assets, net $ 2,086 $ 2,023

Depreciation was charged to functions/programs of governmental activities as follows (in thousands):

Community and cultural/housing: Community development

35 Redevelopment Agency of the City of Long Beach (A Component Financial Reporting Unit of the City of Long Beach, California) Notes to Combined Financial Statements September 30, 2009

Note 6 - Due to/from and Advances from/to the City of Long Beach The composition of receivables and payables to the City as of September 30, 2009 is as follows (in thousands):

Redevelopment Agency

Due to the City of Long Beach Internal Service Fund $ 78 Total due to the City of Long Beach $ 78

Advances from the City of Long Beach General Fund $ 103,219 Housing Development Fund 20% set-aside 17,321 Housing Development Fund other project costs 3,908 General Capital Projects 10,766 Harbor Fund 27,000 Total advances from the City of Long Beach $ 162,214

Advances to the City of Long Beach Aquarium of the Pacific: Funds transfer $ 24,049 Accrued interest Total advances to the City of Long Beach

Low- and Moderate-Income Housing Fund

Due to the City of Long Beach Internal Service Fund Total due to the City of Long Beach

Advances to the Housing Development Fund City of Long Beach $ 856 Housing Development Company 1,440 Total advances to the Housing Development Fund $ 2,296

Advances to the Redevelopment Agency 20% set-aside $ 16,361 Project costs 960 Total advances to the Redevelopment Agency $ 17 321

The advances from the City of Long Beach of $162,214,000 are only reported in the government-wide financial statements as Advances from the City of Long Beach and Advances from Low- and Moderate-Income Housing Fund of $144,893,000 and $17,321,000, respectively.

Due to/from the City of Long Beach Employee Benefit overhead costs of $78,000, such as funding for health benefits and paid time of, relating to the wages and salaries accrued at September 30, 2009, are payable to the City's Employee Benefits Internal Service Fund at September 30, 2009. 36 Redevelopment Agency of the City of Long Beach (A Component Financial Reporting Unit of the City of Long Beach, California) Notes to Combined Financial Statements September 30, 2009

Advances from/to the City of Long Beach The Agency records its debt owed to the City of Long Beach only in its government-wide financial statements. From 1974 to 2009, the City transferred funds to the Agency that included Federal grant monies for use on redevelopment projects. The Agency occasionally makes discretionary payments to the City, which in fiscal year 2009 amounted to $2,784,000. At September 30, 2009, the outstanding balances of these transfers amounted to $103,219,000, $3,908,000, and $9,647,000 in the City's General Fund, Housing Development Special Revenue Fund, and General Capital Projects Fund, respectively, for land acquisition, project, and administration costs. It is the intent of the Agency to repay these transfers as future property tax increment revenues permit. Due to the long-term nature of the repayment, the City has reserved these interfund receivables in the General Fund, Housing Development Special Revenue Fund, and General Capital Projects Fund.

In December 1993, the City agreed to convey to the Agency real property for the Central Long Beach Project equal to the fair market value less any costs of demolition and remediation of the property or $1,877,000. Pursuant to the loan agreement, the Agency is required to make a loan repayment equal to at least 1 percent of the net tax increment received by the Agency for the Central Long Beach Project Area. The funds paid to the City are required to be utilized for gang prevention and other youth-related activities. In fiscal year 2009, the Agency made a loan repayment of $184,000 to the City. The balance of this advance on September 30, 2009 was $1, 119,000.

In 1990, the Agency received an advance from the Long Beach Harbor Department (Port) for the expansion of the Long Beach Convention and Entertainment Center. The resulting note, payable solely from the Downtown Project Area's transient occupancy taxes, was scheduled to be repaid commencing on October 1, 1997. In August 1995, the agreement was amended to defer payment until a certificate of occupancy was issued for the Aquarium of the Pacific Project, which was completed in fiscal year 1998. In 2002, a subsequent amendment deferred further the scheduled quarterly payments of $441,000 over 16 years. In 2009, the agreement was further amended. Under the terms of the amendment, the pledge of transient occupancy taxes was relieved, $435,000 of the original outstanding advance was forgiven, and the Agency agreed to reimburse the Harbor up to a maximum of $27,000,000, using a pledge of future tax increment revenues, for costs of new project area improvements submitted by the Port pursuant to the West Long Beach Industrial Redevelopment Project Area Public Improvement Reimbursement Agreement between the Agency and the Port dated September 1, 2009. Further, the amendment stipulated that at July 1, 2015, if the Port has not submitted requests for reimbursement equivalent to the maximum amount allowable, the amount of the advance equal to the remaining unused balance of the agreement shall be forgiven. At September 30, 2009, the total aggregate balance outstanding was $27,000,000.

In accordance with the Owner Participation Agreement by and among the Redevelopment Agency of the City of Long Beach, Long Beach Bond Finance Authority and the Aquarium of the Pacific, all Redevelopment Agency Fund transient occupancy taxes are pledged to fund the debt service payments of the Lease Revenue Refunding Bonds (Aquarium of the Pacific Project) Series 2001 if needed. The Redevelopment Agency will

37 Redevelopment Agency of the City of Long Beach (A Component Financial Reporting Unit of the City of Long Beach, California) Notes to Combined Financial Statements September 30, 2009 be reimbursed for any such advances together with accrued interest, at an interest rate equal to the rate earned on the City Treasurer's Investment Pool, as monies are available. At September 30, 2009, the Redevelopment Agency had advanced $24,488,000 to the City for the bond payment, including accrued interest of $439,000.

Low- and Moderate-Income Housing Fund Effective in fiscal year 1986, the Agency was allowed to defer a portion or 100 percent of the housing set-aside based on the financial obligations existing prior to January 1986. There was no deferral of the 20 percent housing set-aside for the fiscal year ended September 30, 2009. The deferred payments for the Downtown Project Area of $16,361,000 and the advances made to the Central Long Beach project Area for a residential construction project of $960,000 at September 30, 2009 constitute a debt of the Agency to the Housing Development Fund. This total advances of $17,321,000 is shown as offsetting components of the combined statement of net assets, "Advances from Low- and Moderate-Income Housing Fund" and "Advances to the Redevelopment Agency".

In 2009, the Low- and Moderate-Income Housing Fund advanced $2,296,000 to the City and the Long Beach Housing Development Company for the repayment of long-term notes payable to the California Housing Finance Agency. As of September 30, 2009, $856,000 has been advanced to the City for the Parwood Project and $1,440,000 advanced to the Housing Development Company for the Grisham Project.

Note 7 - Long-Term Obligations Long-Term Debt activity for the year ended September 30, 2009 was as follows (in thousands): Balance at Balance at Due within September 30, 2008 Reductions September 30, 2009 one year Capital ProjectJDebt Service Fund Bonds payable: Tax allocation bonds: $ 332,562 $ $ {8,672) $ 323,890 $ 9,130 Add (less) deferred amounts: Premium 8,927 (454) 8,473 Discount (589) 23 (566) Issuance costs (6,878) (13) 316 (6,575) Loss on defeasance (2,233) 103 (2,130) Total bonds payable 331,789 (13} (8,684) 323,092 9,130 Notes payable 2,875 409 3,284 Advances from the City of Long Beach 143,604 4,693 (3,404) 144,893 Advances from Low- and Moderate-Income Housing Fund 28 17,321 Long-term liabilities $ 5,117 $

Low- and Moderate-Income Housing Fund

Balance at Balance at Due within September 30, 2008 Additions Reductions ~~~~~ one year Notes Payable 1,015 $ 1,015 $ Environmental Remediation 13 $ 13

38 Redevelopment Agency of the City of Long Beach (A Component Financial Reporting Unit of the City of Long Beach, California) Notes to Combined Financial Statements September 30, 2009

Pledged Revenue The Agency has pledged a portion of future tax increment revenues to repay tax allocation bonds issued between 1992 and 2006. The bonds were issued either to finance redevelopment activities within various project areas or to refinance existing debt that was originally issued for the same purpose. The bonds are payable solely from tax increment revenues. Tax increment revenues are projected to produce 392 percent of the debt service requirements over the life of the bonds. As of September 30, 2009, total principal and interest requirement for the bonds is $565,691,000 ($323,890,000 for principal and $241,801,000 for interest), payable semiannually through 2040. For the current year, principal and interest paid and tax increment revenues received were $25,680,000 and $92, 762,000, respectively. The Agency has pledged a portion of future tax increment revenues to repay advances from the City made in between 1974 and 2009. The advances were made to finance redevelopment activities wit~1in or of benefit to various project areas. The advances are payable solely from tax increment revenues. Tax increment revenues are projected to produce 2,305 percent of the debt service requirements over the life of the advances. As of September 30, 2009, the total principal and interest requirement for the advances is $117,893,000 ($68,016,000 for principal and $49,877,000 for interest). At present, the Agency has a maximum termination date of December 2047. For the current year, principal and interest paid and tax increment revenues received were $2,969,000 and $92,762,000, respectively. Taken as a whole, the Agency has pledged $683,584,000 ($391,906,000 for principal and $291,678,000 for interest) of future tax increment revenues resulting in a coverage ratio of tax increment revenues to debt of 398 percent.

39 Redevelopment Agency of the City of Long Beach (A Component Financial Reporting Unit of the City of Long Beach, California) Notes to Combined Financial Statements September 30, 2009

Note 8 - Bonds Payable At September 30, 2009, bonded indebtedness consisted of the following (in thousands): Outstanding Range of Semi- Balance Date Final Annual Interest Authorized and September 30, Issued Maturity Rates Issued 2009 Tax Allocation Bonds: 1992 Multiple Series: Downtown Project - Series A 12/01 /92 11/01/22 2.9 - 6.00% $ 81,020 $ 29,590 West Long Beach Industrial Project 12/01 /92 11/01/22 2.9 - 6.00% 36,470 13,325 2002 Multiple Series: 2002A Poly High Project 06/25/02 08/01/12 4.809% 1,710 599 2002A West Beach Project 06/25/02 08/01 /18 5.152% 8,895 5,880 20028 West Long Beach Industrial Project 12/05/02 11/01/24 2.00 - 5.50% 21,860 19,295 2002A Downtown Project 06/25/02 08/01/24 5.04 - 5.25% 26,820 14,921 20028 Downtown Project 12/05/02 11/01/22 2.25 - 5.50% 25,920 22,615 2002A North Long Beach Project 06/25/02 08/01 /31 6.105% 40,290 8,988 2005A-1 Los Altos Project 03/02/05 08/01 /20 2.20 - 4.00% 4,685 3,620 2005A-1 Central Long Beach Project 03/02/05 08/01/40 3.52 - 5.34% 22,690 21,568 2005A-1 North Long Beach Project 03/02/05 08/01/35 3.52 - 5.16% 39,000 36,349 2005A-2 Poly High Project 03/02/05 08/01/24 3.79- 4.90% 2,558 2,558 2005A-2 West Beach Project 03/02/05 08/01/20 4.59 -4.66% 839 839 20058 Central Long Beach Project 03/02/05 08/01/40 3.52 - 5.34% 34,240 32,547 20058 North Long Beach Project 03/02/05 08/01/35 3.52- 5.16% 25,080 23,376 20058 Housing Fund 03/02/05 08/01/40 3.52 - 5.44% 55,665 52,935 2005C Downtown Project 02/01/06 08/01/24 3.25 - 5.50% 7,900 7,740 2005C North Long Beach Project 02/01/06 08/01 /31 3.70 - 5.50% 27,145 27,145 Total Bonds Payable $ 462,787 $ 323,890

Annual Payments Combined annual debt-service payments to maturity for all bonds are as follows (in thousands):

Total Debt Fiscal Year Principal Interest Service 2010 $ 9, 130 $ 16,568 $ 25,698 2011 9,593 16,084 25,677 2012 10, 110 15,572 25,682 2013 10,842 15,135 25,977 2014 11,375 14,597 25,972 2015 - 2019 65,626 64,264 129,890 2020 - 2024 78,364 46,781 125, 145 2025 - 2029 44,602 28,889 73,491 2030 - 2034 44,848 16,967 61,815 2035 - 2039 32,715 6,595 39,310 2040 6,685 349 7,034 Totals $ 323,890 $ 241,801 $ 565,691

40 Redevelopment Agency of the City of Long Beach (A Component Financial Reporting Unit of the City of Long Beach, California) Notes to Combined Financial Statements September 30, 2009

Note 9 - Notes and Interest Payable At September 30, 2009, the Agency had the following notes payable to land sellers, developers, and other governmental entities (in thousands):

Date Final Range of Originally Outstanding at Issued Maturity Interest Rates September 30, 2009 Capital Project/Debt Service Fund Los Angeles County 1/21/1992 12/10/2036 3.75% $ 3,284

Low- and Moderate-Income Housing Fund State of California 1/23/1992 1/23/2022 3.00% $ 1,015

Combined annual debt service payments to maturity for all notes are as follows (in thousands): Capital Projects and Debt Service Funds

Fiscal Total Debt Year Principal Interest Service 2010 $ $ $ 2011 2012 2013 2014 2015 - 2019 2020 - 2024 2025 - 2029 2030 - 2034 2035 2036 2,762 6,046 Totals $ 2,762 $ 6,046 ======

Low- and Moderate-Income Housing Fund

Fiscal Total Debt Year Principal Interest Service 2010 $ $ $ 2011 2012 2013 2014 2015 - 2019 2020 - 2022 1 ,015 880 1,895 Totals $ 1,015 $ 1,895

41 Redevelopment Agency of the City of Long Beach (A Component Financial Reporting Unit of the City of Long Beach, California) Notes to Combined Financial Statements September 30, 2009

Tax Increment Pass-Through Obligation The Agency has an agreement to pay the County 49.44 percent of tax increment generated by the Los Altos Project Area, payable commencing in 2020 at a simple interest rate of 3.75 percent. The tax increment due to the County at September 30, 2009 totaled $3,284,000.

Low- and Moderate-Income Housing Fund In fiscal year 1992, the Fund entered into a loan agreement totaling $1,015,000 with the State of California Department of Housing and Community Development (State) for construction and rehabilitation of the Fund property. The project was completed in fiscal year 1993. Interest on the loan accrues from the date the funds were disbursed by the State at an annual simple interest rate of 3 percent, with the interest payment due within 60 days of fiscal year-end if sufficient funds are available. The Fund made an interest payment of $14,108 in fiscal year 1997. The principal and any unpaid interest are due in January 2022. As of September 30, 2009, the entire amount remains payable to the State.

Note 10 - Other Assets Other assets depicted in the Capital Projects/Debt Service Fund include the following at September 30, 2009 (in thousands):

Prepaid rent for the IDM structure 1,658 Deposits with Superior Court 1,027 Deposits with State Treasurer's Office 1,232 Other 19 Total Other Assets $ 3,936

Note 11 - Low- and Moderate-Income Housing Set-Aside Community Redevelopment Law requires redevelopment agencies to set aside 20 percent of their property tax increment to increase or improve the supply of low- and moderate-income housing in the community. Agencies must deposit the housing set-aside funds in a low- and moderate-income housing fund. The Agency deposits its housing set­ aside with the City.

Effective January 1, 1986, the laws governing redevelopment were amended to include project areas created prior to 1977 into the low- and moderate-income housing set-aside program. However, the law allows pre-1977 projects to set aside less than 20 percent of tax increment revenue if the project area's obligations from programs, projects, and financial obligations existing prior to January 1, 1986 exceeded the tax increment revenue available. Beginning January 1, 1986, the portion of the set-aside not paid became indebtedness of the project area.

42 Redevelopment Agency of the City of Long Beach (A Component Financial Reporting Unit of the City of Long Beach, California) Notes to Combined Financial Statements September 30, 2009

In fiscal year 1986, all Redevelopment Project Areas, except West Beach, qualified for reduced set-aside payments. In fiscal year 1988, only the Downtown Project Area qualified for a reduced payment but elected to recognize the amount as deferred rather than exempt. The Downtown Project Area qualified for and deferred a portion or the entire set-aside amount in fiscal years 1989 through 2002. Amendments in 1989 to the State Health and Safety Code Section 33334.6 (g) required redevelopment agencies to treat shortfalls in fiscal years 1986 and 1987 as deficits in the low- and moderate-income housing fund. As a result, in fiscal year 1995, the Agency recorded an additional $1,821,000 as a liability in the City's Housing Development Fund; this amount was equal to the fiscal years 1986 and 1987 Downtown Project Area set-aside.

The deferred debt was previously accounted for as a current liability because it was payable from any excess funds that might have become available. However, it has been determined that projections of tax increment revenues in the immediate future made it unlikely that payments would begin soon. As a result, the Agency has determined it necessary to account for the deferred set-aside as a long-term liability beginning in fiscal year 1996. With the implementation of GASB Statement No. 34, the deferred set-aside of $16,361,000 for the Downtown Project Area has been reclassified from the General Long­ Term Debt Account Group to Advances from the City (see note 6). Effective October 1, 2004, the Agency changed its method of accounting for advances from the City based on additional guidance issued by the GASB. The Agency now records its debt owed to the City only in its government-wide financial statements. The Agency has adopted a "Downtown Project Area Housing Fund Deficit Reduction Plan" Resolution RA 21-95, which calls for an analysis of available tax increment and existing obligations beginning in 2010, and every two years thereafter, until reduction of the deferred debt is found feasible, and commences.

During fiscal year 2009, all seven Redevelopment Project Areas paid a full 20 percent of their tax increment revenue to the Housing Development Fund and no Project Area deferred a low- and moderate-income housing set-aside payment.

43 Redevelopment Agency of the City of Long Beach (A Component Financial Reporting Unit of the City of Long Beach, California) Notes to Combined Financial Statements September 30, 2009

The Agency deposits set-aside funds into the Low- and Moderate-Income Housing Fund (Housing Fund). The following table shows the amount deferred from prior years, the current fiscal year's 20 percent set-aside requirement, the current fiscal year's payment, and the total amount not yet paid to the City's Housing Fund at September 30, 2009, for each Project Area (in thousands): Current Year Advances from Payment to Low- and Low- and Moderate- Advances Moderate- Income Housing from Housing Current Year Income Fund Fund October 20% Set Housing September 30, Project Area 1, 2008 Aside Fund 2009 Downtown $ 16,361 $ 4,621 $ (4,621) $ 16,361 West Beach 389 (389) West Long Beach Industrial 2,881 (2,881) Poly High 165 (165) Los Altos 156 (156) Central Long Beach 2,311 (2,311) North Long Beach 12,668 (12,668) Total $ 16,361 ======$ 23,191 $ (23, 191) =$===1=6,=36=1=

Note 12 - Transfers from/to the City of Long Beach For the fiscal year ended September 30, 2009, the City transferred $5,314,000 to the Agency: $920,000 from Housing Development Fund to the Central Long Beach Project Area for project development, $3,326,000 for amortization payment on the 2005 Housing Bonds, and $1,068,000 for the return of surplus funds from the Business Assistance Program.

During the fiscal year ended September 30, 2009, the Agency transferred $6, 140,000 to the City. The funds transferred were as follows (in thousands):

Transfers to Amount Business Assistance Program $ 700 Tidelands Operating Fund 518 General Fund 2,709 Housing Development Fund 2,000 Development Services, Special Revenue Fund 213 Total transfers to the City $ 6,140

The Agency transferred $700,000 to the City for the support and administration of the business loan program for the West Long Beach Industrial, Central Long Beach, and North Long Beach Project Areas.

44 Redevelopment Agency of the City of Long Beach (A Component Financial Reporting Unit of the City of Long Beach, California) Notes to Combined Financial Statements September 30, 2009

The Agency transferred $518,000 to the Tidelands Fund in fiscal year 2009 to supplement the debt service of the bonds issued for the construction of an energy plant at the Convention Center.

The Agency transferred $2,709,000 to the General Fund: $828,000 for the CityPlace Garage debt service and $1,881,000 for the return of transient occupancy tax previously allocated to the Agency.

The Agency transferred $2,000,000 of 2005 Housing Bond proceeds to the Housing Development Fund for various projects.

The Agency transferred $213,000 to the Special Revenue Fund for the General Plan Development.

Any redevelopment project area adopted after 1994 is required to share 20 percent of its tax increment with the taxing agencies affected by the adoption of the project area including city governments. As a result, the Central Long Beach and North Long Beach Project Areas paid $1, 102,000 and $2,875,000, respectively, to the City.

In addition, an amendment to Section 33333.6 of the Health and Safety Code took effect on January 1, 2002, authorizing redevelopment agencies to eliminate the time limit for incurring indebtedness; if this time limit is eliminated for a project area, that project area must commence statutory pass-through payments one year following the year its time limit for incurring indebtedness would have otherwise have been reached. On November 11, 2003, the Long Beach City Council adopted ordinances amending the Redevelopment Plans for the West Beach, Poly High, and West Long Beach Industrial Project Areas to eliminate their time limits for incurring indebtedness. Fiscal year 2009 is the fifth year these project areas are required to make statutory pass-through payments. The Poly High, West Beach, and West Long Beach Industrial Redevelopment Project Areas paid $27,000, $45,000, and $308,000, respectively, to the City.

These payments are part of the pass-through charges expenditure category of $18,306,000 under the Debt Service Fund in the combined statement of revenues, expenditures, and changes in fund balance. The remaining balance of $13,949,000 pass­ through charges relate to money due to agencies other than the City.

45 Redevelopment Agency of the City of Long Beach (A Component Financial Reporting Unit of the City of Long Beach, California) Notes to Combined Financial Statements September 30, 2009

Note 13 - Land Held for Resale The Agency owns various parcels of land located within its various project areas. These properties have been recorded at the lower of cost or estimated fair market value, excluding demolition and relocation costs. Due to the potential long-term nature of these assets, the Agency has reserved fund balance for land held for resale. At September 30, 2009, the Agency had the following amount of land held for resale in each project area (in thousands):

Project Area Value at Lower of Cost or Market Value Low- and Moderate- Capital Projects Income Housing Funds Fund Downtown $ 27,623 $ West Long Beach Industrial 8,940 Poly High 2,203 Central Long Beach 62,223 6,644 North Long Beach 76,375

Total $ 177,364

Note 14- Eliminations and Reclassifications of lnterproject Loans In prior years, interproject loans were recorded to allow one project area to invest excess cash in another project area. This practice is no longer used by the Agency. Existing loans are repayable by the project area if and when sufficient revenues for repayment are available or as provided for under the applicable loan agreement. The principal amount of the loan accrues interest at the various interest rates specified in the corresponding loan agreements.

The following schedule presents interproject loans outstanding as of September 30, 2009 (in thousands):

From To Project West Beach Downtown Los Altos Central LB Total West Long Beach Industrial $ 328 1,054 $ 2,340 $ 5,956 Total $ 328 $ 2,340 $ 5,956

46 Redevelopment Agency of the City of Long Beach (A Component Financial Reporting Unit of the City of Long Beach, California) Notes to Combined Financial Statements September 30, 2009

Advances between redevelopment project areas are as follows (in thousands):

Total Original Principal Interest Outstanding

In June 1995, the West Long Beach Industrial and Leis Altos Project Areas entered into a promissory note and loan agreement for the West Long Beach Industrial Project Area to advance funds on an as needed basis to meet Los Altos acquisition and relocation expenses. The indebtedness accrued interest at a rate equal to that earned by the City Treasurer on the City of Long Beach pooled cash. The sales tax allocated to the Los Altos Project Area by the City of Long Beach and any surplus tax increment from the project are pledged to the West Long Beach Industrial Project Area loan repayment. There have been enough funds available to pay the accrued interest on the Joan. 12,700 . 2,234 2,234

In July 1995, a promissory note and loan agreement was entered into by the West Long Beach Industrial Project Area and Poly High, West Beach, Downtown, and Central Long Beach Project Areas for the West Long Beach Industrial Project Area to advance for contributions to the development of the Long Beach Unified School District Transportation Facility. The indebtedness accrued interest at a rate equal to that which accrues on the Tax Anticipation l'Jotes of the City of Long Beach. Repayment of the indebtedness will be made as future tax increments become available. However, in June 2002, the advance to Poly High Project Area was repaid from tax allocation bond proceeds. 2,626 2,571 · 1, 151 3,722

Totals $15,326 $ 4,805 $ 1, 151 $ 5,956

47 Redevelopment Agency of the City of Long Beach (A Component Financial Reporting Unit of the City of Long Beach, California) Notes to Combined Financial Statements September 30, 2009

Note 15 - Long-term Receivables, Reserved Fund Balance, and Deferred Revenue In the accompanying fund financial statements, long-term receivables are offset by reserved fund balance-other or deferred revenue. The table below presents the detail components of the Agency's and the Low- and Moderate-Income Housing Fund's long-term receivables and corresponding offset accounts at September 30, 2009 (in thousands):

Governmental Funds:

Capital Proiects/Debt Service Fund Reserved Low-and Fund Balance- Moderate-Income Long-term Long-term Deferred Housing Fund • Description Receivables Receivables Revenue Deferred Revenue

Loans receivable: Blk M $ 35 $ 35 $ $ Olson, Downtown Promenade Land Sale 1,352 1,352 Delinquent Tax Los Angeles County 24 24 A& EAmador 30 30 Museum of Latin American Art-Property acquisition 125 125 The Garage Theatre-Building improvement 20 20 Low- and moderate-income housing loans 37,392 Total Long-Term Receivables $ 1,586 89 1.497 37,392

Additional components: Prepaid rent for the IDM structure, non-current 1,623 Accounts receivable-Early payment/set-up 7 Brownfields Clean-up revolving loan fund 28 Advance to City for Aquarium of the Pacific debt service 24,488 Property tax increment receivable 90,683 Cash-Deposits from contractors/developers 383 Total Reserved/Deferred Revenues $ 26,200

Note 16 - Other Reserved Fund Balances Low- and Moderate-Income Housing Fund At September 30, 2009, the reserved fund balance of $61,000 has been accumulated for operating and maintenance reserves required under the Regulatory Agreement of the promissory note with the State for $1,015,000.

Note 17 - Commitments and Contingencies Litigation The Agency is subject to claims and lawsuits arising from the normal course of business. Representatives of the City Attorney's Office routinely evaluate such claims. In the event of litigation, the Agency's management may make provision for probable losses if deemed appropriate on advice of legal counsel. In cases where such provision for damages would be considered necessary, appropriate amounts would be reflected in the accompanying combined financial statements.

As part of the state budget trailer bill (ABX4 26), passed in July 2009 as part of the fiscal year 2009/10 state budget, the State placed a $2.05 billion statewide levy on redevelopment agencies. In October of 2009, the California Redevelopment Associations (CRA), on behalf 48 Redevelopment Agency of the City of Long Beach (A Component Financial Reporting Unit of the City of Long Beach, California) Notes to Combined Financial Statements September 30, 2009 of redevelopment agencies statewide, filed a lawsuit challenging the constitutionality of the action and seeking to prevent the State from taking redevelopment funds for non­ redevelopment purposes in the form-mandated payments to the Supplemental Educational Revenue Augmentation Fund (SERAF). If found to be constitutional, the Redevelopment Agency of the City of Long Beach would be required to remit $29,516,137 to SERAF.

In 2008, the State attempted a similar takeaway that was found to be unconstitutional. The same judge who rendered the decision in favor of the CRA in the 2008 Educational Revenue Augmentation Fund (ERAF) lawsuit is hearing the current lawsuit. Based on the strong similarities between the 2008 ERAF and the current SERAF lawsuit, the Agency has determined that it is probable the CRA will prevail and no liability for this contested mandate has been recorded at September 30, 2009.

49 Intentionally Left Blank

50 Supplementary Financial Information Intentionally Left Blank

51 Redevelopment Agency of the City of Long Beach (A Component Financial Reporting Unit of the City of Long Beach, California) Combining Balance Sheet - Governmental Funds Capital Projects Funds by Project Area September 30, 2009 (In Thousands)

West Long Beach Downtown West Beach Industrial Project Area Project Area Project Area

ASSETS Pooled cash and investments $ 7,391 $ 304 $ 13,139 Short-term investment non-performing 33 3 42 Accounts receivable 10 Receivables from other governments 594 Land held for resale 27,623 8,940 Other assets 1,658 3 Long-term receivables 1,411 30 lnterproject loan and interest receivable 5,956

TOTAL ASSETS $ 38,720 $ 307 $ 28, 110

LIABILITIES Voucher payables $ 587 $ $ 1, 143 Accounts payable 109 25 Accrued wages payable 35 3 27 Accrued claims and judgments 750 Collections held in trust 212 60 Deferred revenues 1,578 Due to other funds-current 16 2 13 lnterproject loan and interest payable 1,054 328

TOTAL LIABILITIES 4,341 333 1,268

FUND BALANCE (ACCUMULATED DEFICIT) Reserved: Land held for resale 27,623 8,940 lnterproject loans (1,054) (328) 5,956 Encumbrances 308 2,270 Long-term receivables 1,682 30 Unreserved: Designated for future projects 5,820 302 9,646 TOTAL FUND BALANCE (ACCUMULATED DEFICIT) 34,379 (26) 26,842

TOTAL LIABILITIES, FUND BALANCE $ 38,720 $ 307 $ 28, 110

See accompanying independent auditors' report.

52 Central North Poly High Project Income Los Altos Long Beach Long Beach Project Area Fund Project Area Project Area Project Area Total

$ 116 $ 3,815 $ 5 $ 2,590 $ 1,445 $ 28,805 1 7 1 3 21 111 597 3 610 594 2,203 62,223 76,375 177,364 1,042 1,233 3,936 145 1,586 5,956

$ 2,320 6 $ 79,077 21

$ 101 $ - $ - $ 1,888 $ 1,507 $ 5,226 122 135 391 8 3 39 50 166 750 158 28 459 180 150 1,908 3 19 23 78 2,340

112 3

2,203 62,223 76,375 177,364 (2,234) (2,340) 4 1,376 955 4,913 1,712

3,819 (2) 595 (146) 20,039

2,208 3,819 61,854 84 204,028

$ 2,320 $ 6 $ 66,600 $ 218,962

53 Redevelopment Agency of the City of Long Beach (A Component Financial Reporting Unit of the City of Long Beach, California) Combining Balance Sheet - Governmental Funds Debt Service Funds by Project Area September 30, 2009 (In Thousands)

West Long Beach Downtown West Beach Industrial Poly High Project Area Project Area Project Area Project Area

ASSETS Pooled cash and investments $ 10, 130 $ 1,244 $ 5,619 $ 570 Non-pooled cash and investments 186 9 605 9 Interest receivable on investments 23 2 7 1 Taxes receivable 18,018 1,625 10,590 673 Accounts and loans receivable Investments 8,050 753 2,528 208 Advances to the City of Long Beach

TOTAL ASSETS $ 36,407 $ 3,633 $ 19,349 $ 1,461

LIABILITIES Voucher payables $ - $ - $ 4 $ Accounts payable 10 46 4 Deferred revenues 18,018 1,625 10,394 662

TOTAL LIABILITIES 18,018 1,635 10,444 666

FUND BALANCE Reserved: Future projects 32 Debt Service 18,357 1,998 8,905 795 Long-term receivables

TOTAL FUND BALANCE 18,389 1,998 8,905 795

TOTAL LIABILITIES, FUND BALANCE $ 36,407 $ 3,633 $ 19,349 $ 1,461

See accompanying independent auditors' report

54 Central North Project Income Los Altos Long Beach Long Beach Housing Fund Project Area Project Area Project Area Fund Total

$ - $ 273 $ 3,791 $ 13,924 $ 22 $ 35,573 3,825 3,984 25,298 33,916 4 36 55 37 165 587 20, 110 40,583 92, 186 467 467 408 4,009 18,085 4,054 38,095 24,488 24,488

$ 24,955 $ 1,272 $ 31,771 $ 76,631 $ 29,411 $ 224,890

$ - $ 5 $ - $ - $ - $ 9 262 676 998 7 587 20,110 39,287 90,690

7 592 20,372 39,963 91,697

3,692 3,819 25,186 32,729 460 680 7,707 32,849 4,225 75,976 24,488 24,488

24,948 680 11,399 36,668 29,411 133, 193

$ 24,955 $ 1,272 $ 31,771 $ 76,631 $ 29,411 $ 224,890

55 Redevelopment Agency of the City of Long Beach (A Component Financial Reporting Unit of the City of Long Beach, California) Combining Balance Sheet-Governmental Funds Low- and Moderate-Income Housing Funds by Project Area September 30, 2009 (In Thousands)

West Long Beach Downtown West Beach Industrial Pr.-.iol"t Area Project Area Project Area Assets Pooled cash and investments $ $ $ 15,617 Short-term investments - non-performing 21 Accounts receivable Receivables-loan, long-term, net Advances to the Housing Development Company Advances to the City of Long Beach . Properties held for resale Other assets Total assets $ 15,638

Liabilities and Fund Balance Liabilities Vouchers/ accounts payable $ $ $ 589 Accrued wages payable Deferred revenues Deposits/collections held in trust Due to other funds Total liabilities

Fund balance Reserved: Replacement and operations Properties held for resale Long-term advances Encumbrances Unreserved/designated - future projects Total fund balance

Total liabilities and fund balance $

See accompanying independent auditors' report.

