$14,093,027.60 $14,095,000 redevelopment agency ...cdiacdocs.sto.ca.gov/2011-0131.pdfjeff stone,...

NEW ISSUE RATINGS: Moody’s: “A3” BOOK ENTRY ONLY Standard & Poor’s: “A-” See “Rating” 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 Series A Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations, although for the purpose of computing the alternative minimum tax imposed on certain corporations, such interest is taken into account in determining certain income and earnings. However, the interest on the Series A-T Bonds is not excluded from gross income for federal income tax purposes. In the further opinion of Bond Counsel, interest on both the Series A Bonds and the Series A-T Bonds is exempt from California personal income taxes. See “TAX MATTERS” herein.

$14,093,027.60 REDEVELOPMENT AGENCY FOR THE

COUNTY OF RIVERSIDE 2011 Tax Allocation Housing Bonds,

Series A

$14,095,000 REDEVELOPMENT AGENCY FOR THE

COUNTY OF RIVERSIDE 2011 Taxable Tax Allocation Housing Bonds,

Series A-T

Dated: Date of Delivery Due: October 1, as shown below

The Redevelopment Agency For the County of Riverside (the “Agency”) is issuing its $14,093,027.60 principal amount of Redevelopment Agency For the County of Riverside 2011 Tax Allocation Housing Bonds, Series A (the “Series A Bonds”) and its $14,095,000 Redevelopment Agency For the County of Riverside 2011 Taxable Tax Allocation Housing Bonds, Series A-T (the “Series A-T Bonds” and, together with the Series A Bonds, the “Bonds”). Proceeds of the Bonds will be used to (i) pay the costs of certain low and moderate income housing projects of the Agency with respect to the Agency’s redevelopment projects as herein described (the “Project Areas”), (ii) fund a Reserve Subaccount with the proceeds of the Bonds; and (iii) pay costs of issuance relating to the Bonds.

The 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 maturity amount or any integral multiple thereof, under the book-entry system maintained by DTC. The Series A Bonds will be issued as Current Interest Bonds and as Convertible Capital Appreciation Bonds. The Series A-T Bonds will be issued as Current Interest Bonds.

The principal of, premium if any, and semiannual interest on the Current Interest Bonds is payable on October 1 and April 1 of each year, commencing October 1, 2011. The Convertible Capital Appreciation Bonds will not bear current interest but will accrete interest from the date of their delivery, compounded semiannually on October 1 and April 1 of each year, commencing October 1, 2011, until the Conversion Date. On the respective Conversion Dates set forth on the inside cover page, the Convertible Capital Appreciation Bonds will convert to Bonds in principal amounts equal to the Accreted Value (defined herein) thereof that bear interest on a current basis. After the Conversion Date, interest with respect to the Convertible Capital Appreciation Bonds will accrue and be payable semiannually on October 1 and April 1 of each year. Payments of principal, interest or Accreted Value will be payable by The Bank of New York Mellon Trust Company, N.A., as Trustee (the “Trustee”), Los Angeles, California, to DTC for subsequent disbursement to DTC participants, so long as DTC or its nominee remains the registered owner of the applicable series of Bonds. The Accreted Values of the Convertible Capital Appreciation Bonds prior to the Conversion Date are set forth in Appendix I hereto.

The Bonds are subject to optional redemption and mandatory redemption as further described herein. See “THE SERIES A BONDS” and “THE SERIES A-T BONDS.”

The Bonds are payable from Housing Tax Revenues (as defined herein) being a portion of Tax Revenues (as defined herein) to be derived from the Project Areas and from amounts on deposit in certain funds and accounts established for the respective series of the Bonds on a parity with each other and on a parity with the repayment of four series of bonds of the Agency, as described herein. See “SECURITY FOR THE BONDS”. The receipt of Housing Tax Revenues is subject to certain risks and limitations. See “BOND OWNERS’ RISKS” and “LIMITATIONS ON TAX REVENUES” herein.

THE BONDS ARE NOT A DEBT OF THE COUNTY OF RIVERSIDE, THE STATE OF CALIFORNIA, OR ANY OF ITS POLITICAL SUBDIVISIONS OTHER THAN THE AGENCY, AND NEITHER THE COUNTY, 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 BONDS ARE PAYABLE SOLELY FROM HOUSING TAX REVENUES ALLOCATED TO THE AGENCY FROM THE PROJECT AREAS AND AMOUNTS IN CERTAIN FUNDS AND ACCOUNTS HELD UNDER THE RESPECTIVE INDENTURES. THE BONDS DO NOT CONSTITUTE AN INDEBTEDNESS WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMITATION OR RESTRICTION. NEITHER THE MEMBERS OF THE AGENCY OR THE COUNTY, NOR ANY PERSONS EXECUTING THE BONDS, ARE LIABLE PERSONALLY ON THE BONDS BY REASON OF THEIR ISSUANCE.

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 Bonds. Investors should review the entire Official Statement before making any investment decision.

MATURITY SCHEDULE

(SEE INSIDE FRONT COVER)

The Bonds are offered when, as and if issued, subject to the approval of their legality by Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel and Disclosure Counsel. Certain matters will be passed upon for the Agency by Riverside County Counsel and for the Underwriters by Stradling Yocca Carlson & Rauth, Newport Beach, California. It is anticipated that the Bonds will be available for delivery through the facilities of DTC in New York, New York by Fast Automated Securities Transfer (“FAST”), on or about March 8, 2011.

Dated: March 2, 2011

REDEVELOPMENT AGENCY FOR THE COUNTY OF RIVERSIDE 2011 Tax Allocation Housing Bonds, Series A

Base CUSIP†: 769123

MATURITY SCHEDULE

Current Interest Term Bonds

$6,580,000 7.125% Current Interest Term Bonds Maturing October 1, 2042; Yield: 7.330%; CUSIP†: JF8

$7,513,027.60 Denominational Amount ($17,965,000 Conversion Value)

Convertible Capital Appreciation Bonds

Maturity (October 1)

Initial Principal Amount

Accretion Rate to

Conversion

Conversion

Date Conversion

Value

Interest Rate after

Conversion Yield

CUSIP†: 2026 $ 665,860.75 8.000% 10/01/2021 $1,525,000 8.000% 8.000% JG6 2031 955,674.05 8.250 10/01/2021 2,245,000 8.250 8.250 JH4 2041 5,891,492.80 8.500 10/01/2021 14,195,000 8.500 8.500 JJ0

REDEVELOPMENT AGENCY FOR THE COUNTY OF RIVERSIDE 2011 Taxable Tax Allocation Housing Bonds, Series A-T

MATURITY SCHEDULE

Maturity Date Principal Interest (October 1) Amount Rate Yield Price CUSIP†:

2011 $1,830,000 2.728% 2.728% 100.000 JK7 2012 955,000 3.328 3.328 100.000 JL5 2013 980,000 4.000 4.261 99.370 JM3 2014 1,030,000 5.000 5.287 99.075 JN1 2015 1,075,000 6.000 6.127 99.495 JP6 2016 1,140,000 6.250 6.627 98.263 JQ4

$7,085,000 8.000% Term Bonds Due October 1, 2021; Yield: 8.579%; CUSIP†: JV3 † CUSIP® A registered trademark of the of the American Bankers Association. Copyright© 1999-2011 Standard & Poor’s, Division of The McGraw-Hill Companies, Inc. CUSIP® data herein is provided by Standard & Poor’s CUSIP Service Bureau. This data is not intended to create a database and does not serve in any way as a substitute for the CUSIP Service Bureau. CUSIP® numbers are provided for convenience of reference only. Neither the Redevelopment Agency nor the Underwriters takes any responsibility for the accuracy of such numbers.

REDEVELOPMENT AGENCY FOR THE COUNTY OF RIVERSIDE

AGENCY/COUNTY BOARD OF SUPERVISORS

Bob A. Buster, District 1 John F. Tavaglione, District 2

Jeff Stone, District 3 John J. Benoit, District 4 Marion Ashley, District 5

AGENCY STAFF

Robert Field, Executive Director Lisa Brandl, Deputy Executive Director Paul Angulo, Agency Auditor/Controller

Pamela J. Walls, County Counsel

SPECIAL SERVICES

Trustee

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

Bond and Disclosure Counsel

Jones Hall, A Professional Law Corporation San Francisco, California

Financial Advisor

C. M. de Crinis & Co. Inc. Sherman Oaks, California

Fiscal Consultant

Urban Analytics, LLC San Francisco, California

[THIS PAGE INTENTIONALLY LEFT BLANK]

TABLE OF CONTENTS INTRODUCTION ........................................................................................................................................................... 1 THE FINANCING PLAN ................................................................................................................................................ 6

The Projects............................................................................................................................................................ 6

Estimated Sources and Uses of Funds................................................................................................................. 7

Debt Service Schedules......................................................................................................................................... 8 THE BONDS ................................................................................................................................................................ 10

Authority for Issuance .......................................................................................................................................... 10

Description............................................................................................................................................................ 10

Redemption Provisions ........................................................................................................................................ 11 SECURITY FOR THE BONDS ................................................................................................................................... 15

Allocation of Taxes............................................................................................................................................... 15

Pledge of Housing Tax Revenues....................................................................................................................... 15

No Power to Tax................................................................................................................................................... 15

Outstanding Parity Debt....................................................................................................................................... 16

Additional Parity Debt .......................................................................................................................................... 16

Reserve Subaccount............................................................................................................................................ 17

Tax Sharing Agreements and Statutory Tax Sharing ........................................................................................ 19 THE REDEVELOPMENT AGENCY FOR THE COUNTY OF RIVERSIDE ............................................................. 20

Authority and Personnel....................................................................................................................................... 20

Agency Administration ......................................................................................................................................... 20

Budgetary Policies ............................................................................................................................................... 21 THE PROJECT AREAS .............................................................................................................................................. 21

Redevelopment Plans.......................................................................................................................................... 21

Redevelopment Plan Limitations......................................................................................................................... 23

Appeals ................................................................................................................................................................. 26

Land Use in the Project Areas............................................................................................................................. 27

Historic Assessed Valuation ................................................................................................................................ 27

Largest Taxpayers in the Project Areas.............................................................................................................. 29 PROJECTED COVERAGE ON THE BONDS ........................................................................................................... 30 BOND OWNERS’ RISKS ............................................................................................................................................ 33

Reduction in Taxable Value................................................................................................................................. 33

Reduction in Inflationary Rate and Changes in Legislation ............................................................................... 33

Levy and Collection.............................................................................................................................................. 33

Impact of Redevelopment Plan Expirations........................................................................................................ 34

Factors Relating to Sub-Prime Loans ................................................................................................................. 35

State of California Fiscal Issues; ERAF; SERAF ............................................................................................... 35

Hazardous Substances........................................................................................................................................ 45

Seismic Considerations and Natural Calamities ................................................................................................ 45

Bankruptcy............................................................................................................................................................ 45

Changes in the Law ............................................................................................................................................. 45

Secondary Market ................................................................................................................................................ 46 LIMITATIONS ON TAX REVENUES.......................................................................................................................... 46

Property Tax Limitations - Article XIIIA ............................................................................................................... 46

Challenges to Article XIIIA ................................................................................................................................... 47

Property Taxes; Teeter Plan................................................................................................................................ 47

Tax Collection Fees ............................................................................................................................................. 48

Unitary Taxation of Utility Property...................................................................................................................... 48

Future Initiatives ................................................................................................................................................... 48 OTHER INFORMATION.............................................................................................................................................. 49

Continuing Disclosure .......................................................................................................................................... 49

Litigation................................................................................................................................................................ 49

Tax Matters........................................................................................................................................................... 49

Legal Opinion ....................................................................................................................................................... 51

Rating.................................................................................................................................................................... 51

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The Authority ........................................................................................................................................................ 51

Underwriting.......................................................................................................................................................... 52

Miscellaneous....................................................................................................................................................... 53 APPENDIX A GENERAL INFORMATION ABOUT EACH PROJECT AREA APPENDIX B COUNTY OF RIVERSIDE GENERAL INFORMATION APPENDIX C AGENCY’S AUDITED FINANCIAL STATEMENTS FOR FISCAL YEAR 2009-10 APPENDIX D FORMS OF OPINION OF BOND COUNSEL APPENDIX E SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURES APPENDIX F FORM OF CONTINUING DISCLOSURE CERTIFICATE APPENDIX G FISCAL CONSULTANT REPORT APPENDIX H BOOK-ENTRY ONLY BONDS APPENDIX I TABLES OF ACCRETED VALUES

GENERAL INFORMATION ABOUT THIS OFFICIAL STATEMENT

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

of the 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 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. The Agency does not plan to issue any updates or revisions to the forward-looking statements set forth in this Official Statement.

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 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 Underwriters. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the Bonds by a person in any jurisdiction in which it is unlawful for such person to make such an offer, solicitation or sale.

Involvement of Underwriters. The Underwriters have submitted the following statement for inclusion

in this Official Statement: The Underwriters have 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 Underwriters do 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 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 BONDS HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATE.

All information considered material to the making of an informed investment decision with respect to

the Bonds is contained in this Official Statement. While the Agency maintains an Internet website for various purposes, none of the information on its website is incorporated by reference into this Official Statement. Any such information that is inconsistent with the information set forth in this Official Statement should be disregarded.

This Official Statement is submitted in connection with the sale of the Bonds and may not be

reproduced or used, in whole or in part, for any other purpose. IN CONNECTION WITH THE OFFERING OF THE BONDS, THE UNDERWRITER MAY EFFECT

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

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County of Riverside Redevelopment Project Areas

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2Z3 Cities 7'V Highways - Water Bodies

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LEGEND

- Project Area No. 1-1986

D Jurupa Valley Project Area

- Mid-County Project Area

- Desert Communities Project Area - Interstate 215 Corridor Project Area

1st District Boundary 2nd District Boundary 3rd District Boundary 4th District Boundary 5th District Boundary

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OFFICIAL STATEMENT

$14.093,027.60 REDEVELOPMENT AGENCY FOR THE COUNTY OF RIVERSIDE

2011 Tax Allocation Housing Bonds, Series A

and $14,095,000

REDEVELOPMENT AGENCY FOR THE COUNTY OF RIVERSIDE 2011 Taxable Tax Allocation Housing Bonds, Series A-T

INTRODUCTION

General The purpose of this Official Statement of the Redevelopment Agency For the County of

Riverside (the “Agency”) is to set forth information in connection with the sale of the Agency’s $14,093,027.60 principal amount of Redevelopment Agency For the County of Riverside 2011 Tax Allocation Housing Bonds, Series A (the “Series A Bonds”) and its $14,095,000 principal amount of Redevelopment Agency For the County of Riverside 2011 Taxable Tax Allocation Housing Bonds, Series A-T (the “Series A-T Bonds” and, together with the Series A Bonds, the “Bonds”). The Series A Bonds will be issued (i) as current interest bonds (“Current Interest Bonds”) in the aggregate principal amount of $6,580,000, and (ii) as Convertible Capital Appreciation Bonds (“Convertible Capital Appreciation Bonds”) in the aggregate initial principal amount of $7,513,027.60 and a total aggregate Conversion Value of $17,965,000. The Series A-T Bonds will be issued only as Current Interest Bonds.

The Bonds are being issued under the Community Redevelopment Law, constituting

Part 1 of Division 24 (commencing with Section 33000) of the Health and Safety Code of the State of California (the “Redevelopment Law”). The Series A Bonds are being issued under an Indenture of Trust, dated as of December 1, 2004, as amended and supplemented, including as amended and supplemented by a Third Supplement to Indenture of Trust, dated as of March 1, 2011 (the “Series A Bonds Indenture”) each between the Agency and The Bank of New York Mellon Trust Company, N.A., or its predecessor, as trustee (the “Trustee”). The Series A-T Bonds are being issued under an Indenture of Trust, dated as of December 1, 2004, as amended and supplemented, including as amended and supplemented by a Second Supplement to Indenture of Trust, dated as of March 1, 2011 (the “Series A-T Bonds Indenture”) each between the Agency and the Trustee (the “Series A-T Bonds Indenture” and, together with the Series A Bonds Indenture, the “Indentures”).

The proceeds of the Bonds will be used to (i) finance low and moderate income housing

projects with respect to the Project Areas, (ii) fund separate Reserve Subaccounts for each series of Bonds, and (iii) pay costs of issuance relating to the Bonds.

The Bonds are being issued for sale to the Riverside County Public 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 Stone & Youngberg LLC and E.J. De La Rosa & Co., Inc., as underwriters (the “Underwriters”).

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The Series A Bonds and the Series A-T Bonds are special obligations of the Agency secured on a parity with each other, and on a parity with the 2004 Bonds, the 2005 Bonds, and the 2010 Bonds (the “Existing Parity Bonds”, all as described herein) by a pledge of, security interest in and first lien on the portion of tax increment revenues derived from the Agency’s redevelopment projects, as herein described (the “Redevelopment Projects” or, sometimes, the “Project Areas”) that are required by the Redevelopment Law to be deposited in the Low and Moderate Income Housing Fund for use pursuant to Section 33334.2 of the Redevelopment Law to increase, improve or preserve the supply of low and moderate income housing within or of benefit to the Project Areas (the “Housing Tax Revenues”) as further defined herein; see “SECURITY FOR THE BONDS - Pledge of Housing Tax Revenues” herein).

The County

The County, which encompasses 7,303 square miles, was organized in 1893 from territory in San Bernardino and San Diego Counties. Located in the southeastern portion of California, Riverside County is bordered on the north by San Bernardino County, on the east by the State of Arizona, on the South by San Diego and Imperial Counties and on the west by Orange and Los Angeles Counties. There are 26 incorporated cities in Riverside County. For certain information regarding the County, see “APPENDIX B - COUNTY OF RIVERSIDE GENERAL INFORMATION.”

The Agency and the Project Areas

The Agency was activated on August 6, 1985, by ordinance of the Board of Supervisors (the “Board”) of the County of Riverside (the “County”) under the Redevelopment Law. The Board at the same time declared itself to be the governing body of the Agency.

There are five separate Project Areas designated as follows and more particularly

described under the caption “THE PROJECT AREAS”:

• Redevelopment Project Area No. 1-1986 (the “Project Area No. 1-1986”),

• Jurupa Valley Redevelopment Project Area (the “Jurupa Valley Project Area”),

• Mid-County Redevelopment Project Area (the “Mid-County Project Area”),

• Desert Communities Redevelopment Project Area (the “Desert Communities Project Area”), and

• Interstate 215 Corridor Redevelopment Project Area (the “Interstate 215

Corridor Project Area”).

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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 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 above indicated. Taxes collected upon the increase in assessed valuations in the Project Areas and received on or after the date of issuance of the Bonds are referred to herein as the “Tax Revenues”.

Not less that 20% of the Tax Revenues are required by the Redevelopment Law to be

deposited in the Agency’s Low and Moderate Income Housing Fund (the “Housing Fund”) for use pursuant to Section 33334.2 of the Redevelopment Law to increase, improve or preserve the supply of low and moderate income housing within or of benefit to the Project Areas (the “Housing Tax Revenues”).

Based on assessment roll data provided by the Riverside County Auditor-Controller and

the State Board of Equalization, the 2010-11 aggregate assessed valuation for the five Project Areas is approximately $11.4 billion. For Fiscal Year 2009-10, aggregate Tax Revenues were approximately $99.3 million and aggregate Housing Tax Revenues were approximately $19.9 million. (See “APPENDIX G - FISCAL CONSULTANT REPORT - Table 4-A”).

Should there occur any future decrease in the taxable valuation in the Project Areas or in

the applicable tax rates, the Tax Revenues (as more particularly described under the caption “SECURITY FOR THE BONDS -- Tax Revenues”) allocated to the Agency from the Project Areas would be reduced and, correspondingly, Housing Tax Revenues would be reduced having a possible adverse impact on the ability of the Agency to repay the Bonds. See “BOND OWNERS RISKS” herein.

Bond Owners’ Risks

Certain events could affect the timely repayment of the principal and interest on the

Bonds when due or the receipt of Housing Tax Revenues by the Agency. See the section of this Official Statement entitled “BOND OWNERS’ RISKS” herein for a discussion of certain factors which should be considered when investing in the Bonds, including a discussion of the Governor’s proposed fiscal year 2011-12 budget, which, if enacted in its current form, would eliminate the current funding mechanism for redevelopment agencies.

Should legislation be introduced or proposals made by the Governor of the State or if

legislation is enacted which would impose additional materially adverse limitations or burdens on the Agency or the County by reason of the issuance of the Bonds or which purport to prohibit the issuance of the Bonds, the Agency and the Underwriters have the right under the bond purchase agreement to not proceed in issuing or purchasing the Bonds.

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Outstanding Parity Debt

The Agency currently has outstanding the following tax allocation bonds (collectively, the “Outstanding Parity Bonds”), which have a pledge of Housing Tax Revenues on a parity with the Agency’s pledge of Housing Tax Revenues for the payment of debt service on the Bonds:

• $38,225,000 2004 Tax Allocation Housing Bonds, Series A (the “2004 Series A

Bonds”), currently outstanding in the aggregate principal amount of $38,225,000.

• $37,000,000 2004 Taxable Tax Allocation Housing Bonds, Series A-T (the “2004 Series A-T Bonds”), currently outstanding in the aggregate principal amount of $30,140,000.

• $18,245,000 principal amount of Redevelopment Agency for the County of

Riverside 2005 Tax Allocation Housing Refunding Bonds, Series A (the “2005 Bonds”), currently outstanding in the aggregate principal amount of $15,955,000.

• $15,885,000 2010 Tax Allocation Housing Bonds, Series A (the “2010 Series A

Bonds”), currently outstanding in the aggregate principal amount of $15,885,000.

• $50,860,000 2010 Taxable Tax Allocation Housing Bonds, Series A-T (the “2010 Series A-T Bonds”), currently outstanding in the aggregate principal amount of $50,860,000.

The Agency has pledged Housing Tax Revenues to the repayment of the 2004 Series A

Bonds, the 2004 Series A-T Bonds, the 2005 Bonds, the 2010 Series A Bonds and the 2010 Series A-T Bonds See “SECURITY FOR THE BONDS – Outstanding Parity Debt.”

Professionals Involved in the Offering

The Bank of New York Mellon Trust Company, N.A., Los Angeles, California, will act as

trustee with respect to the Series A Bonds and the Series A-T Bonds under the respective Indentures.

C. M. de Crinis & Co., Inc., Sherman Oaks, California, has acted as Financial Advisor to

the Agency in the structuring and presentation of the financing. Urban Analytics, LLC, San Francisco, California, has acted as Fiscal Consultant to the

Agency and has prepared an analysis of taxable values and tax increment revenues in the Project Areas. See “APPENDIX G - FISCAL CONSULTANT REPORT” herein.

All proceedings in connection with the issuance of the Bonds are subject to the approval

of Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel. Jones Hall is also acting as Disclosure Counsel. Certain legal matters will be passed on for the Agency by Riverside County Counsel. Stradling Yocca Carlson & Rauth, Newport Beach, California is serving as counsel to the Underwriters. The fees and expenses of the Financial Advisor, Bond Counsel and Disclosure Counsel are contingent upon the sale and delivery of the Bonds.

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Summaries of Documents There follows in this Official Statement brief descriptions of the Bonds, the security for

the Bonds, the Agency, the Project Areas and certain other information relevant to the issuance and sale of the Bonds. All references herein to the Indentures are qualified in their entirety by reference to the definitive form thereof and all references to the Bonds are further qualified by references to the information with respect thereto contained in the respective Indentures. Selected information regarding the County is included in Appendix B. The Agency’s audited financial statements for the Fiscal Year ended June 30, 2010, are included in Appendix C. The proposed forms of Bond Counsel’s legal opinions for the Bonds are set forth in Appendix D. A summary of certain provisions of the Indentures is contained in Appendix E. The proposed form of Continuing Disclosure Certificate is included in Appendix F. The report of the Fiscal Consultant is contained in Appendix G. All capitalized terms used herein and not normally capitalized have the meanings assigned to them in the Indentures, unless otherwise stated in this Official Statement. Definitions of certain terms used herein are set forth in “APPENDIX E - SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURES - Definitions.” Copies of the Indentures are available for inspection during business hours at the office of the Agency, 3403 10th Street, Riverside, California, 92501 and at the corporate trust office of the Trustee in Los Angeles, California.

Other Information; Continuing Disclosure

This Official Statement speaks only of its date, as set forth on the cover hereof, and the

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

The Agency has covenanted to provide certain financial information and operating data

by December 31 in each year, commencing with its report for Fiscal Year 2010-11 (the “Annual Report”), and to provide notices of the occurrence of certain enumerated events. The Annual Report and notices of material events will be filed by the Agency with the Municipal Securities Rulemaking Board’s Electronic Municipal Market Access System for municipal securities disclosures, maintained on the Internet at http://emma.msrb.org/ (“EMMA”). These covenants have been made in order to assist the Underwriter in complying with Securities Exchange Commission Rule 15c2 12(b)(5) (the “Rule”). The specific nature of the information to be contained in the Annual Report or the notices of material events by the Agency is summarized in Appendix F—“FORM OF CONTINUING DISCLOSURE CERTIFICATE.”

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THE FINANCING PLAN

The Projects

The net proceeds of the Series A Bonds and the Series A-T Bonds will be deposited into separate accounts in the Housing Fund which is held by the Trustee, and will be expended by the Agency to finance low and moderate income housing programs, projects and activities relating to the Project Areas located within a Project Area or elsewhere within the County. Proceeds of the Series A Bonds will primarily be used to make grants or to finance public improvements related to a housing project. The proceeds of the Series A-T Bonds will generally be used to make loans. It is expected that the net proceeds of the Bonds will be used to finance some or all of the following projects:

Project

Estimated Cost

Tax-Exempt Portion (Series A)

Taxable Portion (Series A-T)

Orange Blossom Multi-Family Redevelopment Project

$4,000,000 $4,000,000 --

Acquisition, Rehabilitation, and Resale Program

$6,000,000 -- $6,000,000

Infill Housing Development Program $5,000,000 -- $5,000,000

Tres Lagos Phase II $4,000,000 -- $4,000,000

North Hemet Specific Plan Development Implementation

$10,000,000 $6,000,000 $4,000,000

Highgrove Residential $6,000,000 -- $6,000,000

Thermal Multi-Family Housing Project $5,000,000 $2,000,000 $3,000,000

Glen Avon Subdivision $3,000,000 -- $3,000,000

Avenue 34th Residential $3,000,000 -- $3,000,000 Total $46,000,000 $12,000,000 $34,000,000

In addition, the Agency may use a portion of the proceeds to pay interest on the Series A

Bonds on October 1, 2011. The Agency may use a portion of the proceeds of the Series A-T Bonds to pay interest on the Series A-T Bonds on October 1, 2011. The actual timing and scope of the foregoing projects are unknown and cannot be guaranteed. It is possible that one or more of the above may not occur. The Agency may, consistent with the Redevelopment Law and its covenants set forth in the Indentures authorizing the Bonds, substitute other projects for those which are described above.

Finally, reference is hereby made to the heading “Proposed 2011-12 Budget and

Redevelopment Agencies” under “BOND OWNERS’ RISKS – State of California Fiscal Issues; ERAF; SERAF”. Among other things, Governor Brown in his proposed State budget for fiscal year 2011-12 seeks legislation disestablishing redevelopment agencies and providing for the transfer of unspent low and moderate income housing funds to the applicable local housing authority. Assuming the successful disestablishment of the Agency, it is possible that unspent Bond proceeds could be transferred to the Housing Authority of the County of Riverside and be used to finance low and moderate income housing projects by the Authority, however the Agency can make no assurances that it or the Housing Authority of the County of Riverside can spend Bond proceeds on the Projects as planned.

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Estimated Sources and Uses of Funds

The anticipated sources and uses of funds from the sale of the Bonds and amounts to be used to finance costs of the projects described above are estimated to be applied as follows:

TABLE 1

ESTIMATED SOURCES AND USES OF PROCEEDS

The anticipated sources and uses of funds relating to the Bonds are as follows:

SOURCES: SERIES A BONDS SERIES A-T BONDS Par Amount $14,093,027.60 $14,095,000.00 Less: Original Issue Discount (165,552.80) (322,915.05) Less: Underwriters’ Discount (120,069.22) (95,419.77) Total Sources: $13,807,405.58 $13,676,665.18 USES: Deposit to Low and Moderate Income Housing Account

$12,210,602.82

$12,079,665.18

Reserve Subaccount 1,409,302.76 1,409,500.00 Deposit to Costs of Issuance Fund (1) 187,500.00 187,500.00 Total Uses: $13,807,405.58 $13,676,665.18

(1) Includes Trustee fees, Financial Advisor fees, Fiscal Consultant fees, Bond Counsel and

Disclosure Counsel fees, printing costs, rating agency fees and other related costs.

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Debt Service Schedules

The following table presents debt service for the Series A Bonds.

TABLE 2 REDEVELOPMENT AGENCY FOR THE COUNTY OF RIVERSIDE

2011 Tax Allocation Housing Bonds, Series A

Debt Service Schedule

Year

Ending October 1

Series A Bonds

Principal or Initial Amount

Series A Bonds Interest

Series A Bonds Accreted Value

Series A Bonds

Debt Service 2011(1)

- $ 264,365.21 - $ 264,365.21 2012 - 468,825.00 - 468,825.00 2013 - 468,825.00 - 468,825.00 2014 - 468,825.00 - 468,825.00 2015 - 468,825.00 - 468,825.00 2016 - 468,825.00 - 468,825.00 2017 - 468,825.00 - 468,825.00 2018 - 468,825.00 - 468,825.00 2019 - 468,825.00 - 468,825.00 2020 - 468,825.00 - 468,825.00 2021 - 468,825.00 - 468,825.00 2022 $ 115,706.95 1,982,612.50 $ 149,293.05 2,247,612.50 2023 122,256.40 1,961,412.50 157,743.60 2,241,412.50 2024 126,622.70 1,939,012.50 163,377.30 2,229,012.50 2025 146,271.05 1,915,812.50 188,728.95 2,250,812.50 2026 155,003.65 1,889,012.50 199,996.35 2,244,012.50 2027 161,762.20 1,860,612.50 218,237.80 2,240,612.50 2028 174,532.90 1,829,262.50 235,467.10 2,239,262.50 2029 193,688.95 1,795,437.50 261,311.05 2,250,437.50 2030 204,331.20 1,757,900.00 275,668.80 2,237,900.00 2031 221,358.80 1,718,300.00 298,641.20 2,238,300.00 2032 232,422.40 1,675,400.00 327,577.60 2,235,400.00 2033 253,174.40 1,627,800.00 356,825.60 2,237,800.00 2034 222,046.40 1,575,950.00 312,953.60 2,110,950.00 2035 244,873.60 1,530,475.00 345,126.40 2,120,475.00 2036 261,475.20 1,480,325.00 368,524.80 2,110,325.00 2037 284,302.40 1,426,775.00 400,697.60 2,111,775.00 2038 435,792.00 1,368,550.00 614,208.00 2,418,550.00 2039 381,836.80 1,279,300.00 538,163.20 2,199,300.00 2040 2,444,585.60 1,201,100.00 3,445,414.40 7,091,100.00 2041 2,880,984.00 700,450.00 1,594,016.00 5,175,450.00 2042 4,830,000.00 344,137.50 - 5,174,137.50

Total $14,093,027.60 $37,812,252.71 $10,451,972.40 $62,357,252.71 (1) The interest due on October 1, 2011 may be paid by proceeds of the Series A Bonds deposited into the Low and Moderate Income Housing Fund.

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The following table presents debt service for the Series A-T Bonds.


2011 Taxable Tax Allocation Housing Bonds, Series A-T

Debt Service Schedule

Year

Ending October 1

Series A-T

Bonds Principal

Series A-T

Bonds Interest

Series A-T

Bonds Debt Service

2011(1) $ 1,830,000 $ 493,377.29 $ 2,323,377.29 2012 955,000 825,032.40 1,780,032.40 2013 980,000 793,250.00 1,773,250.00 2014 1,030,000 754,050.00 1,784,050.00 2015 1,075,000 702,550.00 1,777,550.00 2016 1,140,000 638,050.00 1,778,050.00 2017 1,210,000 566,800.00 1,776,800.00 2018 1,305,000 470,000.00 1,775,000.00 2019 1,410,000 365,600.00 1,775,600.00 2020 1,520,000 252,800.00 1,772,800.00 2021 1,640,000 131,200.00 1,771,200.00 Total $14,095,000 $5,992,709.69 $20,087,709.69

(1) The interest due on October 1, 2011 may be paid by proceeds of the Series A-T Bonds deposited into the Low and Moderate Income Housing Fund.

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THE BONDS

Authority for Issuance The Bonds are being issued under the Indentures and the provisions of the

Redevelopment Law. On February 15, 2011, the Agency adopted resolutions authorizing the execution and delivery of the Indentures and the issuance and sale of the Bonds.

Description

Current Interest Bonds and Convertible Capital Appreciation Bonds. The Current

Interest Bonds will be dated their date delivery, will bear interest at the rates per annum set forth on the inside cover page hereof payable semiannually on April 1 and October 1 (each, an “Interest Payment Date”), commencing October 1, 2011, and will mature on the dates and in the amounts set forth on the inside cover page hereof. The Current Interest Bonds shall be issued in denominations of $5,000 or any integral multiple thereof, so long as no Bond shall have more than one maturity date.

The Convertible Capital Appreciation Bonds will initially be issued as Capital

Appreciation Bonds and will convert to Bonds that pay interest on a current basis on the conversion date set forth on the inside cover page hereof (the “Conversion Date”). The Convertible Capital Appreciation Bonds will be dated the Dated Date, and will be issued as fully registered bonds, without coupons, in the denominations of $5,000 Conversion Value (where the “Conversion Value” means the accreted value of a Convertible Capital Appreciation Bond on the Conversion Date for such Bond) and any integral multiple thereof. The Conversion Value of each Capital Appreciation Bond is equal to its Accreted Value, being comprised of its Initial Principal Amount and the semi-annually compounded interest between the delivery date and its applicable Conversion Date. See “APPENDIX I – Tables of Accreted Values”.

Each Current Interest Bond and each Convertible Capital Appreciation Bond after its

Conversion Date shall bear interest from the Interest Payment Date next preceding the date of authentication thereof, unless (a) it is authenticated after a Record Date and on or before the following Interest Payment Date, in which event it shall bear interest from such Interest Payment Date; or (b) it is authenticated on or before September 15, 2011, in which event it shall bear interest from the date of delivery of the Current Interest Bonds (the “Closing Date”); provided, however, that if, as of the date of authentication of any Current Interest Bond and on each Convertible Capital Appreciation Bond after its Conversion Date, interest thereon is in default, such Bond shall bear interest from the Interest Payment Date to which interest has previously been paid or made available for payment thereon. The Bonds shall mature and shall bear interest (calculated on the basis of a 360-day year of twelve 30-day months).

Interest on the Current Interest Bonds and each Convertible Capital Appreciation Bond

after its Conversion Date (including the final interest payment upon maturity or redemption) is payable when due by check or draft of the Trustee mailed to the Owner thereof at such Owner’s address as it appears on the Registration Books at the close of business on the preceding Record Date; provided that at the written request of the Owner of at least $1,000,000 aggregate principal amount of Current Interest Bonds, which written request is on file with the Trustee as of any Record Date, interest on such Bonds shall be paid on the succeeding Interest Payment Date to such account in the United States as shall be specified in such written request.

"Accreted Value" means, with respect to Convertible Capital Appreciation Bonds (until

the Conversion Date), the initial principal amount of and accrued and compounded interest

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thereon as of any April 1 or October 1 determined solely by reference to the Table of Accreted Values set forth on the form of Convertible Capital Appreciation Bond. The Accreted Value for any date not specified in said Table shall be determined by adding to the Accreted Value set forth in said Table for the date next preceding the date in question (the “Preceding Accreted Value”) that portion of the difference between the Preceding Accreted Value and the Accreted Value for the date set forth in said Table for the date next succeeding the date in question (the “Succeeding Accreted Value”) that the number of days (based on twelve 30-day months) from the Preceding Accreted Value bears to the total number of days from the date of the Preceding Accreted Value to the date of the Succeeding Accreted Value.

General Provisions. The Bonds will be issued only as one fully registered Bond for

each maturity, in the name of Cede & Co., as nominee for The Depository Trust Company, New York, New York (“DTC”), as registered owner of all Bonds. See “Book-Entry System” below. Ownership may be changed only upon the registration books maintained by The Bank of New York Mellon Trust Company, N.A. (the “Trustee”) as provided in the Indenture.

Pursuant to the Indenture, Bonds may be presented for transfer by a Registered Owner,

in person or by his attorney duly authorized in writing, at the office of the Trustee in Los Angeles, California, or at such other place as is designated by the Trustee, but only in the manner, subject to the limitations and upon payment of the charges provided in the Indenture, and upon surrender and cancellation of such Bond. Upon registration of such transfer a new Bond or Bonds, of authorized denomination or denominations, for the same aggregate principal amount and of the same maturity will be issued to the transferee in exchange therefor.

Notwithstanding the foregoing, while the Series A Bonds or the Series A-T Bonds, or

both, are held in the book-entry only system of DTC, all such payments of principal, interest and premium, if any, will be made to Cede & Co. as the registered owner of the applicable Bonds, for subsequent disbursement to Participants and beneficial owners. See “APPENDIX H - BOOK-ENTRY ONLY BONDS”.

Redemption Provisions

Optional Redemption of the Series A Bonds. The Series A Bonds that are Current

Interest Bonds maturing on October 1, 2042, are subject to redemption, at the option of the Agency on any date on or after October 1, 2021, as a whole or in part, by such maturities as shall be determined by the Agency, and by lot within a maturity, from any available source of funds, at a redemption price equal to the principal amount of the Series A Current Interest Bonds to be redeemed, together with accrued interest thereon to the date fixed for redemption, without premium.

The Series A Bonds that are Convertible Capital Appreciation Bonds maturing on

October 1, 2026, are not subject to optional redemption prior to maturity. The Series A Bonds that are Convertible Capital Appreciation Bonds maturing after October 1, 2026, are subject to redemption, at the option of the Agency on any April 1 or October 1 on or after October 1, 2026, as a whole or in part, by such maturities as shall be determined by the Agency, and by lot within a maturity, from any available source of funds, at a redemption price equal to the Accreted Value of the Convertible Capital Appreciation Bonds to be redeemed, together with accrued interest thereon to the date of redemption if after the Conversion Date, without premium.

The Agency shall be required to give the Trustee written notice of its intention to redeem

Series A Bonds pursuant to optional redemption and of the maturities selected for redemption at least forty-five (45) days prior to the date fixed for redemption (or such later date as shall be

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acceptable to the Trustee). The Current Interest Bonds and the Convertible Capital Appreciation Bonds may all be separately redeemed.

Optional Redemption of the Series A-T Bonds. The Series A-T Bonds are not subject

to optional redemption prior to maturity. Sinking Fund Redemption of Series A Bonds. The Series A Bonds that are Current

Interest Bonds maturing on October 1, 2042 and the Series A Bonds that are Convertible Capital Appreciation Bonds maturing October 1, 2026, October 1, 2031 and October 1, 2041 (the “Series A Term Bonds”) are subject to mandatory redemption in part by lot, on October 1 in each of the years set forth in the following tables, from deposits made for such purposes under the Indenture authorizing the Series A Bonds, at a redemption price equal to the principal amount thereof to be redeemed together with accrued interest thereon to the redemption date, without premium, or in lieu thereof shall be purchased under such Indenture, in the aggregate respective principal amounts and on the respective dates as set forth in the following table; provided, however, that if some but not all of the Series A Term Bonds have been redeemed under the optional redemption provisions described above, the total amount of all future sinking account payments will be reduced by the aggregate principal amount of the Series A Term Bonds so redeemed, to be allocated among such sinking account payments on a pro rata basis in integral multiples of $5,000 as determined by the Agency.

$6,580,000 Series A Term Current Interest Bonds Maturing October 1, 2042

Date

(October 1) Principal Amount To be Redeemed

2041 $1,750,000 2042 (maturity) 4,830,000

Series A Term Convertible Capital Appreciation Bonds Maturing October 1, 2026

Sinking Account Redemption Date

(October 1)

Conversion Value Principal Amount To Be

Redeemed or Purchased

2022 $265,000 2023 280,000 2024 290,000 2025 335,000 2026 (maturity) 355,000



(October 1)



2027 $ 380,000 2028 410,000 2029 455,000 2030 480,000 2031 (maturity) 520,000

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(October 1)



2032 $ 560,000 2033 610,000 2034 535,000 2035 590,000 2036 630,000 2037 685,000 2038 1,050,000 2039 920,000 2040 5,890,000 2041 (maturity) 2,725,000

Sinking Fund Redemption of Series A-T Bonds. Series A-T Bonds maturing on October

1, 2021 (the “Series A-T Term Bonds”) are subject to mandatory redemption in part by lot, on October 1 in each of the years set forth in the following tables, from deposits made for such purposes under the Indenture authorizing the Series A-T Bonds, at a redemption price equal to the principal amount thereof to be redeemed together with accrued interest thereon to the redemption date, without premium, or in lieu thereof shall be purchased under such Indenture, in the aggregate respective principal amounts and on the respective dates as set forth in the following table; provided, however, that if some but not all of the Series A-T Term Bonds have been redeemed under the optional redemption provisions described above, the total amount of all future sinking account payments will be reduced by the aggregate principal amount of the Series A-T Term Bonds so redeemed, to be allocated among such sinking account payments on a pro rata basis in integral multiples of $5,000 as determined by the Agency.

$7,085,000Term Bonds Maturing October 1, 2021

Date

(October 1) Principal Amount To be Redeemed

2017 $1,210,000 2018 1,305,000 2019 1,410,000 2020 1,520,000 2021 (maturity 1,640,000

In lieu of redemption of the Series A Term Bonds or Series A-T Term Bonds under the

preceding paragraph, amounts on deposit in the Debt Service Fund established for the Series A Bonds or the Series A-T Bonds under the applicable Indenture (to the extent not required to be deposited by the Trustee in the Interest Account or the Principal Account during the current Bond Year under the applicable Indenture) may also be used and withdrawn at the direction of the Agency at any time for the purchase of the Series A Term Bonds or the Series A-T Terms Bonds, as applicable, at public or private sale as and when and at such prices (including brokerage and other charges and including accrued interest) as the Agency may in its discretion determine. The par amount of any of such Term Bonds so purchased by the Agency in any twelve-month period ending on August 1 in any year shall be credited towards and shall reduce the par amount of such Term Bonds required to be redeemed on the next succeeding October 1.

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Notice of Redemption. The Trustee on behalf and at the expense of the Agency is required to mail notice of any redemption to the respective Owners of any Bonds designated for redemption, at their respective addresses appearing on the Registration Books, and to the Securities Depositories and to one or more Information Services as designated in the Indenture at least 30 but not more than 60 days prior to the date fixed for redemption; provided, however, that neither failure to receive any such notice so mailed nor any defect therein shall affect the validity of the proceedings for the redemption of such Bonds or the cessation of the accrual of interest thereon.

The Agency has the right to rescind any optional redemption by written notice to the

Trustee on or prior to the date fixed for redemption. Any notice of redemption shall be canceled and annulled if for any reason funds will not be or are not available on the date fixed for redemption for the payment in full of the Bonds then called for redemption, and such cancellation shall not constitute an Event of Default under the Indenture. The Agency and the Trustee shall have no liability to the Owners or any other party related to or arising from such rescission of redemption. The Trustee shall mail notice of such rescission of redemption in the same manner and to the same recipients as the original notice of redemption was sent.

Governor’s Budget Proposal. The Governor’s current 2011-12 State Budget proposal in

its current form does not require prepayment or defeasance of the Bonds. See “BOND OWNERS’ RISKS - State of California Fiscal Issues; ERAF; SERAF”.

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SECURITY FOR THE BONDS

Allocation of Taxes As provided in the respective Redevelopment Plans, and in Article 6 of Chapter 6 of the

Redevelopment Law and Section 16 of Article XVI of the Constitution of the State of California, taxes levied upon taxable property in the Project Areas each year by or for the benefit of the State of California, any city, county, city and county, district, or other public corporation for fiscal years beginning after the effective date of the ordinance approving the Redevelopment Plan shall be divided as follows:

1. 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 said taxing agencies upon the total sum of the assessed value of the taxable property in the Project Areas as shown upon the assessment roll used in connection with the taxation of such property by such taxing agency last equalized prior to the effective date of the ordinance approving the Redevelopment Plan shall be allocated to, and when collected shall be paid into the funds of the respective taxing agencies as taxes by or for said taxing agencies on all other property are paid; and

2. Except for taxes which are attributable to a tax levy 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 applicable taxing agency, that portion of levied taxes each year in excess of such amount will be allocated to, and when collected, will be paid to the Agency to pay the principal of and interest on loans to, money advanced to, or indebtedness incurred by the Agency to finance redevelopment projects.

Pledge of Housing Tax Revenues

The Bonds, together with the Outstanding Parity Bonds, are secured by a first pledge of

and lien on Housing Tax Revenues which consist of a portion of the Tax Revenues. The respective Indentures define “Tax Revenues” to mean all taxes pledged and annually allocated within the Plan Limitations, following the Closing Date, and paid to the Agency with respect to the Project Areas pursuant to Article 6 of Chapter 6 (commencing with Section 33670) of the Redevelopment Law and Section 16 of Article XVI of the Constitution of the State, or pursuant to other applicable State laws, and as provided in the Redevelopment Plan, and all payments, subventions and reimbursements, if any, to the Agency specifically attributable to ad valorem taxes lost by reason of tax exemptions and tax rate limitations, but excluding (i) amounts payable by the State to the Agency under and pursuant to Chapter 1.5 of Part 1 of Division 4 of Title 2 (commencing with Section 16110) of the California Government Code, and (ii) amounts payable by the Agency pursuant to Sections 33607.5 and 33607.7 of the Law, except and to the extent that any amounts so payable are payable on a basis subordinate to the payment of the Bonds or to the payment of Parity Debt, as applicable.

The respective Indentures define “Housing Tax Revenues” to mean that portion of Tax

Revenues required by Section 33334.3 of the Redevelopment Law to be deposited in the Agency’s Low and Moderate Income Housing Fund (referred to herein as the “Housing Fund”).

No Power to Tax

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

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taxing agencies having the effect of reducing the property tax rate, could reduce the amount of Tax Revenues and, therefore, the amount of Housing Tax Revenues that would otherwise be available to pay the principal of, and interest on, the Bonds. Likewise, broadened property tax exemptions could have a similar effect. See “BOND OWNERS’ RISKS”.

The Bonds are not a debt of the County, the State of California or any of its political

subdivisions other than the Agency, and neither the County, State, nor any of its political subdivisions other than the Agency is liable. The Bonds do not constitute an indebtedness within the meaning of any constitutional or statutory debt limit or restriction on the amount of debt.

Existing Parity Debt

2004 Series A Bonds and 2004 Series A-T Bonds. On December 29, 2004, the Agency issued its $38,225,000 principal amount of Redevelopment Agency For the County of Riverside 2004 Tax Allocation Housing Bonds, Series A (the “2004 Series A Bonds”) and its $37,000,000 principal amount of Redevelopment Agency For the County of Riverside 2004 Taxable Tax Allocation Housing Bonds, Series A-T (the “2004 Series A-T Bonds” and, together with the 2004 Series A Bonds, the “2004 Bonds”). Proceeds of the 2004 Bonds were used to pay the costs of certain low and moderate income housing projects of the Agency with respect to the Project Areas. The 2004 Series A Bonds are currently outstanding in the aggregate principal amount of $38,225,000 and the 2004 Series A-T Bonds are currently outstanding in the aggregate principal amount of $30,140,000.

2005 Bonds. On April 21, 2005, the Agency issued its $18,245,000 principal amount of

Redevelopment Agency For the County of Riverside 2005 Tax Allocation Housing Refunding Bonds, Series A (the “2005 Bonds”). Proceeds of the 2005 Bonds were used to prepay the portions of loans of the Agency which were payable from low and moderate income housing funds of the Agency, and consequently refunded the applicable portions of the bonds issued by the Riverside County Public Financing Authority (the “Authority”) to fund such loans. The 2005 Bonds are currently outstanding in the aggregate principal amount of $15,955,000.

2010 Series A Bonds and 2010 Series A-T Bonds. On June 3, 2010, the Agency

issued its $15,885,000 principal amount of Redevelopment Agency For the County of Riverside 2010 Tax Allocation Housing Bonds, Series A (the “2010 Series A Bonds”) and its $50,860,000 principal amount of Redevelopment Agency For the County of Riverside 2010 Taxable Tax Allocation Housing Bonds, Series A-T (the “2010 Series A-T Bonds” and, together with the 2010 Series A Bonds, the “2010 Bonds”). Proceeds of the 2010 Bonds were used to pay the costs of certain low and moderate income housing projects of the Agency with respect to the Project Areas. The 2010 Series A Bonds are currently outstanding in the aggregate principal amount of $15,885,000 and the 2010 Series A-T Bonds are currently outstanding in the aggregate principal amount of $50,860,000.

The Agency has pledged Housing Tax Revenues to the repayment of the Outstanding

Parity Bonds, which pledge is on a parity with the Agency’s pledge of Housing Tax Revenues for the payment of debt service on the Bonds. See Table 9 “Projected Debt Service Coverage Schedule” for the debt service schedule of the Outstanding Parity Bonds.

Additional Parity Debt

In addition to the Bonds and the Parity Bonds, the Agency may issue or incur other

obligations on a parity with the Bonds and the Parity Bonds. In such event, the Agency must

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comply with the requirements of the respective Indentures relating to Parity Debt, including the requirement that the Housing Tax Revenues for each succeeding Fiscal Year, based on the most recent assessed valuation of property in the Project Area as evidenced in written documentation from an appropriate official of the County or a written report of an Independent Redevelopment Consultant, plus any Additional Revenues, shall be at least equal to one hundred and twenty percent (120%) (one hundred twenty five percent (125%) for so long as any of the 2005 Series A Bonds remain outstanding) of Annual Debt Service on the 2004 Bonds, the 2010 Bonds, the Bonds, and any Parity Debt which will be outstanding immediately following the issuance of such Parity Debt for each applicable succeeding Bond Year; provided that in determining the amount of Tax Revenues for any future Fiscal Year, if any single property owner owns property within the Project Area with an assessed value totaling more than six and one-half percent (6.5%) of the total assessed value in the Project Area, the Agency shall disregard the assessed value in excess of six and one-half percent (6.5%) of the total assessed value in determining the Tax Revenues. For purposes of the definition of Annual Debt Service and Section 4.03 of the Indenture, Accreted Value and Conversion Value will be deemed to constitute principal. For all the requirements that must be met for the issuance of Parity Debt, see “APPENDIX E - SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURES – Issuance of Parity Debt”. Reserve Subaccount

Pursuant to the Indenture, the Trustee will establish, maintain and hold in trust, a

separate subaccount within the Reserve Account designated as the "2011 Reserve Subaccount", together with a 2011 Series A-T Sub-subaccount and a 2011 Series A Sub-subaccount therein. Amounts on deposit in the 2011 Reserve Subaccount shall be available to pay debt service only on the Series A Bonds, the Series A-T Bonds and any other Parity Debt hereafter issued that the Agency elects to be secured by the 2011 Reserve Subaccount. In the event that the Agency elects to secure additional Parity Debt with the 2011 Reserve Subaccount, the Agency shall establish additional sub-subaccounts within the 2011 Reserve Subaccount as needed. See “APPENDIX E - SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURES –Deposits of Amounts by Trustee - Reserve Account”.

With respect to the portions of the Reserve Requirement attributable to Outstanding

Parity Debt, the Agency has previously deposited with the Trustee Qualified Reserve Account Credit Instruments as follows:

Outstanding Parity Debt

Credit Instrument

Stated Amount

Provider

2004 Bonds DSR Insurance Policy $5,881,750.00 Syncora Guarantee Inc.(1)

2005 Bonds Surety Bond 1,166,150.00 Ambac Assurance Corporation (1) Formerly XL Capital Assurance Inc.

The reserve subaccounts for the 2010 Series A Bonds and the 2010 Series A-T Bonds

have been funded with cash. The Qualified Reserve Account Credit Instruments or cash deposited with respect to Outstanding Parity Debt are not available to pay the Bonds.

Rating agencies have downgraded or withdrawn the ratings on the claims-paying ability

and financial strength of most of the nation's bond insurance companies, including the providers of the Qualified Reserve Account Credit Instruments shown in the table above. Further deterioration in the financial condition of the providers of the Qualified Reserve Account Credit Instruments or a failure to honor a draw by any of these providers under its Qualified Reserve Account Credit Instrument could occur. Ambac Financial Group Inc., the parent of Ambac

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Assurance Corporation, recently declared bankruptcy under Chapter 11 of the United States Bankruptcy Code. The Agency does not expect that Ambac Assurance Corporation (which is the issuer of the reserve surety bond and which is being restructured by Wisconsin Insurance Regulators) will fail to perform on the Surety Bond described above. However, the Agency can make no assurances as to which (if any) obligations of Ambac Assurance Corporation may be discharged in the bankruptcy proceedings. The Agency is not required under the Indenture to replace a Qualified Reserve Account Credit Instrument with cash or a replacement instrument in the event the ratings of its provider decline or are withdrawn. The Agency currently has no plans to replace such Qualified Reserve Account Credit Instruments with other instruments or cash.

If circumstances should ever cause a Qualified Reserve Account Credit Instrument to be canceled or discharged, such cancellation or discharge could be determined to create a deficiency in the portion of Reserve Requirement previously satisfied by such Qualified Reserve Account Credit Instrument. Under the Indenture, 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 applicable Reserve Requirement be insufficient for such purpose, such insufficiency would not result in an event of default under the Indenture, but the requirement of the Agency to transfer available Tax Revenues to the Trustee would continue. No assurance can be given that there would ever be available Tax Revenues sufficient for such purpose.

The “Reserve Requirement” is defined in the Indentures to mean the least of (i) ten

percent (10%) of the original principal amount of the Bonds or Parity Debt, as applicable, provided that if the original issue discount of the Bonds or Parity Debt exceeds 2% of such original principal amount, then initially ten percent (10%) of the original principal amount of, less original issue discount on, the Bonds or Parity Debt, but excluding from such calculation any proceeds of the Bonds or Parity Debt deposited in an escrow described in the definitions in the Indentures of Annual Debt Service and Maximum Annual Debt Service, (ii) Maximum Annual Debt Service with respect to the Bonds or any Parity Debt, as applicable, or (iii) 125% of average Annual Debt Service on the Bonds or Parity Debt, as applicable. For purposes of calculating Maximum Annual Debt Service with respect to determining the Reserve Requirement, variable rate Parity Debt shall be deemed to bear interest at the maximum interest rate permitted by the Parity Debt Instrument.

“Maximum Annual Debt Service” is defined in the Indentures to mean, as of the date

of calculation, the largest amount of Annual Debt Service on all Outstanding Bonds for the current or any future Bond Year. For purposes of such calculation, there is excluded a pro rata portion of each installment of principal of any Parity Debt, together with the interest to accrue thereon, in the event and to the extent that the proceeds of such Parity Debt are deposited in an escrow fund from which amounts may not be released to the Agency unless the Housing Tax Revenues for the current Fiscal Year (as evidenced in the written records of the County) plus additional Revenues at least meets the coverage requirement for the issuance of Parity Debt.

In the event that the amount on deposit in the Reserve Account becomes less than the

Reserve Requirement, the Trustee shall promptly notify the Agency of such fact. Promptly upon receipt of any such notice, the Agency shall transfer to the Trustee an amount of available Housing Tax Revenues sufficient to maintain the Reserve Requirement on deposit in the Reserve Account. Amounts in the Reserve Account shall be used and withdrawn by the Trustee solely for the purpose of making transfers to the Interest Account and the Principal

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Account, in such order of priority, on any date which the principal of or interest on the Bonds, including any parity Debt, becomes due and payable, in the event of any deficiency at any time in any of such accounts, or at any time for the retirement of all the Bonds or any Parity Debt then Outstanding. So long as no Event of Default has occurred and be continuing, any amount in the Reserve Account in excess of the Reserve Requirement preceding each Interest Payment Date shall be withdrawn from the Reserve Account by the Trustee and deposited in the respective Interest Accounts on or before the Interest Payment Date.

If the Agency at anytime in the future has cash on deposit in the Reserve Account, the

Agency has the right at any time to request the release of funds by the Trustee from the Reserve Account, in whole or in part, by tendering all of the following to the Trustee:

(i) a Qualified Reserve Account Credit Instrument (as defined in the Indentures), and (ii) an opinion of Bond Counsel stating that neither the release of such funds nor the

acceptance of such Qualified Reserve Account Credit Instrument will cause interest on the Series A Bonds to become includable in gross income for purposes of federal income taxation.

See APPENDIX E-“SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURES –

Deposit of Amounts by the Trustee – Reserve Account”.

Tax Sharing Agreements and Statutory Tax Sharing

The Agency has entered into uniform tax-sharing agreements with taxing entities and school districts with respect to all of the Project Areas (the “Tax Sharing Agreements”). In addition, certain of the Project Areas are subject to the tax sharing provisions of AB 1290. Under Section 33607.5 and Section 33607.7 of the Law (added by AB 1290), any territory added to a project area after 1994 is required to share in tax increment revenues generated by such territory pursuant to a statutory formula ("Statutory Tax Sharing"). In addition, Statutory Tax Sharing is applicable upon certain other amendments to the Redevelopment Plans. However, Housing Tax Revenues are not impacted by the Tax Sharing Agreements or the Tax Sharing Statutes.

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THE REDEVELOPMENT AGENCY FOR THE COUNTY OF RIVERSIDE

Authority and Personnel The Agency was established pursuant to the Redevelopment Law and was activated by

the Board of Supervisors of the County (the “Board”) on August 6, 1985, by Ordinance No. 612, at which time the Board declared itself to be the governing board (the “Board of Directors”) of the Agency. The Agency is charged with the authority and responsibility of redeveloping and upgrading blighted areas of the County. The Agency is a separate public body and exercises governmental functions in planning and carrying out redevelopment projects. Subject to requirements and certain limitations in the Redevelopment Law, 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 Areas.

Members of the Agency and their terms of office are shown below:

Member Term Expires Bob A. Buster January, 2013 John F. Tavaglione January, 2015 Jeff Stone January, 2013 John J. Benoit January, 2015 Marion Ashley January, 2015 Agency Administration

The Agency each year adopts an administrative budget. A portion of salaries and benefits of certain County staff members are budgeted and paid for by the Agency. The Agency funds administrative costs out of available revenues. Such reimbursement is subordinate to any outstanding bonded indebtedness of the Agency.

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 Teaman, Ramirez & Smith, Certified Public Accountants, Riverside, California, prepared a financial statement for the Agency for the fiscal year ended June 30, 2010. The Agency’s audited financial statements are public documents and are included within this official statement without the prior approval of the auditor. Accordingly, the auditor has not conducted any post audit of the financial condition of the Agency. See “APPENDIX C – AGENCY’S AUDITED FINANCIAL STATEMENTS FOR FISCAL YEAR 2009-10”.

As mentioned herein, Governor Brown in his proposed State budget for fiscal year 2011-

12 seeks legislation which would disestablish redevelopment agencies and provide for the transfer of unspent low and moderate income housing funds to the applicable local housing authority. Assuming the successful disestablishment of the Agency, it is possible that unspent Bond proceeds could be transferred to the Housing Authority of the County of Riverside and be used to finance low and moderate income housing projects by the Authority. See “BOND OWNERS’ RISKS - State of California Fiscal Issues; ERAF; SERAF”.

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Budgetary Policies

The Board of Directors of the Agency each year approves a budget submitted by the Executive Director prior to the beginning of the new Fiscal Year. Public hearings are conducted prior to its adoption. The budget is subsequently adopted through the passage of a resolution. Budgets for all three fund types utilized by the Agency are adopted on a basis consistent with generally accepted accounting principles.

THE PROJECT AREAS

Redevelopment Plans Under the Redevelopment Law a city or county that activates its redevelopment agency

is permitted to adopt, by ordinance, a redevelopment plan for each redevelopment project area to be undertaken by the redevelopment agency. A redevelopment agency may only undertake those activities within a redevelopment project area specifically authorized in the adopted redevelopment plan. A redevelopment plan is a legal document, the content of which is largely prescribed in the Redevelopment Law, rather than a “plan” in the customary sense of the word.

The Redevelopment Plans for the Project Areas and Sub-Areas (“Sub-Areas”) have two

principal purposes (i) the removal of blight from the Project Areas and (ii) the provision of low and moderate income housing both within the Project Areas and within any other area of the County of Riverside. In order to accomplish these two purposes the Redevelopment Plans provide for the acquisition of property and the demolition of buildings and improvements, the relocation of any displaced occupants and the construction of streets, parking facilities, utilities and other public improvements. In connection with the provision of low and moderate income housing, the Agency may additionally make housing grants and loans and acquire, rehabilitate and sell residential housing to persons and families of low and moderate income. The Redevelopment Plans also allow for redevelopment of land by private enterprise and participation by owners and tenants of properties in the Project Areas.

There are five Project Areas generating Housing Tax Revenues which secure the

Bonds. Each Project Area is comprised of redevelopment project areas established under separate ordinances and subsequently merged, for fiscal reasons, into a Project Area. Key information on each Sub-Area in the Project Areas is shown in Table 4 below. Additional information about each Project Area is set forth in ”APPENDIX A – GENERAL INFORMATION ABOUT EACH PROJECT AREA”.

Project Area No. 1-1986. The Riverside County Board of Supervisors (the “Board”)

approved Project Area No. 1-1986 on December 23, 1986, pursuant to Ordinance No. 635. The Project Area is located in the southwestern region of the County and consists of three Sub-Areas, totaling approximately 4,651 acres. The original Project Area contains Sub-Areas in the communities of Home Gardens and Murrieta. The Board approved Amendment No. 1 to the Project Area on July 20, 1999, pursuant to Ordinance No. 793, which included a new Sub-Area in the communities of Lakeland Village and Wildomar. A second amendment to the Project Area was approved on December 14, 1999, pursuant to Ordinance No. 800. This amendment allowed for the creation of another new Sub-Area in the El Cerrito/Temescal Canyon area.

The Jurupa Valley Project Area. The Board adopted the Jurupa Valley Project Area

on July 9, 1996, via Ordinance No. 763. The project area formation involved the merger of three existing redevelopment project areas, Project Areas Nos.2-1986 (Mira Loma), which was

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amended twice for a total acreage of 3,856 acres; 2-1987 (Glen Avon and Rubidoux) at 635 acres; and 2-1989 (Pedley and Rubidoux), at an total of 1,354 acres. The Amendment and Merger which took place in 1996 included an addition of 10,750 acres of territory (the “Amendment Area”) to the merged project areas. The Jurupa Valley Project Area is a single contiguous project area and is located in the northwest region of the County. The total acreage for the project area is 16,600 acres.

The Mid-County Project Area. The Mid-County Project Area originally consisted of

three project areas: Project Area Nos. 3 (3-1986), 3-1987, and 3-1989. Project Area 3-1986 includes area in the communities of Garnet, Valle Vista, West Garnet, Homeland and Winchester; Project Area 3-1987 includes portions of the community of North Hemet; and Project Area 3-1989 includes area within the community of Cabazon. The Board approved the original boundaries of the Project Area No. 3-1986 on December 23, 1986 via Ordinance No. 637; Project Area 3-1987 on December 22, 1987 via Ordinance No. 646; and, Project Area No. 3-1989 on July 11, 1989 via Ordinance No. 676.

In 1999, the project areas were merged and amended, adding approximately 1,307

acres to the Homeland Sub-Area (renamed Homeland/Green Acres). Both the amendment and merger were approved in May 1999, via Ordinances Nos. 785 and 786, respectively. On January 13, 2009, Amendment No. 2 to the Mid-County Project Area was adopted via Ordinance No. 887 and added 2,693 acres in the Garnet and West Garnet communities to the Sub-Area. The current Mid-County Project Area is composed of approximately 9,721 acres.

The Desert Communities Project Area. The Desert Communities Project Area

originally contained two separate project areas known as Project Area Nos. 4 (also known as 4-1986) and 4-1987. The Riverside County Board of Supervisors (the “Board”) approved the original boundaries of Project Area No. 4 on December 23, 1986 via Ordinance No. 638. Project Area 4-1986 consists of 20,440 acres of territory within the communities of East Blythe, Mecca, North Shore, Palm Desert, Ripley, Thermal (including the airport), and Thousand Palms. Project Area No. 4-1987 was approved by the Board on December 1, 1987 via Ordinance No. 647, and consists of 376 acres in Desert Center. The Airports-1988 project area was approved by the Board on December 19, 1988, via Ordinance No. 668 and consists of six general aviation airports. On July 20, 1999, the Board approved the merger of both project areas with the Airports-1988 project area.

At the time of the merger, the Board approved the amendment of Project Area 4-1986,

to add approximately 408 acres of territory within the community of Thousand Palms. The amendment and merger were approved via Ordinances Nos. 794 and 795,

respectively. On January 13, 2009, Amendment No. 2 to the Desert Communities Project Area was adopted via Ordinance No. 886, and added 1,975 acres in the 100 Palms, Oasis, Mecca and North Shore communities to the Desert Communities Project Area. The Desert Communities Project Area consists of six Sub-Areas, encompassing approximately 29,668 acres.

