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HomeMy WebLinkAboutED RA Sale of RA Bonds, Series 2009CITY OF SAN RAFAEL AGENDA ITEM NO.: 4 MEETING DATE: November 16, 2009 San Rafael Redevelopment Agency Agenda Report SUBJECT: Approval of Sixth Supplemental Resolution Authorizing the Issuance of Not to Exceed $16,000,000 Principal Amount of Central San Rafael Redevelopment Project Tax Allocation Refunding Bonds, Series 2009 Department: Redevelopment Prepared b Initials: Nancy Mackle, Economic Development Director Iten Nordhoff, Executive Director RECOMMENDATION: Staff recommends that the Agency adopt the attached resolution authorizing the issuance of not to exceed $16,000,000 principal amount of Tax Allocation Refunding Bonds, and authorize the City Manager and Economic Development Director to undertake actions associated with the bond issuance. BACKGROUND: The Agency has issued bonds to fund capital improvements in the Project Area and has two outstanding bond series; the 1999 Bonds and the 2002 Refunding Bonds. The Agency entered into a Fiscal Agreement with the County, the San Rafael Schools and the College of Marin in 1984. This Fiscal Agreement limits the annual amount of tax increment that the Agency can claim for bonded indebtedness. The Fiscal Agreement is amended each time the Agency issues new bonds. The Third Amendment to the Fiscal Agreement is the latest amendment and governs the 1999 bonds. ANALYSIS: Agency staff is proposing to refund the 1999 bonds to take advantage of lower interest rates and to provide a loan to the City for street resurfacing, parking improvements and other capital improvements in the Redevelopment Project Area. The Agency will enter into loan agreements with the City to provide for the repayment of funds advanced by the Agency. The Agency's financing team consists of the following: Bond Counsel Stephen Melikian, Jones Hall Disclosure Counsel Andy Hall, Jones Hall Underwriter Eric Scriven, De La Rosa Agency Counsel Lynn Hutchins, Goldfarb & Lipman The financing team has prepared the bond resolution and the Preliminary Official Statement for the proposed bond issue. The bond resolution sets forth the legal framework for the bonds. The preliminary Official Statement is the public disclosure for the Agency, providing information to the bond purchasers on San Rafael, the San Rafael Redevelopment Agency and the proposed financing. The financing team anticipates raising $500,000-$750,000 of net proceeds. The net proceeds will depend on the interest rates at the time of issuance. Staff and the financing team will closely monitor FOR AGENCY SECRETARY ONLY File No.: Agency Meeting: Disposition: _ the market and issue at a time that is projected to be the most advantageous. The earliest issue date will be December 2, 2009. The financing will be structured so the annual debt service is similar to the current debt service and the savings will be front loaded to provide funding to the Agency. This structure is necessary to meet the requirements of the Fiscal Agreement. The taxing entities have received written notification that the Agency plans to refund the 1999 bonds. However, Agency and Bond Counsel have determined that taxing entity approval of the refunding is not required pursuant to the language contained in the Fiscal Agreement. The Agency has pledged to the bondholders all of the tax increment up to 125% of the maximum annual debt service on the bonds. The debt service on all of the Agency's bonds is paid from tax increment allocated to the Agency. The Redevelopment Agency and the City of San Rafael are separate legal entities and no City funds, including the City's General Fund, are pledged to pay the Agency's bonded debt service. FISCAL IMPACT: The annual debt service on the 2009 Tax Allocation Refunding Bonds shall be very similar to the current debt service and shall not exceed the $1,500,000 allowed for the 1999 Bonds pursuant to the Fiscal Agreement. The Resolution provides for a maximum true interest cost of 4% on the refunding bonds and a maximum compensation of 1% of the principal amount to the underwriter. The financing team anticipates raising a minimum of $500,000. OPTIONS: • Adopt the resolution authorizing the issuance of the refunding bonds, approving the Preliminary Official Statement and authorizing the City Manager and Economic Development Director to sign the financing documents with any changes required by Bond Counsel and approved by the City Attorney. • Reject the resolution and bond refunding. Staff does not recommend this option, as the Agency will lose the opportunity to raise additional funds. ACTION REQUIRED: Adopt the attached resolution. ATTACHMENTS: A: Preliminary Official Statement SAN RAFAEL REDEVELOPMENT AGENCY` RESOLUTION NO. Sixth Supplemental Resolution Authorizing the Issuance of Not to Exceed $16,000,000 Principal Amount of Central San Rafael Redevelopment Project Tax Allocation Refunding Bonds, Series 2009 Adopted November 16, 2009 TABLE OF CONTENTS ARTICLE XXV ADDITIONAL DEFINITIONS 25.01. Additional Definitions...................................................................................................................2 25.02. Amended Definitions................................................................................................................... 3 ARTICLE XXVI ISSUANCE AND ADDITIONAL TERMS OF SERIES 2009 BONDS 26.01. Authorization and Purpose of Series 2009 Bonds...................................................................... 4 26.02. Terms of Series 2009 Bonds...................................................................................................... 4 26.03. Redemption of Series 2009 Bonds............................................................................................. 6 26.04. Notice of Redemption................................................................................................................. 6 26.05. Form of Series 2009 Bonds........................................................................................................ 7 26.06. Application of Proceeds of Sale of Series 2009 Bonds: Allocation Among Funds and Accounts.............................................................................................................................. 7 26.07. Establishment and Application of Series 2009 Expense Account .............................................. 8 26.08. Establishment and Application of Series 1999 Refunding Account ........................................... 8 26.09. Establishment and Application of Series 2009 Project Account ................................................. 8 26.10. Terms of Series 2009 Bonds Subject to the Resolution............................................................. 8 26.11. Use of Depository ........................................................................................................................ 9 26.12. General Authorization to Agency Chairperson and Other Agency Officers ............................. 10 26.13. Sale of Bonds; Purchase Contract............................................................................................ 10 26.14. Approval of Official Statement.................................................................................................. 10 ARTICLE XXVII ADDITIONAL COVENANTS OF THE AGENCY 27.01. Tax Covenants; Rebate Fund................................................................................................... 12 27.02. Housing Set-Aside.................................................................................................................... 13 27.03. Future Obligations; Pledge Limitation....................................................................................... 13 27.04. Agreements with Other Taxing Agencies................................................................................. 13 27.05. Concerning the Series 2009 Bond Insurer and the Reserve Facility for the Series 2009 Bonds................................................................................................................................. 13 27.06. Continuing Disclosure............................................................................................................... 13 27.07. Designation of Series 2009 Bonds........................................................................................... 14 ARTICLE XXVIII AMENDMENT TO RESOLUTION 28.01. Discharge of Bonds................................................................................................................... 15 APPENDIX A -- FORM OF SERIES 2009 BOND Moved: Member RESOLUTION NO. Seconded: Member Sixth Supplemental Resolution Authorizing the Issuance of Not to Exceed $16,000,000 Principal Amount of Central San Rafael Redevelopment Project Tax Allocation Refunding Bonds, Series 2009 WHEREAS, the San Rafael Redevelopment Agency (the "Agency") has heretofore issued its Central San Rafael Redevelopment Project Tax Allocation Refunding Bonds, Series 1977 (the "Series 1977 Bonds") pursuant to Resolution No. 77-69, adopted by the Agency on August 15, 1977 (the "Master Resolution"); and WHEREAS, the Agency has heretofore issued its Central San Rafael Redevelopment Project Tax Allocation Refunding Bonds, Series 1992 (the "Series 1992 Bonds"), pursuant to the Master Resolution and Resolution No. 92-6, adopted April 20, 1992 (the "1992 Resolution"); and WHEREAS, the Agency has heretofore issued its Central. San Rafael Redevelopment Project Tax Allocation Bonds, Series 1995 (the "Series 1995 Bonds") pursuant to the Master Resolution, the 1992 Resolution and Resolution No. 95-27, adopted September 5, 1995 (the "1995 Resolution"); and WHEREAS, the Agency has heretofore issued its Central San Redevelopment Project Tax Allocation Bonds, Series 1999 (the "Series 1999 Bonds") pursuant to the Master Resolution, the 1992 Resolution, the 1995 Resolution and Resolution No. 99-16, adopted June 7, 1999 (the "1999 Resolution"); and WHEREAS, the Agency has heretofore issued its Central San Redevelopment Project Tax Allocation Refunding Bonds, Series 2002 (the "Series 2002 Bonds") pursuant to the Master Resolution, the 1992 Resolution, the 1995 Resolution, the 1999 Resolution and Resolution No. 2002-24, adopted September 16, 2002 (the "2002 Resolution"); and WHEREAS, the Agency has heretofore also adopted Resolution No. 96-85 on November 18, 1996 (the "1996 Resolution" and, together with the Master Resolution, the 1992 Resolution, the 1995 Resolution, the 1996 Resolution, the 1999 Resolution, the 2002 Resolution, this Sixth Supplemental Resolution and any other supplemental resolution adopted pursuant to Article VII of the Master Resolution, the "Resolution"); WHEREAS, the Master Resolution provides for the issuance of Additional Bonds (as defined in the Master Resolution) for the purpose of financing or refinancing the Project (as defined in the Master Resolution); and WHEREAS, the Master Resolution provides that it may be amended or supplemented to make provisions not affecting any outstanding series of Bonds of the Agency or for the purpose of curing ambiguities or curing, correcting or supplementing defective provisions in the Master Resolution, as the Agency deems necessary or desirable and not inconsistent with the Master Resolution, and which do not adversely affect the rights of the Holders of the Bonds; and WHEREAS, the Agency has determined to issue an additional series of bonds under the Master Resolution to refund the Series 1999 Bonds that are current interest bonds and to aid in -1- the further financing of the Project, which bonds shall be designated "San Rafael Redevelopment Agency Central San Rafael Redevelopment Project Tax Allocation Refunding Bonds, Series 2009" (the "Series 2009 Bonds"); NOW THEREFORE, BE IT RESOLVED BY THE SAN RAFAEL REDEVELOPMENT AGENCY, AS FOLLOWS: ARTICLE XXV ADDITIONAL DEFINITIONS 25.01. Additional Definitions. Unless the context otherwise requires, the terms defined in this Section 25.01 shall, for all purposes of this Sixth Supplemental Resolution and of any resolutions supplemental hereto, and of any certificate, opinion or other documents herein mentioned, have the meanings herein specified. Capitalized terms not defined in this Section 25.01 shall have the meanings attributed to them pursuant to Section 1.01, Section 10.01, Section 14.01, Section 18.01 or Section 21.01. "Reserve Facility Provider for the Series 2009 Bonds" means the company identified as such, if any, in the Series 2009 Sales Certificate, or any successor thereto. "Series 1999 Irrevocable Refunding Instructions" means the Irrevocable Refunding Instructions to be dated the date of delivery of the Series 2009 Bonds, from the Agency to U.S. Bank National Association, as Fiscal Agent for the Series 1999 Bonds, pursuant to which the Series 1999 Bonds that are current interest bonds are being redeemed and discharged. "Series 1999 Refunding Account" means the account by that name established and applied pursuant to Section 26.08 for the purpose of refunding the Series 1999 Bonds. "Series 2009 Beneficial Owner" means any person who has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Series 2009 Bonds, including persons holding Series 2009 Bonds through nominees or depositories. "Series 2009 Bond Insurance Policy" means the municipal bond new issue insurance policy, if any, issued by the Series 2009 Bond Insurer that guarantees payment of principal of and interest on the Series 2009 Bonds. "Series 2009 Bond Insurer" means the company identified as such, if any, in the Series 2009 Sales Certificate, or any successor thereto. "Series 2009 Bonds" means the San Rafael Redevelopment Agency, Central San Rafael Redevelopment Project Tax Allocation Refunding Bonds, Series 2009, issued pursuant to Article XXVI hereof. "Series 2009 Call Protection Date" means the date prior to which the Series 2009 Bonds are not subject to optional redemption, as set forth in the Series 2009 Sales Certificate. "Series 2009 Continuing Disclosure Certificate" means that certain Continuing Disclosure Certificate of the Issuer dated the date of the issuance and delivery of the Series -2- 2009 Bonds, as originally executed and as it may be amended from time to time in accordance with the terms thereof. "Series 2009 Expense Account" means the account of that name established and applied pursuant to Section 26.07 for the purpose of paying the Costs of Issuance of the Series 2009 Bonds. "Series 2009 Financial Guaranty Agreement" means the agreement, if any, by such name between the Agency and the Reserve Facility Provider of Series 2009 Bonds pursuant to which the Reserve Facility for the Series 2009 Bonds is executed and delivered. "Series 2009 Issue Date" means, with respect to the Series 2009 Bonds, the dated date of the Series 2009 Bonds, as set forth in the Series 2009 Sales Certificate. "Series 2009 Participating Underwriter" or "Participating Underwriter" shall have the meaning ascribed thereto in the Series 2009 Continuing Disclosure Certificate. "Series 2009 Principal Payment Date" means, with respect to the Series 2009 Bonds any December 1 on which principal of the Series 2009 Bonds is scheduled to be paid, as set forth in the Series 2009 Sales Certificate. "Series 2009 Project Account" means the account by that name established hereunder by the Agency within the Redevelopment Fund to hold a portion of the proceeds of the Series 2009 Bonds prior to expenditure on the Project. "Series 2009 Sales Certificate" means the Series 2009 Sales Certificate executed and delivered by the Executive Director pursuant to Section 26.02 hereof specifying certain terms of the Series 2009 Bonds. "Series 2009 Sinking Account Payment Date" means, with respect to the Series 2009 Bonds, any December 1 on which Sinking Account Installments on any Series 2009 Bonds are scheduled to be paid, as set forth in the Series 2009 Sales Certificate. 25.02. Amended Definitions. The definition of Information Services and Securities Depositories set forth in the 1992 Resolution is hereby amended to read as follows: "Information Services" means, in accordance with then current guidelines of the Securities and Exchange Commission, one or more services selected by the Trustee which are then providing information with respect to called bonds, or, if the Trustee does not select a service, then such service or services as the Agency may designate in writing to the Trustee. "Securities Depositories" means The Depository Trust Company; and, in accordance with then current guidelines of the Securities and Exchange Commission, such other addresses and/or such other securities depositories as the Agency may designate. -3- ARTICLE XXVI ISSUANCE AND ADDITIONAL TERMS OF SERIES 2009 BONDS 26.01. Authorization. Purpose and Execution of Series 2009 Bonds. The Agency has reviewed all proceedings heretofore taken relative to the authorization of the Series 2009 Bonds and has found, as a result of such review, and hereby finds and determines that all acts, conditions and things required by law to exist, happen or be performed precedent to and in connection with the issuance of the Series 2009 Bonds do exist, have happened and have been performed in due time, form and manner as required by law, and the Agency is now duly authorized, pursuant to each and every requirement of law, to issue the Series 2009 Bonds in the manner and form provided in the Resolution. The Agency further finds and determines that it is in compliance with all covenants set forth in the Master Resolution and hereby authorizes and directs the Chairperson of the Agency (the "Chairperson"), the Executive Director of the Agency (the "Executive Director") or the Director of Economic Development of the City of San Rafael (the "Director of Economic Development") to file a Certificate of the Agency to that effect with the Fiscal Agent. Accordingly, the Series 2009 Bonds shall be issued for the purpose of providing funds to aid in financing the Project. The Series 2009 Bonds shall be designated generally as the "San Rafael Redevelopment Agency Central San Rafael Redevelopment Project Tax Allocation Refunding Bonds, Series 2009." Notwithstanding Section 2.05 of the Resolution, the Series 2009 Bonds may also be executed by the Director of Economic Development. 26.02. Terms of Series 2009 Bonds. The aggregate principal amount of Series 2009 Bonds issued by the Agency under and subject to the terms of the Resolution and the Law shall not exceed sixteen million dollars ($16,000,000). The Series 2009 Bonds shall be issued in such aggregate principal amount, shall be dated such Issue Date, shall bear interest at such rate or rates (payable on June 1 and December 1 of each year, commencing June 1, 2010 or such later date as may be set forth in the Sales Certificate) not exceeding the maximum rate permitted by law, shall mature and become payable as to principal on such Series 2009 Principal Payment Dates in the amounts and subject to such Series 2009 Sinking Account Payments on such Series 2009 Sinking Account Payment Dates, if any, and shall be subject to such other terms and conditions appropriate to the Series 2009 Bonds, including such terms and conditions, if any, required by either the Series 2009 Bond Insurer or the Series 2009 Reserve Facility Provider for the Series 2009 Bonds or otherwise relating to the Series 2009 Bond Insurance Policy and the Reserve Facility issued in connection with the Series 2009 Bonds, as the Chairperson of the Agency or his designee deem appropriate and necessary, all as set forth in the Series 2009 Sales Certificate. The Chairperson, the Executive Director and the Director of Economic Development are each, acting alone, hereby authorized and directed to execute and deliver the Series 2009 Sales Certificate to the Fiscal Agent at the time of the initial delivery of the Series 2009 Bonds. Notwithstanding the foregoing, the Series 2009 Sales Certificate shall not specify an interest rate on any Series 2009 Bond in excess of nine percent (9%) per annum; a true interest cost on all the Series 2009 Bonds in excess of four percent (4%) per annum; nor a maturity date for any Series 2009 Bond after December 1, 2022. Additionally, the underwriter's discount with respect to the Series 2009 Bonds shall not exceed one percent (1.00%) of the principal amount thereof, excluding original issue discount. 10 The Series 2009 Bonds shall be issued as fully registered bonds in the denomination of $5,000, or any integral multiple of $5,000 (not exceeding the principal amount of Series 2009 Bonds maturing at any one time). The Series 2009 Bonds shall be initially issued registered in the name of "Cede & Co.," as nominee of The Depository Trust Company, and shall be evidenced by one Series 2009 Bond for each maturity date of the Series 2009 Bonds in a denomination corresponding to the total principal amount of the Series 2009 Bonds maturing on each such date. The Series 2009 Bonds shall bear interest from the interest payment date next preceding the date of registration thereof, unless such date of registration is an interest payment date, in which event they shall bear interest from such date, or unless such date of registration is prior to the first interest payment date, in which event they shall bear interest from their Issue Date; provided, however, that if, at the time of registration of any Series 2009 Bonds, interest is then in default on the Outstanding Series 2009 Bonds, such Series 2009 Bonds shall bear interest from the interest payment date to which interest has previously been paid or made available for payment on the Outstanding Series 2009 Bonds. Payment of interest on the Series 2009 Bonds due on or before the maturity or prior redemption of such Series 2009 Bonds shall be made to the person whose name appears on the Series 2009 Bond registration books of the Fiscal Agent as the registered owner thereof, as of the close of business on the fifteenth (15th) day of the month preceding the interest payment date (the "Record Date"), such interest to be paid by check mailed by first class mail, postage prepaid, on each interest payment date to such registered owner at his address as it appears on such books or at such other address as he may have filed with the Fiscal Agent for that purpose prior to the Record Date, or, upon written request of a registered owner of at least $1,000,000 in aggregate principal amount of Series 2009 Bonds (specifying such account information as the Fiscal Agent shall require), by wire transfer in immediately available funds to an account within the continental United States designated by such registered owner prior to the Record Date. Interest on the Series 2009 Bonds shall be computed on the basis of a 360 -day year of twelve 30 -day months. Principal of and redemption premiums, if any, on Series 2009 Bonds, and interest due at maturity or upon prior redemption, shall be payable in lawful money of the United States of America upon the surrender thereof at maturity or upon the prior redemption thereof at the corporate trust office of the Fiscal Agent in St. Paul, Minnesota, or such other corporate trust office as may be designated by the Fiscal Agent. Each payment of principal of or interest on the Series 2009 Bonds shall include the CUSIP identification number, if any, on the Series 2009 Bond with respect to which payment is made. -5- 26.03. Redemption of Series 2009 Bonds. (a) Optional Redemption. Series 2009 Bonds due on or before the Series 2009 Call Protection Date shall not be subject to redemption on or before their respective stated maturities. Series 2009 Bonds maturing by their terms after the Series 2009 Call Protection Date shall be subject to redemption as a whole or in part either on a pro rata basis among maturities or in inverse order of maturity (as determined by the Agency), and by lot within any one maturity, prior to their respective maturity dates, upon notice as provided in Section 26.04 hereof, at the option of the Agency, on any date on or after the Series 2009 Call Protection Date, from funds derived by the Agency from any source, at the redemption prices for the applicable redemption dates as specified in the Series 2009 Sales Certificate, together with interest accrued thereon to the date fixed for redemption. Notwithstanding the preceding sentence, the Agency may determine, as set forth in the Sales Certificate, that certain of the Series 2009 Bonds are not subject to optional redemption or that certain of the Series 2009 Bonds shall have a Series 2009 Call Protection Date which is different than the Series 2009 Call Protection Date for other Series 2009 Bonds. If less than all of the Series 2009 Bonds or the Series 2002 Bonds are redeemed pursuant to this subsection 26.03(a) or to subsection 22.03(a) at any one time, the Fiscal Agent shall redeem that amount of Series 2009 Bonds and Series 2002 Bonds in the proportion which the principal amount of the then Outstanding Series 2009 Bonds and Series 2002 Bonds bear to the principal amount of all of the then Outstanding Bonds that are subject to optional redemption. (b) Sinking Account Redemption. Series 2009 Bonds which are Term Bonds, if any, shall also be subject to mandatory redemption in part by lot prior to their stated maturity dates, on the Sinking Account Payment Dates therefor specified in the Series 2009 Sales Certificate, solely from funds deposited by the Agency in the Term Bonds Sinking Account for such Term Bonds established pursuant to the Series 2009 Sales Certificate, at the principal amount thereof plus accrued interest thereon to the redemption date, without premium, upon notice as provided in Section 26.04 hereof. In lieu of mandatory Sinking Account Payments, amounts on deposit in the Special Fund, to the extent not required for debt service on the Bonds, may be withdrawn and used by the Agency at any time to purchase Series 2009 Bonds which are Term Bonds at public or private sale at such prices (including brokerage and other charges and including accrued interest) as the Agency may in its discretion determine. The par amount of any of the Term Bonds so purchased by the Agency in any twelve-month period ending on October 1 in any year shall be credited towards and will reduce the par amount of the Term Bonds otherwise required to be redeemed on the December 1 following such October 1. 26.04. Notice of Redemption. Notice of redemption shall be mailed by first class mail by the Fiscal Agent, not less than thirty (30) nor more than sixty (60) days prior to the redemption date to (i) the respective Owners of Series 2009 Bonds designated for redemption at their addresses appearing on the bond registration books of the Fiscal Agent as of the fifteenth day prior to the date of mailing such notice, (ii) one or more Information Services, (iii) the Securities Depositories, and (iv) the Series 2002 Bond Insurer and the Series 2009 Bond Insurer, if any. The Agency shall provide written notice to the Fiscal Agent of any optional redemption and special mandatory redemption not less than forty-five (45) days prior to the proposed redemption date. Each notice of redemption shall state the date of such notice, the Series 2009 Bonds to be redeemed, the date of issue of such Series 2009 Bonds, the 0 redemption date, the redemption price, the place or of redemption (including the name and appropriate address or addresses and telephone number or numbers of the Fiscal Agent), the CUSIP number (if any) of the maturity or maturities, and, if less than all of any such maturity, the distinctive certificate numbers of the Series 2009 Bonds of such maturity to be redeemed and, in the case of Series 2009 Bonds to be redeemed in part only, the respective portions of the principal amount thereof to be redeemed. Each such notice shall also state that on said date there will become due and payable on each of such Series 2009 Bonds the redemption price thereof or of said specified portion of the principal amount thereof in the case of a Series 2009 Bond to be redeemed in part only, together with premiums, if any thereof, and that from and after such redemption date interest thereon shall cease to accrue, and shall require that such Series 2009 Bonds be then surrendered at the address or addresses of the Fiscal Agent specified in the redemption notice. The Fiscal Agent shall mail by first class mail a second, identical notice of redemption sixty days after the scheduled redemption date to Owners who failed to surrender their Series 2009 Bonds in connection with such redemption. Failure by the Fiscal Agent to give notice pursuant to this Section to any Bond Insurer, or to any one or more of the Information Services or Securities Depositories, or the insufficiency of any such notice shall not affect the sufficiency of the proceedings for redemption. The failure of any Owner to receive any redemption notice mailed to such Owner and any defect in the notice so mailed shall not affect the sufficiency of the proceedings for redemption. Notwithstanding any other provision of the Resolution, the Agency shall have the right to cause the Fiscal Agent to rescind any notice of redemption given in connection with a redemption pursuant to Section 26.03(a) if on the date set for such redemption, the Agency has not provided sufficient funds to the Fiscal Agent to effect such redemption. Any notice of redemption given in connection with a redemption pursuant to Section 26.03(a) shall state that such notice is subject to rescission by the Agency. 26.05. Form of Series 2009 Bonds. The Series 2009 Bonds, the authentication and registration endorsement and the assignment to appear thereon shall be substantially in the form attached hereto as Appendix "A", with such necessary or appropriate variations, omissions and insertions as permitted or required by this Resolution and the Series 2009 Sales Certificate. 26.06. Application of Proceeds of Sale of Series 2009 Bonds: Allocation Among Funds and Accounts. Upon receipt of payment for the Series 2009 Bonds from the purchaser thereof, the Fiscal Agent shall set aside and deposit the proceeds received from such sale and delivery in the following respective funds and in the following order of priority: (a) The Fiscal Agent shall deposit in the Series 2009 Expense Fund established pursuant to Section 26.07 the amount specified in the Series 2009 Sales Certificate; (b) The Fiscal Agent shall deposit in the Series 1999 Refunding Account established pursuant to Section 26.08 the amount specified in the Series 2009 Sales Certificate; (c) The Fiscal Agent shall deposit in the Reserve Account the amount specified in the Series 2009 Sales Certificate; and 7- (d) The Fiscal Agent shall transfer to the Treasurer of the Agency for deposit in the Series 2009 Project Account established pursuant to Section 26.09 the remainder of such proceeds. 26.07. Establishment and Application of Series 2009 Expense Account. (a) The Fiscal Agent shall establish, maintain and hold in trust a separate account designated as the "Series 2009 Expense Account." The moneys in the Series 2009 Expense Account shall be used and withdrawn by the Fiscal Agent to pay the Costs of Issuance of the Series 2009 Bonds. (b) Before any payment from the Series 2009 Expense Account shall be made, the Agency shall file or cause to be filed with the Fiscal Agent a requisition of the Agency stating (i) the item number of such payment; (ii) the name of the person to whom each such payment is due, which may be the Agency in the case of reimbursement for costs theretofore paid by the Agency; (iii) the respective amounts to be paid; (iv) the purpose by general classification for which each obligation to be paid was incurred; and (v) that obligations in the stated amounts have been incurred by the Agency and are presently due and payable and that each item thereof is a proper charge against the Series 2009 Expense Account and has not been previously paid from said account. (c) The Fiscal Agent shall maintain the Series 2009 Expense Account for a period of 180 days following the date of delivery of the Series 2009 Bonds and then shall transfer any balance therein to the Agency for deposit in the Series 2009 Project Account, and the Series 2009 Expense Account shall be closed. 26.08. Establishment and Application of Series 1999 Refunding Account. The Fiscal Agent shall establish, maintain and hold in trust a separate account designated as the "Series 1999 Refunding Account." All amounts on deposit in the Series 1999 Refunding Account on the Series 2009 Issue Date shall be applied only as provided in the Series 1999 Refunding Instructions, and are not otherwise available to the payment of debt service on any other Bonds outstanding under the Resolution. 26.09. Establishment and Application of Series 2009 Proiect Account. The Agency shall establish, maintain and hold a separate fund designated as the "Series 2009 Project Account" within the Redevelopment Fund. The moneys in the Series 2009 Project Account shall be used and withdrawn by the Agency to pay the costs of the portion of the Project to be financed with the proceeds of the Series 2009 Bonds. All investment earnings on funds held in the Series 2009 Project Account shall be deposited in the Series 2009 Project Account unless deposited by the Agency in the Rebate Fund. 26.10. Terms of Series 2009 Bonds Subject to the Resolution. Except as in this Sixth Supplemental Resolution expressly provided, every term and condition contained in the Resolution shall apply to this Sixth Supplemental Resolution and to the Series 2009 Bonds with the same force and effect as if the same were herein set forth at length, with such omissions, variations and modifications thereof as may be appropriate to make the same conform to this Sixth Supplemental Resolution. This Sixth Supplemental Resolution and all the terms and provisions herein contained shall form part of the Resolution as fully and with the same effect as if all such terms and provisions had been set forth in the Resolution. The Resolution is hereby ratified and confirmed and shall continue in full force and effect in accordance with the terms and provisions thereof, as amended and supplemented hereby. 0 26.11. Use of Depository. Notwithstanding any provision of the Resolution to the contrary: (a) The Series 2009 Bonds shall be initially issued as provided in Section 26.02. Registered ownership of the Series 2009 Bonds, or any portions thereof, may not thereafter be transferred except: (i) To any successor of The Depository Trust Company or its nominee, or to any substitute depository designated pursuant to clause (ii) of this subsection (a) ("substitute depository"); provided that any successor of The Depository Trust Company or substitute depository shall be qualified under any applicable laws to provide the service proposed to be provided by it; (ii) To any substitute depository not objected to by the Fiscal Agent, upon (1) the resignation of The Depository Trust Company or its successor (or any substitute depository or its successor) from its functions as depository, or (2) a determination by the Agency that The Depository Trust Company or its successor (or any substitute depository or its successor) is no longer able to carry out its functions as depository; provided that any such substitute depository shall be qualified under any applicable laws to provide the services proposed to be provided by it; or (iii) To any person as provided below, upon (1) the resignation of The Depository Trust Company or its successor (or substitute depository or its successor) from its functions as depository; provided that no substitute depository which is not objected to by the Fiscal Agent can be obtained, or (2) a determination by the Agency that it is in the best interests of the Agency to remove The Depository Trust Company or its successor (or any substitute depository or its successor) from its function as depository. (b) In the case of any transfer pursuant to clause (i) or clause (ii) of subsection 26.11(a) hereof, upon receipt of all Series 2009 Bonds shall be executed and delivered, registered in the name of such successor or such substitute depository, or their nominees, as the case may be, all as specified in such Written Request. In the case of any transfer pursuant to clause (iii) of subsection 26.11(a) hereof, upon receipt of all outstanding Series 2009 Bonds by the Fiscal Agent together with a Written Request, new Series 2009 Bonds shall be executed and delivered in such denominations and registered in the names of such persons as requested in such Written Request, subject to the limitations of Section 26.02 hereof; provided the Fiscal Agent shall not be required to deliver such new Series 2009 Bonds within a period less than 60 days from the date of receipt of such Written Request. (c) In the case of partial redemption, cancellation or an advance refunding of any Series 2009 Bonds evidencing all or a portion of the principal maturing in a particular year, The Depository Trust Company shall make an appropriate notation on such Series 2009 Bonds indicating the date and amounts of such reduction in principal in form acceptable to the Fiscal Agent. (d) The Agency and the Fiscal Agent shall be entitled to treat the person in whose name any Series 2009 Bond is registered as the Holder thereof for all purposes of the Resolution and any applicable laws, notwithstanding any notice to the contrary received by the Fiscal Agent or the Agency; and the Agency and the Fiscal Agent shall have no responsibility for 0 transmitting payments to, communication with, notifying, or otherwise dealing with any beneficial owners of the Series 2009 Bonds. Neither the Agency nor the Fiscal Agent will have any responsibility or obligations, legal or otherwise, to the beneficial owners or to any other party including The Depository Trust Company or its successor (or substitute depository or its successor), except for the Holder of any Series 2009 Bond. (e) So long as all outstanding Series 2009 Bonds are registered in the name of "Cede & Co." or its registered assign, the Agency and the Fiscal Agent shall cooperate with "Cede & Co.," as sole registered Holder, and its registered assigns in effecting payment of the principal of and redemption premium, if any, and interest on the Series 2009 Bonds by arranging for payment in such manner that funds for such payments are properly identified and are made immediately available on the date they are due. 26.12. General Authorization to Agency Chairperson and Other Agency Officers. The Chairperson, the Executive Director, the Director of Economic Development and all other officers, agents or employees of the Agency are hereby authorized and directed, jointly and severally, to do any and all things and to execute and deliver any and all documents which they may deem necessary or advisable in order to consummate the issuance, sale and delivery of the Series 2009 Bonds, to provide for the issuance of the Series 2009 Bonds in book -entry form, to obtain a Reserve Facility for the Series 2009 Bonds and a Series 2009 Bond Insurance Policy, to provide for the refunding of the Series 1999 Bonds that are current interest bonds (including the delivery of one or more escrow agreements or refunding instructions) and otherwise to effectuate the purposes of the Resolution, and any such actions previously taken by the Chairperson, the Executive Director or the Director of Economic Development and such other officers, agents or employees are hereby ratified, confirmed and approved in all respects. Jones Hall, A Professional Law Corporation, is hereby designated as bond counsel and disclosure counsel with respect to the Series 2009 Bonds, and the Executive Director and the Director of Economic Development are authorized, if they deem it necessary or advisable, to enter into an agreement for legal services with Jones Hall, A Professional Law Corporation, provided that any amounts payable to such firm shall be contingent upon the successful issuance of the Series 2009 Bonds and shall be payable solely from the proceeds of the Series 2009 Bonds. 