56 Central North Poly High Los Altos Long Beach Long Beach Project Area Project Area Project Area Project Area Totals

$ $ $ 1,593 $ 25,855 $ 43,065 21 42 84 6 6 36,236 1,156 37,392 1,440 1,440 856 856 6,644 6,644 1 1 $ $ $ 45,357 $ 28,493 $ 89,488

$ $ $ 1, 178 $ 589 $ 2,356 85 85 36,251 1,156 37,407 17 17 40 40 37,571 1,745 39,905

61 61 6,644 6,644 856 1,440 2,296 1 1 285 25,247 40,581 7,786 26,748 49,583

$ $ $ 45,357 $ 28,493 $ 89,488

57 Redevelopment Agency of the City of Long Beach (A Component Financial Reporting Unit of the City of Long Beach, California) Combining Schedule of Revenues, Expenditures, and Changes in Fund Balance (Deficit) Capital Projects Funds by Project Area Year Ended September 30, 2009 (In Thousands)

West West Long Beach Downtown Beach Industrial Project Area Area REVENUES Interest income $ 206 $ 9 $ 295 Rental income 178 12 Other income 703 6 TOTAL REVENUES 1,087 9

EXP EN DITU RES Administrative costs 2,025 125 1,246 Professional services 192 85 Planning, survey and design 557 62 90 Acquisition expense 155 100 Rental income 956 89 Relocation costs 3 45 Relocation payments 50 400 Site clearance costs 9 60 Project improvemenUconstruction costs 3,184 585 1,902 Disposal costs Loss on sale of land held for resale 641 Rehabilitation grants and Joans 41 519 Furniture, fixture and equipment 1 Pass-through charges Debt service payments: U.S., State and other long-term debts-principal City/County advances and loans - principal Interest 558 4 38 TOTAL EXPENDITURES

Excess of revenues over/(under) expenditures (7,285)

OTHER FINANCING SOURCES AND (USES) Proceeds from issuance of long-term debt Advances between project areas 12,937 (6) (12,783) Land transfers Transfers from Debt Service 8,618 1,021 3,513 Transfers from/(to) the other funds, net (34} Transfers from the City of Long Beach Transfers to the City of Long Beach (855) (253) TOTAL OTHER FINANCING SOURCES (USES) 1,015 (9,557)

Net change in fund balances 13,415 248 (13,819)

Fund balance (accumulated deficit) - October 1 20,964 40,661 FUND BALANCE (ACCUMULATED DEFICIT) - SEPTEMBER 30 $ (26) =$===26='=84=2=

See accompanying independents auditors' report.

58 Central North Poly High Project Income Los Altos Long Beach Long Beach Project Area Fund Project Area Project Area Project Area Total

$ 4 $ 58 $ $ 103 $ 181 $ 857 434 217 841 1,239 4 1,952 4 58 1,776 402 3,650

240 32 132 1,933 2,683 8,416 257 226 760 14 966 1,213 2,902 401 374 1,030 12 240 670 1,967 25 95 168 136 1,632 2,218 3 229 399 700 89 140 3,714 4,429 14,043 102 694 11 807 750 1,391 28 474 966 2,028 1 5 8 311 311

2,484 2,484 62 80 743 489 32 583 12,366 12,783 39,976

(485) 26 (582) (10,590) (12,381) (36,326)

311 1,289 16 1,616 (103) (45) (1,502) (1,502) 253 633 12,264 25,982 52,284 195 (166) 5 1,067 920 1,987 (152) (481) (1,741)

448 901 846 12,774 25,517 52,644

(37) 927 264 2,184 13, 136 16,318

2,245 2,892 (2,496) 59,670 64,048 187,710

$ 2,208 $ 3,819 $ (2,232) $ 61,854 $ 77, 184 $ 204,028

59 Redevelopment Agency of the City of Long Beach (A Component Financial Reporting Unit of the City of Long Beach, California) Combining Schedule of Revenues, Expenditures, and Changes in Fund Balance (Deficit) Debt Service Funds by Project Area Year Ended September 30, 2009 (In Thousands)

West West Long Beach Downtown Beach Industrial Poly High Area Project Area Area Project Area REVENUES Property tax increment $ 18,485 $ 1,557 $ 11,523 $ 658 Transient occupancy Tax Interest income 321 26 116 9 Other income TOTAL REVENUES 1,583 11,639

EXP EN DITU RES Administrative costs 336 30 196 15 Professional services 3 1 Pass-through charges 150 1,810 108 Debt service payments: Bonds and notes payable-principal 3,104 505 1,220 181 Interest 4,211 329 1,855 37 Fiscal agent fees 10 4 8 3 TOTAL EXPENDITURES 5,090 344

Excess of revenues over/(under) expenditures 11, 142 565 6,549 323

OTHER FINANCING SOURCES AND (USES) Operating transfers to Capital Projects (8,618) (1,021) (3,513) (253) Operating transfers from/(to) the other funds, net 17 Operating transfers from the City of Long Beach Operating transfers to the City of Long Beach TOTAL OTHER FINANCING SOURCES (USES) (8,601) (1,021) (253)

Net change in fund balances 2,541 (456) 2,518 70

Fund balance (accumulated deficit) - October 1 2,454 725 FUND BALANCE (ACCUMULATED DEFICIT) - SEPTEMBER 30 $ 8,905

See accompanying independents auditors' report.

60 Central North Project Income Los Altos Long Beach Long Beach Housing Fund Area Project Area Project Area Fund Total

$ $ 623 $ 20,744 $ 39,172 $ $ 92,762 3,495 3,495 23 27 243 680 202 1,647 362 362 1,012 20,987 202 98,266

13 366 783 1,739 10 14 30 4,611 11,597 18,306

275 745 1,922 720 8,672 131 2,768 4,879 2,798 17,008 1 6 25 29 86 450 19,206 3,547

3,508 562 20,646 (3,345) 52,441

(633) (12,264) (25,982) (52,284) (17) 3,327 3,327 (1,881) (4,399)

(1,881) (25,999) (53,356)

1,627 {71) 227 (5,353) (2,018) {915)

751 11, 172 42,021 31 134,108

$ 11,399 $ 36 668 $ 133,193

61 Redevelopment Agency of the City of Long Beach (A Component Financial Reporting Unit of the City of Long Beach, California) Combining Schedule of Revenues, Expenditures and Changes in Fund Balance Low- and Moderate-Income Housing Funds by Project Area September 30, 2009 (In Thousands)

West West Long Beach Downtown Beach Industrial Project Area Area Project Area

REVENUES Property tax increment - 20% set-aside $ 4,621 $ 389 $ 2,881 Interest income 152 95 Rental income Gain on sale of land held for resale Other income TOTAL REVENUES 389

EXPENDITURES Administrative costs 614 383 Acquisition costs Professional services 389 Operation of acquired property 421 Project improvement/construction costs 80 50 Disposal costs Interdepartmental charges 184 15 115 Rehabilitation grants and loans 3,085 374 TOTAL EXPENDITURES 4,773 389

Excess of Revenues over Expenditures 2,428

OTHER FINANCING (USES) Land transfers Transfers to the City Transfers to the Redevelopment Agency

TOTAL OTHER FINANCING (USES)

Net change in fund balances 2,428

Fund balance-October 1 12,621

FUND BALANCE-SEPTEMBER 30 $ $ 15,049

See accompanying independent auditors' report.

62 Central North Poly High Los Altos Long Beach Long Beach Area Project Area Project Area Project Area Total

$ 165 $ 156 $ 2,311 $ 12,668 $ 23, 191 176 317 740 107 107 25 25 247 247 156 12,985

308 1,684 2,989 1 1 389 421 39 219 388 4 4 7 6 91 504 922 158 150 330 2,620 7 165 773 5,027

2,093 7,958 12,479

(1,003) (90) (1,937) (3,430)

(1,937) (4,523)

(493) 6,021 7,956

8,279 20,727 41,627

$ $ $ 7,786 $ 26,748

63 Redevelopment Agency of the City of Long Beach (A Component Financial Reporting Unit of the City of Long Beach, California) Schedule of Revenues, Expenditures, and Changes in Fund Balance (Deficit) Budget and Actual (Non-GAAP Budgetary Basis) Capital Projects Fund Year Ended September 30, 2009 (In Thousands)

Variance with Budgeted Amounts Actual on Final Budget Original Final Budgetary Basis REVENUES Interest income $ 854 $ 854 $ 857 $ 3 Rental income (695) (695) 841 1,536 Land sale proceeds (8,727) (8,727) 50 8,777 Other income 2,543 2,543 1,952

TOTAL REVENUES ----'(_6,_02_5-'--) --~(6~,0_2_5~) ------'---

EXPENDITURES Administration costs 14,205 13,428 13,329 99 Professional services 6,405 6,405 760 5,645 Planning survey and design 188 188 2,902 (2,714) Acquisition costs 213,641 213,097 1,030 212,067 Operation of acquired property (2,128) (2, 128) 1,967 (4,095) Relocation costs 2,006 2,006 168 1,838 Relocation payments (12,455) (12,455) 2,218 (14,673) Site clearance costs (1,501) (1,501) 700 (2,201) Project improvement/construction costs 41,592 40,566 14,043 26,523 Disposal costs (1,923) (1,923) 807 (2,730) Land purchases (129,210} (126,708) 18,372 (145,080) Rehabilitation grants and loans 4,680 4,680 2,028 2,652 Furniture, fixture, and equipment (393) (393) 8 (401) Pass-through charges (395) (395) 311 (706) Debt service payments: U.S., State, and other long-term debt principal (1,597) (1,597) (1,597) City/County advances and loan principal 2,758 2,758 2,484 274 Interest 743 (1, 133)

TOTAL EXPENDITURES 61,870 73,768

Excess (Deficiency) of Revenues over (under) Expenditures (141,663) ___.,__(5-'8,'-17_0-'--) ____8_3;...,4_93_

OTHER FINANCING SOURCES (USES) Proceeds from other long-term debt 3,655 3,655 1,616 (2,039) Transfers in (out), net (105,633) (105,633) 52,284 157,917 lnteragency payments 28,881 28,881 (28,881) Transfer to the City 3,671 4,271 (1,741) (6,012) Transfer from the City ---~(6'-,_51_0-'--) -~(_3,_65_3-'--) ____.:..;..;. _____.:.:.;__;._:;._

TOTAL OTHER FINANCING SOURCES (USES)

Net change in fund balances (217,444) (214,142) (4,024) 210,118

Fund balance-October 1, budgetary basis 24,650 24,650 24,650 Encumbrances-beginning of year 1, 125

$ 21,751 $ 210,118 ======

See accompanying independent auditors' report and supplementary note on page 74.

64 Redevelopment Agency of the City of Long Beach (A Component Financial Reporting Unit of the City of Long Beach, California) Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual (Non-GAAP Budgetary Basis) Debt Service Fund Year Ended September 30, 2009 (In Thousands)

Variance with Budgeted Amounts Actual on Final Budget Original Final Budgetary Basis Positive (Negative) REVENUES Property tax increment $ 74,681 $ 74,681 $ 92,762 $ 18,081 Transient occupancy tax 4,480 4,480 3,495 (985) Interest income 3,588 3,588 1,647 (1,941) Other income 605 605 362 (243)

TOTAL REVENUES 83,354 83,354 98,266 14,912

EXPENDITURES Administration costs 447 447 1,739 (1,292) Professional services 14 (14) Operation of acquired property 1,606 1,606 1,606 Project improvement/construction costs 906 906 · Pass-through charges 11,828 14,661 18,306 (3,645) Debt service payments: Bonds and notes payable-principal 8,621 8,621 8,672 (51) Interest 18,321 18,321 17,008 1,313 Fiscal agent fees 225 225 86 139

TOTAL EXPENDITURES 41,048 44,787 45,825 (1,038)

Excess of Revenues over Expenditures 42,306 38,567 52,441 13,874

OTHER FINANCING SOURCES (USES) Transfers in (out), net (52,284) (52,284) Transfer to the City (13,649) (13,649) (4,399) 9,250 Transfer from the City 3,521 3,521 3,327 (194)

TOTAL OTHER FINANCING SOURCES (USES) (10,128) (10,128) ~~~~(5_3~,3_56~) ~~~~(4_3~,2_28~)

Net change in fund balances 32,178 28,439 (915) (29,354)

Fund balance-October 1, budgetary basis 134,108 134,108 134,108 FUND BALANCE-SEPTEMBER 30, BUDGETARY BASIS $ 166,286 $ 162,547 $ 133,193 ======$ (29,354) See accompanying independent auditors' report and supplementary note on page 74.

65 Redevelopment Agency of the City of Long Beach (A Component Financial Reporting Unit of the City of Long Beach, California) Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual (Non-GAAP Budgetary Basis) Low- and Moderate-Income Housing Fund Year Ended September 30, 2009 (In Thousands)

Variance with Actual On Final Budget Budgetary Basis Positive (Negative Revenues: Property tax increment - 20% set-aside $ 20,214 $ 20,214 $ 23,191 $ 2,977 License and permits 20 20 {20) Rental income 107 107 Interest income 1,721 1,761 740 (1,021) Loan repayments-principal 525 47 76 29 Proceeds from the sale of land 215 215 Other 25 (426) Total revenues 22,505 1,861

Expenditures: Administration costs 4,355 5,163 2,970 2,193 Acquisition costs 3 1 2 Relocation costs 23 23 Disposition costs 4 (4) Professional services 7,755 7,923 389 7,534 Operation of acquired property 274 464 422 42 Low and moderate income housing loans/grants 50,472 44,391 6,717 37,674 Project improvement/construction costs 1,731 932 388 544 Interdepartmental charges 715 726 922 (196) Land purchases 6 6 Property and other taxes 3 19 (16) Debt service payments: Fiscal Agent Fees 14 Total expenditures 59,648 11,832

Excess of expenditures over (under) revenues

Other financing sources and (uses): Transfers (to)/from the Redevelopment Agency (6,518) (3,430) 3,088 Transfers (to)/from the Housing Development Company (342) 342 Transfers (to)/from the City (90) Total other financing. sources (uses) (3,520)

Net change in fund balances (1,473) (1,531) 9,148 10,679

Fund balance- October 1, budgetary basis 33,698 33,698 33,698 Encumbrances, beginning of year 91 91 Encumbrances, beginning of year $ 32,316 $ 42,937 $ 10,679 ======See accompanying independent auditors' report and supplementary note on page 75.

66 Redevelopment Agency of the City of Long Beach (A Component Financial Reporting Unit of the City of Long Beach, California) Schedule of Revenues, Expenditures, and Changes in Fund Balance (Deficit) Budget and Actual (Non-GAAP Budgetary Basis) by Project Area and Project Income Downtown Project Area - Capital and Debt Service Year Ended September 30, 2009 (In Thousands)

Variance with Budgeted Amounts Actual on Final Budget Original Final Budgetary Basis REVENUES Property tax increment $ 15,015 $ 15,015 $ 18,485 $ 3,470 Interest income 327 327 527 200 Rental income 307 307 178 (129) Land sale proceeds (2,397) (2,397) 2,397 Other income (449) (449) 703 1, 152

TOTAL REVENUES 12,803 12,803 19,893 7,090

EXPENDITURES Administration costs 1,256 1,210 2,669 (1,459) Professional services 1,808 1,808 195 1,613 Planning survey and design (164) {164} 557 (721) Acquisition costs 13, 104 12,204 155 12,049 Operation of acquired property 2,340 2,340 956 1,384 Relocation costs (236) (236) 3 (239) Relocation payments (483) (483) 50 (533) Site clearance costs 97 97 9 88 Project improvement/construction costs 15,560 16,244 3,184 13,060 Disposal costs (361) (361) (361) Land purchases (3,701) (3,701) (3,701) Rehabilitation grants and loans 1 1 41 (40) Furniture, fixture, and equipment (393) (393) 1 (394) Pass-through charges (60) 194 194 Debt service payments: Bonds and notes payable-principal 2,545 2,545 3,104 (559) U.S., State, and other long-term debt principal (1,705) (1,705) (1,705) City/County advances and loan principal 550 550 550 Interest 4,431 4,431 4,789 (358) Fiscal agent fees 83 83

TOTAL EXPENDITURES 34,672 34,664 15,723

Excess (Deficiency} of Revenues over (under) Expenditures (21,869) (21,861) 4,170

OTHER FINANCING SOURCES (USES) Proceeds from other long-term debt 2,415 2,415 (2,415) Transfers in (out}, net (12,399} (12,399) 12,399 lnteragency payments 4,673 4,673 12,974 8,301 Transfer to the City 803 803 (855) (1,658) Transfer from the City 1,000 1,000 (1,000)

TOTAL OTHER FINANCING SOURCES (USES) ---~{3_,_50_8~) -~(3_,_50_8~) ____1_2,~1 _19 _____ 1_5._62_7_

Net change in fund balances (25,377) (25,369) 16,289 41,658

Fund balance-October 1, budgetary basis 8,219 8,219 8,219 Encumbrances-beginning of year 329 329

FUND BALANCE (DEFICIT)-SEPTEMBER 30, BUDGETARY BASIS $ 24,837 ======$ 41,658

See accompanying independent auditors' report.

67 Redevelopment Agency of the City of Long Beach (A Component Financial Reporting Unit of the City of Long Beach, California) Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual (Non-GAAP Budgetary Basis) by Project Area and Project Income West Beach Project Area - Capital and Debt Service Year Ended September 30, 2009 (In Thousands)

Variance with Budgeted Amounts Actual on Final Budget Original Final Budgetary Basis REVENUES Property tax increment $ 1,300 $ 1,300 $ 1,557 $ 257 Interest income 35 (41)

TOTAL REVENUES 1,376 1,592 216

EXPENDITURES Administration costs 116 115 155 (40) Professional services 3 3 3 Planning survey and design (67) (67) 62 (129) Operation of acquired property Site clearance costs (2) (2) (2) Project improvemenUconstruction costs 1,001 926 585 341 Pass-through charges 30 105 150 (45) Debt service payments: Bonds and notes payable-principal 460 460 505 (45) Interest 377 377 339 38 Fiscal agent fees

TOTAL EXPENDITURES 1,918 1,917 1,800

Excess (Deficiency) of Revenues over (under) Expenditures (542) (541)

OTHER FINANCING SOURCES (USES) Transfers in (out), net (551)

TOTAL OTHER FINANCING SOURCES (USES) (551)

Net change in fund balances (1,093) (1,092) (208) 884

Fund balance-October 1, budgetary basis 2,180 2,180 2,180

FUND BALANCE-SEPTEMBER 30, BUDGETARY BASIS $ 1,088 $ 1,972

See accompanying independent auditors' report.

68 Redevelopment Agency of the City of Long Beach (A Component Financial Reporting Unit of the City of Long Beach, California) Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual (Non·GAAP Budgetary Basis) by Project Area and Project Income West Long Beach Industrial Project Area · Capital and Debt Service Year Ended September 30, 2009 (In Thousands)

Variance with Budgeted Amounts Actual on Final Budget Original Final Budgetary Basis Positive (Negative) REVENUES Property tax increment $ 9,362 $ 9,362 $ 11,523 $ 2,161 Interest income 1,548 1,548 585 (963) Rental income (13) (13) 12 25 Land sale proceeds (3,236) (3,236) 3,236 Other income (35) 6 41

TOTAL REVENUES 7,626

EXPENDITURES Administration costs 3,086 2,851 3,712 (861) Professional services 55 55 86 (31) Planning survey and design (201) (201) 90 (291) Acquisition costs 7,985 7,985 100 7,885 Operation of acquired property (5) (5) 89 (94) Relocation costs 2,152 2,152 45 2,107 Relocation payments 39 39 400 (361) Site clearance costs (132) (132) 60 (192) Project improvement/construction costs 10,874 10,738 1,902 8,836 Disposal costs (63) (63) (63) Land purchases (3,382) (3,382) 1,622 (5,004) Rehabilitation grants and loans (57) (57) 519 (576) Furniture, fixture, and equipment 1 (1) Pass-through charges 1,006 1,697 1,810 (113) Debt service payments: Bonds and notes payable-principal 1,096 1,096 1,220 (124) Interest 2,039 2,039 1,893 146 Fiscal agent fees 3 3 8

TOTAL EXPENDITURES 24,495 24,815 13,557

Excess (Deficiency) of Revenues over (under) Expenditures (16,869) (17, 189) _____,(---'1,_43_1-'-) ___....:..;;_:.;_..:_:_

OTHER FINANCING SOURCES (USES) Transfers in (out), net (11,260) (11,260) 11,260 lnteragency payments 4,911 4,911 (12,991) (17,902) Transfer to the City (1,438) (1, 138) (771) 367 Transfer from the City 419

TOTAL OTHER FINANCING SOURCES (USES)

Net change in fund balances (24,237) (24,257) (15,193) 9,064

Fund balance-October 1, budgetary basis 39,704 39,704 39,704 Encumbrances-beginning of year 26 26

FUND BALANCE-SEPTEMBER 30, BUDGETARY BASIS ======$ 15,493 $ 15,473

See accompanying independent auditors' report.

69 Redevelopment Agency of the City of Long Beach (A Component Financial Reporting Unit of the City of Long Beach, California) Schedule of Revenues, Expenditures, and Changes in Fund Balance (Deficit) Buqget and Actual {Non-GAAP Budgetary Basis) by Project Area and Project Income Poly High Project Area • Capital and Debt Service Year Ended September 30, 2009 (In Thousands)

Variance with Budgeted Amounts Actual on Final Budget Original Final Budgetary Basis Positive (Negative) REVENUES Property tax increment $ 530 $ 530 $ 658 $ 128 Interest income 84 13

TOTAL REVENUES 614 671

EXPENDITURES Administration costs 99 98 255 (157) Professional services (1) (1) (1) Planning survey and design (38) (38} 14 (52) Acquisition costs 4,914 4,914 4,914 Operation of acquired property (19) (19) 12 (31} Relocation costs (7) (7) (7) Relocation payments (40) (40} (40) Site clearance costs (64) (64} 3 (67) Project improvemenVconstruction costs (60) 240 89 151 Disposal costs (32) (32) 102 (134) Land purchases (2,203) (2,203) (2,203) Rehabilitation grants and loans 28 (28) Pass-through charges 45 45 108 (63) Debt service payments: Bonds and notes payable-principal 166 166 181 (15) Interest 62 62 38 24 Fiscal agent fees 5

TOTAL EXPENDITURES 2,827 3,126 833

Excess (Deficiency) of Revenues over (under) Expenditures (2,213) (2,512) (162)

OTHER FINANCING SOURCES (USES) Transfers in (out), net (2,819) (2,819) 2,819 lnteragency payments

TOTAL OTHER FINANCING SOURCES (USES)

Net change in fund balances (5,032) (5,331) 33 5,364

Fund balance-October 1, budgetary basis 755 755 755 Encumbrances-beginning of year 12 12

FUND BALANCE (DEFICIT)-SEPTEMBER 30, BUDGETARY BASl9 $ (4,265) $ 800

See accompanying independent auditors' report.

70 Redevelopment Agency of the City of Long Beach (A Component Financial Reporting Unit of the City of Long Beach, California) Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual (Non-GAAP Budgetary Basis) by Project Area and Project Income Project Income - Capital and Debt Service Year Ended September 30, 2009 (In Thousands)

Variance with Budgeted Amounts Actual on Final Budget Original Final Budgetary Basis Positive (Negative) REVENUES Transient occupancy tax $ 4,480 $ 4,480 $ 3,495 $ (985) Interest income 81 81 Rental income ------5 5 (5) TOTAL REVENUES 4,485 4,485 3,576 (909)

EXPENDITURES Administration costs 49 48 32 16 Professional services 10 (10) Operation of acquired property 18 18 18 Project improvement/construction costs 14 14 14

TOTAL EXPENDITURES 81 80 42 38

Excess (Deficiency) of Revenues over (under) Expenditures 4,404 4,405 3,534 (871)

OTHER FINANCING SOURCES (USES) Transfers in (out), net (11) (11) 11 lnteragency payments (6,213) (6,213) (166) 6,047 Transfer to the City (4,270) (4,270) (1,881) 2,389 Transfer from the City 1,067 1,067

TOTAL OTHER FINANCING SOURCES (USES) (10,494) (10,494) ____(~9_80~) ____9~,5_14_

Net change in fund balances (6,090) (6,089) 2,554 8,643

Fund balance-October 1, budgetary basis 26,213 26,213 26,213

FUND BALANCE-SEPTEMBER 30, BUDGETARY BASIS $ 20,123 $ 20,124 $ 28,767 $ 8,643 ======

See accompanying independent auditors' report.

71 Redevelopment Agency of the City of Long Beach (A Component Financial Reporting Unit of the City of Long Beach, California) Schedule of Revenues, Expenditures, and Changes in Fund Balance (Deficit) Budget and Actual (Non-GAAP Budgetary Basis) by Project Area and Project Income Los Altos Project Area - Capital and Debt Service Year Ended September 30, 2009 (In Thousands)

Variance with Budgeted Amounts Actual on Final Budget Original Final Positive (Negative) REVENUES Property tax increment $ 456 $ 456 $ 623 $ 167 Interest income 32 32 28 (4) Other income 605 362

TOTAL REVENUES 1,093 1,013 (80)

EXPENDITURES Administration costs 122 120 148 (28) Professional services 1 1 1 Operation of acquired property 15 15 15 Project improvement/construction costs 294 259 140 119 Pass-through charges 264 299 341 (42) Debt service payments: Bonds and notes payable-principal 265 265 275 (10) Interest 163 163 234 (71) Fiscal agent fees 1

TOTAL EXPENDITURES 1, 124 1,139 (17)

Excess (Deficiency) of Revenues over (under) Expenditures (31) (126) (97)

OTHER FINANCING SOURCES (USES) Proceeds from other long-term debt 288 288 311 23 Transfers in (out), net (11) (11) 11 lnteragency payments (605) 610

TOTAL OTHER FINANCING SOURCES (USES} (328) (328) 644

Net change in fund balances (359) (357) 190 547

Fund balance-October 1, budgetary basis (1,745)

FUND BALANCE (DEFICIT)-SEPTEMBER 30, BUDGETARY BASIS $ (2,102) $ 547

See accompanying independent auditors' report.

72 Redevelopment Agency of the City of Long Beach (A Component Financial Reporting Unit of the City of Long Beach, California) Schedule of Revenues, Expenditures, and Changes in Fund Balance (Deficit) Budget and Actual (Non-GAAP Budgetary Basis) by Project Area and Project Income Central Long Beach Project Area - Capital and Debt Service Year Ended September 30, 2009 (In Thousands}

Variance with Budgeted Amounts Actual on Final Budget Original Final _.!::.~~!!..L~~ Positive (Negative) REVENUES Property tax increment $ 16,588 $ 16,588 $ · 20,744 $ 4,156 Interest income (93) (93) 346 439 Rental income (262) (262) 434 696 Land sale proceeds (957) (957) 50 1,007 Other income 423 423 1,239

TOTAL REVENUES 15,699 22,813

EXPENDITURES Administration costs 1,489 1,299 3,676 (2,377) Professional services 2,051 2,051 257 1,794 Planning survey and design (425) (425) 966 (1,391) Acquisition costs 109,193 109,548 401 109,147 Operation of acquired property (1,543) (1,543) 240 (1,783) Relocation costs (2) (2) 25 (27) Relocation payments (7,365) (7,366) 136 (7,502) Site clearance costs (616) (616) 229 (845) Project improvement/construction costs 2,304 1, 106 3,714 (2,608) Disposal costs (353) (353) 694 (1,047) Land purchases (66,742) (64,239) 3,770 (68,009) Rehabilitation grants and loans (431) (431) 474 (905) Furniture, fixture, and equipment 1 (1) Pass-through charges 3,205 4,605 4,611 (6) Debt service payments: Bonds and notes payable-principal 690 690 745 (55) U.S., State, and other long-term debt principal 66 66 66 City/County advances and loan principal 2,208 2,208 2,484 (276) Interest 3,199 3,199 2,875 324 Fiscal agent fees 16 16 6

TOTAL EXPENDITURES 46,944 49,813 25,304

Excess (Deficiency) of Revenues over (under) Expenditures (31,245) (34, 114) ____(,__2'--,4_91-'-) ---...:::...:..1=:.....

OTHER FINANCING SOURCES (USES) Proceeds from other long-term debt 3,100 3,100 1,289 (1,811) Transfers in (out), net (56,712) (56,712) 56;712 lnteragency payments 27,220 27,220 (27,220) Transfer to the City 2,558 2,558 (152) (2, 710) Transfer from the City (5,072) _____9_20 ______5._99_2_

TOTAL OTHER FINANCING SOURCES (USES) (28,906) ____2'-,0_57 _____ 3_0:_,9_63_

Net change in fund balances (63,008) (63,020) (434) 62,586

Fund balance-October 1, budgetary basis 9,749 9,749 9,749 Encumbrances-beginning of year 339

See accompanying independent auditors' report.

