$14,030,000 SUCCESSOR AGENCY TO THE FORMER CUDAHY ...California, as disclosure counsel to the Agency, for the Underwriter by its counsel, utak Rock LLPK , Irvine, California, and for

NEW ISSUE—BOOK-ENTRY ONLY Ratings: S&P “AA” (Insured Rating)

S&P: “A+” (Underlying Rating) See the caption “CONCLUDING INFORMATION—Ratings”

In the opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California (“Bond Counsel”), under existing statutes, regulations, rulings and judicial decisions, the interest with respect to the 2018 Bonds is not excluded from gross income for federal income tax purposes. In the further opinion of Bond Counsel, the interest (and original issue discount) with respect to the 2018 Bonds is exempt from State of California personal income tax. See “TAX MATTERS” herein.

$14,030,000 SUCCESSOR AGENCY TO THE FORMER CUDAHY COMMUNITY DEVELOPMENT COMMISSION

TAXABLE TAX ALLOCATION REFUNDING BONDS, SERIES 2018

Dated: Delivery Date Due: October 1, as shown on the inside front cover page

The Successor Agency to the Former Cudahy Community Development Commission Taxable Tax Allocation Refunding Bonds, Series 2018 (the “2018 Bonds”) will be delivered as fully registered bonds, registered in the name of Cede & Co. as nominee of The Depository Trust Company, New York, New York (“DTC”), and will be available to ultimate purchasers (“Beneficial Owners”) in integral multiples of $5,000 under the book-entry system maintained by DTC. Beneficial Owners will not be entitled to receive delivery of bonds representing their ownership interest in the 2018 Bonds. The principal of and interest (which interest is due April 1 and October 1 of each year, commencing April 1, 2019) on the 2018 Bonds will be payable by The Bank of New York Mellon Trust Company, N.A., as trustee (the “Trustee”), to DTC for subsequent disbursement to DTC Participants, so long as DTC or its nominee remains the registered owner of the 2018 Bonds. See the caption “THE 2018 BONDS—Book-Entry System.”

The 2018 Bonds are being issued pursuant to the Indenture of Trust, dated as of September 1, 2018 (the “Indenture”), by and between the Trustee and the Successor Agency to the Former Cudahy Community Development Commission (the “Agency”): (i) to currently refund certain obligations of the Cudahy Community Development Commission (the “Former Agency”) currently outstanding in the aggregate principal amount of $16,460,000, as described under the caption “REFUNDING PLAN”; (ii) to purchase a municipal bond insurance policy (the “Policy”) with respect to the 2018 Bonds; (iii) to purchase a municipal debt service reserve insurance policy for the 2018 Bonds (the “Reserve Policy”), and (iv) to pay certain costs of issuance of the 2018 Bonds.

The 2018 Bonds are not subject to redemption prior to maturity. See the caption “THE 2018 BONDS—Redemption.”

The 2018 Bonds are secured by the Pledged Tax Revenues deposited in the Redevelopment Property Tax Trust Fund and payable from amounts on deposit therein after payments of certain County of Los Angeles administrative costs and payments to certain taxing agencies, as more fully described under the captions “SECURITY FOR THE 2018 BONDS—Pass-Through Agreements,” “—Statutory Pass-Through Agreements,” “Section 33676 Election” and “PROPERTY TAXATION IN CALIFORNIA—Property Tax Collection Procedures—Property Tax Administrative Costs.” Taxes levied on the property within the Project Area (as defined herein and in the Indenture) on that portion of the taxable valuation over and above the taxable valuation of the base year property tax roll, to the extent that such taxes constitute Pledged Tax Revenues, will be deposited in the Redevelopment Obligation Retirement Fund and administered by the Agency and the Trustee in accordance with the Indenture.

The scheduled payment of principal of and interest on the 2018 Bonds when due will be guaranteed under a municipal bond insurance policy to be issued concurrently with the delivery of the 2018 Bonds by Build America Mutual Assurance Company (the “2018 Insurer” or “BAM”). See the captions “INTRODUCTORY STATEMENT—Bond Insurance” and “BOND INSURANCE” and Appendix I—“SPECIMEN MUNICIPAL BOND INSURANCE POLICY.”

This cover page of the Official Statement contains information for quick reference only. It is not a complete summary of the 2018 Bonds. Investors should read the entire Official Statement to obtain information essential to the making of an informed investment decision. Attention is hereby directed to certain risk factors more fully described herein.

The 2018 Bonds are not a debt of the City of Cudahy, the State of California, or any of its political subdivisions (except the Agency), and neither said City or State, nor any of its political subdivisions (except the Agency), is liable hereon, nor in any event shall the 2018 Bonds be payable out of any funds or properties other than those of the Agency. The 2018 Bonds do not constitute an indebtedness within the meaning of any constitutional or statutory debt limitation or restriction. The principal of and interest on the 2018 Bonds are payable solely from the Pledged Tax Revenues (as defined herein and in the Indenture) allocated to the Agency from the Project Area and other funds as set forth in the Indenture.

The 2018 Bonds are offered, when, as and if issued, subject to the approval of Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California, Bond Counsel. Certain legal matters will be passed on for the Agency by the City Attorney of the City of Cudahy, as counsel to the Agency, and Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California, as disclosure counsel to the Agency, for the Underwriter by its counsel, Kutak Rock LLP, Irvine, California, and for the Trustee by its counsel. It is anticipated that the 2018 Bonds will be available for delivery through the facilities of DTC on or about September 25, 2018.

Ramirez & Co., Inc. Dated: August 29, 2018

MATURITY SCHEDULE

Base CUSIP†22973P

$14,030,000 SUCCESSOR AGENCY TO THE FORMER CUDAHY COMMUNITY DEVELOPMENT COMMISSION

TAXABLE TAX ALLOCATION REFUNDING BONDS, SERIES 2018

Maturity Date (October 1)

Principal Amount

Interest Rate Yield Price

CUSIP†

Suffix

2019 $ 1,360,000 2.808% 2.808% 100.000 AA9 2020 1,405,000 3.123 3.123 100.000 AB7 2021 1,450,000 3.289 3.289 100.000 AC5 2022 1,490,000 3.374 3.374 100.000 AD3 2023 1,540,000 3.474 3.474 100.000 AE1 2024 1,590,000 3.590 3.590 100.000 AF8 2025 1,640,000 3.740 3.740 100.000 AG6 2026 1,700,000 3.779 3.779 100.000 AH4 2027 1,855,000 3.829 3.829 100.000 AJ0

† CUSIP® is a registered trademark of the American Bankers Association. CUSIP Global Services (CGS) is managed on behalf of the American Bankers Association by S&P Global Market Intelligence. Copyright(c) 2018 CUSIP Global Services. All rights reserved. CUSIP® data herein is provided by CUSIP Global Services. This data is not intended to create a database and does not serve in any way as a substitute for the CGS database. CUSIP® numbers are provided for convenience of reference only. Neither the Agency nor the Underwriter or their agents or counsel assume responsibility for the accuracy of such numbers.

SUCCESSOR AGENCY TO THE FORMER

CUDAHY COMMUNITY DEVELOPMENT COMMISSION

Cudahy, California

CITY COUNCIL,

ACTING AS THE GOVERNING BODY OF THE AGENCY

Chris Garcia, Mayor

Christian Hernandez, Vice Mayor Christian Markovich

Baru Sanchez

Jose Gonzalez

AGENCY/CITY STAFF

Jose E. Pulido, Executive Director/City Manager Richard Iglesias, Deputy Secretary/Deputy City Clerk

Steven Dobrenen, Finance Officer/Finance Director

SPECIAL SERVICES

Bond Counsel and Disclosure Counsel

Stradling Yocca Carlson & Rauth,

a Professional Corporation

Newport Beach, California

City Attorney

Olivarez Madruga Lemieux O’Neill, LLP

Los Angeles, California

Trustee

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

Los Angeles, California

Municipal Advisor and Fiscal Consultant

Urban Futures, Inc.

Tustin, California

Verification Agent

Causey Demgen & Moore P.C.

Denver, Colorado

GENERAL INFORMATION ABOUT THIS OFFICIAL STATEMENT

No Offering May Be Made Except by this Official Statement. No dealer, broker, salesperson or other

person has been authorized by the Agency or the Underwriter to give any information or to make any

representations with respect to the 2018 Bonds other than as contained in this Official Statement, and, if given or

made, such other information or representation must not be relied upon as having been given or authorized by the

Agency or the Underwriter.

Use of Official Statement. This Official Statement is submitted in connection with the sale of the 2018

Bonds described in this Official Statement and may not be reproduced or used, in whole or in part, for any other

purpose. This Official Statement does not constitute a contract between any Bond owner and the Agency or the

Underwriter.

Preparation of this Official Statement. The information contained in this Official Statement has been

obtained from sources that are believed to be reliable, but this information is not guaranteed as to accuracy or

completeness. The Underwriter has provided the following sentence for inclusion in this Official Statement: The

Underwriter has reviewed the information in this Official Statement in accordance with, and as part of, its

responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this

transaction, but the Underwriter does not guarantee the accuracy or completeness of such information.

Estimates and Forecasts. When used in this Official Statement and in any continuing disclosure made by

the Agency, the words or phrases “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimate,”

“project,” “forecast,” “expect,” “intend” and similar expressions identify “forward looking statements” within the

meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to risks and

uncertainties that could cause actual results to differ materially from those contemplated in such forward-looking

statements. Any forecast is subject to such uncertainties. Inevitably, some assumptions used to develop the

forecasts will not be realized and unanticipated events and circumstances may occur. Therefore, there are likely to

be differences between forecasts and actual results, and those differences may be material.

This Official Statement speaks only as of its date, and the information and expressions of opinion contained

in this Official Statement are subject to change without notice. Neither the delivery of this Official Statement nor

any sale of the 2018 Bonds will, under any circumstances, create any implication that there has been no change in

the affairs of the Agency or the other parties described in this Official Statement, since the date of this Official

Statement.

Document Summaries. All summaries of the Indenture or other documents contained in this Official

Statement are made subject to the provisions of such documents and do not purport to be complete statements of any

or all such provisions. All references in this Official Statement to the Indenture and such other documents are

qualified in their entirety by reference to such documents, which are on file with the Agency.

No Unlawful Offers or Solicitations. This Official Statement does not constitute an offer to sell or a

solicitation of an offer to buy in any state in which such offer or solicitation is not authorized or in which the person

making such offer or solicitation is not qualified to do so or to any person to whom it is unlawful to make such offer

or solicitation.

No Registration with the SEC. The issuance and sale of the 2018 Bonds have not been registered under

the Securities Act of 1933 or the Securities Exchange Act of 1934, both as amended, in reliance upon exemptions

provided thereunder by Sections 3(a)(2) and 3(a)(12), respectively, for the issuance and sale of municipal securities.

Public Offering Prices. The Underwriter may offer and sell the 2018 Bonds to certain dealers and dealer

banks and banks acting as agent at prices lower than the public offering prices stated on the inside cover page of this

Official Statement, and the Underwriter may change such public offering prices from time to time.

Bond Insurer. Build America Mutual Assurance Company (“BAM”) makes no representation regarding

the Bonds or the advisability of investing in the 2018 Bonds. In addition, BAM has not independently verified,

makes no representation regarding, and does not accept any responsibility for the accuracy or completeness of this

Official Statement or any information or disclosure contained herein, or omitted herefrom, other than with respect to

the accuracy of the information regarding BAM, supplied by BAM and presented under the heading “BOND

INSURANCE” and “Appendix I—Specimen Municipal Bond Insurance Policy”.

Website. The City of Cudahy maintains an Internet website which includes information about the Agency.

However, the information maintained on such website is not a part of this Official Statement and should not be

relied upon in making an investment decision with respect to the 2018 Bonds.

* Properties east of the Los Angeles River are not included in the Project Area.

PROJECT AREA MAP

TABLE OF CONTENTS

i

INTRODUCTORY STATEMENT ........................................... 1 Authority and Purpose ....................................................... 1 The City and the Agency ................................................... 1 The Redevelopment Plan .................................................. 2 Tax Allocation Financing .................................................. 2 Security for the 2018 Bonds .............................................. 3 Prior Payment Obligations ................................................ 4 Issuance of Parity Debt ..................................................... 5 Bond Insurance ................................................................. 5 Reserve Account ............................................................... 5 Further Information ........................................................... 5 Changes Since the Preliminary Official Statement............ 6

REFUNDING PLAN ................................................................ 6 General .............................................................................. 6 Verification of Mathematical Computations ..................... 6 Sources and Uses of Funds ................................................ 7

THE 2018 BONDS ................................................................... 7 Authority for Issuance ....................................................... 7 Description of the 2018 Bonds .......................................... 7 Book-Entry System ........................................................... 8 Redemption ....................................................................... 8 Annual Debt Service ......................................................... 8

SECURITY FOR THE 2018 BONDS ...................................... 8 General .............................................................................. 8 Pledged Tax Revenues .................................................... 10 Redevelopment Obligation Retirement Fund;

Deposit of Pledged Tax Revenues............................... 12 Transfer of Amounts by Trustee...................................... 12 Tax Increment Financing ................................................ 13 Recognized Obligation Payment Schedule ...................... 15 Last and Final Recognized Obligation Payment

Schedule ...................................................................... 17 Pass-Through Agreements .............................................. 18 Statutory Pass-Through Amounts.................................... 20 Section 33676 Election.................................................... 21 Issuance of Additional Indebtedness ............................... 21

BOND INSURANCE ............................................................. 22 Bond Insurance Policy .................................................... 22 Build America Mutual Assurance Company ................... 23

PROPERTY TAXATION IN CALIFORNIA ......................... 24 Property Tax Collection Procedures ................................ 24 Unitary Property .............................................................. 26 Article XIIIA of the State Constitution ........................... 27 Appropriations Limitation – Article XIIIB ..................... 28 Articles XIIIC and XIIID of the State Constitution ......... 28 Proposition 87 ................................................................. 28 Redevelopment Plan Limits ............................................ 29 Appeals of Assessed Values ............................................ 29 Proposition 8 ................................................................... 30 Propositions 218 and 26 .................................................. 30 Future Initiatives ............................................................. 30

THE SUCCESSOR AGENCY TO THE FORMER

CUDAHY COMMUNITY DEVELOPMENT

COMMISSION ....................................................................... 31 Agency Powers ............................................................... 31 Status of Compliance with Dissolution Act..................... 32

THE PROJECT AREA ........................................................... 32 General ............................................................................ 33 Plan Limits ...................................................................... 33 Assessed Valuation ......................................................... 34

Schedule of Historical Incremental Revenues ................. 35 Largest Taxpayers ........................................................... 35 Land Use ......................................................................... 36 Levy and Collection ........................................................ 36 Assessment Appeals ........................................................ 37 New Development ........................................................... 39

PLEDGED TAX REVENUES ................................................ 39 Projected Pledged Tax Revenues .................................... 39 Debt Service Coverage .................................................... 42 Projected RPTTF Distributions ....................................... 42

RISK FACTORS ..................................................................... 43 Reduction in Taxable Value ............................................ 43 Concentration of Ownership ............................................ 44 Risks to Real Estate Market ............................................ 44 Reduction in Inflation Rate ............................................. 44 Effect of Redevelopment Plan Limits .............................. 45 Levy and Collection of Taxes .......................................... 45 State Budget Issues .......................................................... 45 Recognized Obligation Payment Schedule ...................... 47 Last and Final Recognized Obligation Payment

Schedule ...................................................................... 49 Parity Debt Issued Without Reserve ................................ 49 Parity and Subordinate Debt ............................................ 50 Challenges to Dissolution Act ......................................... 50 Bankruptcy and Foreclosure ............................................ 51 Estimated Revenues ........................................................ 51 Hazardous Substances ..................................................... 52 Natural Disasters ............................................................. 53 Changes in the Law ......................................................... 54 Investment Risk ............................................................... 54 Secondary Market ........................................................... 54 No Validation Proceeding Undertaken ............................ 54 Bonds Are Limited Obligations ....................................... 55 Bond Insurance ................................................................ 55 Limitations on Remedies ................................................. 56

TAX MATTERS ..................................................................... 56 CONCLUDING INFORMATION .......................................... 57

Underwriting ................................................................... 57 Municipal Advisor ........................................................... 57 Verification of Mathematical Computations ................... 57 Legal Opinion .................................................................. 57 Litigation ......................................................................... 58 Ratings ............................................................................ 58 Continuing Disclosure ..................................................... 58 Miscellaneous .................................................................. 59

APPENDIX A FISCAL CONSULTANT’S REPORT ....... A-1

APPENDIX B SUMMARY OF THE INDENTURE ......... B-1

APPENDIX C FORM OF BOND COUNSEL OPINION .. C-1

APPENDIX D BOOK-ENTRY ONLY SYSTEM .............. D-1

APPENDIX E COMPREHENSIVE ANNUAL

FINANCIAL REPORT FOR FISCAL

YEAR ENDED JUNE 30, 2017 .................. E-1

APPENDIX F STATE DEPARTMENT OF FINANCE

LETTER ...................................................... F-1

APPENDIX G FORM OF CONTINUING DISCLOSURE

CERTIFICATE ........................................... G-1

APPENDIX H SUPPLEMENTAL INFORMATION—

THE CITY OF CUDAHY .......................... H-1

APPENDIX I SPECIMEN MUNICIPAL BOND

INSURANCE POLICY ................................ I-1

[THIS PAGE INTENTIONALLY LEFT BLANK]

1

$14,030,000

SUCCESSOR AGENCY TO THE FORMER CUDAHY COMMUNITY DEVELOPMENT

COMMISSION

TAXABLE TAX ALLOCATION REFUNDING BONDS,

SERIES 2018

INTRODUCTORY STATEMENT

This Official Statement, including the cover page, is provided to furnish information in connection

with the sale by the Successor Agency to the Former Cudahy Community Development Commission (the

“Agency”) of its $14,030,000 Taxable Tax Allocation Refunding Bonds, Series 2018 (the “2018 Bonds”).

Authority and Purpose

The 2018 Bonds are being issued pursuant to the Constitution and laws of the State of California (the

“State”), including Article 11 (commencing with Section 53580) of Chapter 3 of Part 1 of Division 2 of Title 5

of the Government Code (the “Bond Law”), the Community Redevelopment Law of the State of California,

constituting Part 1 of Division 24 of the Health and Safety Code (the “Redevelopment Law”), the Dissolution

Act (as defined below) and an Indenture of Trust, dated as of September 1, 2018 (the “Indenture”), by and

between the Agency and The Bank of New York Mellon Trust Company, N.A., as trustee (the “Trustee”). See

the caption “THE 2018 BONDS—Authority for Issuance.” The 2018 Bonds and any additional debt (“Parity

Debt”) issued as bonds pursuant to the Indenture are collectively referred to as the “Bonds.”

The 2018 Bonds are being issued: (i) to currently refund certain obligations of the Former Cudahy

Community Development Commission (the “Former Agency”) currently outstanding in the aggregate principal

amount of $16,460,000, as described under the caption “REFUNDING PLAN,” (ii) to purchase a municipal

bond insurance policy (the “Policy”) with respect to the 2018 Bonds; (iii) to purchase a municipal debt service

reserve insurance policy for the 2018 Bonds (the “Reserve Policy”), and (iv) to pay certain costs of issuance of

the 2018 Bonds. See the caption “REFUNDING PLAN—Sources and Uses of Funds.”

The 2018 Bonds are secured by the Pledged Tax Revenues deposited in the Redevelopment Property

Tax Trust Fund (referred to at times herein as the “RPTTF”) and payable from amounts on deposit therein after

payments of certain County of Los Angeles (the “County”) administrative costs and payments to certain taxing

agencies, as more fully described under the captions “SECURITY FOR THE 2018 BONDS—Pass-Through

Agreements,” “—Statutory Pass-Through Amounts” and “PROPERTY TAXATION IN CALIFORNIA—

Property Tax Collection Procedures—Property Tax Administrative Costs.” Upon issuance of the 2018 Bonds,

there will be no other bonds outstanding with a pledge and lien on the Pledged Tax Revenues senior to or on a

parity with the pledge and lien in favor of the 2018 Bonds; provided, however, that the Agency may issue

Parity Debt, subject to compliance with certain conditions set forth in the Indenture. See “SECURITY FOR

THE 2018 BONDS—Issuance of Additional Indebtedness—Parity Debt.”

The City and the Agency

The City of Cudahy (the “City”) is located in the County approximately 7 miles southeast of

downtown Los Angeles. The City covers approximately 1.1 square miles and has an estimated population of

approximately 24,343 persons as of January 1, 2018. The City is bounded on the west by the City of

Huntington Park, on the south by the City of South Gate, on the east by the Los Angeles River and the 710

Freeway and by the City of Bell to the north. The City was incorporated on November 10, 1960. See

APPENDIX H—“SUPPLEMENTAL INFORMATION—THE CITY OF CUDAHY” for more general

information about the City.

2

The Former Agency was activated by Ordinance of the City Council adopted on September 25, 1975

pursuant to the Redevelopment Law. The five members of the City Council served as the governing body of

the Former Agency and exercised all the rights, powers, duties and privileges of the Former Agency.

On June 29, 2011, Assembly Bill No. 26 (“AB X1 26”) was enacted as Chapter 5, Statutes of 2011,

together with a companion bill, Assembly Bill No. 27 (“AB X1 27”). A lawsuit entitled California

Redevelopment Association, et al. v. Matosantos, et al., was brought in the State Supreme Court challenging

the constitutionality of AB X1 26 and AB X1 27. In a published decision (53 Cal. 4th 231 (Dec. 29, 2011)),

the State Supreme Court largely upheld AB X1 26, invalidated AB X1 27, and held that AB X1 26 may be

severed from AB X1 27 and enforced independently. As a result of AB X1 26 and the decision of the State

Supreme Court, as of February 1, 2012, all redevelopment agencies in the State, including the Former Agency,

were dissolved, and successor agencies were designated as successor entities to the former redevelopment

agencies to expeditiously wind down the affairs of the former redevelopment agencies.

The primary provisions of AB X1 26 relating to the dissolution and winding down of former

redevelopment agency affairs are Parts 1.8 (commencing with Section 34161) and 1.85 (commencing with

Section 34170) of Division 24 of the Health & Safety Code of the State, as amended on June 27, 2012 by

Assembly Bill No. 1484 (“AB 1484”), enacted as Chapter 26, Statutes of 2012, and as further amended on

September 22, 2015 by Senate Bill 107 (“SB 107”), enacted as Chapter 325, Statutes of 2015 (collectively, as

amended from time to time, the “Dissolution Act”).

Pursuant to Section 34173 of the Dissolution Act, the City Council of the City serves as the successor

agency to the Former Agency. Subdivision (g) of Section 34173 of the Dissolution Act, which was added by

AB 1484, expressly affirms that the Agency is a separate public entity from the City, that the two entities shall

not merge and that the liabilities of the Former Agency will not be transferred to the City, nor will the assets of

the Former Agency become assets of the City.

The Redevelopment Plan

The 2018 Bonds are principally payable from Pledged Tax Revenues attributable to the Project Area

(defined under the caption “THE PROJECT AREA”). The Redevelopment Plan (defined below under the

caption “THE PROJECT AREA—General”) was originally adopted by Ordinance No. 220 on or about July

18, 1977, and has subsequently been amended by ordinance from time to time. The Project Area covers the

entire area of the City except for 76.6 acres of land located east of the Los Angeles River. See the caption

“THE PROJECT AREA” for detailed information regarding the Redevelopment Plan, certain amendments to

the Redevelopment Plan, and the Project Area.

Tax Allocation Financing

Prior to the enactment of AB X1 26, the Redevelopment Law authorized the financing of

redevelopment projects through the use of tax increment revenues. This method provided that the taxable

valuation of the property within a redevelopment project area on the property tax roll last equalized prior to the

effective date of the ordinance which adopts the redevelopment plan becomes the base year valuation.

Assuming that the taxable valuation never drops below the base year level, the taxing agencies thereafter

received that portion of the taxes produced by applying then current tax rates to the base year valuation, and

the redevelopment agency was allocated the remaining portion produced by applying then current tax rates to

the increase in valuation over the base year. Such incremental tax revenues allocated to a redevelopment

agency were authorized to be pledged to the payment of agency obligations.

The Dissolution Act authorizes refunding bonds, including the 2018 Bonds, to be secured by a pledge

of moneys deposited from time to time in a Redevelopment Property Tax Trust Fund held by a county

auditor-controller with respect to a successor agency, which are equivalent to the tax increment revenues that

3

were formerly allocated under the Redevelopment Law to the redevelopment agency and formerly authorized

under the Redevelopment Law to be used for the financing of redevelopment projects.

Under the Indenture, Pledged Tax Revenues consist of all taxes (i) that were eligible for allocation to

the Former Agency with respect to the Project Area and are allocated to the Agency 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, or pursuant to other applicable State laws and (ii) that are deposited by the Auditor-

Controller of the County of Los Angeles (the “County Auditor-Controller”) in the Redevelopment Property

Tax Trust Fund, all as provided in Section 34172(d) of the Dissolution Act.

Pursuant to the Indenture, the Agency will deposit moneys derived from the Project Area constituting

Pledged Tax Revenues promptly upon receipt thereof into the Redevelopment Obligation Retirement Fund

established pursuant to Section 34170.5(a) of the Dissolution Act. Moneys held in the Redevelopment

Obligation Retirement Fund will be transferred to the Trustee at the times specified in the Indenture to make

payments of principal of and interest on the 2018 Bonds, all as described under the caption “SECURITY FOR

THE 2018 BONDS.”

Successor agencies have no power to levy property taxes and must look specifically to the allocation

of taxes as described above. See the caption “RISK FACTORS.”

Security for the 2018 Bonds

The Dissolution Act requires the County Auditor-Controller to determine the amount of property taxes

that would have been allocated to the Former Agency had the Former Agency not been dissolved pursuant to

the operation of AB X1 26, using current assessed values on the last equalized roll on August 20, and to

deposit such amount in the Redevelopment Property Tax Trust Fund. Section 34177.5(g) of the Dissolution

Act provides that any bonds authorized to be issued by the Agency will be considered indebtedness incurred

by the dissolved Former Agency, with the same legal effect as if such bonds had been issued prior to the

effective date of AB X1 26, in full conformity with the applicable provisions of the Redevelopment Law that

existed prior to that date, will be included in the Agency’s Recognized Obligation Payment Schedule, and will

be secured by a pledge of, and lien on, and will be repaid from moneys deposited from time to time in the

Redevelopment Property Tax Trust Fund established pursuant to, and in accordance with, the Dissolution Act.

See Appendix B and the caption “SECURITY FOR THE 2018 BONDS—Recognized Obligation Payment

Schedule.”

The Dissolution Act further provides that property tax revenues pledged to any bonds authorized

under the Dissolution Act, such as the 2018 Bonds, are taxes allocated to the Agency pursuant to the

provisions of the Redevelopment Law and the State Constitution which provided for the allocation of tax

increment revenues under the Redevelopment Law, as described in the foregoing paragraph.

In accordance with the Dissolution Act, the 2018 Bonds and any Parity Debt (defined in Appendix B)

which may be issued in the future are payable from and secured by, and Pledged Tax Revenues include,

moneys deposited, from time to time, in the Redevelopment Property Tax Trust Fund.

The 2018 Bonds are payable from and secured by the Pledged Tax Revenues, whether held in the

Redevelopment Property Tax Trust Fund or by the Agency or the Trustee. Such pledge constitutes a first and

exclusive lien on and security interest in the Pledged Tax Revenues and the Redevelopment Obligation

Retirement Fund, including the Special Fund therein, and all amounts in the Redevelopment Property Tax

Trust Fund, including without limitation any override tax revenues attributable to tax rate overrides levied by

taxing agencies within the Project Area that were pledged to the Refunded Obligations, and will attach, be

perfected and be valid and binding against all parties having claims of any kind in tort, contract or otherwise

against the Agency, irrespective of whether such parties have notice of the Indenture. Such pledge permits the

payment by the County Auditor-Controller of the County’s administrative costs to the County as allowed

4

under Section 34182 and Section 95.3 of the Revenue and Taxation Code and to various taxing agencies

pursuant to the Pass-Through Agreements, Statutory Pass-Through Amounts and 33676 Amounts (as those

terms are defined under the caption “SECURITY FOR THE 2018 BONDS—Tax Increment Financing—Tax

Sharing”) prior to payment of the principal and interest on the 2018 Bonds (unless such payments to taxing

agencies are subordinated to payments on the 2018 Bonds). Taxes levied on the property within the Project

Area on that portion of the taxable valuation over and above the taxable valuation of the applicable base year

property tax roll with respect to the Project Area, to the extent that such taxes constitute Pledged Tax Revenues

as described in this Official Statement, will be deposited in the Redevelopment Property Tax Trust Fund for

transfer by the County Auditor-Controller to the Agency’s Redevelopment Obligation Retirement Fund on

January 2 and June 1 of each year to the extent required for payments listed in the Agency’s Recognized

Obligation Payment Schedule in accordance with the requirements of the Dissolution Act. See the captions

“SECURITY FOR THE 2018 BONDS—Tax Increment Financing—Tax Sharing,” “—Pass-Through

Agreements,” “—Statutory Pass-Through Amounts,” “—Section 33676 Election” and “—Recognized

Obligation Payment Schedule.” Moneys deposited by the County Auditor-Controller into the Agency’s

Redevelopment Obligation Retirement Fund, and the Special Fund held therein, will be transferred by the

Agency to the Trustee for deposit in the Debt Service Fund established under the Indenture and administered

by the Trustee in accordance with the Indenture.

Metropolitan Water District (“MWD”) levies a tax rate override, which is included in Pledged Tax

Revenues and will be available to pay debt service on the 2018 Bonds if needed. However, the County

Auditor-Controller will pay MWD’s override taxes to MWD unless the Agency informs the County Auditor-

Controller that such amounts are needed to pay debt service on the 2018 Bonds. See the caption “SECURITY

FOR THE 2018 BONDS—General” and the projections of Pledged Tax Revenues set forth in Tables 7 and 8

under the caption “PLEDGED TAX REVENUES—Projected Pledged Tax Revenues.” The Statutory Pass-

Through Amounts, (but not the Pass-Through Agreements or the 33676 Amounts) have been subordinated to

the 2018 Bonds, subject to compliance with certain procedures set forth in the Dissolution Act. Also, see the

captions “SECURITY FOR THE 2018 BONDS—Tax Increment Financing—Tax Sharing,” “–Pass-Through

Agreements,” “–Statutory Pass-Through Amounts” and “—Section 33676 Election.”

Pursuant to the Dissolution Act, former tax increment revenues generated in the Project Area are no

longer required to be deposited into the Low and Moderate Income Housing Fund. Accordingly, and because,

following the issuance of the 2018 Bonds and redemption of the Refunded Obligations, the Agency will have

no obligations that are payable from the Low and Moderate Income Housing Fund, such revenues are now

available and pledged to the repayment of the 2018 Bonds and any Parity Debt. See “SECURITY FOR THE

2018 BONDS—Tax Increment Financing—Elimination of Housing Set-Aside.”

The Agency has no power to levy property taxes and must look specifically to the allocation of taxes

as described above. See the captions “SECURITY FOR THE 2018 BONDS” and “RISK FACTORS.”

Prior Payment Obligations

The use of Pledged Tax Revenues from the Project Area to pay debt service on the 2018 Bonds is

subject to the prior payment of permitted administrative costs of the County Auditor-Controller and payments

to certain taxing entities under Pass-Through Agreements. See the captions “PROPERTY TAXATION IN

CALIFORNIA—Property Tax Collection Procedures—Property Tax Administrative Costs” for a description

of the County’s administrative costs and “SECURITY FOR THE 2018 BONDS—Pass-Through Agreements”

for a description of the Pass-Through Agreements. The Statutory Pass-Through Amounts have been

subordinated to the 2018 Bonds, subject to compliance with certain procedures set forth in the Dissolution Act.

See the caption “SECURITY FOR THE 2018 BONDS—Tax Increment Financing—Tax Sharing.”

Upon the issuance of the 2018 Bonds and the completion of the refundings described under the

caption “REFUNDING PLAN” there will be no bonds or agreements outstanding with a pledge or lien on the

Pledged Tax Revenues senior to or on a parity with the 2018 Bonds.

5

Issuance of Parity Debt

The Indenture permits the Agency to issue Parity Debt to refund outstanding 2018 Bonds or Parity

Debt, subject to compliance with certain requirements set forth in the Indenture. See “SECURITY FOR THE

2018 BONDS—Issuance of Additional Indebtedness.”

Bond Insurance

The scheduled payment of principal of and interest on the 2018 Bonds when due will be guaranteed

under the Policy to be issued concurrently with the delivery of the 2018 Bonds by Build America Mutual

Assurance Company (“the 2018 Insurer” or “BAM”). See the captions “—Authority and Purpose” and

“BOND INSURANCE.”

Reserve Account

A Reserve Account for the 2018 Bonds is established pursuant to the Indenture in an amount equal to

the Reserve Requirement of $1,403,000. See “SECURITY FOR THE 2018 BONDS—Redevelopment

Obligation Retirement Fund; Deposit of Pledged Tax Revenues.”

The Reserve Account will also secure Parity Debt, if issued in the future by the Agency in the form of

Bonds pursuant to a Supplemental Indenture. The Reserve Requirement will be calculated with respect to the

2018 Bonds and each series of Parity Debt issued as Bonds pursuant to a Supplemental Indenture, as of any

date of computation, as the lesser of: (i) 125% of the average Annual Debt Service with respect to such series

of Bonds, (ii) Maximum Annual Debt Service with respect to such series of Bonds, or (iii) with respect to an

individual series of Bonds, 10% of the original principal amount of such series of Bonds (or, if such series of

Bonds has more than a de minimis amount of original issue discount or premium, 10% of the issue price of

such series of Bonds); provided, that in no event will the Agency, in connection with the issuance of Parity

Debt pursuant to a Supplemental Indenture be obligated to deposit an amount in the Reserve Account which is

in excess of the amount permitted by the applicable provisions of the Code to be so deposited from the

proceeds of tax-exempt bonds without having to restrict the yield of any investment purchased with any

portion of such deposit and, in the event the amount of any such deposit into the Reserve Account is so limited,

the Reserve Requirement will, in connection with the issuance of such Parity Debt pursuant to a Supplemental

Indenture, be increased only by the amount of such deposit as permitted by the Code; and, provided further

that the Agency may meet all or a portion of the Reserve Requirement by depositing a Qualified Reserve

Account Credit Instrument meeting the requirements of the Indenture. See “SECURITY FOR THE 2018

BONDS—Transfer of Amounts by Trustee.”

The Reserve Requirement is initially being satisfied by the deposit of the Reserve Policy into the

Reserve Account. See “BOND INSURANCE.”

Further Information

Brief descriptions of the 2018 Bonds, the Indenture, the Agency, the Former Agency and the City are

included in this Official Statement. Such descriptions and information do not purport to be comprehensive or

definitive. All references herein to the Indenture, the Bond Law, the Redevelopment Law, the Dissolution Act,

the Constitution and the laws of the State as well as the proceedings of the Former Agency, the Agency and the

City are qualified in their entirety by reference to such documents. References herein to the 2018 Bonds are

qualified in their entirety by the form thereof included in the Indenture and the information with respect thereto

included herein, copies of which are all available for inspection at the offices of the Agency. Copies of the

forms of all documents are available from the City Clerk’s office, City of Cudahy, 5220 Santa Ana Street,

Cudahy, California 90201.

Capitalized terms used herein and not defined have the meanings set forth in Appendix B.

6

Changes Since the Preliminary Official Statement

Changes have been made under the caption “SECURITY FOR THE 2018 BONDS—Pass-Through

Agreements” relating to the outstanding balance of the County Deferral Loan (defined herein).

REFUNDING PLAN

General

The Agency expects to apply a portion of the proceeds of the 2018 Bonds, together with other funds

on hand, to refund on a current basis all amounts payable pursuant to the following outstanding obligations of

the Agency (collectively, the “Refunded Obligations”).

1. Cudahy Redevelopment Agency Cudahy Redevelopment Project Subordinated Tax

Allocation Refunding Bonds, Series 1999 (Taxable)

2. Cudahy Community Development Commission City-Wide Redevelopment Project Tax

Allocation Refunding Bonds, Series 2003A (Tax Exempt)

3. Cudahy Community Development Commission City-Wide Redevelopment Project Tax

Allocation Refunding Bonds, Series 2003C (Tax Exempt-Subordinate)

4. Cudahy Community Development Commission City-Wide Redevelopment Project, Tax

Allocation Bonds, Series 2011A (Housing Projects)

5. Cudahy Community Development Commission, City-Wide Redevelopment Project Tax

Allocation Bonds, Series 2011B (Redevelopment Projects)

The Agency is issuing the 2018 Bonds to provide moneys (together with other available funds of the

Agency) necessary to refund the Refunded Obligations in whole. On the date of issuance of the 2018 Bonds, a

portion of the proceeds of the 2018 Bonds and other available funds of the Agency will be transferred,

pursuant to separate escrow agreements for each of the Refunded Obligations (each an “Escrow Agreement”),

to The Bank of New York Mellon Trust Company, N.A. (the “Escrow Bank”). Such moneys shall be applied

by the Escrow Bank to the redemption and defeasance of the Refunded Obligations.

The amounts held by the Escrow Bank under each Escrow Agreement are pledged solely to the

redemption of the applicable series of outstanding Refunded Obligations. The moneys deposited with the

Escrow Bank under the Escrow Agreements will not be available for the payments of principal of and interest

on the 2018 Bonds.

Sufficiency of the deposits to the Escrow Funds for the redemption of the Refunded Obligations will

be verified by Causey Demgen & Moore P.C., Denver, Colorado (the “Verification Agent”). Assuming the

accuracy of such computations, as a result of the deposit and application of funds as provided in the Escrow

Agreements, the applicable series of Refunded Obligations will be defeased pursuant to the provisions of the

indenture under which such series of Refunded Obligations was issued as of the date of issuance of the 2018

Bonds.

Verification of Mathematical Computations

Upon issuance of the 2018 Bonds, the Verification Agent will deliver a report on the mathematical

accuracy of certain computations based upon certain information and assertions provided to it by the Underwriter relating to the adequacy of the cash to be deposited in the respective escrow funds to pay the

Redemption Price of the Refunded Obligation.

7

Sources and Uses of Funds

The estimated sources and uses of the 2018 Bonds and other available moneys are summarized as

follows:

Sources:

Principal Amount of 2018 Bonds $ 14,030,000.00

Plus Other Available Moneys(1)

4,380,577.87

Total Sources: $ 18,410,577.87

Uses:

Refunding Fund $ 17,930,250.35

Costs of Issuance Fund(2)

480,327.52

Total Uses: $ 18,410,577.87 (1) Includes moneys on deposit in funds and accounts of the Refunded Obligations.

(2) Includes fees and expenses of Bond and Disclosure Counsel, Municipal Advisor, Fiscal Consultant, Trustee, Escrow Agent,

Verification Agent and City Attorney, printing expenses, rating agency fees, Underwriter’s discount, premiums for the

Policy and Reserve Policy, and other miscellaneous costs.

THE 2018 BONDS

Authority for Issuance

The 2018 Bonds are authorized for issuance pursuant to the Indenture, the Bond Law, the

Redevelopment Law and the Dissolution Act. Direction to undertake the issuance of the 2018 Bonds and the

execution of the related documents was authorized by the Agency pursuant to Resolution No. SA 18-02

adopted on April 17, 2018 (the “Resolution”), and by the Oversight Board of the Agency pursuant to

Resolution No. OB 18-04 adopted on May 17, 2018 (the “Oversight Board Action”).

Written notice of the Oversight Board Action was provided to the State Department of Finance (the

“DOF”) pursuant to the Dissolution Act, and the DOF requested a review within five business days of such

written notice. On July 18, 2018, which is within the time period allotted under the Dissolution Act for the

DOF to review the Oversight Board’s approving resolution, the DOF provided a letter to the Agency stating

that based on the DOF’s review and application of the law, the Oversight Board Action approving the 2018

Bonds is approved by the DOF. A copy of the DOF’s letter is set forth in Appendix F.

Description of the 2018 Bonds

The 2018 Bonds will be issued in fully registered form without coupons in denominations of $5,000 or

any integral multiple thereof, so long as no 2018 Bond will have more than one maturity date. The 2018

Bonds will be dated as of their Closing Date.

Interest on the 2018 Bonds will be payable semiannually on April 1 and October 1 in each year,

commencing on April 1, 2019 (each, an “Interest Payment Date”). Each 2018 Bond will bear interest

(calculated on the basis of a 360-day year comprised of twelve 30-day months) from the Interest Payment Date

next preceding the date of authentication thereof, unless (a) it is authenticated after a Record Date and on or

before the following Interest Payment Date, in which event it will bear interest from such Interest Payment

Date; or (b) it is authenticated on or before March 15, 2019, in which event it will bear interest from its

Closing Date; provided, however, that if, as of the date of authentication of any 2018 Bond, interest thereon is

in default, such 2018 Bond will bear interest from the Interest Payment Date to which interest has previously

been paid or made available for payment thereon.

8

Interest on the 2018 Bonds (including the final interest payment upon maturity) is payable when due

by check or draft of the Trustee mailed on the Interest Payment Date to the Owner thereof at such Owner’s

address as it appears on the Registration Books at the close of business on the preceding Record Date;

provided that at the written request of the Owner of at least $1,000,000 aggregate principal amount of the 2018

Bonds, which written request is on file with the Trustee as of any Record Date, interest on such 2018 Bonds

will be paid on the succeeding Interest Payment Date by wire to such account in the United States as will be

specified in such written request. The principal of the 2018 Bonds and premium, if any, upon redemption, are

payable in lawful money of the United States of America upon presentation and surrender thereof at the

Principal Corporate Trust Office of the Trustee.

Book-Entry System

DTC will act as securities depository for the 2018 Bonds. The 2018 Bonds will be issued as fully-

registered securities registered in the name of Cede & Co. (DTC’s partnership nominee) or such other name as

may be requested by an authorized representative of DTC. One fully-registered certificate will be issued for

each maturity of the 2018 Bonds, each in the aggregate principal amount of such maturity, and will be

deposited with DTC. See Appendix D for further information with respect to DTC and its book-entry system.

Redemption

The 2018 Bonds are not subject to redemption prior to maturity.

Annual Debt Service

The table below sets forth the annualized debt service on the 2018 Bonds.

Bond Year

(Amount Payable

as of October 1) Principal Interest Total

2019 $ 1,360,000 $ 495,337.91 $ 1,855,337.91

2020 1,405,000 449,028.82 1,854,028.82

2021 1,450,000 405,150.68 1,855,150.68

2022 1,490,000 357,460.16 1,847,460.16

2023 1,540,000 307,187.56 1,847,187.56

2024 1,590,000 253,687.96 1,843,687.96

2025 1,640,000 196,606.96 1,836,606.96

2026 1,700,000 135,270.96 1,835,270.96

2027 1,855,000 71,027.96 1,926,027.96

Total 14,030,000 2,670,758.97 16,700,758.97

Source: Underwriter.

SECURITY FOR THE 2018 BONDS

General

The Dissolution Act requires the County Auditor-Controller to determine the amount of property taxes

that would have been allocated to the Former Agency (pursuant to subdivision (b) of Section 16 of Article XVI

of the State Constitution) had the Former Agency not been dissolved pursuant to the operation of AB X1 26,

using current assessed values on the last equalized roll on August 20, and to deposit such amount in the

Redevelopment Property Tax Trust Fund for the Agency established and held by the County

Auditor-Controller pursuant to the Dissolution Act. Section 34177.5(g) of the Dissolution Act provides that

any bonds authorized to be issued by the Agency will be considered indebtedness incurred by the dissolved

9

Former Agency, with the same legal effect as if the bonds had been issued prior to the effective date of

AB X1 26, in full conformity with the applicable provision of the Redevelopment Law that existed prior to that

date; will be included in the Agency’s Recognized Obligation Payment Schedule and will be secured by a

pledge of, and lien on, and will be repaid from moneys deposited from time to time in the Redevelopment

Property Tax Trust Fund established pursuant to the Dissolution Act. Property tax revenues pledged to any

bonds authorized to be issued by the Agency under the Dissolution Act, including the 2018 Bonds, are taxes

allocated to the Agency pursuant to subdivision (b) of Section 33670 of the Redevelopment Law and

Section 16 of Article XVI of the State Constitution. See Appendix B and the caption “—Recognized

Obligation Payment Schedule.”

Pursuant to Section 33670(b) of the Redevelopment Law and Section 16 of Article XVI of the State

Constitution, and as provided in the Redevelopment Plan for the Project Area, taxes levied upon taxable

property in the Project Area each year by or for the benefit of the State, any city, county, district, or other

public corporation (herein sometimes collectively called “taxing agencies”) after the effective date of the

ordinance approving the redevelopment plan, or the respective effective dates of ordinances approving

amendments to the redevelopment plan that added territory to the Project Area, as applicable, are to be divided

as follows:

(a) To Taxing Agencies: That portion of the taxes which 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 applicable Project Area as shown upon the assessment roll used in connection

with the taxation of such property by such taxing agency last equalized prior to the effective date of the

ordinance adopting the redevelopment plan, or the respective effective dates of ordinances approving

amendments thereto that added territory to the Project Area, as applicable (each, a “base year valuation”), will

be allocated to, and when collected will be paid into, the funds of the respective taxing agencies as taxes by or

for the taxing agencies on all other property are paid; and

(b) To the Former Agency/Agency: Except for that portion of the taxes in excess of the amount

identified in (a) above which are 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 the principal of, and the interest on,

any bonded indebtedness approved by the voters of the taxing agency on or after January 1, 1989 for the

acquisition or improvement of real property, which portion shall be allocated to, and when collected shall be

paid into, the fund of that taxing agency (as discussed under the caption “PROPERTY TAXATION IN

CALIFORNIA—Article XIIIA of the State Constitution”), that portion of the levied taxes each year in excess

of such amount, annually allocated within the redevelopment plan limit, when collected will be paid into a

special fund of the Former Agency. Section 34172(a) of the Dissolution Act provides that, for purposes of

Section 16 of Article XVI of the State Constitution, the Redevelopment Property Tax Trust Fund will be

deemed to be a special fund of the Agency to pay the debt service on indebtedness incurred by the Former

Agency or the Agency to finance or refinance the redevelopment projects of the Former Agency.

That portion of the levied taxes described in paragraph (b) above constitutes the amount required

under the Dissolution Act to be deposited by the County Auditor-Controller into the Redevelopment Property

Tax Trust Fund. In addition, Section 34183 of the Dissolution Act effectively eliminates the January 1, 1989

date referred to in paragraph (b) above. SB 107 provides that debt service override revenues approved by the

voters for the purpose of supporting pension programs or capital projects or programs related to the State

Water Project that are not pledged to or not needed for debt service on Agency debt will be allocated and paid

to the entity that levies the override. The MWD levies a tax rate override, which is pledged to pay debt service

on the 2018 Bonds and would be available to pay debt service on the 2018 Bonds if needed. However, the

County Auditor-Controller will pay MWD’s override taxes to MWD unless the Agency informs the County

Auditor-Controller that such amounts are needed to pay debt service on the 2018 Bonds. The MWD override

was approximately $18,899 for fiscal year 2017-18 and will decline over time, until fiscal year 2034-35, in

which the override tax rate will expire. The projections of Pledged Tax Revenues set forth in Tables 7 and 8

10

under the caption “PLEDGED TAX REVENUES—Projected Pledged Tax Revenues” do not include override

tax revenues.

The 2018 Bonds are payable from and secured by deposits into the Redevelopment Property Tax Trust

Fund to be derived from the Project Area on a subordinate basis to amounts required to pay certain County

administrative costs to the County and to pay amounts due to certain taxing entities under the Pass-Though

Agreements and 33676 Amounts. See the captions “—Tax Increment Financing—Tax Sharing” and

“PROPERTY TAXATION IN CALIFORNIA—Property Tax Collection Procedures—Property Tax Administrative Costs.”

The Agency has no power to levy and collect taxes, and various factors beyond its control could affect

the amount of Pledged Tax Revenues available in any fiscal year (defined as July 1 through June 30) to pay the

principal of and interest on the 2018 Bonds. See the captions “—Tax Increment Financing,” “—Recognized

Obligation Payment Schedule,” “PROPERTY TAXATION IN CALIFORNIA” and “RISK FACTORS.”

The 2018 Bonds are not a debt of the City, the State, or any of its political subdivisions (other than the

Agency), and neither said City, said State, nor any of its political subdivisions (other than the Agency) is liable

thereon, nor in any event will the 2018 Bonds be payable out of any funds or properties other than those of the

Agency. The 2018 Bonds do not constitute an indebtedness within the meaning of any constitutional or

statutory debt limitation or restriction.

Pledged Tax Revenues

The Indenture provides that all Pledged Tax Revenues and the Redevelopment Obligation Retirement

Fund, including the Special Fund therein, and all amounts in the Redevelopment Property Tax Trust Fund,

including without limitation any override tax revenues attributable to tax rate overrides levied by taxing

agencies within the Project Area that were pledged to the Refunded Obligations, are irrevocably pledged to

secure the payment of the principal of and interest on the 2018 Bonds and all Parity Debt without preference or

priority for series, issue, number, dated date, sale date, date of execution or date of delivery. Such pledge will

constitute a first and exclusive lien on and security interest in the Pledged Tax Revenues and the

Redevelopment Obligation Retirement Fund, including the Special Fund therein, and all amounts in the

Redevelopment Property Tax Trust Fund, including without limitation any override tax revenues that were

pledged to the Refunded Obligations, and will attach, be perfected and be valid and binding against all parties

having claims of any kind in tort, contract or otherwise against the Agency, irrespective of whether such

parties have notice of the Indenture; provided however, that the County Auditor-Controller is authorized by

Section 34183(a) of the Dissolution Act to use Pledged Tax Revenues to pay the County’s administrative costs

allowed under Section 34182 and Section 95.3 of the Revenue and Taxation Code and is required by

Section 34183 of the Dissolution Act to pay Pledged Tax Revenues to taxing entities pursuant to the Pass-

Through Agreements, Statutory Pass-Through Amounts and 33676 Amounts (unless such payments are

subordinated to payments on the 2018 Bonds and Parity Debt pursuant to Section 33607.5(e) of the

Redevelopment Law or Section 34177.5(c) of the Dissolution Act). Except for the Pledged Tax Revenues,

such amounts and such funds and accounts, no other moneys, funds, accounts 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 2018 Bonds or Parity Debt except as provided in the following paragraph with respect to the 2018 Bonds.

MWD levies a tax rate override, which is pledged to pay debt service on the 2018 Bonds and would be

available to pay debt service on the 2018 Bonds if needed. However, the County Auditor-Controller will pay

MWD’s override taxes to MWD unless the Agency informs the County Auditor-Controller that such amounts

are needed to pay debt service on the 2018 Bonds. See the caption “—General” above and the projections of

Pledged Tax Revenues set forth in Tables 7 and 8 under the caption “PLEDGED TAX REVENUES—

Projected Pledged Tax Revenues.” The Statutory Pass-Through Amounts have been subordinated to the 2018

Bonds, subject to compliance with certain procedures set forth in the Dissolution Act. See the captions

“SECURITY FOR THE 2018 BONDS—Tax Increment Financing—Tax Sharing.”

11

The Indenture further provides that the Debt Service Fund and any fund or account created under the

Indenture, including amounts on deposit therein (including proceeds of the 2018 Bonds), are irrevocably

pledged under the Indenture to secure the payment of the principal of and interest on the 2018 Bonds and other

Bonds without preference or priority for series issue, number, dated date, sale date, date of execution or date of

delivery. Such pledge will constitute a first and exclusive lien on and security interest in the Debt Service

Fund and any other fund or account created under the Indenture, and including amounts on deposit therein

(including proceeds of the 2018 Bonds), and will attach, be perfected and be valid and binding against all

parties having claims of any kind in tort, contract or otherwise against the Agency, irrespective of whether

such parties have notice of the Indenture.

Pursuant to Section 34177.5(g) of the Dissolution Act, except as provided in the Indenture, the 2018

Bonds and Parity Debt will be secured by a pledge of and lien on moneys deposited in the Redevelopment

Property Tax Trust Fund held by the County Auditor-Controller related to the Agency, which moneys, subject

to the payment by the County Auditor-Controller of certain amounts to pay County administrative expenses as

allowed under Section 34182 and Section 95.3 of the Revenue and Taxation Code and to taxing entities

pursuant to the Pass-Through Agreements and Sections 33607.5, 33607.7 and 33676 of the Redevelopment

Law, constitute Pledged Tax Revenues under the Indenture. See the caption “—Tax Increment Financing—

Tax Sharing” below.

As defined in the Indenture, “Pledged Tax Revenues” means all taxes (i) that were eligible for

allocation to the Former Agency with respect to the Project Area and are allocated to the Agency 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, or pursuant to other applicable State laws and (ii) that are

deposited by the County Auditor-Controller in the Redevelopment Property Tax Trust Fund, all as provided in

Section 34172(d) of the Dissolution Act. See Appendix B.

Pursuant to the Dissolution Act, former tax increment revenues generated in the Project Area are no

longer required to be deposited into the Low and Moderate Income Housing Fund. Accordingly, and because,

following the issuance of the 2018 Bonds and redemption of the Refunded Obligations, the Agency will have

no obligations that are payable from the Low and Moderate Income Housing Fund, such revenues are now

available and pledged to the repayment of the 2018 Bonds and any Parity Debt. See “SECURITY FOR THE

2018 BONDS—Tax Increment Financing—Elimination of Housing Set-Aside.”

Taxes levied on the property within the Project Area on that portion of the taxable valuation over and

above the taxable valuation of the applicable base year property tax roll with respect to the various territories

within the Project Area, to the extent that they constitute Pledged Tax Revenues as described below, will be

deposited in the Redevelopment Property Tax Trust Fund for transfer by the County Auditor-Controller to the

Agency’s Redevelopment Obligation Retirement Fund on January 2 and June 1 of each year to the extent

required for payments listed in the Agency’s approved Recognized Obligation Payment Schedule in

accordance with the requirements of the Dissolution Act. See the caption “—Recognized Obligation Payment

Schedule.” Moneys deposited by the County Auditor-Controller into the Agency’s Redevelopment Obligation

Retirement Fund will be transferred by the Agency to the Trustee for deposit in the Debt Service Fund

established under the Indenture and administered by the Trustee in accordance with the Indenture.

In consideration of the acceptance of the 2018 Bonds and other Bonds by those who will hold the

same from time to time, the Indenture constitutes a contract between the Agency and the Owners from time to

time of the 2018 Bonds, and the covenants and agreements set forth in the Indenture to be performed on behalf

of the Agency will be for the equal and proportionate benefit, security and protection of all Owners of the 2018

Bonds and other Bonds without preference, priority or distinction as to security or otherwise of any of the 2018

Bonds and other 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 in the Indenture.

12

Redevelopment Obligation Retirement Fund; Deposit of Pledged Tax Revenues

The Agency has established the Redevelopment Obligation Retirement Fund and the Special Fund

therein pursuant to Section 34170.5(a) of the Dissolution Act, which the Agency will continue to hold so long

as any of the 2018 Bonds are Outstanding. The Indenture also establishes a separate fund known as the “Debt

Service Fund” and the accounts therein which will be held by the Trustee. The Agency will deposit all of the

Pledged Tax Revenues received in any Bond Year in the Special Fund promptly upon receipt by the Agency,

and thereafter will transfer amounts received to the Debt Service Fund until such time as the amounts so

transferred to the Debt Service Fund equal the aggregate amounts required to be deposited by the Trustee into

the Interest Account, the Principal Account, and the Reserve Account of the Debt Service Fund pursuant to the

Indenture on the next succeeding Interest Payment Date following such receipt of Pledged Tax Revenues by

the Agency and for deposit in the funds and accounts established with respect to Parity Debt on the next

succeeding Interest Payment Date following such receipt of Pledged Tax Revenues by the Agency, as provided

in any Supplemental Indenture.

Transfer of Amounts by Trustee

The Indenture creates accounts within the Debt Service Fund as set forth below, to be known

respectively as the Interest Account, the Principal Account, and the Reserve Account. Moneys in the Debt

Service Fund will be transferred by the Trustee in the following amounts at the following times, for deposit in

the following respective accounts within the Debt Service Fund, which are established with the Trustee by the

Indenture, in the following order of priority (provided further that, if on the fifth (5th) Business Day prior to

the date the Agency is required to transfer amounts on deposit in the Special Fund to the Trustee there are not

amounts on deposit therein sufficient to make the following deposits, taking into account amounts required to

be transferred with respect to Bonds other than the 2018 Bonds, the Agency will immediately notify the

Trustee of the amount of any such insufficiency and the Trustee will deposit amounts received from the

Agency into sub-accounts of the Interest Account and/or Principal Account, as applicable, on a pro-rata basis):

Interest Account. On or before the fifth (5th) Business Day preceding each Interest Payment Date,

commencing with the Interest Payment Date of April 1, 2019, the Agency will withdraw from the Special

Fund and transfer to the Trustee, for deposit in the Interest Account an amount which when added to the

amount contained in the Interest Account on that date, will be equal to the aggregate amount of the interest

becoming due and payable on the Outstanding Bonds on such Interest Payment Date. No such transfer and

deposit need be made to the Interest Account if the amount contained therein is at least equal to the interest to

become due on the next succeeding Interest Payment Date upon all of the Outstanding Bonds. All moneys in

the Interest Account will be used and withdrawn by the Trustee solely for the purpose of paying the interest on

the 2018 Bonds as it becomes due and payable.

Principal Account. On or before the fifth (5th) Business Day preceding October 1 in each year

beginning October 1, 2019 (with respect to the 2018 Bonds), the Agency will 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 contained in the Principal Account, will be equal to the principal becoming due and payable on the

Outstanding 2018 Bonds, including pursuant to mandatory sinking account redemption, on the next October 1.

No such transfer and deposit need be made to the Principal Account if the amount contained therein is at least

equal to the principal to become due on the next October 1 on all of the Outstanding 2018 Bonds. All moneys

in the Principal Account will be used and withdrawn by the Trustee solely for the purpose of paying the

principal of the 2018 Bonds, including by mandatory sinking account redemption, as the same becomes due

and payable.