26.13. Sale of Bonds; Purchase Contract. The Purchase Contract relating to the Series 2009 Bonds (the "Purchase Contract"), among the Agency, the City of San Rafael Joint Powers Financing Authority and E. J. De La Rosa & Co., Inc., substantially in the form on file with the Secretary of the Agency and incorporated herein by reference, is hereby approved. The Chairperson, the Executive Director, the Director of Economic Development or their designee is hereby authorized to sell the Series 2009 Bonds by negotiated sale as set forth in the Purchase Contract; provided that the maximum underwriter's discount or compensation shall not exceed one percent (1.00%) of the principal amount of the Series 2009 Bonds, excluding original issue discount. The Chairperson, the Executive Director, the Director of Economic Development or their designees are each authorized, acting alone, to execute and deliver the Purchase Contract, and are also authorized to take any and all actions reasonably required to consummate the sale and issuance of the Series 2009 Bonds, including the correction of any irregularity, ambiguity or other defect contained herein by inserting appropriate language correcting such irregularity, ambiguity or defect in the Sales Certificate. 26.14. Approval of Official Statement. The preliminary Official Statement relating to the Series 2009 Bonds, in the form presented to this meeting, is hereby approved. The so Chairperson, the Executive Director or the Director of Economic Development or their designee are hereby authorized, each acting alone, to "deem final' the preliminary Official Statement in substantially said form pursuant to Rule 15c2-12 of the Securities and Exchange Commission. The Chairperson, the Executive Director, the Director of Economic Development or their designee are hereby authorized, each acting alone, to execute and deliver the final Official Statement in substantially said form with such additions thereto or changes therein as are approved by the Director of Economic Development. -11- ARTICLE XXVII ADDITIONAL COVENANTS OF THE AGENCY 27.01. Tax Covenants: Rebate Fund. (a) In addition to all of the funds and accounts created pursuant to the Resolution, the Fiscal Agent shall establish and maintain with respect to the Series 2009 Bonds a fund separate from any other fund or account established and maintained hereunder designated as the "Series 2009 Rebate Fund." Upon the written direction of the Agency, there shall be deposited in the Series 2009 Rebate Fund such amounts as are required to be deposited therein pursuant to the Tax Certificate relating to the Series 2009 Bonds. All money at any time deposited in the Series 2009 Rebate Fund shall be held by the Fiscal Agent in trust, to the extent required to satisfy the rebate requirement, as set forth in the Certificate as to Arbitrage of Agency delivered in connection with the Series 2009 Bonds (the "Arbitrage Certificate"), for payment to the United States of America. Notwithstanding the provisions of Article IV of the Resolution relating to the pledge of Tax Revenues, the allocation of money in the Special Fund, the investments of money in any fund or account and the defeasance of Outstanding Bonds, all amounts required to be deposited into or on deposit in the Series 2009 Rebate Fund shall be governed exclusively by this Section 27.01 and by the Series 2009 Tax Certificate (which is incorporated herein by reference). The Fiscal Agent shall be deemed conclusively to have complied with such provisions if it follows the written directions of the Agency, and shall have no liability or responsibility to enforce compliance by the Agency with the terms of the Arbitrage Certificate. (b) The Agency shall not use or permit the use of any proceeds of Series 2009 Bonds or any funds of the Agency, directly or indirectly, to acquire any securities or obligations, and shall not take or permit to be taken any other action or actions, which would cause any Bonds to be "arbitrage bonds" within the meaning of Section 148 of the Code of "federally guaranteed" within the meaning of Section 149(b) of the Code and any such applicable requirements promulgated from time to time thereunder and under Section 103(c) of the Internal Revenue Code of 1954, as amended, as applicable. The Agency shall observe and not violate the requirements of Section 148 of the Code and any such applicable regulations. The Agency shall comply with all requirements of Sections 148 and 149(d) of the Code to the extent applicable to the Bonds. In the event that at any time the Agency is of the opinion that for purposes of this Section 27.01(b) it is necessary to restrict or to limit the yield on the investment of any moneys held by the Fiscal Agent under this Resolution, the Agency shall so instruct the Fiscal Agent under this Resolution in writing, and the Fiscal Agent shall take such action as may be necessary in accordance with such instructions. The Agency shall not use or permit the use of any proceeds of the Series 2009 Bonds or any funds of the Agency, directly or indirectly, in any manner; and shall not take or omit to take any action that would cause any of the Bonds to be treated as an obligation not described in Section 103(a) of the Code. (c) Notwithstanding any provisions of this Section 27.01 if the Agency shall provide to the Fiscal Agent an opinion of nationally recognized bond counsel that any specified action required under this Section'27.01 is no longer required or that some further or different action is required to maintain the exclusion from federal income tax of interest with respect to the Bonds, the Fiscal Agent and the Agency may conclusively rely on such opinion in complying with the -12- requirements of this section, and the covenants hereunder shall be deemed to be modified to that extent. (d) The Agency hereby designates the Series 2009 Bonds for purposes of paragraph (3) of section 265(b) of the Code and represents that not more than $30,000,000 aggregate principal amount of obligations the interest on which is excludable (under section 103(a) of the Code) from gross income for federal income tax purposes (excluding (i) private activity bonds, as defined in section 141 of the Code, except qualified 501(c)(3) bonds as defined in section 145 of the Code and (ii) current refunding obligations to the extent the amount of the refunding obligation does not exceed the outstanding amount of the refunded obligation), including the Series 2009 Bonds, has been or will be issued by the Agency, including all subordinate entities of the Agency, during the calendar year 2009. 27.02. Housing Set -Aside. The Agency shall comply with all requirements of the Law relating to the deposit of taxes allocated to the Agency from the Project Area in the Low and Moderate Income Housing Fund established by the Agency pursuant to the Law. 27.03. Future Oblioations; Pledge Limitation. So long as any Bonds are Outstanding, the Agency shall not enter into any obligation or make any expenditure payable from taxes allocated to the Agency under the Law the payments of which, together with payments theretofore made or to be made with respect to other obligations or expenditures (including, but not limited to the Bonds) previously entered into or made by the Agency, would exceed the then -effective limit on the amount of taxes which can be allocated to the Agency pursuant to the Redevelopment Plan. Notwithstanding any other provision hereof, the pledge of Tax Revenues in favor of the Holders shall be limited as required by Section 16112.7(e) of the Government Code. 27.04. Agreements with Other Taxing Agencies. So long as any Series 2009 Bonds are Outstanding under the Resolution, the Agency shall not enter into any agreement (except for any agreement in effect at the time of the adoption of Second Supplemental Resolution) with any other taxing agency which operates as a waiver of the Agency's right to receive Tax Revenues under the Agency's Redevelopment Plan, unless such agreement is made expressly subordinate and junior to the terms of the Resolution and the Bonds and to the repayment of Policy Costs. The Agency shall not undertake proceedings for amendment of the Redevelopment Plan if such amendment shall result in payments to one or more taxing entities pursuant to Sections 33607.5 and 33607.7 of the Law unless the Agency shall first determine that such payments will not adversely impair the Agency's ability to pay debt service on the Bonds. 27.05. Concerning the Series 2009 Bond Insurer and the Reserve Facility for the Series 2009 Bonds. The Agency shall, in the Series 2009 Sales Certificate, agree to such covenants and conditions as are required by the Series 2009 Bond Insurer and the Reserve Facility Provider for the Series 2009 Bonds, and such covenants and conditions shall have the same force and effect as if set forth in this Sixth Supplement Resolution. 27.06. Continuing Disclosure. The Agency hereby covenants and agrees that it will comply with and carry out all of the provisions of the Series 2009 Continuing Disclosure Certificate. Notwithstanding any other provision of the Resolution, failure of the Agency to comply with the Series 2009 Continuing Disclosure Certificate shall not be considered an event of default under the Resolution. 13- I, 27.07. Designation of Series 2009 Bonds. If the issuance of the Series 2009 Bonds occurs in calendar year 2010, the Series 2009 Bonds may, at the option of the Agency, instead be designated "San Rafael Redevelopment Agency Central San Rafael Redevelopment Project Tax Allocation Refunding Bonds, Series 2010." -14- - ARTICLE`'XXVIII AMENDMENT TO RESOLUTION 28.01. Discharge of Bonds. Notwithstanding Section 9.03 of the Resolution, the Agency may discharge all or a portion of a Series of Bonds by making the deposit described in Section 9.03 (1), (2) or (3) with respect to such Bonds, and such Bonds shall no longer be deemed to be outstanding under the Resolution. Sim I, Esther C. Beirne, Agency Secretary of the San Rafael Redevelopment Agency, hereby certify that the foregoing resolution was duly and regularly introduced and adopted at a special joint meeting of said Agency held on the 16th day of November, 2009, by the following vote, to wit: AYES: MEMBERS: NOES: MEMBERS: ABSENT: MEMBERS: -16- Esther C. Beirne, Agency Secretary APPENDIX A [FORM OF SERIES 2009 BOND] No. SAN RAFAEL REDEVELOPMENT AGENCY CENTRAL SAN RAFAEL REDEVELOPMENT PROJECT TAX ALLOCATION REFUNDING BOND, SERIES 2009 BOND DATE: MATURITY DATE: RATE OF INTEREST: CUSIP: Registered Owner: Principal Amount: THE SAN RAFAEL REDEVELOPMENT AGENCY, a public body, corporate and politic, duly organized and existing under and pursuant to the laws of the State of California (the "Agency"), for value received hereby promises to pay to the registered owner specified above, or registered assigns, on the Maturity Date specified above the Principal Amount specified above, together with interest thereon from the interest payment date next preceding the date of registration on this Series 2009 Bond (unless this Series 2009 Bond is registered on an interest payment date, in which event it shall bear interest from such interest payment date, or unless this Series 2009 Bond is registered prior to the first interest payment date, in which event it shall bear interest from Issue Date) until the principal hereof shall have been paid, at the Rate of Interest specified above, payable on June 1 and December 1 in each year, commencing June 1, 2010. Payment of the interest on this Series 2009 Bond due on or before the maturity or prior redemption hereof shall be made to the person whose name appears on the Series 2009 Bond registration books of U.S. Bank National Association, as fiscal agent of the Agency (the "Fiscal Agent") as the registered owner hereof, as of the close of business on the 15th day of the month preceding the applicable interest payment date (the "Record Date"), such interest to be paid by check mailed by first class mail, postage prepaid, on each interest payment date to such registered owner at his address as it appears on such books or at such other address as he may have filed with the Fiscal Agent for that purpose prior to the Record Date, or, upon written request of a registered owner of at least $1,000,000 in aggregate principal amount of Series 2009 Bonds (specifying such account information as the Fiscal Agent shall require), by wire transfer in immediately available funds to an account within the continental United States designated by such registered owner prior to the Record Date. The principal and the redemption price hereof and interest upon maturity or prior redemption are payable in lawful money of the United States of America at the principal corporate trust office of the Fiscal Agent in St. Paul, Minnesota, upon surrender of this Series 2009 Bond. This Series 2009 Bond is one of a duly authorized issue of San Rafael Redevelopment Agency, Central San Rafael Redevelopment Project Tax Allocation Refunding Bonds, Series 2009 (the "Series 2009 Bonds"), limited in initial aggregate principal amount to ($ ), all of like tenor and date (except for such variations, if any, as may be required to A-1 designate varying numbers, maturities, interest rates, payment provisions or redemption provisions), all issued under the provisions of the Community Redevelopment Law of the State of California, as amended) (the "Law"), and pursuant to the provisions of a Resolution No. 77- 69, adopted by the Agency on August 15, 1977, as supplemented and amended by a First Supplemental Resolution adopted on April 20, 1992, a Second Supplemental Resolution adopted on September 5, 1995, a Third Supplemental Resolution adopted on November 18, 1996, a Fourth Supplemental Resolution adopted on June 7, 1999, a Fifth Supplemental Resolution adopted on September 16, 2002 and a Sixth Supplemental Resolution adopted on November 16, 2009 (collectively, the "Resolution"). All Bonds are equally and ratably secured in accordance with the terms and conditions of the Resolution, and reference is hereby made to the Resolution, to any resolutions supplemental thereto and to the Law for a description of the terms on which the Series 2009 Bonds are issued, for the provisions with regard to the nature and extent of the security provided for the bonds and of the nature, extent and manner of enforcement of such security, and for a statement of the rights of the registered owners of the Series 2009 Bonds; and all the terms of the Resolution and the Law are hereby incorporated herein and constitute a contract between the Agency and the registered owner from time to time of this Series 2009 Bond, and to all the provisions thereof, the registered owner of this Series 2009 Bond, by his acceptance hereof, consents and agrees. Each registered owner hereof shall have recourse to all the provisions of the Law and the Resolution and shall be bound by all the terms and conditions thereof. The Series 2009 Bonds are issued to provide funds to aid in refinancing and financing the Central San Rafael Redevelopment Project of the Agency, a duly adopted redevelopment project in San Rafael, California, as more particularly described in the Resolution. The Series 2009 Bonds are special obligations of the Agency and are payable, as to interest thereon, principal thereof and any premiums upon the redemption thereof, exclusively from the Tax Revenues (as that term is defined in the Resolution and herein called the "Tax Revenues"), and the Agency is not obligated to pay them except from the Tax Revenues. The Series 2009 Bonds are payable on a parity from Tax Revenues with the Agency's outstanding Central San Rafael Redevelopment Project Tax Allocation Bonds, Series 1999 initially issued in the aggregate principal amount of $23,504,004.10 and its Central San Rafael Redevelopment Project Tax Allocation Refunding Bonds, Series 2002 initially issued in the aggregate principal amount of $25,020,000 (collectively, the "Prior Bonds"). The Series 2009 Bonds and the Prior Bonds are equally secured by a pledge of, and charge and lien upon, the Tax Revenues, and the Tax Revenues constitute a trust fund for the security and payment of the interest on and principal of and redemption premiums, if any, on the Bonds. Additional tax allocation bonds payable from the Tax Revenues may be issued which will rank equally as to security with the Series 2009 Bonds and the Prior Bonds, but only subject to terms and conditions set forth in the Resolution. The Agency hereby covenants and warrants that, for the payment of the interest on and principal of and redemption premium, if any, on this Series 2009 Bond and all other Bonds issued under the Resolution when due, there has been created and will be maintained by the Fiscal Agent a special fund into which all Tax Revenues shall be deposited, and as an irrevocable charge the Agency has allocated the Tax Revenues solely to the payment of the interest on the principal of and redemption premiums, if any, on the Bonds, and the Agency will pay promptly when due the interest on and principal of and redemption premium, if any, on this Series 2009 Bond and all other Bonds of this issue and all additional tax allocation bonds authorized by the Resolution out of said special fund, all in accordance with the terms and provisions set forth in the Resolution. FTW (At this point thereshall be set forth the redemption terms' and the corresponding redemption price or prices, as the case may be.] As provided in the Resolution, notice of redemption of this Bond shall be mailed by first class mail not less than thirty (30) days nor more than sixty (60) days before the redemption date to the registered owner hereof, but failure to receive such notice shall not affect the sufficiency of such proceedings for redemption. If notice of redemption has been duly given as aforesaid and money for payment of the above-described redemption price is held by the Fiscal Agent, then such Series 2009 Bonds shall, on the redemption date designated in such notice, become due and payable at the above-described redemption price; and from and after the date so designated interest on the Series 2009 Bonds so called for redemption shall cease to accrue and registered owners of such Series 2009 Bonds shall have no rights in respect thereof except to receive payment of such redemption price thereof. If an event of default, as defined in the Resolution, shall occur, the principal of all Series 2009 Bonds may be declared due and payable upon the conditions, in the manner and with the effect provided in the Resolution; except that the Resolution provides that in certain events such declaration and its consequences may be rescinded by the registered owners of at least sixty percent (60%) in aggregate principal amount of the Series 2009 Bonds then outstanding (computed as provided in the Resolution). The Series 2009 Bonds are issuable only in the form of fully registered Bonds in the denomination of $5,000. The Owner of any Bond or Bonds may surrender the same at the above-mentioned office of the Fiscal Agent in exchange for an equal aggregate principal amount of fully registered Series 2009 Bonds of any other authorized denominations, in the manner, subject to the conditions and upon the payment of the charges provided in the Resolution. This Series 2009 Bond is transferable, as provided in the Resolution, only upon a register to be kept for that purpose at the above-mentioned office of the Fiscal Agent by the registered owner hereof in person, or by his duly authorized attorney, upon surrender of this Series 2009 Bond together with a written instrument of transfer satisfactory to the Fiscal Agent duly executed by the registered owner or his duly authorized attorney, and thereupon a new fully registered Series 2009 Bond or Bonds, and in the same aggregate principal amount, shall be issued to the transferee in exchange therefor as provided in the Resolution, and upon payment of the charges therein prescribed. The Agency and the Fiscal Agent may deem and treat the person in whose name this Series 2009 Bond is registered as the absolute owner hereof for the purpose of receiving payment of, or on account of, the interest hereon and principal hereof and redemption premium, if any, hereon and for all other purposes. The rights and obligations of the Agency and of the registered owners of the Series 2009 Bonds may be amended at any time in the manner, to the extent and upon the terms provided in the Resolution, but no such amendment shall (1) extend the maturity of this Series 2009 Bond, or reduce the interest rate hereon, or otherwise alter or impair the obligation of the Agency to pay the interest hereon or principal hereof or any premium payable on the redemption hereof at the time and place and at the rate and in the currency provided herein, without the express written consent of the registered owner of this Series 2009 Bond, or (2) permit the creation by the Agency of any mortgage, pledge or lien upon the Tax Revenues superior to or on a parity with the pledge and lien created in the Resolution for the benefit of the Series 2009 Bonds and all additional tax allocation bonds authorized by the Resolution or (3) reduce the percentage of Series 2009 Bonds required for the written consent to an amendment of the Resolution, or (4) A-3 modify any rights or obligations of the Fiscal Agent without its prior written assent thereto; all as more fully set forth in the Resolution. This Series 2009 Bond is not a debt of the City of San Rafael, the State of California or any of its political subdivisions and neither said City, and State nor any of its political subdivisions is liable hereon, nor in any event shall this Bond or any interest hereon or any redemption premium hereon be payable out of any funds or properties other than those of the Agency. The Series 2009 Bonds do not constitute an indebtedness within the meaning of any constitutional or statutory debt limitation or restriction, and neither the members of the Agency nor any person executing the Series 2009 Bonds shall be personally liable on the Series 2009 Bonds by reason of their issuance. This Series 2009 Bond shall not be entitled to any benefits under the Resolution or become valid or obligatory for any purpose until the certificate of authentication and registration hereon endorsed shall have been signed by the Fiscal Agent. Unless this Bond is presented by an authorized representative of The Depository Trust Company, a New York corporation ("DTC"), to the Fiscal Agent for registration of transfer, exchange, or payment, and any Bond issued is registered in the name of Cede & Co. or in such other name as is requested by an authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein. THIS BOND HAS BEEN DESIGNATED BY THE AUTHORITY AS A "QUALIFIED TAX- EXEMPT OBLIGATION' WITHIN THE MEANING OF SECTION 265(b)(3) OF THE INTERNAL REVENUE CODE OF 1986. It is hereby certified that all of the acts, conditions and things required to exist, to have happened or to have been performed precedent to and in the issuance of this Series 2009 Bond do exist, have happened and have been performed in due time, form and manner as required by law and that the amount of this Series 2009 Bond, together with all other indebtedness of the Agency, does not exceed any limit prescribed by the Constitution or laws of the State of California, and is not in excess of the amount of Series 2009 Bonds permitted to be issued under the Resolution. or IN WITNESS WHEREOF, the San Rafael Redevelopment Agency has caused this Series 2009 Bond to be executed in its name and on its behalf by the Director of Economic Development of the City of San Rafael and attested by its Secretary, and has caused its seal to be reproduced hereon, and has caused this Series 2009 Bond to be dated December _, 2009. (Seal) Attest: Secretary A-5 SAN RAFAEL REDEVELOPMENT AGENCY M Executive Director [FORM OF FISCAL AGENT CERTIFICATE OF AUTHENTICATION AND REGISTRATION TO APPEAR ON SERIES 2009 BONDS] This is one of the Bonds described in the within -mentioned Resolution which has been authenticated and registered on the date set forth below. DATED: U.S. BANK NATIONAL ASSOCIATION, as Fiscal Agent [FORM OF ASSIGNMENT TO APPEAR ON SERIES 2009 BONDS] For value received the undersigned do(es) hereby sell, assign and transfer unto the within -mentioned registered Bond and do(es) hereby irrevocably constitute and appoint attorney to transfer the same on the bond register of the Fiscal Agent, with full power of substitution in the premises. Dated: Note: The signature(s) to this Assignment must correspond with the name(s) as written on the face of the within registered Bond in every particular, without alteration or enlargement or any change whatsoever. A-7 PRELIMINARY OFFICIAL STATEMENT DATED NOVEMBER _, 2009 NEWISSUE FULL BOOK -ENTRY ONLY BANK -QUALIFIED Draft 11/03/09 INSURED RATINGS: S&P Poor's: Fitch Moody's: UNDERLYING RATING: S&P: (See "MISCELLANEOUS — Ratings" herein) In the opinion of Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel, subject, however to certain qualifications described herein, under existing law, the interest on the 2009 Bonds is excluded from gross income for federal income tax purposes, and such interest is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations, and the 2009 Bond are "qualified tax-exempt obligations" within the meaning of section 265(b)(3) of the Internal Revenue Code of 1986. In the further opinion of Bond Counsel, such interest is exempt from California personal income taxes. See MISCELLANEOUS—Tar Matters"herein. SAN RAFAEL REDEVELOPMENT AGENCY Central San Rafael Redevelopment Project Tax Allocation Refunding Bonds, Series 2009 Dated: Date of Delivery Due: December 1, as shown below The captioned bonds (the "Series 2009 Bonds"), are being issued by the San Rafael Redevelopment Agency (the "Agency"). Proceeds of the Series 2009 Bonds will be used to (i) refund and defease a portion of the Agency's Central San Rafael Redevelopment Project Tax Allocation Refunding Bonds, Series 1999, (the "1999 Bonds"); (ii) advance funds to the City of San Rafael (the "City') to finance street and parking improvements of benefit to its Central San Rafael Redevelopment Project (the "Project Area"); (iii) fund a reserve account for the Series 2009 Bonds (which may be funded with a surety bond, as described herein); and (iii) pay the costs of issuing the Series 2009 Bonds. The Series 2009 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 the denomination of $5,000 or any integral multiple thereof, 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 Series 2009 Bonds. Interest on the Series 2009 Bonds will be payable on June 1 and December 1 of each year, commencing on June 1, 2010. The payment of principal of, premium if any, and semiannual interest on the Series 2009 Bonds will be made by U.S. Bank National Association, San Francisco, California, as fiscal agent, to DTC for subsequent disbursement to DTC participants, so long as DTC or its nominee remains the registered owner of the Series 2009 Bonds. The Series 2009 Bonds are subject to optional and mandatory redemption as described herein. The Series 2009 Bonds are special obligations of the Agency and are payable exclusively from Tax Revenues (as defined herein) to be derived from the Project Area and from amounts on deposit in certain funds and accounts established pursuant to the Resolution. The receipt of Tax Revenues is subject to certain risks and limitations. There are other currently outstanding bonds of the Agency payable from Tax Revenues on a parity with the Series 2009 Bonds. See "RISK FACTORS" and "LIMITATIONS ON TAX REVENUES AND POSSIBLE SPENDING LIMITATIONS" herein. Payment of the principal of and interest on the Series 2009 Bonds when due will be insured by a municipal bond insurance policy to be issued by simultaneously with delivery of the Bonds. [All references to be deleted, if not applicable] [Insurer's logo] THE SERIES 2009 BONDS ARE NOT A DEBT OF THE CITY OF SAN RAFAEL, THE STATE OF CALIFORNIA, OR ANY OF ITS POLITICAL SUBDIVISIONS OTHER THAN THE AGENCY, AND NEITHER THE CITY, THE STATE NOR ANY OF ITS POLITICAL SUBDIVISIONS, OTHER THAN THE AGENCY, IS LIABLE THEREFOR. THE PRINCIPAL OF, PREMIUM, IF ANY, AND INTEREST ON THE SERIES 2009 BONDS ARE PAYABLE SOLELY FROM TAX REVENUES ALLOCATED TO THE AGENCY FROM THE PROJECT AREA AND AMOUNTS IN CERTAIN FUNDS AND ACCOUNTS HELD UNDER THE RESOLUTION, NEITHER THE MEMBERS OF THE AGENCY NOR THE CITY COUNCIL OF THE CITY, NOR ANY PERSONS EXECUTING THE SERIES 2009 BONDS ARE LIABLE PERSONALLY ON THE SERIES 2009 BONDS BY REASON OF THEIR ISSUANCE. MATURITY SCHEDULE (See Inside Cover) This cover page contains certain information for quick reference only. It is not intended to be a summary of all factors relating to an investment in the Series 2009 Bonds. Investors should review the entire Official Statement before making any investment decision. The Series 2009 Bonds will be offered when, as and if issued and accepted by the Underwriter, subject to approval as to legality by Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel, and subject to certain other conditions. Jones Hall is also acting as Disclosure Counsel to the Agency. Certain legal matters will be passed on for the Agency by Goldfarb & Lipman, Oakland, California. It is anticipated that the Series 2009 Bonds, in book entry form, will be available for delivery on or about, 2009. Dated: November_, 2009 Preliminary, subject to change. [E.J. De La Rosa & Co. logo] MATURITY SCHEDULE S SAN RAFAEL REDEVELOPMENT AGENCY Central San Rafael Redevelopment Project Tax Allocation Refunding Bonds, Series 2009 (Base CUSIP:t Maturity Principal Interest (December 1) Amount Rate Yield CUSIPt t Copyright 2009, American Bankers Association. CUSIP data are provided by Standard & Poors CUSIP Service Bureau, a division of The McGraw-Hill Companies, Inc., and are provided for convenience of reference only. Neither the Agency nor the Underwriter assumes any responsibility for the accuracy of these CUSIP data. GENERAL INFORMATION ABOUT THIS OFFICIAL STATEMENT Use of Official Statement. This Official Statement is submitted in connection with the offer and sale of the Series 2009 Bonds referred to herein and may not be reproduced or used, in whole or in part, for any other purpose. This Official Statement is not to be construed as a contract with the purchasers of the Series 2009 Bonds. Estimates and Forecasts. When used in this Official Statement and in any continuing disclosure by the Agency in any press release and in any oral statement made with the approval of an authorized officer of the Agency or any other entity described or referenced herein, the words or phrases "will likely result," "are expected to", "will continue", "is anticipated", "estimate", "project,' "forecast', "expect", "intend" and similar expressions identify "forward looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated in such forward-looking statements. Any forecast is subject to such uncertainties. Inevitably, some assumptions used to develop the forecasts will not be realized and unanticipated events and circumstances may occur. Therefore, there are likely to be differences between forecasts and actual results, and those differences may be material. The information and expressions of opinion herein are subject to change without notice, and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, give rise to any implication that there has been no change in the affairs of the Agency or any other entity described or referenced herein since the date hereof. Limit of Offering. No dealer, broker, salesperson or other person has been authorized by the Agency to give any information or to make any representations in connection with the offer or sale of the Series 2009 Bonds other than those contained herein and if given or made, such other information or representation must not be relied upon as having been authorized by the Agency or the Underwriter. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the Series 2009 Bonds by a person in any jurisdiction in which it is unlawful for such person to make such an offer, solicitation or sale. Involvement of Underwriter. The Underwriter has reviewed the information in this Official Statement in accordance with, and as a part of, their responsibilities to investors under the Federal Securities Laws as applied to the facts and circumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness of such information. The information and expressions of opinions herein are subject to change without notice and neither delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the Agency any other entity described or referenced herein since the date hereof. All summaries of the documents referred to in this Official Statement are made subject to the provisions of such documents, respectively, and do not purport to be complete statements of any or all of such provisions. THE SERIES 2009 BONDS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, IN RELIANCE UPON AN EXCEPTION FROM THE REGISTRATION REQUIREMENTS CONTAINED IN SUCH ACT. THE SERIES 2009 BONDS HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATE. SAN RAFAEL REDEVELOPMENT AGENCY AGENCY/CITY COUNCIL MEMBERS Albert J. Boro, Mayor Barbara Heller, Council Member Greg Brockbank, Council Member Damon Connolly, Council Member Cyr N. Miller, Council Member AGENCY AND CITY STAFF Kenneth Nordhoff, Executive Director/City Manager Jim Schutz, Assistant Executive Director Esther C. Beirne, Agency Secretary/City Clerk Nancy Mackle, Economic Development Director Stephanie Smith Lovette, Economic Development Coordinator SPECIAL SERVICES Fiscal Agent U.S. Bank National Association San Francisco, California Bond Counsel and Disclosure Counsel Jones Hall, A Professional Law Corporation San Francisco, California Agency Special Counsel Goldfarb & Lipman Oakland, California Verification Agent Grant Thornton LLP Minneapolis, Minnesota TABLE OF CONTENTS INTRODUCTION................................................1 Summary of Certain Provisions of the Resolution Legal Authority...............................................1 City of San Rafael General Information Financing Purpose.........................................2 Audited Financial Statements of the Agency Tax Allocation Financing ................................ 2 The City and the Agency................................3 27 The Project Area............................................3 Form of Continuing Disclosure Certificate Municipal Bond Insurance ..............................3 Book Entry Only System Continuing Disclosure....................................3 Specimen Municipal Bond Insurance Policy Other Information...........................................4 National Public Finance Guarantee — Corporate Disclosure FINANCING PLAN.............................................4 28 The Refunding................................................4 TheProject.....................................................5 Estimated Sources and Uses of Funds ......... 5 THE SERIES 2009 BONDS...............................6 Description.....................................................6 Optional Redemption.....................................7 Mandatory Redemption From Sinking Fund Payments..........................................7 General Redemption Provisions....................7 32 Debt Service Schedule..................................8 SECURITY FOR THE SERIES 2009 BONDS ..8 Tax Allocation Financing................................9 Allocation of Taxes.........................................9 Tax Revenues................................................9 Reserve Account..........................................11 Additional Bonds..........................................13 BOND INSURANCE.........................................15 THE SAN RAFAEL REDEVELOPMENT AGENCY......................................................15 Authority and Personnel...............................15 Agency Administration.................................15 Budgetary Policies.......................................15 THE PROJECT AREA.....................................16 37 General.........................................................16 The Redevelopment Project Plan................17 Redevelopment Plan Limitations.................17 Pass -Through Agreement. ........................... 20 Allocation of Taxes.......................................21 Low and Moderate Income Housing ............ 21 LandUse......................................................22 39 Historic Assessed Value and Tax Revenues ................................................. 22 Major Taxable Property Owners ..................23 Summary of Certain Provisions of the Resolution Appeals of Assessed Values .......................24 City of San Rafael General Information Projected Tax Revenues..............................26 Audited Financial Statements of the Agency RISK FACTORS...............................................27 for Fiscal Year Ended June 30, 2009 Reduction in Taxable Value ......................... 27 Reduction in Inflationary Rate......................27 Form of Continuing Disclosure Certificate Levy and Collection......................................28 Book Entry Only System Additional Bonds..........................................28 Specimen Municipal Bond Insurance Policy Bankruptcy Risks..........................................28 National Public Finance Guarantee — Corporate Disclosure Factors Relating to Sub -Prime Loans .......... 28 State of California Fiscal Issues ..................29 AB 1389 Reporting Requirements...............30 Seismic Factors............................................31 Risk of Floods...............................................31 Hazardous Substances................................31 Secondary Market........................................32 Loss of Tax Exemption.................................32 LIMITATIONS ON TAX REVENUES AND POSSIBLE SPENDING LIMITATIONS ........ 32 Property Tax Limitations: Article XIIIA of the California Constitution ........................32 Implementing Legislation .............................33 Challenges to Article XIIIA ...........................33 Property Tax Collection Procedures ............34 Unitary Property............................................35 Statement of Indebtedness ..........................35 Exclusion of Tax Revenues for General Obligation Bonds Debt Service................36 Appropriations Limitations: Article XIIIB of the California Constitution ........................36 Proposition 21 ..............................................37 Future Initiatives...........................................37 MISCELLANEOUS ........................................... 