The Interstate 215 Corridor Project Area. The Interstate 215 Corridor Project Area

was originally comprised of two project areas: Project Areas Nos. 5-1986 and 5-1987. The Board approved Project Area No. 5 on December 23, 1986 via Ordinance No. 639, and it included four Sub-Areas: Calimesa, Highgrove, Lakeview, Mead Valley and Romoland, for a total of 3,429 acres. In November of 1998, the Board approved an amendment to the project area to include an additional 843 acres of territory in the Highgrove Sub-Area. Project Area No. 5-1987 consisted of one Sub-Area of 141 acres in the community of Mead Valley and was

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approved by the Board on December 1, 1987 via Ordinance No. 648. The project area was amended to include an additional 715 acres of territory on June 27, 1989 via Ordinance No. 715.

Both project areas were amended and merged on July 25, 2002 via Ordinance No. 821

and 822, respectively. Approximately 1,392 acres was added to the Romoland Sub-Area. The Mead Valley Sub-Area was also expanded and included the addition of 3,200 acres. The amended areas of both Sub-Areas are contiguous with the existing Sub-Area boundaries.

In 2006, Amendment No. 1a and Amendment No. 1b were adopted into the Interstate

215 Corridor Project Area. Amendment No. 1a was adopted on May 16, 2006, and added approximately 2,820 acres of territory in the communities of Lakeview/Nuevo to the Interstate 215 Corridor Project Area. Amendment No. 1b was adopted on May 2, 2006, and added 3,289 acres of additional territory in the communities of Sun City/Quail Valley into the Interstate 215 Corridor Project Area.

On May 4, 2010, Amendment No. 2, called the Highway 74 Communities Sub-Area, was

adopted into the Interstate 215 Corridor Project Area. The amendment added approximately 5,865 acres to the Interstate 215 Corridor Project Area; located within the communities of South Mead Valley, Wagon Wheel, Good Hope, Meadowbrook and Warm Springs. The total acreage for the Interstate Corridor Project Area is 21,695 acres.

Redevelopment Plan Limitations

In 1993, the California Legislature made significant changes in the Redevelopment Law by the adoption of AB 1290, Chapter 942, statutes of 1993 “AB 1290”). Among the changes to the Redevelopment Law accomplished by the enactment of 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 and subject to shorter limitations which may be contained in a redevelopment plan, loans, advances and indebtedness may be incurred within the later of January 1, 2004 or 20 years from the date of original adoption of the redevelopment plan, a redevelopment plan must terminate not later than January 1, 2009 or 40 years following the date of original adoption of the redevelopment plan, and loans, advances and indebtedness must be repaid during a period extending not more than 10 years following the date of termination of the redevelopment plan. AB 1290 further required that any redevelopment plan that either did not contain the appropriate limitations or that contained limitations longer than permitted by AB 1290 must be amended by the applicable legislative body.

In addition, the Sub-Areas added to the Project Areas after January 1, 1994 are subject

to the special requirements of AB1290, which replaced tax increment caps and negotiated fiscal agreements with finite plan durations and statutory payments to taxing entities, among other requirements. All of the Redevelopment Plans were subsequently brought into conformance with plan duration and other provisions of AB1290. The California Legislature enacted Senate Bill 1045, Chapter 260, Statutes 2003, effective September 1, 2003 (“SB 1045”) and Senate Bill 1096, Chapter 211, Statutes of 2004 (“SB 1096”). SB 1045 and SB 1096 provide, among other things, that the Redevelopment Plans for the Project Areas may be amended to add up to three years on to the effectiveness of the Redevelopment Plans and on to the period for collection of tax increment revenues and the repayment of debt. Pursuant to the authorization contained in SB 1045, the Board of Supervisors adopted Ordinance No. 835 on November 30, 2004, (effective December 30, 2004) extending by one year the date of effectiveness of the Redevelopment Plan and the allowed time to pay indebtedness or receive property taxes. The following table takes into account the effect of Ordinance No. 835. The Redevelopment Plans of

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the Agency were adopted too recently to be able to take advantage of the extensions permitted by SB 1096.

The Fiscal Consultant has determined the Volatility Ratio for each of the Project Area

Sub-Areas. The Volatility Ratio is calculated by dividing the current year assessed valuation by the base year assessed valuation. See Table 1 in “APPENDIX G – FISCAL CONSULTANT REPORT”.

TABLE 4

REDEVELOPMENT AGENCY FOR THE COUNTY OF RIVERSIDE Summary of Project Areas and Constituent Sub-Areas

Date of

Adoption

Ordinan

ce Number

Termination

of Plan Activities

Last Date to Repay Debt

Tax Increment

Limit (millions)

Acreage

2010-11 Increment

AV (millions)

Project Area No. 1-1986 1-1986 (Murrieta) 12/23/1986 635 12/23/2027 12/23/2037 $150 350 $180 1-1986 (Lakeland) 7/20/1999 793 7/20/2030 7/20/2045 -- 2,859 248 1-1986 (El Cerrito) 12/21/1999 800 12/21/2030 12/21/2045 -- 1,442 411 Jurupa Valey Project Area 2-1986 (Mira Loma) 12/23/1986 636 12/23/2027 12/23/2037 275 1,955 385 2-1986 (Amend 1) 12/18/1988 667 12/18/2029 12/18/2039 695 368 113 2-1986 (Amend 2) 12/19/1989 686 12/19/2030 12/19/2040 995 1,533 396 2-1987 (Glen Avon) 12/22/1987 645 12/22/2028 12/22/2038 495 635 127 2-1989 (Pedley) 7/5/1989 675 7/5/2028 7/5/2040 535 1,354 372 2-1996 (Jurupa Amend) 7/9/1996 762/3 7/9/2027 7/9/2042 -- 10,755 1,846 Mid-County Project Area 3-1986 (Garnet) 12/23/1986 637 12/23/2027 12/23/2037 500 980 151 3-1986 (Homeland) 12/23/1986 637 12/23/2027 12/23/2037 55 122 8 3-1986 (Green Acres) 5/11/1999 785 5/11/2030 5/11/2045 -- 1,307 79 3-1987 (North Hemet) 12/22/1987 646 12/22/2028 12/22/2038 40 40 2 3-1989 (Cabazon) 7/11/1989 676 7/11/2030 7/11/2040 135 4,598 306 3-2009 (Garnet/W. Garnet) (1) 01/13/2009 887 01/13/2039 01/13/2054 -- 2,674 NA Desert Communities Project Area

4-1986 (East Blythe) 12/23/1986 638 12/23/2027 12/23/2037 900 20,155 1,962 4-1986 (1000 Palms) 12/23/1986 638 12/23/2027 12/23/2037 150 285 70 4-1999 (Amendment) 7/20/1999 794 7/20/2030 7/20/2045 -- 408 119 4-1987 (Desert Center) 12/1/1987 647 12/1/2028 12/1/2038 140 376 4 4-1988 (Airports) 12/19/1988 668 12/19/2029 12/19/2039 360 6,366 55 4-2008 (1000 Palms/Oasis) (1) 01/13/2009 886 01/13/2039 01/13/2054 -- 2,078 NA Interstate 215 Corridor Project Area

5-1986 (Lakeview) 12/23/1986 639 12/23/2027 12/23/2037 578 3,154 311 5-1986 (Highgrove) 12/23/1986 639 12/23/2027 12/23/2037 50 275 51 5-1998 (Highgrove Amend) 11/24/1998 783 11/24/2029 11/24/2044 -- 843 396 5-2002 (Romoland Amend) 6/25/2002 822 6/25/2033 6/25/2048 -- 1,392 765 5-1987 (Mead V 2) 12/1/1987 648 12/1/2028 12/1/2038 120 141 14 5-1989 (Mead 2 Amend) 7/5/1989 677 7/5/2030 7/5/2040 540 715 76 5-2002 (Mead Amend) 6/25/2002 821 6/25/2033 6/25/2048 -- 3,200 105 5-2006 (Lakeview/Nuevo)(1), (2) 05/16/2006 854 05/16/2036 05/16/2051 -- 2,821 5-2006 (Sun Valley/Quail)(1), (2) 05/02/2006 855 05/02/2051 05/02/2051 -- 3,289

22 (3)

5-2010 (Highway 74) 05/04/2010 896 05/04/2040 05/04/2055 -- 5,865 NA

(1) Sub-Areas do not currently contribute tax increment and are excluded from tables used in this table (2) Sub-Areas are combined for reporting purposes. (3) Combined assessed valuation figure for 5-2006 (Lakeview Nuevo) and 5-2006 (Sun Valley/Quail). Source: The Agency

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The Fiscal Consultant has determined that tax increment caps may be reached prior to the plan limits on tax increment collection in the 4-1986 (East Blythe) Sub-Area of the Desert Communities Project Area and the 3-1989 (Cabazon) Sub-Area of the Mid-County Project Area with annual growth rates of 3% and higher; in the 2-1986 (Mira Loma 2) Sub-Area of the Jurupa Valley Project Area with annual growth rates of 4% and higher; in the 2- 1986 (Mira Loma) Sub-Area of the Jurupa Valley Project Area with annual growth rates of 6% and higher; and in the 1-1986 (Murietta) Sub-Area of Project Area No. 1-1986, the 5-1986 (Highgrove) Sub-Area of the Interstate 215 Corridor Project Area and the 2-1986 (Mira Loma 1) Sub-Area of the Jurupa Valley Project Area with annual growth rates of 7% and higher.

The Agency has covenanted that it will annually review, no later than December 1 of

each year, the total amount of Housing Tax Revenues remaining available to be received by the Agency under the Plan Limitations, as well as future cumulative Annual Debt Service, any obligations of the Agency payable from tax increment revenues that are senior to the Bonds, and payments on obligations that are subordinate to the Bonds. If, based on such review, the allocation of Housing Tax Revenues to the Agency in any of the next three succeeding Fiscal Years will cause an amount equal to ninety-five (95%) of the amount of Housing Tax Revenues remaining under the Plan Limitations to fall below the sum of (i) remaining cumulative Annual Debt Service, (ii) any obligations of the Agency payable from Housing Tax Revenues that are senior to the Bonds, and (iii) payments on obligations that are subordinate to the Bonds, the Agency shall either (1) defease Bonds or Parity Debt by depositing an amount of Housing Tax Revenues equal to the amount that is required to ensure continuing compliance in a defeasance escrow to be held by the Trustee and to be pledged solely to the payment of debt service on the Bonds or Parity Debt, which escrow shall be invested in Defeasance Obligations (as defined in the Indenture) and used for the payment of interest on and principal of and redemption premiums, if any, on the Bonds or Parity Debt or (2) adopt a plan approved by an Independent Redevelopment Consultant which demonstrates the Agency's continuing ability to pay debt service on the Bonds and Parity Debt.

The California Legislature enacted SB 211, Chapter 741, Statutes 2001, effective

January 1, 2002 (“SB 211”). SB 211 provides, 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. Ordinance No. 865, adopted by the Riverside County Board of Supervisors on October 3, 2006, deleted the limitations on incurring indebtedness contained in the pre-January 1, 1994 Redevelopment Plans of the Agency. Adoption of Ordinance No. 865 triggered statutory tax sharing requirements with taxing entities receiving property taxes in the applicable Project Area. Statutory tax sharing is calculated based on the increase in assessed valuation after the year in which the limitation would otherwise have become effective.

SB 211 also authorized 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 Finance, or the Department of Housing and 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.

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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 does not currently expect that the Riverside County Board of Supervisors will undertake proceedings pursuant to SB 211 for the extension of the effectiveness of the Redevelopment Plans or the extension of the period to receipt of tax increment and the payment of indebtedness.

Appeals

Proposition 8 Appeals. Most of the appeals that might be filed in the Project Areas

would be based on 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. 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. In most cases, the appeal is filed because the applicant believes that current market conditions (such as residential home prices) cause the property to be worth less than its current assessed value. These market-driven appeals are known as Proposition 8 appeals.

Based on information provided to the Fiscal Consultant, for the 2010-11 roll year, the

County Assessor applied Proposition 8 reductions to 424,506 properties in the County in response to economic conditions. The reductions were primarily applied to residential properties. The total decrease in valuation Countywide due to Proposition 8 was $44.3 billion, accounting for approximately 22% of the 2010-11 Countywide assessed valuation reductions; of this amount, $34.8 billion was for properties in incorporated areas and $9.5 billion for properties in unincorporated areas. The total decrease in valuation Countywide was a negative 4.58% for 2010-11. These percentages are County-wide and do not necessarily correlate to decreases in value in the Project Areas.

Any reduction in the assessment ultimately granted as a Proposition 8 appeal applies to

the year for which application is made and during which the written application was filed. These reductions are often temporary and are adjusted back to their original values when market conditions improve. Once the property has regained its prior value, adjusted for inflation, it once again is subject to the annual inflationary factor growth rate allowed under Article XIIIA. The State Board of Equalization has approved this reassessment practice and such practice has been used by county assessors statewide. This reassessment practice was approved by the California Court of Appeal, Fourth District, in the recent case of County of Orange et al. v Bezaire (petition for review to the California Supreme Court denied).

Based on preliminary information provided to the Fiscal Consultant by the County

Assessor’s office, there are 1,772 appeals pending in all Project Areas. Appeals filings for 2010-11 have not yet been fully processed by the County; the number of pending appeals may be understated. The amount of assessed valuation in dispute totals $925 million, primarily from filings for the 2009-10 roll year. Given incomplete appeals data, the Fiscal Consultant has not adjusted for appeals in projecting Housing Tax Revenues for fiscal year 2011-12. Instead, the Fiscal Consultant has projected a 2% drop in fiscal year 2011-12 Assessed Value, in part, to accommodate the possible impact of appeals.

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Base Year Appeals. A second type of assessment appeal is called a Base Year

appeal, where the property owners challenge the original (basis) value of their property. 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.

For more specific information about pending and settled appeals in the Project Areas,

see “APPENDIX G – FISCAL CONSULTANT REPORT – Assessment Appeals”.

Land Use in the Project Areas The majority of the land in the Project Areas (in terms of assessed valuation) is used for

residential purposes. The following table shows the land use in the Project Areas, based on 2010-11 assessed valuation.

Table 5

ALL PROJECT AREAS LAND USE; FISCAL YEAR 2010-11 (1)

Land Use Secured AV (1) Pct of AV No. of

Parcels Pct of

Parcels Acres Pct of Acres

Agricultural $ 208,335,231 2.1% 431 0.9% 5,443 7.6% Commercial 1,481,170,204 14.9 1,453 3.1 2,664 3.7 Industrial 2,389,351,513 24.0 634 1.4 2,509 3.5 SF Residential. 3,730,014,881 37.5 21,973 47.3 6,347 8.8 Condominiums 92,131,076 0.9 553 1.2 14 0.0 Other Residential (2) 821,336,682 8.3 9,213 19.8 23,006 32.1 Vacant 1,162,328,670 11.7 11,941 25.7 15,161 21.1 Other 52,979,977 0.5 232 0.5 16,577 23.1 Totals: $9,937,648,234 100.0% 46,430 100.0% 71,718 100.0%

(1) Valuations include homeowner's exemptions, restored by the Auditor prior to the calculation of tax increment. Acreage is estimated using tax roll data and information provided by the Agency. Sub-areas not currently contributing tax increment are excluded. (2) “Other Residential” includes multi-family residential and mobile homes. Source: Riverside County Assessor; Urban Analytics

Historic Assessed Valuation

Based on assessment roll data provided by the County Assessor and State Board of

Equalization, the total assessed valuation in the Project Areas is $11.4 billion in 2010-11, after deducting all exemptions. This represents a decrease of 6.29% over 2009-10 total valuation, following a decrease of 2.54% in 2009-10 and gains in prior years of 8.97% (2008-09), 29.78% (2007-08) and 19.03% (2006-07).

The secured roll accounted for 87% of the total valuation in the Project Areas in 2010-

11, with the unsecured roll comprising 7%. The non-unitary utility roll, at $716 million in assessed valuation, accounted for six percent of the total (the unitary utility roll is based on countywide assessments and is not reported by project area). The table below shows a five-year history of assessed valuation in the Project Areas. See “APPENDIX A – General Information About Each Project Area” for historic valuations for each of the Project Areas.

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TABLE 6

ALL PROJECT AREAS HISTORIC ASSESSED VALUATION, TAX INCREMENT COLLECTED AND HOUSING TAX

REVENUES (2) Roll 2006-07 2007-08 2008-09 2009-10 2010-11

Secured

- Land $3,236,802,753 $4,285,175,035 $4,595,829,225 $4,253,663,307 $3,894,142,907

- Improvements 5,003,912,961 6,337,141,642 6,764,167,624 6,557,879,656 6,220,359,999

- Personal Prop. 61,819,374 72,828,985 72,939,379 79,177,222 78,072,186

- Exemptions (184,216,917) (224,076,126 (215,151,251) (243,364,999) (254,926,858)

Secured Total 8,118,318,171 10,471,069,536 11,217,784,977 10,647,355,186 9,937,648,234

Unsecured

- Land 420,559 298,648 258,265 98,547 1,300,011

- Improvements 294,989,193 338,846,469 381,732,795 415,475,664 416,844,631

- Personal Property 428,885,272 433,228,160 462,182,333 392,364,506 371,108,086

- Exemptions (3,093,200) (3,188,850) (3,173,503) (362,991) -53,985

Unsecured Total 721,201,824 769,184,427 840,999,890 807,575,726 789,198,743

Utility

- Land 11,116,500 9,636,436 9,751,026 5,067,003 9,977,408

- Improvements 7,828,299 247,826,303 460,215,445 750,860,568 706,483,718

- Personal Property 904,907 280,436 348,732 355,415 116,500

- Exemptions 0 0 0 0 0

Utility Total (3) 19,849,706 257,743,175 470,315,203 756,282,986 716,577,626

Totals: 8,859,369,701 11,497,997,138 12,529,100,070 12,211,213,898 11,443,424,603

Percent Change 19.03% 29.78% 8.97% (2.54%) (6.29%) Plus: HOPTR AV (4) 83,751,171 93,862,094 94,498,361 94,574,600 93,801,416)

Less: Base AV (2,325,277,564) (2,965,817,951) (2,963,749,239) (2,963,749,239) (2,962,999,259)

Incremental AV 6,617,843,308 8,626,041,281 9,659,849,192 9,342,039,259 8,574,226,760

Incremental Revenue 66,178,433 86,260,413 96,598,492 93,420,393 85,742,268 Plus Additional Revenue (1) 12,825,540 13,495,285 3,842,473 5,909,512 (N.A.)

Tax Increment Collected 79,003,973 99,755,698 100,440,965 99,329,905 (N.A.) Housing Tax Revenues Collected $15,800,795 $19,951,140 $20,088,193 $19,865,981 (N.A.)

(1) Revenue from unitary and supplemental rolls, debt service levy, prior-year adjustments and other sources. (2) Assessed valuation from the Amendment 2 Sub-Areas in Desert Communities Project Area and Mid-County Project Area and

the Highway 74 Community Sub-Area in I-215 are not included. The 2010-11 valuation from the Amendment 2 Sub-Areas was less than their respective base year assessed valuation; consequently there was no tax increment generated in either Sub-Area. The Agency will receive increment from these Sub-Areas once the valuation exceeds the base year valuation. The Highway 74 Sub-Area was newly-established and is not expected to generate tax increment until 2011-12.

(3) Decrease in utility value from 2009-10 to 2010-11 is largely due to the decrease in value of Inland Empire Energy Center due to the facility being reassessed following completion of construction. (4) HOPTR is an acronym for “Homeowners Property Tax Relief”. Source: Urban Analytics; County of Riverside; the Agency

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Largest Taxpayers in the Project Areas

The following table shows the ten largest taxpayers in the Project Areas. The Fiscal

Consultant has identified the location by Sub-Area for each of the largest property tax payers in the table below. For a brief description of the three largest property tax payers in the Project Areas, as well as the locations by Sub-Area, see “APPENDIX G – FISCAL CONSULTANT REPORT – Ten Largest Assessees”.

Pending appeals filed by the ten largest owners in the Project Areas, as identified to date

by the County Assessor’s Office, include two filings by Castle and Cook, owners of the Corona Crossings retail center, in 2010-11 and 2009-10, with $2.4 million in disputed valuation in 2010-11; three filings by Costco in 2009-10 ($79 million in dispute) and one by Prologis in 2009-10 ($13 million in dispute). An appeal filed by AMB Institutional Alliance Fund on three properties in 2009-10 resulted in a reduction in assessed valuation for the 2009-10 roll of $22 million on two of the properties and no change in valution on the third property; the 2010-11 valuations for the two properties with successful appeals were reduced by approximately $22 million as well. Appeals filed in previous year by Chelsea GCA, Costco, Castle and Cook and Prologis were resolved with no change in valuation. For information regarding the largest property tax payers in each Project Area, see “APPENDIX A – GENERAL INFORMATION ABOUT EACH PROJECT AREA.”

TABLE 7

ALL PROJECT AREAS Largest Property Tax Payers- 2010-11

Property Owner Secured and

Utility Unsecured Total (2) % of Total

Sub-Area

Inland Empire Energy Center, LLC(1) $ 709,400,000 $ 0 $709,400,000 6.20% I-125 (Romoland Amended Area) Chelsea GCA Realty Partnership 174,722,669 0 174,722,669 1.53 Mid-County 3-1989 (Cabaon) Castle & Cooke (3) 165,213,781 1,156,388 166,370,169 1.45 1-1986 (El Cerrito/Temescal Canyon) Teachers Insurance Annuity Assn 125,634,428 0 125,634,428 1.10 2-1996 (Jurupa Valley Amend.) T D Desert Dev 103,996,303 0 103,996,303 0.91 DCPA 4-1986 (East Blythe. Mecca) Eastvale Gateway 100,585,729 0 100,585,729 0.88 2-1996 (Jurupa Valley Amend.) Costco Wholesale Corp(3) 96,675,783 1,047,966 97,723,749 0.85 2-1996 (Jurupa Valley Amend.) Amb Institutional Alliance Fund III(3) 93,509,570 0 93,509,570 0.82 2-1996 (Jurupa Valley Amend.) UPS Supply Chain Solutions 85,923,793 0 85,923,793 0.75 2-1996 (Jurupa Valley Amend.) Prologis Calif I(3) 81,589,798 0 81,589,798 0.71 2-1996 (Jurupa Valley Amend.) Totals, Top Ten: 1,737,251,854 2,204,354 1,739,456,208 15.20 Totals, Top Twenty: 2,196,012,861 2,209,704 2,198,222,565 19.21 Totals, Top Hundred: 3,412,030,654 210,914,507 3,622,945,161 31.66 Totals for the Area: $10,654,225,860 $789,198,743 $11,443,424,603 100.00%

(1) The assessed valuation of Inland Empire Energy Center in the Interstate-215 Project Area had a decrease of

approximately 5.2% from the 2009-10 assessed valuation of $748,700,000, due to the facility being reassessed following completion of construction.

(2) Assessed valuation figures include homeowner's exemptions. Sub-areas not currently contributing tax increment are excluded.

(3) These property owners either have pending appeals or have had recent successful appeals. See the paragraph above this Table 7.

Source: Riverside County Office of the Assessor, Urban Analytics

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PROJECTED COVERAGE ON THE BONDS The table following sets forth the projected Housing Tax Revenues expected to be

generated from the five Project Areas. For the 2010-11 tax year, the Proposition 13 adjustment is a negative 0.237%, and for the 2011-12 tax year the Proposition 13 adjustment will be 0.753%. See “BOND OWNER’S RISKS - Reduction in Inflationary Rate and Changes in Legislation” below.

The projections incorporate a decrease in overall assessed valuation of (2.0%) in 2011-

12, based on (i) continued weakness in the local economy as of the January 1, 2011 lien date for the 2011-12 roll, (ii) the application of a CPI factor of 0.753% to real property in 2011-12 and (iii) possible impact from appeals. Beyond 2011-12, assessed values, and therefore Housing Tax Revenues, are shown to rise 2% per year.

Some Sub-Areas will terminate before fiscal year 2041-42 (the final maturity of the

Bonds). See “Table 4” herein for the dates when each Sub-Area can no longer repay debt. In addition, certain Sub-Areas may reach their tax increment caps contained in the Redevelopment Plan before 2041-42. See BOND OWNERS’ RISKS - Limitations on Tax Increment”.

Tax increment and housing fund revenue may increase or decrease at rates that differ

from those shown. Decreases in assessed valuation in later years are due to the plan termination dates for the various Sub-Areas. See “APPENDIX A – GENERAL INFORMATION ABOUT EACH PROJECT AREA” for information about each Project Area and “APPENDIX G – FISCAL CONSULTANT REPORT – Tax Increment Through Plan Terminations”.

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Combined Project Areas Projected Housing Tax Revenues

Fiscal Year

1-1986

Housing Tax Revenues

Jurupa


Mid-County Housing Tax

Revenues

Desert Communities Housing Tax

Revenues

I - 215


Total Projected


2010-11 $1,686,173 $6,500,587 $1,095,558 $4,436,478 $3,538,856 $17,257,652 2011-12 1,639,339 6,343,378 1,071,485 4,342,951 3,433,698 16,830,850 2012-13 1,685,236 6,497,443 1,095,077 4,434,607 3,536,753 17,249,116 2013-14 1,732,051 6,654,590 1,119,140 4,528,097 3,641,868 17,675,746 2014-15 1,779,803 6,814,879 1,143,685 4,623,456 3,749,086 18,110,909 2015-16 1,828,510 6,978,374 1,168,721 4,720,722 3,858,449 18,554,776 2016-17 1,878,190 7,145,139 1,194,258 4,819,934 3,969,998 19,007,520 2017-18 1,928,865 7,315,240 1,220,305 4,921,130 4,083,779 19,469,318 2018-19 1,980,553 7,488,742 1,246,873 5,024,349 4,199,835 19,940,353 2019-20 2,033,274 7,665,715 1,273,973 5,129,634 4,318,213 20,420,808 2020-21 2,087,050 7,846,227 1,301,615 5,237,023 4,438,958 20,910,873 2021-22 2,141,902 8,030,349 1,329,809 5,346,561 4,562,117 21,410,738 2022-23 2,197,851 8,218,153 1,358,567 5,458,289 4,687,740 21,920,601 2023-24 2,254,918 8,409,714 1,387,901 5,572,252 4,815,876 22,440,662 2024-25 2,313,127 8,605,106 1,417,821 5,688,495 4,946,574 22,971,123 2025-26 2,372,500 8,804,406 1,448,340 5,807,062 5,079,886 23,512,194 2026-27 2,433,061 9,007,691 1,479,469 5,928,000 5,215,865 24,064,086 2027-28 2,494,833 9,215,043 1,511,220 6,051,357 5,354,563 24,627,016 2028-29 2,557,840 9,426,541 1,543,607 6,177,182 5,496,034 25,201,204 2029-30 2,622,107 9,642,270 1,576,641 6,305,523 5,640,336 25,786,877 2030-31 2,687,660 9,862,313 1,610,336 6,436,430 5,787,523 26,384,263 2031-32 2,754,524 10,086,757 1,644,705 6,569,956 5,937,654 26,993,596 2032-33 2,822,725 10,315,690 1,679,761 6,706,152 6,090,788 27,615,116 2033-34 2,892,290 10,549,201 1,676,678 6,845,073 6,246,985 28,210,226 2034-35 2,963,247 10,787,383 832,476 6,986,771 6,406,305 27,976,181 2035-36 3,035,622 11,030,328 852,380 7,131,304 6,568,812 28,618,446 2036-37 3,109,445 11,278,132 872,683 7,278,727 6,734,569 29,273,556 2037-38 2,603,897 10,339,781 342,743 637,359 5,575,905 19,499,686 2038-39 2,669,428 10,086,090 343,400 632,574 5,673,397 19,404,889 2039-40 2,736,270 9,917,249 352,619 472,512 5,819,655 19,298,305 2040-41 2,804,448 7,505,711 362,022 491,279 5,695,584 16,859,044 2041-42 2,873,991 7,684,446 371,613 511,163 5,842,082 17,283,295

Source: Urban Analytics; The Agency

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The table below sets forth the debt service and expected debt service coverage for the Series A Bonds, the Series A-T Bonds and the Outstanding Parity Bonds.

TABLE 9

REDEVELOPMENT AGENCY FOR THE COUNTY OF RIVERSIDE Combined Project Areas

Projected Debt Service Coverage Schedule(1)

Fiscal Year

Projected Housing Tax

Revenues

Outstanding Parity Bonds

Series 2011A-T

Bonds Debt Service

Series 2011 A Bonds Debt

Service

Total

Debt Service

Coverage

Ratio

2010-11 $17,257,652 $11,217,057 $ 2,323,377 $ 264,365 $13,804,800 1.25 2011-12 16,830,850 11,212,786 1,780,032 468,825 13,461,643 1.25 2012-13 17,249,116 11,219,989 1,773,250 468,825 13,462,064 1.28 2013-14 17,675,746 11,211,152 1,784,050 468,825 13,464,027 1.31 2014-15 18,110,909 11,214,592 1,777,550 468,825 13,460,967 1.35 2015-16 18,554,776 11,212,835 1,778,050 468,825 13,459,709 1.38 2016-17 19,007,520 11,218,920 1,776,800 468,825 13,464,545 1.41 2017-18 19,469,318 11,217,753 1,775,000 468,825 13,461,578 1.45 2018-19 19,940,353 11,217,862 1,775,600 468,825 13,462,287 1.48 2019-20 20,420,808 11,222,374 1,772,800 468,825 13,463,998 1.52 2020-21 20,910,873 11,219,722 1,771,200 468,825 13,459,746 1.55 2021-22 21,410,738 11,215,045 2,247,613 13,462,658 1.59 2022-23 21,920,601 11,220,849 2,241,413 13,462,261 1.63 2023-24 22,440,662 11,230,814 2,229,013 13,459,826 1.67 2024-25 22,971,123 11,213,697 2,250,813 13,464,509 1.71 2025-26 23,512,194 11,219,754 2,244,013 13,463,767 1.75 2026-27 24,064,086 11,222,768 2,240,613 13,463,380 1.79 2027-28 24,627,016 11,225,175 2,239,263 13,464,438 1.83 2028-29 25,201,204 11,212,738 2,250,438 13,463,176 1.87 2029-30 25,786,877 11,226,488 2,237,900 13,464,388 1.92 2030-31 26,384,263 11,220,863 2,238,300 13,459,163 1.96 2031-32 26,993,596 11,227,988 2,235,400 13,463,388 2.00 2032-33 27,615,116 11,221,788 2,237,800 13,459,588 2.05 2033-34 28,210,226 11,349,600 2,110,950 13,460,550 2.10 2034-35 27,976,181 11,343,250 2,120,475 13,463,725 2.08 2035-36 28,618,446 11,351,575 2,110,325 13,461,900 2.13 2036-37 29,273,556 11,347,525 2,111,775 13,459,300 2.17 2037-38 19,499,686 5,466,500 2,418,550 7,885,050 2.47 2038-39 19,404,889 5,469,600 2,199,300 7,668,900 2.53 2039-40 19,298,305 7,091,100 7,091,100 2.72 2040-41 16,859,044 5,175,450 5,175,450 3.26 2041-42 17,283,295 5,174,138 5,174,138 3.34

Total $704,779,025 $314,371,059 $20,087,710 $62,357,253 $396,816,014

(1) Tax Increment projections are shown on a fiscal year basis; all debt service figures are shown on a Bond Year basis (years ending October 1); may not add due to rounding. Source: Urban Analytics; The Agency (as to debt service and coverage)

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BOND OWNERS’ RISKS

The following factors, along with all other information in this Official Statement, should be considered by potential investors in evaluating the risks of investing in the Bonds.

Reduction in Taxable Value

Tax Revenues allocated to the Agency are determined by the amount of incremental

taxable value in the Project Areas allocable to the Project Areas and the current rate or rates at which property in the Project Areas are taxed. The reduction of taxable values of property caused by economic factors beyond the Agency’s control, such as a relocation out of a 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 a Project Area by a person displaced by eminent domain or similar proceedings, or the discovery of hazardous substances on a property within a Project Area (see “Hazardous Substances,” below) or the complete or partial destruction of such property caused by, among other eventualities, an earthquake (see “Seismic Considerations,” below), flood or other natural disaster, could cause a reduction in the Housing Tax Revenues securing the 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. Based on preliminary information provided by the County Assessor’s office, there are currently 1,772 appeals pending in the Project Areas. Appeal filings for 2010-11 have not yet been fully processed by the County; the number of pending appeals may be understated. A preliminary estimate by the Fiscal Consultant of the amount of assessed valuation in dispute totals $925 million, primarily from filings for the 2009-10 roll year. The Agency cannot predict the potential impact of pending and future appeals on Housing Tax Revenues. See "APPENDIX G - FISCAL CONSULTANT REPORT - Section D - Assessment Appeals”, “TAX REVENUES AND DEBT SERVICE COVERAGE – Assessment Appeals”, and “Table 7”.

Reduction in Inflationary Rate and Changes in Legislation As described in greater detail below (see “LIMITATIONS ON TAX REVENUES”), 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: in fiscal year 1983-84, 1%; in fiscal year 1995-96, 1.19%; in fiscal year 1996-97, 1.11%; in fiscal year 1999-00, 1.85%; and in fiscal year 2004-05, 1.867%. In addition, the inflationary growth rate is negative (0.237%) for 2010-11 and will be 0.753% for 2011-12. The Agency is unable to predict if any further adjustments to the full cash value base of real property within the Project Areas, whether an increase or a reduction, will be realized in the future.

Levy and Collection

The Agency has no independent power to levy and collect property taxes. Any reduction

in the tax rate or the implementation of any constitutional or legislative property tax decrease could reduce the Tax Revenues and, accordingly, could have an adverse impact on the ability of

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the Agency to make debt service payments on the 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 on the Bonds. The County currently allocates 100% of the Tax Revenues collected on the secured property tax roll to the Agency, regardless of the actual amount of payments made by taxpayers (see “LIMITATIONS ON TAX REVENUES - Property Taxes; Teeter Plan”, below). The County currently allocates Tax Revenues collected with respect to unsecured property to the Agency based upon the tax increment actually collected. Concentration of Property Ownership in Sub-Areas

Each of the five Project Areas is comprised of multiple Sub-Areas, each of which have their own plan limitations and base years. There are a total of 31 Sub-Areas. (See Table 4) Additionally, many of the Sub-Areas have concentration of property ownership that may be greater than the average for the entire Project Area. Accordingly, a decline in the property values in a Sub-Area, particularly property representing a high concentration of value in such Sub-Area, could reduce Tax Revenues derived from such Sub-Area more quickly than would be the case if the Project Area did not have separate Sub-Areas and had only one base year. Concentration of ownership presents a risk in that if one or more of the largest property owners in a Sub-Area were to default on their taxes, or were to successfully appeal the tax assessments on property within a Sub-Area, a substantial decline in Tax Revenues and therefore the Housing Tax Revenues could occur.

Impact of Redevelopment Plan Expirations

The final maturity date of the Bonds is October 1, 2042. The final maturity date of the Bonds was established taking into account the final dates to collect tax increment and repay debt in the various constituent areas of the Project Areas, as set forth in Table 4 “Summary of Project Areas and Constituent Sub-Areas”. According to the Fiscal Consultant, approximately 36% of the tax increment revenues currently being generated by all Project Areas is derived from Redevelopment Plans for eight Sub-Areas that will terminate on December 23, 2037, and approximately 17% of the tax increment revenues currently being generated by all Project Areas is derived from Redevelopment Plans for ten Sub-Areas that will terminate after December 23, 2027 but before December 23, 2040. As a result of the termination of the Agency’s right to collect tax increment and repay debt in various of the constituent Sub-Areas, the distribution of land uses and the largest assesses among the constituent Sub-Areas still generating Housing Tax Revenues will change over time while the Bonds are outstanding. The Agency also expects such distribution may change over time as a result of economic and other factors.

Limitations on Tax Increment

The Fiscal Consultant has determined that some Sub-Areas may reach their tax

increment caps contained in those Redevelopment Plans prior to the plan limits on tax increment collection: the 3-1989 (Cabazon) Sub-Area of the Mid-County Project Area with an annual growth rate of 2% and higher;the 4-1986 (East Blythe) Sub-Area of the Desert Communities Project Area with an annual growth rate of 3% and higher; the 2-1986 (Mira Loma 2) Sub-Area of the Jurupa Valley Project Area with an annual growth rate of 4% and higher; the 2- 1986 (Mira Loma) Sub-Area of the Jurupa Valley Project Area with an annual growth rate of 6% and higher; and the 1-1986 (Murietta) Sub-Area of 1-1986, the 5-1986 (Highgrove) Sub-Area of the Interstate 215 Corridor Project Area and the 2-1986 (Mira Loma 1) Sub-Area of the Jurupa Valley Project Area with an annual growth rate of 7% and higher.

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The Agency has covenanted in the Indenture that it will annually review, no later than December 1 of each year, the total amount of Housing Tax Revenues remaining available to be received by the Agency under the Plan Limitations, as well as future cumulative Annual Debt Service, any obligations of the Agency payable from tax increment revenues that are senior to the Bonds, and payments on obligations that are subordinate to the Bonds, if, based on such review, the allocation of Housing Tax Revenues to the Agency in any of the next three succeeding Fiscal Years will cause an amount equal to ninety-five (95%) of the amount of Housing Tax Revenues remaining under the Plan Limitations to fall below the sum of (i) remaining cumulative Annual Debt Service, (ii) any obligations of the Agency payable from Housing Tax Revenues that are senior to the Bonds, and (iii) payments on obligations that are subordinate to the Bonds, the Agency shall either (1) defease Bonds or Parity Debt by depositing an amount of Housing Tax Revenues equal to the amount that is required to ensure continuing compliance with the Indenture in a defeasance escrow to be held by the Trustee and to be pledged solely to the payment of debt service on the Bonds or Parity Debt, which escrow shall be invested in Defeasance Obligations and used for the payment of interest on and principal of and redemption premiums, if any, on the Bonds or Parity Debt or (2) adopt a plan approved by an Independent Redevelopment Consultant which demonstrates the Agency's continuing ability to pay debt service on the Bonds and Parity Debt. In determining the amount to be deposited in escrow with the Trustee, the Agency may consider actual interest earnings on the amounts so deposited.

See “THE PROJECT AREAS - Redevelopment Plan Limitations” herein.

Factors Relating to Sub-Prime Loans

From the end of 2002 through the middle of 2006, many homeowners financed the

purchase of their new homes using loans with little or no downpayment 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 experienced difficulty in making their loan payments due to automatic rate increases on their adjustable loans and rising interest rates in the market, which has led to increased foreclosures.

In addition, as a result of increasing defaults on “sub-prime loans” in recent years, 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. Unavailability of loans for the purchase and development of real property in the Project Areas may adversely impact assessed values and, therefore the availability of Housing Tax Revenues to pay debt service on the Bonds. Moreover, as mortgage loan defaults have increased, bankruptcy filings have also increased. Bankruptcy filings by property owners with delinquent property taxes have also delayed the commencement of and completion of foreclosure proceedings to collect delinquent property taxes.

State of California Fiscal Issues; ERAF; SERAF

State Budgets. Information about the State budget and State spending is regularly available from various State offices or on the applicable websites, 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.

Historical ERAFs. In connection with its approval of the State budget for the 1992-93, 1993-94, 1994-95, 2002-03, 2003-04, 2004-05, 2005-06, and 2008-09 Fiscal Years, the State Legislature enacted legislation which, among other things, reallocated funds from

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redevelopment agencies to school districts by shifting a portion of each agency's tax increment, net of amounts due to other taxing agencies, to school districts for such Fiscal Years for deposit in the Education Revenue Augmentation Fund ("ERAF"). The amount required to be paid by a redevelopment agency under such legislation was apportioned among all of its redevelopment project areas on a collective basis, and was not allocated separately to individual project areas.

Fiscal Year 2008-09. 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. 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.

Fiscal Year 2009-10 and Fiscal Year 2010-11. 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. 26x4 (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.

As noted below, the Agency has timely paid the SERAF payment for Fiscal Year 2009-10 in the amount of $27.8 million and the Agency has preliminarily estimated that its SERAF payment will be $5.7 million for Fiscal Year 2010-11. Pursuant to the 2009 SERAF Legislation, redevelopment agencies may use any funds that are legally available and not legally obligated for other uses, including reserve funds, proceeds of land sales, proceeds of bonds or other indebtedness, lease revenues, interest and other earned income.

The 2009 SERAF Legislation contains provisions that subordinate the obligation of redevelopment agencies to make the SERAF payments specified therein to certain indebtedness. 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."

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

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of the time that the applicable redevelopment agency receives allocations of tax revenues under the Redevelopment Law.

The five percent 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. If the Agency borrows funds from its Housing Fund to make the SERAF payment in either year, and does not repay the funds within the specified time frame, it would be subject to the Penalty Set-Aside Requirement. Note that, if a redevelopment agency fails to comply with the foregoing described requirements in both Fiscal Year 2009-10 and in Fiscal Year 2010-11, the redevelopment agency will be subject to the Penalty Set-aside Requirement in both such Fiscal Years for a total of ten percent (10%) additional housing set-aside penalty. The Agency has not borrowed and does not expect to have to borrow funds from the Housing Fund to pay either of the SERAF payments.

Although 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 California Redevelopment Association, the Union City Redevelopment Agency and the Fountain Valley Redevelopment Agency filed a lawsuit in Sacramento Superior Court on October 20, 2009 challenging the constitutionality of the 2009 SERAF Legislation and seeking to prevent the State from taking redevelopment funds for non-redevelopment purposes. On May 4, 2010, the Superior Court ruled that the 2009 SERAF Legislation is constitutional. However, the California Redevelopment Association has announced that it will appeal the judgment of the Superior Court. The Agency timely paid the SERAF payment in the amount of the $27.8 million payment by May 10, 2010. The Agency cannot predict whether or not the Court of Appeal will approve or overturn the judgment of the Superior Court or whether or not the Agency will be able to recover the amount of the SERAF payment for fiscal year 2009-10 in the event the judgment of the Superior Court is overturned. Further, the Agency can not predict whether or not such judgment will be overturned regarding the SERAF payment for fiscal year 2010-11.

The State’s ability to impose future ERAF and SERAF payments on redevelopment

agencies may be affected by Proposition 22, which was approved by the California electorate on November 2, 2010. Proposition 22, among other things, amends Sections 24 and 25.5 of Article XIII of the California Constitution to prohibit the State from reallocating, transferring, borrowing, appropriating or restricting the use of taxes imposed or levied by a local government solely for the local government’s purposes. As applied to redevelopment agencies, Proposition 22 adds Section 25.5(A)(7) to Article XIII of the State Constitution to prohibit the State from requiring a redevelopment agency (A) to pay, remit, loan, or otherwise transfer, directly or indirectly, taxes on ad valorem real property and tangible personal property allocated to the agency pursuant to Section 16 of Article XVI of the State Constitution to or for the benefit of the State, any agency of the State, or any other jurisdiction; or (B) to use, restrict, or assign a particular purpose for such taxes for the benefit of the State, any agency of the State, or any other jurisdiction, other than (i) statutory pass through payments required by Health and Safety

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Code Sections 33607.5 and 33607.7 and (ii) payments for the purpose of increasing, improving, and preserving the supply of low and moderate income housing available at affordable housing cost. Although the passage of Proposition 22 will have no impact upon the Agency’s obligation to pay the 2010 SERAF Amount, the State Legislative Analyst’s Office (“LAO”) has stated that the measure prohibits the State from enacting new laws that require redevelopment agencies to shift funds to schools or other agencies. No assurance can be provided that Proposition 22 will be implemented as contemplated by the LAO. In addition, Proposition 22 is subject to interpretation by the courts and there can be no assurance that the measure will not be challenged by the State or other parties or repealed by the voters of the State in the future.

Proposed 2011-12 Budget and Redevelopment Agencies. On January 10, 2011

Governor Jerry Brown released his proposed budget for fiscal year 2011-12 ("Proposed Budget"). The Proposed Budget is designed to address an estimated budget shortfall of $25.4 billion in the fiscal year 2011-12 California State Budget. The budget shortfall consists of an $8.2 billion projected deficit for 2010-11 and a $17.2 billion gap between projected revenues and spending in 2011-12. The Governor's proposal includes approximately $12.5 billion in budget cuts, $12 billion in tax extensions and changes, and $1.9 billion in other solutions. The Governor is calling for a statewide special election in June to extend for five more years certain tax measures currently set to expire.

The Proposed Budget makes the following redevelopment-related proposals (the "RDA Provisions"), among others:

(i) The RDA Provisions, if adopted, would eliminate the current funding mechanism for redevelopment agencies, although only limited details are provided for such a far-reaching proposal.

(ii) The RDA Provisions, if adopted, would prohibit existing agencies from creating new contracts or obligations effective upon enactment of urgency legislation.

(iii) By July 1, the RDA Provisions, if adopted, would disestablish existing redevelopment agencies and successor local agencies would be required to use the property tax revenues that redevelopment agencies would otherwise have received to retire redevelopment agency debts and contractual obligations "in accordance with existing payment schedules” (emphasis added).

(iv) For fiscal year 2011-12, the RDA Provisions, if adopted, would divert an estimated $1.7 billion remaining after payment of the redevelopment agency debts and contractual obligations described in the preceding paragraph (iii) to offset State General Fund costs for Medi-Cal and trial courts. An additional estimated $210 million would be distributed on a one-time basis to cities, counties, and special districts proportionate to their current share of the countywide property tax.

(v) For fiscal years after fiscal year 2011-12, the RDA Provisions, if adopted, would distribute the money available after payment of the redevelopment agency debt and contractual obligations described in the preceding paragraph (iii) to schools, counties, cities, and non-enterprise special districts for general uses.

(vi) The RDA Provisions, if adopted, would shift amounts in the redevelopment agency's balances reserved for low-moderate income housing to local housing authorities for low and moderate income housing.

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(vii) If adopted, the RDA Provisions would introduce a new financing mechanism for economic development. Specifically, the Proposed Budget proposes that the Constitution be amended to provide for 55% voter approval for limited tax increases and bonding against local revenues for development projects such as are currently done by redevelopment agencies. Voters in each affected jurisdiction would be required to approve use of their tax revenues for these purposes.

Implementation of the Proposed Budget. Implementation of the Proposed Budget, including the RDA Provisions, would require implementing legislation by the Legislature and perhaps voter approval as to certain material elements and would probably include terms which are not yet proposed but that would be material to the Agency and the Bonds. The Agency cannot predict the ultimate form of any implementing legislation, if any is adopted.

Elements of the RDA Provisions, including the economic development program authorization, contemplate voter approval through the initiative process. It is possible that Proposition 22, which amended the State Constitution to prohibit state diversion of redevelopment agency revenues generally, will affect the State's ability to implement some of the RDA Provisions. It is possible that the Governor and the Legislature may seek voter approval of changes to the terms of Proposition 22 that are in conflict with the Proposed Budget, including the RDA Provisions.

The Agency cannot predict the timing, terms or ultimate implementation of any such final legislation or voter initiative measures, or the impact on the Agency or the Bonds of any proposed, interim or final legislative and constitutional changes which may be adopted arising out of the Proposed Budget.

Legislative Analyst Report. The LAO released its Overview of the Governor's Budget ("LAO Overview") on January 12, 2011. As it relates to the RDA Provisions the LAO Overview suggests the proposal has merit "but faces considerable implementation issues." The LAO Overview notes:

the administration's plan will require considerable work by the Legislature to sort through many legal, financial and policy issues. Several voter-approved constitutional measures, for example, constrain the State's authority to redirect redevelopment funds, use property tax revenues to pay for state programs, or impose increased costs on local agencies. In addition, the administration’s plan does not address many related issues, such as clarifying the future financial responsibility for low- and moderate- income housing (currently, a redevelopment program).

Finally, the LAO Overview recommends that the Legislature pass urgency legislation as soon as possible prohibiting redevelopment agencies, during the period of legislative review of the Proposed Budget, from taking actions that increase their debt.

State Controller’s Review of Redevelopment Agencies. The California State Controller

recently announced that his auditors would review 18 redevelopment agencies selected at random. The Agency was one of the redevelopment agencies reviewed. The Agency reports that nothing of significance with respect to the Bonds resulted from such review and that the Agency believes that the audit will not have an impact on the availability of Housing Tax Revenues or the Agency’s expenditure of the Bond proceeds on Projects.

Potential Impact on the Agency and the Bonds. There are a variety of ways in which the Proposed Budget and the RDA Provisions, if adopted, could impact the Agency and the Bonds,

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although the Agency is not able to predict the full variety or extent of these impacts, and the impacts will vary greatly depending on the final terms of laws adopted to implement the Proposed Budget and the RDA Provisions:

(i) The RDA Provisions, if adopted, could impact the Agency's activities and programs generally and could reduce or eliminate its fund balances and staffing.

(ii) The RDA Provisions, if adopted, could affect the Agency's compliance with and performance under existing contracts and obligations, including Housing Set-Aside obligations.

(iii) Subject to certain constitutional protections described below, the RDA Provisions, if adopted, could affect the Agency's compliance with and performance under the terms of the Indenture and the Bonds. These impacts could relate to the amount or availability of property tax revenue, Tax Revenues or Housing Tax Revenues for the Bonds and other uses, the manner of application of Housing Tax Revenues to debt service, flow of funds, use of Bond proceeds to fund new projects, compliance with Indentures’ covenants, continuing disclosure and other matters.

(iv) Pending final adoption of laws to implement the RDA Provisions, interim proposals could affect the activities of the Agency and the value of the Bonds.

(v) Most significantly, the RDA Provisions -- if adopted and implemented in their proposed form – would eliminate redevelopment agencies and redeploy tax increment revenues affecting redevelopment agencies. These actions would almost certainly raise legal and practical issues, some of which may be subject to litigation and ultimate resolution in the courts, or subsequent legislative action. These issues could affect the Agency and its compliance with the terms of the Indentures and the Bonds, and resolution of these issues could involve expense and delay or modification of certain of the rights of the bondholders in ways the Agency cannot predict.

Constitutional Protections. The Agency believes that constitutional protections against the impairment of contracts will prevent the proposed actions in the RDA Provisions from adversely affecting the validity of the Bonds or the Agency's pledge of Housing Tax Revenues to secure the payment of the Bonds. Indeed, the RDA Provisions purport to provide for the payments by successor entities of existing redevelopment agencies' "debts and contractual obligations."

Article I, section 10 of the United States Constitution provides that “No state shall...pass any...law impairing the obligation of contracts.” Article I, section 9 of the California Constitution provides that a “law impairing the obligation of contracts may not be passed.” Each of these provisions is generally referred to as a “contracts clause”. Federal courts have applied a fact-based three-part test to determine whether a state law violates the federal contracts clause. In general, the test compares any impairment against the significant and legitimate public purpose behind the state law; there is no absolute prohibition against impairment.

The United States Supreme Court has declared in the context of a New Jersey law that would have retroactively repealed a 1962 statutory (but contractual) covenant that would have adversely impacted bondowners: “A governmental entity can always find a use for extra money, especially when taxes do not have to be raised. If a State could reduce its financial obligations whenever it wanted to spend the money for what it regarded as an important public purpose, the Contract Clause would provide no protection at all.” See United States Trust Co. of New York v. New Jersey (1977) 431 U.S. 1, 25-26.

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The Agency cannot predict the applicable scope of "contract clause" protections to the Bonds and the RDA Provisions as they may ultimately be implemented. Efforts to protect the rights of Bondholders and to enforce the terms of the Indenture, if necessary, could involve expense and delay including with respect to the determination of the applicable scope of the "contract clause" provisions. Should legislation be introduced or proposals made by the Governor of the State or legislation enacted which would impose additional materially adverse limitations or burdens on the Agency or the County by reason of the issuance of the Bonds or which purport to prohibit the issuance of the Bonds, the Agency and the Underwriters have the right under the bond purchase agreement to not proceed in issuing or purchasing the Bonds.

Draft Legislation to Eliminate Redevelopment Agencies and Restrict Activities. Draft legislation implementing the Governor’s Proposed Budget was released by the Department of Finance of the State on February 23, 2011 (the "draft legislation). The draft legislation has not been submitted to the Legislature, and the Agency can provide no assurances that the draft legislation will be enacted in its present form, in a different form, or at all. A brief summary of the draft legislation is set forth below, but investors are encouraged to read the entire draft legislation. The draft legislation can be obtained from the State of California’s Department of Finance website at the following address (this address is provided for the convenience of investors and the website is not incorporated in this Official Statement):

http://www.dof.ca.gov/budgeting/trailer_bill_language/financial_research_and_local_gov

ernment/documents/502%20RDA%20Legislation%202-23p.docx. The draft legislation is styled as an urgency measure, which requires a two-thirds vote of

each house of the Legislature for passage; urgency legislation is effective immediately upon passage and upon the signature of the Governor. It is possible that, if the draft legislation is included as a part of a complete budget package passed by the Legislature, it could be passed with only majority vote approval and still become effective immediately. The draft legislation makes it clear that its provisions would not be retroactive.

The draft legislation declares that it is the intent of the Legislature to do the following:

"(1) Bar existing redevelopment agencies from incurring new obligations that

would divert any more money from core functions and dissolve all existing redevelopment. It is the intent of the Legislature that the greatest amount of funding be realized from these actions to fund core governmental services.

(2) Beginning with 2012-13 fiscal year, allocate these funds according to the

existing property tax allocation, except for enterprise special districts, to make the funds available for cities, counties, special districts, school and community college districts to provide core governmental services. As a result of these actions, it is estimated that, by fiscal year 2012-13, these local entities will receive $1.9 billion per year in new resources to use for their core priorities.

(3) Require a successor agency to settle the affairs of the redevelopment

agencies. (4) Require the protection of contractual rights by successor agencies, which will

be required to retire redevelopment agency debts in accord with existing payment schedules. No existing contractual obligations will be impaired."

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The draft legislation would suspend immediately upon adoption a variety of Agency activities, including the issuance of bonds and the entering into of contracts, but allows agencies to continue to make all scheduled payments for “enforceable obligations,” which is a defined term that includes bonds, and to perform obligations required pursuant to any enforceable obligations. Because the draft legislation purports to prohibit the Agency from entering into new contracts after the effective date of the draft legislation, it is not clear whether the Agency would be authorized to enter into new contracts involving the expenditure of Bond proceeds for redevelopment projects after the effective date of the draft legislation, although there appears to be authority for the County (as the successor agency under the draft legislation) to elect to retain the housing assets and functions previously performed by the Agency. If the County elects to retain the responsibility for performing housing functions previously performed by the Agency, all rights, powers, assets, liabilities, duties, and obligations associated with the housing activities of the Agency, along with any amounts in the Low and Moderate Income Housing Fund shall be transferred to the County.

Thereafter, on July 1, 2011, the draft legislation would dissolve all redevelopment

agencies and vest their remaining powers in successor agencies. Each successor agency would be governed by a new seven-member oversight board, which would consist of, among others, a member selected by the county board of supervisors, a member selected by a non-enterprise special district, and two members selected by the county superintendent of education to represent schools and community college districts. The city council or board of supervisors that formed the redevelopment agency could select only one member of the oversight board. The result of this make up of the oversight board is that its actions may not be in the best interest of, and may be adverse to, the former redevelopment agency or the city that formed the redevelopment agency and the owners of the Series 2011 Bonds.

Again, because the draft legislation purports to prohibit the successor agency from

entering into new contracts, it is not clear whether the successor agency would be authorized to enter into new contracts involving the expenditure of bond proceeds for redevelopment projects after the effective date of the draft legislation.

Under the draft legislation, the county or city that authorized the creation of a

redevelopment agency may elect to retain the housing assets and functions previously performed by the redevelopment agency or may designate its local housing authority to perform such functions. If a county or city elects to retain the responsibility for performing housing functions previously performed by a redevelopment agency, all rights, powers, assets, liabilities, duties, and obligations associated with the housing activities of the agency, along with any amounts in the low and moderate income housing fund, will be transferred to such city or county. Under the draft legislation, certain housing functions are subject to oversight by the oversight board. The draft legislation is silent regarding the question of whether a county or city electing to retain the responsibility for performing housing functions previously performed by a redevelopment agency would have the power to enter into new contracts and agreements regarding the expenditure of amounts on deposit in the low and moderate income housing fund. Since proceeds of the Series 2011 Bonds are being deposited in the Agency’s Low and Moderate Income Housing Fund, the expenditure of those proceeds could be limited to projects for which there are currently enforceable obligations if the final legislation is determined to prohibit new contracts or arrangements.

Subject to the approval of the oversight board, each successor agency would be

charged with preparing “Recognized Obligation Payment Schedules” which document the minimum payments and due dates of payments required by “enforceable obligations” for each half-year fiscal period. “Enforceable obligations” include, among other things, bonds issued

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pursuant to the Redevelopment Law (including the required debt service, reserve set-asides and any other payments required under the indenture or similar documents governing the issuance of outstanding bonds of the former agency). Commencing January 1, 2012, only those payments listed in the Recognized Obligation Payment Schedule may be made by the successor agency from funds specified in the Recognized Obligation Payment Schedule. For fiscal year 2011-12, the draft of the Recognized Obligation Payment Schedule must be reviewed and certified, as to its accuracy, by an external auditor. The initial Recognized Obligation Payment Schedule must also be certified by the county auditor-controller.

The draft legislation provides that any legally binding obligations that were entered into

with a pledge of tax increment will continue to have the revenues that were formerly tax increment and which are deposited into a new “Redevelopment Obligation Retirement Fund” to be held by the successor agency. However, the draft legislation establishes a priority of allocation with respect to property tax increment that would have been allocated to each redevelopment agency without regard for existing priority relationships; these property taxes would be deposited in a Redevelopment Property Tax Trust Fund (to be administered by the county auditor-controller) and then, in fiscal year 2012-13 and following, allocated as follows. The allocation is the same for fiscal year 2011-12, except as noted below.

First, to schools and community college districts in the amount that they would

have received if the draft legislation had not been adopted into law. Second, on June 1 and January 2, to successor agencies, for payments listed in

the Recognized Obligation Payment Schedule for the next six month fiscal period beginning on the next July 1 or January 1, in the following priority order: (A) debt service payments scheduled to be made for tax allocation bonds, (B) payments scheduled to be made on revenue bonds, but only to the extent the revenues pledged for them are insufficient to make the payments and only when the agency's tax increment revenues were also pledged for the repayment of such bonds, and (C) payments scheduled for other debts and obligations listed in the Recognized Obligation Payment Schedule. For fiscal year 2011-12, the draft legislation provides that, before being used to make the payments listed in the Recognized Obligation Payment Schedule, the property taxes would be used to pay each successor agency’s share of an aggregate $1.7 billion payment to a “Public Health and Safety Fund”.

Third, on January 2 and June 1, to each successor agency for administrative

costs. Beginning in fiscal year 2012-13, the amount allocated for administrative costs may not exceed 3% of the amount allocated for the purposes described in Second above.

Fourth, on January 2 and June 1, any moneys remaining in the Redevelopment

Tax Trust Fund after the payments and transfers authorized by First, Second and Third will be distributed to cities, counties, non-enterprise special districts, schools and community college districts (schools and community college districts receive no additional allocation in fiscal year 2011-12). If a successor agency is other than the agency that formed a redevelopment agency, the share that would have been allocated to that agency will instead be allocated to the agency that is the successor agency. If a local agency other than the county auditor-controller has accepted responsibility for administering the Public Health and Safety Fund in a county, the county share will be allocated to that local agency.

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In years after fiscal year 2011-12, if the successor agency reports to the county auditor-controller, no later than December 1 or May 1, that the total amount available to the successor agency from the Redevelopment Property Tax Trust Fund allocation to that successor agency’s Redevelopment Obligation Retirement Fund, from other funds transferred from the each redevelopment agency, and from funds that have or will become available through asset sales and all redevelopment operations is insufficient to fund the payments required by this section in the next six-month fiscal period, the county auditor-controller will notify the State Controller and the Department of Finance no later than 10 days later. The county auditor will verify whether the successor agency will have sufficient funds from which to service debts according to the schedule and will report the findings to the Controller. If the Controller concurs that there are insufficient funds to pay required debt service, the amount of such deficiency will be deducted first from the amount remaining to be distributed to taxing entities pursuant to Fourth, and if that amount is exhausted, from amounts available for distribution for administrative costs in Third. If an agency made pass-through payment obligations subordinate to debt service payments required for enforceable obligations, funds for servicing bond debt may be deducted from the amounts for pass-through payments under First, if the amounts remaining to be distributed to taxing entities pursuant to Fourth and the amounts available for distribution for administrative costs in Third have all been exhausted. In fiscal year 2011-12, amounts available for allocation to the Public Health and Safety Fund may also be available for this purpose. Finally, the draft legislation, if adopted, would lengthen the statute of limitations (i) for the

commencement of an action to review a determination or finding by a redevelopment agency or its legislative body, from 90 days to three years after the determination or finding, if such determination or finding is made after January 1, 2011, and (ii) for any action that is brought on or after January 1, 2011, to determine the validity of bonds issued by the redevelopment agency, from 60 days to three years after the date of the triggering event. Although the Agency does not believe there is any defect in the proceedings for the issuance of the Series 2011 Bonds that could give rise to a successful challenge and Bond Counsel is providing its opinion with respect to the Series 2011 Bonds as set forth in an Appendix to this Official Statement, there could be an increased risk of a legal challenge because the Agency is issuing the Series 2011 Bonds after January 1, 2011, and any such challenge could affect the market price of the Series 2011 Bonds on the secondary market.

The draft legislation is merely a draft, and subject to modification during the legislative

process. No assurance can be given that the draft legislation will be enacted in its present form, in a different form, or at all.

Future State Action. The Agency cannot predict what actions will be taken in the future

by the voters of the State, the State Legislature and the Governor to deal with changing State revenues and expenditures and the repercussions they may have on the current fiscal year State Budget, the Proposed Budget and future State budgets, or their impact on the Agency. These developments at the State level, whether related to the Proposed Budget or not, may, in turn, affect local governments and agencies, including the Agency. Even if the proposals affecting the Agency in the Proposed Budget are not adopted, the State Legislature may adopt other legislation from time to time 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 as in the Proposed Budget, balanced its budget by requiring local political subdivisions, such as the County, the Agency, or cities within the County, to fund certain costs previously borne by the State.

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Hazardous Substances

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 one or more of the Project Areas. 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 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.

Seismic Considerations and Natural Calamities

As with most of Southern California, the most significant safety hazard in Riverside County is due to seismic hazards. Two major faults, the San Andreas and the San Jacinto, pass through the mid-county region to the east of the Project Areas. However, according to the draft Safety Element of the Riverside County General Plan, the Project Areas do not contain any mapped faults nor any earthquake fault study zones. In addition, most of the Project Areas have a low level of liquefaction susceptibility, with the exception of the areas closest to the Santa Ana River. Lastly, most of the assessed valuation growth in the Project Areas is due to new construction built in accordance with the Uniform Building Code which contains standards designed to minimize structural damage caused by seismic events.

From time to time, the County is subject to other natural calamities which could

adversely affect economic activity in the County, and which could have a negative impact on the general economy and the values of properties in the Project Areas. There can be no assurance that the occurrence of any natural calamity, such as earthquake, flooding or wildfire, would not cause substantial reduction in the assessed valuations of properties in the Project Areas. Such a reduction of assessed valuations could result in a reduction of the Housing Tax Revenues that secure the Bonds.

Bankruptcy

The rights of the Owners of the Bonds may be subject to bankruptcy, insolvency,

reorganization, moratorium and other similar laws affecting creditors’ rights under currently existing law or laws enacted in the future and may also be subject to the exercise of judicial discretion under certain circumstances. The opinions of Bond Counsel as to the enforceability of the obligation to make payments on the Bonds will be qualified as to bankruptcy and such other legal events. See “APPENDIX D - FORMS OF OPINION OF BOND COUNSEL”.

Changes in the Law

There can be no assurance that the California electorate will not at some future time

adopt initiatives or that the Legislature will not enact legislation that will amend the Redevelopment Law or other laws or the Constitution of the State resulting in a reduction of Housing Tax Revenues, and consequently, have an adverse effect on the Agency's ability to pay debt service on the Bonds.

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Secondary Market There can be no guarantee that there will be a secondary market for the Bonds or, if a

secondary market exists, that any Bond can be sold for any particular price. Prices of bond issues for which a market is being made will depend upon then-prevailing circumstances. Such prices could be substantially different from the original purchase price. No assurance can be given that the market price for the Bonds will not be affected by the introduction or enactment of any future legislation (including without limitation amendments to the Internal Revenue Code), or changes in interpretation of the Internal Revenue Code, or any action of the Internal Revenue Service, including but not limited to the publication of proposed or final regulations, the issuance of rulings, the selection of the Bonds for audit examination, or the course or result of any Internal Revenue Service audit or examination of the Bonds or obligations that present similar tax issues as the Bonds.

LIMITATIONS ON TAX REVENUES

Property Tax Limitations - Article XIIIA California voters, on June 6, 1978, approved an amendment (commonly known as both

Proposition 13 and the Jarvis-Gann Initiative) to the California Constitution. This amendment, which added Article 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. Roll adjustments may be made by the County which would affect the Project Areas assessed value, under Section 51 of the Revenue and Taxation Code.

