NEW ISSUE- BOOK ENTRY ONLY NON-RATED

Bank Qualified

In the opinion of Stradling Yucca Carlson & Rauth, a Professional Corporation, Bond Counsel, under existing statutes, regulations, rolings aild judicial decisions, and assuming certain representations and compliance with certain covenants and requirements described herein, interest on the Notes is excluded from gross tircome fOr federal income tax purposes and is not a specific item of tax preference fOr the purposes of calculating the federal alternative minimum tax imposed on individuals and corporations. In the fUrther opinion of Bond Counsel, interest on the Notes is exempt from State of California personal income taxes .. In addition, the dijference between the issue price of a Note (the first price at which a substantial amount of the Notes of a maturity are to be sold to the public) and the stated redemption price at maturity with respect to a Note constitutes original issue discount, and the amount of original issue discount that accnws to the owner of the Note is excludedfrom the gross income of such owner for federal income tax purposes, is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations, and is exempt from State of California personal income tax. See "TAXMA7TERS" herein.

Dated: Date of Delivery

$1,000,000 LINDSAY REDEVELOPMENT AGENCY

LINDSAY REDEVELOPMENT PROJECT NO_ ONE SUBORDINATE TAX ALLOCATION NOTES

ISSUE OF 2009

Interest Rate- 5.40%j Yield- 5.50%; Price- 99.571% (Original Issue Discount) CUSIPt No. 535536CA2

Due: October 1, 2014

The above-captioned Notes (the "Notes") are being issued by the Lindsay Redevelopment Agency (the "'Agency") pursuant to an Indenture of Trust, dated as of November 1, 2009 (the "Indenture") by and between the Agency and U.S. Bank National Association, as trustee (the "Trustee"). Proceeds of the Notes will be used to: (i) finance a portion of the costs of redevelopment activities of the Agency consisting of certain improvements; (ii) fund a reserve account; and (iii) pay costs of issuance of the Notes.

Interest on the Notes is payable on April I and October I of each year, commencing April 1, 2010. The Notes will be delivered in fully registered fonn, in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York ("DTC"). DTC will act as securities depository of the Notes. Individual purchases of the Notes may be made in book-entry fonn only, in denominations of $5,000 each or any integral multiple thereof. Purchasers will not receive certificates representing their interest in the Notes purchased. Principal and interest on the Notes will be paid directly to DTC by the Trustee. Upon its receipt of payments of principal and interest, DTC is in turn obligated to remit such principal and interest to DTC participants for subsequent disbursement to the beneficial owners of the Notes as described herein. See "THE NOTES-Book-Entry Only System" herein.

The Notes are subject to optional redemption prior to maturity as described herein. See "THE NOTES--Redemption" herein.

The Notes are payable from and secured by Pledged Revenues (as defined herein) to be derived from property in the Project Area. The Notes are being issued on a subordinate basis to the Agency's previously issued: (i) $4,700,000 Lindsay Redevelopment Agency, Lindsay Redevelopment Project No. One, Tax Allocation Refunding Bonds, Issue of 2005 (the "2005 Bonds"), the outstanding amount of which is $4,305,000; (ii) $7,880,000 Lindsay Redevelopment Agency, Lindsay Redevelopment Project No. One, Tax Allocation Bonds, Issue of 2007 (the '"2007 Borids"), the outstanding amount of which is $7,490,000) and (iii) $3,710,000 Lindsay Redevelopment Agency, Lindsay Redevelopment Project No. One, Tax Allocation Bonds, Issue of2008 (the "'2008 Bonds"), the outstanding amount of which is $3,480_,000. See ""SECURITY FOR THE NOTES" herein.

The Notes are being issued for sale to the-Lindsay Financing Authority (the "Authority"). The Authority will resell the Notes to the Underwriter.

THE NOTES ARE NOT A DEBT OF TilE CITY OF LINDSAY. THE STATE OF CALIFORNIA OR ANY OF ITS POLITICAL SUBDIVISIONS (EXCEPT THE AGENCY) AND NEITHER SAID CITY. SAID STATE OR ANY OF ITS POLITICAL SUBDIVISIONS (EXCEPT THE AGENCY) IS LIABLE THEREFOR. THE PRINCIPAL OF AND INTEREST ON THE NOTES ARE PAYABLE SOLELY FROM PLEDGED REVENUES FROM THE PROJECT AREA AS DEFINED HEREIN AND IN THE INDENTURE.

This cover page contains information for general reference only. It is not a complete summary of the security ur terms of the Notes. Investors should read the entire Official Statement to obtain information essential to the making of an informed investment decision. See the section of this Official Statement entitled "RrSK fACTORS" for a discussion of certain risk factors that should be considered, in addition to other matters set fortllherein, in evaluating the investment quality of the Notes.

The Notes are offered, when, as and if issued, subjec.:t to the approval of Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California, as Bond Counsel. Certain legal matters will be passed on for the Agency by Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California, as Disclosure Counsel. It is anticipated that the Notes will be available for delivery to DTC in New York, New York on or about November 24, 2009.

Dated: November 17,2009

t CUSIP® is a registered trademark of the American Bankers Association. Copyright© 1999-2009 Standard & Poor's, a Division of the McGraw Hill Companies, Inc. CUSIP® data herein is provided by Standard & Poor"s CUSlP Service Bureau. This data is not intended to create a database and docs not serve in any way as a substitute for the CUSIP Service Bureau. CUSIP® numbers are provided for convenience of reference only. Neither the Agency nor the Underwriter takes any responsibility for the accuracy of such numbers.

SOUTHWEST SECURITIES, INC-

LINDSAY REDEVELOPMENT AGENCY LINDSAY, CALIFORNIA

AGENCY GOVERNING BOARD

Ed Murray, Chairman Pamela Kimball, Vice-Chairman

Steve Velasquez, Director Danny Salinas, Director

Suzi Picaso, Director

CITY COUNCIL

Ed Murray, Mayor Pamela Kimball, Mayor Pro-Tern Steve Velasquez, Councilmember Danny Salinas, Councilmember

Suzi Picaso, Councilmember

CITY AND AGENCY STAFF

Scot B. Townsend, City Manager Ken Walker, Finance Director/City Clerk

Julia Lew, City Attorney and Agency General Counsel

SPECIAL SERVICES

Bond Counsel and Disclosure Counsel Stradling Y occa Carlson & Rauth

a Professional Corporation Newport Beach, California

Trustee U.S. Bank National Association

Seattle, Washington

Financial Advisor Urban Futures, Inc. Orange, California

V nderwriter Southwest Securities, Inc.

Cardiff by the Sea, California

GENERAL INFORMATION ABOUT THIS OFFICIAL STATEMENT

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

Estimates and Forecasts. Certain statements included or incorporated by reference in this Official Statement and in any continuing disclosure by the Agency, 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, may constitute "forward-looking statements." Such statements are generally identifiable by the terminology used such as "plan," "expect," "anticipate," "estimate," "budget," or other similar words and include, but are not limited to, statements under the captions "PROJECT AREA" and "TAX REVENUES AND DEBT SERVICE COVERAGE." The achievement of certain results or other expectations contained in such forward­looking statements involves known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements described to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. While the Agency has undertaken to provide certain on-going financial and other data pursuant to a continuing disclosure agreement (see "CONTINUING DISCLOSURE"), the Agency does not plan to issue any updates or revisions to those forward-looking statements if or when their expectations or events, conditions or circumstances on which such statements are based change.

Preparation of this Official Statement. The information contained in this Official Statement has been obtained from sources that are believed to be reliable, but is not guaranteed as to accuracy or completeness.

The Underwriter has provided the following sentence for inclusion in this Official Statement: The Underwriter has reviewed the information in this Official Statement in accordance with, and as part of, its responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness of such information.

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 Notes other than those contained in this Official Statement and if given or made, such other information or representation must not be relied upon as having been authorized by the Agency or the Underwriter. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the Notes by a person in any jurisdiction in which it is unlawful for such person to make such an offer, solicitation or sale.

Information as of Dated Date of Official Statement. The information and expressions of opinion 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 or 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 pnrport to be complete statements of any or all of such provisions.

Stabilization of Prices. In connection with this offering, the Underwriter may overallot or effect transactions which stabilize or maintain the market price of the Notes 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 Notes to certain dealers and others at prices lower than the public offering prices set fortb on the front cover page hereof and said public offering prices may be changed from time to time by the Underwriter.

THE NOTES 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 NOTES HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES LAW OF ANY STATE.

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TABLE OF CONTENTS

INTRODUCTION ............................................................................................................................................ I General ............................................................................. : ............................................................................ I The City ........................................................................................................................................................ I The Agency ................................................................................................................................................... 2 Tax Allocation Financing ............................................................................................................................. 2 Pass-Through Agreements ............................................................................................... 2 Statutory Pass-Through Payments ................................................................................................................ 2 Security for the Notes ................................................................................................................................... 3 Outstanding Senior Obligations .................................................................................................................... 3 Reserve Account ........................................................................................................................................... 4 Continuing Disclosure .................................................................................................................................. 4 Other Information ......................................................................................................................................... 4

PLAN OF FINANCING ................................................................................................................................... 4 SOURCES AND USES OF FUNDS ................................................................................................................ 5 THE NOTES ..................................................................................................................................................... 5

Description .................................................................................................................................................... 5 Redemption ................................................................................................................................................... 6 Book-Entry Only System .............................................................................................................................. 6 Transfer or Exchange .................................................................................................................................... 7

SECURITY FOR THE NOTES ........................................................................................................................ 7 Pledged Revenues ......................................................................................................................................... 7 Tax Allocation Financing ............................................................................................................................. 8 Allocation ofTaxes ....................................................................................................................................... 8 Outstanding Senior Obligations .................................................................................................................... 9 Issuance of Parity Notes .............................................................................................. ." .............................. 10 Reserve Account ......................................................................................................................................... I 0

THE AUTHORITY ........................................................................................................................................ II LINSDAY REDEVELOPMENT AGENCY .................................................................................................. II

Agency Powers ........................................................................................................................................... 12 Financial Advisor and Redevelopment Consultant.. ................................................................................... 12 Tax Increment Financing ............................................................................................................................ 12 Housing Set-Aside ...................................................................................................................................... 13 Factors Affecting Redevelopment Agencies Generally .............................................................................. 13

THE PROJECT AREA ................................................................................................................................... 13 Lindsay Redevelopment Project Area ................................................................ , ........................................ 13 Development Activity ................................................................................................................................. 14 Limitations and Requirements of the Redevelopment Plan ........................................................................ 14 Pass-Through Agreements; Statutory Pass-Throughs ................................................................................. 16 Land Use ..................................................................................................................................................... 16 Largest Taxpaxers ....................................................................................................................................... 17

TAX REVENUES AND DEBT SERVICE COVERAGE ............................................................................. 17 Historical Assessed Valuation, Tax Increment and Pledged Revenues ...................................................... 18 Delinquencies .............................................................................................................................................. 18 Appeals of Assessed Values ....................................................................................................................... 18 Projected Pledged Revenues ....................................................................................................................... 19 Coverage Projections .................................................................................................................................. 20

RISK FACTORS ............................................................................................................................................ 21 Limited Obligations of the Agency ............................................................................................................. 21 Reduction in Taxable Value ........................................................................................................................ 21 Real Estate Volatility .................................................................................................................................. 22 Concentration of Ownership ....................................................................................................................... 23 Levy and Collection .................................................................................................................................... 23 Reduction in Inflationary Rate .................................................................................................................... 23

Development Risks ..................................................................................................................................... 23 State Budget ................................................................................................................................................ 23 Natural Disasters ......................................................................................................................................... 25 Hazardous Substances ................................................................................................................................. 26 Bankruptcy Risks; Enforceability of Remedies .......................................................................................... 26 Parity Notes ................................................................................................................................................ 26 Secondary Market ....................................................................................................................................... 26 Loss of Tax Exemption ............................................................................................................................... 26

LIMITATIONS ON TAX REVENUES ......................................................................................................... 27 Article XIIIA of the California Constitution ............................................................................................... 27 Property Tax Collection Procedure ............................................................................................................. 28 Unitary Property ......................................................................................................................................... 29 Article XIIIB of the California Constitution ............................................................................................... 30 Proposition 87 ............................................................................................................................................. 30 Proposition 218 ........................................................................................................................................... 30 AB 1290 and SB 211 .................................................................................................................................. 30 SB 1045 and SB 1096 ................................................................................................................................. 31 Future Initiatives ......................................................................................................................................... 31

CONTINUING DISCLOSURE ...................................................................................................................... 31 CERTAIN LEGAL MATTERS ..................................................................................................................... 32 ABSENCE OF LITIGATION ........................................................................................................................ 32 TAX MATTERS ............................................................................................................................................. 32 BANK-QUALIFICATION ............................................................................................................................. 33 RATINGS ....................................................................................................................................................... 33 UNDERWRITING ......................................................................................................................................... 33 MISCELLANEOUS ....................................................................................................................................... 34

APPENDIX A- CITY OF LINDSAY GENERAL INFORMATION ............................................................. A-1 APPENDIX B- DTC'S BOOK-ENTRY ONLY SYSTEM ........................................................................... B-1 APPENDIX C- SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE ................................... C-1 APPENDIX D- FORM OF BOND COUNSEL OPINION ............................................................................ D-1 APPENDIX E- FORM OF CONTINUING DISCLOSURE AGREEMENT.. ............................................... E-1 APPENDIX F- AUDITED FINANCIAL STATEMENTS OF THE AGENCY FOR FISCAL YEAR

ENDED JUNE 30, 2008 ......................................................................................................... F -I

General

$1,000,000 LINDSAY REDEVELOPMENT AGENCY

LINDSAY REDEVELOPMENT PROJECT AREA NO. ONE SUBORDINATE TAX ALLOCATION NOTES

ISSUE OF 2009

INTRODUCTION

This Official Statement, including the cover page and appendices, is provided to furnish information in connection with the sale by the Lindsay Redevelopment Agency (the "Agency") of its Lindsay Redevelopment Project No. One, Subordinate Tax Allocation Notes, Issue of 2009 (the "Notes") in the aggregate principal amount of $1,000,000. This Introduction contains a brief summary of certain information contained in this Official Statement. It is not intended to be complete and is qualified by the more detailed information contained elsewhere in this Official Statement. Definitions of certain capitalized terms used in this Official Statement are set forth in "APPENDIX C-SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE."

Proceeds from the sale of the Notes will be used to: (i) finance a portion of the costs of redevelopment activities of the Agency consisting of certain improvements; (ii) fund a reserve account; and (iii) pay costs of issuance of the Notes. See "PLAN OF FINANCING" herein.

The Agency is a redevelopment agency existing under the Community Redevelopment Law of the State of California (the "State"), constituting Part I of Division 24 (commencing with Section 33000) of the California Health and Safety Code, as amended (the "Redevelopment Law"). The Notes are being issued under the authority granted to the Agency under the Redevelopment Law, specifically Article 5 of Chapter 6 thereof (commencing with Section 33640). The Notes are being issued pursuant to an Indenture of Trust, dated as of November l, 2009 (the "Indenture"), by and between the Agency and U.S. Bank National Association, as trustee (the "Trustee"). The Notes are secured by a pledge of, security interest in and a lien on Pledged Revenues (defined below) and by the moneys in certain funds and accounts established by the Indenture. The Indenture permits the Agency to, upon satisfaction of certain conditions, incur additional debt payable from and secured by a lien and charge upon Pledged Revenues on a parity with the lien and charge securing the Notes. See "SECURITY FOR THE NOTES" and "APPENDIX C-SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE."

Interest on the Notes will be payable semiannually on April l and October l of each year, commencing April!, 2010. The Notes will be initially delivered as one fully registered certificate for each maturity and, when issued and delivered, will be registered in the name of Cede & Co., as nominee of the Depository Trust Company, New York, New York ("DTC"). DTC will act as the depository for the Notes and all payments due on the Notes will be made to Cede & Co. Ownership interests in the Notes may be purchased only in book-entry form. So long as the Notes are registered in the name of Cede & Co., or any other nominee ofDTC, references in this Official Statement to the Owners of the Notes shall mean Cede & Co. or such other nominee of DTC, and shall not mean the beneficial owners of the Notes. See "THE NOTES­Book-Entry Only System" and "APPENDIX B-DTC'S BOOK-ENTRY ONLY SYSTEM."

The City

The City of Lindsay (the "City") is located approximately 170 miles north of the City of Los Angeles and 60 miles southeast of the City of Fresno in Tulare County (the "County"). The City is a general law city incorporated on February 28, 1910 and provides for a Council-Administrator form of government consisting of five Council Members elected to four-year overlapping terms. The City encompasses an area of approximately 2.5 square miles. The 2009 population of the City was estimated to be 11,684, see "APPENDIX A-CITY OF LINDSAY GENERAL INFORMATION."

The Agency

The Agency was established on September 15, 1986 by the City Council of the City with the adoption of Ordinance No. 411, pursuant to the Law. The five members of the City Council serve as the governing body of the Agency, and exercise all the rights, powers, duties and privileges of the Agency.

The Redevelopment Plan for the Lindsay Redevelopment Project No. One (the "Redevelopment Plan") was approved by Ordinance No. 416, adopted by the City Council of the City on July 20, 1987, as amended by Ordinance No. 452, adopted on July 19, 1993, amended by Ordinance No. 461, adopted on July 17, 1995 and as amended by Ordinance No. 516, adopted on July 12,2005. The Lindsay Redevelopment Project No. One (the "Project Area") consists of approximately 1,456 acres and contains multiple land uses. The Project Area was designated to enable the Agency to eliminate and prevent the spread of blight in the Project Area.

The projections of Pledged Revenues contained in this Official Statement are based on assessed valuations for fiscal year 2009-10. Any future decrease in the receipt of taxes, the assessed valuation of the Project Area, the applicable tax rates or the economic stability of the Project Area could reduce the Pledged Revenues and correspondingly could have an adverse impact on the ability of the Agency to pay debt service on the Notes. See "RISK FACTORS" and "LIMITATIONS ON TAX REVENUES."

Tax Allocation Financing

The Redevelopment Law provides a means for financing redevelopment projects based upon an allocation of taxes collected within a redevelopment project area. The taxable valuation of a redevelopment project area last equalized prior to adoption of the redevelopment plan, or the 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 (except such portion generated by rates levied to pay voter-approved bonded indebtedness after January I, 1989 for the acquisition or improvement of real property) 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 have no authority to levy property taxes and must look specifically to the allocation of taxes produced under the Redevelopment Law.

Sections 33334.2 and 33334.3 of the Redevelopment Law require the Agency to set aside not less than 20 percent of all tax revenues with respect to the Project Area allocated to the Agency in a low and moderate income housing fund (the "Housing Fund") to be expended for authorized low and moderate income housing purposes (the "Housing Set-Aside"). Amounts on deposit in the Housing Fund may be applied to pay debt ~ervice on bonds, loans or advances used to provide financing for such low and moderate income housing purposes. The Pledged Revenues include moneys that are required to be deposited into the Housing Fund.

Pass-Through Agreements

Former Section 33401 of the Redevelopment Law authorized redevelopment agencies to enter into agreements, commonly referred to as "pass-through" or "tax-sharing" agreements, providing for the payment of tax increment revenues to taxing entities in order to alleviate any detriment to the taxing entity resulting from the establishment of a redevelopment project. Pursuant to that section, the Agency has entered into pass­through agreements. See "PROJECT AREA-Pass-Through Agreements; Statutory Pass-Throughs" herein.

Statutory Pass-Through Payments

California Health and Safety Code Section 33607.5 and Section 33607.7 were added to the Redevelopment Law by Assembly Bill 1290 ("AB 1290"), enacted by the State Legislature in 1994. Section 33607.7 has been further amended by SB 211, Chapter 741, Statutes 2001 ("SB 211"). California Health and Safety Code Section 33607.5 and Section 33607.7, together, require that taxing entities receive an

2

additional portion of tax increment revenues (the "Statutory Pass-Through Payments") otherwise payable to the redevelopment agency, if such taxing entities were affected by (i) the adoption after January l, 1994, of a new redevelopment plan for a project area or an amendment to an existing redevelopment plan that added territory to a project area, or (ii) the adoption after January I, 1994 of an amendment (to a redevelopment plan that was adopted before January I, 1994) which extends the time limit on incurring debt with respect to the project area, extends the time limits for the duration and effectiveness of the redevelopment plan or the time limit for establishing indebtedness or increases the dollar cap on the amount of tax increment revenues allocable to the redevelopment agency for the project area (unless a taxing entity already receives pass­throughs under an existing agreement). AB 1290 prohibits redevelopment agencies from entering into any new pass-through agreement to contractually provide for a pass-through of tax increment revenue directed to an affected taxing agency. See "-Pass-Through Agreements" above.

The Agency is obligated to make Statutory Pass-Through Payments to affected taxing entities, from tax increment revenues of the Project Area. See "PROJECT AREA-Pass-Through Agreements; Statutory Pass-Throughs."

Security for the Notes

The Notes are secured by a pledge of Pledged Revenues and certain funds established under the Indenture. "Pledged Revenues" is defined in the Indenture to mean the portion of Tax Revenues less all amounts required to be paid pursuant to the Pass-Through Agreements or Statutory Pass-Thoughs and any amounts required to pay debt service on the Senior Obligations (described herein under the section entitled "SECURITY FOR THE NOTES").

"Tax Revenues" are defined in the Indenture to mean all taxes annually allocated within the Plan Limit, following the Delivery Date, and paid to the Agency with respect to the Project Area pursuant to Article 6 of Chapter 6 (commencing with Section 33670) of the Law and Section 16 of Article XVI of the Constitution of the State, but excluding therefrom any amounts attributable to a tax rate levied by a taxing agency for the purpose of producing revenues in an amount sufficient to make annual repayments of the principal of, and interest on any bonded indebtedness approved by the voters of the taxing agency on or after January l, 1989 for the acquisition or improvement of real property, which portion shall be allocated to and when collected, shall be paid into, the fund of that taxing agency and as provided in the Redevelopment Plan.