37 The Authority................................................37 Litigation.......................................................37 Ratings.........................................................37 Certain Legal Matters...................................38 TaxMatters...................................................38 Underwriting.................................................39 Verification.................................................... 39 Miscellaneous...............................................39 APPENDIX A - Summary of Certain Provisions of the Resolution APPENDIX B - City of San Rafael General Information APPENDIX C - Audited Financial Statements of the Agency for Fiscal Year Ended June 30, 2009 APPENDIX D - Form of Bond Counsel Opinion APPENDIX E - Form of Continuing Disclosure Certificate APPENDIX F - Book Entry Only System APPENDIX G - Specimen Municipal Bond Insurance Policy APPENDIX H - National Public Finance Guarantee — Corporate Disclosure SAN RAFAEL REDEVELOPMENT AGENCY Central San Rafael Redevelopment Project Tax Allocation Refunding Bonds, Series 2009 INTRODUCTION This Official Statement, including the cover page and appendices hereto, is provided to furnish information in connection with the sale by the San Rafael Redevelopment Agency (the "Agency") of its Central San Rafael Redevelopment Project, Tax Allocation Refunding Bonds, Series 2009 (the "Series 2009 Bonds"). This Introduction contains a brief summary of certain information contained in this Official Statement. It is not intended to be complete and is qualified by the more detailed information contained elsewhere in this Official Statement. Definitions of certain terms used in this Official Statement are set forth in "APPENDIX A — Summary of Certain Provisions of the Resolution". Legal Authority The Agency is a redevelopment agency existing under the Community Redevelopment Law of the State of California (the "State"), constituting Part 1 of Division 24 (commencing with Section 33000) of the California Health and Safety Code, as amended (the "Redevelopment Law"). The Series 2009 Bonds are being issued under the Redevelopment Law. The Series 2009 Bonds will be issued pursuant to: • Resolution No 77-69 of the Agency adopted August 15, 1977, • Resolution No. 92-6 of the Agency adopted April 20, 1992, • Resolution No. 95-27 of the Agency adopted September 5, 1995, • Resolution No. 96-86 of the Agency adopted November 18, 1996, • Resolution No. 99-16, adopted June 17, 1999, • Resolution No. 2002-24, adopted September 16, 2002, and • Resolution No. _ adopted November 16, 2009 The above -listed resolutions are collectively called the "Resolution" herein. Pursuant to the Resolution, U.S. Bank National Association, San Francisco, California, has been appointed as the fiscal agent (the "Fiscal Agent") with respect to the Series 2009 Bonds and the hereinafter described Series 1999 Bonds and Series 2002 Bonds. The Series 2009 Bonds are payable from Tax Revenues (as defined herein) on a parity with the Series 2002 Bonds and the portion of the Series 1999 Bonds that will remain outstanding. The Resolution permits, upon satisfaction of certain conditions, the issuance of additional indebtedness ("Parity Debt") payable from Tax Revenues and secured by a lien and charge upon Tax Revenues equal to the lien and charge securing the Series 2002 Bonds, the Series 2009 Bonds, and the portion of the Series 1999 Bonds that will remain outstanding (the "Remaining Series 1999 Bonds"). See "FINANCING PLAN " and "SECURITY FOR THE SERIES 2009 BONDS — Issuance of Parity Debt'— Summary of Certain Provisions of the Resolution." Preliminary, subject to change. -1- The Bonds are being issued for sale to the City of San Rafael Joint Powers Financing Authority (the "Authority") pursuant to the Marks -Roos Local Bond Pooling Act of 1985, constituting Article 4 of Chapter 5 of Division 7 of Title 1 (commencing with Section 6584) of the California Government Code (the "JPA Law"). The Bonds purchased by the Authority will be resold concurrently to E. J. De La Rosa & Co, Inc., the Underwriter. Financing Purpose The proceeds of the Series 2009 Bonds will be used to (i) advance funds to the City to finance street improvements of benefit to the Agency's Central San Rafael Redevelopment Project (the "Project Area"), (ii) refund the callable portion of the Agency's $23,504,004.10 Central San Rafael Redevelopment Project Tax Allocation Refunding Bonds, Series 1999 (the "Series 1999 Bonds"), of which $14,315,000 principal amount will be refunded with proceeds of the Series 2009 Bonds, (iii) fund a debt service reserve account for the Series 2009 Bonds (which may be funded with a surety bond meeting the requirements of the Resolution) and (iv) pay costs of issuance associated with the Series 2009 Bonds. The Series 2009 Bonds will be the seventh series of Bonds issued under the Resolution. The Series 1999 Bonds were also issued under the Resolution. The only other currently outstanding series of Bonds issued by the Agency under the Resolution, and payable from Tax Revenues on a parity with the Remaining Series 1999 Bonds and the Series 2009 Bonds are the Agency's $25,020,000 Central San Rafael Redevelopment Project Tax Allocation Bonds, Series 2002, currently outstanding in the aggregate principal amount of $15,295,000 (the "Series 2002 Bonds"). The Remaining Series 1999 Bonds, the Series 2002 Bonds, the Series 2009 Bonds, and any Additional Bonds issued pursuant to the Resolution are sometimes referred to herein as the "Bonds". Tax Allocation Financing The Redevelopment Law provides a means for financing redevelopment projects based upon an allocation of taxes collected within a redevelopment project area. The taxable valuation of a redevelopment project area last equalized prior to adoption of the redevelopment plan, or base roll, is established and, except for any period during which the taxable valuation drops below the base year level, the taxing agencies thereafter receive the taxes produced by the levy of the then current tax rate upon the base roll. Taxes collected upon any increase in taxable valuation over the base roll are allocated to a redevelopment agency and may be pledged by a redevelopment agency to the repayment of any indebtedness incurred in financing or refinancing a redevelopment project. Redevelopment agencies themselves have no authority to levy property taxes and must look specifically to the allocation of taxes produced as indicated above. The Bonds are secured by a pledge of Tax Revenues. "Tax Revenues" generally include the taxes (including all payments, reimbursements and subventions, if any, specifically attributable to ad valorem taxes lost by reason of tax exemptions and tax rate limitations) eligible for allocation to the Agency pursuant to the Redevelopment Law with respect to the Project Area. Tax Revenues are more fully described under the caption "SECURITY FOR THE SERIES 2009 BONDS -- Tax Revenues". Any future decrease in the taxable valuation in the Project Area or in the applicable tax rates could reduce the Tax Revenues allocated to the Agency and correspondingly could have an adverse impact on the ability of the Agency to pay debt service on the Series 2009 Bonds. See "RISK FACTORS" herein. -2- The City and the Agency The City of San Rafael, California (the "City"), is located in central Marin County (the "County"), and is the county seat and governmental and commercial hub of the County. The City was incorporated in 1874, and became a charter city in 1913. It maintains a council- manager form of government, with the Mayor and Council Members elected at -large for four-year terms. For certain information regarding the City, see "APPENDIX B - City of San Rafael General Information." The Agency was activated on June 19, 1972 by action of the City Council, at which time the City Council declared itself to be the governing board of the Agency. The Project Area The City Council, on behalf of the Agency, adopted the Redevelopment Plan with respect to the Project Area on November 20, 1972 pursuant to its Ordinance No. 1079. The Redevelopment Plan has been subsequently amended and restated in 1989. On November 22, 1994, the Agency, by Ordinance No. 1669, as amended and restated by Ordinance No. 1732 adopted on October 5, 1998, modified the Redevelopment Plan in order to comply with Assembly Bill 1290 ("AB 1290"). The Redevelopment Plan was further amended by Ordinance No. 1776, adopted on March 4, 2002 and was amended and restated by Ordinance No. 1786, adopted on August 19, 2002, by Ordinance No. 1822, adopted on March 15, 2004, and by Ordinance No. 1850, adopted on June 4, 2007. See "THE PROJECT AREA—The Redevelopment Plan". The Project Area includes a mixture of commercial, recreational, residential and industrial facilities. The assessed value of the Project Area in the Base Year, was $162,545,228 compared to its 2009-10 assessed value of $2,431,436,187. The Project Area is the only redevelopment project of the Agency. See "THE PROJECT AREA" for additional information on land use and property ownership within the Project Area. Municipal Bond Insurance Concurrently with issuance of the Series 2009 Bonds, (the "Insurer") will issue its Municipal Bond Insurance Policy (the "Policy") for the Bonds. The Policy unconditionally guarantees the payment of that portion of the principal of and interest on the Bonds which has become due for payment, but which is unpaid. See "SECURITY FOR THE BONDS — Payments Pursuant to Municipal Bond Insurance Policy" and "APPENDIX G — Specimen Municipal Bond Insurance Policy". Continuing Disclosure The Agency has covenanted for the benefit of holders and beneficial owners of the Series 2009 Bonds to provide certain financial information and operating data relating to the Agency by not later than nine (9) months following the end of the Agency's fiscal year (which currently would be by March 31 each year based upon the June 30 end of the Agency's fiscal year), commencing March 31, 2011 with the report for the 2009-10 Fiscal Year (the "Annual Report"), and to provide notices of the occurrence of certain enumerated events, if material. The Annual Report and the'notices of material events will be filed by the Agency with the Municipal Securities Rulemaking Board. The specific nature of the information to be contained in the Annual Report or the notices of material events is set forth in "APPENDIX F — Form of Continuing Disclosure Certificate." These covenants have been made in order to assist the Underwriter in complying -3- with S.E.C. Rule 15c2 -12(b)(5) (the "Rule"). The Agency has never failed to comply timely with its undertakings to provide continuing disclosure under the Rule. Bank Qualified The Agency has designated the Series 2009 Bonds as "qualified tax-exempt obligations" pursuant to Section 265(b)(3) of the Internal Revenue Code of 1986. Such section provides an exception to the prohibition against the ability of a "financial institution" (as defined in the Internal Revenue Code of 1986) to deduct its interest expense allocable to tax-exempt interest. See "MISCELLANEOUS—Tax Matters" herein. Other Information Following in this Official Statement are brief descriptions of the Series 2009 Bonds, the Agency, the City, Tax Revenues, the Project Area, security for the Series 2009 Bonds, risk factors and limitations on Tax Revenues and certain other information relevant to the issuance of the Series 2009 Bonds. All references herein to the Resolution are qualified in their entirety by reference to the Resolution and all references to the Series 2009 Bonds are further qualified by reference to the definitive Series 2009 Bonds and to the terms thereof which are contained in the Resolution. All capitalized terms used but not otherwise defined herein have the meanings assigned to them in the Resolution. FINANCING PLAN The Refunding The Series 1999 Bonds. The Series 1999 Bonds were issued as current interest bonds (the 1999 Current Interest Bonds") in the aggregate principal amount of $21,115,000 and capital appreciation bonds (the "1999 Capital Appreciation Bonds") in the initial principal amount of $2,389,004.01 and a maturity amount of $7,030,000. The 1999 Capital Appreciation Bonds, which as of , 2009 have accreted to an aggregate amount of $ , are not subject to redemption prior to their maturity and will remain outstanding (the "Remaining Series 1999 Bonds"). The 1999 Current Interest Bonds are subject to optional redemption on or after December 1, 2009, at a redemption price of 100% of the par amount of 1999 Current Interest Bonds called for redemption. The 1999 Current Interest Bonds, which are currently outstanding in the aggregate principal amount of $14,315,000, are being refunded on a current basis. Pursuant to those certain Irrevocable Refunding Instructions (the "Refunding Instructions"), to be given by the Agency concurrently with the delivery of the Series 2009 Bonds to U.S. Bank National Association, as the 1999 Fiscal Agent, the 1999 Fiscal Agent will establish and hold under and pursuant to the Resolution a special escrow account known as the "Series 1999 Refunding Account". Concurrently with delivery of the Series 2009 Bonds, the Agency shall cause to be transferred to the Series 1999 Fiscal Agent the amount of $ in immediately available funds to be derived from a portion of the proceeds of sale of the Series 2009 Bonds, which amount the Fiscal Agent shall then transfer for deposit into the Series 1999 Refunding Account. All cash and securities in the Series 1999 Refunding Account are irrevocably pledged as a special trust fund for the payment of the principal of and the interest on the 1999 Current Interest Bonds to be redeemed, in accordance with the provisions of the Resolution. 91 Sufficiency of the escrow to pay and redeem the Series 1999 Current Interest Bonds on December _, 2009, will be verified by Grant Thornton LLP, Minneapolis, Minnesota. See "VERIFICATION" herein. As a result of the deposit and application of funds pursuant to the Refunding Instructions, the lien of the Refunded Series 1999 Current Interest Bonds will be discharged and the Series 1999 Current Interest Bonds will no longer have any claim against the Tax Revenues. The Project Additional Bond proceeds will be used to finance an advance to the City to make street and parking improvements of benefit to the Project Area Additional public improvements, other than the above -describe Project, may also be financed to the extent of available Series 2009 Bond proceeds. Estimated Sources and Uses of Funds The anticipated sources and uses of funds relating to the Series 2009 Bonds, are as follows: SOURCES: Principal Amount of the Series 2009 Bonds Plus: Original Issue Premium Less: Underwriter's Discount Total Sources: USES: Deposit to Series 1999 Refunding Account Series 2009 Project Account Series 2009 Expense Account I' Total Uses: Includes the bond insurance and surety bond premium, Fiscal Agent fees, Bond Counsel and Disclosure Counsel fees and expenses, printing costs, rating agency fees and other related costs. -5- THE SERIES 2009 BONDS Description The Series 2009 Bonds will be registered initially in the name of "Cede & Co.," as nominee of The Depository Trust Company, New York, New York ("DTC'), which has been appointed as securities depository for the Series 2009 Bonds, and registered ownership may not be transferred thereafter except as provided in the Resolution. Purchasers will not receive certificates representing their interests in the Series 2009 Bonds. Principal of and interest on the Series 2009 Bonds will be paid by the Fiscal Agent to DTC, which in turn is obligated to remit such principal and interest to its Participants for subsequent disbursement to beneficial owners of the Series 2009 Bonds as described herein. See "APPENDIX F - Book -Entry Only System" The Series 2009 Bonds will be issued in the aggregate principal amount set forth on the cover hereof as fully registered Bonds. The Series 2009 Bonds will be delivered only in denominations of $5,000 or integral multiples thereof. The Series 2009 Bonds will be dated their date of delivery. Interest on the Series 2009 Bonds will be payable on June 1 and December 1, of each year (each an "Interest Payment Date"), commencing on June 1, 2010. Interest with respect to each Series 2009 Bond will be payable to the person whose name appears on the Registration Books as the Owner thereof as of the close of business on the fifteenth calendar day of the month preceding each Interest Payment Date, whether or not such fifteenth calendar day is a business day (each, a "Record Date"). Principal of the Series 2009 Bonds will be payable on December 1 in each of the years and in the amounts shown on the inside cover page hereof. Interest on the Series 2009 Bonds is payable by check of the Fiscal Agent mailed by first class mail, postage prepaid, on each Interest Payment Date to the owners of the Series 2009 Bonds at their respective addresses shown on the registration books kept by the Fiscal Agent as of the applicable Record Date. The payment of interest to each registered owner of $1,000,000 or more aggregate principal amount of Series 2009 Bonds may be made by wire transfer to an account in the United States designated by such owner in a written request filed with the Fiscal Agent prior to such Record Date. Principal of the Series 2009 Bonds is payable in lawful money of the United States by check of the Fiscal Agent upon presentation and surrender thereof at the corporate trust office of the Fiscal Agent in St. Paul, Minnesota. The Series 2009 Bonds 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 (i) a Series 2009 Bond is authenticated on or before an Interest Payment Date and after the close of business on the preceding Record Date, in which event such Series 2009 Bond will bear interest from such Interest Payment Date, or (ii) a Series 2009 Bond is authenticated on or before the first Record Date, in which event such Series 2009 Bond will bear interest from the date of initial delivery of the Series 2009 Bonds, or (iii) interest on any Series 2009 Bond is in default as of the date of authentication thereof, in which event interest will be payable on each Interest Payment Date from the date to which interest has been paid in full. While the Bonds are held in the book -entry only system of DTC, all payments on the Bonds will be made to Cede & Co., as the registered owner of the Bonds. Principal of, and redemption premium (if any), on the Bonds are payable in lawful money of the United States of America upon surrender of the Bonds at maturity or earlier redemption at the corporate trust office of the Fiscal Agent indicated in the Resolution. See "APPENDIX F — Book Entry Only System". 51 Optional Redemption The Series 2009 Bonds maturing on or before December 1, 20_ are not subject to optional redemption prior to their respective stated maturities. The Series 2009 Bonds maturing on or after December 1, 20_ are subject to optional redemption as a whole or in part either on a pro rata basis among maturities or in inverse order of maturity (as determined by the Agency), and by lot within any one maturity, prior to their respective maturity dates, at the option of the Agency, on any date on or after December 1, 20_ from funds derived by the Agency from any source, at a price equal to the principal amount of such Series 2009 Bonds called for redemption, together with interest accrued on the date fixed for redemption, without premium. If less than all of the Series 2009 Bonds are redeemed pursuant to optional redemption at any one time, the Fiscal Agent shall also redeem that amount of Series 2002 Bonds in the proportion which the principal amount of the then Outstanding Bonds bears to the principal amount of the then Outstanding Series 2009 Bonds. Mandatory Redemption From Sinking Fund Payments The Series 2009 Bonds maturing on December 1, 20_ (the "Term Bonds") are subject to mandatory redemption in part by lot prior to maturity, from sinking account payments made on December 1, 20_ and on each December 1 thereafter to and including December 1, 20_ at a redemption price equal to 100% of the principal amount plus accrued interest, if any, to the redemption date, without premium, as set forth in the following table. Term Bonds Maturing December 1, 20 Sinking Account Payment Date Principal Amount (December 1) To Be Redeemed In lieu of mandatory sinking fund redemption, amounts on deposit in the Special Fund (as defined in the Resolution; see "APPENDIX A — Summary of Certain Provisions of the Resolution) to the extent not required for debt service on the applicable Series 2009 Bonds during the then - current Bond Year, may be withdrawn and used by the Agency at any time to purchase applicable Term Bonds at public or private sale at such prices (including brokerage and other charges and including accrued interest) as the Agency may in its discretion determine. The par amount of any of the Term Bonds so purchased by the Agency in any twelve-month period ending on October 1 in any year shall be credited towards and will reduce the par amount of, the Term Bonds otherwise required to be redeemed on the following December 1. General Redemption Provisions Notice of Redemption. Notice of redemption shall be mailed by the Fiscal Agent (by first class mail, postage prepaid) at least thirty (30) but not more than sixty (60) days prior to the redemption date to the respective registered Owners of the Bonds designated for redemption, to one or more Information Services, and to the Securities Depositories. Such notice shall state the redemption date and the redemption price, and, if less than all of the then outstanding Bonds are to be called for redemption, shall designate the serial numbers of the Bonds to be redeemed. -7- Effect of Redemption. From and after the date fixed for redemption, if funds available for the payment of the redemption price of and interest on the Series 2009 Bonds called for redemption have been duly deposited with the Fiscal Agent, such Series 2009 Bonds so called shall cease to be entitled to any benefit under the Resolution other than the right to receive payment of the redemption price and accrued interest to the redemption date, and no interest shall accrue thereon from and after the redemption date specified in such notice. Transfer and Exchange. Any Bond may, in accordance with its terms, be transferred, upon the registration books of the Fiscal Agent, upon surrender of such Bond to the Fiscal Agent at its corporate trust office for cancellation, accompanied by delivery of a written instrument of transfer in a form acceptable to the Fiscal Agent, duly executed. Whenever any Bond or Bonds shall be surrendered for registration of transfer, the Agency shall execute and the Fiscal Agent shall authenticate and deliver a new Bond or Bonds, of like series, interest rate, maturity and principal amount of authorized denomination. No transfers of Series 2009 Bonds will be made during the 15 days next preceding each Interest Payment Date. Debt Service Schedule Scheduled debt service on the Series 2009 Bonds, as well as the annual debt service requirements of the Remaining Series 1999 Bonds and the Series 2002 Bonds, without regard to any optional redemption, is shown in the following table: Fiscal Year Ending June 30 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 TABLE 1 SAN RAFAEL REDEVELOPMENT AGENCY Central San Rafael Redevelopment Project Debt Service Schedules SECURITY FOR THE SERIES 2009 BONDS N1 2,068,337.50 Aggregate Remaining Remaining 1999, 1999 Bonds Series 2002 Series 2009 Series 2009 Series 2009 2002 and 2009 Debt Bonds Debt Bonds Bonds Bonds Bonds Debt Service Service Principal Interest Total Service SECURITY FOR THE SERIES 2009 BONDS N1 2,068,337.50 2,068,937.50 2,071,287.50 2,069,768.75 2,071,150.00 2,070,400.00 2,070,525.00 2,071,275.00 2,067,525.00 $1,440,000 627,375.00 1,440,000 628,218.75 1,440,000 628,675.00 1,440,000 628,068.75 2,070,000 SECURITY FOR THE SERIES 2009 BONDS N1 Tax Allocation Financing The Redevelopment Law provides a means for financing redevelopment projects based upon an allocation of taxes generated within a redevelopment project area to a redevelopment agency. The taxable valuation of a project area last equalized prior to adoption of the redevelopment plan, or base roll, is established and, except for any period during which the taxable valuation drops below the base year level, the taxing agencies thereafter receive the taxes produced by the levy of the then -current tax rate upon the base roll. Taxes collected upon any increase in taxable valuation over the base roll, subject to certain pass-through obligations to other taxing agencies, are allocated to a redevelopment agency and may be pledged by a redevelopment agency to the repayment of any indebtedness incurred in financing or refinancing a redevelopment project. Redevelopment agencies themselves have no authority to levy property taxes and must look specifically to the allocation of taxes produced as above indicated. Allocation of Taxes As provided in the Redevelopment Plan, and pursuant to Article 6 of Chapter 6 of the Redevelopment Law (commencing with Section 33670 of the California Health and Safety Code) and Section 16 of Article XVI of the Constitution of the State of California, taxes levied upon taxable property in the Project Area each year by or for the benefit of the State of California and any city, county, city and county, district or other public corporation (herein collectively referred to as "taxing agencies") for each fiscal year beginning after the effective date of the ordinance approving the Redevelopment Plan (November 20, 1972), are divided as follows: 1. To other 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 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 November 20, 1972 (being the effective date of Ordinance No. 1079, referred to above) (the "Base Year Amount") shall be allocated to and when collected shall be paid into the funds of the respective taxing agencies in the same manner as taxes by or for the taxing agencies on all other property are paid; and 2. To the Agency: Except for taxes which are attributable to a tax rate levied by a taxing agency for the purpose of producing revenues to repay bonded indebtedness approved by the voters of the taxing agency on or after January 1, 1989, which shall be allocated to and when collected shall be paid to the respective taxing agency, that portion of the levied taxes each year in excess of the Base Year Amount shall be paid into a special fund of the Agency to pay the principal of and interest on bonds, loans, moneys advanced to, or indebtedness (whether funded, refunded, assumed, or otherwise) incurred by the Agency to finance or refinance, in whole or in part, the Project Area. When all bonds, loans, advances, and indebtedness, if any, and interest thereon, have been paid, all moneys thereafter received from taxes upon the taxable property in the Project Area shall be paid into the funds of the respective taxing agencies as taxes on all other property are paid. See "Tax Revenues" below. Tax Revenues General. Pursuant to the Resolution, all right, title and interest of the Agency in Tax Revenues payable or receivable by the Agency under the California Constitution, the In Redevelopment Law and other applicable laws, are assigned and pledged to secure the payment of the principal of and interest on the Remaining Series 1999 Bonds, the Series 2002 Bonds, the Series 2009 Bonds and any Additional Bonds that may be issued. As defined in the Resolution "Tax Revenues" means an annual amount equal to Annual Debt Service plus the amount, if any, required to increase the balance in the Reserve Account to an amount equal to Maximum Annual Debt Service, derived from all taxes allocated to, and paid into the Special Fund of the Agency (established under the Resolution), pursuant to Article 6 of Chapter 6 of the Law and Section 16 of Article XVI of the Constitution of the State of California, and as provided in the Redevelopment Plan, including all payments and reimbursements, if any, to the Agency specifically attributable to ad valorem taxes lost be reason of tax exemptions and tax rate limitations which shall be increased up to an amount that is equal to one -hundred and twenty-five percent (125%) of the Maximum Annual Debt Service on the Bonds without any reduction by reason of Article XIIIB of the Constitution of the State of California. The Agency has covenanted in the Resolution to comply with all requirements of law to insure the allocation and payment to it of the Tax Revenues, including without limitation, the timely filing of any necessary statements of indebtedness with appropriate officials of the County. The Agency's receipt of Tax Revenues is subject to certain limitations ("Plan Limits") contained in the Redevelopment Plan on the number of dollars of taxes which may be divided and allocated to the Agency pursuant to the Redevelopment Plan, as such limitation is prescribed by Section 33333.4 of the Redevelopment Law. As described in "THE PROJECT AREA — The Redevelopment Project Plan," and "Redevelopment Plan Limitations," the Agency's collection of Tax Revenues is subject to limitations on the total tax increment collected by the Agency to a cumulative total of $950 million over the life of the Redevelopment Plan. The Agency confirms that the Plan Limits will not adversely affect the ability of the Agency to pay debt service on the Series 2009 Bonds. The Agency's receipt of Tax Revenues is also subject to the limitations contained in the Pass -Through Agreement as described in "THE PROJECT AREA — Pass- Through Agreement". The Agency has no power to levy and collect property taxes, and any property tax limitation, legislative measure, voter initiative or provisions of additional sources of income to taxing agencies having the effect of reducing the property tax rate, could reduce the amount of Tax Revenues that would otherwise be available to pay debt service on the Series 2009 Bonds. Likewise, broadened property tax exemptions could have a similar effect. See "RISK FACTORS" and "LIMITATIONS ON TAX REVENUES AND POSSIBLE SPENDING LIMITATIONS" herein. THE SERIES 2009 BONDS ARE NOT A DEBT OF THE STATE OF CALIFORNIA, THE CITY OR ANY OF ITS POLITICAL SUBDIVISIONS, AND NEITHER THE STATE, THE CITY NOR ANY OF ITS POLITICAL SUBDIVISIONS (OTHER THAN THE AGENCY) IS LIABLE THEREON. THE AGENCY HAS NO TAXING POWER. THE SERIES 2009 BONDS ARE REVENUE BONDS, PAYABLE EXCLUSIVELY FROM THE TAX REVENUES AND OTHER FUNDS AS PROVIDED IN THE RESOLUTION. THE OBLIGATIONS OF THE AGENCY UNDER THE REMAINING SERIES 1999 BONDS, THE SERIES 2009 BONDS AND ANY ADDITIONAL BONDS OF THE AGENCY ARE PAYABLE SOLELY FROM TAX REVENUES ALLOCATED TO THE AGENCY FROM THE PROJECT AREA. 10- Reserve Account Pursuant to the Resolution, a Reserve Account has been established and held by the Fiscal Agent in trust for the benefit of the Agency and the registered owners of the Bonds. Moneys in the Reserve Account shall be used and withdrawn by the Fiscal Agent solely for the following purposes and in the following order of priority: (i) replenishing the Interest Account or the Principal Account in the event of any deficiency in either of said accounts; (ii) paying the interest on, or principal of, the Bonds if no other funds are available therefor; or (iii) at the direction of the Agency, from moneys in excess of Maximum Annual Debt Service, (1) purchasing the Bonds at public or private sale as and when and at such prices as the Fiscal Agent may in its discretion determine, but only at prices (including brokerage or the expenses but excluding accrued interest) not more than par value, or, in the case of Bonds which by their terms are subject to call and redemption, par value plus the premium applicable at the next following call date; or (2) redeeming the Bonds in the manner and subject to the terms and conditions set forth in the Resolution. The term "Reserve Requirement" means, as of the date of any calculation, the lesser of (i) maximum annual debt service on all Outstanding Bonds, or (ii) 125 percent of average annual debt service with respect to the Series 2009 Bonds, or (iii) ten percent of the outstanding principal amount of the Series 2009 Bonds. In the event that the amount on deposit in the Reserve Account at any time becomes less than the Reserve Requirement, the Fiscal Agent will promptly notify the Agency of such deficiency. Promptly upon receipt of any such notice, the Agency will, subject to the limitations of the Pass -Through Agreement, transfer to the Fiscal Agent an amount of available Tax Revenues sufficient to maintain the Reserve Requirement on deposit in the Reserve Account. See "THE PROJECT AREA — Pass -Through Agreement". So long as no Event of Default (as defined in the Resolution) has occurred and is continuing, any amount in the Reserve Account in excess of the Reserve Requirement on the business day preceding each Interest Payment Date will be withdrawn from the Reserve Account by the Fiscal Agent and deposited in the Interest Account. Pursuant to and subject to the requirements of the Resolution, the Agency has reserved the right with respect to any series of Bonds issued pursuant to the Resolution, including the Series 2009 Bonds, to substitute at any time, and from time to time, one or more Reserve Facilities for the portion of the Reserve Requirement allocable to such series of Bonds. A "Reserve Facility" is generally defined in the Resolution to mean a surety bond, letter of credit, or other financial undertaking meeting the requirements of the Resolution. See "APPENDIX A - Summary of Certain Provisions of the Resolution- Reserve Account". [The portion of the Reserve Requirement attributable to the Series 2009 Bonds will be satisfied by the deposit to the credit of the Reserve Account of a Reserve Facility issued by the Insurer in the principal amount of $ . Such Reserve Facility will be available to pay only debt service on the Series 2009 Bonds.] With respect to the portion of the Reserve Requirement attributable to the Remaining Series 1999 Bonds and the Series 2002 Bonds, the Agency has previously deposited a Reserve Facility in the Reserve Account as follows: Prior Parity Debt Face Amount Provider 1999 Bonds $2,336,555 AMBAC -11- 2002 Bonds 2,071,381 MBIA Moody's Investors Service currently rates Ambac Assurance Corporation ("AMBAC") Caa2 with a Developing Outlook. Standard & Poor's currently rates AMBAC CC with a Negative Outlook. Fitch Ratings withdrew its rating at the request of AMBAC. Moody's Investors Service currently rates MBIA Insurance Corp. B3 with a Negative Outlook. Standard & Poor's currently rates MBIA Insurance Corp. BBB with a Negative Outlook. Fitch Ratings withdrew its rating at the request of MBIA Insurance Corp. On February 18, 2009, MBIA Insurance Corp. ("MBIA") ceded its entire public finance business to a subsidiary, MBIA Insurance Corp of Illinois. MBIA Insurance Corp of Illinois has been renamed National Public Financial Guarantee Corp. ("National"). The Reserve Facility provided by MBIA is now reinsured by National. National's current ratings are as follows: Rating Agency Moody's Investors Service Standard & Poor's Rating Baal, Developing Outlook A, Developing Outlook For a complete discussion of the reinsurance transaction and additional information made available by National, see "APPENDIX H - NATIONAL PUBLIC FINANCE GUARANTEE CORPORATE DISCLOSURE." Neither the Reserve Facility for the Remaining Series 1999 Bonds nor the Reserve Facility for the Series 2002 Bonds is available to pay debt service on the Series 2009 Bonds. However, if there is a draw on a Reserve Facility to meet a debt service deficiency and if the issuer of such Reserve Facility fails to perform under the Reserve Facility, for reasons of bankruptcy of the issuer or such Reserve Facility or otherwise, such failure to perform will cause there to be a deficiency in the portion of the Reserve Requirement previously satisfied by such Reserve Facility. Under the Resolution, in the event that the amount on deposit in the Reserve Account is less than the Reserve Requirement, the Agency is required to transfer to the Trustee an amount of available Tax Revenues sufficient to maintain the amount in the Reserve Account at the Reserve Requirement. Should the amount of Tax Revenues then available to maintain the Reserve Account at the Reserve Requirement be insufficient for such purpose, particularly in view of the limitations on Tax Revenues contained in the Pass-through Agreement, such insufficiency would not result in an event of default under the Resolution, but the requirement of the Agency to transfer available Tax Revenues to the Trustee would continue until satisfied within the limitations of the Pass -Through Agreement. Rebate Fund Notwithstanding the provisions of the Resolution relating to the pledge of Tax Revenues, the allocation of money in the Special Fund, the investments of money in any fund or account and the defeasance of outstanding Bonds, all amounts required to be deposited into or on deposit in the Series 2009 Rebate Fund established by the Resolution shall be held by the Fiscal Agent in trust and used solely to the extent required to satisfy any rebate required to be paid to the federal government with respect to the Series 2009 Bonds. -12- Additional Bonds Pursuant to the Resolution, in addition to the Series 2009 Bonds, the Agency may, by supplementary resolution, issue or incur any bonds, notes, loans, advances or other indebtedness, in such principal amount as may be determined by the Agency, payable from Tax Revenues on a parity with the Remaining Series 1999 Bonds, the Series 2002 Bonds and the Series 2009 Bonds ("Additional Bonds"). The Agency may issue or incur such Additional Bonds subject to the following specific conditions set forth in the Resolution, including the following: (1) The Agency is in compliance with all covenants set forth in the Resolution. (2) (a) The taxes eligible for allocation (pursuant to the Law and the Constitution of the State of California and from which Tax Revenues are derived, and excluding any and all state appropriations and subventions to the Agency in lieu of such taxes) as shown on the equalized assessment roll next preceding the issuance of such Additional Bonds shall be equal to at least 1.25 times the total Maximum Annual Debt Service (taking into account all Bonds that would be outstanding following the issuance of the proposed Additional Bonds). (b) For the purposes of the issuance of Additional Bonds, Outstanding Bonds shall not include any Bonds the proceeds of which are deposited in an escrow fund held by a fiscal agent, provided that the Supplemental Resolution authorizing the issuance of such Additional Bonds shall provide that: (i) Such proceeds must be deposited or invested with or secured by an institution rated "AA" or higher by Standard & Poor's Ratings Services or "Aa" or higher by Moody's Investors Service at a rate of interest which, together with amounts made available by the Agency from bond proceeds or otherwise, is at least sufficient to pay Annual Debt Service on the foregoing Bonds, (ii) Moneys may be transferred from said escrow fund only if Tax Revenues (excluding any and all state appropriations or subventions to the Agency in lieu of such Tax Revenues) for the next preceding fiscal year (1) will be at least equal to 1.25 times Maximum Annual Debt Service on all Outstanding Bonds (exclusive of disqualified Bonds described in the Resolution) less a