73 Redevelopment Agency of the City of Long Beach (A Component Financial Reporting Unit of the City of Long Beach, California) Schedule of Revenues, Expenditures, and Changes in Fund Balance (Deficit) Budget and Actual (Non-GAAP Budgetary Basis) by Project Area and Project Income North Long Beach Project Area - Capital and Debt Service Year Ended September 30, 2009 (In Thousands)

Variance with Budgeted Amounts Actual on Final Budget Original Final Budgetary Basis REVENUES Property tax increment $ 31,430 $ 31,430 $ 39,172 $ 7,742 Interest income 2,314 2,314 861 (1,453) Rental income (732) (732) 217 949 Land sale proceeds (2, 137) (2, 137) 2,137 Other income 2,604 4

TOTAL REVENUES 33,479 40,254

EXPENDITURES Administration costs 8,435 8,134 4,421 3,713 Professional services 2,488 2,488 226 2,262 Planning survey and design 1,083 1,083 1,213 (130) Acquisition costs 78,445 78,446 374 78,072 Operation of acquired property (1,328) (1,328) 670 (1,998) Relocation costs 99 99 95 4 Relocation payments (4,606) (4,605) 1,632 (6,237) Site clearance costs (784) (784) 399 (1,183) Project improvement/construction costs 11,605 11,945 4,429 7,516 Disposal costs (1, 114) (1, 114) 11 (1, 125) Land purchases (53,182) (53,183) 12,980 (66,163) Rehabilitation grants and loans 5,167 5,167 966 4,201 Furniture, fixture, and equipment 5 (5) Pass-through charges 6,943 7,321 11,597 (4,276) Debt service payments: Bonds and notes payable-principal 2,729 2,729 1,922 807 U.S., State, and other long-term debt principal 42 42 42 Interest 4,675 4,675 4,959 (284) Fiscal agent fees 113 25 88

TOTAL EXPENDITURES 61,228 15,304

Excess (Deficiency) of Revenues over (under) Expenditures

OTHER FINANCING SOURCES (USES) Proceeds from other long-term debt (2,148) (2,148) 16 2,164 Transfers in (out), net (21,870) (21,870) 21,870 lnteragency payments (1,105) (1,105) (17) 1,088 Transfer to the City ------'1,_20_9___ __;_.!..:..:_:;______,_(4_8_1._) ____..\..:...;;.;;.;;..._

TOTAL OTHER FINANCING SOURCES (USES) _____,(_23-', 9_1_4_,_) _ _;:;;;.::.:.;;_.:...:.(.. _____,_(4_8_2.,_) ____;;;;;;;.:_;_;;.;:_

Net change in fund balances (51,245) (51,363) (6, 152) 45,211

Fund balance-October 1, budgetary basis 42,254 42,254 42,254 Encumbrances-beginning of year 419 419

FUND BALANCE (DEFICIT)-SEPTEMBER 30, BUDGETARY BASIS =$=====(=8=,5=72=) $ (8,690) ======$===4=5,=2=11=

See accompanying independent auditors' report.

74 Redevelopment Agency of the City of Long Beach {A Component Financial Reporting Unit of the City of Long Beach, California) Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual (Non-GAAP Buqgetary Basis) by Project Area and Project Income Housing Fund - Debt Service Year Ended September 30, 2009 (In Thousands)

Variance with Budgeted Amounts Actual on Final Budget Original Final Budgetary Basis Positive (Negative) REVENUES Interest income $ 154 $ 202 $ 48 202 -----4~8- TOTAL REVENUES 154 ------EXPENDITURES Debt service payments: Bonds and notes payable-principal 670 670 720 (50) Interest 2,985 2,985 2,798 187 Fiscal agent fees

TOTAL EXPENDITURES 3,660

Excess (Deficiency) of Revenues over (under) Expenditures _____;(.._3,'--50_6...._) ------"(3...... c,_50_6..:..) ----'-'----'-(3,345)

OTHER FINANCING SOURCES (USES) Transfer to the City (8,840) (8,840) (2,000) 6,840 Transfer from the City 3,521 3,521 3,327 (194) TOTAL OTHER FINANCING SOURCES (USES) _____;('-5,'--31_9 ..... ) ------"(5...... c,_31_9_,_) ----'----1,327 6,646

Net change in fund balances (8,825) (8,825) (2,018) 6,807

Fund balance-October 1, budgetary basis 31,429

FUND BALANCE-SEPTEMBER 30, BUDGETARY BASIS 22,604 29,411 $ 6,807 $ $ ======

See accompanying independent auditors' report.

75 Redevelopment Agency of the City of Long Beach (A Component Financial Reporting Unit of the City of Long Beach, California) Supplementary Financial Information September 30, 2009

Supplementary Note: Reconciliation of Actual Revenues and Expenditures to the Non-GAAP Budgetary Basis For the Capital Project Funds, Debt Service Funds, and the Low- and Moderate-Income Housing Fund, budget information is presented on a non-GAAP budgetary basis. Appropriations represent budgeted amounts to be expended or encumbered during the period as presented on the combining schedule of revenues, expenditures, and changes in fund balance Budget and Actual, pages 64 - 65.

Budgeted revenue and expenditure amounts represent the original budget modified by adjustments authorized during the year. The legal level of budgetary control is at the fund. Budgeted expenditure amounts represent original appropriations adjusted for supplemental appropriations during the year, which were contingent upon new, or additional revenue sources. Total expenditures of each governmental fund may not legally exceed total appropriations at the fund level.

The following reconciles actual revenues and expenditures for Agency funds to the non­ GAAP budgetary basis by fund type for the fiscal year ended September 30, 2009 (in thousands): · Capital Debt Service Project Funds Funds Total Beginning fund balance at October 1, 2008, on an actual GAAP basis $ 187,710 $ 134, 108 $ 321,818 Encumbrances outstanding at October 1, 2008 (1,125} (1,125) Cumulative effect of capitalization of land held for resale at October 1, 2008 (161,935) (161,935) Beginning fund balance at October 1, 2008, on a budgetary basis 24,650 134,108 158,758

Actual GAAP basis revenue 3,650 98,266 101,916 Adjustment to GAAP basis revenues: Proceeds from the sale of land for resale 50 50 Revenues on a budgetary basis 3,700 98,266 101 ,966

Actual GAAP basis expenditures 39,976 45,825 85,801 Adjustments to GAAP basis expenditures: Encumbrances outstanding at October 1, 2008 (1,125) (1,125) Encumbrances outstanding at September 30, 2009 4,913 4,913 Loss on sale of land held for resale (1,391) (1,391) Current effect of capitalization of land held for resale 18,372 18,372 Expenditures on a budgetary basis 60,745 45,825 106,570 Excess (Deficiency) of revenues over (under) expenditures on a budgetary basis (57,045) 52,441 (4,604)

Other financing sources (uses), on an actual GAAP basis 52,644 (53,356) (712) Transfers of land held for resale 1,502 1,502 Other financing sources (uses) on a budgetary basis 54,146 (53,356) 790

Net change in fund balances, on a budgetary basis (2,899) (915) (3,814)

Ending fund balance at September 30, 2009, on a budgetary basis

76 Redevelopment Agency of the City of Long Beach (A Component Financial Reporting Unit of the City of Long Beach, California) Supplementary Financial Information September 30, 2009

The following reconciles actual revenues and expenditures for the Low- and Moderate­ Income Housing Fund to the non-GAAP budgetary basis for the fiscal year ended September 30, 2009 (in thousands):

Beginning fund balance at October 1, 2008, on an actual GAAP basis $41,627 Encumbrances outstanding at October 1, 2008 (91) Cumulative effect of capitalization of land held for resale at October 1, 2008 (7,838) Beginning fund balance at October 1, 2008, on a budgetary basis 33,698

Actual GAAP basis revenue 24,310 Proceeds from the sale of land for resale 215 Gain on sale of land held for resale (25) Revenues on a budgetary basis 24,500

Actual GAAP basis expenditures 11,831 Adjustments to GAAP basis expenditures: Encumbrances outstanding at October 1, 2008 (91) Encumbrances outstanding at September 30, 2009 1 Expenditures on a budgetary basis 11,741

Excess of revenues over expenditures on a budgetary basis 12,759

Other financing sources (uses), on an actual GAAP basis (4,523) Adjustment to GAAP basis other financing sources (uses): Transfers of land held for resale 1,003 Other financing sources (uses) on a budgetary basis (3,520)

Net change in fund balance, on a budgetary basis 9,239

Ending fund balance at September 30, 2009, on a budgetary basis $42,937

77 Redevelopment Agency of the City of Long Beach (A Component Financial Reporting Unit of the City of Long Beach, California) Schedule of Changes in Long-term Debt Year Ended September 30, 2009 (In Thousands)

Balance Balance September 30 September 30 Additions Deductions Pol}! High Project Bonds-Tax Allocation Bonds 2002 $ 780 $ $ 181 $ 599 Bonds-Tax Allocation Bonds 2005A-2 Total 181

West Beach Project Bonds-Tax Allocation Bonds 2002 6,385 505 5,880 Bonds-Tax Allocation Bonds 2005A-2 839 Total 7,224 505

West Long Beach lnd'I Proj. Bonds-Tax Allocation Bonds 1992 14,420 1,095 13,325 Bonds-Tax Allocation Bonds 20028 19,420 Total 33,840

Downtown Project Bonds-Tax Allocation Bonds 1992A 32,020 2,430 29,590 Bonds-Tax Allocation Bonds 2002A 15,545 624 14,921 Bonds-Tax Allocation Bonds 20028 22,615 22,615 Bonds-Tax Allocation Bonds 2005C 7,790 7,740 Total 77,970 74,866

Los Altos Project Bonds-Tax Allocation Bonds 2005A-1 3,895 275 3,620 Notes-Los Angeles County-Share of Tax Increment: Principal 2,397 309 2,706 Interest Payable 455 97 552 Notes-Los Angeles County Office of Education- Share of Tax Increment: Principal 19 2 21 Interest Payable 5 Total 275 6,904

Central Long Beach Proj Bonds-Tax Allocation Bonds 2005A-1 21,865 297 21,568 Bonds-Tax Allocation Bonds 20058 448 32,547 Total 745 54, 115

North Long Beach Project Bonds-Tax Allocation Bonds 2002 9,760 772 8,988 Bonds-Tax Allocation Bonds 2005A-1 37,049 700 36,349 Bonds-Tax Allocation Bonds 20058 23,826 450 23,376 Bonds-Tax Allocation Bonds 2005C 27,145 27,145 Total 97,780 95,858

Housing Fund Bonds-Tax Allocation Bonds 20058 53,655 Total 53,655 TOTAL AGENCY LONG-TERM DEBT $ 335,437 409

Long-term indebtedness is summarized as follows:

Notes $ 2,875 $ 409 $ $ 3,284 Bonds 332,562 8,672 323,890 Total 409 $ 8,672 $ 327,174

See accompanying independent auditors' report.

78 Auditor's Report on Compliance KPMG LLP Suite 700 20 Pacifica Irvine, CA 92618-3391

Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards

The Honorable Mayor and City Council City of Long Beach, California

The Honorable Members of the Redevelopment Agency Board City of Long Beach, California:

We have audited the combined financial statements of the govenm1ental activities and each major fund of the Redevelopment Agency of the City of Long Beach (the Agency), a component financial reporting unit of the City of Long Beach, California (the City), and the City of Long Beach Low- and Moderate-Income Housing Fund as of and for the year ended September 30, 2009, which collectively comprise the Agency's combined financial statements, and have issued our report thereon dated April 16, 2010. The Agency's combined financial statements are prepared using accounting practices required by the State of California Health and Safety Code Section 33080.1, which practices differ from U.S. generally accepted accounting principles. As such, the combined financial statements do not present fairly, in confonnity with U.S. generally accepted accounting principles, the financial position of the Agency as of September 30, 2009, or the changes in the Agency's financial position for the year then ended. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States.

Internal Control over Financial Reporting In pla1ming and perfornung our audit, we considered the Agency's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opi11ions on the combined financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Agency's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the Agency's internal control over financial reporting.

A deficiency in internal control over financial rep01iing exists when the design or operation of a control does not allow management or employees, in the 1101111al course of perforn1ing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material 1nisstatement of the entity's financial statements will not be prevented, or detected and conected on a timely basis.

Our consideration of internal control over financial reporting was for the li1nited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over financial repmiing that nught be deficiencies, sigiuficant deficiencies, or material wealmesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above.

KPMG LLP, a U.S. limited liability partnership, is the U.S. member firm of KPMG lnternational, a Swiss cooperative. 1

79 Compliance and Other Matters As part of obtaining reasonable assurance about whether the Agency's combined financial statements are free of material misstatement, we perfom1ed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.

This report is intended solely for the information and use of the City of Long Beach's Mayor and City Council, the Members of the Redevelopment Agency Board, managements of the City and the Agency, the State of California's State Controller's Office, the Department of Housing and Community Development, the COlmty of Los Angeles and is not intended to be and should not be used by anyone other than these specified parties.

April 19, 2010

80 General Information DOWNTOWN REDEVELOPMENT PROJECT AREA COMPARISION OF GOALS FOR FY 2008-2009 WITH ACCOMPLISHMENTS FOR FY 2008-2009

GOAL#1 Encourage neighborhood revitalization through commercial and mixed-use development in the Downtown in conformance with the Redevelopment Plan and the Downtown Strategy for Development. • Provide incentives to appropriate retailers to locate in Downtown. • Continue to facilitate development of the Hotel Esterel (formerly D'Orsay Hotel). • Implement disposition and development agreement (ODA) for Promenade site with Lyon Realty Advisors. • Implement DOA for West Gateway Project with Lyon Realty Advisors. • Negotiate OPA with Williams & Dame Development for the block bordered by 3rd and 4th streets and Pine and Pacific Avenues. • Negotiate DOA with Williams & Dame Development for the redevelopment of the block at Long Beach Boulevard and 3rd Street (Broadway Block). • Negotiate DOA with AloftLB, LLC for a hotel project along Long Beach Boulevard between Alta Way and Broadway. • Continue to work with the owner of Pine Square/Pacific Court on the conversion of underutilized AMC Theater space into condominiums.

• Negotiate with developers for development of the southern portion of the block at 1st Street, Long Beach Boulevard and Alta Way. • Initiate dialog related to development of a new Civic Center/Library Master Plan in the Downtown Area. • Continue to pursue development of sites along Ocean Boulevard.

ACCOMPLISHMENTS • Worked in partnership with Downtown Long Beach Associates and the City's Economic Development Bureau to provide incentive packages for appropriate retailers to establish on Pine Avenue. • Monitored the construction and completion of Lyon Realty Advisors' Promenade project (104 units) in accordance with the terms of their DOA • Monitored the construction of Lyon Realty Advisors' West Gateway project (291 units, 26 affordable units) in accordance with the terms of their DOA • Entered into a Memorandum of Understanding with California State University, Long Beach (CSULB) related to graduate housing and a Downtown arts program. Prepared a development concept package and a financial proforma for the Broadway Block.

81 • Terminated negotiations with Urban Growth Long Beach for a hotel project along Long Beach Boulevard between 1st Street and Broadway (MTA Block). • Continued negotiations with AloftLB, LLC for the development of a hotel on the corner of Broadway and Long Beach Boulevard. • Worked with the owner of Pine Square/Pacific Court to secure new retail or alternative uses for the underutilized AMC Theater space, which could include conversion into condominiums.

• Continued development of conceptual plans for the Art Exchange e;1nd moved forward in obtaining project entitlements and CEQA clearance for the project. Worked with the Art Exchange Board to develop their program and vision.

• Released Request for Proposals and reviewed development submissions for the American Hotel.

GOAL #2 Encourage open space and public art development in the Downtown in conformance with the Redevelopment Plan and the Downtown Strategy for Development. • Implement The Promenade Open Space Master Plan and public art installation on three blocks of The Promenade between Ocean Boulevard and 3rd Street. • Implement public art on key corridors with Ocean Boulevard as a priority.

ACCOMPLISHMENTS • The Promenade Mid-block Master Plan improvements were completed including a new storm drain, hardscape, landscape, lighting, and seating. Continue to monitor construction of the public art component and Promenade Square. Continued to work on conceptual plans for the north and south blocks. • Completed conceptual plans for public art on Ocean Boulevard medians.

• Completed temporary landscape improvements on Promenade between Broadway and 3rd Street.

• Continued partnership with Phantom Galleries to place approximately 100 temporary art installations in 20 empty storefronts in Downtown Long Beach.

• Installed temporary murals at Pine and Ocean and around the Lyon West Gateway construction site

• Temporarily relocated the Bikestation into ground floor retail space at Lennar and continued development of conceptual plans for a new permanent Bikestation facility.

GOAL #3 Support the development of affordable housing in Long Beach. • Transfer 20% of available Project Area tax increment to the Housing Development Fund. 82 ACCOMPLISHMENTS • Transferred 20% of available increment to the Housing Development Fund. • Monitored the construction of Lyon Realty Advisors' West Gateway project, which includes 26 affordable units.

GOAL#4 Encourage infrastructure and public improvements in conformance with the Redevelopment Plan and Downtown Strategy for Development. • Begin construction of open space and pedestrian linkages through the West Gateway area to The Promenade and Long Beach Boulevard. • Implement recommendations of the Downtown Parking Study. • Implement DOA with Long Beach Transit on the redevelopment of the southeast corner of Pine Avenue and First Street with the new Long Beach Transit Visitor and Information Center.

• Initiate plans to redevelop the 3rd Street and Promenade site adjacent to the WPA Mosaic into open space. • Initiate dialog related to a new Master Plan for the Convention Center. • Conduct feasibility study and investigate alternatives for improvements and additional parking spaces at CityPlace south garage.

ACCOMPLISHMENTS • Enhanced directional signage to Downtown parking. • Continued public information program on changes in Downtown parking, including working with the Downtown Long Beach Associates (DLBA) on the creation of a website to provide parking information and an online reservation system. • Completed the Long Beach Transit's Visitor and Information Center project in accordance with the terms of their ODA.

• Installed new Traffic Signals at Promenade and Broadway/First Street. • Installed police surveillance cameras south of Ocean Boulevard on Seaside Way, at the Convention center and on the birdcage. • Continued to develop plans for CityPlace Parking Garage Expansion, Improvements and Upgrades. • Began work on the Pine Avenue Streetscape Improvement Project.

GOAL#5 Encourage effective Project Area administration in conformance with the Redevelopment Plan and Downtown Strategy for Development.

83 • Participate in development of the Downtown Community Plan and Program El R, a comprehensive revision of PD30 Zoning for height and density flexibility and for mixed-use project standards. • Continue participation in General Plan update. • Continue partnership with Downtown Long Beach Associates and Downtown businesses through contributions to marketing and economic development efforts. • Provide staff support for the Downtown Property Based Improvement District (PBID) and the DLBA.

ACCOMPLISHMENTS • Completed draft of the Downtown Community Plan, which is being circulated for public review and comment. • Participated in the General Plan update process. • Completed a Downtown Market Study. • Entered into Agreement with DLBA to conduct economic development program. • Contributed to Downtown marketing efforts. • Attended DLBA meetings to report on Redevelopment activities.

84 DOWNTOWN REDEVELOPMENT PROJECT AREA GOALS AND WORK PLAN FOR FY 2009-2010

1) Encourage neighborhood revitalization through commercial and mixed-use development in the Downtown in conformance with the Redevelopment Plan and the Downtown Strategy for Development • Provide incentives to appropriate retailers to locate in Downtown. • Continue to facilitate development of the Hotel Esterel site (formerly D'Orsay Hotel). • Implement DOA for West Gateway Project with Lyon Realty Advisors. • Solicit Requests for Proposals (RFPs) from qualified developers for a mixed­ use development for the half block bordered by 3rd and 4th Streets and Pacific Avenue. • Implement MOU between CSU Long Beach and RDA to explore financial feasibility and conceptual design for the redevelopment of the block at Long Beach Boulevard and 3rd Street (Broadway Block). • Negotiate DOA with AloftLB, LLC for a hotel project along Long Beach Boulevard between Alta Way and Broadway. • Continue to work with the owner of Pine Square/Pacific Court on the reuse/ conversion of underutilized AMC Theater space into retail or condominiums. • Negotiate DOA with Urban Growth Long Beach for development of a hotel on the southern portion of the block at 1st Street, Long Beach Boulevard and Alta Way. • Finalize site plan for the reuse of the American Hotel and submit for planning approvals and CEQA clearance. • Continue to pursue development of sites along Ocean Blvd.

2) Encourage open space and public art development in the Downtown in conformance with the Redevelopment Plan and the Downtown Strategy for Development • Implement Phase I of the Art Exchange at the southeast corner of Long Beach Boulevard and 3rd Street. • Complete construction design for The Promenade Open Space Master Plan and public art installation on the remaining blocks including Promenade Square & BikeStation, South Block and Victory Park, and North Block/Mural Park. • Begin construction of South Block and Victory Park. Implement public art on key corridors yvith Ocean Boulevard as a priority. • Continue working with Phantom Galleries to place interim public art exhibits in vacant storefronts.

85 3) Encourage infrastructure and public improvements in conformance with the Redevelopment Plan and Downtown Strategy for Development • Begin construction of open space and pedestrian linkages (Phase I in front of Lyon West Gateway) through the West Gateway Area to The Promenade and Long Beach Boulevard. • Implement recommendations of the Downtown Parking Study.

• Initiate plans to redevelop the 3rd Street and Promenade site adjacent to the WPA Mosaic (Mural Park) into open space. • Seek additional funding for the construction of additional parking spaces at CityPlace south garage.

4) Support the development of affordable housing in Long Beach • Transfer 20 percent of available project area tax increment to the Housing Development Fund.

5) Encourage effective project area administration in conformance with Redevelopment Plan and Downtown Strategy for Development • Continue participation in Downtown Community Plan, a comprehensive revision of PD30 Zoning for height and density flexibility and for mixed-use project standards. • Continue participation in General Plan update. • Continue partnership with Downtown Long Beach Associates (DLBA) and Downtown businesses through contributions to marketing and economic development efforts. • Provide staff support for the Downtown Property Based Improvement District (PBID) and the Downtown Long Beach Associates (DLBA).

86 WESTBEACHREDEVELOPMENTPROJECTAREA COMPARISON OF GOALS FOR FY 2008-2009 WITH ACCOMPLISHMENTS FOR FY 2008-2009

GOAL #1 Continue to support development of the West Ocean commercial corridor. • Continue to assist private sector developments in the Project Area in conformance with the Redevelopment Plan and Downtown Strategy for Development.

ACCOMPLISHMENT • Staff has continued to assist private sector initiatives in the Project Area that conform to the Redevelopment Plan and Downtown Strategy for Development.

GOAL#2 Provide additional recreation opportunities or other infrastructure improvements to benefit the Project Area. • Assist with infrastructure improvements that benefit the Project Area.

ACCOMPLISHMENT • Continued to work on conceptual plans for The Promenade

GOAL #3 Support the development of affordable housing in Long Beach. • Transfer 20% of available Project Area tax increment to the Housing Development Fund.

ACCOMPLISHMENT • The Housing Development Fund has received 20% of available increment.

GOAL#4 Administer the Project Area effectively. • Provide staff support for the Downtown Property Based Improvement District (PBID) and the Downtown Long Beach Associates (DLBA).

ACCOMPLISHMENT • Agency staff has continued to provide support to a variety of committees and organizations, including the DLBA and the Arts Council.

87 WEST BEACH REDEVELOPMENT PROJECT AREA GOALS AND WORK PLAN FOR FY 2009-2010

1) Participate in the Golden Shore Master Plan and entitlement process.

2) Continue to support development of the West Ocean commercial corridor. • Continue to assist private sector developments in the Project Area in conformance with the Redevelopment Plan and Downtown Strategy for Development.

3) Provide additional recreation opportunities or other infrastructure improvements to benefit the project area. • Assist with infrastructure improvements that benefit the project area, with South Block and Victory Park as a priority.

4) Support the development of affordable housing in Long Beach. • Transfer 20 percent of available project area tax increment to the Housing Development Fund.

5) Serve as staff support to various committees and organizations. • Provide staff support for the Downtown Property Based Improvement District (PBID) and the Downtown Long Beach Associates (DLBA).

88 WEST LONG BEACH INDUSTRIAL REDEVELOPMENT PROJECT AREA COMPARISON OF GOALS FOR FY 2008-2009 WITH ACCOMPLISHMENTS FOR FY 2008-2009

GOAL#1 Contribute to Neighborhood Revitalization • Facilitate removal and conversion of nonconforming uses. • Create new development opportunities. • Ensure that adequate infrastructure is in place to support the growth of existing businesses and other future development. • Expand Community Code Enforcement Program. • Address real and perceived safety by making the Westside a clean, safe and welcoming environment. • Implement Commercial Fa9ade Improvement Program (CFIP). • Strengthen the industrial character of the Westside by retaining existing manufacturers and attracting new ones.

ACCOMPLISHMENTS • Completed negotiation and acquisition of nonconforming use at 1328 - 1340 Canal Avenue. • Completed acquisition of 1652 W. 15th Street. • Negotiated and executed an OPA with McFadden Family Trust dba GMAC Construction for the purpose of business expansion at 1652 W. 15th Street. • Negotiated and executed an OPA with Cowelco for the development of 1328-1340 Canal Avenue for the purpose of business expansion and offsite employee parking. • Completed the purchase negotiation and acquisition for 1650 Seabright Avenue. • Negotiated and executed an OPA with Parker Diving Services for the development of 1650 Seabright Avenue and 1881 W. 16th Street facilitating the company's Phase II expansion • Recorded Certificate of Completion of disposition and development agreement (DOA) with Marinus Scientific regarding the development at 1662-1666 Seabright Avenue. • Negotiated acquisition of a nonconforming use at 2144 W. 15th Street. • Negotiated the purchase of 1404-1420 Hayes Avenue and 1350 Seabright with Tankard Trust. • Terminated the DOA with Cal-Can Holdings, LLC (also known as Redbarn Premium Pet Food Products) for the development of 2110 W. Cowles Street • Negotiated acquisition of a nonconforming use at 1461-1466 Cota Avenue.

89 • Executed the contract agreement with Vasilj, Inc., for construction of Storm Drain and Pump Station Improvement Project. • Executed a rental agreement with Vasilj, Inc., for temporary use of Agency property at 1675 Santa Fe as construction staging area. • Completed design review process with Caltrans for the PCH Streetscape project. • Negotiated permit variance with Caltrans for the PCH Streetscape project. • Completed design process for the Westside monument project. • Completed design of 6 CFIP sites. • Completed 3 fa9ade improvement projects. • Expanded the Commercial Fencing & Screening Program. • Finalized the design phase for the Bob Lee memorial bus shelter project. • Completed parking lot development at 2025 W. 1ih. • Completed the MOU with Calcan Holdings dba Redbarn Premium Pet Products for acquisition of 2136-44 W. 15th Street. • Provided funding for the completion of Phase II & Phase Ill of Pro-Active Code Enforcement Program. • Provided funding for Neighborhood Services Bureau Commercial Exterior Rebates to business/property owners. • Launched the Street & Alley Solar Lighting Project to enhance public safety and promote green technology. • Completed the Security Camera project along Harbor Avenue to enhance public safety. • Continued monitoring the Request for Consideration of a Coastal Aquifer Variance and Basin Plan Amendment for the Westside to the Los Angeles Regional Water Quality Control Board for their Triennial Review. , • Continued implementation of the Westside Industrial Strategic Action Plan.

GOAL#2 Contribute to Corridor Revitalization • Create a more pleasant urban environment through an attractive streetscape program. • Facilitate removal and conversion of non-conforming property uses. • Create new development opportunities. • Introduce Community Code Enforcement Program. • Implement Fa9ade Improvement Program.

90 ACCOMPLISHMENTS • Completed plan review process and secured permit variance with Caltrans for Pacific Coast Highway streetscape improvement project. • Completed acquisition of 1545-1551 Santa Fe Avenue (also known as La Hacienda Night Club). • Recorded Certificate of Completion of DOA with Marinus Scientific regarding the development at 1662-1666 Seabright Avenue. • Completed facade improvement project at 2000 Cowles, 2001 W. 14th, 1700 Santa Fe, and 1401 Santa Fe. • Expanded the Commercial Fencing & Screening Program. • Completed Phase II & Phase Ill of Pro-active Code Enforcement Program. • Provided funding for Neighborhood Services Bureau Commercial Exterior Rebates to business/property owners. • Completed the Harbor Avenue Security Camera Project to enhance public safety. • Continued implementation of the Westside Industrial Strategic Action Plan.

GOAL#3 Promote Open Space I Public Art Development • Enhance the image and identity of the Westside as a prosperous industrial community through improved signage and other actions designed to change the perceptions of the area.

ACCOMPLISHMENTS • Completed the design phase for public art project for Bob Lee Commemorative Bus Shelter. • Completed utility Box Art Project in conjunction with five Cabrillo High School student artists. • Completed the design review process for monument artwork for Westside. • Marketed Agency activities with banners and advertisements. • Partnered with Arts Council for Long Beach regarding public art installations.

GOAL#4 Facilitate the Efficient Administration of the Project Area. • Strengthen partnership with West Long Beach. • Develop a comprehensive public relations, marketing and communications program to market the Westside as a dynamic industrial community.

ACCOMPLISHMENTS • Approved West Long Beach Industrial Project Area Committee (WPAC) Administrative funding agreement for FY 2008-2009. • Continue to provide staff support to the WPAC. 91 • Continue to provide staff support to the WPAC subcommittees. • Promoted development sites throughout the Project Area.

92 WEST LONG BEACH INDUSTRIAL PROJECT AREA GOALS AND WORK PLAN FOR FY 2009-2010

1) Neighborhood Revitalization • Facilitate the removal of non-conforming uses. • Create new development opportunities. • Maintain pro-active Code Enforcement Program. • Maintain commercial fagade improvement program. • Implement the Industrial Strategic Action Plan

2) Corridor Revitalization. • Facilitate removal and conversion of non-conforming uses. • Create new development opportunities. • Maintain pro-active Code Enforcement Program. • Maintain commercial fagade improvement program.

3) Open Space I Public Art Development • Enhance the image and identity of the Westside as a prosperous industrial community.

4) Infrastructure/Public Improvements • Improve infrastructure to support existing businesses: o Storm drain and pump station improvement project • Create a more pleasant environment through an attractive streetscape program: o Pacific Coast Highway

5) Housing • Support the development of affordable housing in Long Beach: o Transfer 20 percent of project area tax increment to the Housing Development Fund.

6) Facilitate the Efficient Administration of the Project Area • Continue to provide funding and staff support to the West Long Beach Industrial Project Area Committee.

93 POLY HIGH REDEVELOPMENT PROJECT AREA COMPARISON OF GOALS FOR FY 2008-2009 WITH ACCOMPLISHMENTS FOR FY 2008-2009

GOAL #1 Eliminate and prevent blight along the Project Area's commercial corridors. • Acquire or provide rehabilitation assistance for commercial properties on Pacific Coast Highway. • Explore the possibility of joint development of sites along Pacific Coast Highway with the Long Beach Unified School District.

ACCOMPLISHMENTS • Completed Poly Gateway Open Space project and new right-turn lane at Atlantic Avenue and Pacific Coast Highway. • Completed the Poly Gateway Open Space project at Martin Luther King Jr. Boulevard and Pacific Coast Highway.

GOAL#2 Preserve the public amenities created as part of the redevelopment of the Poly High Project Area. • Assist in the development of public infrastructure and open space development projects.

ACCOMPLISHMENTS • Initiated the 14th Street alley reconstruction project. • Completed design development of the Poly Gateway Open Space project and new right-turn lane at Atlantic Avenue and Pacific Coast Highway. • Completed design development of the Poly Gateway Open Space project at Martin Luther King Jr. Boulevard and Pacific Coast Highway. • Continued to provide funding for the development of public art.

GOAL#3 Continue to support the development of affordable housing by transferring 20% of Project Area tax increment to the Housing Development Fund. • Provide 20% of Project Area tax increment for the development of affordable housing.

ACCOMPLISHMENTS • Transferred 20% of Project Area tax increment to the Housing Development Fund.