THE NOTES ARE NOT A DEBT, LIABILITY OR OBLIGATION OF THE CITY, THE STATE, OR ANY OF ITS POLITICAL SUBDIVISIONS OTHER THAN THE AGENCY, AND NONE OF THE CITY, THE STATE NOR ANY OF ITS POLITICAL SUBDIVISIONS, OTHER THAN THE AGENCY, IS LIABLE THEREFOR. THE PRINCIPAL OF, PREMIUM, IF ANY, AND INTEREST ON THE NOTES ARE PAYABLE SOLELY FROM PLEDGED REVENUES FROM THE PROJECT AREA AND AMOUNTS IN CERTAIN FUNDS AND ACCOUNTS HELD UNDER THE INDENTURE. THE NOTES DO NOT CONSTITUTE AN INDEBTEDNESS WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMITATION OR RESTRICTION. SEE "SECURITY FOR THE NOTES."

Outstanding Senior Obligations

The Notes are being issued on a subordinate basis to the Agency's previously issued: (i) $4,700,000 Lindsay Redevelopment Agency, Lindsay Redevelopment Project No. One, Tax Allocation Refunding Bonds, Issue of 2005 (the "2005 Bonds"), the outstanding amount of which is $4,305,000; (ii) $7,880,000 Lindsay Redevelopment Agency, Lindsay Redevelopment Project No. One, Tax Allocation Bonds, Issue of 2007 (the "2007 Bonds"), the outstanding amount of which is $7,490,000) and (iii) $3,710,000 Lindsay Redevelopment Agency, Lindsay Redevelopment Project No. One, Tax Allocation Bonds, Issue of 2008 (the "2008 Bonds"), the outstanding amount of which is $3,480,000.). The 2005 Bonds, the 2007 Bonds and the 2008 Bonds are collectively referred to herein as the "Senior Obligations."

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Reserve Account

In order to further secure the payment of principal of and interest on the Notes, a Reserve Account within the Debt Service Fund is created under the Indenture in an amount equal to the Reserve Requirement. Reserve Requirement means an amount equal six months interest on the Notes. See "SECURITY FOR THE NOTES-Reserve Account" herein.

Continuing Disclosure

In connection with the sale of the Notes, the Agency will enter into a Continuing Disclosure Agreement, covenanting to prepare and deliver an annual report and certain other information to the Municipal Securities Rulemaking Board. See "CONTINUING DISCLOSURE" and "APPENDIX E-FORM OF CONTINUING DISCLOSURE AGREEMENT."

Other Information

This Official Statement contains brief descriptions of the Notes, the security for the Notes, certain risk factors, the Agency, the Project Area and certain other documents and information relevant to the issuance of the Notes. All references herein to the Indenture or other documents are qualified in their entirety by reference to the Indenture or such documents and all references to the Notes are further qualified by reference to the definitive Notes and to the terms thereof which are contained in the Indenture. Unless the context clearly requires otherwise, capitalized terms used but not otherwise defined herein have the meanings assigned to them in the Indenture. See "APPENDIX C-SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE- Definitions."

This Official Statement speaks only as 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 since the date hereof.

Unless otherwise expressly noted, references to Internet websites in this Official Statement are shown for reference and convenience only, and none of their content is incorporated herein by reference. The information contained within such websites has not been reviewed by the Agency. The Agency makes no representation regarding the information therein.

PLAN OF FINANCING

Net proceeds of the Notes in the amount of$876,210.00 will be deposited in the Redevelopment Fund to be used by the Agency to finance redevelopment activities benefiting the Project Area. See "SOURCES AND USES OF FUNDS." The Agency intends to use the proceeds of the Notes to constmct street Improvement in the downtown area (Hermosa Street), traffic roundabout (Comer of Elmwood Ave. and Hermosa Street) and provide for first-time homebuyer program grants.

The above-described projects reflect the Agency's current expectations. The Agency may use the proceeds of the Notes for other permitted redevelopment purposes. None of the projects financed with proceeds of the Notes will constitute security for the Notes.

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SOURCES AND USES OF FUNDS

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

Sources: Principal Amount of the Notes

Less: Net Original Issue Discount Less: Underwriter's Discount

Total Sources Uses: Redevelopment Fund <'l Reserve Account <'l Costs oflssuance (J)

Total Uses

$ 1,000,000.00 (4,290.00)

(17.500.00) $ 978,210.00

$ 876,210.00 27,000.00 75 000.00

$ 978,210.00

OJ 20% to be deposited in the Housing Fund (l} Deposit equal to the Reserve Requirement, which is an amount equal to six months interest on the Notes. See "SECURITY

FOR THE NOTES-Reserve Account." (3) To pay fees and expenses of Bond Counsel, Disclosure Counsel, Trustee, Trustee's Counsel and Financial Advisor, costs of

printing this Official Statement and other costs of issuance.

THE NOTES

Description

The Notes will be issued as fully registered Notes, and will bear interest at the rate, and mature on October I, 2014 as set forth on the front cover of this Official Statement. The Notes will be dated their date of delivery.

Interest on the Notes will be payable semiannually on April I and October I of each year, commencing April I, 2010 (each, an "Interest Payment Date"), and will be calculated on the basis of a 360-day year composed of twelve 30-day months. Each Note will bear interest from the Interest Payment Date next preceding the date of authentication thereof, unless (i) it is authenticated as of an Interest Payment Date, in which event it shall bear interest from that Interest Payment Date; (ii) it is authenticated after a Regular Record Date and before the following Interest Payment Date, and if the Agency shall not be in default in the payment of interest due on such Interest Payment Date, in which event it shall bear interest from such Interest Payment Date; or (iii) it is authenticated on or prior to March 15, 2010, in which event it shall bear interest from the Delivery Date.

Interest on the Notes shall be paid by the Trustee by check mailed by first class mail, postage prepaid on the Interest Payment Date to the registered owner as his/her name and address appears on the register kept by the Trustee at the close of business on the Regular Record Date preceding the Interest Payment Date or, upon request in writing made before the Regular Record Date preceding the Interest Payment Date by a Noteowner of $500,000 or more in principal amount of Notes, payment shall be made on the Interest Payment Date by wire transfer in immediately available funds to an account designated by such Noteowner to the Trustee. Should payment come due on a day which is not a Business Day, such payment shall be made on the next succeeding Business Day without accruing additional interest from the Interest Payment Date. The Notes and the interest thereon shall be payable in lawful money of the United States of America and the Notes shall be payable upon presentation at the corporate trust office or agency of the Trustee in St. Paul, Minnesota (except interest which shall be payable by check above) or any other location so designated by the Trustee.

The Notes will be initially delivered as one fully registered certificate and will be delivered by means of the book-entry system of DTC. While the Notes are held in DTC's book-entry only system, all such payments will be made to Cede & Co., as the registered owner of the Notes. See "Book-Entry Only System" below.

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Redemption

Optional Redemption. The Notes may be called before maturity and redeemed, at the option of the Agency, in whole or in part from the proceeds of refunding obligations or other source of available funds, on October I, 2011 or on any date thereafter, prior to maturity, by lot, at a redemption price equal to 100% of the principal amount of the Notes to be redeemed, plus accrued interest to the date of redemption, without premium.

Notice of Redemption. Notice of redemption prior to maturity shall be given by first class mail, postage prepaid not less than 30 nor more than 60 days prior to the redemption date to the registered owner of each such Note at the address shown on the registration books of the Trustee. The actual receipt by the Noteowner of notice of redemption shall not be a condition precedent to redemption, and failure to receive notice shall not affect the validity of the proceedings for the redemption of the Notes or the cessation of interest on the redemption date. Notice of redemption of Notes shall be given by the Trustee on behalf of the Agency and at the expense of the Agency. A certificate by the Trustee that notice of redemption has been given in accordance with the Indenture shall be conclusive as against all parties, and no Noteowner whose Note is called for redemption may object to the redemption or the cessation of interest on the redemption date by claiming or showing that it failed to receive actual notice of call and redemption.

If less thau all of the Notes are to be redeemed, the Trustee will select the Notes to be redeemed in such manner as the Trustee deems appropriate.

Effect o(Redemption. Notice of redemption having been duly given as provided in the Indenture, and moneys for payment of the principal of, premium, if any, and interest payable upon redemption of the Notes being set aside as provided above, the Notes, or parts thereof, called for redemption shall, on the redemption date, become due and payable at the redemption price specified in the notice. Interest on the Notes, or parts thereof, as the case may be, called for redemption shall cease to accrue and be payable from and after the redemption date. The Notes, or parts thereof redeemed, shall cease to be entitled to any lien, benefit or security under the Indenture, and the Owners of the Notes shall have no rights except to receive payment of the redemption price upon surrender of the Notes, and, in the case of partial redemption of Notes, also to receive a new Note or Notes for the unredeemed balance as provided above.

Book-Entry Only System

The Notes will be issued as one fully registered note without coupons and, when issued, will be registered in the name of Cede & Co., as nominee of DTC. DTC will act as securities depository ofthe Notes. Individual purchases may be made in book-entry form only, in the principal amount of $5,000 or multiples thereof. Purchasers will not receive certificates representing their interest in the Notes purchased. Principal and interest will be paid to DTC, which will in turn remit such principal aud interest to its participants for subsequent disbursement to the beneficial owners of the Notes as described herein. So long as DTC's book­entry system is in effect with respect to the Notes, notices to Owners by the Agency or the Trustee will be sent to DTC. Notices and communication by DTC to its participants, and then to the beneficial owners of the Notes, will be governed by arrangements among them, subject to then effective statutory or regulatory requirements. So long as the Notes are registered in the name of Cede & Co., or any other nominee of DTC, references in this Official Statement to the registered owners or use of the capitalized term "Owners" mean Cede & Co. or such other nominee of DTC, and do not mean the beneficial owners of the Notes. See "APPENDIX B-DTC'S BOOK-ENTRY ONLY SYSTEM."

In the event that such book-entry system is discontinued with respect to the Notes, the Agency will execute and deliver replacements in the form of registered certificates and, thereafter, the Notes will be transferable and exchangeable on the terms and conditions provided in the Indenture. In addition, the following provisions would then apply: Interest with respect to any Note will be payable in lawful money of the United States of America on each Interest Payment Date to the Owner thereof as of the close of business on the fifteenth calendar day of the month preceding such Interest Payment Date (the "Record Date"), such interest to be paid by check of the Trustee, mailed by first class mail on the Interest Payment Date to the

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Owner at such Owner's address as it appears, on such Record Date, on the bond registration books maintained by the Trustee; provided however, that payment of interest may be by wire transfer to an account in the United States of America to any registered owner of Notes in the aggregate principal amount of $1,000,000 or more who shall furnish written wire instructions to the Trustee prior to the applicable Record Date. The principal of and premium, if any, on the Notes will be payable when due in lawful money of the United States of America, upon the surrender of such Notes at the corporate trust office of the Trustee in Los Angeles, California or such other location as designated by the Trustee.

Transfer or Exchange

The Notes shall be issued only in fully registered form. The Notes may be exchanged for other Notes of equal aggregate denominations. Transfer of ownership of a Note or Notes shall be made by exchanging the same for a new Note or Notes. All exchanges shall be made in such a manner and upon such reasonable terms and conditions as may be determined and prescribed by the Agency. No transfer or exchange of Notes for which notice of redemption has been given pursuant to the Indenture shall be made after the date of mailing of such notice. The person, firrn or corporation requesting the registration or exchange shall pay any tax or governmental charge that may be imposed in connection with the registration or exchange. The Agency shall pay all other registration and exchange costs and charges including the cost of printing new Notes.

The Trustee will keep at its corporate trust office or agency in St. Paul, Minnesota or at such other place as the Trustee may designate, sufficient books for the registration and transfer of the Notes; and, upon presentation for such purpose, the Trustee shall under such reasonable regulations as it may prescribe, register or transfer, or cause to be registered or transferred, on the register, the Notes as hereinbefore provided. The books will be open to inspection by the Agency at all times during regular business hours with reasonable notice. The Trustee and Agency may conclusively rely upon the registration books of the Trustee as to the registered owners and will not be affected by any notice to the contrary.

SECURITY FOR THE NOTES

Pledged Revenues

The Notes are special, limited obligations of the Agency, secured by a pledge of Pledged Revenues and certain funds and accounts established pursuant to the Indenture. Pledged Revenues means the portion of the Tax Revenues, as defined below, less all amounts required to be paid pursuant to the Pass-Through Agreements or Statutory Pass-Throughs and any amounts required to pay debt service on the Senior Obligations. See "-Allocation of Taxes-Pass-Through Agreements" and "-Allocation of Taxes-­Statutory Pass-Throughs" below.

"Tax Revenues" is defined in the Indenture to mean all taxes annually allocated within the Plan Limit, following the Delivery Date, and paid to the Agency with respect to the Project Area pursuant to Article 6 of Chapter 6 (commencing with Section 33670) of the Law and Section 16 of Article XVI of the Constitution of the State, but excluding therefrom any amounts attributable to a tax rate levied by a taxing agency for the purpose of producing revenues in an amount sufficient to make annual repayments of the principal of, and interest on any bonded indebtedness approved by the voters of the taxing agency on or after January I, 1989 for the acquisition or improvement of real property, which portion shall be allocated to and when collected, shall be paid into, the fund of that taxing agency and as provided in the Redevelopment Plan.

The Notes are not a debt of the City, the State or any of its political subdivisions (other than the Agency) and none of the City, the State, nor any of its political subdivisions (other than the Agency) is liable for the payment thereof In no event shall the Notes be payable out of any funds or properties other than those of the Agency set forth in the Indenture. The Agency has no power to levy and collect property taxes, and any property tax limitation, legislative measure, voter initiative or provisions of additional sources of income to taxing agencies having the effect of reducing the property tax rate, could reduce the amount of Pledged Revenues that would otherwise be available to pay debt service on the Notes. See "RISK FACTORS" and "LIMITATIONS ON TAX REVENUES."

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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 project area. The taxable valuation of a project area last equalized before 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. Generally, taxes collected upon any increase in taxable valuation over the base roll (except such portion generated by rates levied to pay bonded indebtedness approved by the voters on or after January 1, 1989, for the acquisition or improvement of real property or attributable to an increase in tax rate imposed for the benefit of a taxing agency the levy of which occurs after the tax year in which the ordinance approving the project area was adopted) 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 have no authority to levy property taxes and must look specifically to the allocation of tax increment revenues.

Allocation of Taxes

General. As provided in the Redevelopment Plan, and pursuant to Article 6 of Chapter 6 of the Redevelopment Law (commencing with Section 33670 of the California Health and Safety Code) and Section 16 of Article XVI of the Constitution of the State of California, taxes levied upon taxable property in the Project Area each year by or for the benefit of the State, the County, the City, any district or other public corporation (herein collectively referred to as "taxing agencies") for each fiscal year beginning after the effective date of the ordinance approving the Redevelopment Plan, are divided as follows:

I. To other taxing agencies: That portion of the taxes which would be produced by the rate upon which the tax is levied each year by or for each of the taxing agencies upon the total sum of the assessed value of the taxable property in the Project Area as shown upon the assessment roll used in connection with the taxation of that property by the taxing agency, last equalized prior to the effective date of the ordinance approving the Project Area, will be allocated to and when collected will be paid into the funds of the respective taxing agencies as taxes by or for the taxing agencies on all other property are paid; and

2. To the Agency: Except as provided in paragraph (3) below, that portion of the levied taxes each year in excess of the amounts provided in paragraph(!) above, will be allocated to, and when collected, will be paid into a special fund of the Agency to pay the principal of and interest on loans, moneys advanced to, or indebtedness (whether funded, refunded, assumed, or otherwise) incurred by the Agency to finance or refinance, in whole or in part, redevelop1nent activities within the Project Area. Unless and until the total assessed valuation of the taxable property in the Project Area exceeds the total assessed value of the taxable property in the Project Area as shown by the last equalized assessment roll referred to in paragraph (I) above, all of the taxes levied and collected upon the taxable property in the Project Area will be paid into the funds of the respective taxing agencies. When said loans, advances, and indebtedness, if any, and interest thereon, have been paid, all moneys thereafter received from taxes upon the taxable property in the Project Area will be paid into the funds of the respective taxing agencies as taxes.

3. To specific taxing agencies: That portion of the taxes in excess of the amount identified in paragraph ( 1) above, which are attributable to a tax rate levy by a taxing agency for the purpose of producing revenues in an amount sufficient to make annual repayments of the principal of, and the interest on, any bonded indebtedness for the acquisition or improvement of real property will be allocated to, and when collected, will be paid into, the fund of that taxing agency; provided that this will only apply to taxes levied to repay bonded indebtedness approved by the voters of the taxing agencies on or after January I, 1989.

Housing Set-Aside. Sections 33334.2 and 33334.3 of the Redevelopment Law require the Agency to set aside the Housing Set-Aside, i.e., an amount not less than 20 percent of all tax revenues with respect to the Project Area allocated to the Agency, in the Housing Fund to be expended for authorized low and moderate income housing purposes. Amounts on deposit in the Housing Fund may also be applied to pay debt service on bonds, loans or advances used to provide financing for such low and moderate income housing purposes.

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Under the Redevelopment Law, the Housing Set-Aside could be reduced or eliminated if the Agency finds that (i) no need exists in the community to improve or increase the supply of low and moderate income housing or (ii) that some stated percentage less than 20 percent of the tax increment of the Project Area is sufficient to meet the housing need. The Agency has not made any such finding. The Pledged Revenues include moneys that are required to be deposited in the Housing Fund.

Pass-Through Arzreements. The Agency has entered into three agreements for the allocation and distribution of tax increment funds. An Agreement with the County of Tulare (including the Tulare County Free Library, Tulare County Air Pollution Control District and the Tulare County Flood Control District) provides for the County to receive 25% of the County Share (approximately 36.95%) of cumulative tax increment revenues allocated and paid to the Agency that exceed $3,000,000; 50% of the County Share of cumulative tax increment revenues allocated and paid to the Agency that exceed $13,000,000; 75% of the County Share of cumulative tax increment revenues allocated and paid to the Agency that exceed $35,000,000; l 00% of the County Share beginning in the fiscal year in which the cumulative tax increment revenues allocated and paid to the Agency which are attributed to the County Share equal $17,500,000. The second agreement is with the Lindsay-Strathmore Cemetery District and provides for the District to receive l 00% of its share (approximately 1.45%) of tax increment revenue allocated to the Agency. The third agreement is with the Lindsay-Strathmore Cemetery District and provides for the District to receive 100% of its share (approximately !.31%) to tax increment revenue allocate to the Agency. Additionally, the Lindsay Unified School District, College of Sequoias and Tulare County School Services Fund receives their respective portion of Tax Revenues which result from annual inflationary adjustments to the base year valuations. The obligations of the Agency under the agreements are on a parity with the Agency's obligation to pay debt service on the Senior Obligations. (See "PROJECT AREA-Pass-Through Agreements; Statutory Pass-Throughs" herein.

Statutorv Pass-Throughs. California Health and Safety Code Section 33607.5 and Section 33607.7 were added to the Redevelopment Law by Assembly Bill 1290 ("AB 1290"), enacted by the State Legislature in 1994. Section 33607.7 has been further amended by SB 2ll, Chapter 741, Statutes 2001 ("SB 211"). California Health and Safety Code Section 33607.5 and Section 33607.7, together, require that taxing entities receive an additional portion of tax increment revenues (the "Statutory Pass-Throughs") otherwise payable to the redevelopment agency, if such taxing entities were affected by (i) the adoption after January I, 1994, of a new redevelopment plan for a project area or an amendment to an existing redevelopment plan that added territory to a project area, or (ii) the adoption after January I, 1994 of an amendment (to a redevelopment plan that was adopted before January I, 1994) which extends the time limit on incurring debt with respect to the project area, extends the time limits for the duration and effectiveness of the redevelopment plan or the time limit for establishing indebtedness or increases the dollar cap on the amount of tax increment revenues allocable to the redevelopment agency for the project area (unless a taxing entity already receives pass­throughs under an existing agreement). Statutory Pass-Throughs prohibits redevelopment agencies from entering into any new pass-through agreement to contractually provide for a pass-through of tax increment revenue directed to an affected taxing agency. See "-Pass-Through Agreements" above.

Any payments made by the Agency to satisfy the Statutory Pass-Throughs are senior to the Pledged Revenues available to pay debt service on the Notes. Any payments made by the Agency to satisfy the Pass­Through Agreements are senior to the Pledged Revenues available to pay debt service on the Notes. See "SECURITY FOR THE NOTES-Pledged Revenues" herein.

The Agency is obligated to make Statutory Pass-Throughs Payments to affected taxing entities from tax increment revenues of the Project Area. See "PROJECT AREA-Pass-Through Agreements; Statutory Pass-Throughs."

Outstanding Senior Obligations

The Notes are being issued on a subordinate basis to the Agency's previously issued: (i) $4,700,000 Lindsay Redevelopment Agency, Lindsay Redevelopment Project No. One, Tax Allocation Refunding Bonds, Issue of 2005 (the "2005 Bonds"), the outstanding amount of which is $4,305,000; (ii) $7,880,000 Lindsay

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Redevelopment Agency, Lindsay Redevelopment Project No. One, Tax Allocation Bonds, Issue of 2007 (the "2007 Bonds"), the outstanding amount of which is $7,490,000) and (iii) $3,710,000 Lindsay Redevelopment Agency, Lindsay Redevelopment Project No. One, Tax Allocation Bonds, Issue of 2008 (the "2008 Bonds"), the outstanding amount of which is $3,480,000.). The 2005 Bonds, the 2007 Bonds and the 2008 Bonds are collectively referred to herein as the "Senior Obligations."