Reserve Account. There has been established in the Debt Service Fund by the Indenture a separate

fund and account known as the “Reserve Account” solely as security for payments on the 2018 Bonds payable

by the Agency pursuant to the Indenture, which will be held by the Trustee in trust for the benefit of the

Owners of the 2018 Bonds.

13

The Reserve Requirement with respect to the 2018 Bonds is $1,403,000. “Reserve Requirement” is

defined in the Indenture as an amount calculated, with respect to the 2018 Bonds and each series of Parity Debt

issued as Bonds pursuant to a Supplemental Indenture, as the lesser of: (i) 125% of the average Annual Debt

Service with respect to such series of Bonds, (ii) Maximum Annual Debt Service with respect to such series of

Bonds, or (iii) with respect to an individual series of Bonds (or multiple series issued pursuant to a single

Supplemental Indenture), 10% of the original principal amount of such series of Bonds (or, if such series, or

multiple series, of Bonds has more than a de minimis amount of original issue discount or premium, 10% of

the issue price of such series, or multiple series, of Bonds); provided, that in no event will the Agency, in

connection with the issuance of Parity Debt pursuant to a Supplemental Indenture be obligated to deposit an

amount in the Reserve Account which is in excess of the amount permitted by the applicable provisions of the

Code to be so deposited from the proceeds of tax-exempt bonds without having to restrict the yield of any

investment purchased with any portion of such deposit and, in the event the amount of any such deposit into

the Reserve Account is so limited, the Reserve Requirement will, in connection with the issuance of such

Parity Debt pursuant to a Supplemental Indenture, be increased only by the amount of such deposit as

permitted by the Code; and, provided further that the Agency may meet all or a portion of the Reserve

Requirement by depositing a Qualified Reserve Account Credit Instrument meeting the requirements of the

Indenture. See the caption “INTRODUCTORY STATEMENT—Reserve Account.”

The Reserve Requirement for the 2018 Bonds will be satisfied by the delivery of the 2018 Reserve

Policy by the 2018 Insurer on the Closing Date with respect to the 2018 Bonds. The Agency will have no

obligation to replace the 2018 Reserve Policy or to fund the Reserve Account with cash if, at any time that the

2018 Bonds are Outstanding, any rating assigned to the 2018 Insurer is downgraded, suspended or withdrawn

or amounts are not available under the 2018 Reserve Policy, other than in connection with a draw on the 2018

Reserve Policy.

No Reserve Account for Parity Debt Not Issued as Bonds. The Indenture permits the issuance of

Parity Debt under a Parity Debt Instrument without funding the Reserve Requirement with respect to such

Parity Debt in the Reserve Account. The Agency may be more likely to default on the payment of Parity Debt

issued without funding the Reserve Requirement and in the event the Agency has insufficient revenues to pay

debt service on the 2018 Bonds and Parity Debt, Pledged Tax Revenues would be applied pro-rata to the

payment of such Parity Debt and the 2018 Bonds. See the captions “SECURITY FOR THE 2018 BONDS—

Issuance of Additional Indebtedness” and “RISK FACTORS—Parity Debt Issued Without Reserve.”

See Appendix B under the caption “SECURITY OF BONDS; FLOW OF FUNDS—Deposit of

Amounts by Trustee—Reserve Account” for further information with respect to the procedure for drawing

upon the Reserve Account.

Tax Increment Financing

General. Prior to the enactment of AB X1 26, the Redevelopment Law authorized the financing of

redevelopment projects through the use of tax increment revenues. This method provided that the taxable

valuation of the property within a redevelopment project area on the property tax roll last equalized prior to the

effective date of the ordinance which adopts the redevelopment plan becomes the base year valuation.

Assuming that the taxable valuation exceeds the base year level, the taxing agencies thereafter received that

portion of the taxes produced by applying then current tax rates to the base year valuation, and the

redevelopment agency was allocated the remaining portion produced by applying then current tax rates to the

increase in valuation over the base year. Such incremental tax revenues allocated to a redevelopment agency

were authorized to be pledged to the payment of agency obligations.

The Dissolution Act authorizes refunding bonds, including the 2018 Bonds, that are issued by a

successor agency to be secured by a pledge of moneys deposited from time to time in a Redevelopment

Property Tax Trust Fund held by a county auditor-controller with respect to that successor agency, which are

equivalent to the tax increment revenues that were formerly allocated under the Redevelopment Law to the

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redevelopment agency and formerly authorized under the Redevelopment Law to be used for the financing of

redevelopment projects, less amounts deducted pursuant to Section 34183(a) of the Dissolution Act for

permitted administrative costs of the county auditor-controller. Under the Indenture, Pledged Tax Revenues

consist of the amounts deposited from time to time in the Redevelopment Property Tax Trust Fund established

pursuant to and as provided in the Dissolution Act. Successor agencies have no power to levy property taxes

and must look specifically to the allocation of taxes as described above. See the caption “RISK FACTORS.”

Tax Sharing. The Redevelopment Law authorized redevelopment agencies to make payments to

school districts and other taxing agencies to alleviate any financial burden or detriments to such taxing

agencies caused by a redevelopment project. The Former Agency entered into eight agreements for this

purpose. (See the caption “—Pass-Through Agreements” below.) Additionally, Sections 33607.5 and 33607.7

of the Redevelopment Law required mandatory tax sharing applicable to redevelopment projects adopted after

January 1, 1994, or amended thereafter in certain manners specified in such statutes (the “Statutory Pass-

Through Amounts”). (See the caption “—Statutory Pass-Through Amounts” below.) Further, redevelopment

project areas adopted between January 1, 1985 and January 1, 1994 were subject to payments to schools and to

other affected taxing agencies that elected to receive tax revenue payments set forth under Section 33676 of the

Law (“33676 Amounts”). (See the caption “—Section 33676 Election” below.)

The Dissolution Act requires the County Auditor-Controller to distribute from the Redevelopment

Property Tax Trust Fund amounts required to be distributed pursuant to Pass-Through Agreements or as

Statutory Pass-Through Amounts or 33676 Amounts to the taxing entities on each January 2 and June 1 before

amounts are distributed by the County Auditor-Controller from the Redevelopment Property Tax Trust Fund to

the Agency’s Redevelopment Obligation Retirement Fund, unless: (i) pass-through payment obligations have

been made subordinate to debt service payments for the bonded indebtedness of the Agency; (ii) the Agency

has reported, no later than the December 1 and May 1 preceding the applicable January 2 or June 1 distribution

date, that the total amount available to the Agency from the Redevelopment Property Tax Trust Fund

allocation to the Agency’s Redevelopment Obligation Retirement Fund, from other funds transferred from the

Former Agency and from funds that have or will become available through asset sales and all redevelopment

operations, is insufficient to fund the Agency’s enforceable obligations, pass-through payments and the

Agency’s administrative cost allowance for the applicable six-month period; and (iii) the State Controller has

concurred with the Agency that there are insufficient funds for such purposes for the applicable six-month

period.

The Dissolution Act provides for a procedure by which the Agency may make Statutory Pass-Through

Amounts subordinate to the 2018 Bonds. The Agency has undertaken the requisite procedures to obtain

subordination of the Statutory Pass-Through Amounts and, therefore, amounts due as Statutory Pass-Through

Amounts are junior in payment priority to the 2018 Bonds, subject to compliance with the procedures set forth

in the Dissolution Act, as described above. See the caption “PLEDGED TAX REVENUES” for projections of

Pledged Tax Revenues, which take into account projected payments under Pass-Through Agreements. See

“THE PROJECT AREA” for additional information regarding assessed values and tax revenues generated in

the Project Area.

Elimination of Housing Set-Aside. Before the dissolution of the Former Agency, the Redevelopment

Law required the Former Agency to set aside not less than 20% of the gross tax increment allocated to the

Former Agency from the Project Area, i.e., the “Housing Set-Aside,” in the Former Agency’s Low and

Moderate Income Housing Fund, to be expended for low and moderate income housing purposes. Generally,

the Former Agency was authorized to use the Housing Set-Aside to pay debt service on bonds solely to the

extent that the proceeds of such bonds were used to finance or refinance low and moderate income housing

projects. In contrast, under the Redevelopment Law, the Former Agency was authorized to use the portion of

tax increment that was not part of the Housing Set-Aside (the “Non-Housing Portion”) to pay debt service on

all bonds and other indebtedness of the Former Agency incurred to finance or refinance redevelopment

projects for the Project Area, subject to limitations set forth in the indentures or other governing documents.

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The Dissolution Act has eliminated the Low and Moderate Income Housing Fund and the requirement

to deposit the Housing Set-Aside into such fund. None of the property tax revenues deposited in the

Redevelopment Property Tax Trust Fund are designated as the Housing Set-Aside because the Agency has no

obligations that are payable from the Housing Set-Aside. The Redevelopment Property Tax Trust Fund flow

of funds under the Dissolution Act makes no distinction between bonds that were, in whole or in part, secured

by and payable from the Housing Set-Aside and bonds that were solely secured by and payable from the Non-

Housing Portion. In effect, after the Former Agency’s dissolution, all of the Agency’s outstanding bonds are

paid from Redevelopment Property Tax Trust Fund disbursements without distinction between obligations

related to housing and non-housing projects.

Recognized Obligation Payment Schedule

On or before each February 1, with respect to each fiscal year, the Dissolution Act requires successor

agencies to prepare and approve, and submit to the successor agency’s oversight board and the DOF for

approval, a Recognized Obligation Payment Schedule pursuant to which enforceable obligations (as such term

is defined in the Dissolution Act) of the successor agency are listed, together with the source of funds to be

used to pay for each enforceable obligation. As defined in the Dissolution Act, “enforceable obligation”

includes bonds, including the required debt service, reserve set-asides and any other payments required under

an indenture or similar documents governing the issuance of the outstanding bonds of the former

redevelopment agency, as well as other obligations such as loans, judgments or settlements against the former

redevelopment agency, any legally binding and enforceable agreement that is not otherwise void as violating

the debt limit or public policy, contracts necessary for the administration or operation of the successor agency,

and amounts borrowed from the Low and Moderate Income Housing Fund. A reserve may be included on the

Recognized Obligation Payment Schedule and held by the successor agency when required by the bond

indenture or when the next property tax allocation will be insufficient to pay all obligations due under the

provisions of the bond for the next payment due in the following half of the calendar year.

Under the Dissolution Act, the categories of sources of payments for enforceable obligations listed on

a Recognized Obligation Payment Schedule are the following: (i) the Low and Moderate Income Housing

Fund; (ii) bond proceeds; (iii) reserve balances; (iv) administrative cost allowance; (v) the Redevelopment

Property Tax Trust Fund (but only to the extent that no other funding source is available or when payment

from property tax revenues is required by an enforceable obligation or otherwise required under the

Dissolution Act); or (vi) other revenue sources (including rents, concessions, asset sale proceeds, interest

earnings, and any other revenues derived from the former redevelopment agency, as approved by the oversight

board).

The Dissolution Act provides that, commencing on the date that the first Recognized Obligation

Payment Schedule is valid, only those payments listed in the Recognized Obligation Payment Schedule may be

made by the Agency from the funds specified in the Recognized Obligation Payment Schedule. Each annual

Recognized Obligation Payment Schedule may be amended once, provided that (i) the Agency submits the

amendment to DOF no later than October 1, (ii) the Oversight Board makes a finding that the amendment is

necessary for the payment of approved enforceable obligations during the second half of the Recognized

Obligation Payment Schedule period (from January 1 to June 30, inclusive), and (iii) the Agency may only

amend the amount requested for payment of approved enforceable obligations. DOF shall notify the Agency

and the County Auditor-Controller as to whether the Agency’s requested amendment is approved at least

15 days before the January 2 property tax distribution.

The Recognized Obligation Payment Schedule must be submitted by the Agency, after approval by

the Oversight Board, to the County Administrative Officer, the County Auditor-Controller, the DOF and the

State Controller by February 1 in each year with respect to the Agency’s payment obligations during the next

fiscal year. If the Agency does not submit an Oversight Board-approved Recognized Obligation Payment Schedule by such deadline, the City will be subject to a civil penalty equal to $10,000 per day for every day

that the schedule is not submitted. Additionally, the Agency’s administrative cost allowance will be reduced

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by 25% for any fiscal year for which the Agency does not submit an Oversight Board-approved Recognized

Obligation Payment Schedule within 10 days of the February 1 deadline. If the Agency fails to submit a

Recognized Obligation Payment Schedule by the February 1 deadline, any creditor of the Agency or the DOF

or any affected taxing entity shall have standing to, and may request a writ of mandate to, require the Agency

to immediately perform this duty. For additional information regarding procedures under the Dissolution Act

relating to late Recognized Obligation Payment Schedules and implications thereof on the 2018 Bonds, see the

caption “RISK FACTORS—Recognized Obligation Payment Schedule.”

With respect to each Recognized Obligation Payment Schedule submitted by the Agency, the

Dissolution Act requires the DOF to make a determination of the enforceable obligations and the amounts and

funding sources available to pay approved enforceable obligations no later than April 15. Within five business

days of the determination by the DOF, the Agency may request additional review by the DOF and an

opportunity to meet and confer on disputed items, if any. The DOF will notify the Agency and the County

Auditor-Controller as to the outcome of its review at least 15 days before the June 1 property tax distribution

date preceding the applicable Recognized Obligation Payment Schedule period. Additionally, the County

Auditor-Controller may review a submitted Recognized Obligation Payment Schedule and object to the

inclusion of any items that are not demonstrated to be enforceable obligations and may object to the funding

source proposed for any items, provided that the County Auditor-Controller must provide notice of any such

objections to the Agency, the Oversight Board and the DOF at least 60 days prior to the next property tax

distribution date.

See the caption “—Last and Final Recognized Obligation Payment Schedule” for a description of the

Last and Final Recognized Obligation Payment Schedule authorized by the Dissolution Act pursuant to

SB 107.

In connection with the allocation and distribution by the County Auditor-Controller of property tax

revenues deposited in the Redevelopment Property Tax Trust Fund, under the Dissolution Act the County

Auditor-Controller must prepare estimates of the amounts of: (i) property tax to be allocated and distributed;

and (ii) the amounts of pass-through payments to be made for the upcoming fiscal year, and provide those

estimates to the entities receiving the distributions and DOF by no later than October 1 and April 1 of each

year, as applicable. If, after receiving such estimate from the County Auditor-Controller, the Agency

determines and reports, no later than December 1 or May 1, as applicable, that the total amount available to the

Agency from the Redevelopment Property Tax Trust Fund allocation to the Agency’s Redevelopment

Obligation Retirement Fund, from other funds transferred from the Former Agency and from funds that have

or will become available through asset sales and all redevelopment operations, is insufficient to fund the

payment of pass-through obligations, Agency enforceable obligations listed on the Recognized Obligation

Payment Schedule and the Agency’s administrative cost allowance, the County Auditor-Controller must notify

the State Controller and the DOF by no later than 10 days from the date of the Agency’s notification. If the

State Controller concurs that there are insufficient funds to pay required debt service, and if the Agency’s tax

sharing obligations described in Section 34183(a)(1) of the Dissolution Act have been subordinated to the

Agency’s enforceable obligations, then the Dissolution Act provides for certain adjustments to be made to the

estimated distributions, as described in more detail under the caption “—Tax Increment Financing—Tax

Sharing.”

The Dissolution Act provides that any bonds authorized to be issued by the Agency will be considered

indebtedness incurred by the dissolved Former Agency, with the same legal effect as if such bonds had been

issued prior to the effective date of AB X1 26, in full conformity with the applicable provision of the

Redevelopment Law that existed prior to such date, will be included in the Agency’s Recognized Obligation

Payment Schedule and will be secured by a pledge of, and lien on, and will be repaid from moneys deposited

from time to time in the Redevelopment Property Tax Trust Fund established pursuant to the Dissolution Act.

Additionally, if an enforceable obligation provides for an irrevocable commitment of property tax revenue and

where allocation of revenues is expected to occur over time, the Dissolution Act provides that a successor

agency may petition the DOF to provide written confirmation that its determination of such enforceable

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obligation as approved in a Recognized Obligation Payment Schedule is final and conclusive, and reflects the

DOF’s approval of subsequent payments made pursuant to the enforceable obligation. If the confirmation is

granted by the DOF, then the DOF’s review of such payments in each future Recognized Obligation Payment

Schedule will be limited to confirming that they are required by the prior enforceable obligation.

In order to ensure the timely payment of debt service on the 2018 Bonds, on or before each February 1

following the Closing Date (or at such earlier time as may be required by the Dissolution Act), for so long as

any Bonds are outstanding, the Agency shall submit an Oversight Board-approved Recognized Obligation

Payment Schedule to the DOF and to the County Auditor-Controller that shall include, from the first Pledged

Tax Revenues distributed to the Agency on each January 2 and June 1 RPTTF distribution date (subject to

payments to the County for administrative expenses and to certain taxing entities, as provided in the

Indenture): (i) all debt service due on all Outstanding 2018 Bonds and Parity Debt coming due during the

applicable ROPS Period (with one-half of such year’s debt service to be distributed from the Redevelopment

Property Tax Trust Fund on June 1 and the remainder of such year’s debt service to be distributed from the

Redevelopment Property Tax Trust Fund on January 2), as well as all amounts due and owing to any Insurer

under the Indenture, and (ii) any amount required to cure any deficiency in the Reserve Account pursuant to

the Indenture or a reserve account established under any Parity Debt Instrument (including any amounts

required due to a draw on the Qualified Reserve Account Credit Instrument as well as all amounts due and

owing to any Insurer under the Indenture).

The Agency covenants in the Indenture that it will comply with the requirements of the Dissolution

Act, including without limitation to file all required statements and hold all public hearings required under the

Dissolution Act to assure compliance by the Agency with its covenants under the Indenture. See Appendix B.

Last and Final Recognized Obligation Payment Schedule

SB 107 amended the Dissolution Act to permit a successor agency to submit a Last and Final

Recognized Obligation Payment Schedule (a “Last and Final ROPS”) for approval by the oversight board and

DOF if: (i) the successor agency’s only remaining debt is administrative costs and payments pursuant to

enforceable obligations with defined payment schedules, (ii) all remaining obligations have been previously

listed on a Recognized Obligation Payment Schedule and approved by DOF, and (iii) the successor agency is

not a party to outstanding or unresolved litigation. The Last and Final ROPS must list the remaining

enforceable obligations of the successor agency in the following order: (A) enforceable obligations to be

funded from the Redevelopment Property Tax Trust Fund, (B) enforceable obligations to be funded from bond

proceeds or other legally or contractually dedicated or restricted funding sources, and (C) loans or deferrals

authorized for repayment to the city that created the redevelopment agency or the successor to the former

redevelopment agency’s housing functions and assets. The Last and Final ROPS must also include the total

outstanding obligation and a schedule of remaining payments for each enforceable obligation described in

(A) and (B) above, and the total outstanding obligation and an interest rate of 4%, for any loans or deferrals

listed pursuant to (C) above. The Last and Final ROPS shall also establish the maximum amount of

Redevelopment Property Tax Trust Funds to be distributed to the successor agency for each remaining fiscal

year until all obligations have been fully paid. DOF approval is required for any Last and Final ROPS to

become effective. The county auditor-controller shall also review the Last and Final ROPS and provide any

objection to the inclusion of any items or amounts to DOF.

Successor agencies may only amend an approved Last and Final ROPS twice. Approval by the

oversight board and DOF is required for any amendment to a Last and Final ROPS to become effective. The

Dissolution Act provides DOF with 100 days to approve or deny an amendment to a Last and Final ROPS.

Each amended Last and Final ROPS approved by DOF shall become effective in the subsequent

Redevelopment Property Tax Trust Fund distribution period. If an amended Last and Final ROPS is approved

less than 15 days before the date of the property tax distribution, the Last and Final ROPS shall not be effective until the subsequent Redevelopment Property Tax Trust Fund distribution period.

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Any revenues, interest, and earnings of the successor agency, including proceeds from the disposition

of real property, that are not authorized for use pursuant to the approved Last and Final ROPS shall be remitted

to the county auditor-controller for distribution to the affected taxing entities. A successor agency shall not

expend more than the amount approved for each enforceable obligation listed on the approved Last and Final

ROPS. The county auditor-controller shall no longer distribute property tax to the successor agency’s

Redevelopment Property Tax Trust Fund once the aggregate amount of property tax allocated to the successor

agency equals the total outstanding obligation approved in the Last and Final ROPS. Commencing on the

effective date of the approved Last and Final ROPS, the successor agency shall not prepare or transmit annual

Recognized Obligation Payment Schedules.

After the Last and Final ROPS is approved by DOF, the county auditor-controller shall continue to

allocate moneys in the successor agency’s Redevelopment Property Tax Trust Fund pursuant to Section 34183

of the Dissolution Act; however, the county auditor-controller shall allocate such moneys in each fiscal period,

after deducting the county auditor-controller’s administrative costs, in the following order of priority: (A) pass

through payments pursuant to Section 34183(a)(1) of the Dissolution Act, (B) scheduled debt service payments

on tax allocation bonds listed and approved in the Last and Final ROPS, (C) scheduled payments on revenue

bonds listed and approved in the Last and Final ROPS, but only to the extent the revenues pledged for them are

insufficient to make the payments and only if the successor agency’s tax increment revenues were also pledged

for the repayment of bonds, (D) scheduled payments for debts and obligations listed and approved in the Last

and Final ROPS to be paid from the Redevelopment Property Tax Trust Fund, (E) payments listed and

approved on the Last and Final ROPS that were authorized but unfunded in prior periods, (F) repayment of

loans and deferrals to the city that created the redevelopment agency or the successor to the former

redevelopment agency’s housing functions and assets that are listed and approved on the Last and Final ROPS,

and (G) any moneys remaining in the Redevelopment Property Tax Trust Fund after the payments and

transfers described in (A) to (F), above, shall be distributed to taxing entities in accordance with

Section 34183(a)(4) of the Dissolution Act.

If the successor agency reports to the county auditor-controller that the total available amounts in the

Redevelopment Property Tax Trust Fund will be insufficient to fund the successor agency’s current or future

fiscal year obligations, and if the county auditor-controller concurs that there are insufficient funds to pay the

required obligations, the county auditor-controller may divert subordinated pass-through payments to the

successor agency pursuant to Section 34183(b) of the Dissolution Act. See the caption “—Tax Increment

Financing.”

The Agency has no current plans to file a Last and Final ROPS. Further, the Agency has covenanted

in the Indenture not to submit to the Oversight Board or the California Department of Finance a request for the

final amendment permitted for its Last and Final ROPS without the prior written consent of the 2018 Insurer

unless all amounts that could become due to the 2018 Insurer are included as a line item on the Last and Final

ROPS, as amended.

Pass-Through Agreements

Prior to 1994, under the Law, a redevelopment agency could enter into an agreement to pay former tax

increment revenues to any affected taxing agency that has territory located within a redevelopment project in

an amount which in the redevelopment agency’s determination is appropriate to alleviate any financial burden

or detriment caused by the redevelopment project. These Pass-Through Agreements normally provided for

payment or pass-through of tax increment revenue directed to the affected taxing agency, and, therefore, are

commonly referred to as pass-through agreements or tax sharing agreements.

The Former Agency entered into three Pass-Through Agreements with certain taxing agencies with

respect to some or all of the Project Area. These Pass-Through Agreements are briefly summarized below and

all are treated as senior to the payment of debt service on the 2018 Bonds.

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1982 Agreement Regarding First Amendment to Redevelopment Plan

On August 2, 1982, the Former Agency entered into a Pass-Through Agreement with the County of

Los Angeles, the Los Angeles County Flood Control District, and the Los Angeles County Public Library (the

“County Taxing Entities”) and the Consolidated Fire Protection District of Los Angeles County (the “Fire

District”) related to the tax increment revenue from territory located in the First Amendment Area (as defined

below under THE PROJECT AREA—General) (the “1982 Pass-Through Agreement”).

Under the 1982 Pass-Through Agreement, the County Taxing Entities receive the lesser of the actual

amount of property taxes due to the incremental assessed valuation of property within the First Amendment

Area that would have been attributable to the County Taxing Entities without the First Amendment, or 48.1%

of the total property tax increments actually collected, allocated and received by the Agency each year. The

Fire District receives the lesser of the actual amount of property taxes due to the incremental assessed

valuation of property that would have been attributable to the Fire District without the First Amendment, or

18.6% of the total property tax increments actually collected, allocated and received by the Agency each year.

The County Deferral Loan described below provides that the rates described above shall remain in effect

throughout the life of the Redevelopment Plan, as amended.

1993 Agreement Regarding Original Project Area and Third Amendment to Redevelopment Plan

On May 14, 1993, the Former Agency entered into a Pass-Through Agreement with the same County

Taxing Entities as the 1982 Pass-Through Agreement, the Los Angeles County Office of Education

(“LACOE”) and the Fire District (the “1993 County Agreement”). The 1993 County Agreement covers tax

increment revenues from the Original Project Area and the Third Amendment Area (as defined below under

THE PROJECT AREA—General).

With regards to the Original Project Area, the Fire District receives its proportionate share (17.25%)

of property tax revenues received by the Former Agency above the amounts received by the Former Agency in

the 1992-93 fiscal year. These amounts are expressly subordinated to certain then-existing obligations of the

Former Agency, as well as any refunding or refinancing of the then-existing obligations. In any year where

such the Fire District receives less than its full proportionate share of the excess property tax revenues, such

amount is deferred, and becomes a debt of the Agency accruing interest at five (5%) percent, compounded

annually. These deferred amounts are to be repaid as soon as sufficient excess tax increment revenues are

generated. With respect to the Third Amendment Area, the Fire District receives its proportionate share

(17.25%) of the surplus property tax increment revenues.

The County Taxing Entities and LACOE receive their proportionate shares (49.95% and 0.4%,

respectively) of the surplus property tax increment revenues above and beyond the base fiscal year 1992-93

amounts received by the Former Agency. All payments to the County Taxing Entities and LACOE under the

1993 County Agreement are deferred (the “County Deferral Loan”) until the Agency’s share of the tax

increment revenues, which is 27.7%, amounts to the sum of the tax increment revenues received by the Former

Agency during the 1993-93 fiscal year plus one million dollars and any 33676 Amounts or amounts due under

Pass-Through Agreements entered into prior to the County Deferral Loan. Such deferred amounts accrue

interest at a rate of five (5%) percent, compounded annually. The County Deferral Loan is currently

outstanding in the amount of approximately $1,103,541.73 as of June 30, 2018. The Fiscal Consultant projects

that repayment of the County Deferral Loan will not commence before the last date to repay indebtedness of

the Project Area. Further, the Fiscal Consultant projects that assessed values in the Project Area would need to

grow by more than 23% per year to cause the repayment threshold for the County Deferral Loan to be reached

prior to the final maturity of the bonds in Fiscal Year 2026-27. Upon commencement of repayment of the

County Deferral Loan, the Agency will establish a schedule for the repayment of the amounts deferred, and

shall repay all such amounts, with interest, in accordance with such schedule. The repayment schedule will

provide (i) a breakdown of the principal and interest amounts to be repaid; (ii) commencement of payments to

the County Taxing Entities beginning the year the threshold for repayment of the County Deferral Loan is met;

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(iii) the number of years and annual payments necessary to fulfill the Agency’s obligations of repayment under

the 1993 County Agreement; and (iv) annual payments to be made within thirty days of allocation and receipt

by the Agency of tax increment revenues. If a repayment schedule is not developed that fully repays the

County Taxing Entities and the LACOE by the end of the life of the Redevelopment Plan, the County Auditor-

Controller will retain the Agency’s share of tax increment revenues until the County Taxing Entities and the

LACOE are fully repaid. See the caption “PLEDGED TAX REVENUES—Projected Pledged Tax Revenues.”

1993 Agreement with Los Angeles County Community College District

On February 1, 1993, the Former Agency entered into a Pass-Through Agreement with the Los

Angeles County Community College District (“LACCCD”) regarding property tax increment revenue from the

Third Amendment Area (the “LACCCD Pass-Through Agreement”). Using the 1992-93 assessed valuations,

the LACCCD Pass-Through Agreement divides the three percent share of the property tax increment

LACCCD would have received absent the Redevelopment Plan as amended by the Third Amendment as

follows: (1) the District receives the amount of such property tax increment it would receive if the District had

elected to receive 33676 Amounts (as defined under the caption”—Section 33676 Election” below) and (2) the

District receives 40% of the remainder derived from subtracting the 33676 Amounts the District would receive

if it had so elected from the District’s otherwise three percent share of such property tax increment.

For more information about the Pass-Through Agreements, see the Fiscal Consultant’s Report

attached to this Official Statement as Appendix A. See Tables 7 and 8 under the caption “PLEDGED TAX

REVENUES—Projected Pledged Tax Revenues.”

Statutory Pass-Through Amounts

Assembly Bill 1290 (Chapter 942, Statutes of 1993) (“AB 1290”), effective January 1, 1994,

eliminated the statutory authority for negotiated pass-through agreements and provided a formula for

mandatory tax sharing, applicable to projects adopted after January 1, 1994 or amended after that date to add

territory or make certain other amendments. These payments, which are to begin the fiscal year following the

year a redevelopment plan was adopted (if after January 1, 1994) or the fiscal year following the year that a

redevelopment plan’s original plan limitations would have taken effect (in the case of pre-1994 redevelopment

plans), are calculated using the increase in revenue above the amount of revenue generated by the project area

in the year that the redevelopment plan was adopted or the former limit would have been reached, as

applicable. Under the Dissolution Act, in particular Section 34183, the County Auditor-Controller is obligated

to remit these Statutory Pass-Through Amounts to the affected taxing entities from the Agency’s RPTTF for

each ROPS period.

As further described herein under the caption “THE PROJECT AREA,” the City adopted several

ordinances amending the Project Area after 1994 (including the addition of territory in the Fifth Amendment

Area) and, accordingly, the Agency is required to pay the Statutory Pass-Through Amounts to affected taxing

agencies that did not enter into Pass-Through Agreements with the Former Agency. These tax sharing

payments continue so long as tax increment is available to repay indebtedness in the Project Area. The

Statutory Pass-Through Amounts are determined by specific formulas under the Law; and post-dissolution,

these payment obligations of the Agency to affected taxing entities are administered by the County Auditor-

Controller under the Dissolution Act. See “PLEDGED TAX REVENUES—Projected Pledged Tax Revenues”

for a projection of such payments.

Generally speaking, under the Law as amended by AB 1290 and as the obligation continues under the

Dissolution Act, the Agency is required to pay to the affecting taxing entities percentages of tax increment

generated in the Project Area as the Statutory Pass-Through Amounts, as follows:

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1. following the adoption of the redevelopment plan or expiration of the existing time limit to

incur debt (as applicable) and thereafter, 25% of tax increment revenues (after deducting the Housing

Set-Aside amount); plus,

2. for the eleventh year following the triggering event and thereafter, 21% of revenues in excess

of tenth year revenue (after deducting the Housing Set-Aside amount); plus,

3. for the thirty-first year following the triggering event and thereafter, 14% of revenues in

excess of thirtieth year revenues (after deducting the Housing Set-Aside amount).

The payments of the Statutory Pass-Through Amounts to the affected taxing entities are allocated

among each affected taxing entity in proportion to the share of property taxes each affected taxing entity

received in the year funds are allocated. As indicated, amounts specified as payable to affected taxing entities

are computed after deducting the Housing Set-Aside amounts even though the Agency no longer receives

Housing Set-Aside under the Dissolution Act. The Statutory Pass-Through Amounts have been subordinated

to the 2018 Bonds. See the caption “—Tax Increment Financing—Tax Sharing.” Also see the caption

“PLEDGED TAX REVENUES—Projected Pledged Tax Revenues.” For more information about the

Statutory Pass-Through Amounts, see the Fiscal Consultant’s Report attached to this Official Statement as

Appendix A.

Section 33676 Election

Prior to the enactment of AB 1290, redevelopment project areas adopted between January 1, 1985 and

January 1, 1994 were subject to payments to schools and to other affected taxing agencies that elected to

receive tax revenue payments set forth under Section 33676 of the Law (“33676 Amounts”). The annual

payments represent that portion of property taxes that are, or otherwise would be, calculated annually pursuant

to subdivision (f) of Section 110.1 of the Revenue and Taxation Code (and referred to as the 2% inflation

allocation).

The following taxing entities within the Project Area are receiving payments under Section 33676:

Los Angeles Unified School District

33676 Amounts will be paid prior to debt service of the 2018 Bonds. See the caption “—Tax

Increment Financing—Tax Sharing.” Also see the caption “PLEDGED TAX REVENUES—Projected

Pledged Tax Revenues.” For more information regarding the 33676 Amounts payable by the Agency, see the

Fiscal Consultant’s Report attached to this Official Statement as Appendix A.

Issuance of Additional Indebtedness

No Additional Senior Obligations. Under the Indenture, the Agency has covenanted that it will not

issue additional bonds or incur additional obligations that are payable from moneys deposited in the

Redevelopment Property Tax Trust Fund on a senior basis to the 2018 Bonds.

Upon the issuance of the 2018 Bonds and the completion of the refundings described under the

caption “REFUNDING PLAN” there will be no bonds outstanding with a pledge or lien on the Pledged Tax

Revenues senior to the 2018 Bonds.

Parity Debt. Section 34177.5(a) of the Dissolution Act presently permits successor agencies to issue

bonds or incur other indebtedness secured by property tax revenues comprised of former tax increment

revenues required by the Dissolution Act to be deposited into the respective Redevelopment Property Tax

Trust Fund for the applicable successor agency under limited circumstances, including to provide savings to

the successor agency, provided that (A) the total interest cost to maturity on the refunding bonds plus the

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principal amount of the refunding bonds shall not exceed the total remaining interest cost to maturity on the

bonds or other indebtedness to be refunded plus the remaining principal of the bonds or other indebtedness to

be refunded, and (B) the principal amount of the refunding bonds or the indebtedness will not exceed the

amount required to defease the refunded bonds or other indebtedness, to establish customary debt service

reserves, and to pay related costs of issuance. If the foregoing conditions are satisfied, the initial principal

amount of the refunding bonds or indebtedness may be greater than the outstanding principal amount of the

bonds or other indebtedness to be refunded. The successor agency may pledge to the refunding bonds or other

indebtedness the revenues pledged to the bonds or other indebtedness being refunded, having the same lien

priority as the pledge of the bonds or other obligations to be refunded.

In addition to the 2018 Bonds, the Agency may issue Parity Debt to refund any outstanding 2018

Bonds or other Parity Debt in such principal amount as will be determined by the Agency. The Agency may

issue and deliver any such Parity Debt subject to the following conditions precedent:

(a) No Event of Default under the Indenture or an event of default under any Parity Debt

Instrument will have occurred and be continuing unless cured by the issuance of such Parity Debt;

(b) The Parity Debt must provide savings to the Agency in compliance with Health and Safety

Code Section 34177.5;

(c) In the event the Agency issues Parity Debt as Bonds pursuant to a Supplemental Indenture,

the Agency will cause the amount on deposit in the Reserve Account to equal the Reserve Requirement; and

(d) The Agency must deliver to the Trustee a Written Certificate of the Successor Agency

certifying that the conditions precedent to the issuance of such Parity Debt set forth in the Indenture have been

satisfied.

Subordinate Obligations. The Agency has various significant enforceable obligations that are, or will

be, listed on the Agency’s Recognized Obligation Payment Schedules and paid from moneys deposited in the

Agency’s Redevelopment Property Tax Trust Fund from time to time. The Agency has determined that these

obligations are either subordinate to the 2018 Bonds or not secured by a pledge of Pledged Tax Revenues.

Nothing contained in the Indenture prevents the Agency from issuing additional bonds or incurring other loans,

advances or indebtedness payable from Pledged Tax Revenues on a subordinate basis to the 2018 Bonds.

BOND INSURANCE

The information under this caption has been prepared by Build America Mutual Assurance Company

(“BAM” or “2018 Insurer”) for inclusion in this Official Statement. Neither the Agency nor the Underwriter has reviewed this information, nor does the Agency or the Underwriter make any representation with respect

to the accuracy or completeness thereof. The following information is not complete and reference is made to

Appendix I for a specimen of the Policy.

Bond Insurance Policy

Concurrently with the issuance of the 2018 Bonds, BAM will issue its Municipal Bond Insurance

Policy for the 2018 Bonds (the “Policy”). The Policy guarantees the scheduled payment of principal of and

interest on the 2018 Bonds when due as set forth in the form of the Policy included as Appendix I to this

Official Statement.

The Policy is not covered by any insurance security or guaranty fund established under New York,

California, Connecticut or Florida insurance law.

23

Build America Mutual Assurance Company

BAM is a New York domiciled mutual insurance corporation and is licensed to conduct financial

guaranty insurance business in all fifty states of the United States and the District of Columbia. BAM provides

credit enhancement products solely to issuers in the U.S. public finance markets. BAM will only insure

obligations of states, political subdivisions, integral parts of states or political subdivisions or entities otherwise

eligible for the exclusion of income under section 115 of the U.S. Internal Revenue Code of 1986, as amended.

No member of BAM is liable for the obligations of BAM.

The address of the principal executive offices of BAM is: 200 Liberty Street, 27th Floor, New York,

New York 10281, its telephone number is: 212-235-2500, and its website is located at:

www.buildamerica.com.

BAM is licensed and subject to regulation as a financial guaranty insurance corporation under the laws

of the State of New York and in particular Articles 41 and 69 of the New York Insurance Law.

BAM’s financial strength is rated “AA/Stable” by S&P Global Ratings, a business unit of Standard &

Poor's Financial Services LLC (“S&P”). An explanation of the significance of the rating and current reports

may be obtained from S&P at www.standardandpoors.com. The rating of BAM should be evaluated

independently. The rating reflects the S&P’s current assessment of the creditworthiness of BAM and its ability

to pay claims on its policies of insurance. The above rating is not a recommendation to buy, sell or hold the

2018 Bonds, and such rating is subject to revision or withdrawal at any time by S&P, including withdrawal

initiated at the request of BAM in its sole discretion. Any downward revision or withdrawal of the above

rating may have an adverse effect on the market price of the 2018 Bonds. BAM only guarantees scheduled

principal and scheduled interest payments payable by the issuer of the 2018 Bonds on the date(s) when such

amounts were initially scheduled to become due and payable (subject to and in accordance with the terms of

the Policy), and BAM does not guarantee the market price or liquidity of the 2018 Bonds, nor does it guarantee

that the rating on the 2018 Bonds will not be revised or withdrawn.

Capitalization of BAM. BAM’s total admitted assets, total liabilities, and total capital and surplus, as

of June 30, 2018 and as prepared in accordance with statutory accounting practices prescribed or permitted by

the New York State Department of Financial Services were $519.5 million, $99.3 million and $420.2 million,

respectively.

BAM is party to a first loss reinsurance treaty that provides first loss protection up to a maximum of

15% of the par amount outstanding for each policy issued by BAM, subject to certain limitations and

restrictions.

BAM’s most recent Statutory Annual Statement, which has been filed with the New York State

Insurance Department and posted on BAM’s website at www.buildamerica.com, is incorporated herein by

reference and may be obtained, without charge, upon request to BAM at its address provided above (Attention:

Finance Department). Future financial statements will similarly be made available when published.

BAM makes no representation regarding the 2018 Bonds or the advisability of investing in the 2018

Bonds. In addition, BAM has not independently verified, makes no representation regarding, and does not

accept any responsibility for the accuracy or completeness of this Official Statement or any information or

disclosure contained herein, or omitted herefrom, other than with respect to the accuracy of the information

regarding BAM, supplied by BAM and presented under the heading “BOND INSURANCE”.

Additional Information Available from BAM

Credit Insights Videos. For certain BAM-insured issues, BAM produces and posts a brief Credit

Insights video that provides a discussion of the obligor and some of the key factors BAM’s analysts and credit

24

committee considered when approving the credit for insurance. The Credit Insights videos are easily

accessible on BAM's website at buildamerica.com/creditinsights/. (The preceding website address is provided

for convenience of reference only. Information available at such address is not incorporated herein by

reference.)

Credit Profiles. Prior to the pricing of bonds that BAM has been selected to insure, BAM may prepare

a pre-sale Credit Profile for those bonds. These pre-sale Credit Profiles provide information about the sector

designation (e.g. general obligation, sales tax); a preliminary summary of financial information and key ratios;

and demographic and economic data relevant to the obligor, if available. Subsequent to closing, for any

offering that includes bonds insured by BAM, any pre-sale Credit Profile will be updated and superseded by a

final Credit Profile to include information about the gross par insured by CUSIP, maturity and coupon. BAM

pre-sale and final Credit Profiles are easily accessible on BAM's website at buildamerica.com/obligor/. BAM

will produce a Credit Profile for all bonds insured by BAM, whether or not a pre-sale Credit Profile has been

prepared for such bonds. (The preceding website address is provided for convenience of reference only.

Information available at such address is not incorporated herein by reference.)

Disclaimers. The Credit Profiles and the Credit Insights videos and the information contained therein

are not recommendations to purchase, hold or sell securities or to make any investment decisions. Credit-

related and other analyses and statements in the Credit Profiles and the Credit Insights videos are statements of

opinion as of the date expressed, and BAM assumes no responsibility to update the content of such material.

The Credit Profiles and Credit Insight videos are prepared by BAM; they have not been reviewed or approved

by the issuer of or the underwriter for the 2018 Bonds, and the issuer and underwriter assume no responsibility

for their content.

BAM receives compensation (an insurance premium) for the insurance that it is providing with respect

to the 2018 Bonds. Neither BAM nor any affiliate of BAM has purchased, or committed to purchase, any of

the 2018 Bonds, whether at the initial offering or otherwise.

PROPERTY TAXATION IN CALIFORNIA

Property Tax Collection Procedures

Classification. In the State, property which is subject to ad valorem taxes is classified as “secured” or

“unsecured.” Secured and unsecured property is entered on separate parts of the assessment roll maintained by

county assessors. The secured classification includes property on which any property tax levied by a county

becomes a lien on that property. A tax levied on unsecured property does not become a lien against the taxed

unsecured property, but may become a lien on certain other property owned by the taxpayer. Every tax which

becomes a lien on secured property has priority over all other liens on the secured property arising pursuant to

State law, regardless of the time of the creation of other liens. See the caption “RISK FACTORS—

Bankruptcy and Foreclosure” for certain limitations on the priority of secured tax liens under federal law,

however.

Generally, ad valorem taxes are collected by a county for the benefit of the various taxing agencies

(cities, schools and special districts) that share in the ad valorem tax (each, a taxing entity) and successor

agencies eligible to receive distributions from the respective Redevelopment Property Tax Trust Fund.

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

unsecured property. Counties have four ways of collecting unsecured personal property taxes: (i) initiating a

civil action against the taxpayer; (ii) filing a certificate in the office of the county clerk specifying certain facts

in order to obtain a judgment lien on certain property of the taxpayer; (iii) filing a certificate of delinquency for

record in the county recorder’s office to obtain a lien on certain property of the taxpayer; and (iv) seizing and

selling personal property, improvements or possessory interests belonging or assessed to the assessee. The

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exclusive means of enforcing the payment of delinquent taxes with respect to property on the secured roll is

the sale of the property securing the taxes to the State for the amount of taxes which are delinquent.

Penalty. 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 by operation of law and declaration of the tax collector on or about June 30 of each 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. If taxes are unpaid for a period of five years

or more, the property is deeded to the State and then is subject to sale by the county tax collector. A 10%

penalty also applies to delinquent taxes with respect to property on the unsecured roll, and further, an

additional penalty of 1.5% per month accrues with respect to such taxes beginning on varying dates related to

the tax bill mailing date.

Delinquencies. The valuation of property is determined as of the January 1 lien date as equalized in

August of 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 and become delinquent

August 31. The County has not adopted a Teeter Plan alternative method of collection and distribution of

taxes; therefore, delinquencies in the payment of property taxes could have an adverse effect on the Agency’s

ability to make timely debt service payments. See Table 5 under the heading “THE PROJECT AREA—Levy

and Collection.”

Supplemental Assessments. California Revenue and Taxation Code Section 75.70 provides for the

supplemental assessment and taxation of property as of the occurrence of a change of ownership or completion

of new construction. Prior to the enactment of this law, the assessment of such changes was permitted only as

of the next tax lien date following the change, which delayed the realization of increased property taxes from

the new assessments for up to 14 months. Revenue and Taxation Code Section 75.70 provides increased

revenue to the Redevelopment Property Tax Trust Fund to the extent that supplemental assessments of new

construction or changes of ownership occur within the boundaries of the Project Area subsequent to the

January 1 lien date. To the extent that such supplemental assessments occur within the Project Area, Pledged

Tax Revenues may increase. However, because supplemental assessments cannot be accurately projected, no

provision has been made by the Fiscal Consultant to reflect the impact of supplemental assessments on

Pledged Tax Revenues. See Appendix A.

Property Tax Administrative Costs. In 1990, the State Legislature enacted Senate Bill (“SB”) 2557

(Chapter 466, Statutes of 1990) which allows counties to charge for the cost of assessing, collecting and

allocating property tax revenues to local government jurisdictions in proportion to the tax-derived revenues

allocated to each. SB 1559 (Chapter 697, Statutes of 1992) explicitly includes redevelopment agencies among

the jurisdictions which are subject to such charges. In addition, Sections 34182(e) and 34183(a) of the

Dissolution Act allow administrative costs of the County Auditor-Controller for the cost of administering the

provisions of the Dissolution Act, as well as the foregoing SB 1559 amounts, to be deducted from Pledged Tax

Revenues. The County’s total administrative charge for the Project Area, deducted from the Fiscal Year 2017-

18 Redevelopment Property Tax Trust Fund allocation to the Agency, amounted to approximately 1.8% of the

total gross tax revenue allocation for such period. The Fiscal Consultant assumes that the County property tax

administration will continue to be annually charged at this percentage factor to the gross tax revenue generated

by the Project Area in subsequent fiscal years. See the projections set forth in the Fiscal Consultant’s Report

attached as Appendix A and under the caption “PLEDGED TAX REVENUES—Projected Pledged Tax

Revenues” herein.

Pass-Through Agreements. Prior to 1994, under the Redevelopment Law, a redevelopment agency

could enter into an agreement to pay tax increment revenues to any taxing agency that has territory located

within a redevelopment project in an amount which in the redevelopment agency’s determination was appropriate to alleviate any financial burden or detriment caused by the redevelopment project. Such

agreements normally provide for payment or pass-through of tax increment revenue directed to the affected

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taxing agency, and, therefore, are commonly referred to as pass-through agreements or tax sharing agreements.

The Agency’s agreements with affected taxing agencies are referred to herein as “Pass-Through Agreements.”

See the caption “SECURITY FOR THE 2018 BONDS—Pass-Through Agreements” for a discussion of

Pass-Through Agreements for each Project Area and the treatment of Pass-Through Agreements under the

Dissolution Act.

Statutory Pass-Through Amounts. The payment of Statutory Pass-Through Amounts results from:

(i) redevelopment plan amendments which add territory in existing project areas on or after January 1, 1994;

and (ii) redevelopment plan amendments which eliminate, extend or increase one or more limitations within a

redevelopment plan (such as the removal of the time limit on the establishment of loans, advances and

indebtedness). The calculation of the amount due to affected taxing entities is described in Sections 33607.5

and 33607.7 of the Redevelopment Law. See the caption “SECURITY FOR THE 2018 BONDS—Statutory

Pass-Through Amounts” for a discussion of the Agency’s obligation to pay Statutory Pass-Through Amounts

to affected taxing agencies. Also see the caption “SECURITY FOR THE 2018 BONDS—Tax Increment

Financing—Tax Sharing.”

33676 Amounts. The Agency is required to pay certain inflationary increases in tax increment

revenues referred to herein as 33676 Amounts to certain educational taxing agencies. See the caption

“SECURITY FOR THE BONDS—Section 33676 Election” for a discussion of the Agency’s obligation to pay

33676 Amounts. Also see the caption “SECURITY FOR THE 2018 BONDS—Tax Increment Financing—

Tax Sharing.”

Recognized Obligation Payment Schedule. The Dissolution Act provides that, commencing on the

date that the first Recognized Obligation Payment Schedule is valid, only those payments listed in the

Recognized Obligation Payment Schedule may be made by the Agency from the funds specified in the

Recognized Obligation Payment Schedule. Before each February 1, with respect to the following fiscal year,

the Dissolution Act requires successor agencies to prepare and submit to the successor agency’s oversight

board and the DOF for approval, a Recognized Obligation Payment Schedule pursuant to which enforceable

obligations (as defined in the Dissolution Act) of the successor agency are listed, together with the source of

funds to be used to pay for each enforceable obligation. Pledged Tax Revenues will not be distributed from

the Redevelopment Property Tax Trust Fund by the County Auditor-Controller to the Agency’s

Redevelopment Obligation Retirement Fund without a duly approved and effective Recognized Obligation

Payment Schedule obtained in sufficient time prior to each June 1 property tax distribution date. See the

caption “SECURITY FOR THE 2018 BONDS—Recognized Obligation Payment Schedule” and “RISK

FACTORS—Recognized Obligation Payment Schedule.” See also “SECURITY FOR THE 2018 BONDS—

Last and Final Recognized Obligation Payment Schedule” for a description of the Last and Final ROPS

authorized by the Dissolution Act pursuant to SB 107.

Unitary Property

Assembly Bill (“AB”) 2890 (Statutes of 1986, Chapter 1457) provides that, commencing with fiscal

year 1988-89, assessed value derived from State-assessed unitary property (consisting mostly of operational

property owned by utility companies) is to be allocated county-wide as follows: (i) each tax rate area will

receive the same amount from each assessed utility received in the previous fiscal year unless the applicable

county-wide values are insufficient to do so, in which case values will be allocated to each tax rate area on a

pro rata basis; and (ii) if values to be allocated are greater than in the previous fiscal year, each tax rate area

will receive a pro rata share of the increase from each assessed utility according to a specified formula.

Additionally, the lien date on State-assessed property was changed from March 1 to January 1.

AB 454 (Statutes of 1987, Chapter 921) further modified Chapter 1457 regarding the distribution of

tax revenues derived from property assessed by the State Board of Equalization. AB 454 provides for the

consolidation of all State-assessed property, except for regulated railroad property, into a single tax rate area in

each county. AB 454 further provides for a new method of establishing tax rates on State-assessed property

27

and distribution of property tax revenue derived from State-assessed property to taxing jurisdictions within

each county in accordance with a new formula. Railroads will continue to be assessed and revenues allocated

to all tax rate areas where railroad property is located. The intent of AB 2890 and AB 454 is to provide

redevelopment agencies with their appropriate share of revenue generated from property assessed by the State

Board of Equalization.

Actual unitary revenues were $30,195 for Fiscal Year 2017-18. Unitary tax revenues are pledged to

payment of the 2018 Bonds; however, the projections of Pledged Tax Revenues set forth in Tables 7 and 8

under the caption “PLEDGED TAX REVENUES—Projected Pledged Tax Revenues” and in the Fiscal

Consultant’s Report attached hereto as Appendix A do not include unitary revenues.

Article XIIIA of the State Constitution

On June 6, 1978, State voters approved an amendment (commonly known as Proposition 13 or the

Jarvis-Gann Initiative) which added Article XIIIA to the State Constitution. Article XIIIA limits the amount

of ad valorem taxes on real property to 1% of “full cash value” of such property, as determined by the county

assessor. Article XIIIA defines “full cash value” to mean “the county assessor’s valuation of real property as

shown on the State 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.” Furthermore, the “full cash value” of all real property may be increased to reflect the rate of

inflation, as shown by the consumer price index, not to exceed 2% per year, or may be reduced. Each year the

State Board of Equalization announces the applicable adjustment factor. Since the adoption of Proposition 13,

inflation has, in most years, exceeded 2% and the announced factor has reflected the 2% cap. The changes in

the California Consumer Price Index from October of one year and October of the next year are used to

determine the adjustment factor for the January assessment date. During the ten previous Fiscal Years, the

inflation factor has been less than 2% on five occasions. The table below reflects the inflation adjustment

factors for Fiscal Year 2018-19, the current Fiscal Year, and the 10 prior Fiscal Years.

Historical Inflation Adjustment Factors

Fiscal Year Inflation Adj. Factor

2008-09 2.000%

2009-10 2.000

2010-11 -0.237

2011-12 0.753

2012-13 2.000

2013-14 2.000

2014-15 0.454

2015-16 1.998

2016-17 1.525

2017-18 2.000

2018-19 2.000

Article XIIIA has subsequently been amended to permit reduction of the “full cash value” base in the

event of declining property values caused by substantial damage, destruction or other factors, and to provide

that there would be no increase in the “full cash value” base in the event of reconstruction of property damaged

or destroyed in a disaster and in other special circumstances.

Article XIIIA: (i) exempts from the 1% tax limitation taxes to pay debt service on: (a) indebtedness

approved by the voters prior to July 1, 1978; or (b) bonded indebtedness for the acquisition or improvement of

real property approved on or after July 1, 1978, by two-thirds of the votes cast by the voters voting on the proposition; (ii) requires a vote of two-thirds of the qualified electorate to impose special taxes, or certain

28

additional ad valorem taxes; and (iii) requires the approval of two-thirds of all members of the State

Legislature to change any State tax laws resulting in increased tax revenues.

The validity of Article XIIIA has been upheld by both the State Supreme Court and the United States

Supreme Court.

In the general election held on November 4, 1986, voters of the State approved two measures,

Propositions 58 and 60, which further amended Article XIIIA. Proposition 58 amended Article XIIIA to

provide that the terms “purchase” and “change of ownership,” for the 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. This

amendment to Article XIIIA may reduce the rate of growth of local property tax revenues.

Proposition 60 amended Article XIIIA to permit the State Legislature to allow persons over the age of

55 who sell their residence and buy or build another of equal or lesser value within two years in the same

county to transfer the old residence assessed value to the new residence. As a result of the State Legislature’s

action, the growth of property tax revenues may decline.

Legislation enacted by the State Legislature to implement Article XIIIA provides that all taxable

property is shown at full assessed value as described above. In conformity with this procedure, all taxable

property value included in this Official Statement is shown at 100% of assessed value and all general tax rates

reflect the $1 per $100 of taxable value (except as noted). Tax rates for voter-approved bonded indebtedness

and pension liabilities are also applied to 100% of assessed value.

Appropriations Limitation – Article XIIIB

On November 6, 1979, State voters approved Proposition 4 (also known as the Gann Initiative), which

added Article XIIIB to the State Constitution. Article XIIIB limits the annual appropriations of the State and

its political subdivisions 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. The “base year” for establishing

such appropriations limit is State fiscal year 1978-79, and the limit is to be adjusted annually to reflect changes

in population, consumer prices and certain increases in the cost of services provided by these public agencies.

Section 33678 of the Redevelopment Law provides that the allocation of taxes to a redevelopment

agency for the purpose of paying principal of, or interest on, loans, advances, or indebtedness is not deemed to

be the receipt by an agency of proceeds of taxes levied by or on behalf of an agency within the meaning of

Article XIIIB, nor will such portion of taxes be deemed receipt of proceeds of taxes by, or an appropriation

subject to the limitation of, any other public body within the meaning or for the purpose of the Constitution

and laws of the State, including Section 33678 of the Redevelopment Law. The constitutionality of

Section 33678 has been upheld in two State appellate court decisions. On the basis of these decisions, the

Agency does not believe that it is subject to Article XIIIB and has not adopted an appropriations limit.

Articles XIIIC and XIIID of the State Constitution

At the election held on November 5, 1996, Proposition 218 was passed by the voters of California.

The initiative added Articles XIIIC and XIIID to the State Constitution. Provisions in the two articles affect

the ability of local government to raise revenues. The 2018 Bonds are secured by sources of revenues that are

not subject to limitation by Proposition 218. See the caption “—Propositions 218 and 26.”

Proposition 87

On November 8, 1988, the voters of the State approved Proposition 87, which amended Article XVI,

Section 16 of the State Constitution to provide that property tax revenue attributable to the imposition of taxes

29

on property within a redevelopment project area for the purpose of paying debt service on certain bonded

indebtedness issued by a taxing entity (not the Former Agency or the Agency) and approved by the voters of

the taxing entity after January 1, 1989 will be allocated solely to the payment of such indebtedness, and not to

redevelopment agencies. SB 107, which became effective on September 22, 2015, amended Section

34183(a)(1) of the Dissolution Act to provide that such debt service override revenues approved by the voters

for the purpose of supporting pension programs or capital projects or programs related to the State Water

Project that are not pledged to or not needed for debt service on Agency debt will be allocated and paid to the

entity that levies the override. See “SECURITY FOR THE 2018 BONDS—General.” The Metropolitan

Water District levies a tax rate override, which would be available to pay debt service on the 2018 Bonds if

needed. See the projections of Pledged Tax Revenues set forth in Tables 7 and 8 under the caption

“PLEDGED TAX REVENUES—Projected Pledged Tax Revenues.”

Redevelopment Plan Limits

In 1993, the State legislature passed AB 1290, Chapter 942, Statutes 1993, which, among other things,

required redevelopment agencies to adopt time limits in each redevelopment plan specifying: (i) the last date

to incur debt for a redevelopment project; (ii) the last date to undertake redevelopment activity within a project

area; (iii) the last date to collect tax increment revenue from a project area to repay debt; and (iv) a limitation

on the number of dollars of taxes that could be allocated to the Former Agency from the applicable Project

Area. See the caption “THE PROJECT AREA.”

SB 107, which became effective September 22, 2015, amended the Dissolution Act to provide that the

time limits for receiving property tax revenues and the limitation on the amount of property tax revenues that

may be received by the Former Agency and the Agency set forth in the Redevelopment Plan are not effective

for purposes of paying the Agency’s enforceable obligations. Accordingly, the projections set forth in this

Official Statement and in the Fiscal Consultant’s Report attached to this Official Statement as Appendix A do

not take into account the time and financial limitations set forth in the Redevelopment Plan for the Project

Area. See the captions “THE PROJECT AREA—General” and “—Plan Limits.”

The County Auditor-Controller will only deposit revenues into the RPTTF for Project Area that reach

their Plan Limits in the future if the Agency demonstrates that such revenues are needed to pay the Agency’s

enforceable obligations. See the captions “RISK FACTORS— Effect of Redevelopment Plan Limits.”

Appeals of Assessed Values

Pursuant to State law, a property owner may apply for a reduction of the property tax assessment for

such owner’s property by filing a written application, in a form prescribed by the State Board of Equalization,

with the appropriate county board of equalization or assessment appeals board.