Article XIIIA 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 XIII was adopted in August 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. On December 22, 1978, the California Supreme Court upheld the amendment over challenges on several state and federal constitutional grounds (Amador Valley Joint Union School District v. State Board of Equalization).

In the general election held November 4, 1986, voters of the State of California approved

two measures, Propositions 58 and 60, which further amended Article XIIIA. Proposition 58 amended 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 amended 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. Under Proposition 60, the Legislature has enacted legislation permitting counties to implement the provisions of Proposition 60. As a result, there may be a minor reduction of property tax revenues because there is substantial

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residential use within the Project Areas.

Challenges to Article XIIIA There have been many challenges to Article XIIIA of the California Constitution.

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

Property Taxes; Teeter Plan

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.

Current tax payment practices by the County provide for payment to the Agency of Tax

Revenues periodically throughout the fiscal year, with the majority of Tax Revenues derived from secured property paid to the Agency in January and May, and the majority of Tax Revenues derived from unsecured property paid to the Agency by late September. Unitary roll Tax Revenues and Tax Revenues from supplemental assessments are paid to the Agency in May. A final reconciliation is made after the close of the fiscal year. The difference between the final reconciliation and Tax Revenues previously allocated to the Agency is allocated in late July.

Property tax laws provide for the supplemental assessment and taxation of property as

of the occurrence of a change in ownership or completion of new construction. To the extent such supplemental assessments occur within the Project Areas, Tax Revenues may increase.

General taxes, special taxes, tax increments and assessment installments are collected

for all taxing entities and redevelopment agencies by the County. In 1993 the County approved a resolution of intent to begin operating under Section 4701-4717 of the California Revenue and Taxation Code (the "Teeter Plan"). Under the Teeter Plan, the County will maintain a County Tax Loss Reserve Fund for the purpose of paying each taxing entity 100% of the amounts of secured taxes levied (including tax increments) and 1915 Act assessments posted on the tax bill. The County has the power to unilaterally discontinue its practice of paying 100% of the tax levy to the Agency notwithstanding delinquencies and certain assessment appeals on a countywide basis with respect to one or more categories, including general taxes, special taxes or special assessment installments. The Teeter Plan may also be discontinued by petition of two-thirds (2/3) of the participant taxing agencies.

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Tax Collection Fees

Legislation enacted by the State Legislature authorizes county auditors to determine property tax administration costs proportionately attributable to local jurisdictions and to submit invoices to the jurisdictions for such costs. Subsequent legislation specifically includes redevelopment agencies among the entities which are subject to a property tax administration charge. The County administration fee amounts to approximately 2% of the tax increment revenues from a Project Area. The calculations of Housing Tax Revenues are made before the deduction of such administrative costs.

Unitary Taxation of Utility Property

AB 2890 (Statutes of 1986, Chapter 1457) provides that assessed value derived from

State-assessed unitary property (consisting mostly of operational property owned by utility companies) is to be allocated county-wide as follows: (i) each tax rate area will receive the same amount from each assessed utility received in the previous fiscal year unless the applicable county-wide values are insufficient to do so, in which case values will be allocated to each tax rate area on a pro rata basis; and (ii) if values to be allocated are greater than in the previous fiscal year, each tax rate area will receive a pro rata share of the increase from each assessed utility according to a specified formula.

AB 454 (Statutes of 1987, Chapter 921) further modifies Chapter 1457 regarding the

distribution of property tax revenues derived from property assessed by the State Board of Equalization. Chapter 921 provides for the consolidation of all State-assessed property, except for regulated railroad property, into a single tax rate area in each county. Chapter 921 further provides for a new method of establishing tax rates on State-assessed property and distribution of property tax revenues derived from State-assessed property to taxing jurisdictions within each county. Railroads will continue to be assessed and revenues allocated to all tax rate areas where railroad property is sited.

The Inland Empire Energy Center, the largest property tax payer in the Project Areas, is

currently not on the unitary roll. Any change in this status could result in a reduction of Housing Tax Revenues. For additional information see “APPENDIX G - FISCAL CONSULTANT REPORT - Unitary Tax Revenue”.

Future Initiatives

Article XIIIA, Article XIIIB and Proposition 62 were each adopted as measures that

qualified for the ballot under 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.

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OTHER INFORMATION

Continuing Disclosure The Agency will covenant for the benefit of Bondholders to provide certain financial

information and operating data relating to the Agency by not later than December 31 in each year commencing December 31, 2011 (the “Annual Report”), and to provide notices of the occurrence of certain enumerated events, if material.

The specific nature of the information to be contained in the Annual Report or the notices

of material events is described in “APPENDIX F – Form of Continuing Disclosure Certificate”. These covenants will be made in order to assist the Underwriters in complying with Securities and Exchange Commission Rule 15c2-12(b)(5).

The Agency has not failed to comply with a continuing disclosure undertaking in the

previous five years.

Litigation At the time of delivery of and payment for the Bonds, the Agency will certify that, except

as disclosed herein, to its best knowledge there is no litigation, action, suit, proceeding or investigation, at law or in equity, before or by any court, governmental agency or body, pending against or threatened against the Agency in any way affecting the existence of the Agency or the titles of its officers to their respective offices or seeking to restrain or enjoin the issuance, sale or delivery of the Bonds, the application of the proceeds thereof in accordance with the Indenture, or the collection or application of Housing Tax Revenues pledged or to be pledged to pay the principal of and interest on the Bonds, or the pledge thereof, or in any way contesting or affecting the validity or enforceability of the Bonds, the Indentures, or any action of the Agency contemplated by any of said documents, or in any way contesting the completeness or accuracy of this Official Statement or the powers of the Agency or its authority with respect to the Indentures or any action of the Agency contemplated by said document, or which would adversely affect the exclusion of interest paid on the Series A Bonds from gross income for Federal income tax purposes or the exemption of interest paid on the Bonds from California personal income taxation, nor, to the knowledge of the Agency, is there any basis therefor.

Tax Matters

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 Series A Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations. The opinions described in the preceding sentence are subject to the condition that the Agency comply with all requirements of the Tax Code that must be satisfied subsequent to the issuance of the Series A 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 A Bonds.

If the initial offering price to the public (excluding bond houses and brokers) at which a

Series A Bond is sold is less than the amount payable at maturity thereof, then such difference constitutes "original issue discount" for purposes of federal income taxes and State of California

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personal income taxes. If the initial offering price to the public (excluding bond houses and brokers) at which a Series A Bond is sold is greater than the amount payable at maturity thereof, then such difference constitutes "original issue premium" for purposes of federal income taxes and State of California personal income taxes. De minimis original issue discount and original issue premium is disregarded.

Under the Tax Code, original issue discount is treated as interest excluded from federal

gross income and exempt from State of California personal income taxes to the extent properly allocable to each owner thereof subject to the limitations described in the first paragraph of this section. The original issue discount accrues over the term to maturity of the Series A Bond on the basis of a constant interest rate compounded on each interest or principal payment date (with straight-line interpolations between compounding dates). The amount of original issue discount accruing during each period is added to the adjusted basis of such Series A Bonds to determine taxable gain upon disposition (including sale, redemption, or payment on maturity) of such Series A Bond. The Tax Code contains certain provisions relating to the accrual of original issue discount in the case of purchasers of the Series A Bonds who purchase the Series A Bonds after the initial offering of a substantial amount of such maturity. Owners of such Series A Bonds should consult their own tax advisors with respect to the tax consequences of ownership of Series A Bonds with original issue discount, including the treatment of purchasers who do not purchase in the original offering, the allowance of a deduction for any loss on a sale or other disposition, and the treatment of accrued original issue discount on such Series A Bonds under federal individual and corporate alternative minimum taxes.

Under the Tax Code, original issue premium is amortized on an annual basis over the

term of the Series A Bond (said term being the shorter of the Series A Bond's maturity date or its call date). The amount of original issue premium amortized each year reduces the adjusted basis of the owner of the Series A Bond for purposes of determining taxable gain or loss upon disposition. The amount of original issue premium on a Series A Bond is amortized each year over the term to maturity of the Series A Bond on the basis of a constant interest rate compounded on each interest or principal payment date (with straight-line interpolations between compounding dates). Amortized Series A Bond premium is not deductible for federal income tax purposes. Owners of premium Series A Bonds, including purchasers who do not purchase in the original offering, should consult their own tax advisors with respect to State of California personal income tax and federal income tax consequences of owning such Series A Bonds.

In the further opinion of Bond Counsel, interest on both the Series A Bonds and the

Series A-T Bonds is exempt from California personal income taxes. Owners of the Series A Bonds should also be aware that the ownership or disposition of,

or the accrual or receipt of interest on, the Series A Bonds may have federal tax consequences other than as described above. Bond Counsel expresses no opinion regarding any federal or state tax consequences arising with respect to the Series A Bonds other than as expressly described above.

The interest payable on the Series A-T Bonds is not excluded from gross income

for federal income tax purposes.

Circular 230 Disclaimer To ensure compliance with requirements imposed by the Internal Revenue Service,

Bond Counsel informs Owners of the Bonds that any U.S. federal tax advice contained in this

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Official Statement (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Tax Code or (ii) promoting, marketing, or recommending to another party any transaction or matter addressed in this Official Statement.

Legal Opinions

Jones Hall, A Professional Law Corporation, San Francisco, California, will render

opinions with respect to the validity of the Series A Bonds and the Series A-T Bonds, in substantially the forms set forth in Appendix D hereto. Copies of such approving opinions will be available at the time of delivery of the Bonds.

In addition, Bond Counsel, in its capacity as Disclosure Counsel, will deliver to the

Agency and to the Underwriters a letter in customary form concerning the information set forth in this Official Statement.

Certain matters will be passed upon for the Agency by Riverside County Counsel and for

the Underwriters by Stradling Yocca Carlson & Rauth, Newport Beach, California.

Ratings The Bonds have received ratings of “A3” and “A-” from Moody’s Investors Services

(“Moody’s”) and Standard & Poor’s Ratings Services, a Division of The McGraw-Hill Companies (“S&P”), respectively.

Such ratings reflect only the views of such organizations and an explanation of the

significance of such ratings may be obtained from Moody’s and S&P. There is no assurance that such ratings will be retained for any given period of time or that they will not be revised downward or withdrawn entirely by the rating agencies if, in the judgment of such rating agencies, circumstances so warrant. Any such downward revision or withdrawal of any rating obtained may have an adverse effect on the market price of the Bonds.

The Authority

The Riverside County Public Financing Authority is a joint powers authority, organized

under a Joint Exercise of Powers Agreement, dated as of March 20, 1990, between the Agency and the County. The Agreement was entered into under the provisions of Articles 1 through 4, Chapter 5, Division 7, Title 1 of the California Government Code (the “JPA Law”). The Authority was created for the primary purpose of assisting the financing or refinancing of public capital improvements of the County and the Agency. Under the JPA Law, the Authority has the power to purchase bonds issued by any local agency at public or negotiated sale and may sell such bonds to public or private purchasers at public or negotiated sale.

The Authority is governed by a board of directors, consisting of the Board of Supervisors

of Riverside County.

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Underwriting The Bonds are being purchased by the Authority for concurrent resale of the Bonds to

Stone & Youngberg LLC (“Stone & Youngberg”) and E.J. De La Rosa & Co., Inc. (“De La Rosa & Co.”, and together with Stone & Youngberg, as representative, the “Underwriters”).

Series A Bonds. The Underwriters have agreed to purchase the Series A Bonds at a

price of $13,807,405.58 (being the principal amount of the Series A Bonds of $14,093,027.60 less an original issue discount of $165,552.80 less an underwriters’ discount of $120,069.22) under a Bond Purchase Contract among the Agency, the Authority and Stone & Youngberg, as representative of the Underwriters.

Series A-T Bonds. The Underwriters have also agreed to purchase the Series A-T

Bonds at a price of $13,676,665.18 (being the principal amount of the Series A-T Bonds of $14,095,000 less an original issue discount of $322,915.05 less an underwriters’ discount of $95,419.77) under a Bond Purchase Contract among the Agency, the Authority and Stone & Youngberg, as representative of the Underwriters.

The Underwriters may offer and sell the Bonds to certain dealers and others at a price

lower than the offering price stated on the cover page hereof. The offering price may be changed from time to time by the Underwriters.

Stone & Youngberg has entered into an agreement (the “Distribution Agreement”) with

First Republic Securities Company LLC for retail distribution of certain municipal securities offerings, at the original issue prices. Pursuant to the Distribution Agreement, if applicable to the Bonds, Stone & Youngberg will share a portion of its underwriting compensation with respect to the Bonds, with First Republic Securities Company LLC.

De La Rosa & Co., has entered into separate agreements with Credit Suisse Securities

USA LLC, UnionBanc Investment Services LLC and City National Securities, Inc. for retail distribution of certain municipal securities offerings, at the original issue prices. Pursuant to said agreement, if applicable to the Bonds, De La Rosa & Co. will share a portion of its underwriting compensation with respect to the Bonds, with Credit Suisse Securities USA LLC, UnionBanc Investment Services LLC or City National Securities, Inc.

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Miscellaneous

All quotations from and summaries and explanations of the Indentures and other statutes and documents contained herein do not purport to be complete, and reference is made to such documents, Indentures and statutes for full and complete statements of their provisions.

This Official Statement is submitted only in connection with the sale of the Bonds by the

Agency. All estimates, assumptions, statistical information and other statements contained herein, while taken from sources considered reliable, are not guaranteed by the Agency. The information contained herein should not be construed as representing all conditions affecting the Agency or the Bonds.

REDEVELOPMENT AGENCY FOR THE COUNTY OF RIVERSIDE By: /s/ Lisa Brandl Deputy Executive Director

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APPENDIX A

GENERAL INFORMATION ABOUT EACH PROJECT AREA

Project Area No. 1-1986

General. The Riverside County Board of Supervisors (the “Board”) approved Project Area No. 1-1986 on December 23, 1986, pursuant to Ordinance No. 635. Project Area No. 1-1986 is located in the southwestern region of the County and consists of four Sub-Areas, totaling approximately 4,651 acres. The original Project Area No. 1-1986 contains Sub-Areas in the communities of Home Gardens and Murrieta. The Board approved Amendment No. 1 to Project Area No. 1-1986 on July 20, 1999, pursuant to Ordinance No. 793, which included a new Sub-Area in the communities of Lakeland Village and Wildomar. A second amendment to Project Area No. 1-1986 was approved on December 14, 1999, pursuant to Ordinance No. 800. This amendment added territory in the El Cerrito/Temescal Canyon area.

Home Gardens. The Home Gardens Sub-Area encompasses approximately 145 acres

and is located in an unincorporated area of the County, situated between the cities of Riverside and Corona. The area is comprised of commercial, industrial, and some residential uses and has easy access to both State Route 91 and Interstate 15. A small portion of Home Gardens Sub-Area was annexed into the City of Corona and includes a small industrial park.

Murrieta. The Murrieta Sub-Area consists of 200 acres within the City of Murrieta and is

located between the Cities of Lake Elsinore and Temecula. The Sub-Area was formed in 1986 and was subsequently included as part of the incorporation of the City of Murrieta in July of 1991. The Murrieta Sub-Area is located within the historic core of the City of Murrieta and remains mostly rural in nature with large residential lots, limited commercial, office and industrial development and several public facilities. The junction of Interstates 15 and 215 is approximately 1.5 miles southeast of the Sub-Area, making it a convenient location for businesses. The Agency has worked cooperatively with the City of Murrieta to implement a revitalization program to improve the historic district. Improvements implemented under the program include a streetscape project in which new decorative sidewalks, landscaping and lighting will be constructed. As the infrastructure improvements are being completed, the Façade Improvement Program is being utilized by business owners to renovate their commercial buildings along the street frontage.

Lakeland Village/Wildomar. The Lakeland Village/WildomarSub-Area was adopted in

1999 via Ordinance 793, and is located within the First Supervisorial District of Riverside County, adjacent to the City of Lake Elsinore. On July 1, 2008, the City of Wildomar incorporated and a portion of the Sub-Area is located within the Wildomar city limits. The entire Sub-Area is approximately 2,859 acres in size and consists of four non-contiguous areas in the communities of Lakeland Village, Sedco Hills, Cleveland Ridge and the City of Wildomar. The Lakeland Village/Wildomar Sub-Area borders the southern portion of Lake Elsinore. Over half of the Sub-Area is single-family residential, with some commercial development and several public facilities. Because the Sub-Area is adjacent to Lake Elsinore and the Cleveland National Forest, it has significant recreational potential.

El Cerrito/Temescal Canyon. This El Cerrito/Temescal CanyonSub-Area of Project Area

No. 1-1986 was adopted in 1999 via Ordinance 800. The Sub-Area includes approximately 1,442 non-contiguous acres of land on both sides of the 15 Freeway near the City of

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Corona. The El Cerrito region is located north of Cajalco Road and the Temescal Canyon region is located south of Weirick Road. Residential uses make up the largest percentage of existing development in the area, particularly in the El Cerrito portion of the Sub-Area, while commercial and industrial development is prominent in the Temescal Canyon portion of the Sub-Area. A small portion of the El Cerrito region of the Sub-Area has been annexed into the City of Corona.

New Development Project Area No. 1-1986. The primary area of industrial and

commercial development in Project Area No. 1-1986 is in the Temescal Canyon region of the El Cerrito/Temescal Canyon Sub-Area. As part of the southern Corona real estate market, this region saw significant investment and job growth from 2003 through 2005. Projects such as the 300-acre commercial project developed by Castle and Cooke that includes a Regal Cinemas, Kohls, Best Buy, Chili’s Restaurant, and Cost Plus World Market and the Wildrose Business Park which employs over 1,100 people and has an investment of over $50 million in several buildings have made the Temescal Canyon area one of the fastest growing regions of the County. Projects that are currently in process that will facilitate commercial investment include the Temescal Canyon Road Widening Project. The project will widen Temescal Canyon Road to four lanes from the southern limits of Wildrose Business Park to Dawson Canyon Road, and subsequently increase the business potential in the area.

Land Use in Project Area No. 1-1986. The majority of the land in Project Area No. 1-

1986 is used for residential purposes. The following table shows the land use in Project Area No. 1-1986, based on 2010-11 assessed valuation.

Table A-1

PROJECT AREA NO. 1-1986 Land Use; Fiscal Year 2010-11


Parcels Pct of


Agricultural $ 1,039,292 0.1% 3 0.0% 40 0.9% Commercial 255,550,347 22.1 220 3.2 331 7.1 Industrial 205,548,856 17.8 72 1.1 280 6.0 SF Residential. 418,372,756 36.2 3327 48.9 738 15.9 Condominiums 2,078,584 0.2 12 0.2 1 0.0 Other Residential (2) 184,301,109 16.0 2,005 29.5 1,963 42.2 Vacant 86,376,710 7.5 1,156 17.0 1,293 27.8 Other 1,501,200 0.1 7 0.1 5 0.1 Totals: $1,154,768,854 100.0% 6,802 100.0% 4,651 100.0% (1) Valuations include homeowner's exemptions, restored by the Auditor prior to the calculation of tax increment. Acreage is estimated using tax roll data and information provided by the Agency. (2) “Other Residential” includes multi-family residential and mobile homes. Source: Urban Analytics

Historic Assessed Valuation, Tax Revenues and Housing Tax Revenues. In Project

Area No. 1-1986, the roll decreased by 7.30% in 2010-11. The decline in valuation was principally due to Proposition 8 reductions on a substantial number of residential properties. Project Area No. 1-1986 experienced a decrease of 4.73% in 2009-10 for similar reasons; growth ranged from 3.48% to 23.85% in prior years.

The table below shows a five-year history of assessed valuation in Project Area No. 1-

1986.

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Table A-2 PROJECT AREA NO. 1-1986

Historic Assessed Valuation, Tax Revenues and Housing Tax Revenues Roll 2006-07 2007-08 2008-09 2009-10 2010-11

Secured

Land $396,839,228 $449,213,120 $470,569,688 $440,986,037 $404,977,034

Improvements 781,985,790 872,828,022 874,123,823 851,461,232 792,871,444

Personal Property 746,301 508,679 843,510 1,969,711 1,806,359

Exemptions (38,093,463) (39,303,053) (24,465,471) (44,889,751) (44,885,983)

Secured Total 1,141,477,856 1,283,246,768 1,321,071,550 1,249,527,229 1,154,768,854

Unsecured

Land 143,285 132,707 114,744 32,587 113,044

Improvements 57,758,082 58,002,188 68,428,212 71,876,348 68,127,970

Personal Property 41,370,710 46,362,293 46,446,123 46,664,760 45,141,674

Exemptions (150,000) 0 0 (26,518) (50,000)

Unsecured Total 99,122,077 104,497,188 114,989,079 118,547,177 113,332,688

Utility

Land 1,409,883 1,351,476 1,351,476 1,351,476 1,351,476

Improvements 48,492 0 0 0 0

Personal Property 25,303 0 0 0 0

Exemptions 0 0 0 0 0

Utility Total 1,483,678 1,351,476 1,351,476 1,351,476 1,351,476

Totals: 1,242,083,611 1,389,095,432 1,437,412,105 1,369,425,882 1,269,453,018

Percent Change 23.85% 11.84% 3.48% (4.73)% (7.30)%

Plus: HOPTR AV (2) 17,399,352 16,971,170 16,772,192 17,164,418 16,537,188

Less: Base AV (446,601,282) (446,601,282) (446,601,282) (446,601,282) (446,601,282)

Incremental AV 812,881,681 959,465,320 1,007,583,015 939,989,018 839,388,924

Incremental Revenue 8,128,817 9,594,653 10,075,830 9,399,890 8,393,889 Plus: Additional Revenue (1) 1,439,299 1,259,699 277,869 181,903 (N.A.) Tax Increment Collected 9,568,116 10,854,352 10,353,699 9,581,793 (N.A.) Housing Tax Revenues Collected $1,913,623 $2,170,870 $2,070,740 $1,916,359

(N.A.)

(1) Revenue from unitary and supplemental rolls, debt service levy, prior-year adjustments and other sources. (2) HOPTR is an acronym for “Homeowners Property Tax Relief”. Source: Urban Analytics; County of Riverside; the Agency

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Largest Taxpayers in Project Area No. 1-1986. The following table shows the ten

largest taxpayers in Project Area No. 1-1986. The Fiscal Consultant has identified the location by Sub-Area for each of the largest property tax payers in the table below.

See “APPENDIX G – FISCAL CONSULTANT REPORT – Largest Property Owners”.

TABLE A-3 PROJECT AREA NO. 1-1986 Largest Property Tax Payers


Utility Unsecured Total (2) Pct of Total

Sub-Area

Castle & Cooke (1) $ 165,213,781 $ 2,262,917 $ 167,476,698 13.19% 1-1986(El Cerrito/Temescal Can.)

TRM Manufacturing 0 20,995,134 20,995,134 1.65 1-1986(Murrieta, Home Gardens)

Anaisa 19,068,866 0 19,068,866 1.50 1-1986(Murrieta, Home Gardens)

Target Corporation 17,538,890 0 17,538,890 1.38 1-1986(El Cerrito/Temescal Can.)

Fleetwood Aluminum Products Inc 15,426,975 0 15,426,975 1.22 1-1986(Murrieta, Home Gardens)

Mcld Holdings LLC 0 10,384,430 10,384,430 0.82 1-1986(El Cerrito/Temescal Can.)

Wildrose Ridge 17 10,260,508 0 10,260,508 0.81 1-1986(El Cerrito/Temescal Can.)

14 Promenade Partnership L P 10,055,419 0 10,055,419 0.79 1-1986(Murrieta, Home Gardens)

Temescal Canyon Storage Center 9,496,243 0 9,496,243 0.75 1-1986(El Cerrito/Temescal Can.)

Robertshaw Controls Co LSE 9,156,594 0 9,156,594 0.72 1-1986(Murrieta, Home Gardens)

Total, Top Ten: 256,217,276 33,642,481 289,859,757 22.83%

Total, Top Twenty: 323,776,175 39,387,277 363,163,452 28.61%

Total, Top Hundred: 467,784,575 67,211,158 534,995,733 42.14%

Totals for the Area: $1,156,120,330 $113,332,688 $1,269,453,018 100.00%

(1) Pending appeals filed by the ten largest owners in Project Area No. 1-1986 include two filings by Castle and Cook, owners of the Corona Crossings retail center, in 2010-11 and 2009-10, with $2.4 million in disputed valuation in 2010-11. (2) Assessed valuation figures include homeowner's exemptions. Sub-areas not currently contributing tax increment are excluded. Source: Riverside County Office of the Assessor, Urban Analytics

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Projection of Housing Tax Revenues. The table below show a projection of Housing Tax Revenues over the life of the Bonds. The projections incorporate a decrease in overall assessed valuation of (2.0%) in 2011-12, based on (i) continued weakness in the local economy as of the January 1, 2011 lien date for the 2011-12 roll and (ii) the application of a CPI factor of 0.753% to real property in 2011-12 and (iii) possible impact from appeals. Assessed values are projected to increase 2% annually thereafter. See “PROJECTED COVERAGE ON THE BONDS” in this Official Statement for further explanation of these assumptions.

TABLE A-4

PROJECT AREA NO. 1-1986 Projected Housing Tax Revenues

Fiscal

Year (1) Tax

Revenues Housing Tax

Revenues 2010-11 $8,430,864 $1,686,173 2011-12 8,196,693 1,639,339 2012-13 8,426,180 1,685,236 2013-14 8,660,257 1,732,051 2014-15 8,899,015 1,779,803 2015-16 9,142,548 1,828,510 2016-17 9,390,952 1,878,190 2017-18 9,644,324 1,928,865 2018-19 9,902,764 1,980,553 2019-20 10,166,372 2,033,274 2020-21 10,435,252 2,087,050 2021-22 10,709,510 2,141,902 2022-23 10,989,253 2,197,851 2023-24 11,274,591 2,254,918 2024-25 11,565,636 2,313,127 2025-26 11,862,502 2,372,500 2026-27 12,165,305 2,433,061 2027-28 12,474,164 2,494,833 2028-29 12,789,200 2,557,840 2029-30 13,110,537 2,622,107 2030-31 13,438,301 2,687,660 2031-32 13,772,620 2,754,524 2032-33 14,113,625 2,822,725 2033-34 14,461,451 2,892,290 2034-35 14,816,233 2,963,247 2035-36 15,178,110 3,035,622 2036-37 15,547,225 3,109,445 2037-38 13,019,486 2,603,897 2038-39 13,347,141 2,669,428 2039-40 13,681,350 2,736,270 2040-41 14,022,242 2,804,448 2041-42 14,369,953 2,873,991

(1) Sub-Area 1-1986 (Murrieta) terminates on 12/23/2037. Source: Urban Analytics

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The Jurupa Valley Project Area

General. The Board adopted the Jurupa Valley Project Area on July 9, 1996, via Ordinance No. 763. The project area formation involved the merger of three existing redevelopment project areas, Project Areas Nos. 2-1986 (Mira Loma), which was amended twice for a total acreage of 3,856 acres; 2-1987 (Glen Avon and Rubidoux) at 635 acres; and 2-1989 (Pedley and Rubidoux), at an total of 1,354 acres. The Amendment and Merger which took place in 1996 included an addition of 10,750 acres of territory (the “Amendment Area”) to the merged project areas. The Jurupa Valley Project Area is a single contiguous project area and is located in the northwest region of the County. The total acreage for the project area is 16,600 acres.

Mira Loma. Located in the northwestern-most portion of the County, the community of

Mira Loma has evolved into a large-scale industrial center. This center includes 2,489 acres from the original project area, generally located north of State Route 60 and primarily industrial in nature. The Sub-Area also includes a portion of the Amendment Area which resulted in the addition of industrial land along Interstate 15 south of State Route 60. Numerous corporate warehouse/distribution and manufacturing firms have located large facilities in this Sub-Area, including Nestlé, Costco, Anheuser-Busch, Union Pacific and many others. Like much of the land in this region, warehouse distribution and industrial development has steadily replaced dairy farms and grape vineyards. Most of the land in the Sub-Area is zoned either commercial or industrial. The southwestern portion of the Sub-Area consists mostly of older single-family residences with scattered neighborhood commercial uses.

Rubidoux. The community of Rubidoux is an older community with a rich historical past

dating back to the turn of the century. Rubidoux lies just west of the City of Riverside and is adjacent to State Route 60, which is one of two major arterials linking Riverside County to the larger Los Angeles region. The original project area included approximately 1,092 acres of commercial property primarily along two major thoroughfares: Mission and Rubidoux Boulevards. The Amendment Area added residential area outside the commercial core and included some heavy industrial areas along Market Street north of the commercial core. The commercial corridor along Mission Boulevard has been the undergoing a comprehensive revitalization program administered by the Agency. Improvements included upgrades to the existing water system in order to meet fire flow requirements and to serve future development along the boulevard. Other program components include street improvements, landscaping, upgraded lighting and a façade improvement program. The residential areas in Rubidoux primarily contain low to moderate-income housing. The Agency has planned water system improvements and a residential rehabilitation program to help improve the housing stock.

The industrial area in Rubidoux is located north of State Route 60 and a portion of the

Jurupa Valley Project Area is within a state designated Recycling Market Development Zone/Enterprise Zone (RMDZ/EZ) called the Agua Mansa Enterprise Zone. The Enterprise Zone offers state tax credits to businesses and the Recycling Market Development Zone has a low-interest loan program for manufacturers of recycled products.

Glen Avon. The community of Glen Avon is located south of State Route 60 between

Mira Loma and Rubidoux. Bisected by Mission Boulevard, Glen Avon consists mostly of residential and neighborhood commercial uses. The original project area included 120 acres in the commercial core of the area. The Amendment to the project area enabled the Agency to add a large amount of land extending west to Mira Loma and east to Rubidoux. Land uses consist of scattered residential and commercial development and some fallow agricultural land. It is expected that the central location between Mira Loma and Rubidoux should encourage new

A-7

growth in Glen Avon. Pedley. The community of Pedley contains a large portion of the newest housing stock

in the Jurupa Valley Project Area . The original project area contained 777 acres along Limonite Avenue east of Van Buren Boulevard. The Amendment Area included an older residential area just to the west of Van Buren Boulevard. Both suburban and rural in character, the center of the community lies at the intersection of Van Buren Boulevard and Limonite Avenue adjacent to the Santa Ana River. This area is characterized by neighborhood commercial land uses and various types of housing product. The northern and southern portions of the community are designated for industrial development. However, most of the industrial parcels are smaller than those in Mira Loma. The area adjacent to the two heavily traveled roadways, Limonite Avenue and Van Buren Boulevard, has been recognized as having potential for future commercial development.

New Development in the Jurupa Valley Project Area. Historically, the Jurupa Valley

Project Area has seen significant industrial and commercial activity due to its location along the major transportation routes in northwest Riverside County. This level of demand will continue, particularly in the older parts of the Jurupa Valley Project Area. The Agency has expanded the Façade Improvement Program within the Jurupa Valley Project Area, and has assisted businesses, primarily along the Mission Boulevard Corridor, with exterior improvements that have worked towards revitalizing the commercial core of the area. New projects include the Mission Plaza Improvement Project. This mixed use development project involves the redevelopment of an existing deteriorated shopping center, and consists of the rehabilitation and construction of commercial amenities such as a grocery store with multi-family housing. The Rubidoux/Agua Mansa area is facilitating industrial and commercial growth with road improvements, which will facilitate new development as developers move eastward in the project area. In Rubidoux, the Emerald Meadows Specific Plan will provide approximately 1,000 new homes and retail development on approximately 250 acres.

Land Use in the Jurupa Valley Project Area. The largest use of the land in the Jurupa Valley Project Area in terms of assessed value is for industrial purposes. The following table shows the land use in the Jurupa Valley Project Area, based on 2010-11 assessed valuation.

TABLE A-5

JURUPA VALLEY PROJECT AREA Land Use; Fiscal Year 2010-11


Parcels Pct of


Agricultural $ 6,707,964 0.2% 12 0.1% 20 0.1% Commercial 567,020,213 14.4 565 4.5 355 2.1 Industrial 1,620,959,663 41.1 259 2.1 679 4.1 SF Residential. 1,081,165,890 27.4 8441 67.1 1,082 6.5 Condominiums 77,733,460 2.0 316 2.5 3 0.0 Other Residential (2) 193,741,771 4.9 1,334 10.6 13,323 80.3 Vacant 391,429,403 9.9 1,633 13.0 1,125 6.8 Other 7,102,550 0.2 12 0.1 12 0.1 Totals: $3,945,860,913 100.0% 12,572 100.0% 16,600 100.0% (1) Valuations include homeowner's exemptions, restored by the Auditor prior to the calculation of tax increment. (2) “Other Residential” includes multi-family residential and mobile homes. Acreage is estimated using tax roll data and information provided by the Agency. Source: Urban Analytics

A-8

Historic Assessed Valuation. The Jurupa Valley Project Area decreased in valuation by 4.28% in 2010-11, a drop also attributable to Proposition 8 reductions in valuation on residential properties. Project area valuations decreased in 2009-10 by 3.73% after experiencing growth in the three prior years ranging from 7.37% to 16.14%.

The table below shows a five-year history of assessed valuation in the Jurupa Valley

Project Area.

TABLE A-6 JURUPA VALLEY PROJECT AREA

Historic Assessed Valuation, Tax Revenues and Housing Tax Revenues Roll 2006-07 2007-08 2008-09 2009-10 2010-11

Secured

Land $1,237,366,711 $1,459,606,278 $1,593,491,722 $1,533,212,329 $1,454,004,414

Improvements 2,252,971,112 2,581,971,711 2,754,356,517 2,618,113,112 2,528,154,838


Exemptions (75,161,444) (77,724,311) (82,134,772) (82,634,045) (89,238,776)

Secured Total 3,456,245,145 4,013,213,596 4,315,298,684 4,128,184,218 3,945,860,913

Unsecured

Land 124,255 37,285 37,351 29,278 497,117

Improvements 134,091,866 159,848,014 183,733,105 198,332,967 193,431,166


Exemptions 0 (23,389) 0 (220,000) 70,436

Unsecured Total 285,289,627 335,568,695 354,473,330 370,573,218 360,731,720

Utility

Land 3,835,509 2,919,486 3,034,076 2,950,053 3,229,966

Improvements 6,136,579 5,726,303 5,515,445 2,160,568 1,683,718

Personal Property 660,295 280,436 348,732 355,415 116,500


Utility Total 10,632,383 8,926,225 8,898,253 5,466,036 5,030,184

Totals: 3,752,167,155 4,357,708,516 4,678,670,267 4,504,223,472 4,311,622,817

Percent Change 15.27% 16.14% 7.37% (3.73)% (4.28)%

Plus: HOPTR AV (2) 33,231,511 32,601,944 32,994,884 32,540,684 32,206,613

Less: Base AV (1,104,611,835) (1,104,611,835) (1,104,611,835) (1,104,611,835) (1,104,611,835)

Incremental AV 2,680,786,831 3,285,698,625 3,607,053,316 3,432,152,321 3,239,217,595

Incremental Revenue 26,807,868 32,856,986 36,070,533 34,321,523 32,392,176 Plus: Additional Revenue (1) 4,154,132 4,571,252 1,161,593 1,763,270 (N.A.) Tax Increment Collected 30,962,001 37,428,238 37,232,127 36,084,793 (N.A.) Housing Tax Revenues Collected $6,192,400 $7,485,648 $7,446,425 $7,216,959

(N.A.)

(1) Revenue from unitary and supplemental rolls, debt service levy, prior-year adjustments and other sources. (2) HOPTR is an acronym for “Homeowners Property Tax Relief”. Source: Urban Analytics; County of Riverside; the Agency

A-9

Largest Taxpayers in the Jurupa Valley Project Area. The following table shows the ten largest taxpayers in the Jurupa Valley Project Area. The Fiscal Consultant has identified the location by Sub-Area for each of the largest property tax payers in the table below. See “APPENDIX G – FISCAL CONSULTANT REPORT – Largest Property Owners”.

Pending appeals filed by the ten largest owners in the Jurupa Valley Project Area

include three filings by Costco in 2009-10 ($79 million in dispute) and one by Prologis in 2009-10 ($13 million in dispute). An appeal filed by AMB Institutional Alliance Fund III on three properties in 2009-10 resulted in a reduction in assessed valuation for the 2009-10 roll of $22 million on two of the properties and no change in valuation on the third property; the 2010-11 valuations for the two properties with successful appeals were reduced by approximately $22 million as well. Appeals filed in previous year by Costco and Prologis were resolved with no change in valuation.

TABLE A-7

JURUPA VALLEY PROJECT AREA Largest Property Tax Payers



Sub-Area

Teachers Insurance Annuity Assn $ 125,634,428 $ 0 $125,634,428 2.91% 2-1998 (Jurupa Valley Amend.)

Eastvale Gateway 100,585,729 0 100,585,729 2.33 2-1998 (Jurupa Valley Amend.)

Costco Wholesale Corp (2) 96,675,783 0 96,675,783 2.24 2-1998 (Jurupa Valley Amend.)

Amb Institutional Alliance Fund III(2) 93,509,570 1,047,966 94,557,536 2.19 2-1998 (Jurupa Valley Amend.)

Ups Supply Chain Solutions Inc 85,923,793 0 85,923,793 1.99 2-1998 (Jurupa Valley Amend.)

Prologis Calif I(2) 81,589,798 0 81,589,798 1.89 2-1998 (Jurupa Valley Amend.)

Metal Container Corp 64,585,686 5,350 64,591,036 1.50 2-1986 (Mira Loma Amend. 2)

Ontario Warehouse 1 Inc 48,795,201 0 48,795,201 1.13 2-1986 (Mira Loma Amend. 2)

Mira Loma Vineyards Ltd 47,536,146 0 47,536,146 1.10 2-1998 (Jurupa Valley Amend.)

Riverside Cement Co 46,563,791 0 46,563,791 1.08 2-1998 (Jurupa Valley Amend.)

Total, Top Ten: 791,399,925 1,053,316 792,453,241 18.38

Total, Top Twenty: 1,133,431,599 1,053,316 1,134,484,915 26.31

Total, Top Hundred: 1,962,143,238 177,436,571 2,139,579,809 49.62

Totals for the Area: $3,950,891,09

7 $360,731,720 $4,311,622,817 100.00%

(1) Assessed valuation figures include homeowner's exemptions. Sub-areas not currently contributing tax increment are excluded. (2) These property owners either have pending appeals or have had recent successful appeals. See the paragraph above this Table A-7. Source: Riverside County Office of the Assessor, Urban Analytics

Projection of Housing Tax Revenues. The table below show a projection of Housing

Tax Revenues over the life of the Bonds. The projections incorporate a decrease in overall assessed valuation of (2.0%) in 2011-12, based on (i) continued weakness in the local economy as of the January 1, 2011 lien date for the 2011-12 roll, (ii) the application of a CPI factor of 0.753% to real property in 2011-12 and (iii) possible impact from appeals. Assessed values are projected to increase 2% annually thereafter. See “PROJECTED COVERAGE ON THE BONDS” in this Official Statement for further explanation of these assumptions.

Certain Sub-Areas in the Jurupa Valley Project Area will reach their limit on the last date

to repay indebtedness (see “BOND OWNERS’ RISKS - Impact of Redevelopment Plan Expirations”). In the Jurupa Valley Project Area, the following Sub-Areas will reach this limit before 2041-42 (the final maturity of the Bonds).

A-10

Sub-Area

Last Date to Repay

Indebtedness 2-1986 (Mira Loma) 12/23/2037 2-1986 (Amend 1) 12/19/2039 2-1986 (Amend 2) 12/19/2040 2-1987 (Glen Avon) 12/22/2038 Sub-Area 2-1989 (Pedley) 07/05/2040

In addition, certain Sub-Areas may reach their tax increment caps contained in the

Redevelopment Plan before the final maturity of the Bonds. See BOND OWNERS’ RISKS - Limitations on Tax Increment”.

TABLE A-8

JURUPA VALLEY PROJECT AREA Projected Housing Tax Revenue

Fiscal Year

Tax Revenues


2010-11 $32,502,937 $ 6,500,587 2011-12 31,716,890 6,343,378 2012-13 32,487,216 6,497,443 2013-14 33,272,948 6,654,590 2014-15 34,074,396 6,814,879 2015-16 34,891,872 6,978,374 2016-17 35,725,697 7,145,139 2017-18 36,576,199 7,315,240 2018-19 37,443,711 7,488,742 2019-20 38,328,574 7,665,715 2020-21 39,231,133 7,846,227 2021-22 40,151,744 8,030,349 2022-23 41,090,767 8,218,153 2023-24 42,048,570 8,409,714 2024-25 43,025,530 8,605,106 2025-26 44,022,029 8,804,406 2026-27 45,038,457 9,007,691 2027-28 46,075,215 9,215,043 2028-29 47,132,707 9,426,541 2029-30 48,211,349 9,642,270 2030-31 49,311,564 9,862,313 2031-32 50,433,784 10,086,757 2032-33 51,578,448 10,315,690 2033-34 52,746,005 10,549,201 2034-35 53,936,913 10,787,383 2035-36 55,151,639 11,030,328 2036-37 56,390,660 11,278,132 2037-38 51,698,907 10,339,781 2038-39 50,430,448 10,086,090 2039-40 49,586,247 9,917,249 2040-41 37,528,553 7,505,711 2041-42 38,422,232 7,684,446

Source: Urban Analytics

A-11

The Mid-County Project Area

General. The Mid-County Project Area originally consisted of three project areas: Project Area Nos. 3-1986, 3-1987, and 3-1989. Project Area 3-1986 includes area in the communities of Garnet, Valle Vista, West Garnet, Homeland and Winchester; Project Area 3-1987 includes portions of the community of North Hemet; and Project Area 3-1989 includes area within the community of Cabazon. The Board approved the original boundaries of the Project Area No. 3-1986 on December 23, 1986 via Ordinance No. 637; Project Area 3-1987 on December 22, 1987 via Ordinance No. 646; and, Project Area No. 3-1989 on July 11, 1989 via Ordinance No. 676.

In 1999, the project areas were merged and amended, adding approximately 1,307

acres to the Homeland Sub-Area (renamed Homeland/Green Acres). Both the amendment and merger were approved in May 1999, via Ordinances Nos. 785 and 786, respectively. On January 13, 2009, Amendment No. 2 to the Mid-County Project Area was adopted via Ordinance No. 887, and added 2,693 acres in the Garnet and West Garnet communities to the Sub-Area. The current project area is composed of approximately 9,721 acres.

Garnet. Garnet is located in the Fifth Supervisorial District, at the intersection of

Interstate 10 and Indian Avenue, directly between Palm Springs and Desert Hot Springs and serves as an entry point for both cities. The community includes approximately 250 acres of underutilized properties. A portion of the Sub-Area is within Palm Springs city limits and a portion is within the Desert Hot Springs sphere of influence. Business in Garnet has traditionally focused on tourist commercial establishments, including auto service facilities. This focus has shifted toward quality industrial and commercial development as the surrounding area has changed. The recent development of business parks and freeway improvements makes the area ideal for future industrial and commercial development. Additional territory was added to the Garnet Sub-Area in January 2009, as part of Amendment No. 2.

Valle Vista. The Valle Vista Sub-Area includes 550 acres located along Highway 74

portions of which are located within the City of Hemet, in the Third Supervisorial District. The Sub-Area consists of commercial uses along the highway frontage; residential uses are located to the north and south of the commercial corridor. Highway 74 is the main route to numerous recreational opportunities offered by the San Jacinto Mountains, Lake Hemet, and Diamond Valley Lake. It is expected that this Sub-Area will benefit from the increase in traffic flow, enabling an increase in commercial development and general revitalization. In general, commercial development opportunities in the Sub-Area remain strong, because the residential development in the recent past in the surrounding area has continued at a strong pace. Growth potential for the area should also be enhanced by the Agency’s recent infrastructure investments in the Sub-Area, such as road and water improvements. A new sheriff sub-station and library expansion have also been recently constructed.

West Garnet. The West Garnet Sub-Area consists of 144 acres located south of

Interstate 10, is near the City of Palm Springs. The Sub-Area is located in a designated wind energy zone, which is the prevailing development in the area. Additional territory was added to the Sub-Area in January 2009 with the adoption of Amendment No. 2 to the Mid-County Project Area.

Homeland/Green Acres. The original Homeland Sub-Area included approximately 120

acres of land situated between the cities of Perris and Hemet. Amendment No. 1 enabled the Agency to add more territory from both the adjacent Homeland and Green Acres communities to the Sub-Area. The amended area is contiguous and is predominately residential in nature.

A-12

The Sub-Area is bisected by Highway 74, one of two major east-west arterials in the region that connects with Interstate 215. Commercial land uses front Highway 74 and serve as the core of the community. Diamond Valley Lake is located south of the Sub-Area, and is Southern California’s largest drinking water storage facility with 800,000 acre feet or 269 billion gallons of water storage. Numerous recreational opportunities have been made available, including but not limited to bicycling, hiking and equestrian trails, picnicking, camping, golfing, fishing, sailing, and special events. Access to the lake is from Highway 79, which runs south from Highway 74. As such, a large number of visitors are likely to travel through the Sub-Area.

Winchester. The Winchester Sub-Area is located between the cities of Temecula and

Hemet and is bisected by Highway 79. The Sub-Area consists of approximately 30 acres of commercial property that fronts Highway 79 and serves as the core of the community. The Sub- Area was created in this small rural community in order to strengthen the commercial base in a single location, and to revitalize the service commercial and neighborhood commercial uses in this area. Highway 79 serves as a major north-south arterial through the Mid-County region and, as mentioned above, is the primary link between Interstate 215 and the Diamond Valley Lake. Plans are underway to widen this major thoroughfare in order to accommodate the anticipated growth from the reservoir and surrounding development.

North Hemet. Originally known as Project Area No. 3-1987, the Sub-Area of North

Hemet was approved by the Board on December 22, 1987 via Ordinance No. 646. The Sub-Area is approximately 40 acres in size and is comprised of unincorporated County land and land incorporated by the City of Hemet. Generally, the Sub-Area contains commercial uses that face State Street, vacant and underutilized parcels north of Menlo Avenue and residences adjacent to Alessandro Avenue. The Agency is in the process of developing a master mixed-use revitalization plan for the Sub-Area.

Cabazon. Originally called Project Area No. 3-1989, the Sub-Area of Cabazon was

approved by the Board of July 11, 1989 pursuant to Ordinance No. 676. The community of Cabazon is located between the cities of Banning and Palm Springs and shares boundaries with the Morongo Indian Reservation to the north and southeast. The 4,598 acre Sub-Area is bisected by Interstate 10 which is the major east-west corridor linking the westernmost portion of the County with the desert region. The community contains both sloping and flat terrain and is surrounded by the spectacular peaks of the San Jacinto and San Gorgonio Mountains. The land uses in the Sub-Area consist of a large-scale commercial retail outlet (473,000 square feet) comprised of 120 stores, the popular dinosaur tourist stop with restaurants and hotels, and rural residential. Immediately east of the Sub-Area is the Morongo Band of Indians Casino and Hotel, which has increased tourism in the area.

New Development in the Mid-County Project Area. The Mid-County Project Area is

primarily experiencing moderate residential growth with appurtenant retail to follow in all the Sub-Areas. A sewer is being constructed along portions of Dolores and Carmen Avenues in the Cabazon Sub-Area in order to facilitate new development. In addition, the construction of a 12-acre Civic Center in Cabazon is projected to stimulate retail activity in the area. In the Winchester Sub-Area, residential growth will help stimulate retail activity in the area.

Land Use in the Mid-County Project Area. The largest use of the land in the Mid-County Project Area in terms of assessed value is for commercial purposes. The following table shows the land use in the Mid-County Project Area, based on 2010-11 assessed valuation.

A-13

TABLE A-9 MID-COUNTY PROJECT AREA Land Use; Fiscal Year 2010-11

Land Use Secured AV (1) Pct of

AV No. of

Parcels Pct of


Commercial $290,071,719 48.4% 157 2.9% 314 4.5% Industrial 32,769,358 5.5 26 0.5 588 8.4 SF Residential. 90,759,739 15.2 1,026 19.1 383 5.4 Condominiums 6,230,371 1.0 94 1.7 5 0.0 Other Residential (2) 104,298,815 17.4 1,745 32.5 1,704 24.2 Vacant 74,764,458 12.5 2,321 43.2 4,037 57.3 Other 179,722 0.0 6 0.1 18 0.3 Totals: $599,074,182 100.0% 5,375 100.0% 7,047 100.0% (1) Valuations include homeowner's exemptions, restored by the Auditor prior to the calculation of tax increment. Acreage is estimated using tax roll data and information provided by the Agency. (2) “Other Residential” includes multi-family residential and mobile homes. Source: Urban Analytics

Historic Assessed Valuation. The Mid-County Project Area experienced a decrease in

valuation of 4.27% in 2010-11, following gains of between 3.71% and 14.25% in the previous four years. Decreases in valuation in the Mid-County Project Area for 2010-11 included a $10.4 million roll correction on property owned by the Morongo Band of Mission Indians enrolled after the July roll was released, reducing the property from $20.7 million; the owner remains among the ten largest in the Mid-County Project Area.

The table below shows a five-year history of assessed valuation in the Mid-County

Project Area.

A-14

TABLE A-10 MID-COUNTY PROJECT AREA

Historic Assessed Valuation, Tax Revenues and Housing Tax Revenues (2) Roll 2006-07 2007-08 2008-09 2009-10 2010-11

Secured

Land $190,321,811 $218,675,361 $258,674,240 $232,325,504 $205,397,771

Improvements 311,750,091 353,953,243 386,786,561 432,817,428 411,558,423

Personal Property 210,977 686,349 706,585 783,529 4,801,162

Exemptions (21,975,108) (22,129,994) (22,563,059) (22,677,606) (22,683,174)

Secured Total 480,307,771 551,184,959 623,604,327 643,248,855 599,074,182

Unsecured

Land 9,538 234 1,060 1,081 0

Improvements 21,879,516 23,947,989 25,956,300 29,865,277 44,145,808



Unsecured Total 40,629,797 43,423,745 46,595,709 51,800,275 66,277,416

Utility

Land 115,723 69,784 69,784 69,784 69,784




Utility Total 169,957 69,784 69,784 69,784 69,784

Totals: 521,107,525 594,678,488 670,269,820 695,118,914 665,421,382

Percent Change 14.25% 14.12% 12.71% 3.71% (4.27)%

Plus: HOPTR AV (3) 7,788,654 7,679,868 7,487,872 7,493,086 7,490,424

Less: Base AV (127,023,198) (127,023,198) (127,023,198) (127,023,198) (127,023,198)

Incremental AV 401,872,981 475,335,158 550,734,494 575,588,802 545,888,608

Incremental Revenue 4,018,730 4,753,352 5,507,345 5,755,888 5,458,886 Plus: Additional Revenue (1) 978,911 1,170,006 983,477 1,557,701 (N.A.) Tax Increment Collected 4,997,640 5,923,358 6,490,822 7,313,589 (N.A.) Housing Tax Revenues Collected $ 999,528 $1,184,672 $1,298,164 $1,462,718

(N.A.)

(1) Revenue from unitary and supplemental rolls, debt service levy, prior-year adjustments and other sources. (2) Assessed valuation from the new Amendment 2 Sub-Area is not included. The 2010-11 valuation from this Sub-Area was

less than its base year assessed valuation; consequently there was no tax increment generated in the Sub-Area. The Agency will receive increment from the Sub-Area once the valuation exceeds the base year valuation.

(3) HOPTR is an acronym for “Homeowners Property Tax Relief”. Source: Urban Analytics; County of Riverside; the Agency

A-15

Largest Taxpayers in the Mid-County Project Area. The following table shows the ten largest taxpayers in the Mid-County Project Area. The Fiscal Consultant has identified the location by Sub-Area for each of the largest property tax payers in the table below. See “APPENDIX G – FISCAL CONSULTANT REPORT – Largest Property Owners”.

TABLE A-11

MID-COUNTY PROJECT AREA Largest Property Tax Payers



Sub-Area (4)

Chelsea Gca Realty Partnership(1) $ 174,722,669 $ 0 $ 74,722,669 26.26% 3-1989 (Cabazon)

Cabazon Co Stores 12,062,970 0 12,062,970 1.81 3-1989 (Cabazon)

R R M Prop Ltd (2) 10,929,460 0 10,929,460 1.64 3-1989 (Cabazon)

Morongo Band Of Mission Indians 10,354,992 0 10,354,992 1.56 3-1989 (Cabazon)

Osborne Dev Corp 9,962,173 68,688 10,030,861 1.51 3-1986 (Homeland/Green Acres)

Garnet Energy Corp 748,885 8,957,985 9,706,870 1.46 3-1986(Garnet,Valle Vista,Winchest.)

Solarium Capital 9,341,402 0 9,341,402 1.40 3-1986(Garnet,Valle Vista,Winchest.)

Hemet Church Of The Nazarene 8,250,067 0 8,250,067 1.24 3-1986(Garnet,Valle Vista,Winchest.)

Oaktree Riverside 8,063,023 0 8,063,023 1.21 3-1986(Garnet,Valle Vista,Winchest.)

Essex Palm Springs 5,800,700 0 7,635,000 1.15 3-1986(Garnet,Valle Vista,Winchest.)

Total, Top Ten: $250,236,341 9,026,673 $259,263,014 38.96

Total, Top Twenty: 283,035,577 14,767,412 297,802,989 44.75

Total, Top Hundred: 362,618,977 28,517,993 391,136,970 58.78

Totals for the Area: $599,143,966 $66,277,416 $665,421,382 100.00%

(1) An appeal filed in previous year by Chelsea GCA ,was resolved with no change in valuation. (2) Owner has one or more appeals pending. (3) Assessed valuation figures include homeowner's exemptions. Sub-areas not currently contributing tax increment are excluded. (4) Assessed valuation from the new Amendment 2 Sub-Area is not included. The 2010-11 valuation from this Sub-Area was less than its base year assessed valuation; consequently there was no tax increment generated in the Sub-Area. The Agency will receive increment from the Sub-Area once the valuation exceeds the base year valuation. Source: Riverside County Office of the Assessor, Urban Analytics



A-16

Certain Sub-Areas in the Mid-County Project Area will reach their limit on the last date to repay indebtedness (see “BOND OWNERS’ RISKS - Impact of Redevelopment Plan Expirations”). In the Mid-County Project Area, the following Sub-Areas will reach this limit before 2041-42 (the final maturity of the Bonds).

Sub-Area Last Date to

Repay Indebtedness

3-1986 (Garnet) 12/23/2037 3-1986 (Homeland) 12/23/2037 3-1987 (North Hemet) 12/22/2038 3-1989 (Cabazon) 07/11/2040



TABLE A-12

MID-COUNTY PROJECT AREA Projected Housing Tax Revenues

Fiscal Year

Tax Revenues


2010-11 $5,477,790 $1,095,558 2011-12 5,357,424 1,071,485 2012-13 5,475,383 1,095,077 2013-14 5,595,702 1,119,140 2014-15 5,718,426 1,143,685 2015-16 5,843,606 1,168,721 2016-17 5,971,289 1,194,258 2017-18 6,101,525 1,220,305 2018-19 6,234,367 1,246,873 2019-20 6,369,865 1,273,973 2020-21 6,508,073 1,301,615 2021-22 6,649,045 1,329,809 2022-23 6,792,837 1,358,567 2023-24 6,939,505 1,387,901 2024-25 7,089,106 1,417,821 2025-26 7,241,699 1,448,340 2026-27 7,397,343 1,479,469 2027-28 7,556,101 1,511,220 2028-29 7,718,034 1,543,607 2029-30 7,883,205 1,576,641 2030-31 8,051,680 1,610,336 2031-32 8,223,525 1,644,705 2032-33 8,398,806 1,679,761 2033-34 8,383,388 1,676,678 2034-35 4,162,380 832,476 2035-36 4,261,902 852,380 2036-37 4,363,414 872,683 2037-38 1,713,714 342,743 2038-39 1,717,000 343,400 2039-40 1,763,094 352,619 2041-42 1,810,108 362,022


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The Desert Communities Project Area

General. The Desert Communities Project Area originally contained two separate project areas known as Project Area Nos. 4-1986 and 4-1987. The Riverside County Board of Supervisors (the “Board”) approved the original boundaries of Project Area No. 4-1986 on December 23, 1986 via Ordinance No. 638. Project Area 4-1986 consists of 20,440 acres of territory within the communities of East Blythe, Mecca, North Shore, Palm Desert, Ripley, Thermal (including the airport), and Thousand Palms. Project Area No. 4-1987 was approved by the Board on December 1, 1987 via Ordinance No. 647, and consists of 376 acres in Desert Center. The Airports-1988 project area was approved by the Board on December 19, 1988, via Ordinance No. 668 and consists of six general aviation airports. On July 20, 1999, the Board approved the merger of both project areas with the Airports-1988 project area. At the time of the merger, the Board approved the amendment of Project Area 4-1986 to add approximately 408 acres of territory within the community of Thousand Palms.

The amendment and merger were approved via Ordinances Nos. 794 and 795,

respectively. On January 13, 2009, Amendment No. 2 to the Desert Communities Redevelopment Project Area was adopted via Ordinance No. 886, and added 1,975 acres in the 100 Palms, Oasis, Mecca and North Shore communities to the project area. The Desert Communities Project Area project area consists of six Sub-Areas, encompassing approximately 29,668 acres.

East Blythe. The East Blythe Sub-Area is comprised of 1,500 acres. A significant

portion of the Sub-Area was annexed by the City of Blythe when it extended its city limits to the Colorado River.

Mecca. The Mecca Sub-Area is comprised of 350 acres and is located in the eastern

Coachella Valley. Recent developments include the extension of water and sewer lines to the north of Mecca along Lincoln Street. These infrastructure extensions have allowed the development of new affordable single-family housing projects including the Village at Mecca (91 units), Las Serenas (87 units), as well as the 106 space Mecca Mobile Home Park, the 31 unit Chapultepec Apartments, and the 128 unit Las Mananitas migrant farm worker housing project. The Agency also has assisted with the 10-acre Mecca Migrant Farm Labor Village located on Avenue 63, east of Lincoln Street. Currently, the Agency is constructing a Mecca Health Clinic, a library, and a Sheriff’s Station in the Sub-Area. Additional acreage was added to the Mecca Sub-Area in January 2009.

North Shore. The North Shore Sub-Area is a small residential and retirement community

located on the northern end of the Salton Sea and is comprised of 54 acres. Additional acreage was added to the North Shore Sub-Area in January 2009, expanding the possibility of future development.

Palm Desert. The Palm Desert Sub-Area is located adjacent to the City of Palm Desert

and is primarily commercial and residential in nature. The Sub-Area is approximately 86 acres in size. Recent street improvements, traffic signalization and commercial and retail development in the Sub-Area have attracted new housing and commercial development.

Ripley. The Ripley Sub-Area is comprised of 830 acres and is located within a small,

rural community that is made up of residential, commercial and agricultural-related industrial land uses. In addition, there are a number of vacant and underutilized properties. A spur of the Atcheson, Topeka and Santa Fe Railroad runs through the northern part of the project area.

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Thermal. The Thermal Sub-Area is comprised of 17,250 acres located in the eastern Coachella Valley, with approximately 1,600 acres of land located in the northeasterly portion of the Sub-Area being suitable for industrial development. The Sub-Area also includes the 1,800 acre Jacqueline Cochran Regional Airport (formerly Desert Resorts Regional Airport and previously Thermal Airport), a large general aviation facility. The Thermal Sub-Area is at the confluence of the spheres of influence of Coachella, La Quinta, and Indio. It is generally thought that the long-term improvement and development of the Jacqueline Cochran Regional Airport will constitute a major opportunity for the area, and that future industrial development would be enhanced by anticipated airport improvement activities. The Agency has engaged in a number of public infrastructure improvements, including streets, curbs, gutters, flood control, a community center, school facility improvements, and water system improvements.

Thousand Palms. The Thousand Palms Sub-Area was originally 285 acres in size. In

July of 1999, the Board approved an amendment to allow for the addition of new territory to the Sub-Area. The total acreage of the Sub-Area is 693 acres. The Sub-Area is adjacent to Interstate 10 north of the City of Rancho Mirage. The Coachella Valley Enterprise Zone was recently extended into this area to encourage new businesses to the area through the provision of state tax credits. The Agency is in the process of developing a new library, fire station and street improvements along Varner Road and Monterey Avenue.

Desert Center. The Desert Center Sub-Area contains approximately 375 acres in two

non-contiguous areas located along Ragsdale and Kaiser Roads, adjacent to the Lake Tamarisk area. The Lake Tamarisk area is made up of residential and recreational uses. The Sub-Area is comprised of irregularly shaped areas, vacant and underutilized parcels. The southern Sub-Area is a combination of developed public and utility land.

Airports. The Airports Sub-Area consists of six general aviation airports. The following

is a brief description of each of the airports. All of the airports with the exception of Flabob Airport are owned by the County. It should be noted that the Jacqueline Cochran Regional Airport.

Blythe Airport is located in the Colorado River Valley in the easternmost part of the

County. It is seven miles west of the City of Blythe along Interstate 10. The airport is owned by the County and it is leased to and operated by the City of Blythe.

Chiraco Summit Airport is located in the Coachella Valley and is immediately adjacent to

Interstate 10. To the south of the airport are the Orocopia and Chocolate Mountains and the Salton Sea. To the north are the San Bernardino Mountains, Joshua Tree National Park and Eagle Mountain.

Desert Center Airport is located north of Interstate 10 and east of State Highway 177. It

is near the unincorporated communities of Desert Center and Lake Tamarisk. Flabob Airport is located near the community of Rubidoux in the northwestern portion of

the County. The airport is privately owned and operated. French Valley Airport is located in the southwest portion of the County, adjacent to the

communities of Temecula, Murrieta and Winchester. The airport is located adjacent to Highway 79 and is only minutes away from Interstates 15 and 215. The major runway is currently being extended to enhance safety margins for aircraft utilizing the airport facility.

Hemet-Ryan Airport is located in the San Jacinto Valley area of the County and provides

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convenient access to the mid-County region, including the cities of Hemet and San Jacinto and Diamond Valley Reservoir. Highways 74 and 79 provide easy access to the airport.

100 Palms. The 100 Palms Sub-Area, was adopted in January 2009, and is located

adjacent to the existing Thermal Sub-Area and Tribal lands. Land uses are represented by sporadic commercial and residential development, and vacant land.

Oasis. The Oasis Sub-Area was adopted in January 2009, and is located fairly close to

the Salton Sea, and the area is also adjacent to Tribal lands, and can be characterized by sporadic commercial and residential development, as well as vacant land.

New Development in The Desert Communities Project Area

To date, the primary area of industrial and commercial development in the Desert

Communities Project Area has been the Thousand Palms Sub-Area. This area saw significant investment and job growth in the last several years, primarily in the form of large industrial parks and various types of commercial developments. Future industrial development is expected to be focused upon the Thermal Sub-Area, as there are large tracts of industrially-zoned land in the area surrounding Jacqueline Cochran Regional Airport (JCRA) that are served by numerous transportation assets, including Highway 86S (the NAFTA Corridor), Interstate 10, a Union Pacific Railroad main line (with a spur extending directly into the community), and the 1,800 acre JCRA property itself, which is capable of handling large cargo-carrying jet aircraft.

Also, the Thermal Sub-Area is within the Coachella Valley Enterprise Zone, the Desert

Communities Empowerment Zone, and is eligible for inclusion in the Palm Springs Foreign Trade Zone. High value residential and resort development has occurred in the Thermal Sub-Area, including various phases of PGA West. High-end residential development is expected to continue, much of which will likely occur in the Vista Santa Rosa area, which is west of JCRA and south of PGA West.

Various infrastructure projects, such as street improvements, sewer and water

improvements, beautification projects with medians, and interchange improvements, have been initiated in the various Sub-Areas of the Desert Communities Project Area. These projects will facilitate the attractiveness of the area for new commercial and industrial development. Projects include the Monterey, Cook, Washington Streets Interchange Improvements, the Mecca Downtown Street Revitalization Project, the Thermal Sewer and Water Improvements Project, and the Thousand Palms Street Improvements Project.

Land Use in The Desert Communities Project Area. The largest use of the land in The Desert Communities Project Area in terms of assessed value is for residential purposes. The following table shows the land use in The Desert Communities Project Area, based on 2010-11 assessed valuation.

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TABLE A-13 DESERT COMMUNITIES PROJECT AREA

Land Use; Fiscal Year 2010-11 (1)


Parcels Pct of


Agricultural $ 193,357,691 8.3% 397 5.0% 5,071 18.4% Commercial 197,094,071 8.4 256 3.2 1,192 4.3 Industrial 132,407,984 5.7 105 1.3 166 0.6 SF Residential. 1,489,181,153 63.8 3,891 49.0 588 2.1 Condominiums - 0.0 2 0.0 0 0.0 Other Residential (2) 44,836,566 1.9 514 6.5 1,650 6.0 Vacant 234,924,924 10.1 2,579 32.5 2,392 8.7 Other 43,435,423 1.9 197 2.5 16,532 59.9 Totals: $2,335,237,813 100.0% 7,941 100.0% 27,590 100.0% (1) Valuations include homeowner's exemptions, restored by the Auditor prior to the calculation of tax increment. Sub-areas not currently contributing tax increment are excluded. Acreage is estimated using tax roll data and information provided by the Agency. (2) “Other Residential” includes multi-family residential and mobile homes. Source: Urban Analytics

Historic Assessed Valuation. In the Desert Communities Project Area rates of growth

over the past five years have ranged from 47.14% in 2006-07 to -9.45% in 2010-11. Approximately $80 million of the decrease in assessed valuation for 2010-11 in the Desert Communities Project Area was attributable to sales of properties at prices below the assessed valuation; much of the remaining decrease was due to Proposition 8 reductions in valuation, primarily on residential properties.