Issuance of Parity Notes

If at any time the Agency determines it needs to do so, the Agency may provide for the issuance of, and sell, Parity Notes in such principal amounts as it estimates will be needed. The issuance and sale of any Parity Notes shall be subject to the following conditions precedent:

(a) The Agency shall be in compliance with all covenants in the Indenture;

(b) The Parity Notes will be on such terms and conditions as may be set forth in a supplemental resolution or indenture, which shall provide for (i) notes substantially in accordance with the Indenture, and (ii) the disposition of surplus Pledged Revenues in substantially the same manner as in the Indenture;

(c) Receipt of a certificate or opinion of an Independent Financial Consultant showing:

(i) For the current and each future Note Year the Annual Debt Service for each such Note Year with respect to the Notes and all Parity Notes outstanding or to be reasonably expected to be outstanding following the issuance of the Parity Notes;

(ii) For the current Fiscal Year, the Pledged Revenues received or to be received by the Agency; and

(iii) That the Pledged Revenues referred to in item (ii) above, are at least l.l5 times the Annual Debt Service, for the current Fiscal Year, on all Notes and Parity Notes that will be outstanding following the issuance of the Parity Notes (excluding debt service with respect to any portion of the Parity Notes deposited in an escrowed proceeds account); and

(d) The Parity Notes will mature on or after the maturity date of the Notes and interest will be payable on the same dates as the Notes.

Notwithstanding the foregoing, if the Agency is in compliance with all covenants set forth in the Indenture, the Agency may issue and sell obligations pursuant to the Law, having a lien on the Pledged Revenues which is junior to the Notes and any Parity Notes and which shall be payable solely from surplus as then declared or which may thereafter be declared pursuant to the Indenture. "Obligations" include, without limitation, bonds, notes, interim certificates, debentures or other obligations, loans, advances or other forms of indebtedness incurred by the Agency.

Reserve Account

The Trustee will establish and maintain a Reserve Account within the Debt Service Fund. Upon the issuance of the Notes, the amount deposited in (or credited to) the Reserve Account will equal the Reserve Requirement. The Reserve Requirement means an amount equal to six months interest on the Notes.

Moneys in the Reserve Account will be transferred to the Interest Account to pay interest on the Notes as it becomes due to the extent Pledged Revenues are insufficient therefor. Upon the payment or redemption in full of the principal of and interest on all of the outstanding Notes or upon provision therefor pursuant to the Indenture, any or all of the amounts in the Reserve Account shall at the option of the Agency be applied towards such payment or withdrawn by the Trustee and applied as provided in the Indenture pursuant to written instructions of the Agency. Any portion of the Reserve Account which is in excess of the Reserve

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Requirement shall be transferred to the Interest Account on or before six Business Days prior to each Interest Payment Date.

Anything to the contrary herein notwithstanding, the Agency may at any time substitute an Alternate Reserve Account Security, and upon such substitution, the Agency shall be entitled to receive all moneys then held in the Reserve Account which are not required to meet the Reserve Requirement free and clear of the lien of the Indenture. In the event the Agency delivers an Alternate Reserve Account Security, the Trustee shall hold and apply such instrument pursuant to the Indenture so as to have moneys available thereunder for the purpose and at the times required under the Indenture.

"Alternate Reserve Account Security" means one or more letters of credit, surety bonds, bond insurance policies, or other form of guaranty from a financial institution for the benefit of the Trustee, the long-term, unsecured obligations of which are rated not less than "A" by Moody's Investors Service, or "A" by Standard & Poor's Corporation in substitution for or in place of all or any portion of the Reserve Requirement. See "APPENDIX C-SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE."

THE AUTHORITY

The Lindsay Financing Authority (the "Authority) was created by a Joint Exercise of Powers Agreement, dated July 1, 1990 by and between the City and the Agency. Such agreement was entered into pursuant to the provisions of Article I, 2 and 4 of Chapter 5 of Division 7 of Title 1 of the California Government Code. The Authority was created for the purpose of assisting the financing or refinancing of certain public capital facilities within the City. Under the Marks-Roos Local Bond Pooling Act of 1985, Section 6854 et seq. of the State Government Code, 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 five-member Board of Directors (the "Board") which consists of the members of the City Council of the City of Lindsay. The Mayor acts as the Chairman of the Authority, the City Administrator as its Executive Director and Treasurer and the City Clerk as its Secretary.

LINDSAY REDEVELOPMENT AGENCY

The Agency was established on September 15, 1986 by the City Council of the City with the adoption of Ordinance No. 411 pursuant to the Law. The five members of the City Council serve as the governing body of the Agency, and exercise all the rights, powers, duties and privileges of the Agency. The Mayor serves as the Agency Chairman.

Directors and Officers

The directors of the Agency, their terms of office and occupations are shown below:

Name and Office

Ed Murray, Chairman Pamela Kimball, Vice-Chairman Steve Velasquez, Director Danny Salinas, Director Suzi Picaso, Director

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Expiration of Term

November, 2012 November, 2012 November, 2012 November, 2010 November, 201 0

Agency Powers

All powers of the Agency are vested in its five-directors who are elected members of the City Council. Pursuant to the Law, the Agency is a separate public body and may exercise governmental functions in planning and implementing redevelopment projects.

The Agency may exercise broad governmental functions and authority to accomplish its purposes, including, but not limited to, the right to issue bonds or notes for authorized purposes and to expend their proceeds and the right to acquire, sell, rehabilitate, develop, administer or lease property. The Agency may demolish buildings, clear land and cause to be constructed certain improvements including streets, sidewalks, and utilities, and can further prepare for use as a building site any real property which it owns or administers.

The Agency may, from any funds made available to it for such purposes, pay for all or part of the value of land and the cost of buildings, facilities, or other improvements to be publicly owned and operated, provided that such improvements are of benefit to a redevelopment project area and cannot be financed by any other reasonable method. The Agency may not construct or develop buildings, with the exception of public buildings, and must sell or lease cleared property which it acquires within a redevelopment project area for redevelopment in conformity with a particular redevelopment plan, and may further specify a period within which such redevelopment must begin and be completed.

Financial Advisor and Redevelopment Consultant

Urban Futures, Inc., of Orange, California ("Urban Futures"), formed in the early 1970s, provides services in the areas of planning, redevelopment and finance to both governmental and private sector clients.

Urban Futures is currently engaged in consulting activities for a number of cities and redevelopment agencies in the State. Over the past five years, Urban Futures has completed planning, economic and financial consulting assignments for over 130 government clients in the State.

Urban Futures has acted as financial consultant to the Agency concerning the Notes. As financial consultant, Urban Futures will receive compensation contingent upon the sale and delivery of the Notes.

Tax Increment Financing

The Law authorizes the financing of redevelopment projects through the use of t'ax increment revenues. This method provides that the taxable valuation of the property within a redevelopment project area on the property tax roll last equalized prior to the effective date of the ordinance which adopts the redevelopment plan becomes the base year valuation. Assuming the taxable valuation never drops below the base year level, the taxing agencies thereafter receive that portion of the taxes produced by applying then current tax rates to the base year valuation, and the redevelopment agency is allocated the remaining portion produced by applying then current tax rates to the increase in valuation over the base year. Such incremental Pledged Revenues allocated to a redevelopment agency may be pledged to the payment of agency obligations. Pledged Revenues consist of a portion of such incremental tax revenues. Generally, tax increment revenues from one project area may not be used to repay indebtedness incurred for another project area. Redevelopment agencies have no power to levy property taxes and must look specifically to the allocation of taxes as described above. See "RISK FACTORS."

The Law authorizes redevelopment agencies to make payments to school districts and other taxing agencies to alleviate any financial burden or detriments to such taxing agencies caused by a redevelopment project. The Agency has entered into an agreement for this purpose. See "THE PROJECT AREA­Pass-Through Agreements; Statutory Pass-Throughs."

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Housing Set-Aside

In accordance with Sections 33334.2 and 33334.6 of the Law, not less than twenty percent (20%) of all taxes which are allocated to the Agency will be used by the Agency for purposes of improving, increasing and preserving the City's supply of housing for persons and families of low or moderate income (including the payment of indebtedness, such as the Notes, issued or incurred for such purposes) and will be included as a part of "Pledged Revenues" under the Indenture.

Factors Affecting Redevelopm~nt Agencies Generally

Other features of California law which bear on redevelopment agencies include general provisions which require public agencies to let contracts for construction only after competitive bidding. The Law provides that construction in excess of $5,000 undertaken by the Agency will be done only after competitive bidding. California statutes also provide for offenses punishable as felonies which involve direct or indirect interest of a public official in a contract made by such official in his official capacity. In addition, the Law prohibits any Agency or City official or employee who, in the course of his duties, is required to participate in the formulation or approval of plans or policies, from acquiring any interest in property in the Project Area.

Under a State initiative enacted in 1974, public _officials are required to make extensive disclosures regarding their financial interests by filing such disclosures as public records. As of the date of this Official Statement, the members of the City Council and the Agency, and other City and Agency officials have made the required filings.

California also has strict laws regarding public meetings (known as the Ralph M. Brown Act) which generally makes all Agency and City meetings open to the public.

Filing o(Statement o(!ndebtedness. Section 33675 of the Law provides for the filing not later than the first day of October of each year with the County Auditor of a statement of indebtedness certified by the chief fiscal officer of the Agency for each redevelopment plan which provides for the allocation of taxes. The statement of indebtedness is required to contain the date on which the bonds were delivered, the principal amount, term, purposes and interest rate of the bonds and the outstanding balance and amount due on the bonds. Similar information must be given for each loan, advance or indebtedness that the Agency has incurred or entered into which is payable from tax increment.

Section 33675 also provides that payments of tax increment revenues from the County Auditor to the Agency may not exceed the amounts shown on the Agency's statement of indebtedness. The Section further provides that the statement of indebtedness is prima facie evidence of the indebtedness of the Agency, but that the County Auditor may dispute the amount of indebtedness shown on the statement in certain cases and the disputed amount may be withheld from allocation and payment to the Agency. Provision is made for time limits under which the dispute can be made by the County Auditor as well as provisions for a determination by the Superior Court in a declaratory relief action of the proper disposition of the matter. The issue in any such action will involve only the amount of the indebtedness and not the validity of any contract or debt instrument, or any expenditures pursuant thereto. Payments to a trustee under a bond resolution or indenture or payments to a public agency in connection with payments by such public agency pursuant to a bond issue will not be disputed in any action under Section 33675.

THE PROJECT AREA

Lindsay Redevelopment Project Area

The Lindsay Redevelopment Agency was established by the City Council of the City with the adoption of Ordinance No. 411 on September 15, 1986, pursuant to the Law. The five members of the City Council serve as the governing body of the Agency and exercise all the rights, powers, duties and privileges of the Agency.

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The Redevelopment Plan for the Lindsay Redevelopment Project No. One was approved by Ordinance No. 416 by the City Council on July 20, 1987.

The Lindsay Redevelopment Project No. One contains approximately 625 acres generally located in the vicinity of the central to southeast portion of the City, with a non-contiguous portion located in the northwest portion of the City. The project area contains all of the downtown area and the major commercial area of the City as well as other residential, industrial, commercial and public uses.

Amendment No. I to the Redevelopment Plan for the Lindsay Redevelopment Project No. One was approved by Ordinance No. 452 by the City Council on July 19, 1993. The Amendment added 142 acres to the Project Area and deleted 71 acres (the "Deleted Territory") of the original Project Area, adding a net 71 acres. The Deleted Territory was selected for deletion because of a significant decline in assessed valuation of those properties, caused by the departure of Lindsay Olive Growers and General Cable Crop. from the Project Area. Commencing with Fiscal Year 1994-95, the Tulare County Assessor reduced the base year assessed valuation for the Project Area by approximately $26,340,234, to account for the Deleted Territory.

Amendment No. 2 to the Redevelopment Plan for the Lindsay Redevelopment Project No. One was approved by Ordinance No. 461 by the City Council on July 17, 1995. The Amendment added 342 acres to the Project Area. Amendment No. 3 to the Redevelopment Plan for the Lindsay Redevelopment Project No. One was approved by Ordinance No. 516 by the City Council on July 12, 2005. Amendment No.3 added 418 acres, bringing the total Project Area acreage to 1,456.

Development Activity

Development activity in the Project Area includes the McDermont Field House, a 171,000 sq. ft. indoor recreational facility was completed in January 2009, Sweetbrier Plaza Park, which includes the construction of arbors, interactive fountains and stage areas, the McGregor Building, which will include classrooms, meeting rooms, and art exhibit areas, and the renovation of the City's main park, to include a new below-grade soccer field. A Wellness Center that will be owned and operated by the City is currently being planned, to be constructed in 2010. The Agency is assisting with the construction of various new water and sewer lines as well as several new streets and the reconstruction of streets, including a traffic circle at the corner of Hermosa Street and Elmwood Ave to support these new projects.

Limitations and Requirements of the Redevelopment Plan

Pursuant to the Redevelopment Plan, as amended, the total tax increment revenues received by the Agency over the life of the Redevelopment Project cannot exceed a combined total of $300,000,000 ($8,083,337 collected through June 30, 2009), with no limit on the Amendment No. 2 area and Amendment No. 3 area, and the total amount of outstanding bonded indebtedness incurred by the Agency, payable from tax increment revenues which can be outstanding at any one time cannot exceed $75,000,000.

In compliance with the Redevelopment Law, not less than 20% of the tax increment revenues received from the Project Area shall be used for the purpose of increasing and improving the supply of housing for families of low and moderate incomes.

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Original Area 1993 Added

Territory

1995 Added Territory

2005 Added Territory

Lindsay Redevelopment Agency Lindsay Redevelopment Project No. One

REDEVELOPMENT PLAN LIMITATION DATES AND AMOUNTS

Time Limits Plan

Debt Incurrence Effectiveness

7/20/2017 (l) 7/20/2027 7/19/2023 (I) 7119/2033

7117/2015 7/17/2025

7/W2025 7112/2035

Debt Repayment

7120/2037 7/19/2043

7/17/2040

7112/2050

Dollar Limits Cumulative Tax Outstanding

Increment Bond Debt

(sec: below) $300,000,000

(includes Original Area)

No limit

No limit

(sec: below) (see: below)

(sec below)

$75,000,000 (includes all

subareas)

(I) As amended by the Redevelopmcmt Plan for Amendment No. Two.

The California Legislature recently enacted Senate Bill 1045, Chapter 260, Statutes 2003, effective September l, 2003 ("SB 1045"). SB 1045 provides, among other things, that, for the purpose of determining whether the limit on the tax increment revenue that may be allocated to the Agency has been reached, the aggregate amount of Education Revenue Augmentation Fund payments made by the Agency in prior Fiscal Years from tax increment revenue may be deducted from the amount of tax increment revenue deemed to have been received by the Agency. SB I 045 also permits the Redevelopment Plan to be amended to add one year on to the duration of the Redevelopment Plan and on to the period for collection of tax increment revenues and the repayment of debt. The Lindsay City Council has not adopted an ordinance to amend the Redevelopment Plan to add one year to the Redevelopment plan effectiveness date (as shown above).

The California Legislature recently enacted Senate Bill 211, Chapter 741, Statutes 2001, effective January I, 2002 ("SB 211"). SB 211 provides, among other things, that, at anytime after January I, 2002, the limitation on incurring indebtedness contained in a redevelopment plan adopted prior to January I, 1994, may be deleted by ordinance of the legislative body. However, such deletion will trigger statutory tax sharing with those taxing entities that do not have Pass-Through Agreements. Tax sharing will be calculated based on the increase in assessed valuation after the year in which the limitation would otherwise have become effective.

Amounts payable to taxing agencies under the AB 1290 formula are to be computed after deducting the Housing Set-Aside Amounts attributable to the increase in assessed valuation. Hence, amendment of a Redevelopment Plan to delete the limitation on incurring loans, advances and indebtedness will not adversely impact the Agency's ability t() pay debt service on the Notes.

SB 211 also authori%es the amendment of a redevelopment plan adopted prior to January I, 1994, in order to extend for not more than I 0 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 eJttensions. It also would authorize the Attorney General to bring a civil action to challenge the validity of the proposed extensions.

SB 211 also prescribes additional requirements that a redevelopment agency would have to meet upon extending the time limit on the effectiveness of a redevelopment plan, including requiring an increased percentage of new and substantially rehabilitated dwelling units to be available at affordable housing cost to persons and families of low or moderate income prior to the termination of the effectiveness of the plan.

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The Lindsay City Council has not adopted such an ordinance, pursuant to the authorization contained inSB211.

Pass-Through Agreements; Statutory Pass-Throughs

The Agency has entered into three agreements for the allocation and distribution of tax increment funds. An Agreement with the County of Tulare (including the Tulare County Free Library, Tulare County Air Pollution Control District and the Tulare County Flood Control District) provides for the County to receive 25% of the County Share (approximately 36.95%) of cumulative tax increment revenues allocated and paid to the Agency that exceed $3,000,000; 50% of the County Share of cumulative tax increment revenues allocated and paid to the Agency that exceed $13,000,000; 75% of the County Share of cumulative tax increment revenues allocated and paid to the Agency that exceed $35,000,000; 100% of the County Share beginning in the fiscal year in which the cumulative tax increment revenues allocated and paid to the Agency which are attributed to the County Share equal $17,500,000. The second agreement is with the Lindsay-Strathmore Cemetery District and provides for the District to receive I 00% of its share (approximately 1.45%) of tax increment revenue allocated to the Agency. The third agreement is with the Lindsay-Strathmore Cemetery District and provides for the District to receive 100% of its share (approximately 1.31 %) to tax increment revenue allocate to the Agency. Additionally, the Lindsay Unified School District, College of Sequoias and Tulare County School Services Fund receives their respective portion of Tax Revenues which result from annual inflationary adjustments to the base year valuations. The obligations of the Agency under the agreements are senior to the Agency's obligation to pay debt service on the Bonds.

AB 1290 eliminated the statutory authority for negotiated pass-through agreements and provided a formula for mandatory tax sharing, applicable to projects adopted after January I, 1994 or amended after that date to add territory. The formula thus applies to the territory added by the 1995 amendment to the Redevelopment Plan.

Generally speaking, under AB 1290, the Agency is to pay to the affecting taxing agencies percentages of tax increment generated in the territory which was added to the Project Area in 1995 as follows:

I. throughout the term of the Project's eligibility to receive tax increment, 25% of post set-aside revenues; plus,

2. for the eleventh year of the receipt of tax increment and thereafter, 21% of revenues in excess of tenth year revenue; plus,

3. for the thirty-first year of the receipt of tax increment and thereafter, 14% of revenues in excess of thirtieth year revenues.

As indicated, amounts specified as payable to taxing agencies are to be computed after deducting the housing set-aside amount.

Any payments made by the Agency to satisfy the Statutory Pass-Throughs are senior to the Pledged Revenues available to pay debt service on the Notes. Any payments made by the Agency to satisfy the Pass­Through Agreements are senior to the Pledged Revenues available to pay debt service on the Notes. See "PLEDGED REVENUES-Projected Taxable Valuation and Pledged Revenues" herein.

Land Use

Set forth below is the land used breakdowns by secured assessed valuation value for the Project Area based on the 2008-09 secured property tax roll.

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Secured Assessed % of Total

Land Use Parcel Count Valuation Secured A.V. (1)

Residentia~ Single Family 1.461 124.941,164 Residential Multi-Family 266 41 '162,705 Industrial 46 32,916,679 Commercial 172 31,346,314 Agriculture 20 26,119,720 Miscellaneous 23 9,141,241 Institution 33 5.482,699 Recreation 1 369 232 Total 2,022 $271,479,754

(1) Based on Fiscal Year 2008-09 secured assessed valuation Source: Urban Futures, Inc.

Largest Taxpayers

46.02% 15.16% 12.12% 11.55% 9.62% 3.37% 2.02% 0.14%

100.00%

Set forth below are the ten largest taxpayers in the Project Area based on the 2008-09 secured property tax roll.

#of 2008-09 Secured Percent of Taxpayer Properties Assessed Valuation Total A.V. (1)

1 Hilarides Robert J & Sharon J 16,613,004 6.11% 2 Lindsay II Hsng Ptrs 8,172,312 3.01% 3 Suntreat Investment Inc 10 7,616,141 2.80% 4 Capstone Business Credit LLC 1 6,467,401 2.38% 5 Lansco Properties Inc 3 5,624,403 2.07% 6 Sworlco 3 5,211,742 1.92% 7 Smith Donald C (Gen Ptnr) 1 4,532,833 1.67% 8 Lindsay Mission Estates LLC 3 4,319,394 1.59% 9 Creekbridge-Lindsay 1 LLC 2 4,265,253 1.57%

10 Lo Sue Brothers Inc 11 4,040,318 1.49% 75,264,599 24.61%

(1) Based on Fiscal Year 2008~09 secured assessed valuation: $271,688,862 Source: Urban Futures, Inc.

TAX REVENUES AND DEBT SERVICE COVERAGE

The following section presents a summary of the historical and projected assessed valuation and tax increment revenues and Pledged Revenues with respect to the Project Area, prepared by Urban Futures, Inc., Orange, California. Urban Futures, Inc. has been retained to act as the Agency's Financial Advisor in connection with the issuance of the Notes. The Agency believes the assumptions upon which the Financial Advisor's projections are based are reasonable. However, some assumptions may not materialize and unanticipated events and circumstances may occur. See "RISK FACTORS. " The projections do not include an allowance for property tax appeals and related refimds, or delinquencies by taxpayers. The Pledged Revenues received during the forecast period may vary from the projections and the variations may be material.

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Historical Assessed Valuation, Tax Increment and Pledged Revenues

Tax increment revenues are generated from increases in the total assessed value above the base year value. Each year, the County Auditor provides a report of the current year and base year values for the Project Area. Set forth in the table below is a summary of the historical assessed value, tax increment and Pledged Revenues of the Project Area for fiscal years 2005-06 through 2009-10.