principal amount of Bonds which is equal to moneys on deposit in said escrow fund after each such transfer and (2) will be at least equal to Maximum Annual Debt Service on all Outstanding Bonds (exclusive of disqualified Bonds described in the Resolution) less a principal amount of Bonds which is equal to moneys on deposit in said escrow fund after each such transfer plus all unpaid Policy Costs (as defined in the Resolution); and (iii) Additional Bonds shall be redeemed from moneys remaining on deposit in said escrow fund at the expiration of a specified escrow, period in such manner as may be determined by the Agency. -13- (3) The Agency shall have received from an Independent Certified Public Accountant a certificate stating that the requirements of subsection (2) have been complied with. (4) The Supplemental Resolution providing for the issuance of such Additional Bonds shall provide that: (a) Interest on said Additional Bonds shall be payable on June 1 and December 1 in each year of the term thereof, except that during the first year, interest may be payable on December 1; (b) The principal of said Additional Bonds payable on December 1 in any year in which the principal is payable, and shall have a final maturity date at or after the latest maturity date of any of the Bonds at the time outstanding; and (c) Money shall be deposited in the Reserve Account from the proceeds of the sale of said Additional Bonds, or a Reserve Facility shall be provided, in either case in the amount, if any, necessary to increase the balance in the Reserve Account to an amount at least equal to Maximum Annual Debt Service (taking into account all Bonds that would be outstanding following the issuance of said Additional Bonds). (5) The Agency shall have received all required approvals or rulings from any governmental authority or rulings from any governmental authority having jurisdiction over such series of Bonds or their terms, including, without limitation, compliance with all requirements of the Department of the Treasury of the United States. (6) If any Policy Costs are past due and owing, the Agency shall have received the prior written consent of the Reserve Facility Provider to whom such Policy Costs are due and owing. (7) For purposes of the calculations described in subsections 2(a) and 2(b)(ii) above, Maximum Annual Debt Service on any Additional Bonds which bear interest at a variable rate shall be calculated on the basis of the highest rate of interest permissible on such Additional Bonds pursuant to the terms thereof. For purposes of subsection (4)(c) above, Maximum Annual Debt Service on any Additional Bonds which bear interest at a variable rate shall be calculated assuming an interest rate of nine and two-tenths percent per annum. -14- BONDINSURANCE [To come if applicable] THE SAN RAFAEL REDEVELOPMENT AGENCY Authority and Personnel The Agency was established pursuant to the Redevelopment Law and was activated by the City Council on June 19, 1972 at which time the City Council declared itself to be the governing board of the Agency. The Agency is charged with the authority and responsibility of redeveloping and upgrading blighted areas of the City. The Agency is a separate public body and exercises governmental functions in planning and carrying out redevelopment projects. The Agency can build public improvements, facilitate the development of on and off-site improvements for private development projects, acquire and re -sell property, and provide services of special benefit to the Project Area. Members of the Agency and their terms of office are shown below: Member Term Expires Albert J. Boro, Chair/Mayor November 2011 Damon Connolly, Vice-Chair/Vice Mayor November 2011 Greg Brockbank, Agency Member/ Councilmember November 2011 Barbara Heller, Agency Member/Council member November 2009 Cyr N. Miller, Agency Member/CouncilmemberNovember 2009 Agency Administration The Redevelopment Law requires redevelopment agencies to have an independent financial audit conducted each year. The financial audit is also required to include an opinion of the Agency's compliance with laws, regulations and administrative requirements governing activities of the Agency. The firm of Maze & Associates Accountancy Corporation, Pleasant Hill, California, prepared a financial statement for the Agency for the fiscal year ended June 30, 2009. The firm's examination was made in accordance with generally accepted auditing standards. The Agency follows fund accounting principles reflecting the modified accrual basis of accounting in which revenue is recognized when earned or otherwise becomes available, and expenditures are recognized when incurred. The firm reported after their examination that they noted no instances of noncompliance for the fiscal year ended June 30, 2009. See "APPENDIX C - Audited Financial Statements of the Agency for Fiscal Year Ended June 30, 2009". Since the audited financial statements are public documents, the Agency has not requested nor did the Agency obtain permission from Maze & Associates to include the audited financial statements as an appendix to this Official Statement. Accordingly, Maze & Associates has not performed any post -audit review of the financial condition or operations of the Agency. Budgetary Policies The Agency and City operate on a two-year budget cycle. The current budget cycle is for July 1, 2009 through June, 30, 2011. The budget is prepared by staff and submitted to the -15- Agency by the Executive Director. Public meetings are conducted prior to its adoption. Six month interim budget reviews and adjustments are also presented and approved by the Agency Board. In most cases, expenditures may not exceed appropriations at the function level. Operating budget appropriations lapse at the end of the budget cycle. Capital improvement appropriations are maintained through project completion. THE PROJECT AREA General General. The Central San Rafael Redevelopment Project Area (the "Project Area") was formally established with the adoption by the City Council of a redevelopment plan for the Project Area (the "Redevelopment Plan") by Ordinance No. 1079 enacted by the City Council on November 20, 1972, as amended and restated by Ordinance No. 1572 adopted on October 16, 1989, as further amended by City Council Ordinance No. 1669 adopted on November 21, 1994 and as amended and restated by Ordinance No. 1732 adopted on October 5, 1998. The Redevelopment Plan was further amended by Ordinance No. 1776, adopted on March 4, 2002 and was amended and restated by Ordinance No. 1786, adopted on August 19, 2002, Ordinance No. 1822, adopted on March 15, 2004 and Ordinance No. 1850 adopted on June 4, 2007. The Project Area covers the General Plan -designated areas of Downtown, the Canal, East San Rafael and the West Francisco Boulevard in the City. The Project Area encompasses approximately 1,700 acres, bounded on the north and west by residential areas (primarily single-family dwelling units), to the east by the San Francisco Bay and to the south by the San Rafael City limits. It is traversed by U.S. Highway 101 and the main line of the railway, currently owned by Golden Gate Transit Authority, while Interstate 580 (connecting to the Richmond -San Rafael Bridge and Interstate 80) enters the areas on its eastern boundary and proceeds to intersect U.S. Highway 101. Existing land uses have allowed a mixture of commercial, recreational, residential and industrial facilities to develop throughout the area. Approximately three miles north of the Project Area is the Terra Linda section of San Rafael. This area has been entirely developed since the mid -1950's, and includes residential areas as well as a major regional shopping center and the Civic Center Complex of the County. Major Development Activities in the Project Area. A summary of the Agency's major accomplishments since its inception includes: • 423 new apartments in eight projects • 365 new ownership units in three subdivisions • 908,000 square feet of new retail/office buildings in 17 projects • 16.9 acres of new park land in three parks and a 19,000 square foot recreation center • 749 new parking spaces in twelve locations • 2.0 miles of new roads on three streets • Four utility undergrounding districts • Three neighborhood area plans • Three storm water pump station upgrades and eight drainage/flood control projects • New 116,427 square foot Public Works Building and yard on 3 acres • Major aesthetic improvements to Second, Third, Fourth and Irwin Streets and East Francisco Boulevard • Two City -operated child care centers • Downtown Mixed use developments including: on • Rafael Town Center 113 apartments`units 88,with affordabilit restrictions Y 28,000 square feet of retail and 38,000 square feet of office • Lofts @ Albert Park, 111 apartments, 38 with affordability restrictions and 17 office spaces • Clocktower, 30 apartments, 5 with affordability restrictions and 5,580 square feet of retail • Other Downtown Improvements including: • EI Camino Building, 29,000 square foot retail and office development • Rafael Film Center, the rehabilitation of a 1920 movie theatre • Oasis Office, 76,000 square foot office building • San Rafael Corporate Center, LEED Gold, 406,000 square foot _office development —80% completed and leased or leasing • Planning for Downtown station for SMART commuter train from Santa Rosa to Larkspur • Developments in Eastern Portion of Project Area • Auto Dealerships- 250,000 square feet in three new dealerships(Lexus, BMW, GM) • Extended Stay Deluxe Hotel, 112 room hotel • Marin County Wellness Center, LEED Gold, 80,000 square foot campus • Shoreline Center, 19 acre parcel, 13 acres currently developed • 511 E. Francisco, 15,000 square foot retail space The Redevelopment Project Plan The Redevelopment Plan is designed to enable the Agency to, among other things, eliminate blighting influences; encourage existing owners, businesses and tenants within the Project Area to participate in redevelopment activities; to sustain the existing residential, commercial and industrial base of the community; to provide required public improvements so as to encourage new construction by private enterprise; to provide relocation assistance to displaced residential and non-residential occupants; and to provide for open space and recreational land use. The Redevelopment Plan provides for the termination of the Redevelopment Plan activities on November 20, 2015. The Redevelopment Plan allows for commercial, industrial, residential and public uses, as consistent with the general plan of the City. Redevelopment Plan Limitations The Redevelopment Plan limits taxes, as defined in Section 33670 of the California Health and Safety Code, that may be divided and allocated to the Agency to an aggregate amount of $950 million. The Agency does not expect the $950 million aggregate limit to impact its ability to pay debt service on the Bonds. In 1993, the California Legislature enacted AB 1290. Among the changes to the Redevelopment Law accomplished by AB 1290 was a provision which limits the period of time for incurring and repaying loans, advances and indebtedness which are payable from tax increment revenues. In general, a redevelopment plan may terminate not more than 40 years following the date of original adoption, and loans, advances, and indebtedness may be repaid -17- during a period extending not more than 10 years following the date of termination of the redevelopment plan. In order to comply with AB 1290, the City adopted Ordinance No. 1699 on November 22, 1994 with respect to the Project Area, and enacted the following time limitations: 1. Establishina loans, advances and indebtedness: The Agency was not permitted to establish loans, advances or indebtedness after January 1, 2004 (except for refinancing, refunding or restructuring of existing indebtedness where the indebtedness is not increased and the time for repayment is not extended, and certain housing obligations). 2. Payment of indebtedness and receipt of property taxes: The Agency was not permitted to pay indebtedness or receive property taxes after November 20, 2022. SB211. In 2001 the California Legislature enacted SB 211 ("SB211"). SB 211 provided, among other things, that the limitation on incurring indebtedness contained in a redevelopment plan adopted prior to January 1, 1994, may be deleted by ordinance of the legislative body. However, such deletion will trigger statutory tax sharing with those taxing entities that do not have tax sharing agreements. Tax sharing will be calculated based on the increase in assessed valuation after the year in which the limitation would otherwise have become effective. Pursuant to the authorization contained in SB 211, the San Rafael City Council, on February 19, 2002, adopted Ordinance No. 1776, deleting the January 1, 2004, limitation on the incurrence of indebtedness from the Redevelopment Plan. Accordingly, statutory tax sharing will commence in Fiscal Year 2004-05 calculated from a base year of 2003-04. Generally speaking, under statutory tax sharing the Agency is to pay to the affected taxing entities percentages of tax increment generated in the Project Area as follows: 1. From fiscal year 2004-05 to fiscal year 2022-23, 25% of the post Housing Set -Aside revenues in excess of fiscal year 2003-04; plus, 2. From 2014-15, 21% of the post Housing Set -Aside revenues in excess of fiscal year 2013-14 revenues. As indicated, amounts specified as payable to taxing agencies under the AB 1290 formula contained in the Statutory Pass-Throughs are to be computed after deducting the Housing Set -Aside amounts. In addition, only those taxing entities without Pass -Through Agreements are eligible to participate in statutory tax sharing up to their respective pro rata shares of the applicable tax rate. See "Pass -Through Agreements" below. Because statutory tax sharing will be paid by the Agency solely from future growth in tax increment revenues, the payment of statutory tax sharing by the Agency will not adversely affect the Agency's ability to pay debt service on the Bonds. 211 also authorizes the amendment of a redevelopment plan adopted prior to January 1, 1994, in order to extend for not more than 10 years the effectiveness of the redevelopment plan and the time to receive tax increment revenues and to pay indebtedness. Any such extension must meet certain specified requirements, including the requirement that the redevelopment agency establish the existence of both physical and economic blight within a specified geographical area of the redevelopment project and that any additional tax increment revenues received by the redevelopment agency because of the extension be used solely within the designated blighted area. SB 211 authorizes any affected taxing entity, the Department of 10 Finance, or the Department of Housingand Community Development to request the Attorney General to participate in the proceedings to effect such extensions. It also would authorize the Attorney General to bring a civil action to challenge the validity of the proposed extensions. SB 211 also prescribes additional requirements that a redevelopment agency would have to meet upon extending the time limit on the effectiveness of a redevelopment plan, including requiring an increased percentage of new and substantially rehabilitated dwelling units to be available at affordable housing cost to persons and families of low or moderate income prior to the termination of the effectiveness of the plan. The Agency currently has no expectations of undertaking proceedings pursuant to SB 211 to extend the effectiveness of the Redevelopment Plan or to extend the time to receive tax increment revenues and to pay indebtedness under the Redevelopment Plan. SB 1045. In 2003, the State legislature adopted Senate Bill 1045 ("SB 1045"), which provided that the governing body could adopt an ordinance to extend the limits on the termination of redevelopment plans approved prior to 1994 and the authority to collect Tax Increment Revenues by one additional year if the Agency was required to make a payment to the Educational Revenue Augmentation Fund ("ERAF) in 2003/04. By Ordinance No. 1822, adopted March 15, 2004 the City Council amended the Project Area Redevelopment Plan to implement the one-year extension. SB 1096. In 2004, the State legislature adopted Senate Bill 1096 "(SB 1096"), which provided that the governing body could, with respect to redevelopment plans with less than 20 years remaining, adopt an ordinance to extend the limits on the termination of redevelopment plans and the authority to collect Tax Increment Revenues by one additional year for each ERAF payment if the Agency was required to make a payment to ERAF in 2004/05 and 2005/06. By Ordinance No. 1850, adopted June 4, 2007 the City Council amended the Project Area Redevelopment Plan to implement the two-year extension. AB 26. In July 2009, the State legislature adopted Assembly Bill 26 (AB 26), which provided that the governing body could adopt an ordinance to extend the limits on the termination of redevelopment plans approved prior to 1994 and the authority to collect Tax Increment Revenues by one additional year if the Agency makes a payment to the Supplemental Educational Revenue Augmentation Fund ("SERAF) in 2009/10. The Agency expects that, if the validity of AB 26 is judicially upheld, the City Council will amend the Project Area Redevelopment Plan to implement the one year extension. The SERAF payment is described in detail under the caption "RISK FACTORS — State of California Fiscal Issues." The limitations imposed by the Redevelopment Plan are as follows. The Agency does not believe such limitations will impact its ability to pay the Series 2009 Bonds. Maximum Tax Increment Revenues $950 million Maximum Bonded Indebtedness (1) N/A Last Date to Incur Debt (2) N/A Plan Expiration Date (3) November 20, 2015 Last Date to Collect Tax Increment Revenues (3) November 20, 2015 (9 Not required for Redevelopment Plans adopted prior to January 1, 1977. (2) Eliminated pursuant to authority provided by SB 211. (3) Extended pursuant to authority provided by SB 1045 and SB 1096. -19- Pass -Through Agreement In 1973, at the time of adoption of the Redevelopment Plan for the Redevelopment Project, the Agency entered into agreements with the County of Marin and with other taxing entities providing for limits on the amount of tax increment the Agency could receive pursuant to the Redevelopment Plan. These agreements were replaced by a Fiscal Agreement, dated September 11, 1984 (the "Pass -Through Agreement"), by and between the Agency and the following taxing entities: County of Marin, City of San Rafael, San Rafael Elementary School District, San Rafael High School District and Marin Community College District. The Pass - Through Agreement has been amended from time to time concurrently with the issuance of bonds by the Agency. The Pass -Through Agreement, as amended, contains limitations on the amount of tax increment revenues allocable annually to the Agency as follows: (i) For payment of debt service on the 1992 Bonds, or any bonds issued to refund the 1992 Bonds and any bonds issued based on the savings generated by such a refunding, including the Series 2009 Bonds, an amount equal to 125% of maximum annual debt service on such bonds, provided, however, that such maximum annual debt service may not exceed $1,440,000; (ii) For payment of debt service on the 1995 Bonds, or any bonds issued after July 1, 1995, including the Series 2002 Bonds, an amount equal to 125% of maximum annual debt service on such bonds, provided, however, that such maximum annual debt service may not exceed $631,500; (iii) For payment of debt service on the Remaining Series 1999 Bonds, and any Additional Bonds, including the Series 2009 Bonds, an amount equal to 125% of maximum annual debt service on the Remaining Series 1999 Bonds and any Additional Bonds, including the Series 2009 Bonds, provided, however, that maximum annual debt service may not exceed $1,500,000; (iv) Any amount necessary to make payments to the County of Marin pursuant to an agreement between the Agency and the County of Marin entitled Section 33401 Agreement (County), dated September 11, 1984, providing among other things, for the annual payment to the County of tax increment in an amount equal to the County's share of taxes that are attributable to the Agency's use of tax increment to pay debt service on the Remaining 1999 Bonds, the Series 2002 Bonds, and the Series 2009 Bonds; and (v) Any amount the Agency is required to set aside into the Housing Fund pursuant to Sections 33334.2, 33334.3 and 33334.6 of the Redevelopment Law to meet the Agency's low and moderate income housing obligation. See caption "Low and Moderate Income Housing". For purposes of the Pass -Through Agreement, "maximum annual debt service" is deemed to be allocated pro rata among all series of Additional Bonds (as defined in the Resolution) whether or not then outstanding, until all maturities of all such series of Additional Bonds are no longer outstanding and, provided further, that for purposes of such allocation of maximum annual debt service, a series of Additional Bonds that is no longer outstanding shall be deemed to have been refunded by such series of Additional Bonds as are then outstanding. The Pass -Through Agreement further provides that use of tax increment to pay debt service on the Remaining Series 1999 Bonds, the Series 2002 Bonds, and the Series 2009 Bonds has a superior claim over the use of tax increment to pay the County of Marin. However, Wel tax increment deposited in the Housing Fund must be used for low and moderate income housing purposes. Since only proceeds of the Series 1992 Bonds were used to refinance Agency obligations payable from the Housing Fund, or were applied for purposes of the Housing Fund, only Series 1992 Bonds have had a claim on moneys deposited in the Housing Fund to pay debt service. Since the Agency refunded the Series 1992 Bonds with the proceeds of the Series 2002 Bonds, moneys in the Housing Fund are available to pay debt service on the applicable portion of the Series 2002 Bonds. See caption " Low and Moderate Income Housing" and "Table 5 - Projected Incremental Value and Tax Increment Revenue; Estimate Of Debt Service Coverage" herein. Both the Pass -Through Agreement and the definition of "Tax Revenues" contained in the Resolution limit the amount of tax increment revenues that can be used in any one year to pay debt service on the Series 2009 Bonds to an amount equal to 125% of maximum annual debt on the Series 2009 Bonds. Accordingly, if a substantial deficiency occurs in the amount of Tax Revenues required to pay debt service on the Bonds, such deficiency can only be replaced in any one year to the extent of the surplus permitted under the limitation of 125% of maximum annual debt service. In the same manner, the limitation of 125% of maximum annual debt service limits the amount of Tax Revenues that will be available in any one year to replace any deficiency in the amount required to be on deposit in the Reserve Account. (See "SECURITY FOR THE SERIES 2009 BONDS — Reserve Account".) Because of the described limitations, replacement of a substantial deficiency in Tax Revenues may require an extended period of time. Allocation of Taxes Secured taxes are due in two equal installments. Installments of taxes levied upon secured property become delinquent on December 10 and April 10. Taxes on unsecured property are due March 1 and become delinquent August 31. The County Auditor -Controller is responsible for the aggregation of the taxable values assigned by the Assessor as of the January 1 lien date for property within the boundaries of the Project Area. This results in the reported total current year Project Area taxable value and becomes the basis of determining tax increment revenues due to the Agency. Although adjustments to taxable values for property within the Project Area may occur throughout the fiscal year to reflect escaped assessments, roll corrections, etc., such adjustments are not assumed on the tax increment projection. The County remits tax monies to the City and the Agency in three installments, with 55 percent remitted on December 15, 40 percent remitted on April 15 and 5 percent remitted on June 15. Marin County has implemented the Alternative Method of Distribution of Tax Levies and Collections and of Tax Sale Proceeds (the "Teeter Plan"), which allows each entity receiving property taxes in the County to draw on the amount of property taxes levied rather than the amount actually collected. Therefore, the Agency's tax increment revenues reflect actual levies rather than the total amount of taxes collected. Low and Moderate Income Housing Pursuant to Section 33334.6 of the Redevelopment Law, the Agency is required to deposit into its Low and Moderate Income Housing Fund established pursuant to Section 33334.3 of the Redevelopment Law (the "Housing Fund") not less than twenty percent (20%) of all taxes allocated to the Agency. Moneys deposited in the Housing Fund must be used pursuant _21_ to Section 33334.2 of the Law for the purposes of increasing, improving and preserving the City's supply of low and moderate income housing. One of the permitted uses of moneys in the Housing Fund is to pay debt service on bonds, the proceeds of which have been deposited in the Housing Fund. A portion of the proceeds of the 1992 Bonds was used to refund Agency obligations that were payable from the Housing Fund or were applied for purposes of the Housing Fund. A portion of the proceeds of the Series 2002 Bonds was used to refund and defease the Series 1992 Bonds, and, accordingly, the applicable portion of the debt service on the Series 2002 Bonds may be eligible for payment from moneys in the Housing Fund. See "Table 5 - Projected Incremental Value and Tax Increment Revenue; Estimate Of Debt Service Coverage". As described under the caption "Pass -Through Agreement", limitations contained in the Pass -Through Agreement will restrict the Agency's receipt of tax increment. The Pass -Through Agreement also limits the amounts of taxes which are "passed through" to the County of Marin and other taxing agencies. As a result of the limitations in the Pass -Through Agreement, only a portion of the taxes that are potentially allocable to the Agency are actually allocated to the Agency. Under the Redevelopment Law, the Agency only deposits into the Housing Fund twenty percent (20%) of the taxes that are actually allocated to the Agency. The Marin County Auditor -Controller annually calculates and disburses to the Agency what the Agency believes is the appropriate amount of taxes to be deposited by the Agency into the Housing Fund for the then current fiscal year. See "Table 5 - Projected Incremental Value and Tax Increment Revenue; Estimate Of Debt Service Coverage". Section 33334.6 of the Redevelopment Law permits the deposit in the Housing Fund of less than twenty percent (20%) of the taxes allocated to the Agency upon the making of certain findings pursuant to Section 33334.2 of the Redevelopment Law with respect to the lack of a need for such moneys for housing purposes. The Agency does not expect to make such findings during the term of the Series 2009 Bonds. Land Use The table below shows land use n the Project Area, as determined by 2009-10 secured assessed value. TABLE 2 SAN RAFAEL REDEVELOPMENT AGENCY San Rafael Redevelopment Project (1) Includes parcels with an assessed value equal to $0 Source: The Agency Historic Assessed Value and Tax Revenues The Project Area consists of eleven Tax Rate Areas. A Tax Rate Area consists of a geographic area where the taxes on all property are levied by the same taxing entities at the -22- Number 2009-10 Secured % of Secured Land Use of Parcels t'I Assessed Value Assessed Value I'l Residential 1,703 $ 750,508,846 34.0% Commercial 772 1,229,379,924 55.7 Industrial 162 160,150,783 7.3 Institutional 39 4,350,914 0.2 Vacant Land 197 63,561,741 2.9 2,873 $2,207,952,208 100.0% (1) Includes parcels with an assessed value equal to $0 Source: The Agency Historic Assessed Value and Tax Revenues The Project Area consists of eleven Tax Rate Areas. A Tax Rate Area consists of a geographic area where the taxes on all property are levied by the same taxing entities at the -22- same rate. The Tax Rate in Tax Rate Area 8-023 (the largest Tax Rate Area in the Project Area) consists solely of the one percent general levy (1.0000 percent). Total gross tax increment revenues allocated with respect to the Project Area during fiscal year 2008-09 were approximately $17,514,331. This total does not include revenues from supplemental assessments, homeowner's exemptions, public utilities and prior year's collections. Agency receipts for 2008-09 were reduced by the County administration fee for collection of tax increment revenues with respect to the Project Area. Because the County has adopted the Teeter Plan, the Agency's tax revenues reflect actual levies rather than the total amount collected. However, based on information provided by the County of Marin, the Agency considers that historical tax delinquencies within the Project Area not to have been significant. Set forth in the following table is a summary of Project Area historical assessed values, gross tax increment revenues and Tax Revenues that have been available to pay debt service for fiscal years 2005-06 through 2009-10. TABLE 3 SAN RAFAEL REDEVELOPMENT AGENCY San Rafael Redevelopment Project Historic Assessed Values and Tax Revenues (1) Excludes utilities. (2) Calculated at 1% of tax increment. (3) Calculated at 20% of gross tax increment. Source: Marin County Assessor and the Agency. Major Taxable Property Owners The following table lists the twenty-five largest taxable property owners within the Project Area. Based on fiscal year 2009-10 locally assessed taxable valuations, the top twenty-five taxable property owners in the Project Area represent approximately 23.06% of the total Project Area taxable value of $2,431,436,187 and approximately 24.71% of the total Project Area incremental value of $2,268,890,959. (not including non -unitary utility property, e.g., railroad tracks and public utility property not in use). -23- 2005-06 2006-07 2007-08 2008-09 2009-10 Assessed Value; Secured (1) $1,768,262,02 $1,889,084,61 $2,008,225,06 $2,153,766,97 $2,207,952,20 9 9 8 0 8 Unsecured 211,597,814 187,715,991 182,633,604 198,069,668 223,483,979 Total Assessed Value 1,979,859,843 2,076,800,610 2,190,858,672 2,351,836,638 2,431,436,187 Less Base Value _ (162,545,228) (162,545,228) (162,545,228) (162,545,228) (162,545,228) Incremental Assessed Value 1,817,314,615 1,914,255,382 2,028,313,444 2,189,291,410 2,268,890,959 Gross Tax Increment (2) 18,173,146 19,142,554 20,283,134 21,892,914 22,688,910 Less: Housing Set Aside (3) 3,634,629 3,828,511 4,056,627 4,378,583 4,537,782 Net Tax Increment 14,538,517 15,314,043 16,226,508 17,514,331 18,151,128 Series 1999 Bonds Debt Service 1,495,525 1,499,769 1,497,469 1,498,625 1,498,119 Series 2002 Bonds Debt Service 2,069,575 2,066,475 2,071,381 2,070,150 2,068,338 (1) Excludes utilities. (2) Calculated at 1% of tax increment. (3) Calculated at 20% of gross tax increment. Source: Marin County Assessor and the Agency. Major Taxable Property Owners The following table lists the twenty-five largest taxable property owners within the Project Area. Based on fiscal year 2009-10 locally assessed taxable valuations, the top twenty-five taxable property owners in the Project Area represent approximately 23.06% of the total Project Area taxable value of $2,431,436,187 and approximately 24.71% of the total Project Area incremental value of $2,268,890,959. (not including non -unitary utility property, e.g., railroad tracks and public utility property not in use). -23- 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. TABLE 4 SAN RAFAEL REDEVELOPMENT AGENCY San Rafael Redevelopment Project Twenty-five Largest Taxable, Property Owners Property Owner (Number of Parcels) SR Corporation Center Phase 1 LLC (3) SR Corporation Center Phase Two LLC (5) Robert Dickson Trust (7) Sutter Health (6) Marin Sanitary Services (5) Rafael Town Center Investors LLC (1) Casco Properties (2) Home Depot United States A Inc. (1) Montecito Market Place Assoc. Jonathan Parker (2) Universal Portfolio Limited (10) Geary -Market Investment Company Ltr Un (1) Toys R Us Inc (3) Bre ESA Acquisition Properties LLC (1) Phoenix America Inc. (4) Donald N. Tornberg Trust (1) Navjot LLC (4) Bon Air Shopping Center LP (2) Camelot Associates (1) Bacci Family LP Mac Phail Properties Inc. (3) Larken Properties (2) Baypark Real Estate LP (2) Reflectins MarinLLC (2) Best Buy Stores LP (1) Total (1) 2009-10 Assessed Valuation: $2,431,436,187. (2) 2009-10 incremental valuation: 2,268,890,959. Source: The Agency. Appeals of Assessed Values 2009-10 % of Total % of Total Assessed Assessed Incrementa Valuation Value(l) I Value(2) $78,909,600 3.25% 3.48% 50,043,418 2.06 2.21 44,076,750 1.81 1.94 42,396,299 1.74 1.87 39,236,039 1.61 1.73 34,625,211 1.42 1.53 25,722,675 1.06 1.13 23,747,465 0.98 1.05 23,234,191 0.96 1.02 20,278,561 0.83 0.89 16,582,478 0.68 0.73 15,883,742 0.65 0.70 14,918,955 0.61 0.66 14,565,560 0.60 0.64 12,719,110 0.52 0.56 11,446,893 0.47 0.50 11,372,443 0.47 0.50 11,074,502 0.46 0.49 10,945,506 0.45 0.48 10,540,134 0.43 0.46 10,023,209 0.41 0.44 9,741,777 0.40 0.43 9,731,294 0.40 0.43 9,690,000 0.40 0.43 9,369,031 0.39 0.41 $560,874,843 23.06% 24.71% Pursuant to California law, property owners may apply for a reduction of their property tax assessment by filing a written application, in form prescribed by the State Board of Equalization, with the appropriate county board of equalization or assessment appeals board. After the applicant and the assessor have presented their arguments, the Appeals Board makes a final decision on the proper assessed value. The Appeals Board may rule in the assessor's favor, in the applicant's favor, or the Board may set their own opinion of the proper assessed value, which may be more or less than either the assessor's opinion or the applicant's opinion. Any reduction in the assessment ultimately granted applies to the year for which the application is made and may also affect the values in subsequent years. Refunds for taxpayer overpayment of property taxes may include refunds for overpayment of taxes in years after that which was appealed. Current year values may also be adjusted as a result of a successful appeal of prior year values. Any taxpayer payment of property taxes that is based on a value that is subsequently adjusted downward will require a refund for overpayment. -24- Appeals for reduction in the "base year" value of an assessment, if successful, reduce the assessment for the year in which the appeal is taken and prospectively thereafter. The base year is determined by the completion date of new construction or the date of change of ownership. Any base year appeal must be made within four years of the change of ownership or new construction date. Appeals may also be filed under Section 51 of the Revenue and Taxation Code, which requires that for each lien date the value of real property shall be the lesser of its base year value annually adjusted by the inflation factor pursuant to Article XIIIA of the State Constitution or its full cash value, taking into account reductions in value due to damage, destruction, depreciation, obsolescence, removal of property or other factors causing a decline in value. Significant reductions have taken place in some counties due to declining real estate values. Reductions made under this code section may be initiated by the County Assessor or requested by the property owner. After a roll reduction is granted under this section, the property is reviewed on an annual basis to determine its full cash value and the valuation is adjusted accordingly. This may result in further reductions or in value increases. Such increases must be in accordance with the full cash value of the property and it 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. However, an Orange County Superior Court recently held that such reassessment formula violates the inflationary rate increase limitation of Article XIIIA. The Court held that once the assessed value of a property is reduced pursuant to Proposition 8, any subsequent increase in assessed value may not exceed the inflationary rate limitation (not to exceed 2%) of Article XIIIA. This holding of the Superior Court was appealed and reversed by the Appellate court. Hence, the customary reassessment practice has been judicially confirmed. Based on currently available information, there are 38 outstanding assessment appeals with respect to commercial parcels within the Project Area, having the potential for an aggregate reduction in assessed valuations of approximately $151 million. Although the Agency does not anticipate that the final resolution of these appeals will result in a reduction approaching the potential amount, the Agency is not able to an accurate prediction. In addition, the Marin County Assessor's office has informed the Agency that there may be reductions in the assessed valuations of condominium units within the Project Area that have been purchased within the last four years. The Agency has not attempted to take into account any potential reductions in assessed valuations by reason of assessment appeals in the projections of Tax Increment Revenues set forth in Table 5 "Projected Incremental Value and Tax Increment Revenue — Estimate of Debt Service Coverage". -25- Projected Tax Revenues The tax increment revenue projections for the Project Area, as prepared by the Agency, are summarized below. All of the projections are based on the reported values for Fiscal Year 2009-10, which are net of County administration fees. Also, no reduction has been made for possible future "ERAF" payments. See "RISK FACTORS — State Budget'. The Agency has assumed no growth in real property taxable values from the 2009-10 reported assessed value. The maximum inflationary growth rate permitted by law is two percent , and more than two percent inflationary growth has been realized in the Project Area in all but six years since 1981). TABLE 5 SAN RAFAEL REDEVELOPMENT AGENCY Redevelopment Project Projected Incremental Value and Tax Increment Revenue Estimate Of Debt Service Coverage Assessed Value Secured (no growth) (1) Unsecured (no growth) Total Assessed Value Less Base Year Assessed Value Incremental Assessed Value Gross Tax Increment Less: 20% Housing Set -Aside Net Tax Increment Remaining Series 1999 Bonds Debt Service (1) Series 2002 Bonds Debt Service Series 2009 Bonds Debt Service* Total Debt Service Coverage 2009-10 2010-11 20011-12 2012-13 2013-14 2,207,952,208 2,207,952,208 2,207,952,208 2,207,952,208 2,207,952,208 223,483,979 223,483,979 223,483,979 223,483,979 223,483,979 2,431,436,187 2,431,436,187 2,431,436,187 2,431,436,187 2,431,436,187 (162,545,228) (162,545,228) (162,545,228) (162,545,228) (162,545,228) 2,268,890,959 2,268,890,959 2,268,890,959 2,268,890,959 2,268,890,959 22,688,910 22,688,910 22,688,910 22,688,910 22,688,910 4,537,782 4,537,782 4,537,782 4,537,782 4,537,782 18,151,128 18,151,128 18,151,128 18,151,128 18,151,128 2,068,338 2,068,937 2,071,288 2,069,769 2,071,150 329,925(2) 1,490,625 1,490,625 1,496,375 1,496,000 2,398,263 3,559,562 3,561,913 3,566,144 3,567,150 509.93% 509.59% 508.98% 508.84% * Preliminary, subject to change. (1) Debt service on remaining 1999 Capital Appreciation Bonds occurs only in fiscal years 2019 through 2023. See "Table 1 — Debt Service Schedules" herein. (2) June 1, 2010 interest payment on Series 2009 Bonds. Remaining 2009-10 fiscal year debt service on Series 1999 Bonds paid prior to the date of this Official Statement. Source: Marin County Assessor and the Agency. -26- RISK FACTORS The following information should be considered by prospective investors in evaluating the Series 2009 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 Series 2009 Bonds. In addition, the order in which the following information is presented is not intended to reflect the relative importance of any such risks. To estimate the revenues available to pay debt service on the Series 2009 Bonds, the Agency has made certain assumptions with regard to the assessed valuation in the Project Area, future tax rates and percentage of taxes collected. The Agency believes these assumptions to be reasonable, but to the extent that the assessed valuation, the tax rates or the percentage of taxes collected are less than the Agency's assumptions, the Tax Revenues available to pay debt service on the Series 2009 Bonds will, in all likelihood, be less than those projected. Any deficiency in the amount of Tax Revenues required to pay debt service on the Series 2009 Bonds may require an extended period of time to replace because of the annual limitations on the availability of Tax Revenues contained in both the Pass -Through Agreement and in the definition of Tax Revenues contained in the Resolution. See "THE PROJECT AREA — Pass -Through Agreement". Reduction in Taxable Value Tax Revenues allocated to the Agency are determined by the amount of incremental taxable value in the Project Area allocable to 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 caused by economic factors beyond the Agency's control, such as a relocation out of the Project Area by one or more major property owners, or the transfer, pursuant to California Revenue and Taxation Code Section 68, of a lower assessed valuation to property within the Project Area by a person displaced by eminent domain or similar proceedings, or the discovery of hazardous substances on a property within the Project Area (see "Hazardous Substances," below) or the complete or partial destruction of such property caused by, among other eventualities, an earthquake (see "Seismic Factors," below), flood (see "Risk of Flood" below) or other natural disaster, could cause a reduction in the Tax Revenues securing the Series 2009 Bonds. Property owners may also appeal to the County Assessor for a reduction of their assessed valuations or the County Assessor could order a blanket reduction in assessed valuations based on then current economic conditions. Such a reduction of assessed valuations and the resulting decline in Tax Revenues or the resulting property tax refunds could have an adverse effect on the Agency's ability to make timely payments of principal of and interest on the Series 2009 Bonds. See "THE PROJECT AREA - Appeals of Assessed Values." Reduction in Inflationary Rate As described in greater detail below, Article XIIIA of the California Constitution provides that the full cash value base of real property used in determining taxable value may be adjusted from year to year to reflect the inflationary rate, not to exceed a 2% increase for any given year, or may be reduced to reflect a reduction in the consumer price index or comparable local data. 