The table below shows a five-year history of assessed valuation in The Desert

Communities Project Area.

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TABLE A-14 DESERT COMMUNITIES PROJECT AREA

Historic Assessed Valuation, Tax Revenues and Housing Tax Revenues (2) Roll 2006-07 2007-08 2008-09 2009-10 2010-11

Secured

Land $935,969,620 $1,212,580,592 $1,205,018,066 $1,085,886,143 $ 951,432,873

Improvements 986,217,428 1,257,564,754 1,466,393,850 1,503,521,173 1,397,030,702


Exemptions (10,072,272) (11,111,917) (13,457,076) (20,556,935) (21,549,539)

Secured Total 1,920,963,596 2,467,939,534 2,666,735,804 2,577,276,338 2,335,237,813

Unsecured

Land 57,454 48,879 42,875 32,309 489,787

Improvements 20,073,895 27,671,650 25,273,329 30,570,018 29,142,210


Exemptions (2,943,200) (3,165,461) (3,052,763) (4,273) 26,922

Unsecured Total 128,195,500 109,324,411 138,122,673 90,844,819 80,757,183

Utility

Land 185,778 91,320 91,320 91,320 91,320




Utility Total 302,618 91,320 91,320 91,320 91,320

Totals: 2,049,461,714 2,577,355,265 2,804,949,797 2,668,212,477 2,416,086,316

Percent Change 47.14% 25.76% 8.83% (4.87)% (9.45)%

Plus: HOPTR AV (3) 8,614,062 9,516,707 10,337,228 10,615,114 11,163,401

Less: Base AV (220,417,565) (220,417,565) (220,417,565) (220,417,565) (220,417,565)

Incremental AV 1,837,658,211 2,366,454,407 2,594,869,460 2,458,410,026 2,206,832,152

Incremental Revenue 18,376,582 23,664,544 25,948,695 24,584,100 22,068,322 Plus: Additional Revenue (1) 4,929,622 3,585,461 516,392 1,965,539

(N.A.)

Tax Increment Collected 23,306,205 27,250,005 26,465,086 26,549,639

(N.A.)

Housing Tax Revenues Collected $4,661,241 $5,450,001 $5,293,017 $5,309,928

(N.A.)

(1) Revenue from unitary and supplemental rolls, debt service levy, prior-year adjustments and other sources. (2) Assessed valuation from the new Amendment 2 Sub-Area is not included. The 2010-11 valuation from this Sub-Area was

less than its base year assessed valuation; consequently there was no tax increment generated in the Sub-Area. The Agency will receive increment from the Sub-Area once the valuation exceeds the base year valuation.

(3) HOPTR is an acronym for “Homeowners Property Tax Relief”. Source: Urban Analytics; County of Riverside; the Agency

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Largest Taxpayers in The Desert Communities Project Area. The following table shows the ten largest taxpayers in the Desert Communities Project Area. The Fiscal Consultant has identified the location by Sub-Area for each of the largest property tax payers in the table below. See “APPENDIX G – FISCAL CONSULTANT REPORT – Largest Property Owners”.

TABLE A-15

DESERT COMMUNITIES PROJECT AREA Largest Property Tax Payers



Sub-Area (4)

T D Desert Dev $ 103,996,303 $ 0 $ 103,996,303 4.30% 4-1986 (East Blythe, Mecca)

Griffin Ranch (2), (3) 40,944,546 0 40,944,546 1.69 4-1986 (East Blythe, Mecca)

Coral Option 1 39,280,517 0 39,280,517 1.63 4-1986 (East Blythe, Mecca)

Mission South (2) 22,128,320 0 22,128,320 0.92 4-1988 (Airports) Deutsch Engineered Devices Inc 0 17,595,342 17,595,342 0.73

4-1986 (East Blythe, Mecca)

FKC Palm Desert Parcel I 14,386,491 0 14,386,491 0.60

4-1986 (East Blythe, Mecca)

MSR Resort Golf Course 13,320,032 0 13,320,032 0.55 4-1986 (East Blythe, Mecca)

Cocopah Nurseries Inc. 13,116,708 0 13,116,708 0.54 4-1986 (East Blythe, Mecca)

Kerry Inc 12,533,500 0 12,533,500 0.52 4-1986 (East Blythe, Mecca)

Ralphs Grocery Inc (2) 11,103,203 11,103,203 0.46 4-1986 (East Blythe, Mecca)

Total, Top Ten: 270,809,620 17,595,342 288,404,962 11.94

Total, Top Twenty: 342,782,446 39,888,242 382,670,688 15.84

Total, Top Hundred: 624,564,495 62,077,884 686,642,379 28.42


(1) Assessed valuation figures include homeowner's exemptions. Sub-areas not currently contributing tax increment are excluded. (2) Owner has one or more appeals pending. (3) Owners have not paid some or all of the property taxes due for 2008-09, 2009-10 and the payment due December 2011. (4) Assessed valuation from the new Amendment 2 Sub-Area is not included. The 2010-11 valuation from this Sub-Area was less than its base year assessed valuation; consequently there was no tax increment generated in the Sub-Area. The Agency will receive increment from the Sub-Area once the valuation exceeds the base year valuation. Source: Riverside County Office of the Assessor, Urban Analytics



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Certain Sub-Areas in the Desert Communities Project Area will reach their limit on the last date to repay indebtedness (see “BOND OWNERS’ RISKS - Impact of Redevelopment Plan Expirations”). In the Desert Communities Project Area, the following Sub-Areas will reach this limit before 2041-42 (the final maturity of the Bonds).


Repay Indebtedness

4-1986 (East Blythe) 12/23/2037 4-1986 (1000 Palms) 12/23/2037 4-1987 (Desert Center) 12/22/2038 4-1988 (Airports) 12/19/2039



TABLE A-16

DESERT COMMUNITIES PROJECT AREA Projected Housing Tax Revenues

Fiscal Year

Tax Revenues


2010-11 $22,182,389 $4,436,478 2011-12 21,714,755 4,342,951 2012-13 22,173,037 4,434,607 2013-14 22,640,483 4,528,097 2014-15 23,117,279 4,623,456 2015-16 23,603,610 4,720,722 2016-17 24,099,669 4,819,934 2017-18 24,605,648 4,921,130 2018-19 25,121,747 5,024,349 2019-20 25,648,168 5,129,634 2020-21 26,185,117 5,237,023 2021-22 26,732,805 5,346,561 2022-23 27,291,447 5,458,289 2023-24 27,861,262 5,572,252 2024-25 28,442,474 5,688,495 2025-26 29,035,309 5,807,062 2026-27 29,640,001 5,928,000 2027-28 30,256,787 6,051,357 2028-29 30,885,909 6,177,182 2029-30 31,527,613 6,305,523 2030-31 32,182,151 6,436,430 2031-32 32,849,780 6,569,956 2032-33 33,530,762 6,706,152 2033-34 34,225,363 6,845,073 2034-35 34,933,856 6,986,771 2035-36 35,656,519 7,131,304 2036-37 36,393,636 7,278,727 2037-38 3,186,795 637,359 2038-39 3,162,872 632,574 2039-40 2,362,562 472,512 2040-41 2,456,393 491,279 2041-42 2,555,815 511,163


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The Interstate 215 Corridor Project Area

General. The Interstate 215 Corridor Project Area was originally comprised of two project areas: Project Areas Nos. 5-1986 and 5-1987. The Board approved Sub-AreaProject Area No. 5-1986 on December 23, 1986 via Ordinance No. 639, and it includes four Sub-Areas: Highgrove, Lakeview, Mead Valley and Romoland, for a total of 3,429 acres. In November of 1998, the Board approved an amendment to the project area to include an additional 843 acres of territory in the Highgrove Sub-Area. Project Area No. 5-1987 consisted of one Sub-Area of 141 acres in the community of Mead Valley and was approved by the Board on December 1, 1987 via Ordinance No. 648. The project area was amended to include an additional 715 acres of territory on June 27, 1989 via Ordinance No. 715.

Both project areas were amended and merged on July 25, 2002 via Ordinance No. 821

and 822, respectively. Approximately 1,392 acres was added to the Romoland Sub-Area. The Mead Valley Sub-Area was also expanded and included the addition of 3,200 acres. The amended areas of both Sub-Areas are contiguous with the existing Sub-Area boundaries.

In 2006, Amendment No. 1a and Amendment No. 1b were adopted into the project area.

Amendment No. 1a was adopted on May 16, 2006, and added approximately 2,820 acres of territory in the communities of Lakeview/Nuevo to the I-215 Project Area. Amendment No. 1b was adopted on May 2, 2006, and added 3,289 acres of additional territory in the communities of Sun City/Quail Valley into the I-215 Project Area.

On May 4, 2010, Amendment No. 2, called the Highway 74 Communities Sub-Area, was

adopted into the project area. The amendment added approximately 5,865 acres to the I-215 Project Area; located within the communities of South Mead Valley, Wagon Wheel, Good Hope, Meadowbrook and Warm Springs. The total acreage for the project area is 21,695 acres.

Highgrove. The original Sub-Area contained 275 acres. On November 24, 1998, the

Board approved an amendment to the Interstate 215 Corridor Project Areato add approximately 843 acres to the Highgrove Sub-Area for a total of 1,118 acres. The area is characterized by older residential, neighborhood commercial and industrial development. Commercial development is primarily service-oriented serving the local community as well as the nearby cities of Riverside and Grand Terrace. Industrial development in the area began as a conglomeration of citrus packing facilities serving the citrus farms located at the east end of the community. Today many of these facilities have been converted into a variety of light manufacturing plants since the citrus industry has declined in the region. The Highgrove Sub-Area also includes Hunter Park, one of the most prosperous industrial areas which is home to the University of California, Riverside Technical Research Park.

Lakeview. The community of Lakeview is bisected by the Ramona Expressway and lies

east of the City of Perris, west of the cities of Hemet and San Jacinto, east of Lake Perris State Recreation Area. The Sub-Area includes about 100 acres characterized by older commercial and industrial uses. The community is nestled in a generally flat rural setting and ringed by the Lakeview Mountains to the southeast and the Bernasconi Hills to the northwest. Recreational opportunities include bicycling, hiking and equestrian trails, picnicking, camping, boating, fishing and swimming. Lakeview’s rural and agricultural atmosphere, mild climate, and proximity to recreational opportunities are ideal for future large-lot residential development.

Mead Valley. The Sub-Area includes 6,563 acres along Interstate 215 between the

cities of Riverside and Perris. The Sub-Area is bisected by Cajalco Road which is the major east-west arterial roadway through the community. The Sub-Area includes two large industrial

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specific plans and a community facilities district has funded all of the necessary infrastructure. The specific plans offer fully improved, ready to build lots from 1 to 40 acres. The Sub-Area primarily consists of large-lot residential development and industrial and commercial properties.

Romoland. The Romoland Sub-Area contains 1,939 acres located east of the City of

Perris. As mentioned above, approximately 1,392 acres was added to the existing project area of 547 acres. The community offers prime freeway frontage with access and visibility from both Highway 74 and Interstate 215, and provides a good location for commercial and industrial uses. Romoland is characterized by older commercial and lower-income housing in the core of the community. Southern California Edison and Eastern Municipal Water District have regional facilities in the area. Romoland’s rural atmosphere, mild climate, and proximity to recreational opportunities are fitting for in-fill and large-lot development. Portions of the Sub-Area are within the boundaries of the newly incorporated City of Menifee.

Lakeview/Nuevo. In 2006, the Agency amended the area and added 2,820 acres of land

in the communities of Lakeview and Nuevo. The amendment area is primarily developed with single family residential homes and a small commercial area in the Nuevo area. There are opportunities for infill residential development throughout the area and there is a need for additional commercial development to serve the community.

Sun City/Quail Valley. The amendment area is composed of two Sub-Areas consisting

of 3,289 acres in two non-contiguous areas in the Sun City and Quail Valley areas. The Quail Valley area consists of 2,039 acres and is located west of Interstate 215 and lies along Goetz Road between McCall Boulevard and Newport Road. It is primarily residential in nature with some small commercial uses. The Sun City Sub-Area consists of 1,250 acres and lies both east and west of Interstate 215 from Ethanac Road to just south of McCall Boulevard. The area is characterized by a large commercial area in the core of Sun City, commercial areas along Interstate 215 and both residential and industrial uses in the surrounding areas. Portions of the Sub-Area are located within the boundaries of the newly incorporated City of Menifee.

New Development in the Interstate 215 Corridor Project Area

The Interstate 215 Corridor Project Area is seeing new industrial and residential

development occur as the market moves eastward to this area. The Highgrove Sub-Area is experiencing tremendous growth in the industrial sector particularly in the area within the boundaries of the City of Riverside. A backbone sewer is being constructed along a portion of the Sub-Area, along East La Cadena to Center Street, which will facilitate industrial and commercial development. In the Mead Valley Sub-Area, road improvements are being designed and constructed, specifically the Mead Valley Road Improvement Projects. The project consists of the paving of roads, which will spur both residential and thereby associated commercial development. The Romoland Sub-Area will be home to the Big League Dreams Sports Park, a thirty-five (35) acre sports park consisting of six softball/baseball fields, restaurant, two playground areas, batting cages, two open turf areas, and other amenities, including four (4) “replica” fields that are designed to look like major league stadiums. Development of Big League Dreams is fostering new interest among retail commercial developers who are interested in acquiring and leasing land for businesses that will service the people who attend events at the Big League Dreams sports park.

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Land Use in the Interstate 215 Corridor Project Area. The largest use of the land in the Interstate 215 Corridor Project Area in terms of assessed value is for residential purposes. The following table shows the land use in the Interstate 215 Corridor Project Area, based on 2010-11 assessed valuation.

TABLE A-17

INTERSTATE 215 CORRIDOR PROJECT AREA Land Use; Fiscal Year 2010-11 (1)


Parcels Pct of


Agricultural $ 7,230,285 0.4% 19 0.1% 312 2.0% Commercial 171,433,853 9.0 255 1.9 472 3.0 Industrial 397,665,653 20.9 172 1.3 796 5.0 SF Residential. 650,535,343 34.2 5288 38.5 3,555 22.5 Condominiums 6,088,661 0.3 129 0.9 5 0.0 Other Residential (2) 294,158,421 15.5 3,615 26.3 4,366 27.6 Vacant 374,833,175 19.7 4,252 30.9 6,313 39.9 Other 761,083 0.0 10 0.1 11 0.1 Totals: $1,902,706,472 100.0% 13,740 100.0% 15,830 100.0% (1) Valuations include homeowner's exemptions, restored by the Auditor prior to the calculation of tax increment. Acreage is estimated using tax roll data and information provided by the Agency. Sub-areas not currently contributing tax increment are excluded. (2) “Other Residential” includes multi-family residential and mobile homes. Source: Urban Analytics

Historic Assessed Valuation. Assessed valuation in the Interstate 215 Corridor

Project Area decreased by 6.50% in 2010-11 due largely to Proposition 8 reductions in valuation on residential properties. This follows gains ranging from 1.24% to 99.23% over the previous four years; the large gain in 2007-08 was principally due to tax increment from the newly-added Lakeview/Nuevo and Sun Valley/Quail Sub-Areas.

The table below shows a five-year history of assessed valuation in the Interstate 215

Corridor Project Area.

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TABLE A-18 INTERSTATE 215 CORRIDOR PROJECT AREA

Historic Assessed Valuation, Tax Revenues and Housing Tax Revenues Roll 2006-07 2007-08 2008-09 2009-10 2010-11 (2)

Secured

Land $476,305,383 $945,099,684 $1,068,075,509 $ 961,253,294 $ 878,330,815

Improvements 670,988,540 1,270,823,912 1,282,506,873 1,151,966,711 1,090,744,592


Exemptions (38,914,630) (73,806,851) (72,530,873) (72,606,662) (76,569,386)

Secured Total 1,119,323,803 2,155,484,679 2,291,074,612 2,049,118,546 1,902,706,472

Unsecured

Land 86,027 79,543 62,235 3,292 200,063

Improvements 61,185,834 69,376,628 78,341,849 84,831,054 81,997,477


Exemptions 0 0 (120,740) (112,200) (101,343)

Unsecured Total 167,964,823 176,370,388 186,819,099 175,810,237 168,099,736

Utility

Land 5,569,607 5,204,370 5,204,370 604,370 5,234,862

Improvements 1,533,234 242,100,000 454,700,000 748,700,000 704,800,000



Utility Total 7,261,070 247,304,370 459,904,370 749,304,370 710,034,862

Totals: 1,294,549,696 2,579,159,437 2,937,798,081 2,974,233,153 2,780,841,070

Percent Change 24.53% 99.23% 13.91% 1.24% (6.50%)

Plus: HOPTR AV (3) 16,717,592 27,092,405 26,906,185 26,761,298 26,403,790

Less: Base AV (426,623,684) (1,067,164,071) (1,067,164,071) (1,067,164,071) (1,067,164,071)

Incremental AV 884,643,604 1,539,087,771 1,897,540,195 1,933,830,380 1,740,080,789

Incremental Revenue 8,846,436 15,390,878 18,975,402 19,338,304 17,400,808

Plus: Additional Revenue (1) 1,323,575 2,908,867 923,828 461,787

(N.A.)

Tax Increment Collected 10,170,011 18,299,745 19,899,230 19,800,091 (N.A.) Housing Tax Revenues Collected 2,034,002 3,659,949 3,979,846 3,960,018 (N.A.)

(1) Revenue from unitary and supplemental rolls, debt service levy, prior-year adjustments and other sources. (2) Assessed valuation from the new Highway 74 Communities Sub-Area is not included, as the Sub-Area did not generate tax

increment in 2010-11. (3) HOPTR is an acronym for “Homeowners Property Tax Relief”. Source: Urban Analytics; County of Riverside; the Agency

A-28

Largest Taxpayers in the Interstate 215 Corridor Project Area. The following table shows the ten largest taxpayers in the Interstate 215 Corridor Project Area. The Fiscal Consultant has identified the location by Sub-Area for each of the largest property tax payers in the table below. See “APPENDIX G – FISCAL CONSULTANT REPORT – Largest Property Owners”.

TABLE A-19

INTERSTATE 215 CORRIDOR PROJECT AREA Largest Property Tax Payers



Sub-Area

Inland Empire Energy Center, LLC (1) $ 709,400,000 $ 0 $ 709,400,000 25.51% 5-2002(Romoland Amend. Area)

Majestic Freeway Business Center 51,940,644 0 51,940,644 1.87 5-1986(Lakeview, Mead Valley 1)

K & N Engineering Inc 2,802,419 31,324,400 34,126,819 1.23 5-1998(Highgrove Amend. Area)

Fr Cal Harvill Road (2) 24,792,918 0 24,792,918 0.89 5-1986(Lakeview, Mead Valley 1)

Citrus Business Park 20,547,391 0 20,547,391 0.74 5-1998(Highgrove Amend. Area)

Oakmont Riverside Hunter Park 19,359,909 0 19,359,909 0.70 5-1998(Highgrove Amend. Area)

Perris Citrus Avenue Storage (2) 18,323,787 0 18,323,787 0.66 5-1986(Lakeview, Mead Valley 1)

Mdc Hunter Park (2) 17,997,781 0 17,997,781 0.65 5-1998(Highgrove Amend. Area)

Johnson Machinery Co 9,931,400 5,234,886 15,166,286 0.55 5-1998(Highgrove Amend. Area)

Pacific Park Inv 14,540,400 0 14,540,400 0.52 5-1998(Highgrove Amend. Area)

Total, Top Ten: 889,636,649 36,559,286 926,195,935 33.31

Total, Top Twenty: 1,008,503,701 36,559,286 1,045,062,987 37.58

Total, Top Hundred: 1,315,345,719 98,074,245 1,413,419,964 50.83


(1) The assessed valuation of Inland Empire Energy Center in the Interstate 215 Corridor Project Area had a

decrease of approximately 5.2% from the 2009-10 assessed valuation of $748,700,000, due to the facility being reassessed following completion of construction.

(2) Owner has one or more appeals pending. (3) Assessed valuation figures include homeowner's exemptions. Sub-areas not currently contributing tax increment are excluded. Source: Riverside County Office of the Assessor, Urban Analytics

Projection of Housing Tax Revenues. The following table shows projected Tax

Revenues and Housing Tax Revenues. The projections incorporate a decrease in overall assessed valuation of (2.0%) in 2011-12, based on (i) continued weakness in the local economy as of the January 1, 2011 lien date for the 2011-12 roll, (ii) the application of a CPI factor of 0.753% to real property in 2011-12 and (iii) possible impact from appeals. Assessed values are projected to increase 2% annually thereafter. See “PROJECTED COVERAGE ON THE BONDS” in this Official Statement for further explanation of these assumptions.

A-29

Certain Sub-Areas in the Interstate 215 Corridor Project Area will reach their limit on the last date to repay indebtedness (see “BOND OWNERS’ RISKS - Impact of Redevelopment Plan Expirations”). In the Interstate 215 Corridor Project Area, the following Sub-Areas will reach this limit before 2041-42 (the final maturity of the Bonds).


Repay Indebtedness

5-1986 (Lakeview) 12/23/2037 5-1986 (Highgrove) 12/23/2037 5-1987 (Mead V. 2) 12/15/2038 5-1989 (Mead 2 Amend) 07/05/2040



TABLE A-20

INTERSTATE 215 CORRIDOR PROJECT AREA Projected Housing Tax Revenues

Fiscal Year

Tax Revenues


2010-11 $17,694,278 $3,538,856 2011-12 17,168,489 3,433,698 2012-13 17,683,763 3,536,753 2013-14 18,209,341 3,641,868 2014-15 18,745,431 3,749,086 2015-16 19,292,243 3,858,449 2016-17 19,849,992 3,969,998 2017-18 20,418,895 4,083,779 2018-19 20,999,176 4,199,835 2019-20 21,591,063 4,318,213 2020-21 22,194,788 4,438,958 2021-22 22,810,587 4,562,117 2022-23 23,438,702 4,687,740 2023-24 24,079,379 4,815,876 2024-25 24,732,870 4,946,574 2025-26 25,399,431 5,079,886 2026-27 26,079,323 5,215,865 2027-28 26,772,813 5,354,563 2028-29 27,480,172 5,496,034 2029-30 28,201,679 5,640,336 2030-31 28,937,616 5,787,523 2031-32 29,688,272 5,937,654 2032-33 30,453,941 6,090,788 2033-34 31,234,923 6,246,985 2034-35 32,031,525 6,406,305 2035-36 32,844,058 6,568,812 2036-37 33,672,843 6,734,569 2037-38 27,879,527 5,575,905 2038-39 28,366,984 5,673,397 2039-40 29,098,273 5,819,655 2040-41 28,477,920 5,695,584 2041-42 29,210,411 5,842,082


B-1

APPENDIX B

COUNTY OF RIVERSIDE GENERAL INFORMATION

Information contained in this Appendix is presented as general background data. The

Bonds are payable solely from the Housing Tax Revenues and other sources as described herein. The taxing power of the County, the State of California or any political subdivision thereof is not pledged to the payment of the Bonds. See “SECURITY FOR THE BONDS” herein for a description of the security for the Bonds.

General Description and Background

Riverside County, which encompasses 7,303 square miles, was organized in 1893 from

territory in San Bernardino and San Diego Counties. Located in the southeastern portion of California, Riverside County is bordered on the north by San Bernardino County, on the east by the State of Arizona, on the South by San Diego and Imperial Counties and on the west by Orange and Los Angeles Counties. There are 26 incorporated cities in Riverside County.

Riverside County's varying topology includes desert, valley and mountain areas as well

as gently rolling terrain. Three distinct geographical areas characterize Riverside County: the western valley area, the higher elevations of the mountains, and the deserts. The western valley, the San Jacinto mountains and the Cleveland National Forest experience the mild climate typical of Southern California. The eastern desert areas experience warmer and dryer weather conditions. Riverside County is the site for famous resorts, such as Palm Springs, as well as a leading area for inland water recreation. Nearly 20 lakes in Riverside County are open to the public. The dry summers and moderate to cool winters make it possible to enjoy these and other recreational and cultural facilities on a year-round basis. Population

According to the State Department of Finance, Demographic Research Unit, Riverside County’s population was estimated at 2,139,535 as of January 1, 2010. The largest cities in Riverside County are the cities of Riverside, Moreno Valley, Corona, Hemet, Indio, Palm Springs, Temecula and Cathedral City. The areas of most rapid population growth continue to be those more populated and industrialized cities in the western and central regions of Riverside County and the southwestern unincorporated region of Riverside County between Sun City and Temecula.

B-2

The following table sets forth annual population figures, as of January 1, for cities located within Riverside County for each of the years listed:

RIVERSIDE COUNTY Population Estimates

1980 (1) 1990 (1) 2006 2007 2008 2009 2010 Banning 14,020 20,570 28,250 28,234 28,193 28,551 28,751 Beaumont 6,818 9,685 23,249 28,216 31,308 32,448 34,217 Blythe 6,805 8,428 22,238 22,609 21,621 21,346 21,812 Calimesa -- -- 7,475 7,433 7,417 7,504 7,555 Canyon Lake -- -- 10,987 10,957 10,990 11,143 11,225 Cathedral City -- 30,085 51,306 52,046 51,945 52,508 52,841 Coachella 9,129 16,896 35,359 38,434 40,292 41,043 42,591 Corona 37,791 76,095 145,295 145,848 146,620 148,770 150,416 Desert Hot Springs 5,941 11,668 23,464 24,857 25,926 26,584 26,811 Hemet 22,454 36,094 71,205 73,011 73,644 74,931 75,820 Indian Wells 1,394 2,647 4,886 4,934 4,997 5,099 5,144 Indio 21,611 36,793 71,965 77,047 80,920 82,325 83,675 Lake Elsinore 5,982 18,285 41,164 47,567 49,528 50,324 50,983 La Quinta -- 11,215 38,510 41,040 42,721 43,830 44,421 Mennifee -- -- -- -- -- 67,819 68,905 Moreno Valley -- 118,779 175,330 180,227 182,845 186,515 188,537 Murrieta -- 93,243 97,034 99,527 100,835 101,487 Norco 19,732 23,302 27,363 27,333 27,134 27,189 27,370 Palm Desert 11,081 23,252 49,786 49,718 50,660 51,570 52,067 Palm Springs 32,359 40,181 46,638 46,795 46,992 47,653 48,040 Perris 6,827 21,460 47,346 50,598 53,312 54,387 55,133 Rancho Mirage 6,281 9,778 16,585 16,736 16,741 16,938 17,008 Riverside 170,591 226,505 289,045 291,814 296,038 300,769 304,051 San Jacinto 7,098 16,210 31,203 34,300 35,475 36,521 36,933 Temecula -- 27,099 93,683 97,131 99,809 102,713 105,029 Wildomar -- -- -- -- -- 31,374 31,907 Unincorporated 276,565 385,384 516,623 536,135 552,528 459,193 466,806 County Total 663,199 1,170,413 1,962,198 2,030,054 2,077,183 2,109,882 2,139,535

(1) From U.S. Census. Source: State Department of Finance estimates (as of January 1).

B-3

Commerce In 2009, the State Board of Equalization converted the business codes of sales and use

tax permit holders to North American Industry Classification System codes. As a result of the coding change, data for 2009 is not comparable to that of prior years. A summary of historic taxable sales within the County during the past five years in which data is available is shown in the following table.

Total taxable sales during calendar year 2009 in the County were reported to be

$22,227,877,000, a 14.5% decrease over the total taxable sales of $26,003,595,000 reported during calendar year 2008. Figures are not yet available for 2010.

RIVERSIDE COUNTY Taxable Retail Sales

Number of Permits and Valuation of Taxable Transactions

Retail Stores Total All Outlets

Number

of Permits

Taxable

Transactions

Number

of Permits

Taxable

Transactions 2005 22,691 $20,839,212 44,222 $28,256,491 2006 23,322 21,842,345 43,672 29,816,237 2007 22,918 21,242,516 45,279 29,023,609 2008 23,604 18,689,249 46,272 26,003,595 2009 (1) 29,829 16,057,488 42765 22,227,877

(1) “Retail Stores” category includes Food Services beginning in 2009. Source: State Board of Equalization.

B-4

Employment The following table presents the annual average distribution of persons in various wage

and salary employment categories for Riverside-San Bernardino Primary Metropolitan Statistical Area for calendar years 2005 through 2009.

RIVERSIDE-SAN BERNARDINO PRIMARY METROPOLITAN STATISTICAL AREA

Civilian Labor Force, Employment and Unemployment (Annual Averages)

2005 2006 2007 2008 2009

Civilian Labor Force (1) 1,707,400 1,751,300 1,774,800 1,783,800 1,778,200 Employment 1,616,600 1,665,100 1,671,900 1,636,900 1,541,600 Unemployment 90,800 86,200 102,900 146,900 236,500 Unemployment Rate 5.3% 4.9% 5.8% 8.2% 13.3% Wage and Salary Employment: (2) Agriculture 18,300 17,300 16,400 15,900 15,200 Natural Resources and Mining 1,400 1,400 1,300 1,200 1,200 Construction 123,300 127,500 112,500 90,700 67,400 Manufacturing 121,000 123,400 118,500 106,900 88,500 Wholesale Trade 49,900 54,200 56,800 54,100 48,300 Retail Trade 165,700 173,200 175,600 168,600 154,900 Transportation, Warehousing and Utilities 60,200 63,800 69,500 70,200 66,500 Information 14,500 15,300 15,400 14,900 14,800 Finance and Insurance 30,100 31,700 30,700 28,000 27,000 Real Estate and Rental and Leasing 18,900 19,900 19,500 18,700 16,600 Professional and Business Services 133,200 142,300 145,000 137,400 127,300 Educational and Health Services 119,900 122,100 127,000 131,500 132,600 Leisure and Hospitality 122,600 128,100 132,600 131,000 123,000 Other Services 40,800 42,500 41,200 40,800 36,700 Federal Government 18,700 19,300 19,400 19,600 20,100 State Government 27,000 27,400 28,700 29,600 29,700 Local Government 174,800 175,700 177,200 180,700 177,500 Total All Industries 1,240,300 1,285,000 1,287,300 1,239,700 1,147,100 (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. Source: State of California Employment Development Department.

B-5

The 25 largest employers (listed alphabetically) in the County are shown below.

RIVERSIDE COUNTY LARGEST EMPLOYERS- Listed Alphabetically

(As of January 1, 2011)

Employer Name Location Industry Abbott Vascular Temecula Physicians & Surgeons Agua Caliente Casino Rancho Mirage Casinos Corrections Dept Norco State Govt-Correctional Institutions Crossroads Truck Dismantling Mira Loma Automobile Wrecking (Whls) Eisenhower Medical Center Rancho Mirage Hospitals Handsome Rewards Perris Internet & Catalog Shopping Hemet Valley Medical Center Hemet Hospitals Hotel At Fantasy Springs Indio Casinos Hub International Of Ca Insurance Riverside Insurance J W Marriott-Desert Springs Resort Palm Desert Hotels & Motels Kaiser Permanente Riverside Hospitals La Quinta Resort & Club La Quinta Resorts Morongo Hotel Cabazon Casinos Morongo Tribal Gaming Ent. Banning Business Management Consultants Pechanga Casino Temecula Casinos Restoration Technologies Inc. Corona Electronic Equipment & Supplies Riverside Community Hospital Riverside Hospitals Riverside County Regional Med Moreno Valley Hospitals Riverside Forklift Training Riverside Trucks-Industrial (Whls) Starcrest Of California Perris Internet & Catalog Shopping Starcrest Products-California Perris Gift Shops Sun World Intl LLC Coachella Fruits & Vegetables-Growers & Shippers Universal Protection Services Palm Desert Security Guard & Patrol Service University Of Ca-Riverside Riverside Schools-Universities & Colleges Academic Watson Pharmaceuticals Inc. Corona Drug Millers (Mfrs)

Source: California Employment Development Dept., America's Labor Market Information System (ALMIS) Employer Database, 2011 1st Edition.

B-6

Construction Activity

The following is a five year summary of the valuation of building permits issued in the County.

RIVERSIDE COUNTY Building Permit Valuation

(Valuation in Thousands of Dollars)

2005 2006 2007 2008 2009 Permit Valuation New Single-family $2,972,203.7 $4,412,255.1 $1,263,350 $1,214,753.0 $892,790.0 New Multi-family 114,787.0 431,580.9 155,820.1 243,741.9 75,756.1 Res. Alterations/Additions 157,825.3 158,099.4 128,336.1 118,488.7 85,148.0 Total Residential 3,244,816.0 5,001,935.4 1,547,506.7 1,576,983.5 1,053,694.1 New Commercial 552,666.9 442,650.9 569,354.4 539,943.4 94,651.4 New Industrial 120,367.6 372,801.3 350,521.0 70,410.8 12,277.6 New Other 344,703.2 237,689.2 190,362.6 138,765.2 107,332.1 Com. Alterations/Additions 274,337.7 268,738.1 255,984.2 292,693.8 162,557.5 Total Nonresidential 1,292,075.4 1,321,879.5 1,366,222.3 1,041,813.1 376,818.7 New Dwelling Units Single Family 15,305 20,692 6,239 3,815 3,431 Multiple Family 1,379 4,519 1,765 2,104 759 TOTAL 16,684 25,211 8,004 5,919 4,190

Source: Construction Industry Research Board, Building Permit Summary.

B-7

Personal Income The following table is based on effective buying income, as reported in the annual

publication “Survey of Buying Power,” published by Sales and Marketing Management. Effective buying income is defined as personal income less personal taxes and non-tax payments. Personal income includes wages and salaries, other labor-related income, proprietor’s income, rental income, dividends, personal interest income and transfer payments. Deductions are then made for federal, state and local taxes, non-tax payments (such as fines and penalties) and personal contributions for social insurance. The following items are not included in the definition of effective buying income: (1) employer contributions to private pension funds, supplemental unemployment insurance funds and privately administered workers’ compensation programs; (2) imputed personal income, which includes the imputed value of services provided by depository institutions and income earned by life insurance carriers and private noninsured pension funds on the principal amounts contributed by policy holders and pension beneficiaries; and (3) imputed rental income of owner-occupied nonfamily dwellings.

The table below summarizes the total effective buying income and the median

household effective buying income for the City, the County, the State and the United States from 2005 through 2009.

RIVERSIDE COUNTY PERSONAL INCOME

For Calendar Years 2005 Through 2009

Year

Area

Total Effective Buying Income (000’s Omitted)

Median Household Effective Buying

Income

2005 Riverside County $ 32,004,438 $41,326 California 720,798,106 44,681 United States 5,894,663,364 40,529





Source: The Nielsen Company (US), Inc.

B-8

Riverside County Agriculture Agriculture remains a leading source of income in Riverside County. Principal

agricultural products are milk, eggs, table grapes, grapefruit, nursery, alfalfa, dates, lemons and avocados. Four areas in Riverside County account for the major portion of agricultural activity: the Riverside/Corona and San Jacinto/Temecula Valley Districts in the western portion of Riverside County, the Coachella Valley in the central portion and the Palo Verde Valley near Riverside County’s eastern border.

Riverside County Transportation

Easy access to job opportunities in Riverside County and nearby Los Angeles, Orange

and San Diego Counties is important to Riverside County’s employment picture. Several major freeways and highways provide access between Riverside County and all parts of Southern California. The Riverside Freeway (State Route 91) extends southwest through Corona and connects with the Orange County freeway network in Fullerton. Interstate 10 traverses the width of Riverside County, the western-most portion of which links up with major cities and freeways in the eastern part of Los Angeles County and the southern part of San Bernardino County. Interstate 15 and 215 extend north and then east to Las Vegas, and south to San Diego. The Moreno Valley Freeway (U.S. 60) provides an alternate (to Interstate 10) east-west link to Los Angeles County.

Currently, Metrolink provides commuter rail service to Los Angeles and Orange Counties

from several stations in Riverside County. Transcontinental passenger rail service is provided by Amtrak with a stop in Indio. Freight service to major west coast and national markets is provided by two transcontinental railroads – Burlington Northern/Santa Fe and Union Pacific. Truck service is provided by several common carriers, making available overnight delivery service to major California cities.

Transcontinental bus service is provided by Greyhound Lines. Intercounty, intercity and

local bus service is provided by the Riverside Transit Agency to western County cities and communities. The SunLine Transit Agency provides local bus service throughout the Coachella Valley, including the cities of Palm Springs and Indio. The City of Banning also operates a local bus system.

Riverside County seat, located in the City of Riverside, is within 20 miles of the Ontario

International Airport in neighboring San Bernardino County. This airport is operated by the Los Angeles Department of Airports. Four major airlines schedule commercial flight service at Palm Springs Regional Airport. County-operated general aviation airports include those in Thermal, Hemet, Blythe and French Valley. The cities of Riverside, Corona and Banning also operate general aviation airports. There is a military base at March Air Force Base, which converted from an active duty base to a reserve-only base on April 1, 1996. Plans for joint military and civilian use of the base thereafter are presently being formulated by the March AFB Joint Powers Authority, comprised of Riverside County and the Cities of Riverside, Moreno Valley and Perris.

C-1

APPENDIX C

AGENCY’S AUDITED FINANCIAL STATEMENTS FOR

FISCAL YEAR ENDED JUNE 30, 2010

REDEVELOPMENT AGENCY FOR THE

COUNTY OF RIVERSIDE, CALIFORNIA

ANNUAL AUDIT REPORT

Year Ended June 30, 2010

Redevelopment Agency for the County of Riverside, California Table of Contents


TABLE OF CONTENTS PAGE I. INDEPENDENT AUDITORS’ REPORT i - ii II. MANAGEMENT’S DISCUSSION AND ANALYSIS iii - xii III. FINANCIAL STATEMENTS Basic Component Unit Financial Statements: Government-wide Financial Statements: Statement of Net Assets 1 Statement of Activities 2 Fund Financial Statements: Balance Sheet - Governmental Funds 3 - 6 Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Assets

7

Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds

8 - 11

Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities

12

Notes to Financial Statements 13- 47 Supplementary Information: Combining Balance Sheet - Capital Projects Governmental Funds 48 - 49 Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Capital Projects Governmental Funds 50- 51 Combining Balance Sheet - Debt Service Governmental Funds 52 - 53 Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Debt Service Governmental Funds 54 - 55 Combining Balance Sheet - Special Revenue Governmental Funds 56 - 57 Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Special Revenue Governmental Funds 58 - 59 Independent Auditors’ Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards

60

'=r-C)CS TEAMAN. RAMIREZ& SMITH, INC. • • I ~ c E R T I f I E 0 p u 8 l I c A c c 0 u II T A N T s

INDEPENDENT AUDITORS' REPORT

Board of Directors Redevelopment Agency for the County of Riverside Riverside, California

We have audited the accompanying financial statements of the governmental activities and each major fund of the Redevelopment Agency for the County of Riverside, California, (the "Agency") as of and for the year ended June 30, 2010, which collectively comprise the Agency's basic financial statements as listed in the table of contents. These financial statements are the responsibility of the Agency's management. Our responsibility is to express opinions on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in the United States of America applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions.

As described in Note 1 to the financial statements, the financial statements present only the Redevelopment Agency for the County of Riverside, California and are not intended to present fairly the financial position and results of operations of the County of Riverside in conformity with accounting principles generally accepted in the United States of America.

In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities and each major fund of the Redevelopment Agency for the County of Riverside, California, as of June 30, 2010, and the respective changes in financial position thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America.

I.n accordance with Government Auditing Standards, we have also issued a report dated November 22, 2010 on our consideration of the Redevelopment Agency for the County of Riverside, California's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit.

The information identified in the accompanying table of contents as management's discussion and analysis is not a required part of the basic financial statements but is supplementary information required by accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of management's discussion and analysis. However, we did not audit the information and express no opinion on it.

Rich ard A. Teaman, CPA • Greg W. Fankha ne l, CPA • David M . Ramirez, C PA • Javie r H . Carrillo, C P A

4201 Brockton Ave. S uite 100, Riverside CA 92501 • 951.274.9500 • 951 .274.7828 FAX • www.trscpas.com

Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Agency's

basic financial statements. The supplementary information section, as listed in the table of contents, is presented for purposes of additional analysis and is no a required part of the basic finandal statements. The supplementary schedules have been subjected

to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole.

November 22, 2010

ii

iii

MANAGEMENT’S DISCUSSION & ANALYSIS (MD&A) The Redevelopment Agency for the County of Riverside (the “Redevelopment Agency”) presents this MD&A to provide a narrative overview, financial highlights, and analyses of the audited annual financial statements. This MD&A section is being presented as required by the provisions of the Governmental Accounting Standards Board (GASB) Statement 34. The financial statements are reported on the basis of a twelve month fiscal year which starts on July 1 of one calendar year and ends on June 30 of the next calendar year; the fiscal year is named by the calendar year in which the fiscal year ends. Therefore, the basic annual financial statements presented in this report are for Fiscal Year 2010, which started July 1, 2009 and ended June 30, 2010. Please read this overview in conjunction with your reading of the basic financial statements and the accompanying notes to those financial statements. THE PURPOSE OF THE REDEVELOPMENT AGENCY The Redevelopment Agency was established in 1985, through its special legal and financial mechanisms, to alleviate conditions of economic and physical blight in the redevelopment project areas through the implementation of new public improvement projects, the stimulation of economic development, and by increasing and improving the stock of affordable housing. The activities of the Redevelopment Agency are funded through tax increment financing. Tax increment is generated when property taxes increase as a result of increased property values over the base year assessed value of a project area. The base year assessed value of a project area is the total assessed value of all property within a project area at the time of adoption of a project area. One-fifth of the tax increment received must be set-aside in a separate fund and can only be used to increase or improve the supply of low and moderate-income housing. In order to receive tax increment, the Agency is required to establish debt to finance redevelopment. For this reason, the Redevelopment Agency’s financial statements reflect negative net assets resulting from the establishment of long-term debt. Typically, this debt is established through the issuance of tax-exempt bonds, which are used to fund capital improvement projects and are secured by tax increment revenues. The Redevelopment Agency manages five redevelopment areas encompassing 76,386 acres located in 35 communities and 5 airports. Agency staff performs general administration, manages construction projects, administers loan and grant programs, coordinates budget and reporting requirements, maintains the Agency’s official records, and manages real property activity. FINANCIAL HIGHLIGHTS Financial highlights of the year include the following:

• The Redevelopment Agency ended the fiscal year of operations with assets of $502,318,642 and liabilities of $711,679,215 resulting in net assets of $(209,360,573).

• As of the close of the current fiscal year, the Redevelopment Agency’s funds reported combined ending fund balances of $477,814,815.

• The Redevelopment Agency’s total long-term debt increased by $69,367,214, which represents a 11% increase in total debt.

These financial highlights are detailed further in the presentation of condensed financial information with analysis of the overall financial position.

iv

OVERVIEW OF THE BASIC FINANCIAL STATEMENTS As a component unit of a larger governmental body, the Redevelopment Agency provides its financial statements to the County of Riverside, which in turn, includes the Redevelopment Agency’s financial information in the County’s Comprehensive Annual Financial Report (CAFR). The Redevelopment Agency is required to present its financial statements in the format of governmental fund financial statements, in conformity with generally accepted accounting principles. This MD&A should be used in conjunction with the basic financial statements, which comprise the government-wide financial statements and the fund financial statements. These two sets of financial statements, along with the notes to the financial statements, provide different views of the Redevelopment Agency’s financial activities and financial position. This report also contains other supplementary information in addition to the basic financial statements. The government-wide financial statements provide a broad overview of the Redevelopment Agency’s activities as a whole and comprise the Statement of Net Assets (formerly the Balance Sheet) and the Statement of Activities (formerly the Statement of Revenues, Expenditures and Changes in Fund Balances).

The Statement of Net Assets presents information on all of the Redevelopment Agency’s assets and liabilities, with the difference between the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator in assessing whether the financial position of the Redevelopment Agency is improving or deteriorating. The terminology of “net assets” replaces the Balance Sheet terminology of “equity” or “fund balance.” The Statement of Activities presents information showing how the government’s net assets changed during the most recent fiscal year. All changes in net assets are reported as soon as the event occurs, regardless of the timing of related cash flows. As a result, revenues and expenses reported in this statement may be for items that could affect the cash flow in future fiscal periods.

The government-wide financial statements can be found on pages 1-2 of this report. The fund financial statements provide detailed information about each of the Redevelopment Agency’s funds. A fund is considered to be a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The Redevelopment Agency, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the Redevelopment Agency’s funds are governmental-type funds. Financial statements for these funds are prepared on the modified accrual basis of accounting, which means that only revenue, which is measurable and available, is recorded in the current period. Capital assets and other long-lived assets, along with long-term liabilities, are not presented in the governmental fund financial statements. The Redevelopment Agency maintains three individual governmental-type funds. Information is presented separately in the governmental fund Balance Sheet and Statement of Revenues, Expenditures and Changes in Fund Balances for the following fund types: Capital Project, Special Revenue (Low and Moderate Income Housing), and Debt Service. In establishing major fund criteria, the GASB intended that a major fund arises when a particular element of a fund meets certain percentage thresholds; all other funds that are not considered major funds must be combined in a separate column (other governmental funds). For FY 2010, all funds were considered major funds and are reflected as such in the Governmental Fund Financial Statements. While detailed sub-area information is not presented, separate accounts are maintained for each program to control and manage money for particular purposes or to demonstrate that the Redevelopment Agency is properly using specific appropriations and grants.

v

The governmental fund financial statements can be found on pages 3-12 of this report. The notes to the financial statements provide additional information that is essential to a full understanding of the data provided in the government wide and fund financial statements. The notes to the financial statements can be found on pages 13-47 of this report. PRESENTATION OF CONDENSED FINANCIAL INFORMATION WITH FINANCIAL ANALYSIS OF OVERALL POSITION Statement of Net Assets Financial statements, presented as follows, are shown in a condensed format to compare amounts from the current fiscal year (2010) to amounts from the prior fiscal year (2009). Charts to illustrate selected aspects of financial information, along with brief narrative analyses, accompany these condensed financial statements.

2010 2009ASSETS

Cash and Investments 104,504,148$ 120,552,030$ Cash and Investments with Fiscal Agent 231,163,354 249,305,443 Accounts Receivable 6,383,746 480,743 Interest Receivable 1,011,641 643,704 Loans Receivable 67,192,484 37,933,807 Land Held for Resale 79,665,801 80,034,902 Deferred Charges 12,173,514 12,109,908 Capital Assets, Net of Depreciation 223,954 294,971

Total Assets 502,318,642 501,355,508

LIABILITIESAccounts Payable 9,458,724 13,826,197 Due to Other Governments 2,647,635 488,950 Interest Payable 7,641,374 7,122,429 Deferred Revenues 7,610,418 7,736,908 Long-Term Liabilities:

Due in One Year 12,377,096 11,913,088 Due in More Than One Year 671,943,968 603,040,762

Total Liabilities 711,679,215 644,128,334

NET ASSETSInvested in Capital Assets 223,954 294,971 Restricted for:

L & M Housing 163,559,786 100,601,681 Unrestricted (373,144,313) (243,669,478)

Total Net Assets (Deficit) (209,360,573)$ (142,772,826)$

Redevelopment Agency for the County of RiversideStatement of Net Assets

vi

As previously illustrated by the Statement of Net Assets, the Redevelopment Agency ended the fiscal year of operations with assets of $502,318,642 and liabilities of $711,679,215 resulting in net assets of $(209,360,573). These net assets consisted of $223,954 in invested capital assets, $163,559,786 in restricted assets, and $(373,144,313) in unrestricted assets. The ending net assets of ($209,360,573) represent a decrease in net assets of ($66,587,747) from the prior fiscal year. The decrease can be attributed to the following:

• A decrease in Cash and Investments was a result of higher utilization of bond proceeds for public improvements, community development activities, commercial projects, housing and rehabilitation of properties.

• An increase in Cash and Investments with Fiscal Agent, and Long-term Debt occurred due to the issuance of $66,745,000 in loans payable and bonds related to long-term debt. However, the overall net effect still resulted in a decrease due to higher utilization of bond proceeds for public improvements, community development activities, commercial projects, housing and rehabilitation of properties.

• An increase in Accounts Receivable occurred as a result of anticipated revenue accrued in FY

2010 that was not accrued in FY 2009.

• An increase in Loans Receivable was due to increases in the Mobile Home Program as well as the recording of the Vernola Basin Project.

Invested in capital assets, net of related debt, accounts for $223,954 of net assets. Currently, there is no related debt to capital assets. The Redevelopment Agency’s capital assets represent office equipment and four vehicles used for the purpose of removing graffiti. Restricted net assets of $163,559,786 represent the largest portion of the Redevelopment Agency’s total net assets. This amount represents resources that are subject to external restrictions on how they may be used, such as the payment of debt service and housing (special revenue) reserves. These restrictions limit the Redevelopment Agency’s ability to use those net assets for day-to-day operations. Unrestricted net assets of $(373,144,313) represent resources available for the Redevelopment Agency to use for day-to-day operations. It should be noted that this amount is negative due to the reporting of long-term liabilities. Based on the economic resources measurement focus and the full accrual basis of accounting, revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. The assets used to pay for the long-term liabilities are not recorded in the Statement of Net Assets since the resources to repay this debt will come from future operating revenues, such as tax increment revenue and interest income. Statement of Activities The Statement of Activities, presented as follows, is shown in a condensed format to compare amounts from the current fiscal year (2010) to amounts from the prior fiscal year (2009). These condensed financial statements are accompanied by charts to illustrate selected aspects of financial information, along with a brief narrative analysis. The General Government category of Expenses in the Statement of Activities includes all redevelopment costs not classified as Housing, Project Improvements, and Interest on Long-Term Debt. Examples of General Government type expenses include costs for managing effective and efficient project development activities, legal counsel, required annual audits, and legally mandated pass-through payments of tax increment money to government agencies and schools.

vii

2010 2009Revenues:

Program Revenues:Charges for Service 20,580,670$ 25,870,116$

General Revenues:Tax Increment 99,329,906 100,440,964 Interest Income 4,099,392 10,618,742 Other 276,921 276,921

Total Revenues 124,286,889 137,206,743

Expenses:General Government 35,028,976 21,753,558 State ERAF 27,793,518 - Housing 10,536,930 15,355,003 Project Improvements 101,964,203 86,563,515 Interest on Long-term Debt 28,634,040 28,727,989

Total Expenses 203,957,667 152,400,065

Change in Net Assets (79,670,778) (15,193,322)

Net Assets - Beginning of Year (Deficit) (142,772,826) (126,165,346)

Prior Period Adjustments 13,083,031 (1,414,158)

Net Assets - Beginning of Year-Restated (Deficit) (129,689,795) (127,579,504)

Net Assets - End of Year (Deficit) (209,360,573)$ (142,772,826)$

ActivitiesGovernmental

Redevelopment Agency for the County of RiversideStatement of Activities

Revenues by SourceFiscal Year Ended June 30, 2010

Tax Increment79.9%

Program Revenues16.6%

Other0.2%

Interest Income3.3%

viii

Expenses by CategoryFiscal Year Ended June 30, 2010

General Government17%

State ERAF14%

Housing5%Project Improvements

50%

Interest on Long-term Debt14%

As shown by the Statement of Activities, the Redevelopment Agency’s total expenses exceeded total revenues by $(79,670,778) for the fiscal year ended 2010. The decrease in net assets can be explained by these major variances:

• Interest income from the prior year decreased by 61% due to reduction of bond investments; the drop in interest rates resulting from the United States economic crisis; and the use of bond proceeds for project improvements and housing projects.

• Expenses increase due to the mandated State SERAF shift for FY 09-10, which was not a FY

08-09 expenditure.

• A decrease of 34% in Housing expenditures was due to the fact that there was no Housing Bond funds available to spend until the new bond issuance occurred in May, 2010.

• Project Improvements increased by 15% due to new non-housing developments.

The Expenses by Category chart indicates that General Government expenses represent 17% of the total expenses for the current fiscal year, which represent administrative costs, professional services, and other expenditures such as pass through payments, contributions to other non-county agencies, and the State mandated Educational Revenue Augmentation Fund (ERAF) payments when applicable. Further, 5% of total tax increment revenues are dedicated to housing developments; and 50% represents Project Improvement expenses funded with bond proceeds, with a significant amount being spent on non-housing projects. ANALYSIS OF SIGNIFICANT BUDGET VARIANCES The Redevelopment Agency’s fiscal department works closely with the other departments to monitor the annual operating budget throughout the fiscal year in order to avoid expenditures in excess of available funds. Significant budget variances are analyzed to determine their causes and effects. A comparison between the original budget and final (revised) budget is shown below.

ix

Comparison of Original Budget and Final Budget The original and final budgets for FY2010 and the percentages of change are presented as follows:

Original Budget Final Budget % ChangeRevenues:Tax Increment 97,378,200$ 135,401,500$ 39%Interest Income 2,355,300 2,355,300 0%Other Income 36,864,400 7,458,393 -80%Gain (Loss) on Sale of Property Held for Resale 2,000 2,000 0%Long-term Debt Proceeds 146,511,900 161,511,900 10%Total Revenue 283,111,800 306,729,093 8%

Expenditures:Administrative Costs 14,048,137 15,520,545 10%Professional Services 349,400 349,400 0%Project Improvement Costs 213,179,263 231,648,348 9%Other Expenditures (pass thrus, ACO fees, ERAF) 21,644,900 27,144,900 25%State ERAF 1,000 27,989,589 2798859%Interest and Fiscal Charges 23,719,900 27,999,305 18%Capital Outlay 1,000 1,000 0%Long-Term Obligation Principal Payments 9,454,600 10,894,600 15%Payments for Government Advances 713,600 713,600 0%Total Expenditures 283,111,800 342,261,287 21%

Excess of Revenues Over (Under) Expenditures -$ (35,532,194)$

Redevelopment Agency for the County of RiversideBudget Comparison


The most significant changes to the FY2010 original budget were an 80% decrease in Other Income and a significant increase in State ERAF. Comparison of Actual Operations and Final Budget Overall, the actual revenues amounts were less than the final budgeted amounts and the actual expenditures were less than the final budgeted amounts by (35%) and (39%), respectively. On the following page is an illustration of the comparison between the actuals and the final-revised budget.

Actuals Final Budget % DifferenceRevenues:

Tax Increment 99,329,906$ 135,401,500$ -27%Interest Income 4,099,392 2,355,300 74%Other Income 20,580,670 7,458,393 176%Gain (Loss) on Sale of Property Held for Resale (7,157,306) 2,000 -3580%Long-Term Debt Proceeds 81,269,012 161,511,900 -50%Total Revenue 198,121,674 306,729,093 -35%

Expenditures:Administrative Costs 12,269,917 15,520,545 21%Professional Services 357,976 349,400 2%Project Improvement Costs 100,663,766 231,648,348 -57%Other Expenditures (pass thrus, ACO fees, ERAF) 27,409,697 27,144,900 1%State ERAF 27,793,518 27,989,589 -1%Interest and Fiscal Charges 28,190,178 27,999,305 1%Capital Outlay - 1,000 -100%Long-Term Obligation Principal Payments 10,664,001 10,894,600 -2%Payments for Government Advances - 713,600 -17%Debt Issuance Costs 509,729 - 100%Total Expenditures 207,858,782 342,261,287 -39%

Excess of Revenues Over (Under) Expenditures (9,737,108)$ (35,532,194)$

Redevelopment Agency for the County of RiversideBudget Comparison


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The table illustrated above shows the differences between the actual operating results and final budgeted amounts. The most significant differences can be attributed to the following:

• Tax increment revenue was 27% lower than the final budget amount as a result of the current United States economic crises.

• The Agency received more Interest Income than expected as a result of the timing and usage

of bond proceeds for project improvements and housing projects.

• The Agency received 176% more Other Income than expected due to refunds and reimbursements on project expense.

• A Loss in the Sale of Property held for resale was not anticipated when the final budget was

compiled.

• The Long-Term Debt Proceeds reflect the issuance of the Housing Bonds during FY 09-10; the anticipated Non-Housing Bond issuance was not issued until early FY 10-11.

• The Actuals reflected significantly lower Project Improvement Costs versus Final Budget

amounts because some projected housing development costs were not fulfilled due to new housing bonds not being issued until late in the fiscal year.

• The Payment for Government Advances was over-budgeted for the Coral Lease Payment which was paid through another general ledger account.

• Debt Issuance Costs were over budget as a result of the new Housing Bond issuances.

CAPITAL ASSETS AND DEBT ADMINISTRATION Capital Assets. The Redevelopment Agency’s investment in capital assets for its governmental activities amounts to $223,954 (net of accumulated depreciation of $207,143) as of June 30, 2010. This investment in capital assets includes vehicles. There were no deletions or additions in the current year to capital assets.

Capital Assets (Net of Depreciation)

Governmental Activities 2010 2009 Vehicles $ 220,623 $ 291,512 Equipment 3,331 3,459 Total $ 223,954 $ 294,971

Additional information on the Redevelopment Agency’s capital assets can be found in Note 4-E to the basic financial statements on page 34 of this report.

xi

Long-Term Debt. At the end of FY2010, the current fiscal year, the Redevelopment Agency for the County of Riverside had total bonded debt and loans payable outstanding of $664,767,644.

2010 2009

Loans Payable 425,737,644$ 433,154,258$ Tax Allocation Bonds 239,030,000 175,520,000

Total 664,767,644$ 608,674,258$

Governmental Activities

Outstanding Debt Redevelopment Agency for the County of Riverside

The Redevelopment Agency currently has six outstanding issues of bonded indebtedness and three loan payables with the Riverside County Public Financing Authority. In Fiscal Year 2010, the Redevelopment Agency’s total long-term debt increased by $(69,367,214) or approximately 11%. The key factors in this increase are as follows:

• The Agency issued new Tax Allocation Bonds in the amount of $66,745,000 and made principal payments to loans payable of $7,416,614 and bonded indebtedness of $3,235,000.

Additional information on the Agency’s long-term debt can be found in Note 4-F on pages 35-46. ECONOMIC FACTORS The Redevelopment Agency is supported financially by tax increment revenues generated within the agency’s five project areas. In the fiscal year ending June 2010, gross tax increment received by the Agency decreased by 1% from the previous fiscal year. Based on current year’s assessed valuations, it is anticipated that this new trend will reflect a steady decline in property values within the project areas through the fiscal year ending June 2011, as shown in the chart below.

GROWTH IN NET TAX INCREMENT VALUES

-5,000,000

10,000,00015,000,00020,000,00025,000,00030,000,000

01-86 JVPA MCPA DCPA I-215Project Area

Am

ount

FY 06-07 FY 07-08 FY 08-09 FY 09-10 FY 10-11

xii

REQUESTS FOR INFORMATION This financial report is designed to provide a general overview of the Redevelopment Agency for the County of Riverside’s finances for all those with an interest in the Agency’s finances. Questions concerning any of the information provided in this report or requests for additional information should be addressed to the Fiscal Manager at the Redevelopment Agency for the County of Riverside, 3133 Mission Inn Avenue, Riverside, CA 92507.