94 POLY HIGH REDEVELOPMENT PROJECT AREA GOALS AND WORK PLAN FOR FY 2009-2010

1} Contribute to corridor revitalization. • Eliminate and prevent blight along the Project Area's commercial corridors. o Provide rehabilitation assistance for commercial properties along commercial corridors. o Explore the possibility of joint development of sites along Pacific Coast Highway with the Long Beach Unified School District. o Continue to support the Fence Enhancement Pilot Program with Poly High School. o Continue to support the Commercial Screening Program.

2) Contribute to open space and public art development. • Support the creation and installation of public art. • Support the creation of streetscape/open space improvements.

3) Contribute to infrastructure and public improvements. • Preserve the public amenities created as part of the redevelopment of the Poly High School Project Area: o Continue to assist in the development of public infrastructure and open space development projects.

4) Support the development of affordable housing in Long Beach. • Continue to support the development of affordable housing by transferring 20 percent of project area tax increment to the Housing Development Fund. o Provide 20 percent of project area tax increment for the development of affordable housing.

95 LOS ALTOS REDEVELOPMENT PROJECT AREA COMPARISON OF GOALS FOR FY 2008-2009 WITH ACCOMPLISHMENTS FOR FY 2008-2009

GOAL#1 Preserve the public amenities created as part of the redevelopment of the Los Altos Shopping Center. • Maintain reserve for capital replacement.

ACCOMPLISHMENT • Completed repaving and rehabilitation of an alley serving businesses in the project area.

GOAL#2 Support the development of affordable housing in Long Beach. • Transfer 20% of available Project Area tax increment to the Housing Development Fund.

ACCOMPLISHMENT • Transferred 20% of available Project Area tax increment to the Housing Development Fund.

GOAL#3 Administer the Project Area's obligations effectively. • Use sales tax revenue and tax increment for bond debt service, administrative expenses, public art maintenance, and repayment of the loan from the West Long Beach Industrial Project Area.

ACCOMPLISHMENT • All of the Project Area's obligations were met.

96 LOS ALTOS REDEVELOPMENT PROJECT AREA GOALS AND WORK PLAN FOR FY 2009-2010

1) Support the development of affordable housing in Long Beach • Transfer 20 percent of available project area tax increment to the Housing Development Fund.

2) Administer the Project Area's obligations effectively • Use sales tax revenue and tax increment for bond debt service, administrative expenses, public art maintenance, and repayment of the loan from the West Long Beach Industrial Project Area.

• Maintain reserve for capital replacement to preserve the public amenities created as part of the redevelopment of the Los Altos Shopping Center.

97 CENTRAL LONG BEACH REDEVELOPMENT PROJECT AREA COMPARISON OF GOALS FOR FY 2008-2009 WITH ACCOMPLISHMENTS FOR FY 2008-2009

GOAL#1 Contribute to Neighborhood Revitalization. • Encourage human-scale, pedestrian-oriented developments. • Encourage neighborhood identity initiatives. • Support the preservation and enhancement of historic districts and structures. • Support the development of market-rate housing developments. o Shoreline Gateway o West Gateway o Willmore City o Atlantic Avenue and Willow Street • Develop programs for enhancing and rehabilitating existing housing stock. • Continue to facilitate and encourage homeownership opportunities. • Develop initiatives to reduce density in overcrowded neighborhoods.

ACCOMPLISHMENTS • Supported the implementation strategies for the eight targeted Neighborhood Centers for concentrated redevelopment activities as identified in the Central Long Beach Strategic Guide for Development. • Completed entitlements of a 35-story mixed-use development on Ocean Boulevard and Alamitos Avenue. • Acquired 532-558 Willow Street as part of the land assembly for the Phase Ill development of Atlantic Avenue and Willow Street. • Oversaw construction of a 65-unit affordable senior housing development on Atlantic Avenue at Vernon Street. • Entered into an Exclusive Negotiating Agreement for the development of a Ronald ·McDonald House at Atlantic Avenue and Vernon Street. • Furthered the entitlement of a 351 residential units and 42,000 square feet of ground floor retail in a mixed-used project at the southwest comer of Long Beach Boulevard and Anaheim Street. • Entered into an Exclusive Negotiating Agreement for the development of live/work units at 825-837 E. 7th Street. • Initiated efforts for the development of the Orizaba Design District. • Incorporated the recommendations identified in the Central Design Guidelines into new construction projects to encourage pedestrian-oriented development within the Project Area.

98 • Completed site acquisition of 612 Sunrise Boulevard to provide a gateway entrance to the Sunrise Historic District. • Facilitated owner-occupancy of four historic homes that were moved to the Willmore Historic District pursuant to the Willmore District Implementation Plan by releasing an RFP and selecting four homeowner/developers to work towards entry into Exclusive Negotiating Agreements. • Initiated negotiations with the Garage Theatre for participation in the East Village Artist Loan Program. • Leveraged Project Area funds with local, state and federal funds to support projects and initiatives. • Provided funding to support code enforcement activities within the Wrigley and Hellmann neighborhoods. • Completed historic rehabilitation of a historic home moved to 419 Daisy Avenue.

GOAL#2 Contribute to Corridor Revitalization. • Continue redevelopment efforts along commercial corridors including transit-oriented developments. • Initiate the Commercial Fagade Improvement Program along target corridors. o West Willow Street o East Anaheim Street o West Anaheim Street o Pacific Avenue • Facilitate the development of the Pacific Avenue and Pacific Coast Highway Node. • Initiate the disposition and development of the Walnut Avenue and Anaheim Street Development Site. • Complete construction of the Anaheim Street and Atlantic Avenue Development Site. • Support the implementation of St. Mary and Memorial Hospital's master plans. • Complete construction of exterior improvements to the Big Saver Center at Willow Street and Caspian Avenue. • Initiate a Fence Enhancement Pilot Program with Long Beach Unified School District: o Burnett Elementary o Washington Elementary o Poly High • Support the recruitment, retention and expansion of Project Area businesses. • Support and encourage business assistance programs that focus on Central Long Beach businesses. • Provide funding for economic development activities in Central Long Beach.

99 ACCOMPLISHMENTS • Completed the Alamitos Corridor Street Enhancement Plan that identifies opportunity sites for streetscape improvements. • Entered into an Exclusive Negotiating Agreement with the State of California for the development of a regional courthouse. • Supported the long-range strategic planning study of Long Beach Boulevard. • Continued facilitating fac;ade improvements through the Commercial Fac;ade Improvement Program. • Continued center remodel to a commercial center at Willow Street and Caspian Avenue. • Provided financial assistance to the City's Economic Development Bureau for business retention and attraction activities. • Provided financial assistance to the City's Neighborhood Code Enforcement Program for effective code compliance monitoring and graffiti removal services in the Project Area. • Commenced development of a Downtown Community Plan and Environmental Impact Report that will guide development in the downtown area. • Supported the expansion of Long Beach Memorial Medical Center and Miller Children's Hospital at Long Beach Memorial. • Provided funding for peer design review of non-Agency residential projects in the predevelopment phase. • Assisted in the entitlement of a commercial development project at Atlantic Avenue and Anaheim Street. • Assisted in the development of business recruitment and retention initiatives throughout the Project Area. • Entered into an agreement with Long Beach City College to acquire blighted properties to allow for the expansion of the campus. • Acquired a blighted liquor store at Martin Luther King •.Jr. Boulevard and Pacific Coast Highway to allow for the development of a new commercial development. • Continued Wrigley Village Streetscape Improvements on Pacific Avenue between Pacific Coast Highway and Willow Street. • Acquired a blighted motel at 1837 Pacific Avenue to allow for a new commercial development at Pacific Avenue and Pacific Coast Highway. • Completed land assembly and site clearance of a blighted recycling center at 101 E. Pacific Coast Highway and 1814 Pine Avenue.

• Completed fac;ade improvements for 4th & Linden Creative Offices.

• Completed removal of billboard at Ocean and Lime.

100 GOAL#3 Contribute to Open Space and Public Art Development. • Facilitate the development of the Orizaba Park Expansion Project. • Facilitate the development of the 15th Street and Alamitos Avenue Open Space. • Facilitate the development and expansion of Chittick Field. • Facilitate the development of the California Recreation Senior Center. • Facilitate the development at the PE Right-of-Way-Bike Trail Project.

ACCOMPLISHMENTS • Completed acquisition and site clearance of four targeted blighted properties to allow for the expansion of Orizaba Park. • Completed the schematic design development for the expansion of Orizaba Park. • Completed the design development for Rosa Parks Park at 15th and Alamitos Avenue. • Completed the K9 Corner Dog Park at Pacific Avenue and 9th Street. • Completed the Downtown Dog Park at the Civic Center complex. • Assisted in the development of the conceptual design for the PE Right of Way Bike Trail Project. • Provided funding to support land assembly for the expansion and development of open space and recreational opportunities at Drake Park. • Began construction on Seaside Park. • Began construction on the Homeland Cultural Center Improvement Project at MacArthur Park. • Partnered with Cal State Long Beach graduate studies department for the design development of a large-scale public art project at Ocean Boulevard and Alamitos Avenue. • Partnered with Downtown Long Beach Associates to present the Summer and Music concert series. • Commissioned and installed temporary art throughout the Project Area's vacant lots and storefronts. • Continue to partner with the Arts Council for Long Beach in implementing new public art. • Selected artists througl1 a Request for Qualifications for public artists in collaboration with the Arts Council for Long Beach for two sites in the Project Area.

101 GOAL#4 Contribute to Infrastructure and Public Improvements. • Begin construction of the Magnolia Industrial Group Street Reconstruction Project - Phase I. • Complete the construction of the Martin Luther King IVledian Islands. • Initiate the development of the Burnett Library Expansion Plan. • Initiate pedestrian-oriented streetscape improvements within pedestrian-oriented retail districts: o East Village o Wrigley Village

ACCOMPLISHMENTS • Completed Magnolia Industrial Group Street Reconstruction Project - Phase I (Oregon Street) and signal upgrade. • Completed pedestrian lighting and streetscape improvements in the East Village Arts District. • Assisted in the design development of the First Street street reconstruction project. • Completed the construction of Martin Luther King Jr. Boulevard Median Islands. • Facilitated design for Phase I improvements to the Magnolia Industrial Area along Oregon Avenue between Anaheim Street and Pacific Coast Highway. • Continued development of the Phase II Wrigley Village Streetscape Improvements on Pacific Avenue at 19th Street.

GOAL#5 Facilitate the efficient administration of the Project Area. • Implement the Strategic Guide for Development for the Central Study Area. • Implement the Willmore District Implementation Plan. • Implement the Central Long Beach Design Guidelines. • Continue to provide staff support to the Central Project Area Committee. • Continue to provide staff support to the East Village Steering Committee and East Village Association. • Continue to liaison with the Arts Council for Long Beach.

ACCOMPLISHMENTS • Provided staff support to various committees and organizations. o Central Project Area Committee o East Village Steering Committee o Arts Council for Long Beach • Supported the implementation strategies for the eight targeted Neighborhood Centers for concentrated redevelopment activities as identified in the Central Long Beach Strategic Guide for Development. 102 • Continued to apply the recommendations identified in the Central Design Guidelines to all new projects in the Project Area. • Continue to partner with the Arts Council for Long Beach in implementing new public art. • Continued support of events and organizations throughout the Project Area.

GOAL#6 Support the development of affordable housing in Long Beach. • Transfer 20% of available Project Area tax increment to the Housing Development Fund. • Continue to identify future opportunities for affordable housing within the Housing Action Plan target areas. • Assist in site assembly to support affordable housing developments. • Support the implementation of the goals identified in the Housing Action Plan. • Support opportunities to incorporate affordable housing in residential or mixed-use developments.

ACCOMPLISHMENTS • Provided 20% of the available Project Area tax increment to the Housing Development Fund. • Completed construction of the Long Beach Senior Housing development that provides 65 apartment units for very-low income seniors. • Assisted in the design development of a workforce housing project located at 2000- 2200 Atlantic Avenue. • Assisted in the design development of a mixed-income housing project located at 1235 Long Beach Boulevard. • Assisted in the implementation of the Housing Action Plan.

103 CENTRAL LONG BEACH REDEVELOPMENT PROJECT AREA GOALS AND WORK PLAN FOR FY 2009-2010

1) Contribute to neighborhood revitalization • Encourage human-scale, pedestrian-oriented developments as well as neighborhood identity initiatives: o East Village o Wrigley Village o Orizaba Design District

•. Support the preservation and enhancement of the Willmore City Historic District with the disposition and rehabilitation of four vintage homes.

• Support the development of market-rate housing/mixed-use/commercial/ industrial developments: o Shoreline Gateway o Downtown Courthouse o Atlantic Avenue and Willow Street

• Facilitate the development of the Willow and Atlantic Development Site. • Support Neighborhood Code Enforcement and Graffiti Abatement.

2) Contribute to corridor revitalization • Continue redevelopment efforts along commercial corridors including transit­ oriented developments. • Initiate the Commercial Fac;ade Improvement Program along target corridors: o West Willow Street o East Anaheim Street o West Anaheim Street o Pacific Avenue o Pacific Coast Highway • Facilitate the development of the Pacific Avenue and Pacific Coast Highway Node. • Facilitate the development of Agency-owned property along commercial corridors: o Pine Avenue and Pacific Coast Highway o East Anaheim and Lime Avenue

• Continue to support the Commercial Screening Program. • Support the implementation of St. Mary and Memorial Hospital's master plans. • Continue to support the Fence Enhancement Pilot Program with Long Beach Unified School District. • Support and encourage business assistance programs that focus on Central Long Beach Businesses. 104 3) Contribute to open space/public art • Begin construction of the Orizaba Park Expansion Project. • Complete the development of Rosa Parks Park at 15th Street and Alamitos Avenue. • Facilitate the development of Craftsman Park. • Facilitate the development and expansion of McBride Park. • Facilitate the development and expansion at P E Right of Way Bike Trail Project. • Complete the development and expansion of Seaside Park. • Support the creation and installation of public art.

4) Contribute to infrastructure/public improvements • Complete Phase II construction of the Magnolia Industrial Group Street Reconstruction. • Maintain the enhancements to the Martin Luther King Median Islands. • Begin construction of the pedestrian-oriented streetscape improvements wit~1in pedestrian-oriented retail districts. o East Village o Wrigley Village

5) Support the development of affordable housing in Long Beach • Transfer 20 percent of available project area tax increment to the Housing Development Fund. • Continue to identify future opportunities for affordable housing within the Housing Action Plan target areas. • Assist in site assembly to support affordable housing developments. • Support the implementation of the goals identified in the Housing Action Plan. • Support opportunities to incorporate affordable housing in residential or mixed­ use developments.

6) Facilitate the efficient administration of the Project Area • Implement the Strategic Guide for Development for the Central Project Area. • 1m·p1ement the Willmore District Implementation Plan. • Implement the Central Long Beach Design Guidelines. • Implement the Orizaba Design District lmplemental Plan. • Continue to provide staff support to the Central Project Area Committee. • Continue to liaison with the Arts Council of Long Beach.

105 NORTH LONG BEACH REDEVELOPMENT PROJECT AREA COMPARISON OF GOALS FOR FY 2008-2009 WITH ACCOMPLISHMENTS FOR FY 2008-2009

GOAL#1 Contribute towards neighborhood revitalization. • Continue Neighborhood Enhancement Area program. • Continue Multi-Family Improvement program. • Continue Pro-active Code Enforcement program. • Add work force housing. • Add home ownership opportunities. • Add senior housing near public transportation corridors.

ACCOMPLISHMENTS • Provided funding to complete the following Neighborhood Enhancement Areas: Hamilton, California/Cherry, McKinley, Ramona and Del Amo. • Provided funding to start the following Neighborhood Enhancement Areas: Coolidge, Jordan, Grant, Dairy, Sutter and Jane Adams. • Continued a Pro-active Code Enforcement program on all the major commercial corridors in North Long Beach. • Re-executed an Exclusive Negotiating Agreement (ENA) with Golden Pacific Partners for the development of housing at 5060-5090 Long Beach Boulevard. • Acquired and demolished a blighted hotel at 5100-5110 Long Beach Boulevard to expand the housing project at 5060-5090 Long Beach Boulevard. • Identified Agency owned vacant lot at 306 Home Street for ACE Program. • Facilitated the presentation of affordable senior housing at 3290 Artesia Boulevard. • Continued the design of one-way street couplet in Dairy Neighborhood. • Funded graffiti abatement funding program • Entered into Memorandum of Understanding with the Long BeachHousing Development Company to facilitate the acquisition of real property

GOAL#2 Contribute towards corridor revitalization. • Revitalize existing commercial/retail sites. • Develop new commercial/retail sites.

106 • Add median and/or streetscape improvements. • Add public facilities. • Continue commercial fac;ade renovations. • Add public parking. • Implement decorative fencing program. • Continue business incentive program. • Preserve buildings with historical or architectural significance.

ACCOMPLISHMENTS • Completed working with existing property owner to facilitate redevelopment of the former Home Base site into a new Target Department Store. • Amend Language Commercial Screening Program to facilitate greater access to program benefits. • Completed construction of exterior and public improvements for the new Long Beach BMW Motorcycle dealership at 2125 E. Spring Street. • Acquired 5301 Long Beach Boulevard, completed demolition and preliminary designs for the expansion of El Ranchito Restaurant parking lot. • Cleared blighted motel sites on 4800 block of Long Beach Boulevard. • Completed demolition of former Roberts Department Store and commenced construction of Marshall store development for the Bixby Knolls Shopping Center. • Completed the City's conceptual site plan review, and Technical Advisory Committee. Certified Final Environmental Impact Report for the North Village Center development. • Commenced DOA negotiations and site plan review with development team regarding the Atlantic and Artesia site. • Extended Cooperative Agreement with California State University, Long Beach (CSU LB) for the development of the remaining development site at Technology Park. • Acquired the following properties for future development: o 5927 Atlantic Avenue (Housing) o 5368 Long Beach Boulevard o 5948 Atlantic Avenue o 685 East Artesia • Worked with the North Project Area Committee (NPAC) to identify new fac;ade improvement on commercial corridors: Artesia Boulevard; Long Beach Boulevard from Del Amo Boulevard to 53rd Street; Santa Fe Avenue from Pacific Coast Highway to Hill Street; and various sites in the Bixby Knolls Business Improvement Area. • Continued to negotiate fac;ade renovation contracts with Virginia Village businesses.

107 • Completed fa9ade improvement at 5360-5366, 5413-15 and 5417 Long Beach Boulevard. • Completed sign improvements of retail center located at 4913 Long Beach Boulevard. • Acquired and demolished blighted property and initiated the design of a paseo (parkway) at 5368 Long Beach Blvd • Initiated commercial fa9ade improvement projects. • Acquired 5640 Atlantic Avenue and completed the design for the expansion of the planned North Village public parking lot at 5640-5648 Atlantic Avenue, and reconfigured parking lot to maximize spaces. • Funded Bixby Knolls Improvement Association beautification and promotions agreement. • Supported the preservation of 620-638 E. South Street. • Entered into a contract with and provided funding to the Bixby Knolls Business Improvement Association • Entered into lease with and provided funding to the Bixby Knolls Business Improvement Association for the use of 4321 Atlantic Avenue for public community events programming. • Completed leases for three vacant buildings (5372 Long Beach Blvd; 5641 and 5643 Atlantic Avenue

GOAL#3 Contribute towards open space/public art development. • Continue development of additional open/park space. • Continue development of public art.

ACCOMPLISHMENTS • Completed designs for and commenced construction on the Admiral Kidd Park Expansion. • Provided funding for the conceptual designs for Houghton Park Community Center. • Completed demolition of blighted building and commenced design and public participation in the development of the future Oregon/Del Amo park. • Completed demolition of industrial warehouse structures in preparation for the expansion of Pops Davenport Park. • Continued CEQA and landfill closure plan for the expansion of Pops Davenport Park. • Supported neighborhood efforts to create beauty and pride through funding Neighborhood Partners Program grants and funding neighborhood murals, including the North Village Center mural.

108 • Continued to support NPAC by providing utility box art • Continued to support the NPAC with the installation of street pole banners. • Continued to fund and work with Arts Council for Long Beach. • Execute contract with Art Council for Long Beach for public art management services. • Installed "Orange Twist" public art sculpture on Atlantic Avenue. • Completed a mural ("A Neighborhood Perspective") at the SuperMex Restaurant located at 5650 Atlantic Avenue. • Entered into agreements with West Coast Choppers, Inc. and Patrick Vogel Designs, Inc. for decorative metal fabrications services for public art. • Funded public artwork on designated traffic signal controller cabinets.

GOAL#4 Contribute towards infrastructure/public improvements. • Add infrastructure improvements (including reconstructing major streets, collector streets, local streets, curbs, gutters, alleys, sidewalks and other public works).

ACCOMPLISHMENTS • Certified CEQA Environmental Impact Report for the construction of the new North Public Library • Completed the design of Fire Station #12 and released construction bid solicitation for construction. • Completed installation of new traffic control signals on Atlantic Avenue at the intersection of Cartagena Street and Marshall Street • Completed street improvement project on Long Beach Boulevard from Wardlow Road. to San Antonio Drive. • Completed street improvement project with new medians on Long Beach Boulevard from San Antonio Drive to Del Amo Boulevard. • Initiated contract for Atlantic Avenue street work from Bixby Road. to San Antonio Drive and from 52nd Street to South Street. • Completed installation of fencing at Orizaba Tunnel Mural Site. • Implement one-way street couplet in Dairy Neighborhood. • Completed construction of new medians on Atlantic Avenue in front of Jordan High School. • Continued designs for Del Amo Boulevard median improvement project Long Beach Boulevard to Cherry Avenue.

109 • Continued designs for Atlantic Avenue median improvement project from Del Amo Boulevard to 56th Street. • Continued construction of new medians on Long Beach Boulevard from Sort Street to Victoria Street. • Continued construction on new medians, tree grates and crosswalk pavers on Atlantic Avenue from Bixby Road to San Antonia Drive. • Continued construction on new medians, tree grates and crosswalk pavers on Atlantic Avenue from 52nd Street to South Street. " • Continued designs for Atlantic Avenue median improvement project from Aloha Street to 59th Street. • Continued designs for Artesia Boulevard median improvement project from Atlantic Avenue to Obispo Street. • Entered into a cooperation agreement with the Board of Harbor Commissioners to provide funding for the construction of public improvements. • Constructed offsite landscape and wayfinding improvements at 600, 700, 870 and 880 Queensway Drive • Completed construction of the North Village public parking lot at southeast corner of South Street and Linden Avenue. • Completed Cabrillo High School area median monument sign.

GOAL#5 Facilitate efficient administration of the Project Area. • Implement North Long Beach Strategic Guide for Redevelopment. • Implement North Long Beach Street Enhancement Plan. • Facilitate General Plan and Zoning Ordinance changes to implement Strategic Guide. • Continue business attraction/retention in North Long Beach. • Create job opportunities for residents of North Long Beach. • Implement North Long Beach Design Guidelines. • Identify sites for redevelopment consistent with the Strategic Guide. • Provide support to the North Project Area Committee.

ACCOMPLISHMENTS • Continued to work with Planning and Building Bureaus towards revising the General Plan and Zoning Ordinance for consistency with the North Long Beach Strategic Guide for Redevelopment. • Continued design of streetscape improvements for Virginia Village.

110 • Continued to support Economic Development Bureau's business incentive programs. • Continued implementation of the North Long Bach Design Guidelines. • Identified southwest corner of Atlantic Avenue and 52nd Street as .a potential development site. Initiated acquisition negotiations with various property owners at that site. • Continued implementation of the Bixby Knolls Design Guidelines. • Continue to provide staff support to the NPAC. • Continue to provide staff support to the I\JPAC subcommittees.

111 NORTHLONGBEACHREDEVELOPMENTPROJECTAREA GOALS AND WORK PLAN FOR FY 2009-2010

1) Contribute towards neighborhood revitalization • Continue Neighborhood Enhancement Area program: o Sutter School & Coolidge Triangle o Jane Addams & Grant School o Dairy Avenue & Jordan High School o Lindbergh School & Bret Harte o DeForest Park & Cal-Cherry • Continue Multi-Family Improvement program • Continue Pro-active Code Enforcement program

2) Contribute towards corridor revitalization • Revitalize existing commercial/retail sites: o Bixby Knolls - General o Bixby Knolls Shopping Center o North Village Center o Virginia Village • Develop new commercial/retail sites: o North Village Center o NEC Atlantic Avenue and Artesia Boulevard • Continue Commercial Fac;ade Program. • Add public parking: o North Village Center o Virginia Village • Continue Commercial Fencing Program • Create new home ownership opportunities with a focus on public transportation: o Waite Motel Site

3) Contribute towards open space/public art development • Continue development of additional open/park space: o Scherer Park facility improvements o Houghton Park facility improvements o Davenport Expansion o Oregon Park • Continue development of public art

4) Contribute towards infrastructure/public improvements • Continue streetscape improvements

112 • Continue median improvements • Fire Station 12 • Fire Station 9 • North Village Library • Add median and/or streetscape improvements: o Del Amo Boulevard o Atlantic Avenue and Southern Gateway o Artesia Boulevard o Long Beach Boulevard

5) Facilitate efficient administration of the Project Area • Implement North Long Beach Strategic Guide for Redevelopment • Implement North Long Beach Street Enhancement Plan • Facilitate business attraction/retention in North Long Beach • Implement North Long Beach Design Guidelines • Identify sites for redevelopment consistent with the Strategic Guide • Provide support to the North Project Area Committee

113 THIS PAGE INTENTIONALLY LEFT BLANK APPENDIX D

FISCAL CONSULTANT’S REPORT

Appendix D

THIS PAGE INTENTIONALLY LEFT BLANK KEYSER MARSTON ASSOCIATES

FISCAL CONSUL TANT REPORT NORTH LONG BEACH REDEVELOPMENT PRO ..IECT AREA

Prepared for the:

REDEVELOPMENT AGENCY OF THE CITY OF LONG BEACH

March 23, 2010

FISCAL CONSULTANT REPORT NORTH LONG BEACH REDEVELOPMENT PROJECT AREA

Prepared for the:

REDEVELOPMENT AGENCY OF THE CITY OF LONG BEACH

Prepared by:

Keyser Marston Associates, Inc. 500 South Grand Avenue, Suite 1480 Los Angeles, California 90071

March 23, 2010

1. INTRODUCTION

Keyser Marston Associates, Inc. (KMA) has been retained as Fiscal Consultant to the Redevelopment Agency of the City of Long Beach (the Agency) to prepare this Report of the Fiscal Consultant analyzing the tax increment revenues of the North Long Beach Redevelopment Project Area (the Project Area). The California Community Redevelopment Law (CRL) provides for the creation of a redevelopment agency for the purpose of eliminating blight. To achieve this purpose, the CRL, along with Article 16, Section 16 of the California Constitution, authorizes the Agency to receive that portion of property tax revenue generated from the increase of the current year taxable values over the base year taxable values that existed at the time of adoption of a redevelopment project. This portion of property tax revenue is referred to as tax increment revenue. The CRL provides that the tax increment revenue may be pledged by the Agency for the repayment of Agency indebtedness.

This Fiscal Consultant Report has been prepared to reflect the tax increment revenues that would be allocable to the Agency beginning in the current 2009-10 fiscal year, based upon reported Project Area assessed values by the Los Angeles County Auditor-Controller. The projected taxable values and resulting tax increment revenues for the Project Area are based on assumptions determined by a review of the taxable value history of the Project Area and the property tax assessment and property tax apportionment procedures of Los Angeles County.

This Report also includes a review of the Project Area’s redevelopment plan limits and a review of the Project Area’s historic assessed value trends, major property tax payers, distribution of assessed values by identified land use types, historic property tax allocations, and potential valuation impacts and tax refunds resulting from current assessment appeals.

2. REVIEW OF THE PROJECT AREA

2.1 Redevelopment Plan Time Limits

Existing redevelopment law requires the Agency to impose specific time limitations on the incurrence of debt, the redevelopment plan effectiveness and the collection of tax increment revenue to repay debt. The Project Area was adopted July 16, 1996, establishing a base year of FY 1995-96. The current limitations set forth in the redevelopment plan for the Project Area are as follows: Bond Debt Limit Debt Incurrence July 16, 2016 Plan Effectiveness 1 July 16, 2027 $2,000,000,000 Debt Repayment 1 July 16, 2042

1 The dates shown for the Redevelopment Plan effectiveness date and debt repayment date include a one-year extension allowed by SB 1045. The dates shown above may be extended by an additional year under AB 26-4x.

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2.2 Review of Agency Obligations

a. Low and Moderate Income Housing Set Aside Requirement

The CRL requires redevelopment agencies to annually set aside 20% of all tax increment revenues into a Low and Moderate Income Housing Set Aside Fund. The set aside requirement could be reduced or eliminated if the redevelopment agency finds that: (1) no need exists in the community to improve or increase the supply of low and moderate income housing; (2) that some stated percentage less than 20% of the tax increment is sufficient to meet the housing need; or (3) that other substantial efforts, including the obligation of funds from certain local, state or federal sources for low and moderate income housing, of equivalent impact are being provided for in the community. It is assumed that the Agency will not make any such findings and will continue to set aside 20% of annual tax increment.

b. Statutory Pass Through

The North Project Area was adopted after the passage of AB 1290 and is therefore subject to the statutory pass through requirements of Health and Safety Code Section 33607.5 which provides for specific formulas for payments to be made by the Agency to affected taxing entities as follows:

(1) from the first fiscal year in which the Agency receives tax increment through the last fiscal year in which the Agency receives the tax increment, the Agency shall pay to the affected taxing entities, including the community if the community elects to receive a payment, an amount equal to 25% of the tax increments received by the Agency after the amount required to be deposited in the Low and Moderate Income Housing Fund (the payment is referred to as the Tier 1 Statutory Pass Through);

(2) commencing in the 11th fiscal year in which the Agency receives tax increments and continuing through the last fiscal year in which the Agency receives tax increments, the Agency shall pay to the affected taxing entities, other than the community which has adopted the project, in addition to the Tier 1 Statutory Pass Through and after deducting the amount allocated to the Low and Moderate Income Housing Fund, an amount equal to 21% of the portion of tax increments received by the Agency which shall be calculated by applying the tax rate against the amount of assessed value by which the current year assessed value exceeds the first adjusted base year value. The first adjusted base year value is defined to be the Project Area assessed value in the 10th fiscal year in which the Agency receives tax increment (the payment is referred to as the Tier 2 Statutory Pass Through); and

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(3) commencing in the 31st fiscal year in which the Agency receives tax increments and continuing through the last fiscal year in which the Agency receives tax increments, the Agency shall pay to the affected taxing entities, other than the community which has adopted the project, in addition to the Tier 1 and Tier 2 Statutory Pass Through payments and after deducting the amount allocated to the Low and Moderate Income Housing Fund, an amount equal to 14% of the portion of tax increments received by the Agency which shall be calculated by applying the tax rate against the amount of assessed value by which the current year assessed value exceeds the second adjusted base year value. The second adjusted base year value is defined to be the Project Area assessed value in the 30th fiscal year in which the Agency receives tax increment (the payment is referred to as the Tier 3 Statutory Pass Through).