Table 3 LINDSAY REDEVELOPMENT AGENCY

Lindsay Redevelopment Project One Historical Assessed Values, Historical Tax Increment and Pledged Revenues

Fiscal Years 2005-06 to 2009-I 0

2005-06 2006-07 2007.08 2008.09

Taxable Valuation $ 196,809,240 $ 255,790,154 $ 295,307,803 $ 305,627,466 Less: Base Year Valuation (1) 91 296 181 118499760 118499 760 119373 764 Incremental Valuation (2) $ 105,513,059 $ 137,290,394 $ 176,808,043 $ 186,253,702 Typical Tax Rate .l.!lll% .l.!lll% .l.!lll% .l.!lll% Incremental Revenue $ 1,055,131 $ 1,372,904 $ 1,768,080 $ 1,862,537 Less: SenOr Obligation Debt Service $ 223,484 $ 295,985 $ 727,618 $ 882,618 Less: Pass~ Through Payments (3) 274 862 373 324 480 859 501 268 Pledged Tax Revenues $ 556,7B5 $ 703,595 $ 559,604 $ 478,651

(1) The base year valuation is combined for all Project subareas. (2) Increase over base year valuation. (3) Pass through payments indude County administration fees.

2009-10

$ 308,528,549 119404414

189,512,164 .l.!lll%

$ 1,895,122 $ 997,368

530 252 $ 367,502

Property values and overall development in the City increased since the adoption of the Redevelopment Plan in 1987. The assessed value of the Project Area increased by $111,719,309 from approximately $196,809,240 in fiscal year 2005-06 to approximately $308,528,549 in fiscal year 2009-10. The projected fiscal year 2010-11 assessed value of the Project Area is approximately $317,784,405.

Beginning in 2006, many real estate markets throughout the State experienced a slow-down period. DataQuick Information Systems, a provider of real estate market data, reported that for February 2009, the number of homes sold in the County decreased by 59.4 percent, when compared to February 2008. The median price of those homes sold in February 2009 decreased by 12.3 percent, when compared to February 2008.

Property value and further development in the Project Area will be subject to the fluctuation of the real estate market throughout the term of the Notes. A significant economic downturn may negatively impact the property value in the Project Area. See "RISK FACTORS-Reduction in Taxable Value" and "RISK FACTORS-Real Estate Volatility."

Delinquencies

California counties can elect to implement the Alternative Method of Distribution of Tax Levies and Collections and of Tax Sale Proceeds (the "Teeter Plan"), as provided for in Section 4701 et seq. of the California Revenue and Taxation Code. Pursuant to the Teeter Plan, a participating county will apportion to the participating local agencies, amounts equal to I 00 percent of the taxes levied regardless of the amount actually collected. In return, the participating county receives and retains all penalties and interest which are collected with delinquent taxes. The County is part of the Teeter Plan so the projected Pledged Revenues do not include any allowance for projected delinquencies.

Appeals of Assessed Values

Pursuant to California law, property owners may apply for a reduction of their property tax assessment by filing a written appeal. After the applicant and the assessor have presented their arguments, the applicable local appeals board makes a final decision on the proper assessed value. The appeals board may rule in the

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assessor's favor, rule in the applicant's favor, or set its own opinion of the proper assessed value, which may be more or less than either the assessor's opinion or the applicant's opinion. Any reduction in the assessment ultimately granted applies to the year for which the application is made and may also affect the values in subsequent years. Refunds for taxpayer overpayment of property taxes may include refunds for overpayment of taxes in years after that which was appealed. Current year values may also be adjusted as a result of a successful appeal of prior year values. Any taxpayer payment of property taxes that is based on a value that is subsequently adjusted downward will require a refund for overpayment.

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. ky base year appeal must be made within four years of the change of ownership or new construction date. A base year assessment appeal has significant future revenue impacts because a reduced base year assessment will then reduce the compounded value of the property prospectively. Except for the two percent inflation factor, the value of the property cannot be increased until a change of ownership occurs or additional improvements are added.

Section 51 of the Revenue and Taxation Code permits a reduction in the assessed value if the full cash value of the property has been reduced by damage, destruction, depreciation, obsolescence, removal of property or other factors causing a decline in value. Significant reductions have taken place in some counties due to declining real estate values. Reductions made under this code section may be initiated by the County Assessor or requested by the property owner.

After a roll reduction is granted under this section, the property is reviewed on an annual basis to determine its full cash value and the valuation is adjusted accordingly. This may result in further reductions or in value increases. Such increases must be in accordance with the full cash value of the property and may exceed the maximum annual inflationary growth rate allowed on other properties under Article XIIIA of the State Constitution. Once the property has regained its prior value, adjusted for inflation, it once again is subject to the annual inflationary factor growth rate allowed under Article XIIIA.

The taxable value of unitary property may be contested by utility companies and railroads to the State Board of Equalization. Generally, the impact of utility appeals is on the statewide value of a utility determined by the State Board of Equalization. As a result, the successful appeal of a utility may not impact the taxable value of a project area but could impact a project area's allocation of unitary property tax revenues.

Any assessment appeal that is pending or which may be filed in the future, if successful, will result in a reduction of the assessed value of the subject property. A reduction of assessed valuation due to appeals, if significant, and the resulting property tax refunds could adversely impact the amount of Pledged Revenues available to pay debt service on the Notes. Based on a review of the records of the County, the Financial Advisor reports that none of the top ten taxpayers in the Project Area have appeals pending. The projections set forth herein do not include an allowance for reduction of assessed values due to successful appeals or related refunds. See "RISK FACTORS-Reduction in Taxable Value."

Projected Pledged Revenues

The projections of Pledged Revenues for the Project Area from fiscal years 2009-10 to 2013-14, as prepared by the Financial Advisor, are summarized below. The projections are calculated based on the values for fiscal year 2009-10 (see Table 3 above), and assume that secured assessed value in the Project Area will increase by three percent annually in fiscal year 20 I 0-11 and thereafter. The projected assessed values do not include an allowance for property tax appeals and related refunds, or delinquencies. The Pledged Revenues received during the forecast period may vary from the projections and the variations may be material. See "RISK FACTORS - Reduction in Taxable Value."

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Table 4 LINDSAY REDEVELOPMENT AGENCY

Lindsay Redevelopment Project No One Projected Pledged Revenues

Fiscal Years 2010-11 through 2014-2015

Taxable Incremental Pass Through Senior Obligation Fiscal Year Valuation (1) Revenues (2) Payments (3) Debt Service

2009-10 2010-11 2011-12 2012-13 2013-14 2014-15

308,528,549 317,784,405 327,317,938 337,137,476 347,251,600 357,669,148

1 ,895,122 1,983,800 2,079,135 2,177,331 2,278,472 2,382,647

530,252 997,368 555,419 1,023,468 579,313 1,023,192 619,704 1,026,136 661,219 1,023,310 703,888 1,025,712

(1) Taxable valuation increased by 3% in Fiscal Year 2010-11, and 3% each Fiscal Year thereafter. (2) Incremental Revenues based on the incremental valuation times a tax rate of 1.00%. Base

Year valuation is $119,404,414. (3) Pass through payments include County administration fees.

Coverage Projections

Pledged Revenues

367,502 404,913 476,630 531,490 593,943 653,047

The tables below shows the projected debt service coverage by Pledged Revenues on the Notes (Table 5) and also Tax Revenues on the Notes and Senior Obligations combined (Table 6), assuming that assessed values will increase by three percent annually in fiscal year 2010-11 and thereafter.

Table 5 LINDSAY REDEVELOPMENT AGENCY

Lindsay Redevelopment Project No One Estimated Debt Service Coverage

Fiscal Projected Debt Year Pledged Revenues (1) Service (2) Coverage (3)

2009-10 367,502 19,050 19.29 2010-11 404,913 54,000 7.50 2011-12 476,630 54,000 8.83 2012-13 531,490 54,000 9.84 2013-14 593,943 54,000 11.00 2014-15 (4) 653,047 100,000 6.53

(I) See Table 4. (l) Debt service dollar amounts based on those scheduled to be payable during the corresponding fiscal year, assuming no

optional redemption prior to maturity. (J) Equals "Projected Pledged Revenues" divided by "Debt Service." <4> Assumes the notes are refinanced as 30-year, fully amortized bonds at an annual rate of 8%. Source: Projected Pledged Revenues from Urban Futures, Inc.; debt service and coverage from Southwest Securities.

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Table 6 LINDSAY REDEVELOPMENT AGENCY

Lindsay Redevelopment Project No One Estimated Aggregate Senior Obligation and Note Debt Service Coverage

Fiscal Projected Debt Year Net Tax Revenues (I) Service (2) Coverage (3)

2009-10 1,364,870 1,016,418 1.34 2010-11 1,428,381 1,077,468 1.33

2011-12 1,499,822 1,077,192 1.39 2012-13 1,557,626 1,080,136 1.44 2013-14 1,617,253 1,077,310 1.50 2014-15 (4) 1,678,759 1,125,712 1.49

(I) Tax Revenues less Pass-Throughs and Statutory Pass-Throughs pledged to both the Notes and Senior Obligations. (l) Debt service on the Notes and Senior Obligations based on those scheduled to be payable during the corresponding fiscal

year, assuming no optional redemption prior to maturity. (J) Equals "Projected Net Tax Revenues" divided by "Debt Service." (4

) Assumes the Notes are refinanced as 30-year, fully amortized bonds at an annual rate of 8%. Source: Projected Pledged Revenues from Urban Futures, Inc.; debt service and coverage from Southwest Securities.

RISK FACTORS

Investment in the Notes involves elements of risk. The following section describes certain specific risk factors affecting the payment and security of the Notes. The following discussion of risks is not meant to be an exhaustive list of the risks associated with the purchase of the Notes and the order of discussion of such risks does not necessarily reflect the relative importance of the various risks. Potential investors are advised to consider the following factors along with all other itiformation in this Official Statement in evaluating the Notes. There can be no assurance that other risk factors not discussed under this caption will not become material in the future.

Limited Obligations of the Agency

The Notes are limited obligations of the Agency. The Notes are not a debt, liability or obligation of the City, the State of California, or any of its political subdivisions other than the Agency, and none of the City, the State nor any of its political subdivisions, other than the Agency, is liable therefore. The principal of, premium, if any, and interest on the Notes are payable solely from Pledged Revenues from the Project Area and amounts in certain funds and accounts held under the Indenture. The Agency has no power to levy and collect property taxes, and any property tax limitation, legislative measure, voter initiative or provisions of additional sources of income to taxing agencies having the effect of reducing the property tax rate could reduce the amount of Pledged Revenues that would otherwise be available to pay debt service on the Notes. See "SECURITY FOR THE NOTES."

Reduction in Taxable Value

The projected Pledged Revenues shown in this Official Statement are based on certain assumptions with regard to the assessed valuation in the Project Area, future tax rates and percentage of taxes collected. While the Agency believes these assumptions to be reasonable, to the extent that the assessed valuation, the tax rates or the percentage of taxes collected are less than the Agency's assumptions, the Pledged Revenues available to pay debt service on the Notes will, in all likelihood, be less than those projected.

Tax Revenues allocated to the Agency are detennined by the amount of incremental taxable value in the Project Area allocable to the Project Area and the current rate or rates at which property in the Project Area

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is taxed. A reduction of taxable value of property in the Project Area will likely reduce the amount of Tax Revenues collected by the Agency and therefore, the amount of Pledged Revenues. As discussed under "TAX REVENUES AND DEBT SERVICE COVERAGE-Historical Assessed Valuation, Tax Increment and Pledged Revenues," the total assessed value in the Project Area increased by 57 percent between fiscal year 2005-06 and fiscal year 2009-10. While the total assessed value of property in the Project Area continued to increase by 4.6 percent from fiscal year 2007-08 to fiscal year 2009-10, home sales volume and average home sale prices in some California areas decreased during the same period as the result of a general slow-down in the region's residential real estate market. Property value and development growth in the Project Area will be subject to the fluctuation of the real estate market throughout the term of the Notes. See "-Real Estate Volatility" below.

The reduction of taxable values of property may be caused by factors beyond the Agency's control. A relocation out of the Project Area by one or more major property owners, or the transfer, the discovery of hazardous substances on a property within the Project Area (see "Hazardous Substances" below) or the complete or partial destruction of such property caused by, among other eventualities, an earthquake, flood or other natural disaster (see "Natural Disasters" below or any other event which would permit a reassessment of property at lower values), could cause a reduction in the Pledged Revenues securing the Notes. Future initiatives or legislation may be approved by the electorate or the legislature which would further limit the increase of assessed value of property or reduce the tax rate applicable to the property. Property owners may also appeal to the County Assessor for a reduction of their assessed valuations or the County Assessor could order a blanket reduction in assessed valuations based on then current economic conditions. Such a reduction of assessed valuations and the resulting decline in Pledged Revenues or the resulting property tax refunds could have an adverse effect on the Agency's ability to make timely payments of principal of and interest on the Notes. See "LIMITATIONS ON TAX REVENUES." The projected Pledged Revenues shown in this Official Statement do not take into account any allowance for property tax appeals and related refunds. See also "TAX REVENUES AND DEBT SERVICE COVERAGE-Appeals of Assessed Values."

Real Estate Volatility

Changes in the City's assessed valuation have occurred and will continue to occur while the Notes are outstanding. Economic and other factors beyond the Agency's control, such as a general market decline in land values, reclassification of property to a class that is exempt from taxation, whether by ownership or use (such as exemptions for property owned by State and local agencies and property used for qualified educational, hospital, charitable or religious purposes), or the complete or partial destruction of taxable property caused by natural or manmade disaster, such as earthquake, flood, fire, terrorist activities, toxic dumping, etc., could cause a reduction in the assessed value of taxable property within the City and could thereby result in a decrease in the general revenues of the City and Agency.

Unconventional Mortgage Structure and Tightening of Credit by Lenders

From 2002 through the first half of 2006, the California housing market experienced significant price appreciation with increasing demand. One factor contributing to the housing boom in California was readily available credit, including the use of unconventional mortgage structures, such as a cross between a fixed and adjustable rate mortgage, having a low initial (or "teaser") fixed interest rate for several years that converts to an adjustable interest rate determined by an index plus a fixed margin, and interest-only mortgages, where the borrower pays only interest for a set period of time and then pays down the principal plus interest. Homeowners who financed the purchase of their homes with such mortgages can expect their monthly mortgage payments to increase after the initial period. As the initial low-interest or interest-only periods related to such unconventional mortgages have expired, many homeowners have not been able to maintain payments on their existing loans or to obtain refinancing loans for their homes. As a result, foreclosure proceedings in California have increased dramatically from 2006 through 2009. In the second half of 2007, lenders began tightening standards for providing mortgages. In addition, the economy has experienced a downturn in the last couple of years, with an increased unemployment rate and with the financial markets experiencing significant credit and liquidity problems. As a result of such factors, in the past couple of years there has been a decline in the California housing market, as evidenced by a decrease in home sale prices,

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increasing inventory of new homes and slowing demand. The Agency has not undertaken to assess the financial condition of the current owners of the residential properties within the City and expresses no view concerning these matters. The Agency cannot predict and expresses no view as to how the current housing market crisis will affect property assessed valuations within the Project Area.

Concentration of Ownership

The ten largest property taxpayers in the Project Area account for $75,264,590 of secured assessed value, or approximately 25 percent of the total secured assessed value of the Project Area for fiscal year 2009-10. Concentration of ownership presents a risk in that if one or more of the largest property owners were to default on their taxes, or were to successfully appeal the tax assessments on property within the Project Area, a substantial decline in Pledged Revenues could result. See "PROJECT AREA-Top Property Owners" and "TAX REVENUES AND DEBT SERVICE COVERAGE-Appeals of Assessed Values."

Levy and Collection

The Agency does not have any independent power to levy and collect property taxes. Any reduction in the tax rate or the implementation of any constitutional or legislative property tax decrease could reduce the Pledged Revenues, and accordingly, could have an adverse impact on the ability of the Agency to repay the Notes. Likewise, delinquencies in the payment of property taxes could have an adverse effect on the Agency's ability to make timely debt service payments.

Reduction in Inflationary Rate

As described in greater detail below, Article XIIIA of the California Constitution provides that, generally, absent a change of ownership, the full cash value of real property used in determining taxable value may be adjusted from year to year to reflect the inflationary rate, not to exceed a two percent increase for any given year, or may be reduced to reflect a reduction in the consumer price index 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 two percent, there have been years in which the assessed values were adjusted by actual inflationary rates, which were less than two percent. The Financial Advisor has projected Pledged Revenues to be received by the Agency based, among other things, upon a three percent annual increase in assessed value. The Agency is unable to predict if any adjustments to the full cash value of real property within the Project Area, whether an increase or a reduction, will be realized in the future. See "LIMITATIONS ON TAX REVENUES."

Development Risks

As discussed in the "PROJECT AREA-Development in the Project Area," there are several commercial projects in development in and around the Project Area. If successful, these developments will likely contribute to the continued growth of the Project Area. The tax increment revenue projections assume a growth rate in assessed value in the Project Area of three percent annually. See "TAX REVENUES AND DEBT SERVICE COVERAGE-Projected Tax Revenues." There are risks, however, associated with any real estate development project. The development may be subject to unexpected delays, disruptions and changes. For example, real estate development operations may be adversely affected by changes in general economic conditions, fluctuations in the real estate market, fluctuations in interest rates, unexpected increases in development costs and by other factors. Further, real estate development operations in and around the Project Area could be affected by governmental policies, including governmental policies to restrict or control development. Delayed or halted developments in or around the Project Area could adversely impact the economy of, and property value in, the Project Area. See "Reduction in Taxable Value" above.

State Budget

In connection with its approval of the 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

23

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

In 2008, the State Legislature adopted, and the Governor signed, legislation, Chapter 75 I, Statutes 2008 (AB 1389) ("AB 1389"), that among other things require redevelopment agencies to pay into ERAF in fiscal year 2008-09 prior to May 10, 2009, an aggregate amount of $350 million, of which the Agency was to pay approximately $325,IOO. AB 1389 provides that part of the ERAF obligation of the Agency is calculated based on the gross tax increment received by the Agency and the other part of the ERAF obligation of the Agency is calculated based on net tax increment revenues (after any pass-through payments to other taxing entities). AB 1389 provides that required transfers to ERAF are subordinate to payments on bonds secured by tax increment revenues. 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 September 23, 2009, the State filed an Abandonment of Appeal, abandoning its appeal of the decision of the superior court.

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 signed, 2009-10 Fourth Extraordinary Session Assembly Bill No. 26 (the "2009 SERAF Legislation").

The 2009 SERAF Legislation mandates that redevelopment agencies in the State make deposits to the Supplemental Educational Revenue Augmentation Fund ("SERAF") that is established in each county treasury throughout the State the aggregate amounts of $1.7 billion for Fiscal Year 2009-10, which are due prior to May 10, 2010, and $350 million for Fiscal Year 2010- I I, which are due prior to May I 0, 2011.

The Agency has preliminarily estimated that the total amount payable by it pursuant to the 2009 SERAF Legislation for its redevelopment project areas will be $523,477 for Fiscal Year 2009- IO and $107,775 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 Agency believes it will have sufficient funds to pay the full amount of such SERAF payments when due. Potential sources of funds used to pay the SERAF include: tax increment revenues from Fiscal Years 2009-10 and 20 I 0- I 1 and available moneys on deposit in Agency funds.

The 2009 SERAF Legislation contains provisions that subordinate the obligation of redevelopment agencies to make the SERAF payments specified therein to certain indebtedness. Section 6 of the 2009 SERAF Legislation, to be codified at Cal. Health and Safety Code, § 33690 (a) (3) states: "The obligation of any agency to make the payments required pursuant to this subdivision shall be subordinate to the lien of any pledge of collateral securing, directly or indirectly, the payment of the principal, or interest on any bonds of the agency including, without limitation, bonds secured by a pledge of taxes allocated to the agency pursuant to Section 33670 [ofthe 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 of the time that the applicable redevelopment agency receives allocations of tax revenues under the

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Redevelopment Law. The five percent (5%) additional housing set-aside penalty provision referred to in the 2009 SERAF Legislation (the "Penalty Set-Aside Requirement") would be in addition to the twenty percent (20%) of such tax revenues already required to be used for low and moderate income housing purposes. A redevelopment agency that borrows from amounts required to be allocated to its housing set-aside funds to make required SERAF payments but does not timely repay the funds, may also be subject to the Penalty Set­Aside Requirement.

As stated above, the Agency believes that it will be able to timely satisfy the requirements imposed on it by the 2009 SERAF Legislation.

On October 20, 2009, the California Redevelopment Association and two redevelopment agencies filed suit in California Redevelopment Association v. Michael C. Genest (County of Sacramento) (Case No. 34-2009-80000359), challenging the constitutionality of the 2009 SERAF Legislation (the "2009 SERAF Litigation"). The Agency cannot predict the outcome of the 2009 SERAF Litigation.

Legislation to amend the 2009 SERAF Legislation is now being considered by the State Assembly (AB 182). The current version of such amendment (the "SERAF Amendment") has been passed by the State Senate. Under the SERAF Amendment, a redevelopment agency would be able to borrow from its Low and Moderate Income Housing Fund (not just the current year set-aside amount) in order to make the required Fiscal Year 2009-10 SERAF payment. Such provision would not apply to the required Fiscal Year 2010-ll SERAF payment.

The SERAF Amendment also would permit the Department of Finance to use Fiscal Year 2007- 08 data to calculate the amounts of agencies' SERAF payments. The 2009 SERAF Legislation currently provides for the use of Fiscal Year 2006-07 data. Such change would cause significant changes in allocation. Under such change, the Agency's required SERAF payment for Fiscal Year 2009-10 would increase by approximately $61,247 to an estimated total of $584,724. The Agency cannot predict whether or not the SERAF Amendment will pass and be enacted into law nor whether or not further changes will be made to the SERAF Amendment prior to passage.

The Agency cannot predict what actions will be taken in the future by the State Legislature and the Governor to deal with changing State revenues and expenditures and the repercussions they may have on the Fiscal Year 2009-10 State Budget and future State budgets. These developments at the State level may, in tum, affect local governments and agencies, including the Agency. The State Legislature may adopt other legislation requiring redevelopment agencies to make other payments to ERAF or SERAF or to make other payments. The impact that current and future State fiscal shortfalls will have on the Agency is unknown at this time. In prior years, the State has experienced budgetary difficulties and balanced its budget by requiring local political subdivisions, such as the City and the Agency, to fund certain costs theretofore borne by the State.