ASSETSCash and Investments 104,504,148$ Cash and Investments with Fiscal Agent 231,163,354 Accounts Receivable 6,383,746 Interest Receivable 1,011,641 Loans Receivable 67,192,484 Land Held for Resale 79,665,801 Deferred Charges 12,173,514 Capital Assets, Net of Depreciation 223,954

Total Assets 502,318,642

LIABILITIESAccounts Payable 9,458,724 Due to Other Governments 2,647,635 Interest Payable 7,641,374 Deferred Revenues 7,610,418 Long-Term Liabilities: Due in One Year 12,377,096 Due in More Than One Year 671,943,968

Total Liabilities 711,679,215

NET ASSETSInvested in Capital Assets 223,954 Restricted for:

L & M Housing 163,559,786 Unrestricted (373,144,313)

Total Net Assets (Deficit) (209,360,573)$

Redevelopment Agency for the County of Riverside, CaliforniaStatement of Net Assets

June 30, 2010

The accompanying notes are an integral part of this statement.1

ProgramRevenues

Charges forFunctions/Programs Expenses Services TotalGovernmental Activities:

General Government 35,028,976$ $ (35,028,976)$ State ERAF 27,793,518 (27,793,518) Housing 10,536,930 306,851 (10,230,079) Project Improvements 101,964,203 20,273,819 (81,690,384) Interest on Long-Term Debt 28,634,040 (28,634,040)

Total 203,957,667$ 20,580,670$ (183,376,997)

General Revenues:Tax Increment 99,329,906 Investment Income 4,099,392 Other 276,921

Total General Revenues 103,706,219

Change in Net Assets (79,670,778)

Net Assets - Beginning of Year (Deficit) - As Previously Reported (142,772,826)

Prior Period Adjustments 13,083,031

Net Assets - Beginning of Year (Deficit) - Restated (129,689,795)

Net Assets - End of Year (Deficit) (209,360,573)$

Redevelopment Agency for the County of Riverside, CaliforniaStatement of Activities



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Project Area Jurupa MID Desert1-1986 Valley County Communities

ASSETSCash and Investments 8,580,562$ 573,465$ 1,890,354$ 8,409,260$ Cash and Investments with Fiscal Agent 25,883,878 45,682,418 16,599,151 25,293,661Accounts Receivable 2,502,243 10,000 3,412,632Interest Receivable 117,231 329,315 69,414 157,652Due from Other Funds 2,821 2,953,778 1,615 6,813Loans Receivable 27,229,796 876,287 568,107Land Held for Resale 2,764,269 24,129,244 536,723 18,464,293

TOTAL ASSETS 37,348,761$ 103,400,259$ 19,983,544$ 56,312,418$

LIABILITIESAccounts Payable 244,028$ 3,119,579$ 477,585$ 2,595,561$ Due to Other GovernmentsDue to Other Funds 2,000,000 803

TOTAL LIABILITIES 244,028 5,119,579 477,585 2,596,364

FUND BALANCESReserved for Debt ServiceReserved for Encumbrances 3,273,911 27,459,449 4,760,000 25,314,266Reserved for Receivables 27,229,796 876,287 568,107Reserved for Land Held for Resale 2,764,269 24,129,244 536,723 18,464,293

Unreserved:Designated for Specific Capital

Projects and Programs 31,066,553 19,462,191 13,332,949 9,369,388Undesignated

TOTAL FUND BALANCES 37,104,733 98,280,680 19,505,959 53,716,054

TOTAL LIABILITIES ANDFUND BALANCES 37,348,761$ 103,400,259$ 19,983,544$ 56,312,418$

Capital Projects

Redevelopment Agency for the County of Riverside, CaliforniaBalance Sheet - Governmental Funds

June 30, 2010


Capital ProjectsI-215 Project Area Jurupa MID Desert I-215

Corridor 1-1986 Valley County Communities Corridor

10,337,810$ 4,776,291$ 2,653,232$ 3,458,188$ 10,252,148$ 11,822,500$ 44,209,726 4,248,065 2,710,771 1,655,341 2,426,638 5,020,601

67,590 20,296 149,729 54,263 102,745 64,248176,996 25,493 6,209 12,769 21,855 52,862

2,005,775

4,688,870

61,486,767$ 9,070,145$ 5,519,941$ 5,180,561$ 12,803,386$ 16,960,211$

1,746,481$ 47,071$ 115,643$ 1,366$ 2,023$ 451,141$

2,009 2,970,706 3,398 17,864 10,810

1,746,481 49,080 3,086,349 4,764 19,887 461,951

9,021,065 2,433,592 5,175,797 12,783,499 16,498,26038,440,746

4,688,870

16,610,670

59,740,286 9,021,065 2,433,592 5,175,797 12,783,499 16,498,260

61,486,767$ 9,070,145$ 5,519,941$ 5,180,561$ 12,803,386$ 16,960,211$

Debt Service



ASSETSCash and Investments 8,126,278$ 11,442,439$ 563,611$ 9,352,112$ Cash and Investments with Fiscal Agent 6,911,527 29,737,708 96,134 79,199Accounts ReceivableInterest Receivable 7,855 13,044 1 9,075Due from Other Funds 2,009 9,027,004 3,398 18,667Loans Receivable 2,543,817 11,796,094 2,644,228 20,085,001Land Held for Resale 16,816,965 3,386,565 8,623,247

TOTAL ASSETS 17,591,486$ 78,833,254$ 6,693,937$ 38,167,301$

LIABILITIESAccounts Payable 62,620$ 344,369$ 110,944$ 108,553$ Due to Other Governments 275,683 984,420 157,748 665,618Due to Other Funds 2,821 10,076 2,501,615 6,506,813

TOTAL LIABILITIES 341,124 1,338,865 2,770,307 7,280,984

FUND BALANCESReserved for Debt ServiceReserved for Encumbrances 180,095 6,883,564 1,281,825 13,990,163Reserved for Receivables 2,543,817 11,796,094 2,644,228 20,085,001Reserved for Land Held for Resale 16,816,965 3,386,565 8,623,247


Projects and Programs 14,526,450 41,997,766Undesignated (3,388,988) (11,812,094)

TOTAL FUND BALANCES 17,250,362 77,494,389 3,923,630 30,886,317

TOTAL LIABILITIES ANDFUND BALANCES 17,591,486$ 78,833,254$ 6,693,937$ 38,167,301$

Redevelopment Agency for the County of Riverside, CaliforniaBalance Sheet - Governmental Funds

June 30, 2010

Special Revenue


Special Revenue Total I-215 Governmental

Corridor Funds

12,265,898$ 104,504,148$ 20,608,536 231,163,354

6,383,74611,870 1,011,64110,810 14,032,690

1,449,154 67,192,484255,625 79,665,801

34,601,893$ 503,953,864$

31,760$ 9,458,724$ 564,166 2,647,635

5,775 14,032,690

601,701 26,139,049

45,912,213577,686 122,161,705

1,449,154 67,192,484255,625 79,665,801

31,717,727 178,083,694(15,201,082)

34,000,192 477,814,815

34,601,893$ 503,953,864$


Fund Balances of Governmental Funds 477,814,815$

Amounts reported for governmental activities in the Statement of Net Assets aredifferent because:

The assets and liabilities below are not due and payable in the current period and thereforeare not reported in the funds:

Deferred Charges 12,173,514Capital Assets, Net of Depreciation 223,954Interest Payable (7,641,374)Deferred Revenue (7,610,418)Long-term Debt (684,321,064)

Net Assets of Governmental Activities (209,360,573)$

Redevelopment Agency for the County of Riverside, CaliforniaReconciliation of the Balance Sheet of Governmental Funds

to the Statement of Net AssetsYear Ended June 30, 2010



REVENUESTax Increment $ $ $ $Investment Income 492,450 928,013 204,463 535,086Other Income 240,048 16,342,210 5,074 3,503,159

TOTAL REVENUES 732,498 17,270,223 209,537 4,038,245

EXPENDITURESCurrent:

Administrative Costs 819,641 3,568,812 460,881 1,952,572Professional Services 46,279 67,200 10,929 53,967Project Improvement Costs 9,438,416 28,217,758 1,129,081 39,339,577Other ExpendituresState ERAF

Debt Service:Long-term Obligation Principal PaymentsInterest and Fiscal Charges 19,894Debt Issuance Costs

TOTAL EXPENDITURES 10,304,336 31,853,770 1,620,785 41,346,116

EXCESS OF REVENUES OVER(UNDER) EXPENDITURES (9,571,838) (14,583,547) (1,411,248) (37,307,871)

OTHER FINANCING SOURCES (USES)Transfers In 2,000,000 8,000,000 1,000,000 6,000,000Transfers Out (487,347) (1,523,892) (260,309) (1,588,234)Issuance of Long-term Debt 2,000,000Premiums on Long-term DebtDiscount on Long-term DebtGain (Loss) on Sale of Property (5,208,483) (1,656,476)

NET CHANGE IN FUND BALANCES (8,059,185) (13,315,922) (328,033) (32,896,105)

FUND BALANCES - BEGINNING OF YEAR,AS PREVIOUSLY REPORTED 45,163,918 98,680,161 19,833,992 86,612,159

PRIOR PERIOD ADJUSTMENT 12,916,441

FUND BALANCES - BEGINNING OF YEAR,AS RESTATED 45,163,918 111,596,602 19,833,992 86,612,159

FUND BALANCES - END OF YEAR 37,104,733$ 98,280,680$ 19,505,959$ 53,716,054$

Capital Projects

Redevelopment Agency for the County of Riverside, CaliforniaStatement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds



Capital ProjectsI-215 Project Area Jurupa MID Desert I-215

Corridor 1-1986 Valley County Communities Corridor

$ 7,665,454$ 28,867,893$ 5,850,881$ 21,239,756$ 15,840,226$ 643,416 132,443 108,154 70,605 214,694 300,824183,328

826,744 7,797,897 28,976,047 5,921,486 21,454,450 16,141,050

1,658,446 350,954 230,53592,426

16,682,0651,645,275 11,388,285 2,459,625 7,666,843 4,021,0073,578,297 11,246,390 1,604,899 7,653,844 3,710,088

1,371,209 4,795,008 696,352 2,381,310 1,420,12255,189 3,801,914 12,342,719 1,792,431 6,265,473 3,912,558

18,488,126 10,396,695 40,123,356 6,553,307 23,967,470 13,294,310

(17,661,382) (2,598,798) (11,147,309) (631,821) (2,513,020) 2,846,740

10,000,000 1,047,492 4,374,735 896,658 2,594,773 1,314,926(649,396) (2,000,000) (8,000,000) (1,000,000) (6,000,000) (10,000,000)

13,000,000 819,229 2,660,042 419,452 2,371,009 1,907,51415,071 48,935 7,716 43,618 35,091

(292,347)

4,396,875 (2,717,006) (12,063,597) (307,995) (3,503,620) (3,895,729)

55,343,411 11,738,071 14,497,189 5,483,792 16,287,119 20,393,989

55,343,411 11,738,071 14,497,189 5,483,792 16,287,119 20,393,989

59,740,286$ 9,021,065$ 2,433,592$ 5,175,797$ 12,783,499$ 16,498,260$

Continued

Debt Service



REVENUESTax Increment 1,916,339$ 7,216,901$ 1,462,708$ 5,309,883$ Investment Income 89,163 141,874 1,020 110,769Other Income 182,951 30,967 67,181

TOTAL REVENUES 2,005,502 7,541,726 1,494,695 5,487,833


Administrative Costs 336,752 1,199,978 192,288 811,367Professional Services 7,427 27,581 4,343 33,012Project Improvement Costs 283,999 176,087 1,603,219 3,405,334Other Expenditures 22,986 83,810 14,047 60,015State ERAF

Debt Service:Long-term Obligation Principal PaymentsInterest and Fiscal ChargesDebt Issuance Costs 50,744 164,685 27,584 148,644

TOTAL EXPENDITURES 701,908 1,652,141 1,841,481 4,458,372

EXCESS OF REVENUES OVER(UNDER) EXPENDITURES 1,303,594 5,889,585 (346,786) 1,029,461

OTHER FINANCING SOURCES (USES)Transfers InTransfers Out (560,145) (2,850,843) (636,349) (1,006,539)Issuance of Long-term Debt 5,867,552 19,051,973 3,004,233 16,981,838Premiums on Long-term DebtDiscount on Long-term Debt (63,080) (204,902) (30,695) (180,784)Gain (Loss) on Sale of Property

NET CHANGE IN FUND BALANCES 6,547,921 21,885,813 1,990,403 16,823,976

FUND BALANCES - BEGINNING OF YEARAS PREVIOUSLY REPORTED 10,702,441 55,608,576 1,933,227 14,062,341

PRIOR PERIOD ADJUSTMENT

FUND BALANCES - BEGINNING OF YEAR,AS RESTATED 10,702,441 55,608,576 1,933,227 14,062,341

FUND BALANCES - END OF YEAR 17,250,362$ 77,494,389$ 3,923,630$ 30,886,317$

Special Revenue

Redevelopment Agency for the County of Riverside, CaliforniaStatement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds



Special Revenue Total I-215 Governmental

Corridor Funds

3,959,865$ 99,329,906$ 126,418 4,099,392

25,752 20,580,670

4,112,035 124,009,968

687,691 12,269,91714,812 357,976

388,230 100,663,76647,804 27,409,697

27,793,518

10,664,00128,190,178

118,072 509,729

1,256,609 207,858,782

2,855,426 (83,848,814)

37,228,584(665,530) (37,228,584)

13,662,158 81,745,000150,431

(146,958) (626,419)(7,157,306)

15,705,096 (9,737,108)

18,295,096 474,635,482

12,916,441

18,295,096 487,551,923

34,000,192$ 477,814,815$


Net Change in Fund Balances-Total Governmental Funds (9,737,108)$

Amounts reported in the statement of activities are different because:

LONG - TERM DEBT

Debt Issuance Costs 509,729Principal Repayments 11,881,903Net Change in Compensated Absences 48,129Issuance of Long-term Debt (81,745,000)Premiums on Long-term Debt (150,431)Discount on Long-term Debt 626,419

CAPITAL ASSETS

Depreciation (71,017)

OTHER ITEMS

Interest and Fiscal Charges (518,945)Amortization of Bond Discount (111,024)Amortization of Bond Refunding (234,231)Amortization of Bond Issuance Costs (446,123)Amortization of Premiums on Long-term Debt 276,921

Changes in Net Assets of Governmental Activities (79,670,778)$

The issuance of long-term debt provides current financial resources to governmental funds,while any principal repayments reduce long-term debt. Also, governmental funds report theeffect of issuance costs, premiums, discounts, and similar items when debt is first issued,whereas these amounts are deferred and amortized in the Statement of Activities.

The amounts below included in the Statement of Activities do not provide for (require) theuse of current financial resources and therefore are not reported as revenues or expendituresin governmental funds (net change).

Redevelopment Agency for the County of Riverside, CaliforniaReconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances

of Governmental Funds to the Statement of ActivitiesYear Ended June 30, 2010

Governmental funds report capital outlay as an expenditure in the full amount as current financial resources are used. However, in the Statement of Activities the cost of these assets is allocated over the estimated useful life as depreciation expense.


Redevelopment Agency for the County of Riverside, California Notes to Financial Statements


13

NOTE DESCRIPTION PAGE

1 Summary of Significant Accounting Policies 14 - 21 2 Reconciliation of Government-wide and Fund Financial Statements 22 3 Stewardship, Compliance, and Accountability 22 - 23 4 Detailed Notes on All Funds 23 - 46 5 Other Information 46 - 47



14

1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Redevelopment Agency for the County of Riverside, California was formed under Section 33,000 et. seq. of the Health

and Safety Code. For the period under audit, the Agency consisted of five separate project areas. The Agency’s office and records are located at 3133 Mission Inn Avenue, Riverside, California 92507, telephone number

(951) 955-8916. Agency officers are as follows:

Name Title Marion Ashley Chairman Bob A. Buster Vice Chairman John Benoit Director Jeff Stone Director John F. Tavaglione Director

The Board of Directors is also the County Board of Supervisors. The Board of Directors typically meets every Tuesday. The Agency is a component unit of the County of Riverside and, accordingly, the financial statements of the Agency are

included in the comprehensive annual financial report of the County of Riverside. The accounting policies of the Agency conform to accounting principles generally accepted in the United States of America

as they are applicable to governmental units. The Governmental Accounting Standards Board (GASB) is the accepted standard setting body for establishing governmental accounting and financial reporting principles. The more significant accounting policies reflected in the financial statements are summarized as follows:

A) Implementation of Governmental Accounting Standards Board (GASB) Pronouncements Governmental Accounting Standards Board Statement No. 51

In June 2007, GASB issued Statement No. 51, Accounting and Financial Reporting for Intangible Assets. This Statement is effective for financial statements for periods beginning after June 15, 2009. Governments possess many different types of assets that may be considered intangible assets, including easements, water rights, timber rights, patents, trademarks, and computer software. The objective of this Statement is to establish accounting and financial reporting requirements of intangible assets to enhance the comparability of the accounting and financial reporting of such assets among state and local governments. This Statement requires that an intangible asset be recognized in the statements of net assets only if it is considered identifiable. Additionally, this Statement establishes a specified-conditions approach to recognizing intangible assets that are internally generated. This Statement also establishes guidance specific to intangible assets related to amortization. Currently, the Agency has no intangible assets. Governmental Accounting Standards Board Statement No. 53 In June 2008, GASB issued Statement No. 53, Accounting and Financial Reporting for Derivative Instruments. This Statement addresses the recognition, measurement, and disclosure of information regarding derivative instruments entered into by state and local governments. Derivative instruments are often complex financial instruments used by governments include interest rate and commodity swaps, interest rate locks, options (caps, floors, and collars),



15

1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued A) Implementation of Governmental Accounting Standards Board (GASB) Pronouncements - Continued

Governmental Accounting Standards Board Statement No. 53 - Continued swaptions, forward contracts, and futures contracts. Governments enter into derivative instruments as investments; as hedges of identified financial risks associated with assets or liabilities, or expected transactions (that is hedgeable items); or to lower the costs for borrowings. Governments often enter into derivative instruments with the intention of effectively fixing cash flows or synthetically fixing prices. Governments also enter into derivative instruments to offset the changes in fair value of hedgeable items. A key provision in this Statement is that derivative instruments covered in its scope, with the exception of synthetic guaranteed investment contracts (SGICs) that are fully benefit-responsive, are reported at fair value. The objectives, terms, and risks of hedging derivative instruments are required disclosures. Disclosures also include a summary of derivative instrument activity that provides an indication of the location of fair value amounts reported on the financial statements. The disclosures for investment derivative instruments are similar to the disclosures of other investments. The requirements of this Statement are effective for financial statements and for periods beginning after June 15, 2009. Currently, the Agency has no investments with derivatives. Governmental Accounting Standards Board Statement No. 54 In March 2009, GASB issued Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions. This Statement establishes fund balance classifications that comprise a hierarchy based primarily on the extent to which a government is bound to observe constraints imposed upon the use of the resources reported in governmental funds. The initial distinction that is made in reporting fund balance information is identifying amounts that are considered nonspendable, such as fund balance associated with inventories. This Statement also provides for additional classification as restricted, committed, assigned, and unassigned based on the relative strength of the constraints that control low specific amounts can be spent. The restricted fund balance category includes amounts that can be spent only for the specific purposes stipulated by constitution, external resources providers, or through enabling legislation. The committed fund balance classification includes amounts that can be used only for the specific purposes determined by a formal action of the government’s highest level of decision-making authority. The assigned fund balance classification is for amounts intended to be used by the government for specific purposes but do not meet the criteria to be classified as restricted or committed. In governmental funds other than the general fund, assigned fund balance represents the remaining amount that is not restricted or committed. Unassigned fund balance is the residual classification for the government’s general fund and includes all spendable amounts not contained in the other classifications. In other funds, the unassigned classification should be used only to report a deficit balance resulting from overspending for specific purposes for which amounts had been restricted. The requirements of this Statement are effective for financial statements for periods beginning after June 15, 2010. The Agency has elected not to early implement GASB No. 54 and has not determined its effect on the Agency’s financial statements.

B) Basis of Presentation The accompanying financial statements are presented on the basis set forth in Government Accounting Standards Board

Statement 34, Basic Financial Statements – and Management’s Discussion and Analysis – for State and Local Governments.



16

1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued B) Basis of Presentation - Continued GASB Statement 34 requires that the financial statements described below be presented: Government-wide Statements: The Statement of Net Assets and the Statement of Activities display information

about the primary government (the Agency). These statements include the financial activities of the Agency overall. Eliminations have been made to minimize double counting of internal activities. These statements display the governmental activities of the Agency. Governmental activities generally are financed through taxes, intergovernmental revenues, and nonexchange transactions.

The Statement of Activities presents a comparison between direct expenses and program revenues for each function of

the Agency’s governmental activities. Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Program revenues include (a) charges paid by recipients of goods and services offered by the programs and (b) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues are presented as general revenues, including all taxes.

Fund Financial Statements: The fund financial statements provide information about the Agency’s funds. The

emphasis of fund financial statements is on major individual governmental funds, each of which is displayed in a separate column. All remaining governmental funds are aggregated and reported as nonmajor funds.

All governmental funds are accounted for on a spending or financial flow measurement focus which means that only

current assets and current liabilities are generally included on their balance sheets. Their reported fund balance is their net current assets, which is considered only to be a measure of available spendable resources. Governmental fund operating statements present a summary of sources and uses of available spendable resources during a period by presenting increases and decreases in net current assets.

Because of their spending measurement focus, governmental funds exclude noncurrent liabilities. In those cases when

a governmental fund records long-term receivables or other non-current assets, an offsetting credit is made to deferred revenue or undesignated fund balance is reduced to reflect the fact that this amount is not yet available.

C) Basis of Accounting

The government-wide financial statements are reported using the economic resources measurement focus and the full accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. All governmental funds are accounted for using the modified accrual basis of accounting. These fund revenues are recognized when they become measurable and available as net current assets. Measurable means the amount of the transaction can be determined and available means the amount is collectible within the current period or soon thereafter (generally sixty days) to be used to pay liabilities of the current period. Governmental fund expenditures are recognized under the modified accrual basis of accounting. Those revenues susceptible to accrual are incremental property taxes and interest revenue.



17

1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

D) Major Funds

GASB Statement 34 defines major funds and requires that the Agency’s major governmental type funds be identified and presented separately in the Fund financial statements. All other funds, called nonmajor funds, are combined and reported in a single column, regardless of their fund type. Major funds are defined as funds which have either assets, liabilities, revenues or expenditures equal to ten percent of their fund type total and five percent of the grand total; however, the Agency may select other funds it believes should be presented as major funds. The Agency has selected to report all funds as major. The Agency reported the following major governmental funds in the accompanying financial statements: Project Area 1-1986:

Capital Project: This fund accounts for project expenditures in the related project area. Debt Service: This fund accounts for this project area’s share of the Agency’s long term debt service payments. Special Revenue: This fund accounts for low and moderate income housing activities within this project area.

Mid-County Project Area: Capital Project: This fund accounts for project expenditures in this project area. Debt Service: This fund accounts for this project area’s share of the Agency’s long term debt service payments. Special Revenue: This fund accounts for low and moderate income housing activities within the project area.

Jurupa Valley Project Area: Capital Project: This fund accounts for project expenditures in the related project area.

Debt Service: This fund accounts for the related project area’s share of the Agency’s long term debt service payments.

Special Revenue: This fund accounts for low and moderate income housing activities within this project area.

Desert Communities Project Area: Capital Project: This fund accounts for project expenditures in the related project area. Debt Service: This fund accounts for the related project area’s share of the Agency’s long term debt service

payments. Special Revenue: This fund accounts for low and moderate income housing activities within this project area.

I-215 Corridor Project Area: Capital Project: This fund accounts for project expenditures in the related project area.

Debt Service: This fund accounts for the related project area’s share of the Agency’s long-term debt service payments.

Special Revenue: This fund accounts for low and moderate income housing activities within this project area.

E) Fund Accounting

The accounting records of the Agency are maintained on the modified accrual basis of accounting. Under the modified accrual basis, revenues are recorded when received in cash or accrued when they are both measurable and available as a resource to finance operations of the current year; expenditures are recorded at the time liabilities are incurred.



18

1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

E) Fund Accounting - Continued The accounts of the Agency are organized on the basis of funds and account groups, each of which is considered a separate accounting entity. The operations of each fund are accounted for with a separate set of self-balancing accounts which comprise its assets, liabilities, fund equity, revenues and expenditures. The Agency uses the following fund types:

Capital Project Funds - Used to account for financial resources expended for the acquisition or construction of major capital facilities.

Special Revenue Funds - Used to account for the proceeds of specific revenue sources or to finance housing activities

as required by law or administrative regulation. The Agency's special revenue funds consist solely of Low and Moderate Income Housing Funds.

Debt Service Funds - Used to account for the resources accumulated and payments made for principal and interest on

long-term general obligation debt of governmental funds. F) Assets, Liabilities, and Net Assets or Equity Deposits and Investments As a governmental entity other than an external investment pool in accordance with GASB 31, the Agency's

investments are stated at fair value except for interest-earning investment contracts (see Note 4A). In applying GASB 31, the Agency utilized the following methods and assumptions:

1) Fair value is based on quoted market prices as of the valuation date; 2) The portfolio did not hold investments in any of the following: a) Items required to be reported at amortized cost, b) Items in external pools that are not SEC-registered, c) Items subject to involuntary participation in an external pool, d) Items associated with a fund other than the fund to which the income is assigned;

3) The gain/loss resulting from valuation will be reported within the revenue account "interest income" on the Government-wide and Fund Financial Statements - Statement of Revenues, Expenditures and Changes in Fund Balances.

Restricted Assets Certain proceeds of bonds, notes and loans, as well as certain resources set aside for their repayment, are classified as

restricted assets on the balance sheet because they are maintained in separate bank accounts and their use is limited by applicable bond covenants.

The Agency is required by California Law to set aside a portion of the property tax increments it receives to increase

and improve the County’s supply of Low and Moderate Income Housing, and therefore such assets are restricted for that purpose.



19

1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued F) Assets, Liabilities, and Net Assets or Equity - Continued Receivables and Payables Activity between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal

year are referred to as either “due to/from other funds” (i.e., the current portion of interfund loans) or “advances to/from other funds” (i.e., the non-current portion of interfund loans). All other outstanding balances between funds are reported as “due to/from other funds.”

Advances between funds, as reported in the fund financial statements, are offset by a fund balance reserve account in

applicable governmental funds to indicate that they are not available for appropriation and are not expendable available financial resources.

Capital Assets The Agency follows the capital assets policy of the County of Riverside which is summarized below: Capital assets (including infrastructure) are recorded at historical cost or at estimated historical cost if actual historical

cost is not available. Contributed capital assets are valued at their estimated fair market value on the date contributed. Capital assets include public domain (infrastructure) general capital assets consisting of certain improvements including roads, bridges, traffic signals, park trails and improvements, flood control channels, storm drains, dams, and basins. The capitalization threshold for equipment is $5,000. Capital assets used in operations are depreciated or amortized (assets under capital leases) using the straight-line method over the lesser of the capital lease period or their estimated useful lives in the government-wide statements.

The estimated useful lives are as follows:

Infrastructure: Flood Channels 99 years Flood Storm Drains 65 years Flood Dams and Basins 99 years Roads 20 years Traffic Signals 10 years Parks Trails and Improvements 20 years Bridges 50 years Buildings 25-50 years Improvements 10-20 years Equipment 3-20 years



20

1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued F) Assets, Liabilities, and Net Assets or Equity - Continued Property Taxes Property taxes are assessed and collected each fiscal year according to the following property tax calendar:

Lien Date January 1 Levy Date July 1 to June 30 Due Date November 1 - 1st Installment February 1 - 2nd Installment Delinquent Date December 10 - 1st Installment April 10 - 2nd Installment

Under California law, property taxes are assessed and collected by the counties up to 1% of assessed value, plus other

increases approved by the voters. The property taxes go into a pool, and are then allocated to the agencies based on complex formulas prescribed by the state statutes.

Land Held for Resale Land is stated at cost, which approximates market value at June 30, 2010. Compensated Absences The Agency follows the vacation and sick pay policies of the County of Riverside. Upon termination or retirement,

employees with less than five years of service, are entitled to receive compensation at their current base salary for all unused vacation leave; however, employees with five or more years of service, will have the value of their pay out contributed into the Post Employment Program. Under the Post Employment Program, the employee will designate if they want their funds deposited into the Special Pay Plan and/or the Health Savings Plan. Only retiring employees are entitled to a portion of accumulated sick leave hours, however, the total shall not exceed a sum equal to 960 hours. The balance at June 30, 2010 was $827,162 (see Note 4-F).

Long-Term Obligations In the government-wide financial statements, long-term debt and other long-term obligations are reported as liabilities

in the applicable governmental activities. Bond premiums and discounts, as well as issuance costs, are deferred and amortized over the life of the bonds using the effective interest method. Bonds payable are reported net of the applicable bond premium or discount. Bond issuance costs are reported as deferred charges and amortized over the term of the related debt.

In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond

issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures.



21

1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued F) Assets, Liabilities, and Net Assets or Equity - Continued Fund Equity In the fund financial statements, governmental fund types report reservations of fund balance for amounts that are not

available for appropriation or are legally restricted by outside parties for use for a specific purpose. Designations of fund balance represent tentative management plans that are subject to change.

G) Tax Increment The Agency follows a policy of what constitutes contractual obligations for the purpose of spending tax increment

revenue. This policy holds that all expenditures of the Capital Project Funds (i.e. salaries, goods and supplies, professional services, etc.) are contractual obligations. Monies are therefore transferred from the Debt Service Funds to cover the costs of the expenditures from the Capital Project Funds.

The Agency has no power to levy and collect taxes, and any legislative property tax de-emphasis might necessarily

reduce the amount of Tax Revenues that would otherwise be available. Broadened property tax exemptions could have a similar effect. Conversely, any increase in the tax rate or assessed valuation, or any reduction or elimination of present exemptions would necessarily increase the amount of Tax Revenues that would be available.

H) Use of Estimates The financial statements have been prepared in accordance with accounting principles generally accepted in the United

States of America and necessarily include amounts based on estimates and assumptions by Management. Actual results could differ from those amounts.

I) Relationship to the County of Riverside

The Agency is an integral part of the reporting entity of the County of Riverside. The funds and account groups of the Agency have been blended within the financial statements of the County because the County Board of Supervisors is the governing board of the Agency and exercises control over the operations of the Agency. Only the funds and account groups of the Agency are included herein; therefore, these financial statements do not purport to represent the financial position or results of operations of the County of Riverside, California.

J) Prior Period Adjustments

Description

Statement of Activities

Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds

Adjustments for long-term debt outstanding (see Note 4-F). $ 166,590 $ Adjustments for loans receivable that were not previously recorded. 12,916,441 12,916,441 Total $ 13,083,031 $ 12,916,441



22

2) RECONCILIATION OF GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS

A) Explanation of certain differences between the governmental fund balance sheet and the government-wide statement of net assets

The governmental fund balance sheet includes a reconciliation between fund balance-total governmental funds and net assets - governmental activities as reported in the government-wide statement of net assets. The details of capital assets and long-term debt is as follows: Capital Assets $ 431,097 Depreciation (207,143) Capital Assets, Net of Depreciation $ 223,954 Long-term Debt Payable $ (693,802,251) Less: Bond Discount (to be amortized as interest expense) 3,427,822 Bond Refunding 6,053,365 Total Long-term Debt $ (684,321,064)

B) Explanation of certain differences between the governmental fund statement of revenues, expenditures, and

changes in fund balances and the government-wide statement of activities

The governmental fund statement of revenues, expenditures, and changes in fund balances includes a reconciliation between net changes in fund balances - total governmental funds and changes in net assets of governmental activities as reported in the government-wide statement of activities. One element of that reconciliation states that “the repayment of the principal of long-term debt consumes the current financial resources of governmental funds.” This transaction, however, has no effect on net assets. Principal Repayments on Loans and Bonds $ 10,664,001 Principal Repayments on Other Long-term Debt 1,217,902 Total Principal Repayments $ 11,881,903

3) STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY A) Budgetary Accounting The Agency, as part of the County's budget process, uses the following procedures in establishing the budgetary data

reflected in the financial statements. 1) Before the beginning of the fiscal year the Executive Director submits to the Board of Directors a proposed budget

for the year commencing the following July 1. 2) Public hearings are conducted to obtain taxpayer comments. 3) The budget is subsequently adopted through passage of a resolution.



23

3) STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY - Continued A) Budgetary Accounting - Continued 4) All appropriated amounts are as originally adopted or as amended by the Board and lapse at year end. 5) Encumbrances and Continuing Appropriations are rebudgeted on July 1 by Board action. 6) Original appropriations are modified by supplementary appropriations and transfers among budget categories. The

Board approves all significant changes. 7) Formal budgetary integration is employed as a management control device during the year for all three fund types

utilized by the Agency. 8) Budgets for all three fund types utilized by the Agency are adopted on a basis consistent with generally accepted

accounting principles.

The Agency, as part of the County’s budget process, adopts its annual budget in total by fund type as stated above, and not by individual funds. Therefore, budgetary to actual comparisons for each major special revenue fund as required by Generally Accepted Accounting Principles is not presented as it is not possible to do so.

B) Encumbrances Encumbrance accounting employed by governmental funds, under which purchase orders, contracts and other

commitments for the expenditure of monies are recorded in order to reserve that portion of the applicable appropriation, is employed as an extension of formal budgetary integration. Encumbrances outstanding at year-end are reported as reservations of fund balances since they do not constitute expenditures or liabilities.

C) Other Expenditures

This amount includes $25,977,704 of ACO fees and Pass-Through payments to other governmental entities (see Note 5-C). 4) DETAILED NOTES ON ALL FUNDS

A) Deposits and Investments Cash and investments are classified in the accompanying financial statements as follows:

Statement of Net Assets: Cash and Investments $ 104,504,148 Cash and Investments with Fiscal Agent 231,163,354 Total Cash and Investments $ 335,667,502



24

4) DETAILED NOTES ON ALL FUNDS - Continued

A) Deposits and Investments - Continued Cash and investments consist of the following:

Riverside County Treasurer’s Pooled Investment Fund $ 261,785,894 Investments 73,881,608 Total Cash and Investments $ 335,667,502

Investments Authorized by the California Government Code and the Agency’s Investment Policy

The following table identifies the investment types that are authorized for the Agency by the California Government Code (or the Agency’s investment policy, where more restrictive). The table also identifies certain provisions of the California Government Code (or the Agency’s investment policy, where more restrictive) that address interest rate risk, credit risk, and concentration of credit risk. This table does not address investments of debt proceeds held by bond trustee that are governed by the provisions of debt agreements of the Agency, rather than the general provisions of the California Government Code or the Agency’s investment policy. Maximum Maximum Maximum Percentage Investment Authorized Investment Type Maturity Of *Portfolio In One Issuer U.S. Treasury notes, bills, bonds or other certificates of indebtedness

5 years

None

None

Notes, participations, or obligations issued by the agencies of the federal government

5 Years

None

None

Bonds, notes, warrants or certificates of indebtedness issued by the state or local agencies or County of Riverside

3 years

15% or $150 million

3%

Bankers Acceptance (BA’s) 180 days 30% 3% or

$50 million Commercial Paper (CP) of U.S. corporations with total assets exceeding $500 million

270 days

40%

3% or $50 million

Local Agency Obligations 3 years 2.5% 1.25% CalTRUST Short Term Fund Daily liquidity 1% None Negotiable CD’s issued by national or state chartered banks or a licensed branch of a foreign bank

1 year

25%

$50 million

Collateralized Time Deposits 1 year 2% None Repurchase Agreements (repo) with 102% collateral restricted to U.S. Treasuries, agencies, agency mortgages, CP, BA’s

45 days

40%

None



25


A) Deposits and Investments - Continued

Investments Authorized by the California Government Code and the Agency’s Investment Policy - Continued

Maximum Maximum Maximum Percentage Investment Authorized Investment Type Maturity of *Portfolio In One Issuer Reverse Repurchase Agreement on U.S. Treasury and Federal agency securities in portfolio

60 days

10%

None

Medium Term Notes or Corporate Notes on U.S. corporations 3 years 20% 3% or

$25 million Money Market Mutual Funds that invest in eligible securities meeting requirements of California Government Code

Daily liquidity

20%

None

*Excluding amounts held by bond trustee that are not subject to California Government Code restrictions.

Investments Authorized by Debt Agreements

Investments of debt proceeds held by bond trustee are governed by provisions of the debt agreements, rather than the general provisions of the California Government Code or the Agency’s investment policy. The table below identifies the investment types that are authorized for investments held by bond trustee. The table also identifies certain provisions of these debt agreements that address interest rate risk, credit risk, and concentration of credit risk.

Maximum Maximum Maximum Percentage Investment Authorized Investment Type Maturity of Portfolio In One Issuer Federal Securities None None None Federal Obligations None None None U.S. Dollar Denominated Deposit Accounts, Federal Funds and Banker’s Acceptances

180 days

None

None

Commercial Paper 270 days None None Money Market Fund N/A None None Bonds or Other Obligations None None None Investment Agreements None None None Other Investments None None None Local Agency Investment Fund (LAIF) None None None Riverside County Investment Pool None None None



26

4) DETAILED NOTES ON ALL FUNDS - Continued A) Deposits and Investments - Continued Disclosures Relating to Interest Rate Risk

Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value to changes in market interest rates. One of the ways that the Agency manages its exposure to interest rate risk is by purchasing a combination of shorter term and longer term investments and by timing cash flows from maturities so that a portion of the portfolio is maturing or coming close to maturity evenly over time as necessary to provide the cash flow and liquidity needed for operations.

The Agency had the following investments:

Maturity Date Riverside County Treasurer’s Pooled Investment Fund

$ 104,504,148

N/A

Held by Fiscal Agent: Money Market Funds 65,840,793 N/A Riverside County Treasurer’s Pooled Investment Fund

157,281,746

N/A

Investment Agreements 8,040,815 October 1, 2010 Total $ 335,667,502

Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. Presented below is the minimum rating required by (where applicable) the California Government Code, the Agency’s investment policy, or debt agreements, and the actual rating as of the year end for each investment type:

Minimum Not Rating as of Year End Legal Required Rating To Be Rated AAA Aa Unrated Riverside County Treasurer’s Pooled Investment Fund

$ 104,504,148

N/A

$

$ 104,504,148

$

$

Held by Fiscal Agent: Money Market Funds 65,840,793 AAA 65,840,793 Riverside County Treasurer’s Pooled Investment Fund

157,281,746

N/A

157,281,746

Investment Agreements 8,040,815 N/A 8,040,815 Total $ 335,667,502 $ 0 $ 335,667,502 $ 0 $ 0



27

4) DETAILED NOTES ON ALL FUNDS - Continued A) Deposits and Investments - Continued Disclosures Relating to Concentration of Credit Risk

The investment policy of the Agency contains no limitations on the amount that can be invested in any one issuer beyond that stipulated by the California Government Code. There were no investments in any one issuer (other than U.S. Treasury Securities, mutual funds, and external investment pools) that represent 5% or more of total Agency’s investments.

Disclosures Relating to Custodial Credit Risk

Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, a government will not be able to recover its deposits or will not be able to recover collateral securities that are in the possession of an outside party. The custodial credit risk for investments is the risk that, in the event of the failure of the counterparty (e.g., broker-dealer) to a transaction, a government will not be able to recover the value of its investment or collateral securities that are in the possession of another party. The California Government Code and the Agency’s investment policy do not contain legal or policy requirements that would limit the exposure to custodial credit risk for deposits or investments, other than the following provision for deposits: The California Government Code requires that a financial institution secure deposits made by state or local governmental units by pledging securities in an undivided collateral pool held by a depository regulated under state law (unless so waived by the governmental unit). The market value of the pledged securities in the collateral pool must equal at least 110% of the total amount deposited by the public agencies. California law also allows financial institutions to secure deposits by pledging first trust deed mortgage notes having a value of 150% of the secured public deposits.

As of June 30, 2010, all deposits with financial institutions in excess of federal depository insurance limit were held in collateralized accounts where the collateral is not held specifically in the name of the Agency, as described above. As of June 30, 2010, the Agency did not have any investments held by a broker-dealer (counterparty) that was used by the Agency to buy the securities. Investment in Riverside County Treasurer’s Pooled Investment Fund The Riverside County Treasurer maintains a cash and investment pool for all funds of the County and other agencies for which the County treasury is the depository. Interest earned on the pooled funds is allocated and credited to these funds quarterly. Interest is apportioned to the Agency based on the average daily balances on deposit with the Riverside County Treasurer. The Agency is voluntary participant in the pool regulated by the California Government Code, under the oversight of the Treasurer of the County of Riverside. The fair value of the Agency’s investment in this pool is reported in the accompanying financial statements at amounts based upon the Agency’s pro-rata share of the fair value provided by the County of Riverside for the entire pool portfolio (in relation to the amortized cost of that portfolio). The balance available for withdrawal is based on the accounting records maintained by the pool, which are recorded on an amortized cost basis.



28


B) Interest Receivable

This amount represents accrued interest receivable on monies held in the County Treasury as well as monies on deposit with the fiscal agent. As of June 30, 2010, the Agency has accrued interest receivable in the amount of $1,011,641.

C) Loans and Notes Receivable

Loans and Notes Receivable consisted of the following:

Project Area Jurupa MID Desert I-215 1-1986 Valley County Communities Corridor Total Capital Projects Funds $ $ 27,229,796 $ 876,287 $ 568,107 $ $ 28,674,190Special Revenue Funds 2,543,817 11,796,094 2,644,228 20,085,001 1,449,154 38,518,294 Total $ 2,543,817 $ 39,025,890 $ 3,520,515 $ 20,653,108 $ 1,449,154 $ 67,192,484

• On an ongoing basis, the Agency has made numerous loans as a part of the Home Improvement Program and First Time Home Buyer’s Program. Each loan is to be repaid in a single payment upon sale, conveyance, alienation or transfer of the property to other than the present owner of record or surviving joint tenant. The loans bear no interest rate. The payoff amount is equal to the principal amount plus the Agency’s proportionate share of the equity in the property. Loans from prior years were $2,428,949. At June 30, 2010, the balance of Home Improvement Program and First Time Home Buyer’s program loans was $2,754,659.

• In 1996-97, the Agency sold the North Hemet parcel of land. The Agency received a note in the amount of

$530,000 which was split into $265,000 for Phase I and $265,000 for Phase II of the project. Then the Agency committed an additional $350,000 for development costs for Phase II which was subsequently amended and increased to an amount not to exceed $1,550,000. However, the developer only used $1,200,000 and the note was amended to that amount for the development portion of the note receivable. The principal is to be amortized over fifty-five years at an interest rate of 1%. Annual principal payments of $10,118, plus interest shall be paid from the available net proceeds, until March 31, 2027, at which time all outstanding principal along with accrued interest shall be due and payable. In the event there are insufficient net proceeds for the payment, the payment shall be deferred pursuant to the note. At June 30, 2010, the balance of the note receivable was $530,000 for the land and $1,200,000 for development costs.

• During 1997-98, the Agency loaned to the Romoland School District $150,000 to assist with the construction of

buildings and facilities. The note bears no interest and will be paid with pass through money each year until paid off. At June 30, 2010, the note balance was $85,000.

• In 1996-97, the Agency approved a note agreement with the Cabazon County Water District to loan the District the

actual cost, not to exceed $300,000 at 0% interest, for the engineering, construction and installation of water improvements. The outstanding note balance is to be reimbursed to the Agency as development occurs. At June 30, 2010, the balance of the note receivable was $261,286.



29


C) Loans and Notes Receivable - Continued

• In 1998-99, the Agency entered into a loan agreement not to exceed $2,750,000 with Wildomar Senior Partners, LP. The purpose of the loan is to help finance the development of a low-income senior apartment complex. The loan terms provide for amortization of principal at 1% interest for 30 years with an initial ten year deferral after which time payments are due from the project’s residual receipts. During 2000-01, the Agency agreed to pay the Elsinore Valley Municipal Water District for sewer connection fees in the amount of $252,435 on behalf of the Wildomar Senior Partners. Under the agreement, the Wildomar Senior Partners agreed to repay the debt by assigning to the Agency reimbursement payments from the Elsinore Valley Municipal Water District. These payments will be remitted directly to the Agency and consist of water and sewer reimbursement fees collected by the water district from property owners. At June 30, 2010, the balance of the loan and reimbursement agreement was $3,068,000.

• In 1998-99, the Agency loaned $520,000 in low and moderate income housing funds to the County, the County

then loaned the full amount to Southern California Housing Development Corporation to aid in the acquisition and rehabilitation of a mobile home park for low-income residents. The Corporation will provide payment to the County from the projects residual receipts in an amount not to exceed $520,000. In 1999, the agreement was amended to reduce the loan to $150,000 with the difference of $370,000 provided as a grant. Any repayment made by the Corporation to the County from residual receipts related to this project is to be remitted back to the Agency’s Low and Moderate Income Housing Fund. At June 30, 2010, the balance of the loan was $150,000.

• On an ongoing basis, the Agency has made housing loans as a part of the Mobile Home and Agricultural Housing

Programs for the Coachella Valley. The loans bear various interest rates ranging from 0% interest to a 3 % fixed rate. At June 30, 2010, the balance of the Mobile Home and Agricultural Housing Program loans was $12,868,525.

• In 2001-02, the Agency loaned $800,000 in low and moderate income housing funds to the Mecca Family Housing

Associates, a California Limited Partnership, to assist in financing the Mecca Family Housing Development. The loan terms provide for payment on demand, or if no demand is made, the loan shall be deferred for a period of 660 months and shall have a maturity date of July 1, 2056. In 2006, an additional $70,000 was loaned to Mecca Apartments. The loan carries a zero percent interest rate. At June 30, 2010, the balance of the loan was $870,000.

• In 1996-97, the County Board of Supervisors approved an agreement recommending the Agency advance

redevelopment funds in the amount of $1,500,000 to finance the construction of a new sheriff station in the Jurupa Valley Project Area. The agreement pledges all future Jurupa Law Enforcement Mitigation fees as repayment for the advance by the Agency until paid in full. At June 30, 2010 the balance outstanding was $40,679.

• In 2006-07, the Agency entered into an agreement with the Jurupa Unified School District to loan $5,000,000 for

the design, engineering and construction of a multi-purpose stadium at Rubidoux High School. The agreement calls for $3,000,000 of zero percent interest shall be reimbursed to the Agency from the District’s annual pass-through funds in the amount of $200,000 per year on an annual basis until June 15, 2022. The remaining $2,000,000 will be paid from incremental pass through funds received by the District from the Agency that exceed the amount received in fiscal year 2005-2006. Payments from pass-through funds received reached $2,000,000 in 2009-2010 and have been recorded as an offset. At June 30, 2010, the balance of the note was $2,400,000.



30


C) Loans and Notes Receivable - Continued • In 2006-07, the Agency executed a promissory note with Chuckwalla Valley Associates, LLC, a California

limited liability company for $637,000. The promissory note was related to the sale of certain properties located in the community of Desert Center by the Agency to Chuckwalla Valley Associates. The promissory note is due and payable in full on December 13, 2007; however, repayment was extended for an additional one year term, until December 13, 2008 plus accrued interest. The note carries a 7% interest per annum. At June 30, 2010, the balance of the promissory note was $568,107.

• In 2003-04, the Agency was authorized to borrow $1,750,000 in installments from the California Housing

Finance Agency (CalHFA) and to loan the same money to the Coachella Valley Housing Coalition (CVHC) as a revolving loan fund for land acquisition, off-site infrastructure improvements and other up-front costs associated with the development of affordable housing in the Mecca community. The CalHFA revolving loan to the Agency bears simple interest at 3% per annum with payments deferred for 10 years until maturity on May 23, 2013.

As permitted by the CalHFA loan agreement, the Agency loaned the entire $1,750,000 to CVHC for the purpose of developing 200 single family housing units, named the La Huerta de Mecca project. The Agency loan to CVHC bears simple interest at 1.5% per annum with payments made to the Agency as each housing unit is sold. As of June 30, 2010, the balance of this loan was $8,750.

In October 2008, the Agency entered into an agreement to loan CVHC $750,000 for the construction of the next affordable housing project, known as the Valencia Homes with 45 single homes constructed through CVHC’s Mutual Self Help Program. As of June 30, 2010, the balance of this loan was paid off. Also in October 2008, the Agency entered into an agreement to loan CVHC $1,000,000 for the construction of 291 single family homes called the Nuestro Orgullo Homes through CVHC’s Mutual Self Help Program. As of June 30, 2010, the balance of this loan was $622,036.

• In 2006-07, the Agency entered into a loan agreement for $560,000 with the Angel View Crippled Children’s

Foundation for use in the development and construction of a single family group home near Desert Hot Springs. This family group home will be State licensed to provide 24-hour personal care, developmental services and nursing supervision for zero to three year old infants with disabilities who have been removed from their homes by court order. The loan shall accrue simple interest at 3% per annum on December 30, 2063. However, it is intended that the full amount of the loan will be forgiven at 55 years from the Certificate of Occupancy. At June 30, 2010, the balance of the loan was $560,000.

• In 2006-07, the Agency loaned $1,500,000 to Coachella Valley Housing Coalition to assist in the development

of 275 single family units of Nuestro Ogrullo Homes designated for low income residents. The principal of the loan bears interest at zero percent per annum and will be transferred to individual homebuyers as mortgage assistance in the form of a silent deed of trust forgiven in 45 years. It is intended that the full amount of the loan will be reduced by the mortgage assistance subsidies given to the low income buyers. At June 30, 2010, the balance of the loan was $1,500,000.



31


C) Loans and Notes Receivable - Continued • In 2003-04, the Agency entered into a loan agreement with Mission LaRue Limited Partnership, a California

Limited Partnership. The purpose of the loan is to finance the development of an affordable rental housing complex for independent living seniors. The original loan was $250,000 but was amended to $750,000. The term of the loan agreement is for fifty-five years and is due and payable on March 31, 2034. The loan shall accrue interest at a rate of 1% per annum. At June 30, 2010, the balance of the loan was $750,000.

• In 2006-07, the Agency entered into a loan agreement with Mission Larue II, a California Limited Partnership.

The purpose of the loan is to help finance the development of a low-income senior apartment complex, “Mission Palms II Apartments”. The original loan was for $1,400,000 but was amended to $1,000,000. The term of the agreement is for fifty-five years and is due and payable in full on July 1, 2063. The loan shall accrue simple interest at a rate of 1% per annum. At June 30, 2010, the balance of the loan was $400,000.

• In 2007-08, the Agency was authorized to loan $1,500,000 in low and moderate income housing funds to

MCFA Partners, a California Limited Partnership, to help finance the development and construction of a rental housing complex known as Clinton Family Apartments, in the community of Mecca. The principal is to be amortized over fifty-five years at an interest rate of 3%. Annual principal payments of $56,024, plus interest shall be due and payable on the first of December starting 2010 until maturity on December 31, 2064. At June 30, 2010, the balance of the loan was $1,500,000.

• In November 2008, the Agency entered into a loan agreement with Paseo Housing Associates, L.P. for

$1,525,000 to construct a 52-unit-for-rent mobile home park in the community of Mecca. The principal of the loan is to be amortized over fifty-five (55) years at 3% simple interest per annum, due and payable in full by December 31, 2065. As of June 30, 2010 the balance of this loan was $1,448,750.

• In September 2008, the Agency and Mission Village Senior Apartments, L.P. (Borrower), a California limited

partnership entered into an Affordable Housing Agreement for a loan of $9,824,015. The loan bears simple interest at 3% per annum based on the amount advanced by the Agency to the Borrower. The loan shall be paid annually equal to 50% of the Residual Receipts from the operation of the housing project. Any remaining portion of the loan is due and payable on the 56th anniversary of the date of the County’s issuance of a Certificate of Occupancy for all units in the housing project. As of June 30, 2010 the balance of this loan was $8,286,041.

• In December 2008, the Agency entered a Memorandum of Understanding (MOU) with the National

Community Renaissance of California for a loan of $408,000 to build an 80-unit multifamily affordable housing complex for low income households in the Agency’s property on Clinton Street. The loan amount will be used for the entitlement process and to explore a possible Disposition and Development Agreement satisfactory to the Agency’s terms. The term of the agreement is for 18 months from the date of the agreement. As of June 30, 2010 the balance of this loan was $334,871.

• In September 2009, the Agency entered into an agreement for the Infill Construction of a single family home in

North Shore. The term of the loan is to be fifty-five (55) years and shall be due in full on March 1, 2065. The principal of the loan is to be amortized over fifty-five (55) years at 1%. Monthly payments begin on April 1, 2010. At June 30, 2010, the balance of the loan is $145,586.



32


C) Loans and Notes Receivable - Continued • In March 2010, the Agency entered into an agreement with Operation Safe House, Inc., in the amount of

$1,100,000. The loan bears no interest rate. The repayment of the loan shall be paid by the Borrower’s annual payment to the Agency of an amount equal to 50% of the residual receipts from operation of the Housing Project as determined by a residual receipts calculation from the operation of the Housing Project the preceding calendar year and shall be paid within 90 days of each year-end. As of June 30, 2010, the balance of the loan is $144,000.

• In January 2009, the Agency entered into an agreement for a Pre-redevelopment Loan to the developer,

Northtown Housing Development Corporation. The purpose of the loan is to provide the developer with funds for pre-redevelopment activities including obtaining entitlements to the property. The amount of the loan is $660,000. The balance of the loan as of June 30, 2010, is $130,800.

• In July 2009, the Agency entered into an agreement with SK-Imperial, LLC. The purpose of the loan

agreement is to fund a pilot program, whereby SL-Imperial, LLC will acquire foreclosed homes, repair and rehabilitate the homes, then sell the homes to first-time home buyers, whose income is less than 120% of the county area median income. As of June 30, 2010, the balance of the loan is $1,448,653.

• In October 2009, the Agency entered into an agreement with Inspire Life Skills Training Inc., for the use of low

and moderate income housing. The low and moderate-income housing set-aside funds will be used to improve and increase the supply of the affordable housing in the unincorporated area of Riverside County. These funds will also be used to acquire and rehabilitate one single-family property and rent to very low-income households. As of June 30, 2010, the balance of the loan is $327,623.

• In 2004, the Agency entered into a cooperative agreement with the Jurupa Area Recreation and Park District,

whereby they both will cooperate and assist each other in certain redevelopment activities. The agreement outlines the terms and conditions by which the Agency will provide funding to rehabilitate and improve Agate Park, Avalon Park, Memorial Park Ball fields and Knowles Park. The Agency will provide complete design, construction and administration services with the use of the Jurupa Valley redevelopment capital improvement funds, which shall be reduced by its pass through payments. Pursuant to Health and Safety (H & S) Code, Section 33607.5 (a) (2), the agency shall reduce its pass through payments to the Jurupa Valley Project Area for the post-AB1290 amendment area of the Jurupa Valley Redevelopment Project Area, by any amount the Agency has paid, directly or indirectly, in connection with the Project, which includes but is not limited to, all engineering costs, construction costs, permits, fees, inspection costs and furnishings. As of June 30, 2010 the balance of the loan is $4,859,425.

• In 2002/03, the Agency entered into a cooperative agreement with the Rubidoux Community Services District,

(RCSD). The Agency agreed to provide gap funding in the amount to $2,000,000 for design and construction of the Rubidoux Community Fire Station Project. Pursuant to Health and Safety (H & S) Code, Section 33607.5 (a) (2), the agency shall reduce its pass through payments to the RCSD for the post-AB1290 amendment area of the Jurupa Valley Redevelopment Project Area, by any amount the Agency has paid, directly or indirectly, in connection with the Project, which includes but is not limited to, all engineering costs, construction costs, permits, fees, inspection costs and furnishings. The term of this agreement is fifteen, (15) Years. As of June 30, 2010 the balance of the loan is $4,187,241.



33


C) Loans and Notes Receivable - Continued • In 2005, the Agency entered into the Vernola Basin Reimbursement Agreement with eight property owners,

Flood control and water conservation district, (“Flood”) and Jurupa Area Recreation and Park District, (JARPD). The purpose of this agreement was to assist in the design, construction, and installation of certain storm water facilities, an outlet line, a storm water drain line, certain street improvements, and park improvements.

The reimbursement obligation for the eight property owners will be calculated based on their individual

acreage. As of June 30, 2010, the balance of the property owners’ loan was $11,495,893. The Agency has incurred costs of $2,537,407, through June 30, 2010 for the Flood district. Flood has paid this amount in full as of June 30, 2010. The Agency’s cost of constructing and installing the Park Improvements is estimated to be $5,250,000. The Agency has provided the Jurupa Area Recreation and Park District with a $1,000,000 grant. The remaining $4,250,000 will be reimbursed to the Agency by the Jurupa Area Recreation and Park District who will be using Quimby Fees and Mello-Roos Community Facilities District, (“Park District CFD”). The balance of JARPD’s loan is $4,250,000 as of June 30, 2010.

D) Interfund Receivables, Payables, and Transfers

The composition of interfund balances is as follows: Due To/From Other Funds:

Receivable Fund Payable Fund Amount Capital Project - Project Area 1-1986 Special Revenue - Project Area 1-1986 $ 2,821 Capital Project - Jurupa Valley Debt Service - Jurupa Valley 2,943,702 Special Revenue - Jurupa Valley 10,076 Capital Project - MID County Special Revenue - MID County 1,615 Capital Project - Desert Communities Special Revenue - Desert Communities 6,813 Capital Project - I-215 Corridor Capital Project - Jurupa Valley 2,000,000 Special Revenue - I-215 Corridor 5,775 Special Revenue - Project Area 1-1986 Debt Service - Project Area 1-1986 2,009 Special Revenue - Jurupa Valley Debt Service - Jurupa Valley 27,004 Special Revenue - MID County 2,500,000 Special Revenue - Desert Communities 6,500,000 Special Revenue - MID County Debt Service - MID County 3,398 Special Revenue - Desert Communities Capital Project - Desert Communities 803 Debt Service - Desert Communities 17,864 Special Revenue - I-215 Corridor Debt Service- I-215 Corridor 10,810

$ 14,032,690



34

4) DETAILED NOTES ON ALL FUNDS - Continued D) Interfund Receivables, Payables, and Transfers - Continued

Interfund Transfers:

Transfers In Transfers Out Capital Project Funds: Project Area 1 - 1986 $ 2,000,000 $ 487,347 Jurupa Valley 8,000,000 1,523,892 MID County 1,000,000 260,309 Desert Communities 6,000,000 1,588,234 I-215 Corridor 10,000,000 649,396 Debt Service Funds: Project Area 1-1986 1,047,492 2,000,000 Jurupa Valley 4,374,735 8,000,000 MID County 896,658 1,000,000 Desert Communities 2,594,773 6,000,000 I-215 Corridor 1,314,926 10,000,000 Special Revenue Fund: Project Area 1-1986 560,145 Jurupa Valley 2,850,843 MID County 636,349 Desert Communities 1,006,539 I-215 Corridor 665,530 $ 37,228,584 $ 37,228,584

A majority of the revenues are received in the debt service funds, and the transfers are made to meet contractual debt

service obligations in the capital project funds. Special revenue, debt service and capital project funds due to/from are between funds within the fund type to cover

cash shortages and reimburse other funds for services.

E) Capital Assets

Capital asset activity for the year was as follows:

Beginning Ending Balance Increases Decreases Balance Governmental Activities: Capital Assets Being Depreciated: Equipment $ 5,765 $ $ $ 5,765 Vehicles 425,332 425,332 Total Capital Assets Being Depreciated

431,097

0

431,097

Less Accumulated Depreciation: Equipment (2,306) (128) (2,434) Vehicles (133,820) (70,889) (204,709) Total Accumulated Depreciation (136,126) (71,017) 0 (207,143) Total Capital Assets Being Depreciated, Net

294,971

(71,017)

0

223,954

Governmental Activities Capital Assets, Net of Depreciation

$ 294,971

$ (71,017)

$ 0

$ 223,954



35


E) Capital Assets - Continued

Depreciation expense was charged to functions/programs as follows:

Governmental Activities: Project Improvement Costs $ 71,017 Total Depreciation Expense - Governmental Activities $ 71,017

F) Changes in Long-Term Liabilities Activities related to Long-Term Liabilities are presented as follows:

Date of Years of Interest Amount Description Issue Maturity Rate Authorized Compensated Absences (Note 1) N/A N/A N/A $ N/A CORAL Reimbursement Agreement 6-88 1988-2015 5.65% N/A CORAL Lease Agreement - Bellegrave Land 11-93 N/A N/A 5,128,789Loans Payable Various Various Various 452,163,523CalHFA Loan 5-03 2013 3% 1,750,000Contractual Agreements Payable Various 1999-2028 3.50-7.00% 3,059,500Owner Participation Agreements Various Various Various N/A 2004 Tax Allocation Bonds - Series A 12-04 2005-2037 4.75-5.00% 38,225,0002004 Tax Allocation Bonds - Series A-T 12-04 2005-2028 2.90 - 4.87% 37,000,0002005 Tax Allocation Housing Refunding Bonds - Series A 4-05 2005-2034 3.00 - 4.50% 18,245,0002007 Tax Allocation Refunding Bonds 4-07 2009-2036 4.00 - 4.50% 89,990,000County Bond Anticipation Note - Series 2009 7-09 2012 Variable 15,000,0002010 Tax Allocation Housing Bond - Series A 5-10 2036-2039 6.00% 15,885,0002010 Tax Allocation Housing Bond - Series A-T 5-10 2011-2037 4.75 - 7.75% 50,860,000



36


F) Changes in Long-Term Liabilities - Continued Beginning New Retired Ending Due Within Description Balance Adjustments(1) Indebtedness During Year Balance One Year Compensated Absences (Note 1) $ 875,291 $ $ $ 48,129 $ 827,162 $ 41,358CORAL Reimbursement Agreement 2,986,474 358,773 358,353 2,986,894 440,299CORAL Lease Agreement - Bellegrave Land

2,995,716

(54,362)

294,520

2,646,834

329,397

Loans Payable 431,404,258 7,416,614 423,987,644 7,689,693CalHFA Loan 1,750,000 1,750,000 Contractual Agreements Payable 564,000 94,000 470,000 94,000Owner Participation Agreements 8,058,134 (471,001) 483,416 7,103,717 417,3492004 Tax Allocation Bonds - Series A 38,225,000 38,225,000 2004 Tax Allocation Bonds Series - A-T 32,275,000 1,045,000 31,230,000 1,090,0002005 Tax Allocation Housing Refunding Bonds - Series A

16,755,000

395,000

16,360,000

405,000

2007 Tax Allocation Refunding Bonds 88,265,000 1,795,000 86,470,000 1,870,000County Bond Anticipation Note - Series 2009

15,000,000

15,000,000

2010 Tax Allocation Housing Bonds - Series A

15,885,000

15,885,000

2010 Tax Allocation Housing Bonds - Series A-T

50,860,000

50,860,000

Total 624,153,873 (166,590) 81,745,000 11,930,032 693,802,251 12,377,096 Less Deferred Amounts: Bond Discounts (2,912,427) (626,419) (111,024) (3,427,822) On Refunding (6,287,596) (234,231) (6,053,365) Total Long-Term Liabilities $ 614,953,850 $ (166,590) $ 81,118,581 $ 11,584,777 $ 684,321,064 $ 12,377,096

(1)The Coral Reimbursement Agreement, Coral Lease Agreement - Bellegrave Land and Owner Participation Agreements had prior period adjustments due to changes in estimated outstanding debt (see Note 1I).

The future debt requirements of the Long-Term Liabilities are as follows:

2000 2005 2006Year Ended Loans Payable Loans Payable Loans Payable

June 30, Principal Interest Principal Interest Principal Interest

2011 $ 89,693 $ 140,842 $ 1,280,000 $ 4,696,275 $ 2,710,000 $ 6,186,587 2012 98,573 131,962 1,325,000 4,650,575 2,800,000 6,076,388 2013 108,332 122,203 1,375,000 4,593,137 2,930,000 5,961,788 2014 119,056 111,478 1,425,000 4,530,137 3,040,000 5,842,387 2015 130,843 99,692 1,500,000 4,460,575 3,160,000 5,718,388

2016-2020 876,147 276,529 8,695,000 21,051,725 17,925,000 26,400,863 2021-2025 11,200,000 18,487,681 22,220,000 21,949,344 2026-2030 14,275,000 15,359,606 28,045,000 16,022,887 2031-2035 20,085,000 11,377,125 33,055,000 8,712,425 2036-2038 34,310,000 2,978,500 18,555,000 1,421,875

Total $ 1,422,644 $ 882,706 $ 95,470,000 $ 92,185,336 $ 134,440,000 $104,292,932



37


F) Changes in Long-Term Liabilities - Continued

2005A 2004A 2004AT Tax Allocation Housing

Year Ended Tax Allocation Bonds Tax Allocation Bonds Refunding Bonds June 30, Principal Interest Principal Interest Principal Interest

2011 $ $ 1,890,625 $ 1,090,000 $ 1,589,969 $ 405,000 $ 741,4502012 1,890,625 1,135,000 1,541,277 420,000 727,5192013 1,890,625 1,185,000 1,488,593 430,000 711,5692014 1,890,625 1,240,000 1,431,708 455,000 694,4372015 1,890,625 1,300,000 1,370,541 465,000 676,606

2016-2020 9,453,125 7,570,000 5,755,558 2,645,000 3,071,6252021-2025 9,453,125 9,755,000 3,498,277 3,295,000 2,426,2092026-2030 4,700,000 9,240,375 7,955,000 735,824 4,125,000 1,563,7622031-2035 17,510,000 6,315,437 4,120,000 424,2502036-2038 16,015,000 1,227,125

Total $ 38,225,000 $ 45,142,312 $ 31,230,000 $ 17,411,747 $ 16,360,000 $ 11,037,428

2007 TotalYear Ended Loans Payable Loans Payable

June 30, Principal Interest Principal Interest

2011 $ 3,610,000 $ 8,818,988 $ 7,689,693 $ 19,842,692 2012 3,770,000 8,656,375 7,993,573 19,515,300 2013 3,935,000 8,489,847 8,348,332 19,166,975 2014 4,110,000 8,324,344 8,694,056 18,808,346 2015 4,275,000 8,127,619 9,065,843 18,406,274

2016-2020 24,475,000 37,547,581 51,971,147 85,276,698 2021-2025 30,730,000 31,120,394 64,150,000 71,557,419 2026-2030 38,780,000 22,887,281 81,100,000 54,269,774 2031-2035 47,565,000 12,855,709 100,705,000 32,945,259 2036-2038 31,405,000 2,168,600 84,270,000 6,568,975

Total $ 192,655,000 $ 148,996,738 $ 423,987,644 $346,357,712



38



2007 2009 Tax Allocation County Bond

Year Ended Refunding Bonds Anticipation Note June 30, Principal Interest Principal Interest

2011 $ 1,870,000 $ 3,669,012 $ $ 190,8972012 1,940,000 3,592,813 15,000,000 15,9082013 2,015,000 3,513,712 2014 2,095,000 3,431,513 2015 2,185,000 3,345,913

2016-2020 12,300,000 15,319,463 2021-2025 15,000,000 12,537,478 2026-2030 18,485,000 8,971,128 2031-2035 24,130,000 4,336,322 2036-2040 6,450,000 144,209

Total $ 86,470,000 $ 58,861,563 $ 15,000,000 $ 206,805

2010A 2010 A-T Tax Allocation County Bond

Year Ended Housing Bond Housing Bond June 30, Principal Interest Principal Interest

2011 $ $ 788,955 $ $ 3,060,1912012 953,100 820,000 3,677,4002013 953,100 860,000 3,637,5002014 953,100 900,000 3,595,7002015 953,100 940,000 3,552,000

2016-2020 4,765,500 5,545,000 16,847,5442021-2025 4,765,500 7,745,000 14,551,3502026-2030 4,765,500 11,100,000 11,060,0622031-2035 4,765,500 15,990,000 5,974,9192036-2040 15,885,000 3,123,150 6,960,000 621,550

Total $ 15,885,000 $ 26,786,505 $ 50,860,000 $ 66,578,216

Coral Reimbursement Agreement The County of Riverside Asset Leasing Corporation ("CORAL") has issued Certificates of Participation for the plan,

design, and construction of public facilities within Redevelopment Project areas. In June 1988, the Agency entered into an agreement with CORAL whereby taxes collected by the Agency will be used to reimburse CORAL for debt service on the 1985 Certificates of Participation for a minimum of $3,659,852 payable in annual installments in varying amounts over the term of the certificates.



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The amount to be reimbursed by the RDA is determined by multiplying the ratio of the assessed property value of the RDA over the assessed unincorporated property value of the County times the amount of the 1985 Certificates outstanding. The terms of the reimbursement agreement call for annual payments to be made by the RDA to CORAL over the life of the 1985 Certificates in an amount determined by applying the ratio described above to the annual lease payment made by the County to CORAL on the capital projects funded by the 1985 Certificates.

The amount represents the portion of the total CORAL indebtedness which was used to construct public facilities. The

Agency can defer any annual payment until adequate funds are available. The deferred payments shall bear interest at the same rate for the same periods as the CORAL Certificates of Participation.

The $358,773 adjustment was made to book the proper long term liability based on projected assessed values over the

remaining years of the certificates outstanding. Each year this balance will need to be adjusted based on the updated projected assessed property values.

The outstanding balance at June 30, 2010, is $2,986,894.

Coral Lease Agreement

In 1990-91, the County of Riverside Asset Leasing Corporation (“CORAL”) purchased the property for a Sheriff Station with the understanding that the Redevelopment Agency’s tax increment could be a resource to service the debt. A formal agreement between the Agency and the County was not executed at the time and the Agency's share of the purchase price was not formally agreed upon. Therefore, at June 30, 1993, this was considered to be a contingent liability. In 1993-94 a formal lease agreement was executed and lease payments were applied according to the variable interest rate in the lease agreement plus an annual administrative fee. The property was developed as a sports park after the Sheriff Station was constructed on another site.

The outstanding balance at June 30, 2010, is $2,646,834. Loans Payable

1) During the fiscal year ending 2000, the Riverside County Economic Development Agency loaned the Redevelopment Agency $1,100,000 to allow the Redevelopment Agency to purchase land within the Highgrove sub-area for Project 5-1986. The loan bears a 9.9 % annual interest rate and was originally to be paid in 15 annual payments of $143,797 starting January 1, 2001. During FY2006, the loan was restructured whereby the Agency will make 15 annual payments of $230,535; the Agency paid the first installment in FY2006.

The outstanding balance at June 30, 2010 is $1,422,644.