According to the County Auditor-Controller, the Tier 2 Statutory Pass Through commences in FY 2008-09 with the first adjusted base year value based on FY 2007- 08 assessed value. The tax increment revenue projection summarized on Table 6 does not forecast a Tier 2 Statutory Pass Through because the current year FY 2009-10 assessed value is less than the FY 2007-08 first adjusted base year value and no increases in assessed value are forecast on Table 6. To the extent that actual subsequent fiscal year assessed values exceed the FY 2007-08 first adjusted base year value, then Tier 2 Statutory Pass Through payments will be paid by the Agency pursuant to the provisions of Section 33607.5.

c. County Administrative Fees

Chapter 466, Statutes of 1990, (referred to as SB 2557) permits the County to withhold a portion of annual tax revenues for the recovery of County charges related to property tax administration services to cities in an amount equal to their property tax administration costs proportionately attributable to cities. SB 2557, and subsequent legislation under SB 1559 (Statutes of 1992), permitted counties to charge all jurisdictions, including redevelopment agencies, on a year-to-year basis. The County Auditor-Controller charged the Agency a Project Area fee of 1.47% of the gross tax increment revenue for FY 2009-10 (or approximately $653,000). The projection assumes that the County administrative charge will continue to debited against annual tax increment and be equal to 1.47% of gross tax increment. The County also charges a significantly smaller administrative fee allowed under AB 1924 in the amount of $480 per redevelopment project area.

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3. REVIEW OF PROJECT ASSESSED VALUES

3.1 Current Year Assessed Values

The Project assessed values are prepared by the County Assessor and, until the 1996-97 fiscal year, have reflected a lien date of March 1. Commencing with the 1997-98 fiscal year, the property tax lien date was changed to January 1. Each property assessment is assigned a unique Assessor Parcel Number (APN) which correlates to assessment maps prepared by the County. The corresponding assessed values for each parcel are then encoded to Tax Rate Areas (TRAs) which are geographic subareas with common distribution of taxes and which are contained within the Project Area boundaries.

The County Auditor-Controller is responsible for the aggregation of the assessed values assigned by the Assessor for properties within the boundaries of the Project Area. This results in the reported total current year assessed value and becomes the basis for determining tax increment revenues due to the Agency. The reported values of the Project Areas for FY 2009-10 are as follows: FY 2009-10 Value % Total

Secured Property $5,141,820,265 68.51% Secured Possessory Interest 2 1,473,012,632 19.62% Secured Mineral Rights 1,519,347 0.02% Secured State Non-Unitary 3,779,482 0.05% Unsecured Property 885,865,930 11.80% Total North Project Area $7,505,997,656 100.00%

Secured Property (including Secured Possessory Interest, Secured Mineral Rights and Secured State Non-Unitary assessed values) includes property on which any property tax levied by the County becomes a lien on that property. Unsecured Property typically includes the value of tenant improvements, trade fixtures, personal property and possessory interest. Unsecured Property values reflect depreciation factors on the useful life of the tenant improvements, trade fixtures and personal property of the assessee. The taxes levied on Unsecured Property are levied at the previous year's Secured Property tax rate.

3.2 Real and Personal Property

Real Property, as referred to in this Report, is defined to represent land and improvement assessed values on both the Secured and Unsecured property tax rolls of the County Assessor. Annual increases in the assessed value of Real Property are limited to an annual inflationary increase of up to 2%, as governed by Article XIIIA of the State Constitution (passed by voters as Proposition 13). Real Property values are also permitted to increase or decrease as a result of a property's change of ownership or new construction activity. The assessed value of

2 A suspected misplacement of $169,396,572 in Possessory Interest value assessed to Chevron USA Inc. has been excluded from the FY 2009-10 value. The Agency had indicated that the identified misplacement is outside of the Project Area.

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Personal Property is not subject to the Proposition 13 inflation factor and is subject to annual appraisal, either upward or downward. State assessed Non-Unitary properties assessed by the State Board of Equalization (SBE) also may be revalued annually and such assessments are not subject to the annual 2% inflation limitation of Article XIIIA. As discussed below, the assessed value of taxable property is subject to reduction under certain conditions.

For property tax purposes, the Proposition 13 inflation factor is subject to the State’s Consumer Price Index (CPI) inflation adjustment of up to 2% per year. The CPI adjustment is based on the change in the CPI from October to October. As of the January 1, 2010 property tax lien date for FY 2010-11, the Proposition 13 property tax assessments will be reduced due to a reported negative CPI inflation adjustment of -0.237%. This will be the first time since the passage of Proposition 13 that the CPI adjustment will be reported as a negative. The annual CPI factor has been less than 2% only five other times since the enactment of Proposition 13:

1983-84 1.000% 1995-96 1.194% 1996-97 1.115% 1999-00 1.853% 2004-05 1.867%

The County Auditor-Controller is responsible for the aggregation of the assessed values assigned by the Assessor for properties within the boundaries of the Project Area. This results in the reported total current year assessed value and becomes the basis for determining tax increment revenues due to the Agency. In FY 2009-10, secured properties account for over 88% of the total assessed value of the Project Area and unsecured properties account for approximately 12% of assessed value.

3.3 Proposition 8 Temporary Decline In Value

In 1978 a Constitutional amendment was passed by the California voters (Proposition 8) that provides for a temporary reduction in assessed value when the Proposition 13 value of a property exceeds its actual market value. The property owner is entitled to the lower of two values: (1) the property’s existing Proposition 13 value, which is the purchase price and/or the cost of new construction, annually adjusted for inflation not to exceed 2% per year; or (2) the property’s market value as of the January 1 property tax lien date. Once this temporary reduction in assessed value has been granted by the County Assessor, the Assessor must review the property’s value annually until it is fully restored to its Proposition 13 value. Depending on the market value determined by such future reviews, the assessed value may be further adjusted, left unchanged, be partially increased or be fully restored to its Proposition 13 value.

As a result of the declining market value of residential properties in the County, commencing in 2008 the Assessor’s office began a proactive review of single-family residences

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1003022.LGB:GSH:gbd 15610.018.001//03/23/10 and condominiums based on an analysis of residential market trends to determine whether or not such parcels qualified for the temporary decline in value adjustment. Single-family residences and condominiums purchased between July 1, 2004 and June 30, 2007 were included in this review in 2008. Then in 2009, the Assessor expanded its proactive review to include single-family residences and condominiums purchased between July 1, 2003 and June 30, 2008. The review included 473,000 residential parcels County-wide, resulting in a temporary decline in value involving approximately 333,000 parcels. According to the Assessor, the average adjustment in assessed value was $120,000. County database information as to how many residential parcels in the Project Area were involved in the adjustment was not available to KMA. For 2010, the Assessor’s office will proactively review the value of single- family residences and condominiums purchased between July 1, 2003 and June 30, 2009 that were not previously reviewed and granted the temporary decline in value adjustment. Beginning March 1, 2010, property owners will then be able to check with the Assessor’s office to determine whether or not their property was included in the review. By June 30, 2010, the Assessor anticipates that its review will be completed and the results will be posted for the FY 2010-11 secured tax roll.

3.4 Mineral Rights

Mineral Rights values represent the assessment of oil and gas producing properties within a Project Area and constitute $1.5-million in assessed value. The County Assessor appraises Mineral Rights using the income approach to value in which the anticipated net income stream over the remaining productive life of the property is converted into a capital sum. Typically, the net income stream is a declining one since the economic life of the property is not perpetual. Economic life of an oil or gas producing property is determined when the operating expense curve and the income curve meet, so determining the life of the field being assessed. Economic life of Mineral Rights is also affected by other external factors including market price and demand, the costs of operation and extraction, and the investment of capital into new technologies to increase production, Mineral Rights values could increase from current year levels to the extent the productive life of the respective oil fields is extended as a result of the discovery of new deposits, improved extraction technology or the rising market price of oil. Similarly, declines in Mineral Rights values could occur if these factors are not present in future years.

3.5 Possessory Interest

Possessory Interest values are private property interests in publicly-owned Real Property and constitute $1.47-billion or nearly 20% of the Project Area’s assessed value. A Possessory Interest constitutes a private right to the possession and use of publicly-owned property for a period of time less than perpetuity, in this case, all of the container terminal leases represented by the area of the Project Area in the Port of Long Beach. In appraising a Possessory Interest, the County Assessor seeks to value the present worth of the return a property will yield to the holder of the Possessory Interest over the effective term of their possession. The County Assessor appraises the Possessory Interest using one of more of the

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1003022.LGB:GSH:gbd 15610.018.001//03/23/10 following appraisal techniques: the sales comparison, the income approach or the cost approach. The appraisals are initially triggered when a new lease is entered into and then re- audited by the Assessor every three to five years thereafter.

3.6 Base Year Assessed Value

Commencing with FY 2007-08, the Los Angeles County Auditor-Controller has adopted an internal administrative policy to annually review and revise the Base Year assessed values of redevelopment project areas to the extent that properties within a redevelopment project area are acquired for public uses by tax-exempt public taxing agencies. The precedent for this action stems from the 1963 case of Redevelopment Agency of the City of Sacramento vs. Malaki, 216 Cal.Appl.2d 480, and subsequent related cases. In the Project Area, the Base Year assessed value historically remained constant until FY 2007-08, from which point the County has annually adjusted the Base Year assessed values, resulting in an adjustment of $8,113,388 from the originally reported Base Year when the Project Area was adopted. This adjustment results in an $81,134 increase in annual gross tax increment revenues from the Project Area.

Total Base Value

FY 2006-07 $3,104,508,715 FY 2007-08 3,103,192,950 FY 2008-09 3,103,980,865 FY 2009-10 3,096,395,327

This Base Year value includes $57,665,527 in Homeowner’s Exemption (HOX) value reported for Project Area. In practice, the County reports the annual and base year values net of HOX and makes a single year-end revenue allocation to the Agency derived from the current and base year HOX value. Since the Agency is eligible to receive any tax increment derived from the HOX value, all of the values used to calculate tax increment revenues in this Report are values inclusive of the HOX value.

3.7 Historic Assessed Values

Aggregated historic to current year Project Area values are summarized on Table 1 covering fiscal years 2004-05 to 2009-10. The historic to current year taxable values reflect an average annual increase of 6.3% for the period as reported. The Secured values, which comprise 88% of the total reported value, reflected an average 6.9% annual increase for the period. The Unsecured values comprise a smaller share of the Project Area’s total assessed value (12%) and reflect declines in value as a result of depreciation factors or tenant relocations out of the Project Area, as well as increases in value as new tenants move into the Project Area. Unsecured values were observed to increase an average of 2.2% over the period.

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3.8 Land Use Composition

As shown on Table 2, KMA analyzed the composition of land uses vis-à-vis assessed value for the Project Area using the County Assessor’s tax roll classification system. The assessed values of the Project Area are generally spread between residential and commercial uses. Secured residential property uses represent 47% of the total Project Area value in FY 2009-10, with possessory interest values accounting for nearly 20%. Secured commercial uses represent 11% and industrial uses account for 9%. Unsecured values comprised 12% of the overall value.

3.9 Ten Largest Taxpayers

The ten largest property owners in the Project Area were identified by KMA based upon a review of the FY 2009-10 locally assessed secured and unsecured valuations reported by the County Assessor. The aggregated secured, possessory interest and unsecured assessed values of the identified ten largest tax payers are shown on Table 3 and include the assessee name, parcel count, FY 2009-10 assessed value, percentage share of the Project Area value and percentage share of the incremental value, and an estimate of the tax refund exposure due either to an identified current year or prior year assessment appeal filing.

The ten identified assessees represent 25.7%, or $1,927,681,632 of the total Project Area assessed value for FY 2009-10. The value of the top ten taxpayers is primarily represented by Possessory Interest values which account for $1,327,713,665 (69%) of the total top ten taxpayer assessed values, followed by $395,689,583 (21%) in Unsecured value and $204,278,384 (11%) in Secured value. When compared against the incremental assessed value, the ten assesses represent 43.7% of the Project Area incremental value. The ten largest property owners identified in this analysis are highlighted as follows:

1. Total Terminals - Located on Pier T, this 380-acre container terminal has a long- term 25-year lease with the Port of Long Beach (Port) that commenced in 2002. Operating under the name Total Terminals International, the pier contains fourteen 65-ton gantry cranes and handles general containerized cargo. No appeal to the assessed value of this Possessory Interest was reported for FY 2009-10, although appeals were filed in FY 2007-08 to FY 2008-09 (refer to Table 3 footnote for potential tax refund exposure on the prior year filings if the applicant’s opinion of value prevails).

2. International Transportation Services (ITS) - Located on Pier G, this 246-acre container terminal has a long-term 20-year lease with the Port that commenced in 2006. Operating under the name International Transportation Service, Inc., the pier contains seven gantry cranes, with capacities ranging from 30-tons to 60-tons, and handles general containerized cargo. The Port is in the planning stage to invest $800-million in the redevelopment of the Pier G facilities. An appeal of the assessed value of this Possessory Interest was filed in FY 2009-10 and is pending a hearing

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from the Assessment Appeals Board. If the applicant’s opinion of value prevails, then the potential tax refund exposure to the Project Area is estimated to be $2,305,000. In addition, the applicant has filed appeals in FY 2007-08 to FY 2008- 09 (refer to Table 3 footnote for potential tax refund exposure on the prior year filings if the applicant’s opinion of value prevails).

3. Pacific Maritime Services LLC - Located on Pier J, this 256-acre container terminal has a long-term 20-year lease with the Port that commenced in 2002. Operating under the name Pacific Maritime Services, the pier contains sixteen gantry cranes, with capacities ranging from 40-tons to 60-tons, and handles general containerized cargo. No appeal to the assessed value of this Possessory Interest was reported for FY 2009-10, although appeals were filed in FY 2005-06 through FY 2008-09 (refer to Table 3 footnote for potential tax refund exposure on the prior year filings if the applicant’s opinion of value prevails).

4. Hughes Aircraft Company - This 30-acre site contains offices and parking in an office and industrial park situated at the northwest corner confluence of the San Diego 405 Freeway and the Long Beach 710 Freeway. No appeal was reported for FY 2009-10.

5. Toyota Motor Credit Corporation/ TABC Inc./ Catalytic Component Products Inc. - Toyota operates its vehicle importing and processing facilities at the Port, located on Pier B (in the West Long Beach Industrial Redevelopment Project Area). However, two parcels totaling 28 acres are owned by Toyota Motor Credit Corp. and TABC Inc. and are located in the Project Area at the southwest corner of Artesia and Paramount. TABC Inc. and Catalytic Component Products Inc. are manufacturing subsidiaries of Toyota responsible for the processing of vehicle catalytic converters, steering columns and stamped parts. No appeal was reported for FY 2009-10.

6. Long Beach Container Terminal - Located on Pier F, this 102-acre container terminal has a long-term 25-year lease with the Port that commenced in 1986 and will end in 2011. Operating under the name Long Beach Container Terminal, Inc. (LBCT), the pier contains seven gantry cranes and handles general containerized cargo. Pier F is situated in the Port’s Middle Harbor expansion plan. Several options are being considered by the Port to accommodate LBCT either in its present Pier F location or be relocated to another temporary pier. No appeal was reported for FY 2009-10.

7. ARCO Terminal Services Corporation - This 66-acre vacant parcel located northwest of the intersection of Paramount Boulevard and South Street contains twenty petroleum storage tanks. No appeal was reported for FY 2009-10.

8. Oxbow Carbon and Minerals LLC - Located on four pad locations leased from the Port, this company is responsible for the storage and exportation of petroleum coke,

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a by-product of petroleum refining used for fuel. Each pad location has long-term leases ranging from 20-years to 40-years. No appeal was reported for FY 2009-10.

9. Carnival Corporation - Represents two leasehold interests, one with a City-owned parking site within the Project Area and the other with the Harbor Department for wharfage adjacent to the Spruce Goose Dome. No appeal was reported for FY 2009-10.

10. Metropolitan Stevedore Company, Inc. - Located on Pier G, this 23-acre site has a long-term lease dating back to 1981 for the loading of dry bulk cargo, including petroleum coke, coal, potash, borax, sodium sulfates, soda ash and prilled sulfur. Operating under the name Metro Ports, the pier contains 2 electric travelling bulk shiploaders and various conveyor systems. No appeal to the assessed value of this Possessory Interest was reported for FY 2009-10, although appeals were filed in FY 2006-07 through FY 2008-09 (refer to Table 3 footnote for potential tax refund exposure on the prior year filings if the applicant’s opinion of value prevails).

4. TAX ALLOCATION AND DISBURSEMENT

4.1 Tax Rates

The tax rates which are applied to incremental taxable values consist of two components: the General Tax Rate of $1.00 per $100 of taxable values and the Override Tax Rate which is levied to pay voter approved indebtedness. The basic levy tax rate may not exceed 1% ($1.00 of $100 taxable value) in accordance with Article XIIIA. An amendment to the Constitution prohibits redevelopment agencies from receiving taxes generated by new Override Tax Rates, which are reflective of debt approved after December 31, 1988. Based upon the anticipated FY 2009-10 tax increment revenue forecast by the County Auditor- Controller relative to the incremental assessed value of the Project Area, KMA estimates the tax override rate to be a relatively low at 1.004292% in FY 2009-10. Therefore, for purposes of this projection, this computed rate has been incorporated in the tax increment revenue forecast for subsequent fiscal years.

4.2 Allocation of Taxes

Secured taxes are due in two equal installments. Installments of taxes levied upon secured property become delinquent on December 10 and April 10. Taxes on unsecured property are due March 1 and become delinquent August 31. The County Auditor-Controller is responsible for the aggregation of the taxable values assigned by the Assessor as of the lien date for property within the boundaries of the Project Area. This results in the reported total current year Project Area taxable value and becomes the basis for determining tax increment revenues due to the Agency. Tax increment revenue is disbursed to the Agency based upon actual collections within the Project TRAs. Although adjustments to taxable values for property

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1003022.LGB:GSH:gbd 15610.018.001//03/23/10 within the Project Area may occur throughout the fiscal year, such adjustments are not assumed in the tax increment projection prepared by KMA.

The secured tax revenues are disbursed beginning in December with a 35% advance payment followed by a 5% advance in January. A reconciliation payment reflecting actual first installment collections is made in February. In April, 75% of the total levy is disbursed to the Agency, followed by a reconciliation payment in May reflecting actual second installment collections. Final payments are generally allocated in August. In prior years, over- allocations were deducted from the next year's allocation, although in August 2008 the County made a direct demand to the Agency for an Agency-wide overpayment rather than debit the subsequent year’s allocation. The unsecured tax increment revenues are advanced in November and March of each year with final reconciliation payments made in August.

4.3 Tax Receipts to Tax Levy

Tax increment revenues are allocated to the Agency based upon actual tax collections received in the Project Area. To estimate the percentage of collected taxes in a given Project, a comparison of computed tax levy to actual tax receipts was conducted by KMA. This comparison, summarized on Table 4, was reviewed for FY 2004-05 to FY 2008-09. The annual tax collection rates include both secured and unsecured taxes and are shown in two comparisons:

1) Percent collected from only current year tax levies (i.e. tax increment generated in the current fiscal year based upon initially reported equalized assessed values).

2) Percent collected from all annual tax levies received by the Agency (including supplemental taxes, prior year redemptions, as well as tax refunds due to appeals, mid-year roll adjustments and administrative charges).

The collection of current year tax levies over the past five years for the Project Area averaged 96%. Over the course of a fiscal year, the Agency is allocated redemption payments from previously delinquent taxes and supplemental tax revenues. The Auditor- Controller also debits or credits the Agency with mid-year adjustments due to refunds on appeals, Assessor roll corrections and administrative charges. The resulting average collections rate based upon all annual tax allocations over the period was 7.6% greater than the computed levy for the Project Area. Given the foregoing, the Table 6 tax increment revenue projection does not reflect any adjustments for future collections being less than 100% of the computed levy.

5. ASSESSMENT APPEALS

Property taxable values determined by the County Assessor may be subject to an appeal by the property owner. Assessment appeals are annually filed with the County

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Assessment Appeals Board (AAB) for a hearing and resolution. The resolution of an appeal may result in a reduction to the Assessor's original taxable value and a tax refund to the property owner. The reduction in future Project taxable values and the refund of taxes affects all taxing entities, including the Agency.

In prior years, the filing period for filing decline-in-value reviews was January 1 through December 31. However, effective January 1, 2010, the County Assessor has announced that decline-in-value requests will now begin on June 1 through November 30, which will mark the last day a property owner can file for an assessment appeal with the County.

As stated in Section 3.3 above, beginning in 2008 and continuing in 2010, the County Assessor has proactively reviewed the value of single-family residences and condominiums purchased between July 1, 2003 and June 30, 2009. Beginning March 1, 2010, the Assessor will identify which parcels are under review and by June 30, 2010, the Assessor anticipates that its review will be completed and the results will be posted for the FY 2010-11 secured tax roll. These County-wide reviews and temporary decline in value reductions may result in fewer individual assessment appeal filings of single-family residential and condominium property assessments.

5.1 Estimated Value Reductions

KMA researched the status of assessment appeals filed by property owners in the Project Area based upon the latest information available from the County AAB database as of January 19, 2010 representing appeal records as of the Fourth Quarter 2009. The County has informed KMA that this database does not include all appeals filed for FY 2009-10 due to a backlog of appeals being processed. A subsequent First Quarter 2010 release of the database will be issued in April 2010 and will likely include additional filings not appearing in the current database.

The Table 5 summary contains the application number, secured parcel number or unsecured bill number, tax roll year, applicant name, contested value, applicant opinion of value, assumed resolved value, the projected value reduction and the resolution assumption incorporated by KMA. Unless a particular pattern from parcel-specific prior year filings is seen, it is difficult to project with any degree of certainty which appeal filings would ultimately be withdrawn, denied, invalidated or revoked due to non-appearance. Therefore, the projected tax refunds and valuation reductions shown on Table 5 assume that all outstanding appeals will be subject to a reduction based upon one of several methods listed below:

1. If the parcel assessment was reduced by prior stipulation or Appeals Board action, the contested value was reduced to the reported resolved value.

2. If the applicant, in prior fiscal year appeal filings, withdrew an appeal or failed to appear for a scheduled hearing or was denied the appeal request by the Appeals

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Board, it was assumed that the same would occur with respect to the open appeals being filed by the applicant.

For all other appeal records, the following assumptions listed below were incorporated in the analysis.

1. For contested Secured property values a reduction to the greater of either the applicant’s opinion of value or 86% of the contested value was used (this 14% reduction was determined from the average percentage reduction experienced by a sampling of 425 stipulated secured appeals in the entire City from 2004 to 2008).

2. For contested Secured Possessory Interest property values a reduction to the greater of either the applicant’s opinion of value or 68% of the contested value was used (this 32% reduction was determined from the average percentage reduction experienced by a sampling of 45 stipulated possessory interest appeals in the entire City from 2004 to 2008).

3. For contested Unsecured property values a reduction to the greater of either the applicant’s opinion of value or 79% of the contested value was used (this 21% reduction was determined from the average percentage reduction experienced by a sampling of 161 stipulated unsecured appeals in the entire City from 2004 to 2008).

5.2 Estimated Fiscal Impact

Tax refunds payable from resolved appeals (to the extent applicants are not delinquent in their property tax payments) are deducted by the County Auditor-Controller from current year tax increment allocations. As shown on Table 5, if all of the open appeals were stipulated to the assumed values reflected on Table 5 (after the adjustments described in Section 5.1 above), then the projected tax refunds debited against FY 2009-10 revenues is estimated to be $8,922,000. The subsequent assessed value reductions to the future FY 2010- 11 tax roll amounts to a value reduction of $637.6-million for all open appeals. However, actual resolution of appeals are determined by a number of factors including vacancy and rental rates, circumstances of hardship and other real estate comparables, all of which are unique to the individual assessment. Therefore, actual reductions, if any, may be higher or lower than the reductions incorporated in the projection. An appeal may be withdrawn by the applicant, the Appeals Board may deny or modify the appeal at hearing or by stipulation, or the final value may be adjusted to an amount other than the stated opinion of value.

5.3 Actual Appeal Filing Outcomes

The intentional decision to assume that every identified appeal shown on Table 5 will result in an assessed value reduction and tax refund is a very conservative approach, given

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1003022.LGB:GSH:gbd 15610.018.001//03/23/10 that, historically, not every filed appeal has resulted in an assessed value reduction. To measure the historic patterns of success rates from appeals filed in the Project Area, KMA conducted a database extraction of assessment appeal records for the Project Area. A total of 678 records for the period ranging from FY 2004-05 to FY 2008-09 3 were identified. Based upon the distribution of appeals shown on the table below, historic statistical patterns between FY 2004-05 and FY 2008-09 indicate that 18% of all appeal filings were reduced or stipulated, while 65% of all filed appeals subsequently were withdrawn, denied, deemed invalid or the applicant fails to appear. Denied, Invalid, Stipulated or Withdrawn or Open Fiscal Year Total Filings Reduced Non-appearance Appeals

2009-10 86 --- 5 81 5.8% 94.2%

2008-09 334 71 198 65 21.3% 59.3% 19.5%

2007-08 87 11 58 18 12.6% 66.7% 20.7%

2006-07 81 9 57 15 11.1% 70.4% 18.5%

2005-06 71 16 49 6 22.5% 69% 8.5%

2004-05 105 18 82 5 17.1% 78.1% 4.8%

Combined 678 125 444 109 2004-05 – 2008-09 18.4% 65.5% 16.1%

5.4 Actual Overall Net Value Impact

A secondary historic analysis was conducted from the Project Area parcel extraction to determine the assessed valuation reduction impact experienced from all prior year secured and unsecured resolved filings (excluding any appeals with an “open” status designation, which therefore would exclude the FY 2009-10 filings). The average percentage reductions of assessed values resulting from stipulated appeals, combined with the unchanged assessed values from appeals withdrawn, denied, deemed invalid or not heard because of the non-appearance by the applicant, are reflected in the table below. The corresponding contested and resolved values 4 were then aggregated and the average percentage reductions were determined. The resulting historic percentage reductions experienced for the period analyzed are as follows:

3 For purposes of this statistical comparison, appeal records for FY 2009-10 are still in the midst of being reviewed and input by the County and therefore reflect an incomplete fiscal year of appeal comparables for inclusion in this statistical review. 4 The resolved value of appeals withdrawn, denied, invalid or a no show is the same as the value contested since no reduction was approved by the Assessment Appeals Board.

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Resolved Fiscal Resolved & Closed Contested Resolved % Year Records Records Value Value Reduction

Secured 2008-09 70 249 252,574,151 237,434,444 6.0% 2007-08 3 46 228,166,123 224,106,782 1.8% 2006-07 2 42 593,844,068 590,111,333 0.6% 2005-06 4 32 1,193,072,816 1,138,303,246 4.6% 2004-05 6 57 1,338,241,347 1,323,787,911 1.1% Combined 85 426 $3,605,898,505 $3,513,743,716 2.6%

Resolved Fiscal Resolved & Closed Contested Resolved % Year Records Records Value Value Reduction

Unsecured 2008-09 1 20 52,730,797 50,351,912 4.5% 2007-08 8 23 216,971,528 191,046,504 11.9% 2006-07 7 24 423,548,450 391,722,846 7.5% 2005-06 12 33 325,283,050 293,930,707 9.6% 2004-05 12 43 325,302,185 305,543,548 6.1% Combined 40 143 $1,343,836,010 $1,232,595,517 8.3%

For the historic period reviewed, properties that were the subject of assessment appeal filings in the Project Area only resulted in an overall average net secured value reduction of 2.6% and an overall average net unsecured value reduction of 8.3%. Therefore, the projected assessed value reductions and tax refunds estimated for this review and utilizing the approach discussed in Section 5.1 above, represents a worst case scenario for the Project Area.

6. TAX INCREMENT REVENUE PROJECTION

6.1 New Development Value Added

New developments occurring in the Project Area have been identified by Agency staff for inclusion in the tax increment revenue projection. The estimate of assessed values added to the Secured tax roll as a result of the completion of the identified new developments are presented below. The amount of new assessed values is assumed to be as of the January 1st lien date. The assessed valuations are based on cost estimates provided by Agency staff and only reflect significant Agency-identified projects nearing completion. Additional new development value could be added for small scale projects and transfers of ownership that may occur throughout the Project Area, but these are not assumed in the Table 6 tax increment revenue projection.

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Projected Value Tax Year Value Identified New Development Added May Appear

Weber Metals - Industrial Forge $4,086,000 FY 2012-13 ITS Rail Yard – Office 55,000,000 FY 2013-14 Secured Real Property Value Added $59,086,000

Weber Metals – The development of a 33,000-square-foot industrial building with an accompanying 3,500-square-foot grinding canopy and 1,000-square-foot storage canopy is underway at this 10-acre industrial site operated by Weber Metals. The construction of the foundation is underway and construction of the proposed improvements is pending approval by the City. KMA estimates that completion will occur in 2011.

ITS Rail Yard – As discussed in Section 3.9 above, the Port of Long Beach is undertaking an $800-million renovation of the ITS terminal located at Pier G. Currently under construction is a $55-million development of new administration and operations buildings. The multi-phased expansion and redevelopment plan will eventually include not only the administration and operations buildings, but the development of maintenance and repair facilities, the doubling of rail capacity, the filling-in of the north end of the pier and the repaving of over 200 acres of the terminal site. Completion of the administration and operations buildings is anticipated in early 2012 and the value of the completed development is expected to be incorporated into the Port’s rent adjustment with ITS.

6.2 Unitary Tax Revenue

Commencing in 1988-89, the reporting of public utility values assessed by the SBE was modified pursuant to legislation enacted in 1986 (Chapter 1457) and 1987 (Chapter 921). Previously, property assessed by the SBE was assessed State-wide and was allocated according to the location of individual components of a utility in a TRA. Hence, public utility values located within a project area were fully reflected in the Project Area’s annual taxable value. Since the County no longer included the taxable value of unitary properties as part of the reported taxable values in a redevelopment project, base year reductions were made equal to the amount of unitary taxable value that existed originally in the base year. The values of most public utility properties are now assessed as a single unit on a County-wide basis (referred to as unitary values). Railroad properties and utility owned parcels not included by SBE in the unitary assessment are referred to as Non-Unitary assessments.

Unitary tax revenues are distributed by the County in the following manner: (1) each taxing entity will receive the same amount as in the previous year plus an increase for inflation of up to 2%; (2) if utility tax revenues are insufficient to provide the same amount of revenue as in the previous year, allocation of the taxes would be reduced pro-rata County-wide; and (3) any increase in revenue above 2% would be allocated in the same proportion as the taxing entity's local secured taxable values are distributed to the local secured taxable values of the County. According to the tax remittance advice ledger of the County Auditor-Controller, the

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Agency is expected to be allocated $49,166 in Unitary tax revenues in FY 2009-10. For purposes of this projection, it is assumed that the Unitary tax revenues will stabilize at this amount thereafter.

6.3 Supplemental Assessments

Supplemental assessments are authorized under Chapter 498 of the Statutes of 1983, which provides that property may be reassessed upon the occurrence of a change of ownership or completion of new construction. The supplemental assessment reflects the difference between the new value and old value. Prior to the enactment of Chapter 498, property reassessments occurred only on the lien date next following the change in ownership or new construction. The supplemental tax (if there is a resulting increase in value) or the supplemental refund (if there is a resulting decrease in value) is determined by applying the current year tax rate to the amount of supplemental assessment and prorating the resulting tax based upon the number of months remaining in the current fiscal year and, in certain instances, in the forthcoming fiscal year.5

The tax revenues or refunds derived from supplemental assessments are allocated to redevelopment agencies on a monthly basis and incorporated in the tax payments prepared by the County Auditor-Controller. Future new developments or property transfers occurring in the Project Area could likely result in supplemental tax revenues being allocated to the Agency. However, due to their nature as one-time occurring revenues, supplemental taxes can be a relatively minimal revenue source to the Agency to the extent no new developments or transfers of ownership are occurring in the Project Area. In addition, pursuant to conversations with County Tax Collector staff, the receipt of supplemental taxes by the Agency can be delayed by as much as six to nine months after a property transfer or construction.