In the County, a property owner desiring to reduce the assessed value of such owner’s property in any

one year must submit an application to the County Assessment Appeals Board (the “Appeals Board”).

Applications for any tax year must be submitted by November 30 of such tax year. Following a review of each

application by the staff of the County Assessor’s Office, the staff makes a recommendation to the Appeals

Board on each application which has not been rejected for incompleteness or untimeliness or withdrawn. The

Appeals Board holds a hearing and either reduces or confirms the assessment. The Appeals Board generally is

required to determine the outcome of appeals within two years of each appeal’s filing date. Any reduction in

the assessment ultimately granted applies only to the year for which application is made and during which the

written application is filed. The assessed value increases to its pre-reduction level for fiscal years following

the year for which the reduction application is filed. However, if the taxpayer establishes through proof of

comparable values that the property continues to be overvalued (known as “ongoing hardship”), the Assessor

has the power to grant a reduction not only for the year for which application was originally made, but also for the then current year as well. Appeals for reduction in the “base year” value of an assessment, which generally

must be made within three years of the date of change in ownership or completion of new construction that

30

determined the base year, if successful, reduce the assessment for the year in which the appeal is taken and

prospectively thereafter. Moreover, in the case of any reduction in any one year of assessed value granted for

“ongoing hardship” in the then current year, and also in any cases involving stipulated appeals for prior years

relating to base year and personal property assessments, the property tax revenues from which Pledged Tax

Revenues are derived attributable to such properties will be reduced in the then current year. In practice, such

a reduced assessment may remain in effect beyond the year in which it is granted. See Appendix A for

information regarding the appeals pending with respect to the assessed valuations of the top ten property

owners within the Project Area.

Proposition 8

Proposition 8, approved in 1978 (California Revenue and Taxation Code Section 51(b)), 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 pursuant to Proposition 8 may be initiated by the County Assessor or requested by the

property owner, and such reductions apply only to a single tax year.

After a roll reduction is granted pursuant to Proposition 8, 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. Such increases must be in accordance with the full 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 once again is

subject to the annual inflationary factor growth rate allowed under Article XIIIA.

The County Assessor has the ability to use Proposition 8 criteria to apply blanket reductions in

valuation to classes of property affected by particular negative economic conditions. The Agency is aware that

the County Assessor made such reductions to assessed values of residential property in the Project Area and

the City generally in recent fiscal years, a portion of which reductions have now been restored. The Fiscal

Consultant’s Report does not assume any future reductions in assessed valuations as a result of Proposition 8,

but there can be no assurance that such reductions will not be made in the future. See the caption “THE

PROJECT AREA” for further information with respect to reductions in assessed value within the Project Area

in the last ten fiscal years.

Propositions 218 and 26

On November 5, 1996, State 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 State Constitution, imposing certain vote requirements

and other limitations on the imposition of new or increased taxes, assessments and property-related fees and

charges. On November 2, 2010, California voters approved Proposition 26, the “Supermajority Vote to Pass

New Taxes and Fees Act.” Proposition 26 amended Article XIIIC of the State Constitution by adding an

expansive definition for the term “tax,” which previously was not defined under the State Constitution.

Pledged Tax Revenues securing the 2018 Bonds are derived from property taxes which are outside the scope of

taxes, assessments and property-related fees and charges which are limited by Proposition 218 and outside of

the scope of taxes which are limited by Proposition 26.

Future Initiatives

Articles XIIIA, XIIIB, XIIIC and XIIID to the State Constitution and certain other propositions

affecting property tax levies were each adopted as measures which qualified for the ballot pursuant to the

State’s initiative process. From time to time other initiative measures could be adopted, further affecting

Agency revenues or the Agency’s ability to expend revenues.

31

THE SUCCESSOR AGENCY TO THE

FORMER CUDAHY COMMUNITY DEVELOPMENT COMMISSION

The Former Agency was established by the City Council of the City and was activated by Ordinance

adopted by the City Council on September 25, 1975, pursuant to the Redevelopment Law. On June 29, 2011,

AB X1 26 was enacted as Chapter 5, Statutes of 2011, together with a companion bill, AB X1 27. A lawsuit

entitled California Redevelopment Association, et al. v. Matosantos, et al., was brought in the State Supreme

Court challenging the constitutionality of AB X1 26 and AB X1 27. In a published decision (53 Cal. 4th 231

(Dec. 29, 2011)), the State Supreme Court largely upheld AB X1 26, invalidated AB X1 27, and held that

AB X1 26 may be severed from AB X1 27 and enforced independently. As a result of AB X1 26 and the

decision of the State Supreme Court, as of February 1, 2012, all redevelopment agencies in the State, including

the Former Agency, were dissolved, and successor agencies were designated as successor entities to the former

redevelopment agencies to expeditiously wind down the affairs of the former redevelopment agencies.

Pursuant to Section 34173 of the Dissolution Act, the City Council of the City serves as the successor

agency to the Former Agency. Subdivision (g) of Section 34173 of the Dissolution Act, added by AB 1484,

expressly affirms that the Agency is a separate public entity from the City, that the two entities shall not merge

and that the liabilities of the Former Agency will not be transferred to the City nor will the assets of the Former

Agency become assets of the City.

The Agency is governed by the five-member legislative body (the “Board”) which consists of the City

Council of the City. The Mayor acts as the Chair of the Board, the City Manager as its Executive Director, the

City Clerk as its Secretary and the Finance Director of the City as its Finance Officer.

Agency Powers

All powers of the Agency are vested in the Board. Pursuant to the Dissolution Act, the Agency is a

separate public body from the City and successor to the organizational status of the Former Agency, but

without any legal authority to participate in redevelopment activities except to complete any work related to an

approved enforceable obligation. The Agency is tasked with expeditiously winding down the affairs of the

Former Agency pursuant to the procedures and provisions of the Dissolution Act. Under the Dissolution Act,

many Agency actions are subject to approval by the Oversight Board, as well as review by the DOF. The State

has strict laws regarding public meetings (known as the Ralph M. Brown Act) which generally make all Board

and Oversight Board meetings open to the public in a similar manner as City Council meetings.

Previously, Section 33675 of the Redevelopment Law required the Former Agency to file not later

than the first day of October of each year with the County Auditor a statement of indebtedness certified by the

chief fiscal officer of the Former Agency for each redevelopment plan which provides for the allocation of

taxes (i.e., the Redevelopment Plan). The statement of indebtedness was required to contain the date on which

the bonds were delivered, the principal amount, term, purposes and interest rate of the bonds and the

outstanding balance and amount due on the bonds. Similar information was required to be given for each loan,

advance or indebtedness that the Former Agency had incurred or entered into which is payable from tax

increment. Section 33675 also provided that payments of tax increment revenues from the County Auditor-

Controller to the Former Agency could not exceed the amounts shown on the Former Agency’s statement of

indebtedness. The Dissolution Act eliminates this requirement and provides that, commencing on the date that

the first Recognized Obligation Payment Schedule is valid thereunder, the Recognized Obligation Payment

Schedule supersedes the statement of indebtedness previously required under the Redevelopment Law, and

that, commencing on such date, the statement of indebtedness will no longer be prepared nor have any effect

under the Redevelopment Law. See the caption “SECURITY FOR THE 2018 BONDS—Recognized


32

Status of Compliance with Dissolution Act

The Dissolution Act requires a due diligence review to determine the unobligated balances of each

successor agency that are available for transfer to taxing entities. The due diligence review involves separate

reviews of each successor agency’s low and moderate income housing fund and of all other funds and

accounts. Once a successor agency completes the due diligence review and any transfers to taxing entities, the

DOF will issue a finding of completion that expands the authority of each successor agency in carrying out the

wind down process. A finding of completion allows a successor agency to, among other things, retain real

property assets of the dissolved redevelopment agency and utilize proceeds derived from bonds issued prior to

January 1, 2011.

The Successor Agency completed the due diligence process and received its Finding of Completion on

October 18, 2013.

After receiving a finding of completion, each successor agency is required to submit a Long Range

Property Management Plan detailing what it intends to do with its inventory of properties. Successor agencies

are not required to immediately dispose of their properties but are limited in terms of what they can do with the

retained properties. Permissible uses include: sale of the property, use of the property to satisfy an enforceable

obligation, retention of the property for future redevelopment, and retention of the property for governmental

use. These plans must be filed by successor agencies within six months of receiving a finding of completion,

and the DOF will review these plans as submitted on a rolling basis.

The DOF approved the Successor Agency’s Long Range Property Management Plan on December 16,

2015.

Prior to its dissolution, the City formed the Cudahy Economic Development Corporation (the “EDC”).

On or about April 1, 2011, the Former Agency transferred all of its moneys and assets, including bond

proceeds, to the EDC. The transferred assets totaled approximately $20,978,178 (approximately $5,068,178 in

land and approximately $15,910,000 in cash). Pursuant to its authority under the Dissolution Act, the State

Controller’s Office (the “SCO”) reviewed these transfers, and issued a report dated April 15, 2014 (the “SCO

Order”) ordering that all assets transferred by the Former Agency to the EDC be returned to the Successor

Agency. The report of the State Controller’s Office concluded these transfers were improper under the

Dissolution Act because they were made after January 1, 2011 and did not include assets that had already been

committed to a third party prior to June 28, 2011. Certain properties that were the subject of the SCO Order

had already been sold by the EDC to third parties. Further, the City and Agency maintained that the EDC was

a separate legal entity from the City and that the transfers were allowable under the Dissolution Act and the

Redevelopment Law. However, the City and Agency by letter to the SCO dated April 7, 2014, confirmed their

agreement to reverse the transfers to the EDC and to recover properties previously conveyed by the EDC to

third parties. The Agency and the EDC have complied with the orders set forth in the SCO Order and the

Successor Agency’s Long Range Property Management Plan, including the provisions regarding the properties

that were previously transferred to the EDC, has been approved by DOF.

THE PROJECT AREA

Under the Law, a city or county that activated a redevelopment agency was required to adopt, by

ordinance, a redevelopment plan for each redevelopment project to be undertaken by the redevelopment

agency. A redevelopment agency could only undertake those activities within a redevelopment project

specifically authorized in the adopted redevelopment plan. A redevelopment plan is a legal document, the

content of which is largely prescribed in the Redevelopment Law, rather than a “plan” in the customary sense

of the word. Each redevelopment plan originally included separate time and financial limitations applicable to

each Project Area. SB 107, which became effective September 22, 2015, amended the Dissolution Act to provide that the time limits for receiving property tax revenues and the limitation on the amount of property

tax revenues that may be received by the Former Agency and the Agency set forth in the applicable

33

redevelopment plan are not effective for purposes of paying the Agency’s enforceable obligations.

Accordingly, the projections set forth in this Official Statement and in the Fiscal Consultant’s Report attached

to this Official Statement as Appendix A were prepared without regard to the time and financial limitations set

forth in the Redevelopment Plan for the Project Area. Also, the County Auditor-Controller will only deposit

revenues into the RPTTF after a Project Area reaches a plan limit set forth in the redevelopment plan if and to

the extent the Agency provides evidence that the revenues are needed to pay enforceable obligations. See

“RISK FACTORS—Effect of Redevelopment Plan Limits.” See below under this caption for additional

information regarding the Project Area, including information on land use, property ownership, assessed

valuation and Pledged Tax Revenues generated within the Project Area. See “SECURITY FOR THE 2018

BONDS—Pledged Tax Revenues.”

General

The Project Area exists pursuant to the Redevelopment Plan (the “Redevelopment Plan”), which has

been amended from time to time. A brief description of the location and land uses within the Project Area is

set forth below. The Project Area was initially adopted by ordinance of the City Council and has been subject

to periodic amendment from time to time pursuant to and in accordance with the Law. Various amendments to

the Redevelopment Plan have added areas of the City to the Project Area (each an “Amendment Area” of the

Project Area).

The City Council of the City of Cudahy adopted the Redevelopment Plan for the Commercial-

Industrial Redevelopment Project (the “Original Project Area”) by Ordinance No. 220 on July 18, 1977. The

Redevelopment Plan was subsequently amended by Ordinance No. 275 on September 8, 1981, for the purpose

of adding and deleting certain sections of the original plan and adding territory to the project area (“First

Amendment Area”). The Redevelopment Plan was further amended by Ordinance No. 465, adopted on

December 14, 1992, for the purpose of amending the text of the Redevelopment Plan.

The Redevelopment Plan was amended for a third time by Ordinance No. 475, adopted on July 13,

1993, which further amended the text of the Redevelopment Plan and added additional territory to the Project

Area (the “Third Amendment Area”). Ordinance No. 499, adopted on December 5, 1994, amended the

Redevelopment Plan for the fourth time by incorporating time limitations on the activities of the Former

Agency as required by Section 33333.6 of the Health and Safety Code. The time limitations imposed by

Ordinance No. 499 affect the Original Project Area as well as the First Amendment Area and the Third

Amendment Area, which are collectively referred to as the “Amended Cudahy Commercial-Industrial

Redevelopment Project”. The Amended Cudahy Commercial-Industrial Redevelopment Project consists of

approximately 276.5 acres and is located, for the most part, along both the east and west sides of Atlantic

Avenue between Florence Avenue on the north and Patata Street on the south.

The Redevelopment Plan was further amended by the City-Wide Redevelopment Project, as adopted

by Ordinance No. 580 on July 2, 2002, which added approximately 435 acres to the then existing Project Area

(the “Fifth Amendment Area”). The Fifth Amendment Area includes all of the land in the City that is not

within the Amended Cudahy-Commercial-Industrial Redevelopment Project, except for 76.6 acres of land

located east of the Los Angeles River.

Plan Limits




for purposes of paying the Agency’s enforceable obligations. The projections set forth in this Official

Statement and in the Fiscal Consultant’s Report attached to this Official Statement as Appendix A continue to reflect the impact of these plan limits on the revenues projected to be available to pay debt service on the 2018

Bonds and Existing Parity Bonds; actual Pledged Tax Revenues, to the extent needed for payment of debt

34

service on the 2018 Bonds and Existing Parity Bonds, will likely not be limited by such plan limits. See the

caption “PLEDGED TAX REVENUES—Projected Pledged Tax Revenues.” The following table summarizes

the time and financial limits set forth in the Redevelopment Plan.

REDEVELOPMENT PLAN LIMITATION DATES AND AMOUNTS

Component

Area

Last Date to Incur

Indebtedness

Plan

Effectiveness

Debt

Repayment

Cumulative Tax

Increment(1)

Outstanding

Bond Debt(2)

July 18, 1977

(Original Project

Area)

(eliminated) 7/18/2020 7/18/2030

$55 million, with

annual CPI

adjustments

$27 million

(outstanding

principal amount) September 8, 1981

(Amend. No. 1)

(eliminated) 9/8/2024 1/8/2030

July 13, 1993

(Amend. No. 3)

7/13/2033 7/13/2034 7/13/2044

July 19, 2002

(Amend. No. 5)

7/2/2022 7/2/2033 7/2/2048 (No limit for

Amend. No. 5)

($51 million for

Amend No. 5) (1) The Former Agency and Agency have received approximately $48.1 million (combined) to date of tax revenues that would

apply to the cumulative tax increment cap amount. In order to reach the cumulative tax increment cap amount ($95.8

million as of May 2018) prior to the final term date of the 2018 Bonds, annual assessed valuation growth would have to

exceed an average of 18.5% per year. (2) The Agency currently has $16,460,000 (principal amount) of bond debt outstanding, all of which will be refunded upon

issuance of the 2018 Bonds.

Assessed Valuation

As discussed under the caption “SECURITY FOR THE BONDS—Tax Increment Financing,” the

2018 Bonds are secured by Pledged Tax Revenues from the Project Area.

A breakdown of the reported taxable valuations and incremental assessed value in the Project Area for

Fiscal Year 2018-19 is set forth in the below table:

Table 1

SUCCESSOR AGENCY TO THE


Taxable Values (Fiscal Year 2018-19)

Original

Project Area

First

Amendment

Area

Third

Amendment

Area

Fifth

Amendment

Area Total

Total Secured $ 185,998,866 $ 102,242,222 $ 11,254,882 $ 486,319,371 $ 785,815,341

Total Unsecured 28,658,432 7,036 192,326 344,247 29,202,041

Total Assessed Value 214,657,298 102,249,258 11,447,208 486,663,618 $ 815,017,382

Base Year Assessed Value $ (27,083,016) $ (9,048,382) $ (3,808,276) $ (212,286,881) $ (252,226,555)

Incremental Assessed Value $ 187,574,282 $ 93,200,876 $ 7,638,932 $ 274,376,737 $ 562,790,827

Incremental Assessed Value for

Prior Year $ 178,409,532 $ 88,835,144 $ 6,433,274 $ 266,299,714 $ 539,977,664

% increase (decrease) from

prior year 5.14% 4.91% 18.74% 3.03% 4.22%

Source: Urban Futures, Inc.

35

Schedule of Historical Incremental Revenues

The following table is a schedule of the taxable valuations and resulting incremental tax revenues in

the Project Area for the Fiscal Years 2013-14 through 2017-18.

Table 2



Historical Taxable Values and Incremental Revenues

(Fiscal Years 2013-14 through 2017-18)

2013-14 2014-15 2015-16 2016-17 2017-18

Total Taxable Valuation(1) $ 679,592,815 $ 708,035,855 $ 745,674,549 $ 768,855,339 $ 792,204,219

Base Year Valuation (253,003,602) (253,747,276) (253,747,276) (253,526,233) (252,226,555)

Incremental Valuation $ 426,589,213 $ 454,288,579 $ 491,927,273 $ 515,329,106 $ 539,977,664

Typical Tax Rate/$100 1.0000 1.0000 1.0000 1.0000 1.0000

Incremental Revenues $ 4,265,892 $ 4,542,886 $ 4,919,273 $ 5,153,291 $ 5,399,777

Actual RPTTF Deposit(2) $ 4,779,672 $ 4,126,935 $ 4,460,908 $ 4,946,993 $ 5,345,388

(1) Assessed Valuation provided by Los Angeles County Auditor-Controller’s office. (2) Based on actual collections. Includes unitary and supplemental tax revenues. See the Caption “PROPERTY TAXATION

IN CALIFORNIA—Property Tax Collection Procedures” and “—Unitary Property.”

Source: Urban Futures, Inc.; Los Angeles County Auditor Controller.

Largest Taxpayers

The top ten taxpayers for the Project Area in the current Fiscal Year are set forth in the below table.

Table 3



Top Ten Taxpayers (Fiscal Year 2018-19)

Name

2018-19

Assessed Valuation

Primary

Land Use

Percent of

Secured

Value(1)

Percent of

Incremental

Value(2)

1. Excel Realty Partners LP $ 26,136,996 Commercial 3.33% 4.64%

2. Kaiser Foundation Health 20,044,635 Commercial 2.55 3.56

3. Tag Enterprises LLC 16,283,013 Commercial 2.07 2.89

4. 4645 Live Oak LLC (3) 13,583,199 Multi-Family Residential 1.73 2.41

5. Calderon J Vladimir Tr 10,696,105 Industrial 1.36 1.90

6. Barrera Arturo Co Tr (3) 9,327,656 Multi-Family Residential 1.19 1.66

7. Cudahy Cecilia LLC 7,877,500 Industrial 1.00 1.40

8. Tssay J & R LLC 7,612,441 Recreational 0.97 1.35

9. Cudahy Assoc 5,524,877 Commercial 0.70 0.98

10. Smith Fred & Myrna I Trs 5,002,145 Industrial 0.64 0.89

Total $ 122,088,567 15.54% 21.69%

(1) Based on Fiscal Year 2018-19 secured assessed valuation of $785,815,341. (2) Based on Fiscal Year 2018-19 incremental valuation of $562,790,827. (3) Currently has assessment appeal on file.

Source: Urban Futures, Inc. with information from the Los Angeles County 2018-19 Secured Property Tax Roll.

Additional information on the top three largest taxpayers can be found below.

Excel Realty Partners LP, the largest taxpayer within the Project Area, is the owner of Cudahy Plaza,

a 9.15 acre shopping mall located at the southwest corner of Atlantic Avenue and Elizabeth Street. The mall

36

contains approximately 148,000 sq. ft. of retail and restaurant space, including Big Lots, Payless Shoe Source,

Little Caesar’s restaurant, and Jamba Juice.

Kaiser Foundation Health, the second largest taxpayer, is the owner of a 122,860 sq. ft. medical (non-

emergency) office building located at the northwest corner of Atlantic Avenue and Elizabeth Street. The

building was constructed in 1989 and is located on a 3.93 acre site.

Tag Enterprises LLC, the third largest taxpayer, is the owner of a 7.26 acre shopping mall located at

the southeast corner of Atlantic Avenue and Florence Street. The mall contains approximately 114,000 sq. ft.

of retail and restaurant space, including Auto Zone, Superior Grocery Store, a U.S. Bank branch, Verizon

wireless store, and a Panda Bowl restaurant.

Land Use

The following table illustrates the land use of property in the Project Area.

Table 4



Land Use Statistics (Fiscal Year 2018-19)(1)

Land Use

No. of

Parcels

Secured Assessed

Valuation

Percent of

Secured Assessed

Valuation(2)

Multi-Family Residential 778 $ 407,701,775 51.88%

Single Family Residential 717 177,161,752 22.54

Commercial 70 104,273,663 13.27

Industrial 86 66,534,443 8.47

Governmental/Institutional/Other 92 9,165,525 1.17

Vacant Industrial 14 7,368,347 0.94

Vacant Residential 38 5,837,327 0.74

Recreational 1 3,948,003 0.50

Vacant Governmental/Institutional/Other 17 3,270,400 0.42

Vacant Commercial 4 554,105 0.07

Total All Secured 1817 $ 785,815,341 100.00% (1) Totals may not add due to rounding. (2) Based on Fiscal Year 2018-19 secured assessed valuation of $785,815,341.


Levy and Collection

The following table sets forth property tax levy and collections in the Project Area from Fiscal Year

2012-13 through 2016-17. The County has not adopted the “Teeter Plan” alternative method for collection of

taxes and, therefore, the receipt of property taxes is subject to delinquencies. Actual receipts of tax increment

have averaged 95.99% of the levy for the Project Area over such five-year period.

37

Table 5



Tax Levy and Collections (Fiscal Years 2012-13 to 2016-17)

Fiscal Year

Ending June 30 Computed Levy(1)

Actual Based on

Collections Rate Collections Rate

2013 $3,990,600 $3,855,246 96.61%

2014 4,427,503 4,227,203 95.48

2015 4,425,034 4,162,258 94.06

2016 4,699,510 4,539,974 96.61

2017 4,927,176 4,784,633 97.11

(1) Computed Levy based on reported incremental value multiplied by the tax rate to compute gross tax increment. Computed

Levy also includes unitary taxes, if any, as reported by the County Auditor-Controller.

Source: County; Urban Futures, Inc.

Assessment Appeals

There are two basic types of assessment appeals provided for under California law. The first type of

appeal, commonly referred to as a base year assessment appeal, involves a dispute on the valuation assigned by

the County Assessor following a change in ownership or completion of new construction. If the base year

value assigned by the County Assessor is reduced, the valuation of the property cannot increase in subsequent

years more than 2% annually unless and until another change in ownership and/or additional new construction

activity occurs. The second type of appeal, commonly referred to as a Proposition 8 appeal, can result if

factors occur causing a decline in the market value of the property to a level below the property’s then current

taxable value.

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 Assessment Appeals Board for a

hearing and resolution. The resolution of an appeal may result in a reduction to the County Assessor’s original

taxable value and a tax refund to the property owner. A property owner can file for a regular assessment

appeal with the County between July 2 and November 30. Revenue and Taxation Code Section 1604 allows

up to two years for an assessment appeal to be decided. Two of the top ten taxpayers within the Project Area

have filed assessment appeals that are currently pending. Additional appeals to assessed values in the Project

Area may be filed from time to time in the future. The Agency cannot predict the extent of these appeals or

their likelihood of success.

The Fiscal Consultant researched the status of assessment appeals filed by property owners in the

Project Area based upon the latest information available from the County Appeals Board database from

January 2013 through June 2018. The Fiscal Consultant’s estimates are based upon the historical averages of

successful appeals and amounts of value reductions. Actual appeals, reductions and refunds may vary from

historical averages. The Fiscal Consultant’s estimated reductions in values are not reflected in its projections

of Pledged Tax Revenues, as the results of pending appeals are uncertain.

The following table, showing appeal data for the period of January 2013 through June 2018,

summarizes the potential losses from pending assessment appeals within the Project Area.

38

Table 6



Assessed Valuation Appeals (January 2013 to June 2018)

No. of

Appeals

Filed

No. of

Successful

Appeals

Assessed Value

of Property

Owner’s Opinion

of Value

Total Requested

Assessed Value

Reduction

Reduction

Allowed by

Board

Allowed

Reductions

as % of

Requested

155 43 $267,013,205 $96,996,974 $170,016,231 $10,230,224 6.02%

Outstanding Assessment Appeals

Roll Year

Appealed

No. of

Appeals

Filed

Assessed Value

of Property

Owner’s Opinion

of Value

Potential Loss of

Assessed Value

Historical

Success Rate

Est.

Reduction

(based on

historical

success)

2013 6 $ 1,811,957 $ 46,733 $ 1,765,224 6.02% $ 106,217

2014 2 280,095 42,873 237,222 6.02 14,274

2015 8 2,472,102 406,959 2,065,143 6.02 124,264

2016 14 24,251,298 14,438,089 9,813,209 6.02 590,481

2017 18 18,853,257 9,623,969 9,229,288 6.02 555,345

Total 48 $ 47,668,709 $ 24,558,623 $ 23,110,086 6.02% $ 1,390,581

Source: Urban Futures, Inc. with data obtained from Los Angeles County.

39

New Development

According to the Agency, several new developments are in progress, or are anticipated to begin in the

near future, within the Project Area. Such new developments are expected to increase assessed valuations

within Project Area. However, the projections of Pledged Tax Revenues in the Fiscal Consultant Report and

this Official Statement do not reflect any increases in assessed valuations relating to development within the

Project Area that is in progress or anticipated to begin in the near future.

PLEDGED TAX REVENUES

Pledged Tax Revenues are to be deposited in the Redevelopment Obligation Retirement Fund, and

thereafter and after transfers have been made by the Agency to the Debt Service Fund, administered by the

Trustee and applied to the payment of the principal of and interest on the 2018 Bonds.

Projected Pledged Tax Revenues

The Agency retained the Fiscal Consultant to provide projections of taxable valuation and Pledged

Tax Revenues from developments in the Project Area. The Agency believes that the assumptions (set forth in

the footnotes below and in Appendix A) upon which the projections are based are reasonable; however, some

assumptions may not materialize and unanticipated events and circumstances may occur. See the caption

“RISK FACTORS.” Therefore, the actual Pledged Tax Revenues received during the forecast period may vary

from the projections and the variations may be material. A summary of the projected total taxable valuation

and Pledged Tax Revenues for the Project Area is set forth in the following tables. The projections set forth in

Table 7 assume no growth in assessed value. The projections set forth in Table 8 assume assessed value

growth at 2% in Fiscal Year 2018-19 and thereafter.




for purposes of paying the Agency’s enforceable obligations. The projections set forth in this Official

Statement and in the Fiscal Consultant’s Report attached to this Official Statement as Appendix A continue to

reflect the impact of these plan limits on the revenues projected to be available to pay debt service on the 2018

Bonds and Existing Parity Bonds; actual Pledged Tax Revenues, to the extent needed for payment of debt

service on the 2018 Bonds and Existing Parity Bonds, will likely not be limited by such plan limits.

40

A summary of the projected total taxable valuation and Pledged Tax Revenues for the Project Area assuming 0% annual growth is set forth in the

below table:

Table 7



Projected Pledged Tax Revenues—Assumes No Value Growth

Fiscal Year

Ending June 30

Assessed

Valuation(1)

Incremental Value

Over Base(2)

Gross Tax

Increment

Revenue(3)

County Admin.

Charges(4)

Senior Pass-

Through

Amounts(5)

Pledged Tax

Revenues(6)

2019 $815,017,382 $562,790,827 $5,627,908 $(101,302) $(619,881) $4,906,725

2020 815,017,382 562,790,827 5,627,908 (101,302) (619,881) 4,906,725

2021 815,017,382 562,790,827 5,627,908 (101,302) (619,881) 4,906,725

2022 815,017,382 562,790,827 5,627,908 (101,302) (619,881) 4,906,725

2023 815,017,382 562,790,827 5,627,908 (101,302) (619,881) 4,906,725

2024 815,017,382 562,790,827 5,627,908 (101,302) (619,881) 4,906,725

2025 815,017,382 562,790,827 5,627,908 (101,302) (619,881) 4,906,725

2026 815,017,382 562,790,827 5,627,908 (101,302) (619,881) 4,906,725

2027 815,017,382 562,790,827 5,627,908 (101,302) (619,881) 4,906,725 (1) Based on Fiscal Year 2018-19 taxable value. No annual growth assumed after Fiscal Year 2018-19. Real property consists of land and improvements. (2) Represents reported and projected incremental values over a Base Year value of $252,226,595 (reported by the County in Fiscal Year 2017-18). (3) Based on the general 1.00% tax rate. Excludes override tax rate levied by MWD. See the caption “SECURITY FOR THE 2018 BONDS—General.” (4) County Administrative Charges include charges under SB 2557 and AB X1 26. The Fiscal Consultant estimates the charges at 1.80% of Gross Tax Increment Revenues. (5) Includes payments pursuant to Pass-Through Agreements and 33676 Amounts. See the caption “SECURITY FOR THE 2018 BONDS—Pass-Through Agreements” and “—Section 33676

Election.” Payment of Statutory Pass-Through Amounts has been subordinated to payment of the 2018 Bonds. See the caption ““SECURITY FOR THE 2018 BONDS—Tax Increment Financing—Tax Sharing” and “—Statutory Pass-Through Amounts.”

(6) Pledged Tax Revenues available for debt service payments on the 2018 Bonds.


41

A summary of the projected total taxable valuation and Pledged Tax Revenues for the Project Area assuming 2% annual growth is set forth in the

below table:

Table 8



Projected Pledged Tax Revenues—Assumes Value Growth

Fiscal Year

Ending June 30

Assessed

Valuation(1)

Incremental Value

Over Base(2)

Gross Tax

Increment

Revenue(3)

County Admin.

Charges(4)

Senior Pass-

Through

Amounts(5)

Pledged Tax

Revenues(6)

2019 $815,017,382 $562,790,827 $5,627,908 $(101,302) $(619,881) $4,906,725

2020 831,317,730 579,091,175 5,790,912 (104,236) (637,399) 5,049,276

2021 847,944,084 595,717,529 5,957,175 (107,229) (655,413) 5,194,533

2022 864,902,966 612,676,411 6,126,764 (110,282) (673,936) 5,342,547

2023 882,201,025 629,974,470 6,299,745 (113,395) (692,982) 5,493,367

2024 899,845,046 647,618,491 6,476,185 (116,571) (712,567) 5,647,046

2025 917,841,947 665,615,392 6,656,154 (119,811) (732,706) 5,803,637

2026 936,198,786 683,972,231 6,839,722 (123,115) (753,415) 5,963,192

2027 954,922,761 702,696,206 7,026,962 (126,485) (774,709) 6,125,768 (1) Based on Fiscal Year 2018-19 taxable value. Projected taxable values have been increased by 2% each year thereafter. Real property consists of land and improvements. (2) Represents reported and projected incremental values over a Base Year value of $252,226,595 (reported by the County in Fiscal Year 2017-18). (3) Based on the general 1.00% tax rate. Excludes override tax rate levied by MWD. See the caption “SECURITY FOR THE 2018 BONDS—General.” (4) County Administrative Charges include charges under SB 2557 and AB X1 26. The Fiscal Consultant estimates the charges at 1.80% of Gross Tax Increment Revenues. (5) Includes payments pursuant to Pass-Through Agreements and 33676 Amounts. See the caption “SECURITY FOR THE 2018 BONDS—Pass-Through Agreements” and “—Section 33676

Election.” Payment of Statutory Pass-Through Amounts has been subordinated to payment of the 2018 Bonds. See the caption ““SECURITY FOR THE 2018 BONDS—Tax Increment Financing—Tax Sharing” and “—Statutory Pass-Through Amounts.”

(6) Pledged Tax Revenues available for debt service payments on the 2018 Bonds.


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Debt Service Coverage

Set forth below is the estimated debt service coverage for the 2018 Bonds using Fiscal Year 2018-19

Pledged Tax Revenues assuming 0% value growth in tax increment revenues.

Table 9



Estimated Debt Service Coverage—Assumes No Value Growth

Year Ending

June 30

Pledged

Tax Revenues 2018 Bonds(1)

Debt Service

Coverage

2019 $4,906,725 $1,855,338 2.64x

2020 4,906,725 1,854,029 2.65

2021 4,906,725 1,855,151 2.64

2022 4,906,725 1,847,460 2.66

2023 4,906,725 1,847,188 2.66

2024 4,906,725 1,843,688 2.66

2025 4,906,725 1,836,607 2.67

2026 4,906,725 1,835,271 2.67

2027 4,906,725 1,926,028 2.55

(1) Reflects debt service on 2018 Bonds payable in calendar year that begins in such Fiscal Year.

Source: Urban Futures, Inc.; Underwriter.

Set forth below is the estimated debt service coverage for the 2018 Bonds using Fiscal Year 2018-19

Pledged Tax Revenues assuming approximately 2% growth in tax increment revenues thereafter.

Table 10



Estimated Debt Service Coverage—Assumes Value Growth

Year Ending

June 30

Pledged

Tax Revenues 2018 Bonds(1)

Debt Service

Coverage

2019 $4,906,725 $1,855,338 2.64x

2020 5,049,276 1,854,029 2.72

2021 5,194,533 1,855,151 2.80

2022 5,342,547 1,847,460 2.89

2023 5,493,367 1,847,188 2.97

2024 5,647,046 1,843,688 3.06

2025 5,803,637 1,836,607 3.16

2026 5,963,192 1,835,271 3.25

2027 6,125,768 1,926,028 3.18

(1) Reflects debt service on 2018 Bonds payable in calendar year that begins in such Fiscal Year.

Source: Urban Futures, Inc.; Underwriter

Projected RPTTF Distributions

The estimated distributions of moneys from the Agency’s Redevelopment Property Tax Trust Fund

for January 2, 2019, June 1, 2019 and January 2, 2020 are set forth in Table 11 below. The subordinate obligation debt service shown in the below table assumes the issuance of the 2018 Bonds in August, 2018.

43

Table 11



Estimated RPTTF Distributions

(January 2, 2019 to January 2, 2020)

Fiscal Year January 2, 2019 June 1, 2019 January 2, 2020

Gross Tax Revenues (Based on Fiscal Year)

Tax Increment $2,470,652 $3,157,256 $2,542,210

Unitary Revenue -- -- --

Total Gross Tax Revenues 2,470,652 3,157,256 2,542,210

Deductions

Property Tax Administrative Fee 92,590 8,712 95,272

Pass-Through Agreements 239,274 380,607 246,036

Total Deductions 331,864 389,319 341,308

Tax Revenues Available for the 2018 Bonds 2,138,788 2,767,937 2,200,902

2018 Bonds 927,669 927,669 927,014

Remaining for Other Subordinate Obligations 1,211,119 1,840,268 1,273,888


RISK FACTORS

The following information should be considered by prospective investors in evaluating the 2018

Bonds. However, the following does not purport to be an exhaustive listing of risks and other considerations which may be relevant to investing in the 2018 Bonds. In addition, the order in which the following

information is presented is not intended to reflect the relative importance of any such risks.

Reduction in Taxable Value

Pledged Tax Revenues allocated to the Redevelopment Property Tax Trust Fund are determined by

the amount of incremental taxable value in the Project Area and the current rate or rates at which property in

the Project Area is taxed. The reduction of taxable values of property in the Project Area caused by economic

factors beyond the Agency’s control, such as relocation out of the Project Area by one or more major property

owners, sale of property to a non-profit corporation exempt from property taxation or the complete or partial

destruction of such property caused by, among other eventualities, earthquake or other natural disaster, could

cause a reduction in the Pledged Tax Revenues that provide for the repayment of and secure the 2018 Bonds.

Such reduction in Pledged Tax Revenues could have an adverse effect on the Agency’s ability to make timely

payments of principal of and interest on the 2018 Bonds.

As described in greater detail under the caption “PROPERTY TAXATION IN CALIFORNIA—

Article XIIIA of the State Constitution,” Article XIIIA 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 2% 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 above). Such measure is computed on a calendar year basis. Any resulting

reduction in the full cash value base over the term of the 2018 Bonds could reduce Pledged Tax Revenues

securing the 2018 Bonds.

44

In addition to the other limitations on and required application under the Dissolution Act of Pledged

Tax Revenues on deposit in the Redevelopment Property Tax Trust Fund, as described in this Official

Statement, the State electorate or Legislature could adopt a constitutional or legislative property tax reduction

with the effect of reducing Pledged Tax Revenues allocated to the Redevelopment Property Tax Trust Fund

and available to the Agency. Although the federal and State Constitutions include clauses generally

prohibiting the Legislature’s impairment of contracts, there are also recognized exceptions to these

prohibitions. There is no assurance that the State electorate or Legislature will not at some future time approve

additional limitations that could reduce the Pledged Tax Revenues and adversely affect the source of

repayment and security of the 2018 Bonds.

Concentration of Ownership

The ten largest property taxpayers in the Project Area, based upon the Fiscal Year 2018-19 locally

assessed tax roll reported by the County Assessor, owned approximately 15.54% of the total Project Area

value and approximately 21.69% of the total incremental assessed value within the Project Area. See the

Fiscal Consultant’s Report attached to this Official Statement as Appendix A. Concentration of ownership

presents a risk in that if one or more of the largest property owners were to default on their taxes, or were to

successfully appeal the tax assessments on property within the Project Area, a substantial decline in Pledged

Tax Revenues could result. See the caption “THE PROJECT AREA—Largest Taxpayers” for more

information about these ten largest property taxpayers and see “THE PROJECT AREA—Assessment

Appeals” for information as to pending appeals of tax assessments.

Risks to Real Estate Market

The Agency’s ability to make payments on the 2018 Bonds is dependent upon the economic strength

of the Project Area. The general economy of the Project Area is subject to all of the risks generally associated

with urban real estate markets. Real estate prices and 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, the supply of or demand for competitive properties in such area, the market value of

property in the event of sale or foreclosure and other similar factors. Furthermore, real estate development

within the Project Area could be adversely affected by limitations of infrastructure or future governmental

policies, including governmental policies to restrict or control development, changes in real estate tax rates and

other operating expenses, zoning laws and laws relating to threatened and endangered species and hazardous

materials and fiscal policies, as well as natural disasters (including, without limitation, earthquakes, wildfires

and floods), which may result in uninsured losses. In addition, if there is a decline in the general economy of

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 or may petition for reduced assessed valuation causing a delay or

interruption in the receipt of Pledged Tax Revenues by the Agency from the Project Area.

Because assessed values do not necessarily indicate fair market values, the declines in fair market

values in recent years may have been even greater than the declines in assessed valuations, although it is also

possible that market values could be greater than assessed valuations at any given time. No assurance can be

given that the individual parcel owners will pay property taxes in the future or that they will be able to pay

such taxes on a timely basis. See the caption “—Bankruptcy and Foreclosure” for a discussion of certain

limitations on the City’s ability to pursue judicial proceedings with respect to delinquent parcels.

Reduction in Inflation Rate

As described in greater detail above, Article XIIIA of the State Constitution provides that the full cash

value of real property used in determining taxable value may be adjusted from year to year to reflect the rate of

inflation, not to exceed a 2% increase for any given year, or may be reduced to reflect a reduction in the consumer price index or comparable local data. Such measure is computed on a calendar year basis. Because

Article XIIIA limits inflationary assessed value adjustments to the lesser of the actual inflationary rate or 2%,

45

there have been years in which the assessed values were adjusted by actual inflationary rates, which were less

than 2%. The Agency is unable to predict if any adjustments to the full cash value of real property within the

Project Area, whether an increase or a reduction, will be realized in the future. See “PROPERTY TAXATION

IN CALIFORNIA—Article XIIIA of the State Constitution.”

Effect of Redevelopment Plan Limits

Prior to the enactment of SB 107, the Agency’s Project Area were subject to various limitations on the

amount of and time within which tax increment could be received by the Agency. Such limitations are referred

to as “Plan Limits.” Revenues in excess of such plan limits are not deposited into the RPTTF and are not

reflected in the projections of Pledged Tax Revenues set forth in Tables 7 and 8 and the Fiscal Consultant’s

Report attached as Appendix A. The County Auditor-Controller will only deposit revenues into the RPTTF

for Project Area that reach their Plan Limits in the future if the Agency demonstrates that such revenues are

needed to pay the Agency’s enforceable obligations. The Agency does not expect this to affect the availability

of Pledged Tax Revenues to pay debt service on the 2018 Bonds when due. Certain of the component areas

within the Project Area were subject to plan limitations, though due to the passage of SB 107, such plan

limitations are no longer in effect. See the caption “THE PROJECT AREA—Plan Limits.”

Levy and Collection of Taxes

The Agency has no independent power to levy or collect property taxes. Any reduction in the tax rate

or the implementation of any constitutional or legislative property tax decrease could reduce the Pledged Tax

Revenues, and accordingly, could have an adverse impact on the security for and the ability of the Agency to

repay the 2018 Bonds.

Likewise, delinquencies in the payment of property taxes by the owners of land in the Project Area,

and the impact of bankruptcy proceedings on the ability of taxing agencies to collect property taxes, could

have an adverse effect on the Agency’s ability to make timely payments on the 2018 Bonds. As discussed

under the caption “PROPERTY TAXATION IN CALIFORNIA—Property Tax Collection Procedures—

Delinquencies,” the County has not adopted a “Teeter Plan” alternative method for collection of taxes and,

therefore, the receipt of property taxes is subject to delinquencies. Any reduction in Pledged Tax Revenues,

regardless of the reason, could have an adverse effect on the Agency’s ability to pay the principal of and

interest on the 2018 Bonds. See Table 5 under the caption “THE PROJECT AREA—Levy and Collection.”

State Budget Issues

General. AB X1 26 and AB 1484 were enacted by the State Legislature and Governor as trailer bills

necessary to implement provisions of the State’s budget acts for its fiscal years 2011-12 and 2012-13,

respectively, and constituted efforts to address structural deficits in the State general fund budget. In general

terms, these bills implemented a framework to transfer cash assets which were previously held by

redevelopment agencies to cities, counties and special districts to fund core public services, with assets

transferred to schools offsetting State general fund costs (then projected savings of $1.5 billion). There can be

no assurance that additional legislation will not be enacted in the future to additionally implement provisions

relating to the State budget or otherwise that may affect successor agencies or tax increment revenues,

including RPTTF Revenues.

SB 107, which made extensive amendments to the Dissolution Act, was enacted following the

adoption of the State fiscal year 2015-16 budget, after having initially been presented as AB 113, a trailer bill

to the State fiscal year 2015-16 budget. SB 107 changed the process for submitting Recognized Obligation

Payment Schedules from a six-month to an annual process, authorized successor agencies to submit and obtain

DOF approval of a Last and Final ROPS to govern all remaining payment obligations of successor agencies,

altered the provisions governing the distribution of Redevelopment Property Tax Trust Fund moneys

attributable to pension and State Water Project tax rate overrides and eliminated the impact of financial and

46

time limitations in redevelopment plans for purposes of paying enforceable obligations, among other changes

to the Dissolution Act. These statutory amendments impact the manner in which successor agencies claim

Redevelopment Property Tax Trust Fund moneys for enforceable obligations and, for some successor agencies,

impact the amount of Redevelopment Property Tax Trust Fund moneys that will be available for payment of a

successor agency’s enforceable obligations.

The following information concerning the State’s budget for State fiscal year 2017-18 and State fiscal

year 2018-19 has been obtained from publicly available information that the Agency believes to be reliable;

however, the City and the Underwriter take no responsibility for the accuracy or completeness thereof and

have not independently verified such information. Information about the State budget is regularly available at

various State-maintained websites. Text of proposed and adopted budgets may be found at the website of the

DOF, http://www.dof.ca.gov, under the heading “California Budget.” An impartial analysis of the budget is

posted by the Legislative Analyst’s Office (the “LAO”) at http://www.lao.ca.gov. In addition, various State

official statements, many of which contain a summary of the current and past State budgets and the impact of

those budgets on cities in the State, may be found at the website of the State Treasurer,

http://www.treasurer.ca.gov. The information referred to is prepared by the respective State agency

maintaining each website and not by the City, the Agency or the Underwriter, and the City, the Agency and the

Underwriter take no responsibility for the continued accuracy of these Internet addresses or for the accuracy,

completeness or timeliness of information posted thereon, and such information is not incorporated herein by

these references.

2018-19 Budget. On June 27, 2018, the Governor signed into law the State budget for fiscal year

2018-19 (the “2018-19 Budget”). The following information is drawn from the DOF’s summary of the 2018-

19 Budget.

To protect against potential future economic recessions, the 2018-19 Budget fully funds the Budget

Stabilization Account (the “BSA”), the State’s basic reserve account, with a total deposit of over $4.35 billion

and adds two additional reserves to State law: the Budget Deficit Savings Account, intended to facilitate

supplemental payments to continue to fully fund the BSA; and the Safety Net Reserve Fund, intended to

protect against potential future cuts to certain health and welfare programs.

For fiscal year 2017-18, the 2018-19 Budget projects total general fund revenues and transfers of

$129.8 billion and total expenditures of $127.0 billion. The State is projected to end the 2017-18 fiscal year

with total available general fund reserves of $16.7 billion, including $7.3 billion in the traditional general fund

reserve and $9.4 billion in the BSA. For fiscal year 2018-19, the 2018-19 Budget projects total general fund

revenues of $133.3 billion and authorizes expenditures of $138.7 billion. The State is projected to end the

2018-19 fiscal year with total available general fund reserves of $15.9 billion, including $2.0 billion in the

traditional general fund reserve and $13.8 billion in the BSA. The projected ending balance in the BSA at the

end of the 2018-19 fiscal year is expected to equal the BSA’s current constitutional maximum of 10 percent of

the estimated general fund revenues for fiscal year 2018-19.

For additional information regarding the 2018-19 Budget, see the DOF’s website at www.dof.ca.gov

and the LAO’s website at www.lao.ca.gov.

Certain litigation which challenges some of the terms of the Dissolution Act is currently ongoing (as

described under the caption “—Challenges to Dissolution Act”), and it is anticipated that there will be

additional future legislation in this area. The Agency cannot predict what measures may be proposed or

implemented for the current fiscal year or in the future.

None of the websites or webpages that are referenced above is in any way incorporated into this

Official Statement. They are cited for informational purposes only. Neither the Agency nor the Underwriter makes any representation whatsoever as to the accuracy or completeness of any of the information on such

websites.

47

There can be no assurance that additional legislation will not be enacted in the future to implement

provisions relating to the State budget or otherwise that may affect successor agencies or tax increment

revenues.

Recognized Obligation Payment Schedule

The Dissolution Act provides that, commencing on the date that the first Recognized Obligation

Payment Schedule is valid thereunder, only those obligations listed in the Recognized Obligation Payment

Schedule may be paid by the Agency from the funds specified in the Recognized Obligation Payment

Schedule. Before each February 1, with respect to the following fiscal year, the Dissolution Act requires

successor agencies to prepare and submit to the successor agency’s oversight board and the DOF for approval,

a Recognized Obligation Payment Schedule pursuant to which enforceable obligations (as described under the

caption “SECURITY FOR THE 2018 BONDS—Recognized Obligation Payment Schedule”) of the successor

agency are listed, together with the source of funds to be used to pay for each enforceable obligation. Pledged

Tax Revenues will not be distributed from the Redevelopment Property Tax Trust Fund by the County

Auditor-Controller to the Agency’s Redevelopment Obligation Retirement Fund without a duly approved and

effective Recognized Obligation Payment Schedule obtained in sufficient time prior to the June 1 property tax

distribution date. See the caption “SECURITY FOR THE 2018 BONDS—Recognized Obligation Payment

Schedule” and “PROPERTY TAXATION IN CALIFORNIA—Property Tax Collection Procedures—

Recognized Obligation Payment Schedule.” In the event that the Agency fails to file a Recognized Obligation

Payment Schedule with respect to a fiscal year, the availability of Pledged Tax Revenues to the Agency could

be adversely affected for such period.

In the event that a successor agency fails to submit to the DOF an oversight board-approved

Recognized Obligation Payment Schedule complying with the provisions of the Dissolution Act within five

business days of the date upon which the Recognized Obligation Payment Schedule is to be used to determine

the amount of property tax allocations, the DOF may determine if any amount should be withheld by the

applicable county auditor-controller for payments for enforceable obligations from distribution to taxing

entities pursuant to clause (iv) below, pending approval of a Recognized Obligation Payment Schedule. Upon

notice provided by the DOF to the county auditor-controller of an amount to be withheld from allocations to

taxing entities, the county auditor-controller must distribute to taxing entities any moneys in the

Redevelopment Property Tax Trust Fund in excess of the withholding amount set forth in the notice, and the

county auditor-controller must distribute withheld funds to the successor agency only in accordance with a

Recognized Obligation Payment Schedule when and as approved by the DOF.

Typically, under the Redevelopment Property Tax Trust Fund distribution provisions of the

Dissolution Act, the county auditor-controller is to distribute funds for each six-month period in the following

order specified in Section 34183 of the Dissolution Act:

(i) First, to each local agency and school entity, to the extent applicable, amounts required for

pass-through payments that such entity would have received under provisions of the Redevelopment Law, as

those provisions read on January 1, 2011, including pursuant to the Statutory Pass-Through Amounts. Pension

or State Water Project override revenues that are not pledged to or not needed for debt service on Agency debt

will be allocated and paid to the entity that levies the override;

(ii) Second, to the Agency for payments listed in its Recognized Obligation Payment Schedule;

(iii) Third, to the Agency for the administrative cost allowance, as defined in the Dissolution Act;

and

(iv) Fourth, the remainder is distributed to the taxing entities in an amount proportionate to such taxing entity’s share of property tax revenues in the tax rate area in such fiscal year (without adjustment for

pass-through obligations).

48

If the Agency does not submit an Oversight Board-approved Recognized Obligation Payment

Schedule within five business days of the date upon which the Recognized Obligation Payment Schedule is to

be used to determine the amount of property tax allocations and the DOF does not provide a notice to the

County Auditor-Controller to withhold funds from distribution to taxing entities, amounts in the

Redevelopment Property Tax Trust Fund for such fiscal year would be distributed to taxing entities pursuant to

clause (iv) above.

Additionally, in the event Redevelopment Property Tax Trust Fund moneys are insufficient to pay all

pass-through amounts and enforceable obligations, the County Auditor-Controller will disburse moneys to

taxing agencies for pass-through payments prior to disbursing any moneys to the Agency for debt service on

the 2018 Bonds or other enforceable obligations, unless the Agency has complied with the procedures set forth

in Section 34177.5(c) of the Dissolution Act to subordinate such pass-through payments to the 2018 Bonds.

The Agency has taken the required actions to subordinate the Statutory Pass-Through Amounts to the 2018

Bonds and therefore the Statutory Pass-Through Amounts will be available to pay debt service on the 2018

Bonds, subject to compliance with the procedures set forth in the Dissolution Act for accessing such revenues.

See the caption “SECURITY FOR THE 2018 BONDS—Tax Increment Financing—Tax Sharing,” and “—

Statutory Pass-Through Amounts.”

The Agency covenants in the Indenture that it will comply with all of the requirements of the

Redevelopment Law and the Dissolution Act, including without limitation to file all required statements and

hold all public hearings required under the Dissolution Act to assure compliance by the Agency with its

covenants under the Indenture.

Further, the Agency covenants in the Indenture to take all actions required under the Dissolution Act

to include: (i) scheduled debt service on the 2018 Bonds and any Parity Debt and any amount required under

the Indenture to replenish the Reserve Account established hereunder or the reserve account established under

any Parity Debt Instrument, and (ii) amounts due to any Insurer under the Indenture or under an insurance or

surety bond agreement, in Recognized Obligation Payment Schedules for each ROPS Period so as to enable

the County Auditor-Controller to distribute from the Redevelopment Property Tax Trust Fund to the Agency’s

Redevelopment Obligation Retirement Fund on each January 2 and June 1 amounts required for the Agency to

pay principal of, and interest on, the 2018 Bonds coming due in the respective ROPS Period and to pay

amounts owed to any Insurer, as well as the other amounts set forth above.

In order to accomplish the foregoing, on or before each February 1 (or at such earlier time as may be

required by the Dissolution Act), for so long as any Bonds are outstanding, the Agency shall submit an

Oversight Board-approved Recognized Obligation Payment Schedule to the DOF and to the County Auditor-

Controller that shall include, from the first Pledged Tax Revenues distributed to the Agency on each January 2

and June 1 RPTTF distribution date (subject to prior payments described in the Indenture): (i) all debt service

due on all Outstanding 2018 Bonds and Parity Debt coming due during the applicable ROPS Period (with one-

half of such year’s debt service to be distributed from the Redevelopment Property Tax Trust Fund on June 1

and the remainder of such year’s debt service to be distributed from the Redevelopment Property Tax Trust

Fund on January 2), as well as all amounts due and owing to any Insurer under the Indenture, and (ii) any

amount required to cure any deficiency in the Reserve Account pursuant to the Indenture or a reserve account

established under any Parity Debt Instrument (including any amounts required due to a draw on the Qualified

Reserve Account Credit Instrument as well as all amounts due and owing to any Insurer under the Indenture).

See Appendix B.

The Dissolution Act also imposes certain penalties in the event that the Agency does not timely

submit a Recognized Obligation Payment Schedule for each fiscal year. Specifically, a Recognized Obligation

Payment Schedule must be submitted by the Agency, after approval by the Oversight Board, to the County

Administrative Officer, the County Auditor-Controller, the DOF and the State Controller by February 1 in each year with respect to the following Fiscal Year. If the Agency does not submit an Oversight Board-

approved Recognized Obligation Payment Schedule by such deadline, the City will be subject to a civil

49

penalty equal to $10,000 per day for every day that the schedule is not submitted. Additionally, the Agency’s

administrative cost allowance will be reduced by 25% for any fiscal year for which the Agency does not

submit an Oversight Board-approved Recognized Obligation Payment Schedule within 10 days of the

February 1 deadline. If the Agency fails to submit a Recognized Obligation Payment Schedule by the

February 1 deadline, any creditor of the Agency or DOF or any affected taxing entity shall have standing to,

and may request a writ of mandate to, require the Agency to immediately perform this duty.

The Agency filed the following Oversight Board-approved Recognized Obligation Payment Schedules

after the statutory deadlines: ROPS 2013-14A and ROPS 2013-14B. For additional information regarding

procedures under the Dissolution Act relating to late Recognized Obligation Payment Schedules and

implications thereof on the 2018 Bonds, see the caption “SECURITY FOR THE 2018 BONDS—Recognized


Last and Final Recognized Obligation Payment Schedule

SB 107 amended the Dissolution Act to permit certain successor agencies with limited remaining

obligations to submit a Last and Final ROPS for approval by the oversight board and DOF. The Last and Final

ROPS must list the remaining enforceable obligations of the successor agency, including the total outstanding

obligation amount and a schedule of remaining payments for each enforceable obligation. The Last and Final

ROPS shall also establish the maximum amount of Redevelopment Property Tax Trust Funds to be distributed

to the successor agency for each remaining fiscal year until all obligations have been fully paid.

Any revenues, interest, and earnings of the successor agency, including proceeds from the disposition

of real property, that are not authorized for use pursuant to the approved Last and Final ROPS shall be remitted

to the county auditor-controller for distribution to the affected taxing entities. A successor agency shall not

expend more than the amount approved for each enforceable obligation listed on the approved Last and Final

ROPS and once the successor agency has received Redevelopment Property Tax Trust Fund moneys equal to

the amount of the total outstanding obligations approved in the Last and Final ROPS, the county auditor-

controller will not allocate further Redevelopment Property Tax Trust Fund moneys to the successor agency.

Successor agencies may only amend an approved Last and Final ROPS twice. If the Agency prepares

and obtains DOF approval of a Last and Final ROPS and subsequently amends the Last and Final ROPS two

times, the Agency may be unable to make unexpected or unscheduled reserve deposits or payments due to the

Insurers of Bonds or other Parity Debt.

See the caption “SECURITY FOR THE 2018 BONDS—Last and Final Recognized Obligation

Payment Schedule” for a discussion of the requirements for a Last and Final ROPS and the mechanics for

allocation of Redevelopment Property Tax Trust Fund moneys pursuant to an approved Last and Final ROPS.

The Agency has no current plans to file a Last and Final ROPS. Further, the Agency has covenanted

in the Indenture not to submit to the Oversight Board or the California Department of Finance a request for the

final amendment permitted for its Last and Final ROPS without the prior written consent of the 2018 Insurer

unless all amounts that could become due to the 2018 Insurer are included as a line item on the Last and Final

ROPS, as amended.

Parity Debt Issued Without Reserve

The Indenture permits the issuance of Parity Debt, subject to compliance with certain requirements.

See the caption “SECURITY FOR THE 2018 BONDS—Issuance of Additional Indebtedness.” If such Parity

Debt is issued in the form of Bonds pursuant to a Supplemental Indenture, the Indenture requires the amount

on deposit in the Reserve Account to equal the Reserve Requirement; however, the Agency may issue Parity

Debt in a form other than Bonds, pursuant to a Parity Debt Instrument that is not a Supplemental Indenture,

without satisfying the Reserve Requirement. In the event Pledged Tax Revenues are insufficient to pay debt

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service on all Bonds and Parity Debt, the likelihood of a default by the Agency under such Parity Debt

Instrument would be higher than the likelihood of default by the Agency under the Indenture or a

Supplemental Indenture, because moneys held in the Reserve Account would only be available to make

payments on the 2018 Bonds and Parity Debt issued under a Supplemental Indenture, not to make payments on

Parity Debt issued under another Parity Debt Instrument.