2) In FY2005, the Riverside County Public Financing Authority (the “Authority”) issued Tax Allocation Revenue

Bonds for financing projects in the Agency’s five redevelopment project areas. The Redevelopment Agency issued five separate series of bonds and re-sold those bonds to the Authority to be pooled and sold pursuant to the Marks-Roos Act. Concurrent with the execution and delivery of the Agency Bonds, the Authority issued the aggregate principal amount of the Tax Allocation Revenue Bonds to the Redevelopment Agency.



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F) Changes in Long-Term Liabilities - Continued Loans Payable - Continued

The Bonds are limited obligations of the Authority entitled, ratably and equally, to the benefits of the Indenture and are payable solely from and secured by an assignment and pledge of certain tax revenues derived from taxes assessed on property within the Project Areas and other amounts allocated and paid to the Agency.

The Agency is required to maintain a Reserve Account for each project area that is not covered by a surety bond, so long as any debt service remains with respect to the Bonds as of any calculation date, the least of (i) ten percent (10%) of the outstanding principal amount of Bonds, (ii) Maximum Annual Debt Service, or, (iii) 125% of average Annual Debt Service on the Bonds. In the event that the Agency receives insufficient Tax Revenues from the respective project area or otherwise defaults on payments, the Agency is obligated to pay such amounts from the Reserve Accounts. The Jurupa Valley and Desert Communities Project Areas are covered by an insurance policy and are exempted from the above requirements.


The reserve balance requirement at June 30, 2010 is as follows:

Required Actual Reserve Accounts $ 3,771,959 $ 3,791,723

3) In FY2006, the Riverside County Public Financing Authority (the “Authority”) issued Tax Allocation Revenue

Bonds for financing projects in the Agency’s five redevelopment project areas. The Redevelopment Agency issued five separate series of bonds and re-sold those bonds to the Authority to be pooled and sold pursuant to the Marks Roos Act. Concurrent with the execution and delivery of the Agency Bonds, the Authority issued the aggregate principle amount of the Tax Allocation Revenue Bonds to the Redevelopment Agency.

The Bonds are limited obligations of the Authority entitled, ratably and equally, to the benefits of the Indenture and are payable solely from and secured by an assignment and pledge of certain tax revenues derived from taxes assessed on property within the Project Areas and other amounts allocated and paid to the Agency.

The Agency is required to maintain a Reserve Account for each project area that is not covered by a surety bond, so long as any debt service remains with respect to the Bonds as of any calculation date, the least of (i) ten percent (10%) of the outstanding principal amount of Bonds, (ii) Maximum Annual Debt Service, or, (iii) 125% of average Annual Debt Service on the Bonds. In the event that the Agency receives insufficient Tax Revenues from the respective project area or otherwise defaults on payments, the Agency is obligated to pay such amounts from the Reserve Accounts. The Jurupa Valley and Desert Communities project areas are covered by an insurance policy and are exempted from the above requirements.




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F) Changes in Long-Term Liabilities - Continued Loans Payable - Continued

The reserve balance requirement at June 30, 2010 is as follows:

Required Actual Reserve Accounts $ 8,950,388 $ 3,918,085*

*An insurance policy was purchased to cover the remainder of the reserve requirement.

4) In FY2007, the Riverside County Public Financing Authority (the “Authority”) issued Tax Allocation Revenue Bonds for financing projects in the Agency’s five redevelopment project areas. The Redevelopment Agency issued five separate series of bonds and re-sold those bonds to the Authority to be pooled and sold pursuant to the Marks Roos Act. Concurrent with the execution and delivery of the Agency Bonds, the Authority issued the aggregate principle amount of the Tax Allocation Revenue Bonds to the Redevelopment Agency.

The Bonds are limited obligations of the Authority entitled, ratably and equally, to the benefits of the Indenture and

are payable solely from and secured by an assignment and pledge of certain tax revenues derived from taxes assessed on property within the Project Areas and other amounts allocated and paid to the Agency.

The Agency is required to maintain a Reserve Account for each project area that is not covered by a surety bond,

so long as any debt service remains with respect to the Bonds as of any calculation date, the least of (i) ten percent (10%) of the outstanding principal amount of Bonds, (ii) Maximum Annual Debt Service, or, (iii) 125% of average Annual Debt Service on the Bonds. In the event that the Agency receives insufficient Tax Revenues from the respective project area or otherwise defaults on payments, the Agency is obligated to pay such amounts from the Reserve Accounts. The project areas are covered by an insurance policy and are exempted from the above requirements.

The outstanding balance at June 30, 2010 is $192,655,000. CalHFA Loan

The California Housing Finance Agency entered into an agreement, on May 23, 2003, with the Redevelopment Agency to loan funds for the purpose of assisting the Redevelopment Agency in operating a local housing program. The loan amount under the agreement is up to a maximum of $1,750,000. The loan carries a simple annual interest rate of 3% and the principal portion of the loan is due on May 23, 2013, ten years from date of the agreement. The outstanding balance at June 30, 2010 is $1,750,000.

Contractual Agreement Payable In fiscal year ending 1995, the Agency entered into an agreement, which was later amended in 1997, to assist the

County of Riverside in the construction of certain street improvements within the Desert Communities Project Area with the Agency’s portion not to exceed $1,880,000. The Agency currently makes annual payments of $94,000 to the County not to exceed 20 years from the start of the contract in 1996-97. The outstanding balance at June 30, 2010 is $470,000.



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F) Changes in Long-Term Liabilities - Continued Owner Participation Agreements

The Agency has entered into several Owner Participation Agreements with various property owners in several project areas dating back to 1990. Currently, five agreements are still legal and binding. The agreements are for the reimbursement of tax increments to certain companies. The outstanding agreements have various payments.

The following chart shows the beginning date of the agreement, rebate amounts paid to date, the remaining balance not

to be exceeded and the expiration year on the agreement regardless of total rebate payments.

Beginning Rebates Balance Expiration Company/Owner Name Date Paid to Date Remaining Date CFD 87-1 1990 $ 810,660 $ 2,568,453 2020

CFD 88-8 1990 615,021 951,200 2015 Taber-Oak Tree Apartments 1991 88,936 84,064 2011 Valle Del Sol Energy, LLC 2007 3,500,000 * Totals $ 1,514,617 $ 7,103,717

*Maximum period of five years upon completion of the project. At June 30, 2010, the Agency had $7,103,717 in Owner Participation Agreements outstanding. 2004 TAX ALLOCATION BONDS - Series A

During the fiscal year ended June 30, 2005, the Agency issued Tax Allocation Bonds for financing projects of the County Redevelopment Agency and to provide funds for the various debt obligations of the Agency within the various project areas.

The Bonds are special obligations of the Agency and are payable exclusively from tax revenues to be derived from the various project areas and from amounts on deposit in certain funds and accounts established pursuant to the Indenture. The Bonds were used to (i) pay the costs of certain low and moderate income housing projects of the Agency with respect to the Agency’s redevelopment project areas, (ii) purchase a reserve policy for credit to the Reserve Account for the Bonds; and (iii) pay costs of issuance relating to the Bonds. The Agency is required to maintain a Reserve Account for so long as any debt service remains with respect to the Bonds as of any calculation date, the least of (i) ten percent (10%) of the outstanding principal amount of Bonds, (ii) Maximum Annual Debt Service, or (iii) 125% of average Annual Debt Service on the Bonds. In the event that the Agency receives insufficient Tax Revenues from the respective project area or otherwise defaults on payments, the Agency is obligated to pay such amounts from the Reserve Accounts. The reserve requirement is covered by a bond insurance policy. The outstanding balance at June 30, 2010 is $38,225,000.



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2004 TAX ALLOCATION BONDS - Series A-T

During the fiscal year ended June 30, 2005, the Agency issued Tax Allocation Bonds for financing projects of the County Redevelopment Agency and to provide funds for the various debt obligations of the Agency within the various project areas. The Bonds are special obligations of the Agency and are payable exclusively from tax revenues to be derived from the various project areas and from amounts on deposit in certain funds and accounts established pursuant to the Indenture.

The Bonds were used to (i) pay the costs of certain low and moderate income housing projects of the Agency with respect to the Agency’s redevelopment project areas, (ii) purchase a reserve policy for credit to the Reserve Account for the Bonds; and (iii) pay costs of issuance relating to the Bonds. The Agency is required to maintain a Reserve Account for so long as any debt service remains with respect to the Bonds as of any calculation date, the least of (i) ten percent (10%) of the outstanding principal amount of Bonds, (ii) Maximum Annual Debt Service, or (iii) 125% of average Annual Debt Service on the Bonds. In the event that the Agency receives insufficient Tax Revenues from the respective project area or otherwise defaults on payments, the Agency is obligated to pay such amounts from the Reserve Accounts. The reserve requirement is covered by a bond insurance policy. The outstanding balance at June 30, 2010 is $31,230,000.

2005 TAX ALLOCATION HOUSING REFUNDING BONDS - Series A

During the fiscal year ended June 30, 2005, the Agency issued Tax Allocation Bonds as a result of current low interest rates to save money on debt service, to refund the housing portion of the 1997 bonds of the County Redevelopment Agency and to provide funds for the various debt obligations of the Agency within the various project areas. The Bonds are special obligations of the Agency and are payable exclusively from tax revenues to be derived from the various project areas and from amounts on deposit in certain funds and accounts established pursuant to the Indenture. The Bonds were used to (i) prepay the portions of the Agency’s 1997 Loans which are payable from low and moderate income housing funds of the Agency, and consequently advance refund the related portions of the 1997 Bonds issued by the Riverside County Public Financing Authority (the “Authority”), (ii) purchase a reserve policy for credit to the Reserve Account for the Bonds; and (iii) pay costs of issuance relating to the Bonds. The outstanding balance at June 30, 2010 is $16,360,000.



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2007 TAX ALLOCATION REFUNDING BONDS

During the fiscal year ended June 30, 2007, the Agency issued Tax Allocation Refunding Bonds as a result of current low interest rates to save money on debt service, to refund the 2001 Tax Allocation Bonds of the County Redevelopment Agency and to provide funds for the various debt obligations of the Agency within the various project areas.

The Bonds are special obligations of the Agency and are payable exclusively from tax revenues to be derived from the various project areas and from amounts on deposit in certain funds and accounts established pursuant to the Indenture. The Bonds were used to (i) refund all of the Agency’s $90,025,000 2001 Tax Allocation Bonds, (ii) fund projects of benefit to the Agency’s Jurupa Valley Redevelopment Project Area; (iii) purchase a reserve policy; and (iv) pay the costs of issuing the bonds. The reserve requirement is covered by a bond insurance policy. The outstanding balance at June 30, 2010 is $86,470,000.

COUNTY BOND ANTICIPATION NOTE - Series 2009

On July 21, 2009, the Agency entered into an agreement with the County of Riverside Treasurer and Tax Collector for a principal amount not to exceed $15,000,000. The proceeds of the note will be used to finance certain redevelopment projects, Eller Park, the Romoland Beautification Project and the Romoland/Homeland Community Center, Childcare Center and Park, within and outside the Romoland Subarea of the I-215 Corridor project area as well as the Homeland Subarea of the MID County project area. The Agency will use future bond proceeds or tax increment to repay the note. The principal amount of the note is due on or before July 21, 2011. Interest accrues at a variable interest rate equal to the rate of interest payable with respect to the Riverside County Pooled Investment Fund plus 0.50%. The outstanding balance at June 30, 2010 is $15,000,000. 2010 TAX ALLOCATION HOUSING BONDS - Series A During the fiscal year ended June 30, 2010, the Agency issued Tax Allocation Bonds for financing low and moderate income housing projects of the County Redevelopment Agency and to provide funds for the various debt obligations of the Agency within the various project areas. The Bonds are special obligations of the Agency and are payable exclusively from tax revenues to be derived from the various project areas and from amounts on deposit in certain funds and accounts established pursuant to the Indenture. The Bonds were used to (i) finance low and moderate income housing projects with respect to the Project Areas, (ii) fund a reserve sub-account with the proceeds of the bonds; and (iii) pay costs of issuance relating to the Bonds.



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F) Changes in Long-Term Liabilities - Continued 2010 TAX ALLOCATION HOUSING BONDS - Series A - Continued The Agency is required to maintain a Reserve Account for so long as any debt service remains with respect to the Bonds as of any calculation date, the least of (i) ten percent (10%) of the outstanding principal amount of Bonds, (ii) Maximum Annual Debt Service, or (iii) 125% of average Annual Debt Service on the Bonds. In the event that the Agency receives insufficient Tax Revenues from the respective project area or otherwise defaults on payments, the Agency is obligated to pay such amounts from the Reserve Accounts. The reserve requirement is covered by a bond insurance policy. The outstanding balance at June 30, 2010 is $15,885,000. The reserve balance requirement at June 30, 2010 is as follows:

Required Actual

Reserve Accounts $ 1,302,079 $ 1,302,079

2010 TAX ALLOCATION HOUSING BONDS - Series A-T During the fiscal year ended June 30, 2010, the Agency issued Tax Allocation Bonds for financing low and moderate income housing projects of the County Redevelopment Agency and to provide funds for the various debt obligations of the Agency within the various project areas. The Bonds are special obligations of the Agency and are payable exclusively from tax revenues to be derived from the various project areas and from amounts on deposit in certain funds and accounts established pursuant to the Indenture. The Bonds were used to (i) finance low and moderate income housing projects with respect to the Project Areas, (ii) fund a reserve sub-account with the proceeds of the bonds; and (iii) pay costs of issuance relating to the Bonds. The Agency is required to maintain a Reserve Account for so long as any debt service remains with respect to the Bonds as of any calculation date, the least of (i) ten percent (10%) of the outstanding principal amount of Bonds, (ii) Maximum Annual Debt Service, or (iii) 125% of average Annual Debt Service on the Bonds. In the event that the Agency receives insufficient Tax Revenues from the respective project area or otherwise defaults on payments, the Agency is obligated to pay such amounts from the Reserve Accounts. The reserve requirement is covered by a bond insurance policy. The outstanding balance at June 30, 2010 is $50,860,000. The reserve balance requirement at June 30, 2010 is as follows:

Required Actual Reserve Accounts $ 4,168,946 $ 4,168,946



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F) Changes in Long-Term Liabilities - Continued Defeased Obligations In April 2007, the Agency issued $89,990,000 in Tax Allocation Refunding Bonds to provide proceeds that were placed in an irrevocable trust with an escrow agent to provide for all future debt service payments on the 2001 Tax Allocation Bond for $87,870,000. As a result, the refunding portion of the 2001 Tax Allocation Bond is considered to be defeased and the liability has been removed from the governmental activities column of the Statement of Net Assets. At June 30, 2010, the following amounts of bonds held in trust are considered to be defeased and outstanding: $83,545,000 in 2001 Tax Allocation Bonds

Tax Increment Revenues Pledged The Agency has pledged a portion of future tax increment revenues and a portion of investment earnings to repay the Agency’s long-term debt. The Agency’s long-term debt is payable solely from the tax increment and a portion of investment earnings in the Agency’s project areas. Total principal and interest remaining on the bonds is $677,975,089 and $572,718,279, payable through fiscal year 2040. For the current year, principal and interest paid by tax increment revenues and investment earnings were $11,787,902 and $28,247,364, respectively.

5) OTHER INFORMATION A) Risk Management

To account for risks of loss and liability claims, the Agency participates in the County’s Risk Management Fund (an internal service fund). Premiums are paid annually by the Agency into the Risk Management Fund via inter-fund transfer. It is the County’s responsibility to administer the self-insured programs of insurance and pay all liability claims within the stated limits.

B) Employee Retirement Systems and Pension Plans

The Agency, through the County, is a participant in the Public Employee’s Retirement System of the State of California covering all of its permanent employees. The excess, if any, of the actuarially computed value of vested benefits over the amounts available in the pension fund would be a liability of the County and not the Agency.

C) Pass-Through Agreements

In order to lessen the fiscal impact of the tax increment financing of redevelopment projects on other units of local governments, the Agency has entered into pass-through agreements with various governmental agencies to "pass-through" portions of tax increment funds received by the Agency, attributable to the area within the territorial limits of other agencies (see Note 3-C).



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5) OTHER INFORMATION - Continued

D) Commitments and Contingencies As of the end of the fiscal year, the Agency is not aware of any outstanding litigations that would have a material

effect on the financial position of the Agency. E) Subsequent Events In July 2010, the Agency issued $5,645,000 2010 Tax Allocation Bonds, Series C, to fund projects of benefit to the

Agency’s Mid-County Redevelopment Project Area. Interest on the bond is payable October 1 and April 1 of each year. Interest on the bond accrues at rates varying from 2.000% to 6.250% per annum. Principal on the bonds is payable in annual installments that range from $545,000 to $1,120,000 and commence on October 1, 2011 through October 1, 2040.

In July 2010, the Agency issued $32,415,000 2010 Tax Allocation Bonds, Series D, to fund projects of benefit to the

Agency’s Desert Communities Redevelopment Project Area. Interest on the bond is payable October 1 and April 1 of each year. Interest on the bond accrues at rates varying from 2.000% to 6.000% per annum. Principal on the bonds is payable in annual installments that range from $640,000 to $2,225,000 and commence on October 1, 2011 through October 1, 2037.

In July 2010, the Agency issued $50,520,000 2010 Tax Allocation Bonds, Series E, to fund projects of benefit to the

Agency’s Interstate 215 Corridor Redevelopment Project Area. Interest on the bond is payable October 1 and April 1 of each year. Interest on the bond accrues at rates varying from 2.000% to 6.500% per annum. Principal on the bonds is payable in annual installments that range from $585,000 to $6,420,000 and commence on October 1, 2011 through October 1, 2040.

In July 2010, the Agency repaid the outstanding principal balance and interest accrued of the $15,000,000 Bond

Anticipation Notes with the County of Riverside. The Outstanding principal was due on or before July 21, 2011.

SUPPLEMENTARY INFORMATION

Project Area Jurupa MID1-1986 Valley County

ASSETSCash and Investments 8,580,562$ 573,465$ 1,890,354$ Cash and Investments with Fiscal Agent 25,883,878 45,682,418 16,599,151Accounts Receivable 2,502,243 10,000Interest Receivable 117,231 329,315 69,414Due from Other Funds 2,821 2,953,778 1,615Loan Receivable 27,229,796 876,287Land Held for Resale 2,764,269 24,129,244 536,723

TOTAL ASSETS 37,348,761$ 103,400,259$ 19,983,544$

LIABILITIESAccounts Payable 244,028$ 3,119,579$ 477,585$ Due to Other Funds 2,000,000

TOTAL LIABILITIES 244,028 5,119,579 477,585

FUND BALANCESReserved for Encumbrances 3,273,911 27,459,449 4,760,000Reserved for Receivables 27,229,796 876,287Reserved for Land Held for Resale 2,764,269 24,129,244 536,723


Projects and Programs 31,066,553 19,462,191 13,332,949

TOTAL FUND BALANCES 37,104,733 98,280,680 19,505,959

TOTAL LIABILITIES AND FUND BALANCES 37,348,761$ 103,400,259$ 19,983,544$

Redevelopment Agency for the County of Riverside, CaliforniaCombining Balance Sheet - Capital Projects Governmental Funds

June 30, 2010

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Desert I-215Communities Corridor Total

8,409,260$ 10,337,810$ 29,791,451$ 25,293,661 44,209,726 157,668,834

3,412,632 67,590 5,992,465157,652 176,996 850,608

6,813 2,005,775 4,970,802568,107 28,674,190

18,464,293 4,688,870 50,583,399

56,312,418$ 61,486,767$ 278,531,749$

2,595,561$ 1,746,481$ 8,183,234$ 803 2,000,803

2,596,364 1,746,481 10,184,037

25,314,266 38,440,746 99,248,372568,107 28,674,190

18,464,293 4,688,870 50,583,399

9,369,388 16,610,670 89,841,751

53,716,054 59,740,286 268,347,712

56,312,418$ 61,486,767$ 278,531,749$

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REVENUESInvestment Income 492,450$ 928,013$ 204,463$ Other Income 240,048 16,342,210 5,074

TOTAL REVENUES 732,498 17,270,223 209,537


Administrative Costs 819,641 3,568,812 460,881Professional Services 46,279 67,200 10,929Project Improvement Costs 9,438,416 28,217,758 1,129,081Interest and Fiscal Charges 19,894

TOTAL EXPENDITURES 10,304,336 31,853,770 1,620,785

EXCESS OF REVENUES OVER(UNDER) EXPENDITURES (9,571,838) (14,583,547) (1,411,248)

OTHER FINANCING SOURCES (USES)Transfers In 2,000,000 8,000,000 1,000,000Transfers Out (487,347) (1,523,892) (260,309)Gain (Loss) on Sale of Property (5,208,483) (1,656,476)Issuance of Long-term Debt 2,000,000

NET CHANGE IN FUND BALANCES (8,059,185) (13,315,922) (328,033)

FUND BALANCES - BEGINNING OF YEAR, AS PREVIOUSLY REPORTED 45,163,918 98,680,161 19,833,992

PRIOR PERIOD ADJUSTMENT 12,916,441

FUND BALANCES - BEGINNING OF YEAR, 45,163,918 111,596,602 19,833,992AS RESTATED

FUND BALANCES - END OF YEAR 37,104,733$ 98,280,680$ 19,505,959$

Redevelopment Agency for the County of Riverside, CaliforniaCombining Statement of Revenues, Expenditures and Changes in Fund Balances -

Capital Projects Governmental FundsYear Ended June 30, 2010

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535,086$ 643,416$ 2,803,428$ 3,503,159 183,328 20,273,819

4,038,245 826,744 23,077,247

1,952,572 1,658,446 8,460,35253,967 92,426 270,801

39,339,577 16,682,065 94,806,89755,189 75,083

41,346,116 18,488,126 103,613,133

(37,307,871) (17,661,382) (80,535,886)

6,000,000 10,000,000 27,000,000(1,588,234) (649,396) (4,509,178)

(292,347) (7,157,306)13,000,000 15,000,000

(32,896,105) 4,396,875 (50,202,370)

86,612,159 55,343,411 305,633,641

12,916,441

86,612,159 55,343,411 318,550,082

53,716,054$ 59,740,286$ 268,347,712$

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ASSETSCash and Investments 4,776,291$ 2,653,232$ 3,458,188$ Cash and Investments with Fiscal Agent 4,248,065 2,710,771 1,655,341Accounts Receivable 20,296 149,729 54,263Interest Receivable 25,493 6,209 12,769

TOTAL ASSETS 9,070,145$ 5,519,941$ 5,180,561$

LIABILITIESAccounts Payable 47,071$ 115,643$ 1,366$ Due to Other Funds 2,009 2,970,706 3,398

TOTAL LIABILITIES 49,080 3,086,349 4,764

FUND BALANCESReserved for Debt Service 9,021,065 2,433,592 5,175,797



Redevelopment Agency for the County of Riverside, CaliforniaCombining Balance Sheet - Debt Service Governmental Funds

June 30, 2010

52


10,252,148$ 11,822,500$ 32,962,359$ 2,426,638 5,020,601 16,061,416

102,745 64,248 391,28121,855 52,862 119,188

12,803,386$ 16,960,211$ 49,534,244$

2,023$ 451,141$ 617,244$ 17,864 10,810 3,004,787

19,887 461,951 3,622,031

12,783,499 16,498,260 45,912,213

12,783,499 16,498,260 45,912,213

12,803,386$ 16,960,211$ 49,534,244$

53


REVENUESTax Increment 7,665,454$ 28,867,893$ 5,850,881$ Investment Income 132,443 108,154 70,605

TOTAL REVENUES 7,797,897 28,976,047 5,921,486


Administrative Costs 350,954Other Expenditures 1,645,275 11,388,285 2,459,625State ERAF 3,578,297 11,246,390 1,604,899

Debt Service:Long-term Obligation Principal Payments 1,371,209 4,795,008 696,352Interest and Fiscal Charges 3,801,914 12,342,719 1,792,431

TOTAL EXPENDITURES 10,396,695 40,123,356 6,553,307

EXCESS OF REVENUES OVER(UNDER) EXPENDITURES (2,598,798) (11,147,309) (631,821)

OTHER FINANCING SOURCES (USES)Transfers In 1,047,492 4,374,735 896,658Transfers Out (2,000,000) (8,000,000) (1,000,000)Issuance of Long-term Debt 819,229 2,660,042 419,452Premiums on Long-term Debt 15,071 48,935 7,716

NET CHANGE IN FUND BALANCES (2,717,006) (12,063,597) (307,995)

FUND BALANCES - BEGINNING OF YEAR 11,738,071 14,497,189 5,483,792



Debt Service Governmental FundsYear Ended June 30, 2010

54


21,239,756$ 15,840,226$ 79,464,210$ 214,694 300,824 826,720

21,454,450 16,141,050 80,290,930

230,535 581,4897,666,843 4,021,007 27,181,0357,653,844 3,710,088 27,793,518

2,381,310 1,420,122 10,664,0016,265,473 3,912,558 28,115,095

23,967,470 13,294,310 94,335,138

(2,513,020) 2,846,740 (14,044,208)

2,594,773 1,314,926 10,228,584(6,000,000) (10,000,000) (27,000,000)2,371,009 1,907,514 8,177,246

43,618 35,091 150,431

(3,503,620) (3,895,729) (22,487,947)

16,287,119 20,393,989 68,400,160

12,783,499$ 16,498,260$ 45,912,213$

55

Project Area Jurupa MID 1-1986 Valley County

ASSETSCash and Investments 8,126,278$ 11,442,439$ 563,611$ Cash and Investments with Fiscal Agent 6,911,527 29,737,708 96,134Interest Receivable 7,855 13,044 1Due from Other Funds 2,009 9,027,004 3,398Loans Receivable 2,543,817 11,796,094 2,644,228Land Held for Resale 16,816,965 3,386,565

TOTAL ASSETS 17,591,486$ 78,833,254$ 6,693,937$

LIABILITIESAccounts Payable 62,620$ 344,369$ 110,944$ Due to Other Governments 275,683 984,420 157,748 Due to Other Funds 2,821 10,076 2,501,615

TOTAL LIABILITIES 341,124 1,338,865 2,770,307

FUND BALANCESReserved for Encumbrances 180,095 6,883,564 1,281,825Reserved for Receivables 2,543,817 11,796,094 2,644,228Reserved for Land Held for Resale 16,816,965 3,386,565


Projects and Programs 14,526,450 41,997,766Undesignated (3,388,988)



Redevelopment Agency for the County of Riverside, CaliforniaCombining Balance Sheet - Special Revenue Governmental Funds

June 30, 2010

56


9,352,112$ 12,265,898$ 41,750,338$ 79,199 20,608,536 57,433,104

9,075 11,870 41,84518,667 10,810 9,061,888

20,085,001 1,449,154 38,518,2948,623,247 255,625 29,082,402

38,167,301$ 34,601,893$ 175,887,871$

108,553$ 31,760$ 658,246$ 665,618 564,166 2,647,635

6,506,813 5,775 9,027,100

7,280,984 601,701 12,332,981

13,990,163 577,686 22,913,33320,085,001 1,449,154 38,518,294

8,623,247 255,625 29,082,402

31,717,727 88,241,943(11,812,094) (15,201,082)

30,886,317 34,000,192 163,554,890

38,167,301$ 34,601,893$ 175,887,871$

57

Project Area Jurupa MID 1-1986 Valley County

REVENUESTax Increment 1,916,339$ 7,216,901$ 1,462,708$ Investment Income 89,163 141,874 1,020Other Income 182,951 30,967

TOTAL REVENUES 2,005,502 7,541,726 1,494,695


Administrative Costs 336,752 1,199,978 192,288Professional Services 7,427 27,581 4,343Project Improvement Costs 283,999 176,087 1,603,219Other Expenditures 22,986 83,810 14,047

Debt Service:Debt Issuance Costs 50,744 164,685 27,584

TOTAL EXPENDITURES 701,908 1,652,141 1,841,481

EXCESS OF REVENUES OVER (UNDER)EXPENDITURES 1,303,594 5,889,585 (346,786)

OTHER FINANCING SOURCES (USES)Transfers Out (560,145) (2,850,843) (636,349)Issuance of Long-term Debt 5,867,552 19,051,973 3,004,233Discount on Long-term Debt (63,080) (204,902) (30,695)

NET CHANGE IN FUND BALANCES 6,547,921 21,885,813 1,990,403

FUND BALANCES - BEGINNING OF YEAR 10,702,441 55,608,576 1,933,227



Special Revenue Governmental FundsYear Ended June 30, 2010

58


5,309,883$ 3,959,865$ 19,865,696$ 110,769 126,418 469,244

67,181 25,752 306,851

5,487,833 4,112,035 20,641,791

811,367 687,691 3,228,07633,012 14,812 87,175

3,405,334 388,230 5,856,86960,015 47,804 228,662

148,644 118,072 509,729

4,458,372 1,256,609 9,910,511

1,029,461 2,855,426 10,731,280

(1,006,539) (665,530) (5,719,406)16,981,838 13,662,158 58,567,754

(180,784) (146,958) (626,419)

16,823,976 15,705,096 62,953,209

14,062,341 18,295,096 100,601,681

30,886,317$ 34,000,192$ 163,554,890$

59

-=ri::)C TEAMAN, RAMIREZ & SM ITH. INC. ~· I ~CERTI FI E D PUBLIC ACCO UN TAN TS

Board ofDirectors Redevelopment Agency for the County of Riverside Riverside, California

INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN

AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS

We have audited the financial statements of the governmental activities and each major fund of the Redevelopment Agency for the County of Riverside as of and for the year ended June 30, 2010, which collectively comprise the Agency's basic financial statements and have issued our report thereon dated November 22, 2010. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial .audits contained in Government Auditing Standards, issued by the Comptroller General of the United States.

Internal Control Over Financial Reporting

In planning and pe1forming our audit, we considered the Redevelopment Agency for the Cotmty of Riverside's internal control over financial reporting in order to determine our auditing procedures for the purpose of expressing our opinions on the financial statements and not to provide assurance on the internal control over financial reporting. Our consideration of the internal control over financial reporting would not necessarily disclose all matters in the internal control over financial reporting that might be material weaknesses. A material weakness is a reportable condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that misstatements in amounts would be material in relation to the financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. We noted no matters involving the internal control over financial reporting and its operation that we consider to be material weaknesses.

Compliance and Other Matters

As part of obtaining reasonable assurance about whether the financial statements of the Redevelopment Agency for the County of Riverside are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grants, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. Such provisions include those provisions of laws and regulations identified in the Guidelines for Compliance Audits of California Redevelopment Agencies, issued by the State Controller. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance that are required to be reported under Government Auditing Standards and Guidelines for ComplianceAudits of California Redevelopment Agencies.

This report is intended solely for the information and use of the Board of Directors and management of the Redevelopment Agency of the County of Riverside and the State Controller' s Office, Division of Accounting and Reporting and is not intended to be and should not be used by anyone other than these specified parties.

November 22,2010

Richard A. Teama n, C PA • Greg W. Fankha ne l, C PA • David M . Ramirez, CPA • Javier H. Carrillo, CPA

420 1 B rockto n A ve. Suite 100, R ivers ide CA 92501 • 951 .274.9500 • 951.274.7828 FAX • www.t rscpas.com

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APPENDIX D

FORMS OF OPINION OF BOND COUNSEL

[OPINION FOR SERIES A BONDS]

[LETTERHEAD OF JONES HALL]

March __, 2011 Redevelopment Agency for the County of Riverside Riverside, California

OPINION: $14,093,027.60 Redevelopment Agency for the County of Riverside 2011 Tax Allocation Housing Bonds, Series A Members of the Agency:

We have acted as bond counsel in connection with the issuance by the Redevelopment

Agency for the County of Riverside (the "Agency") of its $14,093,027.60 aggregate principal amount of Redevelopment Agency for the County of Riverside 2011 Tax Allocation Housing Bonds, Series A (the "2011 Series A Bonds"), pursuant to the provisions of Part 1 of Division 24 of the California Health and Safety Code (the "Law"), and an Indenture of Trust dated as of December 1, 2004, as heretofore supplemented and amended and as supplemented and amended by a Third Supplement to Indenture of Trust dated as of March 1, 2011 (collectively, the "Indenture"), by and between the Agency and The Bank of New York Mellon Trust Company, N.A., as trustee. We have examined the law and such certified proceedings and other papers as we deem necessary to render this opinion.

As to questions of fact material to our opinion, we have relied upon representations of

the Agency contained in the Indenture and in the certified proceedings and other certifications of public officials furnished to us, without undertaking to verify the same by independent investigation.

Based upon the foregoing, we are of the opinion, under existing law, as follows: 1. The Agency is a public body corporate and politic, duly organized and validly existing

under the laws of the State of California with the power to enter into the Indenture, perform the agreements on its part contained therein and issue the 2011 Series A Bonds.

2. The Indenture has been duly approved by the Agency and constitutes a valid and

binding obligation of the Agency enforceable against the Agency in accordance with its terms.

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3. Pursuant to the Law, the Indenture creates a valid first lien on the Housing Tax Revenues pledged by the Indenture for the security of the 2011 Series A Bonds, on a parity with any Parity Debt issued in accordance with the Indenture.

4. The 2011 Series A Bonds have been duly authorized, executed and delivered by the

Agency and are valid and binding special obligations of the Agency, payable solely from the sources provided therefor in the Indenture.

5. The interest on the 2011 Series A Bonds is excluded from gross income for federal

income tax purposes, and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations; it should be noted, however, that, for the purpose of computing the alternative minimum tax imposed on corporations (as defined for federal income tax purposes), such interest is taken into account in determining certain income and earnings. The opinions set forth in the preceding sentence are subject to the condition that the Agency comply with all requirements of the Internal Revenue Code of 1986 that must be satisfied subsequent to the issuance of the 2011 Series A Bonds in order that interest thereon 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 interest on the 2011 Series A Bonds in gross income for federal income tax purposes to be retroactive to the date of issuance of the 2011 Series A Bonds. We express no opinion regarding other federal tax consequences arising with respect to the 2011 Series A Bonds.

6. The interest on the 2011 Series A Bonds is exempt from personal income taxation

imposed by the State of California. The rights of the owners of the 2011 Series A Bonds and the enforceability of the 2011

Series A Bonds and the Indenture may be subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors' rights heretofore or hereafter enacted and may also be subject to the exercise of judicial discretion in appropriate cases.

Respectfully submitted, A Professional Law Corporation

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[OPINION FOR SERIES A-T BONDS]

[LETTERHEAD OF JONES HALL]

[2011 SERIES A-T BONDS]

March __, 2011 Redevelopment Agency for the County of Riverside 3403 10th Street Riverside, California 92501

OPINION: $14,095,000 Redevelopment Agency for the County of Riverside 2011 Taxable Tax Allocation Housing Bonds, Series A-T Members of the Agency:

We have acted as bond counsel in connection with the issuance by the Redevelopment

Agency for the County of Riverside (the "Agency") of its $14,095,000__ aggregate principal amount of Redevelopment Agency for the County of Riverside 2011 Taxable Tax Allocation Housing Bonds, Series A-T (the "2011 Series A-T Bonds"), pursuant to the provisions of Part 1 of Division 24 of the California Health and Safety Code (the "Law"), and an Indenture of Trust dated as of December 1, 2004, as heretofore supplemented and amended and as supplemented and amended by a Second Supplement to Indenture of Trust dated as of March 1, 2011 (collectively, the "Indenture"), by and between the Agency and The Bank of New York Mellon Trust Company, N.A., as trustee. We have examined the law and such certified proceedings and other papers as we deem necessary to render this opinion.

As to questions of fact material to our opinion, we have relied upon representations of

the Agency contained in the Indenture and in the certified proceedings and other certifications of public officials furnished to us, without undertaking to verify the same by independent investigation.

Based upon the foregoing, we are of the opinion, under existing law, as follows:

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1. The Agency is a public body corporate and politic, duly organized and validly existing

under the laws of the State of California with the power to enter into the Indenture, perform the agreements on its part contained therein and issue the 2011 Series A-T Bonds.

2. The Indenture has been duly approved by the Agency and constitutes a valid and

binding obligation of the Agency enforceable against the Agency in accordance with its terms. 3. Pursuant to the Law, the Indenture creates a valid first lien on the Housing Tax

Revenues pledged by the Indenture for the security of the 2011 Series A-T Bonds, on a parity with any Parity Debt issued in accordance with the Indenture.

4. The 2011 Series A-T Bonds have been duly authorized, executed and delivered by

the Agency and are valid and binding special obligations of the Agency, payable solely from the sources provided therefor in the Indenture.

5. The interest on the 2011 Series A-T Bonds is not excluded from gross income for

federal income tax purposes, and is subject to all applicable federal income taxation. 6. The interest on the 2011 Series A-T Bonds is exempt from personal income taxation

imposed by the State of California. To ensure compliance with requirements imposed by the Internal Revenue Service, we

inform owners of the Bonds that any U.S. federal tax advice contained in this opinion is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any transaction or matter addressed herein.

Further, we note that the rights of the owners of the 2011 Series A-T Bonds and the

enforceability of the 2011 Series A-T Bonds and the Indenture may be subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors' rights heretofore or hereafter enacted and may also be subject to the exercise of judicial discretion in appropriate cases.

Respectfully submitted, A Professional Law Corporation

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APPENDIX E

SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURES Certain provisions common to the Indentures are summarized below. In addition, certain

tax covenants particular to the Series A Bonds are at the end of this Appendix. This summary does not purport to be complete or definitive and is qualified in its entirety by reference to the full terms of the Indentures.

Definitions

"Accreted Value" means, with respect to the Convertible Capital Appreciation Bonds (until the Conversion Date), the initial principal amount of and accrued and compounded interest thereon as of any April 1 or October 1 determined solely by reference to the Table of Accreted Values set forth on the form of the Convertible Capital Appreciation Bond. The Accreted Value for any date not specified in said Table shall be determined by adding to the Accreted Value set forth in said Table for the date next preceding the date in question (the “Preceding Accreted Value”) that portion of the difference between the Preceding Accreted Value and the Accreted Value for the date set forth in said Table for the date next succeeding the date in question (the “Succeeding Accreted Value”) that the number of days (based on twelve 30-day months) from the Preceding Accreted Value bears to the total number of days from the date of the Preceding Accreted Value to the date of the Succeeding Accreted Value.

"Additional Revenues" means, as the date of calculation, the amount of Housing Tax

Revenues which, as shown in a report of an Independent Redevelopment Consultant, are estimated to be receivable by the Agency within the Fiscal Year following the Fiscal Year in which such calculation is made as a result of increases in the assessed valuation of taxable property in the Project Area due to either (a) construction which has been completed and for which a certificate of occupancy has been issued by the County or other appropriate governmental entity but which is not then reflected on the tax rolls, or (b) transfer of ownership or any other interest in real property which has been recorded but which is not then reflected on the tax rolls. For purposes of this definition, the term "increases in the assessed valuation" means the amount by which the assessed valuation of taxable property in the Project Area is estimated to increase above the assessed valuation of taxable property in the Project Area (as evidenced in the written records of the County) as of the date on which such calculation is made.

"Annual Debt Service" means, for each Bond Year, the sum of (a) the interest payable

on the Bonds in such Bond Year, and (b) the principal amount of the Outstanding Bonds scheduled to be paid in such Bond Year upon the maturity or mandatory sinking account redemption thereof. For purposes of such calculation, variable rate Parity Debt shall be deemed to bear interest at the maximum rate permitted by the Parity Debt Instrument pursuant to which such Parity Debt is issued. For purposes of such calculation, there shall be excluded debt service payments with respect to the Bonds or any Parity Debt (i) to the extent that amounts due with respect to the Bonds or such Parity Debt are prepaid or other wise discharged in accordance with the Indentures or the relevant Parity Debt Instrument or (ii) to the extent the proceeds thereof are then deposited in an escrow fund in which amounts are invested in Permitted Investments and from which moneys may not be released to the Agency unless the amount of Housing Tax Revenues for the current Fiscal Year (as evidenced in the written records of the County) plus Additional Revenues at least meets the coverage requirements for

E-2

the issuance of Parity Debt. For purposes of the definition of Annual Debt Service, Accreted Value and Conversion Value will be deemed to constitute principal.

"Bond Counsel" means (a) Jones Hall, A Professional Law Corporation, or (b) any

other attorney or firm of attorneys appointed by or acceptable to the Agency of nationally-recognized experience in the issuance of obligations the interest on which is excludable from gross income for federal income tax purposes under the Tax Code.

"Bond Obligation" means, with respect to any Series A Bond or any maturity of Series

A Bonds or all Outstanding Series A Bonds and as of any given date of calculation, the principal amount of all Outstanding Series A Bonds other than Convertible Capital Appreciation Bonds, (2) the Accreted Value of all Outstanding Capital Appreciation Bonds as of the next preceding April 1 or October 1 (without any adjustment for any period elapsed after such April 1 or October 1, or, if the date of calculation is an April 1 or October 1, such April 1 or October 1), and (3) with respect to the Convertible Capital Appreciation Bonds, prior to the Conversion Date, the Accreted Value of all Outstanding Convertible Capital Appreciation Bonds as of the next preceding April 1 or October 1 (without any adjustment for any period elapsed after such April 1 or October 1, or, if the date of calculation is an April 1 or October 1, such April 1 or October 1) and, after the Conversion Date, the Conversion Value.

"Bond Year" means any twelve-month period beginning on October 2 in any year and

extending to the next succeeding October 1, both dates inclusive; except that the first Bond Year with respect to the Series A Bonds and the Series A-T Bonds shall begin on the Closing Date and end on October 1, 2011.

"Bonds" means the 2004 Series A Bonds, the 2004 Series A-T Bonds, the 2005 Series

A Bonds, the 2010 Series A Bonds, the 2010 Series A-T Bonds and any Parity Debt issued as bonds pursuant to a Supplemental Indenture.

"Business Day" means a day of the year (other than a Saturday or Sunday) on which

banks in the State or the state of New York are not required or permitted to be closed, and on which the New York Stock Exchange is open.

"Certificate of the Agency" means a certificate in writing signed by the Executive

Director, Deputy Executive Director, Secretary or Finance Director of the Agency, or any other officer of the Agency duly authorized by the Agency for that purpose.

"Code" means the Internal Revenue Code of 1986, as amended. "Continuing Disclosure Certificates" means that certain Continuing Disclosure

Certificates for the Bonds executed by the Agency, dated as of the Closing Date, as originally executed and as they may be amended from time to time in accordance with the terms thereof.

"Conversion Date" means, with respect to any Convertible Capital Appreciation Bond,

October 1, 2021, which is the date on which such Convertible Capital Appreciation Bond starts to pay bear interest on a current basis, payable each April 1, and October 1, commencing April 1, 2022.

"Conversion Value" means, with respect to any Convertible Capital Appreciation Bond,

the value of such Convertible Capital Appreciation Bond as of its Conversion Date.

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"Convertible Capital Appreciation Bonds" means the portion of the Series A Bonds designated as such in the Indenture.

"Current Interest Bonds" means the portion of the Series A Bonds designated as such

in the Indenture. "Defeasance Obligations" means:

(a) cash; (b) U.S. Treasury Certificates, Notes and Bonds (including State and Local

Government Series); (c) Direct obligations of the Treasury which have been stripped by the

Treasury itself, CATS, TIGRS and similar securities; (d) The interest component of Resolution Funding Corporation strips which

have been stripped by request to the Federal Reserve Bank of New York in book entry form;

(e) Pre-refunded municipal bonds rated "Aaa" by Moody’s and "AAA" by

S&P, provided that, if the issue is rated only by S&P (i.e., there is no Moody’s rating), then the pre-refunded municipal bonds must have been pre-refunded with cash, direct U.S. or U.S. guaranteed obligations, or AAA rated pre-refunded municipals; and

(f) Bonds, debentures, notes or other evidence of indebtedness issued or

guaranteed by any of the following federal agencies and provided such obligations are backed by the full faith and credit of the United States of America (stripped securities are only permitted if they have been stripped by the agency itself): (i) direct obligations or fully guaranteed certificates of beneficial ownership of the U.S. Export-Import Bank; (ii) certificates of beneficial ownership of the Rural Economic Community Development Administration (formerly the Farmers Home Administration); (iii) obligations of the Federal Financing Bank; (iv) debentures of the Federal Housing Administration; (v) participation certificates of the General Services Administration; (vi) guaranteed Title XI financings of the U.S. Maritime Administration; (vii) project notes, local authority bonds, new communities debentures and U.S. public housing notes and bonds of the U.S. Department of Housing and Urban Development. "Costs of Issuance" means all items of expense directly or indirectly payable by or

reimbursable to the Agency relating to the authorization, issuance, sale and delivery of the Bonds, including but not limited to printing expenses, rating agency fees, filing and recording fees, initial fees, expenses and charges of the Trustee and its counsel, including the Trustee's first annual administrative fee, acceptance fees, fees, charges and disbursements of attorneys, financial advisors, fiscal consultants, accounting firms, other consultants and other professionals, fees and charges for preparation, execution and safekeeping of the Bonds and any other cost, charge or fee in connection with the original issuance of the Bonds.

"Desert Communities Redevelopment Project Area Redevelopment Plan" means

the Redevelopment Plan for the Desert Communities Redevelopment Project Area approved by Ordinance No. 638 of the Board adopted December 23, 1986, as heretofore amended together with any further amendments thereof at any time duly authorized pursuant to the Redevelopment Law.

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"Event of Default" means any of the events described as events of default under the

caption "Events of Default and Acceleration of Maturities". "Federal Securities" means: (a) any direct general obligations of the United States of

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

"Fiscal Year" means any twelve-month period beginning on July 1 in any year and

extending to the next succeeding June 30, both dates inclusive, or any other twelve month period selected and designated by the Agency to the Trustee in writing as its official fiscal year period.

"Housing Tax Revenues" means that portion of Tax Revenues required by Section

33334.3 of the Redevelopment Law to be deposited in the Agency’s Low and Moderate Income Housing Fund.

"Indentures" means the two Indentures of Trust, by and between the Agency and the

Trustee, under which the Series A Bonds and the Series A-T Bonds are being issued, as originally entered into and as they have been amended and supplemented through the issuance of the Series A Bonds and the Series A-T Bonds and as they may be amended or supplemented by any Supplemental Indentures entered into pursuant to the provisions thereof.

"Independent Accountant" means any accountant or firm of such accountants duly

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

"Independent Redevelopment Consultant" means any consultant or firm of such

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

"Interstate 215 Corridor Redevelopment Project Area Redevelopment Plan" means

the Redevelopment Plan for the Interstate 215 Corridor Redevelopment Project Area approved by Ordinance No. 639 of the Board adopted December 23, 1986, as heretofore amended, together with any further amendments thereof at any time duly authorized pursuant to the Redevelopment Law.

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"Jurupa Valley Redevelopment Project Area Redevelopment Plan" means the Redevelopment Plan for the Jurupa Valley Redevelopment Project Area, approved by Ordinance No. 762 and Ordinance No. 763, each adopted by the Board of Supervisors of the County of Riverside on July 9, 1996, together with any further amendments thereof heretofore or hereafter duly authorized and adopted pursuant to the Redevelopment Law.

"Low and Moderate Income Housing Fund" means the fund of the Agency

established by the Agency pursuant to section 33334.3 of the Redevelopment Law. "Maximum Annual Debt Service" means, as of the date of calculation, the largest

amount of Annual Debt Service on all Outstanding Bonds for the current or any future Bond Year. For purposes of such calculation, there shall be excluded a pro rata portion of each installment of principal of any Parity Debt, together with the interest to accrue thereon, in the event and to the extent that the proceeds of such Parity Debt are deposited in an escrow fund from which amounts may not be released to the Agency unless the Housing Tax Revenues for the current Fiscal Year (as evidenced in the written records of the County) plus Additional Revenues at least meets the coverage requirements for the issuance of Parity Debt.

"Mid-County Redevelopment Project Area Redevelopment Plan" means the

Redevelopment Plan for the Mid-County Redevelopment Project Area approved by Ordinance No. 637 of the Board adopted December 23, 1986, as heretofore amended, together with any further amendments thereof at any time duly authorized pursuant to the Redevelopment Law.

"Moody’s" means Moody’s Investors Service, its successors and assigns. "Net Proceeds" means the proceeds from the sale of the 2011 Series A Bonds (par

amount of the 2011 Series A Bonds less original issue discount less the discount of the Original Purchaser) less proceeds of the 2011 Series A Bonds deposited into the 2011 Reserve Subaccount.

"Outstanding" when used as of any particular time with reference to Bonds, means

(subject to the provisions of the Indentures relating to disqualified Bonds) all Bonds except:

(a) Bonds theretofore canceled by the Trustee or surrendered to the Trustee for cancellation;

(b) Bonds paid or deemed to have been paid; and (c) Bonds in lieu of or in substitution for which other Bonds shall have been

authorized, executed, issued and delivered by the Agency pursuant to the Indentures. "Owner" or "Bondowner" means, with respect to any Bond, the person in whose name

the ownership of such Bond shall be registered on the Registration Books. "Parity Debt" means the Series A Bonds, Series A-T Bonds, the 2004 Series A Bonds,

the 2004 Series A-T Bonds, the 2005 Series A Bonds, the 2010 Series A Bonds, the 2010 Series A-T Bonds, and any notes, bonds, loans, advances or other indebtedness issued or incurred by the Agency on a parity with the Bonds pursuant to the Indentures.

"Parity Debt Instrument" means the resolution, trust indenture or installment sale

agreement adopted, entered into or executed and delivered by the Agency, and under which Parity Debt is issued.

E-6

"Participating Underwriter" has the meaning ascribed thereto in the Continuing

Disclosure Certificates. "Permitted Investments" means any of the following which at the time of investment

are legal investments under the laws of the State of California for the moneys proposed to be invested therein (provided that the Trustee shall be entitled to rely upon any investment direction from the Agency as conclusive certification to the Trustee that the investments described therein are so authorized under the laws of the State and constitute Permitted Investments):

(a) Federal Securities; (b) obligations of any of the following federal agencies which

obligations represent full faith and credit of the United States of America, including: Export-Import Bank, Farm Credit System Financial Assistance Corporation, Rural Economic Community Development Administration (formerly Farmers Home Administration), General Services Administration, U.S. Maritime Administration, Small Business Administration, Government National Mortgage Association, U.S. Department of Housing & Urban Development, Federal Housing Administration and Federal Financing Bank;

(c) direct obligations for any of the following federal agencies which

obligations are not fully guaranteed by the full faith and credit of the United States of America: senior debt obligations rated "Aaa" by Moody’s and "AAA" by S&P issued by Fannie Mae or Federal Home Loan Mortgage Corporation (FHLMC); obligations of the Resolution Funding Corporation (REFCORP); senior debt obligations of the Federal Home Loan Bank System; and senior debt obligations of other Government Sponsored Agencies;

(d) U.S. dollar denominated deposit accounts, federal funds and

banker’s acceptances with domestic commercial banks which have a rating on their short term certificates of deposit on the date of purchase of A-1 or A-1+ by S&P and P-1 by Moody’s, and maturing no more than 360 days after the date of purchase, including those of the Trustee or its affiliates;

(e) commercial paper which is rated at the time of purchase in the

single highest classification, A-1+ by S&P and P-1 by Moody’s and which matures not more than 270 days after the date of purchase;

(f) investments in a money market fund rated AAAm or AAAm-G or

better by S&P, including funds for which the Trustee or its affiliates provide investment advisory or other management services;

(g) any bonds or other obligations of any state of the United States of

America or of any agency, instrumentality or local governmental unit of any such state which are not callable at the option of the obligor prior to maturity or as to which irrevocable instructions have been given by the obligor to call on the date specified in the notice; and (i) which are rated, based on the escrow, in the highest rating category of S&P and Moody’s or (ii)(A) which are fully secured as to principal and interest and redemption premium, if any, by a fund consisting only of cash or Federal Securities, which fund may be applied only to the

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payment of such principal of and interest and redemption premium, if any, in such bonds or other obligations on the maturity date or dates thereof or the specified redemption date or dates pursuant to such irrevocable instructions, as appropriate, and (B) which fund is sufficient, as verified by an Independent Accountant and with the prior approval of S&P, to pay principal of and interest and redemption premium, if any, on the bonds or other obligations described in this paragraph on the maturity date or dates thereof or on the redemption date or dates specified in the irrevocable instructions referred to above, as appropriate;

(h) investment agreements with notice to S&P; (i) other forms of investments with notice to S&P; (j) the County's investment pool; and (k) the Local Agency Investment Fund of the State, created pursuant

to Section 11429.1 of the California Government Code but only, in the case of Trustee held funds, to the extent any monies invested by the Trustee are subject to deposit and withdrawal solely by the Trustee. "Plan Limitations" means the limitations contained or incorporated in the

Redevelopment Plan on (a) the aggregate principal amount of indebtedness payable from Tax Revenues derived under the Redevelopment Plan which may be outstanding at any time, (b) the aggregate amount of taxes which may be divided and allocated to the Agency pursuant to the Redevelopment Plan, and (c) the period of time for establishing, incurring or repaying indebtedness payable from Tax Revenues derived under the Redevelopment Plan.

"Project Area" means the territory within the Redevelopment Project, as described in

the Redevelopment Plan. "Qualified Reserve Account Credit Instrument" means an irrevocable standby or

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

"Rating Category" means any generic rating category of S&P or Moody's, without

regard to any refinement of such category by plus or minus sign or by numerical or other qualifying designation.

"Redevelopment Law" means the Community Redevelopment Law of the State,

constituting Part 1 of Division 24 of the Health and Safety Code of the State, and the acts amendatory thereof and supplemental thereto, including Section 33334.3 and Chapter 6, Article 5 (commencing with Section 33640) thereof.

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"Redevelopment Plan" means, collectively, the Redevelopment Project Area No. 1-

1986 Redevelopment Plan, the Jurupa Valley Redevelopment Project Area Redevelopment Plan, the Mid-County Redevelopment Project Area Redevelopment Plan, the Desert Communities Redevelopment Project Area Redevelopment Plan and the Interstate 215 Corridor Redevelopment Project Area Redevelopment Plan.

"Redevelopment Project" means the undertaking of the Agency pursuant to the

Redevelopment Plan and the Redevelopment Law for the redevelopment of the areas subject to the Redevelopment Plan.

"Redevelopment Project Area No. 1-1986 Redevelopment Plan" means the

Redevelopment Plan for Redevelopment Project Area No. 1-1986 approved by Ordinance No. 635 of the Board adopted December 23, 1986, as heretofore amended, together with any further amendments thereof at any time duly authorized pursuant to the Redevelopment Law.

"Report" means a document in writing signed by an Independent Redevelopment

Consultant and including: (a) a statement that the person or firm making or giving such Report has read the pertinent provisions of the Indentures to which such Report relates; (b) a brief statement as to the nature and scope of the examination or investigation upon which the Report is based; and (c) a statement that, in the opinion of such person or firm, sufficient examination or investigation was made as is necessary to enable said consultant to express an informed opinion with respect to the subject matter referred to in the Report.

"Request of the Agency" means a request in writing signed by the Executive Director,

Deputy Executive Director, Secretary or Finance Director of the Agency, or any other officer of the Agency duly authorized by the Agency for that purpose.

"Reserve Requirement" means with respect to the Bonds or any other Parity Debt, as

of any calculation date, the least of (i) ten percent (10%) of the original principal amount of the Bonds or other Parity Debt, as applicable, provided that if the original issue discount of the Bonds or other Parity Debt exceeds 2% of such original principal amount, then initially ten percent (10%) of the original principal amount of, less original issue discount on, the Bonds or other Parity Debt, but excluding from such calculation any proceeds of Parity Debt deposited in an escrow described in the definitions of Annual Debt Service and Maximum Annual Debt Service, (ii) Maximum Annual Debt Service with respect to the Bonds or other Parity Debt, as applicable, or (iii) 125% of average Annual Debt Service on the Bonds or other Parity Debt, as applicable; provided further that the Agency may meet all or of a portion of the Reserve Requirement by depositing a Qualified Reserve Account Credit Instrument meeting the requirements of the Indenture. For purposes of calculating Maximum Annual Debt Service with respect to determining the Reserve Requirement, variable rate Parity Debt shall be deemed to bear interest rate at the maximum rate permitted by the Parity Debt Instrument. The calculation of the Reserve Requirement may, at the option of the Agency, be made with respect to all Parity Debt, including the Bonds, on a combined basis.

In the event proceeds of Parity Debt are deposited in an escrow described in the

definitions of Annual Debt Service and Maximum Annual Debt Service, each such time that moneys are released from such escrow, other than to prepay a portion of the Parity Debt, an amount of such released moneys shall be deposited in the applicable Reserve Account as is necessary to ensure that the amount on deposit therein at least equals the Reserve Requirement for the Parity Debt after such release.

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"Serial Bonds" means all Bonds other than Term Bonds. "Series A Bonds" means the Agency's 2011 Tax Allocation Housing Bonds, Series A

issued in the initial principal amount of $14,093,027.60. "Series A-T Bonds" means the Agency's 2011 Taxable Tax Allocation Housing Bonds,

Series A-T issued in the initial principal amount of $14,095,000. "S&P" means Standard & Poor’s Ratings Services, a division of The McGraw-Hill

Companies, Inc., New York, New York, or its successors. "State" means the State of California. "Subordinate Debt" means any loans, advances or indebtedness issued or incurred by

the Agency in accordance with the requirements of the Indentures, which are either: (i) payable from, but not secured by a pledge of or lien upon, the Housing Tax Revenues; or (ii) secured by a pledge of or lien upon the Housing Tax Revenues which is subordinate in all respects to the pledge of and lien upon the Housing Tax Revenues under the Indentures for the security of the Bonds.

"Supplemental Indenture" means any resolution, agreement or other instrument which

has been duly adopted or entered into by the Agency, but only if and to the extent that such Supplemental Indenture is specifically authorized under the Indentures.

"Tax Code" means the Internal Revenue Code of 1986, as in effect on the date of

issuance of the Series A Bonds or (except as otherwise referenced herein) as it may be amended to apply to obligations issued on the date of issuance of the Series A Bonds, together with applicable proposed, temporary and final regulations promulgated, and applicable official public guidance published, under the Tax Code (including the Tax Regulations).

"Tax Revenues" means all taxes pledged and annually allocated within the Plan

Limitations and paid to the Agency with respect to the Project Area pursuant to Article 6 of Chapter 6 (commencing with Section 33670) of the Redevelopment Law and Section 16 of Article XVI of the Constitution of the State, or pursuant to other applicable State laws, and as provided in the Redevelopment Plan, and all payments, subventions and reimbursements, if any, to the Agency specifically attributable to ad valorem taxes lost by reason of tax exemptions and tax rate limitations, but excluding (i) amounts payable by the State to the Agency under and pursuant to Chapter 1.5 of Part 1 of Division 4 of Title 2 (commencing with Section 16110) of the California Government Code, and (ii) amounts payable by the Agency pursuant to Sections 33607.5 and 33607.7 of the Redevelopment Law, except and to the extent that any amounts so payable are not on a basis subordinate to the payment of the Bonds or to the payment of Parity Debt, as applicable.

"Term Bonds" means the Series A Bonds maturing October 1, 2026, October 1, 2031,

October 1, 2041 and October 1, 2042, and the Series A-T Bonds maturing October 1, 2021. "2004 Series A Bonds" means the Agency’s 2004 Tax Allocation Housing Bonds,

Series A initially issued in the principal amount of $38,225,000. "2004 Series A-T Bonds" means the Agency’s 2004 Taxable Tax Allocation Housing

Bonds, Series A-T initially issued in the principal amount of $37,000,000.

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"2005 Series A Bonds" means the Agency’s 2005 Tax Allocation Housing Refunding Bonds, Series A initially issued in the principal amount of $18,245,000.

"2010 Series A Bonds" means the Agency’s 2010 Tax Allocation Housing Bonds,

Series A initially issued in the principal amount of $15,885,000. "2010 Series A-T Bonds" means the Agency’s 2010 Taxable Tax Allocation Housing

Bonds, Series A-T initially issued in the principal amount of $50,860,000. "2011 Reserve Subaccount" means the subaccount by that name established and held

by the Trustee within the Reserve Account.

Costs of Issuance Funds The moneys in the Costs of Issuance Funds shall be used and withdrawn by the Trustee

from time to time to pay the Costs of Issuance upon submission of a Request of the Agency stating the person to whom payment is to be made, the amount to be paid, the purpose for which the obligation was incurred and that such payment is a proper charge against said fund. On October 1, 2011, or upon the earlier Request of the Agency stating that all known Costs of Issuance have been paid, all amounts, if any, remaining in the respective Costs of Issuance Funds shall be withdrawn therefrom by the Trustee and transferred to the appropriate account within the Agency’s Low and Moderate Income Housing Fund.

Security of Bonds; Equal Security

The Bonds and all Parity Debt shall be secured by a first pledge of and lien on all of the

Housing Tax Revenues, and all of the moneys on deposit in the Special Fund. In addition, the Bonds shall be secured by a first and exclusive pledge of and lien upon all of the moneys in the Debt Service Fund, the Interest Account, the Principal Account, the Sinking Account, the Redemption Account and the Reserve Account. Such pledges and liens shall be for the equal security of the Outstanding Bonds without preference or priority for series, issue, number, dated date, sale date, date of execution or date of delivery. Except for the Housing Tax Revenues and such moneys, no funds or properties of the Agency shall be pledged to, or otherwise liable for, the payment of principal of or interest on the Bonds.

In consideration of the acceptance of the Bonds by those who shall hold the same from

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

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Special Fund

There is established in the Indentures a special fund to be known as the "Special Fund",

which shall be held by the Agency, and which shall be established by the Agency as a separate restricted fund within the Low and Moderate Income Housing Fund. Amounts deposited to and held by the Agency in the Special Fund shall be at all times separately accounted for by the Agency from all other funds or accounts in the Low and Moderate Income Housing Fund, and shall be used and applied solely as set forth in the Indentures and as required by any other Parity Debt Instrument. The Agency shall not pledge or encumber any amounts in the Special Fund except as set forth in the Indentures.

The Agency shall deposit all of the Housing Tax Revenues received in any Bond Year in

the Special Fund promptly upon receipt thereof by the Agency, until such time during such Bond Year as the amounts on deposit in the Special Fund equal the aggregate amounts required to be transferred to the Trustee for deposit into the Interest Account, the Principal Account and the Reserve Account in such Bond Year pursuant to the Indentures and for deposit in such Bond Year into the funds and accounts established with respect to Parity Debt, and as may be provided in any Parity Debt Instrument.

All Housing Tax Revenues received by the Agency during any Bond Year in excess of

the amount required to be deposited in the Special Fund during such Bond Year pursuant to the preceding paragraph and any Parity Debt Instrument shall be released from the pledge and lien under the Indentures for the security of the Bonds, shall be deposited in the unrestricted accounts of the Low and Moderate Income Housing Fund and may be applied by the Agency for any lawful purpose of the Low and Moderate Income Housing Fund. Prior to the payment in full of the principal of and interest on the Bonds, and the payment in full of all other amounts payable under the Indentures and under any Parity Debt Instrument, the Agency shall not have any beneficial right or interest in the moneys on deposit in the Special Fund, except as may be provided in the Indentures.

Deposit of Amounts by Trustee

Moneys in the Special Fund created under each of the Indentures shall be transferred by

the Agency to the Trustee in the following amounts, at the following times, and deposited by the Trustee in the following respective special accounts, which are established in each of the Debt Service Funds, and in the following order of priority:

(a) Interest Account. On or before the third (3rd) Business Day preceding each Interest Payment Date, the Agency shall withdraw from the Special Fund and transfer to the Trustee, for deposit in the Interest Accounts an amount which when added to the amount contained in the Interest Account on that date, will be equal to the aggregate amount of the interest becoming due and payable on the Outstanding Bonds on such Interest Payment Date. No such transfer and deposit need be made to the Interest Account if the amount contained therein is at least equal to the interest to become due on the next succeeding Interest Payment Date upon all of the Outstanding Bonds. All moneys in the Interest Account shall be used and withdrawn by the Trustee solely for the purpose of paying the interest on the Bonds as it shall become due and payable (including accrued interest on any Bonds redeemed prior to maturity pursuant to the Indentures).

(b) Principal Account. On or before the third (3rd) fifth Business Day preceding each

date on which principal of the Bonds becomes due and payable at maturity, the Agency shall

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withdraw from the Special Fund and transfer to the Trustee for deposit in the Principal Account an amount which, when added to the amount then contained in the Principal Account, will be equal to the principal becoming due and payable on the Outstanding Serial Bonds and maturing Term Bonds. All moneys in the Principal Account shall be used and withdrawn by the Trustee solely for the purpose of paying the principal of the Serial Bonds and maturing Term Bonds as it shall become due and payable. For purposes of this provision, Accreted Value and Conversion Value will be deemed to constitute principal.

(c) Sinking Account. No later than the third (3rd) Business Day preceding each

October 1 on which any Outstanding Term Bonds, including those issued as Parity Debt pursuant to a Supplemental Indenture, are subject to mandatory sinking account redemption, or otherwise for purchases of Term Bonds, the Agency shall withdraw from the Special Fund and transfer to the Trustee for deposit in the Sinking Account an amount which, when added to the amount then contained in the Sinking Account, will be equal to the aggregate principal amount of the Term Bonds required to be redeemed pursuant to mandatory sinking account redemption on such October 1. All moneys on deposit in the Sinking Account shall be used and withdrawn by the Trustee for the sole purpose of paying the principal of the Term Bonds as it shall become due and payable upon redemption or the purchase thereof.