Supplemental taxes are prorated by the number of months that remain in the fiscal year. However, the City’s projection of future new developments occurring in the Project Area did not contain specific completion months, making an annual supplemental tax estimate difficult to project. Therefore, for purposes of the projection, KMA has not included any revenues in the tax increment projection resulting from future supplemental assessments. Supplemental tax revenues are subject to the annual tax increment revenue limits imposed by the Redevelopment Plan.

6.4 Tax Increment Revenue Projection

Property tax revenues in excess of the amount resulting from the valuation shown on the assessment roll for the base year value of the Project Area are referred to as tax increment. The base year for a project area represents the fiscal year in which taxable property was last equalized prior to the effective date of the ordinance approving the redevelopment plans for the respective redevelopment projects.

5 Two supplemental assessments would occur in instances where a change in ownership or a new construction occurs between the January 1 lien date and May 31st.

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The projections of tax increment revenues shown on Table 6 are based upon the FY 2009-10 assessed values and base year assessed values reported by the County Auditor- Controller. The projection is separated into Real Property value, Possessory Interest value and Personal Property value. No growth assumptions have been made to the projection on Table 6. Net tax increment revenue represents the gross tax increment revenue less the County's administrative fees, Housing Set Aside and statutory pass through payments.

6.5 SERAF

The California State Legislature adopted Assembly Bill 26-4x to take $1.7-billion from local redevelopment funds in FY 2009-10 and an additional $350-million in FY 2010-11, and shift the tax increment funds to the Supplemental Education Revenue Augmentation Fund (SERAF) to offset State deficits to K-12 schools and community college districts. According to Agency staff estimates (pursuant to estimates provided by the California Director of Finance) the Agency’s FY 2009-10 SERAF exposure is $29,516,137, from which Agency staff estimate that the Project Area would contribute $10,149,308. For FY 2010-11, the Agency’s exposure is $6,070,996, from which it is estimated that the Project Area would contribute $2,750,824. The potential SERAF payment contributions from the Project Area are determined at the discretion of the Agency Board and subject to modification. For purposes of this analysis, the Project Area’s current SERAF exposure each year has been included in the Table 6 revenue projection.

A lawsuit filed with the Sacramento Superior Court by the California Redevelopment Association has challenged the constitutionality of AB 26-4x and is awaiting a decision. Until a decision or injunction to AB 26-4x is handed down, the Agency has a potential exposure to the SERAF demand by the State. If the Agency is required to make the FY 2009- 10 SERAF payment, then the funding would come from a borrowing of the FY 2009-10 housing set aside and any balance may be funded from a borrowing against the Housing Fund itself. The amount borrowed from the FY 2009-10 housing set aside and any Housing Fund balance would have to be repaid, on a basis subordinate to Agency debt obligations, before FY 2014-15 as allowed under AB 26-4x. The borrowing and repayment assumptions anticipated under such a scenario are reflected on Table 6. Future year demands from the State are not assumed in the projection.

7. CAVEATS

The projection reflects assumptions based on KMA's understanding of the assessment and tax apportionment procedures employed by the County. The County procedures are subject to change as a reflection of policy revisions or administrative, regulatory or legislative mandate. While we believe our estimates to be reasonable, taxable values resulting from actual appraisals may vary from the amounts assumed in the projections. Assumptions have also been made that Unitary tax revenues will continue to be allocated in the manner discussed herein and that legislatively-mandated payments to the State will not be required in future fiscal

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No assurances are provided by KMA as to the certainty of the projected tax increment revenues shown on Table 6. Actual revenues may be higher or lower than what has been projected and are subject to valuation changes resulting from new developments or transfers of ownership not specifically identified herein, actual resolution of outstanding appeals, future filing of appeals, changes in assessor valuation standards, or the non-payment of taxes due. The accuracy or completeness of assessment appeals identified in the attached table are based solely upon information provided by the County Assessor’s office as of the date of the original review of said data by KMA.

Attachment

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1003022.LGB:GSH:gbd 15610.018.001//03/23/10 Table 1 Historic Project Area Assessed Values North Long Beach Redevelopment Project Long Beach Redevelopment Agency

Average Annual 2004-05 2005-06 2006-07 2007-08 2008-09 (1) 2009-10 (2) Growth

I. Secured: Land 2,524,169,220 2,890,426,504 3,326,838,516 3,646,040,113 4,081,365,523 3,829,774,674 8.70% Improvements 2,300,450,158 2,542,941,693 2,656,723,391 2,880,962,435 2,955,067,946 2,881,715,262 4.61% Personal Property 34,465,843 33,324,556 36,521,522 37,027,528 30,120,743 35,180,424 0.41% Less Exemptions 112,835,950 112,327,369 118,656,467 111,579,622 129,757,275 130,318,116 2.92% Total Secured 4,746,249,271 5,354,365,384 5,901,426,962 6,452,450,454 6,936,796,937 6,616,352,244 6.87%

II. Utilities: Land 1,134,421 1,131,969 1,108,542 898,796 898,796 898,811 -4.55% Improvements 189,020 187,419 169,041 2,880,671 2,880,671 2,880,671 72.42% Personal Property 101,581 100,538 90,435 0 0 0 -100.00% Less Exemptions 0000000.00% Total Utilities 1,425,022 1,419,926 1,368,018 3,779,467 3,779,467 3,779,482 21.54%

III. Unsecured: Land 0000000.00% Improvements 373,634,635 492,408,281 484,266,496 562,867,299 444,675,175 429,843,553 2.84% Personal Property 422,272,574 476,160,722 501,312,718 509,428,294 483,596,204 478,001,782 2.51% Less Exemptions 3,086,150 4,521,932 3,886,406 4,081,060 16,041,598 21,979,405 48.09% Total Unsecured 792,821,059 964,047,071 981,692,808 1,068,214,533 912,229,781 885,865,930 2.24%

IV. Project Value: Land 2,525,303,641 2,891,558,473 3,327,947,058 3,646,938,909 4,082,264,319 3,830,673,485 8.69% Improvements 2,674,273,813 3,035,537,393 3,141,158,928 3,446,710,405 3,402,623,792 3,314,439,486 4.39% Personal Property 456,839,998 509,585,816 537,924,675 546,455,822 513,716,947 513,182,206 2.35% Less Exemptions 115,922,100 116,849,301 122,542,873 115,660,682 145,798,873 152,297,521 5.61% Total Project 5,540,495,352 6,319,832,381 6,884,487,788 7,524,444,454 7,852,806,185 7,505,997,656 6.26%

(1) Adjusted to remove overstated Possessory Interest value misplacement of $170,030,923 assessed to parcel 8940-759-594 (Chevron USA Inc). (2) Adjusted to remove overstated Possessory Interest value misplacement of $169,396,572 assessed to parcel 8940-759-594 (Chevron USA Inc).

Source: Los Angeles County Auditor Controller Prepared by Keyser Marston Associates, Inc. Filename: NO_Hist_2010-01-29.xls: HIST: 2/16/2010: GSH Table 2 Values by Use North Redevelopment Project Area Long Beach Redevelopment Agency

Use Parcels Total AV Percentage 1 Single Family 11,129 2,174,089,507 28.96% 2 Multi-Family 3,205 1,179,434,690 15.71% 3 Condominiums 814 155,386,951 2.07% 4 Mobile Home Parks 12 36,216,374 0.48% 5 Vacant Residential 192 6,761,362 0.09% 6 Commercial 1,278 803,736,648 10.71% 7 Industrial 384 686,629,042 9.15% 8 Agricultural 3 3,713,042 0.05% 9 Recreational 16 43,004,114 0.57% 10 Institutional 79 40,443,765 0.54% 1 11 Miscellaneous Uses 288 659,558 0.01% 12 Possessory Interest 70 1,473,012,632 19.62% 13 Mineral Rights 2 1,519,347 0.02% 14 Other Assessments 2 509 11,745,212 0.16% 15 State Public Utility -- 3,779,482 0.05% 16 Unsecured -- 885,865,930 11.80% 17 Total AV 17,981 7,505,997,656 100.0%

Single Family Multi-Family 29.0% 15.7% Condominiums 2.1% Mobile Home Parks 0.5% Vacant Residential 0.1%

Commercial 10.7% Unsecured 11.8%

State Public Utility Industrial 0.1% 9.1% Other All Cross Reference 1.2% 19.8%

County Assessor's $169.4 million possessory interest value error to Chevron USA Inc. removed from reported value. (1) Miscellaneous Uses include rights-of-way and easements for mining, water rights, pipe lines or canals. (2) Other Assessments include penalty assessments identified on the Assessor's Cross Reference Tax Roll.

Source: Los Angeles County Assessor Prepared by: Keyser Marston Associates, Inc. Filename: Ten_North_0910_2010-01-29.xls: T2 Use: 2/16/2010: nym Table 3 Ten Largest Assessees - FY 2009-10 North Redevelopment Project Area Long Beach Redevelopment Agency Aggregate % of Total % of Total Potential Appeal Refund Exposure No. of 2009-10 Project Increment Based on Applicant 2009-10 Opinion of Value Assessee Name Tax Roll Parcels Value Value (1) Value (2) or Prior Year Opinion of Value

1 Total Terminals Possessory Interest 2 526,953,699 7.02% 11.95% (2,270,000) No 2009-10 appeal reported (3)

2 International Transportation Services Possessory Interest 1 344,376,120 4.59% 7.81% (1,722,000) Based on 2009-10 opinion (4) Unsecured 1 116,596,200 1.55% 2.64% (583,000) Based on 2009-10 opinion (5) Subtotal 2 460,972,320 6.14% 10.45% (2,305,000)

3 Pacific Maritime Services LLC Possessory Interest 1 297,800,000 3.97% 6.75% (1,322,000) No 2009-10 appeal reported (6) Unsecured 1 100,651,982 1.34% 2.28% - Subtotal 3 398,451,982 5.31% 9.04% (1,322,000) 4 Hughes Aircraft Co Secured 3 120,774,533 1.61% 2.74% - 5Toyota Motors/ TABC Inc./Catalytic Secured 2 21,920,031 0.29% 0.50% - Component Products Inc. Unsecured 8 94,306,252 1.26% 2.14% Subtotal 5 116,226,283 1.55% 2.64% 6 Long Beach Container Terminal Possessory Interest 1 38,249,000 0.51% 0.87% - Unsecured 1 62,710,525 0.84% 1.42% Subtotal 6 100,959,525 1.35% 2.29% 7 ARCO Terminal Services Corp Secured 2 61,583,820 0.82% 1.40% - Unsecured 1 8,487 0.00% 0.00% Subtotal 7 61,592,307 0.82% 1.40% 8 Oxbow Carbon and Minerals LLC Possessory Interest 6 33,905,785 0.45% 0.77% - Unsecured 4 14,832,684 0.20% 0.34% Subtotal 8 48,738,469 0.65% 1.11% 9 Carnival Corp Possessory Interest 3 45,104,283 0.60% 1.02% - Unsecured 1 1,432,704 0.02% 0.03% Subtotal 9 46,536,987 0.62% 1.06%

10 Metropolitan Stevedore Co. Inc. Possessory Interest 3 41,324,778 0.55% 0.94% (283,000) No 2009-10 appeal reported (7) Unsecured 1 5,150,749 0.07% 0.12% (37,000) No 2009-10 appeal reported (8) Subtotal 10 46,475,527 0.62% 1.05% (320,000) TOTALS 1,927,681,632 25.68% 43.72%

Source: Los Angeles County Assessment Appeals Database as of 01-19-2010 Prepared by: Keyser Marston Associates, Inc. Filename: Ten_North_0910_2010-01-29.xls: T1 TT: 2/16/2010: nym: Page 1 of 2 Footnotes to Table 3:

(1) Based upon reported FY 2009-10 Project Area secured and unsecured assessed value of $7,505,997,656. County Assessor's $169.4 million possessory interest value error to Chevron USA Inc. removed from reported value.

(2) Based upon reported FY 2009-10 Project Area incremental assessed value of $4,409,602,329.

(3) No appeal reported for FY 2009-10 and refund amount is shown for comparative purposes only to the extent the AAB subsequently identifies a 2009-10 filing in the future. Estimated tax refund exposure from prior year filings on APN 8940-432-040 for FY 2007-08 is $1.9 million and FY 2008-09 is $2.1 million if applicant opinion of value prevails.

(4) Appeal filed for FY 2009-10 on APN 8940-432-002. Tax refund exposure for FY 2007-08 is $957,000 and for FY 2008-09 is $1.7 million if applicant opinion of value prevails.

(5) Appeal filed for FY 2009-10 Unsecured assessments. Tax refund exposure for FY 2007-08 is $506,000 and for FY 2008-09 is $600,000 if applicant opinion of value prevails.

(6) No appeal reported for FY 2009-10 and refund amount is shown for comparative purposes only to the extent the AAB subsequently identifies a 2009-10 filing in the future. Estimated tax refund exposure from prior year filings on APN 8940-432-031 for FY 2005-06 is $1.9 million, for FY 2006-07 is $1.6 million, for FY 2007-08 is $1.6 million, and for FY 2008-09 is $1.7 million if applicant opinion of value prevails.

(7) No appeal reported for FY 2009-10 and refund amount is shown for comparative purposes only to the extent the AAB subsequently identifies a 2009-10 filing in the future. Estimated tax refund exposure from prior year filings on APN 8940-432-003, et.al., for FY 2006-07 is $333,000, for FY 2007-08 is $206,000, for FY 2008-09 is $297,000 if applicant opinion of value prevails.

(8) No appeal reported for FY 2009-10 and refund amount is shown for comparative purposes only to the extent the AAB subsequently identifies a 2009-10 filing in the future. Estimated tax refund exposure from prior year filings for the Unsecured assessments for FY 2006-07 is $41,000, for FY 2007-08 is $38,000, and for FY 2008-09 is $137,000 if applicant opinion of value prevails.

Source: Los Angeles County Assessment Appeals Database as of 01-19-2010 Prepared by: Keyser Marston Associates, Inc. Filename: Ten_North_0910_2010-01-29.xls: T1 TT: 2/16/2010: nym: Page 2 of 2 Table 4 Historic Receipts to Levy Analysis North Long Beach Redevelopment Project Long Beach Redevelopment Agency

2008-09 (4) 2007-08 2006-07 2005-06 2004-05 I. Reported Assessed Value (1): Secured 6,936,796,937 6,452,450,454 5,901,426,962 5,354,365,384 4,746,249,271 State Assessed 3,779,467 3,779,467 1,368,018 1,419,926 1,425,022 Unsecured 912,229,781 1,068,214,533 981,692,808 964,047,071 792,821,059 II. Total Project Value 7,852,806,185 7,524,444,454 6,884,487,788 6,319,832,381 5,540,495,352 Less Base Value (1) 3,103,980,865 3,130,192,950 3,104,508,715 3,104,508,715 3,104,508,715 Incremental Value 4,748,825,320 4,394,251,504 3,779,979,073 3,215,323,666 2,435,986,637 Averaged Tax Rate 1.0054066% 1.0054066% 1.0054066% 1.0060376% 1.0069661% III. Gross Tax Increment 47,745,005 44,180,096 38,004,161 32,347,364 24,529,560 Unitary Tax Revenue 46,888 0000 Total Computed Levy 47,791,893 44,180,096 38,004,161 32,347,364 24,529,560

IV. Tax Allocation (2): Secured Tax Increment 42,268,629 35,313,129 30,623,803 25,902,799 20,156,141 Unsecured Tax Increment 4,786,065 6,470,374 4,561,491 5,503,477 3,765,507 Unitary Tax Revenue 46,888 0000 Total Annual Tax Increment 47,101,582 41,783,503 35,185,294 31,406,277 23,921,648 Variance From Computed Levy (690,312) (2,396,593) (2,818,867) (941,087) (607,912)

V. % Collected (Current Levy Only) 98.56% 94.58% 92.58% 97.09% 97.52%

VI. Total Allocation per County (3): 51,839,624 40,450,589 40,118,177 38,104,748 30,615,305 % Collected (All Allocations) 108.47% 91.56% 105.56% 117.80% 124.81%

(1) Amounts shown are as reported by the Los Angeles County Auditor-Controller in August of each fiscal year. (2) Source: County Auditor-Controller year-end remittance advice summaries. Amounts represent the annual tax increment revenues allocable to the Agency and do not include administrative fees, supplemental taxes, prior year redemption payments, tax refunds, adjustments by the County Assessor and pass through payments. (3) Total Allocations reflect all tax increment revenues allocated for the close of each fiscal year, as reported by the County Auditor-Controller. Amounts include supplemental taxes, prior year redemptions payments, tax refunds, roll corrections and administrative charges and net of County-administered pass throughs. (4) Adjusted to remove overstated Possessory Interest value misplacement of $170,030,923 assessed to parcel 8940-759-594 (Chevron USA Inc).

Source: Los Angeles County Auditor Controller year-end Remittance Advice summaries Prepared by Keyser Marston Associates, Inc. Filename: NO_Hist_2010-01-29.xls: LEVY: 2/16/2010: GSH Table 5 Projected Assessment Appeal Impact North Long Beach Project Area Long Beach Redevelopment Agency

Applicant Appeal APN or Bill Total Contested Opinion of Estimated Projected Value Number Number FY Applicant Name Value Value Resolved Value Variance KMA Assumption

SECURED APPEALS: 1 2008-018983 7101-023-010 08 LUIS H LICEA 613,836 - 450,000 (163,836) RESOLVED: Assessor reduced (1) 2 2008-016920 7113-001-027 08 CIVIGENICS, INC. 8,450,000 2,240,628 7,250,787 (1,199,213) Decreased per comparable reductions in past appeals. (1) 3 2009-004986 7113-005-050 09 ALFONSO REYES 450,000 449,955 449,955 (45) Decreased per comparable reductions in past appeals. (1) 4 2008-033974 7113-007-019 08 MASTER PROCESSING CENTER (BANDAG) 5,511,109 4,000,000 4,728,980 (782,129) Decreased per comparable reductions in past appeals. (1) 5 2008-033974 7113-007-020 08 MASTER PROCESSING CENTER (BANDAG) 16,320,000 12,000,000 14,003,888 (2,316,112) Decreased per comparable reductions in past appeals. (1) 6 2008-029242 7113-013-034 08 EL CAMINO REALTY INC. G& I GOODMAN PROP LLC 3,230,442 1,939,000 2,771,982 (458,460) Decreased per comparable reductions in past appeals. 7 2009-012747 7113-013-034 09 EL CAMINO REALTY INC./G&I GOODMAN PROP INC. 3,295,050 1,318,000 2,827,421 (467,629) Decreased per comparable reductions in past appeals. (1) 8 2008-029242 7113-013-038 08 EL CAMINO REALTY INC. G& I GOODMAN PROP LLC 1,477,368 886,000 1,267,702 (209,666) Decreased per comparable reductions in past appeals. 9 2009-012747 7113-013-038 09 EL CAMINO REALTY INC./G&I GOODMAN PROP INC. 1,506,915 603,000 1,293,056 (213,859) Decreased per comparable reductions in past appeals. (1) 10 2008-006874 7113-016-010 08 THEANY AND JASMINE INN 554,800 410,000 520,000 (34,800) RESOLVED: Assessor reduced (1) 11 2009-010308 7114-004-035 09 CATHERINE S. DICKERSON 208,914 170,000 179,265 (29,649) Decreased per comparable reductions in past appeals. (1) 12 2009-008022 7114-005-041 09 THERESA D. WOODS 288,000 83,100 247,127 (40,873) Decreased per comparable reductions in past appeals. (1) 13 2008-023557 7114-010-046 08 IRENE MADRIGAL 529,380 - 385,000 (144,380) RESOLVED: Assessor reduced (1) 14 2008-023556 7114-015-054 08 ELOY CABALLERO 391,700 - 340,000 (51,700) RESOLVED: Assessor reduced (1) 15 2008-013022 7114-015-057 08 ROSA GAYTAN 424,822 - 385,000 (39,822) RESOLVED: Assessor reduced (1) 16 2008-013023 7114-022-014 08 JUDITH BOWEN 387,500 - 295,000 (92,500) RESOLVED: Assessor reduced (1) 17 2009-005299 7115-006-032 09 PETER KIM 860,000 - 737,950 (122,050) Decreased per comparable reductions in past appeals. (1) 18 2009-005171 7115-007-017 09 VALENTINA A. & LEONCIO URBINA 316,095 - 271,235 (44,860) Decreased per comparable reductions in past appeals. (1) 19 2008-016849 7115-014-008 08 DORA MUNOZ RIVERA 551,412 492,452 410,000 (141,412) RESOLVED: Assessor reduced (1) 20 2008-023555 7115-017-022 08 ROATHSOPEARY RUN 395,298 - 360,000 (35,298) RESOLVED: Assessor reduced (1) 21 2008-023554 7115-020-044 08 JOSE L. & MARIA T. BRIONES 408,563 - 360,000 (48,563) RESOLVED: Assessor reduced (1) 22 2008-007545 7115-030-009 08 THERESA MORRISON 232,896 162,900 199,844 (33,052) Decreased per comparable reductions in past appeals. (1) 23 2008-036645 7115-030-025 08 BLANCA NAVA 445,300 300,000 382,104 (63,196) Decreased per comparable reductions in past appeals. (1) 24 2009-009635 7116-004-015 09 CRM INVESTMENT LLC 2,543,714 1,812,438 2,182,714 (361,000) Decreased per comparable reductions in past appeals. (1) 25 2008-026570 7116-013-046 08 PAUL MILLER 445,000 415,000 315,000 (130,000) RESOLVED: Assessor reduced 26 2009-013714 7116-013-046 09 PAUL MILLER 303,800 190,000 260,685 (43,115) Decreased per comparable reductions in past appeals. (1) 27 2008-014559 7118-003-022 08 ALFONSO & LINDA CAZARES 486,540 - 360,000 (126,540) RESOLVED: Assessor reduced (1) 28 2008-011792 7118-011-020 08 GRAHAM A. BEST 425,542 - 370,000 (55,542) RESOLVED: Assessor reduced (1) 29 2008-013012 7118-014-002 08 PEDRO OVIEDO 465,000 - 414,000 (51,000) RESOLVED: Assessor reduced (1) 30 2008-028687 7118-019-015 08 JOSE & ESCOBAR ROSARIO NAVARRO 383,600 - 364,000 (19,600) RESOLVED: Assessor reduced (1) 31 2009-008912 7118-021-025 09 SHERWIN VIGILANT 298,000 268,000 268,000 (30,000) Decreased per comparable reductions in past appeals. (1) 32 2009-005375 7119-001-011 09 PETER KIM 835,000 - 716,498 (118,502) Decreased per comparable reductions in past appeals. (1) 33 2009-000314 7119-001-016 09 SEO FAMILY TRUST 2,754,000 - 2,363,156 (390,844) Decreased per comparable reductions in past appeals. (1) 34 2008-023442 7119-008-008 08 VICTOR J. RODRIGUEZ 398,200 - 370,000 (28,200) RESOLVED: Assessor reduced (1) 35 2008-007307 7119-012-035 08 ROBERT & ISABELITA EDRALIN 432,600 - 330,000 (102,600) RESOLVED: Assessor reduced (1) 36 2008-023443 7119-014-012 08 MANOLO GONZALEZ 352,700 - 315,000 (37,700) RESOLVED: Assessor reduced (1) 37 2009-007926 7119-015-018 09 DAVID HOLSTEIN 400,463 283,000 343,630 (56,833) Decreased per comparable reductions in past appeals. (1) 38 2008-034432 7119-018-031 08 JDL SOUTH STREET LLC 11,444,400 8,500,000 8,300,000 (3,144,400) RESOLVED: Assessor reduced (1) 39 2009-012748 7119-019-005 09 STOR-IT LONG BEACH LLC 4,948,890 1,980,000 4,948,890 - Assumed withdrawn as in 2008. (1) 40 2008-013478 7120-006-005 08 PRITAM S. MATHARU 408,000 275,000 286,108 (121,892) RESOLVED: Reduced (1) Source: Los Angeles County Assessment Appeals Board data as of 01-19-2010. Prepared by: Keyser Marston Associates, Inc. Filename: LB North 2009 Appeals 4Q 1-29-10.xls:Open:NYM: Page 1 of 7 Table 5 Projected Assessment Appeal Impact North Long Beach Project Area Long Beach Redevelopment Agency

Applicant Appeal APN or Bill Total Contested Opinion of Estimated Projected Value Number Number FY Applicant Name Value Value Resolved Value Variance KMA Assumption

41 2009-007206 7120-013-013 09 CHRISTOPHER M. GONZALEZ 258,673 200,000 221,962 (36,711) Decreased per comparable reductions in past appeals. (1) 42 2009-009958 7120-014-022 09 DEMESNE DEVELOPMENT CO. 75,914 - 65,140 (10,774) Decreased per comparable reductions in past appeals. (1) 43 2009-009958 7120-014-023 09 DEMESNE DEVELOPMENT CO. 686,948 - 589,457 (97,491) Decreased per comparable reductions in past appeals. (1) 44 2008-007308 7120-016-029 08 ELIAGH KINARD 411,322 - 335,000 (76,322) RESOLVED: Assessor reduced (1) 45 2008-009103 7120-018-033 08 RAMESH PATEL 2,366,910 - 1,800,000 (566,910) RESOLVED: Assessor reduced 46 2009-007072 7120-018-033 09 RAMESH PATEL 2,414,248 - 1,836,000 (578,248) Assumed 2% annual increase over 2008 reduced AV. (1) 47 2008-000938 7120-024-036 08 ERIC HAN 509,795 - 420,000 (89,795) RESOLVED: Assessor reduced (1) 48 2008-021981 7120-024-049 08 EDGAR A. CORDOVA 456,318 - 425,000 (31,318) RESOLVED: Assessor reduced (1) 49 2009-011143 7121-007-001 09 5901 DOWNEY AVENUE LLC. 2,207,312 1,500,000 2,207,312 - Assumed withdrawn as in 2007. (1) 50 2008-024654 7123-004-018 08 MARIO J. MARTINEZ 459,000 - 380,000 (79,000) RESOLVED: Assessor reduced (1) 51 2008-014561 7123-009-012 08 BUNTA OUN 469,200 - 390,000 (79,200) RESOLVED: Assessor reduced (1) 52 2009-010619 7123-013-024 09 MARIO MELBOURNE 245,603 198,000 210,747 (34,856) Decreased per comparable reductions in past appeals. (1) 53 2008-007309 7124-014-016 08 FILEMON CARDOSO 429,245 - 330,000 (99,245) RESOLVED: Assessor reduced (1) 54 2009-001692 7124-017-015 09 EUGENE RAWLS 703,579 - 603,728 (99,851) Decreased per comparable reductions in past appeals. (1) 55 2008-024648 7124-023-004 08 ALEJANDRO & REYNA JIMENEZ 429,500 - 332,000 (97,500) RESOLVED: Assessor reduced (1) 56 2008-030569 7124-031-021 08 MIGUEL BLASS 382,033 233,041 287,000 (95,033) RESOLVED: Assessor reduced (1) 57 2009-009283 7125-007-008 09 DONALD E. & GLORIA A. CABRAL 145,008 101,504 124,429 (20,579) Decreased per comparable reductions in past appeals. (1) 58 2008-040971 7125-013-018 08 GUADALUPE ROBLES 416,000 300,000 356,962 (59,038) Decreased per comparable reductions in past appeals. (1) 59 2008-024646 7125-027-006 08 RAFAEL & MARIA V. GOMEZ 408,000 - 386,000 (22,000) RESOLVED: Assessor reduced (1) 60 2009-000716 7125-030-040 09 SIMON R. KINGS 1,618,341 1,200,000 1,388,668 (229,673) Decreased per comparable reductions in past appeals. (1) 61 2008-007310 7125-032-002 08 PEDRO A. MARTINEZ 426,600 - 400,000 (26,600) RESOLVED: Assessor reduced (1) 62 2008-024645 7125-032-028 08 PERFECTO RODRIGUEZ 416,055 - 380,000 (36,055) RESOLVED: Assessor reduced (1) 63 2008-000257 7126-001-022 08 CHRIS HOLMES 472,236 - 390,000 (82,236) RESOLVED: Assessor reduced (1) 64 2008-024644 7126-016-041 08 LEOVIGILDO MACIAS 250,000 - 209,000 (41,000) RESOLVED: Assessor reduced (1) 65 2009-006037 7126-017-001 09 TAREK RAMANDAN 500,000 - 429,041 (70,959) Decreased per comparable reductions in past appeals. (1) 66 2009-006037 7126-017-002 09 TAREK RAMANDAN 100,000 - 85,808 (14,192) Decreased per comparable reductions in past appeals. (1) 67 2009-006037 7126-017-003 09 TAREK RAMANDAN 210,000 - 180,197 (29,803) Decreased per comparable reductions in past appeals. (1) 68 2009-006037 7126-017-004 09 TAREK RAMANDAN 90,000 - 77,227 (12,773) Decreased per comparable reductions in past appeals. (1) 69 2009-006037 7126-017-005 09 TAREK RAMANDAN 100,000 - 85,808 (14,192) Decreased per comparable reductions in past appeals. (1) 70 2009-003833 7126-018-022 09 NOV YOUNG 371,040 - 318,383 (52,657) Decreased per comparable reductions in past appeals. (1) 71 2008-033925 7126-034-008 08 EMILIA LARA 400,000 300,000 343,233 (56,767) Decreased per comparable reductions in past appeals. (1) 72 2009-004703 7126-034-023 09 MARCUS LYNCH 663,494 - 569,332 (94,162) Decreased per comparable reductions in past appeals. (1) 73 2008-007311 7127-004-031 08 JAIME & MARIA RODRIGUEZ 379,910 - 310,000 (69,910) RESOLVED: Assessor reduced (1) 74 2009-006074 7127-005-009 09 KIMSAN HIN 220,000 214,000 214,000 (6,000) Decreased per comparable reductions in past appeals. (1) 75 2009-010474 7127-009-028 09 THOMAS V. JONES 749,087 575,000 642,778 (106,309) Decreased per comparable reductions in past appeals. (1) 76 2008-037329 7127-016-011 08 LILEITH BROWN-SWABY 230,000 341,000 230,000 - Assumed withdrawn as in previous 2008 Appeal. (1) 77 2008-035940 7127-018-004 08 GRANDPOINT LLC 515,100 300,000 450,000 (65,100) RESOLVED: Assessor reduced (1) 78 2008-006557 7127-024-032 08 DANIEL H. DAHAN 757,701 520,000 710,000 (47,701) RESOLVED: Assessor reduced (1) 79 2008-027768 7127-028-025 08 SAMANTHA KHUTH 679,080 520,000 560,000 (119,080) RESOLVED: Assessor reduced (1) 80 2008-023445 7128-004-029 08 FREDDY BARBA 448,800 - 340,000 (108,800) RESOLVED: Assessor reduced (1) 81 2008-024643 7128-005-014 08 FRANCISCO PULIDO 359,000 - 320,000 (39,000) RESOLVED: Assessor reduced (1) Source: Los Angeles County Assessment Appeals Board data as of 01-19-2010. Prepared by: Keyser Marston Associates, Inc. Filename: LB North 2009 Appeals 4Q 1-29-10.xls:Open:NYM: Page 2 of 7 Table 5 Projected Assessment Appeal Impact North Long Beach Project Area Long Beach Redevelopment Agency