Information about the State budget and State spending is regularly available from various State offices, including the Department of Finance, the Office of the Legislative Analyst and the State Treasurer. However, none of such information is incorporated by such reference.

Natural Disasters

The value of the property in the Project Area in the future can be adversely affected by a variety of additional factors, particularly those which may affect infrastructure and other public improvements and private improvements on property and the continued habitability and enjoyment of such private improvements. Such additional factors include, without limitation, geologic conditions such as earthquakes, topographic conditions such as earth movements, landslides and floods and climatic conditions such as droughts. In the event that one or more of such conditions occur, such occurrence could cause damages of varying seriousness to the land and improvements and the value of property in the Project Area could be diminished in the aftermath of such events. A substantial reduction of the value of such properties and could affect the ability or willingness of the property owners to pay the property taxes.

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The City, like most communities in California, is an area of unpredictable seismic acllvtty, and therefore, is subject to potentially destructive earthquakes. Numerous active and inactive fault lines pass through or near the City. The occurrence of severe seismic activity in the City could result in substantial damage to property located in the Project Area, and could lead to successful appeals for reduction in assessed values of such property. Such a reduction could result in a decrease in Pledged Revenues.

Hazardous Substances

An additional environmental condition that may result in the reduction in the assessed valne of property would be the discovery of a hazardous substance that would limit the beneficial use of taxable property within the Project Area. In general, the owners and operators of property may be required by law to remedy conditions of the property relating to releases or threatened releases of hazardous substances. The owner or operator may be required to remedy a hazardous substance condition of property whether or not the owner or operator has anything to do with creating or handling the hazardous substance. The effect, therefore, should any of the property within the Project Area be affected by a hazardous substance, could be to reduce the marketability and value of the property by the costs of remedying the condition.

Bankruptcy Risks; Enforceability of Remedies

The enforceability of the rights and remedies of the owners of the Notes and the obligations of the Agency may become subject to the following: the federal bankruptcy code and applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or affecting the enforcement of creditors' rights generally, now or hereafter in effect; usual equitable principles which may limit the specific enforcement under state law of certain remedies; the exercise by the United States of America of the powers delegated to it by the federal Constitution; and the reasonable and necessary exercise, in certain exceptional situations of the police power inherent in the sovereignty of the State of California and its goverrunental bodies in the interest of servicing a significant and legitimate public purpose. Bankruptcy proceedings, or the exercise of powers by the federal or state goverrunent, if initiated, could subject the owners of the Notes to judicial discretion and interpretation of their rights in bankruptcy or otherwise and consequently may entail risks of delay, limitation, or modification of their rights.

Parity Notes

The Agency may issue or incur obligations payable from Pledged Revenues on a parity with its pledge of Pledged Revenues to payment of debt service on the Notes. See "SECURITY FOR THE NOTES -Incurrence of Parity Notes." The existence of and the potential for more of such obligations increases the risks associated with the Agency's payment of debt service on the Notes in the event of a decrease in the Agency's collection of Pledged Revenues.

Secondary Market

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

Loss ofT ax Exemption

Compliance by Agency. In order to maintain the exclusion of interest on the Notes from gross income for federal income tax purposes, the Agency has covenanted to comply with the applicable requirements of Section 148 and certain other sections of the Internal Revenue Code of 1986, as an1ended, relative to arbitrage and avoidance of characterization as private activity bonds, among other things. Interest on the Notes could become includable in gross income for purposes of federal income taxation retroactive to the date of issuance

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of the Notes as a result of acts or omissions of the Agency in violation of these covenants. See "TAX MATTERS."

Future Legislation or Court Decisions. Legislation affecting the tax exemption of interest on the Notes may be considered by the United States Congress and the State legislature. Federal and state court proceedings and the outcome of such proceedings could also affect the tax exemption of interest on the Notes. No assurance can be given that legislation enacted or proposed, or actions by a court, after the date of issuance of the Notes will not have an adverse effect on the tax exemption of interest on the Notes or the market value of the Notes.

LIMITATIONS ON TAX REVENUES

Article XIIIA of the California Constitution

California voters, on June 6, 1978, approved an amendment (commonly known as both Proposition 13 and the Jarvis-Gann Initiative) to the California Constitution. This amendment, which added Article XIIIA to the California Constitution, among other things, affects the valuation of real property for the purpose of taxation in that it defines the full cash value of property to mean "the county assessor's valuation of real property as shown on the fiscal year 1975-76 tax bill under full cash value, or thereafter, the appraised value of real property when purchased, newly constructed, or a change in ownership has occurred after the 1975 assessment." The full cash value may be adjusted annually to reflect inflation at a rate not to exceed two percent per year, or any reduction in the consumer price index or comparable local data, or any reduction in the event of declining property value caused by damage, destruction or other factors. The amendment further limits the amount of any ad valorem tax on real property to one percent of the full cash value except that additional taxes may be levied to pay debt service on indebtedness approved by the voters prior to July I, 1978. In addition, an amendment to Article XIIIA was adopted in October 1986 by initiative which exempts from the one percent limitation any bonded indebtedness approved by two-thirds (55 percent in certain instances) of the votes cast by the voters for the acquisition or improvement of real property.

On September 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). The Court reserved certain constitutional issues and the validity of legislation implementing the amendment for future determination in proper cases.

In the general elections of 1986, 1988 and 1990, the voters of the State approved various measures which further amended Article XIIIA. One such amendment generally provides that the purchase or transfer of (i) real property between spouses or (ii) the principal residence and the first $1 ,000,000 of the full cash value of other real property between parents and children, do not constitute a "purchase" or "change of ownership" triggering reassessment under Article XIIIA. This amendment has reduced local property tax revenues. Other amendments pennitted the Legislature to allow persons over 55 years old who sell their residence on or after November 5, 1986, 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, and permitted the Legislature to authorize each county under certain circumstances to adopt an ordinance making such transfers or assessed value applicable to situations in which the replacement dwelling purchased or constructed after November 8, 1988, is located within the county and the original property is located in another county within California.

In the October 1990 election, the voters approved additional amendments to Article XIIIA pennitting the State Legislature to extend the replacement dwelling provisions applicable to persons over 55 years old to severely disabled homeowners for replacement dwellings purchased or newly constructed on or after June 5, 1990, and to exclude from the definition of "new construction," which triggers reassessment, improvements to certain dwellings for the purpose of making the dwelling more accessible to severely disabled persons. In the November 1990 election, the voters approved the amendment of Article XIIIA to penni! the State Legislature to exclude from the definition of "new construction" seismic retrofitting improvements or improvements utilizing earthquake hazard mitigation technologies constructed or installed in existing buildings after November 6, 1990.

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Challenges to Article XII/A. California trial and appellate courts have upheld the constitutionality of Article XliiA's assessment rules in three significant cases. The United States Supreme Court in an appeal to one of these cases upheld the constitutionality of Article XIIIA's tax assessment system. 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 Pledged Revenues should a future decision hold unconstitutional the method of assessing property.

Implementing Legislation. Legislation enacted by the California Legislature to implement Article XIIIA provides that all taxable property is shown at full assessed value as described above. In conformity with this procedure, all taxable property value included in this Official Statement (except as noted) is shown at 100 percent of assessed value and all general tax rates reflect the $1 per $100 of taxable value. Tax rates for voter approved bonded indebtedness and pension liability are also applied to 100 percent of assessed value.

Future assessed valuation growth allowed under Article XIIIA (new construction, change of ownership, two percent annual value growth) is allocated on the basis of "situs" among the jurisdictions that serve the tax rate area within which the growth occurs, except for certain utility property assessed by the State Board of Equalization. Local agencies and school districts share the growth of "base" revenue from the tax rate area. Each year's growth allocation becomes part of each agency's allocation the following year. The Agency is unable to predict the nature or magnitude of future revenue sources which may be provided by the State of California to replace lost property tax revenues. Article XliiA effectively prohibits the levying of any other ad valorem property tax above the one percent limit except for taxes to support indebtedness approved by the voters as described above.

In 1990, the State enacted Senate Bill 2557 which allows counties to charge fees to local jurisdictions for the cost of preparing and overseeing the tax roll.

Property Tax Collection Procedure

In California, property which is subject to ad valorem taxes is classified as "secured" or "unsecured." The secured classification includes property on which any property tax levied by the County becomes a lien on that property. A tax levied on unsecured property does not become a lien against the unsecured property, but may become a lien on certain other property owned by the taxpayer. Every tax which becomes a lien on secured property has priority over all other liens on the secured property, regardless of the time of the creation of other private liens.

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

A ten percent penalty is added to delinquent taxes which have been levied with respect to property on the secured roll. In addition, on or about June 30 of the fiscal year, property on the secured roll on which taxes are delinquent is declared in default by operation of law and declaration of the tax collector. Such property may thereafter be redeemed by payment of the delinquent taxes and a delinquency penalty, plus a redemption penalty of one and a half percent per month to the time of redemption. If taxes are unpaid for a period of five years or more, the property is subject to sale by the County tax collector.

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The valuation of property is detennined as of the January I lien date as equalized in August of each year and equal installments of taxes levied upon secured property become delinquent on the following April 10 and December 10. Unsecured taxes, if unpaid, are delinquent by August 31.

A bill enacted in 1983, SB 813 (Statutes of 1983, Chapter 498), provides for the supplemental assessment and taxation of property upon the occurrence of a change in ownership or completion of new construction. Previously, statutes enabled the assessment of such changes only as of the next January I tax lien date following the change and thus delayed the realization of increased property taxes from the new assessments for up to 14 months. As enacted, Chapter 498 provides increased revenue to redevelopment agencies to the extent that supplemental assessments of new construction or changes of ownership occur within the boundaries of redevelopment projects subsequent to the January I lien date. To the extent such supplemental assessments occur within the Project Area, Agency revenues may increase.

In 1990, the State Legislature enacted Senate Bill 2557 (Statutes of 1990, Chapter 466) ("SB 2557") which allows counties to charge for the cost of assessing, collecting and allocating property tax revenues to local government jurisdictions on a prorated basis. California courts have upheld the inclusion of redevelopment agencies as a local government agency which must share the cost of property tax administration. The 1992 enactment of Senate Bill 1559 (Chapter 697) and the decision of the California Court of Appeal in Arcadia Redevelopment Agency v. Ikemoto have clarified that redevelopment agencies, such as the Agency, are to share in the cost of property tax administration charged by most California counties, including the County. During fiscal year 2008-09, the County withheld approximately $122,466 from the Agency for such administrative costs with respect to the Project Area.

Unitary Property

AB 2890 (Statutes of 1986, Chapter 1457) provides that, commencing with fiscal year 1988-89, assessed value derived from State-assessed unitary property (consisting mostly of operational property owned by certain railroad and utility companies) is to be allocated county-wide as follows: (i) each tax rate area will receive the same amount from each assessed utility received in the previous fiscal year unless the applicable county-wide values are insufficient to do so, in which case values will be allocated to each tax rate area on a pro rata basis; and (ii) if values to be allocated are greater than in the previous fiscal year, each tax rate area will receive a pro rata share of the increase from each assessed utility according to a specified formula. Additionally, the lien date on State-assessed property is changed from March I to January I.

AB 454 (Statutes of 1987, Chapter 921) further modifies Chapter 1457 regarding the distribution of 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 as follows: for revenues generated from the one percent tax rate, each jurisdiction, including redevelopment project areas, receives a percentage up to 102 percent of its prior year State-assessed unitary revenues; and if county-wide revenues generated for unitary property are greater than I 02 percent of the previous year's unitary revenues, each jurisdiction receives a percentage share of the excess unitary revenues generated from the application of the debt service tax rate to county wide unitary taxable value, further, each jurisdiction will receive a percentage share of revenues based on the jurisdiction's annual debt service requirements and the percentage of property taxes received by each jurisdiction from unitary property taxes. Railroads will continue to be assessed and revenues allocated to all tax rate areas where railroad property is sited.

The intent of Chapters 1457 and 921 is to provide redevelopment agencies with their appropriate share of revenues generated from the property assessed by the State Board of Equalization. The County Auditor­Controller remitted no unitary revenues to the Agency for the Project Area during the 2006-07 fiscal year.

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Article XIIIB of the California Constitution

On November 6, 1979, California voters approved Proposition 4 which added Article X!IlB to the California Constitution and has been subsequently amended several times. The principal effect of Article XIIIB is to limit the annual appropriations of the State and any city, county, school district, authority or other political subdivision of the State to the level of appropriations for the prior fiscal year, as adjusted for changes in the cost of living, population and services rendered by the government entity. The base years for establishing such appropriation limit is fiscal year 1986-87 and the limit is to be adjusted annually to reflect changes in population, cost of living and certain increases in the cost of services provided by these public agencies.

Appropriations subject to Article XIIIB include generally the proceeds of taxes levied by the State or other entity of local government, exclusive of certain State subventions, refunds of taxes, benefit payments from retirement, unemployment insurance and disability insurance funds.

Effective September 30, 1980, the California Legislature added Section 33678 to the Health and Safety Code which provides that the allocation of taxes to a redevelopment agency for the purpose of paying principal of, or interest on, loans, advances, or indebtedness will not be deemed the receipt by the agency of proceeds of taxes levied by or on behalf of the agency within the meaning of Article XIIIB or any statutory provision enacted in implementation thereof. The constitutionality of Section 33678 has been upheld by the Second and Fourth District Courts of Appeal in two decisions: Bell Community Redevelopment Agency v. Woosely and Brown v. Community Redevelopment Agency of the City of Santa Ana, which cases were not accepted for review by the California Supreme Court.

Proposition 87

Under prior State law, if a taxing entity increased its tax rate to obtain revenues to repay voter approved general obligation bonds, any redevelopment project area which included property affected by the tax rate increase would realize a proportionate increase in tax increment.

Proposition 87, approved by the voters of the State on November 8, 1993, requires that all revenues produced by a tax rate increase (approved by the voters on or after January I, 1989) go directly to the taxing entity which increases the tax rate to repay the general obligation bonded indebtedness. As a result, redevelopment agencies no longer receive an increase in tax increment when taxes on property in the project area are increased to repay voter approved general obligation debt.

Proposition 218

On November 5, 1996, California voters approved Proposition 218 - Voter Approval for Local Government Taxes - Limitation on Fees, Assessments, and Charges - Initiative Constitutional Amendment. Pledged Revenues securing the Agency's obligations to make payments on the Notes are derived from property taxes, which are outside the scope of taxes, assessments and property-related fees and charges which were limited by Proposition 218.

AB 1290 and SB 211

In 1993, the California Legislature enacted AB 1290, which mandated a limitation on the period of time for incurring and repaying loans, advances and indebtedness which are payable from Tax Revenues. Senate Bill 211 ("SB 211 "), which was adopted by the California Legislature in 2001 and took effect as of January 1, 2002, provides that redevelopment plans adopted on or before December 31, 1993 may be amended by a legislative body by adoption of an ordinance to eliminate the time limit on establishing indebtedness (meaning the redevelopment agency could incur debt up to the end of the effectiveness of its redevelopment plan), but would in tum trigger statutory pass-throughs to all taxing entities with whom the redevelopment agency does not have a pass-through agreement at the time the ordinance is adopted. If an agency were to eliminate a project area's existing time limit to incur indebtedness as permitted by SB 211, the statutory pass-

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throughs would apply starting in the year after what is now the final year to incur indebtedness. Although the Agency has not adopted an ordinance pursuant to SB 211 eliminating the time limit to incur indebtedness, the Agency is subject to statutory pass-through payments since the Agency's Redevelopment Plan was amended after January 1, 1994. See "SECURITY FOR THE NOTES~Allocation of Taxes."

SB 211 also authorizes the amendment of a redevelopment plan adopted prior to January I, 1994, in order to extend for not more than I 0 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 1045 and SB 1096

Senate Bill 1045 ("SB 1045"), which was adopted by the California Legislature in 2003, mandated a shift of$135 million in tax increment revenues from California redevelopment agencies to ERAF in fiscal year 2003-04. Senate Bill I 096 ("SB I 096"), which was adopted by the California Legislature in 2004, further mandated a shift of approximately $1.3 billion over a period of two years (fiscal years 2004-05 and 2005-06) in property taxes from local agencies to ERAF. See "RISK FACTORS- State Budget; ERAF." In addition to requiring the shift of tax increment revenues, SB 1045 and SB I 096 allowed redevelopment agencies to amend redevelopment plans to extend time limits on the effectiveness of the redevelopment plans if payments were made to ERAF. A redevelopment agency may not adopt an SB 1096 amendment if the time limit for the effectiveness of the redevelopment plan is more than 20 years from the last day of the fiscal year in which the related ERAF payment is made. The Agency did not amend the time limit for the effectiveness of the Redevelopment Plan for the Project Area pursuant to SB 1045 or SB 1096.

Future Initiatives

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

CONTINUING DISCLOSURE

The Agency has undertaken for the benefit of holders and beneficial owners of the Notes to provide certain financial information relating to the Agency and other data relating to the Project Area by not later than February 15 after the close of each fiscal year, commencing with the report for the 2008-09 fiscal year (the "Annual Report"), and to provide notices of the occurrence of certain enumerated events, if material. The Armual Report and notices of material events will be filed by the Agency or Urban Futures, Inc., as the Dissemination Agent on behalf of the Agency, with the Municipal Securities Rulemaking Board, via its Electronic Municipal Market Access ("EMMA") system. The specific nature of the information to be contained in the Armual Report or the notices of material events is set forth in "APPENDIX E - FORM OF CONTINUING DISCLOSURE AGREEMENT." This undertaking has been made in order to assist the Underwriter in complying with Rule 15c2-12(b)(5) (the "Rule") promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended.

A failure by the Agency to comply with the provisions of the Continuing Disclosure Agreement is not an event of default under the Indenture (although the holders and beneficial owners of the Notes do have remedies at law and in equity). However, a failure to comply with the provisions of the Continuing Disclosure Agreement must be reported in accordance with the Rule and must be considered by any broker, dealer or municipal securities dealer before recommending the purchase or sale of the Notes. Therefore, a failure by the Agency to comply with the provisions of the Continuing Disclosure Agreement may adversely affect the marketability of the Notes on the secondary market.

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CERTAIN LEGAL MATTERS

All of the legal proceedings in connection with the authorization and issuance of the Notes are subject to the approval of Stradling Y occa Carlson & Rauth, A Professional Corporation, as Bond Counsel ("Bond Counsel"). Bond Counsel's opinion with respect to the Notes will be substantially in the form set forth in Appendix D of this Official Statement. Certain matters with respect to this Official Statement will be considered on behalf of the Agency by Stradling Y occa Carlson & Rauth, A Professional Corporation, as disclosure counsel ("Disclosure Counsel"). Payment of the fees of Bond Counsel and Disclosure Counsel is contingent upon issuance of the Notes.

ABSENCE OF LITIGATION

There is no litigation pending and notice of which has been received by the Agency, or, to the Agency's knowledge, threatened in any way to restrain or enjoin the issuance, execution or delivery of the Notes, to contest the validity of the Notes, the Indenture or any proceedings of the Agency with respect thereto. To the knowledge of the Agency and its General Counsel, there are no lawsuits or claims pending against the Agency which will materially affect the Agency's finances so as to impair the ability to pay principal of and interest on the Notes when due.

TAX MATTERS

The Internal Revenue Code of 1986 (the "Code") establishes certain requirements which must be met subsequent to the issuance and delivery of the Notes for interest thereon to be and remain excluded from gross income for Federal income tax purposes. Noncompliance with such requirements could cause the interest on the Notes to be included in gross income for Federal income tax purposes retroactively to the date of issue of the Notes. These requirements include, but are not limited to, provisions which prescribe yield and other limits within which the proceeds of the Notes are to be invested and require, under certain circumstances, that certain investment earnings on the foregoing be rebated on a periodic basis to the Treasury Department of the United States of America. The Agency has covenanted in the Indenture to maintain the exclusion of the interest on the Notes from gross income for Federal income tax purposes pursuant to Section 103(a) of the Code.

In the opinion of Stradling Y occa Carlson & Rauth, a Professional Corporation, Bond Counsel, under existing law, interest on the Notes is exempt from personal income taxation of the State of California and, assuming compliance with the aforementioned covenant, interest on the Notes is excluded from gross income for Federal income tax purposes. Bond Counsel are also of the opinion that the Notes are not "specified private activity Notes" within the meaning of Section 57 (a) (5) of the Code and, therefore, the interest on the Notes will not be treated as a preference item for purposes of computing the alternative minimum tax imposed by Section 55 of the Code. Interest on the Notes owned by corporations will, however, be taken into account in determining the alternative minimum tax imposed by Section 55 of the Code on 75 percent of adjusted current earnings over alternative minimum taxable income (determined without regard to this adjustment and the alternative tax net operating loss deduction). In addition, the difference between the issue price of a Note (the first price at which a substantial amount of the Notes of a maturity are to be sold to the public) and the stated redemption price at maturity with respect to a Note constitutes original issue discount. Original issue discount accrues under a constant yield method, and original issued discount will accrue to a Noteowner before receipt of cash attributable to such excludable income. The amount of original issue discount that accrues to the owner of the Note is excluded from the gross income of such owner for federal income tax purposes, is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations, and is exempt from State of California personal income tax.

Bond Counsel has not undertaken to advise in the future whether any events after the date of issuance of the Notes may affect the tax status of interest on the Notes. No assurance can be given that future legislation, or amendments to the Code, if enacted into law, will not contain provisions which could directly or indirectly reduce the benefit of the exclusion of the interest on the Notes from gross income for Federal income tax purposes. Certain requirements and procedures contained or referred to in the Indenture and other relevant documents may be changed and certain actions may be taken, under the circumstances and subject to the terms

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and conditions set forth in such documents, upon the advice or with the approving opinion of nationally recognized Bond Counsel. Bond Counsel expresses no opinions as to any Note, or the interest thereon, if any such change occurs or action is taken upon the advice or approval of Bond Counsel other than Stradling Yocca Carlson & Rauth, A Professional Corporation.