The Agency’s ability to issue Parity Debt is limited to refundings of Outstanding 2018 Bonds and

other Parity Debt. As of the date of this Official Statement, the Agency has no debt obligations on a parity

with, or senior to, the Refunded Obligations that will be refunded by the 2018 Bonds. Further, the Agency

projects that sufficient Pledged Tax Revenues will be available to make debt service payments on the 2018

Bonds. See Tables 7 and 8 under the caption “PLEDGED TAX REVENUES—Projected Pledged Tax

Revenues.”

Parity and Subordinate Debt

The Indenture permits the issuance by the Agency of certain refunding indebtedness which may have

a lien upon the Tax Revenues on parity with the lien of the 2018 Bonds. The Agency has covenanted not to

issue any additional obligations with a lien on former tax increment revenues senior to the lien of the 2018

Bonds. See “SECURITY FOR THE 2018 BONDS—Limitations on Additional Indebtedness” for a

description of the conditions precedent to issuance of such additional obligations. The Indenture does not limit

the issuance of tax allocation bonds or other indebtedness secured by a pledge of tax increment revenues

subordinate to the pledge of Tax Revenues securing the 2018 Bonds.

Challenges to Dissolution Act

Several successor agencies, cities and other entities have filed judicial actions challenging the legality

of various provisions of the Dissolution Act. One such challenge is an action filed on August 1, 2012, by

Syncora Guarantee Inc. and Syncora Capital Assurance Inc. (collectively, “Syncora”) against the State, the

State Controller, the State Director of Finance, and the County Auditor-Controller on his own behalf and as the

representative of all other County Auditors in the State (Superior Court of the State of California, County of

Sacramento, Case No. 34-2012-80001215). Syncora is a monoline financial guaranty insurer domiciled in the

State of New York and has provided bond insurance and other related insurance policies for bonds issued by

former California redevelopment agencies.

The complaint alleged that the Dissolution Act, and specifically the “Redistribution Provisions”

thereof (i.e., California Health and Safety Code sections 34172(d), 34174, 34177(d), 34183(a)(4), and 34188)

violate the “contract clauses” of the United States and California Constitutions (U.S. Const. art. 1, §10, cl.1;

Cal. Const. art. 1, §9) because they unconstitutionally impair the contracts among the former redevelopment

agencies, bondholders and Syncora. The complaint also alleged that the Redistribution Provisions violate the

“Takings Clauses” of the United States and California Constitutions (U.S. Const. amend. V; Cal Const. art. 1 §

19) because they unconstitutionally take and appropriate bondholders’ and Syncora’s contractual right to

critical security mechanisms without just compensation.

After hearing by the Sacramento County Superior Court on May 3, 2013, the Superior Court ruled that

Syncora’s constitutional claims based on contractual impairment were premature. The Superior Court also

held that Syncora’s takings claims, to the extent based on the same arguments, were also premature. Pursuant

to a Judgment stipulated to by the parties, the Superior Court on October 3, 2013, entered its order dismissing

the action. The Judgment, however, provides that Syncora preserves its rights to reassert its challenges to the

Dissolution Act in the future. The Successor Agency does not guarantee that any reassertion of challenges by

Syncora or that the final results of any of the judicial actions brought by others challenging the Dissolution Act

will not result in an outcome that may have a material adverse effect on the Successor Agency’s ability to timely pay debt service on the 2018 Bonds.

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Bankruptcy and Foreclosure

The payment of the property taxes from which Pledged Tax Revenues are derived and the ability of

the County to foreclose the lien of a delinquent unpaid tax may be limited by bankruptcy, insolvency or other

laws generally affecting creditors’ rights (such as the Soldiers’ and Sailors’ Relief Act of 1940 discussed

below) or by the laws of the State relating to judicial foreclosure. In addition, the prosecution of a foreclosure

action could be delayed due to crowded local court calendars or delays in the legal process. The various legal

opinions to be delivered concurrently with the delivery of the 2018 Bonds (including Bond Counsel’s

approving legal opinions) will be qualified as to the enforceability of the various legal instruments by

bankruptcy, insolvency, reorganization, moratorium, or other similar laws affecting creditors’ rights, by the

application of equitable principles and by the exercise of judicial discretion in appropriate cases.

Although bankruptcy proceedings would not cause the liens to become extinguished, bankruptcy of a

property owner could result in a delay in prosecuting superior court foreclosure proceedings because federal

bankruptcy laws may provide for an automatic stay of foreclosure and sale of tax sale proceedings. Such delay

would increase the possibility of delinquent tax installments not being paid in full and thereby increase the

likelihood of a delay or default in payment of the principal of and interest on the 2018 Bonds. Moreover, if the

value of the subject property is less than the lien of property taxes, such excess could be treated as an

unsecured claim by the bankruptcy court. Further, should remedies be exercised under the federal bankruptcy

laws, payment of property taxes may be subordinated to bankruptcy law priorities. Thus, certain claims may

have priority over property taxes in a bankruptcy proceeding even though they would not outside of a

bankruptcy proceeding.

In addition, the United States Bankruptcy Code might prevent moneys on deposit in the

Redevelopment Obligation Retirement Fund from being applied to pay interest on the 2018 Bonds and/or to

redeem Bonds if bankruptcy proceedings were brought by or against a landowner and if the court found that

such landowner had an interest in such moneys within the meaning of Section 541(a)(1) of the United States

Bankruptcy Code.

Other laws generally affecting creditors’ rights or relating to judicial foreclosure may affect the ability

to enforce payment of property taxes or the timing of enforcement thereof. For example, the Soldiers and

Sailors Civil Relief Act of 1940 affords protections such as a stay in enforcement of the foreclosure covenant,

a six-month period after termination of military service to redeem property sold to enforce the collection of a

tax or assessment and a limitation on the interest rate on the delinquent tax or assessment to persons in military

service if a court concludes that the ability to pay such taxes or assessments is materially affected by reason of

such service.

As discussed under the caption “PROPERTY TAXATION IN CALIFORNIA—Property Tax

Collection Procedures—Delinquencies,” the County has not adopted a “Teeter Plan” alternative method for

collection of taxes and, therefore, the receipt of property taxes is subject to delinquencies.

Estimated Revenues

In estimating that Pledged Tax Revenues will be sufficient to pay debt service on the 2018 Bonds, the

Agency has made certain assumptions with regard to present and future assessed valuation in the Project Area,

future tax rates and percentage of taxes collected. The Agency believes these assumptions to be reasonable,

but there is no assurance that these assumptions will be realized. To the extent that the assessed valuation and

the tax rates are less than expected, the Pledged Tax Revenues available to pay debt service on the 2018 Bonds

will be less than those projected and such reduced Pledged Tax Revenues may be insufficient to provide for

the payment of principal of, premium (if any) and interest on the 2018 Bonds.

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Hazardous Substances

General. While governmental taxes, assessments, and charges are a common claim against the value

of a taxable parcel, other less common claims may be relevant. One example is a claim with regard to a

hazardous substance.

The presence of hazardous substances on a parcel may result in a reduction in the value of a parcel. In

general, the owners and operators of a taxable parcel may be required by law to remedy conditions of the

parcel relating to releases or threatened releases of hazardous substances. The federal Comprehensive

Environmental Response, Compensation and Liability Act of 1980, sometimes referred to as “CERCLA” or

the “Superfund Act,” is the most well-known and widely applicable of these laws, but State and local laws

with regard to hazardous substances are also stringent and similar. Under many of these laws, the owner (or

operator) is obligated to remedy a hazardous substance condition of property whether or not the owner (or

operator) has anything to do with creating or handling the hazardous substance. The effect, therefore, should

any of the taxable parcels be affected by a hazardous substance is to reduce the marketability and value of the

parcel by the costs of remedying the condition, because the purchaser, upon becoming owner, will become

obligated to remedy the condition just as is the seller. 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 value of the property that is realizable upon a delinquency and foreclosure.

Further, it is possible that liabilities may arise in the future with respect to any of the taxable parcels

resulting from the existence, currently, on the parcel of a substance presently classified as hazardous but which

has not been released or the release of which is not presently threatened, or may arise in the future resulting

from the existence, currently, on the parcel of a substance not presently classified as hazardous but which may

in the future be so classified. Further, such liabilities may arise not only from the existence of a hazardous

substance but from the method of handling it. All of these possibilities could significantly affect the value of a

taxable parcel that is realizable upon a delinquency.

According to the Safety Element of the City’s General Plan, some streets and railroad tracks that pass

through or nearby the Project Area are used to transport hazardous and toxic substances. Train derailment is a

risk posed by the railroad tracks within the City, which are utilized daily. Five oil and natural gas pipelines are

also in and near Cudahy, and each poses potential environmental and public safety hazards associated with

rupture. Due to past and current industrial practices, the City and the Project Area have several potentially

hazardous sites, hazardous waste handlers, cleanup sites, and other hazards that require local, state, or federal

assessment, inventory, and/or oversight. These include CERCLA hazardous waste sites, as well as sites

identified under various other federal and state environmental laws.

Exide Technologies. In March 2015, the Exide Technologies, Inc. battery recycling facility located in

the City of Vernon (the “Exide Facility”) was permanently shut down after being in operation under the

ownership of various entities since 1922. In 2013, the California Department of Toxic Substances Control

(“DTSC”) ordered Exide to start sampling soil for lead contamination in residential areas nearest the Exide

Facility. Activities conducted at the Exide Facility that may have contributed to contamination of offsite

properties include battery breaking, smelting, refining lead, and storage, handling, and transportation of

batteries, finished lead product, and other materials associated with lead recycling operations.

In February 2015, the DTSC notified Exide that the DTSC would deny Exide’s request for a new

operating permit, and then ordered Exide to expand the soil sampling. DTSC’s preliminary analysis of

approximately 20,000 samples concluded that lead contamination released by operations at the Exide Facility

extended 1.3 to 1.7 miles from the Exide Facility. This 1.7 mile radius surrounding the Exide Facility became

the DTSC’s Preliminary Investigation Area and certain residential properties and other sensitive land uses

within the Preliminary Investigation Area have been identified as requiring remediation. The Preliminary

Investigation Area includes properties in the Cities of Bell, Commerce, Huntington Park, Los Angeles (Boyle

Heights Neighborhood), and portions of unincorporated Los Angeles County. DTSC is overseeing the closure

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of the Exide Facility and the related cleanup efforts. In April 2016, the California Legislature approved a

$176.6 million appropriation for the cleanup efforts related to the Exide Facility, which is expected to allow for

the remediation of approximately 2,500 properties within the Preliminary Investigation Area. The

Environmental Impact Report prepared for the cleanup project anticipates that at a rate of 25 properties cleaned

per week, the cleanup efforts for 2,500 impacted properties will be completed within approximately two years

of the commencement of the clean-up efforts.

The City and the Project Area are situated approximately 2.5 miles from the Exide Facility, and are

therefore outside of DTSC’s Preliminary Investigation Area. The California Department of Public Health

(“CDPH”) conducted an analysis that found blood lead levels in children under the age of 6 living near the

Exide Facility are higher than for those who live further from the Exide Facility; however, the age of housing

in the area appears to have played a significant role as well. The area used for the CDPH study included areas

up to 4.5 miles from the Exide Facility, and included portions of the City of Cudahy. More information about

the Exide Facility and the related Removal Action Plan and Environmental Impact Report may be found at the

DTSC website at https://www.dtsc.ca.gov/.

The above information concerning Exide Technologies has been obtained from publicly available information which the Agency believes to be reliable; however, the Agency does not guaranty the accuracy or

completeness of this information and has not independently verified such information. None of the websites or webpages that are referenced above is in any way incorporated into this Official Statement. They are cited for

informational purposes only. The Agency makes no representation whatsoever as to the accuracy or

completeness of any of the information on such websites.

Natural Disasters

Natural disasters, including floods and earthquakes, could damage improvements and/or property in

the Project Area, or impair the ability of landowners within the Project Area to develop their properties or to

pay property taxes.

Several active fault zones lie within Southern California. Although no known earthquake fault crosses

the City, potentially active faults in the vicinity of the City include the Whitter-Elsinore, Norwalk, Raymond,

Santa Monica, Sierra Madre, Verdugo, Palos Verdes, Newport-Inglewood and San Andreas faults. Recent

earthquakes affecting the City include the Northridge Earthquake of 1994 (magnitude 6.7), Whittier

Earthquake of 1987 (magnitude 5.9) and Landers Quake (magnitude 7.3). Seismic activity also can occur on

previously undetected faults. In the event of a significant earthquake, substantial damage could occur to the

property within the Project Area.

If an earthquake were to substantially damage or destroy taxable property within the Project Area, the

assessed valuation of such property would be reduced. Such a reduction of assessed valuations could result in

a reduction of the Pledged Tax Revenues that secure the 2018 Bonds.

The Project Area lies within the inundation areas for the Hansen and Sepulveda Dams. The Hansen

Dam, located on the northern edge of the San Fernando Valley, is approximately 26.1 miles northwest of the

City. Hansen Dam provides flood protection to all downstream cities, including the City. The Sepulveda Dam

is located on the Los Angeles River near the intersection of the Ventura and San Diego Frees in Van Nuys. In

the event if a significant flood release from either of these dams, property within the Project Area could be

damaged or destroyed by flooding causing a reduction in assessed valuation within the Project Area. Such a

reduction of assessed valuations could result in a reduction of the Pledged Tax Revenues that secure the 2018

Bonds.

The property within the Project Area may also be at risk from other events of force majeure, such as

damaging storms, floods, fires and explosions, strikes, sabotage, riots and spills of hazardous substances,

among other events. The Agency cannot predict what force majeure events may occur in the future.

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Changes in the Law

There can be no assurance that the State electorate will not at some future time adopt initiatives or that

the State Legislature will not enact legislation that will amend the Dissolution Act, the Redevelopment Law or

other laws or the Constitution of the State resulting in a reduction of Pledged Tax Revenues, which could have

an adverse effect on the Agency’s ability to pay debt service on the 2018 Bonds.

Investment Risk

Funds held under the Indenture are required to be invested in Permitted Investments as provided under

the Indenture. See Appendix B for a summary of the definition of Permitted Investments. The funds and

accounts of the Agency, into which a portion of the proceeds of the 2018 Bonds will be deposited and into

which Pledged Tax Revenues are deposited, may be invested by the Agency in any investment authorized by

law. All investments, including the Permitted Investments and those authorized by law from time to time for

investments by municipalities, contain a certain degree of risk. Such risks include, but are not limited to, a

lower rate of return than expected and loss or delayed receipt of principal. See also the caption “—Bankruptcy

and Foreclosure.”

Secondary Market

There can be no guarantee that there will be a secondary market for the 2018 Bonds, or, if a secondary

market exists, that the 2018 Bonds can be sold for any particular price. Although the Agency has committed to

provide certain financial and operating information on an annual basis, there can be no assurance that such

information will be available to Owners of the 2018 Bonds on a timely basis. See the caption

“CONCLUDING INFORMATION—Continuing Disclosure” and Appendix G. Any failure to provide annual

financial information, if required, does not give rise to monetary damages but merely an action for specific

performance. 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 original purchase

price.

No Validation Proceeding Undertaken

Code of Civil Procedure Section 860 authorizes public agencies to institute a process, otherwise

known as a “validation proceeding,” for purposes of determining the validity of a resolution or any action

taken pursuant thereto. Section 860 authorizes a public agency to institute validation proceedings in cases

where another statute authorizes its use. Relevant to the 2018 Bonds, Government Code Section 53511

authorizes a local agency to “bring an action to determine the validity of its bonds, warrants, contracts,

obligations or evidences of indebtedness.” Pursuant to Code of Civil Procedure Section 870, a final favorable

judgment issued in a validation proceeding shall, notwithstanding any other provision of law, be forever

binding and conclusive, as to all matters therein adjudicated or which could have been adjudicated, against all

persons: “The judgment shall permanently enjoin the institution by any person of any action or proceeding

raising any issue as to which the judgment is binding and conclusive.”

The Agency has not undertaken or endeavored to undertake any validation proceeding in connection

with the issuance of the 2018 Bonds. The Agency and Bond Counsel have relied on the provisions of

AB 1484 authorizing the issuance of the 2018 Bonds and specifying the related deadline for any challenge to

the 2018 Bonds to be brought. Specifically, Section 34177.5(e) of the Dissolution Act provides that

notwithstanding any other law, an action to challenge the issuance of bonds (such as the 2018 Bonds), the

incurrence of indebtedness, the amendment of an enforceable obligation, or the execution of a financing

agreement authorized under Section 34177.5, must be brought within 30 days after the date on which the

55

oversight board approves the resolution of the successor agency approving such financing. Such challenge

period expired with respect to the 2018 Bonds and the Oversight Board Resolution on June 16, 2018.

It is possible that the definition of Pledged Tax Revenues could be affected by changes in law or

judicial decisions relating to the dissolution of redevelopment agencies. However, any action by a court to

invalidate provisions of the Dissolution Act required for the timely payment of principal of, and interest on, the

2018 Bonds could be subject to issues regarding unconstitutional impairment of contracts and unconstitutional

taking without just compensation. The Agency believes this constitutional provision would provide some

protection against the adverse consequences upon the Agency and the availability of Pledged Tax Revenues for

the payment of debt service on the 2018 Bonds in the event of successful challenges to the Dissolution Act or

portions thereof. However, the Agency provides no assurance that any other lawsuit challenging the

Dissolution Act or portions thereof will not result in an outcome that may have a detrimental effect on the

Agency’s ability to timely pay debt service on the 2018 Bonds.

Bonds Are Limited Obligations

Neither the faith and credit nor the taxing power of the Agency (except to the limited extent set forth

in the Indenture), the City, the State or any political subdivision thereof is pledged to the payment of the 2018

Bonds. The 2018 Bonds are special obligations of the Agency; and, except as provided in the Indenture, they

are payable solely from Pledged Tax Revenues. Pledged Tax Revenues could be insufficient to pay debt

service on the 2018 Bonds as a result of delinquencies in the payment of property taxes or the insufficiency of

proceeds derived from the sale of land within the Agency following a delinquency in the payment of the

applicable property taxes. As discussed under the caption “PROPERTY TAXATION IN CALIFORNIA—

Property Tax Collection Procedures—Delinquencies,” the County has not adopted a “Teeter Plan” alternative

method for collection of taxes and, therefore, the receipt of property taxes is subject to delinquencies. The

Agency has no obligation to pay debt service on the 2018 Bonds in the event of insufficient Pledged Tax

Revenues, except to the extent that money is available for such purpose in the Redevelopment Obligation

Retirement Fund, the Debt Service Fund and the Reserve Account.

Bond Insurance

In the event of default of the payment of the scheduled principal of or interest on the 2018 Bonds

when all or some becomes due, the Trustee on behalf of any owner of the 2018 Bonds shall have a claim under

the Policy for such payments. The 2018 Insurer may direct and must consent to any remedies with respect to

the 2018 Bonds and the 2018 Insurer’s consent may be required in connection with amendments to any

applicable documents relating to the 2018 Bonds. See Appendix B—“SUMMARY OF THE INDENTURE—

SECURITY OF BONDS; FLOW OF FUNDS—Provisions Relating to the 2018 Insurance Policy” and “—

Provisions Relating to 2018 Reserve Policy.”

The long-term ratings on the 2018 Bonds are dependent in part on the financial strength of the 2018

Insurer and its claims paying ability. The 2018 Insurer’s financial strength and claims paying ability are

predicated upon a number of factors which could change over time. No assurance is given that the long-term

ratings of the 2018 Insurer and the ratings on the 2018 Bonds will not be subject to downgrade and such event

could adversely affect the market price of the 2018 Bonds or the marketability (liquidity) for the 2018 Bonds.

See “CONCLUDING INFORMATION—Ratings” herein.

The obligations of the 2018 Insurer are unsecured contractual obligations and in an event of default by

the 2018 Insurer, the remedies available may be limited by applicable bankruptcy law or state law related to

insolvency of insurance companies.

Neither the Agency nor the Underwriter has made independent investigation into the claims paying

ability of the 2018 Insurer and no assurance or representation regarding the financial strength or projected

financial strength of the 2018 Insurer is given. Thus, when making an investment decision, potential investors

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should carefully consider the ability of the Agency to make the payments on the 2018 Bonds and the claims

paying ability of the 2018 Insurer, particularly over the life of the investment. See “BOND INSURANCE”

herein for further information regarding the 2018 Insurer and the Policy, which includes further instructions for

obtaining current financial information concerning the 2018 Insurer.

Limitations on Remedies

Remedies available to the Owners of the 2018 Bonds may be limited by a variety of factors and may

be inadequate to assure the timely payment of principal of and interest on the 2018 Bonds or to preserve the

tax-exempt status of the 2018 Bonds.

Bond Counsel has limited its opinion as to the enforceability of the 2018 Bonds and of the Indenture

to the extent that enforceability may be limited by bankruptcy, insolvency, reorganization, fraudulent

conveyance or transfer, moratorium or other similar laws affecting generally the enforcement of creditors’

rights, by equitable principles and by the exercise of judicial discretion. The lack of availability of certain

remedies or the limitation of remedies may entail risks of delay, limitation or modification of the rights of the

Owners.

Enforceability of the rights and remedies of the Owners of the 2018 Bonds, and the obligations

incurred by the Agency, may become subject to the United States 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, equity 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, the reasonable and necessary exercise, in certain exceptional situations, of the police

powers inherent in the sovereignty of the State and its governmental bodies in the interest of serving a

significant and legitimate public purpose and the limitations on remedies against governmental entities in the

State. See the caption “—Bankruptcy and Foreclosure.”

TAX MATTERS

In the opinion of Bond Counsel, under existing statutes, regulations, rulings and judicial decisions,

interest with respect to the 2018 Bonds is exempt from State of California personal income tax.

The difference between the issue price of a 2018 Bond (the first price at which a substantial amount of

the 2018 Bonds of the same series and maturity is to be sold to the public) and the stated redemption price at

maturity with respect to such 2018 Bond constitutes original issue discount. Original issue discount accrues

under a constant yield method. The amount of original issue discount deemed received by the 2018 Bond

Owner will increase the 2018 Bond Owner’s basis in the 2018 Bond.

The amount by which a 2018 Bond Owner’s original basis for determining loss on sale or exchange in

the applicable 2018 Bond (generally, the purchase price) exceeds the amount payable on maturity (or on an

earlier call date) constitutes amortizable 2018 Bond premium, which a 2018 Bond holder may elect to amortize

under Section 171 of the Code; such amortizable 2018 Bond premium reduces the 2018 Bond Owner’s basis in

the applicable 2018 Bond (and the amount of taxable interest received), and is deductible for federal income

tax purposes. The basis reduction as a result of the amortization of 2018 Bond premium may result in a 2018

Bond Owner realizing a taxable gain when a 2018 Bond is sold by the Owner for an amount equal to or less

(under certain circumstances) than the original cost of the 2018 Bond to the Owner. Purchasers of the 2018

Bond should consult their own tax advisors as to the treatment, computation and collateral consequences of

amortizable 2018 Bond premium.

The federal tax and State of California personal income tax discussion set forth above is included for

general information only and may not be applicable depending upon an owner’s particular situation. The

ownership and disposal of the 2018 Bonds and the accrual or receipt of interest (and original issue discount)

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with respect to the 2018 Bonds may otherwise affect the tax liability of certain persons. Bond Counsel

expresses no opinion regarding any such tax consequences. Accordingly, before purchasing any of the 2018

Bonds, all potential purchasers should consult their tax advisors with respect to collateral tax consequences

relating to the 2018 Bonds.

A copy of the proposed form of the opinion of Bond Counsel to be delivered at Closing is attached

hereto as Appendix C.

CONCLUDING INFORMATION

Underwriting

The 2018 Bonds are being purchased by Samuel A. Ramirez & Co., Inc. (the “Underwriter”) pursuant

to a Bond Purchase Agreement, dated August 29, 2018 (the “Purchase Agreement”), by and between the

Underwriter and the Agency. The Underwriter has agreed to purchase the 2018 Bonds at a price of

$13,903,730 (being the aggregate principal amount thereof less an Underwriter’s discount of $126,270). The

Purchase Agreement provides that the Underwriter will purchase all of the 2018 Bonds if any are purchased.

The obligation to make such purchase is subject to certain terms and conditions set forth in the Purchase

Agreement, the approval of certain legal matters by counsel and certain other conditions.

The initial public offering prices stated on the inside front cover page of this Official Statement may

be changed from time to time by the Underwriter. The Underwriter may offer and sell the 2018 Bonds to

certain dealers (including dealers depositing Bonds into investment trusts), dealer banks, banks acting as

agents and others at prices lower than said public offering prices.

Municipal Advisor

Urban Futures, Inc., Tustin, California, has served as municipal advisor ("Municipal Advisor") to the

Agency in connection with the 2018 Bonds. The Municipal Advisor is not obligated to undertake, and has not

undertaken to make, an independent verification or to assume responsibility for the accuracy, completeness or

fairness of the information contained in this Official Statement. The Municipal Advisor is an independent

advisory firm and is not engaged in the business of underwriting, trading or distributing municipal or other

public securities.

Verification of Mathematical Computations

The Verification Agent, an independent accountant, upon delivery of the 2018 Bonds, will deliver a

report on the mathematical accuracy of certain computations, contained in schedules provided to them that

were prepared by the Agency, relating to the sufficiency of the cash and/or the maturing principal of and

interest on the escrow securities to be deposited in the respective escrow funds for the Refunded Obligations,

to pay, when due, the principal, whether at maturity or upon prior redemption, interest and redemption

premium with respect to the Refunded Obligations.

The Verification Agent’s report will include the statement that the scope of its engagement is limited

to verifying the mathematical accuracy of the computations contained in such schedules provided to it, and that

it has no obligation to update its report because of events occurring, or date or information coming to its

attention, subsequent to the date of its report.

Legal Opinion

The opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation, Bond Counsel,

approving the validity of the 2018 Bonds and stating that interest on the 2018 Bonds is exempt from California

personal income taxes under present State income tax laws will be furnished to the purchaser at the time of

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delivery of the 2018 Bonds at the expense of the Agency. Compensation for Bond Counsel’s services is

entirely contingent upon the sale and delivery of the 2018 Bonds.

A copy of the proposed form of Bond Counsel’s final approving opinion with respect to the 2018

Bonds is attached hereto as Appendix C. The legal opinion is only as to legality and is not intended to be nor

is it to be interpreted or relied upon as a disclosure document or an express or implied recommendation as to

the investment quality of the 2018 Bonds.

In addition, certain legal matters will be passed on for the Underwriter by Kutak Rock LLP, as

Underwriter’s Counsel, for the Agency by the City Attorney of the City of Cudahy, as counsel to the Agency,

and by Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California, as

disclosure counsel and for the Trustee by its counsel.

Litigation

There is no action, suit or proceeding known to the Agency to be pending and notice of which has

been served upon and received by the Agency, or threatened, restraining or enjoining the execution or delivery

of the 2018 Bonds or the Indenture or in any way contesting or affecting the validity of the foregoing or any

proceedings of the Agency taken with respect to any of the foregoing.

Ratings

In connection with the issuance and delivery of the 2018 Bonds, S&P Global Ratings, a Standard &

Poor’s Financial Services, LLC business (“S&P”) has assigned its underlying municipal rating of “A+” to the

2018 Bonds. S&P is also expected to assign the 2018 Bonds the rating of “AA” (stable outlook) based upon

the delivery of the Policy by the 2018 Insurer at the time of issuance of the 2018 Bonds. See the caption

“BOND INSURANCE.” There is no assurance that the credit ratings given to the 2018 Bonds will be

maintained for any period of time or that the ratings may not be lowered or withdrawn entirely by S&P if, in

the judgment of S&P, circumstances so warrant. Any downward revision or withdrawal of either of such

ratings may have an adverse effect on the market price of the 2018 Bonds. Such ratings reflect only the views

of S&P and an explanation of the significance of such ratings may be obtained from S&P. Generally, rating

agencies base their ratings on information and materials furnished to them (which may include information and

material from the Agency which is not included in this Official Statement) and on investigations, studies and

assumptions by the rating agencies.

Continuing Disclosure

The Agency has covenanted in a Continuing Disclosure Certificate (the “Continuing Disclosure

Certificate”) for the benefit of the holders and Beneficial Owners of the 2018 Bonds to provide certain

financial information and operating data relating to the Agency by March 31 following the end of the Agency’s

fiscal year (currently its fiscal year ends on June 30) (the “Annual Report”), commencing with the report for

fiscal year ending June 30, 2018, and to provide notices of the occurrence of certain enumerated events.

The Annual Report and the notices of enumerated events will be filed by the Agency with the

Municipal Securities Rulemaking Board’s Electronic Municipal Market Access System for municipal

securities disclosures, maintained on the Internet at http://emma.msrb.org/. The specific nature of the

information to be contained in the Annual Report and the notices of enumerated events are set forth in

Appendix G. These covenants have been made in order to assist the Underwriter in complying with

Rule 15c2-12(b)(5) promulgated under the Securities Exchange Act of 1934 (“Rule 15c2-12”).

The City and its related governmental entities – specifically those entities (such as the Former Agency and the Agency) for whom City staff is responsible for undertaking compliance with continuing disclosure

59

undertakings – have previously entered into disclosure undertakings under Rule 15c2-12 in connection with

the issuance of long-term obligations.

During the last five years, the City and its related entities failed to comply in certain respects with

continuing disclosure undertakings related to outstanding bonded indebtedness. The failures to comply include

late filings of certain Annual Reports and audited financial statements in connection with each series of

Refunded Obligations. In most cases, such filings were up to 5 days late; however, the audited financial

statements for Fiscal Year 2012-13 were filed over four months late. The City and its related entities are

currently in compliance with all material continuing disclosure undertakings.

Miscellaneous

All of the preceding summaries of the Indenture, the Bond Law, the Dissolution Act, the

Redevelopment Law, other applicable legislation, the Redevelopment Plan for the Project Area, agreements

and other documents are made subject to the provisions of such documents respectively and do not purport to

be complete statements of any or all of such provisions. Reference is hereby made to such documents on file

with the Agency for further information in connection therewith.

This Official Statement does not constitute a contract with the purchasers of the 2018 Bonds. Any

statements made in this Official Statement involving matters of opinion or estimates, whether or not so

expressly stated, are set forth as such and not as representations of fact, and no representation is made that any

of the estimates will be realized.

The execution and delivery of this Official Statement by the City Manager, as the Executive Director

of the Agency, has been duly authorized by the Agency.


FORMER CUDAHY COMMUNITY DEVELOPMENT

COMMISSION

By: /s/ Jose Pulido

Executive Director


A-1

APPENDIX A

FISCAL CONSULTANT’S REPORT


17821 E. 17th Street, Suite 245 Tustin, CA 92780 (714) 283-9334

August 21, 2018 Steven Dobrenen, Finance Director City of Cudahy 5220 Santa Ana Street Cudahy, California 90201 RE: Successor Agency to the Former Cudahy Community Development Commission Taxable Tax Allocation Refunding Bonds, Series 2018 Fiscal Consultant Report Dear Mr. Dobrenen: Urban Futures, Inc. (UFI) is pleased to present this report of projected tax revenues to the Successor Agency (the “Agency”) to the former Cudahy Community Development Commission (the “Prior Agency”). The following information is included as exhibits to this report:

Exhibits A and A-1: Tax Increment Projections

Exhibit B: FY 18-19 Assessed Valuation Breakdown

Exhibit C: Historical Assessed Valuations and Tax Revenues

Exhibit D: Largest Secured Taxpayers

Exhibit E: Project Area Land Uses

Exhibit F: Assessment Appeals

Projected taxable valuations and tax revenues contained in this report are based on assumptions derived from the following information:

1. Historical growth trends;

2. Trended growth in valuation as permitted by Article XIIIA of the California Constitution (Proposition 13);

3. Financial reports and information supplied or prepared by the City;

4. Information provided by the County of Los Angeles, from the offices of the Auditor-Controller and Assessor; and

5. Data provided by Transamerica/Metroscan for property resale and assessed valuation information.

2

The purpose of the projections is to demonstrate the availability of the Agency’s tax revenues to secure debt service requirements of the Agency for its Taxable Tax Allocation Refunding Bonds, Series 2018 (the “2018 Bonds”). Tax revenues will be allocated to the Agency pursuant to the procedures described in AB X1 26, as amended by AB 1484 and SB 107 (the “Dissolution Act”), which include requirements that the Agency annually file a Recognized Obligation Payment Schedule (the “ROPS”) with the County and the State, and that each such ROPS be approved by the Agency’s oversight board (the “Oversight Board”) and by the State Department of Finance. Assessed valuation and tax revenue projections have been conservatively estimated in order to reduce the risk of overstating future tax revenues. Redevelopment Project Area The Redevelopment Plan for the Commercial-Industrial Redevelopment Project (the “Redevelopment Plan”) was adopted on July 18, 1977 and amended in 1981, 1992, 1993, 1994, 2002, and 2003. With the exception of approximately 77 acres formerly in the City of Bell and annexed into the City, the entire City is in the redevelopment project area (the “Project Area”), consisting of approximately 711 acres. Table 1 below illustrates the Redevelopment Plan limitation dates and amounts. It should be noted, however, that SB 107, enacted September 22, 2015 and effective on the same date, has amended the Dissolution Act with new provisions stating that for the purposes of the payment of enforceable obligations defined by Health and Safety Code 34171(d)(1)(A) through (G) (which includes bonds), and for no other purpose whatsoever, a successor agency is not subject to the limitations relating to time, number of tax dollars, or any other matters set forth in Health and Safety Code Sections 33333.2, 33333.4, and 33333.6 (including time limits on the receipt of property taxes and the repayment of indebtedness, and limits on the maximum amount of tax dollars that may be allocated to the agency under the redevelopment plan). Plan Chronology and Redevelopment Project Area

TABLE 1: REDEVELOPMENT PLAN LIMITATION DATES AND AMOUNTS

COMPONENT AREA DATE OF ADOPTION

LAST DATE TO INCUR

INDEBTEDNESS

PLAN EFFECTIVENESS

DEBT REPAYMENT

CUMULATIVE TAX INCREMENT

OUTSTANDING BOND DEBT

July 18, 1977 (Original Area) (eliminated) 7/18/2020 7/18/2030

$55 million, with annual CPI adjustments

$27 million (outstanding

principal amount) Sept. 8, 1981

(Amend. No. 1) (eliminated) 9/8/2024 1/8/2030

July 13, 1993 (Amend. No. 3) 7/13/2033 7/13/2034 7/13/2044

July 19, 2002 (Amend. No. 5) 7/2/2022 7/2/2033 7/2/2048

(No limit for Amend. No. 5)

($51 million for Amend. No. 5)

Project Tax Rate Areas The tax rate area numbers used by the Los Angeles County Auditor-Controller’s Office to identify tax revenue apportionment for the Project Area are summarized in the following table.

3

TABLE 2: PROJECT TAX RATE AREA ID NUMBERS

Original Area: 00630, 00631, 00634, 00639, 01945, 05751

Amend. No. 1: 00635, 00637

Amend. No. 3: 11638, 11740

Amend. No. 5: 00593, 00633, 00636, 00638, 00640

Source: Los Angeles County Auditor-Controller Tax Sharing Agreements: Prior to 1994, under the Law, a redevelopment agency could enter into an agreement to pay former tax increment revenues to any affected taxing agency that has territory located within a redevelopment project in an amount which in the redevelopment agency’s determination is appropriate to alleviate any financial burden or detriment caused by the redevelopment project. These Pass-Through Agreements normally provided for payment or pass-through of tax increment revenue directed to the affected taxing agency, and, therefore, are commonly referred to as pass-through agreements or tax sharing agreements.

The Former Agency entered into three Pass-Through Agreements with certain taxing agencies with respect to some or all of the Project Area. These Pass-Through Agreements are briefly summarized below and all are treated as senior to the payment of debt service on the 2018 Bonds.

1982 Agreement Regarding First Amendment to Redevelopment Plan

On August 2, 1982, the Former Agency entered into a Pass-Through Agreement with the County of Los Angeles, the Los Angeles County Flood Control District, and the Los Angeles County Public Library (the “County Taxing Entities”) and the Consolidated Fire Protection District of Los Angeles County (the “Fire District”) related to the tax increment revenue from territory located in the First Amendment Area.

Under the 1982 Pass-Through Agreement, the County Taxing Entities receive the lesser of the actual amount of property taxes due to the incremental assessed valuation of property within the First Amendment Area that would have been attributable to the County Taxing Entities without the First Amendment, or 48.1% of the total property tax increments actually collected, allocated and received by the Agency each year. The Fire District receives the lesser of the actual amount of property taxes due to the incremental assessed valuation of property that would have been attributable to the Fire District without the First Amendment, or 18.6% of the total property tax increments actually collected, allocated and received by the Agency each year. The County Deferral Loan described below provides that the rates described above shall remain in effect throughout the life of the Redevelopment Plan, as amended.

1993 Agreement Regarding Original Project Area and Third Amendment to Redevelopment Plan

On May 14, 1993, the Former Agency entered into a Pass-Through Agreement with the same County Taxing Entities as the 1982 Pass-Through Agreement, the Los Angeles County Office of Education (“LACOE”) and

4

the Fire District (the “1993 County Agreement”). The 1993 County Agreement covers tax increment revenues from the Original Project Area and the Third Amendment Area.

With regards to the Original Project Area, the Fire District receives its proportionate share (17.25%) of property tax revenues received by the Former Agency above the amounts received by the Former Agency in the 1992-93 fiscal year. These amounts are expressly subordinated to certain then-existing obligations of the Former Agency, as well as any refunding or refinancing of the then-existing obligations. In any year where such the Fire District receives less than its full proportionate share of the excess property tax revenues, such amount is deferred, and becomes a debt of the Agency accruing interest at five (5%) percent, compounded annually. These deferred amounts are to be repaid as soon as sufficient excess tax increment revenues are generated. With respect to the Third Amendment Area, the Fire District receives its proportionate share (17.25%) of the surplus property tax increment revenues.

The County Taxing Entities and LACOE receive their proportionate shares (49.95% and 0.4%, respectively) of the surplus property tax increment revenues above and beyond the base fiscal year 1992-93 amounts received by the Former Agency. All payments to the County Taxing Entities and LACOE under the 1993 County Agreement are deferred (the “County Deferral Loan”) until the Agency’s share of the tax increment revenues, which is 27.7%, amounts to the sum of the tax increment revenues received by the Former Agency during the 1993-93 fiscal year plus one million dollars and any 33676 Amounts or amounts due under Pass-Through Agreements entered into prior to the County Deferral Loan. Such deferred amounts accrue interest at a rate of five (5%) percent, compounded annually. The County Deferral Loan is currently outstanding in the amount of approximately $1,050,992.11 as of June 30, 2017. It is not expected that repayment of the County Deferral Loan will not commence before the last date to repay indebtedness of the Project Area. Assessed values in the Project Area would need to grow by more than 23% per year to cause the repayment threshold for the County Deferral Loan to be reached prior to the final maturity of the bonds in Fiscal Year 2026-27. Upon commencement of repayment of the County Deferral Loan, the Agency will establish a schedule for the repayment of the amounts deferred, and shall repay all such amounts, with interest, in accordance with such schedule. The repayment schedule will provide (i) a breakdown of the principal and interest amounts to be repaid; (ii) commencement of payments to the County Taxing Entities beginning the year the threshold for repayment of the County Deferral Loan is met; (iii) the number of years and annual payments necessary to fulfill the Agency’s obligations of repayment under the 1993 County Agreement; and (iv) annual payments to be made within thirty days of allocation and receipt by the Agency of tax increment revenues. If a repayment schedule is not developed that fully repays the County Taxing Entities and the LACOE by the end of the life of the Redevelopment Plan, the County Auditor-Controller will retain the Agency’s share of tax increment revenues until the County Taxing Entities and the LACOE are fully repaid.

1993 Agreement with Los Angeles County Community College District

On February 1, 1993, the Former Agency entered into a Pass-Through Agreement with the Los Angeles County Community College District (“LACCCD”) regarding property tax increment revenue from the Third Amendment Area (the “LACCCD Pass-Through Agreement”). Using the 1992-93 assessed valuations, the LACCCD Pass-Through Agreement divides the three percent share of the property tax increment LACCCD would have received absent the Redevelopment Plan as amended by the Third Amendment as follows: (1) the District receives the amount of such property tax increment it would receive if the District had elected to receive 33676 Amounts (defined below) and (2) the District receives 40% of the remainder derived from subtracting the 33676 Amounts the District would receive if it had so elected from the District’s otherwise three percent share of such property tax increment.

Statutory Pass-Through Amounts

Assembly Bill 1290 (Chapter 942, Statutes of 1993) (“AB 1290”), effective January 1, 1994, eliminated the statutory authority for negotiated pass-through agreements and provided a formula for mandatory tax sharing,

5

applicable to projects adopted after January 1, 1994 or amended after that date to add territory or make certain other amendments. These payments, which are to begin the fiscal year following the year a redevelopment plan was adopted (if after January 1, 1994) or the fiscal year following the year that a redevelopment plan’s original plan limitations would have taken effect (in the case of pre-1994 redevelopment plans), are calculated using the increase in revenue above the amount of revenue generated by the project area in the year that the redevelopment plan was adopted or the former limit would have been reached, as applicable. Under the Dissolution Act, in particular Section 34183, the County Auditor-Controller is obligated to remit these Statutory Pass-Through Amounts to the affected taxing entities from the Agency’s RPTTF for each ROPS period.

The City adopted several ordinances amending the Project Area after 1994 (including the addition of territory in the Fifth Amendment Area) and, accordingly, the Agency is required to pay the Statutory Pass-Through Amounts to affected taxing agencies that did not enter into Pass-Through Agreements with the Former Agency. These tax sharing payments continue so long as tax increment is available to repay indebtedness in the Project Area. The Statutory Pass-Through Amounts are determined by specific formulas under the Law; and post-dissolution, these payment obligations of the Agency to affected taxing entities are administered by the County Auditor-Controller under the Dissolution Act.

Generally speaking, under the Law as amended by AB 1290 and as the obligation continues under the Dissolution Act, the Agency is required to pay to the affecting taxing entities percentages of tax increment generated in the Project Area as the Statutory Pass-Through Amounts, as follows:

1. following the adoption of the redevelopment plan or expiration of the existing time limit to incur debt (as applicable) and thereafter, 25% of tax increment revenues (after deducting the Housing Set-Aside amount); plus,

2. for the eleventh year following the triggering event and thereafter, 21% of revenues in excess of tenth year revenue (after deducting the Housing Set-Aside amount); plus,

3. for the thirty-first year following the triggering event and thereafter, 14% of revenues in excess of thirtieth year revenues (after deducting the Housing Set-Aside amount).

The payments of the Statutory Pass-Through Amounts to the affected taxing entities are allocated among each affected taxing entity in proportion to the share of property taxes each affected taxing entity received in the year funds are allocated. As indicated, amounts specified as payable to affected taxing entities are computed after deducting the Housing Set-Aside amounts even though the Agency no longer receives Housing Set-Aside under the Dissolution Act. The Statutory Pass-Through Amounts have been subordinated to the 2018 Bonds.

Section 33676 Election

Prior to the enactment of AB 1290, redevelopment project areas adopted between January 1, 1985 and January 1, 1994 were subject to payments to schools and to other affected taxing agencies that elected to receive tax revenue payments set forth under Section 33676 of the Law (“33676 Amounts”). The annual payments represent that portion of property taxes that are, or otherwise would be, calculated annually pursuant to subdivision (f) of Section 110.1 of the Revenue and Taxation Code (and referred to as the 2% inflation allocation).

The following taxing entities within the Project Area are receiving payments under Section 33676:

Los Angeles Unified School District

33676 Amounts will be paid prior to debt service of the 2018 Bonds.

6

Assessment Appeals In Los Angeles County, a property owner desiring to reduce the assessed value of such owner's property in any one year must submit an application to the Los Angeles County Assessment Appeals Board (the "Appeals Board"). Applications for any tax year must be submitted by November 30 of such tax year. The Appeals Board, within two years of each applicant's filing date, will hold a hearing and then either reduce the assessment or confirm the assessment. Estimated adjustments to Project Area assessed valuation are shown in Exhibit F, but have not been factored into the projected revenues shown in Exhibits A and A-1, as the outcome of pending appeals is uncertain. * * * * * While UFI has taken steps to assure the accuracy of the data used in the formulation of these projections, we cannot insure that projected valuations will, in fact, be realized because actual values will most likely be affected by future events and conditions that cannot be predicted with certainty. We believe that this report provides the Successor Agency to the former Cudahy Community Development Commission with a reasonable basis for demonstrating the available tax increment revenues of the Project Area. We are available to answer any questions that you may have regarding this information. Sincerely, URBAN FUTURES, INC. Douglas P. Anderson Managing Principal

Successor Agency to the Former Exhibit ACudahy Community Development CommissionTax Increment Projections

(1) (2) (3) (4) (5) (6)Assessed Incremental Gross Tax County Admin. Senior Pass Pledged Tax

FY Valuation Valuation Increment Fees Through Pmts. Revenues18‐19 815,017,382 562,790,827 5,627,908 101,302 619,881 4,906,725 19‐20 831,317,730 579,091,175 5,790,912 104,236 637,399 5,049,276 20‐21 847,944,084 595,717,529 5,957,175 107,229 655,413 5,194,533 21‐22 864,902,966 612,676,411 6,126,764 110,282 673,936 5,342,547 22‐23 882,201,025 629,974,470 6,299,745 113,395 692,982 5,493,367 23‐24 899,845,046 647,618,491 6,476,185 116,571 712,567 5,647,046 24‐25 917,841,947 665,615,392 6,656,154 119,811 732,706 5,803,637 25‐26 936,198,786 683,972,231 6,839,722 123,115 753,415 5,963,192 26‐27 954,922,761 702,696,206 7,026,962 126,485 774,709 6,125,768

(1) Based on FY 18‐19 actual AV, with assumed 2% annual growth thereafter.(2) Incremental assessed valuation over base year valuation of $252,226,555.(3) Gross tax increment based on 1.00% tax rate.(4) Estimated at 1.80% of annual Gross Tax Increment, based on actual FY 17‐18 amount.(5) Includes pass through payments pursuant to former HSC Section 33401, and HSC Section 33676 payments.(6) Pledged Tax Revenues available for debt service payments on the Bonds.

Successor Agency to the Former Exhibit A‐1Cudahy Community Development Commission ("No‐growth")Tax Increment Projections

(1) (2) (3) (4) (5) (6)Assessed Incremental Gross Tax County Admin. Senior Pass Pledged Tax

FY Valuation Valuation Increment Fees Through Pmts. Revenues18‐19 815,017,382 562,790,827 5,627,908 101,302 619,881 4,906,725 19‐20 815,017,382 562,790,827 5,627,908 101,302 619,881 4,906,725 20‐21 815,017,382 562,790,827 5,627,908 101,302 619,881 4,906,725 21‐22 815,017,382 562,790,827 5,627,908 101,302 619,881 4,906,725 22‐23 815,017,382 562,790,827 5,627,908 101,302 619,881 4,906,725 23‐24 815,017,382 562,790,827 5,627,908 101,302 619,881 4,906,725 24‐25 815,017,382 562,790,827 5,627,908 101,302 619,881 4,906,725 25‐26 815,017,382 562,790,827 5,627,908 101,302 619,881 4,906,725 26‐27 815,017,382 562,790,827 5,627,908 101,302 619,881 4,906,725

(1) Based on FY 18‐19 actual AV, assuming no growth in value thereafter.(2) Incremental assessed valuation over base year valuation of $252,226,555.(3) Gross tax increment based on 1.00% tax rate.(4) Estimated at 1.80% of annual Gross Tax Increment, based on actual FY 17‐18 amount.(5) Includes pass through payments pursuant to former HSC Section 33401, and HSC Section 33676 payments.(6) Pledged Tax Revenues available for debt service payments on the 2018 Bonds.

Exhibit B

Original Amend. Amend. Amend. Project Area No. 1 No. 3 No. 5

138.02 138.03 138.04 138.05 TotalTotal Secured 185,998,866$ 102,242,222$ 11,254,882$ 486,319,371$ 785,815,341$ Total Unsecured 28,658,432 7,036 192,326 344,247 29,202,041$

Total 214,657,298 102,249,258 11,447,208 486,663,618 815,017,382

Less: Base Year A.V. (27,083,016) (9,048,382) (3,808,276) (212,286,881) (252,226,555)

Incremental A.V. 187,574,282 93,200,876 7,638,932 274,376,737 562,790,827

Incremental A.V. for prior year 178,409,532 88,835,144 6,433,274 266,299,714 539,977,664

% increase (decrease) from prior year 5.14% 4.91% 18.74% 3.03% 4.22%

2018-19 Comparison to prior year 2018-19 2017-18 Difference % ChangeSecured 785,815,341$ 764,555,486$ 21,259,855$ 2.78%Unsecured 29,202,041 27,648,733 1,553,308 5.62%

Total A.V. 815,017,382 792,204,219 22,813,163 2.88%

Successor Agency to the Former Cudahy Community Development CommissionBreakdown of Assessed Valuation for 2018-19

Exhibit C

Successor Agency to the Former Cudahy Community Development Commission

Historical Assessed Valuations and Incremental Revenues (FY 2013-14 through FY 2017-18)

2013-14 2014-15 2015-16 2016-17 2017-18

Total Valuation (1) 679,592,815$ 708,035,855$ 745,674,549$ 768,855,339$ 792,204,219$ Less: Base Year Valuation (253,003,602) (253,747,276) (253,747,276) (253,526,233) (252,226,555) Incremental Valuation 426,589,213$ 454,288,579$ 491,927,273$ 515,329,106$ 539,977,664$

Tax Rate/$100 1.0000 1.0000 1.0000 1.0000 1.0000 Incremental Revenues 4,265,892$ 4,542,886$ 4,919,273$ 5,153,291$ 5,399,777$ Actual RPTTF Deposit (2) 4,779,672$ 4,126,935$ 4,460,908$ 4,946,993$ 5,345,388$

(1) Assessed Valuation provided by Los Angeles County Auditor-Controller's office.

(2) Based on actual collections. Includes unitary and supplemental tax revenues.

Source: Urban Futures, Inc. & County of Los Angeles

Exhibit D

Taxable Secured Primary Percent of Percent of

Property Owner Assessed Valuation Land Use Secured AV(1) Incremental AV(2)

1. Excel Realty Partners LP $26,136,996 Commercial 3.33% 4.64%

2. Kaiser Foundation Health 20,044,635 Commercial 2.55% 3.56%

3. Tag Enterprises LLC 16,283,013 Commercial 2.07% 2.89%

4. 4645 Live Oak LLC (3) 13,583,199 Multi-Family Residential 1.73% 2.41%

5. Calderon J Vladimir Tr 10,696,105 Industrial 1.36% 1.90%

6. Barrera Arturo Co Tr (3) 9,327,656 Multi-Family Residential 1.19% 1.66%

7. Cudahy Cecilia LLC 7,877,500 Industrial 1.00% 1.40%

8. Tssay J & R LLC 7,612,441 Recreational 0.97% 1.35%

9. Cudahy Assoc 5,524,877 Commercial 0.70% 0.98%

10. Smith Fred & Myrna I Trs 5,002,145 Industrial 0.64% 0.89%

Total $122,088,567 15.54% 21.69%

(1) Based on fiscal year 2018-19 secured assessed valuation of $785,815,341.

(2) Based on fiscal year 2018-19 incremental assessed valuation of $562,790,827.

(3) Currently has assessment appeal on file.


SUCCESSOR AGENCY TO THE CUDAHY COMMUNITY DEVELOPMENT COMMISSION

City-Wide Redevelopment Project

Largest Local Secured Taxpayers/Property Owners

Fiscal Year 2018-19

Exhibit E

Land Use Number of ParcelsSecured Assessed

Valuation

Percent of Secured

A.V.(1)

Multi-Family Residential 778 407,701,775$ 51.88%

Single Family Residential 717 177,161,752 22.54%

Commercial 70 104,273,663 13.27%

Industrial 86 66,534,443 8.47%

Governmental/Institutional/Other 92 9,165,525 1.17%

Vacant Industrial 14 7,368,347 0.94%

Vacant Residential 38 5,837,327 0.74%

Recreational 1 3,948,003 0.50%

Vacant Governmental/Institutional/Other 17 3,270,400 0.42%

Vacant Commercial 4 554,105 0.07%

Total All Secured 1817 785,815,341$ 100.00%


SUCCESSOR AGENCY TO FORMER CUDAHY COMMUNITY DEVELOPMENT COMMISSION


Land Use Summary

Fiscal Year 2018-19

(1) Based on fiscal year 2018-19 secured assessed valuation of $785,815,341

Exhibit F

Number of Appeals

Filed

Number of Successful

Appeals

Assessed Value of Property

Owner's Opinion of

ValueTotal Requested

AV Reduction

Reduction Allowed by

Board

Allowed Reductions as %

of Requested

155 43 $267,013,205 $96,996,974 $170,016,231 $10,230,224 6.02%

Roll Year Appealed

Number of Appeals Filed

Assessed Value of Property

Owner's Opinion of

Value

Potential Loss of Assessed

ValueHistorical

Success Rate

Reduction Based on Historical

Success

2013 6 $1,811,957 $46,733 $1,765,224 6.02% $106,217

2014 2 280,095 42,873 237,222 6.02% 14,274

2015 8 2,472,102 406,959 2,065,143 6.02% 124,264

2016 14 24,251,298 14,438,089 9,813,209 6.02% 590,481

2017 18 18,853,257 9,623,969 9,229,288 6.02% 555,345

Total 48 $47,668,709 $24,558,623 $23,110,086 6.02% $1,390,581

SUCCESSOR AGENCY TO THE CUDAHY COMMUNITY DEVELOPMENT COMMISSION


Historical Assessment Appeals Reviewed January, 2013 Through June, 2018

Pending Assessment Appeals, June, 2018

Source: Urban Futures, Inc. with data obtained from Los Angeles County.


B-1

APPENDIX B

SUMMARY OF THE INDENTURE

The following is a brief summary of certain provisions of the Indenture of Trust (the “Indenture”)

authorizing the 2018 Bonds that are not otherwise described in the text of this Official Statement. Such

summary is not intended to be definitive, and reference is made to the actual Indenture (copies of which may be obtained from the Trustee) for the complete terms thereof.

DETERMINATIONS; DEFINITIONS

Definitions. Unless the context otherwise requires, the terms defined in the Indenture will, for all

purposes of the Indenture, of any Supplemental Indenture, and of any certificate, opinion or other document

mentioned in the Indenture, have the meanings specified in the Indenture.

“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.

“Bonds” means the 2018 Bonds and any Parity Debt issued pursuant to a Supplemental Indenture.

“Bond Counsel” means (a) Stradling Yocca Carlson & Rauth, a Professional Corporation, or (b) any

other attorney or firm of attorneys appointed by or acceptable to the Successor 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 Code.

“Bond Year” means each twelve (12) month period extending from October 2 in one calendar year to

October 1 of the succeeding calendar year, both dates inclusive; provided that the first Bond Year with respect

to the 2018 Bonds will commence on the Closing Date and end on October 1, 2019.

“Business Day” means any day, other than a Saturday or Sunday or a day on which commercial banks

in New York, New York, or any other city or cities where the Principal Corporate Trust Office of the Trustee

is located are required or authorized by law to close or a day on which the Federal Reserve System is closed.

“City” means the City of Cudahy.

“Closing Date” means the date on which a series of Bonds is delivered by the Successor Agency to

the original purchaser thereof. The Closing Date with respect to the 2018 Bonds is September 25, 2018.

“Code” means the Internal Revenue Code of 1986, as amended.

“Continuing Disclosure Certificate” means that certain Continuing Disclosure Certificate, with

respect to the 2018 Bonds, executed by the Successor Agency, as originally executed and as it may be

amended from time to time in accordance with the terms thereof.

“County” means the County of Los Angeles.

“County Auditor-Controller” means the Auditor-Controller of the County of Los Angeles.

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

Indenture.

“Defeasance Obligations” 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 and are in compliance

with the Successor Agency’s investment policies then in effect (provided that the Trustee will be entitled to

rely upon any investment direction from the Successor Agency as conclusive certification to the Trustee that

investments described therein are legal and are in compliance with the Successor Agency’s investment policies

then in effect), but only to the extent the same are acquired at Fair Market Value:

(a) Cash;

(b) Federal Securities, including direct obligations of the Treasury which have been stripped by

the Treasury itself, CATS, TIGRS and similar securities;

(c) The interest component of Resolution Funding Corporation strips which have been stripped

by request to the Federal Reserve Bank of New York in book-entry form;

(d) Pre-refunded municipal bonds rated “Aaa” by Moody’s and “AAA” by S&P, provided that, if

the issue is rated only by S&P (i.e., there is no Moody’s rating), then the pre-refunded municipal bonds must

have been pre-refunded with cash, direct U.S. or U.S. guaranteed obligations, or AAA rated pre-refunded

municipals; and

(e) 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 (stripped securities are only permitted if they have been stripped by the agency itself):

(i) direct obligations or fully guaranteed certificates of beneficial ownership of the U.S. Export-Import Bank;

(ii) certificates of beneficial ownership of the Farmers Home Administration; (iii) participation certificates of

the General Services Administration; (iv) Federal Financing Bank bonds and debentures; (v) guaranteed Title

XI financings of the U.S. Maritime Administration; and (vi) project notes, local authority bonds, new

communities debentures and U.S. public housing notes and bonds of the U.S. Department of Housing and

Urban Development.

“Department of Finance” means the Department of Finance of the State of California.

“Depository” means (a) initially, DTC, and (b) any other Securities Depository acting as Depository

pursuant to the Indenture.

“Depository System Participant” means any participant in the Depository’s book-entry system.

“Dissolution Act” means California Assembly Bill X1 26 approved by the Governor of the State of

California on June 28, 2011, as it has previously been amended and as it may subsequently be amended.

“DTC” means The Depository Trust Company, New York, New York, and its successors and assigns.

“Event of Default” means any of the events described 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 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 Code, (ii) the investment is an

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 Code, (iii) the investment is a

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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) any commingled investment fund in

which the Successor Agency and related parties do not own more than a ten percent (10%) beneficial interest

therein if the return paid by the fund is without regard to the source of the investment.

“Federal Securities” means any direct, noncallable 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 and CATS and TGRS), or obligations the payment of principal of

and interest on which are directly or indirectly guaranteed by the United States of America.

“Fiscal Year” means any twelve-month period beginning on July 1 in any year and extending to the

next succeeding June 30, both dates inclusive, or any other twelve month period selected and designated by the

Successor Agency to the Trustee in writing as its official fiscal year period.