Applicant Appeal APN or Bill Total Contested Opinion of Estimated Projected Value Number Number FY Applicant Name Value Value Resolved Value Variance KMA Assumption

82 2008-003889 7128-008-006 08 JACQUELINE M. LORD 436,968 - 374,954 (62,014) Decreased per comparable reductions in past appeals. 83 2009-000067 7128-008-006 09 JACQUELINE LORD 445,707 - 382,453 (63,254) Decreased per comparable reductions in past appeals. (1) 84 2008-003889 7128-008-007 08 JACQUELINE M. LORD 608,634 - 522,257 (86,377) Decreased per comparable reductions in past appeals. 85 2009-000067 7128-008-007 09 JACQUELINE LORD 620,806 - 532,702 (88,104) Decreased per comparable reductions in past appeals. (1) 86 2008-003889 7128-008-022 08 JACQUELINE M. LORD 297,840 - 255,571 (42,269) Decreased per comparable reductions in past appeals. 87 2009-000066 7128-008-022 09 JACQUELINE M. LORD 303,796 - 260,682 (43,114) Decreased per comparable reductions in past appeals. (1) 88 2008-023446 7128-013-026 08 MAURICE & TREDENA REYNOLDS 492,800 - 380,000 (112,800) RESOLVED: Assessor reduced (1) 89 2009-008830 7128-021-032 09 ANDREW KALMAN 474,751 308,590 407,375 (67,376) Decreased per comparable reductions in past appeals. (1) 90 2008-029021 7128-026-009 08 ROLAND DOON 487,100 - 400,000 (87,100) RESOLVED: Assessor reduced (1) 91 2008-013011 7128-028-004 08 BERNARDO S & CAROLINE CHAVEZ 399,400 - 350,000 (49,400) RESOLVED: Assessor reduced (1) 92 2008-000934 7128-028-007 08 TENORIO GRAGERA 560,030 - 450,000 (110,030) RESOLVED: Assessor reduced (1) 93 2008-021281 7128-029-035 08 PIONEER GROUP, LLC 11,376,149 6,825,000 10,000,000 (1,376,149) RESOLVED: Assessor reduced 94 2009-012749 7128-029-035 09 PIONEER GROUP LLC 11,614,771 4,642,000 10,200,000 (1,414,771) Assumed 2% annual increase over 2008 reduced AV. (1) 95 2008-000120 7129-006-012 08 CARLOS E. DIAZ 433,552 - 372,023 (61,529) Decreased per comparable reductions in past appeals. (1) 96 2008-008776 7129-013-010 08 KIN S. & PHI S. LAM 424,000 - 410,000 (14,000) RESOLVED: Assessor reduced (1) 97 2008-024311 7130-012-012 08 JORGE & JUANA CERVANTES 380,345 - 340,000 (40,345) RESOLVED: Assessor reduced (1) 98 2008-033930 7130-012-034 08 AYENI OSITA 488,987 340,006 419,591 (69,396) Decreased per comparable reductions in past appeals. (1) 99 2008-024310 7130-013-011 08 ANNA H. LAM 519,991 - 430,000 (89,991) RESOLVED: Assessor reduced (1) 100 2008-015213 7130-013-012 08 ANGELA & JESUS RUBIO 360,217 - 340,000 (20,217) RESOLVED: Assessor reduced (1) 101 2009-006849 7130-016-016 09 PLEASANTVILLE 27, LLC 791,622 600,000 679,276 (112,346) Decreased per comparable reductions in past appeals. (1) 102 2009-006850 7130-016-017 09 PLEASANTVILLE 27, LLC 791,622 600,000 679,276 (112,346) Decreased per comparable reductions in past appeals. (1) 103 2009-006875 7130-016-018 09 PLEASANTVILLE 27, LLC 790,519 600,000 678,330 (112,189) Decreased per comparable reductions in past appeals. (1) 104 2008-034084 7130-022-007 08 DOUGLAS D. SPAHR 327,910 171,453 210,000 (117,910) RESOLVED: Reduced (1) 105 2008-024309 7130-022-015 08 ARNEL E. MOVILLA 400,900 - 395,000 (5,900) RESOLVED: Reduced 106 2009-007232 7130-022-015 09 ARNEL E. MOVILLA 281,700 - 281,700 - Assumed denied. Value was reduced in 2008. (1) 107 2009-003048 7131-015-032 09 AFIMUAO T. LAFOLAVEA 279,600 - 239,920 (39,680) Decreased per comparable reductions in past appeals. (1) 108 2008-005976 7131-017-020 08 JACQUELINE TR THOMAS 388,100 - 350,000 (38,100) RESOLVED: Reduced (1) 109 2009-003834 7131-025-019 09 ROBERT L. & ALFIYA V. ALVIES 276,961 - 237,655 (39,306) Decreased per comparable reductions in past appeals. (1) 110 2008-012682 7132-009-016 08 LAURA CARRILLO 375,000 - 350,000 (25,000) RESOLVED: Assessor reduced (1) 111 2008-012684 7132-021-004 08 SALVADOR PONCE 390,000 - 375,000 (15,000) RESOLVED: Assessor reduced (1) 112 2008-024659 7133-007-003 08 ALISON L. WILLIAMS 331,200 - 310,000 (21,200) RESOLVED: Reduced (1) 113 2009-012750 7133-013-004 09 DIVERSIFIED INCOME PROPERTIES, L.P. 233,975 112,000 233,975 - Assumed withdrawn as in 2008. (1) 114 2009-012750 7133-013-023 09 DIVERSIFIED INCOME PROPERTIES, L.P. 1,429,169 572,000 1,429,169 - Assumed withdrawn as in 2008. (1) 115 2009-012751 7133-032-023 09 SATISH R. BHAGAT 128,993 51,000 128,993 - Assumed withdrawn as in 2008. (1) 116 2009-012751 7133-032-024 09 SATISH R. BHAGAT 322,502 129,000 322,502 - Assumed withdrawn as in 2008. (1) 117 2009-013678 7138-016-018 09 CARSON LB, LLC - - - - Decreased per comparable reductions in past appeals. (1) 118 2009-013678 7138-016-019 09 CARSON LB, LLC - - - - Decreased per comparable reductions in past appeals. (1) 119 2009-013678 7138-016-020 09 CARSON LB, LLC - - - - Decreased per comparable reductions in past appeals. (1) 120 2009-013678 7138-016-021 09 CARSON LB, LLC - - - - Decreased per comparable reductions in past appeals. (1) 121 2009-008315 7139-011-026 09 KNOLLS MEDICAL GROUP LLC 2,476,152 - 2,124,740 (351,412) Decreased per comparable reductions in past appeals. (1) 122 2009-013148 7145-014-016 09 SERVANDO OROZCO 1,040,400 - 892,748 (147,652) Decreased per comparable reductions in past appeals. (1) Source: Los Angeles County Assessment Appeals Board data as of 01-19-2010. Prepared by: Keyser Marston Associates, Inc. Filename: LB North 2009 Appeals 4Q 1-29-10.xls:Open:NYM: Page 3 of 7 Table 5 Projected Assessment Appeal Impact North Long Beach Project Area Long Beach Redevelopment Agency

Applicant Appeal APN or Bill Total Contested Opinion of Estimated Projected Value Number Number FY Applicant Name Value Value Resolved Value Variance KMA Assumption

123 2008-035627 7152-001-016 08 RICH SIGNAL HILL LLC & CARSON PACIFIC LLC 8,037,090 7,732,262 8,037,090 - Assumed withdrawn as in prior 2008 duplicate filing. (1) 124 2008-029496 7157-012-210 08 ARON SCHIFMAN 1,836,000 - 1,560,000 (276,000) RESOLVED: Reduced (1) 125 2008-012670 7157-012-211 08 ANA BORICEAN 192,000 - 185,000 (7,000) RESOLVED: Reduced (1) 126 2008-025176 7157-015-024 08 FOUNTAIN VALLEY APTS I, LLC 19,530,167 - 17,600,000 (1,930,167) RESOLVED: Assessor reduced 127 2009-001515 7157-015-024 09 FOUNTAIN VALLEY APTS. I, LLC 19,530,167 - 17,952,000 (1,578,167) Assumed 2% annual increase over 2008 reduced AV. (1) 128 2008-007317 7160-007-059 08 MANALANG 484,000 - 450,000 (34,000) RESOLVED: Assessor reduced (1) 129 2009-013203 7160-007-062 09 TOLLIE R. HICKS 359,000 251,300 308,051 (50,949) Decreased per comparable reductions in past appeals. (1) 130 2008-002419 7160-012-040 08 FRANCISCO O. MELENA 431,700 306,600 360,000 (71,700) RESOLVED: Assessor reduced (1) 131 2008-028130 7160-015-008 08 ROBERT RENTERIA 457,500 401,000 425,000 (32,500) RESOLVED: Assessor reduced 132 2009-001889 7160-015-008 09 ROBERT RENTERIA 400,000 340,000 400,000 - Assumed denied. Value was reduced in 2008. (1) 133 2008-005919 7160-015-017 08 JEANNETTE R. MA 675,000 - 675,000 - Assumed withdrawn as in duplicate filing in 2008. (1) 134 2008-000496 7210-024-028 08 BICH N. NGUYEN 566,197 - 475,000 (91,197) RESOLVED: Assessor reduced (1) 135 2009-006298 7212-004-012 09 ROBERT AUTREY/ AUTREY FAMILY LLC 1,958,400 - 1,680,467 (277,933) Decreased per comparable reductions in past appeals. (1) 136 2008-001644 7212-004-018 08 STUART KLABIN 4,010,000 1,604,000 3,700,000 (310,000) RESOLVED: Reduced 137 2009-012764 7212-004-018 09 STUART KLABIN 3,700,000 1,604,000 3,700,000 - Assumed denied. Value was reduced in 2008. (1) 138 2008-019647 7246-024-051 08 JAMES D. AND CIELO YATES 1,300,500 910,000 1,075,000 (225,500) RESOLVED: Assessor reduced (1) 139 2009-003023 7303-005-042 09 NICANOR RUIZ 327,600 - 281,107 (46,493) Decreased per comparable reductions in past appeals. (1) 140 2008-024317 7303-014-001 08 ARTURO LOPEZ 323,667 - 290,000 (33,667) RESOLVED: Assessor reduced (1) 141 2008-035176 7303-014-012 08 JESUS & GRACIELA SALDANA 598,230 - 425,000 (173,230) RESOLVED: Assessor reduced (1) 142 2009-008246 7303-025-050 09 JESSE L. OWENS 175,134 168,000 168,000 (7,134) Decreased per comparable reductions in past appeals. (1) 143 2009-004794 7304-004-020 09 GEORGE AJRAB 259,358 - 222,550 (36,808) Decreased per comparable reductions in past appeals. (1) 144 2008-012935 7304-006-045 08 TERESA FLORES 330,000 - 315,000 (15,000) RESOLVED: Reduced (1) 145 2008-034905 7305-017-003 08 SHARAD C. PATEL 499,021 - 428,201 (70,820) Decreased per comparable reductions in past appeals. (1) 146 2008-024316 7307-001-036 08 CESAR MACIEL 436,400 - 375,000 (61,400) RESOLVED: Assessor reduced (1) 147 2006-000908 7310-016-065 06 RAYTHEON COMPANY 1,255,979 123,136 1,255,979 - Assumed withdrawn as in 2004 & 2005. (1) 148 2006-000907 7310-016-066 06 RAYTHEON COMPANY 16,400,000 1,640,000 16,400,000 - Assumed withdrawn as in 2004 & 2005. (1) 149 2006-000906 7310-016-072 06 RAYTHEON COMPANY 49,600,000 4,680,000 49,600,000 - Assumed withdrawn as in 2004 & 2005. (1) 150 2009-002066 7310-016-080 09 BRCP REALTY SO CAL PORTFOLIO, LLC 9,413,019 4,750,000 9,413,019 - Assumed withdrawn as in 2008. (1) 151 2008-000445 7310-016-081 08 BRCP REALTY SO CAL PORTFOLIO, LLC 3,366,000 627,000 3,100,000 (266,000) RESOLVED: Assessor reduced 152 2009-002064 7310-016-081 09 BRCP REALTY SO CAL PORTFOLIO, LLC 3,100,000 1,550,000 3,100,000 - Assumed denied. Value was reduced in 2008. (1) 153 2008-000444 7310-016-082 08 BRCP REALTY SO CAL PORTFOLIO, LLC 12,868,830 6,434,000 10,730,000 (2,138,830) RESOLVED: Assessor reduced 154 2009-002064 7310-016-082 09 BRCP REALTY SO CAL PORTFOLIO, LLC 10,730,000 5,365,000 10,730,000 - Assumed denied. Value was reduced in 2008. (1) 155 2008-016886 7310-016-083 08 CA BROADCAST CENTER, LLC. 16,664,018 1,416,442 14,299,083 (2,364,935) Decreased per comparable reductions in past appeals. (1) 156 2009-006363 7402-021-036 09 CALIFORNIA STATE UNIVERSITY 6,557,485 4,438,000 5,626,856 (930,629) Decreased per comparable reductions in past appeals. (1) 157 2009-006363 7402-021-039 09 CALIFORNIA STATE UNIVERSITY 3,823,846 2,587,000 3,281,171 (542,675) Decreased per comparable reductions in past appeals. (1) 158 2009-006363 7402-021-041 09 CALIFORNIA STATE UNIVERSITY 1,895,554 1,282,000 1,626,540 (269,014) Decreased per comparable reductions in past appeals. (1) 159 2009-006363 7402-021-043 09 CALIFORNIA STATE UNIVERSITY 1,022,473 692,000 877,365 (145,108) Decreased per comparable reductions in past appeals. (1) 160 2009-006364 7402-021-044 09 CALIFORNIA STATE UNIVERSITY 4,825,126 3,154,000 4,140,351 (684,775) Decreased per comparable reductions in past appeals. (1) 161 2009-006364 7402-021-045 09 CALIFORNIA STATE UNIVERSITY 2,821,935 1,845,000 2,421,450 (400,485) Decreased per comparable reductions in past appeals. (1) 162 2009-005283 7431-035-013 09 PETER KIM 654,000 - 561,185 (92,815) Decreased per comparable reductions in past appeals. (1)

Source: Los Angeles County Assessment Appeals Board data as of 01-19-2010. Prepared by: Keyser Marston Associates, Inc. Filename: LB North 2009 Appeals 4Q 1-29-10.xls:Open:NYM: Page 4 of 7 Table 5 Projected Assessment Appeal Impact North Long Beach Project Area Long Beach Redevelopment Agency

Applicant Appeal APN or Bill Total Contested Opinion of Estimated Projected Value Number Number FY Applicant Name Value Value Resolved Value Variance KMA Assumption

POSSESSORY INTEREST APPEALS: 163 2003-002711 8940-430-015 03 VALERO ENERGY CORPORATION/ULTAMAR, INC 3,155,880 600,000 3,155,880 - Assumed denied; appeal older than 5 years. 164 2004-001759 8940-430-015 04 ULTRAMAR, INC VALERO ENERGY CORPORATION 3,214,799 600,000 3,214,799 - Assumed denied; appeal older than 5 years. 165 2005-001332 8940-430-015 05 VALERO ENERGY CORPORATION/ULTRAMAR, INC. 3,279,094 - 2,233,333 (1,045,761) Decreased per comparable reductions in past appeals. 166 2006-003871 8940-430-015 06 ULTRAMAR, INC. VALERO ENERGY CORPORATION 3,344,675 600,000 2,277,999 (1,066,676) Decreased per comparable reductions in past appeals. 167 2007-004427 8940-430-015 07 VALERO ENERGY CORPORATION/ULTRAMAR, INC. 3,136,805 600,000 2,136,423 (1,000,382) Decreased per comparable reductions in past appeals. 168 2008-025398 8940-430-015 08 VALERO ENERGY CORP./ULTRAMAR, INC. 3,199,540 310,000 2,179,150 (1,020,390) Decreased per comparable reductions in past appeals. (2) 169 2008-020973 8940-430-065 08 THUMS LONG BEACH COMPANY PARTICIPANTS IN LB 1,156,083 102,000 1,156,083 - Assumed denied as in 2003 through 2007. (2) 170 2008-020973 8940-430-066 08 THUMS LONG BEACH COMPANY PARTICIPANTS IN LB 8,835,698 1,100,000 8,835,698 - Assumed denied as in 2003 through 2007. (2) 171 2008-020973 8940-430-067 08 THUMS LONG BEACH COMPANY PARTICIPANTS IN LB 2,981,685 450,000 2,981,685 - Assumed denied as in 2003 through 2007. (2) 172 2008-020973 8940-430-069 08 THUMS LONG BEACH COMPANY PARTICIPANTS IN LB 314,759 37,000 314,759 - Assumed denied as in 2003 through 2007. (2) 173 2008-020973 8940-430-072 08 THUMS LONG BEACH COMPANY PARTICIPANTS IN LB 1,358,517 130,000 1,358,517 - Assumed denied as in 2003 through 2007. (2) 174 2008-020973 8940-430-119 08 THUMS LONG BEACH COMPANY PARTICIPANTS IN LB 920,890 120,000 920,890 - Assumed denied as in 2003 through 2007. (2) 175 2007-003517 8940-431-007 07 TOTAL TERMINALS INTERNATIONAL, LLC 1,008,780 650,000 1,008,780 - Assumed withdrawn as in 2006. 176 2008-019243 8940-431-007 08 TOTAL TERMINALS INTERNATIONAL, LLC 1,028,955 650,000 1,028,955 - Assumed withdrawn as in 2006. (2) 177 2008-020973 8940-431-136 08 THUMS LONG BEACH COMPANY PARTICIPANTS IN LB 37,740 3,000 25,704 (12,036) Decreased per comparable reductions in past appeals. (2) 178 2008-026432 8940-431-225 08 MITSUBISHI CEMENT TERMINAL 33,000 1,000 22,476 (10,524) Decreased per comparable reductions in past appeals. (2) 179 2007-007789 8940-432-002 07 INTERNATIONAL TRANSPORTATION SERVICES 95,691,028 - 65,173,471 (30,517,557) Decreased per comparable reductions in past appeals. 180 2008-010803 8940-432-002 08 INTERNATIONAL TRANS SERVICE INC. 341,598,000 170,799,000 232,656,371 (108,941,629) Decreased per comparable reductions in past appeals. 181 2009-007098 8940-432-002 09 INTERNATIONAL TRANS. SERVICE INC. 344,376,120 172,188,060 234,548,500 (109,827,620) Decreased per comparable reductions in past appeals. (2) 182 2006-003595 8940-432-003 06 METROPOLITAN STEVEDORE COMPANY 22,221,000 6,000,000 22,221,000 - Assumed withdrawn as in 2003 through 2005. 183 2007-002924 8940-432-003 07 METROPOLITAN STEVEDORE COMPANY 22,533,000 18,000,000 22,533,000 - Assumed withdrawn as in 2003 through 2005. 184 2008-026443 8940-432-003 08 METROPOLITAN STEVEDORE COMPANY 21,546,000 11,000,000 21,546,000 - Assumed withdrawn as in 2003 through 2005. (2) 185 2008-026432 8940-432-012 08 MITSUBISHI CEMENT TERMINAL 9,068,515 1,600,000 6,176,406 (2,892,109) Decreased per comparable reductions in past appeals. (2) 186 2005-005804 8940-432-031 05 PACIFIC MARITIME SERVICES, LLC 317,825,482 126,800,000 216,465,328 (101,360,154) Decreased per comparable reductions in past appeals. 187 2006-005475 8940-432-031 06 PACIFIC MARITIME SERVICES LLC 324,181,990 162,100,000 220,794,634 (103,387,356) Decreased per comparable reductions in past appeals. 188 2007-004898 8940-432-031 07 PACIFIC MARITIME SERVICES LLC. 330,665,628 165,600,000 225,210,525 (105,455,103) Decreased per comparable reductions in past appeals. 189 2008-021342 8940-432-031 08 PACIFIC MARITIME SERVICES LLC 337,278,940 165,600,000 229,714,735 (107,564,205) Decreased per comparable reductions in past appeals. (2) 190 2007-003517 8940-432-040 07 TOTAL TERMINALS INTERNATIONAL, LLC 491,734,622 300,000,000 491,734,622 - Assumed withdrawn as in 2003 through 2006. 191 2008-019243 8940-432-040 08 TOTAL TERMINALS INTERNATIONAL, LLC 516,069,313 300,000,000 516,069,313 - Assumed withdrawn as in 2003 through 2006. (2) 192 2004-001759 8940-759-501 04 ULTRAMAR, INC VALERO ENERGY CORPORATION 272,906 50,000 272,906 - Assumed denied; appeal older than 5 years. 193 2007-004427 8940-759-501 07 VALERO ENERGY CORPORATION/ULTRAMAR, INC. 993,394 200,000 676,583 (316,811) Decreased per comparable reductions in past appeals. 194 2008-025398 8940-759-501 08 VALERO ENERGY CORP./ULTRAMAR, INC. 1,013,254 200,000 690,109 (323,145) Decreased per comparable reductions in past appeals. (2) 195 2008-016635 8940-759-547 08 CHEVRON U.S.A., INC. 1,272,054 929,968 929,968 (342,086) Decreased per comparable reductions in past appeals. (2) 196 2007-007054 8940-759-589 07 EDGINGTON OIL COMPANY, LLC. 18,754,000 10,100,000 12,773,019 (5,980,981) Decreased per comparable reductions in past appeals. 197 2008-031424 8940-759-589 08 EDGINGTON OIL COMPANY, LLC. 18,564,740 10,100,000 12,644,117 (5,920,623) Decreased per comparable reductions in past appeals. (2) 198 2008-016635 8940-759-594 08 CHEVRON U.S.A., INC. 170,030,923 - 115,805,062 (54,225,861) Decreased per comparable reductions in past appeals. (2) 199 2008-026443 8940-759-874 08 METROPOLITAN STEVEDORE COMPANY 11,204,887 2,000,000 7,631,451 (3,573,436) Decreased per comparable reductions in past appeals. (2) 200 2008-026443 8940-759-875 08 METROPOLITAN STEVEDORE COMPANY 9,970,022 10,000 6,790,406 (3,179,616) Decreased per comparable reductions in past appeals. (2) 201 2007-002924 8940-759-881 07 METROPOLITAN STEVEDORE COMPANY 5,342,550 1,000,000 3,638,717 (1,703,833) Decreased per comparable reductions in past appeals. (2) 202 2007-002924 8940-759-882 07 METROPOLITAN STEVEDORE COMPANY 11,792,852 100,000 8,031,903 (3,760,949) Decreased per comparable reductions in past appeals. (2) Source: Los Angeles County Assessment Appeals Board data as of 01-19-2010. Prepared by: Keyser Marston Associates, Inc. Filename: LB North 2009 Appeals 4Q 1-29-10.xls:Open:NYM: Page 5 of 7 Table 5 Projected Assessment Appeal Impact North Long Beach Project Area Long Beach Redevelopment Agency

Applicant Appeal APN or Bill Total Contested Opinion of Estimated Projected Value Number Number FY Applicant Name Value Value Resolved Value Variance KMA Assumption

203 2008-026439 8940-759-884 08 CALIFORNIA UNITED TERMINALS 908,784 - - (908,784) RESOLVED: No change (2) 204 2006-003595 8940-759-897 06 METROPOLITAN STEVEDORE COMPANY 12,271,030 1,500,000 8,357,582 (3,913,448) Decreased per comparable reductions in past appeals. (2) 205 2006-003595 8940-759-898 06 METROPOLITAN STEVEDORE COMPANY 6,433,045 100,000 4,381,433 (2,051,612) Decreased per comparable reductions in past appeals. (2)

UNSECURED APPEALS: 206 2008-039540 0049-203-779 08 BRAND SERVICES #214 13,583,472 - 10,692,303 (2,891,169) Decreased per comparable reductions in past appeals. (3) 207 2008-039539 0049-917-731 08 BRAND SERVICES #214 5,195,571 - 4,089,722 (1,105,849) Decreased per comparable reductions in past appeals. (3) 208 2008-039538 0049-917-732 08 BRAND SERVICES #214 1,590,151 - 1,251,696 (338,455) Decreased per comparable reductions in past appeals. (3) 209 2008-039537 0049-917-733 08 BRAND SERVICES #214 6,660,069 - 5,242,509 (1,417,560) Decreased per comparable reductions in past appeals. (3) 210 2006-007565 0049-909-635 04 CALIFORNIA BROADCAST CENTER 922,803 - 922,803 - Assumed withdrawn as in 2002 & 2003. 211 2008-026439 0040-801-189 08 CALIFORNIA UNITED TERMINALS 23,315,143 1,500,000 20,936,258 (2,378,885) RESOLVED: Assessor reduced (3) 212 2006-001050 0040-769-604 06 CBS OUTDOOR INC. 835,311 278,000 657,520 (177,791) Decreased per comparable reductions in past appeals. 213 2006-001050 0040-769-618 06 CBS OUTDOOR INC. 1,781,773 594,000 1,402,532 (379,241) Decreased per comparable reductions in past appeals. 214 2007-000833 0040-802-811 07 CBS OUTDOOR INC. 852,015 250,000 670,668 (181,347) Decreased per comparable reductions in past appeals. 215 2007-000833 0040-802-825 07 CBS OUTDOOR INC. 1,817,403 600,000 1,430,579 (386,824) Decreased per comparable reductions in past appeals. 216 2008-012211 0040-805-782 08 CBS OUTDOOR INC. 1,853,746 925,000 1,459,186 (394,560) Decreased per comparable reductions in past appeals. 217 2009-010709 0040-805-863 09 CBS OUTDOOR INC. 803,899 530,573 632,793 (171,106) Decreased per comparable reductions in past appeals. (3) 218 2009-010709 0040-805-877 09 CBS OUTDOOR INC. 1,714,768 1,131,746 1,349,789 (364,979) Decreased per comparable reductions in past appeals. (3) 219 2009-007118 0047-003-221 08 CONNOLLY-PACIFIC COMPANY 1,088,355 - 856,705 (231,650) Decreased per comparable reductions in past appeals. (3) 220 2009-007118 0047-061-226 07 CONNOLLY-PACIFIC COMPANY 1,068,062 - 840,731 (227,331) Decreased per comparable reductions in past appeals. 221 2009-007118 0047-062-452 06 CONNOLLY-PACIFIC COMPANY 1,070,109 - 842,342 (227,767) Decreased per comparable reductions in past appeals. 222 2009-007118 0047-124-198 05 CONNOLLY-PACIFIC COMPANY 1,033,188 - 813,280 (219,908) Decreased per comparable reductions in past appeals. 223 2008-025851 0040-811-150 08 ENVISION HEALTHCARE INC. 1,060,000 530,000 834,385 (225,615) Decreased per comparable reductions in past appeals. (3) 224 2008-007573 0040-776-497 08 FAMU CORPORATION DBA DEL AMO PETROLEUM 250,000 - 196,789 (53,211) Decreased per comparable reductions in past appeals. 225 2009-006056 0040-799-147 09 FAMU CORPORATION DBA DEL AMO PETROLEUM 250,000 112,528 196,789 (53,211) Decreased per comparable reductions in past appeals. (3) 226 2009-004069 0047-058-343 09 HARBOR ISLAND YACHT CLUB, INC. 137,816 81,054 108,483 (29,333) Decreased per comparable reductions in past appeals. (3) 227 2009-010004 0040-817-707 09 HINO MOTORS MANUFACTURING USA INC. 12,494,897 500,000 9,835,426 (2,659,471) Decreased per comparable reductions in past appeals. (3) 228 2003-000361 0040-782-898 03 HUGHES COMMUNICATIONS SATELLITE SERVICES INC. 771,362 - 771,362 - Assumed denied; appeal older than 5 years. 229 2005-007070 0049-914-399 99 HUGHES COMMUNICATIONS SATELLITE SERVICES INC. 3,161,903 - 3,161,903 - Assumed denied; appeal older than 5 years. 230 2009-007099 0040-803-086 09 INTERNATIONAL TRANSPORTATION SERVICE INC. 116,596,200 58,298,100 91,779,330 (24,816,870) Decreased per comparable reductions in past appeals. (3) 231 2008-005159 0040-772-492 08 INTERNATIONAL TRANSPORTATION SERVICES 119,727,327 59,863,664 94,244,013 (25,483,314) Decreased per comparable reductions in past appeals. 232 2007-001743 0040-780-903 07 INTERNATIONAL TRANSPORTATION SERVICES 101,159,524 50,579,763 79,628,267 (21,531,257) Decreased per comparable reductions in past appeals. 233 2008-040653 0040-746-268 09 LINK LETTER SELF STORAGE COMPANY 15,000 5,000 11,807 (3,193) Decreased per comparable reductions in past appeals. (3) 234 2008-033602 0040-798-145 08 LONG BEACH ACQUISITION, LLC 31,785,055 16,000,000 31,785,055 - Assumed withdrawn as in 2007. (3) 235 2008-033974 0040-808-477 07 MASTER PROCESSING CENTER (BANDAG) 5,252,192 3,400,000 4,134,291 (1,117,901) Decreased per comparable reductions in past appeals. 236 2008-026443 0040-771-901 08 METROPOLITAN STEVEDORE COMPANY 5,404,775 1,500,000 4,254,398 (1,150,377) Decreased per comparable reductions in past appeals. (3) 237 2006-003594 0040-777-419 06 METROPOLITAN STEVEDORE COMPANY 5,105,358 1,000,000 4,018,710 (1,086,648) Decreased per comparable reductions in past appeals. 238 2007-002924 0040-793-025 07 METROPOLITAN STEVEDORE COMPANY 4,946,119 1,100,000 3,893,364 (1,052,755) Decreased per comparable reductions in past appeals. 239 2008-040961 0049-909-725 08 METROPOLITAN STEVEDORE COMPANY 4,788,741 - 3,769,483 (1,019,258) Decreased per comparable reductions in past appeals. (3) 240 2008-040961 0049-909-726 08 METROPOLITAN STEVEDORE COMPANY 5,018,411 - 3,950,269 (1,068,142) Decreased per comparable reductions in past appeals. (3) 241 2008-026432 0040-805-508 08 MITSUBISHI CEMENT TERMINAL 18,480,191 3,000,000 18,480,191 - Assumed withdrawn as in 2005, 2006, and 2007. (3) Source: Los Angeles County Assessment Appeals Board data as of 01-19-2010. Prepared by: Keyser Marston Associates, Inc. Filename: LB North 2009 Appeals 4Q 1-29-10.xls:Open:NYM: Page 6 of 7 Table 5 Projected Assessment Appeal Impact North Long Beach Project Area Long Beach Redevelopment Agency

Applicant Appeal APN or Bill Total Contested Opinion of Estimated Projected Value Number Number FY Applicant Name Value Value Resolved Value Variance KMA Assumption