Although Bond Counsel have rendered an opinion that interest (and original issue discount) on the Notes is excluded from gross income for Federal income tax purposes, an Owner's Federal tax liability may otherwise be affected by the ownership or disposition of the Notes. The nature and extent of these other tax consequences will depend upon the Owner's other items of income or deduction. Without limiting the generality of the foregoing, prospective purchasers of the Notes should be aware that (i) Section 265 of the Code denies a deduction for interest on indebtedness incurred or continued to purchase or carry the Notes or, in the case of a financial institution, that portion of a holder's interest expense allocated to interest on the Notes, (ii) with respect to insurance companies subject to the tax imposed by Section 831 of the Code, Section 832(b)(5)(b)(i) reduces the deduction for loss reserves by 15 percent of the sum of certain items, including interest on the Notes, (iii) interest on the Notes earned by some corporations could be subject to the environmental tax imposed by Section 59 A of the Code, (iv) interest on the Notes earned by certain foreign corporations doing business in the United States could be subject to a branch profits tax imposed by Section 884 of the Code, (v) passive investment income, including interest on the Notes, may be subject to Federal income taxation under Section 1375 of the Code for Subchapter S corporations that have Subchapter C earnings and profits at the close of the taxable year if greater than 25% of the gross receipts of such Subchapter S corporation is passive investment income and (vi) Section 86 of the Code requires recipients of certain Social Security and certain Railroad Retirement benefits to take into account, in determining the taxability of such benefits, receipts or accruals of interest on the Notes. Bond Counsel have expressed no opinion regarding any such other tax consequences

BANK-QUALIFICATION

The Notes have been designated "qualified tax-exempt obligations" pursuant to Section 265(b)(3) of the Code. Such section provides an exception to the prohibition against the ability of a "financial institution" (as defined in the Code) to deduct any of its interest expense allocable to tax-exempt interest and instead generally subjects certain financial institutions to a prohibition against deducting 20 percent of its interest expense allocable to interest on the Notes.

RATINGS

The Agency has not made, and does not contemplate making, application to any rating agency for the assignment of a rating to the Notes.

UNDERWRITING

The Notes are being issued for sale to the Lindsay Public Financing Authority (the "Authority") pursuant to the Marks-Roos Local Note Pooling Act of 1985, constituting Article 4 of Chapter 5 of Division 7 of Title I (commencing with Section 6584) of the California Government Code. The Authority will simultaneously resell the Notes to Southwest Securities (the "Underwriter"), pursuant to a Note Purchase Agreement (the "Note Purchase Agreement"), by and among the Agency, the Authority and the Underwriter.

The Underwriter has agreed, pursuant to the Note Purchase Agreement, to purchase the Notes at a purchase price of $978,210.00 (being equal to the principal amount of the Notes, less a net original issue discount of $4,290.00 and less an underwriter's discount of $17,500.00). The Underwriter intends to offer the Notes to th_e public initially at the prices set forth on the cover page of this Official Statement, which prices may subsequently change without any requirement of prior notice.

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MISCELLANEOUS

All summaries of the Indenture, the Redevelopment Plan, the Redevelopment Law and other applicable legislation, agreements and other documents are made subject to the provisions of such documents respectively and do not purport to be complete statements of any or all of such provisions. Reference is hereby made to such documents on file with the Agency for further information in connection therewith.

The Agency has appointed U.S. Bank National Association, a national banking association organized under the laws of the United States, to serve as Trustee. The Trustee is to carry out those duties assignable to it under the Indenture of Trust and Note documents. Except for the contents of this section, the Trustee has not reviewed or participated in the preparation of this Official Statement and assumes no responsibility for the contents, accuracy, fairness or completeness of the information set forth in this Official Statement or for the recitals contained in the Indenture or the Bonds, or for the validity, sufficiency, or legal effect of any of such documents.

Furthermore, the Trustee has no oversight responsibility, and is not accountable, for the use or application by the Agency of any of the Notes authenticated or delivered pursuant to the Indenture or for the use or application of the proceeds of such Notes by the Issuer. The Trustee has not evaluated the risks, benefits, or propriety of any investment in the Notes and makes no representation, and has reached no conclusions, regarding the value or condition of any assets or revenues pledged or assigned as security for the Bonds, [the technical or financial feasibility of the Project,] or the investment quality of the Notes, about all of which the Trustee expresses no opinion and expressly disclaims the expertise to evaluate.

Additional information about the Trustee may be found at its website at http://www.usbank.com/comoratetrust. Neither the information on U.S. Bank's website, nor any links from that website, is a part of this Official Statement, nor should any such information be relied upon to make investment decisions regarding the Notes.

This Official Statement does not constitute a contract with the purchasers of the Notes. Any statements made in this Official Statement involving matters of opinion or estimates, whether or not expressly stated, are set forth as such and not as representations of fact, and no representation is made that any of the estimates will be realized.

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

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LINDSAY REDEVELOPMENT AGENCY

By: Is/ Scot B. Townsend Executive Director

APPENDIX A

CITY OF LINDSAY GENERAL INFORMATION

The following iriformation concerning the City of Lindsay is presented as general background data. The Bonds are not an obligation of the City of Lindsay, the County of Tulare, the State of California or any of its political subdivisions, and neither said City, said County, said State nor any of its political subdivisions is liable therefore.

Population

The City's population, as of January I, 2006 was 11,200 according to the State Department of Finance. A historical summary of the City's population (as of January I of each year except where noted) is shown below.

City of Lindsay

Year

2002 2003 2004 2005 2006 2007 2008 2009

Population

10,400 10,600 10,700 11,000 11,200 11,114 11,505 11,684

Source: State Department of Finance, Demographic Research Unit, estimate as of January l of each year.

Assessed Valuation and Tax Collection

Taxes are levied for each fiscal year on taxable real and personal property which is situated in each City as of the preceding January 1. For assessment and collection purposes, property is classified either as secured or unsecured and is listed accordingly on separate parts of the assessment roll. The Secured rolls is that part of the assessment roll containing State-assessed public utilities property and property the taxes on which are a lien on real property sufficient, in the opinion of the County Assessor, to secure payment of the taxes. Other property is assessed on the unsecured roll.

Property Taxes on the secured roll are due in two installments, on November I and February I of the fiscal year. If unpaid, such taxes become delinquent on December 10 and April!O, respectively, and a 12% penalty attaches to any delinquent payment. In addition, property on the secured roll with respect to which taxes are delinquent is sold to the State on or about June 30 of the fiscal year.

Such property may thereafter be redeemed by payment of the delinquent taxes and the delinquent penalty, plus a redemption penalty of 5% per month to the time of redemption. If taxes are unpaid for a period of five years or more, the property is deeded to the State and then is subject to sale by the County Tax Collector.

Property taxes on the unsecured roll are due as of the March 1 lien date and become delinquent, if unpaid, on August 31, of the fiscal year. A I 0% penalty attaches to the delinquent taxes on property on the unsecured roll, and an additional penalty of 1.5% per month begins to accrue beginning November 30 of the fiscal year. The taxing authority has four ways of collecting unsecured personal property taxes: (a) a civil action against the taxpayer; (b) filing a certificate in the office of the County Clerk specifYing certain facts in

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order to obtain a judgment lien on certain property of the taxpayer; (c) filing a certificate of delinquency for record in the County Recorder's office, in order to obtain a lien on certain property of the taxpayer; and (d) seizure and sale of personal property, improvements or possessory interests belonging or assessed to the assessee.

A nine-year history of the City's assessed valuation is as follows:

1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10

Local Secured

$189,129,905 211,958,734 219,468,095 227,579,992 237,945,915 222,483,814 231,562,145 250,562,793 268,854,137 305,182,822 323,965,148 313,920,895

Source: California Municipal Statistics, Inc.

Taxable Transactions

Utility

$631,207 638,339 663,338 553,281 447,668 463,524 538,541 537,021 568,251 279,885 279,885 388,029

Unsecured

$18,397,618 22,034,676 20,794,239 19,102,747 19,756,308 19,911,255 19,483,776 21,511,423 28,810,747 37,444,859 36,958,380 44,173,781

Total Before Redevelopment

Increment

$208,158,730 234,631,749 240,925,672 247,236,020 258,149,891 242,858,593 251,584,462 272,611,237 298,233,135 342,907,566 361,203,416 358,482,705

The number of establishments selling merchandise subject to sales tax and the valuation of taxable transactions is presented in the following table.

Taxable Retail Sales City of Lindsay Number of Permits and Valuation of Taxable Transactions

Retail Stores Total All Outlets Number of Taxable Number of Taxable

Permits Transactions Permits Transactions

1999 85 23,575 172 30,099 2000 84 24,601 \74 31,607 2001 85 23,735 175 33,066 2002 84 26,377 167 32,032 2003 88 29,858 161 35,506 2004 91 35,409 162 41,187 2005 91 42,082 163 48,360 2006 104 46,575 179 57,134 2007 109 49,303 193 60,825 2008(l) 116 25,612 204 32,071

0' Through 2nd quarter, 2008 Source: California State Board of Equalization, Taxable Sales in California (Sales & Use Tax).

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Employment and Industry

The City is located in the Tulare Labor Market Area. In the county of Tulare the labor force employment and unemployment figures since 2002 for the County is as follows:

2004 2005 2006 2007 2008

Agriculture 31,600 31,900 33,700 35,000 37,100 Natural Resources, Mining and Construction 6,300 7,400 8,400 7,600 6,200 Manufacturing 11,200 11,500 11,900 12,000 11,800 Trade, Transportation and Utilities 23,200 22,900 24,000 24,800 25,200 Information 1,100 1,000 1,100 1,100 1,400 Financial Activities 4,300 4,500 4,500 4,500 4,400 Professional and Business Services 9,000 9,700 10,800 9,900 9,900 Educational and Health Services 9,100 9,900 10,300 10,700 10,900 Leisure and Hospitality 8,300 8,000 8,600 9,000 8,800 Other Services 2,500 2,900 2,900 3,000 3,100 Government 29,100 30,000 30,200 31,000 31 600

Total All Industries l351QQ 1321QQ 1'16,3QQ 1'18 6QQ 150 500 Total Civilian Labor Force (I) 175,500 185,600 189,300 193,600 201,700 Total Unemployment 25,900 17,400 16,100 17,900 21,900 Unemployment Rate l'l 14.8% 9.4% 8.5% 9.2% 10.8%

(I) Annual average total labor force (and components) by location of residence; includes workers involved in trade disputes. (2) The unemployment rate is computed from unrounded data; therefore, it may differ from rates using rounded figures. (3) Through December, 2008. Source: State Development Department, Employment and Data Research.

Major Employers

The following listing sets forth the top employers in the City:

City Of Lindsay Major Employers and Number of Employees

Employer

Citrus Packing Houses (I 0) Lindsay Unified School District National Diversified Sales HIT Products Vita-Pakt Citrus Products Champion Home Builders Tulare County Lindsay Gardens Friant Water Users Authority Shell Gas/Burger King Art's Custom Cabinets

Source: City of Lindsay

Approximate No. of Employees

1,800 475 302 165 150 135 125 104 75 69 35

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Type of Business

Agricultural Education Plastic Drainage Mfg Irrigation Equipment Fruit Pulp Products Mobile Home Mfg County Government Skilled Nursing Facility Water District Fast Food/Gas CabinetMfg

Direct and Overlapping Bonded Indebtedness

A statement of the City's direct and overlapping bonded indebtedness is as follows:

2006-07 Assessed Valuation: Redevelopment Incremental Valuation: Adjusted Assessed Valuation:

$298,233,135 121.453,085

$176 780 050

DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT: %Applicable Lindsay Unified School District 43.855% City of Lindsay 100.000

TOTAL DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT

OVERLAPPING GENERAL FUND DEBT: Tulare County General Fund Obligations Tulare County Pension Obligations College of the Sequoias Certificates of Participation Lindsay Unified School District General Fund Obligations

TOTAL OVERLAPPING GENERAL FUND DEBT

COMBINED TOTAL DEBT

Ratios to 2006-07 Assessed Valuation: Direct Debt ............................................................................ 0.00% Total Direct and Overlapping Tax and Assessment Debt ..... 0.60%

Ratios to Adjusted Assessed Valuation: Combined Total Debt.. .......................................................... 2.21%

STATE SCHOOL BUILDING AID REPAYABLE AS OF 6/30/06: $0

(IJ Excludes tax allocation bonds to be sold.

0.849% 0.849 0.914

43.855

Debt 2/1/07 $1,792,695

0 (I) .-_____\L

$1,792,695

$ 776,580 213,736

67,907 I 063 484

$2,121,707

$3,914,40zl'l

(2) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and tax allocation bonds and non-bonded

capital lease obligations. Source: California Municipal Statistics, Inc.

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APPENDIXB

DTC'S BOOK-ENTRY ONLY SYSTEM

The information in this Appendix concerning DTC and DTC's book-entry system has been obtained from sources that the Agency believes to be reliable, and the Agency does not take any responsibility for the accuracy thereof The Agency gives no assurances that (i) DTC, the Direct and Indirect Participants or others will distribute payments of principal, premium (if any) or interest with respect to the Notes paid to DTC or its nominee as, the registered owner, to the Beneficial Owners, (ii) such entities will distribute redemption notices or other notices, to the Beneficial Owners, or (iii) an error or delay relating thereto will not occur.

The Depository Trust Company ("DTC"), New York, New York, will act as securities depository for the Notes. The Notes will be issued as fully-registered securities registered in the name of Cede & Co. (DTC's partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered certificate will be issued for each maturity of the Notes, each in the aggregate principal amount of such maturity, and will be deposited with DTC.

DTC, the world's largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Unifoljll Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17 A of ihe Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 2.2 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments from over 85 countries that DTC's participants ("Direct Participants") deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants' accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation ("DTCC"). DTCC, in turn, is owned by a number of Direct Participants of DTC and Members of the National Securities Clearing Corporation, Fixed Income Clearing Corporation and Emerging Markets Clearing Corporation, (NSCC, FICC and EMCC, also subsidiaries of DTCC), as well as by the New York Stock Exchange, Inc., the American Stock Exchange LLC, and the National Association of Securities Dealers, Inc. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ("Indirect Participants"). DTC has Standard & Poor's highest rating: AAA. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com and www.dtc.org.

Purchases of Notes under the DTC system must be made by or through Direct Participants, which will receive a credit for the Notes on DTC's records. The ownership interest of each actual purchaser of each Note ("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 Notes are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in the Notes, except in the event that use of the book-entry system for the Notes is discontinued.

To facilitate subsequent transfers, all Notes 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 Notes with DTC and their registration in the name of Cede

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& 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 Notes; DTC's records reflect only the identity of the Direct Participants to whose accounts such Notes are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers.

Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time.

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

Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to the Notes unless authorized by a Direct Participant in accordance with DTC's 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 the Notes are credited on the record date (identified in a listing attached to the Omnibus Proxy).

Principal, premium (if any) and interest payments on the Notes will be made to Cede & Co., or such other nominee as may be requested by an authorized representative ofDTC. DTC's practice is to credit Direct Participants' accounts upon DTC's receipt of funds and corresponding detail information from the Agency or the Trustee, on payable date in accordance with their respective holdings shown on DTC's records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Participant and not of DTC, the Agency or the Trustee, subject to any statutory or regulatory requirements as may be in effect from time to time. Principal, premium (if any) and interest payments with respect to the Notes to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Agency or the Trustee, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants.

DTC may discontinue providing its services as depository with respect to the Notes at any time by giving reasonable notice to the Agency or the Trustee. Under such circumstances, in the event that a successor depository is not obtained, Note certificates are required to be printed and delivered.

The Agency may decide to discontinue use of the system of book-entry transfers through DTC (or a successor securities depository). In that event, physical certificates will be printed and delivered.

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APPENDIXC

SUMMARY OF PROVISIONS OF THE LEGAL DOCUMENTS

The following is a brief summary of certain provisions of the Indenture of Trust not described elsewhere in this Official Statement. This summary does not purport to be complete and is qualified in its entirety by reference to said documents.

DEFINITIONS

"Additional Notes" means Parity Notes.

"Agency" or "Redevelopment Agency" means the Lindsay Redevelopment Agency, a public body corporate and politic duly organized and existing under the Law.

"Alternate Reserve Account Securitv" means one or more letters of credit, surety bonds, bond insurance policies, or other form of guaranty from a financial institution for the benefit of the Trustee, the long-term, unsecured obligations of which are rated not less than "A" by Moody's Investors Service, or "A" by Standard & Poor's Corporation in substitution for or in place of all or any portion of the Reserve Requirement.

"Annual Debt Service" means, for any Note Year, the principal and interest payable on the Outstanding 2009 Notes in such Note Year.

"Bond Counsel" means an attorney or firm of attorneys acceptable to the Agency of nationally recognized standing in matters pertaining to the federal tax exemption of interest on bonds issued by states and political subdivisions, and duly admitted to practice law before the highest court of any state of the United States of America or the District of Columbia.

"Business Day" means a day other than (i) a Saturday, Sunday or legal holiday or a day on which banking institutions in the city in which the corporate trust office of the Trustee is located are authorized to close, or (ii) a day on which the New York Stock Exchange is closed.

"Certificate" or "Certificate of the Agency" means a certificate signed by the Chairman or Executive Director of the Agency or their respective deputies.

"Chair" or "Chairman" means the chairman of the Agency appointed pursuant to Section 33113 of the Health and Safety Code of the State of California, or other duly appointed officer of the Agency authorized by the Agency by resolution or bylaw to perform the functions of the chair in the event of the chairman's absence or disqualification.

"City" means the City of Lindsay, State of California.

"Code" means the Internal Revenue Code of 1986, as amended, and any regulations, rulings, judicial decisions, and notices, announcements, and other releases of the United States Treasury Department or Internal Revenue Service interpreting and construing it.

"Computation Year" means, with respect to the 2009 Notes, the period beginning on the Delivery Date and ending on November I, 20!0 and each twelve (!2) month period ending on October I thereafter until there are no longer any 2009 Notes Outstanding.

"Continuing Disclosure Agreement" means that certain Continuing Disclosure Agreement between the Agency and Urban Futures, Incorporated, as Dissemination Agent, dated the Delivery Date as originally executed and as it may be amended from time to time in accordance with the terms thereof.

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"Corporate Trust Office" means the corporate trust office of the Trustee, currently in Los Angeles, California, except for exchange, surrender and payment of the Notes, in which case "Trust Office" shall refer to the corporate trust office of U.S. Bank National Association in St. Paul, Minnesota, or such other or additional offices as may be specified to the Agency by the Trustee in writing.

"Costs of Issuance" means the costs and expenses incurred in connection with the issuance and sale of the 2009 Notes including the acceptance and initial fees and expenses of the Trustee, legal fees and expenses, costs of printing the 2009 Notes and Official Statement, fees of financial consultants and other fees and expenses set forth in a written Certificate of the Agency.

"County" means the County of Tulare, California.

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

"Delivery Date" means the date the 2009 Notes are delivered to the initial purchaser thereof.

"Depository" means (a) initially, DTC, and (b) any other Securities Depository acting as Depository.

"DTC" means The Depository Trust Company, New York, New York, and its successors and assigns.

"Event of Default" means any of the events described in the Indenture thereof.

"Executive Director" means the Executive Director of the Agency.

"Federal Securities" means direct obligations of the United States of America (including obligations issued or held in book entry form on the Books of the Department of Treasury of the United States of America and CATS and TIGRS) or obligations the principal of and interest on which are unconditionally guaranteed by the United States of America.

"Fiscal Year" means any twelve (12) month period beginning on July 1st and ending on the next following June 30th.

"Fund or Account" means any of the funds or accounts referred to herein.

"Housing Fund" means the Low and Moderate Income Housing Fund established pursuant to Section 33334.2 and 33334.3 of the Law.

"Housing Set-Aside Amount" means that portion of the Tax Revenues required to be set aside and deposited in the Housing Fund by Section 33334.2 of the Law.

"Independent Financial Consultant," "Independent Certified Public Accountant" or "Independent Redevelopment Consultant" means any individual or firm engaged in the profession involved, appointed by the Agency, and who, or each of whom, has a favorable reputation in the field in which his/her opinion or certificate will be given, and:

(I) Is in fact independent and not under domination of the Agency;

(2) Does not have any substantial interest, direct or indirect, with the Agency; and

(3) Is not connected with the Agency as an officer or employee of the Agency, hut who may he regularly retained to make reports to the Agency.

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"Interest Payment Date" means April I and October I of each year commencing April I, 20 I 0.

"Law" means the Community Redevelopment Law of the State of California (commencing with Health and Safety Code Section 33000).

"Note" or "Notes" mean the 2009 Notes.

"Noteowner" or "Owner of Notes," or any similar term, means any person who shall be the registered owner or his duly authorized attorney, trustee or representative of any Outstanding Note. For the purpose of Noteowners' voting rights or consents, Notes owned by or held for the account of the Agency, or the City, directly or indirectly (as certified to the Trustee by the City or Agency), shall not be counted.

"Note Year" means the twelve (12) month period commencing on October 2 of each year and each anniversary date thereafter, provided that the first Note Year shall extend from the Delivery Date to October I, 2010.

"Opinion of Counsel" means a written opm10n of an attorney or finn of attorneys of favorable reputation in the field of municipal bond law. Any opinion of such counsel may be based upon, insofar as it is related to factual matters, information which is in the possession of the Agency as shown by a certificate or opinion of, or representation by, an officer or officers of the Agency, unless such counsel knows, or in the exercise of reasonable care should have known, that the certificate, opinion or representation with respect to the matters upon which his or her opinion may be based, as aforesaid, is erroneous.

"Outstanding." when used as of any particular time with reference to Notes, means, subject to the provisions of Article XI, all Notes except:

(a) Notes theretofore cancelled by the Trustee or surrendered to the Trustee for cancellation;

(b) Notes paid or deemed to have been paid pursuant to the Indenture thereof; and

(c) Notes in lieu of or in substitution for which other Notes shall have been authorized, executed, issued and delivered by the Agency and authenticated by the Trustee pursuant to the Indenture or any Supplemental Indenture.