(d) Reserve Account. In the event that the amount on deposit in the Reserve

Account at the time of the valuation becomes less than the Reserve Requirement, the Trustee shall promptly notify the Agency of such fact. Promptly upon receipt of any such notice, the Agency shall transfer to the Trustee an amount of available Housing Tax Revenues sufficient to maintain the Reserve Requirement on deposit in the Reserve Account. Amounts in the Reserve Account shall be used and withdrawn by the Trustee solely for the purpose of making transfers to the Interest Account and the Principal Account, in such order of priority, on any date which the principal of or interest on the Bonds becomes due and payable under the Indentures, in the event of any deficiency at any time in any of such accounts, or at any time for the retirement of all the Bonds then Outstanding. So long as no Event of Default shall have occurred and be continuing, any amount in the Reserve Account in excess of the Reserve Requirement preceding each Interest Payment Date shall be withdrawn from the Reserve Account by the Trustee and deposited in the Interest Account on or before the Interest Payment Date.

The Agency shall have the right at any time to release funds from the Reserve Account,

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

At least fifteen (15) days prior to the expiration of any Qualified Reserve Account Credit

Instrument, the Agency shall be obligated either (i) to replace such Qualified Reserve Account Credit Instrument with a new Qualified Reserve Account Credit Instrument, or (ii) to deposit or cause to be deposited with the Trustee an amount of funds such that the amount on deposit in

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the Reserve Account is equal to the Reserve Requirement (without taking into account such expiring Qualified Reserve Fund Credit Instrument). In the event that the Agency shall fail to take action as specified in clause (i) or (ii) of the preceding sentence, the Trustee shall, prior to the expiration thereof, draw upon the Qualified Reserve Account Credit Instrument in full and deposit the proceeds of such draw in the Reserve Account.

Amounts on deposit in the 2011 Reserve Subaccount shall be available to pay debt

service only on the 2011 Series A Bonds, the 2011 Series A-T Bonds, and any other Parity Debt hereafter issued that the Agency elects to be secured by the 2011 Reserve Subaccount. Amounts on deposit in the 2011 Reserve Subaccount are not available to pay debt service on the 2004 Series A Bonds, the 2004 Series A-T Bonds, the 2005 Series A Bonds, the 2010 Series A Bonds or the 2010 Series A-T Bonds, and are not pledged to the payment thereof.

Pursuant to the Indenture, in the event of a draw on amounts on deposit in the 2011

Reserve Subaccount to pay debt service on the 2011 Bonds, such draw shall be replenished from Tax Revenues on a proportionate basis with the draws on other subaccounts within the Reserve Account based on the respective Reserve Requirements with respect to each such subaccount without regard to whether a particular subaccount contained cash or a Qualified Reserve Account Credit Instrument that was drawn upon.

Issuance of Parity Debt

In addition to the Bonds, the 2004 Series A Bonds, the 2004 Series A-T Bonds, the 2005 Series A Bonds, the 2010 Series A Bonds, the 2010 Series A-T Bonds, the 2011 Series A Bonds and the 2011 Series A-T Bonds, the Agency may issue or incur Parity Debt in such principal amount as shall be determined by the Agency, pursuant to a Parity Debt Instrument adopted or entered into by the Agency. The Agency may issue or incur such Parity Debt subject to the following specific conditions precedent:

(a) The Agency shall be in compliance with all covenants set forth in the

Indentures and all Parity Debt Instruments. (b) The Housing Tax Revenues for each succeeding Fiscal Year, based on

the most recent assessed valuation of property in the Project Area as evidenced in written documentation from an appropriate official of the County or a written report of an Independent Redevelopment Consultant, plus any Additional Revenues, shall be at least equal to one hundred and twenty percent (120%) (one hundred twenty five percent (125%) for so long as any of the 2005 Series A Bonds remain outstanding) of Annual Debt Service on the 2004 Series A Bonds, the 2004 Series A-T Bonds, the 2005 Series A Bonds, the 2010 Series A Bonds, the 2010 Series A-T Bonds, the 2011 Series A Bonds, the 2011 Series A-T Bonds and any additional Parity Debt which will be outstanding immediately following the issuance of such Parity Debt for each applicable succeeding Bond Year; provided that in determining the amount of Tax Revenues for any future Fiscal Year, if any single property owner owns property within the Project Area with an assessed value totaling more than six and one-half percent (6.5%) of the total assessed value in the Project Area, the Agency shall disregard the assessed value in excess of six and one-half percent (6.5%) of the total assessed value in determining the Tax Revenues.

(c) The Agency shall deliver to the Trustee a Certificate of the Agency

certifying, and an opinion of Bond Counsel stating that the conditions precedent to the

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issuance of such Parity Debt set forth in the foregoing subsections (a) and (b) above have been satisfied.

Issuance of Subordinate Debt

In addition to the Bonds and any Parity Debt, from time to time the Agency may issue or incur additional Subordinate Debt in such principal amount as shall be determined by the Agency, provided that the issuance of such Subordinate Debt shall not cause the Agency to exceed any applicable Plan Limitations. Covenants of the Agency

Punctual Payment. The Agency shall punctually pay or cause to be paid the principal

and interest to become due in respect of all the Bonds together with the premium thereon, if any, in strict conformity with the terms of the Bonds and of the Indentures.

Limitation on Superior Debt. The Agency has covenanted that, so long as the Bonds

remain unpaid, the Agency shall not issue any bonds or other obligations, enter into any agreement or otherwise incur any loans, advances or indebtedness, which is in any case secured by a lien on all or any part of the Housing Tax Revenues which is superior to the lien established under the Indentures for the security of the Bonds. Nothing in the Indentures is intended or shall be construed in any way to prohibit or impose any limitations upon the issuance or incurrence by the Agency of Parity Debt or Subordinate Debt, other than as expressly provided in the Indentures.

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

Books and Accounts; Financial Statements. The Agency will keep, or cause to be kept,

proper books of record and accounts, separate from all other records and accounts of the Agency and the County, in which complete and correct entries shall be made of all transactions relating to the Redevelopment Project, the Housing Tax Revenues, the Special Fund and the Low and Moderate Income Housing Fund. Such books of record and accounts shall at all times during business hours be subject, upon prior written request, to the reasonable inspection of the Agency, the Trustee and the Owners of any Bonds then Outstanding, or their representatives authorized in writing. The Trustee shall have no duty to review such books of record and account.

The Agency will cause to be prepared and sent to the Trustee annually, within one

hundred and eighty (180) days after the close of each Fiscal Year so long as any of the Bonds are Outstanding, complete audited financial statements with respect to such Fiscal Year showing the Housing Tax Revenues, all disbursements from the Special Fund and the Low and Moderate Income Housing Fund and the financial condition of the Redevelopment Project, including the Low and Moderate Income Housing Fund, as of the end of such Fiscal Year. The Agency will furnish a copy of such statements, upon reasonable request, to any Bond Owner. The Trustee shall have no duty to review such statements.

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Protection of Security and Rights of Owners. The Agency will preserve and protect the security of the Bonds and the rights of the Owners. From and after the Closing Date, the Bonds shall be incontestable by the Agency.

Payments of Taxes and Other Charges. The Agency will pay and discharge, or cause to

be paid and discharged, all taxes, service charges, assessments and other governmental charges which may hereafter be lawfully imposed upon the Agency or the properties then owned by the Agency in the Project Area, or upon the revenues therefrom when the same shall become due. Nothing contained in the Indentures shall require the Agency to make any such payment so long as the Agency in good faith shall contest the validity of said taxes, assessments or charges. The Agency will duly observe and conform with all valid requirements of any governmental authority relative to the Redevelopment Project or any part thereof.

Disposition of Property. The Agency will not participate in the disposition of any land or

real property in the Project Area which will result in such property becoming exempt from taxation because of public ownership or use or otherwise (except property dedicated for public right-of-way) if such disposition, when taken together with other such dispositions, would either (a) aggregate more than 10% of the land area in the Project Area, (b) aggregate more than 10% of the assessed valuation of the property in the Project Area, or (c) cause the amount of Housing Tax Revenues to be received in the succeeding Fiscal Year to fall below 120% of Maximum Annual Debt Service.

Continuing Disclosure. The Agency has covenanted and agreed that it will comply with

and carry out all of the provisions of the Continuing Disclosure Certificate. Notwithstanding any other provision of the Indentures, failure of the Agency to comply with the Continuing Disclosure Certificate shall not be considered an Event of Default; however, the Trustee may (and at the request of any Participating Underwriter or the holders of at least 25% aggregate principal amount of Outstanding Bonds, shall) (but only to the extent the Trustee has been tendered funds in an amount satisfactory to it or it has been otherwise indemnified to its reasonable satisfaction from and against any loss, liability, cost or expense, including without limitation, fees and expense of its counsel and agents and additional fees and charges of the Trustee) or any holder or beneficial owner of the Bonds may, take such actions as may be necessary and appropriate to compel performance, including seeking mandate or specific performance by court order.

Maintenance of Housing Tax Revenues. The Agency shall comply with all requirements of the Redevelopment Law to insure the allocation and payment to it of the Housing Tax Revenues, including without limitation the timely filing of any necessary statements of indebtedness with appropriate officials of the County and, in the case of amounts payable by the State, appropriate officials of the State.

Redevelopment Plan Limitations. The Agency shall manage its fiscal affairs in a manner

which ensures that it will have sufficient Housing Tax Revenues available under the Plan Limitations in the amounts and at the times required to enable the Agency to pay the principal of and interest and premium (if any) on the Bonds and on any Parity Debt when due.

Additionally, the Agency has covenanted that it will annually review, no later than

December 1 of each year, the total amount of Housing Tax Revenues remaining available to be received by the Agency under the Plan Limitations, as well as future cumulative Annual Debt Service, any obligations of the Agency payable from tax increment revenues that are senior to the Bonds, and payments on obligations that are subordinate to the Bonds. If, based on such review, the allocation of Housing Tax Revenues to the Agency in any of the next three

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succeeding Fiscal Years will cause an amount equal to ninety-five (95%) of the amount of Housing Tax Revenues remaining under the Plan Limitations to fall below the sum of (i) remaining cumulative Annual Debt Service, (ii) any obligations of the Agency payable from Housing Tax Revenues that are senior to the Bonds, and (iii) payments on obligations that are subordinate to the Bonds, the Agency shall either (1) defease Bonds or Parity Debt by depositing an amount of Housing Tax Revenues equal to the amount that is required to ensure continuing compliance with the preceding paragraph in a defeasance escrow to be held by the Trustee and to be pledged solely to the payment of debt service on the Bonds or Parity Debt, which escrow shall be invested in Defeasance Obligations and used for the payment of interest on and principal of and redemption premiums, if any, on the Bonds or Parity Debt or (2) adopt a plan approved by an Independent Redevelopment Consultant which demonstrates the Agency's continuing ability to pay debt service on the Bonds and Parity Debt. In determining the amount to be deposited in escrow with the Trustee, the Agency may consider actual interest earnings on the amounts so deposited. In the event that the Agency elects to adopt a plan approved by an Independent Redevelopment Consultant, the Agency shall provide a copy of such plan to the Moody’s and S&P.

Tax Covenants of the Agency

Maintenance of Tax Exemption. The Agency shall take all actions necessary to assure the exclusion of interest on the 2011 Series A Bonds from the gross income of the Owners of the 2011 Series A 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 2011 Series A Bonds.

Federal Guarantee Prohibition. 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 2011 Series A Bonds to be "federally guaranteed" within the meaning of section 149(b) of the Code.

Rebate Requirement. The Agency shall take any and all actions necessary to assure

compliance with section 148(f) of the Code, relating to the rebate of excess investment earnings, if any, to the federal government, to the extent that such section is applicable to the 2011 Series A Bonds.

No Arbitrage. The Agency shall not take, or permit or suffer to be taken by the Trustee or

otherwise, any action with respect to the proceeds of the 2011 Series A 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 2011 Series A Bonds would have caused the 2011 Series A Bonds to be "arbitrage bonds" within the meaning of section 148 of the Code.

Maintenance of Tax-Exemption. The Agency shall take all actions necessary to assure

the exclusion of interest on the 2011 Series A Bonds from the gross income of the owners of the 2011 Series A 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 2011 Series A Bonds.

Private Activity Bond Limitation. The Agency shall assure that the proceeds of the 2011

Series A Bonds are not so used as to cause the 2011 Series A 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.

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Qualification of 2011 Series A Bonds as Hedge Bonds.

Qualified Investments. Beginning on the date of the issuance of the 2011 Series A Bonds, and at all times prior to the final maturity date of the 2011 Series A Bonds, not less than 95% of the Net Proceeds of the 2011 Series A Bonds will be invested in Qualified Investments (as defined below). For these purposes, amounts derived from the disposition or redemption of Qualified Investments and held pending reinvestment or redemption of 2011 Series A Bonds for a period of not more than 30 days will be treated as Qualified Investments.

Recordkeeping and Monitoring of 2011 Series A Tax Allocation Bond Proceeds

Account.

Information Regarding Qualified Investments. The Agency hereby covenants that it will record or cause to be recorded with respect to each Qualified Investment the following information:

(i) purchase date, (ii) purchase price, (iii) information establishing the fair market value of such Qualified

Investment, (iv) face amount, (v) coupon rate, (vi) periodicity of interest payments, (vii) disposition price, and (viii) disposition date. Investment in Qualified Non-AMT Mutual Funds. The Agency covenants

that, with respect to each investment of Net Proceeds of the 2011 Series A Bonds in a Qualified Non-AMT Mutual Fund (as defined below), in addition to recording the information set forth above, it will retain a copy of each IRS information reporting form and account statement provided to it by such Qualified Non-AMT Mutual Fund. In the event any such reporting form or other document received by the Agency indicates that less than 97% of the income to the Agency derived from such Qualified Non-AMT Mutual Fund in any three-month period is derived from Non-AMT Bonds, the Agency will, within five business days after receipt of such notice, dispose of any investment in such Qualified Non-AMT Mutual Fund to the extent such investment is allocable to Net Proceeds of the 2011 Series A Bonds.

Quarterly Monitoring of Qualified Investments. The Agency further

covenants that it will monitor the investment of the Net Proceeds of the 2011 Series A Bonds not less frequently than at the close of every three-month period during which any proceeds of the 2011 Series A Bonds are invested in Qualified Investments.

Retention of Records. The Agency hereby covenants that it will retain the

records referred to above, including each IRS information reporting form referred to above, with its books and records with respect to the 2011 Series A Bonds until six years following the last date that any obligation comprising the 2011 Series A Bonds is retired.

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Arbitrage Investment Restrictions. Proceeds of the 2011 Series A Bonds and the

amounts on deposit in the aforementioned funds and accounts may be invested as follows:

(i) Proceeds derived from the sale of the 2011 Series A Bonds to be

applied to pay Costs of Issuance that are not expended on the date of issuance of the 2011 Series A Bonds and those Net Proceeds of the 2011 Series A Bonds that are to be deposited into the 2011 Series A Tax Allocation Proceeds Account will be invested in Qualified Investments to the extent required by this Section 5.16(c) until such amounts are expended to pay Costs of Issuance or expended to pay costs of eligible projects.

(ii) Amounts in the 2011 Series A Costs of Issuance Fund that are not

expended on the date of issuance of the 2011 Series A Bonds will be invested in Qualified Investments until such amounts are expended or transferred to the 2011 Series A Tax Allocation Proceeds Account.

"Qualified Investments" shall mean (A) obligations the interest on which is

excludable from gross income for federal income tax purposes under Section 103(a) of the Code and not treated as an item of tax preference under Section 57(a)(5)(C) of the Code ("Non-AMT Bonds"), and (B) stock in a regulated investment company to the extent that at least 95% of the income of such regulated investment company is interest that is excludable from gross income under Section 103 of the Code and not an item of tax preference under Section 57(a)(5)(C) of the Code (a "Qualified Non-AMT Mutual Fund"). A guaranteed investment contract or similar investment agreement (e.g., a forward supply contract, GIC, repo, etc.) does not constitute a Qualified Investment.

The Trustee shall not be responsible for monitoring the Agency’s compliance with

the provisions regarding Qualified Hedge Bonds. Deposit and Investment of Moneys in Funds

Moneys in the 2011 Series A Tax Allocation Bond Proceeds Account or the 2011 Series

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

Obligations purchased as an investment of moneys in any fund shall be deemed to be

part of such fund or account. Whenever in the Indentures any moneys are required to be transferred by the Agency to the Trustee, such transfer may be accomplished by transferring a like amount of Permitted Investments. All interest or gain derived from the investment of amounts in any of the funds or accounts held by the Trustee shall be retained in the respective fund or account from which such investment was made; provided, however, that (i) all interest or gain from the investment of amounts in the Reserve Account shall be deposited by the Trustee in the Interest Account to the extent not required to cause the balance in the Reserve Account

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to equal the Reserve Requirement, and (ii) so long as no Event of Default shall have occurred and be continuing, all interest or gain on investments of amounts in the Special Fund shall be released from the pledge of the Indentures and used by the Agency for any lawful purposes. For purposes of acquiring any investments, the Trustee may commingle funds held by it under the Indentures. The Trustee or an affiliate may act as principal or agent in the acquisition or disposition of any investment and may impose its customary charges therefor.

The Agency acknowledges that to the extent regulations of the Comptroller of the

Currency or other applicable regulatory entity grant Agency the right to receive brokerage confirmations of security transactions as they occur, the Agency specifically waives receipt of such confirmations to the extent permitted by law. The Trustee will furnish the Agency periodic cash transaction statements which include detail for all investment transactions made by the Trustee under the Indenture. Amendment Without Consent of Owners

The Indentures and the rights and obligations of the Agency and of the Owners may be

modified or amended at any time by a Supplemental Indenture which shall become binding upon adoption, without the consent of any Owners (except that no such consent shall be required for a Supplemental Indenture being executed for the purpose described in (c) below), to the extent permitted by law and only for any one or more of the following purposes-

(a) to add to the covenants and agreements of the Agency in the Indentures

contained, other covenants and agreements thereafter to be observed, or to limit or surrender any rights or powers in the Indentures reserved to or conferred upon the Agency; or

(b) to make such provisions for the purpose of curing any ambiguity, or of curing,

correcting or supplementing any defective provision contained in the Indentures, or in any other respect whatsoever as the Agency may deem necessary or desirable, provided under any circumstances that such modifications or amendments shall not, in the reasonable determination of the Agency, materially adversely affect the interests of the Owners; or

(c) to provide for the issuance of Parity Debt in accordance with the Indentures; or (d) to amend any provision of the Indentures relating to the requirements of or

compliance with the Tax Code, to any extent whatsoever but only if and to the extent such amendment will not adversely affect the exemption from federal income taxation of interest on any of the Series A Bonds, in the opinion of nationally recognized bond counsel.

Amendment With Consent of Owners

Except as described above, the Indentures and the rights and obligations of the Agency

and of the Owners may be modified or amended at any time by a Supplemental Indenture. No such modification or amendment shall (a) extend the maturity of or reduce the interest rate on any Bond or otherwise alter or impair the obligation of the Agency to pay the principal or interest at the time and place and at the rate and in the currency provided therein of any Bond without the express written consent of the Owner of such Bond, (b) reduce the percentage of Bonds required for the written consent to any such amendment or modification, or (c) without its written consent thereto, modify any of the rights or obligations of the Trustee.

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Effect of Supplemental Indenture From and after the time any Supplemental Indenture becomes effective pursuant to the

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

Events of Default and Acceleration of Maturities

The following events shall constitute Events of Default under the Indentures:

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

(b) Failure to pay any installment of interest on any Bonds when and as the

same shall become due and payable. (c) Failure by the Agency to observe and perform any of the other covenants,

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

(d) The Agency shall commence a voluntary case under Title 11 of the

United States Code or any substitute or successor statute. If an Event of Default has occurred and is continuing, the Trustee may, and if requested

in writing by the Owners of a majority in aggregate principal amount of the Bonds then Outstanding the Trustee shall, (a) declare the principal of the Bonds, together with the accrued interest thereon, to be due and payable immediately, and upon any such declaration the same shall become immediately due and payable, anything in the Indentures or in the Bonds to the contrary notwithstanding, and (b) upon being indemnified to is satisfaction, exercise any other remedies available to the Trustee and the Owners in law or at equity.

Immediately upon becoming aware of the occurrence of an Event of Default, the Trustee

shall give notice of such Event of Default to the Agency by telephone confirmed in writing. Such notice shall also state whether the principal of the Bonds shall have been declared to be or have immediately become due and payable. With respect to any Event of Default described in clauses (a) or (b) above the Trustee shall, and with respect to any Event of Default described in clause (c) above the Trustee in its sole discretion may, also give such notice to the Owners, which shall include the statement that interest on the Bonds shall cease to accrue from and after the date, if any, on which the Trustee shall have declared the Bonds to become due and payable pursuant to the preceding paragraph (but only to the extent that principal and any accrued, but unpaid, interest on the Bonds is actually paid on such date).

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This provision, however, is subject to the condition that if, at any time after the principal

of the Bonds shall have been so declared due and payable, and before any judgment or decree for the payment of the moneys due shall have been obtained or entered, the Agency shall deposit with the Trustee a sum sufficient to pay all principal on the Bonds matured prior to such declaration and all matured installments of interest (if any) upon all the Bonds, with interest on such overdue installments of principal and interest (to the extent permitted by law) at the net effective rate then borne by the Outstanding Bonds, and the fees and expenses of the Trustee, including any fees and expenses of its attorneys, and any and all other defaults known to the Trustee (other than in the payment of principal of and interest on the Bonds due and payable solely by reason of such declaration) shall have been made good or cured to the satisfaction of the Trustee or provision deemed by the Trustee to be adequate shall have been made therefor, then, and in every such case, the Owners of a majority in aggregate principal amount of the Bonds then Outstanding by written notice to the Agency and to the Trustee, may, on behalf of the Owners of all of the Bonds, rescind and annul such declaration and its consequences. However, no such rescission and annulment shall extend to or shall affect any subsequent default, or shall impair or exhaust any right or power consequent thereon.

Application of Funds Upon Acceleration

All of the Housing Tax Revenues and all sums in the funds and accounts established

and held by the Trustee under the Indentures upon the date of the declaration of acceleration as described above, and all sums thereafter received by the Trustee under the Indentures, shall be applied by the Trustee as follows and in the following order:

(a) To the payment of any fees, costs and expenses incurred by the Trustee

to protect the interests of the Owners of the Bonds; payment of the reasonable fees, costs and expenses of the Trustee (including reasonable fees and expenses of its counsel) incurred in and about the performance of its powers and duties under the Indentures and the payment of all reasonable fees, costs and expenses owing to the Trustee;

(b) To the payment of the whole amount then owing and unpaid upon the

Bonds for interest and principal with interest on such overdue amounts at the respective rates of interest borne by the Outstanding Bonds, and in case such moneys shall be insufficient to pay in full the whole amount so owing and unpaid upon the Bonds, then to the payment of such interest, principal and interest on overdue amounts without preference or priority among such interest, principal and interest on overdue amounts ratably to the aggregate of such interest, principal and interest on overdue amounts.

Power of Trustee to Control Proceedings In the event that the Trustee, upon the happening of an Event of Default, shall have

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

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of a majority in principal amount of the Outstanding Bonds under the Indentures opposing such discontinuance, withdrawal, compromise, settlement or other disposal of such litigation.

Limitation on Owner’s Right to Sue

No Owner of any Bond issued under the Indentures shall have the right to institute any

suit, action or proceeding at law or in equity, for any remedy under or upon the Indentures, unless (a) such Owner shall have previously given to the Trustee written notice of the occurrence of an Event of Default; (b) the Owners of a majority in aggregate principal amount of all the Bonds then Outstanding shall have made written request upon the Trustee to exercise the powers hereinbefore granted or to institute such action, suit or proceeding in its own name; (c) said Owners shall have tendered to the Trustee indemnity reasonably acceptable to the Trustee against the costs, expenses and liabilities to be incurred in compliance with such request; and (d) the Trustee shall have refused or omitted to comply with such request for a period of sixty (60) days after such written request shall have been received by, and said tender of indemnity shall have been made to, the Trustee.

Such notification, request, tender of indemnity and refusal or omission are declared, in

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

The right of any Owner of any Bond to receive payment of the principal of (and premium,

if any) and interest on such Bond as in the Indentures provided, shall not be impaired or affected without the written consent of such Owner, notwithstanding the foregoing provisions of the Indentures or any other provision of the Indentures.

Remedies Not Exclusive

No remedy in the Indentures conferred upon or reserved to the Owners is intended to be

exclusive of any other remedy. Every such remedy shall be cumulative and shall be in addition to every other remedy given under the Indentures or now or hereafter existing, at law or in equity or by statute or otherwise, and may be exercised without exhausting and without regard to any other remedy conferred by the Redevelopment Law or any other law.

Discharge of Indentures

If the Agency shall pay and discharge the entire indebtedness on all Bonds or any

portion thereof in any one or more of the following ways:

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

(b) by irrevocably depositing with the Trustee or another fiduciary, in trust, at

or before maturity, money which, together with the available amounts then on deposit in the funds and accounts established pursuant to the Indentures, in the opinion or report of an Independent Accountant is fully sufficient to pay such Bonds, including all principal and interest;

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

(d) by purchasing such Bonds prior to maturity and tendering such Bonds to

the Trustee for cancellation;

and, if such Bonds are to be redeemed prior to the maturity thereof, notice of such redemption shall have been given pursuant to the Indentures or provision satisfactory to the Trustee shall have been made for the giving of such notice, then, at the election of the Agency, and notwithstanding that any Bonds shall not have been surrendered for payment, the pledge of the Housing Tax Revenues and other funds provided for in the Indentures and all other obligations of the Trustee and the Agency under the shall cease and terminate with respect to all Outstanding Bonds or, if applicable, with respect to that portion of the Bonds which has been paid and discharged, except only (a) the covenants of the Agency under the Indentures with respect to the Tax Code, (b) the obligation of the Trustee to transfer and exchange Bonds under the Indentures, (c) the obligations of the Agency under the Indentures, and (d) the obligation of the Agency to pay or cause to be paid to the Owners, from the amounts so deposited with the Trustee, all sums due thereon and to pay the Trustee all fees, expenses and costs of the Trustee.

To accomplish defeasance the Agency shall cause to be delivered (i) a report of an

Independent Accountant’s verifying the sufficiency of the escrow established to pay the Bonds in full on the maturity or earlier redemption date ("Verification"), (ii) an escrow deposit Agreement, and (iii) an opinion of nationally recognized bond counsel to the effect that the Bonds are no longer "Outstanding" under the Indentures; each Verification and defeasance opinion shall be acceptable in form and substance, and addressed, to the Agency and the Trustee. Tax Covenants of the Agency in the Indenture Relating to the Series A Bonds

(a) Maintenance of Tax Exemption. The Agency shall take all actions necessary to

assure the exclusion of interest on the Series A Bonds from the gross income of the Owners of the Series A Bonds to the same extent as such interest is permitted to be excluded from gross income under the Tax Code as in effect on the date of issuance of the Series A Bonds.

(b) Federal Guarantee Prohibition. 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 A Bonds to be "federally guaranteed" within the meaning of section 149(b) of the Tax Code.

(c) Rebate Requirement. The Agency shall take any and all actions necessary to

assure compliance with section 148(f) of the Tax Code, relating to the rebate of excess investment earnings, if any, to the federal government, to the extent that such section is applicable to the Series A Bonds.

(d) No Arbitrage. The Agency shall not take, or permit or suffer to be taken by the

Trustee or otherwise, any action with respect to the proceeds of the Series A Bonds which, if such action had been reasonably expected to have been taken, or had been deliberately and

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intentionally taken, on the date of issuance of the Series A Bonds would have caused the Series A Bonds to be "arbitrage bonds" within the meaning of section 148 of the Tax Code.

(e) Maintenance of Tax-Exemption. The Agency shall take all actions necessary to

assure the exclusion of interest on the Series A Bonds from the gross income of the owners of the Series A Bonds to the same extent as such interest is permitted to be excluded from gross income under the Tax Code as in effect on the date of issuance of the Series A Bonds.

(f) Private Activity Bond Limitation. The Agency shall assure that the proceeds of

the Series A Bonds are not so used as to cause the Series A Bonds to satisfy the private business tests of section 141(b) of the Tax Code or the private loan financing test of section 141(c) of the Tax Code.

Bond Obligation

Whenever there is a need to determine the aggregate principal amount of Series A Bonds Outstanding, the principal amount of the Series A Bonds shall be the Bond Obligation with respect thereto.

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APPENDIX F

FORM OF CONTINUING DISCLOSURE CERTIFICATE

This Continuing Disclosure Certificate (the “Disclosure Certificate”) is executed and

delivered by the Redevelopment Agency for the County of Riverside (the “Agency”) in connection with the issuance by the Agency of its $14,093,027.60 Redevelopment Agency for the County of Riverside 2011 Tax Allocation Housing Bonds, Series A (the “Series A Bonds”) and its $14,095,000 Redevelopment Agency for the County of Riverside 2011 Taxable Tax Allocation Housing Bonds, Series A-T (the “Series A-T Bonds” and, together with the Series A Bonds, the “Bonds”). The Bonds are being issued pursuant to two separate Indentures of Trust, each dated as of December 1, 2004, as supplemented and amended (together, the “Indentures”), and each between the Agency and The Bank of New York Mellon Trust Company, N.A., as trustee (the “Trustee”). 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 Bonds and in order to assist the Participating Underwriters in complying with S.E.C. Rule 15c2-12(b)(5).

Section 2. Definitions. In addition to the definitions set forth in the Indentures, 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 six months after the end of the Agency’s

fiscal year (currently December 31 based on the Agency’s fiscal year end of June 30). “Beneficial Owner” shall mean any person which (a) has the power, directly or indirectly,

to vote or consent with respect to, or to dispose of ownership of, any Bonds (including persons holding Bonds through nominees, depositories or other intermediaries), or (b) is treated as the owner of any Bonds for federal income tax purposes.

“Dissemination Agent” shall mean the Agency 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 dated March 2, 2011, relating

to the Bonds.

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“Participating Underwriter” shall mean any of the original underwriters of the Bonds required to comply with the Rule in connection with offering the Bonds.

“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.

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 December 31, 2011, with the report for the 2010-11 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 Trustee 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) Audited Financial Statements of the Agency 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 such audited financial statements are not available by the time the Annual Report is required

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to be filed pursuant to Section 3(a), 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

prior to the annual filing deadline for the Annual Reports provided for in Section 3 above, 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 for the Bonds, as follows:

(i) information, updated to incorporate information with respect to the most recently ended Fiscal Year, of the type included in Table 6 of the Official Statement, “Historic Assessed Values, Tax Revenues and Housing Tax Revenues”, in Table 7 of the Official Statement, “Largest Property Tax Payers”, in Table 8 of the Official Statement, “Projected Housing Tax Revenues” in Table 9 of the Official Statement, “Projected Debt Service Coverage Schedule” and in Tables B-2, B-6, B-10, B-14 and B-18 regarding the Historic Assessed Valuation, Tax Increment Collected and Housing Tax Revenues for each Project Area;

(ii) description of any Parity Debt (date, amount, term, rating,

insurance) issued by the Agency in the Fiscal Year to which the Annual Report pertains and of the amount of all Agency debt outstanding and payable with Housing Tax Revenues;

(iii) any amendments to any Redevelopment Plan affecting the

receipt of Housing Tax Revenues; (iv) the results of the calculations required to be performed

pursuant to Section 5.10 of each of the Indentures; and (v) any change to the County’s policy with respect to the Teeter

Plan (as defined in the Official Statement) potentially affecting the Housing Tax Revenues, and, if any such change occurs, information regarding any property tax delinquencies relating to the top ten property taxpayers for the applicable fiscal year.

(c) In addition to any of the information expressly required to be provided

under this Disclosure Certificate, the Agency shall provide such further material 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.

(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.

(e) The Trustee shall have no responsibility for the content of the Annual

Report, or any part thereof.

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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 Listed Events with respect to the Bonds:

(1) Principal and interest payment delinquencies. (2) Non-payment related defaults, if material. (3) Unscheduled draws on debt service reserves reflecting financial

difficulties. (4) Unscheduled draws on credit enhancements reflecting financial

difficulties. (5) Substitution of credit or liquidity providers, or their failure to

perform. (6) Adverse tax opinions, the issuance by the Internal Revenue

Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status of the security, or other material events affecting the tax status of the security.

(7) Modifications to rights of security holders, if material. (8) Bond calls, if material, and tender offers. (9) Defeasances. (10) Release, substitution, or sale of property securing repayment of

the securities, if material. (11) Rating changes. (12) Bankruptcy, insolvency, receivership or similar event of the

Agency or other obligated person. (13) The consummation of a merger, consolidation, or acquisition

involving the Agency or an obligated person, or the sale of all or substantially all of the assets of the Agency or an obligated person (other than in the ordinary course of business), the entry into a definitive agreement to undertake such an action, or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material.

(14) Appointment of a successor or additional trustee or the change of

name of a trustee, if material.

(b) Whenever the Agency obtains knowledge of the occurrence of a Listed Event, the Agency shall, or shall cause the Dissemination Agent (if not the Agency) to, file a

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notice of such occurrence with the MSRB, in an electronic format as prescribed by the MSRB, in a timely manner not in excess of 10 business days after the occurrence of the Listed Event. 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.

(c) The Agency acknowledges that the events described in subparagraphs (a)(2),

(a)(7), (a)(8) (if the event is a bond call), (a)(10), (a)(13), and (a)(14) of this Section 5 contain the qualifier “if material.” The Agency shall cause a notice to be filed as set forth in paragraph (b) above with respect to any such event only to the extent that the Agency determines the event’s occurrence is material for purposes of U.S. federal securities law.

Section 6. Identifying Information for Filings with the MSRB. All documents provided to

the MSRB under the Disclosure Agreement 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 Bonds. If such termination occurs prior to the final maturity of the Bonds, the Agency shall give notice of such termination in the same manner as for a Listed Event under Section 5(c).

Section 8. Dissemination Agent. From time to time, the Agency may appoint or engage

a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Agreement, and may discharge any such Agent, with or without appointing a successor Dissemination Agent. If at any time there is not any other designated Dissemination Agent, the Trustee shall be the Dissemination Agent.

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 (provided however, no amendment increasing or affecting the obligations or duties of the Dissemination Agent shall be made without the consent of the Dissemination Agent):

(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 Bonds, or type of business conducted;

(b) the undertakings herein, as proposed to be amended or waived, would, in

the opinion of nationally recognized bond counsel, have complied with the requirements of the Rule at the time of the primary offering of the Bonds, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and

(c) the proposed amendment or waiver either (i) is approved by holders of

the Bonds in the manner provided in the Indentures for amendments to the Indentures with the consent of holders, or (ii) does not, in the opinion of nationally recognized bond counsel, materially impair the interests of the holders or beneficial owners of the 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

F-6

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 Participating Underwriter or any holder or beneficial owner of the 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 Indentures, 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 misconduct. The obligations of the Agency under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Bonds. The Trustee shall not be required to consent to any amendment which would impose any greater duties or risk of liability on the Trustee. No person shall have any right to commence any action against the Trustee seeking any remedy other than to compel specific performance of this Agreement. The Trustee shall not be liable under any circumstances for monetary damages to any person for any breach of this Disclosure Certificate.

Section 13. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit of

the Agency, the Trustee, the Dissemination Agent, the Participating Underwriters and holders

F-7

and beneficial owners from time to time of the Bonds, and shall create no rights in any other person or entity.

Section 14. Counterparts. This Disclosure Agreement may be executed in several

counterparts, each of which shall be regarded as an original, and all of which shall constitute one and the same instrument.

Date: March 8, 2011

REDEVELOPMENT AGENCY FOR THE COUNTY OF RIVERSIDE By:

Deputy Executive Director

F-8

EXHIBIT A

NOTICE OF FAILURE TO FILE ANNUAL REPORT

Name of Issuer: Redevelopment Agency for the County of Riverside Name of Bond Issue: $14,093,027.60 Redevelopment Agency for the County of

Riverside 2011 Tax Allocation Housing Bonds, Series A and $14,095,000 Redevelopment Agency for the County of Riverside 2011 Taxable Tax Allocation Housing Bonds, Series A-T

Date of Issuance: March 8, 2011 NOTICE IS HEREBY GIVEN that the Redevelopment Agency for the County of

Riverside (the “Agency”) has not provided an Annual Report with respect to the above-named Bonds as required by that certain Third Supplement to Indenture of Trust, dated as of March 1, 2011, between the Agency and The Bank of New York Mellon Trust Company, N.A., as trustee, as supplemented and amended and that certain Second Supplement to Indenture of Trust, dated as of March 1, 2011, between the Agency and The Bank of New York Mellon Trust Company, N.A., as trustee, as supplemented and amended. The Agency anticipates that the Annual Report will be filed by _____________.

Dated:

REDEVELOPMENT AGENCY FOR THE COUNTY OF RIVERSIDE By

cc: Trustee

G-1

APPENDIX G

FISCAL CONSULTANT REPORT

U r b a n A n a l y t i c s

F I S C A L C O N S U L T A N T R E P O R T

F O R T H E

R E D E V E L O P M E N T A G E N C Y F O R T H E C O U N T Y O F R I V E R S I D E

T A X A L L O C A T I O N H O U S I N G B O N D S

S E R I E S 2 0 1 1 A

F E B R U A R Y 1 7 , 2 0 1 1

February 17, 2011

F isca l Consul tant Report 1

I N T R O D U C T I O N

In connection with the issuance of the Redevelopment Agency for the County of Riverside Tax Allocation Housing Bonds Series 2011A (the Bonds), the Redevelopment Agency for the County of Riverside (the Agency) has retained Urban Analytics (the Consultant) as fiscal consultant to evaluate available tax revenue for the Agency's redevelopment project areas and provide a Fiscal Consultant Report (this Report).

The Report provides a review of various matters affecting the Agency’s receipt of tax increment in the Project Areas. The Project Areas that are the subject of this Report are the 1-1986 Project Area, the Jurupa Valley Project Area (JVPA), the Mid-County Project Area (MCPA), the Desert Communities Project Area (DCPA) and the Interstate 215 Project Area (I-215) (together, the "Pooled Project Areas"). Each of these five Project Areas is comprised of individual Sub-Areas that were merged for fiscal purposes. The County Controller, using different base year assessments, tabulates and reports tax increment from each of the constituent Sub-Areas separately. As described below, termination dates differ among the constituent Sub-Areas.

The Bonds are to be secured by housing set-aside funds paid into the Agency’s Low and Moderate Income Housing Fund (the Housing Fund). The Agency separately maintains a fund for redevelopment activities (the Redevelopment Fund) that is not included in this Report.

This Report is based in part on assessed valuation information provided by the County of Riverside (the County); on the County’s assessment and apportionment practices; on base year assessed valuation for the Pooled Project Areas as reported by the County; and on information regarding redevelopment plan terms provided by Agency staff. The analysis and projections included in this Report utilize the 2010-11 roll unless otherwise noted.

S U M M A R Y O F F I N D I N G S

The five Project Areas are expected to generate a combined total of $86,288,259 in gross property tax increment in 2010-11, including $17,257,652 in Housing Funds. The Agency’s ability to collect tax increment from the Sub-Areas comprising each individual Project Area will cease at varying times, the earliest date being December 23, 2037 and the last date being January 13, 2054.

T H E A L L O C A T I O N O F T A X I N C R E M E N T R E V E N U E T O T H E A G E N C Y

Under California redevelopment law, the County allocates to the Agency all locally assessed secured and unsecured property tax revenue and state-assessed utility revenue collected within the Project Areas above each Sub-Area’s base year assessed valuation. The County also apportions to the Agency a share of state-assessed unitary revenue as well as revenue from supplemental assessments.

Tax revenue deriving from the base year assessed valuation is distributed to all other taxing jurisdictions within the tax rate areas comprising the Pooled Project Areas. The distribution of the base year tax revenue is accomplished using the same AB8 apportionment factors used to allocate property tax revenue in non-redevelopment tax rate areas.

February 17, 2011


Tax revenue derived from assessed valuation in the Pooled Project Areas in excess of the base year assessed valuation is allocated to the Agency. The Auditor-Controller determines the amount of valuation in excess of the base year at the beginning of the fiscal year and distributes the resultant revenue in several installments during the year.

The Agency is allocated most of its revenue in January and May, with additional payments occurring in other months. Unitary roll revenue and revenue from supplemental assessments are paid in May.

The Auditor-Controller’s office applies any tax refunds paid to property owners in the Pooled Project Areas against the Agency’s allocation of supplemental assessment revenue. While it is the current practice of the Auditor-Controller not to apply refunds in excess of the supplemental revenue – thereby not affecting the tax increment revenue securing the bonds – it is possible that this practice could change in the future. Should the Auditor-Controller deduct tax refunds in amounts greater than the Agency’s supplemental assessment revenue, the Agency’s tax increment revenue could be reduced.

Unitary roll revenue is derived from utility properties including pipelines and other properties which are assessed on a countywide basis as a unit. Property taxes on these unitary assessments are distributed to jurisdictions in the County using an allocation formula similar to the regular apportionment mechanism. The Agency is projected to receive $545,991 in unitary revenue in 2010-11.

In 2000, The State Board of Equalization made significant changes in its assessment of utility-owned properties throughout the state resulting, in many cases, in substantial reductions of assessed valuation. The effect on the Agency was minor, as State Board-assessed properties at the time accounted for less than one-half of one percent of the Agency’s total assessed valuation. Non-unitary properties assessed by the State Board in the Pooled Project Areas are valued at $716 million in 2010-11.

The County utilizes a device known as the Teeter Plan (Section 4701 et seq. of the California Revenue and Taxation Code) to distribute secured property tax revenue to all jurisdictions, including the Agency, without regard to delinquencies. This mechanism allows the County to maintain a reserve fund to cover delinquencies and allocate revenue based on the original secured roll, retaining all delinquent tax payments and penalties. Consequently, the Agency is not affected by delinquent tax payments.

The County charges an administration fee to recover property tax administration costs from the Agency and other jurisdictions under the Revenue and Taxation Code, Section 95.3. The fee is based on County costs that vary from year to year so that the amount charged to each jurisdiction annually is variable. The administration fee amounts to approximately 2% of the tax increment revenue from the project area.

Tax increment calculations made in this Report use revenue from the secured, unsecured and utility rolls along with revenue from unitary assessments. Supplemental roll revenues are considered when calculating cumulative tax increment caps but are not otherwise included in tax increment calculations used in the Report. Roll corrections made through December 31, 2010 are incorporated in the tables used in this Report.

February 17, 2011


H O U S I N G S E T - A S I D E F U N D

California redevelopment law requires that agencies maintain a low-moderate income housing fund and deposit into the fund a minimum of twenty percent of gross tax increment revenues annually. This fund is maintained by the Agency. The Agency uses its 80% Redevelopment Fund, not the Housing Fund, to meet its non-housing program needs, its passthrough payment obligations and other payment obligations.

Redevelopment agencies are required to report to, and are monitored by, the state Department of Housing and Community Development to ensure that they do not build up an unexpended and unencumbered fund balance in their housing funds beyond a certain level. Agencies that exceed this level are found to have an ‘excess surplus’ of housing funds and must eliminate that condition or face penalties, including the inability to further collect tax increment until the condition is resolved. The Agency maintains an active housing program and reports that it does not have, nor does it expect to have, an excess surplus condition.

T H E R E D E V E L O P M E N T P L A N S

There are five Project Areas in the Pooled Project Areas: the 1-1986 Project Area (1-1986), the Jurupa Valley Project Area (JVPA), the Mid-County Project Area (MCPA), the Desert Communities Project Area (DCPA) and the Interstate 215 Project Area (I-215). Each Project Area is comprised of redevelopment project areas (Sub-Areas) established under separate ordinances and subsequently merged, for fiscal reasons, into the Project Area. Key information on each Sub-Area in the Project Areas is shown in Table 1. Additional information regarding land usage is shown in Tables 2-A through 2-F for each Project Area and for all Project Areas combined.

The 1-1986 Project Area includes the original 1-1986 Sub-Area established December 23, 1986 in the Murrietta and Home Gardens communities and two Sub-Areas added by amendment, one on July 20, 1999 in the Lakeland Village/Wildomar area and a second on December 21, 1999 in the El Cerrito/Temescal Canyon area.

The Jurupa Valley Project Area is comprised of the Mira Loma Sub-Area established December 23, 1986 and two Sub-Areas in the Mira Loma area added to that plan by amendment in December 1988 and December 1989. The Agency added a new Sub-Area to the JVPA in December 1987, located in the Glen Avon and Rubidoux communities, as well as a new Sub-Area in the Pedley and Rubidoux communities in July 1989. The JVPA was expanded with a 10,755-acre amended Sub-Area in the Jurupa Valley in July 1996.

The MCPA includes two Sub-Areas formed on December 23, 1986, one in the Garnet, Valle Vista, West Garnet and Winchester communities and another in the Homeland community. SubAreas were added in December 1987 in the North Hemet area and in July 1989 in the Cabazon area. A new Sub-Area was established in the Homeland/Green Acres area in May 1999, and area added by amendment to the Garnet/West Garnet Sub-Area in 2009. The 2010-11 assessed valuation from the Garnet/West Garnet Sub-Area is less than the base year valuation for the Sub-Area; consequently, the Agency receives no tax increment from this Sub-Area. Valuation from this Sub-Area is excluded from tables used in this Report.

February 17, 2011


In the DCPA, the initial Sub-Areas were established in December 1986, one to include Sub-Areas in East Blythe, Mecca, North Shore, Palm Desert, Ripley and Thermal communities and a second to include Sub-Areas in 1000 Palms. The Desert Center Sub-Area was added in December 1987, and in December 1988, the Agency established Sub-Areas for several general aviation airports including Bermuda Dunes, Blythe, Chiraco, Desert Center, Flabob, French Valley and Hemet Ryan. A new Sub-Area was created in the 1000 Palms community in July 1999, and additional Sub-Area was added by a 2009 amendment in the 1000 Palms, Oasis, Mecca and North Shore communities. The 2010-11 assessed valuation from the 1000 Palms/Oasis/Mecca/North Shore Sub-Area is less than the base year valuation for the Sub-Area; consequently, the Agency receives no tax increment from this Sub-Area. Valuation from this Sub-Area is excluded from tables used in this Report.

The Interstate 215 Project Area includes two Sub-Areas formed in December 1986, one in the Lakeview, Mead Valley and Romoland communities and another in the Highgrove area. Additional Sub-Areas were created in the Mead Valley community in December 1987, July 1989 and June 2002. A second Sub-Area was established in the Highgrove area in November 1998, while a new Sub-Area was created in the Romoland community in June 2002. Two new Sub-Areas were created in 2006 in the Lakeview/Nuevo and Sun Valley/Quail areas. The Highway 74 Communities Sub-Area was established in 2010 in the South Mead Valley, Wagon Wheel, Good Hope, Meadowbrook and Warm Springs communities; as it does not yet generate tax increment the Sub-Area is omitted from the tables used in this Report.

The twelve Sub-Areas added after January 1, 1994 are subject to the requirements of AB1290, which replaced tax increment caps and negotiated fiscal agreements with finite plan durations and statutory payments to taxing entities, among other requirements. All of the plans established before that date were subsequently brought into conformance with plan duration and other provisions of AB1290.

February 17, 2011


Table 1 Pooled Project Areas and Constituent Sub-Areas

Date of

Adoption

Termina-tion of Plan

Activities

Last Date to Repay Indebted-

ness

Tax Incre-ment Limit

(Millions) Acre-age

Vola-tility Ratio

2010-11 Incremen-

tal AV (Millions)

Project Area 1-1986 1-1986 (Murrieta) 12/23/86 12/23/27 12/23/37 $150 350 0.12 $180 1-1986 (Lakeland) 7/20/99 7/20/30 7/20/45 - 2,859 0.56 248 1-1986 (El Cerrito) 12/14/99 12/14/30 12/14/45 - 1,442 0.21 411 Jurupa Valley Project Area 2-1986 (Mira Loma) 12/23/86 12/23/27 12/23/37 275 1,955 0.05 385 2-1986 (Amend 1) 12/19/88 12/19/29 12/19/39 695 368 0.30 113 2-1986 (Amend 2) 12/19/89 12/19/30 12/19/40 995 1,533 0.10 396 2-1987 (Glen Avon) 12/22/87 12/22/28 12/22/38 495 635 0.32 127 2-1989 (Pedley) 7/5/89 7/5/30 7/5/40 535 1,354 0.15 372 2-1996 (Jurupa Amend) 7/9/96 7/9/27 7/9/42 - 10,755 0.32 1,846 Mid-County Project Area 3-1986 (Garnet) 12/23/86 12/23/27 12/23/37 500 980 0.21 151 3-1986 (Homeland) 12/23/86 12/23/27 12/23/37 55 122 0.36 8 3-1986 (Green Acres) 5/11/99 5/11/30 5/11/45 - 1,307 0.43 79 3-1987 (North Hemet) 12/22/87 12/22/28 12/22/38 40 40 0.49 2 3-1989 (Cabazon) 7/11/89 7/11/30 7/11/40 135 4,598 0.07 306 3-2009 (Garnet/W. Garnet) * 1/13/09 1/13/39 1/13/54 - 2,674 NA NA Desert Communities Project Area 4-1986 (East Blythe) 12/23/86 12/23/27 12/23/37 900 20,155 0.06 1,962 4-1986 (1000 Palms) 12/23/86 12/23/27 12/23/37 150 285 0.12 70 4-1999 (Amendment) 7/20/99 7/20/30 7/20/45 - 408 0.34 119 4-1987 (Desert Center) 12/22/87 12/22/28 12/22/38 140 376 0.52 4 4-1988 (Airports) 12/19/88 12/19/29 12/19/39 360 6,366 0.17 55 4-2009 (1000 Palms/Oasis) * 1/13/09 1/13/39 1/13/54 - 2,078 NA NA Interstate I-215 Corridor Project Area 5-1986 (Lakeview) 12/23/86 12/23/27 12/23/37 578 3,154 0.20 311 5-1986 (Highgrove) 12/23/86 12/23/27 12/23/37 50 275 0.34 51 5-1998 (Highgrove Amend) 11/24/98 11/24/29 11/24/44 - 843 0.25 396 5-2002 (Romo. Amend) 7/16/02 7/16/33 7/16/48 - 1,392 0.07 765 5-1987 (Mead V. 2) 12/15/87 12/15/28 12/15/38 120 141 0.13 14 5-1989 (Mead 2 Amend) 7/5/89 7/5/30 7/5/40 540 715 0.09 76 5-2002 (Mead Amend) 7/16/02 7/16/33 7/16/48 - 3,200 0.54 105 5-2006 (Lakeview/Nuevo) ** 5/16/06 5/16/36 5/16/51 - 2,821 5-2006 (Sun Valley/Quail) ** 5/2/06 5/2/36 5/2/51 - 3,289

0.97 22

5-2010 (Highway 74) * 5/4/10 5/4/40 5/4/55 - 5,865 NA NA * Sub-Areas do not currently contribute tax increment and are excluded from tables used in this Report.

** Sub-Areas are combined for reporting purposes.

Note: Sub-Area names have been shortened for presentation purposes. The Agency amended the pre-1994 plans on November 29, 1994 (Ordinance 750) to bring them into conformance with the requirements of AB1290. The plan limits shown above reflect the changes made through that ordinance. The Agency has extended by one year the Termination of Plan Activities and the Last Date to Repay Indebtedness as permitted under SB1045; dates reflect this extension. The Volatility Ratio is calculated by dividing the current year assessed valuation by the Base Year assessed valuation.

Source: the Agency

February 17, 2011


Table 2-A Land Use, Pooled Project Areas, 2010-11

Land Use Secured AV Pct of AV Number of

Parcels Pct of


Agricultural $ 208,335,231 2.1% 431 0.9% 5,443 7.6%

Commercial 1,481,170,204 14.9% 1,453 3.1% 2,664 3.7%

Industrial 2,389,351,513 24.0% 634 1.4% 2,509 3.5%

Single-Family Res 3,730,014,881 37.5% 21973 47.3% 6,347 8.8%

Condominiums 92,131,076 0.9% 553 1.2% 11 0.0%

Other Residential 821,336,682 8.3% 9,213 19.8% 23,006 32.1%

Vacant 1,162,328,670 11.7% 11,941 25.7% 15,161 21.1%

Other 52,979,977 0.5% 232 0.5% 16,577 23.1%

Total $9,937,648,234 100.0% 46,430 100.0% 71,718 100.0%

Table 2-B Land Use, 1-1986 Project Area, 2010-11


Parcels Pct of


Agricultural $ 1,039,292 0.1% 3 0.0% 40 0.9%

Commercial 255,550,347 22.1% 220 3.2% 331 7.1%

Industrial 205,548,856 17.8% 72 1.1% 280 6.0%

Single-Family Res 418,372,756 36.2% 3327 48.9% 738 15.9%

Condominiums 2,078,584 0.2% 12 0.2% 1 0.0%


Vacant 86,376,710 7.5% 1,156 17.0% 1,293 27.8%

Other 1,501,200 0.1% 7 0.1% 5 0.1%

Total $1,154,768,854 100.0% 6,802 100.0% 4,651 100.0%

Table 2-C Land Use, JVPA Project Area, 2010-11


Parcels Pct of


Agricultural $ 6,707,964 0.2% 12 0.1% 20 0.1%

Commercial 567,020,213 14.4% 565 4.5% 355 2.1%

Industrial 1,620,959,663 41.1% 259 2.1% 679 4.1%

Single-Family Res 1,081,165,890 27.4% 8441 67.1% 1,082 6.5%

Condominiums 77,733,460 2.0% 316 2.5% 3 0.0%


Vacant 391,429,403 9.9% 1,633 13.0% 1,125 6.8%

Other 7,102,550 0.2% 12 0.1% 12 0.1%

Total $3,945,860,913 100.0% 12,572 100.0% 16,600 100.0%

February 17, 2011


Table 2-D Land Use, MCPA Project Area, 2010-11


Parcels Pct of Parcels Acres Pct of Acres

Commercial

$290,071,719 48.4% 157 2.9% 314 4.5%

Industrial 32,769,358 5.5% 26 0.5% 588 8.4%

Single-Family Res 90,759,739 15.2% 1026 19.1% 383 5.4%

Condominiums 6,230,371 1.0% 94 1.7% 2 0.0%


Vacant 74,764,458 12.5% 2,321 43.2% 4,037 57.3%

Other 179,722 0.0% 6 0.1% 18 0.3%

Total $599,074,182 100.0% 5,375 100.0% 7,047 100.0%

Table 2-E Land Use, DCPA Project Area, 2010-11


Parcels Pct of


Agricultural $ 193,357,691 8.3% 397 5.0% 5,071 18.4%

Commercial 197,094,071 8.4% 256 3.2% 1,192 4.3%

Industrial 132,407,984 5.7% 105 1.3% 166 0.6%

Single-Family Res 1,489,181,153 63.8% 3891 49.0% 588 2.1%

Condominiums - 0.0% 2 0.0% 0 0.0%

Other Residential 44,836,566 1.9% 514 6.5% 1,650 6.0%

Vacant 234,924,924 10.1% 2,579 32.5% 2,392 8.7%

Other 43,435,423 1.9% 197 2.5% 16,532 59.9%

Total $2,335,237,813 100.0% 7,941 100.0% 27,590 100.0%

Table 2-F Land Use, I-215 Project Area, 2010-11


Parcels Pct of


Agricultural $ 7,230,285 0.4% 19 0.1% 312 2.0%

Commercial 171,433,853 9.0% 255 1.9% 472 3.0%

Industrial 397,665,653 20.9% 172 1.3% 796 5.0%

Single-Family Res 650,535,343 34.2% 5288 38.5% 3,555 22.5%

Condominiums 6,088,661 0.3% 129 0.9% 5 0.0%


Vacant 374,833,175 19.7% 4,252 30.9% 6,313 39.9%

Other 761,083 0.0% 10 0.1% 11 0.1%

Total $1,902,706,472 100.0% 13,740 100.0% 15,830 100.0%

Notes: Valuations include homeowner's exemptions, restored by the Auditor prior to the calculation of tax increment. Acreage is estimated using tax roll data and information provided by the Agency. Other Residential includes mobile homes and multi-family dwellings. Sub-areas not currently contributing tax increment are excluded.

Source: Riverside County Assessor; Urban Analytics

February 17, 2011


T a x I n c r e m e n t C a p s

Of the thirty-one Sub-Areas that comprise the Project Areas, eighteen were established prior to AB1290 in 1994. Each of these pre-1994 project areas has a separate tax increment cap, a limitation on the amount of tax increment the Agency can receive from the project area during the redevelopment plan’s duration (see Table 1).

These tax increment caps were incorporated into the projections used in preparing this report. Agency records of tax increment collected to date were used to establish the amount of tax increment collected in the Sub-Areas through 2009-10. Estimated annual tax increment is added to this figure to obtain a cumulative total of tax increment collected throughout the life of each redevelopment plan. Under the assumptions used in projecting tax increment for this report, none of the tax increment caps are reached prior to the plan limits on tax increment collection. Tax increment caps may be reached prior to the plan limits on tax increment collection in the 3-1989 (Cabazon) Sub-Area of MCPA with annual growth rates of 2% and higher; in the 4-1986 (East Blythe) Sub-Area of DCPA with annual growth rates of 3% and higher; in the 2-1986 (Mira Loma 2) Sub-Area of JVPA with annual growth rates of 4% and higher; in the 2-1986 (Mira Loma) Sub-Area of JVPA with annual growth rates of 6% and higher; and in the 1-1986 (Murietta) Sub-Area of 1-1986, the 5-1986 (Highgrove) Sub-Area of I-215 and the 2-1986 (Mira Loma 1) Sub-Area of JVPA with annual growth rates of 7% and higher.

Under ERAF-related legislation, the 2004-05 and 2005-06 ERAF payments may be deducted from the revenues that count against the tax increment caps in the pre-1994 project areas.

P l a n L i m i t s

The Agency cannot receive tax increment or repay indebtedness beyond certain dates, which differ among the Project Areas' constituent Sub-Areas (see Table 1). The Agency amended the pre-1994 plans on November 29, 1994 through Ordinance 750 to bring the plans into conformance with AB1290. Under that ordinance, all pre-1994 plans were assigned a time limit on redevelopment plan activities of forty years after the adoption date of the plan. Under redevelopment law, the Agency is permitted to collect tax increment to repay indebtedness for an additional ten years after the plan termination date. Thus, the pre-1994 plans permit the Agency to collect tax increment for fifty years from the adoption of the plan.

The Agency amended the pre-1994 plans to delete the limitations on incurring indebtedness by Ordinance 865, adopted on October 3, 2006. That amendment triggered statutory passthrough payments for taxing entities that did not already have contractual tax-sharing agreements. The new statutory passthrough payments begin in the fiscal year after the year in which the original limitation on incurring indebtedness would have taken effect, and are based on increases in tax increment over a base established in the year the original limitation would have taken effect.

Under the twelve plans adopted after January 1, 1994 the Agency may collect tax increment for a period of forty-five years from the adoption of each plan, as permitted under redevelopment law.

February 17, 2011


The Agency has extended the time limit on plan activities and on the repayment of indebtedness by one year in all Project Areas, as permitted under SB1045. This legislation was passed in conjunction with legislation requiring redevelopment agencies to contribute to ERAF in 2003-04.

Similar legislation, SB1096, accompanying legislation requiring redevelopment agencies to contribute to ERAF in 2004-05 and 2005-06, also allows redevelopment agencies to extend the effectiveness of the redevelopment plan for plans with 20 years or less remaining as of the last date of the fiscal year in which the ERAF payment is made. As the earliest termination date for the Project Areas' redevelopment plans, December 23, 2026, is over 20 years from July 31, 2006, the Project Areas' plans are not eligible for a plan extension under this legislation.

The earliest date on which tax increment may no longer be collected in a Sub-Area is December 23, 2037, for plans adopted on that date in 1986. Approximately thirty-six percent of the tax increment currently generated in all Project Areas is derived from the eight plans subject to the December 23, 2037 limit. The twenty-two plans adopted after December 23, 1986 have limits in various years, with the latest being January 13, 2054.

Under AB1290, redevelopment plans adopted after December 31, 1993 were required to include a final date for the establishment of debt. Plans adopted before January 1, 1994 may have their debt incurrence limits removed through a simple plan amendment; as noted above, the Agency adopted Ordinance 865 to remove the debt incurrence limit on pre-1994 plans. For the post-1993 plans, the earliest date beyond which the Agency can no longer establish debt in the Project Areas is November 24, 2018; the latest date is January 13, 2029. The Agency cannot establish or incur loans, advances or indebtedness after these dates, although debt established before then can be repaid beyond that date. There are exceptions to this limit with respect to the Low and Moderate Income Housing Fund.

The limits on the effectiveness of redevelopment plans in the Project Areas vary, with the first limit reached on December 23, 2027 and the last on January 13, 2039. The Agency cannot take actions regarding land use or other provisions in the Plan after those dates, although it can continue to collect tax increment and repay indebtedness.

F i s c a l A g r e e m e n t s

Under redevelopment law at the time of the Agency’s plan adoptions from 1986 through 1993, taxing jurisdictions that would experience a fiscal burden due to the existence of the redevelopment plan could enter into fiscal agreements with redevelopment agencies to alleviate that burden. Such agreements, known as Section 33401 fiscal, or pass-through, agreements, generally provide for redevelopment agencies to pay to a taxing entity some or all of that entity’s share of the tax increment received by the agency. Taxing entities could separately receive their share of the growth in valuation due to inflation, known as Section 33676 or the 2% payments.

The Agency reports that it has a uniform set of agreements with non-school taxing entities regarding payments under Section 33401. Under these agreements, the Agency passes through to the taxing entities 100% of the tax increment that the entities would otherwise receive. The County itself does not receive pass-through payments for the general fund or for county fire or library districts under these agreements.

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The Agency has a similarly uniform set of agreements with school jurisdictions. Under the school pass-through agreements, the school districts receive 29.62% of the tax increment that each district would normally receive. The Agency has no resolutions in effect with taxing entities under Section 33676.

All Section 33401 pass-through payments are calculated and made by the Auditor-Controller on the Agency’s behalf. In the twelve Sub-Areas adopted after January 1, 1994, the Agency itself makes pass-through payments to taxing entities using the statutory mechanism set out in AB1290.

Both statutory and contractual pass-through payments are paid by the Agency from the Redevelopment Fund and not from the Housing Fund.

The Agency has a number of Reimbursement Agreements, also known as Owner Participation Agreements (OPAs), relating to various development undertakings in the Project Areas. These OPAs are paid from the Redevelopment Fund and not from the Housing Fund.

L E G I S L A T I O N A N D C O U R T A C T I O N S

S t a t e B u d g e t

On January 10, 2011, California Governor Jerry Brown released a proposed budget that included a number of recommendations concerning redevelopment agencies, including the disestablishment of existing redevelopment agencies by July 1, 2011 with successor local agencies collecting the tax revenues that would otherwise have been allocated to redevelopment agencies to meet existing redevelopment agency debt service and other contractual obligations. In fiscal 2011-12, property tax revenue above that required for debt service and contractual obligations would be used to meet passthrough obligations and to fund certain state programs with a portion used to fund local government. Beginning in 2012-13, property tax revenue above that required for debt service and contractual obligations would be distributed to local government agencies in proportion to their share of the general property tax. No legislation has yet been proposed regarding this proposal.

E R A F L E G I S L A T I O N

As part of the 2008-09 budget package, the State passed AB1389 that required redevelopment agencies to contribute a portion of their revenue to schools through the Educational Revenue Augmentation Fund (ERAF) mechanism, thereby reducing the amount of State funding for schools. The AB1389 ERAF requirement was subsequently invalidated by the courts, and the State has determined it will not appeal that decision.

AB1389 also includes a requirement that redevelopment agencies annually report, by October 1 of each year, their prior-year passthrough payments to taxing entities for project areas adopted after January 1, 1994 and for older areas amended after that date to include additional territory. Agencies must obtain the concurrence of the county auditor-controller and of the State Controller’s Office with the report of prior-year passthrough payments by February 1 of the following year. Agencies that do not obtain such concurrence by that date, or that have unpaid prior-year passthrough obligations outstanding on that date, will have penalties imposed, including restrictions on their ability to issue new debt after February 1, restrictions on spending funds for purposes other than indebtedness incurred prior to February 1, limits on expenditures for operations, and a prohibition on adding new

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project areas or expanding existing areas. The Agency received concurrence with its AB1389 passthrough payment report for 2007-08 and 2008-09.

Legislation adopted during the 2008-09 State budget process (ABX4-26) and follow-up legislation (SB68) included a requirement that agencies make payments by May 10, 2010 and May 10, 2011 to a Supplemental ERAF account (SERAF). The Agency’s payments were $27.8 million for 2009-10 and $5.7 million for 2010-11. Agencies are required to report to the county auditor as to how they intend to fund their SERAF payment by the March 1 prior to the May 10 payment date. The Agency met its 2009-10 SERAF obligation through available redevelopment funds (not the Housing Fund), and expects to meet its 2010-11 SERAF obligation through the same source. On May 4, 2010, a state Superior Court upheld ABX4-26, and a request by the California Redevelopment Association for a stay on the SERAF payment due May 10, 2010 was denied by the Court. The California Redevelopment Association has appealed the decision; the Court of Appeals also denied a request for a stay on the May 10, 2010 SERAF payment. The Court of Appeals has not reached a decision on the May 10, 2010 or the May 10, 2011 SERAF payments.