“Former Agency” means the Cudahy Community Development Commission.

“Indenture” means the Indenture of Trust by and between the Successor Agency and the Trustee, as

originally entered into or as it may be amended or supplemented by any Supplemental Indenture entered into

pursuant to the provisions of the Indenture.

“Independent Accountant” means any accountant or firm of such accountants duly licensed or

registered or entitled to practice as such under the laws of the State, appointed by the Successor Agency, and

who, or each of whom:

(a) is in fact independent and not under domination of the Successor Agency or the City;

(b) does not have any substantial interest, direct or indirect, with the Successor Agency

or the City; and

(c) is not connected with the Successor Agency or the City as an officer or employee of

the Successor Agency or the City, but who may be regularly retained to make reports to the Successor Agency

or the City.

“Independent Redevelopment Consultant” means any consultant or firm of such consultants

appointed by the Successor Agency, and who, or each of whom:

(a) is judged by the Successor Agency to have experience in matters relating to the collection of

Pledged Tax Revenues or otherwise with respect to the financing of redevelopment projects;

(b) is in fact independent and not under domination of the Successor Agency or the City;

(c) does not have any substantial interest, direct or indirect, with the Successor Agency or the

City; and

(d) is not connected with the Successor Agency or the City as an officer or employee of the Successor Agency or the City, but who may be regularly retained to make reports to the Successor Agency or

the City.

“Information Services” means, in accordance with then current guidelines of the Securities and

Exchange Commission, such services providing information with respect to the redemption of bonds as the

Successor Agency may designate in a Written Request of the Successor Agency filed with the Trustee.

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“Insurer” means the 2018 Insurer and, as applicable, the provider of a municipal bond or financial

guaranty insurance policy with respect to other Bonds.

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

the Indenture.

“Interest Payment Date” means each April 1 and October 1, commencing April 1, 2019, for so long

as any of the Bonds remain Outstanding under the Indenture.

“Law” means the Community Redevelopment Law of the State, constituting Part 1 of Division 24 of

the Health and Safety Code of the State, and the acts amendatory thereof and supplemental thereto (including

the Dissolution Act).

“Late Payment Rate” means, as calculated by the Insurer, the lesser of (a) the greater of (i) the per

annum rate of interest, publicly announced from time to time by JPMorgan Chase Bank at its principal office

in the City of New York, as its prime or base lending rate (any change in such rate of interest to be effective on

the date such change is announced by JPMorgan Chase Bank) plus 3%, and (ii) the then applicable highest rate

of interest on the Bonds and (b) the maximum rate permissible under applicable usury or similar laws limiting

interest rates. The Late Payment Rate will be computed on the basis of the actual number of days elapsed over

a year of 360 days. In the event JPMorgan Chase Bank ceases to announce its Prime Rate publicly, Prime Rate

will be the publicly announced prime or base lending rate of such bank, banking association or trust company

bank as the Bond Insurer in its sole and absolute discretion will specify.

“Maximum Annual Debt Service” means, as of the date of calculation, the largest amount of

principal and interest payments due with respect to the current or any future Bond Year payable in such Bond

Year. For purposes of such calculation, there will be excluded payments with respect to each series of Bonds

to the extent that amounts due with respect to such series of Bonds are prepaid or otherwise discharged in

accordance with the Indenture.

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

“Nominee” means (a) initially, Cede & Co., as nominee of DTC, and (b) any other nominee of the

Depository designated pursuant to the Indenture.

“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 will have been authorized, executed,

issued and delivered by the Successor Agency pursuant to the Indenture.

“Oversight Board” means the Oversight Board of the Successor Agency established pursuant to

Section 34179 of the Dissolution Act.

“Owner” or “Bondowner” means, with respect to any Bond, the person in whose name the ownership

of such Bond will be registered on the Registration Books.

“Parity Debt” means any additional bonds, loans, advances or indebtedness issued or incurred by the

Successor Agency on a parity with the 2018 Bonds pursuant to the Indenture, whether issued as Bonds under a

Supplemental Indenture or issued under a Parity Debt Instrument.

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“Parity Debt Instrument” means a resolution, indenture of trust, supplemental indenture of trust,

loan agreement, trust agreement or other instrument authorizing the issuance of any Parity Debt, other than a

Supplemental Indenture.

“Participating Underwriter” has the meaning ascribed thereto in the Continuing Disclosure

Certificate.

“Pass-Through Agreements” means those agreements listed in Exhibit C, each providing for the

allocation of former tax increment revenues generated by the Project Area of the Former Agency, and any

other tax sharing entered into between the Former Agency and affected taxing agencies pursuant to former

Health and Safety Code Section 33401, that have not been expressly subordinated to the Bonds.

“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 and are in compliance

with the Successor Agency’s investment policies then in effect (provided that the Trustee will be entitled to

rely upon any investment direction from the Successor Agency as conclusive certification to the Trustee that

investments described therein are legal and are in compliance with the Successor Agency’s investment policies

then in effect), but only to the extent the same are acquired at Fair Market Value:

(a) Federal Securities;

(b) 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 (stripped securities are only permitted if they have been stripped by the agency itself):

(i) direct obligations or fully guaranteed certificates of beneficial ownership of the U.S. Export-Import Bank;

(ii) certificates of beneficial ownership of the Farmers Home Administration; (iii) Federal Housing

Administration debentures; (iv) participation certificates of the General Services Administration; (v) Federal

Financing Bank bonds and debentures; (vi) guaranteed mortgage-backed bonds or guaranteed pass-through

obligations of Ginnie Mae (formerly known as the Government National Mortgage Association);

(vii) guaranteed Title XI financings of the U.S. Maritime Administration; and (viii) project notes, local

authority bonds, new communities debentures and U.S. public housing notes and bonds of the U.S. Department

of Housing and Urban Development;

(c) Bonds, debentures, notes or other evidence of indebtedness issued or guaranteed by any of the

following non-full faith and credit U.S. government agencies (stripped securities only as stripped by the

agency itself): (i) senior debt obligations of the Federal Home Loan Bank System; (ii) participation certificates

and senior debt obligations of the Federal Home Loan Mortgage Corporation; (iii) mortgaged-backed securities

and senior debt obligations of Fannie Mae; (iv) senior debt obligations of Sallie Mae (formerly known as the

Student Loan Marketing Association); (v) obligations of the Resolution Funding Corporation; and

(vi) consolidated system-wide bonds and notes of the Farm Credit System;

(d) Money market funds registered under the Federal Investment Company Act of 1940, whose

shares are registered under the Federal Securities Act of 1933, and having a rating by S&P of at least AAAm-

G, AAAm or AAm, and a rating by Moody’s of Aaa, Aa1 or Aa2 (such funds may include those for which the

Trustee or an affiliate receives and retains a fee for services provided to the fund, whether as a custodian,

transfer agent, investment advisor or otherwise);

(e) Unsecured certificates of deposit (having maturities of not more than 365 days) of any bank the short-term obligations of which are rated on the date of purchase “A-1+” or better by S&P and “P-1” by

Moody’s and or certificates of deposit (including those of the Trustee, its parent and its affiliates) secured at all

times by collateral that may be used by a national bank for purposes of satisfying its obligations to collateralize

pursuant to federal law which are issued by commercial banks, savings and loan associations or mutual savings

bank whose short-term obligations are rated on the date of purchase A-1 or better by S&P, Moody’s and Fitch;

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(f) Certificates of deposit, including those placed by a third party pursuant to an agreement

between the Trustee and the Successor Agency, time deposits, deposit accounts, demand deposits, trust funds,

trust accounts, overnight bank deposits, interest-bearing deposits, other deposit products, or bankers

acceptances of depository institutions, or interest bearing money market deposits or accounts (including those

of the Trustee, its parent and its affiliates) that are fully insured by FDIC, including BIF and SAIF;

(g) Investment agreements, including guaranteed investment contracts, forward purchase

agreements, reserve fund put agreements and collateralized investment agreements with an entity rated “Aa” or

better by Moody’s and “AA” or better by S&P, or unconditionally guaranteed by an entity rated “Aa” or better

by Moody’s and “AA” or better by S&P;

(h) Commercial paper rated, at the time of purchase, “Prime-1” by Moody’s and “A-1+” or better

by S&P;

(i) Bonds or notes issued by any state or municipality which are rated by Moody’s and S&P in

one of the two highest rating categories assigned by such agencies;

(j) Federal funds or bankers acceptances with a maximum term of one year of any bank which

has an unsecured, uninsured and unguaranteed obligation rating of “Prime-1” or “A3” or better by Moody’s,

and “A-1+” by S&P; and

(k) The Local Agency Investment Fund that is administered by the California Treasurer for the

investment of funds belonging to local agencies within the State of California, provided that for investment of

funds held by the Trustee, the Trustee is entitled to make investments and withdrawals in its own name as

Trustee.

Ratings of Permitted Investments will be determined at the time of purchase of such Permitted

Investments and without regard to ratings subcategories.

“Pledged Tax Revenues” means all taxes (i) that were eligible for allocation to the Former Agency

with respect to the Project Area and are allocated to the Successor Agency pursuant to Article 6 of Chapter 6

(commencing with Section 33670) of the Law and Section 16 of Article XVI of the Constitution of the State,

or pursuant to other applicable State laws and (ii) that are deposited or available for deposit by the County

Auditor-Controller in the Redevelopment Property Tax Trust Fund, all as provided in Section 34172(d) of the

Dissolution Act.

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

the Indenture.

“Principal Corporate Trust Office” means the corporate trust office of the Trustee in Los Angeles,

California, or such other or additional offices as the Trustee may designate in writing to the Successor Agency

from time to time as the corporate trust office for purposes of the Indenture; except that with respect to

presentation of Bonds for payment or for registration of transfer and exchange, such term means the office or

agency of the Trustee at which, at any particular time, its corporate trust agency business is conducted.

“Project Area” means the City-Wide Redevelopment Project.

“Qualified Reserve Account Credit Instrument” means (i) the 2018 Reserve Policy, and (ii) an

irrevocable standby or direct-pay letter of credit, insurance policy, or surety bond issued by a commercial bank

or insurance company and deposited with the Trustee with respect to other Bonds, provided that all of the

following requirements are met at the time of acceptance thereof by the Trustee: (a) S&P or Moody’s have

assigned a long-term credit rating to such bank or insurance company at the time of issuance of such Qualified

Reserve Account Credit Instrument of “A” (without regard to modifier) or higher; (b) such letter of credit,

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insurance policy or surety bond has a term of at least 12 months; (c) such letter of credit, insurance policy or

surety bond has a stated amount at least equal to the portion of the Reserve Requirement with respect to the

Bonds with respect to which it is deposited or with respect to which funds are proposed to be released; and

(d) the Trustee is authorized pursuant to the terms of such letter of credit, insurance policy or surety bond to

draw thereunder an amount equal to any deficiencies which may exist from time to time in the Interest

Account or the Principal Account for the purpose of making payments required pursuant to the Indenture.

“Recognized Obligation Payment Schedule” means a Recognized Obligation Payment Schedule,

each prepared and approved from time to time pursuant to subdivision (o) of Section 34177 of the California

Health and Safety Code.

“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.

“Redevelopment Obligation Retirement Fund” means the fund by that name established pursuant to

California Health and Safety Code Section 34170.5(a) and administered by the Successor Agency.

“Redevelopment Plan” means the Redevelopment Plan for the Project Area described in the

Indenture, as such Redevelopment Plan has previously been amended and as it may subsequently be amended

in accordance with the law.

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

Redevelopment Plan and the Law for the redevelopment of the Project Area.

“Redevelopment Property Tax Trust Fund” means the fund by that name established pursuant to

California Health & Safety Code Sections 34170.5(b) and 34172(c) and administered by the County Auditor-

Controller.

“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 Redevelopment Consultant and

including:

(a) a statement that the person or firm making or giving such Report has read the

pertinent provisions of the 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 said consultant to express an informed opinion with respect to

the subject matter referred to in the Report.

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

the Indenture.

“Reserve Requirement” means, subject to the Indenture, with respect to the 2018 Bonds and each

series (or multiple series) of Parity Debt issued as Bonds pursuant to a single Supplemental Indenture for

which a reserve is to be funded and as of any date of computation, the lesser of

(i) 125% of the average Annual Debt Service with respect to such series of Bonds,

(ii) Maximum Annual Debt Service with respect to such series of Bonds, or

(iii) with respect to an individual series of Bonds (or multiple series issued to a single

Supplemental Indenture), 10% of the original principal amount of such series (or multiple series) of Bonds (or,

if such series (or multiple series) of Bonds has more than a de minimis amount of original issue discount or

premium, 10% of the issue price of such series (or multiple series) of Bonds);

provided, that in no event will the Successor Agency, in connection with the issuance of Parity Debt pursuant

to a Supplemental Indenture be obligated to deposit an amount in the Reserve Account which is in excess of

the amount permitted by the applicable provisions of the Code to be so deposited from the proceeds of tax-

exempt bonds without having to restrict the yield of any investment purchased with any portion of such deposit

and, in the event the amount of any such deposit into the Reserve Account is so limited, the Reserve

Requirement will, in connection with the issuance of such Parity Debt pursuant to a Supplemental Indenture,

be increased only by the amount of such deposit as permitted by the Code; and, provided further that the

Successor Agency may meet all or a portion of the Reserve Requirement by depositing a Qualified Reserve

Account Credit Instrument meeting the requirements of the Indenture.

“ROPS Period” means each annual period beginning on July 1 of any calendar year and ending on

June 30 of the next calendar year, or such other period as provided in the Dissolution Act.

“S&P” means S&P Global Ratings and its successors.

“Securities Depositories” means The Depository Trust Company, New York, New York 10041-0099,

Fax-(212) 855-7232; or, in accordance with then current guidelines of the Securities and Exchange

Commission, such other addresses and/or such other securities depositories as the Successor Agency may

designate in a Written Request of the Successor Agency delivered to the Trustee.

“Special Fund” means the fund held by the Successor Agency established within the Redevelopment

Obligation Retirement Fund pursuant to the Indenture.

“State” means the State of California.

“Supplemental Indenture” means any supplement to the Indenture which has been duly adopted or

entered into by the Successor Agency, but only if and to the extent that such Supplemental Indenture is

specifically authorized under the Indenture.

“Trustee” means The Bank of New York Mellon Trust Company, N.A., as trustee under the

Indenture, or any successor thereto appointed as trustee under the Indenture in accordance with the provisions

of the Indenture.

“Written Request of the Successor Agency” or “Written Certificate of the Successor Agency”

means a request or certificate, in writing signed by the Executive Director or Finance Officer of the Successor

Agency, or the designee of either, or by any other officer of the Successor Agency or the City duly authorized

by the Successor Agency for that purpose.

“2018 Bonds” means the $14,030,000 initial aggregate principal amount of Successor Agency to the

Former Cudahy Community Development Commission Taxable Tax Allocation Refunding Bonds, Series

2018.

“2018 Insurance Policy” means the insurance policy issued by the 2018 Insurer guaranteeing the

scheduled payment of principal of and interest on the 2018 Bonds when due.

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“2018 Insurer” means Build America Mutual Assurance Company, or any successor thereto or

assignee thereof.

“2018 Reserve Policy” means the Municipal Bond Debt Service Reserve Insurance Policy issued by

the 2018 Insurer guaranteeing certain payments into the Reserve Account with respect to the 2018 Bonds as

provided therein and subject to the limitation set forth therein.

AUTHORIZATION AND TERMS

Form of 2018 Bonds. The 2018 Bonds, the form of Trustee’s Certificate of Authentication, and the

form of Assignment to appear thereon, will be substantially in the form set forth in the Indenture, with

necessary or appropriate variations, omissions and insertions, as permitted or required by the Indenture.

Execution of Bonds. The Bonds will be executed on behalf of the Successor Agency by the signature

of its Executive Director or its Finance Officer or the written designee of either and the signature of its

Secretary who are in office on the date of execution and delivery of the Indenture or at any time thereafter.

Either or both of such signatures may be made manually or may be affixed by facsimile thereof. If any officer

whose signature appears on any Bond ceases to be such officer before delivery of the Bonds to the purchaser,

such signature will nevertheless be as effective as if the officer had remained in office until the delivery of the

Bonds to the purchaser. Any Bond may be signed and attested on behalf of the Successor Agency by such

persons as at the actual date of the execution of such Bond will be the proper officers of the Successor Agency

although on the date of such Bond any such person will not have been such officer of the Successor Agency.

Only such of the Bonds as will bear thereon a Certificate of Authentication in the form set forth in the

Indenture, manually executed and dated by the Trustee, will be valid or obligatory for any purpose or entitled

to the benefits of the Indenture, and such Certificate will be conclusive evidence that such Bonds have been

duly authenticated and delivered under the Indenture and are entitled to the benefits of the Indenture.

Transfer of Bonds. Any Bond may, in accordance with its terms, be transferred, upon the

Registration Books, by the person in whose name it is registered, in person or by a duly authorized attorney of

such person, upon surrender of such Bond to the Trustee at its Principal Corporate Trust Office for

cancellation, accompanied by delivery of a written instrument of transfer in a form acceptable to the Trustee,

duly executed. Whenever any Bond is surrendered for transfer, the Successor Agency will execute and the

Trustee will thereupon authenticate and deliver to the transferee a new Bond or Bonds of like series, tenor,

maturity and aggregate principal amount of authorized denominations. The Trustee will collect from the

Owner any tax or other governmental charge on the transfer of any Bonds pursuant to the Indenture. The cost

of printing Bonds and any services rendered or expenses incurred by the Trustee in connection with any

transfer will be paid by the Successor Agency.

The Trustee may refuse to transfer, under the provisions of the Indenture, either (a) any Bonds during

the period fifteen (15) days prior to the date established by the Trustee for the selection of Bonds for

redemption, or (b) any Bonds selected by the Trustee for redemption. The Trustee may further require all

information it deems necessary to allow the Trustee to comply with any applicable reporting or withholding

obligations under the Code. The Trustee may rely on the information provided to it and will have no

responsibility to verify or ensure the accuracy of such information. To the extent any such information is not

timely provided or is incomplete or inaccurate in any respect, the Trustee will be entitled to report or withhold

on any payments under the Indenture, without liability, to the extent it determines in its discretion such

reporting or withholding, as applicable, is required under the Code.

Exchange of Bonds. Bonds may be exchanged at the Principal Corporate Trust Office of the Trustee

for Bonds of the same series, tenor and maturity and of other authorized denominations. The Trustee will

collect any tax or other governmental charge on the exchange of any Bonds pursuant to the Indenture. The

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cost of printing Bonds and any services rendered or expenses incurred by the Trustee in connection with any

exchange will be paid by the Successor Agency.

The Trustee may refuse to exchange, under the provisions of the Indenture, either (a) any Bonds

during the fifteen (15) days prior to the date established by the Trustee for the selection of Bonds for

redemption or (b) any Bonds selected by the Trustee for redemption. The Trustee may further require all

information it deems necessary to allow the Trustee to comply with any applicable reporting or withholding

obligations under the Code. The Trustee may rely on the information provided to it and will have no

responsibility to verify or ensure the accuracy of such information. To the extent any such information is not

timely provided or is incomplete or inaccurate in any respect, the Trustee will be entitled to report or withhold

on any payments under the Indenture, without liability, to the extent it determines in its discretion such

reporting or withholding, as applicable, is required under the Code.

Registration of Bonds. The Trustee will keep or cause to be kept, at its Principal Corporate Trust

Office, sufficient records for the registration and registration of transfer of the Bonds, which will at all times

during normal business hours be open to inspection and copying by the Successor Agency, upon reasonable

prior notice to the Trustee; and, upon presentation for such purpose, the Trustee will, under such reasonable

regulations as it may prescribe, register or transfer or cause to be registered or transferred, on the Registration

Books Bonds as provided in the Indenture.

Bonds Mutilated, Lost, Destroyed or Stolen. If any Bond becomes mutilated, the Successor

Agency, at the expense of the Owner of such Bond, will execute, and the Trustee will thereupon authenticate

and deliver, a new Bond of like tenor and amount in exchange and substitution for the Bond so mutilated, but

only upon surrender to the Trustee of the Bond so mutilated. Every mutilated Bond so surrendered to the

Trustee will be canceled by it. If any Bond is lost, destroyed or stolen, evidence of such loss, destruction or

theft may be submitted to the Trustee and, if such evidence be satisfactory to it and indemnity satisfactory to it

is given, the Successor Agency, at the expense of the Owner, will execute, and the Trustee will thereupon

authenticate and deliver, a new Bond of like tenor and amount in lieu of and in substitution for the Bond so

lost, destroyed or stolen (or if any such Bond has matured or has been called for redemption, instead of issuing

a substitute Bond, the Trustee may pay the same without surrender thereof upon receipt of indemnity

satisfactory to the Trustee and the Successor Agency). The Successor Agency may require payment by the

Owner of a sum not exceeding the actual cost of preparing each new Bond issued under the Indenture and of

the expenses which may be incurred by the Successor Agency and the Trustee in the premises. Any Bond

issued under the provisions of the Indenture in lieu of any Bond alleged to be lost, destroyed or stolen will

constitute an original additional contractual obligation on the part of the Successor Agency whether or not the

Bond so alleged to be lost, destroyed or stolen be at any time enforceable by anyone, and is equally and

proportionately entitled to the benefits of the Indenture with all other Bonds issued pursuant to the Indenture.

Book-Entry System.

Original Delivery. The Bonds will be initially delivered in the form of a separate single fully

registered Bond without coupons (which may be typewritten) for each maturity of the Bonds. Upon initial

delivery, the ownership of each such Bond will be registered on the Registration Books in the name of the

Nominee. Except as provided in the Indenture, the ownership of all of the Outstanding Bonds will be

registered in the name of the Nominee on the Registration Books.

With respect to Bonds the ownership of which will be registered in the name of the Nominee, neither

the Successor Agency nor the Trustee will have any responsibility or obligation to any Depository System

Participant or to any person on behalf of which the Depository System Participant holds an interest in the

Bonds. Without limiting the generality of the immediately preceding sentence, neither the Successor Agency

nor the Trustee will have any responsibility or obligation with respect to (i) the accuracy of the records of the

Depository, the Nominee or any Depository System Participant with respect to any ownership interest in the

Bonds, (ii) the delivery to any Depository System Participant or any other person, other than a Bondowner as

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shown in the Registration Books, of any notice with respect to the Bonds, including any notice of redemption,

(iii) the selection by the Depository of the beneficial interests in the Bonds to be redeemed in the event the Successor Agency elects to redeem the Bonds in part, (iv) the payment to any Depository System Participant or any other person, other than a Bondowner as shown in the Registration Books, of any amount with respect to principal, premium, if any, or interest on the Bonds or (v) any consent given or other action taken by the Depository as Owner of the Bonds. The Successor Agency and the Trustee may treat and consider the person in whose name each Bond is registered as the absolute owner of such Bond for the purpose of payment of principal, premium and interest on such Bond, for the purpose of giving notices of redemption and other matters with respect to such Bond, for the purpose of registering transfers of ownership of such Bond, and for all other purposes whatsoever. The Trustee will pay the principal of and interest and premium, if any, on the Bonds only to the respective Owners or their respective attorneys duly authorized in writing, and all such payments will be valid and effective to fully satisfy and discharge all obligations with respect to payment of principal of and interest and premium, if any, on the Bonds to the extent of the sum or sums so paid. No person other than a Bondowner will receive a Bond evidencing the obligation of the Successor Agency to make payments of principal, interest and premium, if any, pursuant to the Indenture. Upon delivery by the Depository to the Nominee of written notice to the effect that the Depository has determined to substitute a new nominee in its place, and subject to the provisions of the Indenture with respect to Record Dates, such new nominee will become the Nominee under the Indenture for all purposes; and upon receipt of such a notice the Successor Agency will promptly deliver a copy of the same to the Trustee.

Representation Letter. In order to qualify the Bonds for the Depository’s book-entry system, the

Successor Agency will execute and deliver to such Depository a letter representing such matters as are

necessary to so qualify the Bonds. The execution and delivery of such letter will not in any way limit the

provisions of the Indenture or in any other way impose upon the Successor Agency or the Trustee any

obligation whatsoever with respect to persons having interests in the Bonds other than the Bondowners. The

Trustee agrees to comply with all provisions in such letter with respect to the giving of notices thereunder by

the Trustee. In addition to the execution and delivery of such letter, upon written request of the Depository or

the Trustee, the Successor Agency may take any other actions, not inconsistent with the Indenture, to qualify

the Bonds for the Depository’s book-entry program.

Transfers Outside Book-Entry System. In the event that either (i) the Depository determines not to

continue to act as Depository for the Bonds, or (ii) the Successor Agency determines to terminate the

Depository as such, then the Successor Agency will thereupon discontinue the book-entry system with such

Depository. In such event, the Depository will cooperate with the Successor Agency and the Trustee in the

issuance of replacement Bonds by providing the Trustee with a list showing the interests of the Depository

System Participants in the Bonds, and by surrendering the Bonds, registered in the name of the Nominee, to

the Trustee on or before the date such replacement Bonds are to be issued. The Depository, by accepting

delivery of the Bonds, agrees to be bound by the provisions of the Indenture. If, prior to the termination of the

Depository acting as such, the Successor Agency fails to identify another Securities Depository to replace the

Depository, then the Bonds will no longer be required to be registered in the Registration Books in the name of

the Nominee, but will be registered in whatever name or names the Owners transferring or exchanging Bonds

will designate, in accordance with the provisions of the Indenture. Prior to its termination, the Depository will

furnish the Trustee with the names and addresses of the Depository System Participants and respective

ownership interests thereof.

Payments to the Nominee. Notwithstanding any other provision of the Indenture to the contrary, so

long as any Bond is registered in the name of the Nominee, all payments with respect to principal of and

interest and premium, if any, on such Bond and all notices with respect to such Bond will be made and given,

respectively, as provided in the letter described in the Indenture or as otherwise instructed by the Depository.

Applicability of Provisions to Parity Debt. Unless otherwise provided in a Supplemental Indenture,

the foregoing will apply to all Bonds.

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SECURITY OF BONDS; FLOW OF FUNDS

Deposit of Amounts by Trustee.

Reserve Account. The Indenture establishes in the Debt Service Fund a separate account known as

the “Reserve Account” solely as security for payments of 2018 Bonds payable by the Successor Agency

pursuant to the Indenture which will be held by the Trustee in trust for the benefit of the Owners of the 2018

Bonds, provided separate subaccounts may be established in the Reserve Account as separate security for any

future issue of Parity Debt. The Reserve Requirement for the 2018 Bonds will be satisfied by the delivery of

the 2018 Reserve Policy by the 2018 Insurer on the Closing Date with respect to the 2018 Bonds. The

Successor Agency will have no obligation to replace the 2018 Reserve Policy or to fund the Reserve Account

with cash if, at any time that the 2018 Bonds are Outstanding, any rating assigned to the 2018 Insurer is

downgraded, suspended or withdrawn or amounts are not available under the 2018 Reserve Policy, other than

in connection with a draw on the 2018 Reserve Policy.

Except as described above and as may be provided in a Supplemental Indenture or Parity Debt

Instrument, in the event that the amount on deposit in the Reserve Account (or the applicable subaccount) at

any time becomes less than the Reserve Requirement applicable thereto, the Trustee will promptly notify the

Successor Agency of such fact. Upon receipt of any such notice and as promptly as is permitted by the Law,

the Successor Agency will transfer to the Trustee an amount sufficient to maintain the Reserve Requirement on

deposit in the applicable Reserve Account.

The amounts available under the 2018 Reserve Policy will be used and withdrawn by the Trustee

solely for the purpose of making transfers to the Interest Account and the Principal Account in such order of

priority, in the event of any deficiency at any time in any of such accounts with respect to the payment of debt

service on the 2018 Bonds.

Moneys, if any, on deposit in the Reserve Account (or the applicable account therein) will be

withdrawn and applied by the Trustee for the final payment or payments of principal of and interest on the

2018 Bonds (or the applicable account therein, respectively). The Trustee will compute the Reserve

Requirement annually on or before October 1.

In no event will amounts in the Reserve Account (exclusive of subaccounts therein, which will be

applied in accordance with the terms of the Supplemental Indenture providing for Parity Debt) be applied to

payment of any Bonds or Parity Debt other than 2018 Bonds.

Except as provided in the Indenture, the amount on deposit in the Reserve Account will be maintained

at the Reserve Requirement at all times prior to the payment of the applicable series of Bonds in full. If there

will then not be sufficient Pledged Tax Revenues to transfer an amount sufficient to maintain the Reserve

Requirement on deposit in the Reserve Account, the Successor Agency will be obligated to continue making

transfers as Pledged Tax Revenues become available until there is an amount sufficient to maintain the

Reserve Requirement on deposit in the Reserve Account. No such transfer and deposit need be made to the

Reserve Account so long as there will be on deposit therein a sum at least equal to the Reserve Requirement.

All money in the Reserve Account will be used and withdrawn by the Trustee solely for the purpose of making

transfers pursuant to any Parity Debt Instrument and under the Indenture to the Interest Account and the

Principal Account, in the event of any deficiency at any time in any of such accounts or for the retirement of

all the Bonds then Outstanding, except that so long as the Successor Agency is not in default under the

Indenture or under any Parity Debt Instrument, any amount in the Reserve Account in excess of the Reserve

Requirement will be withdrawn from the Reserve Account semiannually on or before two (2) Business Days

preceding each April 1 and October 1 by the Trustee and deposited in the Interest Account or be applied pro

rata in accordance with any applicable provision of a Parity Debt Instrument. On the Business Day preceding

the final Interest Payment Date for a series of Bonds (or multiple series of Bonds issued under the Indenture or

a single Parity Debt Instrument), all amounts held in the applicable subaccount of the Reserve Account will be

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withdrawn from the Reserve Account and will be transferred to the applicable subaccounts of the Interest

Account and the Principal Account, in such order, for such series of Bonds, to the extent required to make the

deposits then required to be made pursuant to the Indenture, or will be applied pro rata as required by any

Parity Debt Instrument, as applicable.

Provisions Relating to 2018 Insurance Policy. Notwithstanding any other provision in the Indenture

to the contrary, so long as the 2018 Insurance Policy is in effect and the 2018 Insurer is not in default

thereunder, the Successor Agency and the Trustee agree to comply with the following provisions:

(a) In the event that principal and/or interest due on the 2018 Bonds is paid by the 2018 Insurer

pursuant to the 2018 Insurance Policy, the 2018 Bonds will remain outstanding for all purposes, not be

defeased or otherwise satisfied and not be considered paid by the Successor Agency, the assignment and

pledge of the trust estate and all covenants, agreements and other obligations of the Successor Agency to the

registered owners will continue to exist and will run to the benefit of the 2018 Insurer, and the 2018 Insurer

will be subrogated to the rights of such registered owners including, without limitation, any rights that such

owners may have in respect of securities law violations arising from the offer and sale of the 2018 Bonds.

(b) In the event that on the second (2nd) business day prior to any payment date on the 2018

Bonds, the Trustee has not received sufficient moneys to pay all principal of and interest on the 2018 Bonds

due on such payment date, the Trustee will immediately notify the 2018 Insurer or its designee on the same

business day by telephone or electronic mail, of the amount of the deficiency. If any deficiency is made up in

whole or in part prior to or on the payment date, the Trustee will so notify the 2018 Insurer or its designee.

In addition, if the Trustee has notice that any holder of the 2018 Bonds has been required to disgorge

payments of principal of or interest on the 2018 Bonds pursuant to a final, non-appealable order by a court of

competent jurisdiction that such payment constitutes an avoidable preference to such holder within the

meaning of any applicable bankruptcy law, then the Trustee will notify the 2018 Insurer or its designee of such

fact by telephone or electronic mail, or by overnight or other delivery service as to which a delivery receipt is

signed by a person authorized to accept delivery on behalf of the 2018 Insurer.

(c) The Trustee will irrevocably be designated, appointed, directed and authorized to act as

attorney-in-fact for holders of the 2018 Bonds as follows:

(i) If there is a deficiency in amounts required to pay interest and/or principal on the

2018 Bonds, the Trustee will (i) execute and deliver to the 2018 Insurer, in form satisfactory to the 2018

Insurer, an instrument appointing the 2018 Insurer as agent and attorney-in-fact for such holders of the 2018

Bonds in any legal proceeding related to the payment and assignment to the 2018 Insurer of the claims for

interest on the 2018 Bonds, (ii) segregate all payments received by the Trustee under the 2018 Insurance

Policy in a separate account (the “2018 BAM Policy Payment Account”) to only be used to make scheduled

payments of principal of and interest on the 2018 Bonds, and (iii) disburse the same to such respective holders;

and

(ii) If there is a deficiency in amounts required to pay principal of the 2018 Bonds, the

Trustee will (i) execute and deliver to the 2018 Insurer, in form satisfactory to the 2018 Insurer, an instrument

appointing the 2018 Insurer as agent and attorney-in- fact for such holder of the 2018 Bonds in any legal

proceeding related to the payment of such principal and an assignment to the 2018 Insurer of the 2018 Bonds

surrendered to the 2018 Insurer, (ii) segregate all payments received by the Trustee under the 2018 Insurance

Policy in the 2018 BAM Policy Payment Account to only be used to make scheduled payments of principal of

and interest, and (iii) disburse the same to such holders.

(d) The Trustee will designate any portion of payment of principal on 2018 Bonds paid by the2018 Insurer, whether by virtue of mandatory sinking fund redemption, maturity or other advancement of

maturity, on its books as a reduction in the principal amount of 2018 Bonds registered to the then current

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holder, whether DTC or its nominee or otherwise, and will issue a replacement Insured Bond to the 2018

Insurer, registered in the name directed by the 2018 Insurer, in a principal amount equal to the amount of

principal so paid (without regard to authorized denominations); provided that the Trustee’s failure to so

designate any payment or issue any replacement Insured Bond will have no effect on the amount of principal

or interest payable by the Successor Agency on any Insured Bond or the subrogation or assignment rights of

the 2018 Insurer.

(e) Payments with respect to claims for interest on and principal of 2018 Bonds disbursed by the Trustee from proceeds of the 2018 Insurance Policy will not be considered to discharge the obligation of the Successor Agency with respect to such 2018 Bonds, and the 2018 Insurer will become the owner of such unpaid 2018 Bonds and claims for the interest in accordance with the tenor of the assignment made to it under the provisions of the preceding paragraphs or otherwise.

(f) Irrespective of whether any such assignment is executed and delivered, the Successor Agency and the Trustee agree for the benefit of the 2018 Insurer that: (a) they recognize that to the extent the 2018

Insurer makes payments directly or indirectly (e.g., by paying through the Trustee), on account of principal of

or interest on the 2018 Bonds, the 2018 Insurer will be subrogated to the rights of such holders to receive the

amount of such principal and interest from the Successor Agency, with interest thereon, as provided and solely

from the sources stated in the Indenture and the 2018 Bonds; and (b) they will accordingly pay to the 2018

Insurer the amount of such principal and interest, with interest thereon as provided in the Indenture and the

2018 Bonds, but only from the sources and in the manner provided therein for the payment of principal of and

interest on the 2018 Bonds to holders, and will otherwise treat the 2018 Insurer as the owner of such rights to

the amount of such principal and interest.

(g) The Successor Agency agrees unconditionally that it will pay or reimburse the 2018 Insurer on demand any and all reasonable charges, fees, costs, losses, liabilities and expenses that the 2018 Insurer

may pay or incur, including, but not limited to, fees and expenses of the 2018 Insurer’s agents, attorneys,

accountants, consultants, appraisers and auditors and reasonable costs of investigations, in connection with the

administration (including waivers and consents, if any), enforcement, defense, exercise or preservation of any

rights and remedies in respect of the Indenture (“Administrative Costs”). For purposes of the foregoing, costs

and expenses will include a reasonable allocation of compensation and overhead attributable to the time of

employees of the 2018 Insurer spent in connection with the actions described in the preceding sentence. The

Successor Agency agrees that failure to pay any Administrative Costs on a timely basis will result in the

accrual of interest on the unpaid amount at the Late Payment Rate, compounded semi-annually, from the date

that payment is first due to the 2018 Insurer until the date the 2018 Insurer is paid in full.

(h) Notwithstanding anything herein to the contrary, the Successor Agency agrees to pay to the 2018 Insurer (i) a sum equal to the total of all amounts paid by the 2018 Insurer under the 2018 Insurance

Policy (the “2018 Insurer Policy Payment”); and (ii) interest on such 2018 Insurer Policy Payments from the

date paid by the 2018 Insurer until payment thereof in full by the Successor Agency, payable to the 2018

Insurer at the Late Payment Rate per annum (collectively, the “2018 Insurer Reimbursement Amounts”)

compounded semi-annually. The Successor Agency covenants and agrees in the Indenture that the 2018

Insurer Reimbursement Amounts are payable from and secured by a lien on and pledge of the same revenues

and other collateral pledged to the 2018 Bonds on a parity with debt service due on the 2018 Bonds.

(i) The rights granted to the 2018 Insurer under the Indenture to request, consent to or direct any action are rights granted to the 2018 Insurer in consideration of its issuance of the 2018 Insurance Policy. Any exercise by the 2018 Insurer of such rights is merely an exercise of the 2018 Insurer’s contractual rights and will not be construed or deemed to be taken for the benefit, or on behalf, of the holders of the 2018 Bonds and such action does not evidence any position of the 2018 Insurer, affirmative or negative, as to whether the consent of the holders of the 2018 Bonds or any other person is required in addition to the consent of the 2018 Insurer.

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The 2018 Insurer will be entitled to pay principal or interest on the 2018 Bonds that will become Due

for Payment but are unpaid by reason of Nonpayment by the Successor Agency (as such terms are defined in

the 2018 Insurance Policy) and any amounts due on the 2018 Bonds as a result of acceleration of the maturity

thereof in accordance with the Indenture, whether or not the 2018 Insurer has received a claim upon the 2018

Insurance Policy.

(j) The Successor Agency will provide the 2018 Insurer with all notices and other information it

is obligated to provide (i) under its Continuing Disclosure Certificate and (ii) to the holders of 2018 Bonds or

the Trustee under the Indenture.

Provisions Relating to 2018 Reserve Policy. Notwithstanding any other provision in the Indenture

to the contrary, so long as the 2018 Reserve Policy is in effect, the Successor Agency and the Trustee agree to

comply with the following provisions:

(a) The Successor Agency will repay any draws under the 2018 Reserve Policy and pay all

related reasonable expenses incurred by the 2018 Insurer and will pay interest on such draws and expenses

from the date of payment by the 2018 Insurer at the Late Payment Rate.

(b) Payment of draws and payment of expenses and accrued interest thereon at the Late Payment

Rate (collectively, the “Policy Costs”) will commence in the first month following each draw, and each such

monthly payment will be in an amount at least equal to 1/12 of the aggregate of Policy Costs related to such

draw.

(c) Amounts in respect of Policy Costs paid to the 2018 Insurer will be credited first to interest

due, then to the expenses due and then to principal (the amount drawn under the 2018 Reserve Policy) due. As

and to the extent that payments are made to the 2018 Insurer on account of principal due, the coverage under

the 2018 Reserve Policy will be increased by a like amount, subject to the terms of the 2018 Reserve Policy.

(d) All cash and investments in the Reserve Account, if any, will be transferred to the Debt

Service Fund for payment of principal (and sinking account payments) of and interest on the Bonds before any

drawing may be made on the 2018 Reserve Policy or any other Alternate Reserve Account Security (each, a

“Credit Facility”). Payment of any Policy Costs will be made prior to replenishment of any such cash

amounts. Draws on all Credit Facilities (including the 2018 Reserve Policy) on which there is available

coverage will be made on a pro-rata basis (calculated by reference to the coverage then available thereunder)

after applying all available cash and investments in the Reserve Account. Payment of Policy Costs and

reimbursement of amounts with respect to other Credit Facilities will be made on a pro-rata basis prior to

replenishment of any cash drawn from the Reserve Account. For the avoidance of doubt, “available coverage”

means the coverage then available for disbursement pursuant to the terms of the applicable alternative credit

instrument without regard to the legal or financial ability or willingness of the provider of such instrument to

honor a claim or draw thereon or the failure of such provider to honor any such claim or draw.

(e) If the Successor Agency fails to pay any Policy Costs in accordance with the requirements of

this section, the 2018 Insurer will be entitled to exercise any and all legal and equitable remedies available to

it, including those provided under the Indenture, other than: (i) acceleration of the maturity of the Bonds; or

(ii) remedies which would adversely affect Owners of the Bonds. The Indenture will not be discharged until all Policy Costs owing to the 2018 Insurer have been paid in full. The Successor Agency’s obligation to pay such amounts will expressly survive payment in full of the Bonds. The Trustee will ascertain the necessity for a claim upon the 2018 Reserve Policy in accordance with the provisions of this section and provide notice to the 2018 Insurer in accordance with the terms of the 2018 Reserve Policy at least three (3) Business Days prior to each date upon which interest or principal (or sinking account payment) is due on the Bonds. The 2018 Reserve Policy will expire on the earlier of the date the Bonds are no longer Outstanding or the final maturity of the Bonds.

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In order to secure the Successor Agency’s payment obligations with respect to the Policy Costs, there

is hereby granted and perfected in favor of the 2018 Insurer a security interest (subordinate only to that of the

owners of the Bonds) in all revenues and collateral pledged as security for the Bonds.

OTHER COVENANTS OF THE SUCCESSOR AGENCY

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

interest to become due in respect of all the Bonds together with the premium thereon, if any, in strict

conformity with the terms of the Bonds and of the Indenture. The Successor Agency will faithfully observe

and perform all of the conditions, covenants and requirements of the Indenture, all Supplemental Indentures

and the Bonds. Nothing in the Indenture contained will prevent the Successor Agency from making advances

of its own moneys howsoever derived to any of the uses or purposes referred to in the Indenture.

Limitation on Additional Indebtedness; Against Encumbrances. The Successor Agency

covenants in the Indenture that, so long as the Bonds are Outstanding, the Successor Agency will not issue any

bonds, notes or other obligations, enter into any agreement or otherwise incur any indebtedness, which is in

any case payable from all or any part of the Pledged Tax Revenues (i) on a basis senior to the Bonds or (ii) on

a parity with the Bonds except for Parity Debt issued to refund any of the Bonds or other Parity Debt, and then

only if the requirements of the Indenture are met. The Successor Agency will not otherwise encumber, pledge

or place any charge or lien upon any of the Pledged Tax Revenues or other amounts pledged to the Bonds

superior or equal to the pledge and lien created in the Indenture for the benefit of the Bonds.

Extension of Payment. The Successor 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 will be

extended or funded, whether or not with the consent of the Successor Agency, such Bond or claim for interest

so extended or funded will not be entitled, in case of default under the Indenture, 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 will not have been so extended or funded.

Payment of Claims. The Successor Agency will promptly 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 Successor Agency or upon the Pledged Tax Revenues or other

amounts pledged to the payment of the Bonds, 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 Indenture contained will require the

Successor Agency to make any such payment so long as the Successor Agency in good faith will contest the

validity of said claims.

Books and Accounts; Financial Statements. The Successor Agency will keep, or cause to be kept,

proper books of record and accounts, separate from all other records and accounts of the Successor Agency

and the City, in which complete and correct entries will be made of all transactions relating to the

Redevelopment Project, the Pledged Tax Revenues and the Special Fund. Such books of record and accounts

will at all times during business hours be subject to the inspection of the 2018 Insurer, any other Insurer and

the Owners of not less than ten percent (10%) in aggregate principal amount of the Bonds then Outstanding, or

their representatives authorized in writing.

The Successor Agency will cause to be prepared, on or before each March 1 so long as the Bonds are

Outstanding, complete audited financial statements with respect to such Fiscal Year showing the Pledged Tax

Revenues, all disbursements of Pledged Tax Revenues and the financial condition of the Redevelopment

Project, including the balances in all funds and accounts relating to the Redevelopment Project, as of the end of

such Fiscal Year. The Successor Agency will promptly furnish a copy of such financial statements to the

Trustee, the 2018 Insurer and any other Insurer at no expense and to any Owner upon reasonable request and at

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the expense of such Owner. The Trustee will have no obligation to review, verify or analyze any financial

statements provided to it by the Successor Agency and will hold such financial statement solely as a repository

for the benefit of the Owners of the Bonds. The Trustee will not be deemed to have notice of any information

contained therein, or default or Event of Default which may be disclosed therein in any manner.

The Successor Agency agrees, consents and will cooperate in good faith to provide information

reasonably requested by the 2018 Insurer and will further provide appropriately designated individuals and

officers to discuss the affairs, finances and accounts of the Successor Agency or any other matter as the 2018

Insurer may reasonably request.

Protection of Security and Rights of Owners. The Successor Agency will preserve and protect the

security of the Bonds and the rights of the Owners. From and after the Closing Date with respect to Bonds, the

Bonds will be incontestable by the Successor Agency.

Payments of Taxes and Other Charges. Except as otherwise provided in the Indenture, the

Successor Agency will pay and discharge, or cause to be paid and discharged, all taxes, service charges,

assessments and other governmental charges which may subsequently be lawfully imposed upon the Successor

Agency or the properties then owned by the Successor Agency in the Project Area, or upon the revenues

therefrom when the same will become due. Nothing in the Indenture contained will require the Successor

Agency to make any such payment so long as the Successor Agency in good faith will contest the validity of

said taxes, assessments or charges. The Successor Agency will duly observe and conform with all valid

requirements of any governmental authority relative to the Project Area or any part thereof.

Taxation of Leased Property. All amounts derived by the Successor Agency pursuant to

Section 33673 of the Law with respect to the lease of property for redevelopment will be treated as Tax

Revenues for all purposes of the Indenture.

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

real property in a 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 issuance of

the 2018 Bonds) so that such disposition will, when taken together with other such dispositions, aggregate

more than ten percent (10%) of the land area in the applicable Project Area unless such disposition is permitted

as provided in the Indenture. If the Successor Agency proposes to participate in such a disposition, it will

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, or the rights of the Successor Agency, the Bondowners and the Trustee under the Indenture will not be

materially impaired by said proposed disposition, the Successor Agency may thereafter make such disposition.

If said Report concludes that such security will be materially impaired by said proposed disposition, the

Successor Agency will disapprove said proposed disposition. This section will not apply to the disposition of

properties to the City pursuant to the Successor Agency’s Long Range Property Management Plan prepared

pursuant to Health and Safety Code Section 34191.4.

Maintenance of Pledged Tax Revenues. The Successor Agency will comply with all requirements

of the Law and the Dissolution Act to ensure the allocation and payment to it of the Pledged Tax Revenues as

provided in the Dissolution Act.

Continuing Disclosure. The Successor Agency in the Indenture covenants and agrees that it will

comply with and carry out all of the provisions of the Continuing Disclosure Certificate. Notwithstanding any

other provision of the Indenture, failure of the Successor Agency to comply with the Continuing Disclosure

Certificate will not be considered an Event of Default; however, the Trustee at the request of any Participating

Underwriter (as defined in the Continuing Disclosure Certificate) or the holders of at least 25% aggregate

principal amount of Outstanding Bonds, will, but only to the extent the Trustee has been indemnified from and

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against any loss, liability, cost or expense, including, without limitation, fees and expenses of its attorneys and

advisors and additional fees and expenses of the Trustee, take such actions as may be necessary and

appropriate to compel performance, including seeking mandate or specific performance by court order.

THE TRUSTEE

Duties, Immunities and Liabilities of Trustee.

(a) The Trustee will, prior to the occurrence of an Event of Default, and after the curing or waiver of all Events of Default which may have occurred, perform such duties and only such duties as are

specifically set forth in the Indenture and no implied covenants, duties or obligations will be read into the

Indenture against the Trustee. The Trustee will, during the existence of any Event of Default (which has not

been cured or waived), exercise such of the rights and powers vested in it by the Indenture, and use the same

degree of care and skill in their exercise, as a prudent man would exercise or use under the circumstances in

the conduct of his own affairs.

(b) The Successor Agency may remove the Trustee at any time, but only with the consent of all Insurers, upon thirty days’ prior written notice, unless an Event of Default will have occurred and then be

continuing, and will remove the Trustee (i) if at any time requested to do so by an instrument or concurrent

instruments in writing signed by the Owners of not less than a majority in aggregate principal amount of the

Bonds then Outstanding (or their attorneys duly authorized in writing) or (ii) if at any time the Successor

Agency has knowledge that the Trustee will cease to be eligible in accordance with the Indenture, or will

become incapable of acting, or will be adjudged a bankrupt or insolvent, or a receiver of the Trustee or its

property will be appointed, or any public officer will take control or charge of the Trustee or of its property or

affairs for the purpose of rehabilitation, conservation or liquidation. In each case such removal will be

accomplished by the giving of written notice of such removal by the Successor Agency to the Trustee, with a

copy to any Insurer, whereupon the Successor Agency will appoint a successor Trustee by an instrument in

writing.

(c) The Trustee may at any time resign by giving written notice of such resignation to the Successor Agency and by giving the Owners and any Insurer notice of such resignation by first class mail,

postage prepaid, at their respective addresses shown on the Registration Books. Upon receiving such notice of

resignation, the Successor Agency will promptly appoint a successor Trustee by an instrument in writing, with

notice of such appointment to be furnished to any Insurer. In each case such removal will be accomplished by

the giving of at least thirty (30) days’ written notice of such removal by the Successor Agency to the Trustee

whereupon the Successor Agency will immediately appoint a successor Trustee by an instrument in writing.

(d) Any removal or resignation of the Trustee and appointment of a successor Trustee will become effective only upon acceptance of appointment by the successor Trustee. If no successor Trustee will

have been appointed and have accepted appointment within forty-five (45) days of giving notice of removal or

notice of resignation as aforesaid, the resigning Trustee or any Owner (on behalf of such Owner and all other

Owners) may petition any court of competent jurisdiction at the expense of the Successor Agency for the

appointment of a successor Trustee and after being paid its fees and expenses then due and owing to it, and

such court may thereupon, after such notice (if any) as it may deem proper, appoint such successor Trustee.

Any successor Trustee appointed under the Indenture will signify its acceptance of such appointment by

executing, acknowledging and delivering to the Successor Agency and to its predecessor Trustee a written

acceptance thereof, and thereupon such successor Trustee, without any further act, deed or conveyance, will

become vested with all the moneys, estates, properties, rights, powers, trusts, duties and obligations of such

predecessor Trustee, with like effect as if originally named Trustee in the Indenture; but, nevertheless at the

Written Request of the Successor Agency or the request of the successor Trustee, such predecessor Trustee

will execute and deliver any and all instruments of conveyance or further assurance and do such other things as

may reasonably be required for more fully and certainly vesting in and confirming to such successor Trustee

all the right, title and interest of such predecessor Trustee in and to any property held by it under the Indenture

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and will pay over, transfer, assign and deliver to the successor Trustee any money or other property subject to

the trusts and conditions in the Indenture set forth. Upon request of the successor Trustee, the Successor

Agency will execute and deliver any and all instruments as may be reasonably required for more fully and

certainly vesting in and confirming to such successor Trustee all such moneys, estates, properties, rights,

powers, trusts, duties and obligations. Upon acceptance of appointment by a successor Trustee as provided in

this subsection, the Successor Agency will cause either the predecessor Trustee or the successor Trustee to

mail a notice of the succession of such Trustee to the trusts under the Indenture to each rating agency which

then has a current rating on the Bonds and to the Owners at their respective addresses shown on the

Registration Books.

(e) If an Event of Default under the Indenture occurs with respect to any Bonds of which the

Trustee has been given or is deemed to have notice, as provided in the Indenture, then the Trustee will

immediately give written notice thereof, by first-class mail to the any Insurer and the Owner of each such

Bond, unless such Event of Default will have been cured before the giving of such notice; provided, however,

that unless such Event of Default consists of the failure by the Successor Agency to make any payment when

due, the Trustee will, within thirty (30) days of the Trustee’s knowledge thereof, give such notice to any

Insurer, and the Trustee, with the consent of any Insurer may elect not to give such notice if and so long as the

Trustee in good faith determines that it is in the best interests of the Bondowners not to give such notice.

(f) The Successor Agency agrees in the Indenture that, so long as any Bonds are Outstanding, the

Trustee will be: (i) a financial institution having a trust office in the State, having (or in the case of a

corporation, national banking association or trust company included in a bank holding company system, the

related bank holding company will have) a combined capital and surplus of at least $50,000,000, and subject to

supervision or examination by federal or state authority; (ii) a state-chartered commercial bank that is a

member of the Federal Reserve System having at least $1,000,000,000 of assets; or (iii) an entity otherwise

approved by all Insurers in writing. If such financial institution publishes a report of condition at least

annually, pursuant to law or to the requirements of any supervising or examining authority above referred to,

then for the purpose of this subsection the combined capital and surplus of such financial institution will be

deemed to be its combined capital and surplus as set forth in its most recent report of condition so published.

In case at any time the Trustee will cease to be eligible in accordance with the provisions of this subsection, the

Trustee will resign immediately in the manner and with the effect specified in the Indenture.

Merger or Consolidation. Any bank, national banking association or trust company into which the

Trustee may be merged or converted or with which may be consolidated or any bank, national banking

association or trust company resulting from any merger, conversion or consolidation to which it will be a party

or any bank, national banking association or trust company to which the Trustee may sell or transfer all or

substantially all of its corporate trust business, provided such bank, national banking association or trust

company will be eligible the Indenture, will be the successor to such Trustee without the execution or filing of

any paper or any further act, anything in the Indenture to the contrary notwithstanding.

Liability of Trustee.

(a) The recitals of facts in the Indenture and in the Bonds contained will be taken as statements of the Successor Agency, and the Trustee will not assume responsibility for the correctness of the same, nor make

any representations as to the validity or sufficiency of the Indenture or of the security for the Bonds or the tax

status of interest thereon nor will incur any responsibility in respect thereof, other than as expressly stated in

the Indenture. The Trustee will, however, be responsible for its representations contained in its certificate of

authentication on the Bonds. The Trustee will not be liable in connection with the performance of its duties

under the Indenture, except for its own negligence or willful misconduct as finally determined by a court of

competent jurisdiction. The Trustee will not be liable for the acts of any agents of the Trustee selected by it

with due care. The Trustee and its officers and employees may become the Owner of any Bonds with the same

rights it would have if they were not Trustee and, to the extent permitted by law, may act as depository for and

permit any of its officers or directors to act as a member of, or in any other capacity with respect to, any

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committee formed to protect the rights of the Owners, whether or not such committee will represent the

Owners of a majority in principal amount of the Bonds then Outstanding.

(b) The Trustee will not be liable with respect to any action taken or omitted to be taken by it in

accordance with the direction of the Owners of not less than a majority in aggregate principal amount of the

Bonds at the time Outstanding relating to the time, method and place of conducting any proceeding for any

remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee under the

Indenture.

(c) The Trustee will not be liable for any action taken by it and believed by it to be authorized or

within the discretion or rights or powers conferred upon it by the Indenture, except for actions arising from the

negligence or willful misconduct of the Trustee as finally determined by a court of competent jurisdiction.

Where the Trustee is given the permissive right to do things enumerated in the Indenture, such right will not be

construed as a mandatory duty.

(d) The Trustee will not be deemed to have knowledge of any Event of Default under the

Indenture unless and until a responsible officer will have actual knowledge thereof, or will have received

written notice thereof from the Successor Agency at its Principal Corporate Trust Office. In the absence of

such actual knowledge or notice, the Trustee may conclusively assume that no Event of Default has occurred

and is continuing under the Indenture. Except as otherwise expressly provided in the Indenture, the Trustee

will not be bound to ascertain or inquire as to the performance or observance by any other party of any of the

terms, conditions, covenants or agreements in the Indenture or of any of the documents executed in connection

with the Bonds, or as to the existence of an Event of Default thereunder. The Trustee will not be responsible

for the validity or effectiveness of any collateral given to or held by it. Without limiting the generality of the

foregoing, the Trustee may rely conclusively on the Successor Agency’s certificates to establish the Successor

Agency’s compliance with its financial covenants under the Indenture, including, without limitation, its

covenants regarding the deposit of Pledged Tax Revenues into the Special Fund and the investment and

application of moneys on deposit in the Special Fund (other than its covenants to transfer such moneys to the

Trustee when due under the Indenture).

(e) The Trustee will have no liability or obligation to the Bondowners with respect to the

payment of debt service on the Bonds by the Successor Agency or with respect to the observance or

performance by the Successor Agency of the other conditions, covenants and terms contained in the Indenture,

or with respect to the investment of any moneys in any fund or account established, held or maintained by the

Successor Agency pursuant to the Indenture or otherwise.

(f) No provision of the Indenture will require the Trustee to expend or risk its own funds or

otherwise incur any financial liability in the performance of any of its duties under the Indenture, or in the

exercise of any of its rights or powers. The Trustee will be entitled to interest on all amounts advanced by it at

the maximum rate permitted by law.

(g) The Trustee may execute any of the trusts or powers under the Indenture or perform any

duties under the Indenture either directly or by or through agents, attorneys or receivers and the Trustee will

not be responsible for any intentional misconduct or negligence on the part of any agent, attorney or receiver

appointed with due care by it under the Indenture.

(h) The Trustee will have no responsibility, opinion, or liability with respect to any information,

statements or recital in any offering memorandum or other disclosure material prepared or distributed with

respect to the issuance of the Bonds.

(i) Before taking any action under the Indenture at the request of the Owners or any Insurer, the

Trustee may require that a satisfactory indemnity bond be furnished by the Owners or any Insurer for the

reimbursement of all expenses to which it may be put and to protect it against all liability, except liability

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which is finally adjudicated by a court of competent jurisdiction to have resulted from its negligence or willful

misconduct in connection with any action so taken.