"Parity Notes" means any additional tax allocation notes (including, without limitation, bonds, notes, interim certificates, debentures or other obligations) issued by the Agency as permitted by the Indenture payable out of Pledged Revenues and ranking on a parity with the 2009 Notes.

"Pass-Through Agreements" means the agreements entered into on or prior to the date hereof pursuant to Section 33401 of the Health and Safety Code with (i) the County of Tulare, (ii) the Alta Cemetery District, (iii) the Tulare County Flood Control District, (iv) the Tulare County Pollution Control District, and (v) the Lindsay Mosquito Abatement District.

"Paying Agent" means any paying agent appointed by the Agency pursuant to this Indenture.

"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: (a) Federal Securities; (b) Federal Home Loan Mortgage Corporation participation certificates or senior debt obligations; (c) Federal National Mortgage Association mortgage backed securities or senior debt obligations; (d) certificates of deposit, time deposits or bankers' acceptances with a maturity of one (I) year or less of any bank (including the Trustee) the long term debt obligations of which or the long term debt obligations of the holding company of which have been rated A or better by Standard & Poor's and having a short term debt rating of A I+ or better by Standard and Poor's; (e) obligations rated at least AA by Standard & Poor's Ratings

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Services; (f) taxable government money market funds rated AAArnG by Standard & Poor's Ratings Services and restricted to obligations with maturities of one (I) year or less issued or guaranteed as to payment of principal and interest by the full faith and credit of the United States; (g) deposits (including deposits with the Trustee) which are fully insured by the Federal Deposit Insurance Corporation; (h) repurchase agreements with financial institutions fully insured by the Federal Deposit Insurance Corporation or any broker dealer with "retail customers" which falls under Securities Investors Protection Corporation jurisdiction, which repurchase agreements are secured by any of the obligations referred to in (a) above, provided that the Trustee or a third party acting solely as agent for the Trustee has possession of the collateral securing such repurchase agreement and the Trustee has a perfected first security interest in the collateral securing such repurchase agreement; (i) an investment agreement approved by the Agency; (j) investment in the CEDARS program, or (k) the Local Agency Investment Fund.

"Plan Limit" means the limitation contained in the Redevelopment Plan on the number of dollars of taxes which may be divided and allocated to the Agency pursuant to the Redevelopment Plan, as such limitation is prescribed by Section 33333.4 of the Law.

"Pledged Revenues" means the Tax Revenues less all amounts required to be paid to other taxing entities pursuant to the Pass-Through Agreements or Statutory Pass-Throughs and any amounts required to pay debt service on the Senior Obligations.

"Rebate Regulations" means any final, proposed or temporary Treasury Regulations issued under Section 148(1) of the Code.

"Redemption Fund" shall have the meaning set forth in the Indenture thereof.

"Redevelopment Fund" shall have the meaning set forth in the Indenture thereof.

"Redevelopment Plan" means the Redevelopment Plan for the Redevelopment Project No. One, approved by Ordinance No. 416 of the City of Lindsay, adopted on July 20, !987, and amended by Ordinance No. 452 adopted on July 19, 1993 and amended by Ordinance No. 461 adopted on July 17, 1995 and includes any amendment thereof made pursuant to the Law as more particularly described in the Recitals herein.

"Redevelopment Project Area," "Redevelopment Project" or "Project Area" means the Lindsay Redevelopment Project No. One.

"Regular Record Date" means the ftfteenth day of the month preceding any Interest Payment Date whether or not such day is a Business Day.

"Report" means a document in writing signed by an Independent Financial Consultant and including:

(a) A statement that the person or firm making or giving such Report has read the pertinent provisions of this Indenture to which such Report relates;

(b) A brief statement as to the nature and scope of the examination or investigation upon which the Report is based; and

(c) A statement that, in the opinion of such person or firm, sufficient examination or investigation was made as is necessary to enable said consultant to express an informed opinion with respect to the subject matter referred to in the Report.

"Reserve Requirement" means an amount equal to six ( 6) months interest on the Notes.

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"Revenues" means the Pledged Revenues together with all other moneys held by the Trustee in any Fund or Account (except the Rebate Fund and the Redevelopment Fund) and the interest earnings thereon.

"Securities Depository'' means The Depository Trust Company, 55 Water Street, 50th Floor, New York, New York 10041, Fax 212-855-7232; or such other addresses and/or such other securities depositories as the Agency may designated to the Trustee in writing.

"Senior Obligations" means the 2005 Bonds, the 2007 Bonds and the 2008 Bonds.

"SLG" means U.S. Treasury Securities State and Local Government Series.

"Special Fund" means the Fund by that name established and held by the Agency pursuant to the Indenture.

"Standard & Poor's" means Standard & Poor's Ratings Services, New York, New York, and its successors and assigns.

"State" means the State of California.

"Statutory Pass-Throughs" means the amounts required to be paid to taxing agencies pursuant to Section 33607.5 and Section 33607.7 of the Law.

"Supplemental Indenture" or "supplemental indenture" means any indenture then in full force and effect which has been duly adopted by the Agency under the Law, or any act supplementary thereto or amendatory thereof, of a meeting of the Agency duly convened and held, at which a quorum was present and acted thereon, amendatory of or supplemental to this Indenture or any indebtedness entered into in connection with the issuance of Parity Notes; but only if and to the extent that such Supplementallndenture is specifically authorized hereunder.

"Tax Certificate" means that certain Tax Certificate executed by the Agency with respect to the Notes or any Parity Notes.

"Tax Revenues" means all taxes annually allocated within the Plan Limit, following the Delivery Date, and paid to the Agency with respect to the Project Area pursuant to Article 6 of Chapter 6 (commencing with Section 33670) of the Law and Section 16 of Article XVI of the Constitution of the State, but excluding there from any amounts attributable to a tax rate levied by a taxing agency for the purpose of producing revenues in an amount sufficient to make annual repayments of the principal of, and interest on any bonded indebtedness approved by the voters of the taxing agency on or after January I, 1989 for the acquisition or improvement of real property, which portion shall be allocated to and when collected, shall be paid into, the fund of that taxing agency and as provided in the Redevelopment Plan.

"Treasurer" or "Treasurer of the Agency" means the officer who is then performing the functions of Treasurer of the Agency.

"Trustee" means the trustee appointed by the Agency pursuant to the Indenture thereof, its successors and assigns, and any other corporation or association which may at any time be substituted in its place, as provided in this Indenture.

"2005 Bonds" means the $4,700,000 Lindsay Redevelopment Agency, Lindsay Redevelopment Project No. One, Tax Allocation Refunding Bonds, Issue of 2005 (the "2005 Bonds") authorized and issued pursuant to the 2005 Indenture.

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"2005 Indenture" means that certain Indenture of Trust dated as of March I, 2005 between the Agency and the Trustee, approved by Resolution No. LRA 05 04 adopted by the Agency on February 22, 2005 authorizing the issuance of the 2005 Bonds.

"2007 Bonds" means the $7,880,000 Lindsay Redevelopment Agency, Lindsay Redevelopment Project No. One, Tax Allocation Bonds, Issue of 2007 authorized and issued pursuant to the 2007 Indenture.

"2007 Indenture" means that certain Indenture of Trust dated as of March I, 2007 between the Agency and the Trustee, approved by Resolution No. LRA 07 01 adopted by the Agency on February 27, 2007 authorizing the issuance of the 2007 Bonds.

"2008 Bonds" means the $3,710,000 Lindsay Redevelopment Project No. One, Tax Allocation Bonds, Issue of 2008, authorized and issued pursuant to the 2008 Indenture.

"2008 Indenture" means that certain Indenture of Trust dated as of March I, 2008 between the Agency and the Trustee, approved by Resolution No. LRA 08 02 adopted by the Agency on February 12, 2008 authorizing the issuance of the 2008 Bonds.

"2009 Notes" means the "$1,000,000 Lindsay Redevelopment Project No. One, Subordinate Tax Allocation Notes, Issue of2009" authorized by this Indenture and any obligations issued pursuant to refund the 2009 Notes.

"2009 Notes Indenture" means this Indenture of Trust between the Agency and the Trustee, as originally adopted or as it may be amended or supplemented by any Supplemental Indenture entered into pursuant to the provisions hereof.

"Written Request of the Agency" or "Written Certificate of the Agency" means a request or certificate, in writing signed by the Executive Director, Secretary or Treasurer of the Agency or by any other officer of the Agency duly authorized by the Agency for that purpose.

INDENTURE OF TRUST

Revenues and Funds

Source of Payment of Notes. The Notes and all payments required of the Agency heretmder are not general obligations of the Agency but are limited obligations as described in the Indenture thereof. The Pledged Revenues and all moneys held in any Fund or Account (except the Rebate Fund and the Redevelopment Fund) are hereby conveyed, pledged and assigned absolutely and as a first lien pledge as security for the equal and ratable benefit of the owners of the 2009 Notes and shall be used for no other purpose than payment of the principal of, premium (if any) and interest on the Notes, except as may be otherwise expressly authorized in this Indenture.

Creation of Funds and Accounts. There is hereby continued with the Treasurer special trust funds called the "Lindsay Redevelopment Agency Special Fund (the "Special Fund") and the Lindsay Redevelopment Project No. One Redevelopment Fund (the "Redevelopment Fund") and an account therein called the "Redevelopment Fund. There is hereby created with the Trustee a trust fund called the "Lindsay Redevelopment Agency, Debt Service Fund" (the "Debt Service Fund") with special trust accounts contained therein known as the "Interest Account," the "Principal Account," the Reserve Account" and the "Surplus Account," a trust fund called the "Costs of Issuance Fund," and a trust fund called the "Rebate Fund." Notwithstanding any other provision of this Indenture, neither the Rebate Fund nor the Redevelopment Fund or amounts credited or properly creditable thereto shall be deemed to be pledged to secure the Notes. Article VI of this Indenture creates the Redemption Fund described therein.

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So long as any of the Notes or Parity Notes, or any interest on them, remain unpaid, the Agency shall not have any beneficial right or interest in the Pledged Revenues except as provided in this Indenture and the moneys in the foregoing Funds and Accounts shall be used for no purposes other than those required or pennitted by this Indenture and the Law and the foregoing Funds and Accounts on deposit with the Trustee shall be pledged to the payment of the Notes.

Each Fund and Account (other than the Redevelopment Fund and the Special Fund) shall be maintained by the Trustee as a separate and distinct trust fund or account to be held, managed, invested, disbursed and administered as provided in this Indenture. All moneys deposited in the Funds and Accounts shall be used solely for the purposes set forth in this Indenture. The Trustee shall keep and maintain adequate records pertaining to each Fund and Account maintained by it and all disbursements therefrom (other than the Redevelopment Fund and Special Fund as to which the Agency will keep such records).

Sale of Notes; Disposition of Note Proceeds; Redevelopment Fund. The Agency may provide by resolution for the sale of the Notes in the manner provided by the Law.

Upon the delivery of the Notes to the purchasers thereof, the Trustee, on behalf of the Agency, shall receive the proceeds from the sale of the Notes in the amount set forth in writing by the Agency, deposit and dispose of the proceeds and moneys so deposited as follows:

• Deposit in the Costs oflssuance Fund an amount set forth in a Certificate of the Agency to pay Costs oflssuance;

• Deposit in the Reserve Account an amount equal to the Reserve Requirement; and

• After making the above deposits or transfers, the balance of the proceeds from the sale of the Notes shall be transferred to the Agency for deposit in the Redevelopment Fund.

The Trustee may establish in its records such temporary funds or accounts as it deems necessary to facilitate such deposits and transfers.

Except as hereinafter provided, the moneys set aside in the Redevelopment Fund shall remain there until from time to time expended for the purpose of financing a portion of the costs of the Redevelopment Project and other related costs, and also including in such costs:

• The cost of any lawful activities in connection with the implementation of the Redevelopment Project, including, without limitation, those activities authorized by Sections 33334.2 and 33445 of the Law; and

• The necessary expenses in connection with the issuance and sale of the Notes and fees and expenses of the Trustee not otherwise paid under paragraph (iii) below.

If any sum remains in the Redevelopment Fund after the full accomplishment of the objects and purposes for which the Notes were issued, that sum shall be transferred to the Trustee for deposit in the Debt Service Fund pursuant to written instructions from the Agency. Moreover, all interest and income earned from the Redevelopment Fund on or prior to the date established by resolution of the Agency shall be retained therein.

All of the above uses constitute a "redevelopment activity" as that term is defined in Health and Safety Code Section 33678.

The moneys deposited in the Costs of Issuance Fund shall be applied by the Trustee to the payment of Costs of Issuance as directed by a Certificate of the Agency. Any moneys remaining in the Costs of Issuance

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Fund on March I, 2010, shall be transferred by the Trustee to the Agency for deposit in the Redevelopment Fund. Thereafter, the Costs of Issuance Fund shall be closed and all further responsibility for payment of Costs oflssuance shall belong solely to the Agency.

Final Balances. Upon the deposit with the Trustee of moneys sufficient to pay all principal of, premium, if any, and interest on the Notes, and upon satisfaction of all claims against the Agency hereunder, including all fees, charges and expenses of the Trustee and any Paying Agent which are properly due and payable hereunder, or upon the making of adequate provisions for the payment of such amounts as permitted hereby, all moneys remaining in all Funds and Accounts shall be paid to the Agency.

Security of Funds. All moneys deposited with the Trustee or with any agent of the Trustee appointed pursuant to the Indenture shall be held in trust and (except for moneys held by the Trustee, as paying agent, or remitted to any Paying Agent for the payment of the principal of, premium, if any, and interest on the Notes) shall, while held by the Trustee, constitute part of the Trust Estate and shall be and remain entitled to the benefit and shall be subject to the security of this Indenture for the equal and proportionate benefit of the owners of all Outstanding Notes.

Non Presentment of Notes. In the event any Note shall not be presented for payment when the principal thereof becomes due, either at maturity or otherwise, or at the date fixed for redemption thereof, if moneys sufficient to pay such Note shall have been deposited in the Debt Service Fund or the Accounts thereunder or Redemption Fund, as applicable, all liability of the Agency to the owner thereof for the payment of such Note shall forthwith cease, terminate and be completely discharged, and thereupon it shall be the duty of the Trustee to hold such moneys in trust subject to the limitation set forth in the Indenture, without liability for interest thereon, for the benefit of the owner of such Note who shall thereafter be restricted exclusively to such moneys, for any claim of whatever nature on his or her part under this Indenture or on, or with respect to, said Note.

Moneys to be Held in Trust. All moneys required to be deposited with or paid to the Trustee under any provisions of this Indenture shall be held by the Trustee in trust and applied for the purposes specified herein.

Revenues and Application

Pledged Revenues. As provided in the Redevelopment Plan, pursuant to Article 6 of the Law and Section 16 of Article XVI of the Constitution of the State of California, taxes levied upon taxable property in the Redevelopment Project Area each year by or for the benefit of the State of California, any city, county, city and county, district, or other public corporation (herein sometimes collectively called "taxing agencies") after the effective date of the Ordinance approving the Redevelopment Plan or adding territory thereto shall be divided as follows:

• That portion of the taxes which would be produced by the rate upon which the tax is levied each year by or for each of the taxing agencies upon the total sum of the assessed value of the taxable property in the Redevelopment Project Area as shown upon the assessment roll used in connection with the taxation of such property by such taxing agency last equalized prior to the effective dates of the ordinance, referred to above, shall be allocated to and when collected shall be paid into the funds of the respective taxing agencies as taxes by or for the taxing agencies on all other property are paid;

• Except for that portion of the taxes in excess of the amount identified in (a) above which are attributable to a tax rate levied by a taxing agency for the purpose of producing revenues in an amount sufficient to make annual repayments of the principal of, and the interest on, any bonded indebtedness approved by the voters of the taxing agency on or after January I, 1989 for the acquisition or improvement of real property, which portion shall be allocated to, and when

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collected shall be paid into, the fund of that taxing agency, that portion of the levied taxes each year in excess of such amounts provided for in (a) above shall be allocated to and when collected shall be paid to the Agency. This portion of the levied taxes and, to the extent permitted by law, 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 are herein referred to as "Tax Revenues;" and

• The Pledged Revenues consist of the Tax Revenues less all amounts required to be paid to other taxing entities pursuant to the Pass-Through Agreements or Statutory Pass-Throughs and any amounts required to pay debt service on the Senior Obligations, but excluding therefrom any amount required to be paid for debt service on the Senior Obligations.

The foregoing provisions of are a portion of the provisions of Article 6 of the Law as applied to the Notes and shall be interpreted in accordance with Article 6, and the further provisions and definitions contained in Article 6 are incorporated by reference herein and shall apply.

The Pledged Revenues received by the Agency on or after the date of issue of the Notes shall be deposited in the Special Fund and transferred to the Trustee for deposit in the Debt Service Fund. The Pledged Revenues are hereby irrevocably pledged to the payment of the principal of, premium, if any, and interest on the 2009 Notes and any additional Parity Notes, and until all ofthe Notes and all interest thereon, have been paid (or with respect to the Notes and any Parity Notes until moneys for that purpose have been irrevocably set aside), the Pledged Revenues (subject to the exception set forth in the Indenture thereof shall be applied solely to the payment of the Notes and any Parity Notes plus premium, if any, and the interest thereon as provided in this Indenture. This allocation and pledge is for the exclusive benefit of the Owners of the Notes and shall be irrevocable.

Section 33645 of the Health and Safety Code provides, in applicable part as follows: "The resolution, trust indenture, or mortgage shall provide that tax increment funds allocated to an agency pursuant to Section 33670 shall not be payable to a trustee on account of any issued notes when sufficient funds have been placed with the trustee to redeem all Outstanding Notes of the issue." This Indenture is intended to comply with the above quoted provision and shall be so construed.

Debt Service Fund. The Agency shall pay or cause to be paid to the Trustee for deposit in the Debt Service Fund in accordance with the Indenture thereof all Pledged Revenues in the amounts and within the times set forth herein; provided, however, if (i) no Event of Default shall have occurred and be continuing, (ii) any required transfer has been made to the Rebate Fund, and (iii) the Trustee has on deposit in the Debt Service Fund or the Accounts therein Pledged Revenues or other moneys which are, or by the applicable Interest Payment Date will be sufficient (together with moneys already on deposit in such Accounts) to pay the interest coming due on the next succeeding Interest Payment Date, then additional Pledged Revenues received between the date of such determination and the next Interest Payment Date need not be deposited into the Debt Service Fund pursuant to the Indenture and may be retained by the Agency and used for any lawful purpose. The interest on the Notes until maturity shall be paid by the Trustee on behalf of the Agency from the Interest Account of the Debt Service Fund. At the maturity of the Notes, and after all interest then due on the Notes then Outstanding has been paid or provided for, moneys remaining in the Debt Service Fund shall be applied to the payment of the principal of any of such Notes or any Parity Notes.

Without limiting the generality of the foregoing and for the purpose of assuring that the payments referred to above will be made as scheduled, the Pledged Revenues accumulated in the Debt Service Fund shall be used in the following priority; provided, however, to the extent that deposits have been made in any of the Accounts referred to below from the proceeds of the sale of the Notes or otherwise, the deposits below need not be made:

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Interest Account. Deposits shall be made by the Trustee from moneys in the Debt Service Fund into the Interest Account so that the balance in the Interest Account five (5) Business Days prior to the next Interest Payment Date shall be equal to 180 days' interest on the then Outstanding Notes. Moneys in the Interest Account shall be used for the payment of interest on the Notes as interest on the Notes becomes due.

Reserve Account. After deposits have been made pursuant to subparagraph (a) above, deposits shall be made to the Reserve Account, if necessary, in order to cause the amount on deposit therein to equal the Reserve Requirement. Moneys in the Reserve Account shall be transferred to the Interest Account to pay interest on the Notes as it becomes due to the extent Pledged Revenues are insufficient therefor. Upon the payment or redemption in full of the principal of and interest on all of the outstanding Notes or upon provision therefor pursuant to Article XI, any or all of the amounts in the Reserve Account shall at the option of the Agency be applied towards such payment or withdrawn by the Trustee and applied as hereinafter provided pursuant to written instructions of the Agency. Any portion of the Reserve Account which is in excess of the Reserve Requirement shall be transferred to the Interest Account on or before six ( 6) Business Days prior to each Interest Payment Date.

Anything to the contrary herein notwithstanding, the Agency may at any time substitute an Alternate Reserve Account Security, and upon such substitution, the Agency shall be entitled to receive all moneys then held in the Reserve Account which are not required to meet the Reserve Requirement free and clear of the lien of this Indenture.

In the event the Agency delivers an Alternate Reserve Account Security, the Trustee shall hold and apply such instrument pursuant to this Indenture so as to have moneys available thereunder for the purpose and at the times required under this Indenture.

Principal Account. Not later than four (4) Business Days before October I, 2014, the Trustee shall withdraw from the Debt Service Fund and deposit moneys in the Principal Account in an amount which, when added to the amount contained in the Principal Account on that date will be equal to the principal becoming due and payable on the Outstanding Notes on October I, 2014. No deposit need be made into the Principal Account if moneys contained therein are at least equal to the principal to become due on October I, 2014, upon all of the Notes issued hereunder and then Outstanding. All moneys deposited in the Principal Account shall be used and withdrawn by the Trustee solely for the purpose of paying the principal on the Notes as it shall become due and payable.

Surolus Account. It is the intent of this Indenture: (i) that the deposits in subparagraph (a) above to the Interest Account shall be made as scheduled, and that all payments and/or transfers required by the Indenture to the Rebate Fund shall be made as scheduled; and (ii) that the deposits in subparagraph (b) above to the Reserve Account shall be made as necessary to maintain a balance equal to the Reserve Requirement, if and only if the Pledged Revenues are sufficient therefor. Should it be necessary to defer all or part of any deposits referred to in subparagraph (b) above, such deferred deposits shall be cumulative and shall be made when the Pledged Revenues are sufficient to make the deposit required by subparagraph (a) and (c) and thereafter make the deposit required by subparagraph (b).