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%, there have been years in which the assessed values were adjusted by actual inflationary rates, which were less than 2%. Since Article XIIIA was approved, the annual adjustment for inflation has fallen below the 2% limitation five times: for 1993-94, 1%; for 1995-96, 1.19%; for 1996-97, 1.11%; for 1999- -P7- 00, 1.853%; and for 2004-05 1.867%. The Agency is informed by the Marin County Assessor's office that the inflationary rate for the next fiscal year s expected to be between 0% and 1%. The Agency is unable to predict if any adjustments to the full cash value base of real property within the Project Area, whether an increase or a reduction, will be realized in fiscal years following the next fiscal year. Levy and Collection The Agency does not have any independent power to levy and collect property taxes. Any reduction in the tax rate or the implementation of any constitutional or legislative property tax decrease could reduce the Tax Revenues, and accordingly, could have an adverse impact on the ability of the Agency to repay the Series 2009 Bonds. Likewise, delinquencies in the payment of property taxes could have an adverse effect on the Agency's ability to make timely debt service payments. Additional Bonds As described in "THE SERIES 2009 BONDS — Additional Bonds," the Agency may issue or incur obligations payable from Tax Revenues on a parity with its pledge of Tax Revenues to payment of debt service on the Remaining Series 1999 Bonds, the Series 2002 Bonds, and the Series 2009 Bonds. The existence of and the potential for such obligations increases the risks associated with the Agency's payment of debt service on the Series 2009 Bonds in the event of a decrease in the Agency's collection of Tax Revenues. Bankruptcy Risks The enforceability of the rights and remedies of the owners of the Series 2009 Bonds and the obligations of the Agency may become subject to the following: the federal bankruptcy code and applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or affecting the enforcement of creditors' rights generally, now or hereafter in effect; usual equitable principles which may limit the specific enforcement under state law of certain remedies: the exercise by the United States of America of the powers delegated to it by the federal Constitution; and the reasonable and necessary exercise, in certain exceptional situations of the police power inherent in the sovereignty of the State of California and its governmental bodies in the interest of servicing a significant and legitimate public purpose. Bankruptcy proceedings, or the exercise of powers by the federal or state government, if initiated, could subject the owners of the Series 2009 Bonds to judicial discretion and interpretation of their rights in bankruptcy or otherwise and consequently may entail risks of delay, limitation, or modification of their rights. Factors Relating to Sub -Prime Loans Since the end of 2002, many homeowners have financed the purchase of their new homes using loans with little or no down payment and with adjustable interest rates that are subject to being reset at higher rates on a specified date or on the occurrence of specified conditions. Some homeowners who purchased their homes with "sub -prime loans" have begun to experience difficulty in making their loan payments due to automatic rate increases on their adjustable loans and rising interest rates in the market, which could lead to increased foreclosures. In addition, as a result of increasing defaults on "sub -prime loans" in recent months, credit has become more difficult and more expensive to obtain, not only in the residential market, but also in the commercial, retail and industrial sectors. Rising foreclosure levels and M unavailability of loans for the purchase and development of real property in the Project Area may adversely impact assessed values. State of California Fiscal Issues In connection with its approval of the budget for the 1992/93, 1993/94, 1994/95, 2002/03, 2003/04, 2004/05, and 2005/06, the State Legislature enacted legislation which, among other things, reallocated funds from redevelopment agencies to school districts by shifting a portion of each agency's tax increment, net of amounts due to other taxing agencies, to school districts for such Fiscal Years for deposit in the Education Revenue Augmentation Fund ("ERAF"). The ERAF payments were paid timely by the Agency by allocation of the ERAF payments among the amounts otherwise required to be passed through to taxing entities as surplus Tax Increment Revenues. In 2008, the State Legislature adopted, and the Governor of the State signed, legislation, Chapter 751, Statutes 2008 (AB 1389) ("AB 1389"), that among other things require redevelopment agencies to pay into ERAF in Fiscal Year 2008/09, prior to May 10, 2009, an aggregate amount of $350 million, of which the Agency was to pay approximately $280,000. On April 30, 2009, a California Superior Court in California Redevelopment Association v. Genest (County of Sacramento) (Case No. 34-2008-00028334) held that the required payment by redevelopment agencies into ERAF in Fiscal Year 2008/09 pursuant to AB 1389 violated the California constitution and invalidated and enjoined the operation of the California Health and Safety Code section requiring such payment. On May 26, 2009, the State did file a notice that it would appeal the decision of the superior court. On September 28, 2009, the State noticed its withdrawal of its appeal of California Redevelopment Association v. Genest. Accordingly, the Superior Court holding of invalidity of the applicable portion of AB 1389 is final. In connection with various legislation related to the budget for the State for its Fiscal Year 2009/10, in late July 2009, the State legislature adopted, and the Governor of the State signed, Assembly Bill No. 26 (the "2009 SERAF Legislation"). The 2009 SERAF Legislation mandates that redevelopment agencies in the State make deposits to the Supplemental Educational Revenue Augmentation Fund ("SERAF") that is established in each county treasury throughout the State the aggregate amounts of $1.7 billion for Fiscal Year 2009/10, which are due prior to May 10, 2010, and $350 million for Fiscal Year 2010/11, which are due prior to May 10, 2011. The Agency has preliminarily estimated that the total amount payable by it pursuant to the 2009 SERAF Legislation will be approximately $1,370,000 for Fiscal Year 2009/10 and $280,000 for Fiscal Year 2010/11. The Agency expects that the SERAF payments will be paid timely by the Agency by allocation of the SERAF payments among the amounts otherwise required to be passed through to taxing entities as surplus Tax Increment Revenues. The 2009 SERAF Legislation contains provisions that subordinate the obligation of redevelopment agencies to make the SERAF payments specified therein to certain indebtedness. Section 6 of AB 26, to be codified at Cal. Health and Safety Code, § 33690 (a) (3), states: "The obligation of any agency to make the payments required pursuant to this subdivision shall be subordinate to the lien of any pledge of collateral securing, directly or indirectly, the payment of the principal, or interest on any bonds of the agency including, without limitation, bonds secured by a pledge of taxes allocated to the agency pursuant to Section 33670 of the California Health and Safety Code." 44011 The 2009 SERAF Legislation imposes various restrictions on redevelopment agencies that fail to timely make the required SERAF payments, including (i) a prohibition on adding or expanding project areas, (ii) a prohibition on the incurrence of additional debt, (iii) limitations on the encumbrance and expenditure of funds, including funds for operation and administration expenses, and (iv) commencing with the July 1 following the due date of a SERAF annual payment that is not timely made, a requirement that the applicable redevelopment agency allocate an additional five percent (5%) of all taxes that are allocated to the redevelopment agency under the Redevelopment Law for low and moderate income housing for the remainder of the time that the applicable redevelopment agency receives allocations of tax revenues under the Redevelopment Law. The five percent (5%) additional housing set-aside penalty provision referred to in the 2009 SERAF Legislation (the "Penalty Set -Aside Requirement") would be in addition to the twenty percent (20%) of such tax revenues already required to be used for low and moderate income housing purposes. A redevelopment agency that borrows from amounts required to be allocated to its housing set aside funds to make required SERAF payments but does not timely repay the funds, will also be subject to the Penalty Set -Aside Requirement. The California Redevelopment Association, the Union City Redevelopment Agency and the Fountain Valley Redevelopment Agency filed a lawsuit in Sacramento County Superior Court on October 29, 2009, challenging the constitutionality pf the 2009 SERAF Legislation and seeking a permanent injunction to prevent the State from taking redevelopment funds for non - redevelopment purposes. The Agency cannot predict the ultimate outcome of any such challenge. While the 2009 SERAF Legislation contains provisions that subordinate the obligation of redevelopment agencies to make the SERAF payments specified therein to certain indebtedness (which would include a subordination of the Agency's obligations with respect to the new SERAF payments to the Agency's obligation to pay debt service on the Bonds), there is no provision in the 2009 SERAF Legislation subordinating the Penalty Set -Aside Requirement to any indebtedness of a redevelopment agency that fails to timely make the SERAF payments mandated by the SERAF Legislation. The Agency cannot predict what actions will be taken in the future by the State Legislature and the Governor to deal with changing State revenues and expenditures and the repercussions they may have on the Fiscal Year 2009/10 State Budget and future State budgets. These developments at the State level may, in turn, affect local governments and agencies, including the Agency. The State Legislature may adopt other legislation requiring redevelopment agencies to make other payments to ERAF or SERAF or to make other payments. The impact that current and future State fiscal shortfalls will have on the Agency is unknown at this time. In prior years, the State has experienced budgetary difficulties and balanced its budget by requiring local political subdivisions, such as the City and the Agency, to fund certain costs theretofore borne by the State. Information about the State budget and State spending is regularly available from various State offices, including the Department of Finance, the Office of the Legislative Analyst and the State Treasurer. However, none of such information is incorporated by such reference. AB 1389 Reporting Requirements AB 1389, also requires redevelopment agencies, under certain circumstances, to submit reports to the office of the county auditor in the county in which they are located. These reports are required to include calculations of the tax increment revenues that redevelopment agencies have received and payments that redevelopment agencies have made pursuant to Tax Sharing Agreements with taxing entities and Statutory Tax Sharing. County auditors are required to review the reports and, if they concur, issue a finding of concurrence. The State Controller is -30- required to review such reports and submit a report to the Legislative Analyst's office and the Department of Finance identifying redevelopment agencies for which county auditors had not issued a finding of concurrence or are otherwise not in compliance with provisions of AB 1389. AB 1389 includes penalties for any redevelopment agency listed on the most recent State Controller's report, including a prohibition on issuing bonds or other obligations until the listed agency is removed from the State Controller's report. The Agency filed the first required report for the five year period ending June 30, 2008 with the Marin Auditor -Controller. In April 2009, the State Controller's office issued a report which included the Agency on the list of redevelopment agencies with respect to which the County Auditor had concurred with their reports. The report required by AB 1389 for the Fiscal Year ended June 30, 2009 was due by October 1, 2009 and the Agency made a timely submission. The Agency expects that the County Auditor -Controller will again concur with the information contained in the Agency's Fiscal Year 2008/09 report. Seismic Factors The City, like most regions in the State of California, is located in an area of seismic activity and, therefore, could be subject to potentially destructive earthquakes. According to the Safety Element contained in the City's General Plan, the City is vulnerable to earthquakes because it is located in one of the most earthquake -prone areas. There are no known active faults within the City but the area is subject to seismic activity from nearby faults, and numerous epicenters have been recorded within the City. The nearest known active fault traces are the San Andreas Fault, about ten miles to the southwest, and the Hayward Fault, eight miles to the northeast. The risk from seismic shaking from events on these faults is considered high. The maximum predicted earthquake magnitudes for these faults are 8.3 and 7.0, respectively (Borcherdt, 1975). According to the California Seismographic Station at Berkeley approximately 89 "significant" earthquakes have been recorded within the San Rafael Planning Area since 1853, although the epicenter locations can only be roughly estimated. The occurrence of severe seismic activity in the City could result in substantial damage to property located in the Project Area, and could lead to successful appeals for reduction of assessed values of such property. Such a reduction of assessed valuations could result in a reduction of the Tax Revenues that secure the Series 2009 Bonds. Risk of Floods According to information contained in the Safety Element of the City's General Plan, flooding has been an historical problem within the City. Between 1899 and 1952, at least 23 major storms have caused extensive flooding in the City. More recent flood episodes occurred in 1955, 1958, 1973, 1982 and 1983. The January 1982 storm caused extensive damage to residential, commercial and industrial property within the City, with an estimated storm damage cost of $16,713,400. Approximately 70 percent of the Project Area and 20% of the remainder of the City lies within the Federal Emergency Management Agency 100 -year flood zone. The City has an ongoing flood management program, including culvert sediment removal, storm drain repair, pump station maintenance, levee repair and clearing of tide gates. For more information see "San Rafael General Plan- Safety Background" on file with the San Rafael City Clerk. Hazardous Substances -31- An additional environmental condition that may result in the reduction in the assessed value of property would be the discovery of a hazardous substance that would limit the beneficial use of taxable property within the Project Area. In general, the owners and operators of a property may be required by law to remedy conditions of the property relating to releases or threatened releases of hazardous substances. The owner or operator may be required to remedy a hazardous substance condition of property whether or not the owner or operator has anything to do with creating or handling the hazardous substance. The effect, therefore, should any of the property within the Project Area be affected by a hazardous substance, could be to reduce the marketability and value of the property by the costs of remedying the condition. Secondary Market There can be no guarantee that there will be a secondary market for the Series 2009 Bonds, or, if a secondary market exists, that such Series 2009 Bonds can be sold for any particular price. Occasionally, because of general market conditions or because of adverse history or economic prospects connected with a particular issue, secondary marketing practices in connection with a particular issue are suspended or terminated. Additionally, prices of issues for which a market is being made will depend upon the then prevailing circumstances. Such prices could be substantially different from the original purchase price. Loss of Tax Exemption As discussed under the caption "MISCELLANEOUS — Tax Matters" herein, interest on the Series 2009 Bonds could become includable in gross income for purposes of federal income taxation retroactive to the date the Series 2009 Bonds were issued as a result of future acts or omissions of the Agency in violation of its covenants contained in the Resolution. Should such an event of taxability occur, the Series 2009 Bonds are not subject to special redemption or any increase in interest rate and may remain outstanding until maturity. LIMITATIONS ON TAX REVENUES AND POSSIBLE SPENDING LIMITATIONS Property Tax Limitations: Article XIIIA of the California Constitution California voters, on June 6, 1978, approved an amendment (commonly known as both Proposition 13 and the Jarvis -Gann Initiative) to the California Constitution. This amendment, which added Article XIIIA to the California Constitution, among other things, affects the valuation of real property for the purpose of taxation in that it defines the full cash value of property to mean "the county assessor's valuation of real property as shown on the 1975/76 tax bill under full cash value, or thereafter, the appraised value of real property when purchased, newly constructed, or a change in ownership has occurred after the 1975 assessment." The full cash value may be adjusted annually to reflect inflation at a rate not to exceed 2% per year, or any reduction in the consumer price index or comparable local. data, or any reduction in the event of declining property value caused by damage, destruction or other factors. The amendment further limits the amount of any ad valorem tax on real property to 1% of the full cash value except that additional taxes may be levied to pay debt service on indebtedness approved by the voters prior to July 1, 1978. In addition, an amendment to Article XIIIA was adopted in June 1986 by initiative which exempts any bonded indebtedness approved by two-thirds of the votes cast by voters for the acquisition or improvement of real property from the 1 % limitation. In the general election held November 4, 1986, voters of the State of California approved two measures, Propositions 58 and 60, which further amend Article XIIIA. Proposition 58 RYA amends Article XIIIA to provide that the terms "purchased" and "change of ownership," for purposes of determining full cash value of property under Article XIIIA, do not include the purchase or transfer of (1) real property between spouses and (2) the principal residence and the first $1,000,000 of other property between parents and children. Proposition 60 amends Article XIIIA to permit the Legislature to allow persons over age 55 who sell their residence to buy or build another of equal or lesser value within two years in the same county, to transfer the old residence's assessed value to the new residence. Pursuant to Proposition 60, the Legislature has enacted legislation permitting counties to implement the provisions of Proposition 60. Implementing Legislation Legislation enacted by the California Legislature to implement Article XIIIA (Statutes of 1978, Chapter 292, as amended) provides that, notwithstanding any other law, local agencies may not levy any property tax, except to pay debt service on indebtedness approved by the voters prior to July 1, 1978, and that each county will levy the maximum tax permitted by Article XIIIA of $4.00 per $100 assessed valuation (based on the traditional practice in California of using 25% of full cash value as the assessed value for tax purposes). The legislation further provided that, for fiscal year 1978-79, the tax levied by each county was to be appropriated among all taxing agencies within the county in proportion to their average share of taxes levied in certain previous years. The apportionment of property taxes in fiscal years after fiscal year 1978-79 has been revised pursuant to Statutes of 1979, Chapter 282 which provides relief funds from State moneys beginning in fiscal year 1978-79 and is designed to provide a permanent system for sharing State taxes and budget surplus funds with local agencies. Under Chapter 282, cities and counties receive about one-third more of the remaining property tax revenues collected under Proposition 13 instead of direct State aid. School districts receive a correspondingly reduced amount of property taxes, but receive compensation directly from the State and are given additional relief. Chapter 282 does not affect the derivation of the base levy ($4.00 per $100 assessed valuation) and the bonded debt tax rate. Effective as of fiscal year 1981-82, assessors in California no longer record property values in the tax rolls at the assessed value of 25% of market values. All taxable property is shown at full market value (subject to a 2% annual limit in growth so long as property is not sold). In conformity with this change in procedure, all taxable property value included in this Official Statement is shown at 100% of market value and all general tax rates reflect the $1 per $100 of taxable value. Tax rates for bond service and pension liability are also applied to 100% of market value. Future assessed valuation growth allowed under Article XIIIA (new construction, change of ownership, annual inflationary value growth of up to 2%) will be allocated on the basis of "situs" among the jurisdictions that serve the tax rate area within which the growth occurs except for certain utility property assessed by the State Board of Equalization ("Unitary Property") which is allocated by a different method as described under "--Unitary Property" below. Challenges to Article XIIIA There have been many challenges to Article XIIIA of the California Constitution. In Nordlinger v. Hahn, the United States Supreme Court heard an appeal relating to residential property. Based upon the facts presented in Nordlinger, the United States Supreme Court held that the method of property tax assessment under Article XIIIA did not violate the federal -33- Constitution. The Agency cannot predict whether there will be any future challenges to California's present system of property tax assessment and cannot evaluate the ultimate effect on the Agency's receipt of tax increment revenues should a future decision hold unconstitutional the method of assessing property. Property Tax Collection Procedures Classifications. In California, property which is subject to ad valorem taxes is classified as "secured" or "unsecured." Secured and unsecured property are entered on separate parts of the assessment roll maintained by the county assessor. The secured classification includes property on which any property tax levied by the County becomes a lien on that property sufficient, in the opinion of the county assessor, to secure payment of the taxes. Every tax which becomes a lien on secured property has priority over all other liens on the secured property, regardless of the time of the creation of other liens. A tax levied on unsecured property does not become a lien against the taxes on unsecured property, but may become a lien on certain other property owned by the taxpayer. Collections. The method of collecting delinquent taxes is substantially different for the two classifications of property. The taxing authority has four ways of collecting unsecured property taxes in the absence of timely payment by the taxpayer: (1) a civil action against the taxpayer; (2) filing a certificate in the office of the county clerk specifying certain facts an order to obtain a judgment lien on certain property of the taxpayer; (3) filing a certificate of delinquency for record in the county recorder's office, in order to obtain a lien on certain property of the taxpayer; and (4) seizure and sale of the personal property,' improvements or possessory interests belonging or assessed to the assessee. The exclusive means of enforcing the payment of delinquent taxes with respect to property on the secured roll is the sale of property securing the taxes to the State for the amount of taxes which are delinquent. A 10% penalty also applies to delinquent taxes on property on the unsecured roll, and further, an additional penalty of 1 'h% per month accrues with respect to such taxes beginning the first day of the third month following the delinquency date. The valuation of property is determined as of January 1 each year and equal installments of taxes levied upon secured property become delinquent on the following December 10 and April 10. Taxes on unsecured property are due August 1 and become delinquent August 31. Supplemental Assessments. A bill enacted in 1983, SB 813 (Statutes of 1983, Chapter 498) provides for the supplemental assessment and taxation of property as of the occurrence of a change in ownership or completion of new construction. Previously, statutes enabled the assessment of such changes only as of the next tax lien date following the change and thus delayed the realization of increased property taxes from the new assessments for up to 14 months. As enacted, Chapter 498 provided increased revenue to redevelopment agencies to the extent that supplemental assessments as a result of new construction or changes of ownership occur within the boundaries of redevelopment projects subsequent to the tax lien date. To the extent such supplemental assessments occur within the Project Area, Tax Revenue may increase. Property Tax Administration Costs. In 1990, the Legislature enacted SB 2557 (Chapter 466, Statutes of 1990) which allows counties to charge for the cost of assessing, collecting and allocating property tax revenues to local government jurisdictions on a prorated basis. It has been the practice of most California counties, including Sonoma County, to reduce an agency's tax increment or bill an agency for their pro rata share of property tax administration costs. For RLI 2008-09, the amount of such costs was $108,123 for the Project Area. Such costs are not included in the Tax Revenues which are pledged to repay the Series 2009 Bonds. Unitary Property Commencing in fiscal year 1988-89, the Revenue and Taxation Code of the State of California changed the method of allocating property tax revenues derived from state assessed utility properties. It provides for the distribution of state assessed values to tax rate areas by a county -wide mathematical formula rather than assignment of state assessed value according to the location of those values in individual tax rate areas. Commencing with fiscal year 1988-89, each county has established one county -wide tax rate area. The assessed value of all unitary property in the county has been assigned to this tax rate area and one tax rate is levied against all such property ("Unitary Revenues"). The property tax revenue derived from the assessed value assigned to the county -wide tax rate area shall be allocated as follows: (1) each jurisdiction will be allocated up to 2% of the increase in Unitary Revenues on a pro rata basis county -wide; and (2) any decrease in Unitary Revenues or increases less than 2%, or any increase in Unitary Revenues above 2% will be allocated among jurisdictions in the same proportion of each jurisdiction's Unitary Revenues received in the prior year to the total Unitary Revenues county -wide. However, legislation adopted in 2006 (SB 1317, Chapter 872) and taking effect with fiscal year 2007-08 required counties to transfer certain railroad properties into a countywide tax rate area from their existing tax rate area. Taxes on these properties are now distributed in a manner similar to other unitary properties, except that redevelopment agencies no longer share in the distribution. Statement of Indebtedness Under the Redevelopment Law, the Agency must file with the County Auditor a statement of indebtedness for the Project Area by October 1 of each year. As described below, the statement of indebtedness controls the amount of tax increment revenue that will be paid to the Agency in each fiscal year. Each statement of indebtedness is filed on a form prescribed by the State Controller and specifies, among other things: (i) the total amount of principal and interest payable on all loans, advances or indebtedness (including the Series 2009 Bonds and other Agency debt) (the "Debt"), both over the life of the Debt and for the current fiscal year, and (ii) the amount of "available revenue" as of the end of the previous fiscal year. "Available Revenue" is calculated by subtracting the total payments on Debt during the previous fiscal year from the total revenues (both tax increment revenues and other revenues) received during the previous fiscal year, plus any carry -forward from the prior fiscal year. Available Revenue includes amounts held by the Agency and irrevocably pledged to the payment of Debt other than amounts set aside for low- and moderate -income housing. The County Auditor may only pay tax increment revenue to the Agency in any fiscal year to the extent that the total remaining principal and interest on all Debt exceeds the amount of available revenues as shown on the statement of indebtedness. NO The statement of indebtedness constitutes prima facie evidence of the indebtedness of the Agency; however, the County Auditor may dispute the statement of indebtedness in certain cases. Section 33675 of the Redevelopment Law provides for certain time limits controlling any dispute of the statement of indebtedness, and allows for Superior Court determination of such dispute if it cannot be resolved by the Agency and the County. Any such action may only challenge the amount of the Debt as shown on the statement, and not the validity of any Debt or its related contract or expenditures. No challenge can be made to payments to a trustee in connection with a bond issue or payments to a public agency in connection with payments by that public agency with respect to a lease or bond issue. The Agency's October 1, 2009 Statement of Indebtedness included Debt sufficient to collect all the tax increment currently permitted under the Pass -Through Agreement with respect to 2009-10 in the Project Area for fiscal year 2008-09. The Agency expects that its future Statements of Indebtedness will also include Debt sufficient to collect all of the tax increment generated in the Project Area in future fiscal years. Exclusion of Tax Revenues for General Obligation Bonds Debt Service An initiative to amend the California Constitution entitled "Property Tax Revenues of Redevelopment Agencies" was approved by California voters at the November 8, 1988 general election. Under prior law, a redevelopment agency using tax increment revenue received additional property tax revenue whenever a local government increases its property tax rate to pay off its general obligation bonds. This initiative amended the California Constitution to allow the California Legislature to prohibit redevelopment agencies from receiving any of the property tax revenue raised by increased property tax rates imposed by local governments to make payments on their bonded indebtedness. The initiative only applies to tax rates levied to finance bonds approved by the voters on or after January 1, 1989. Appropriations Limitations: Article XIIIB of the California Constitution On November 6, 1979, California voters approved Proposition 4, the so-called Gann Initiative, which added Article XIIIB to the California Constitution. The principal effect of Article XIIIB is to limit the annual appropriations of the State and any city, county, school district, authority or other political subdivision of the State to the level of appropriations for the prior fiscal year, as adjusted for changes in the cost of living, population and services rendered by the government entity. Effective September 30, 1980, the California Legislature added Section 33678 to the Redevelopment Law which provided that the allocation of taxes to a redevelopment agency for the purpose of paying principal of, or interest on, loans, advances, or indebtedness shall not be deemed the receipt by such agency of proceeds of taxes levied by or on behalf of the agency within the meaning of Article XIIIB, nor shall such portion of taxes be deemed receipt of proceeds of taxes by, or an appropriation subject to the limitation of, any other public body within the meaning or for the purpose of the Constitution and laws of the State of California, including Section 33678 of the Redevelopment Law. The constitutionality of Section 33678 has been upheld in two California appellate court decisions, Brown v. Community Redevelopment Agency of the City of Santa Ana and Bell Community Redevelopment Agency v. Woosley. The plaintiff in Brown v. Community Redevelopment Agency of the City of Santa Ana petitioned the California Supreme Court for a hearing of this case. The California Supreme Court formally denied the petition and therefore the earlier court decisions are now final and binding. On the basis of these court decisions, the Agency has not adopted an appropriations limit. -36- Proposition 218 On November 5, 1996, California voters approved Proposition 218—Voter Approval for Local Government Taxes—Limitation on Fees, Assessments, and Charges—Initiative Constitutional Amendment. Proposition 218 added Articles XIIIC and XIIID to the California Constitution, imposing certain vote requirements and other limitations on the imposition of new or increased taxes, assessments and property -related fees and charges. Tax Revenues securing the 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. Future Initiatives Article XIIIA, Article XIIIB and certain other propositions affecting property tax levies were each adopted as measures which qualified for the ballot pursuant to California's initiative process. From time to time other initiative measures could be adopted, further affecting Agency revenues or the Agency's ability to expend revenues. MISCELLANEOUS The Authority The City of San Rafael Joint Powers Financing Authority was established pursuant to a Joint Exercise of Powers Agreement dated May 6, 1992, as amended, by and between the City and the Agency in accordance with the provisions of the Act. The Authority was created for the purpose of providing financing and refinancing for public capital improvements for the City and the Agency through the acquisition by the Authority of such public capital improvements and/or the purchase by the Authority of local obligations within the meaning of the Act. Under the Act, the Authority has the power to purchase the Series 2009 Bonds for concurrent resale to the Underwriter. Litigation There is no litigation pending or, to the Agency's knowledge, threatened in any way to restrain or enjoin the issuance, execution or delivery of the Series 2009 Bonds, to contest the validity of the Series 2009 Bonds, the Resolution or any proceedings of the Agency with respect thereto. In the opinion of the Agency and its counsel, there are no lawsuits or claims pending against the Agency which will materially affect the Agency's finances so as to impair the ability to pay principal of and interest on the Series 2009 Bonds when due. Ratings Moody's Investors Service ("Moody's") and Standard & Poor's Credit Market Services, a Division of the McGraw-Hill Companies ("S&P"), and Fitch, Inc. ("Fitch") have assigned their municipal bond rating of " ", and "" respectively, to the Series 2009 Bonds with the understanding that upon delivery of such Series 2009 Bonds a policy insuring the payment when due