Agencies that do not make their SERAF payments in either 2010-11 or 2011-12 are subject to sanctions including prohibitions on incurring additional debt and adding or expanding project areas, limitations on the encumbrance and expenditure of funds, and an increase in the percentage of tax increment required to be paid into the Housing Fund from 20% to 25% for the remaining life of the project areas. Agencies may borrow from their housing fund and apply those funds to the SERAF payment, provided that they repay those funds by June 30, 2015 (June 30, 2016 for the payment due May 10, 2011); agencies that do not repay housing funds by the specified dates are required to increase their contribution to the Housing Fund by 5% for each unmet repayment. As noted above, the Agency intends to fund its SERAF obligations through available funds and does not intend to borrow from the Housing Fund.

ABX4-26 authorized agencies making an SERAF payment to extend the life of their project areas. Agencies financing the SERAF payment through a joint powers authority may deduct the payments made to the joint powers authority from a project area’s tax increment cap; payments made from other sources do not apply against the cap. The projections used in this Report do not incorporate either the potential plan extension or any potential tax increment cap credits from the 2009-10 and 2010-11 SERAF payments.

Previous legislation related to the state budget has required redevelopment agencies to make payments to ERAF in the 1993-94, 2002-03, 2003-04, 2004-05 and 2005-06 fiscal years (a payment initially required for 2008-09 was invalidated by the courts).

AB2670, passed September 29, 2006 and taking effect with the 2007-08 fiscal year, removed certain utility properties from both the Pooled Project Areas' tax rate areas and from the base year valuation and placed them in a countywide tax rate area for distribution to districts other than redevelopment agencies. As the valuation was removed from both the current roll and the base year, the effect on the Agency is negligible.

A 2002 court decision in Santa Ana regarding statutory payments made to taxing entities under the pre-1994 Section 33676 of the Health and Safety Code found that school districts and community college districts that had failed to elect to receive payments under that section were entitled to collect them. Because the Agency has Section 33401 fiscal

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agreements in effect with all school and community college districts, the districts are not eligible for separate payments under Section 33676.

A court case regarding the proper method of reassessing properties once they received a temporary reduction in valuation (a Proposition 8 adjustment) was resolved on appeal in favor of the County of Orange. In that case, the assessor was found to have properly returned a property to its statutory base valuation adjusted for inflation once the Proposition 8 adjustment terminated. The assessment practice that was validated by the court is one used in Riverside County and most other counties in the state.

P R O P O S I T I O N 1 3 A D J U S T M E N T A N D 2 0 1 0 - 1 1 R O L L V A L U A T I O N S

Under Section 51 of the Revenue and Taxation Code, the annual increase in assessed valuation for real property is limited to the lesser of two percent or the October-to-October change in the California Consumer Price Index (CCPI) preceding the January 1 lien date. Since 1976-77, and prior to 2009-10, the CCPI has been above two percent in all but five years, with the lowest CCPI being one percent in 1983-84.

The CCPI applied to the 2010-11 assessment roll was 0.99763, representing a decrease of 0.237%. The State Board of Equalization has notified assessors that the CCPI to be applied to the 2011-12 assessment roll is 1.00753, an increase of 0.753%. The CCPI factor affects all properties that did not have a change in their assessed values through sale or new construction during the prior year, or which were not subject to reductions under Proposition 8.

T A X R A T E S

The tax rate applicable to redevelopment incremental assessed valuation includes the basic one percent levy. In addition, redevelopment agencies receive tax revenue from debt service override levies except those that are imposed to repay indebtedness approved by voters on or after January 1, 1989.

For the purposes of calculating the tax increment used in this report, only the one percent levy was used. Although the Agency receives some revenue from the pre-1989 debt service levies those levies are expected to diminish over time as the underlying debt is retired.

The Agency has no power to levy a property tax itself, has no control over the override levy, and may not receive tax revenue from any future levy for voter-approved indebtedness.

L A R G E S T P R O P E R T Y O W N E R S

The ten largest assessees in all Pooled Project Areas and in each of the Pooled Project Areas individually are shown in Tables 6-A through 6-F for 2010-11. Tables include the total valuations for the top twenty and top hundred property owners, and the total valuations for the area as a whole; area totals exclude homeowner’s exemptions. The percentage of total valuation accounted for by each owner is calculated by dividing the owner’s valuation into the total valuation for the Project Area. The Sub-Area location is shown for each owner.

The largest property owner in the Pooled Project Areas is the Inland Empire Energy Center, an 800 megawatt power plant located in the Romoland Sub-Area of the I-215 Project Area

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that came online in 2008. The facility is assessed at $709.4 million in 2010-11, accounting for 6.20% of the assessed value in the Pooled Project Areas. Valuation on this property increased from $459 million in 2008-09 due to construction.

Three of the largest property owners in the Pooled Project Areas are shopping centers. The Corona Crossings shopping center is owned by Castle and Cooke and located in the El Cerrito/Temescal Sub-Area of the 1-1986 Project Area; Eastvale Gateway is located in the Jurupa Valley Sub-Area of the JVPA Project Area; and the Desert Hills Premium Outlet, owned by Chelsea GCA Realty Partnership, is located in the Cabazon Sub-Area of the MCPA Project Area. Businesses leasing space in each of these shopping centers generate additional assessed valuation on the unsecured roll. A Costco store, located in the Mira Loma Sub-Area of the JVPA Project Area, is also one of the largest property owners. Assessed valuations on the Desert Hills and Costco properties have increased over the past four years; valuations on the Corona Crossings property decreased slightly (0.11%) in 2010-11 after three years of increases. The assessed valuation of the Eastvale Gateway property decreased from $111 million in 2008-09 to $103 million in 2009-10 and to $100.6 million in 2010-11, following increases in previous years.

AMB Institutional Alliance Fund, Teachers Insurance and Annuity Association, UPS Supply Chain Solutions and ProLogis own a number of industrial warehouse properties in the Mira Loma Sub-Area of the JVPA Project Area. TD Desert Development owns a golf course and residential development in La Quinta Sub-Area of the DCPA Project Area consisting of 258 parcels; as of the January 1, 2010 lien date, 70 were assessed as single-family residential properties with improvements, 9 as golf course properties and the remainder as undeveloped residential parcels.

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Table 3-A Top Ten Property Owners By Valuation, 2010-11

Pooled Project Areas

Property Owner Secured and Utility Unsecured Total Pct of Total Sub-Area

INLAND EMPIRE ENERGY CENTER, LLC 709,400,000 0 709,400,000 6.20% I-215 5-2002 (Romoland Amended Area)

CHELSEA GCA REALTY PARTNERSHIP 174,722,669 0 174,722,669 1.53% MCPA 3-1989 (Cabazon)

CASTLE & COOKE * 165,213,781 1,156,388 166,370,169 1.45% 1-1986 (El Cerrito/Temescal Canyon)

TEACHERS INSURANCE ANNUITY ASSN * 125,634,428 0 125,634,428 1.10% 2-1996 (Jurupa Valley Amendment)

T D DESERT DEV 103,996,303 0 103,996,303 0.91% DCPA 4-1986 (East Blythe, Mecca)

EASTVALE GATEWAY 100,585,729 0 100,585,729 0.88% 2-1996 (Jurupa Valley Amendment)

COSTCO WHOLESALE CORP * 96,675,783 1,047,966 97,723,749 0.85% 2-1996 (Jurupa Valley Amendment)

AMB INSTITUTIONAL ALLIANCE FUND III 93,509,570 0 93,509,570 0.82% 2-1996 (Jurupa Valley Amendment)

UPS SUPPLY CHAIN SOLUTIONS INC 85,923,793 0 85,923,793 0.75% 2-1996 (Jurupa Valley Amendment)

PROLOGIS CALIF I * 81,589,798 0 81,589,798 0.71% 2-1996 (Jurupa Valley Amendment)

Total, Top Ten: 1,737,251,854 2,204,354 1,739,456,208 15.20%

Total, Top Twenty: 2,196,012,861 2,209,704 2,198,222,565 19.21%

Total, Top Hundred: 3,412,030,654 210,914,507 3,622,945,161 31.66%

Totals for the Area: 10,654,225,860 789,198,743 11,443,424,603 100.00%

* Owner has one or more appeals pending.

Note: Assessed valuation figures include homeowner's exemptions. Sub-areas not currently contributing tax increment are excluded.

Source: Riverside County Office of the Assessor; Urban Analytics

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Table 3-B Top Ten Property Owners By Valuation, 2010-11

Project Area 1-1986


CASTLE & COOKE * 165,213,781 2,262,917 167,476,698 13.19% 1-1986 (El Cerrito/Temescal Canyon)

TRM MANUFACTURING 0 20,995,134 20,995,134 1.65% 1-1986 (Murrieta, Home Gardens)

ANAISA 19,068,866 0 19,068,866 1.50% 1-1986 (Murrieta, Home Gardens)

TARGET CORPORATION 17,538,890 0 17,538,890 1.38% 1-1986 (El Cerrito/Temescal Canyon)

FLEETWOOD ALUMINUM PRODUCTS INC * 15,426,975 0 15,426,975 1.22% 1-1986 (Murrieta, Home Gardens)

MCLD HOLDINGS LLC * 0 10,384,430 10,384,430 0.82% 1-1986 (El Cerrito/Temescal Canyon)

WILDROSE RIDGE 17 10,260,508 0 10,260,508 0.81% 1-1986 (El Cerrito/Temescal Canyon)

14 PROMENADE PARTNERSHIP L P 10,055,419 0 10,055,419 0.79% 1-1986 (Murrieta, Home Gardens)

TEMESCAL CANYON STORAGE CENTER 9,496,243 0 9,496,243 0.75% 1-1986 (El Cerrito/Temescal Canyon)

ROBERTSHAW CONTROLS CO LSE 9,156,594 0 9,156,594 0.72% 1-1986 (Murrieta, Home Gardens)

Total, Top Ten: 256,217,276 33,642,481 289,859,757 22.83%

Total, Top Twenty: 323,776,175 39,387,277 363,163,452 28.61%






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Table 3-C Top Ten Property Owners By Valuation, 2010-11

Project Area JVPA


TEACHERS INSURANCE ANNUITY ASSN * 125,634,428 0 125,634,428 2.91% 2-1996 (Jurupa Valley Amendment)

EASTVALE GATEWAY 100,585,729 0 100,585,729 2.33% 2-1996 (Jurupa Valley Amendment)

COSTCO WHOLESALE CORP * 96,675,783 0 96,675,783 2.24% 2-1996 (Jurupa Valley Amendment)

AMB INSTITUTIONAL ALLIANCE FUND III 93,509,570 1,047,966 94,557,536 2.19% 2-1996 (Jurupa Valley Amendment)

UPS SUPPLY CHAIN SOLUTIONS GEN SERV INC 85,923,793 0 85,923,793 1.99% 2-1996 (Jurupa Valley Amendment)

PROLOGIS CALIF I * 81,589,798 0 81,589,798 1.89% 2-1996 (Jurupa Valley Amendment)

METAL CONTAINER CORP 64,585,686 5,350 64,591,036 1.50% 2-1986 (Mira Loma Amendment 2)

ONTARIO WAREHOUSE 1 INC 48,795,201 0 48,795,201 1.13% 2-1986 (Mira Loma: Glen Avon & Pedley)

MIRA LOMA VINEYARDS LTD 47,536,146 0 47,536,146 1.10% 2-1996 (Jurupa Valley Amendment)

RIVERSIDE CEMENT CO * 46,563,791 0 46,563,791 1.08% 2-1996 (Jurupa Valley Amendment)

Total, Top Ten: 791,399,925 1,053,316 792,453,241 18.38%

Total, Top Twenty: 1,133,431,599 1,053,316 1,134,484,915 26.31%






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Table 3-D Top Ten Property Owners By Valuation, 2010-11

Project Area MCPA


CHELSEA GCA REALTY PARTNERSHIP 174,722,669 0 174,722,669 26.26% 3-1989 (Cabazon)

CABAZON CO STORES 12,062,970 0 12,062,970 1.81% 3-1989 (Cabazon)

R R M PROP LTD * 10,929,460 0 10,929,460 1.64% 3-1989 (Cabazon)

MORONGO BAND OF MISSION INDIANS 10,354,992 0 10,354,992 1.56% 3-1989 (Cabazon)

OSBORNE DEV CORP 9,962,173 68,688 10,030,861 1.51% 3-1986 (Homeland/Green Acres)

GARNET ENERGY CORP 748,885 8,957,985 9,706,870 1.46% 3-1986 (Garnet, Valle Vista, Winchester)

SOLARIUM CAPITAL * 9,341,402 0 9,341,402 1.40% 3-1986 (Garnet, Valle Vista, Winchester)

HEMET CHURCH OF THE NAZARENE 8,250,067 0 8,250,067 1.24% 3-1986 (Garnet, Valle Vista, Winchester

OAKTREE RIVERSIDE 8,063,023 0 8,063,023 1.21% 3-1986 (Garnet, Valle Vista, Winchester

ESSEX PALM SPRINGS I * 5,800,700 0 5,800,700 0.87% 3-1986 (Garnet, Valle Vista, Winchester

Total, Top Ten: 250,236,341 9,026,673 259,263,014 38.96%

Total, Top Twenty: 283,035,577 14,767,412 297,802,989 44.75%


Totals for the Area: 599,143,966 66,277,416 665,421,382 100.00%




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Table 3-E Top Ten Property Owners By Valuation, 2010-11

Project Area DCPA


T D DESERT DEV 103,996,303 0 103,996,303 4.30% 4-1986 (East Blythe, Mecca)

GRIFFIN RANCH * ** 40,944,546 0 40,944,546 1.69% 4-1986 (East Blythe, Mecca)

CORAL OPTION 1 39,280,517 0 39,280,517 1.63% 4-1986 (East Blythe, Mecca)

MISSION SOUTH ** 22,128,320 0 22,128,320 0.92% 4-1986 (East Blythe, Mecca)

DEUTSCH ENGINEERED DEVICES INC 0 17,595,342 17,595,342 0.73% 4-1988 (Airports)

FKC PALM DESERT PARCEL 1 14,386,491 0 14,386,491 0.60% 4-1986 (East Blythe, Mecca)

MSR RESORT GOLF COURSE 13,320,032 0 13,320,032 0.55% 4-1986 (East Blythe, Mecca)

COCOPAH NURSERIES INC 13,116,708 0 13,116,708 0.54% 4-1986 (East Blythe, Mecca)

KERRY INC 12,533,500 0 12,533,500 0.52% 4-1986 (East Blythe, Mecca)

RALPHS GROCERY INC * 11,103,203 0 11,103,203 0.46% 4-1986 (East Blythe, Mecca)

Total, Top Ten: 270,809,620 17,595,342 288,404,962 11.94%

Total, Top Twenty: 342,782,446 39,888,242 382,670,688 15.84%



* Owner has one or more appeals pending. ** Owners have not paid some or all of the property taxes due for 2008-09, 2009-10 and the payment due December 2011.



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Table 3-F Top Ten Property Owners By Valuation, 2010-11

Project Area I-215


INLAND EMPIRE ENERGY CENTER, LLC 709,400,000 0 709,400,000 25.51% 5-2002 (Romoland Amended Area)

MAJESTIC FREEWAY BUSINESS CENTER 51,940,644 0 51,940,644 1.87% 5-1986 (Lakeview, Mead Valley 1)

K & N ENGINEERING INC 2,802,419 31,324,400 34,126,819 1.23% 5-1998 (Highgrove Amended Area)

FR CAL HARVILL ROAD * 24,792,918 0 24,792,918 0.89% 5-1986 (Lakeview, Mead Valley 1)

CITRUS BUSINESS PARK 20,547,391 0 20,547,391 0.74% 5-1998 (Highgrove Amended Area)

OAKMONT RIVERSIDE HUNTER PARK 19,359,909 0 19,359,909 0.70% 5-1998 (Highgrove Amended Area)

PERRIS CITRUS AVENUE STORAGE * 18,323,787 0 18,323,787 0.66% 5-1986 (Lakeview, Mead Valley 1)

MDC HUNTER PARK * 17,997,781 0 17,997,781 0.65% 5-1998 (Highgrove Amended Area)

JOHNSON MACHINERY CO 9,931,400 5,234,886 15,166,286 0.55% 5-1998 (Highgrove Amended Area)

PACIFIC PARK INV 14,540,400 0 14,540,400 0.52% 5-1998 (Highgrove Amended Area)

Total, Top Ten: 889,636,649 36,559,286 926,195,935 33.31%

Total, Top Twenty: 1,008,503,701 36,559,286 1,045,062,987 37.58%






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H I S T O R I C A N D C U R R E N T A S S E S S E D V A L U A T I O N

Based on assessment roll data provided by the County Assessor and State Board of Equalization, the total assessed valuation in the Pooled Project Areas is $11.4 billion in 2010-11, after deducting all exemptions (see Table 4-A through F). This represents a decrease of 6.29% over 2009-10 total valuation, following a decrease of 2.54% in 2009-10 and gains in prior years of 8.97% (2008-09), 29.78% (2007-08) and 19.03% (2006-07)%.

The secured roll accounted for 87% of the total valuation in the Pooled Project Areas in 2010-11, with the unsecured roll comprising 7%. The non-unitary utility roll, at $716 million in assessed valuation, accounted for six percent of the total (the unitary utility roll is based on countywide assessments and is not reported by project area).

In the 1-1986 Project Area (Table 4-B), the roll decreased by 7.30% in 2010-11. The decline in valuation was principally due to Proposition 8 reductions on a substantial number of residential properties. The Project Area experienced a decrease of 4.73% in 2009-10 for similar reasons; growth ranged from 3.48% to 23.85% in prior years.

The Jurupa Valley Project Area (Table 4-C) decreased in valuation by 4.28% in 2010-11, a drop also attributable to Proposition 8 reductions in valuation on residential properties. Project area valuations decreased in 2009-10 by 3.73% after experiencing growth in the three prior years ranging from 7.37% to 16.14%.

The Mid-County Project Area (Table 4-D) experienced a decrease in valuation of 4.27% in 2010-11, following gains of between 3.71% and 14.25% in the previous four years. Decreases in valuation in the Project Area for 2010-11 included a $10.4 million roll correction on property owned by the Morongo Band of Mission Indians enrolled after the July roll was released, reducing the property from $20.7 million; the owner remains among the ten largest in the Project Area.

In the Desert Communities Project Area (Table 4-E), rates of growth over the past five years have ranged from 47.14% in 2006-07 to -9.45% in 2010-11. Approximately $80 million of the decrease in assessed valuation for 2010-11 in DCPA was attributable to sales of residential and vacant-land properties at prices below the assessed valuation; much of the remaining decrease was due to Proposition 8 reductions in valuation, primarily on residential properties. The base year valuation for the DCPA has decreased from $220.4 million in 2007-08 to $218.3 million in 2008-09 and to $217.6 million in 2010-11 corresponding to parcels in the La Quinta area that became publicly owned.

Assessed valuation in the Interstate I-215 area (Table 4-E) decreased by 6.50% in 2010-11 due largely to Proposition 8 reductions in valuation on residential properties. This follows gains ranging from 1.24% to 99.23% over the previous four years; the large gain in 2007-08 was principally due to tax increment from the newly-added Lakeview/Nuevo and Sun Valley/Quail Sub-Areas.

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Table 4-A Historical Assessed Valuations, Pooled Project Areas

Roll 2006-07 2007-08 2008-09 2009-10 2010-11 **

Secured

- Land 3,236,802,753 4,285,175,035 4,595,829,225 4,253,663,307 3,894,142,907

- Improvements 5,003,912,961 6,337,141,642 6,764,167,624 6,557,879,656 6,220,359,999


- Exemptions -184,216,917 -224,076,126 -215,151,251 -243,364,999 -254,926,858

Secured Total 8,118,318,171 10,471,069,536 11,217,784,977 10,647,355,186 9,937,648,234

Unsecured

- Land 420,559 298,648 258,265 98,547 1,300,011

- Improvements 294,989,193 338,846,469 381,732,795 415,475,664 416,844,631


- Exemptions -3,093,200 -3,188,850 -3,173,503 -362,991 -53,985

Unsecured Total 721,201,824 769,184,427 840,999,890 807,575,726 789,198,743

Utility

- Land 11,116,500 9,636,436 9,751,026 5,067,003 9,977,408

- Improvements 7,828,299 247,826,303 460,215,445 750,860,568 706,483,718



Utility Total 19,849,706 257,743,175 470,315,203 756,282,986 716,577,626

Totals: 8,859,369,701 11,497,997,138 12,529,100,070 12,211,213,898 11,443,424,603

Percent Change 19.03% 29.78% 8.97% -2.54% -6.29%

Plus: HOPTR AV 83,751,171 93,862,094 94,498,361 94,574,600 93,801,416

Less: Base AV -2,325,277,564 -2,965,817,951 -2,963,749,239 -2,963,749,239 -2,962,999,259

Incremental AV: 6,617,843,308 8,626,041,281 9,659,849,192 9,342,039,259 8,574,226,760

Incremental Revenue (1%) 66,178,433 86,260,413 96,598,492 93,420,393 85,742,268

Plus: Additional Revenue * 12,825,540 13,495,285 3,842,473 5,909,512 (N.A.)

Tax Increment Collected 79,003,973 99,755,698 100,440,965 99,329,905 (N.A.)

* Revenue from unitary and supplemental rolls, debt service levy, prior-year adjustments and other sources.

** Assessed valuation from the Amendment 2 Sub-Areas in DCPA and MCPA and the Highway 74 Community Sub-Area in I-215 are not included. The 2010-11 valuation from the Amendment 2 Sub-Areas was less than their respective base year assessed valuation; consequently there was no tax increment generated in either Sub-Area. The Agency will receive increment from these Sub-Areas once the valuation exceeds the base year valuation. The Highway 74 Sub-Area was newly-established and is not expected to generate tax increment until 2011-12.

Source: Urban Analytics; County of Riverside, the Agency

February 17, 2011


Table 4-B Historical Assessed Valuations, 1-1986 Project Area

Roll 2006-07 2007-08 2008-09 2009-10 2010-11

Secured

- Land 396,839,228 449,213,120 470,569,688 440,986,037 404,977,034

- Improvements 781,985,790 872,828,022 874,123,823 851,461,232 792,871,444

- Personal Property 746,301 508,679 843,510 1,969,711 1,806,359

- Exemptions (38,093,463) (39,303,053) (24,465,471) (44,889,751) (44,885,983)

Secured Total 1,141,477,856 1,283,246,768 1,321,071,550 1,249,527,229 1,154,768,854

Unsecured

- Land 143,285 132,707 114,744 32,587 113,044

- Improvements 57,758,082 58,002,188 68,428,212 71,876,348 68,127,970


- Exemptions (150,000) 0 0 (26,518) (50,000)

Unsecured Total 99,122,077 104,497,188 114,989,079 118,547,177 113,332,688

Utility

- Land 1,409,883 1,351,476 1,351,476 1,351,476 1,351,476

- Improvements 48,492 0 0 0 0

- Personal Property 25,303 0 0 0 0


Utility Total 1,483,678 1,351,476 1,351,476 1,351,476 1,351,476

Totals: 1,242,083,611 1,389,095,432 1,437,412,105 1,369,425,882 1,269,453,018

Percent Change 23.85% 11.84% 3.48% -4.73% -7.30%

Plus: HOPTR AV 17,399,352 16,971,170 16,772,192 17,164,418 16,537,188

Less: Base AV -446,601,282 -446,601,282 -446,601,282 -446,601,282 -446,601,282

Incremental AV: 812,881,681 959,465,320 1,007,583,015 939,989,018 839,388,924


Plus: Additional Revenue * 1,439,299 1,259,699 277,869 181,903 (N.A.)




February 17, 2011


Table 4-C Historical Assessed Valuations, JVPA Project Area

Roll 2006-07 2007-08 2008-09 2009-10 2010-11

Secured

- Land 1,237,366,711 1,459,606,278 1,593,491,722 1,533,212,329 1,454,004,414

- Improvements 2,252,971,112 2,581,971,711 2,754,356,517 2,618,113,112 2,528,154,838


- Exemptions (75,161,444) (77,724,311) (82,134,772) (82,634,045) (89,238,776)

Secured Total 3,456,245,145 4,013,213,596 4,315,298,684 4,128,184,218 3,945,860,913

Unsecured

- Land 124,255 37,285 37,351 29,278 497,117

- Improvements 134,091,866 159,848,014 183,733,105 198,332,967 193,431,166


- Exemptions 0 (23,389) 0 (220,000) 70,436

Unsecured Total 285,289,627 335,568,695 354,473,330 370,573,218 360,731,720

Utility

- Land 3,835,509 2,919,486 3,034,076 2,950,053 3,229,966

- Improvements 6,136,579 5,726,303 5,515,445 2,160,568 1,683,718



Utility Total 10,632,383 8,926,225 8,898,253 5,466,036 5,030,184

Totals: 3,752,167,155 4,357,708,516 4,678,670,267 4,504,223,472 4,311,622,817

Percent Change 15.27% 16.14% 7.37% -3.73% -4.28%

Plus: HOPTR AV 33,231,511 32,601,944 32,994,884 32,540,684 32,206,613

Less: Base AV -1,104,611,835 -1,104,611,835 -1,104,611,835 -1,104,611,835 -1,104,611,835

Incremental AV: 2,680,786,831 3,285,698,625 3,607,053,316 3,432,152,321 3,239,217,595


Plus: Additional Revenue * 4,154,132 4,571,252 1,161,593 1,763,270 (N.A.)




February 17, 2011


Table 4-D Historical Assessed Valuations, MCPA Project Area

Roll 2006-07 2007-08 2008-09 2009-10 2010-11 **

Secured

- Land 190,321,811 218,675,361 258,674,240 232,325,504 205,397,771

- Improvements 311,750,091 353,953,243 386,786,561 432,817,428 411,558,423

- Personal Property 210,977 686,349 706,585 783,529 4,801,162

- Exemptions (21,975,108) (22,129,994) (22,563,059) (22,677,606) (22,683,174)

Secured Total 480,307,771 551,184,959 623,604,327 643,248,855 599,074,182

Unsecured

- Land 9,538 234 1,060 1,081 0

- Improvements 21,879,516 23,947,989 25,956,300 29,865,277 44,145,808



Unsecured Total 40,629,797 43,423,745 46,595,709 51,800,275 66,277,416

Utility

- Land 115,723 69,784 69,784 69,784 69,784




Utility Total 169,957 69,784 69,784 69,784 69,784

Totals: 521,107,525 594,678,488 670,269,820 695,118,914 665,421,382

Percent Change 14.25% 14.12% 12.71% 3.71% -4.27%

Plus: HOPTR AV 7,788,654 7,679,868 7,487,872 7,493,086 7,490,424

Less: Base AV -127,023,198 -127,023,198 -127,023,198 -127,023,198 -127,023,198

Incremental AV: 401,872,981 475,335,158 550,734,494 575,588,802 545,888,608


Plus: Additional Revenue * 978,911 1,170,006 983,477 1,557,701 (N.A.)



** Assessed valuation from the new Amendment 2 Sub-Area is not included. The 2010-11 valuation from this Sub-Area was less than its base year assessed valuation; consequently there was no tax increment generated in the Sub-Area. The Agency will receive increment from the Sub-Area once the valuation exceeds the base year valuation.


February 17, 2011


Table 4-E Historical Assessed Valuations, DCPA Project Area

Roll 2006-07 2007-08 2008-09 2009-10 2010-11 **

Secured

- Land 935,969,620 1,212,580,592 1,205,018,066 1,085,886,143 951,432,873

- Improvements 986,217,428 1,257,564,754 1,466,393,850 1,503,521,173 1,397,030,702


- Exemptions (10,072,272) (11,111,917) (13,457,076) (20,556,935) (21,549,539)

Secured Total 1,920,963,596 2,467,939,534 2,666,735,804 2,577,276,338 2,335,237,813

Unsecured

- Land 57,454 48,879 42,875 32,309 489,787

- Improvements 20,073,895 27,671,650 25,273,329 30,570,018 29,142,210


- Exemptions (2,943,200) (3,165,461) (3,052,763) (4,273) 26,922

Unsecured Total 128,195,500 109,324,411 138,122,673 90,844,819 80,757,183

Utility

- Land 185,778 91,320 91,320 91,320 91,320




Utility Total 302,618 91,320 91,320 91,320 91,320

Totals: 2,049,461,714 2,577,355,265 2,804,949,797 2,668,212,477 2,416,086,316

Percent Change 47.14% 25.76% 8.83% -4.87% -9.45%

Plus: HOPTR AV 8,614,062 9,516,707 10,337,228 10,615,114 11,163,401

Less: Base AV -220,417,565 -220,417,565 -218,348,853 -218,348,853 -217,598,873

Incremental AV: 1,837,658,211 2,366,454,407 2,596,938,172 2,460,478,738 2,209,650,844


Plus: Additional Revenue * 4,929,622 3,585,461 495,705 1,944,852 (N.A.)



** Assessed valuation from the new Amendment 2 Sub-Area is not included. The 2010-11 valuation from this Sub-Area was less than its base year assessed valuation; consequently there was no tax increment generated in the Sub-Area. The Agency will receive increment from the Sub-Area once the valuation exceeds the base year valuation.


February 17, 2011


Table 4-F Historical Assessed Valuations, I-215 Project Area

Roll 2006-07 2007-08 2008-09 2009-10 2010-11 **

Secured

- Land 476,305,383 945,099,684 1,068,075,509 961,253,294 878,330,815

- Improvements 670,988,540 1,270,823,912 1,282,506,873 1,151,966,711 1,090,744,592


- Exemptions (38,914,630) (73,806,851) (72,530,873) (72,606,662) (76,569,386)

Secured Total 1,119,323,803 2,155,484,679 2,291,074,612 2,049,118,546 1,902,706,472

Unsecured

- Land 86,027 79,543 62,235 3,292 200,063

- Improvements 61,185,834 69,376,628 78,341,849 84,831,054 81,997,477


- Exemptions 0 0 (120,740) (112,200) (101,343)

Unsecured Total 167,964,823 176,370,388 186,819,099 175,810,237 168,099,736

Utility

- Land 5,569,607 5,204,370 5,204,370 604,370 5,234,862

- Improvements 1,533,234 242,100,000 454,700,000 748,700,000 704,800,000



Utility Total 7,261,070 247,304,370 459,904,370 749,304,370 710,034,862

Totals: 1,294,549,696 2,579,159,437 2,937,798,081 2,974,233,153 2,780,841,070

Percent Change 24.53% 99.23% 13.91% 1.24% -6.50%

Plus: HOPTR AV 16,717,592 27,092,405 26,906,185 26,761,298 26,403,790

Less: Base AV -426,623,684 -1,067,164,071 -1,067,164,071 -1,067,164,071 -1,067,164,071

Incremental AV: 884,643,604 1,539,087,771 1,897,540,195 1,933,830,380 1,740,080,789


Plus: Additional Revenue * 1,323,575 2,908,867 923,828 461,787 (N.A.)



** Assessed valuation from the new Highway 74 Communities Sub-Area is not included, as the Sub-Area did not generate tax increment in 2010-11.


February 17, 2011


P R O P O S I T I O N 8 A S S E S S M E N T R E D U C T I O N S

For the 2010-11 roll year, the assessor applied Proposition 8 reductions to 424,506 properties in the County in response to economic conditions. These temporary reductions are reviewed annually, and as market conditions improve, may be restored to their factored base year value. The reductions were primarily applied to residential properties. The total decrease in valuation countywide due to Proposition 8 was $44.3 billion, or approximately 22% of the 2009-10 countywide assessed valuation; of this amount, $34.8 million was for properties in incorporated areas and $9.5 million for properties in unincorporated areas. The total change in valuation countywide was -4.58% for 2010-11.

A S S E S S M E N T A P P E A L S

Appeals of assessments by property owners in the project area can result in reductions in assessed valuations that affect the Agency. However, these reductions do not currently affect the Agency’s allocation of regular tax increment revenue due to the Auditor-Controller’s practice of deducting taxpayer refunds from supplemental revenue payments to the Agency and not from the regular tax increment apportionment.

The Auditor-Controller’s office debits the Agency for tax refunds due to successful property tax appeals by offsetting the Agency’s allocation of supplemental roll revenue. The Auditor-Controller’s office has stated that current practice is to offset no more than the Agency’s supplemental revenue in any given period. Under this system the Agency’s regular tax increment revenue, pledged to the bonds, is not reduced by tax refunds. Should this practice change at some future date it would be possible for the Agency’s tax increment revenue and its Housing Fund payment to be affected.

The most common type of appeal filed is known as a Proposition 8 appeal, in which the property owner seeks a reduction in a particular year’s assessment based on the current economic value of the property (the assessor may also adjust valuations based on Proposition 8 criteria). Property owners may also appeal the Proposition 13 base assessment of a property. Although less frequently filed, such appeals, if successful, can permanently reduce the enrolled valuation of a property and consequently affect the Agency’s annual revenue.

Based on preliminary information provided by the County Assessor’s office, there are 1,772 appeals pending in the Pooled Project Areas, shown in Table 5-A. Appeals filings for 2010-11 have not yet been fully processed by the County; the number of pending appeals may be understated. A preliminary estimate of the amount of assessed valuation in dispute totals $925 million, primarily from filings for the 2009-10 roll year. The disputed amounts shown will be resolved in the appeals process and some portion of that disputed amount may be adjusted. To provide some indication of the proportion of valuation upheld on appeal, the Tables provide information on resolved appeals filed in previous years in the Pooled Project Areas. Overall, the 3,611 appeals settled in the Pooled Project Areas resulted in reductions in valuation of $239 million out of $5.0 billion in enrolled valuation, or around 5%. The overall retention rate has thus been about 95% of the original valuation.

February 17, 2011


An indicator of the potential exposure of Agency tax increment revenue to appeals – were the Auditor-Controller either to change its policy of deducting appeal-related tax refunds solely from supplemental revenue and not from regular tax increment – may be seen by applying the retention rate to the amount of valuation in dispute in pending appeals.

Applying the 95% retention rate for resolved appeals to the preliminary estimate of $925 million in currently-pending disputed valuation indicates a potential valuation reduction of $97 million or approximately $1 million in tax revenue. In the event that the full amount of the preliminary estimate of disputed valuation was granted for all pending appeals the potential reduction in tax revenue would be $9.3 million.

Pending appeals filed by the ten largest owners in the Pooled Project Areas, as identified to date by the County Assessor's office, include two filings by Castle and Cook, owners of the Corona Crossings retail center, in 2010-11 and 2009-10, with $2.4 million in disputed valuation in 2010-11; three filings by Costco in 2009-10 ($79 million in dispute) and one by Prologis in 2009-10 ($13 million in dispute). An appeal filed by AMB Institutional Alliance Fund on three properties in 2009-10 resulted in a reduction in assessed valuation for the 2009-10 roll of $22 million on two of the properties and no change in valution on the third property; the 2010-11 valuations for the two properties with successful appeals were reduced by approximately $22 million as well. Appeals filed in previous year by Chelsea GCA, Costco, Castle and Cook and Prologis were resolved with no change in valuation.

February 17, 2011


Table 5-A Assessment Appeals In Pooled Project Areas

Roll Year Status

Number of

Appeals County

Valuation

Applicant Opinion of

Value Valuation

After Appeal Retention

Rate * 2010-11 Resolved 19 16,144,790 9,538,631 16,000,396 99.1%

2010-11 Pending 559 762,131,456 425,817,751 TBD TBD

2009-10 Resolved 732 928,508,209 474,592,294 882,214,851 95.0%

2009-10 Pending 1,174 1,198,400,020 656,882,090 TBD TBD

2008-09 Resolved 1,504 1,319,950,490 835,102,562 ,292,018,290 97.9%

2008-09 Pending 30 81,536,525 39,466,873 TBD TBD

2007-08 Resolved 551 460,683,097 285,007,060 445,294,109 96.7%

2007-08 Pending 5 7,596,974 4,508,566 TBD TBD

2006-07 Resolved 140 428,146,969 233,202,947 415,485,113 97.0%

2006-07 Pending 3 11,775,065 7,247,622 TBD TBD

2005-06 Resolved 110 330,624,640 127,002,470 313,640,661 94.9%

2005-06 Pending 1 - 2,508,280 TBD TBD

2004-05 Resolved 119 441,479,101 191,636,455 441,492,399 100.0%

2004-05 Pending - - - - -

2003-04 Resolved 126 476,358,617 298,167,828 475,944,701 99.9%

2003-04 Pending - - - - -

2002-03 Resolved 159 397,420,896 138,685,841 301,126,424 75.8%

2002-03 Pending - - - - -

2001-02 Resolved 151 236,570,053 70,320,211 214,113,035 90.5%

2001-02 Pending - - - - -

All Years Resolved 3,611 5,035,886,862 2,663,256,299 4,797,329,979 95.3%

All Years Pending 1,772 2,061,440,040

1,136,431,182 TBD TBD

* Retention Rate is the proportion of value retained after resolution of an appeal. The rate is calculated by dividing the 'Valuation After Appeal' into the 'County Valuation'. For withdrawn and denied appeals, the 'Valuation After Appeal' is the original County valuation. Data obtained from the Riverside County Assessor's Assessment Appeals as of 2/3/2011. Figures for 2010-11 are preliminary and subject to change. Source: Riverside County Office of the Assessor; Urban Analytics

February 17, 2011


Table 5-B Assessment Appeals In Project Area 1-1986

Roll Year Status Number of Appeals County Valuation


Value Valuation After

Appeal Retention

Rate * 2010-11 Resolved 1 214,281 70,000 214,281 100.0%

2010-11 Pending 49 100,295,744 57,288,469 TBD TBD

2009-10 Resolved 74 43,859,503 20,341,432 42,495,223 96.9%

2009-10 Pending 39 37,558,247 20,927,423 TBD TBD

2008-09 Resolved 67 46,005,323 23,794,494 58,431,176 127.0%

2008-09 Pending 5 705,369 109,729 TBD TBD

2007-08 Resolved 12 21,531,431 14,544,851 21,513,531 99.9%

2007-08 Pending 1 487,539 48,754 TBD TBD

2006-07 Resolved 5 10,201,450 5,575,122 10,201,450 100.0%

2006-07 Pending - - - - -

2005-06 Resolved 6 8,959,708 3,927,511 8,959,708 100.0%

2005-06 Pending - - - - -

2004-05 Resolved 15 20,466,358 11,253,890 20,406,051 99.7%

2004-05 Pending - - - - -

2003-04 Resolved 12 14,622,813 5,245,664 14,592,213 99.8%

2003-04 Pending - - - - -

2002-03 Resolved 8 12,801,820 8,856,631 12,801,820 100.0%

2002-03 Pending - - - - -

2001-02 Resolved 5 5,004,235 2,393,061 5,004,235 100.0%

2001-02 Pending - - - - -

All Years Resolved 205 183,666,922 96,002,656 194,619,688 106.0%

All Years Pending 94 139,046,899 78,374,375 TBD TBD


February 17, 2011


Table 5-C Assessment Appeals In Project Area JVPA




Appeal Retention

Rate * 2010-11 Resolved 3 5,216,322 3,460,000 5,216,322 100.0%

2010-11 Pending 150 356,410,378 203,764,279 TBD TBD

2009-10 Resolved 155 491,104,937 249,657,791 457,914,564 93.2%

2009-10 Pending 182 705,629,463 395,063,112 TBD TBD

2008-09 Resolved 284 725,424,893 463,732,206 708,317,268 97.6%

2008-09 Pending 8 44,010,503 18,893,504 TBD TBD

2007-08 Resolved 106 297,306,398 186,948,137 290,431,922 97.7%

2007-08 Pending 2 5,777,446 1,717,000 TBD TBD

2006-07 Resolved 66 319,768,419 162,335,106 307,106,563 96.0%

2006-07 Pending 1 52,123 - TBD TBD

2005-06 Resolved 57 243,251,209 101,805,652 226,543,846 93.1%

2005-06 Pending - - - - -

2004-05 Resolved 51 334,977,033 132,660,925 334,948,033 100.0%

2004-05 Pending - - - - -

2003-04 Resolved 58 406,804,239 263,475,116 406,681,585 100.0%

2003-04 Pending - - - - -

2002-03 Resolved 78 346,070,241 106,768,239 249,953,596 72.2%

2002-03 Pending - - - - -

2001-02 Resolved 81 159,636,688 41,899,179 146,256,517 91.6%

2001-02 Pending - - - - -

All Years Resolved 939 3,329,560,379 1,712,742,351 3,133,370,216 94.1%

All Years Pending 343 1,111,879,913 619,437,895 TBD TBD


February 17, 2011


Table 5-D Assessment Appeals In Project Area MCPA




Appeal Retention

Rate * 2010-11 Resolved 4 868,207 318,500 723,813 83.4%

2010-11 Pending 42 22,274,174 14,164,024 TBD TBD

2009-10 Resolved 124 100,927,907 56,067,305 100,648,489 99.7%

2009-10 Pending 61 26,201,296 12,320,058 TBD TBD

2008-09 Resolved 317 121,534,051 82,041,451 120,742,803 99.4%

2008-09 Pending 2 1,706,628 325,863 TBD TBD

2007-08 Resolved 8 41,224,045 30,868,789 41,193,745 99.9%

2007-08 Pending 1 1,331,989 133,198 TBD TBD

2006-07 Resolved 3 39,494,356 31,250,000 39,494,356 100.0%

2006-07 Pending - - - - -

2005-06 Resolved 12 48,116,821 6,155,219 47,890,205 99.5%

2005-06 Pending - - - - -

2004-05 Resolved 13 48,382,437 33,126,535 48,485,042 100.2%

2004-05 Pending - - - - -

2003-04 Resolved 11 6,818,154 4,048,449 7,017,494 102.9%

2003-04 Pending - - - - -

2002-03 Resolved 12 2,974,595 1,847,974 2,974,595 100.0%

2002-03 Pending - - - - -

2001-02 Resolved 31 28,936,843 12,859,360 19,990,185 69.1%

2001-02 Pending - - - - -




February 17, 2011


Table 5-E Assessment Appeals In Project Area DCPA




Appeal Retention

Rate * 2010-11 Resolved 6 6,171,135 4,105,291 6,171,135 100.0%

2010-11 Pending 190 103,525,051 61,455,943 TBD TBD

2009-10 Resolved 150 130,634,310 80,219,162 128,387,192 98.3%

2009-10 Pending 717 219,188,680 125,580,326 TBD TBD

2008-09 Resolved 712 313,888,982 203,955,959 294,323,548 93.8%

2008-09 Pending 11 20,194,485 10,228,163 TBD TBD

2007-08 Resolved 418 88,527,479 43,673,213 80,093,567 90.5%

2007-08 Pending - - - - -

2006-07 Resolved 55 44,361,078 25,489,664 44,361,078 100.0%

2006-07 Pending - - - - -

2005-06 Resolved 30 30,051,147 14,960,680 30,001,147 99.8%

2005-06 Pending - - - - -

2004-05 Resolved 37 37,345,598 14,426,907 37,345,598 100.0%

2004-05 Pending - - - - -

2003-04 Resolved 36 39,230,832 20,923,054 38,815,996 98.9%

2003-04 Pending - - - - -

2002-03 Resolved 50 20,784,278 15,238,929 20,606,451 99.1%

2002-03 Pending - - - - -

2001-02 Resolved 18 21,909,897 8,296,078 21,876,838 99.9%

2001-02 Pending - - - - -

All Years Resolved 1,512 732,904,736 431,288,937 701,982,550 95.8%



February 17, 2011


Table 5-F Assessment Appeals In Project Area I-215




Appeal Retention

Rate * 2010-11 Resolved 5 3,674,845 1,584,840 3,674,845 100.0%

2010-11 Pending 128 179,626,109 89,145,036 TBD TBD

2009-10 Resolved 229 161,981,552 68,306,604 152,769,383 94.3%

2009-10 Pending 175 209,822,334 102,991,171 TBD TBD

2008-09 Resolved 124 113,097,241 61,578,452 110,203,495 97.4%

2008-09 Pending 4 14,919,540 9,909,614 TBD TBD

2007-08 Resolved 7 12,093,744 8,972,070 12,061,344 99.7%

2007-08 Pending 1 - 2,609,614 TBD TBD

2006-07 Resolved 11 14,321,666 8,553,055 14,321,666 100.0%

2006-07 Pending 2 11,722,942 7,247,622 TBD TBD

2005-06 Resolved 5 245,755 153,408 245,755 100.0%

2005-06 Pending 1 - 2,508,280 TBD TBD

2004-05 Resolved 3 307,675 168,198 307,675 100.0%

2004-05 Pending - - - - -

2003-04 Resolved 9 8,882,579 4,475,545 8,837,413 99.5%

2003-04 Pending - - - - -

2002-03 Resolved 11 14,789,962 5,974,068 14,789,962 100.0%

2002-03 Pending - - - - -

2001-02 Resolved 16 21,082,390 4,872,533 20,985,260 99.5%

2001-02 Pending - - - - -




February 17, 2011


T A X I N C R E M E N T R E V E N U E E S T I M A T E

The tax increment revenue estimates for 2010-11 are presented in Table 6 for each of the Pooled Project Areas and for the combined Pooled Project Areas. The Gross Tax Increment from the Project Area for 2010-11, shown below and including secured, unsecured and utility valuations, is $86,288,259. Included in this total is unitary revenue, estimated to be $545,991. The Agency’s payment to the Housing Fund is estimated to be $17,257,652 for 2010-11.

As discussed under "Proposition 13 and 2010-11 Roll Valuations", the Proposition 13 adjustment for 2010-11 was a negative 0.237%. In addition, some reductions in valuations occurred after the July roll was released, due to Proposition 8 reductions in valuation, exemptions applied to some properties and other adjustments made by the assessor. The Proposition 13 adjustment for the 2011-12 roll year is 0.753%. It is assumed that the continued weakness in the local economy will result in some further decreases in assessed valuation for 2011-12. The projected decrease in valuation for 2011-12, should it occur, would reduce the revenue paid into the Housing Fund to $16,825,213 in that year. These assumptions are incorporated into the projections in Table 8.

February 17, 2011


Table 6 Tax Increment Calculation, 2010-11

Pooled Project Areas

All Sub-Areas 1-1986 JVPA MCPA DCPA I-215

Secured AV 9,937,648,234 1,154,768,854 3,945,860,913 599,074,182 2,335,237,813 1,902,706,472

Unsecured AV 789,198,743 113,332,688 360,731,720 66,277,416 80,757,183 168,099,736

SBE-Assessed Utility AV 716,577,626 1,351,476 5,030,184 69,784 91,320 710,034,862

Total Assessed Valuation 11,443,424,603 1,269,453,018 4,311,622,817 665,421,382 2,416,086,316 2,780,841,070

Plus: Homeowner's Exempt AV 93,801,416 16,537,188 32,206,613 7,490,424 11,163,401 26,403,790

Less: Base Year AV -2,962,999,259 -446,601,282 -1,104,611,835 -127,023,198 -217,598,873 -1,067,164,071

Incremental AV 8,574,226,760 839,388,924 3,239,217,595 545,888,608 2,209,650,844 1,740,080,789

Tax Increment 85,742,268 8,393,889 32,392,176 5,458,886 22,096,508 17,400,808

Plus: Unitary Revenue 545,991 36,974 110,761 18,904 85,881 293,470

Gross Tax Increment 86,288,259 8,430,864 32,502,937 5,477,790 22,182,389 17,694,278

20% Housing Set-Aside 17,257,652 1,686,173 6,500,587 1,095,558 4,436,478 3,538,856

February 17, 2011


T A X I N C R E M E N T T H R O U G H P L A N T E R M I N A T I O N S

The Pooled Project Areas' tax increment is projected over the life of the constituent redevelopment plans in Table 8, with detail regarding the projected assessed valuation for 2010-11 and 2011-12 shown in Table 7. The projections incorporate a decrease in overall assessed valuation of 2.0% in 2011-12, based on a) continued weakness in the local economy as of the January 1, 2011 lien date for the 2011-12 roll and b) the application of a CCPI factor of 0.753% to real property in 2011-12.

In addition to reflecting assumptions regarding tax increment growth over the next two years, the table illustrates the manner in which the assessed valuation decreases as component Sub-Areas terminate. The tax increment shown from 2012-13 forward assumes a constant rate of growth of 2%, and does not include any further increases or decreases in assessed valuation from new development, property sales, changes in pre-1989 debt service levies, assessment appeals, Proposition 8 assessment adjustments or other causes. As discussed in previous sections of this Report, any of these factors may affect future tax increment receipts.

L I M I T A T I O N S O F R E P O R T

The calculation of assessed valuations and tax increment shown in this Report are based on information believed to be complete, current and reliable at the time of this Report. Projections of tax increment are based on reasonable assumptions and may not reflect actual future revenue received by the Agency. Information regarding the practices and methods used by the County in assessing and allocating property tax revenue has been obtained from County staff and analysis of County records, while information concerning the Project Area, redevelopment plans, amendments and passthrough agreements has been obtained through discussions with Agency staff and through review of the plan documents made available to the Consultant.

While the Consultant has made a reasonable effort to verify the accuracy of the figures and information presented in this Report and presumes that the information relied upon is correct, the Consultant makes no warranty as to its accuracy.

February 17, 2011


Table 7 2010-11 Actual and 2011-12 Projected Assessed Valuation, Pooled Project Areas

AV Change Factors All Sub-Areas 1-1986 JVPA MCPA DCPA I-215

2010-11 AV (July 2010) 11,635,571,732 1,291,880,464 4,400,739,297 681,840,164 2,443,349,984 2,817,761,823

Mid-Year Roll Corrections -98,345,713 -5,890,258 -56,909,867 -8,928,358 -16,100,267 -10,516,963

2010-11 AV (December 2010) 11,537,226,019 1,285,990,206 4,343,829,430 672,911,806 2,427,249,717 2,807,244,860

Projected 2011-12 AV:

Projected AV Change -230,744,520 -25,719,804 -86,876,589 -13,458,236 -48,544,994 -56,144,897

Projected 2011-12 AV 11,306,481,499 1,260,270,402 4,256,952,841 659,453,570 2,378,704,723 2,751,099,963

Pct Change -2.00% -2.00% -2.00% -2.00% -2.00% -2.00%

Note: Mid-Year Roll Corrections are valuation changes enrolled by the assessor after release of the July 2010 roll. Corrections may include Proposition 8 reductions, exemptions and other roll adjustments. 2011-12 assessed valuation is assumed to decrease by 2.0% from 2010-11.

Assessed valuations for MCPA and DCPA exclude two Sub-Areas

Source: County of Riverside, Urban Analytics

February 17, 2011


Table 8

Tax Increment Projections for the Pooled Project Areas

All Areas 1-1986 JVPA Fiscal Year

Gross Tax Increment

Housing Set-Aside

Gross Tax Increment

Housing Set-Aside

Gross Tax Increment

Housing Set-Aside

2010/11 86,288,259 17,257,652 8,430,864 1,686,173 32,502,937 6,500,587 2011/12 84,154,252 16,830,850 8,196,693 1,639,339 31,716,890 6,343,378 2012/13 86,245,579 17,249,116 8,426,180 1,685,236 32,487,216 6,497,443 2013/14 88,378,731 17,675,746 8,660,257 1,732,051 33,272,948 6,654,590 2014/15 90,554,547 18,110,909 8,899,015 1,779,803 34,074,396 6,814,879 2015/16 92,773,879 18,554,776 9,142,548 1,828,510 34,891,872 6,978,374 2016/17 95,037,598 19,007,520 9,390,952 1,878,190 35,725,697 7,145,139 2017/18 97,346,591 19,469,318 9,644,324 1,928,865 36,576,199 7,315,240 2018/19 99,701,765 19,940,353 9,902,764 1,980,553 37,443,711 7,488,742 2019/20 102,104,041 20,420,808 10,166,372 2,033,274 38,328,574 7,665,715 2020/21 104,554,363 20,910,873 10,435,252 2,087,050 39,231,133 7,846,227 2021/22 107,053,692 21,410,738 10,709,510 2,141,902 40,151,744 8,030,349 2022/23 109,603,007 21,920,601 10,989,253 2,197,851 41,090,767 8,218,153 2023/24 112,203,308 22,440,662 11,274,591 2,254,918 42,048,570 8,409,714 2024/25 114,855,616 22,971,123 11,565,636 2,313,127 43,025,530 8,605,106 2025/26 117,560,969 23,512,194 11,862,502 2,372,500 44,022,029 8,804,406 2026/27 120,320,430 24,064,086 12,165,305 2,433,061 45,038,457 9,007,691 2027/28 123,135,080 24,627,016 12,474,164 2,494,833 46,075,215 9,215,043 2028/29 126,006,022 25,201,204 12,789,200 2,557,840 47,132,707 9,426,541 2029/30 128,934,384 25,786,877 13,110,537 2,622,107 48,211,349 9,642,270 2030/31 131,921,313 26,384,263 13,438,301 2,687,660 49,311,564 9,862,313 2031/32 134,967,980 26,993,596 13,772,620 2,754,524 50,433,784 10,086,757 2032/33 138,075,581 27,615,116 14,113,625 2,822,725 51,578,448 10,315,690 2033/34 141,051,129 28,210,226 14,461,451 2,892,290 52,746,005 10,549,201 2034/35 139,880,907 27,976,181 14,816,233 2,963,247 53,936,913 10,787,383 2035/36 143,092,229 28,618,446 15,178,110 3,035,622 55,151,639 11,030,328 2036/37 146,367,778 29,273,556 15,547,225 3,109,445 56,390,660 11,278,132 2037/38 97,498,429 19,499,686 13,019,486 2,603,897 51,698,907 10,339,781 2038/39 97,024,445 19,404,889 13,347,141 2,669,428 50,430,448 10,086,090 2039/40 96,491,525 19,298,305 13,681,350 2,736,270 49,586,247 9,917,249 2040/41 84,295,218 16,859,044 14,022,242 2,804,448 37,528,553 7,505,711 2041/42 86,416,474 17,283,295 14,369,953 2,873,991 38,422,232 7,684,446 2042/43 49,246,372 9,849,274 14,724,618 2,944,924 0 0 2043/44 50,523,544 10,104,709 15,086,376 3,017,275 0 0 2044/45 44,137,259 8,827,452 15,455,369 3,091,074 0 0 2045/46 24,696,329 4,939,266 0 0 0 0 2046/47 25,389,394 5,077,879 0 0 0 0 2047/48 26,096,320 5,219,264 0 0 0 0 2048/49 7,346,819 1,469,364 0 0 0 0 2049/50 7,659,893 1,531,979 0 0 0 0 2050/51 7,979,229 1,595,846 0 0 0 0 2051/52 544,119 108,824 0 0 0 0 2052/53 595,915 119,183 0 0 0 0 2053/54 648,747 129,749 0 0 0 0 2054/55 0 0 0 0 0 0

Total 3,768,759,063 753,751,813 423,270,018 84,654,004 1,380,263,341 276,052,668

February 17, 2011


Table 8 continued Tax Increment Projections for the Pooled Project Areas

MCPA DCPA I-215 Fiscal Year

Gross Tax Increment

Housing Set-Aside

Gross Tax Increment

Housing Set-Aside

Gross Tax Increment

Housing Set-Aside

2010/11 5,477,790 1,095,558 22,182,389 4,436,478 17,694,278 3,538,856 2011/12 5,357,424 1,071,485 21,714,755 4,342,951 17,168,489 3,433,698 2012/13 5,475,383 1,095,077 22,173,037 4,434,607 17,683,763 3,536,753 2013/14 5,595,702 1,119,140 22,640,483 4,528,097 18,209,341 3,641,868 2014/15 5,718,426 1,143,685 23,117,279 4,623,456 18,745,431 3,749,086 2015/16 5,843,606 1,168,721 23,603,610 4,720,722 19,292,243 3,858,449 2016/17 5,971,289 1,194,258 24,099,669 4,819,934 19,849,992 3,969,998 2017/18 6,101,525 1,220,305 24,605,648 4,921,130 20,418,895 4,083,779 2018/19 6,234,367 1,246,873 25,121,747 5,024,349 20,999,176 4,199,835 2019/20 6,369,865 1,273,973 25,648,168 5,129,634 21,591,063 4,318,213 2020/21 6,508,073 1,301,615 26,185,117 5,237,023 22,194,788 4,438,958 2021/22 6,649,045 1,329,809 26,732,805 5,346,561 22,810,587 4,562,117 2022/23 6,792,837 1,358,567 27,291,447 5,458,289 23,438,702 4,687,740 2023/24 6,939,505 1,387,901 27,861,262 5,572,252 24,079,379 4,815,876 2024/25 7,089,106 1,417,821 28,442,474 5,688,495 24,732,870 4,946,574 2025/26 7,241,699 1,448,340 29,035,309 5,807,062 25,399,431 5,079,886 2026/27 7,397,343 1,479,469 29,640,001 5,928,000 26,079,323 5,215,865 2027/28 7,556,101 1,511,220 30,256,787 6,051,357 26,772,813 5,354,563 2028/29 7,718,034 1,543,607 30,885,909 6,177,182 27,480,172 5,496,034 2029/30 7,883,205 1,576,641 31,527,613 6,305,523 28,201,679 5,640,336 2030/31 8,051,680 1,610,336 32,182,151 6,436,430 28,937,616 5,787,523 2031/32 8,223,525 1,644,705 32,849,780 6,569,956 29,688,272 5,937,654 2032/33 8,398,806 1,679,761 33,530,762 6,706,152 30,453,941 6,090,788 2033/34 8,383,388 1,676,678 34,225,363 6,845,073 31,234,923 6,246,985 2034/35 4,162,380 832,476 34,933,856 6,986,771 32,031,525 6,406,305 2035/36 4,261,902 852,380 35,656,519 7,131,304 32,844,058 6,568,812 2036/37 4,363,414 872,683 36,393,636 7,278,727 33,672,843 6,734,569 2037/38 1,713,714 342,743 3,186,795 637,359 27,879,527 5,575,905 2038/39 1,717,000 343,400 3,162,872 632,574 28,366,984 5,673,397 2039/40 1,763,094 352,619 2,362,562 472,512 29,098,273 5,819,655 2040/41 1,810,108 362,022 2,456,393 491,279 28,477,920 5,695,584 2041/42 1,858,064 371,613 2,555,815 511,163 29,210,411 5,842,082 2042/43 1,906,978 381,396 2,657,226 531,445 29,957,551 5,991,510 2043/44 1,956,871 391,374 2,760,664 552,133 30,719,634 6,143,927 2044/45 2,007,761 401,552 2,866,171 573,234 23,807,958 4,761,592 2045/46 0 0 253,987 50,797 24,442,342 4,888,468 2046/47 0 0 299,981 59,996 25,089,414 5,017,883 2047/48 0 0 346,894 69,379 25,749,427 5,149,885 2048/49 0 0 394,745 78,949 6,952,074 1,390,415 2049/50 0 0 443,554 88,711 7,216,340 1,443,268 2050/51 0 0 493,338 98,668 7,485,891 1,497,178 2051/52 0 0 544,119 108,824 0 0 2052/53 0 0 595,915 119,183 0 0 2053/54 0 0 648,747 129,749 0 0 2054/55 0 0 0 0 0 0

Total 190,499,012 38,099,802 788,567,355 157,713,471 986,159,337 197,231,867

Note: 2010-11 valuations reflect roll corrections applied by the assessor through December 2010. Tables assume a decrease in assessed valuation in all project areas of -2.0% in 2011-12 and 2.00% growth from 2012-13 forward. Tax increment and housing fund revenue may increase or decrease at rates that differ from those shown. Decreases in assessed valuation in later years are due to the plan termination dates for the various Sub-Areas.

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APPENDIX H

BOOK-ENTRY ONLY BONDS

THE INFORMATION IN THIS SECTION CONCERNING DTC AND DTC’S BOOK-ENTRY ONLY FORM HAS BEEN OBTAINED FROM SOURCES THAT THE AGENCY BELIEVES TO BE RELIABLE, BUT THE AGENCY TAKES NO RESPONSIBILITY FOR THE ACCURACY OR COMPLETENESS THEREOF. THE BENEFICIAL OWNERS (AS HEREINAFTER DEFINED) SHOULD CONFIRM THE FOLLOWING INFORMATION WITH DTC OR THE DTC PARTICIPANTS.

The following description of the Depository Trust Company (“DTC”), 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 Agency nor the Trustee take any responsibility for the information contained

in this Section. 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) Bonds 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 “Bonds”). The Bonds will be issued as fully-registered securities registered in the name of Cede & Co. (DTC’s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered Security certificate will be issued for the Bonds, in the aggregate principal amount of such issue, and will be deposited with DTC.

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

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between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). DTC has 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 Bonds under the DTC system must be made by or through Direct

Participants, which will receive a credit for the Bonds on DTC’s records. The ownership interest of each actual purchaser of each Security (“Beneficial Owner”) is in turn to be recorded on the Direct and Indirect Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Bonds, except in the event that use of the book-entry system for the Bonds is discontinued.

4. To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC

are registered in the name of DTC’s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC’s records reflect only the identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers.

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 Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Bonds, such as redemptions, tenders, defaults, and proposed amendments to the Security documents. For example, Beneficial Owners of Bonds may wish to ascertain that the nominee holding the Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the 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 Bonds within an issue

are being redeemed, DTC’s practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed.

7. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with

respect to Bonds unless authorized by a Direct Participant in accordance with DTC’s MMI

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Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the Agency as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to whose accounts Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy).

8. Redemption proceeds, distributions, and dividend payments on the Bonds will be

made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit Direct Participants’ accounts upon DTC’s receipt of funds and corresponding detail information from the Agency 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 the Agency, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Agency 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. A Beneficial Owner shall give notice to elect to have its Bonds purchased or tendered,

through its Participant, to the Trustee, and shall effect delivery of such Bonds by causing the Direct Participant to transfer the Participant’s interest in the Bonds, on DTC’s records, to the Trustee. The requirement for physical delivery of Bonds in connection with an optional tender or a mandatory purchase will be deemed satisfied when the ownership rights in the Bonds are transferred by Direct Participants on DTC’s records and followed by a book-entry credit of tendered Bonds to the Trustee’s DTC account.

10. DTC may discontinue providing its services as depository with respect to the Bonds

at any time by giving reasonable notice to the Agency or Agent. Under such circumstances, in the event that a successor depository is not obtained, Security certificates are required to be printed and delivered.

11. The Agency may decide to discontinue use of the system of book-entry-only

transfers through DTC (or a successor securities depository). In that event, Security certificates will be printed and delivered to DTC.

12. The information in this section concerning DTC and DTC’s book-entry system has

been obtained from sources that the Agency believes to be reliable, but the Agency takes no responsibility for the accuracy thereof.

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APPENDIX I

TABLES OF ACCRETED VALUES

Mar 3, 2011 11:04 am Prepared by Stone & Youngberg LLC (Finance 6.019 2011 tax allocation bonds:2011) Page 9

BOND ACCRETED VALUE TABLE

Redevelopment Agency for the County of Riverside2011 Tax Allocation Housing Bonds, Series A

**FINAL PRICING NUMBERS**

Convertible Convertible ConvertibleCapital Capital Capital

Appreciation Appreciation AppreciationBonds 2026 Bonds 2031 Bonds 2041

Term Term TermDate 8% 8.25% 8.5%

03/08/2011 665,860.75 955,674.05 5,891,492.8004/01/2011 669,215.75 960,635.50 5,922,863.7510/01/2011 695,979.50 1,000,259.75 6,174,541.1004/01/2012 723,826.00 1,041,522.85 6,437,006.6510/01/2012 752,770.50 1,084,469.70 6,710,544.3004/01/2013 782,889.25 1,129,212.55 6,995,863.8010/01/2013 814,197.50 1,175,796.30 7,293,107.1004/01/2014 846,771.50 1,224,288.30 7,603,125.9010/01/2014 880,641.75 1,274,800.80 7,926,204.1004/01/2015 915,869.25 1,327,378.70 8,263,051.4510/01/2015 952,499.75 1,382,134.25 8,614,235.7504/01/2016 990,609.50 1,439,157.25 8,980,324.8010/01/2016 1,030,229.00 1,498,515.05 9,362,028.3504/01/2017 1,071,434.50 1,560,342.35 9,759,914.2010/01/2017 1,114,302.25 1,624,706.50 10,174,692.1004/01/2018 1,158,862.75 1,691,719.75 10,607,213.7510/01/2018 1,205,222.75 1,761,494.35 11,058,046.9504/01/2019 1,253,428.00 1,834,165.00 11,527,901.4510/01/2019 1,303,570.00 1,909,821.50 12,017,912.8504/01/2020 1,355,709.75 1,988,598.55 12,528,648.9510/01/2020 1,409,938.75 2,070,630.85 13,061,103.4004/01/2021 1,466,333.25 2,156,053.10 13,616,269.8510/01/2021 1,525,000.00 2,245,000.00 14,195,000.00