(j) The Trustee will have the right to accept and act upon instructions, including funds transfer

instructions (“Instructions”) given pursuant to the Indenture and delivered using Electronic Means (“Electronic

Means” means the following communications methods: e-mail, facsimile transmission, secure electronic

transmission containing applicable authorization codes, passwords and/or authentication keys issued by the

Trustee, or another method or system specified by the Trustee as available for use in connection with its

services under the Indenture); provided, however, that the Successor Agency will provide to the Trustee an

incumbency certificate listing officers with the authority to provide such Instructions (“Authorized Officers”)

and containing specimen signatures of such Authorized Officers, which incumbency certificate will be

amended by the Successor Agency whenever a person is to be added or deleted from the listing. If the

Successor Agency elects to give the Trustee Instructions using Electronic Means and the Trustee in its

discretion elects to act upon such Instructions, the Trustee’s understanding of such Instructions will be deemed

controlling. The Successor Agency understands and agrees that the Trustee cannot determine the identity of

the actual sender of such Instructions and that the Trustee will conclusively presume that directions that

purport to have been sent by an Authorized Officer listed on the incumbency certificate provided to the Trustee

have been sent by such Authorized Officer. The Successor Agency will be responsible for ensuring that only

Authorized Officers transmit such Instructions to the Trustee and that the Successor Agency and all Authorized

Officers are solely responsible to safeguard the use and confidentiality of applicable user and authorization

codes, passwords and/or authentication keys upon receipt by the Successor Agency. The Trustee will not be

liable for any losses, costs or expenses arising directly or indirectly from the Trustee’s reliance upon and

compliance with such Instructions notwithstanding such directions conflict or are inconsistent with a

subsequent written instruction. The Successor Agency agrees in the Indenture: (i) to assume all risks arising

out of the use of Electronic Means to submit Instructions to the Trustee, including without limitation the risk of

the Trustee acting on unauthorized Instructions, and the risk of interception and misuse by third parties;

(ii) that it is fully informed of the protections and risks associated with the various methods of transmitting

Instructions to the Trustee and that there may be more secure methods of transmitting Instructions than the

method(s) selected by the Successor Agency; (iii) that the security procedures (if any) to be followed in

connection with its transmission of Instructions provide to it a commercially reasonable degree of protection in

light of its particular needs and circumstances; and (iv) to notify the Trustee immediately upon learning of any

compromise or unauthorized use of the security procedures.

(k) The Trustee will not be liable to the parties to the Indenture or deemed in breach or default

under the Indenture if and to the extent its performance under the Indenture is prevented by reason of force

majeure. The term “force majeure” means an occurrence that is beyond the control of the Trustee and could

not have been avoided by exercising due care. Force majeure shall include but not be limited to acts of God,

terrorism, war, riots, strikes, fire, floods, earthquakes, epidemics or other similar occurrences.

(l) The Trustee will not be responsible for or accountable to anyone for the subsequent use or application of any moneys which shall be released or withdrawn in accordance with the provisions of the

Indenture.

Right to Rely on Documents and Opinions. The Trustee will have no liability in acting upon any

notice, resolution, request, consent, order, certificate, report, opinion, facsimile transmission, electronic mail,

or other paper or document reasonably believed by it to be genuine and to have been signed or prescribed by

the proper party or parties, and will not be required to make any investigation into the facts or matters

contained thereon. The Trustee may consult with counsel, including, without limitation, counsel of or to the

Successor Agency, with regard to legal questions, and the opinion of such counsel will be full and complete

authorization and protection in respect of any action taken or suffered by the Trustee under the Indenture in

accordance therewith.

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The Trustee will not be bound to recognize any person as the Owner of a Bond unless and until such

Bond is submitted for inspection, if required, and his title thereto is established to the satisfaction of the

Trustee.

Whenever in the administration of the trusts imposed upon it by the Indenture the Trustee will deem it

necessary or desirable that a matter be proved or established prior to taking or suffering any action under the

Indenture, such matter (unless other evidence in respect thereof be in the Indenture specifically prescribed)

may be deemed to be conclusively proved and established by a Written Certificate of the Successor Agency,

which will be full warrant to the Trustee for any action taken or suffered under the provisions of the Indenture

in reliance upon such Written Certificate, but in its discretion the Trustee may, in lieu thereof, accept other

evidence of such matter or may require such additional evidence as it may deem reasonable. The Trustee may

conclusively rely on any certificate or report of any Independent Accountant or Independent Redevelopment

Consultant appointed by the Successor Agency.

Preservation and Inspection of Documents. All documents received by the Trustee under the

provisions of the Indenture will be retained in its possession and will be subject at all reasonable times upon

reasonable notice to the inspection of and copying by the Successor Agency and any Insurer and any Owner,

and their agents and representatives duly authorized in writing, during regular business hours and under

reasonable conditions.

Compensation and Indemnification. The Successor Agency will pay to the Trustee from time to

time reasonable compensation for all services rendered under the Indenture in accordance with the letter

proposal from the Trustee approved by the Successor Agency and also all reasonable expenses, charges, legal

and consulting fees and other disbursements and those of its attorneys (including the allocated costs and

disbursement of in-house counsel to the extent such services are not redundant with those provided by outside

counsel), agents and employees, incurred in and about the performance of its powers and duties under the

Indenture. The Trustee will have a lien on the Pledged Tax Revenues and all funds and accounts held by the

Trustee under the Indenture to secure the payment to the Trustee of all fees, costs and expenses, including

reasonable compensation to its experts, attorneys and counsel (including the allocated costs and disbursement

of in-house counsel to the extent such services are not redundant with those provided by outside counsel).

The Successor Agency further covenants and agrees to indemnify, defend and save the Trustee and its

officers, directors, agents and employees, harmless against any loss, expense, including legal fees and

expenses, and liabilities which it may incur to the extent arising out of or in connection with 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 willful misconduct of the Trustee, its officers, directors, agents or employees as finally

determined by a court of competent jurisdiction. The obligations of the Successor Agency and the rights of the

Trustee under the Indenture 6.06 will survive resignation or removal of the Trustee under the Indenture and

payment of the Bonds and discharge of the Indenture.

Deposit and Investment of Moneys in Funds. Moneys in the Debt Service Fund, the Interest

Account, the Principal Account, the Reserve Account and the Costs of Issuance Fund will be invested by the

Trustee in Permitted Investments as directed by the Successor Agency in the Written Request of the Successor

Agency filed with the Trustee at least two (2) Business Days in advance of the making of such investments,

except that moneys in the Reserve Account will not be invested in Permitted Investments having a maturity of

more than five (5) years, unless any such Permitted Investment is described in clause (g) of the definition

thereof. In the absence of any such Written Request of the Successor Agency, the Trustee will hold any such

moneys uninvested. The Trustee will be entitled to rely conclusively upon the written instructions of the

Successor Agency directing investments in Permitted Investments as to the fact that each such investment is

permitted by the laws of the State, and will not be required to make further investigation with respect thereto.

With respect to any restrictions set forth in the above list which embody legal conclusions (e.g., the existence,

validity and perfection of security interests in collateral), the Trustee will be entitled to rely conclusively on an

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opinion of counsel or upon a representation of the provider of such Permitted Investment obtained at the

Successor Agency’s expense. Moneys in the Special Fund may be invested by the Successor Agency in any

obligations in which the Successor Agency is legally authorized to invest its funds. Obligations purchased as

an investment of moneys in any fund will be deemed to be part of such fund or account. All interest or gain

derived from the investment of amounts in any of the funds or accounts held by the Trustee under the

Indenture will be deposited in the Interest Account (pro-rata among sub-accounts); provided, however, that all

interest or gain from the investment of amounts in the Reserve Account will be deposited by the Trustee in the

Interest Account only to the extent not required to cause the balance in the Reserve Account to equal the

Reserve Requirement. 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 will incur no liability for losses

arising from any investments made at the direction of the Successor Agency or otherwise made in accordance

with the Indenture. For investment purposes only, the Trustee may commingle the funds and accounts

established under the Indenture, but will account for each separately.

The Successor Agency acknowledges that to the extent regulations of the Comptroller of the Currency

or other applicable regulatory entity grant the Successor Agency the right to receive brokerage confirmations

of security transactions as they occur, the Successor Agency specifically waives receipt of such confirmations

to the extent permitted by law. The Trustee will furnish the Successor Agency monthly cash transaction

statements which will include detail for all investment transactions made by the Trustee under the Indenture.

All moneys held by the Trustee will be held in trust, but need not be segregated from other funds

unless specifically required by the Indenture. Except as specifically provided in the Indenture, the Trustee will

not be liable to pay interest on any moneys received by it, but will be liable only to account to the Successor

Agency for earnings derived from funds that have been invested.

If applicable, the Successor Agency covenants that all investments of amounts deposited in any fund

or account created by or pursuant to the Indenture, or otherwise containing gross proceeds of any tax-exempt

Bonds (within the meaning of Section 148 of the Code), will be acquired, disposed of, and valued (as of the

date that valuation is required by the Indenture or the Code) at Fair Market Value. The Trustee will have no

duty in connection with the determination of Fair Market Value other than to follow its normal practice in

determining the value of Permitted Investments, which may include utilizing generally recognized pricing

services (including brokers and dealers in securities) that may be available to it including those available

through its regular accounting system and rely conclusively and without liability thereon.

Investments in funds or accounts (or portions thereof) that are subject to a yield restriction under

applicable provisions of the Code will be valued by the Successor Agency at their present value (within the

meaning of Section 148 of the Code). Investments on deposit in the Reserve Account will be valued

semiannually two (2) Business Days preceding each April 1 and October 1 at their Fair Market Value.

Accounting Records and Financial Statements. The Trustee will at all times keep, or cause to be

kept, proper books of record and account, prepared in accordance with corporate trust industry standards, in

which accurate entries will be made of all transactions relating to the proceeds of the Bonds made by it and all

funds and accounts held by the Trustee established pursuant to the Indenture. Such books of record and

account will be available for inspection by the Successor Agency upon reasonable prior notice, at reasonable

hours and under reasonable circumstances. The Trustee will furnish to the Successor Agency, on at least a

monthly basis, an accounting of all transactions in the form of its customary statements relating to the proceeds

of the Bonds and all funds and accounts held by the Trustee pursuant to the Indenture.

Other Transactions with Successor Agency. The Trustee, either as principal or agent, may engage

in or be interested in any financial or other transaction with the Successor Agency.

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MODIFICATION OR AMENDMENT OF THE INDENTURE

Amendment With And Without Consent of Owners. The Indenture and the rights and obligations

of the Successor Agency and of the Owners may be modified or amended at any time by a Supplemental

Indenture which will become binding upon adoption without the consent of any Owners or any Insurer, to the

extent permitted by law, but only for any one or more of the following purposes:

(a) to add to the covenants and agreements of the Successor Agency in the Indenture contained,

other covenants and agreements thereafter to be observed, including any covenant or agreement that provides

for additional security for the Bonds, or to limit or surrender any rights or powers in the Indenture reserved to

or conferred upon the Successor 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

Successor Agency may deem necessary or desirable, provided under any circumstances that such

modifications or amendments will not, in the reasonable determination of the Successor Agency, materially

adversely affect the interests of the Owners; or

(c) to provide for the issuance of Parity Debt in accordance with the Indenture; or

(d) if applicable, to amend any provision hereof relating to the requirements of or compliance

with the Code, to any extent whatsoever but only if and to the extent such amendment will not adversely affect

the exemption from federal income taxation of interest on any of the Bonds, in the opinion of Bond Counsel;

or

(e) to comply with amendments or supplements to the Dissolution Act; or

(f) to comply with the requirements of a provider of a Qualified Reserve Account Credit

Instrument; or

(g) in any other respect whatsoever as the Successor Agency may deem necessary or desirable, provided that such modification or amendment does not materially adversely affect the interests of the Bondowners or the 2018 Insurer under the Indenture, in the opinion of Bond Counsel filed with the Successor Agency and the Trustee.

Except as set forth in the preceding paragraph, the Indenture and the rights and obligations of the

Successor Agency and of the Owners may be modified or amended at any time by a Supplemental Indenture

which will become binding when the written consent of each Insurer (but only with respect to any Bonds

insured by such Insurer) and the Owners of a majority in aggregate principal amount of the Bonds then

Outstanding are filed with the Trustee. No such modification or amendment will (a) extend the maturity of or

reduce the interest rate on any Bond or otherwise alter or impair the obligation of the Successor Agency to pay

the principal, interest, or redemption premiums (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 any Insurer or the Owner of such Bond, or

(b) reduce the percentage of Bonds required for the written consent to any such amendment or modification. In no event will any Supplemental Indenture modify any of the rights or obligations of the Trustee without its prior written consent. In no event will any Supplemental Indenture adversely affect the security for the Bonds or modify any of the rights or obligations of any Insurer without its prior written consent. In determining whether any amendment, consent, waiver or other action to be taken, or any failure to take action, under the Indenture would adversely affect the security for the 2018 Bonds or the rights of the Owners of the 2018 Bonds, the effect of any such amendment, consent, waiver, action or inaction will be considered as if there were no 2018 Insurance Policy.

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Effect of Supplemental Indenture. From and after the time any Supplemental Indenture becomes

effective pursuant to the Indenture, the Indenture will be deemed to be modified and amended in accordance

therewith, the respective rights, duties and obligations of the parties thereto and all Owners, as the case may

be, will thereafter be determined, exercised and enforced under the Indenture subject in all respects to such

modification and amendment, and all the terms and conditions of any Supplemental Indenture will be deemed

to be part of the terms and conditions of the Indenture for any and all purposes.

Endorsement or Replacement of Bonds After Amendment. After the effective date of any

amendment or modification hereof pursuant to the Indenture, the Successor Agency may, with the prior written

consent of any Insurer, determine that any or all of the Bonds will bear a notation, by endorsement in form

approved by the Successor Agency, as to such amendment or modification and in that case upon demand of the

Successor Agency the Owners of such Bonds will present such Bonds for that purpose at the Principal

Corporate Trust Office of the Trustee, and thereupon a suitable notation as to such action will be made on such

Bonds. In lieu of such notation, the Successor Agency may determine that new Bonds will be prepared at the

expense of the Successor Agency and executed in exchange for any or all of the Bonds, and in that case, upon

demand of the Successor Agency, the Owners of the Bonds will present such Bonds for exchange at the

Principal Corporate Trust Office of the Trustee, without cost to such Owners.

Amendment by Mutual Consent. The provisions of the Indenture will 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 and, provided further that written consent to such amendment will first be obtained from

any Insurer.

Opinion of Counsel. Prior to executing any Supplemental Indenture, the Trustee will be furnished an

opinion of counsel, upon which it may conclusively rely to the effect that all conditions precedent to the

execution of such Supplemental Indenture under the Indenture have been satisfied and such Supplemental

Indenture is authorized and permitted under the Indenture and, if applicable, does not adversely affect the

exclusion of interest on any tax-exempt Bonds from gross income for federal income tax purposes or adversely

affect the exemption of interest on the Bonds from personal income taxation by the State.

Copy of Supplemental Indenture to S&P and Moody’s. The Successor Agency will provide to

S&P and Moody’s, for so long as S&P and Moody’s, as the case may be, maintain a rating on any of the

Bonds (without regard to any municipal bond or financial guaranty insurance), a copy of any Supplemental

Indenture at least fifteen (15) days prior to its proposed effective date.

EVENTS OF DEFAULT AND REMEDIES OF OWNERS

Events of Default and Acceleration of Maturities. The following events will constitute Events of

Default under the Indenture:

(a) if default will be made by the Successor Agency in the due and punctual payment of the principal of or interest or redemption premium (if any) on any Bond when and as the same will become due and payable, whether at maturity as therein expressed, by declaration or otherwise;

(b) if default will be made by the Successor Agency in the observance of any of the covenants, agreements or conditions on its part in the Indenture or in the Bonds contained, other than a default described

in the preceding clause (a), and such default will have continued for a period of thirty (30) days following

receipt by the Successor Agency of written notice from the Trustee or any Insurer or written notice from any

Owner (with a copy of said notice delivered to the Trustee and any Insurer) of the occurrence of such default,

provided that if in the reasonable opinion of the Successor Agency the failure stated in the notice can be

corrected, but not within such thirty (30) day period, such failure will not constitute an event of default if

corrective action is instituted by the Successor Agency (with the prior written consent of any Insurer) within

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such thirty (30) day period and the Successor Agency thereafter diligently and in good faith cures such failure

in a reasonable period of time as approved by any Insurer;

(c) If the Successor Agency files a petition seeking reorganization or arrangement under the federal bankruptcy laws or any other applicable law of the United States of America, or if a court of competent

jurisdiction will approve a petition by the Successor Agency seeking reorganization under the federal

bankruptcy laws or any other applicable law of the United States of America, or, if under the provisions of any

other law for the relief or aid of debtors, any court of competent jurisdiction will approve a petition by the

Successor Agency, seeking reorganization under the federal bankruptcy laws or any other applicable law of the

United States of America, or, if under the provisions of any other law for the relief or aid of debtors, any court

of competent jurisdiction will assume custody or control of the Successor Agency or of the whole or any

substantial part of its property; or

(d) The principal of any Parity Obligation will be declared immediately due and payable under the terms of a Parity Debt Instrument.

In determining whether an Event of Default has occurred under (a) above, no effect will be given to

payments made under any municipal bond insurance policy, financial guaranty insurance policy or Qualified

Reserve Account Credit Instrument.

If an Event of Default has occurred under the Indenture and is continuing, the Trustee, may, with the

consent of the 2018 Insurer, and, if requested in writing by the Owners of a majority in aggregate principal

amount of the Bonds then Outstanding the Trustee will, (y) declare the principal of the Bonds, together with

the accrued interest thereon, to be due and payable immediately, and upon any such declaration the same will

become immediately due and payable, anything in the Indenture or in the Bonds to the contrary

notwithstanding, and (z) subject to the provisions of the Indenture, exercise any other remedies available to the

Trustee and the Bondowners in law or at equity, including an action in mandamus.

Immediately upon receiving notice or actual knowledge of the occurrence of an Event of Default, the

Trustee will give notice of such Event of Default to each Insurer and to the Successor Agency by telephone

promptly confirmed in writing. Such notice will also state whether the principal of the Bonds will have been

declared to be or have immediately become due and payable. With respect to any Event of Default described

in subsections (a) or (c) above the Trustee will, and with respect to any Event of Default described in

subsection (b) above the Trustee in its sole discretion may, also give such notice to the Owners by mail, which

will include the statement that interest on the Bonds will cease to accrue from and after the date, if any, on

which the Trustee will have declared the Bonds to become due and payable pursuant to the preceding

paragraph (but only to the extent that principal and any accrued, but unpaid, interest on the Bonds is actually

paid on such date).

This provision, however, is subject to the condition that if, at any time after the principal of the Bonds

will have been so declared due and payable, and before any judgment or decree for the payment of the moneys

due will have been obtained or entered, the Successor Agency will, with the written consent of a majority in

aggregate principal amount of the Owners of the Bonds then Outstanding, deposit with the Trustee a sum

sufficient to pay all principal on the Bonds matured prior to such declaration and all matured installments of

interest (if any) upon all the Bonds, with interest on such overdue installments of principal and interest (to the

extent permitted by law), and the reasonable fees and expenses of the Trustee, (including the allocated costs

and disbursements of its in-house counsel to the extent such services are not redundant with those provided by

outside counsel) and any and all other defaults known to the Trustee (other than in the payment of principal of

and interest on the Bonds due and payable solely by reason of such declaration) will have been made good or

cured to the satisfaction of the Trustee or provision deemed by the Trustee to be adequate will have been made

therefor, then, and in every such case, the Trustee will promptly give written notice of the foregoing to any

Insurer and the Owners of all Bonds then Outstanding, and with the prior written approval of the Owners of at

least a majority in aggregate principal amount of the Bonds then Outstanding, by written notice to the

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Successor Agency and to the Trustee, may, on behalf of the Owners of all of the Bonds then Outstanding,

rescind and annul such declaration and its consequences. However, no such rescission and annulment will

extend to or will affect any subsequent default or will impair or exhaust any right or power consequent thereon.

Application of Funds Upon Acceleration. All amounts received by the Trustee pursuant to any right

given or action taken by the Trustee under the provisions of the Indenture (including the Trustee’s share of any

Pledged Tax Revenues) and all sums in the funds and accounts established and held by the Trustee under the

Indenture upon the date of the declaration of acceleration as provided in the Indenture, and all sums thereafter

received by the Trustee under the Indenture, will be applied by the Trustee in the following order upon

presentation of the Bonds, and the stamping thereon of the payment if only partially paid, or upon the

surrender thereof if fully paid:

First, to the payment of the fees, costs and expenses of the Trustee in declaring such Event of Default

and in exercising the rights and remedies set forth in the Indenture, including reasonable compensation to its

agents, attorneys (including the allocated costs and disbursements of its in-house counsel to the extent such

services are not redundant with those provided by outside counsel) and counsel and any outstanding fees and

expenses of the Trustee; and

Second, to the payment of the whole amount then owing and unpaid upon the 2018 Bonds and Parity

Debt for principal and interest, as applicable, with interest on the overdue principal, and installments of interest

at the net effective rate then borne by the Outstanding 2018 Bonds or Parity Debt (to the extent that such

interest on overdue installments of principal and interest will have been collected), and in case such moneys

will be insufficient to pay in full the whole amount so owing and unpaid upon the 2018 Bonds and Parity Debt,

then to the payment of such principal and interest without preference or priority, ratably to the aggregate of

such principal and interest; and

Third, to the payment of amounts required to restore the Reserve Account to the Reserve Requirement

and to repay any amounts owed to the Insurer in connection with a draw on the Reserve Policy.

Power of Trustee to Control Proceedings. In the event that the Trustee, upon the happening of an

Event of Default, will 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 will 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 will 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.

Limitation on Owner’s Right to Sue. No Owner of any Bond issued under the Indenture will 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 will have previously given to the Successor Agency, the Trustee and any

Insurer 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 will have made written request upon the Trustee to

exercise the powers in the Indenture granted or to institute such action, suit or proceeding in its own name;

(c) said Owners will 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 will have refused or omitted to comply with such request for a period of sixty (60) days after such written request will have been received by, and said tender of indemnity will have been made to, the Trustee.

Such notification, request, tender of indemnity and refusal or omission are in the Indenture declared,

in every case, to be conditions precedent to the exercise by any Owner of any remedy under the Indenture; it

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being understood and intended that no one or more Owners will have any right in any manner whatever by his

or their action to enforce any right under the Indenture, except in the manner in the Indenture provided, and

that all proceedings at law or in equity to enforce any provision of the Indenture will 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, will not be impaired or affected without the written consent

of such Owner, notwithstanding the foregoing provisions of the Indenture or any other provision of the

Indenture.

Non-Waiver. Nothing in the Indenture or in any other provision of the Indenture or in the Bonds, will

affect or impair the obligation of the Successor Agency, which is absolute and unconditional, to pay from the

Pledged Tax 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 on the respective Interest Payment Dates,

as in the Indenture provided, or affect or impair the right of action, which is also absolute and unconditional, of

the Owners or the Trustee to institute suit to enforce such payment by virtue of the contract embodied in the

Bonds.

A waiver of any default by any Owner or the Trustee will 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 will impair any such right or power or will be construed to be a waiver of any

such default or an acquiescence therein, and every power and remedy conferred upon the Owners and the

Trustee by the Law or by the Indenture may be enforced and exercised from time to time and as often as will

be deemed expedient by the Owners and the Trustee.

If a suit, action or proceeding to enforce any right or exercise any remedy will be abandoned or

determined adversely to the Owners or the Trustee, the Successor Agency, the Trustee and the Owners will be

restored to their former positions, rights and remedies as if such suit, action or proceeding had not been

brought or taken.

Actions by Trustee as Attorney-in-Fact. Any suit, action or proceeding which any Owner will 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 in the Indenture appointed (and

the successive respective Owners by taking and holding the Bonds will 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, provided, however, the Trustee will have no duty or obligation to exercise any such right or remedy

unless it has been indemnified to its satisfaction from any loss, liability or expense (including fees and

expenses of its outside counsel and the allocated costs and disbursements of its in-house counsel to the extent

such services are not redundant with those provided by outside counsel).

Remedies Not Exclusive. No remedy in the Indenture conferred upon or reserved to the Owners is

intended to be exclusive of any other remedy. Every such remedy will be cumulative and will be in addition to

every other remedy given under the Indenture or now or subsequently 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 Law or any other law.

Determination of Percentage of Bondowners. Whenever in the Indenture the consent, direction or

other action is required or permitted to be given or taken by a percentage of the Owners of an aggregate

principal amount of Outstanding Bonds (including by the Owners of a majority in aggregate principal amount

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of the Outstanding Bonds), such percentage will be calculated on the basis of the principal amount of the

Outstanding Bonds determined as of the next succeeding Interest Payment Date.

Rights of 2018 Insurer. Any reorganization or liquidation plan with respect to the Successor Agency

must be acceptable to the 2018 Insurer. In the event of any reorganization or liquidation of the Successor

Agency, the 2018 Insurer will have the right to vote on behalf of all holders of the 2018 Bonds absent a

continuing failure by the 2018 Insurer to make a payment under the 2018 Insurance Policies.

Anything in the Indenture to the contrary notwithstanding, upon the occurrence and continuance of a

Default, the 2018 Insurer will be entitled to control and direct the enforcement of all rights and remedies

granted to the holders of the 2018 Bonds or the Trustee for the benefit of the holders of the 2018 Bonds under

the Indenture. No Default may be waived without the 2018 Insurer’s written consent. Further, in the event of a

Default with respect to the 2018 Bonds, the 2018 Insurer will have the right to direct the replacement of the

Trustee.

2018 Insurer as Owner. Upon the occurrence and continuance of a Default, the 2018 Insurer will be

deemed to be the sole owner of the 2018 Bonds for all purposes under the Indenture, including, without

limitations, for purposes of exercising remedies and approving amendments.

Special Provisions for 2018 Insurer Default. If a 2018 Insurer Default will occur and be continuing,

then, notwithstanding anything in the Indenture to the contrary, (1) if at any time prior to or following a 2018

Insurer Default, the 2018 Insurer has made payment under the 2018 Insurance Policy, to the extent of such

payment the 2018 Insurer will be treated like any other holder of the 2018 Bonds, for all purposes, including

giving of consents, and (2) if the 2018 Insurer has not made any payment under the 2018 Insurance Policy, the

2018 Insurer will have no further consent rights until the particular 2018 Insurer Default is no longer

continuing or the 2018 Insurer makes a payment under the 2018 Insurance Policy, in which event, the

foregoing clause (1) will control. For purposes of this paragraph, “2018 Insurer Default” means: (A) the 2018

Insurer has failed to make any payment under the 2018 Insurance Policy when due and owing in accordance

with its terms; or (B) the 2018 Insurer shall (i) voluntarily commence any proceeding or file any petition

seeking relief under the United States Bankruptcy Code or any other Federal, state or foreign bankruptcy,

insolvency or similar law, (ii) consent to the institution of or fail to controvert in a timely and appropriate

manner, any such proceeding or the filing of any such petition, (iii) apply for or consent to the appointment of

a receiver, trustee, custodian, sequestrator or similar official for such party or for a substantial part of its

property, (iv) file an answer admitting the material allegations of a petition filed against it in any such

proceeding, (v) make a general assignment for the benefit of creditors, or (vi) take action for the purpose of

effecting any of the foregoing; or (C) any state or federal agency or instrumentality shall order the suspension

of payments on the Series 2018 Insurance Policy or shall obtain an order or grant approval for the

rehabilitation, liquidation, conservation or dissolution of the 2018 Insurer (including without limitation under

the New York Insurance Law).

MISCELLANEOUS

Benefits Limited to Parties. Nothing in the Indenture, expressed or implied, is intended to give to

any person other than the Successor Agency, each Insurer, the Trustee and the Owners, any right, remedy or

claim under or by reason of the Indenture. Any covenants, stipulations, promises or agreements in the

Indenture contained by and on behalf of the Successor Agency will be for the sole and exclusive benefit of the

Trustee, such Insurers and the Owners. To the extent that the Indenture confers upon or gives any Insurer any

right, remedy or claim under or by reason of the Indenture, each Insurer is in the Indenture explicitly

recognized as being third-party beneficiaries under the Indenture and may enforce any such right remedy or

claim conferred, given or granted under the Indenture.

Successor is Deemed Included in All References to Predecessor. Whenever in the Indenture or any

Supplemental Indenture either the Successor Agency or the Trustee is named or referred to, such reference will

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be deemed to include the successors or assigns thereof, and all the covenants and agreements in the Indenture

contained by or on behalf of the Successor Agency or the Trustee will bind and inure to the benefit of the

respective successors and assigns thereof whether so expressed or not.

Discharge of Indenture.

(a) If the Successor Agency will pay and discharge the entire indebtedness on all Bonds or any portion thereof in any one or more of the following ways:

(i) by well and truly paying or causing to be paid the principal of and interest and premium (if any) on all or the applicable portion of Outstanding Bonds, as and when the same become due and payable;

(ii) by irrevocably depositing with the Trustee in trust or an escrow agent, at or before maturity, money which, together with the available amounts then on deposit in the funds and accounts established pursuant to the Indenture, is fully sufficient to pay all or the applicable portion of Outstanding Bonds, including all principal, interest and redemption premiums, if any, or;

(iii) by irrevocably depositing with the Trustee in trust or an escrow agent, Defeasance Obligations in such amount as an Independent Accountant will determine will, together with the interest to accrue thereon and available moneys then on deposit in the funds and accounts established pursuant to the Indenture, be fully sufficient to pay and discharge the indebtedness on all Bonds or the applicable portion thereof (including all principal, interest and redemption premiums) at or before maturity;

then, at the election of the Successor Agency, and notwithstanding that any Bonds will not

have been surrendered for payment, the pledge of the Pledged Tax Revenues and other amounts, funds and

accounts described in the Indenture and all other obligations of the Trustee and the Successor Agency under

the Indenture will cease and terminate with respect to all Outstanding Bonds or, if applicable, with respect to

that portion of the Bonds which has been paid and discharged, except only (A) the covenants of the Successor

Agency under the Indenture with respect to the Code, (B) the obligation of the Trustee to transfer and

exchange Bonds under the Indenture, (C) the obligations of the Successor Agency under the Indenture, and

(D) the obligation of the Successor Agency to pay or cause to be paid to the Owners (or any Insurer), from the amounts so deposited with the Trustee, all sums due thereon and to pay the Trustee and any Insurer all fees, expenses and costs of the Trustee and any Insurer. In the event the Successor Agency will, pursuant to the foregoing provision, pay and discharge any portion or all of the Bonds then Outstanding, the Trustee will be authorized to take such actions and execute and deliver to the Successor Agency all such instruments as may be necessary or desirable to evidence such discharge, including, without limitation, selection by lot of Bonds of any maturity of the Bonds that the Successor Agency has determined to pay and discharge in part.

In the case of a defeasance or payment of all of the Bonds Outstanding, any funds thereafter

held by the Trustee which are not required for said purpose or for payment of amounts due the Trustee

pursuant to the Indenture will be paid over to the Successor Agency.

To the extent that any of the Bonds to be defeased are 2018 Bonds, at least three Business

Days prior to any defeasance, the Successor Agency will deliver to the 2018 Insurer draft copies of an escrow

agreement, an opinion of Bond Counsel regarding the validity and enforceability of the escrow agreement and

the defeasance of such 2018 Bonds, and a verification report (a “Verification Report”) prepared by an

Independent Accountant regarding the sufficiency of the escrow fund. Such opinion and Verification Report

will be addressed to such Insurer and will be in form and substance satisfactory to the 2018 Insurer. In

addition, the escrow agreement will provide that: a) any substitution of securities will require the delivery of a

verification report, and b) the Successor Agency will not amend the escrow agreement or enter into a forward

purchase agreement or other agreement with respect to rights in the escrow without the prior written consent of

such Insurer.

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(b) Notwithstanding anything in the Indenture to the contrary, in the event that the principal and/or interest due of the Bonds is paid by any Insurer, such Bonds will remain Outstanding for all purposes, not be defeased or otherwise satisfied and not be considered paid by the Successor Agency, and the assignment and pledge of the Pledged Tax Revenues and other assets under the Indenture and all covenants, agreements and other obligations of the Successor Agency to the Bondowners so paid will continue to exist and will run to the benefit of such Insurer, and such Insurer will be subrogated to the rights of such Bondowners, as applicable.

Execution of Documents and Proof of Ownership by Owners. Any request, consent, declaration or

other instrument which the Indenture may require or permit to be executed by any Owner may be in one or

more instruments of similar tenor, and will be executed by such Owner in person or by such Owner’s attorneys

appointed in writing.

Except as otherwise in the Indenture expressly provided, the fact and date of the execution by any

Owner or his attorney of such request, declaration or other instrument, or of such writing appointing such

attorney, may be proved by the certificate of any notary public or other officer authorized to take

acknowledgments of deeds to be recorded in the state in which he purports to act, that the person signing such

request, declaration or other instrument or writing acknowledged to him the execution thereof, or by an

affidavit of a witness of such execution, duly sworn to before such notary public or other officer.

The ownership of Bonds and the amount, maturity, number and date of ownership thereof will be

proved by the Registration Books.

Any demand, request, direction, consent, declaration or other instrument or writing of the Owner of

any Bond will bind all future Owners of such Bond in respect of anything done or suffered to be done by the

Successor Agency or the Trustee and in accordance therewith, provided, however, that the Trustee will not be

deemed to have knowledge that any Bond is owned by or for the account of the Successor Agency unless the

Successor Agency is the registered Owner or the Trustee has received written notice that any other registered

Owner is such an affiliate.

Disqualified Bonds. In determining whether the Owners of the requisite aggregate principal amount

of Bonds have concurred in any demand, request, direction, consent or waiver under the Indenture, Bonds

which are owned or held by or for the account of the Successor Agency or the City (but excluding Bonds held

in any employees’ retirement fund) will be disregarded and deemed not to be Outstanding for the purpose of

any such determination. Upon request of the Trustee, the Successor Agency and the City will specify in a

certificate to the Trustee those Bonds disqualified pursuant to the Indenture and the Trustee may conclusively

rely on such certificate.

Waiver of Personal Liability. No member, officer, agent or employee of the Successor Agency will

be individually or personally liable for the payment of the principal or interest or any premium on the Bonds;

but nothing in the Indenture contained will relieve any such member, officer, agent or employee from the

performance of any official duty provided by law.

Destruction of Cancelled Bonds. Whenever in the Indenture provision is made for the surrender to

the Trustee of any Bonds which have been paid or cancelled pursuant to the provisions of the Indenture, the

Trustee will destroy such bonds and upon request of the Successor Agency provide the Successor Agency a

certificate of destruction. The Successor Agency will be entitled to rely upon any statement of fact contained

in any certificate with respect to the destruction of any such Bonds therein referred to.

Partial Invalidity. If any section, paragraph, sentence, clause or phrase of the Indenture will for any

reason be held illegal, invalid or unenforceable, such holding will not affect the validity of the remaining

portions of the Indenture. The Successor Agency in the Indenture declares that it would have adopted the

Indenture and each and every other section, paragraph, sentence, clause or phrase thereof and authorized the

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issue of the Bonds pursuant thereto irrespective of the fact that any one or more sections, paragraphs,

sentences, clauses, or phrases of the Indenture may be held illegal, invalid or unenforceable. If, by reason of

the judgment of any court, the Trustee is rendered unable to perform its duties under the Indenture, all such

duties and all of the rights and powers of the Trustee under the Indenture will, pending appointment of a

successor Trustee in accordance with the provisions of the Indenture, be assumed by and vest in the Finance

Officer of the Successor Agency in trust for the benefit of the Owners. The Successor Agency covenants for

the direct benefit of the Owners that its Finance Officer in such case will be vested with all of the rights and

powers of the Trustee under the Indenture, and will assume all of the responsibilities and perform all of the

duties of the Trustee under the Indenture, in trust for the benefit of the Bonds, pending appointment of a

successor Trustee in accordance with the provisions of the Indenture.

Unclaimed Moneys. Anything contained in the Indenture to the contrary notwithstanding, any money

held by the Trustee in trust for the payment and discharge of the interest or premium (if any) on or principal of

the Bonds which remains unclaimed for two (2) years after the date when the payments of such interest,

premium and principal have become payable, if such money was held by the Trustee at such date, or for two

(2) years after the date of deposit of such money if deposited with the Trustee after the date when the interest

and premium (if any) on and principal of such Bonds have become payable, will be repaid by the Trustee to the

Successor Agency as its absolute property free from trust, and the Trustee will thereupon be released and

discharged with respect thereto and the Bondowners will look only to the Successor Agency for the payment

of the principal of and interest and redemption premium (if any) on of such Bonds.

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APPENDIX C

FORM OF BOND COUNSEL OPINION

Upon issuance of the 2018 Bonds, Stradling Yocca Carlson & Rauth, a Professional Corporation,

Bond Counsel, proposes to render its final approving opinion in substantially the following form:

___________, 2018

Successor Agency to the Former Cudahy Community Development Commission

11333 Valley Boulevard

Cudahy, California

Re: $14,030,000 Successor Agency to the Former Cudahy Community Development Commission

Taxable Tax Allocation Refunding Bonds, Series 2018

Dear Honorable Members of the Successor Agency:

We have examined the Constitution and the laws of the State of California, a certified record of the

proceedings of the Successor Agency to the Former Cudahy Community Development Commission (the

“Agency”) taken in connection with the authorization and issuance by the Agency of the above-referenced

Bonds (the “Bonds”) and such other information and documents as we consider necessary to render this

opinion. In rendering this opinion, we have relied upon certain representations of fact and certifications made

by the Agency, the Trustee, the Underwriter of the Bonds and others. We have not undertaken to verify

through independent investigation the accuracy of the representations and certifications relied upon by us.

The Bonds have been issued by the Agency pursuant to the Constitution and laws of the State of

California (the “State”), including Article 11 of Chapter 3 (Commencing with Section 53580) of Part 1 of

Division 2 of Title 5 of the California Government Code (the “Bond Law”), Parts 1.8 (commencing with

Section 34161) and 1.85 (commencing with Section 34170) of Division 24 of the Health and Safety Code of

the State of California (as amended from time to time, the “Dissolution Act”), Resolution No. SA 18-02

adopted by the Agency on April 17, 2018 and Resolution No. 18-04 adopted by the Oversight Board of the

Agency on May 17, 2018, and in accordance with an Indenture of Trust, dated as of September 1, 2018 (the

“Indenture”), by and between the Agency and The Bank of New York Mellon Trust Company, N.A., as

trustee. Capitalized terms not defined herein shall have the meanings ascribed to those terms in the Indenture.

Based upon our examination of the foregoing, and in reliance thereon and on all matters of fact as we

deem relevant under the circumstances, and upon consideration of applicable laws, we are of the opinion that:

(1) The Bonds have been duly and validly authorized by the Agency and are legal, valid and

binding limited obligations of the Agency, enforceable in accordance with their terms and the terms of the

Indenture.

(2) The Indenture has been duly executed and delivered by the Agency. The Indenture creates a

valid pledge of the Pledged Tax Revenues and the amounts on deposit in certain funds and accounts

established under the Indenture to secure the Bonds, as and to the extent provided in the Indenture.

(3) Under existing statutes, regulations, rulings and judicial decisions, interest (and original issue

discount) on the Bonds is not excluded from gross income for federal income tax purposes.

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(4) Interest (and original issue discount) on the Bonds is exempt from State of California personal

income tax.

Except as expressly set forth in paragraphs (3) and (4) above we express no opinion regarding any tax

consequences with respect to the Bonds. Potential purchasers should consult their independent tax advisors

with respect to the tax consequences relating to the Bonds and the taxpayer’s particular circumstances.

With respect to the opinions expressed herein, the rights and obligations under the Indenture and the

2018 Bonds are subject to bankruptcy, insolvency, moratorium and other laws affecting the enforcement of

creditors’ rights, to the application of equitable principles if equitable remedies are sought, to the limitations on

legal remedies against public agencies in the State of California and to limitations on rights of indemnity by

principles of public policy.

Our opinion is limited to matters governed by the laws of the State of California and federal law. We

assume no responsibility with respect to the applicability or the effect of the laws of any other jurisdiction.

The opinions expressed herein may be affected by actions taken (or not taken) or events occurring (or

not occurring) after the date hereof. Our engagement as Bond Counsel terminates upon the issuance of the

Bonds and we have not undertaken to determine, or to inform any person, whether any such actions or events

are taken (or not taken) or do occur (or do not occur).

The opinions expressed herein are based upon our analysis and interpretation of existing laws,

regulations, rulings and judicial decisions and cover certain matters not directly addressed by such authorities.

We express no opinion herein as to the accuracy, completeness or sufficiency of the Official

Statement relating to the Bonds or other offering material relating to the Bonds and expressly disclaim any

duty to advise the owners of the Bonds with respect to matters contained in the Official Statement.

Respectfully submitted,

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APPENDIX D

BOOK-ENTRY ONLY SYSTEM

The information in this Appendix concerning The Depository Trust Company (“DTC”), New York,

New York, and DTC’s book-entry system has been obtained from DTC and the Agency takes no responsibility for the completeness or accuracy thereof. The Agency cannot and does not give any assurances that DTC,

DTC Participants or Indirect Participants will distribute to the Beneficial Owners (a) payments of interest,

principal or premium, if any, with respect to the 2018 Bonds, (b) certificates representing ownership interest in or other confirmation or ownership interest in the 2018 Bonds, or (c) redemption or other notices sent to

DTC or Cede & Co., its nominee, as the registered owner of the 2018 Bonds, or that they will so do on a timely

basis, or that DTC, DTC Participants or DTC Indirect Participants will act in the manner described in this Appendix. The current “Rules” applicable to DTC are on file with the Securities and Exchange Commission

and the current “Procedures” of DTC to be followed in dealing with DTC Participants are on file with DTC.

The Depository Trust Company (“DTC”), New York, NY, will act as securities depository for the

2018 Bonds. The 2018 Bonds will be issued as fully-registered securities registered in the name of Cede &

Co. (DTC’s partnership nominee) or such other name as may be requested by an authorized representative of

DTC. One fully-registered certificate will be issued for each maturity of the 2018 Bonds, each in the aggregate

principal amount of such maturity, and will be deposited with DTC.

DTC, the world’s largest securities depository, is a limited-purpose trust company organized under the

New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a

member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform

Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the

Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S.

and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over

100 countries) that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post-

trade settlement among Direct Participants of sales and other securities transactions in deposited securities,

through electronic computerized book-entry transfers and pledges between Direct Participants’ accounts. This

eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and

non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other

organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation

(“DTCC”). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed

Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its

regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S.

securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain

a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). DTC

has a Standard & Poor’s rating of AA+. The DTC Rules applicable to its Participants are on file with the

Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com.

Purchases of Bonds under the DTC system must be made by or through Direct Participants, which will

receive a credit for the 2018 Bonds on DTC’s records. The ownership interest of each actual purchaser of each

Bond (“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 2018 Bonds are to be accomplished by

entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners.

Beneficial Owners will not receive certificates representing their ownership interests in Bonds, except in the

event that use of the book-entry system for the 2018 Bonds is discontinued.

To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are registered

in the name of DTC’s partnership nominee, Cede & Co., or such other name as may be requested by an

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authorized representative of DTC. The deposit of Bonds with DTC and their registration in the name of Cede

& Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge

of the actual Beneficial Owners of the 2018 Bonds; DTC’s records reflect only the identity of the Direct

Participants to whose accounts such Bonds are credited, which may or may not be the Beneficial Owners. The

Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their

customers.

Conveyance of notices and other communications by DTC to Direct Participants, by Direct

Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners

will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be

in effect from time to time. Beneficial Owners of Bonds may wish to take certain steps to augment the

transmission to them of notices of significant events with respect to the 2018 Bonds, such as redemptions,

tenders, defaults, and proposed amendments to the 2018 Bond documents. For example, Beneficial Owners of

Bonds may wish to ascertain that the nominee holding the 2018 Bonds for their benefit has agreed to obtain

and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their

names and addresses to the registrar and request that copies of notices be provided directly to them.

Redemption notices shall be sent to DTC. If less than all of the 2018 Bonds within a maturity are

being redeemed, DTC’s practice is to determine by lot the amount of the interest of each Direct Participant in

such maturity to be redeemed.

Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Bonds

unless authorized by a Direct Participant in accordance with DTC’s MMI Procedures. Under its usual

procedures, DTC mails an Omnibus Proxy to the Agency 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 Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy).

Principal, premium (if any), and interest payments on the 2018 Bonds will be made to Cede & Co., or

such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit

Direct Participants’ accounts upon DTC’s receipt of funds and corresponding detail information from the

Agency or the Trustee, on payable date in accordance with their respective holdings shown on DTC’s records.

Payments by Participants to Beneficial Owners will be governed by standing instructions and customary

practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street

name,” and will be the responsibility of such Participant and not of DTC, the Trustee, or the Agency, subject to

any statutory or regulatory requirements as may be in effect from time to time. Principal, premium (if any),

and interest payments with respect to the 2018 Bonds to Cede & Co. (or such other nominee as may be

requested by an authorized representative of DTC) is the responsibility of the Agency or the Trustee,

disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of

such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants.

DTC may discontinue providing its services as depository with respect to the 2018 Bonds at any time

by giving reasonable notice to the Agency or the Trustee. Under such circumstances, in the event that a

successor depository is not obtained, certificates representing the 2018 Bonds are required to be printed and

delivered.

The Agency may decide to discontinue use of the system of book-entry-only transfers through DTC

(or a successor securities depository). In that event, representing the 2018 Bonds will be printed and delivered

to DTC in accordance with the provisions of the Indenture.

The information in this Appendix concerning DTC and DTC’s book-entry system has been obtained

from sources that the Agency believes to be reliable, but the Agency takes no responsibility for the accuracy

thereof.

E-1

APPENDIX E

COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR

FISCAL YEAR ENDED JUNE 30, 2017


City of Cudahy

General Purpose Financial Statements Year Ended June 30, 2017

with Report of Independent Auditors


City of Cudahy General Purpose Financial Statements

Year Ended June 30, 2017 with Report of Independent Auditors


City of Cudahy Table of Contents

PAGEFINANCIAL SECTION

Report of Independent Auditors 1

Basic Financial Statements

Government-wide Financial Statements Statement of Net Position 4 Statement of Activities 5 Fund Financial Statements

Description of Major Funds 6 Balance Sheet 7 Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position 8 Statement of Revenues, Expenditures and Changes in Fund Balances 9 Reconciliation of the Statement of Revenues, Expenditures, and Changes in

Fund Balances of Governmental Funds to the Statement of Activities 10Description of Fiduciary Funds 11Statement of Fiduciary Net Position Statement of Changes in Fiduciary Net Position Statement of Changes in Assets and Liabilities – Agency Funds

121314

Notes to Financial Statements 15

Required Supplementary Information Budgetary Comparison Schedule

General Fund Community Development Block Grant Fund State Gas Tax Fund

515253

Proposition A 54Other Grants 55Housing Authority 56

Schedule of Funding Progress – Other Postemployment Benefits (OPEB) 57 Schedule of Proportionate Share of the Net Pension Liability 58 Schedule of Pension Contributions 59

Supplementary Information Nonmajor Governmental Funds:

Description of Nonmajor Special Revenue Funds Combining Balance Sheet

6062

Combining Statement of Revenues, Expenditures and Changes in Fund Balances 66

Budgetary Comparison Schedules - Special Revenue Funds Drug Asset Seizure Prop 1B Local Street Improvements

7071

City of Cudahy Table of Contents

PAGESupplementary Information - Continued

Proposition C 72Measure R 73Air Quality Improvement 74Used Oil Grant 75Recycling Conservation Grants 76Community Oriented Policing Services (COPS) Grant 77County Park Bond 78TDA – Transportation Development 79Street Lighting 80Cal Home Grant 81Quimby Act 82Federal STPL 83

1

Report of Independent Auditors City Council City of Cudahy, California Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of the City of Cudahy, California (the City), as of and for the year ended June 30, 2017, and the related notes to financial statements which collectively comprise the City's basic financial statements, as listed in the table of contents. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors’ Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

2

Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, each major fund, and the aggregate remaining fund information of the City of Cudahy, California as of June 30, 2017, and the respective changes in financial position for the year then ended in accordance with accounting principles generally accepted in the United States of America. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the Budgetary Comparison Schedule on pages 51 through 56, the Schedule of Funding Progress on page 57, the Schedule of Proportionate Share of the Net Pension Liability on page 58, and the Schedule of Pension Contributions on page 59 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Management has not presented the management’s discussion and analysis that the Governmental Accounting Standards Board has determined is necessary to supplement, although not required to be part of the basic financial statements. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City’s basic financial statements. The combining and individual nonmajor fund financial statements are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining and individual nonmajor fund financial statements and budgetary comparison schedules on pages 62 through 83 are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining and individual nonmajor fund financial statements and budgetary comparison schedules on pages 62 through 83 are fairly stated in all material respects in relation to the basic financial statements as a whole.

3

Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated March 27, 2018, on our consideration of the City’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City’s internal control over financial reporting and compliance.

Los Angeles, California March 27, 2018

City of Cudahy Statement of Net Position

June 30, 2017

See notes to financial statements. 4

Cash and investments $ 7,201,183 Receivables:

Accounts 1,139,248 Notes, net 3,051,826 Interest 10,495

Prepaid expense 94,020 Advances to Successor Agency Private Purpose Trust Fund

(net of allowance for doubtful accounts of $89,219) 435,697 Capital assets, net 19,396,435

Total assets 31,328,904

Deferred outflows of resources related to pensions 584,267

Accounts payable and other current liabilities 2,120,107 Due to other governments 495,866 Noncurrent liabilities: Due within one year 26,814 Due in more than one year 1,087,164

Net pension liability 3,146,658

Total liabilities 6,876,609

Deferred inflows of resources related to pensions 211,472

Net investment in capital assets 19,396,435 Restricted 5,353,794 Unrestricted 74,861

Total net position $ 24,825,090

ASSETS

LIABILITIES

NET POSITION

DEFERRED OUTFLOWS OF RESOURCES

DEFERRED INFLOWS OF RESOURCES

City of Cudahy Statement of Activities

Year ended June 30, 2017


Net (Expenses) Revenues and

Operating CapitalCharges for Grants and Grants and Governmental

Functions/Programs Expenses Services Contributions Contributions ActivitiesPrimary government

Governmental activities:General government $ 3,709,054 $ 237,036 $ - $ - $ (3,472,018) Public safety 4,104,356 323,878 129,324 - (3,651,154) Community services 1,996,809 204,729 1,706,941 1,211,522 1,126,383 Community development 1,148,144 360,590 248,161 326,617 (212,776)

Total primary government $ 10,958,363 $ 1,126,233 $ 2,084,426 $ 1,538,139 (6,209,565)

General revenues:Property taxes 367,393 Sales and use taxes 1,243,683 Franchise and transfer taxes 340,489 Transient occupancy tax 61,985 Business license tax 509,186 Motor vehicle In lieu tax 2,550,694 Utility users tax 1,007,592 Investment income 31,180 Other revenue 116,549

Sale of property 1,198,046

Total general and other revenues 7,426,797

1,217,232

Net position, beginning of year 23,607,858 Net position, end of year $ 24,825,090

Program Revenues Net Position Changes in

Net change in net position

City of Cudahy Description of Major Funds


6

General Fund - accounts for all general revenues of the City not specifically levied or collected for other City funds and for expenditures related to the rendering of general services by the City. CDBG Special Revenue Fund - accounts for expenses of the Community Development Block Grant received through the County of Los Angeles. State Gas Tax Special Revenue Fund - accounts for gas tax revenue received from the State of California to cover costs of street maintenance and improvements. Proposition A Special Revenue Fund - accounts for revenues and expenditures for projects from a voter-approved sales tax override for public transportation purposes.

Other Grants Special Revenue Fund - accounts for State Grants relating to future development in the City including transportation related projects.

Housing Authority Special Revenue Fund - accounts for assets used for low and moderate income housing activities in accordance with the applicable housing-related regulations.

City of Cudahy Governmental Funds

Balance Sheet June 30, 2017


Other

State Proposition Other Housing GovernmentalGeneral CDBG Gas Tax A Grants Authority Funds Totals

ASSETS: Cash and investments $ 1,692,723 $ - $ 577,593 $ 1,303,878 $ - $ 1,223,610 $ 2,403,379 $ 7,201,183 Receivables:

Accounts 396,848 37,408 - - 665,523 4,483 34,986 1,139,248 Notes, net 6,000 275,460 - - - 2,549,804 220,562 3,051,826 Interest 2,832 - 1,077 2,238 - - 4,348 10,495

Prepaid expense 94,019 - - - - - - 94,019 Due from other funds 98,358 - - - - - - 98,358 Advances to Successor Agency Private Purpose Trust Fund, net 435,697 - - - - - - 435,697

$ 2,726,477 $ 312,868 $ 578,670 $ 1,306,116 $ 665,523 $ 3,777,897 $ 2,663,275 $ 12,030,826

Accounts payable $ 1,217,019 $ 18,432 $ 49,447 $ 23,597 $ 684,868 $ 2,265 $ 114,158 $ 2,109,786 Deposits payable 10,320 - - - - - - 10,320 Due to other governments - 275,460 - - - - 220,406 495,866 Due to other funds - 10,095 - - 66,897 - 21,366 98,358

Total liabilities 1,227,339 303,987 49,447 23,597 751,765 2,265 355,930 2,714,330

63,199 - - - 657,648 2,549,804 27,000 3,297,651

Prepaid expense 94,019 - - - - - - 94,019 Advances to Private-Purpose Trust Fund 435,697 - - - - - - 435,697

- 8,881 529,223 1,282,519 - 1,225,828 2,307,343 5,353,794 906,223 - - - (743,890) - (26,998) 135,335

Total fund balances 1,435,939 8,881 529,223 1,282,519 (743,890) 1,225,828 2,280,345 6,018,845

Total liabilities, deferred inflows of

$ 2,726,477 $ 312,868 $ 578,670 $ 1,306,116 $ 665,523 $ 3,777,897 $ 2,663,275 $ 12,030,826

ASSETS

Special Revenue


FUND BALANCES

resources and fund balances

Unavailable revenue

Total assets

LIABILITIES

Special revenue fundsUnassigned

Nonspendable

Restricted

City of Cudahy Reconciliation of the Balance Sheet of Governmental Funds

to the Statement of Net Position June 30, 2017

8

Fund balance of governmental funds $ 6,018,845

Amounts reported for governmental activities in the Statement of Net Position are different because:

Capital assets, net of depreciation, of governmental activities are not financial resources and are not reported in the governmental funds. 19,396,435

Deferred outflows of resources related to pensions are not considered financial resources and are not reported in the governmental funds 584,267

Deferred inflows of resources related to pensions are not available to pay for current period expenses and are not reported in the governmental funds (211,472)

Unavailable revenues are not available to pay for current period expenditures and therefore are deferred in the funds and recognized as revenue in the Statement of Activities. 3,297,651

Long-term liabilities are not due and payable in the current period and are not reported in the governmental funds.

Insurance liability $ (376,473) Compensated absences (109,477)OPEB obligation (628,028)Net pension liability (3,146,658) (4,260,636)

Net position of governmental activities $ 24,825,090


Statement of Revenues, Expenditures, and Changes in Fund Balances Year ended June 30, 2017

9

OtherState Proposition Other Housing Governmental

Revenues General CDBG Gas Tax A Grants Authority Funds TotalsTaxes $ 3,021,233 $ - $ - $ - $ - $ - $ 84,614 $ 3,105,847 Licenses and permits 1,075,637 - - - - - - 1,075,637 Intergovernmental 2,550,694 208,441 469,586 470,552 139,913 - 1,636,134 5,475,320 Charges for services 189,401 - - - - - 27,112 216,513 Fines, forfeitures and penalties 160,428 - - - - - - 160,428 Investment income (loss) 6,828 - 3,963 - - - 23,835 34,626 Other revenue 51,438 - 6,703 6,554 - 20,127 63,218 148,040

7,055,659 208,441 480,252 477,106 139,913 20,127 1,834,913 10,216,411

ExpendituresCurrent:

General government 2,737,776 - - - - - - 2,737,776 Public safety 4,078,465 - - - - - 25,891 4,104,356 Community services 348,607 - 860,144 110,642 - - 480,024 1,799,417 Community development 714,112 164,897 - - 24,758 26,730 188,639 1,119,136

Capital outlay - - - - 707,830 - 308,972 1,016,802 7,878,960 164,897 860,144 110,642 732,588 26,730 1,003,526 10,777,487

(823,301) 43,544 (379,892) 366,464 (592,675) (6,603) 831,387 (561,076)

Other financing sources (uses)

Sale of property - - - - - 1,198,046 - 1,198,046

Return of funds to grantor - - - - - - (24,067) (24,067)

- - - - - 1,198,046 (24,067) 1,173,979

(823,301) 43,544 (379,892) 366,464 (592,675) 1,191,443 807,320 612,903

Fund balance (deficit), beginning of year 2,259,240 (34,663) 909,115 916,055 (151,215) 34,385 1,473,025 5,405,942

Fund balance (deficit), end of year $ 1,435,939 $ 8,881 $ 529,223 $ 1,282,519 $ (743,890) $ 1,225,828 $ 2,280,345 $ 6,018,845

Total revenues

Total expendituresExcess (deficiency) of revenues

over expenditures

Net other financing sources (uses)

Change in fund balance

Special Revenue


Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities


10

Change in fund balances - governmental funds $ 612,903

Amounts reported for governmental activities in the Statement of Activities differ from theamounts reported in the Statement of Revenues, Expenditures, and Changes in FundBalances because:

Governmental funds report capital outlay as an expenditure. However, in the Statement

Capital outlay, net of dispositions $ 976,014 Depreciation (692,089) 283,925

Revenues that are measurable but not available are recorded as deferred or unavailablerevenue under the modified accrual basis of accounting. 785,205

Governmental funds report activity of long-term liabilities as revenues and expenditures,but they are included as increases and reductions on the long-term liabilities in the Statement of Net Position.

OPEB obligation (104,026) Insurance liability (207,094)

In the Statement of Activities, compensated absences are measured by the amounts

amounts paid). This represents the change in compensated absences during the year. (15,342)

Pension contribution made after the measurement date was recorded as an expenditure in the governmental funds but deferred in the government-wide financial statements. 91,846

Pension expenses reported in the Statement of Activities do not require the use of currentfinancial resources and therefore are not reported in the governmental funds. (230,185)

Change in net position of governmental activities $ 1,217,232

of Activities, the cost of these assets is allocated over the useful lives as depreciationexpense.

earned during the fiscal year. In governmental funds, however, expenditures for theseitems are measured by the amount of financial resources used (essentially the

City of Cudahy Description of Fiduciary Funds

June 30, 2017

11

Agency Funds - accounts for the assets held by the City as an agent for individuals, private organizations or other government units and/or other funds. The City’s agency fund is the Cudahy Youth Foundation. Successor Agency Private-Purpose Trust Fund - this is a fiduciary fund type used by the City to report trust arrangements under which principal and income benefit other governments. This fund reports the assets, liabilities and activities of the Successor Agency to the dissolved Cudahy Community Development Commission. Unlike the limited reporting typically utilized for Agency Fund, the Private-Purpose Trust Fund reports a Statement of Fiduciary Net Position and a Statement of Changes in Fiduciary Net Position. .