of the principal of and interest on the Series 2009 Bonds will be issued by the Insurer. In addition, S&P has assigned its underlying rating of " " to the Series 2009 Bonds. Certain information was supplied by the Agency to such rating agencies to be considered in evaluating the Series 2009 Bonds. These ratings reflect only the views of such rating -37- agencies and are not a recommendation to buy, sell or hold the Series 2009 Bonds. An explanation of the significance of such ratings should be obtained from such rating agencies at the following addresses: Moody's Investors Service, 99 Church Street, New York, New York 10007, Standard & Poor's Ratings Services, 55 Water Street, New York, New York 10041 and Fitch, One State Street Plaza, New York, New York, 10004, (212) 668-8322. No assurance can be given that such ratings will be retained for any given period of time or that the same will not be revised or withdrawn entirely by the respective rating agency if, in its judgment, circumstances so warrant. Except as otherwise required in the Continuing Disclosure Certificate, the Agency undertakes no responsibility either to bring to the attention of the owners of any Series 2009 Bonds any downward revision or withdrawal of any rating obtained or to oppose any such revision or withdrawal. Any such downward revision or withdrawal of the ratings obtained may have an adverse effect on the marketability or market price of the Series 2009 Bonds. Certain Legal Matters Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel, will render an opinion with respect to the Bonds substantially in the form set forth in APPENDIX D to this Official Statement. Copies of this opinion will be available at the time of delivery of the Bonds. Jones Hall is also acting as Disclosure Counsel to the Agency. Payment of the fees of Bond Counsel and Disclosure Counsel are contingent upon the issuance of the Bonds. Certain legal matters will be passed upon for the Agency by Agency Counsel and for the Authority by the City Attorney of the City. Tax Matters In the opinion of Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel, subject, however to the qualifications set forth below, under existing law, the interest on the Series 2009 Bonds is excluded from gross income for federal income tax purposes and such interest is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations, and the Series 2009 Bonds are "qualified tax-exempt obligations" within the meaning of section 265(b)(3) of the Internal Revenue Code of 1986. The opinions set forth in the preceding paragraph are subject to the condition that the Agency comply with all requirements of the Internal Revenue Code of 1986 (the "Code") that must be satisfied subsequent to the issuance of the Series 2009 Bonds in order that such interest be, or continue to be, excluded from gross income for federal income tax purposes. The Agency has covenanted to comply with each such requirement. Failure to comply with certain of such requirements may cause the inclusion of such interest in gross income for federal income tax purposes to be retroactive to the date of issuance of the Series 2009 Bonds. In the further opinion of Bond Counsel, interest on the Series 2009 Bonds is exempt from California personal income taxes. Owners of the Series 2009 Bonds should also be aware that the ownership or disposition of, or the accrual or receipt of interest on, the Series 2009 Bonds may have federal or state tax consequences other than as described above. Bond Counsel express no opinion regarding any federal or state tax consequences arising with respect to the Series 2009 Bonds other than as expressly described above. A copy of the proposed form of opinion of Bond Counsel is attached hereto as Appendix D. Underwriting The Series 2009 Bonds are being purchased for reoffering by E. J. De La Rosa & Co, Inc. (the "Underwriter"). The Underwriter has agreed to purchase the Series 2009 Bonds for $ (representing the aggregate principal amount of the Series 2009 Bonds less an underwriter's discount of $ and less an original issue discount of $ ). The purchase contract pursuant to which the Underwriter is purchasing the Series 2009 Bonds provides that the Underwriter will purchase all of the Series 2009 Bonds if any are purchased. The obligation of the Underwriter to make such purchase is subject to certain terms and conditions set forth in such contract of purchase. The Underwriter may offer and sell the Series 2009 Bonds to certain dealers and others at prices different from the prices stated on the cover page of this Official Statement. The offering prices may be changed from time to time by the Underwriter. Verification Grant Thornton LLP, Minneapolis, Minnesota, independent public accountants, upon delivery of the Refunding Bonds, will deliver a report on the mathematical accuracy of certain computations contained in schedules provided to them relating to the sufficiency of monies and securities deposited into the Escrow Fund to pay, when due, the principal, interest and redemption premium on the Series 1999 Current Interest Bonds to be refunded. The report of Grant Thornton LLP 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 data or information coming to its attention, subsequent to the date of its report. Miscellaneous All summaries of the Resolution, applicable legislation, agreements and other documents are made subject to the provisions of such documents 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. Any statements made in this Official Statement involving matters of opinion or of estimates, whether or not expressly stated, are set forth as such and not as representations of fact, and no representation is made that any of the estimates will be realized. -39- The execution and delivery of this Official Statement has been duly authorized by the Agency. SAN RAFAEL REDEVELOPMENT AGENCY By: Executive Director APPENDIX A SUMMARY OF CERTAIN PROVISIONS OF THE RESOLUTION F1,51 APPENDIX B CITY OF SAN RAFAEL GENERAL INFORMATION General Description The City of San Rafael (the "City") is located 17 miles north of San Francisco in Marin County (the "County"). Protected by its Mediterranean like setting along the shores of the San Francisco Bay, the City enjoys a mild climate year round. As the County seat, the City is considered the trade, financial and industrial leader of the County. The City currently has a land area of 22 square miles which includes 17 square miles of land and five of water and tide lands. In addition to the City's cultural, park and recreational resources, there are other nearby attractions including Muir Woods, five State parks, the San Francisco area, Oakland and the wine country. The City provides municipal services required by statute or charter, namely: Fire, Police, Community Development (encompassing Building, Planning and Code Enforcement), Public Works, Community Services (both Recreational and Child Care Programs), Redevelopment, Library and General Administrative Services. Marin County was one of the original counties of California, created in 1850 at the time of statehood. The County has a total area of 828 miles and, as of January 1, 2009, a population of approximately 258,618. Geographically, the county forms a large, southward -facing peninsula, with the Pacific Ocean to the west, San Pablo Bay and San Francisco Bay to the east, and -- across the Golden Gate -- the city of San Francisco to the south. Marin County's northern border is with Sonoma County. Most of the county's population resides on the eastern side, with a string of communities running along the Bay, from Sausalito to Tiburon to San Rafael to Corte Madera. The interior contains large areas of agricultural and open space; West Marin, through which California State Route 1 runs alongside the California coast, contains many small unincorporated communities dependent on agriculture and tourism for their economies. Population Population figures for the City, the County and the State for the last five years are shown in the following table. CITY OF SAN RAFAEL Population Estimates Source: State Department of Finance estimates (as of January 1) As City of Marin State of Year San Rafael County California 2005 57,072 251,820 36,675,346 2006 57,490 253,818 37,114,598 2007 58,047 255,982 37,559,440 2008 58,034 256,511 37,883,992 2009 58,363 258,618 38,292,687 Source: State Department of Finance estimates (as of January 1) As Employment and Industry The County is included in the San Francisco -San Mateo -Redwood City Metropolitan Division. The following table summarizes the civilian labor force, employment and unemployment in the County for the calendar years 2004 through 2008. These figures are county -wide statistics and may not necessarily accurately reflect employment trends in the City. During June 2009, the unemployment rate was 9.3% in the Metropolitan Division, 8.2% in Marin County and 12.1% in the State. SAN FRANCISCO -SAN MATEO-REDWOOD CITY METROPOLITAN DIVISION Civilian Labor Force, Employment and Unemployment (Annual Averages) Civilian Labor Force (1) Employment Unemployment Unemployment Rate Wage and Salary Employment: (2) Agriculture Natural Resources and Mining Construction Manufacturing Wholesale Trade Retail Trade Transportation, Warehousing and Utilities Information Finance and Insurance Real Estate and Rental and Leasing Professional and Business Services Educational and Health Services Leisure and Hospitality Other Services Federal Government State Government Local Government Total All Industries 131 2004 2005 2006 2007 2008 912,700 907,700 919,500 943,800 971,900 864,900 866,300 883,700 906,100 923,700 47,800 41,400 35,800 37;700 48,200 5.2% 4.6% 3.9% 4.0% 5.0% 3,100 2,700 2,800 2,700 2,700 200 200 200 200 200 42,200 41,300 43,100 45,400 44,100 44,100 42,600 43,500 43,500 42,600 26,500 26,100 26,700 27,100 26,700 93,300 93,800 93,600 95,000 93,900 44,900 43,500 42,100 40,600 40,300 43,500 40,800 39,000 39,500 40,000 66,600 66,900 67,500 67,700 65,000 20,800 20,900 21,200 21,100 21,200 176,000 183,000 191,700 203,900 210,600 100,100 100,800 103,200 105,200 106,700 114,000 116,100 119,900 124,300 126,100 36,900 36,900 37,300 38,600 39,200 21,400 20,400 19,900 19,400 19,300 31,100 32,800 34,100 34,900 35,600 77,800 79,800 81,400 82,700 83,500 942,500 948,600 967,200 991,800 997,700 (1) Labor force data is by place of residence; includes self-employed individuals, unpaid family workers, household domestic workers, and workers on strike. (2) Industry employment is by place of work; excludes self-employed individuals, unpaid family workers, household domestic workers, and workers on strike. (3) Totals may not add due to rounding. Source: State of California Employment Development Department. M Largest Employers The 25 largest private -sector employers in the County as of December 1, 2008 are listed below. COUNTY OF MARIN Largest Private -Sector Employers (As of December 2008) Employer Name No. of Emplovees Industry Kaiser Permanente 1,626 Hospital, health plan Marin General Hospital 1,267 Healthcare Autodesk 1,200 Software developer Fireman's Fund Insurance 1,200 Insurance Comcast 619 Telecommunications Safeway 452 Retail grocer Macy's 445 Department store Frank Howard Allen Realtors 425 Real Estate brokerage BioMarin Pharmaceutical 400 Bio -pharmaceutical Fair Issac 366 Business analytics, management MHN 350 Behavioral health benefits provider Dominican University of California 325 Higher education W. Bradley Electric 295 Electrical, telecom, visual systems Brayton Purcell 288 Legal services Guide Dogs for the Blind 387 Nonprofit Novato Community Hospital 274 Hospital Mollie Stone's Markets 270 Retail grocer Wells Fargo Bank 265 Financial services,, Costco Wholesale 260 Retail/wholesale Ghiotti Brothers 250 General engineering/construction Kentfield Rehabilitation Hospital 229 Rehabilitation specialty hospital Lucasfilm 220 Animation, film software/effects CVS 217 Drugstore Nordstrom 211 Department store Coldwell Banker Residential Brokers 207 Real Estate brokerage Source: North Bay Business Journal Effective Buying Income "Effective Buying Income" is defined as personal income less personal tax and nontax payments, a number often referred to as "disposable" or "after-tax" income. Personal income is the aggregate of wages and salaries, other labor -related income (such as employer contributions to private pension funds), proprietor's income, rental income (which includes imputed rental income of owner -occupants of non-farm dwellings), dividends paid by corporations, interest income from all sources, and transfer payments (such as pensions and welfare assistance). Deducted from this total are personal taxes (federal, state and local), nontax payments (fines, fees, penalties, etc.) and personal contributions to social insurance. According to U.S. government definitions, the resultant figure is commonly known as "disposable personal income." L -M History of Taxable Transactions. For the first three quarters of 2008, total taxable transactions in the City were reported to be $1,142,152,000, a 5.6% decrease from the $1,209,408,000 of taxable transactions that were reported for the first three quarters of 2007. The following table shows taxable transactions in the City by type of business during calendar years 2003 through 2007. Annual figures are not yet available for 2008. CITY OF SAN RAFAEL Taxable Transactions by Type of Business For Calendar Years 2003 through 2007 (Dollars in thousands) Source: State Board of Equalization 2003 2004 2005 2006 2007 Retail Stores: Apparel Stores $ 20,803 $ 20,953 $ 20,011 $ 19,648 $ 21,820 General Merchandise Stores 121,708 118,611 113,107 117,592 113,702 Food Stores 54,717 54,054 58,740 60,125 64,434 Eating and Drinking Places 86,712 88,543 90,145 91,612 97,339 Home Furnishings and Appliances 87,086 92,473 98,062 99,082 95,163 Bldg. Materials and Farm Implmnts. 223,296 251,915 248,716 246,896 238,357 Auto Dealers and Auto Supplies 391,000 383,276 345,049 336,392 342,336 Service Stations 69,551 75,943 83,414 101,964 95,894 Other Retail Stores 179,778 187,435 190,815 188,718 202.315 Retail Store Totals 1,234,651 1,273,203 1,248,059 1,262,029 1,271,360 All Other Outlets 312.772 314,280 312.333 342.742 371.531 TOTAL ALL OUTLETS $1,547,423 $1,587,483 $1,560,392 $1,604,771 $1,642,891 Source: State Board of Equalization The following table summarizes the total effective buying income for the City; the County, the State and the United States for the period 2004 through 2008. CITY OF SAN RAFAEL Effective Buying Income As of January 1, 2004 through 2008 Source: Sales & Marketing Management Survey of Buying Power for 2004; Claritas Demographics for 2005 through 2008. Total Effective Buying Median Household Year Area Income (000's Omitted) Effective Buying Income 2004 City of San Rafael n/a n/a Marin County $ 9,888,678 61,606 California 705,108,410 43,915 United States 5,692,909,567 39,324 2005 City of San Rafael $ 1,663,310 $52,871 Marin County 9,505,593 61,624 California 720,798,106 44,681 United States 5,894,663,364 40,529 2006 City of San Rafael $ 1,769,150 $54,463 Marin County 10,057,703 64,365 California 764,120,963 46,275 United States 6,107,092,244 41,255 2007 City of San Rafael $ 1,874,323 $57,071 Marin County 10,585,120 67,799 California 814,894,438 48,203 United States 6,300,794,040 41,792 2008 City of San Rafael $ 1,899,075 $57,466 Marin County 10,769,315 68,816 California 832,531,445 48,952 United States 6,443,994,426 42,303 Source: Sales & Marketing Management Survey of Buying Power for 2004; Claritas Demographics for 2005 through 2008. Construction Activity Building activity for the past five years in the City is shown in the following table. CITY OF SAN RAFAEL Total Building Permit Valuations (valuations in thousands) Calendar Year 2004 to 2008 The Investment Policy. The City Council adopted an Investment Policy in 2005. The Investment Policy is annually updated. The latest update was adopted by the City Council on June 15, 2009, and covers all short-term operating funds and investment activities of the City. These funds are accounted for in the City's annual audit report and include the General Fund, Special Revenue Funds, Debt Service Funds, Capital Project Funds, Enterprise Funds, Internal Funds and Fiduciary Funds. The Investment Policy is adopted by resolution of the City Council annually. The management responsibility for the City's investment program is delegated annually by the City Counsel to the Treasurer pursuant to California Government Code Section 53607. The Treasurer may delegate the authority to conduct investment transactions and to manage the operation of the investment portfolio to other specifically authorized staff members. The City Manager and the Treasurer jointly develop written administrative procedures and internal controls, consistent with the Investment Policy. The City may engage the support services of outside investment advisors, as long as it can be clearly demonstrated that these services produce a net financial advantage or necessary financial protection of the City's financial resources. Beginning in January 2005, the City established a contract with MBIA Municipal Investors Service Corporation to administer cash management services to a portion of the portfolio. These services include updating the Investment Policy annually, cash flow C. 2004 2005 2006 2007 2008 Permit Valuation New Single-family $14,601.9 $ 10,146.8 $ 6,304.0 $ 4,717.8 $ 1,372.5 New Multi -family 22,057.0 6,238.6 0.0 0.0 0.0 Res. Alterations/Additions 24,562.6 24,914.0 23,466.7 31.202.7 15.212.2 Total Residential 61,221.6 41,299.4 29,770.7 35,920.5 16,584.7 New Commercial 7,475.8 650.0 11,300.0 0.0 17,800.0 New Industrial 0.0 0.0 0.0 0.0 0.0 New Other 538.9 3,983.7 13,231.6 225.4 144.0 Com. Alterations/Additions 15,806.6 14.502.7 11,364.7 16.955.4 30,712.2 Total Nonresidential 23,821.3 19,136.5 35,896.3 17,180.8 $48,656.2 New Dwelling Units Single Family 78 36 7 4 2 Multiple Family 169 56 0 0 0 Total 247 92 7' 4 2 Source: Economic Sciences Corporation, California Building Permit Activity. Investment of City Funds The City may invest moneys not immediately required for operations in a manner consistent with the City's Statement of Investment Policy (the "Investment Policy"). The Investment Policy. The City Council adopted an Investment Policy in 2005. The Investment Policy is annually updated. The latest update was adopted by the City Council on June 15, 2009, and covers all short-term operating funds and investment activities of the City. These funds are accounted for in the City's annual audit report and include the General Fund, Special Revenue Funds, Debt Service Funds, Capital Project Funds, Enterprise Funds, Internal Funds and Fiduciary Funds. The Investment Policy is adopted by resolution of the City Council annually. The management responsibility for the City's investment program is delegated annually by the City Counsel to the Treasurer pursuant to California Government Code Section 53607. The Treasurer may delegate the authority to conduct investment transactions and to manage the operation of the investment portfolio to other specifically authorized staff members. The City Manager and the Treasurer jointly develop written administrative procedures and internal controls, consistent with the Investment Policy. The City may engage the support services of outside investment advisors, as long as it can be clearly demonstrated that these services produce a net financial advantage or necessary financial protection of the City's financial resources. Beginning in January 2005, the City established a contract with MBIA Municipal Investors Service Corporation to administer cash management services to a portion of the portfolio. These services include updating the Investment Policy annually, cash flow C. administration, procurement of various instruments, and preparing a comprehensive monthly report. The Investment Policy establishes five objectives for City investment: 1. Preservation of capital and protection of investment principal. 2. Maintenance of sufficient liquidity to meet anticipated cash flows. 3. Attainment of a market value rate of return. 4. Diversification to avoid incurring unreasonable market risks. 5. Compliance with the City's Municipal Code and with all applicable California statutes and Federal regulations. Specific Investment Restrictions. The City is governed by Sections 16429.1, 53600- 53609 and 53630-53686 et seq. of the California Government Code, except that, pursuant to California Government Code Section 5903(e), proceeds of bonds and any moneys set aside or pledged to secure payment of bonds may be invested in securities or obligations described in the ordinance, resolution, indenture, agreement or other instrument providing for the issuance of the bonds.. The City has further restricted the eligible types of securities and transactions to the following instruments (with further specific restrictions specified in the Investment Policy): 1. United States Treasury bills, notes and bonds with a final maturity not exceeding 5 years from the date of purchase. 2. Federal Agency debentures and mortgage-backed securities with a final maturity not exceeding 5 years from the date of purchase. 3. Federal Instrumentality (government sponsored enterprise) debentures, discount notes, callable and step-up securities, with a final maturity not exceeding 5 years from the date of purchase, issued only by Federal Home Loan Banks, Federal National Mortgage Association, Federal Farm Credit Banks, and federal Home Loan Mortgage Corporation and rated at least AAA or the equivalent. 4. Repurchase Agreements with a final termination date not exceeding one year collateralized by U.S. Treasury obligations, Federal Agency securities, or Federal Instrumentality securities listed in items 1, 2 and 3 above with a final maturity not exceeding 5 years. 5. Prime Commercial Paper with a final maturity not exceeding 270 days from the date of purchase. 6. Eligible Bankers Acceptances issued by FDIC insured commercial banks. 7. Medium -Term Notes issued by corporations organized and operating within the United States with a final maturity not exceeding 5 years from the date of purchase. 8. Negotiable Certificates of Deposit with a final maturity not exceeding 5 years from the date of purchase. 9. Non -Negotiable Certificates of Deposit and savings deposits with a maturity not exceeding 180 days. 10. State of California's Local Agency Investment Fund. 11. Money Market Funds. The above investment categories are more fully described in the Investment Policy. Recent Monthly Report. The City Treasurer submits a monthly report to the City Council detailing and summarizing all transactions and stating the present status of City investments (the "Monthly Report"). As of July 31, 2009, the City Treasurer reports that the annualized return of the City's investment portfolio was 2.77% (based on a 365 -day year) and the weighted average days to effective maturity was 100 days. EN The following table summarizes certain information relating to the City's investment portfolio as of July 31, 2009: CITY OF SAN RAFAEL Source: City of San Rafael M Investment Portfolio Summary (as of July 31, 2009) Type of Investment Historic Cost Market Value % of Portfolio (2) Cash and equivalents $17,570,258 $17,570,258 76.2% U.S. Treasury 999,453 1,000,012 4.3 U.S. Instrumentality 3,989,879 3,995,294 17.3 Corporate 496,270 497.946 2.2 Total $23,055,860 $23,063,510 100.0% Source: City of San Rafael M APPENDIX C AUDITED FINANCIAL STATEMENTS OF THE AGENCY FOR FISCAL YEAR ENDED JUNE 30, 2001 C-1 APPENDIX D FORM OF BOND COUNSEL OPINION D-1 26058-07 JH:SM:kar 10/06/09 10/26/09 10/28/09 APPENDIX E FORM OF CONTINUING DISCLOSURE CERTIFICATE This Continuing Disclosure Certificate (the "Disclosure Certificate") is executed and delivered by the San Rafael Redevelopment Agency (the "Agency") in connection with the issuance by the Agency of its $ Central San Rafael Redevelopment Project Tax Allocation Refunding Bonds, Series 2009 (the "2009 Bonds"). The 2009 Bonds are being issued pursuant to Resolution No 77-69 of the Agency adopted August 15, 1977, Resolution No. 92-6 of the Agency adopted April 20, 1992, Resolution No. 95-27 of the Agency adopted September 5, 1995, Resolution No. 96-86 of the Agency adopted November 18, 1996, Resolution No. 99-6 of the Agency adopted June 7, 1999, Resolution No. 2002-24 of the Agency adopted September 16, 2002 and Resolution No. 2009-_ of the Agency adopted on November 16, 2009 (collectively, the "Resolution"). Pursuant to the Resolution, U.S. Bank National Association, San Francisco, California, has been appointed as the fiscal agent (the "Fiscal Agent") with respect to the 2009 Bonds. The Agency hereby covenants and agrees as follows: Section 1. Purpose of the Disclosure Certificate. This Disclosure Certificate is being executed and delivered by the Agency for the benefit of the holders and beneficial owners of the 2009 Bonds and in order to assist the Series 2009 Participating Underwriter in complying with S.E.C. Rule 15c2 -12(b)(5). Section 2. Definitions. In addition to the definitions set forth in the Resolution, which apply to any capitalized term used in this Disclosure Certificate unless otherwise defined in this Section, the following capitalized terms shall have the following meanings: "Annual Report' shall mean any Annual Report provided by the Agency pursuant to, and as described in, Sections 3 and 4 of this Disclosure Certificate. "Annual Report Date" means the date that is nine months after the end of the Agency's fiscal year (currently March 31 based on the Agency's fiscal year end of June 30). "Bond Insure" shall mean "Dissemination Agent' shall mean Willdan Financial Services, or any successor Dissemination Agent designated in writing by the Agency and which has filed with the Agency a written acceptance of such designation. "Listed Events' shall mean 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' shall mean the final Official Statement relating to the 2009 Bonds. E-1 "Rule" shall mean Rule 15c2 -12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time. "Series 2009 Participating Underwrite' shall mean any of the original underwriters of the 2009 Bonds required to comply with the Rule in connection with offering of the 2009 Bonds. Section 3. Provision of Annual Reports. (a) The Agency shall, or shall cause the Dissemination Agent to, not later than the Annual Report Date, commencing 31, 20, with the report for the 20_-_ 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, with a copy to the Fiscal Agent and the Participating Underwriter. Not later than 15 Business Days prior to the Annual Report Date, the Agency shall provide the Annual Report to the Dissemination Agent (if other than the Agency). If by 15 Business Days prior to the Annual Report Date the Dissemination Agent (if other than the Agency) has not received a copy of the Annual Report, the Dissemination Agent shall contact the Agency to determine if the Agency is in compliance with the previous sentence. The Annual Report may be submitted as a single document or as separate documents comprising a package, and may include by reference other information as provided in Section 4 of this Disclosure Certificate; provided that the audited financial statements of the Agency may be submitted separately from the balance of the Annual Report, and later than the Annual Report Date, if not available by that date. If the Agency's fiscal year changes, it shall give notice of such change in the same manner as for a Listed Event under Section 5(c). The Agency shall provide a written certification with each Annual Report furnished to the Dissemination Agent to the effect that such Annual Report constitutes the Annual Report required to be furnished by the Agency hereunder. (b) If the Agency does not provide (or cause the Dissemination Agent to provide) an Annual Report by the Annual Report Date, the Agency shall provide (or cause the Dissemination Agent to provide) to the MSRB, in an electronic format as prescribed by the MSRB, a notice in substantially the form attached as Exhibit A. (c) With respect to each Annual Report, the Dissemination Agent shall: (i) determine each year prior to the Annual Report Date the then -applicable rules and electronic format prescribed by the MSRB for the filing of annual continuing disclosure reports; and (ii) if the Dissemination Agent is other than the Agency, file a report with the Agency, 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 Agency's Annual Report shall contain or incorporate by reference the following: (a) The Agency's audited financial statements prepared in accordance with generally accepted accounting principles as promulgated to apply to governmental entities from time to time by the Governmental Accounting Standards Board. If the Agency's audited financial statements are not available by the Annual Report Date, the Annual Report shall contain unaudited financial statements in a format similar to the financial statements contained in the final Official Statement, and the audited financial statements shall be filed in the same manner as the Annual Report when they become available. (b) 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 Agency for the preceding fiscal year, substantially similar to that provided in the corresponding tables in the Official Statement, financial information and operating data with respect to the Agency for the prior fiscal year of the type included in the Official Statement in the following categories (to the extent not included in the Agency's audited financial statements): (i) aggregate assessed values of the Redevelopment Project Area; (ii) list of top twenty largest local secured property taxpayers in the Redevelopment Project Area; (iii) calculation of pro forma coverage ratio calculated in the same manner as provided in the Official Statement under the section entitled "THE PROJECT AREA — Projected Tax Revenues"; (iv) information concerning significant events or transactions affecting the Project Area; (v) information concerning significant events or transactions affecting the amount of Tax Revenues available to pay the 2009 Bonds; and (vi) description of outstanding indebtedness other than the 2009 Bonds, not described in the Official Statement, payable from Tax Revenues. Any or all of the items listed above may be included by specific reference to other documents, including official statements of debt issues of the Agency or related public entities, which have been submitted to the Municipal Securities Rulemaking Board. The Agency shall clearly identify each such other document so included by reference. (c) In addition to any of the information expressly required to be provided under paragraphs (a) and (b) of this Section, the Agency shall provide such further information, if any, as may be necessary to make the specifically required statements, in the light of the circumstances under which they are made, not misleading. Any or all of the items listed above may be included by specific reference to other documents, including official statements of debt issues of the Agency or related public entities, which have been submitted to each of the Repositories or the Securities and Exchange Commission. If the document included by reference is a final official statement, it must be available from the Municipal Securities Rulemaking Board. The Agency shall clearly identify each such other document so included by reference. (d) Any or all of the items listed above may be included by specific reference to other documents, including official statements of debt issues of the Agency or related public entities, which are available to the public on the MSRB's Internet web site or filed with the Securities and Exchange Commission. The Agency shall clearly identify each such other document so included by reference. Section 5. Reporting of Significant Events. (a) Pursuant to the provisions of this Section 5, the Agency shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the 2009 Bonds, if material: (1) Principal and interest payment delinquencies. (2) Non-payment related defaults. (3) Unscheduled draws on debt service reserves reflecting financial difficulties. E-3 L4) Unscheduled draws on credit enhancements reflecting financial difficulties. (5) Substitution of credit or liquidity providers, or their failure to perform. `) Adverse tax opinions or events affecting the tax-exempt status of the security. (7) Modifications to rights of security holders. (8) Contingent or unscheduled bond calls. (9) Defeasances. (10) Release, substitution, or sale of property securing repayment of the securities. (11) Rating changes. (b) Whenever the Agency obtains knowledge of the occurrence of a Listed Event, the Agency shall as soon as possible determine if such event would be material under applicable Federal securities law. (c) If the Agency determines that knowledge of the occurrence of a Listed Event would be material under applicable Federal securities law, the Agency shall, or shall cause the Dissemination Agent (if not the Agency) to, promptly file a notice of such occurrence with the MSRB, in an electronic format as prescribed by the MSRB. Notwithstanding the foregoing, notice of Listed Events described in subsections (a)(8) and (9) above need not be given under this subsection any earlier than the notice (if any) of the underlying event is given to holders of affected Bonds under the Indenture. 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 Agency's obligations under this Disclosure Certificate shall terminate upon the legal defeasance, prior redemption or payment in full of all of the 2009 Bonds. If such termination occurs prior to the final maturity of the 2009 Bonds, the Agency shall give notice of such termination in the same manner as for a Listed Event under Section 5(c). Section 8. Dissemination Agent. The Agency may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Certificate, and the Agency may discharge any such Agent, or such Agent may resign, in either case upon 5 days' prior written notice, with or without appointing a successor Dissemination Agent. The initial Dissemination Agent shall be Willdan Financial Services. Section 9. Amendment: Waiver. Notwithstanding any other provision of this Disclosure Certificate, the Agency may amend this Disclosure Certificate, and any provision of this Disclosure Certificate may be waived, provided that the following conditions are satisfied: (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 2009 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 lam! at the time of the primary offering of'the 2009 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 2009 Bonds in the manner provided in the Resolution for amendments to the Resolution with the consent of holders, or (ii) does not, in the opinion of the Fiscal Agent or nationally recognized bond counsel, materially impair the interests of the holders or beneficial owners of the 2009 Bonds. If the annual financial information or operating data to be provided in the Annual Report is amended pursuant to the provisions hereof, the first annual financial information filed pursuant hereto containing the amended operating data or financial information shall explain, in narrative form, the reasons for the amendment and the impact of the change in the type of operating data or financial information being provided. If an amendment is made to the undertaking specifying the accounting principles to be followed in preparing financial statements, the annual financial information for the year in which the change is made shall present a comparison between the financial statements or information prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. The comparison shall include a qualitative discussion of the differences in the accounting principles and the impact of the change in the accounting principles on the presentation of the financial information, in order to provide information to investors to enable them to evaluate the ability of the Agency to meet its obligations. To the extent reasonably feasible, the comparison shall be quantitative. A notice of the change in the accounting principles shall be 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 Agency from disseminating any other information, using the means of dissemination set forth in this Disclosure Certificate or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Certificate. If the Agency chooses to include any information in any Annual Report or notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Certificate, the Agency shall have no obligation under this Disclosure Certificate to update such information or include it in any future Annual Report or notice of occurrence of a Listed Event. Section 11. Default. In the event of a failure of the Agency to comply with any provision of this Disclosure Certificate, any Series 2009 Participating Underwriter or any holder or beneficial owner of the 2009 Bonds may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the Agency to comply with its obligations under this Disclosure Certificate. A default under this Disclosure Certificate shall not be deemed an Event of Default under the Resolution, and the sole remedy under this Disclosure Certificate in the event of any failure of the Agency to comply with this Disclosure Certificate shall be an action to compel performance. Section 12. Duties. Immunities and Liabilities of Dissemination Agent. The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Certificate, and the Agency agrees to indemnify and save the Dissemination Agent, its officers, directors, employees and agents, harmless against any loss, expense and liabilities which it may incur arising out of or in the exercise or performance of its powers and duties hereunder, including the costs and expenses (including attorneys fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent's negligence or willful E-5 misconduct. The obligations of the Agency under this Section shall survive resignation or removal of the Dissemination Agent and payment of the 2009 Bonds. The Agency shall pay compensation to the Dissemination Agent for its services as agreed by the Agency and the Dissemination Agent from time to time, and its reasonable out-of- pocket expenses, which fees and expenses shall be in addition to its fees and expenses payable to it as Fiscal Agent, if applicable. The Dissemination Agent shall have no duty to review any information provided to it hereunder and shall not be deemed to be acting in a fiduciary capacity. All information provided to the Dissemination Agent shall be in form suitable for filing. Section 13. Notices. Any notice or communications to be given under this Disclosure Certificate may be given as follows: To the Agency: San Rafael Redevelopment Agency 1313 Fifth Avenue San Rafael, CA 94901 Fax: 415-485-3175 Attention: Economic Development Director To the Dissemination Agent: Willdan Financial Services 27368 Via Industria, Suite 110 Temecula, CA 92590 Fax: 951-587-3510 Attention: Federal Compliance To the Participating Underwriter: E. J. De La Rosa & Co., Inc. 101 Montgomery Street, Suite 2150 San Francisco, CA 94104 Fax: 415-495-3383 Attention: 415-495-3384 To the Fiscal Agent: U.S. Bank National Association One California Street, Suite 2100 San Francisco, CA 94111 Fax: 415-273-4591 Attention: Corporate Trust Department E-6 Section 14. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the Agency, the Dissemination Agent, the Fiscal Agent, the Series 2009 Participating Underwriters and holders and beneficial owners from time to time of the 2009 Bonds, and shall create no rights in any other person or entity. Date: December _, 2009 Acceptance of Dissemination Agent: AGREED AND ACCEPTED: WILLDAN FINANCIAL SERVICES, as Dissemination Agent By: Title: E-7 SAN RAFAEL REDEVELOPMENT AGENCY an Executive Director EXHIBIT A NOTICE OF FAILURE TO FILE ANNUAL REPORT Name of Issuer: San Rafael Redevelopment Agency Name of Bond Issue: San Rafael Redevelopment Agency, Central San Rafael Redevelopment Project Tax Allocation Refunding Bonds, Series 2009 (the "2009 Bonds"). Date of Issuance: December _, 2009 NOTICE IS HEREBY GIVEN that the San Rafael Redevelopment Agency (the "Agency") has not provided an Annual Report with respect to the above-named Bonds as required by Resolution No 77-69 adopted August 15, 1977, as supplemented and amended, including by Resolution No 09 --adopted on November 16, 2009, authorizing the issuance of the 2009 Bonds. The Agency anticipates that the Annual Report will be filed by Dated cc: Fiscal Agent W; SAN RAFAEL REDEVELOPMENT AGENCY APPENDIX F BOOK ENTRY ONLY SYSTEM The following description of the Depository Trust Company ("DTC'9, the procedures and record keeping with respect to beneficial ownership interests in the Bonds, payment of principal, interest and other payments on the Bonds to DTC Participants or Beneficial Owners, confirmation and transfer of beneficial ownership interest in the Bonds and other related transactions by and between DTC, the DTC Participants and the Beneficial Owners is based solely on information provided by DTC. Accordingly, no representations can be made concerning these matters and neither the DTC Participants nor the Beneficial Owners should rely on the foregoing information with respect to such matters, but should instead confirm the same with DTC or the DTC Participants, as the case may be. Neither the issuer of the Bonds (the `Issuer") nor the trustee, fiscal agent or paying agent appointed with respect to the Bonds (the `Agent') take any responsibility for the information contained in this Appendix. No assurances can be given that DTC, DTC Participants or Indirect Participants will distribute to the Beneficial Owners (a) payments of interest, principal or premium, if any, with respect to the Bonds, (b) certificates representing ownership interest in or other confirmation or ownership interest in the Bonds, or (c) redemption or other notices sent to DTC or Cede & Co., its nominee, as the registered owner of the Bonds, or that they will so do on a timely basis, or that DTC, DTC Participants or DTC Indirect Participants will act in the manner described in this Appendix. The current "Rules" applicable to DTC are on file with the Securities and Exchange Commission and the current "Procedures" of DTC to be followed in dealing with DTC Participants are on file with DTC. 1. The Depository Trust Company ("DTC"), New York, NY, will act as securities depository for the securities (the "Securities"). The Securities will be issued as fully -registered securities registered in the name of Cede & Co. (DTC's partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully -registered Security certificate will be issued for each issue of the Securities, each in the aggregate principal amount of such issue, and will be deposited with DTC. If, however, the aggregate principal amount of any issue exceeds $500 million, one certificate will be issued with respect to each $500 million of principal amount, and an additional certificate will be issued with respect to any remaining principal amount of such issue. 2. DTC, the world's largest securities depository, is a limited -purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial. Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non -U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC's participants ("Direct Participants") deposit with DTC. DTC also facilitates the post -trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book -entry transfers and pledges between Direct Participants' accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non -U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly - F -1 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 Standard & Poor's highest rating: AAA. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com and www.dtc.org. 3. Purchases of Securities under the DTC system must be made by or through Direct Participants, which will receive a credit for the Securities on DTC's records. The ownership interest of each actual purchaser of each Security ("Beneficial Owner") is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Securities are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Securities, except in the event that use of the book -entry system for the Securities is discontinued. 4. To facilitate subsequent transfers, all Securities deposited by Direct Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Securities with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Securities; DTC's records reflect only the identity of the Direct Participants to whose accounts such Securities are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. 5. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Securities may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Securities, such as redemptions, tenders, defaults, and proposed amendments to the Security documents. For example, Beneficial Owners of Securities may wish to ascertain that the nominee holding the Securities for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them. 6. Redemption notices shall be sent to DTC. If less than all of the Securities within an issue are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed. 7. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Securities unless authorized by a Direct Participant in accordance with DTC's MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to Issuer as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting F-2 rights to those Direct Participants to whose` accounts Securities are credited on the record date (identified in a listing attached to the Omnibus Proxy). 8. Redemption proceeds, distributions, and dividend payments on the Securities will be made to Cede & Co., or such other nominee ;as may be requested by an authorized representative of DTC. DTC's practice is to credit Direct Participants' accounts upon DTC's receipt of funds and corresponding detail information from Issuer or Agent, on payable date in accordance with their respective holdings shown on DTC's records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Participant and not of DTC, Agent, or Issuer, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of Issuer or Agent, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. 9. DTC may discontinue providing its services as depository with respect to the Securities at any time by giving reasonable notice to Issuer or Agent. Under such circumstances, in the event that a successor depository is not obtained, Security certificates are required to be printed and delivered. 10. Issuer may decide to discontinue use of the system of book -entry -only transfers through DTC (or a successor securities depository). In that event, Security certificates will be printed and delivered to DTC. 11. The information in this section concerning DTC and DTC's book -entry system has been obtained from sources that Issuer believes to be reliable, but Issuer takes no responsibility for the accuracy thereof. F-3 APPENDIX G SPECIMEN MUNICIPAL BOND INSURANCE POLICY G-1 APPENDIX H NATIONAL PUBLIC FINANCE GUARANTEE CORPORATE DISCLOSURE The following information has been made available by National Public Finance Guarantee Corporation ("National"). National does not accept any responsibility for the accuracy or completeness of this appendix or any information or disclosure contained herein, or omitted herefrom, other than with respect to the accuracy of the information regarding the MBIA Insurance Corp. Insurance Policy (as defined in the Resolution and described herein under the heading "SECURITY FOR THE SERIES 2009 BONDS — Reserve Account." Additionally, National makes no representation regarding the Series 2009 Bonds or the advisability of investing in the Series 2009 Bonds. MBIA Insurance Corp. ("MBIA Corp.") issued its insurance policy, No. 39271 (1) and debt service reserve fund surety bond No. 39271(2) on October 24, 2002, (the "Policy") in connection with the $25,020,000 San Rafael Redevelopment Agency Central San Rafael Redevelopment Project Tax Allocation Refunding Bonds, Series 2002, which Policy remains in full force and effect. On February 18, 2009, MBIA Inc., the parent holding company of MBIA Corp., announced that it had established a new U.S. public finance financial guarantee insurance company within the MBIA Inc. group by restructuring MBIA Corp. and its subsidiaries. As part of the restructuring, (i) the stock of MBIA Insurance Corp. of Illinois (which, effective March 19, 2009 was renamed National Public Finance Guarantee Corporation), an existing public finance financial guarantee insurance subsidiary of MBIA Corp., was transferred to a newly established intermediate holding company, National Public Finance Guarantee Holdings, Inc. ("National Holdings"), also a subsidiary of MBIA Inc.; and (ii) effective January 1, 2009, MBIA Corp. ceded to National all of MBIA Corp.'s U.S. public finance business, including the MBIA Insurance Policy, pursuant to that certain Amended and Restated Quota Share Reinsurance Agreement between MBIA Corp. and National (the "Reinsurance Agreement"). Pursuant to the Reinsurance Agreement, MBIA Corp. paid to National approximately $2.89 billion (which equals the net unearned premium, loss and loss adjustment expense reserves, net of the 22 percent ceding commission that MBIA Corp. received) as a premium to reinsure the policies covered under the Reinsurance Agreement (each a "Covered Policy"). Each of the MBIA Insurance Policies listed above is a Covered Policy. National was further capitalized with $2.09 billion from funds distributed by MBIA Corp. to MBIA Inc. as a dividend and return of capital, which was ultimately contributed to National through National Holdings. The Reinsurance Agreement provides a cut -through provision enabling the holder of a Covered Policy to make a claim for payment directly against National. In addition, National has also issued second -to -pay policies for the benefit of the holder of a Covered Policy, granting such policyholder the right to make a claim directly against National if MBIA Corp. did not honor such claim. National Public Finance Guarantee Corporation ("National") National is an operating subsidiary of MBIA Inc., a New York Stock Exchange listed company. MBIA Inc. is not obligated to pay the debts of or claims against National. National is domiciled in the State of Illinois and is licensed to do business in and subject to regulation under the laws of 47 states, the District of Columbia and the Commonwealth of Puerto Rico. H-1 The principal executive offices of National are located at 113 King Street. Armonk, New York 10504 and the main telephone number at that address is (914) 765-3333. Regulation National is currently domiciled in Illinois and has announced its intention to redomesticate to New York. National is licensed in Illinois to provide fidelity, surety and miscellaneous insurance. As a result of being licensed in Illinois to transact such lines of insurance, National is authorized to provide financial guarantee insurance in Illinois. Illinois has promulgated a regulation that governs the transaction of municipal bond insurance. The regulation defines municipal bond insurance as insurance or reinsurance against financial loss by reason of nonpayment of principal, interest or other payment obligations pursuant to the terms of municipal bonds. Under the Illinois municipal bond regulation, National is permitted to transact municipal bond insurance subject to complying with the requirements set forth in the regulation, which include establishing reserves and satisfying certain risk limitations. As a financial guaranty insurance company licensed to do business in the State of New York, National is also subject to the New York .Insurance Law which, among other things, prescribes minimum capital requirements and contingency reserves against liabilities for National, limits the classes and concentrations of investments that are made by National and requires the approval of policy rates and forms that are employed by National. State law also regulates the amount of both the aggregate and individual risks that may be insured by National, the payment of dividends by National, changes in control with respect to National and transactions among National and its affiliates. The MBIA Insurance Policy is not covered by the Property/Casualty Insurance Security Fund specified in Article 76 of the New York Insurance Law. Financial Strength Ratings of National National's current financial strength ratings from the major rating agencies are summarized below: Agency Ratings Outlook S&P A Developing Moody's Baal Developing Each rating of National should be evaluated independently. The ratings reflect the respective rating agency's current assessment of the creditworthiness of National and its ability to pay claims on its policies of insurance. Any further explanation as to the significance of the above ratings may be obtained only from the applicable rating agency. The above ratings are not recommendations to buy, sell or hold the Bonds. and such ratings may be subject to revision or withdrawal at any time by the rating agencies. Any downward revision or withdrawal of any of the above ratings may have an adverse effect on the market price of the Bonds. National does not guaranty the market price of the Bonds nor does it guaranty that the ratings on the Bonds will not be revised or withdrawn. Recent Litigation On March 11. 2009, a complaint was filed in the United States District Court of the Southern District of New York against the Company and its subsidiaries, MBIA Corp. and H-2 National. entitled Aurelius Capital Master; Ltd. et a]. n MBIA Inc. et al., 09-cv-2242 (S.D.N.Y.). The lead plaintiffs, Aurelius Capital Master, Ltd.. Aurelius Capital Partners, LP, Fir Tree Value Master Fund, L.P., Fir Tree Capital Opportunity Master Fund, L.P., and Fir Tree Mortgage Opportunity Master Fund. L.P., purport to be acting as representatives for a class consisting of all holders of securities, instruments, or other obligations for which MBIA Corp., before February 18, 2009, issued financial guarantee insurance other than United States municipal/governmental bond securities. The complaint alleges that certain of the terms of the transactions entered into by the Company and its subsidiaries (the "Transactions"), which were approved by the New York State Department of Insurance, constituted fraudulent conveyances under § 273, 274 and 276 of New York Debtor and Creditor Law and a breach of the implied covenant of good faith and fair dealing under New York common law. The Complaint seeks, inter alia, (a) a declaration that the alleged fraudulent conveyances are null and void and set aside, (b) a declaration that National is responsible for the insurance polices issued by MBIA Insurance Corporation up to February 17. 2009, and (c) an award of damages in an unspecified amount together with costs, expenses and attorneys' fees in connection with the action. Defendants filed their motion to dismiss on May 6, 2009. On April 6, 2009, a complaint was filed in the Court of Chancery for the State of Delaware against two subsidiaries of the Company, MBIA Corp. and National, entitled Third Avenue Trust and Third Avenue Variable Series Trust v. MBIA Insurance Corp. and MBIA Insurance Corp. of Illinois. CA 4486 -UCL. Plaintiffs allege that they are holders of approximately $400 million of surplus notes issued by MBIA Corp. (for purposes of this section, the "Notes") in January 2008. The complaint alleges (Count 1) that certain of the Transactions breached the terms of the Notes and the Fiscal Agency Agreement dated January 16, 2008 pursuant to which the Notes were issued. The complaint also alleges that certain transfers under the Transactions were fraudulent in that they allegedly left MBIA Corp. with "unreasonably small capital" (Count II), "insolvent" (Count III), and were made with an "actual intent to defraud" (Count IV). The complaint seeks a judgment (a) ordering the defendants to unwind the Transactions, (b) declaring that the Transactions constituted a fraudulent conveyance, and (c) damages in an unspecified amount. Defendants filed their motion to dismiss on April 27, 2009. On May 13, 2009, a complaint was filed in the New York State Supreme Court against the Company and its subsidiaries, MBIA Corp. and National, entitled ABN AMRO Bank N. V. et al. v MBIA Inc. et al.. The plaintiffs, a group of 19 domestic and international financial institutions, purport to be acting as holders of insurance policies issued by MBIA Corp. directly or indirectly guaranteeing the repayment of structured finance products. The complaint alleges that certain of the terms of the transactions entered into by the Company and its subsidiaries, which were approved by the New York State Department of Insurance, constituted fraudulent conveyances and a breach of the implied covenant of good faith and fair dealing under New York law. The complaint seeks a judgment (a) ordering the defendants to unwind the Transactions (b) declaring that the Transactions constituted a fraudulent conveyance, (c) declaring that MBIA Inc. and National are jointly and severally liable for the insurance policies issued by MBIA Corp., and (d) damages in an unspecified amount. Defendants filed their motion to dismiss on June 11, 2009. On June 15, 2009, the same group of 19 domestic and international financial institutions who filed the above described plenary action in New York State Supreme Court filed a proceeding pursuant to Article 78 of New York's Civil Practice Law & Rules in New York State Supreme Court against the New York Insurance Department, Eric Dinallo in his capacity as Superintendent for the Department, and MBIA Inc. and its subsidiaries, MBIA Corp. and National, entitled ABNAMRO Bank N. V et al. v. Eric Dinallo, in his capacity as Superintendent of the New York Insurance Department, the New York State Insurance Department, MBIA Inc. et al. In its motions to dismiss the three above -referenced plenary actions, MBIA Inc. argued that an Article 78 proceeding is the exclusive forum in which a plaintiff may raise any challenge to the H-3 Transactions approved by the Superintendent and the Department. The petition seeks a judgment (a) declaring void and to annul the approval letter of the Superintendent of insurance, (b) to recover dividends paid in connection with the Transactions, (c) declaring that the approval letter does not extinguish plaintiffs' direct claims against MBIA Inc. and its subsidiaries in the plenary action described above. MBIA Inc. believes that the litigation described above filed against it and its subsidiaries in connection with the Transactions is without merit and intends to contest it vigorously. National Financial Information Based upon statutory financials, as of June 30, 2009, National had cash and admitted assets of $7.1 billion (unaudited), total liabilities of $6.8 billion (unaudited), and total surplus of $0.4 billion (unaudited) determined in accordance with statutory accounting practices prescribed or permitted by insurance regulatory authorities. For further information concerning National, see the financial statements of MBIA Inc. and its subsidiaries as of June 30, 2009, prepared in accordance with generally accepted accounting principles, included in the Quarterly Report on Form 10-Q of MBIA Inc. for the quarter ended June 30. 2009, which are hereby incorporated by reference into this appendix and shall be deemed to be a part hereof. Incorporation of Certain Documents by Reference The following documents filed by MBIA Inc. with the Securities and Exchange Commission (the "SEC") are incorporated by reference into this appendix: MBIA Inc.'s Annual Report on Form 10-K for the year ended December 31, 2008; MBIA Inc.'s Quarterly Report on Form 10-0 for the quarter ended June 30, 2009; and Any documents, including any financial statements of National that are included therein or attached as exhibits thereto, or any Form 8-K, filed by MBIA Inc. pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of MBIA Inc.'s most recent Quarterly Report on Form 10-Q or Annual Report on Form 10-K, and prior to the termination of the offering of the Series 2009 Bonds offered hereby shall be deemed to be incorporated by reference in this appendix and to be a part hereof from the respective dates of filing such documents. Any statement contained in a document incorporated or deemed to be incorporated by reference herein, or contained in this appendix, shall be deemed to be modified or superseded for purposes of this appendix to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this appendix. MBIA Inc, files annual, quarterly and special reports, information statements and other information with the SEC under File No. 1-9583. Copies of MBIA Inc.'s SEC filings (including (1) MBIA Inc.'s Annual Report on Form 10-K for the year ended December 31, 2008, and (2) MBIA Inc.'s Quarterly Report on Form 10-Q for the quarter ended June 30, 2009) are available (i) over the Internet at the SEC's web site at http:/Avww.sec.eov: (ii) at the SEC's public reference room in Washington D.C.; (iii) over the Internet at MBIA Inc.'s web site at http://www.mbia.com; and (iv) at no cost, upon request to National at its principal executive offices. :SI 26058-07 JH:SM:kar 10/06/09 10/26/09 10/28/09 IRREVOCABLE REFUNDING INSTRUCTIONS These IRREVOCABLE REFUNDING INSTRUCTIONS (these `Instructions") are given by the SAN RAFAEL REDEVELOPMENT AGENCY, organized and existing under the laws of the State of California (the "Agency"), to U.S. BANK NATIONAL ASSOCIATION, a national banking association organized and existing under the laws of the United States of America, acting as fiscal agent for the hereinafter defined Series 1999 Bonds (the "Series 1999 Fiscal Agent"); WITNESSETH: WHEREAS, the Agency has previously issued its Central San Rafael Redevelopment Project Tax Allocation Bonds, Series 1999 (the "Series 1999 Bonds") in the original aggregate principal amount of pursuant to the provisions of Resolution No. 77-69, adopted by the Agency on August 15, 1977, and Resolution No. 92-6, adopted by the Agency on April 20, 1992 (together, with Resolution No. 95-27, adopted by the Agency on September 5, 1995, Resolution No. 96-85, adopted by the Agency on November 18, 1996, Resolution No. 99-16, adopted by the Agency on June 7, 1999, Resolution No. 2002-24 adopted by the Agency on September 16, 2002 and Resolution No. 2009-_ adopted by the Agency on November 16, 2009, the "Resolution"); and WHEREAS, the Agency has determined that it is in its best financial interests at this time to refund, on a current basis, a portion of the Series 1999 Bonds; and WHEREAS, in order to provide funds for such purpose (among others), the Agency is issuing its Central San Rafael Redevelopment Project Tax Allocation Refunding Bonds, Series 2009 (the "Series 2009 Bonds") and applying a portion of the proceeds thereof, together with certain other moneys, to redeem a portion of the Series 1999 Bonds; and WHEREAS, the Agency wishes to give these Instructions to the Series 1999 Fiscal Agent for the purpose of providing the terms and conditions relating to the deposit and application of moneys and securities to provide for the payment and redemption of the outstanding Series 1999 Bonds that are current interest bonds pursuant to Section 19.03(a) of the Resolution; NOW, THEREFORE, the Agency hereby irrevocably instructs the Series 1999 Fiscal Agent as follows: Section 1. Establishment of Series 1999 Refunding Account. Pursuant to Section 26.08 of the Resolution, the Series 1999 Fiscal Agent is hereby directed to establish and hold under and pursuant to the Resolution a special account known as the "Series 1999 Refunding Account'. All cash and securities in the Series 1999 Refunding Account are hereby irrevocably pledged as a special trust fund for the redemption of the Series 1999 Bonds that are current interest bonds in accordance with the Resolution. The Series 1999 Fiscal Agent shall have no lien upon or right of set off against the securities and cash at any time on deposit in the Series 1999 Refunding Account, and such amounts shall be applied only as provided herein. Section 2. Deposit into Series 1999 Refunding Account; Investment of Amounts. Concurrently with delivery of the Series 2009 Bonds, the Agency shall cause to be transferred to the Series 1999 Fiscal Agent the amount of $ in immediately available funds to be derived from a portion of the proceeds of sale of the Series 2009 Bonds, which amount the Fiscal Agent shall then transfer for deposit hereunder into the Series 1999 Refunding Account. [Additionally, the Fiscal Agent shall also deposit in the Series 1999 Refunding Account $ currently on deposit under the Resolution for the benefit of the owners of the Series 1999 Bonds, making the total deposit into the Series 1999 Refunding Account $ .] The Series 1999 Fiscal Agent shall invest all of such amounts, other than $ which shall be held by the Series 1999 Fiscal Agent uninvested, in the security described in Exhibit A hereto (the "Investment Security'). Such Investment Security shall be deposited with and held by the Series 1999 Fiscal Agent in the Series 1999 Refunding Account solely for the uses and purposes set forth herein. Earnings on the investment of amounts deposited in the Series 1999 Refunding Account shall be credited to and deposited in such fund. Upon the receipt by the Series 1999 Fiscal Agent of any cash from the maturity of the Investment Security or otherwise, the Series 1999 Fiscal Agent shall hold such cash uninvested until required to make a payment pursuant to Section 4. The Agency signifies that by making the deposit described herein, it is discharging the Series 1999 Bonds pursuant to Sections 9.03 and 24.01 of the Resolution. Section 3. Proceedings for Redemption of Series 1999 Bonds. The Agency hereby irrevocably elects, and directs the Series 1999 Fiscal Agent, to redeem, on January _, 2010, the outstanding Series 1999 Bonds that are current interest bonds pursuant to the provisions of Section 11.03(b) of the Resolution. Notice of such redemption shall be given by the Series 1999 Fiscal Agent in accordance with Section 11.04 of the Resolution. Section 4. Application of Funds to Redeem Series 1999 Bonds. The Series 1999 Fiscal Agent shall apply the amounts on deposit in the Series 1999 Refunding Account to redeem the outstanding Series 1999 Bonds that are current interest bonds on January _, 2010 at a price equal to 100% of the principal amount thereof plus accrued and unpaid interest. Section 5. Transfer of Remaining Funds. On January _, 2010, following the payment and redemption described above and payment of any amounts then owed to the Series 1999 Fiscal Agent, the Series 1999 Fiscal Agent shall withdraw any amounts remaining on deposit in the Series 1999 Refunding Account and transfer such amounts to the 2009 Special Fund established under the Resolution. Section 6. Amendment. These Instructions shall be irrevocable by the Agency. These Instructions may be amended or supplemented by the Agency, but only if the Agency shall file with the Series 1999 Fiscal Agent (a) an opinion of nationally recognized bond counsel engaged by the Agency stating that such amendment or supplement will not, of itself, adversely affect the exclusion from gross income of interest represented by the Series 1999 Bonds or the Series 2009 Bonds under federal income tax law, and (b) a certification of an independent accountant or independent financial adviser engaged by the Agency stating that such amendment or supplement will not affect the sufficiency of funds invested and held hereunder to make the payments required by Section 4. Section 7. Governing Law. These Instructions shall be construed in accordance with and governed by the laws of the State of California. -2- Dated: December _; 2009 SAN RAFAEL REDEVELOPMENT AGENCY LIM -3- Executive Director EXHIBIT A DESCRIPTION OF INVESTMENT SECURITY Type Coupon Maturity Par Amount U.S. Treasury - State and Local Government Securities A-1 Total Purchase Price 26058-07 JH:SM:kar 10/06/09 10/25/09 SAN RAFAEL REDEVELOPMENT AGENCY CENTRAL SAN RAFAEL REDEVELOPMENT PROJEC'T TAX ALLOCATION REFUNDING BONDS, SERIES 2009 SERIES 2009 SALES CERTIFICATE The undersigned, the Executive Director of the San Rafael Redevelopment Agency, on behalf of the San Rafael Redevelopment Agency (the "Agency"), hereby establishes the following terms of the Agency's Central San Rafael Redevelopment Project Tax Allocation Refunding Bonds, Series 2009 (the "Series 2009 Bonds"), pursuant to the provisions of Resolution No. 77-69, adopted by the Agency on August 15, 1977, Resolution No. 92-6, adopted by the Agency on April 20, 1992, Resolution No. 95-27, adopted by the Agency on September 5, 1995, Resolution No. 96-85, adopted by the Agency on November 18, 1996, Resolution No. 99-16, adopted by the Agency on June 7, 1999, Resolution No. 2002-24, adopted by the Agency on September 16, 2002, Resolution No. 2009-_, adopted by the Agency on November 16, 2009 (collectively, the "Resolution") (capitalized terms used herein and not otherwise defined shall have the meanings assigned to them under the Resolution): 1. Maturities: Interest Rates; Interest Payment Dates. All of the Series 2009 Bonds are Current Interest Bonds. The Series 2009 Bonds shall be issued in the aggregate principal amount of $ and shall mature on December 1 in the years in the amounts and bearing interest at the rates as shown below: Maturity Date Principal Interest (December 1) Amount Rate The Interest Payment Dates for the Series 2009 Bonds shall be each June 1 and December 1, commencing June 1, 2010. 2. Issue Date. The Issue'Date for the Series 2009 Bonds shall be December _, 2009. 3. Call Protection Date. The Call Protection Date for the Series 2009 Bonds shall be November 30, 201- 4. Optional Redemption. Pursuant to Section 26.03(a) of the Resolution, the Series 2009 Bonds maturing on or after December 1, 201_ shall be subject to optional redemption as a whole or in part either on a pro rata basis among maturities or in inverse order of maturity (as determined by the Agency), and by lot within any one maturity, prior to their respective maturity dates, at the option of the Agency, on any date on or after December 1, 201_ from funds derived by the Agency from any source, at a price (equal to the principal amount of such Series 2009 Bonds called for redemption), together with interest accrued on the date fixed for redemption; without premium. 5. Mandatory Redemption. (a) Pursuant to Section 26.03(b) of the Resolution, the Series 2009 Bonds maturing on December 1, 2023 shall be Term Bonds and shall be subject to mandatory redemption in part by lot on each December 1 on or after December 1, 201_ (each Sinking Account Payment Date) solely from Sinking Account Installments deposited by the Agency in the Series 2009 Term Bonds of 2023 Sinking Account, which account the Fiscal Agent shall establish and maintain pursuant to the Resolution, at the principal amount thereof, plus accrued interest thereon to the date fixed for redemption, in accordance with the following schedule: Sinking Account Payment Date (December 1) Amount 6. Deposits to Funds and Accounts. Pursuant to Section 26.06 of the Resolution, the Fiscal Agent shall deposit the following amounts, constituting the proceeds of the Series 2009 Bonds, in the following funds and accounts established pursuant to the Resolution, provided that the amount of $ shall be wired by E. J. De La Rosa & Co., Inc., the underwriter of the Series 2009 Bonds, directly to the Series 2009 Bond Insurer to pay for the premiums for the Series 2009 Bond Insurance and the Reserve Facility with respect to the Series 2009 Bonds: (a) the Fiscal Agent shall deposit or credit the amount of $ in or to the Series 2009 Expense Account; (b) the Fiscal Agent shall deposit or credit the amount of in or to the Series 1999 Refunding Account; [(c) the Fiscal Agent shall deposit the amount of $ in the Series Reserve Account; and] -2- (d) the Fiscal Agent shall transfer the remainder of the proceeds of the Series 2009 Bonds, being the amount of $ , to the Agency for deposit in the Series 2009 Project Account within the Redevelopment Fund. The Fiscal Agent may establish a temporary fund or account in its records to facilitate and record the foregoing deposits and transfers. Additionally, the Agency hereby creates the "Series 2009 Reserve Subaccount" in which the Fiscal Agent shall hold the amounts deposited in the Reserve Account pursuant to (c) above. [7. Provisions Relating to the Series 2009 Bond Insurer and the Series 2009 Bond Insurance Policy. [to come if applicable] 8. Provisions Relatina to the Reserve Facility Provider and the Reserve Facility with respect to the Series 2009 Bonds. [to come if applicable] 9. Additional Covenants. The Agency hereby covenants as follow: (a) The Agency shall assure that the proceeds of the Series 2009 Bonds are not so used as to cause the Series 2009 Bonds to satisfy the private business tests of section 141(b) of the Code or the private loan financing test of section 141(c) of the Code. (b) The Agency shall not take any action or permit or suffer any action to be taken if the result of the same would be to cause any of the Series 2009 Bonds to be "federally guaranteed" within the meaning of section 149(b) of the Code. (c) The Agency shall not take, or permit or suffer to be taken, any action with respect to the proceeds of the Series 2009 Bonds which, if such action had been reasonably expected to have been taken, or had been deliberately and intentionally taken, on the date of issuance of the Series 2009 Bonds would have caused the Series 2009 Bonds to be "arbitrage bonds" within the meaning of section 148 of the Code. (d) The Agency shall take all actions necessary to assure the exclusion of interest on the Series 2009 Bonds from the gross income of the Holders of the Series 2009 Bonds to the same extent as such interest is permitted to be excluded from gross income under the Code as in effect on the date of issuance of the Series 2009 Bonds. (e) Except as otherwise provided in the following sentence, the Agency covenants that all investments of amounts deposited in any fund or account created by or pursuant to the Resolution, or otherwise containing gross proceeds of the Series 2009 Bonds (within the meaning of section 148 of the Code) shall be acquired, disposed of, and valued (as of the date that valuation is required by the Resolution or the Code) at Fair Market Value (as defined below). Investments in funds or accounts held under the Resolution (or portions thereof) that are subject to a yield restriction under applicable provisions of the Code and (unless valuation is undertaken at least annually) investments, if any, in the Series 2009 Reserve Subaccount shall be valued at their present value (within the meaning of section 148 of the Code). -3- "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 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 United State 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 City 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. 