242 2006-000903 0040-779-029 06 RAYTHEON COMPANY 10,005,008 1,000,501 7,875,496 (2,129,512) Decreased per comparable reductions in past appeals. 243 2006-000902 0040-779-030 06 RAYTHEON COMPANY 2,714,938 271,494 2,714,938 - Assumed withdrawn as in 2004 & 2005. 244 2007-000873 0040-781-447 07 RAYTHEON COMPANY 1,562,644 156,265 1,230,044 (332,600) Decreased per comparable reductions in past appeals. 245 2007-000872 0040-781-448 07 RAYTHEON COMPANY 1,236,547 123,654 973,355 (263,192) Decreased per comparable reductions in past appeals. 246 2008-036408 0040-794-130 08 RAYTHEON TECHNICAL SERVICES LLC 801,695 - 631,059 (170,636) Decreased per comparable reductions in past appeals. (3) 247 2008-020973 0040-742-775 08 THUMS LONG BEACH COMPANY PARTICIPANTS IN LB 4,275,439 - 3,365,435 (910,004) Decreased per comparable reductions in past appeals. (3) 248 2008-020973 0047-003-194 08 THUMS LONG BEACH COMPANY PARTICIPANTS IN LB 152,868 15,000 120,331 (32,537) Decreased per comparable reductions in past appeals. (3) 249 2008-020973 0047-003-212 08 THUMS LONG BEACH COMPANY PARTICIPANTS IN LB 573,041 50,000 451,072 (121,969) Decreased per comparable reductions in past appeals. (3) 250 2008-020973 0047-003-213 08 THUMS LONG BEACH COMPANY PARTICIPANTS IN LB 74,132 7,500 58,353 (15,779) Decreased per comparable reductions in past appeals. (3) 251 2008-020973 0047-005-108 08 THUMS LONG BEACH COMPANY PARTICIPANTS IN LB 573,041 50,000 451,072 (121,969) Decreased per comparable reductions in past appeals. (3) 252 2008-026062 0040-797-815 08 UNITED RENTALS NORTHWEST, INC. 6,543,805 6,243,244 6,243,244 (300,561) Decreased per comparable reductions in past appeals. (3) 253 2008-026063 0040-797-817 08 UNITED RENTALS NORTHWEST, INC. 1,287,847 1,092,575 1,092,575 (195,272) Decreased per comparable reductions in past appeals. (3) 254 2003-004193 0040-785-310 03 VIACOM OUTDOOR INC 132,487 39,000 132,487 - Assumed denied; appeal older than 5 years. 255 2003-004193 0040-785-321 03 VIACOM OUTDOOR INC 438,863 128,000 438,863 - Assumed denied; appeal older than 5 years. 256 2005-000681 0040-759-848 05 VIACOM OUTDOOR, INC. 801,135 400,500 630,618 (170,517) Decreased per comparable reductions in past appeals. 257 2005-000681 0040-759-862 05 VIACOM OUTDOOR, INC. 1,708,873 854,500 1,345,149 (363,724) Decreased per comparable reductions in past appeals. 258 2004-001346 0040-772-720 04 VIACOM OUTDOOR, INC. 331,731 80,000 331,731 - Assumed denied; appeal older than 5 years. 259 2004-001346 0040-772-731 04 VIACOM OUTDOOR, INC. 468,845 110,000 468,845 - Assumed denied; appeal older than 5 years. 260 2009-007204 0040-821-823 09 VONS COMPANIES INC. 2,319,901 1,159,951 1,826,123 (493,778) Decreased per comparable reductions in past appeals. (3) 261 2008-006286 0040-791-720 08 VONS COMPANIES, INC. 2,432,388 1,216,194 1,914,667 (517,721) Decreased per comparable reductions in past appeals. 262 2009-000775 0040-773-066 09 WMZ, INC. 20,000 60,000 60,000 40,000 Decreased per comparable reductions in past appeals. (3) 263 2008-020028 0049-118-178 08 XEROX CORPORATION 122,110 94,093 96,120 (25,990) Decreased per comparable reductions in past appeals. (3) 264 2008-020028 0049-118-351 08 XEROX CORPORATION 253,521 186,680 199,560 (53,961) Decreased per comparable reductions in past appeals. (3)

PROJECTED ASSESSMENT APPEALS IMPACT - NORTH RP 265 Total Reductions for Tax Refund (892,176,000) 266 Projected Tax Refund at 1% (8,922,000)

267 (1) Secured Value Reduction (unique filings) (277,825,000) 268 (2) Possessory Interest Value Reduction (unique filings) (317,469,000) 269 (3) Unsecured Value Reduction (unique filings) (42,328,000) 270 Total Projected Value Reduction for FY 2010-11 (unique filings) (637,622,000)

Note: The assessment appeal records shown above represent County reported "open" appeal filings as of the Fourth Quarter 2009, as contained in the assessment appeals database of January 19, 2010. The County has informed KMA that the Fourth Quarter 2009 database may not include all appeal records filed for FY 2009-10 due to the number of filings and that a subsequent First Quarter 2010 database (to be released in April 2010) will likely include additional filings not reflected in this table. The table presented here is based on extracted records reported by the County to date. KMA cannot guarantee the completeness or accuracy of the County's data.

Source: Los Angeles County Assessment Appeals Board data as of 01-19-2010. Prepared by: Keyser Marston Associates, Inc. Filename: LB North 2009 Appeals 4Q 1-29-10.xls:Open:NYM: Page 7 of 7 Table 6 N O I N F L A T I O N A R Y G R O W T H Tax Increment Revenue Projection North Long Beach Project Long Beach Redevelopment Agency (000's Omitted)

Debt Incurrence Time Limit Reported 7-16-2016 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20

1 Real Property 5,108,159 5,108,159 4,818,886 4,818,886 4,822,972 4,822,972 4,822,972 4,822,972 4,822,972 4,822,972 4,822,972 2 Projected Appeal Value Loss (Table 5) 0 (277,825) 000000000 3 CPI Adjustment 0 (11,448) 000000000 4 New Development Value (Weber Metals) 0 0 0 4,086 0000000 5 Total Real Property 5,108,159 4,818,886 4,818,886 4,822,972 4,822,972 4,822,972 4,822,972 4,822,972 4,822,972 4,822,972 4,822,972 6 Possessory Interest 1,473,013 1,473,013 1,152,805 1,152,805 1,191,305 1,207,805 1,207,805 1,207,805 1,207,805 1,207,805 1,207,805 7 Projected Appeal Value Loss (Table 5) 0 (317,469) 000000000 8 CPI Adjustment 0 (2,739) 000000000 9 New Development Value (ITS Rail Yard) 0 0 0 38,500 16,500 000000 10 Total Possessory Interest 1,473,013 1,152,805 1,152,805 1,191,305 1,207,805 1,207,805 1,207,805 1,207,805 1,207,805 1,207,805 1,207,805 11 Personal Property & SBE 924,826 924,826 882,498 882,498 882,498 882,498 882,498 882,498 882,498 882,498 882,498 12 Projected Appeal Value Loss (Table 5) 0 (42,328) 000000000 13 Total Personal Property 924,826 882,498 882,498 882,498 882,498 882,498 882,498 882,498 882,498 882,498 882,498 14 Total Project Value 7,505,998 6,854,189 6,854,189 6,896,775 6,913,275 6,913,275 6,913,275 6,913,275 6,913,275 6,913,275 6,913,275 15 Less Base Value (3,096,395) (3,096,395) (3,096,395) (3,096,395) (3,096,395) (3,096,395) (3,096,395) (3,096,395) (3,096,395) (3,096,395) (3,096,395) 16 Incremental Value Over Base 4,409,602 3,757,794 3,757,794 3,800,380 3,816,880 3,816,880 3,816,880 3,816,880 3,816,880 3,816,880 3,816,880

17 Gross Tax Revenue 44,285 37,739 37,739 38,167 38,333 38,333 38,333 38,333 38,333 38,333 38,333 18 Add Unitary Tax Revenue 49 49 49 49 49 49 49 49 49 49 49 19 Projected Appeal Tax Refund (Table 5) (8,922) 0000000000 20 Gross Tax Increment Revenue 35,412 37,788 37,788 38,216 38,382 38,382 38,382 38,382 38,382 38,382 38,382 21 Less County Admin Fees at -1.47% (654) (553) (554) (560) (563) (563) (563) (563) (563) (563) (563) 22 Subtotal 34,759 37,235 37,235 37,656 37,819 37,819 37,819 37,819 37,819 37,819 37,819 23 Less Housing Set Aside at -20% (7,082) (7,558) (7,558) (7,643) (7,676) (7,676) (7,676) (7,676) (7,676) (7,676) (7,676) 24 Net Tax Increment Revenue 27,676 29,677 29,677 30,013 30,143 30,143 30,143 30,143 30,143 30,143 30,143 25 Less AB1290 Statutory Pass Through (7,082) (7,558) (7,558) (7,643) (7,676) (7,676) (7,676) (7,676) (7,676) (7,676) (7,676) 26 Net Revenue after Pass Through 20,594 22,120 22,119 22,370 22,467 22,467 22,467 22,467 22,467 22,467 22,467

27 Less 2009-10 SERAF (10,149) 0000000000 28 Less 2010-11 SERAF 0 (2,751) 0000 29 Add Borrowed from Housing 8,439 00000 30 Less Repayment to Housing 0 (1,688) (1,688) (1,688) (1,688) (1,688) 00000 31 Net After SERAF 18,883 17,681 20,431 20,682 20,779 20,779 22,467 22,467 22,467 22,467 22,467

Prepared by KeyserMarston Associates, Inc. TI_Long_Beach_2010-01-29.xls:TI:2/16/2010: NYM: Page 1 of 1 APPENDIX E

FORM OF OPINION OF BOND COUNSEL

May __, 2010

Redevelopment Agency of the City of Long Beach 333 West Ocean Boulevard Long Beach, California 90802

OPINION: $22,235,000 Redevelopment Agency of the City of Long Beach Taxable Recovery Zone Economic Development Bonds, 2010 Series A (North Long Beach Redevelopment Project) and $10,745,000 Redevelopment Agency of the City of Long Beach Taxable Build America Bonds, 2010 Series B (North Long Beach Redevelopment Project)

Members of the Agency:

We have acted as bond counsel in connection with the issuance by the Redevelopment Agency of the City of Long Beach (the “Agency”) of its $22,235,000 Redevelopment Agency of the City of Long Beach Taxable Recovery Zone Economic Development Bonds, 2010 Series A (North Long Beach Redevelopment Project), and its $10,745,000 Redevelopment Agency of the City of Long Beach Taxable Build America Bonds, 2010 Series B (North Long Beach Redevelopment Project) (collectively, the “Bonds”), pursuant to the provisions of the Community Redevelopment Law of the State of California (the “Law”), Resolution No. R.A. 09-2010, adopted by the Agency on April 5, 2010, and an Indenture of Trust, dated as of May 1, 2002 (the “Original Indenture”), as amended and supplemented by a First Supplemental Indenture of Trust, dated as of February 1, 2005 (the “First Supplement”), by a Second Supplemental Indenture of Trust, dated as of February 1, 2006 (the “Second Supplement”), and by a Third Supplemental Indenture of Trust, dated as of May 1, 2010 (the “Third Supplement”), each between the Agency and The Bank of New York Mellon Trust Company, N.A. (successor to BNY Western Trust Company, and formerly known as The Bank of New York Trust Company, N.A.), as trustee. The Original Indenture, as amended and supplemented by the First Supplement, by the Second Supplement and by the Third Supplement, is referred to below as the “Indenture.”

In connection with this opinion, we have examined the law and such certified proceedings and other papers as we deem necessary to render this opinion. As to questions of fact material to our opinion, we have relied upon representations of the Agency contained in the Indenture and in the certified proceedings and certifications of public officials and others furnished to us without undertaking to verify the same by independent investigation.

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

1. The Agency is duly created and validly existing as a public body, corporate and politic, with the power to enter into the Indenture, perform the agreements on its part contained therein and issue the Bonds.

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

Appendix E Page 1 3. Pursuant to the Law, the Indenture creates a valid lien on the funds pledged by the Indenture for the security of the Bonds, on a parity with the lien thereon with respect to the 2002 Bonds, the 2005 Bonds and any future Parity Debt, as such terms are defined in the Indenture.

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

5. The interest on the Bonds is subject to all applicable federal taxation.

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

Ownership of the Bonds may result in other tax consequences to certain taxpayers, and we express no opinion regarding any such collateral consequences arising with respect to the Bonds.

The rights of the owners of the Bonds and the enforceability of the Bonds and the Indenture may be subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors’ rights heretofore or hereafter enacted and also may be subject to the exercise of judicial discretion in accordance with general principles of equity.

In rendering this opinion, we have relied upon certifications of the Agency and others with respect to certain material facts. Our opinion represents our legal judgment based upon such review of the law and the facts that we deem relevant to render our opinion and is not a guarantee of a result. This opinion is given as of the date hereof and we assume no obligation to revise or supplement this opinion to reflect any facts or circumstances that may hereafter come to our attention or any changes in law that may hereafter occur.

Respectfully submitted,

Appendix E Page 2 APPENDIX F

FORM OF CONTINUING DISCLOSURE AGREEMENT

THIS CONTINUING DISCLOSURE AGREEMENT (this “Disclosure Agreement”) dated for convenience as of May 1, 2010 (and entered into as of May 12, 2010), is executed and delivered by the Redevelopment Agency of the City of Long Beach (the “Issuer”) and the City of Long Beach (the “Dissemination Agent”), in connection with the issuance by the Issuer of its Redevelopment Agency of the City of Long Beach Taxable Recovery Zone Economic Development Bonds, 2010 Series A (North Long Beach Redevelopment Project) and its Redevelopment Agency of the City of Long Beach Taxable Build America Bonds, 2010 Series B (North Long Beach Redevelopment Project) (collectively, the “2010 Bonds”). The 2010 Bonds are being issued pursuant to an Indenture of Trust, dated as of May 1, 2002 (the “Original Indenture”), as amended and supplemented by a First Supplemental Indenture of Trust, dated as of February 1, 2005, by a Second Supplemental Indenture of Trust, dated as of February 1, 2006, and by a Third Supplemental Indenture of Trust, dated as of May 1, 2010 (the Original Indenture, as so amended and supplemented, is referred to below as the “Indenture”), each by and between the Issuer and The Bank of New York Mellon Trust Company, N.A. (successor to BNY Western Trust Company and formerly known as The Bank of New York Trust Company, N.A.), as trustee (the ”Trustee”).

The Issuer and the Dissemination Agent hereby agree as follows:

SECTION 1. Purpose of the Disclosure Agreement. This Disclosure Agreement is being executed and delivered by the Issuer and the Dissemination Agent for the benefit of the Owners and Beneficial Owners of the 2010 Bonds and in order to assist the Participating Underwriter in complying with the Rule.

SECTION 2. Definitions. In addition to the definitions set forth in the Indenture, which apply to any capitalized term used in this Disclosure Agreement unless otherwise defined in this Section, the following capitalized terms shall have the following meanings:

“Annual Report” shall mean any Annual Report provided by the Issuer pursuant to, and as described in, Sections 3 and 4 of this Disclosure Agreement.

“Beneficial Owner” shall mean any person who (a) has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any 2010 Bond (including a person holding a 2010 Bond through a nominee, depository or other intermediary), or (b) is treated as the owner of any 2010 Bond for federal income purposes.

“Dissemination Agent” shall mean the City of Long Beach, or any successor Dissemination Agent designed in writing by the Issuer and which has filed with the Issuer a written acceptance of such designation.

“Listed Events” shall mean any of the events listed in Section 5(a) of this Disclosure Agreement.

“National Repository” shall mean the Municipal Securities Rulemaking Board’s Electronic Municipal Market Access (EMMA) system, and any other Nationally Recognized Municipal Securities Information Repository for purposes of the Rule. The National Repositories currently recognized by the Securities and Exchange Commission are set forth in the SEC website located at http://www.sec.gov/info/municipal/nrmsir.htm.

Appendix F Page 1 “Official Statement” shall mean the Issuer’s official statement with respect to the 2010 Bonds.

“Participating Underwriter” shall mean the original underwriter of the 2010 Bonds required to comply with the Rule in connection with the offer and sale of the 2010 Bonds.

“Repository” shall mean the National Repository and each State Repository, if any.

“Rule” shall mean Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time.

“State Repository” shall mean any public or private repository or entity designated by the State of California as a state repository for the purpose of the Rule and recognized as such by the Securities and Exchange Commission. As of the date of this Disclosure Agreement, there is no State Repository.

SECTION 3. Provision of Annual Reports.

(a) Not later than 180 days after the end of the Issuer’s fiscal year (which currently ends on September 30), commencing with the fiscal year ending September 30, 2010, the Issuer shall, or shall cause the Dissemination Agent to, provide to each Repository an Annual Report which is consistent with the requirements of Section 4 of this Disclosure Agreement. Not later than 15 business days prior to the date referred to in the prior sentence hereof, the Issuer shall provide the Annual Report (in a form suitable for filing with the Repositories) to the Dissemination Agent. The Annual Report may be submitted as a single document or as separate documents comprising a package and may include by reference other information as provided in Section 4 of this Disclosure Agreement. The Issuer shall provide a written certification with each Annual Report furnished to the Dissemination Agent to the effect that such Annual Report constitutes the Annual Report required to be furnished by it hereunder. The Dissemination Agent may conclusively rely upon such certification of the Issuer and shall have no duty or obligation to review such Annual Report.

(b) If by the date required in subsection (a) the Dissemination Agent has not received a copy of the Annual Report, the Dissemination Agent shall contact the Issuer to determine if the Issuer will be filing the Annual Report in compliance with subsection (a).

(c) If the Dissemination Agent is unable to verify that an Annual Report has been provided to the Repositories by the date required in subsection (a), the Dissemination Agent shall send a notice in substantially the form attached as Exhibit A to the Municipal Securities Rulemaking Board (“MSRB”) and each State Repository, if any.

(d) The Dissemination Agent shall:

(i) determine each year prior to the date for providing the Annual Report and the name and address of each Repository;

(ii) provide any Annual Report received by it to each Repository as provided herein; and

(iii) if it has provided the Annual Report pursuant to (ii) above, file a report with the Issuer certifying that the Annual Report has been provided pursuant to this Disclosure Agreement, stating the date it was provided and listing all the Repositories to which it was provided.

Appendix F Page 2

SECTION 4. Content of Annual Reports. The Issuer’s Annual Report shall contain or include by reference:

(a) Financial Statements. The audited financial statements of the Issuer for the most recent fiscal year of the Issuer then ended. If the audited financial statements are not available by the time the Annual Report is required to be filed, the Annual Report shall contain any unaudited financial statements of the Issuer in a format similar to the audited financial statements, and the audited financial statements shall be filed in the same manner as the Annual Report when they become available.

(b) Financial and Operating Data. The Annual Report shall contain or incorporate by reference the following information:

(i) A description of any Parity Debt issued during such Fiscal Year.

(ii) Updates to the following tables in the Official Statement (or the provision of comparable information) using information for the most recent fiscal or calendar year for which information is available to the Issuer: (A) Table 4, indicating the ten largest taxpayers by assessed value in the Project Area; (B) Table 3, indicating historical taxable values and total incremental value for property in the Project Area; and (C) Table 6, indicating tax increment revenues, debt service on outstanding Bonds and debt service coverage, but only with regards to the information for the most recent Fiscal Year and including debt service on any Parity Debt issued after the 2010 Bonds.

(iii) Such further information, if any, as may be necessary to make the statements specifically required pursuant to this Section 4(b), in the light of the circumstances under which they are made, not misleading.

(c) Any or all of the items listed in (a) or (b) above may be included by specific reference to other documents, including official statements of debt issues of the Issuer or related public entities, which have been submitted to each of the Repositories or the Securities and Exchange Commission. If the document included by reference is a final official statement, it must be available from the MSRB. The Issuer shall clearly identify each such other document so included by reference.

SECTION 5. Reporting of Material Events.

(a) Pursuant to the provisions of this Section 5, the Issuer shall give, or cause the Dissemination Agent to give, notice of the occurrence of any of the following events with respect to the 2010 Bonds, if material:

(i) principal and interest payment delinquencies,

(ii) non-payment related defaults,

(iii) unscheduled draws on the Reserve Fund reflecting financial difficulties,

(iv) unscheduled draws on any credit enhancements reflecting financial difficulties,

(v) substitution of credit or liquidity providers, or their failure to perform,

Appendix F Page 3 (vi) adverse tax opinions or events adversely affecting the Tax-Exempt status of the 2010 Bonds,

(vii) modifications to the rights of Bond Owners,

(viii) contingent or unscheduled redemption of any Bond,

(ix) defeasances,

(x) any release, substitution, or sale of property securing repayment of the 2010 Bonds, and

(xi) rating changes.

(b) Whenever the Issuer obtains knowledge of the occurrence of a Listed Event, the Issuer shall as soon as possible determine if such event would be material under applicable federal securities laws.

(c) If the Issuer has determined that the Listed Event would be material under applicable federal securities laws, the Issuer shall promptly notify the Dissemination Agent in writing. Such notice shall instruct the Dissemination Agent to report the occurrence pursuant to subsection (d).

(d) If the Dissemination Agent has been instructed by the Issuer to report the occurrence of a Listed Event, the Dissemination Agent shall file a notice of such occurrence with the MSRB and each State Repository. Notwithstanding the foregoing, notice of Listed Events described in subsections (a)(viii) and (ix) need not be given under this subsection any earlier than the notice (if any) of the underlying event is given to Owners of affected 2010 Bonds pursuant to the Indenture.

(e) In the event that the Issuer’s fiscal year changes, the Issuer shall give notice of such change to the Dissemination Agent and shall instruct the Dissemination Agent to report such change in the same manner and to the same parties as a material Listed Event would be reported pursuant to this Section.

SECTION 6. Termination of Reporting Obligation. The obligations of the Issuer and the Dissemination Agent under this Disclosure Agreement shall terminate upon the legal defeasance, prior redemption or payment in full of all of the 2010 Bonds. If such termination occurs prior to the final maturity of the 2010 Bonds, the Issuer shall give notice of such termination in the same manner as for a Listed Event under Section 5.

SECTION 7. Dissemination Agent. The Issuer may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under the Disclosure Agreement, and may discharge any such Dissemination Agent, with or without appointing a successor Dissemination Agent. The Dissemination Agent may resign by providing thirty days written notice to the Issuer.

SECTION 8. Amendment.

(a) This Disclosure Amendment may be amended, by written agreement of the parties, without the consent of the Owners, and any provision of this Dissemination Agreement may be waived, if all of the following conditions are satisfied: (i) such amendment or waiver is made in connection with a change in circumstances that arises from a change in legal (including regulatory) requirements, a change in law, or a change in the identity, nature or

Appendix F Page 4 status of the Issuer or the type of business conducted thereby, (ii) the undertakings in this Disclosure Agreement as so amended or waived would, in the opinion of a nationally recognized bond counsel, have complied with the requirements of the Rule as of the date of this Disclosure Agreement, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances, and (iii) the amendment or waiver either (A) is approved by the Owners of the 2010 Bonds in the same manner as provided in the Indenture for amendments to the Indenture with the consent of Owners of the 2010 Bonds or (B) does not, in the determination of the Issuer, materially impair the interests of the Owners or Beneficial Owners of the 2010 Bonds.

(b) To the extent any amendment to this Disclosure Agreement results in a change in the type of financial information or operating data provided pursuant to this Disclosure Agreement, the first Annual Report provided thereafter shall include a narrative explanation of the reasons for the amendment and the impact of the change in the type of operating data or financial information being provided.

(c) If an amendment is made to the basis on which financial statements are prepared, the Annual Report for the year in which the change is made shall present a comparison between the financial statements or information prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. Such comparison shall include a quantitative and, to the extent reasonably feasible, qualitative discussion of the differences in the accounting principles and the impact of the change in the accounting principles on the presentation of the financial information.

SECTION 9. Additional Information. Nothing in this Disclosure Agreement shall be deemed to prevent the Issuer from disseminating any other information, using the means of dissemination set forth in this Disclosure Agreement or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Agreement. If the Issuer chooses to include any information in any Annual Report or notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Agreement, the Issuer shall have no obligation under this Disclosure Agreement to update such information or include it in any future Annual Report or notice of occurrence of a Listed Event.

SECTION 10. Default. In the event of a failure of the Issuer or the Dissemination Agent to comply with any provision of this Disclosure Agreement, any Owner or Beneficial Owner of the 2010 Bonds may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the Issuer and/or the Dissemination Agent to comply with their respective obligations under this Disclosure Agreement. A default under this Disclosure Agreement shall not be deemed an Event of Default under the Indenture, and the sole remedy under this Disclosure Agreement in the event of any failure of the Issuer or the Dissemination Agent to comply with this Disclosure Agreement shall be an action to compel performance.

SECTION 11. Duties, Immunities and Liabilities of Dissemination Agent. The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Agreement, and the Issuer agrees to indemnify and save the Dissemination Agent and its officers, Councilmembers, employees and agents harmless against any loss, expense and liabilities which they may incur arising out of or in the exercise or performance of their powers and duties hereunder, including the costs and expenses (including attorneys fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent’s gross negligence or willful misconduct. The Dissemination Agent shall be paid compensation by the Issuer for its services provided hereunder as mutually agreed upon by the Executive Director of the Agency and the City Treasurer. The Dissemination Agent shall have no duty or

Appendix F Page 5 obligation to review any information provided to it by the Issuer pursuant to this Disclosure Agreement. The obligations of the Issuer under this Section shall survive resignation or removal of the Dissemination Agent and payment of the 2010 Bonds. No person shall have any right to commence any action against the Dissemination Agent seeking any remedy other than to compel specific performance of this Disclosure Agreement. The Dissemination Agent shall not be liable under any circumstances for monetary damages to any person for any breach under this Disclosure Agreement.

SECTION 12. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit of the Issuer, the Dissemination Agent, the Participating Underwriter and Owners and Beneficial Owners from time to time of the 2010 Bonds; and it shall create no rights in any other person or entity.

Appendix F Page 6

SECTION 13. Counterparts. This Disclosure Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument.

REDEVELOPMENT AGENCY OF THE CITY OF LONG BEACH

By: David S. Nakamoto, Agency Treasurer

CITY OF LONG BEACH, as Dissemination Agent

By: David S. Nakamoto, City Treasurer

Appendix F Page 7 EXHIBIT A

NOTICE TO REPOSITORIES OF FAILURE TO FILE ANNUAL REPORT

Name of Issuer: Redevelopment Agency of the City of Long Beach

Name of Bond Issue: Redevelopment Agency of the City of Long Beach Taxable Recovery Zone Economic Development Bonds, 2010 Series A (North Long Beach Redevelopment Project) and Redevelopment Agency of the City of Long Beach Taxable Build America Bonds, 2010 Series B (North Long Beach Redevelopment Project)

Date of Issuance: May 12, 2009

NOTICE IS HEREBY GIVEN that the Redevelopment Agency of the City of Long Beach (the “Issuer”) has not provided an Annual Report with respect to the above-named Bonds as required by Section 3 of the Continuing Disclosure Agreement, dated as of May 1, 2010. [The Issuer anticipates that the Annual Report will be filed by ______.]

Dated:

City of Long Beach, as Dissemination Agent

By: Its:

Appendix F Page 8 APPENDIX G

BOOK-ENTRY ONLY SYSTEM

THE INFORMATION IN THIS APPENDIX G HAS BEEN PROVIDED BY THE DEPOSITORY TRUST COMPANY (“DTC”), NEW YORK, NEW YORK, FOR USE IN SECURITIES OFFERING DOCUMENTS, AND THE REDEVELOPMENT AGENCY OF THE CITY OF LONG BEACH (THE “AGENCY”) TAKES NO RESPONSIBILITY FOR THE ACCURACY OR COMPLETENESS THEREOF. THE AGENCY CANNOT GIVE ANY ASSURANCES THAT DTC, DTC PARTICIPANTS OR INDIRECT PARTICIPANTS WILL DISTRIBUTE THE BENEFICIAL OWNERS EITHER (A) PAYMENTS OF INTEREST, PRINCIPAL OR PREMIUM, IF ANY, WITH RESPECT TO THE BONDS OR (B) CERTIFICATES REPRESENTING OWNERSHIP INTEREST IN OR OTHER CONFIRMATION OF OWNERSHIP INTEREST IN THE BONDS, OR THAT THEY WILL SO DO ON A TIMELY BASIS OR THAT DTC, DTC DIRECT PARTICIPANTS OR DTC INDIRECT PARTICIPANTS WILL ACT IN THE MANNER DESCRIBED IN THIS OFFICIAL STATEMENT.

1. DTC will act as securities depository for the Bonds (the “Securities”). The Securities will be issued as fully-registered securities registered in the name of Cede & Co. (DTC’s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered Security certificate will be issued for each maturity of the Securities, in the aggregate principal amount of such issue, and will be deposited with DTC.

2. DTC, the world’s largest depository, is a limited purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 2 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments from over 85 countries that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post- trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC, in turn, is owned by a number of Direct Participants of DTC and Members of the National Securities Clearing Corporation, Government Securities Clearing Corporation, MBS Clearing Corporation, and Emerging Markets Clearing Corporation, (NSCC, GSCC, MBSCC, and EMCC, also subsidiaries of DTCC), as well as by the New York Stock Exchange, Inc., the American Stock Exchange LLC, and the National Association of Securities Dealers, Inc. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). DTC has Standard & Poor’s highest rating: AAA. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Agency. More information about DTC can be found at www.dtcc.com.

3. Purchases of Securities under the DTC system must be made by or through Direct Participants, which will receive a credit for the Securities on DTC’s records. The ownership interest of each actual purchaser of each Security (“Beneficial Owner”) is in turn to be recorded on the Direct and Indirect Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Securities are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Securities, except in the event that use of the book-entry system for the Securities is discontinued.

Appendix G Page 1 4. To facilitate subsequent transfers, all Securities deposited by Direct Participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Securities with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Securities; DTC’s records reflect only the identity of the Direct Participants to whose accounts such Securities are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers.

5. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time.

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

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

8. Redemption proceeds, distributions, and dividend payments on the Securities will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit Direct Participants’ accounts upon DTC’s receipt of funds and corresponding detail information from the issuer or the paying agent or bond trustee, on payable date in accordance with their respective holdings shown on DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of such Participant and not of DTC nor its nominee, the paying agent or bond trustee, or the issuer, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the issuer or the paying agent or bond trustee, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants.

NEITHER THE AGENCY NOR THE TRUSTEE WILL HAVE ANY RESPONSIBILITY OR OBLIGATION TO DTC PARTICIPANTS, INDIRECT PARTICIPANTS FOR BENEFICIAL OWNERS WITH RESPECT TO THE PAYMENTS ON THE BONDS OR THE PROVIDING OF NOTICES TO DTC PARTICIPANTS, INDIRECT PARTICIPANTS OR BENEFICIAL OWNERS OR THE SELECTION OF BONDS FOR REDEMPTION.

9. DTC may discontinue providing its services as depository with respect to the Securities at any time by giving reasonable notice to the issuer or the paying agent or bond trustee. Under such circumstances, in the event that a successor depository is not obtained, Security certificates are required to be printed and delivered.

10. The Agency may decide to discontinue use of the system of book-entry transfers through DTC (or a successor securities depository). In that event, Security certificates will be printed and delivered.

Appendix G Page 2