City of Cudahy Fiduciary Funds

Statement of Fiduciary Net Position June 30, 2017


Successor Agency to the

Dissolved Cudahy

CommunityDevelopment Commission

Agency Private-PurposeFunds Trust Fund

ASSETSCash and cash equivalents $ 10,641 $ 3,237,611

- 4,094,435 Rental and other accounts receivable, net 30 42,828 Prepaid expenses 14,625 - Capital assets, net of accumulated depreciation - 14,402,527 Land held for development - 2,136,097

Total assets $ 25,296 23,913,498

Unamortized loss on defeasance of debt - 12,512

Accounts payable $ 25,296 196,536 Accrued interest payable - 296,726

Advances from the City of Cudahy - 524,916 Noncurrent liabilities

Due within one year - 665,000 Due in more than one year - 19,007,952

Total liabilities $ 25,296 20,691,130

FIDUCIARY NET POSITIONRestricted net position $ 3,234,880

Restricted cash, cash equivalents and investments

DEFERRED OUTFLOWS OF RESOURCES

LIABILITIES

City of Cudahy Fiduciary Funds

Statement of Changes in Fiduciary Net Position For the fiscal year ended June 30, 2017


Successor Agency to the

Dissolved Cudahy

CommunityDevelopment

CommissionPrivate-Purpose

Trust Fund

AdditionsContributions: Redevelopment Agency Property Tax Trust Fund $ 2,850,341 Interest and investment revenue:

Use of money and property 1,678 Other revenue 204,166

Total revenues 3,056,185

DeductionsInterest on bonds payable 1,288,722 Loans receivable written off 308,219 Administrative expenses 353,156

Total expenses 1,950,097

Net change in net position 1,106,088

Net position held in trust - beginning 2,128,792

Net position held in trust - ending $ 3,234,880

City of Cudahy Agency Funds

Statement of Changes in Assets and Liabilities Year ended June 30, 2017


Balance BalanceJuly 1, 2016 Additions Deletions June 30, 2017

AssetsCash and cash equivalents $ 19,903 $ 15,688 $ 24,950 $ 10,641 Accounts receivable 27 3 - 30 Prepaid expenses 20,575 14,625 20,575 14,625

Total assets $ 40,505 $ 30,316 $ 45,525 $ 25,296

LiabilitiesAccounts payable $ 40,505 $ 25,269 $ 40,478 $ 25,296

Total liabilities $ 40,505 $ 25,269 $ 40,478 $ 25,296

City of Cudahy Notes to the Financial Statements


15

NOTE 1 REPORTING ENTITY The City is a municipal corporation governed by an elected five-member council. As required by generally accepted accounting principles, these financial statements present the government and its component unit, which is a separate legal entity for which the city is considered to be financially accountable. Component Unit The City has a component unit which is the Cudahy Economic Development Corporation (CEDC). The CEDC was created to hold the assets of the former redevelopment agency of the City. In 2014, the State Controller’s Office ordered the transfer of the assets to the Successor Agency to the former Cudahy Community Development Commission/Redevelopment Agency (Successor Agency). In 2015, the Board of Directors of CEDC and the Oversight Board to the Successor Agency approved the asset transfer agreement. Accordingly, all properties of CEDC were transferred to the Successor Agency on October 19, 2015.

NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The City's financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America as applied to governmental agencies. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The City's more significant accounting policies are described below. Measurement Focus, Basis of Accounting, and Financial Statement Presentation The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the providers have been met. Government-wide and fund financial statements The statement of net position and statement of activities (i.e., the government-wide financial statements) display information on all of the non-fiduciary activities of the primary government (the City) and its discretely presented component unit. The statement of activities presents a comparison between direct expenses and program revenues for each function of the City's governmental activities. Direct expenses are those that are specifically associated with a program or function and are clearly identifiable to a particular function. Program revenues include 1) charges paid by the recipients of goods or services offered by the programs and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues.



16

NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

As a general rule, the effect of interfund activity has been eliminated from the government-wide financial statements. Direct expenses have not been eliminated from the functional categories; indirect expenses and internal payments have been eliminated. Amounts reported as program revenues include 1) charges to customers or applicants for goods, services, or privileges provided, 2) operating grants and contributions, and 3) capital grants and contributions. Internally dedicated resources are reported as general revenues rather than as program revenues. Likewise, general revenues include all taxes. When both restricted and unrestricted resources are available for use, the City's policy is to use restricted resources first, then the unrestricted resources as they are needed. Governmental fund financial statements Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collected within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the City considers revenues to be available if they are collected within 60 days of the end of the current fiscal period, except for certain grants which are considered available if collected within 7 months after year-end. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due. The City reports the following major governmental funds:

General Fund: This fund is used to account for all financial resources of the City, except for those required to be accounted for in another fund. CDBG Special Revenue Fund: This Fund accounts for revenues and expenditures of the Community Development Block Grant funded by the City of Los Angeles. State Gas Tax Special Revenue Fund: This fund accounts for gas tax revenue received from the State of California to cover costs of street maintenance and improvements. Proposition A Special Revenue Fund: This fund accounts for receipts and expenditures of projects from a voter approved sales tax override for public transportation purposes.



17

NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Other Grants Special Revenue Fund: This fund accounts for State Grants relating to future development in the City including transportation related projects. Housing Authority Special Revenue Fund: This fund accounts for assets used for low and moderate income housing activities in accordance with the applicable housing-related regulations.

Additionally, the City reports the following fund types: Other Governmental Funds Special revenue funds account for proceeds of specific revenue sources that are legally restricted or otherwise designated for specific purposes. Fiduciary Funds Agency Funds These funds are used to account for the assets held by the City as an agent for individuals, private organizations or other government units and/or other funds. Successor Agency Private-Purpose Trust Fund Private-Purpose trust fund is a fiduciary fund type used by the City to report trust arrangements under which principal and income benefit other governments. This fund is used to report the assets, liabilities and activities of the Successor Agency to the Dissolved Cudahy Community Development Commission. Unlike the limited reporting typically utilized for Agency Fund, Private-Purpose Trust Fund reports a Statement of Fiduciary Net Position and a Statement of Changes in Fiduciary Net Position.

Budgetary Control and Accounting The accounting and financial reporting treatment applied to a fund is determined by its measurement focus. All governmental funds are accounted for using a current financial resources measurement focus. With this measurement focus, only current assets and current liabilities generally are included on the balance sheet. Operating statements of these funds present increases (i.e., revenues and other financing sources) and decreases (i.e., expenditures and other financing uses) as changes in net position. All governmental fund types and agency funds use the modified accrual basis of accounting. Under the modified accrual basis of accounting, revenues are recognized when susceptible to accrual (i.e., when they become both measurable and available). "Measurable" means the amount of the transaction can be determined and "available” means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. The City considers property taxes and sales taxes to be available if they are collected within 60 days after year-end. Expenditures are recorded when the related fund liability is incurred, except for unmatured principal and interest on general long-term debt which is recognized when due.



18

NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Revenues considered susceptible to accrual are property taxes, sales taxes, utility taxes, admission tax, interest revenue and grant revenues. All other revenues are not considered susceptible to accrual by the City. The City at times reports unavailable revenue in its financial statements. Unavailable revenues arise when potential revenue does not meet the “available" criterion for recognition in the current period. Additionally, unearned revenues arise when the City receives resources before it has a legal claim to them, as when grant monies are received prior to the incurrence of qualifying expenditures. In subsequent periods, when both revenue recognition criteria are met, or when the City has a legal claim to the resources, the unavailable and unearned revenue is removed from the balance sheet and revenue is recognized. Budgets are adopted on a basis consistent with GAAP. The City Council approves the budget submitted each year by the City Manager prior to the beginning of the new fiscal year. Supplemental appropriations are approved by the Council and City Manager when required during the period. The City Manager may amend the budget administratively so long as the amendment does not increase the total appropriation for each fund. All other budget amendments are approved by the City Council. Expenditures may not exceed appropriations at the fund level, which is the legal level of control. Annual appropriated budgets are adopted for the general and special revenue funds. Assets, Liabilities, Deferred Outflows and Inflows of Resources, and Net Position or Equity Cash and Investments Cash equivalents are defined as short-term, highly liquid investments that are both readily convertible to known amounts of cash or so near their maturity that they present insignificant risk of changes in value because of changes in interest rates. Cash equivalents have an original maturity date of three months or less from the date of purchase. Investments are recorded at fair value. The estimated fair value of all investments is the quoted market price. Interest income earned on pooled cash and investments is allocated to the various funds based on their monthly average cash balances. Changes in fair value that occur during a fiscal year are recognized as investment income reported for that fiscal year. Investment income includes interest earnings, changes in fair value, and any gains or losses realized upon the liquidation, maturity, or sale of investments. The City pools cash and investments of all funds. Each fund’s share in this pool is displayed in the accompanying financial statements as cash and investments.



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NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) The City pools cash from all funds in order to increase income earned through its investment program. Investment income from pooled investments is allocated to those funds which are required by law or administrative action to receive interest. Investment income is allocated on a quarterly basis based on the weighted average cash balance in each fund. Property Taxes Assessed values are levied on an annual basis by the Los Angeles County Assessor as of July 1. Taxes become a lien on real property on January 1 and are payable in two installments on November 1 and February 1. They become delinquent if not paid by December 10 and April 10, respectively.

Receivables and Payables Property, sales, use, and utility user taxes related to the current fiscal year are accrued as revenue and accounts receivable and considered available if received within 60 days of year-end. Federal and State grants are considered receivable and accrued as revenue when reimbursable costs are incurred under the accrual basis of accounting. The amount recognized as revenue under the modified accrual basis of accounting is limited to the amount that is deemed measurable and available. Prepaid Items Certain payments to vendors reflect costs applicable to future periods and are recorded under prepaid items in both government-wide and fund financial statements. These costs will be recognized in the period when services are received or when the City receives title to the property. lnterfund Transactions lnterfund transactions are reflected as loans, services provided reimbursements, or transfers. Loans are reported as receivables and payables as appropriate, are subject to elimination upon consolidation and are referred to as either "due to/from other funds" (i.e., the current portion of lnterfund loans) or "advances to/from other funds" (i.e., the noncurrent portion of lnterfund loans). Any residual balance outstanding in the governmental activities is reported in the government-wide financial statements as "internal balance". Advances between funds, as reported in the fund financial statements, are offset by a fund balance reserve account in applicable governmental funds to indicate that they are not available for appropriation and are not available financial resources. There were no internal balances reported at June 30, 2017. Services provided, deemed to be at market or near market rates, are treated as revenues and expenditures/expenses. Reimbursements are when one fund incurs a cost, charges the appropriate benefiting fund and reduces its related cost as a reimbursement. All other lnterfund transactions are treated as transfers. Restricted Assets Certain proceeds of debt issues, as well as certain resources set aside for their repayment, are classified as restricted assets on the balance sheet because their use is limited by applicable bond covenants.



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NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Capital Assets Capital assets, which include land, buildings, improvements, equipment and infrastructure assets (e.g., roads, bridges, sidewalks, and similar items) are reported in the governmental activities column in the government-wide financial statements. Capital assets are recorded at the lower of actual historical cost or fair value (as of the date donated for contributed assets). The City has analyzed its capital assets for potential impairment. The City does not believe that any capital assets are impaired at June 30, 2017. The costs of normal maintenance and repairs that do not add to the value of the assets or materially extend asset lives are not capitalized. Capital assets are depreciated using the straight-line method over the following estimated useful lives: Building and improvements 50 years Parks and park improvements 40 years Infrastructure 10 to 40 years Vehicles, furniture and equipment 3 to 5 years It is the City's policy to capitalize all land, building, improvements, equipment and infrastructure assets, except assets costing less than $5,000, and to capitalize infrastructure assets costing $50,000 or more. In the government-wide financial statements, costs of assets sold or retired (and related amounts of accumulated depreciation) are eliminated from the accounts in the year of sale or retirement and the resulting gain or loss is included in the statement of activities. In governmental funds, the sale of general capital assets is included in the statement of revenues, expenditures and changes in fund balances as proceeds from sale. Deferred Outflows and Inflows of Resources Pursuant to GASB Statements No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position, and No. 65, Items Previously Reported as Assets and Liabilities, the City recognizes deferred outflows and inflows of resources. A deferred outflow of resources is defined as a consumption of net position by the government that is applicable to a future reporting period. A deferred inflow of resources is defined as an acquisition of net position by the government that is applicable to a future reporting period. Revenues earned, but not yet received, may not be available in a timely manner to pay current expenditures or obligations. Such receivables, not meeting the availability criteria necessary for accrual under modified accrual basis accounting principles, are reported as unavailable revenues for that period in the fund financial statements. In the government-wide financial statements, however, availability criteria are not considered. Instead, revenues become, and remain receivable from the point in time when revenue is earned through performance or similar recognition standards, until received. Refer to Notes 10 and 12 for the list of deferred outflows and deferred inflows of resources the City has recognized as of June 30, 2017.



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NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Compensated Absences City employees receive up to 240 hours per year, depending upon their length of service. In the fund financial statements, the City accounts for compensated absences (unpaid vacation and sick leave) as expenditures in the year paid, as it is the City's policy to liquidate any unpaid vacation or compensatory pay from future resources, rather than from currently available expendable resources. All unpaid vacation and sick pay is accrued when earned in the government-wide and fiduciary fund financial statements. Unearned Revenues Unearned revenues arise when the City receives resources before it has a legal claim to them (e.g., when grant monies are received prior to the incurrence of qualifying expenditures). Long-term Obligations In the government-wide and fiduciary fund financial statements, long-term debt and other long-term obligations are reported as liabilities. Bond premiums and discounts are deferred and amortized over the life of the bonds. Bonds payable are reported net of the applicable bond premium or discount. Bond issuance costs are expensed when incurred. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenditures during the reporting period. Actual results could differ from those estimates. Fund Balance Reporting Governmental Accounting Standards Board (GASB) Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions, establishes the following 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:

Nonspendable fund balance includes amounts that cannot be spent because they are either (a) not in spendable form or (b) legally or contractually required to be maintained intact. The City’s nonspendable fund balances represent prepaid expenses, long-term receivables, and land held for resale.

Restricted fund balance includes resources that are subject to externally enforceable legal restrictions. It includes amounts that can be spent only for the specific purposes stipulated by constitution, external resource providers, or through enabling legislation.



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NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

The City’s restricted fund balance of $5,353,794 represents resources restricted for special projects, and programs funded by local, state and federal grants. Committed fund balance includes amounts that can be used only for the specific purposes determined by a formal action or resolution of the City’s highest level of decision-making authority (City Council). Committed amounts cannot be used for any other purpose unless the City Council removes or changes the specific use through the same type of formal action or resolution taken to establish the commitment. The City has no committed fund balances.

Assigned fund balance consists of funds that are set aside for specific purposes by the City’s highest level of decision making authority or a body or official that has been given the authority to assign funds. The City Council delegates the authority to assign fund balance to the City Manager for purposes of reporting in the annual financial statements. The City has no assigned fund balances.

Unassigned fund balance is the residual classification for the City’s general fund and includes all spendable amounts not contained in the other classifications. This category also provides the resources necessary to meet unexpected expenditures and revenue shortfalls.

The government-wide financial statements utilize a net position presentation. Net position is categorized as net investment in capital assets, restricted, and unrestricted.

Net investment in capital assets - This category groups all capital assets, including infrastructure, into one component of net position. Accumulated depreciation and the outstanding balances of debt that are attributable to the acquisition, construction or improvement of these assets reduce the balance of this category.

Restricted net position - This category presents external restrictions imposed by creditors, grantors, contributors, laws or regulations of other governments and restrictions imposed by law through constitutional provisions or enabling legislation.

Unrestricted net position - This category represents the City's net positions, which are not restricted for any project or other purpose.

Implementation of New Accounting Pronouncements During the fiscal year ended June 30, 2017, the City adopted the following new Statements of the Governmental Accounting Standards Board (GASB):



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NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) GASB Statement No. 77, Tax Abatement Disclosures. The scope of this

Statement addresses accounting and financial reporting by giving users of financial statements information that is not consistently or comprehensively reported to the public at present. This Statement requires governments that enter into tax abatement agreements to disclose relevant information such as brief descriptive information, that includes the tax being abated, the authority under which tax abatements are provided, eligibility criteria, the mechanism by which taxes are abated, provisions for recapturing abated taxes, and the types of commitments made by the tax abatement recipients. The implementation of this new standards did not have a significant impact on the City’s 2017 financial statements.

GASB Statement No. 78, Pensions Provided through Certain Multiple-Employer Defined Benefit Pension Plans. The objective of this Statement is to address a practice issue regarding the scope and applicability of Statement No. 68, Accounting and Financial Reporting for Pensions. The Statement is effective for periods beginning after December 15, 2015. The implementation of this new standards did not have a significant impact on the City’s 2017 financial statements.

GASB Statement No. 80, Blending Requirements for Certain Component Units—an amendment of GASB Statement No. 14. The objective of this Statement is to improve financial reporting by clarifying the financial statement presentation requirements for certain component units. This Statement amends the blending requirements established in paragraph 53 of Statement No. 14, The Financial Reporting Entity, as amended. The Statement is effective for periods beginning after June 15, 2016. The implementation of this new standards did not have a significant impact on the City’s 2017 financial statements.

GASB Statement No. 82, Pension Issues—an amendment of GASB Statements

No. 67, No. 68, and No. 73. The objective of this Statement is to address certain issues that have been raised with respect to Statements No. 67, Financial Reporting for Pension Plans, No. 68, Accounting and Financial Reporting for Pensions, and No. 73, Accounting and Financial Reporting for Pensions and Related Assets That Are Not within the Scope of GASB Statement 68, and Amendments to Certain Provisions of GASB Statement. The Statement is effective for periods beginning after June 15, 2016. The implementation of this new standards did not have a significant impact on the City’s 2017 financial statements.

Pensions For purposes of measuring the net pension liability and deferred outflows/inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the City’s California Public Employees’ Retirement System (CalPERS) plans and additions to/deductions from the Plans’ fiduciary net position have been determined on the same basis as they are reported by CalPERS. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value.



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NOTE 3 STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY

Fund balances at June 30, 2017 consisted of the following:

Major funds:Nonspendable $ 529,716 Restricted for special purposes 3,046,451 Unassigned 162,333

Total major 3,738,500 Nonmajor funds:

Restricted for special purposes 2,307,343 Unassigned (26,998)

Total nonmajor 2,280,345 Total $ 6,018,845

Deficit Fund Balances

The following funds have deficit fund balances at June 30, 2017. Management expects to eliminate the deficits with subsequent revenue in the funds or transfers from the General Fund:

Major funds:Other Grants $ 743,890

Nonmajor funds:County Park Bond 26,998

Expenditures in Excess of Appropriations Expenditures for the year ended June 30, 2017 exceeded the appropriations by the following amounts in the following fund:

Nonmajor funds:County Park Bond $ 42,794



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NOTE 4 CASH AND INVESTMENTS

Cash and Investments as of June 30, 2017 are classified in the financial statements as follows:

Governmental Activities:Cash and investments - unrestricted $ 7,201,183

Fiduciary Activities:Statement of Fiduciary Net Position:

Cash and cash equivalents - unrestricted 3,248,252Cash and Investments with fiscal agent 4,094,435

Total cash and investments $ 14,543,870

Cash and investments consist of the following:Petty cash $ 10,820Deposits with financial institutions 4,821,306Investments 9,711,744Total $ 14,543,870

Statement of Net Position:

Investments Authorized by the California Government Code and the City’s Investment Policy The following table identifies the investment types that are authorized for the City by the California Government Code and the City's investment policy. The table also identifies certain provisions of the California Government Code (or the City's investment policy, if more restrictive) that address interest rate risk, credit risk, and concentration of credit risk. This table does not address investments of debt proceeds held by bond trustee that are governed by the provisions of debt agreements of the City, rather than the general provisions of the California Government Code or the City's investment policy.

Maximum MaximumAuthorized by Maximum Percentage Investment

Authorized Investment Type Investment Policy Maturity* of Portfolio* In One Issuer

Local Agency Bonds No N/A N/A N/AU.S. Treasury Obligations Yes 5 years None NoneU.S. Agency Securities Yes 5 years None NoneBanker’s Acceptances Yes 180 days 30% 30%Commercial Paper No 270 days 25% 10%Certificates of Deposit Yes 5 years 30% NoneRepurchase Agreements Yes 1 year N/A N/AReverse Repurchase Agreements No N/A N/A N/AMedium-Term Notes No N/A N/A N/AMutual Funds No N/A N/A N/AMoney Market Mutual Funds Yes N/A 20% 10%Mortgage Pass-Through Securities No N/A N/A N/A

County Pooled Investment Funds No N/A N/A N/ALocal Agency Investment Fund Yes N/A None $40 million



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NOTE 4 CASH AND INVESTMENTS (CONTINUED) Investments Authorized by Debt Agreements Investments of debt proceeds held by fiscal agent are governed by provisions of the debt agreements, rather than the general provisions of the California Government Code or the City's investment policy. The table below identifies the investment types that are authorized for investments held by fiscal agent. The table also identifies certain provisions of these debt agreements that address interest rate risk, credit risk, and concentration of credit risk.

Maximum MaximumMaximum Percentage Investment

Authorized Investment Type Maturity of Portfolio In One Issuer

Local Agency Bonds None None NoneU.S. Treasury Obligations None None NoneU.S. Agency Securities None None NoneBanker’s Acceptances 1 year None NoneCommercial Paper 270 days None NoneNegotiable Certificates of Deposit None None NoneRepurchase Agreements 30 days None NoneMoney Market Mutual Funds N/A None NoneLocal Agency Investment Fund N/A None NoneInvestment Agreements N/A None None Disclosures Relating to 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 is the sensitivity of its fair value to changes in market interest rates. One of the ways that the City may manage its exposure to interest rates risk is by purchasing a combination of shorter-term and longer-term investments and by timing cash flows from maturities so that a portion of the portfolio is maturing or coming close to maturity over time as necessary to provide the cash flow and liquidity needed for operations. Information about the sensitivity of the fair values of the City’s investments to market interest rate fluctuations is provided by the following table that shows the distribution of the City’s investments by maturity:

12 Months 13 to 24 25 to 60 More thanTotal or Less Months Months 60 Months

Investment TypeLocal Agency Investment Fund $ 5,617,309 $ 5,617,309 $ - $ - $ -Held by Bond Trustee:

Money Market Funds 2,915,935 2,915,935 - - - Life Insurance Investment Agreement 1,178,500 - - - 1,178,500Total $ 9,711,744 $ 8,533,244 $ - $ - $ 1,178,500

Remaining Maturity in Months



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NOTE 4 CASH AND INVESTMENTS (CONTINUED) 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. Presented below is the minimum rating required by (where applicable) the California Government Code or the City's investment policy and the actual rating as of yearend for each investment type.

MinimumTotal as of Legal

Investment Type June 30, 2017 Rating AAA Not RatedLAIF $ 5,617,309 N/A - 5,617,309Held By Bond Trustee: Money Market Mutual Funds 2,915,935 N/A 2,915,935 - Life Insurance Investment Agreement 1,178,500 N/A - 1,178,500Total $ 9,711,744 2,915,935 6,795,809

Custodial Credit Risk Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, a government will not be able to recover its deposits or will not be able to recover collateral securities that are in the possession of an outside party. The 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, other than the following provision for deposits: The California Government Code requires that a financial institution secure deposits made by state or local government units by pledging securities in an undivided collateral pool held by a depository regulated under state law (unless so waived by the governmental unit). The market value of the pledged securities in the collateral pool must equal at least 110% of the total amount deposited by the public agencies. California law also allows financial institutions to secure City deposits by pledging first trust deed mortgage notes having a value of 150% of the secured public deposits. As of June 30, 2017, no deposits with financial institutions in excess of federal depository insurance limits were held in uncollateralized accounts. Custodial credit risk does not apply to a local government’s indirect investment in securities through the use of mutual funds or government investment pools (such as LAIF). As of June 30, 2017, none of the City’s investments were held by the broker-dealer (counterparty) that was used by the City to purchase the securities. Investment in State Investment Pool The City is a voluntary participant in the Local Agency Investment Fund (LAIF) that is regulated by the California Government Code under the oversight of the Treasurer of the State of California. The fair value of the City's investment in this pool of $5.6 million was reported in the accompanying financial statements at amounts based upon the City's pro-rata share of the fair value provided by LAlF for the entire LAlF portfolio (in relation to the amortized cost of that portfolio).



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NOTE 4 CASH AND INVESTMENTS (CONTINUED) The balance available for withdrawal is based on the accounting records maintained by LAIF, which are recorded on an amortized cost basis. LAIF’s and the City’s exposure to risk (credit, market or legal) is not currently available. Life Insurance Contracts Held by Bond Trustee The life insurance contracts held by BNY Mellon, the Bond Trustee, are based on an investment agreement with Transamerica Life; this investment is not a publicly traded asset, and there is no CUSIP. BNY Mellon has valued the investment at $1.00 per share, so the market value is the cost. The funds are considered to be liquid; however BNY Mellon is reporting them with a maturity date of 2027. Under the circumstances stated in the agreement, the funds can be withdrawn by BNY Mellon if the funds are needed to make the required payments to the bondholders, or if the City decides to refund the related bond. Fair Value Measurement In accordance with GASB Statement No. 72, Fair Value Measurement and Application, which became effective for the fiscal year ended June 30, 2017, the City categorizes its fair value measurement within the fair value hierarchy that is based on the valuation inputs used to measure the fair value of the investment. Level 1 inputs are quoted prices in active markets for identical investments; Level 2 inputs are significant other observable inputs; Level 3 inputs are significant unobservable inputs. Accordingly, the City reports its investments at fair value and recognizes unrealized gain (loss) on investments. The City’s investments in LAIF and Life Insurance Investments Agreements were not measured within the fair value hierarchy. The City’s investment in Money Market Mutual Funds was measured using Level 2 inputs.

NOTE 5 RECEIVABLES Notes Receivable Notes receivable as of June 30, 2017 are as follows: Governmental Funds – Housing Authority Pursuant to the provisions of ABX1 26 and Resolution No 12-04, the City assumed all housing assets and housing functions of the former Redevelopment Commission. The housing assets transferred on February 1, 2012 to the Housing Authority included the following notes receivables which represent loans made for assistance in rehabilitating property for affordable housing, plus accrued interest. Because interest is payable at maturity and is not available to finance current operations, interest on notes receivable is not recognized in the financial statements as a current period revenue:



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NOTE 5 RECEIVABLES (CONTINUED) Balance

a) In November 1995 and May 1997, the Successor Agency (previously Cudahy Community Development Commission) loaned $220,000 and $60,000, respectively, to Elizabeth West & East L.P. The note is collateralized by a deed of trust on 5225-27 Elizabeth Street. The note bears compounding interest at 6.55% and all principal and accrued interest is due in November 2025.

$ 1,031,808

b) In June 1998, February 2000, and September 2000, the

Successor Agency loaned $150,000, $140,000 and $210,000, respectively, to 5159 Clara Street LLP for a total loan of $500,000. The note is collateralized by a deed of trust on 5159 Clara Street. The note bears simple interest at 1% and all principal and accrued interest are due in May 2026.

588,233c) During the year ended June 30, 2000, the Successor Agency

agreed to loan $650,000 to Live Oak LLP, of which $590,000 had been advanced through June 30, 2003. The note is collateralized by a deed of trust on 5203 Live Oak. The note bears interest at 2.5% and all principal and accrued interest are due in August 2029. 929,763

Subtotal – Housing Authority 2,549,804 Governmental Fund – Other Funds In fiscal year 2013, the City entered into a loan with a

local company due to a legal settlement. The settlement agreement includes a property tax claim of $120,000, evidenced by a note requiring monthly payment of $2,000 for 60 months, and an unsecured claim of $200,000. In addition, interest shall be paid on the property tax claim at an annual rate of 3% on the unpaid principal balance and shall be payable as a balloon payment with the final payment. It is collateralized as an “allowed priority tax claim”.

Principal 206,200 Interest 8,124 Total 214,324 Less: Allowance for doubtful accounts (208,324) Net 6,000 The City granted loans to qualified individual

homeowners in connection with the Cal Home and CDBG programs. The loans are collateralized by deeds of trust in favor of the City. The notes vary as to terms and conditions. The notes have varying interest rates up to 3% and due dates from 5 years to unspecified.

496,022 Subtotal – Other Funds 502,022

Total $ 3,051,826



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NOTE 6 CAPITAL ASSETS

Capital asset activity for the year ended June 30, 2017 was as follows:

Balance Balance June 30, 2016 Increases Decreases June 30, 2017

Capital assets, not being depreciated Land $ 2,806,643 $ - $ - $ 2,806,643 Construction-in-progress 163,805 712,272 - 876,077

2,970,448 712,272 - 3,682,720

Capital assets, being depreciated Structures and improvements 12,535,321 - - 12,535,321 Infrastructure 48,716,305 302,942 (39,200) 48,980,047 Vehicles 512,085 - (3,908) 508,177 Furniture & equipment 265,061 - - 265,061 Total 62,028,772 302,942 (43,108) 62,288,606

Less accumulated depreciation: Structures and improvements 4,811,694 223,436 - 5,035,130 Infrastructure 40,399,754 410,293 - 40,810,047 Vehicles 473,954 38,133 (3,908) 508,179 Furniture & equipment 201,308 20,227 - 221,535 Total 45,886,710 692,089 (3,908) 46,574,891

Net 16,142,062 (389,147) (39,200) 15,713,715 Governmental activities capital assets, net $ 19,112,510 $ 323,125 $ (39,200) $ 19,396,435

Depreciation expense was charged to functions of the governmental activities as follows:

General government $ 546,751 Community services 145,338

$ 692,089



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NOTE 7 LONG-TERM DEBT Long-term liability activity of the government wide financial statements for the year ended June 30, 2017 follows:

Balance Balance Due WithinJuly 1,2016 Additions Reductions June 30,2017 One Year

Insurance liability $ 169,379 $ 270,908 $ (63,814) $ 376,473 $ 26,814 Compensated absences 94,135 133,358 (118,016) 109,477 - OPEB liability 524,002 196,976 (92,950) 628,028 - Net pension liability 2,625,985 608,666 (87,993) 3,146,658 - Total $ 3,413,501 $ 1,209,908 $ (362,773) $ 4,260,636 $ 26,814

NOTE 8 INTERFUND RECEIVABLES AND PAYABLES Interfund receivables and payables balances are as follows:

Due from Other Funds Due to Other Funds

Major funds:General Fund $ 98,358 $ - CDBG - 10,095 Other Grants - 66,897

98,358 76,992 Nonmajor funds:

County Park Bond - 21,366

Total funds $ 98,358 $ 98,358

NOTE 9 COMMITMENTS AND CONTINGENCIES

Risk Management The City is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and emissions; and natural disasters for which the City participates in the Municipal Insurance Cooperative Joint Powers Authority.

Lawsuits Legal claims and lawsuits arise from time to time in the normal course of business, which, in the opinion of management, will have no material effect on the City's financial position.

Grant Audit Contingencies Under the terms of federal and state grants, periodic audits are required and certain costs may be questioned as not being appropriate expenditures. Such audits could lead to reimbursement to the grantor agencies. City management believes disallowances, if any, would be immaterial.



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NOTE 9 COMMITMENTS AND CONTINGENCIES (CONTINUED) Description of Municipal Insurance Cooperative Joint Powers Authority The City of Cudahy is a member of the Municipal Insurance Cooperative (MIC) Joint Powers Authority. MIC was formed in 2014 to provide insurance coverage and risk management services to public entities and made up of 6 members. MIC is a non-risk sharing pool that provides the JPA members, at their option, the opportunity to purchase property, liability, and workers’ compensation on a group basis. The unique design of MIC allows member agencies to obtain coverage that is more cost effective than they could by on their own while avoiding the risks associated with joint and several liabilities. Self-Insurance Programs of the Authority MIC provides comprehensive and cost effective policies in terms of limits of liability and insurance coverage. MIC is available to public entities of all sizes, providing an insurance program that will assist them in maximizing valuable resources. Liability In the liability program, each member is individually rated based upon current market conditions and loss experience. Members have the option to purchase any and all of the available insurance program that makes sense for their agency. The City of Cudahy has elected to purchase excess liability coverage through MIC with total limits of $10M with a $50K self-insured retention. Premiums for the coverage are paid annually and are not subject to retrospective adjustments. Workers' Compensation In the workers’ compensation program, each member is individually rated based upon current market conditions and loss experience. Members have the option to purchase excess workers’ compensation coverage at a retention level that makes sense for their agency. The City of Cudahy has elected to purchase excess workers’ compensation coverage through MIC with statutory limits and a self-insured retention of $1M. In addition, the City has a buffer policy with total limits of $925K and $75K self-insured retention. Premiums for the coverage are paid annually and are not subject to retrospective adjustments. Property Insurance The City of Cudahy purchases stand-alone all-risk property coverage for all city owned property. City of Cudahy property currently has all-risk property insurance protection in the amount of $28,492,075. There is a $10,000 deductible per occurrence. Premiums for the coverage are paid annually and are not subject to retrospective adjustments.



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NOTE 9 COMMITMENTS AND CONTINGENCIES (CONTINUED) Crime Insurance The City of Cudahy purchases crime insurance coverage in the amount of $1,000,000 with a $5,000 deductible. The fidelity coverage is provided through standard insurance. Premiums are paid annually and are not subject to retrospective adjustments. Special Event Tenant User Liability Insurance The City of Cudahy further protects against liability damages by requiring tenant users of certain property to purchase low-cost tenant user liability insurance for certain activities on agency property. The insurance premium is paid by the tenant user and is paid to the City of Cudahy according to a schedule. The City of Cudahy then pays for the insurance. The insurance is arranged by the City’s insurance broker, Keenan & Associates. Adequacy of Protection In the past three years, no claims for general liability or workers’ compensation have exceeded the City’s self-insured retention level. Claims and Judgments The City accounts for uninsured, material claims and judgments and associated legal and administrative costs when it is probable that the liability claim has been incurred and the amount of the loss can be reasonably estimated. Included therein are claims incurred but not reported, which consists of (a) known loss events expected to be presented as claims later, (b) unknown loss events that are expected to become claims, and (c) expected future development on claims already reported. This is based upon historical actual results that have established a reliable pattern supplemental by specific information about current matters. Small dollar claims and judgments are recorded as expenditures when paid.



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NOTE 10 DEFINED BENEFIT PENSION PLAN A. General Information about the Pension Plans Plan Description All qualified permanent and probationary employees are eligible to participate in the City’s Miscellaneous Employee Pension Plan. The City’s Miscellaneous Employee Pension Plan is part of the Miscellaneous Risk Pool, a cost-sharing multiple employer defined benefit pension plan administered by the California Public Employees’ Retirement System (CalPERS). Benefit provisions under the Plan are established by State statute and the City’s resolution. CalPERS issues publicly available reports that include a full description of the pension plan regarding benefit provisions, assumptions and membership information that can be found on the CalPERS website. Classic participants (defined as eligible participants prior to January 1, 2013) are required to contribute 8% of their annual covered salary. Second tier participants are required to contribute 7% of their annual covered salary. New or Public Employees’ Pension Reform Act of 2013 (PEPRA) participants (defined as eligible employees brought into CalPERS membership for the first time on or after January 1, 2013) contribute at least half the normal cost rate as determined by CalPERS. The City contributes the remaining amounts necessary to fund the benefits for its employees, using the actuarial basis adopted by the CalPERS Board of Administration. Benefits Provided CalPERS provides service retirement and disability benefits, annual cost of living adjustments and death benefits to Plan members, who must be public employees and beneficiaries. Benefits are based on years of credited service, equal to one year of full time employment. Members with five years of total service are eligible to retire at age 50 with statutorily reduced benefits. All members are eligible for non-duty disability benefits after 10 years of service. The death benefit is one of the following: the Basic Death Benefit, the 1957 Survivor Benefit, or the Optional Settlement 2W Death Benefit. The cost of living adjustments for each plan are applied as specified by the California Public Employees’ Retirement Law.



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NOTE 10 DEFINED BENEFIT PENSION PLAN (CONTINUED) The Plans’ provisions and benefits in effect at June 30, 2017 are summarized as follows:

Classic Second Tier PEPRA

Hire date Prior to Prior to On or afterJanuary 1, 2013 January 1, 2013 January 1, 2013

Benefit formula 2.7% @ 55 2% @ 60 2% @ 62Benefit vesting schedule 5 years service 5 years service 5 years serviceBenefit payments monthly for life monthly for life monthly for lifeRetirement age 50 - 55 50 - 55 52 - 67Monthly benefits, as a % of eligible compensation compensation 2.0% to 2.7% 2.0% to 2.7% 1.0% to 2.5%Required employee contribution rates 8% 7% 6.55%Required employer contribution rates 11.63% 7.61% 6.25%

Miscellaneous Plan

Contributions Section 20814(c) of the California Public Employees’ Retirement Law requires that the employer contribution rates for all public employers be determined on an annual basis by the actuary and shall be effective on July 1st following notice of a change in the rate. Funding contributions are determined annually on an actuarial basis as of June 30 by CalPERS. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. The City is required to contribute the difference between the actuarially determined rate and the contribution rate of employees. For the year ended June 30, 2017, the contributions recognized as part of pension expense for the Plan were as follows:

Miscellaneous

Contributions - employer $ 91,846 Contributions - employee 74,917



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NOTE 10 DEFINED BENEFIT PENSION PLAN (CONTINUED) B. Pension Liabilities, Pension Expenses and Deferred Outflows/Inflows of

Resources Related to Pensions As of June 30, 2017, the City reported net pension liability for its proportionate share of the net pension liability of the Plan as follows:

Proportionate Share of Net

Pension Liability (Asset)

Miscellaneous $ 3,146,658

Effective for measurement period 2015, CalPERS provides GASB Statement No. 68 Accounting Valuation Report for the Miscellaneous Risk Pool and Allocation Methodology to be used by participants in the risk pool. The schedules of employer allocation include three ratios. It includes allocation for the Total Pension Liability, Plan Fiduciary Net Position and all others pension amounts (e.g. deferred outflows/inflows of resources and pension expense). The Total Pension Liability is allocated based on the Actuarial Accrued Liability from the most recent Actuarial Valuation Report as of June 30, 2015 used for funding purposes. The Plan Fiduciary Net Position is allocated based on the sum of the Market Value of Assets from the most recent Actuarial Valuation as of June 30, 2015 used for funding purposes plus supplemental payments made by employers during the current measurement period to reduce their unfunded actuarial accrued liabilities. All other pension amounts (deferred outflows/inflows of resources and pension expense) are allocated based on the legally or statutorily required employer contributions for the fiscal year ended June 30, 2016, including reported contribution adjustments and suspended payroll information. The City’s allocation bases for pension items are as follows:

Miscellaneous

Total pension liability 0.0006989Plan fiduciary net position 0.0006331All other pension amounts (deferred outflows/inflows of resources and pension expense) 0.0007971 For the year ended June 30, 2017, the City recognized pension expense of $230,186. At June 30, 2017, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:



37

NOTE 10 DEFINED BENEFIT PENSION PLAN (CONTINUED)

Deferred Outflows of Resources

Deferred Inflows of Resources

Pension contributions subsequent to measurement date $ 91,846 $ - Differences between actual and expected experience 6,022 2,214 Changes in assumptions - 56,975 Change in employer's proportion 103,366 - Differences in proportion 4,442 - Differences between the employer’s contribution and the employer's proportionate share of contributions - 152,283 Net differences between projected and actual earnings on plan investments 378,591 -

Total 584,267 211,472 $ $

$91,846 reported as deferred outflows of resources related to contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended June 30, 2018. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized as pension expense as follows:

Year Ended June 30 Amount

2018 $ (8,962) 2019 3,622 2020 163,077 2021 123,211

Thereafter - Actuarial Assumptions The total pension liabilities in the June 30, 2015 actuarial valuations were determined using the following actuarial assumptions:



38

NOTE 10 DEFINED BENEFIT PENSION PLAN (CONTINUED)

Valuation Date June 30, 2015Measurement Date June 30, 2016Actuarial Cost Method Entry-Age Normal

Cost MethodActuarial Assumptions:

Discount Rate 7.65%Inflation 2.75%Payroll Growth 3.00%Projected Salary Increase (1) Investment Rate of Return 7.5% (2)Mortality (3)Post-Retirement Benefit Increase (4)

(1) Varies by entry age and service(2) Net of pension plan investment expenses, including inflation(3) Derived using CalPERS' Membership Data for all funds(4) Contract COLA up to 2.75% until Purchasing Power Protection Allowance Floor on Purchasing Power applies, 2.75% thereafter.

The underlying mortality assumptions and all other actuarial assumptions used in the June 30, 2015 valuation were based on actuarial experience study for the period 1997 to 2011, including updates to salary increase and mortality and retirement rates. The Experience Study report can be obtained at CalPERS’ website under Forms and Publications. Discount Rate The discount rate used to measure the total pension liability was 7.65% for the Plan. To determine whether the municipal bond rate should be used in the calculation of a discount rate, CalPERS stress tested plans that would most likely result in a discount rate that would be different from the actuarially assumed discount rate. Based on the testing of the plans, none of the tested plans ran out of assets. Therefore, the current 7.65% discount rate is appropriate and the use of the municipal bond rate calculation is not necessary. The discount rate of 7.65% used for the June 30, 2016 measurement date is without reduction of pension plan administrative expenses and will be applied to all plans in the Public Employees Retirement Fund (PERF). The stress test results are presented in a detailed report that can be obtained from the CalPERS website.



39

NOTE 10 DEFINED BENEFIT PENSION PLAN (CONTINUED) The long-term expected rate of return on pension plan investments was determined using a building-block method in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. In determining the long-term expected rate of return, CalPERS took into account both short-term and long-term market return expectations as well as the expected pension fund cash flows. Using historical returns of all the funds’ asset classes, expected compound returns were calculated over the short-term (first 10 years) and the long-term (11-60 years) using a building-block approach. Using the expected nominal returns for both short-term and long-term, the present value of benefits was calculated for each fund. The expected rate of return was set by calculating the single equivalent expected return that arrived at the same present value of benefits for cash flows as the one calculated using both short-term and long-term returns. The expected rate of return was then set equivalent to the single equivalent rate calculated above and rounded down to the nearest one quarter of one percent. The following table reflects long-term expected real rate of return by asset class. The rate of return was calculated using the capital market assumptions applied to determine the discount rate and asset allocation. These geometric rates of return are net of administrative expenses.

CurrentTarget Real Return Real Return

Asset Class Allocation Years 1 - 10 (a) Years 11+ (b)

Global Equity 51.00% 5.25% 5.71%Global Fixed Income 20.00% 0.99% 2.43%Inflation Sensitive 6.00% 0.45% 3.36%Private Equity 10.00% 6.83% 6.95%Real Estate 10.00% 4.50% 5.13%Infrastructure and Forestland 2.00% 4.50% 5.09%Liquidity 1.00% -0.55% -1.05%

100.00%

(a) An expected inflation of 2.5% used for this period.

(b) An expected inflation of 3.0% used for this period.



40

NOTE 10 DEFINED BENEFIT PENSION PLAN (CONTINUED) Sensitivity of the Proportionate Share of the Net Pension Liability to Changes in the Discount Rate The following presents the City’s proportionate share of the net pension liability for the Plan, calculated using the discount rate for the Plan, as well as what the City’s proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1-percentage point lower or 1-percentage point higher than the current rate:

Miscellaneous

1% Decrease 6.65%Net Pension Liability (Asset) $ 4,501,358

Current Discount Rate 7.65%Net Pension Liability (Asset) $ 3,146,658

1% Increase 8.65%Net Pension Liability (Asset) $ 2,027,065

C. Pension Plan Fiduciary Net Position Detailed information about each pension plan’s fiduciary net position is available in the separately issued CalPERS financial reports. D. Payable to the Pension Plan As of June 30, 2017, the City did not have outstanding amount of contributions to the pension plan required for the year ended June 30, 2017.

NOTE 11 POST EMPLOYMENT BENEFITS Plan Description Integrated medical/prescription drug coverage is provided through CalPERS under the Public Employees' Medical and Hospital Care Act (PEMHCA). Employees may choose from a variety of HMO and PPO options. The City pays 100% of the cost of PEMHCA coverage for active full-time employees, including coverage for spouse and dependent children. The City also pays a 0.36% of premium administrative charge for all active employees. The City offers the same medical plans to its eligible retirees as to its active employees, with the exception that once a retiree becomes eligible for Medicare (that is, reaches age 65), he or she must join a Medicare HMO or a Medicare Supplement plan under PEMHCA.



41

NOTE 11 POST EMPLOYMENT BENEFITS (CONTINUED) Certain employees become eligible to retire and receive City-paid healthcare benefits upon attainment of age 50 and 5 years of covered PERS service, or by qualifying disability retirement status. Benefits are paid for the lifetime of the retiree and, if applicable, the surviving spouse of the retiree. The City's contribution on behalf of all eligible retirees is the same as it is for active employees (100% of the cost of coverage for retiree, spouse and dependent children). The City has elected the equal contribution method, where the contribution will remain the same annually. Funding Policy The contribution requirements of the City are established and may be amended by the City Council. The required contribution is based on pay-as-you-go financing requirements. For fiscal year 2016-2017, the City contributed $92,950 to the plan, which was 100% of the total current premiums. Annual OPEB Cost and Net OPEB Obligation The City's annual other OPEB cost (expense) is calculated based on the annual required contribution of the employer (ARC), an amount actuarially determined in accordance with GASB Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) not to exceed thirty years. The following table shows the components of the City's annual OPEB cost for the year, the amount actually contributed to the plan, and changes in the City's net OPEB obligation:

Annual Required Contribution (ARC) $ 206,319 Interest on net OPEB obligation 20,960 Adjustment to ARC (30,303) Annual OPEB cost 196,976 Less: Contributions made during the year (92,950) Increase in Net OPEB obligation 104,026 Net OPEB Obligation - beginning of the year 524,002 Net OPEB Obligation - end of the year $ 628,028

The City's annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for 2017 and the preceding year were as follows:

June 30, 2017 June 30, 2016

Annual OPEB cost $ 196,976 $ 198,563

% of Annual OPEB cost contributed to the plan 47.19% 55.19%

Net OPEB Obligation $ 628,028 $ 524,002



42

NOTE 12 DEFERRED OUTFLOWS/INFLOWS OF RESOURCES The deferred inflow of resources recognized in the governmental fund financial statements pertains to unavailable revenues which represent receivables that were not received within the availability period.

Governmental Funds Balance at

June 30, 2017Deferred inflow of resources

Unavailable Revenue - Accounts receivable, grant reimbursements and Housing Authority receivables that were not received within the availability period and were not recognized as revenues $ 3,297,651

Refer to Note 10 for deferred outflows and inflows of resources related to pensions.

NOTE 13 SALE OF PROPERTY

During the Fiscal Year 2015-2016, the City, as the Housing Successor Agency, determined that certain properties that are included in the Settlement Agreement between the Successor Agency and Paramount Villas were acquired using tax increment revenues derived from the low and moderate income housing fund, and therefore, belong to the Housing Successor Agency. The Housing Successor Agency submitted an updated Housing Asset Transfer (HAT) Form to the Department of Finance to include these properties. On May 24, 2016, the Department of Finance approved the inclusion of the properties in the HAT Form and considered the assets eligible for transfer to the City of Cudahy, as the Housing Successor Agency. As part of the Settlement Agreement, Paramount Villas paid the Successor Agency $1.2 million for the purchase of said property.

The actual transfer of related assets to the Housing Successor Agency, which amounted to $1.2 million, was completed on July 27, 2016. The actual net cash received from the settlement amounted to $1,198,046.

NOTE 14 SUCCESSOR AGENCY DISCLOSURES The accompanying financial statements also include the Private-purpose Trust Fund for the Successor Agency to the City’s former Redevelopment Agency (Successor Agency). The City, as the Successor Agency, serves in a fiduciary capacity, as custodian for the assets and to wind down the affairs of the former Redevelopment Agency. Its assets are held in trust for the benefit of the taxing entities within the former Redevelopment Agency’s boundaries and as such, are not available for the use of the City.



43

NOTE 14 SUCCESSOR AGENCY DISCLOSURES (CONTINUED) In 2014, the State Controller’s Office ordered the transfer of assets from Cudahy Economic Development Corporation (CEDC) back to the Successor Agency. In 2015, the Board of Directors of CEDC and the Oversight Board to the Successor Agency approved the asset transfer agreement. The assets were returned to the Successor Agency with the recording of quit claim deeds on October 19, 2015. The accompanying financial statements of the Successor Agency as of and for the year ended June 30, 2017 reflect the transferred assets with a net book value of $17,208,580. Disclosures related to assets and long-term liabilities of the Successor Agency are as follows: Rental and Other Accounts Receivable

At June 30, 2017, rental and other accounts receivable consisted of the following:

Rental receivable 124,687$ Other receivable 42,828

Total 167,515 Less allowance for bad debts (124,687)

Net 42,828$

Loans Receivable Written-off As part of the Settlement Agreement by and between the Successor Agency and Paramount Villas, the loans receivable previously reported at $308,219 was forgiven and written off in the Successor Agency’s financial statements during the fiscal year ended June 30, 2017.



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NOTE 14 SUCCESSOR AGENCY DISCLOSURES (CONTINUED) Capital Assets and Land Held for Development At June 30, 2017, land and buildings are composed of the following:

Site Reference Address APN Cost

399,889$ 1,127,027 *1,323,297 2,850,213

3,650,074 1,541,620

407,532 6,608,296

3,315,954

1,116,500

Total land and buildings 17,588,641$

Land and buildings, cost 15,452,544$ Less: Accumulated depreciation (1,050,017) Land and buildings, net 14,402,527$

* Land held for development 2,136,097$

62240190144610 Santa Ana Santa Ana Street

6224-034-014, -032, -040, -041

8420 Atlantic Avenue4819 Patata Street

Patata Industrial Property

6224-018-068, -069, -070, -071

4720 Santa Ana Street8110 Atlantic Avenue8100 Atlantic Avenue

Santa Ana Street & Atlantic Avenue

*1,009,070 6226-022-002, -008, -019, -020, -021,

-022, -023, -024

7638 Atlantic Avenue7644 Atlantic Avenue7630 Atlantic Avenue7660 Atlantic Avenue4613 Clara Street

Atlantic Avenue & Clara Street

2,904,717

792,961 6224-001-014, -015

5256 Elizabeth Street5260 Elizabeth Street

Elizabeth Street Residential

2,219,090

1,096,864 6224-022-001,

-002, -003, -004, -012

8201 Atlantic Avenue8221 Atlantic Avenue4633 Cecilia Street8135 Atlantic Avenue4629 Cecilia Street

Atlantic Avenue & Cecilia Street



45

NOTE 14 SUCCESSOR AGENCY DISCLOSURES (CONTINUED) Deferred Outflows of Resources Pursuant to GASB Statement No. 63, “Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position” and GASB Statement No. 65, “Items Previously Reported as Assets and Liabilities,” the City recognized deferred outflows of resources in the City’s financial statements. The deferred outflow of resources pertains to the unamortized loss on defeasance of debt. This deferred outflow of resources is recognized as a component of interest expense in a systematic and rational manner over the remaining life of the old debt or the life of the new debt, whichever is shorter.

Private-Purpose

Trust Fund Balance at

June 30, 2017Deferred outflow of resources

Unamortized loss on defeasance of debt $ 12,512

Long-term Debt Long-term liability activity of the successor agency for the year ended June 30, 2017 follows:

Balance Balance Due WithinJuly 1, 2016 Additions Reductions June 30, 2017 One Year

Note payable $ 1,409,928 $ - $ - $ 1,409,928 $ - Tax allocation refunding 18,840,000 - (1,225,000) 17,615,000 665,000 Less: Bond discount (448,276) - 45,308 (402,968) - County deferral 1,000,945 50,047 - 1,050,992 - Total $ 20,802,597 $ 50,047 $ (1,179,692) $ 19,672,952 $ 665,000

Notes Payable In 1986-1987, the Agency borrowed a total of $1,000,000 from a financial institution for costs associated with a development project (Parcel A). Payments are due in annual installments equal to the incremental difference between sales tax revenue from Parcel A as of the 1984-1985 tax year and sales tax revenues for each subsequent fiscal year. Sales tax incremental revenue from Parcel A is insufficient to make loan payments. The note is carried at $1,409,928.



46

NOTE 14 SUCCESSOR AGENCY DISCLOSURES (CONTINUED) Tax Allocation Refunding Bonds On August 1, 2003, the City issued, at a discount of $480,116, Tax Allocation Refunding Bonds series 2003A, 2003B, and 2003C amounting to $3,680,000, $3,255,000, and $6,680,000, respectively. The 2003A Bonds were issued to provide funds to the City to promote the supply of low and moderate income housing within the Project Area of the former redevelopment agency. The 2003B and 2003C Bonds were issued for the purpose of refunding the City's previously Issued $7,245,000 Cudahy Redevelopment Project Tax Allocation Refunding Bonds, Series 1994A and Series 1994B. The 2003A and 2003B Bonds are secured on a parity basis with the City's outstanding $1,425,000 Tax Allocation Refunding Bonds Series 1999. The 2003C Bonds are secured on a basis subordinate to the 1999 Bonds, 2003A and 2003B Bonds. The Bonds are payable from and secured by pledged tax revenues to be derived from the Project Area. On April 13, 2011, the Agency issued, at a discount of $404,854, Tax Allocation Refunding Bonds Series 2011A (Housing Projects) and 2011B (Redevelopment Projects) amounting to $2,285,000, and $8,920,000 respectively. The 2011A Bonds were issued to finance various housing projects to the Agency to promote the supply of low and moderate income housing within the Project Area. The 2011 B Bonds were issued to finance various infrastructure improvements within the Project Area. The 2011A Bonds are payable from and both are secured by the housing revenues and 2011 B Bonds are payable from and secured by the pledged tax revenues on parity with the former redevelopment agency, City-Wide Redevelopment Project, Tax Allocation Refunding Bonds, and Series 2003C outstanding in the amount of $5,980,000. The 2011A Bonds are subordinate to the lien of the owners of the former redevelopment agency, City-Wide Redevelopment Project, Tax Allocation Refunding Bonds, Series 2003A, outstanding principal amount of $2,065,000. The 2011B Bonds are subordinate to the lien of the owners of the former redevelopment agency, City-Wide Redevelopment Project Tax Allocation Refunding Bonds Series 1999, outstanding in the amount of $1,425,000.

At June 30, 2017, bonded indebtedness consisted of the following Tax Allocation Refunding Bonds:

Date Final Amount

Issued Maturity Interest Rate Issued OutstandingSeries 2011 A 04/13/11 10/01/27 5.70%-7.75% $ 2,285,000 $ 2,170,000Series 2011 B 04/13/11 10/01/27 5.70%-7.75% 8,920,000 5,975,000Series 2003 A 08/01/03 10/01/27 5.70%-7.75% 3,680,000 2,065,000Series 2003 C 08/01/03 10/01/27 6.50% 6,680,000 5,980,000Series 1999 (Taxable) 10/15/99 10/01/26 8.95% 1,425,000 1,425,000

$ 22,990,000 $ 17,615,000



47

NOTE 14 SUCCESSOR AGENCY DISCLOSURES (CONTINUED) Tax Allocation Refunding Bonds (Continued) Interest is payable semi-annually. Principal redemptions begin October 2005, October 2008, October 2009, October 2021, October 2011, and October 2011 for the Series 2003A, Series 2003B, Series 2003C and the Series 1999, Series 2011A, and Series 2011B, respectively. Annual requirements to amortize outstanding bonded debt, including interest payments, are as follows:

Year endingJune 30 Principal Interest Total

2018 $ 665,000 $ 1,210,005 $ 1,875,0052019 705,000 1,168,788 1,873,7882020 745,000 1,123,079 1,868,0792021 795,000 1,072,816 1,867,8162022 855,000 1,017,598 1,872,598

2023-2027 6,595,000 3,855,083 10,450,0832028 7,255,000 626,850 7,881,850

Total $ 17,615,000 $ 10,074,219 $ 27,689,219

Pledged Future Revenues The City pledged future tax revenues associated with its bond issuances for Series 1999, 2003 and 2011 (the Bonds). These debt issuances and pledged tax revenues are reported in the Private-Purpose Trust Fund (fiduciary funds). The pledged tax revenues are to be used solely for the repayment of principal and interest on the bonds until they are paid in full through 2028 and are not available for other purposes during the duration that the bonds are outstanding. The pledged tax revenues totaled $2,850,341 for the year ended June 30, 2017. The principal and interest payments on the bonds that had the pledged tax revenues for the year ended June 30, 2017 were approximately $1,225,000 and $1,238,020, respectively. The total principal and interest remaining is approximately $27,700,000. Management expects that pledged tax revenues will be sufficient to make future principal and interest payments on the bonds. County Deferrals The City, Agency and County entered into agreements whereby the County will defer tax increment generated within the project area to meet the Agency's debt service obligations. The outstanding balance accrues interest of five percent (5%) compounded annually and shall be repaid with the property tax revenues received by the Agency in excess of its debt service payment requirements. The County Deferral is recorded as tax revenue when earned and debt in the fiduciary funds.