10. Miscellaneous. (a) The Series 2009 Bonds shall be delivered to E.J. De La Rosa & Co., Inc. (b) The provisions of this Sales Certificate shall be deemed to be part of the Resolution as if such provisions were actually included in the Resolution. Dated: December _, 2009 ATTEST: Agency Secretary me SAN RAFAEL REDEVELOPMENT AGENCY Executive Director 29280-07 JH:ACH:brf $ SAN RAFAEL REDEVELOPMENT AGENCY CENTRAL SAN RAFAEL REDEVELOPMENT PROJECT TAX ALLOCATION REFUDING BONDS, SERIES 2009 PURCHASE CONTRACT November _, 2009 San Rafael Joint Powers Financing Authority 1313 Fifth Avenue San Rafael, California 94901 San Rafael Redevelopment Agency` 1313 Fifth Avenue San Rafael, California 94901 Ladies and Gentlemen 9/04/02 The undersigned, E. J. De La Rosa & Co, Inc., (the "Underwriter") offers to enter into this Purchase Contract (this "Purchase Contract') with the San Rafael Joint Powers Financing Authority (the "Authority") and the San Rafael Redevelopment Agency (the "Agency") which will be binding upon the Authority, the Agency and the Underwriter upon the acceptance hereof by the Authority and the Agency. This offer is made subject to its acceptance by the Authority and the Agency by execution of this Purchase Contract and its delivery to the Underwriter on or before 5:00 p.m., California time, on the date hereof. All terms used herein and not otherwise defined shall have the respective meanings given to such terms in the Resolution (as hereinafter defined). Section 1. Purchase and Sale. Upon the terms and conditions and upon the basis of the representations, warranties and agreements hereinafter set forth, the Underwriter hereby agrees to purchase from the Authority for offering to the public, and the Authority hereby agrees to sell to the Underwriter for such purpose, all (but not less than all) of the $ aggregate principal amount of the Agency's San Rafael Redevelopment Agency Central San Rafael Redevelopment Project Bonds Tax Allocation Refunding Bonds, Series 2009 (the "Bonds"), at a purchase price equal to $ (being the aggregate principal amount thereof less an Underwriter' discount of $ and an original issue discount of $ . The Bonds are to be purchased by the Authority from the Agency pursuant hereto for resale and delivery to the Underwriter concurrently with the purchase of the Bonds by the Underwriter from the Authority; provided that the obligation of the Authority to purchase the Bonds from the Agency shall be solely with moneys provided by the Underwriter. Section 2. Description of the Bonds. The Bonds will be issued under the provisions of Resolution No. 77-69 of the Agency adopted August 15, 1977, as heretofore supplemented and amended and as supplemented and amended by a resolution of the Agency adopted November _, 2009 (as so supplemented and amended, the "Resolution") and pursuant to the California Community Redevelopment Law, constituting Part 1, Division 24 commencing with Section 33000) of the California Health and Safety Code (the "Law"). The Bonds shall be as described in the Resolution and the Official Statement dated the date hereof relating to the Bonds (which, together with all exhibits and appendices included therein or attached thereto and such amendments or supplements thereto which shall be approved by the Underwriter, is hereinafter called the "Official Statement"). The net proceeds of the Bonds will be used to finance and refinance redevelopment activities of the Agency with respect to the Agency's Central San Rafael Redevelopment Project. The Bonds shall be secured by a first pledge of and lien on all of the Tax Revenues (as defined in the Resolution) allocated to the Agency with respect to the Project Area on a parity with the Agency's $25,020,000 Central San Rafael Redevelopment Project Tax Allocation Refunding Bonds, Series 2002. The scheduled payment of principal of and interest on the Bonds shall be insured by (the "Insurer") by the issuance of a bond insurance policy (the "Policy"). [All provisions relating to the Insurer and the Policy to be completed, if applicable — otherwise to be deleted] Section 3. Public Offering. The Underwriter agrees to make a bona fide public offering of all the Bonds initially at the public offering prices (or yields) set forth on Appendix A attached hereto and incorporated herein by reference. Subsequent to the initial public offering, the Underwriter reserves the right to change the public offering prices (or yields) as it deems necessary in connection with the marketing of the Bonds, provided that the Underwriter shall not change the interest rates set forth on Appendix A. The Bonds may be offered and sold to certain dealers at prices lower than such initial public offering prices. Section 4. Delivery of Official Statement. The Agency has delivered or caused to be delivered to the Underwriter prior to the execution of this Purchase Contract, copies of the Preliminary Official Statement relating to the Bonds (the "Preliminary Official Statement"). Such Preliminary Official Statement is the official statement deemed final by the Agency for purposes of Rule 15c2-12 under the Securities Exchange Act of 1934 (the "Rule") and approved for distribution by resolution of the Agency. The Agency shall have executed and delivered to the Underwriter a certification to such effect in the form attached hereto as Appendix B. Within seven (7) business days from the date hereof (and, thereafter, for such period of time ending on the earlier of: (1) 90 days after the End of the Underwriting Period (as hereinafter defined); or (2) the time when the Official Statement becomes available from the Municipal Securities Rule Making Board, but in no event less than 25 days after the End of the Underwriting Period), the Agency shall deliver to the Underwriter a final Official Statement, executed on behalf of the Agency by an authorized representative of the Agency and dated the date hereof, which shall include information permitted to be omitted by paragraph (b)(1) of the Rule and with such other amendments or supplements as shall have been approved by the Agency and the Underwriter. The Agency also agrees to delivery to the Underwriter, at the Agency's' sole cost and at such address as the Underwriter shall specify, as many copies of the Official Statement as the Underwriter shall reasonably request as necessary to comply with paragraph (b)(4) of the Rule and with Rule G-32 and all other applicable rules of the Municipal Securities Rulemaking Board. As used herein, the term "End of the Underwriting Period" means the later of such time as (i) the Bonds are delivered to the Underwriter, or (ii) the Underwriter do not retain, directly or -2- as a member of an underwriting syndicate, an unsold balance of the Bonds for sale to the public. Unless the Underwriter gives notice to the contrary, the End of the Underwriting Period shall be deemed to be the date of the Closing. Any notice delivered pursuant to this provision shall be written notice delivered to the Agency at or prior to the Closing, and shall specify a date (other than the date of the Closing) to be deemed the "End of the Underwriting Period." For a period of 25 days after the Closing Date, the Underwriter agree to deliver a copy of the Official Statement to each of their customers purchasing Bonds no later than the settlement date of such purchase transaction. The Underwriter agrees to deliver the Official Statement, promptly upon receipt thereof, to the Municipal Securities Rule Making Board. The Underwriter further agrees that it will not confirm the sale of any Bonds unless the confirmation of sale is accompanied or preceded by the delivery of a copy of the Official Statement. The Agency will undertake, pursuant to the Resolution and a continuing disclosure certificate (the "Continuing Disclosure Certificate"), to provide certain annual financial information and notices of the occurrence of certain events, if material. The form of the Continuing Disclosure Certificate is appended to the Official Statement. Section 5. The Closing. At 8:00 a.m., California time, on December _, 2009, or at such other time or on such earlier or later business day as shall have been mutually agreed upon by the Agency and the Underwriter, the Authority and the Agency will deliver (i) the Bonds in definitive form (one bond for each annual maturity) to the Underwriter through the facilities of The Depository Trust Company ("DTC"), with CUSIP identification numbers printed thereon, in fully registered form and registered in the name of Cede & Co., and (ii) the closing documents hereinafter mentioned at the offices of Jones Hall, A Professional Law Corporation, in San Francisco, California, or another place to be mutually agreed upon by the Agency and the Underwriter. The Underwriter will accept such delivery and pay the purchase price of the Bonds as set forth in Section 1 hereof by federal funds wire payable to the order of the Trustee on behalf of the Agency. This payment and delivery, together with the delivery of the aforementioned documents, is herein called the "Closing" Unless the DTC Fast Automated Securities Transfer ("FAST") is utilized, the Bonds will be made available for inspection by DTC at least one business day prior to the Closing. Section 6. Agency Representations, Warranties and Covenants. The Agency represents, warrants and covenants to the Underwriter that: (a) Due Organization and Existence of Agency. The Agency is 'a public body corporate and politic, organized and existing under the laws of the State, including the Community Redevelopment Law of the State, constituting Part 1 of Division 24 of the Health and Safety Code (the "Redevelopment Law"), with full right, power and authority to adopt or to execute and deliver, as applicable, and to perform its obligations under the Resolution, this Purchase Contract and the Continuing Disclosure Certificate (collectively, the "Agency Documents") and to carry out and consummate the transactions contemplated by the Agency Documents and the Official Statement. (b) Due Authorization and Approval. By all necessary official action of the Agency, the Agency has duly authorized and approved the execution and delivery of, and the performance by the Agency of the obligations contained in, the Agency Documents and as of the date hereof, such authorizations and approvals are in full force and effect and have not been amended, modified or rescinded. The Resolution when adopted and the other Agency Documents when executed and delivered, constitute the legally valid and binding obligations of the Agency enforceable in accordance with their respective terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable 521 i,. principles relating to or affecting creditors' rights generally. The Agency has complied, and will at the Closing be in compliance in all respects, with the terms of the Agency Documents, provided that no representation is made with respect to compliance with the securities or "Blue Sky" laws of the various states of the United States. (c) Official Statement Accurate and Complete. The Preliminary Official Statement was as of its date, and the final Official Statement is, and at all times subsequent to the date of the final Official Statement up to and including the Closing will be, true and correct in all material respects, and the Preliminary Official Statement and the final Official Statement contain, and up to and including the Closing will contain, no misstatement of any material fact and do not, and up to and including the Closing will not, omit any statement necessary to make the statements contained therein, in the light of the circumstances in which such statements were made, not misleading. (d) Underwriter' Consent to Amendments and Supplements to Official Statement. Up to and including 25 days after the End of the Underwriting Period, the Agency will advise the Underwriter promptly of any proposal to amend or supplement the Official Statement, and will not effect or consent to any such amendment or supplement without the consent of the Underwriter, which consent will not be unreasonably withheld. The Agency will advise the Underwriter promptly of the institution of any proceedings known to it by any governmental agency prohibiting or otherwise affecting the use of the Official Statement in connection with the offering, sale or distribution of the Bonds. (e) No Breach or Default. As of the time of acceptance hereof and as of the time of the Closing, except as otherwise disclosed in the Official Statement, the Agency is not and will not be in breach of or in default under any applicable constitutional provision, law or administrative rule or regulation of the State or the United States, or any applicable judgment or decree or any trust agreement, loan agreement, bond, note, resolution, ordinance, agreement or other instrument to which the Agency is a party or is otherwise subject, and no event has occurred and is continuing which, with the passage of time or the giving of notice, or both, would constitute a default or event of default under any such instrument; and, as of such times, except as disclosed in the Official Statement, the authorization, execution and delivery of the Agency Documents and compliance with the provisions of each of such agreements or instruments do not and will not conflict with or constitute a breach of or default under any applicable constitutional provision, law or administrative rule or regulation of the State or the United States, or any applicable judgment, decree, license, permit, trust agreement, loan agreement, bond, note, resolution, ordinance, agreement or other instrument to which the Agency (or any of its officers in their respective capacities as such) is subject, or by which it or any of its properties is bound, nor will any such authorization, execution, delivery or compliance result in the creation or imposition of any lien, charge or other security interest or encumbrance of any nature whatsoever upon any of its assets or properties or under the terms of any such law, regulation or instrument, except as may be provided by the Agency Documents. (f) No Litigation. As of the time of acceptance hereof and the Closing, except as disclosed in the Official Statement, no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, government agency, public board or body, pending or threatened (i) in any way questioning the corporate existence of the Agency or the titles of the officers of the Agency to their respective offices; (ii) affecting, contesting or seeking to prohibit, restrain or enjoin the issuance or delivery of any of the Bonds, or the payment or collection of any amounts pledged or to be pledged to pay the principal of and interest on the Bonds, or in any way contesting or affecting the validity of the Bonds or the Agency Documents or the consummation of the transactions contemplated thereby, or contesting the exclusion of the interest on the Bonds from taxation or contesting the powers of the Agency and its authority to -4- pledge the Tax Revenues; (iii) which may result in any material adverse change relating to the Agency; or (iv) contesting the completeness or accuracy of the Preliminary Official Statement or the final Official Statement or any supplement or amendment thereto or asserting that the Preliminary Official Statement or the final Official Statement contained any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, and there is no basis for any action, suit, proceeding, inquiry or investigation of the nature described in clauses (i) through (iv) of this sentence. (g) Preliminary Official Statement. For purposes of the Rule, the Agency has heretofore deemed final the Preliminary Official Statement prior to its use and distribution by the Underwriter, except for the information specifically permitted to be omitted by paragraph (b)(1) of the Rule. The Agency has never failed to comply timely with any filing requirements under the Rule. (h) Excess Surplus. The Agency's Low and Moderate Income Housing Fund established pursuant to Section 33334.3 of the Law does not on the date hereof, and will not on the date of the Closing, contain an "excess surplus" (within the meaning of Section 33334.12 of the Law) that would cause the Agency to be subject to the sanctions contained in Section 33334.12(e)(1) of the Law. (i) Order Prohibiting. The Agency does not on the date hereof, and will not as of the Closing, have "major audit violations" (within the meaning of Section 33080.8(i) of the Redevelopment Law) so as to be subject to a court order prohibiting the activities set forth in Section 33080.8(e)(3) of the Redevelopment Law. Q) Arbitrage Certificate. The Agency has not been notified of any listing or proposed listing by the Internal Revenue Service to the effect that it is a bond issuer whose arbitrage certificates may not be relied upon. Section 7. Authority Representations, Warranties and Covenants. The Authority represents, warrants and covenants to the Underwriter that: (a) Due Organization and Existence of Authority. The Authority is a joint powers authority, duly organized and existing, and authorized to transact business and exercise powers under and pursuant to the provisions of the laws of the State of California and has, and as of Closing will have, full legal right, power and authority to enter into this Purchase Contract, and to carry out and to consummate the transactions contemplated by this Purchase Contract. (b) Official Statement Accurate and Complete. The information relating to the Authority contained in the Preliminary Official Statement and the final Official Statement is correct in all material respects and does not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements contained therein, in the light of the circumstances under which they were made, not misleading. (c) Purchase and Sale of Bonds. The Bonds will be purchased and sold by the Authority pursuant to the Mark -Roos Local Bond Pooling Act of 1985, constituting Article 4 of Chapter 5, Division 7 of Title 1 (commencing with Section 6584) of the California Government Code (the "JPA Act"). (d) Compliance with JPA Act. The Authority has complied, and will on the Closing Date be in compliance, in all respects, with the JPA Act and all other applicable laws of the State -5- of California (and it is understood that the Authority is not responsible for compliance with or the consequences of failure to comply with applicable "Blue Sky" laws). Section 8. Closing Conditions. The Underwriter has entered into this Purchase Contract in reliance upon the representations, warranties and covenants herein and the performance by the Agency and the Authority of their respective obligations hereunder, both as of the date hereof and as of the date of the Closing. The Underwriter' obligations under this Purchase Contract to purchase and pay for the Bonds shall be subject to the following additional conditions: (a) Bring -Down Representation. The representations, warranties and covenants of the Authority and the Agency contained herein shall be true, complete and correct at the date hereof and at the time of the Closing, as if made on the date of the Closing. (b) Executed Agreements and Performance Thereunder. At the time of the Closing (i) the Agency Documents shall be in full force and effect, and shall not have been amended, modified or supplemented except with the written consent of the Underwriter and (ii) there shall be in full force and effect the Resolution and such other such resolutions of the Agency and the Authority as, in the opinion of Bond Counsel, shall be necessary in connection with the transactions contemplated by this Purchase Contract, the Official Statement and the Agency Documents. (c) Closing Documents. At or prior to the Closing, the Underwriter shall receive each of the documents identified in Section 9. Section 9. Closing Documents. In addition to the other conditions to the Underwriter' obligations under this Purchase Contract to purchase and pay for the Bonds, at or before the Closing the Underwriter shall receive each of the following documents, provided that the actual payment for the Bonds by the Underwriter and the acceptance of delivery thereof shall be conclusive evidence that the requirements of this Section 9 shall have been satisfied or waived by the Underwriter. (a) Bond Counsel Opinion. An approving opinion of Bond Counsel dated the date of the Closing and substantially in the form appended to the Official Statement, together with a letter from such counsel, dated the date of the Closing and addressed to the Underwriter, to the effect that the foregoing opinion may be relied upon by the Underwriter to the same extent as if such opinion were addressed to it. (b) Supplemental Opinion. A supplemental opinion or opinions of Bond Counsel addressed to the Underwriter, in form and substance acceptable to the Underwriter, and dated the date of the Closing substantially to the following effect: (i) This Purchase Contract has been duly authorized, executed and delivered by the Agency and the Authority, as applicable, and constitute the valid, legal and binding agreements of the Agency and the Authority, as applicable, enforceable in accordance with its terms. (ii) The statements contained in the Official Statement (including the cover page and the Appendices thereto), insofar as such statements purport to summarize certain provisions of the Bonds, the Resolution or federal tax law, accurately summarize the information presented therein; provided that Bond Counsel need not express any opinion with respect to any financial or statistical information contained therein. 1.1 (iii) The Agency's obligations under the Resolution are exempt from registration under the Securities Act of 1933, as amended, and the Resolution is exempt from qualification pursuant to the Trust Resolution Act of 1939, as amended. (c) Disclosure Counsel Opinion. An opinion of Jones Hall, A Professional Law Corporation ("Disclosure Counsel"), dated the date of the Closing, addressed to the Underwriter, to the effect that the Bonds are not subject to the registration requirements of the Securities Act of 1933, as amended, and that the Resolution is exempt from qualifications pursuant to the Trust Resolution Act of 1939, as amended. In addition, such counsel shall state in its letter containing the foregoing opinion, or in a separate letter, dated the date of the Closing, to the effect that based upon its participation in the preparation of the Official Statement and without having undertaken to determine independently the fairness, accuracy or completeness of the statements contained in the Official Statement, such counsel has no reason to believe that, as of the date of the Closing, the Official Statement (excluding therefrom the reports, financial and statistical data and forecasts therein and the information included in the Appendices thereto, excluding information relating to the Insurer and the Policy and excluding information relating to DTC, as to which no advice need be expressed) contains any untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. (d) Agency Counsel Opinion. An opinion of Counsel to the Agency, dated the date of the Closing and addressed to the Underwriter, in form and substance acceptable to the Underwriter substantially to the following effect: (i) The Agency is a public body corporate and politic duly organized and validly existing under the laws of the State of California. (ii) The Resolution was duly adopted at a meeting of the Agency which was called and held pursuant to law and with all public notice required by law and at which a quorum was present and acting throughout, and the Resolution is in full force and effect and has not been modified, amended or rescinded. (iii) Except as otherwise disclosed in the Official Statement and to the best knowledge of such counsel after due inquiry, there is no litigation, proceeding, action, suit, or investigation at law or in equity before or by any court, governmental agency or body, pending or threatened against the Agency, challenging the creation, organization or existence of the Agency, or the validity of the Agency Documents or seeking to restrain or enjoin the repayment of the Bonds or in any way contesting or affecting the validity of the Agency Documents or contesting the authority of the Agency to enter into or perform its obligations under any of the Agency Documents, or under which a determination adverse to the Agency would have a material adverse effect upon the financial condition or the revenues of the Agency, or which, in any manner, questions the right of the Agency to use the Tax Revenues for repayment of the Bonds or affects in any manner the right or ability of the Agency to collect or pledge the Tax Revenues. (e) Authority Counsel Opinion. An opinion of Counsel to the Authority, dated the Closing Date and addressed to the Underwriter, to the effect that: -7- (i) The Authority is a public body, corporate and politic, organized and existing under the laws of the State, including the JPA Act. (ii) The resolution of the Authority approving and authorizing the execution and delivery of this Purchase Contract (the "Authority Resolution") was duly adopted at a meeting of the Authority which was called and held pursuant to law and with all public notice required by law and at which a quorum was present and acting throughout and the Authority Resolution is in full force and effect and has not been modified, amended or rescinded (iii) To the best of such counsel's knowledge after due investigation, there is no action, suit, proceeding or investigation at law or in equity before or by any court, public board or body pending or threatened against or affecting the Authority to restrain or enjoin the Authority's participation in, or in any way contesting the existence of the Authority or the powers of the Authority with respect to the transactions contemplated by this Purchase Contract. (f) Trustee Counsel Opinion. The opinion of counsel to the Trustee, dated the date of the Closing, addressed to the Underwriter, to the effect that: (i) The Trustee is a national banking association, duly organized and validly existing under the laws of the United States of America, having full power to enter into, accept and administer the trust created under the Resolution. (ii) The Resolution has been duly authorized, executed and delivered by the Trustee and the Resolution constitutes the legal, valid and binding obligation of the Trustee enforceable in accordance with its terms, except as enforcement thereof may be limited by bankruptcy, insolvency or other laws affecting the enforcement of creditors' rights generally and by the application of equitable principles, if equitable remedies are sought. (iii) Except as may be required under Blue Sky or other securities laws of any state, no consent, approval, authorization or other action by any governmental or regulatory authority having jurisdiction over the Trustee that has not been obtained is or will be required for the execution and delivery of the Resolution or the consummation of the transactions contemplated by the Resolution. (g) Agency Certificate. A certificate of the Agency, dated the date of the Closing, signed on behalf of the Agency by the Executive Director or other duly authorized officer of the Agency to the effect that: (i) The representations, warranties and covenants of the Agency contained herein are true and correct in all material respects on and as of the date of the Closing as if made on the date of the Closing and the Agency has complied with all of the terms and conditions of this Purchase Contract required to be complied with by the Agency at or prior to the date of the Closing. (ii) No event affecting the Agency has occurred since the date of the Official Statement which has not been disclosed therein or in any supplement or amendment thereto which event should be disclosed in the Official Statement in E order to make the statements therein, in the light of the circumstances under which they were made, not misleading. (iii) Except as otherwise disclosed in the Official Statement and to the best knowledge of such signing officer after due inquiry, there is no litigation, proceeding, action, suit, or investigation at law or in equity before or by any court, governmental agency or body, pending or threatened against the Agency, challenging the creation, organization or existence of the Agency, or the validity of the Agency Documents or seeking to restrain or enjoin the repayment of the Bonds or in any way contesting or affecting the validity of the Agency Documents or contesting the authority of the Agency to enter into or perform its obligations under any of the Agency Documents, or under which a determination adverse to the Agency would have a material adverse effect upon the financial condition or the revenues of the Agency, or which, in any manner, questions the right of the Agency to use the Tax Revenues for repayment of the Bonds or affects in any manner the right or ability of the Agency to collect or pledge the Tax Revenues. (h) Authority Certificate. A certificate of the Authority, dated the date of the Closing, signed on behalf of the Authority by the Executive Director or other duly authorized officer of the Authority to the effect that: (i) The representations, warranties and covenants of the Authority contained herein are true and correct in all material respects on and as of the date of the Closing as if made on the date of the Closing and the Authority has complied with all of the terms and conditions of this Purchase Contract required to be complied with by the Authority at or prior to the date of the Closing. (ii) No event affecting the Authority has occurred since the date of the Official Statement which has not been disclosed therein or in any supplement or amendment thereto which event should be disclosed in the Official Statement in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. (iii) Except as otherwise disclosed in the Official Statement and to the best knowledge of such signing officer after due inquiry, there is no litigation, proceeding, action, suit, or investigation at law or in equity before or by any court, governmental Authority or body, pending or threatened against the Authority, challenging the creation, organization or existence of the Authority, or the validity of this Purchase Contract or contesting the authority of the Authority to enter into or perform its obligations under this Purchase Contract. (i) Trustee's Certificate. A certificate of the Trustee, dated the date of Closing, in form and substance acceptable to counsel for the Underwriter, to the following effect: (i) The Trustee is duly organized and existing as anational banking association in good standing under the laws of the United States of America, having the full power and authority to enter into and perform its duties under the Resolution. (ii) The Trustee is duly authorized to enter into the Resolution. (iii) To its best knowledge after due inquiry, there is no action, suit, proceeding or investigation, at law or in equity, before or by any court or -9- governmental agency, public board or body pending against the Trustee or threatened against the Trustee which in the reasonable judgment of the Trustee would affect the existence of the Trustee or in any way contesting or affecting the validity or enforceability of the Resolution or contesting the powers of the Trustee or its authority to enter into and perform its obligation under the Resolution. (j) Documents. Certified copies of the Resolution and the Authority Resolution and an original executed copy of each of the other Agency Documents. (k) Municipal Bond Insurance Policy. A copy of the Policy, as duly executed and delivered by the Insurer. (1) Ratings. Evidence that the Bonds have been rated "AAA" by Standard & Poor's Credit Market Services and "Aaa" by Moody's Investors Service. [To be revised — depending upon whether Bonds are insured or not] (m) Additional Documents. Such additional certificates, instruments and other documents as Bond Counsel, the Agency or the Underwriter may reasonably deem necessary. If the Agency or the Authority shall be unable to satisfy the conditions contained in this Purchase Contract, or if the obligations of the Underwriter shall be terminated for any reason permitted by this Purchase Contract, this Purchase Contract shall terminate and neither the Underwriter nor the Agency or the Authority shall be under further obligation hereunder, except as further set forth in Section 11 hereof. Section 10. Termination Events. The Underwriter shall have the right to terminate this Purchase Contract, without liability therefor, by notification to the Agency and the Authority if at any time between the date hereof and prior to the Closing: (a) any event shall occur which causes any statement contained in the Official Statement to be materially misleading or results in a failure of the Official Statement to state a material fact necessary to make the statements in the Official Statement, in the light of the circumstances under which they were made, not misleading; or (b) the marketability of the Bonds or the market price thereof, in the opinion of the Underwriter, has been materially adversely affected by an amendment to the Constitution of the United States or by any legislation in or by the Congress of the United States or by the State, or the amendment of legislation pending as of the date of this Purchase Contract in the Congress of the United States, or the recommendation to Congress or endorsement for passage (by press release, other form of notice or otherwise) of legislation by the President of the United States, the Treasury Department of the United States, the Internal Revenue Service or the Chairman or ranking minority member of the Committee on Finance of the United States Senate or the Committee on Ways and Means of the United States House of Representatives, or the proposal for consideration of legislation by either such Committee or by any member thereof, or the presentment of legislation for consideration as an option by either such Committee, or by the staff of the Joint Committee on Taxation of the Congress of the United States, or the favorable reporting for passage of legislation to either House of the Congress of the United States by a Committee of such House to which such legislation has been referred for consideration, or any decision of any Federal or State court or any ruling or regulation (final, temporary or proposed) or official statement on behalf of the United States Treasury Department, the Internal Revenue Service or other federal or State authority materially adversely affecting the federal or State tax -10- status of the Agency, or the interest on bonds or notes or obligations of the general character of the Bonds; or (c) any legislation, ordinance, rule or regulation shall be introduced in, or be enacted by any governmental body, department or agency of the State, or a decision by any court of competent jurisdiction within the State or any court of the United States shall be rendered which, in the reasonable opinion of the Underwriter, materially adversely affects the market price of the Bonds; or (d) legislation shall be enacted by the Congress of the United States, or a decision by a court of the United States shall be rendered, or a stop order, ruling, regulation or official statement by, or on behalf of, the Securities and Exchange Commission or any other governmental agency having jurisdiction of the subject matter shall be issued or made to the effect that the issuance, offering or sale of obligations of the general character of the Bonds, or the issuance, offering or sale of the Bonds, including all underlying obligations, as contemplated hereby or by the Official Statement, is in violation or would be in violation of, or that obligations of the general character of the Bonds, or the Bonds, are not exempt from registration under, any provision of the federal securities laws, including the Securities Act of 1933, as amended and as then in effect, or that the Resolution needs to be qualified under the Trust Resolution Act of 1939, as amended and as then in effect; or (e) additional material restrictions not in force as of the date hereof shall have been imposed upon trading in securities generally by any governmental authority or by any national securities exchange which restrictions materially adversely affect the Underwriter' ability to trade the Bonds; or (f) a general banking moratorium shall have been established by federal or State authorities; or (g) the United States has become engaged in hostilities which have resulted in a declaration of war or a national emergency or there has occurred any other outbreak of hostilities or a national or international calamity or crisis, or there has occurred any escalation of existing hostilities, calamity or crisis, financial or otherwise, the effect of which on the financial markets of the United States being such as, in the reasonable opinion of the Underwriter, would affect materially and adversely the ability of the Underwriter to market the Bonds; or (h) any rating of the Bonds shall have been downgraded, suspended or withdrawn by a national rating service, which, in the Underwriter' reasonable opinion, materially adversely affects the marketability or market price of the Bonds; or (i) the commencement of any action, suit or proceeding described in Section 6(f) hereof which, in the judgment of the Underwriter, materially adversely affects the market price of the Bonds; or (j) there shall be in force a general suspension of trading on the New York Stock Exchange. Section 11. Expenses. The Underwriter shall be under no obligation to pay and the Agency shall pay or cause to be paid the expenses incident to the performance of the obligations of the Agency and the Authority hereunder including but not limited to (a) the costs of the preparation and printing, or other reproduction (for distribution on or prior to the date hereof) of the Agency Documents and the cost of preparing, printing, issuing and delivering the definitive Bonds, (b) the fees and disbursements of any counsel, financial advisors, accountants or other -11- experts or consultants retained by the Agency; (c) the fees and disbursements of Bond Counsel and Disclosure Counsel; (d) the cost of printing the Preliminary Official Statement and any supplements and amendments thereto and the cost of printing the Official Statement, including the requisite number of copies thereof for distribution by the Underwriter; (e) charges of rating agencies for the rating of the Bonds; and (f) the premium payable to the Insurer in consideration of the issuance by the Insurer of the Policy. The Underwriter shall pay and the Agency shall be under no obligation to pay all expenses incurred by it in connection with the public offering and distribution of the Bonds, the fees of the California Debt and Investment Advisory Commission and the CUSIP Service Bureau charge for the assignment of CUSIP numbers to the Bonds. Section 12. Notice. Any notice or other communication to be given to the Agency and the Authority under this Purchase Contract may be given by delivering the same in writing to such entity at the address set forth above. Any notice or other communication to be given to the Underwriter under this Purchase Contract may be given by delivering the same in writing to: E. J. De La Rosa & Co., Inc. 101 Montgomery Street, Suite 2150 San Francisco, CA 94104 Attn: Eric J. Scriven, Senior Vice President Section 13. Entire Agreement. This Purchase Contract, when accepted by the Agency and the Authority, shall constitute the entire agreement between the Agency, the Authority and the Underwriter and is made solely for the benefit of the Agency, the Authority and the Underwriter (including the successors or assigns of any Underwriter). No other person shall acquire or have any right hereunder by virtue hereof, except as provided herein. All the Agency's and the Authority's representations, warranties and covenants in this Purchase Contract shall remain operative and in full force and effect, regardless of any investigation made by or on behalf of the Underwriter. Section 14. Counterparts. This Purchase Contract may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument. Section 15. Severability. In case any one or more of the provisions contained herein shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision hereof. Section 16. State of California Law Governs. The validity, interpretation and performance of this Purchase Contract shall be governed by the laws of the State. Section 17. No Assignment. The rights and obligations created by this Purchase Contract shall not be subject to assignment by the Underwriter, the Authority or the Agency without the prior written consent of the other parties hereto. E. J. DE LA ROSA & CO.INC. -12- Accepted as of the date first stated above: SAN RAFAEL JOINT POWERS FINANCING AUTHORITY M Authority Treasurer SAN RAFAEL REDEVELOPMENT AGENCY By: Economic Development Director -13- By: Eric J. Scriven, Senior Vice President APPENDIX A TAX ALLOCATION REFUNDING BONDS, SERIES 2009 [Maturity Schedule to be inserted] m APPENDIX B RULE 15c2-12 CERTIFICATE The undersigned hereby certifies and represents to E. J. De La Rosa & Co., Inc. (the "Underwriter"), that [s]he is a duly appointed and acting officer of the San Rafael Redevelopment Agency (the "Agency"), and as such is authorized to execute and deliver this Certificate and further hereby certifies and reconfirms on behalf of the Agency to the Underwriter as follows: (1) This Certificate is delivered to enable the Underwriter to comply with Securities and Exchange Commission Rule 15c2-12 under the Securities Exchange Act of 1934 (the "Rule") in connection with the offering and sale of the Agency's San Rafael Redevelopment Agency Central San Rafael Redevelopment Project Tax Allocation Refunding Bonds, Series 2009 (the "Bonds"). (2) In connection with the offering and sale of the Bonds, there has been prepared a Preliminary Official Statement, setting forth information concerning the Bonds and the issuer of the Bonds (the "Preliminary Official Statement"). (3) As used herein, "Permitted Omissions" shall mean the offering prices, interest rate(s), selling compensation, aggregate principal amount, principal amount per maturity, delivery dates, ratings and other terms of the Bonds depending on such matters and the identity of the Underwriter, all with respect to the Bonds. (4) The Preliminary Official Statement is, except for the Permitted Omissions, deemed final within the meaning of the Rule and has been, and the information therein is accurate and complete in all material respects except for the Permitted Omissions. (5) If, at any time prior to the execution of the final contract of purchase, any event occurs as a result of which the Preliminary Official Statement might include an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, the Agency shall promptly notify the Underwriter thereof. IN WITNESS WHEREOF, we have hereunto set our hands as of the day of November. 2009. SAN RAFAEL REDEVELOPMENT AGENCY a ME