48

NOTE 15 GOVERNMENTAL ACCOUNTING STANDARDS BOARD (GASB) STATEMENTS ISSUED, NOT YET EFFECTIVE The Governmental Accounting Standards Board (GASB) has issued several pronouncements prior to June 30, 2017, that have effective dates that may impact future financial presentations. Management has not yet determined the impact that implementation of the following statements may have on the financial statements of the City. GASB No. 75 - Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions. The requirements of this Statement will improve the decision-usefulness of information in employer and governmental nonemployer contributing entity financial reports and will enhance its value for assessing accountability and interperiod equity by requiring recognition of the entire OPEB liability and a more comprehensive measure of OPEB expense. The provisions of this Statement are effective for financial statements for periods beginning after June 15, 2017. GASB No. 81 – Irrevocable Split-Interest Agreements. This Statement enhances the comparability of financial statements by providing accounting and financial reporting guidance for irrevocable split-interest agreements in which a government is a beneficiary. This Statement also enhances the decision-usefulness of general purpose external financial reports, and their value for assessing accountability, by more clearly identifying the resources that are available for the government to carry out its mission. The provisions of this Statement are effective for financial statements for periods beginning after December 15, 2016. GASB No. 82 – Pension Issues-An Amendment of GASB No. 67, No. 68 and No. 73. The requirements of this Statement will improve financial reporting by enhancing consistency in the application of financial reporting requirements to certain pension issues. The provisions of this Statement are effective for financial statements for period beginning after June 15, 2017. GASB No. 83 - Certain Asset Retirement Obligations. This Statement addresses accounting and financial reporting for certain asset retirement obligations (AROs). An ARO is a legally enforceable liability associated with the retirement of a tangible capital asset. GASB Statement No. 83 establishes criteria for determining the timing and pattern of recognition of a liability and a corresponding deferred outflows of resources for AROs. The determination of when the liability is incurred should be based on the occurrence of external laws, regulations, contracts, or court judgments, together with the occurrence of an internal event that obligates a government to perform asset retirement activities. This Statement requires the measurement of an ARO to be based on the best estimate of the current value of outlays expected to be incurred and to be adjusted for the effects of general inflation or deflation at least annually. This Statement also requires disclosure of information about the nature of a government ARO, the methods and assumption used for the estimate of the liabilities, and the estimated remaining useful life of the associated tangible capital assets. The requirements of this Statement are effective for reporting periods beginning after June 15, 2018.



49

NOTE 15 GOVERNMENTAL ACCOUNTING STANDARDS BOARD (GASB) STATEMENTS ISSUED, NOT YET EFFECTIVE (CONTINUED) GASB No. 85 - Omnibus 2017. This statement addresses practice issues that have been identified during implementation and application of certain GASB Statements. This Statement addresses a variety of topics including issues related to blending component units, goodwill, fair value measurement and application, and postemployment benefits (pensions and other postemployment benefits (OPEB). The requirements of this statement are effective for reporting period beginning after June 15, 2017. GASB No. 86 - Certain Debt Extinguishment Issues. The objective of this Statement is to provide guidance for the accounting of in-substance debt defeasance where existing resources - as opposed to the proceeds of refunding debt – are used to fund an irrevocable trust. Now the debt will be considered defeased whether the trust is funded with existing resources or refunding debt proceeds. However, in financial statements using the economic resources measurement focus, governments must recognize any difference between the reacquisition price (the amount placed in the trust) and the net carrying amount of the debt defeased in substance using only existing resources as a separately identified gain or loss in the period of defeasance. The Statement also requires disclosure of cases where risk-free trust assets can be substituted with assets that are not risk-free. The requirements of this Statement are effective for reporting periods beginning after June 15, 2017. GASB No. 87 - Leases. The objective of this Statement is to better meet the information needs of financial statement users by improving accounting and financial reporting for leases by governments. This Statement increases the usefulness of governments’ financial statements by requiring recognition of certain lease assets and liabilities for leases that previously were classified as operating leases and recognized as inflows of resources or outflows of resources based on the payment provisions of the contract. It establishes a single model for lease accounting based on the foundational principle that leases are financings of the right to use an underlying asset. Under this Statement, a lessee is required to recognize a lease liability and an intangible right-to-use lease asset, and a lessor is required to recognize a lease receivable and a deferred inflow of resources, thereby enhancing the relevance and consistency of information about governments’ leasing activities. The requirements of this Statement are effective for reporting periods beginning after June 15, 2017.



50

NOTE 16 SUBSEQUENT EVENTS

The City has evaluated events subsequent to June 30, 2017 to assess the need for potential recognition or disclosure in the financial statements. Such events were evaluated through March 27, 2018, the date the financial statements were available to be issued. Based upon this evaluation, it was determined that no subsequent events occurred that require recognition or additional disclosure in the financial statements.

City of Cudahy General Fund

Schedule of Revenues and Expenditures – Budget and Actual Year ended June 30, 2017

51

Variance with Final Budget-

Final Actual Positive

Budget Amounts (Negative)

Taxes $ 2,779,200 $ 3,021,233 $ 242,033 Licenses and permits 773,000 1,075,637 302,637 Intergovernmental 2,539,000 2,550,694 11,694 Charges for services 150,330 189,401 39,071 Fines, forfeitures and penalties 229,000 160,428 (68,572) Investment income 6,000 6,828 828 Other revenue 940,000 51,438 (888,562)

7,416,530 7,055,659 (360,871)

Current: General government 2,973,299 2,737,776 235,523 Public safety 4,081,898 4,078,465 3,433 Community services 299,599 348,607 (49,008) Community development 1,105,147 714,112 391,035

8,459,943 7,878,960 580,983

(1,043,413) (823,301) 220,112

2,259,240 2,259,240 -

$ 1,215,827 $ 1,435,939 $ 220,112 Fund balance (deficit), end of year

Expenditures

Revenues


Total revenues

Total expenditures

Fund balance, beginning of year

City of Cudahy Community Development Block Grant

Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual Year ended June 30, 2017

52


Final Actual Positive

Budget Amounts (Negative)

Intergovernmental $ 325,861 $ 208,441 $ (117,420) 325,861 208,441 (117,420)

Current:Community development 325,861 164,897 160,964

325,861 164,897 160,964

- 43,544 43,544

(34,663) (34,663) -

$ (34,663) $ 8,881 $ 43,544



Fund balance (deficit), end of year

Revenues

Expenditures

Total revenues

Total expenditures

City of Cudahy State Gas Tax Fund


53


Final Actual PositiveBudget Amounts (Negative)

Intergovernmental $ 530,000 $ 469,586 $ (60,414) Use of money and property 2,000 3,963 1,963 Miscellaneous - 6,703 6,703

532,000 480,252 (51,748)

Current: Community services 1,214,395 860,144 354,251 Capital outlay 230,000 - 230,000

1,444,395 860,144 584,251

(912,395) (379,892) 532,503

909,115 909,115 -

$ (3,280) $ 529,223 $ 532,503

Total revenues


Revenues

Expenditures

Total expenditures



City of Cudahy Proposition A Local Return Fund


54



Intergovernmental $ 450,000 470,552 20,552 Use of money and property 1,000 6,554 5,554

451,000 477,106 26,106

Current: Community services 126,488 110,642 15,846 Capital outlay 250,000 - 250,000

376,488 110,642 265,846

74,512 366,464 291,952

916,055 916,055 -

$ 990,567 $ 1,282,519 $ 291,952 Fund balance (deficit), end of year

Expenditures

Total expenditures



Total revenues

Revenues

City of Cudahy Other Grants


55



Intergovernmental $ 1,951,800 $ 139,913 $ (1,811,887) Other revenue 451,225 - (451,225)

2,403,025 139,913 (2,263,112)


Capital outlay 1,880,300 707,830 1,172,470 2,403,025 732,588 1,670,437

- (592,675) (592,675)

(151,215) (151,215) -

$ (151,215) $ (743,890) $ (592,675)

Revenues


Fund deficit, beginning of year


Total revenues

Expenditures

Total expenditures

City of Cudahy Housing Authority


56



Other revenue $ - $ 20,127 $ 20,127 - 20,127 20,127


861,861 26,730 835,131

(861,861) (6,603) 855,258

Sale of property - 1,198,046 1,198,046

(861,861) 1,191,443 2,053,304

34,385 34,385 -

$ (827,476) $ 1,225,828 $ 2,053,304

Total revenues

Revenues


Expenditures

Total expenditures

Excess (deficiency) of revenuesover expenditures



Other financing sources (uses)

City of Cudahy Schedule of Funding Progress

Other Postemployment Benefits (OPEB) Year ended June 30, 2017

57

ActuarialAccrued UAAL as

Actuarial Liability Unfunded a % ofActuarial Value of (AAL) Entry AAL Funded Covered CoveredValuation Assets Age (UAAL) Ratio Payroll Payroll

Date (a) (b) (b-a) (a/b) (c) (b-a)/(c)7/1/2011 $ - $ 2,002,495 $ 2,002,495 0% $ 1,105,000 181%7/1/2014 - 2,090,184 2,090,184 0% 1,098,208 190%

Note: The latest actuarial valuation date was July 1, 2014. The city has 11 active employees and 14 retired employees. There were no significant changes in the number of employees participating in and receiving benefits under the OPEB Plan.

City of Cudahy Schedule of Proportionate Share of the Net Pension Liability

Last 10 Years*

58

Measurement DateJune 30, 2016

Classic Second Tier PEPRA Classic Second Tier PEPRA

Proportion of the net pension liability (asset) 0.09058% 0.07024% 0.00051% 0.00017% 0.03347% 0.00008% 0.00000%

Proportionate Share of the net pension liability (asset) $ 3,146,658 $ 2,626,208 $ 534 $ (757) $ 2,082,443 $ 4,983 $ 140

Covered - employee payroll (1) $ 1,179,459 $ 463,703 $ 452,647 $ 257,941 $ 628,845 $ 320,891 $ 88,443

Proportionate Share of the net pension liability (asset) as percentage of covered-employee payroll 267% 566% 0% 0% 331.15% 1.55% 0.16%

Plan's Proportionate Share of the Fiduciary Net Position as 68.73% 72.59% 99.23% 103.32% 79.87% 83.03% 83.05% a Percentage of the Plan's Total Pension Liability

Plan's Proportionate Share of Aggregate Employer Contributions (2) $ 257,534 $ 127,356 $ 41,418 $ 18,506 $ 223,430 $ 659 $ 19

Miscellaneous Plan

June 30, 2014June 30, 2015Measurement Date Measurement Date

Miscellaneous Plan Miscellaneous Plan

Notes to Schedule

1 Covered-Employee Payroll represented above is based on pensionable earnings provided by the

employer. However, GASB Statement No. 68 defines covered-employee payroll as the total payroll of employees that are provided pensions through the pension plan.

2 The Plan’s proportionate share of aggregate employer contributions may not match the actual

contributions made by the employer during the measurement period. The Plan’s proportionate share of aggregate employer contributions is based on the Plan’s proportion of fiduciary net position shown on line 5 of the table above as well as any additional side fund (or unfunded liability) contributions made by the City during the measurement period.

* - Fiscal year 2015 was the 1st year of implementation, therefore only three years are shown.

City of Cudahy Schedule of Pension Contributions

Last 10 years*

59

June 30, 2017

Classic PEPRA Classic PEPRA

(actuarially determined) $ 91,846 $ 73,439 $ 14,443 $ 118,139 $ 12,145 Contributions in relation to the actuarially determined contributions (91,846) (73,439) (14,443) (118,139) (12,145) Contribution deficiency (excess) $ - $ - $ - $ - $ -

Covered-employee payroll $ 1,179,459 $ 916,350 $ 257,941 $ 949,736 $ 88,443

Contributions as a percentage of covered-employee payroll 7.79% 8.01% 5.60% 12.44% 13.73%

Notes to Schedule

Valuation date

Methods and assumptions used to determine contribution rates:Actuarial Cost Method Entry-Age Normal Cost MethodAmortization method Level percentage of payroll, closedRemaining amortization period 15 years as of valuation dateAsset valuation method 5-year smoothed marketInflationSalary increases Varies by entry age and ageInvestment rate of return 7.50%, net of pension plan investment expense

includes inflationRetirement age 57 yrs.Mortality Rate Table Derived using CalPERS' membership data for

all funds

June 30, 2015

2.75%

Miscellaneous Plan Miscellaneous PlanJune 30, 2015June 30, 2016

Miscellaneous Plan

Contractually required contribution

* - Fiscal year 2015 was the 1st year of implementation, therefore only three years are shown.

City of Cudahy

Nonmajor Funds June 30, 2017

60

SPECIAL REVENUE FUNDS Special Revenue Funds are used to account for the proceeds of specific revenue sources that are legally restricted to be expended for specific purposes. Drug Asset Seizure To account for revenues and expenditures associated with the

City’s asset seizure monies. Prop 1B Local Street Prop 1B came from bond proceeds issued to fund maintenance Improvements and improvement of local streets and roads. Proposition C To account for financial transactions in accordance with

Proposition C of the Local Transit Assistance Act. Measure R Measure R is funded with ½ percent sales tax revenues approved

by Los Angeles County voters to fund local street projects in LA County.

Air Quality Improvement To account for the additional vehicle registration fees received

from Southern California Air Quality Management District in accordance with AB 2766, as authorized by the California Clean Air Act of 1988.

Used Oil Grant To increase public awareness of the benefits of recycling oil. Recycling Conservation Grant To account for revenue and expenditure pertaining to recycling

grants. COPS To account for financial transactions in accordance with grant

requirements from the California Office of Criminal Justice. County Park To account for projects and grants funded by the County Park

Bond Act. Transportation Development To account for funds received from the Transportation

Development Authority for transport projects. Street Lighting To account for revenues and costs associated with the City’s

street lighting program.

City of Cudahy Nonmajor Funds

June 30, 2017

61

SPECIAL REVENUE FUNDS (CONTINUED) Cal Home To account for transactions funded by the Cal Home program. Quimby Act To account for monies received from developers restricted to

finance the acquisition and develop new parkland space. These monies are restricted under the Quimby Act by ordinance and require the dedication of land or impose a requirement of the payment of fee in lieu.

Federal STPL To account for Federal, state, and local Surface Transportation

Program funds received from Los Angeles County Metropolitan Transportation Authority for transportation related projects.

62

Prop 1BDrug Asset Local Street

Seizure Improvements Proposition C

Cash and cash equivalents $ 4,427 $ 81,707 $ 257,882 Accounts receivable - - - Notes receivable - - - Interest receivable 8 147 447

Total assets $ 4,435 $ 81,854 $ 258,329

Accounts payable $ - $ - $ 23,778 Due to other funds - - - Due to other government - - -

Total liabilities - - 23,778

Unavailable revenue - - -

Restricted:

Special revenue funds 4,435 81,854 234,551

- - -

4,435 81,854 234,551

$ 4,435 $ 81,854 $ 258,329


Special Revenue

Total liabilities and fund balances

ASSETS

LIABILITIES

FUND BALANCES (DEFICIT):

Unassigned

Total fund balances (deficit)

City of Cudahy Nonmajor Governmental Funds

Combining Balance Sheet June 30, 2017

63

RecyclingUsed Oil Conservation County Park

Measure R AQMD Grant Grants COPS Bond

$ 837,745 $ 67,660 $ 3,718 $ 30,920 $ 171,496 $ 138 - 7,986 - - - 27,000 - - - - - -

1,772 117 7 56 317 - $ 839,517 $ 75,763 $ 3,725 $ 30,976 $ 171,813 $ 27,138

$ 41,052 $ 4,663 $ 999 $ 875 $ 28,980 $ 5,770 - - - - - 21,366 - - - - - -

41,052 4,663 999 875 28,980 27,136

- - - - - 27,000

798,465 71,100 2,726 30,101 142,833 -

- - - - - (26,998)

798,465 71,100 2,726 30,101 142,833 (26,998)

$ 839,517 $ 75,763 $ 3,725 $ 30,976 $ 171,813 $ 27,138

Special Revenue

64

TDA - Transportation StreetDevelopment Lighting Cal Home

Cash and cash equivalents $ - $ 16,055 $ 87,145 Accounts receivable - - - Notes receivable - - 220,562 Interest receivable - 38 -

Total assets $ - $ 16,093 $ 307,707

Accounts payable $ - $ 8,041 $ - Due to other funds - - - Due to other government - - 220,406

Total liabilities - 8,041 220,406

Unavailable revenue - - -

Restricted:

Special revenue funds - 8,052 87,301

- - -

- 8,052 87,301

$ - $ 16,093 $ 307,707


Special Revenue

ASSETS

LIABILITIES

FUND BALANCES (DEFICIT):

Unassigned

Total fund balances (deficit)

Total liabilities and fund balances


Combining Balance Sheet June 30, 2017

65

Total

NonmajorFederal Governmental

Quimby Act STPL Funds

$ 63,218 $ 781,268 $ 2,403,379 - - 34,986 - - 220,562 38 1,401 4,348

$ 63,256 $ 782,669 $ 2,663,275

$ - $ - $ 114,158 - - 21,366 - - 220,406 - - 355,930

- - 27,000

63,256 782,669 2,307,343

- - (26,998)

63,256 782,669 2,280,345

$ 63,256 $ 782,669 $ 2,663,275

Special Revenue

66

Prop 1BDrug Asset Local Street

Seizure Improvements Proposition CRevenues:Taxes $ - $ - $ - Intergovernmental - - 368,917 Charges for services - - 27,112 Use of money and property 67 474 1,554 Other revenue - - -

67 474 397,583

Expenditures:Current: Public safety - - - Community development - - - Community services - - 333,021 Public services - - -

Capital outlay - - 3,150 - - 336,171

67 474 61,412

Other financing sources (uses):Return of fund to grantor (24,067) - -

(24,000) 474 61,412

Fund balances, beginning of year 28,435 81,380 173,139

Fund balances, end of year $ 4,435 $ 81,854 $ 234,551

Special Revenue


Total expenditures

Total revenues

Excess (deficiency) of revenues over expenditures


Combining Statement of Revenues, Expenditures and Changes in Fund Balances Year Ended June 30, 2017

67

RecyclingUsed Oil Conservation County Park

Measure R AQMD Grant Grant COPS Bond

$ - $ - $ - $ - $ - $ - 275,574 39,720 - 6,466 129,324 326,617

- - - - - - 5,681 337 31 173 882 -

- - - - - - 281,255 40,057 31 6,639 130,206 326,617

- - - - 25,891 - 44,496 17,230 4,000 - - 121,559

- - - 3,500 43,506 - - - - - - -

303,817 - - - - 1,235348,313 17,230 4,000 3,500 69,397 122,794

(67,058) 22,827 (3,969) 3,139 60,809 203,823

- - - - - -

(67,058) 22,827 (3,969) 3,139 60,809 203,823

865,523 48,273 6,695 26,962 82,024 (230,821)

$ 798,465 $ 71,100 $ 2,726 $ 30,101 $ 142,833 $ (26,998)

Special Revenue

68

TDA -Transportation StreetDevelopment Lighting Cal Home

Revenues:Taxes $ - $ 84,614 $ - Intergovernmental 69,252 - - Charges for services - - - Use of money and property - 89 10,491 Other revenue - - -

69,252 84,703 10,491

Expenditures:Current: Public safety - - - Community development - - 1,354 Community services - 99,997 - Public services - - - Capital outlay - - -

- 99,997 1,354

69,252 (15,294) 9,137

Other financing sources (uses):Return of fund to grantor - - -

69,252 (15,294) 9,137

Fund balances, beginning of year (69,252) 23,346 78,164

Fund balances, end of year $ - $ 8,052 $ 87,301

Total expenditures

Excess (deficiency) of revenues over expenditures


Total revenues

Special Revenue


Combining Statement of Revenues, Expenditures and Changes in Fund Balances Year Ended June 30, 2017

69

Special Revenue Total

NonmajorFederal Governmental

Quimby Act STPL Funds

$ - $ - $ 84,614 - 420,264 1,636,134 - - 27,112 38 4,018 23,835

63,218 - 63,218 63,256 424,282 1,834,913

- - 25,891 - - 188,639 - - 480,024 - - - - 770 308,972 - 770 1,003,526

63,256 423,512 831,387

- - (24,067)

63,256 423,512 807,320

- 359,157 1,473,025

$ 63,256 $ 782,669 $ 2,280,345

City of Cudahy Nonmajor Special Revenue Fund

Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget & Actual Drug Asset Seizure Fund


70

Variance withFinal Budget-


Revenues

Use of money and property $ - $ 67 $ 67 - 67 67

Expenditures - - - - - -

- 67 67

Other financing sources (uses)Return of funds - (24,067) (24,067)

Change in fund balance - (24,000) (24,000)

Fund balance, beginning of year 28,435 28,435 -

Fund balance (deficit), end of year $ 28,435 $ 4,435 $ (24,000)

Excess (deficiency) of revenuesover expenditures

Total revenues

Total expenditures


Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget & Actual Prop 1B Local Street Improvements Fund


71



Revenues

Use of money and property $ 750 $ 474 $ (276) 750 474 (276)


Change in fund balance 750 474 (276)


Fund balance (deficit), end of year $ 82,130 $ 81,854 $ (276)

Total revenues

Total expenditures


Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget & Actual Proposition C Local Return Fund


72



Revenues

Intergovernmental $ 350,000 $ 368,917 $ 18,917 Charges for services 30,000 27,112 (2,888) Use of money and property 350 1,554 1,204

380,350 397,583 17,233


Community services 327,467 333,021 (5,554) Capital outlays 345,000 3,150 341,850

672,467 336,171 336,296

Change in fund balance (292,117) 61,412 353,529


Fund balance (deficit), end of year $ (118,978) $ 234,551 $ 353,529

Total revenues

Total expenditures


Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget & Actual Measure R Fund


73



Revenues

Intergovernmental $ 270,000 $ 275,574 $ 5,574 Use of money and property 1,000 5,681 4,681

271,000 281,255 10,255

ExpendituresCurrent

Community development 44,357 44,496 (139) Capital outlays 745,000 303,817 441,183

789,357 348,313 441,044

Change in fund balance (518,357) (67,058) 451,299


Fund balance (deficit), end of year $ 347,166 $ 798,465 $ 451,299

Total revenues

Total expenditures


Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget & Actual Air Quality Improvement Fund


74



Revenues

Intergovernmental $ 28,000 $ 39,720 $ 11,720 Use of money and property 100 337 237

28,100 40,057 11,957


Community development 25,900 17,230 8,670 25,900 17,230 8,670

Change in fund balance 2,200 22,827 20,627



Total revenues

Total expenditures


Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget & Actual Used Oil Grant Fund


75



Revenues

Use of money and property $ - $ 31 $ 31 - 31 31


Community development 4,000 4,000 - 4,000 4,000 -

Change in fund balance (4,000) (3,969) 31


Fund balance (deficit), end of year $ 2,695 $ 2,726 $ 31

Total revenues

Total Expenditures


Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget & Actual Recycling Conservation Grant Fund


76



Revenues

Intergovernmental $ 6,466 $ 6,466 $ - Use of money and property 10 173 163

6,476 6,639 163

ExpendituresGeneral government 19,133 3,500 15,633

19,133 3,500 15,633




Total revenues

Total Expenditures


Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget & Actual Community Oriented Policing Services (COPS)


77



Revenues

Intergovernmental $ 100,000 $ 129,324 $ 29,324 Use of money and property - 882 882

100,000 130,206 30,206

ExpendituresCurrent

Public safety 70,000 25,891 44,109 Community services 30,000 43,506 (13,506)

100,000 69,397 30,603

Change in fund balance - 60,809 60,809



Total revenues

Total expenditures


Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget & Actual County Park Bond


78



Revenues

Intergovernmental $ 373,000 $ 326,617 $ (46,383) 373,000 326,617 (46,383)

ExpendituresCurrent: Community development 80,000 121,559 (41,559) Capital Outlays - 1,235 (1,235)

80,000 122,794 (42,794)

Change in fund balance 293,000 203,823 (89,177)

Fund balance, beginning of year (230,821) (230,821) -

Fund balance (deficit), end of year $ 62,179 $ (26,998) $ (89,177)

Total revenues

Total expenditures


Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget & Actual TDA – Transportation Development


79



Revenues

Intergovernmental $ - $ 69,252 $ 69,252 - 69,252 69,252


Change in fund balance - 69,252 69,252

Fund balance, beginning of year (69,252) (69,252) -

Fund balance (deficit), end of year $ (69,252) $ - $ 69,252

Total revenues

Total expenditures


Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget & Actual Street Lighting Fund


80



Revenues

Taxes $ 75,244 $ 84,614 $ 9,370 Use of money and property 80 89 9

75,324 84,703 9,379


Community services 102,250 99,997 2,253 102,250 99,997 2,253

Change in fund balance (26,926) (15,294) 11,632


Fund balance (deficit), end of year $ (3,580) $ 8,052 $ 11,632

Total revenues

Total expenditures


Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget & Actual Cal HOME Fund


81



Revenues

Use of money and property $ - $ 10,491 $ 10,491 - 10,491 10,491


Community development 10,000 1,354 8,646 10,000 1,354 8,646




Total revenues

Total expenditures


Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget & Actual Quimby Act Fund


82



Revenues

Use of money and property $ - $ 38 $ 38 Miscellaneous 60,000 63,218 3,218

60,000 63,256 3,256



Fund balance, beginning of year - - -


Total Revenues

Total expenditures


Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget & Actual Federal STPL


83



Revenues

Intergovernmental $ 420,264 $ 420,264 $ - Use of money and property - 4,018 4,018

420,264 424,282 4,018

ExpendituresCapital Outlays 357,629 770 356,859

357,629 770 356,859




Total revenues

Total Expenditures

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F-1

APPENDIX F

STATE DEPARTMENT OF FINANCE LETTER


G-1

APPENDIX G

FORM OF CONTINUING DISCLOSURE CERTIFICATE

Upon the issuance of the 2018 Bonds, the Agency proposes to enter into a Continuing Disclosure

Certificate in substantially the following form:

This CONTINUING DISCLOSURE CERTIFICATE (this “Disclosure Certificate”) is executed and

delivered by the Successor Agency to the Former Cudahy Community Development Commission (the

“Successor Agency”) in connection with the execution and delivery of the $14,030,000 Successor Agency to

the Former Cudahy Community Development Commission Taxable Tax Allocation Refunding Bonds, Series

2018 (the “Bonds”). The Bonds are being executed and delivered pursuant to an Indenture of Trust, dated as

of September 1, 2018, by and between the Successor Agency and The Bank of New York Mellon Trust

Company, N.A., as trustee (the “Indenture”).

The Successor Agency covenants and agrees as follows:

Section 1. Purpose of the Disclosure Certificate. This Disclosure Certificate is being executed and

delivered by the Successor Agency for the benefit of the holders and beneficial owners of the 2018 Bonds and

in order to assist the Participating Underwriter in complying with S.E.C. Rule 15c2-12(b)(5).

Section 2. Definitions. In addition to the definitions set forth above and in the Indenture, which apply

to any capitalized term used in this Disclosure Certificate unless otherwise defined in this Section 2, the

following capitalized terms shall have the following meanings:

“Annual Report” means any Annual Report provided by the Successor Agency pursuant to, and as

described in, Sections 3 and 4 of this Disclosure Certificate.

“Annual Report Date” means each March 31, commencing March 31, 2019, or the date that is nine

months after the end of the Successor Agency’s fiscal year if the Successor Agency’s fiscal year is changed

(the Successor Agency’s fiscal year currently ends June 30).

“Dissemination Agent” means HdL Coren & Cone, or any successor Dissemination Agent designated

in writing by the Successor Agency and which has filed with the Successor Agency a written acceptance of

such designation.

“Listed Events” means any of the events listed in Section 5(a) of this Disclosure Certificate.

“MSRB” means the Municipal Securities Rulemaking Board, which has been designated by the

Securities and Exchange Commission as the sole repository of disclosure information for purposes of the Rule,

or any other repository of disclosure information that may be designated by the Securities and Exchange

Commission as such for purposes of the Rule in the future.

“Official Statement” means the final official statement executed by the Successor Agency in

connection with the issuance of the 2018 Bonds.

“Participating Underwriter” means Samuel A. Ramirez & Co., Inc., the original underwriter of the

2018 Bonds required to comply with the Rule in connection with offering of the 2018 Bonds.

“Rule” means Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as it may be amended from time to time.

G-2

Section 3. Provision of Annual Reports.

(a) The Successor Agency shall, or shall cause the Dissemination Agent to, not later than the

Annual Report Date, commencing March 31, 2019 with the report for the 2017-18 fiscal year, provide to the

MSRB, in an electronic format as prescribed by the MSRB, an Annual Report that is consistent with the

requirements of Section 4 of this Disclosure Certificate. Not later than 15 Business Days prior to the Annual

Report Date, the Successor Agency shall provide the Annual Report to the Dissemination Agent (if other than

the Successor Agency). If by 15 Business Days prior to the Annual Report Date the Dissemination Agent (if

other than the Successor Agency) has not received a copy of the Annual Report, the Dissemination Agent shall

contact the Successor Agency to determine if the Successor Agency is in compliance with the previous

sentence. The Annual Report may be submitted as a single document or as separate documents comprising a

package, and may include by reference other information as provided in Section 4 of this Disclosure

Certificate; provided that the audited financial statements of the Successor Agency may be submitted

separately from the balance of the Annual Report, and later than the Annual Report Date, if not available by

that date. If the Successor Agency’s fiscal year changes, it shall give notice of such change in the same

manner as for a Listed Event under Section 5(c). The Successor Agency shall provide a written certification

with each Annual Report furnished to the Dissemination Agent to the effect that such Annual Report

constitutes the Annual Report required to be furnished by the Successor Agency hereunder.

(b) If the Successor Agency does not provide (or cause the Dissemination Agent to provide) an

Annual Report by the Annual Report Date, the Successor Agency shall provide (or cause the Dissemination

Agent to provide) to the MSRB, in a timely manner and in an electronic format as prescribed by the MSRB, a

notice in substantially the form attached as Exhibit A.

(c) With respect to each Annual Report, the Dissemination Agent shall:

(i) determine each year prior to the Annual Report Date the then-applicable rules and

electronic format prescribed by the MSRB for the filing of annual continuing disclosure reports; and

(ii) if the Dissemination Agent is other than the Successor Agency, file a report with the

Successor Agency certifying that the Annual Report has been provided pursuant to this Disclosure Certificate,

and stating the date it was provided.

Section 4. Content of Annual Reports. The Annual Report shall contain or incorporate by reference

the following:

(a) The Successor Agency’s audited financial statements prepared in accordance with generally

accepted accounting principles as promulgated to apply to governmental entities from time to time by the

Governmental Accounting Standards Board. If the Successor Agency’s audited financial statements are not

available by the Annual Report Date, the Annual Report shall contain unaudited financial statements in a

format similar to the financial statements contained in the final Official Statement, and the audited financial

statements shall be filed in the same manner as the Annual Report when they become available.

(b) Unless otherwise provided in the audited financial statements filed on or before the Annual

Report Date, financial information and operating data with respect to the Successor Agency for the preceding

fiscal year, substantially similar to that provided in the corresponding tables in the Official Statement:

(i) Description of issuance by the Successor Agency of any debt payable from or

secured by a pledge of Pledged Tax Revenues in the Project Area (as defined in the Official Statement) in the

most recently completed fiscal year only (including details as to date, amount, term, rating, insurance).

G-3

(ii) The assessed value of property in the Project Area (but without any obligation to

report values for amendment areas separately) for the current fiscal year only in the form of Table 1 in the

Official Statement.

(iii) The ten largest property taxpayers in the Project Area for the current fiscal year only

in the form of Table 3 to the Official Statement.

(iv) The property tax levy and collections in the Project Area for the most recently-

completed fiscal year only in the form of Table 5 in the Official Statement.

(v) The coverage ratio provided by Pledged Tax Revenues in the Project Area with

respect to debt service on the Bonds and any Parity Debt for the current fiscal year only, in the form of Table 9

in the Official Statement without any requirement to update any projected Pledged Tax Revenues set forth in

Table 9.

(c) Any or all of the items listed above may be included by specific reference to other documents,

including official statements of debt issues of the Successor Agency or related public entities, which are

available to the public on the MSRB’s Internet web site or filed with the Securities and Exchange Commission.

The Successor Agency shall clearly identify each such other document so included by reference.

Section 5. Reporting of Significant Events.

(a) The Successor Agency shall give, or cause to be given, notice of the occurrence of any of the

following Listed Events with respect to the Bonds:

(1) Principal and interest payment delinquencies.

(2) Non-payment related defaults, if material.

(3) Unscheduled draws on debt service reserves reflecting financial difficulties.

(4) Unscheduled draws on credit enhancements reflecting financial difficulties.

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

(6) Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or

final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB)

or other material notices or determinations with respect to the tax status of the

security, or other material events affecting the tax status of the security.

(7) Modifications to rights of security holders, if material.

(8) Bond calls, if material, and tender offers.

(9) Defeasances.

(10) Release, substitution, or sale of property securing repayment of the securities, if

material.

(11) Rating changes.

(12) Bankruptcy, insolvency, receivership or similar event of the Successor Agency or

other obligated person.

G-4

(13) The consummation of a merger, consolidation, or acquisition involving the Successor

Agency or an obligated person, or the sale of all or substantially all of the assets of

the Successor Agency or an obligated person (other than in the ordinary course of

business), the entry into a definitive agreement to undertake such an action, or the

termination of a definitive agreement relating to any such actions, other than

pursuant to its terms, if material.

(14) Appointment of a successor or additional trustee or the change of name of a trustee,

if material.

(b) Whenever the Successor Agency obtains knowledge of the occurrence of a Listed Event, the

Successor Agency shall, or shall cause the Dissemination Agent (if not the Successor Agency) to, file a notice

of such occurrence with the MSRB, in an electronic format as prescribed by the MSRB, in a timely manner not

in excess of 10 business days after the occurrence of the Listed Event.

(c) The Successor Agency acknowledges that the events described in subparagraphs (a)(2),

(a)(7), (a)(8) (if the event is a bond call), (a)(10), (a)(13), and (a)(14) of this Section 5 contain the qualifier “if

material” and that subparagraph (a)(6) also contains the qualifier “material” with respect to certain notices,

determinations or other events affecting the tax status of the Bonds. The Successor Agency shall cause a

notice to be filed as set forth in paragraph (b) above with respect to any such event only to the extent that it

determines the event’s occurrence is material for purposes of U.S. federal securities law. Whenever the

Successor Agency obtains knowledge of the occurrence of any of these Listed Events, the Successor Agency

will as soon as possible determine if such event would be material under applicable federal securities law. If

such event is determined to be material, the Successor Agency will cause a notice to be filed as set forth in

paragraph (b) above.

(d) For purposes of this Disclosure Certificate, any event described in paragraph (a)(12) above is

considered to occur when any of the following occur: the appointment of a receiver, fiscal agent, or similar

officer for the Successor Agency in a proceeding under the United States Bankruptcy Code or in any other

proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over

substantially all of the assets or business of the Successor Agency, or if such jurisdiction has been assumed by

leaving the existing governing body and officials or officers in possession but subject to the supervision and

orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization,

arrangement, or liquidation by a court or governmental authority having supervision or jurisdiction over

substantially all of the assets or business of the Successor Agency.

Section 6. Identifying Information for Filings with the MSRB. All documents provided to the MSRB

under the Disclosure Certificate shall be accompanied by identifying information as prescribed by the MSRB.

Section 7. Termination of Reporting Obligation. The Successor Agency’s obligations under this

Disclosure Certificate shall terminate upon the legal defeasance, prior redemption or payment in full of all of

the 2018 Bonds. If such termination occurs prior to the final maturity of the 2018 Bonds, the Successor

Agency shall give notice of such termination in the same manner as for a Listed Event under Section 5(c).

Section 8. Dissemination Agent. The Successor Agency may, from time to time, appoint or engage a

Dissemination Agent to assist it in carrying out its obligations under this Disclosure Certificate, and may

discharge any Dissemination Agent, with or without appointing a successor Dissemination Agent. The initial

Dissemination Agent shall be HdL Coren & Cone. Any Dissemination Agent may resign by providing 30

days’ written notice to the Successor Agency.

Section 9. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Certificate,

the Successor Agency may amend this Disclosure Certificate, and any provision of this Disclosure Certificate

may be waived, provided that the following conditions are satisfied:

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(a) if the amendment or waiver relates to the provisions of Sections 3(a), 4 or 5(a), it may only be

made in connection with a change in circumstances that arises from a change in legal requirements, change in

law, or change in the identity, nature, or status of an obligated person with respect to the 2018 Bonds, or type

of business conducted;

(b) the undertakings herein, as proposed to be amended or waived, would, in the opinion of

nationally recognized bond counsel, have complied with the requirements of the Rule at the time of the

primary offering of the Bonds, after taking into account any amendments or interpretations of the Rule, as well

as any change in circumstances; and

(c) the proposed amendment or waiver either (i) is approved by holders of the Bonds in the

manner provided in the Indenture for amendments to the Indenture with the consent of holders, or (ii) does not,

in the opinion of nationally recognized bond counsel, materially impair the interests of the holders or beneficial

owners of the 2018 Bonds.

If the annual financial information or operating data to be provided in the Annual Report is amended

pursuant to the provisions hereof, the first Annual Report filed pursuant hereto containing the amended

operating data or financial information shall explain, in narrative form, the reasons for the amendment and the

impact of the change in the type of operating data or financial information being provided.

If an amendment is made to this Disclosure Certificate modifying the accounting principles to be

followed in preparing financial statements, 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. The comparison

shall include a qualitative discussion of the differences in the accounting principles and the impact of the

change in the accounting principles on the presentation of the financial information, in order to provide

information to investors to enable them to evaluate the ability of the Successor Agency to meet its obligations.

To the extent reasonably feasible, the comparison shall be quantitative.

A notice of any amendment made pursuant to this Section 9 shall be filed in the same manner as for a

Listed Event under Section 5(c).

Section 10. Additional Information. Nothing in this Disclosure Certificate shall be deemed to prevent

the Successor Agency from disseminating any other information, using the means of dissemination set forth in

this Disclosure Certificate or any other means of communication, or including any other information in any

Annual Report or notice of occurrence of a Listed Event, in addition to that which is required by this

Disclosure Certificate. If the Successor Agency chooses to include any information in any Annual Report or

notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure

Certificate, the Successor Agency shall have no obligation under this Disclosure Certificate to update such

information or include it in any future Annual Report or notice of occurrence of a Listed Event.

Section 11. Default. If the Successor Agency fails to comply with any provision of this Disclosure

Certificate, the Participating Underwriter or any holder or beneficial owner of the 2018 Bonds may take such

actions as may be necessary and appropriate, including seeking mandate or specific performance by court

order, to cause the Successor Agency to comply with its obligations under this Disclosure Certificate. A

default under this Disclosure Certificate shall not be deemed an Event of Default under the Indenture, and the

sole remedy under this Disclosure Certificate in the event of any failure of the Successor Agency to comply

with this Disclosure Certificate shall be an action to compel performance.

Section 12. Duties, Immunities and Liabilities of Dissemination Agent.

(a) The Dissemination Agent shall have only such duties as are specifically set forth in this

Disclosure Certificate, and the Successor Agency agrees to indemnify and save the Dissemination Agent, its

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officers, directors, employees and agents, harmless against any loss, expense and liabilities which they may

incur arising out of or in the exercise or performance of its powers and duties hereunder, including the costs

and expenses (including attorneys fees) of defending against any claim of liability, but excluding liabilities due

to the Dissemination Agent’s negligence or willful misconduct. The Dissemination Agent shall have no duty

or obligation to review any information provided to it by the Successor Agency hereunder, and shall not be

deemed to be acting in any fiduciary capacity for the Successor Agency, the Bond holders or any other party.

The obligations of the Successor Agency under this Section shall survive resignation or removal of the

Dissemination Agent and payment of the 2018 Bonds.

(b) The Dissemination Agent shall be paid compensation by the Successor Agency for its

services provided hereunder in accordance with its schedule of fees as amended from time to time, and shall be

reimbursed for all expenses, legal fees and advances made or incurred by the Dissemination Agent in the

performance of its duties hereunder.

Section 13. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the

Successor Agency, the Dissemination Agent, the Participating Underwriter and the holders and beneficial

owners from time to time of the Bonds, and shall create no rights in any other person or entity.

Section 14. Counterparts. This Disclosure Certificate may be executed in several counterparts, each

of which shall be regarded as an original, and all of which shall constitute one and the same instrument.

Date: __________, 2018

SUCCESSOR AGENCY TO THE FORMER CUDAHY

COMMUNITY DEVELOPMENT COMMISSION

By:

Name:

Title: Executive Director

AGREED AND ACCEPTED:

HDL COREN & CONE,

as Dissemination Agent

By:

Name:

Title:

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EXHIBIT A

NOTICE OF FAILURE TO FILE ANNUAL REPORT

Name of Issuer: Successor Agency to the Former Cudahy Community Development

Commission

Name of Issue: Successor Agency to the Former Cudahy Community Development

Commission Taxable Tax Allocation Refunding Bonds, Series 2018

Date of Issuance: _____, 2018

NOTICE IS HEREBY GIVEN that the Successor Agency has not provided an Annual Report with

respect to the above-named Bonds as required by the Indenture of Trust, dated as of September 1, 2018, by and

between the Successor Agency and The Bank of New York Mellon Trust Company, N.A., as trustee. The

Successor Agency anticipates that the Annual Report will be filed by ________________.

Dated: __________

DISSEMINATION AGENT:

HDL COREN & CONE

By:

Its:


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APPENDIX H

SUPPLEMENTAL INFORMATION—THE CITY OF CUDAHY

The following information relating to the City of Cudahy (the “City”) and the County of Los Angeles,

California (the “County”) is supplied solely for purposes of information. Neither the City nor the County is obligated in any manner to pay principal of or interest on the 2018 Bonds or to cure any delinquency or

default on the 2018 Bonds. The 2018 Bonds are payable solely from the sources described in the Official

Statement. The Agency makes no representation as to the accuracy of the information set forth in this Appendix.

City Council

The members of the City Council and the expiration dates of their respective terms are as follows:

CITY OF CUDAHY

City Council

Name Term Expires

Chris Garcia November 2020

Christian Hernandez November 2018

Baru Sanchez November 2018

Cristian Markovich November 2018

Jose Gonzalez November 2018

The City Council appoints the City Manager who serves as the Chief Executive Officer of the City

and supervises the various City services, prepares proposals for the City Council’s consideration and

implements the City Council’s policy.

Population

The City’s population as of January 1, 2018 was approximately 28,343. This represents an increase of

approximately 0.06 percent from January 1, 2017. The following table shows the population for the City, the

County and the State from 2014 through 2018.

POPULATION

For Years 2014 through 2018

Year

(January 1)

City of

Cudahy

County of

Los Angeles

State of

California

2014 24,293 10,088,458 38,568,628

2015 24,368 10,149,661 38,912,464

2016 24,374 10,180,169 39,179,627

2017 24,328 10,231,271 39,500,973

2018 24,343 10,283,523 39,809,693

Source: State of California, Department of Finance, E-4 Population Estimates for Cities, Counties, and the State, 2011-2018,

with 2010 Census Benchmark, Sacramento, California, May 2018.

H-2

Building Activity

Residential building activity for the past five calendar years for the City is shown in the following

tables.

CITY OF CUDAHY

New Housing Units Building Permits

2013 2014 2015 2016 2017

Single Family Units 0 6 4 1 0

Multifamily Units 0 0 0 0 0

Total Units 0 6 4 1 0

Source: Construction Industry Research Board and California Homebuilding Foundation.

CITY OF CUDAHY

Building Permit Valuations

(Dollars in Thousands)

2013 2014 2015 2016 2017 Residential

New Single Family $ 0 $ 2,369 $ 609 $ 216 $ 0

New Multifamily 0 0 0 0 0

Res. Alt. & Adds 258 973 374 370 326

Total Residential $ 258 $ 3,342 $ 983 $ 586 $ 326

Nonresidential

New Commercial $ 0 $ 0 $ 450 $ 0 $ 0

New Industrial 0 0 0 0 0

New Other(1)

25 9 57 176 3,056

Alters. & Adds. 469 39 585 1,321 467

Total Non-Residential $ 494 $ 48 $ 1,092 $ 1,497 $ 3,523

Total All Building $ 752 $ 3,402 $ 2,075 $ 2,083 $ 3,849

(1) Includes churches and religious buildings, hospitals and institutional buildings, schools and educational buildings,

residential garages, public works and utilities buildings.

Note: “Total All Building” is the sum of Residential and Nonresidential Building Permit Valuations. Totals may not add to sum

because of independent rounding.

Source: Construction Industry Research Board and California Homebuilding Foundation.

Personal Income

Personal Income is the income that is received by all persons from all sources. It is calculated as the

sum of wage and salary disbursements, supplements to wages and salaries, proprietors’ income with inventory

valuation and capital consumption adjustments, rental income of persons with capital consumption adjustment,

personal dividend income, personal interest income, and personal current transfer receipts, less contributions

for government social insurance.

The personal income of an area is the income that is received by, or on behalf of, all the individuals

who live in the area; therefore, the estimates of personal income are presented by the place of residence of the

income recipients.

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The following tables show the personal income and per capita personal income for the County, State

of California and United States from 2012 through 2017.

PERSONAL INCOME

County of Los Angeles, California, and United States

2012-2017(1)

Year

County of

Los Angeles California United States

2012 $486,733,508 $1,838,567,162 $13,904,485,000

2013 483,578,594 1,861,956,514 14,068,960,000

2014 514,516,564 1,986,025,976 14,811,388,000

2015 549,073,019 2,133,664,158 15,547,661,000

2016 563,907,868 2,212,691,221 15,912,777,000

2017(1)

-- 2,303,870,496 16,413,550,863

Note: Dollars in Thousands. (1) County data not yet available.

Source: U.S. Department of Commerce, Bureau of Economic Analysis.

The following table summarizes per capita personal income for the County, the State of California and

the United States for the years 2012-2017. This measure of income is calculated as the personal income of the

residents of the area divided by the resident population of the area.

PER CAPITA PERSONAL INCOME(1)

County of Los Angeles, State of California, and United States

2012-2017(2)

Year

County of

Los Angeles California United States

2012 $48,900 $48,359 $44,283

2013 48,283 48,555 44,489

2014 51,111 51,317 48,486

2015 54,298 54,664 48,429

2016 55,624 56,308 49,204

2017(2)

-- 58,272 50,392

(1) Per capita personal income is the total personal income divided by the total mid-year population estimates of the U.S.

Bureau of the Census. All dollar estimates are in current dollars (not adjusted for inflation). (2) County data not yet available.

Source: U.S. Department of Commerce, Bureau of Economic Analysis.

H-4

Employment

The following table summarizes the labor force, employment and unemployment figures over the past

five years for the City, the County of Los Angeles, the State of California and the nation as a whole.

LABOR FORCE, EMPLOYMENT AND UNEMPLOYMENT

Yearly Average for Years 2013 through 2017

Year and Area Labor Force Employment(1)

Unemployment(2)

Unemployment

Rate (%)(3)

2013

City of Cudahy 10,200 9,000 1,200 12.2%

Los Angeles County 4,979,000 4,494,400 484,600 9.7

State of California 18,625,000 16,958,400 1,666,600 8.9

United States(4)

155,389,000 143,929,000 11,460,000 7.4

2014

City of Cudahy 10,300 9,200 1,100 10.3%



United States(4)

155,922,000 146,305,000 9,617,000 6.2

2015

City of Cudahy 10,200 9,400 900 8.4%



United States(4)

157,130,000 148,834,000 8,296,000 5.3

2016

City of Cudahy 10,300 9,600 700 6.6%



United States(4)

159,187,000 151,436,000 7,751,000 4.9

2017

City of Cudahy 10,500 9,800 700 6.4%


State of California 19,312,000 18,393,100 918,900 4.8

United States(4)

160,320,000 153,337,000 6,982,000 4.4

Note: Data is not seasonally adjusted. (1) Includes persons involved in labor-management trade disputes. (2) Includes all persons without jobs who are actively seeking work. (3) The unemployment rate is computed from unrounded data; therefore, it may differ from rates computed from rounded

figures in this table. (4) Not strictly comparable with data for prior years.

Source: California Employment Development Department, based on March 2017 benchmark and U.S. Department of Labor,

Bureau of Labor Statistics.

H-5

Employment data by industry is not separately reported on an annual basis for the City but is compiled

for the Los Angeles-Long Beach-Glendale Metropolitan Division (the “MD”). In addition to varied

manufacturing employment, the MD has large and growing commercial and service sector employment, as

reflected in the table below.

The following table represents the Annual Average Labor Force and Industry Employment for the

County for the period from 2013 through 2017.

LOS ANGELES-LONG BEACH-GLENDALE METROPOLITAN DIVISION

INDUSTRY EMPLOYMENT & LABOR FORCE - BY ANNUAL AVERAGE

Category 2013 2014 2015 2016 2017

Total Farm 5,500 5,200 5,000 5,300 5,800

Total Nonfarm 4,108,100 4,184,600 4,277,300 4,385,500 4,435,700

Total Private 3,556,900 3,628,500 3,708,800 3,808,800 3,850,200

Goods Producing 493,500 492,700 496,800 496,700 490,100

Natural Resources and Mining 3,400 3,100 2,900 2,500 2,200

Construction 114,600 118,500 126,200 133,900 137,700

Manufacturing 375,600 371,100 367,800 360,300 350,100

Durable Goods 210,600 208,700 208,100 203,200 202,000

Nondurable Goods 164,900 162,400 159,700 157,100 148,100

Service Providing 3,614,600 3,692,000 3,780,500 3,888,800 3,945,600

Private Service Providing 3,063,400 3,135,800 3,212,000 3,312,100 3,360,100

Trade, Transportation and Utilities 781,900 798,900 816,500 829,000 838,900

Wholesale Trade 218,700 222,500 225,600 225,200 224,500

Retail Trade 405,800 413,100 419,300 421,500 422,500

Transportation, Warehousing and Utilities 157,500 163,400 171,500 182,300 191,800

Information 197,000 198,800 207,500 229,200 214,500

Financial Activities 213,000 211,200 215,500 219,800 221,100

Professional and Business Services 584,800 591,700 593,800 603,200 613,400

Educational and Health Services 702,100 720,700 741,100 767,600 794,300

Leisure and Hospitality 438,900 464,100 486,600 510,000 523,900

Other Services 145,700 150,500 151,000 153,300 154,100

Government 551,200 556,200 568,500 576,700 585,500

Total, All Industries 4,113,600 4,189,800 4,282,300 4,390,800 4,441,400

Note: The “Total, All Industries” data is not directly comparable to the employment data found herein.

Source: State of California, Employment Development Department, Labor Market Information Division, March 2017

Benchmark.

H-6

Commercial Activity

The following table summarizes the annual volume of taxable transactions within the City for the

years 2012 through 2016.

CITY OF CUDAHY

TABLE OF TAXABLE TRANSACTIONS

For the Years 2012 Through 2016

(000’s)

Year

Retail

Permits

Retail and Food

Taxable Transactions Total Permits

Total Outlets

Taxable Transactions

2012 340 $53,096 429 $104,515

2013 303 51,479 387 105,391

2014 310 48,943 394 115,660

2015 343 55,382 456 103,034

2016 319 62,296 430 106,812

Source: California State Board of Equalization.

I-1

APPENDIX I

SPECIMEN MUNICIPAL BOND INSURANCE POLICY


MUNICIPAL BOND INSURANCE POLICY

ISSUER: [NAME OF ISSUER] Policy No: _____ MEMBER: [NAME OF MEMBER] BONDS: $__________ in aggregate principal Effective Date: _________ amount of [NAME OF TRANSACTION] [and maturing on]

Risk Premium: $__________ Member Surplus Contribution: $ _________

Total Insurance Payment: $_________ BUILD AMERICA MUTUAL ASSURANCE COMPANY (“BAM”), for consideration received, hereby UNCONDITIONALLY AND

IRREVOCABLY agrees to pay to the trustee (the “Trustee”) or paying agent (the “Paying Agent”) for the Bonds named above (as set forth in the documentation providing for the issuance and securing of the Bonds), for the benefit of the Owners or, at the election of BAM, directly to each Owner, subject only to the terms of this Policy (which includes each endorsement hereto), that portion of the principal of and interest on the Bonds that shall become Due for Payment but shall be unpaid by reason of Nonpayment by the Issuer.

On the later of the day on which such principal and interest becomes Due for Payment or the first Business Day following the Business Day on which BAM shall have received Notice of Nonpayment, BAM will disburse (but without duplication in the case of duplicate claims for the same Nonpayment) to or for the benefit of each Owner of the Bonds, the face amount of principal of and interest on the Bonds that is then Due for Payment but is then unpaid by reason of Nonpayment by the Issuer, but only upon receipt by BAM, in a form reasonably satisfactory to it, of (a) evidence of the Owner’s right to receive payment of such principal or interest then Due for Payment and (b) evidence, including any appropriate instruments of assignment, that all of the Owner’s rights with respect to payment of such principal or interest that is Due for Payment shall thereupon vest in BAM. A Notice of Nonpayment will be deemed received on a given Business Day if it is received prior to 1:00 p.m. (New York time) on such Business Day; otherwise, it will be deemed received on the next Business Day. If any Notice of Nonpayment received by BAM is incomplete, it shall be deemed not to have been received by BAM for purposes of the preceding sentence, and BAM shall promptly so advise the Trustee, Paying Agent or Owner, as appropriate, any of whom may submit an amended Notice of Nonpayment. Upon disbursement under this Policy in respect of a Bond and to the extent of such payment, BAM shall become the owner of such Bond, any appurtenant coupon to such Bond and right to receipt of payment of principal of or interest on such Bond and shall be fully subrogated to the rights of the Owner, including the Owner’s right to receive payments under such Bond. Payment by BAM either to the Trustee or Paying Agent for the benefit of the Owners, or directly to the Owners, on account of any Nonpayment shall discharge the obligation of BAM under this Policy with respect to said Nonpayment.

Except to the extent expressly modified by an endorsement hereto, the following terms shall have the meanings specified for all purposes of this Policy. “Business Day” means any day other than (a) a Saturday or Sunday or (b) a day on which banking institutions in the State of New York or the Insurer’s Fiscal Agent (as defined herein) are authorized or required by law or executive order to remain closed. “Due for Payment” means (a) when referring to the principal of a Bond, payable on the stated maturity date thereof or the date on which the same shall have been duly called for mandatory sinking fund redemption and does not refer to any earlier date on which payment is due by reason of call for redemption (other than by mandatory sinking fund redemption), acceleration or other advancement of maturity (unless BAM shall elect, in its sole discretion, to pay such principal due upon such acceleration together with any accrued interest to the date of acceleration) and (b) when referring to interest on a Bond, payable on the stated date for payment of interest. “Nonpayment” means, in respect of a Bond, the failure of the Issuer to have provided sufficient funds to the Trustee or, if there is no Trustee, to the Paying Agent for payment in full of all principal and interest that is Due for Payment on such Bond. “Nonpayment” shall also include, in respect of a Bond, any payment made to an Owner by or on behalf of the Issuer of principal or interest that is Due for Payment, which payment has been recovered from such Owner pursuant to the United States Bankruptcy Code in accordance with a final, nonappealable order of a court having competent jurisdiction. “Notice” means delivery to BAM of a notice of claim and certificate, by certified mail, email or telecopy as set forth on the attached Schedule or other acceptable electronic delivery, in a form satisfactory to BAM, from and signed by an Owner, the Trustee or the Paying Agent, which notice shall specify (a) the person or entity making the claim, (b) the Policy Number, (c) the claimed amount, (d) payment instructions and (e) the date such claimed amount becomes or became Due for Payment. “Owner” means, in respect of a Bond, the person or entity who, at the time of Nonpayment, is entitled under the terms of such Bond to payment thereof, except that “Owner” shall not include the Issuer, the Member or any other person or entity whose direct or indirect obligation constitutes the underlying security for the Bonds.

BAM may appoint a fiscal agent (the “Insurer’s Fiscal Agent”) for purposes of this Policy by giving written notice to the Trustee, the Paying Agent, the Member and the Issuer specifying the name and notice address of the Insurer’s Fiscal Agent. From and after the date of receipt of such notice by the Trustee, the Paying Agent, the Member or the Issuer (a) copies of all notices required to be delivered to BAM pursuant to this Policy shall be simultaneously delivered to the Insurer’s Fiscal Agent and to BAM and shall not be deemed received until received by both and (b) all payments required to be made by BAM under this Policy may be made directly by BAM or by the Insurer’s Fiscal Agent on behalf of BAM. The Insurer’s Fiscal Agent is the agent of BAM only, and the Insurer’s Fiscal Agent shall in no event be liable to the Trustee, Paying Agent or any Owner for any act of the Insurer’s Fiscal Agent or any failure of BAM to deposit or cause to be deposited sufficient funds to make payments due under this Policy.

To the fullest extent permitted by applicable law, BAM agrees not to assert, and hereby waives, only for the benefit of each Owner, all rights (whether by counterclaim, setoff or otherwise) and defenses (including, without limitation, the defense of fraud), whether acquired by subrogation, assignment or otherwise, to the extent that such rights and defenses may be available to BAM to avoid payment of its obligations under this Policy in accordance with the express provisions of this Policy. This Policy may not be canceled or revoked.

This Policy sets forth in full the undertaking of BAM and shall not be modified, altered or affected by any other agreement or instrument, including any modification or amendment thereto. Except to the extent expressly modified by an endorsement hereto, any premium paid in respect of this Policy is nonrefundable for any reason whatsoever, including payment, or provision being made for payment, of the Bonds prior to maturity. THIS POLICY IS NOT COVERED BY THE PROPERTY/CASUALTY INSURANCE SECURITY FUND SPECIFIED IN ARTICLE 76 OF THE NEW YORK INSURANCE LAW. THIS POLICY IS ISSUED WITHOUT CONTINGENT MUTUAL LIABILITY FOR ASSESSMENT.

In witness whereof, BUILD AMERICA MUTUAL ASSURANCE COMPANY has caused this Policy to be executed on its behalf by its Authorized Officer.

BUILD AMERICA MUTUAL ASSURANCE COMPANY By: _______________________________________ Authorized Officer

Notices (Unless Otherwise Specified by BAM) Email: [email protected] Address: 200 Liberty Street, 27th floor New York, New York 10281 Telecopy: 212-962-1524 (attention: Claims)

CALIFORNIA ENDORSEMENT TO MUNICIPAL BOND INSURANCE POLICY NO.

This Policy is not covered by the California Insurance Guaranty Association established pursuant to Article 15.2 of Chapter 1 of Part 2 of Division 1 of the California Law.

Nothing herein shall be construed to waive, alter, reduce or amend coverage in any other section of the Policy. If found contrary to the Policy language, the terms of this Endorsement supersede the Policy language

IN WITNESS WHEREOF, BUILDAMERICA MUTUAL ASSURANCE COMPANY has caused this policy to be executed on its behalf by its Authorized Officer.

BUILD AMERICA MUTUAL ASSURANCE COMPANY By _______________________________________________ Authorized Officer

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