The Agency shall not be obligated to deposit in the Debt Service Fund in any Note Year an amount of Pledged Revenues which, together with other amounts in tile Debt Service Fund, exceeds the amounts required to be transferred to the Trustee for deposit into the Interest Account and the Reserve Account in such Note Year pursuant to the Indenture. In the event that for any reason whatsoever any amounts shall remain on deposit in the Debt Service Fund on or after any October I after making all of the transfers theretofore required to be made pursuant to the preceding clauses (a) and (b), the Trustee shall deposit such amounts to the Surplus Account and the Agency may, upon written request to the Trustee withdraw such amounts from the Surplus Account of the Debt Service Fund, to be used for any lawful purpose of the Agency; provided that no funds shall be retained by the Agency pursuant to the Indenture after October I, 20 II, except in connection with the issuance of refunding obligations.

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All Pledged Revenues received by the Agency during any Note Year in excess of the amount required to be deposited in the Interest Account and Principal Account of the Debt Service Fund during such Note Year pursuant to the preceding paragraph of the Indenture shall be declared as "surplus" and released from the pledge and lien hereunder for the security of the Notes and may be applied by the Agency for any lawful purposes of the Agency, including but not limited to the payment of any amounts due and owing to the United States of America pursuant to the Indenture. Prior to the payment in full of the principal of and interest and redemption premium (if any) on the Notes and the payment in full of other amounts payable under this Indenture, and under any Supplemental Indentures, the Agency shall not have any beneficial right or interest in the moneys on deposit in the Debt Service Fund, except as may be provided in this Indenture and in any Supplemental Indentures.

Payments of Principal, Premium and Interest. The Trustee shall make available to the Paying Agent, if any, from the Pledged Revenues, sufficient amounts to pay the principal of, premium, if any, and interest on, the Notes as the same become due and payable.

Revenues to be Held for All Noteowners: Certain Exceptions. The Revenues shall, until applied as provided in this Indenture, be held by the Trustee for the benefit of the owners of all Outstanding Notes, except as provided in the Indenture thereof and except that any portion of the Revenues held pursuant to the Indenture thereof representing principal or redemption price of and interest on, any Notes previously called for redemption in accordance with the Indenture or previously matured shall be held for the benefit of the owners of such Notes only and shall not be deposited or invested pursuant to the Indenture thereof, notwithstanding any provision of the Indenture.

Investment of Moneys

Rebate Fund. The Trustee shall establish the Rebate Fund and the Agency shall comply with the requirements below. All money at any time deposited in the Rebate Fund shall be held by the Trustee in trust, for payment to the United States Treasury. All amounts on deposit in the Rebate Fund shall be governed by the Indenture and the applicable Tax Certificate, unless the Agency obtains an opinion of Bond Counsel that the exclusion from gross income of interest on the Notes will not be adversely affected for federal income tax purposes if such requirements are not satisfied.

Excess Investment Earnings

Periodic Computation. Within 55 days of the end of each Computation Year with respect to the Notes (except for the first three Computation Years unless the Notes are retired during such period), the Agency shall calculate or cause to be calculated the amount of rebatable arbitrage, in accordance with Section l48(f)(2) of the Code and Section 1.148 3 of the Rebate Regulations (taking into account any applicable exceptions with respect to the computation of the rebatable arbitrage, described, if applicable, in the Tax Certificate (e.g., the temporary investments exceptions of Section l48(f)( 4)(B) and (C) of the Code)), for this purpose treating the last day of the applicable Computation Year as a computation date, within the meaning of Section 1.148 l (b) of the Rebate Regulations (the "Rebatable Arbitrage"). The Agency shall obtain expert advice as to the amount of the Rebatable Arbitrage to comply with the Indenture.

Periodic Transfer. Within 55 days of the end of each Computation Year (except for the first three Computation Years unless the Notes are retired during such period) with respect to the Notes, upon the Treasurer's written direction, an amount shall be deposited to the Rebate Fund by the Trustee from any legally available funds, including the other funds and accounts established herein, so that the balance in the Rebate Fund shall equal the amount of Rebatable Arbitrage so calculated in accordance with the Indenture. In the event that immediately following the transfer required by the previous sentence, the amount then on deposit to the credit of the Rebate Fund exceeds the amount required to be on deposit therein, upon written instructions from the Treasurer, the Trustee shall withdraw the excess from the Rebate Fund and then credit the excess to the Debt Service Fund.

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Payment to the Treasury. The Agency shall direct the Trustee in writing to pay to the United States Treasury, out of amounts in the Rebate Fund:

(X) Not later than 60 days after the end of (A) the third Computation Year with respect to the Notes, and (B) the third Computation Year, an amount equal to at least 90% of the Rebatable Arbitrage calculated as of the end of such Computation Year; and

(Y) Not later than 60 days after the payment of all the Notes, an amount equal to I 00% of the Rebatable Arbitrage calculated as of the end of such applicable Computation Year, and any income attributable to the Rebatable Arbitrage, computed in accordance with Section 148(f) of the Code.

In the event that, prior to the time of any payment required to be made from the Rebate Fund, the amount in the Rebate Fund is not sufficient to make such payment when such payment is due, the Agency shall calculate or cause to be calculated the amount of such deficiency and deposit an amount received from any legally available source, including the other funds and accounts established herein, equal to such deficiency in the Rebate Fund prior to the time such payment is due. Each payment required to be made pursuant to the Indenture shall be made to the Internal Revenue Service Center, Ogden, Utah 84201 on or before the date on which such payment is due, and shall be accompanied by Internal Revenue Service Form 8038 T prepared by the Agency, or shall be made in such other manner as provided under the Code.

Disposition of Unexpended Funds. Any funds remaining in the Rebate Fund after redemption and payment of the Notes and the payments described in the Indenture, shall be transferred by the Trustee to the Agency at the written direction of the Treasurer and utilized in any manner by the Agency.

Survival of Defeasance. Notwithstanding anything in the Indenture to the contrary, the obligation to comply with the requirements shall survive the defeasance of the Notes and any Parity Notes.

Trustee Responsible. The Trustee shall have no obligations or responsibilities under the Indenture other than to follow the written directions of the Treasurer. The Trustee shall have no responsibility to make any calculations of rebate or to independently review or verify such calculations.

Investment of Moneys in Funds and Accounts. Moneys in the Debt Service Fund and the Accounts therein and the Redemption Fund shall be invested and reinvested by the Trustee in Permitted Investments, provided that such investments mature by their terms prior to the date on which such moneys are required to be paid out hereunder. The Trustee shall be protected from any liability in acting in accordance with the Indenture or the Agency's direction. Such investments shall be made in specific investments meeting the requirements of the Indenture as directed in writing by the Executive Director (such written request to be received by 12:00 noon Pacific Time two (2) Business Days prior to such investment) or, in the absence of such written direction, by the Trustee in Permitted Investments described in part (f) of the definition thereof confirmed in writing to the Agency. Moneys in the Special Fund and the Redevelopment Fund shall be invested in any legal investments for Agency funds. Moneys in the Rebate Fund shall be invested in Federal Securities which mature before the date such amounts are required to be paid to the United States. Obligations purchased as an investment of moneys in any Fund or Account held by the Trustee hereunder shall be deemed to be part of such Fund or Account. Any or all interest or gain received from such investments or moneys in the Debt Service Fund and the Accounts therein and the Rebate Fund shall be deposited by the Trustee in the Fund or Accounts from which the investment was made and any loss incurred in connection with such investments shall be debited against the Fund or Account from which the investment was made. The Trustee shall have no liability or responsibility for any loss resulting from any investments made in accordance with this Article V and is entitled to rely upon any investment direction of the Agency as a certification that such investment is a Permitted Investtnent. The Agency acknowledges that to the extent regulations of the Comptroller of the Currency or other applicable regulatory entity grant the Agency the right to receive brokerage continuations of security transactions as they occur, the Agency will not receive copies of such

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confirmations to the extent permitted by law. The Trustee will furnish the Agency periodic cash transaction statements which include detail for all investment transactions inade by the Trustee hereunder. The Trustee may make any investruents hereunder through its own bond or investment department or trust investment department, or those of its parent or any affiliate. The Trustee or any of its affiliates may act as sponsor, advisor or manager in connection with any investments made by the Trustee hereunder.

Investments. The Trustee may make any and all investments permitted by the provisions of the Indenture thereof and the Tax Certificate delivered on the Delivery Date through its own bond or investment department. As and when any amount invested pursuant to this Article may be needed for disbursement, the Trustee may cause a sufficient amount of such investments to be sold and reduced to cash to the credit of such Funds and Accounts.

Redemption of Notes Before Maturity

Limitation on Redemption. The Notes shall be subject to redemption prior to maturity only as provided in this Article VI.

Optional Redemption. The 2009 Notes may be called before maturity and redeemed, at the option of the Agency, in whole or in part from the proceeds of refunding obligations or other source of available funds, on October I, 2011 or on any date thereafter, prior to maturity, by lot, at a redemption price equal to 100% of the principal amount of the 2009 Notes to be redeemed, plus accrued interest to the date of redemption, without premium.

Call and Redemption; Notice of Redemption. Notice of redemption prior to maturity shall be given by first class mail, postage prepaid not less than thirty (30) nor more than sixty (60) days prior to the redemption date to the registered owner of each such Note at the address shown on the registration books of the Trustee. Neither the failure to receive such notice nor any defect in any notice mailed shall affect the sufficiency of the proceedings for the redemption of any 2009 Notes. The notice of redemption shall: (a) state the redemption date; (b) state the redemption price; (c) state the numbers of the 2009 Notes to be redeemed; provided, however, that whenever any call for redemption includes all of the Outstanding 2009 Notes, the numbers of the 2009 Notes need not be stated; (d) state, as to any 2009 Notes redeemed in part only, the Note numbers and the principal portion thereof to be redeemed; and (e) state that interest on the principal portion of the 2009 Notes designated for redemption shall cease to accrue from and after the redemption date and that on the redemption date there shall become due and payable on each of such 2009 Notes the redemption price for each Note. If less than all of the Notes are to be redeemed, the Trustee shall select the Notes to be redeemed in such manner as the Trustee shall deem appropriate.

The actual receipt by the Noteowner of notice of redemption shall not be a condition precedent to redemption, and failure to receive notice shall not affect the validity of the proceedings for the redemption of the 2009 Notes or the cessation of interest on the redemption date. Notice of redemption of 2009 Notes shall be given by the Trustee on behalf of the Agency and at the expense of the Agency.

A certificate by the Trustee that notice of redemption has been given in accordance with this Indenture shall be conclusive as against all parties, and no Noteowner whose Note is called for redemption may object to the redemption or the cessation of interest on the redemption date by claiming or showing that it failed to receive actual notice of call and redemption.

Redemption Fund. Prior to the mailing of notice as required above, the Trustee shall establish, maintain and hold in trust a separate fund which is hereby created for the purpose of this Indenture entitled "Lindsay Redevelopment Agency, Lindsay Redevelopment Project No. One, Subordinate Tax Allocation Notes, Issue of 2009 Redemption Fund" (hereinafter referred to as the "Redemption Fund"). There shall be set aside in the Redemption Fund prior to mailing notice of optional redemption, moneys for the purpose of and sufficient to redeem, at the premiums, if any, payable as provided in this Indenture, the Notes designated in the

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notice of redemption. The moneys must be set aside in the Redemption Fund solely for that ptrrpose and shall be applied on or after the redemption date to the payment (principal and premium, if any) of the Notes to be redeemed upon presentation and surrender of the Notes.

Partial Redemption of Notes. Upon surrender of any Note redeemed in part only, the Agency shall execute and the Trustee shall authenticate and deliver to the registered owner, at the expense of the Agency, a new Note or Notes of authorized denominations equal in aggregate principal amount to the unredeemed portion of the Note surrendered and of the same interest rate and same maturity.

Effect of Redemption. Notice of redemption having been duly given as provided above, and moneys for payment of the principal of, premium, if any, and interest payable upon redemption of the Notes being set aside as provided above, the Notes, or parts thereof, called for redemption shall, on the redemption date, become due and payable at the redemption price specified in the notice. Interest on the Notes, or parts thereof, as the case may be, called for redemption shall cease to accrue and be payable from and after the redemption date. The Notes, or parts thereof redeemed, shall cease to be entitled to any lien, benefit or security under this Indenture, and the Owners of the Notes shall have no rights except to receive payment of the redemption price upon surrender of the Notes, and, in the case of partial redemption of Notes, also to receive a new Note or Notes for the unredeemed balance as provided above.

Purchase of Notes. In lieu of redemption or otherwise, the Agency is hereby authorized to purchase Notes on the open market at any time and the Trustee will upon written direction of the Agency settle these purchases from moneys deposited by the Agency with the Trustee at a price not to exceed the principal amount of Notes plus the applicable premium and accrued interest, if any, to the date of purchase plus brokerage fees, if any.

Payment, Covenants of the Agency

Payment of Principal or Redemption Price of and Interest on Notes. The Agency shall promptly pay or cause the Trustee to pay the principal or redemption price of, and the interest on, every Note issued hereunder according to the terms thereof, but shall be required to make such payment or cause such payment to be made only out of Revenues.

Covenants of the Agency. As long as the Notes are Outstanding and unpaid, the Agency shall (through its proper members, officers, agents or employees) faithfully perform and abide by all of the covenants, undertakings and provisions contained in this Indenture or in any Note issued hereunder, including the following covenants and agreements for the benefit of the Noteowners which are necessary, convenient and desirable to secure the Notes and will tend to make them more marketable; provided, however, that the covenants set forth below do not require the Agency to expend any funds other than the Pledged Revenues:

Covenant l. Complete Redevelopment Project; Amendment to Redevelopment Plan. The Agency covenants and agrees that it will diligently carry out and continue to completion in a sound and economical manner, with all practicable dispatch, the Redevelopment Project in accordance with its duty to do so under and in accordance with the Law and the Redevelopment Plan and in a sound and economical manner. The Redevelopment Plan may be amended as provided in the Law but no amendment shall be made unless it will not substantially impair the security of the Notes or the rights of the Noteowners, as shown by an Opinion of Counsel addressed to the Agency and Trustee, based upon a certificate or opinion of an Independent Financial Consultant appointed by the Agency.

Covenant 2. Use of Proceeds. Management and Operation of Properties. The Agency covenants and agrees that the proceeds of the sale of the Notes will be deposited and used as provided in this Indenture and that it will manage and operate all properties owned by it comprising any part of the Project Area in a sound and businesslike manner consistent with the Redevelopment Plan.

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Covenant 3. No Prioritv. The Agency covenants and agrees that it will not issue any obligations payable, either as to principal or interest from the Pledged Revenues which have any lien upon the Pledged Revenues prior or superior to the lien of the Notes and interest thereon. Except as permitted by the Indenture thereof, it will not issue any obligations, payable as to principal or interest, from the Pledged Revenues which have any lien upon the Pledged Revenues on a parity with the Notes authorized herein or any Parity Notes. Notwithstanding the foregoing, nothing in this Indenture shall prevent the Agency: (i) from issuing and selling pursuant to Jaw, refunding obligations payable from and having any lawful lien upon the Pledged Revenues, if such refunding obligations are issued for the purpose of, and are sufficient for the purpose of, refunding all of the Outstanding Notes and Parity Notes; (ii) from issuing and selling obligations which have, or purport to have, any lien upon the Pledged Revenues which is junior to the Notes or any Parity Notes; or (iii) from issuing and selling notes or other obligations which are payable in whole or in part from sources other than the Pledged Revenues. As used herein "obligations" shall include, without limitation, bonds, notes, interim certificates, debentures or other obligations, loans, advances, or other forms of indebtedness incurred by the Agency.

Covenant 4. Punctual Payment. The Agency covenants and agrees that it will duly and punctually pay or cause to be paid the principal of and interest on each of the Notes on the date, at the place and in the manner provided in the Notes.

Covenant 5. Payment of Taxes and Other Charges. The Agency covenants and agrees that it will from time to time pay and discharge, or cause to be paid and discharged, all payments in lieu of taxes, service charges, assessments or other governmental charges which may lawfully be imposed upon the Agency or any of the properties then owned by it in the Project Area, or upon the revenues and income therefrom, and will pay all lawful claims for labor, materials and supplies which if unpaid might become a lien or charge upon any of the properties, revenues or income or which might impair the security of the Notes or the use of Pledged Revenues or other legally available funds to pay the principal of and interest on the Notes or any Parity Notes, all to the end that the priority and security of the Notes and any Parity Notes shall be preserved; provided, however, that nothing in this covenant shall require the Agency to make any such payment so long as the Agency in good faith shall contest the validity of the payment.

Covenant 6. Books and Accounts; Financial Statements. The Agency covenants and agrees that it will at all times keep, or cause to be kept, proper and current books and accounts (separate from all other records and accounts) in which complete and accurate entries shall be made of all transactions relating to the Redevelopment Project, the Tax Revenues, the Pledged Revenues and other funds relating to the Redevelopment Project. The Agency will prepare within one hundred eighty (180) days after the close of each of its Fiscal Years a complete financial statement or statements for the Fiscal Year, in reasonable detail covering the Redevelopment Project Tax Revenues, Pledged Revenues and other funds, accompanied by an opinion of an Independent Certified Public Accountant appointed by the Agency, and will furnish a copy of the statement or statements to the Trustee and any rating agency which maintains a rating on the Notes, and upon written request, to any Noteowner. The Trustee shall have no duty to review the Agency's financial statements.

Covenant 7. Taxation of Leased Prooertv. All amounts derived hy the Agency pursuant to Section 33673 of the Law with respect to the lease of property for redevelopment shall be treated as Pledged Revenues for all purposes of the Indenture.

Covenant 8. Eminent Domain Proceeds. The Agency covenants and agrees that if all or any part of the Project Area should be taken from it without its consent, by eminent domain proceedings or other proceedings authorized by Jaw, for any public or other use under which the property will be tax exempt, it shall take all steps necessary to adjust accordingly the base year property tax roll of the Project Area.

Covenant 9. Disposition of Property. The Agency covenants and agrees that it will not dispose of more than five percent (5%) of the land area in the Project Area (except property shown in the Redevelopment

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Plan in effect on the date this Indenture is adopted as planned for public use, or property to be used for public streets, public offstreet parking, sewage facilities, parks, easements or right of way for public utilities, or other similar uses) to public bodies or other persons or entities whose property is tax exempt, unless such disposition will not result in the security of the Notes or the rights ofNoteowners being substantially impaired, as shown by an Opinion of Counsel addressed to the Agency and the Trustee, based upon the certificate or opinion of an Independent Financial Consultant appointed by the Agency.

Covenant 10. Protection of Security and Rights of Noteowners. The Agency covenants and agrees to preserve and protect the security of the Notes and any Parity Notes and the rights of the Noteowners and any Parity Noteowners and to contest by court action or otherwise: (a) the assertion by any officer of any government unit or any other person whatsoever against the Agency that: (i) the Law is unconstitutional or (ii) that the Pledged Revenues pledged hereunder cannot be paid to the Agency for the debt service on the Notes; or (b) any other action affecting the validity of the Notes or diluting the security therefor, including, with respect to the Pledged Revenues, the senior lien position of the Notes to the Pass-Through Agreements.

Covenant 11. Refunding. The Agency covenants and agrees to issue its refunding bonds or other refunding obligations at such time and in such amounts which, together with other moneys in the Debt Service Fund and the Accounts thereof will be sufficient to refund all of the Outstanding Notes or to otherwise pay the Notes at maturity. The Agency covenants and agrees to commence proceedings as soon as legally feasible (in the Opinion of Counsel) and financially feasible (in the opinion of an Independent Financial Consultant appointed by the Agency) to refund the Notes and to continue such refunding process through to completion; provided that the Agency shall not be required to refund the Note prior to October 1, 2011 (the ftrst optional redemption date).

Covenant 12. Tax Covenants. The Agency covenants and agrees to contest by court action or otherwise any assertion by the United States of America or any departments or agency thereof that the interest received by the Noteowners is includable in gross income of the recipient under federal income tax laws on the date of issuance of the Notes. Notwithstanding any other provision of this Indenture, absent an opinion of Bond Counsel that the exclusion from gross income of interest with respect to the Notes and any Parity Notes will not be adversely affected for federal income tax purposes, the Agency covenants to comply with all applicable requirements of the Code necessary to preserve such exclusion from gross income and specifically covenants, without limiting the generality of the foregoing, as follows:

(a) Private Activity. The Agency will take no action or refrain from taking any action or make any use of the proceeds of the Notes or any Parity Notes or of any other monies or property which would cause the Notes or any Parity Notes to be "private activity bonds" within the meaning of Section 141 of the Code;

(b) Arbitrage. The Agency will make no use of the proceeds of the Notes or any Parity Notes or of any other amounts or property, regardless of the source, or take any action or refrain from taking any action which will cause the Notes or any Parity Notes to be "arbitrage bonds" within the meaning of Section 148 of the Code;

(c) Federal Guaranty. The Agency will make no use of the proceeds of the Notes or any Parity Notes or take or omit to take any action that would cause the Notes or any Parity Notes to be "federally guaranteed" within the meaning of Section 149(b) of the Code;

(d) Information Reporting. The Agency will take or cause to be taken all necessary action to comply with the informational reporting requirement of Section 149( e) of the Code;

(e) Hedge Bonds. The Agency will make no use of the proceeds of the Notes or any Parity Notes or any other amounts or property, regardless of the source, or take any action or refrain from taking any action that would cause either the Notes or any Parity Notes to be considered "hedge bonds" within

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the meaning of Section 149(g) of the Code unless the Agency takes all necessary action to assure compliance with the requirements of Section 149(g) of the Code to maintain the exclusion from gross income of interest on the Notes and any Parity Notes for federal income tax purposes; and

(f) Miscellaneous. The Agency will take no action or refrain from taking any action inconsistent with its expectations stated in that certain Tax Certificate executed by the Agency in connection with each issuance of Notes and any Parity Notes and will comply with the covenants and requirements stated therein and incorporated by reference herein.

Covenant 13. Pledged Revenues. The Agency shall comply with all requirements of the Law to insure the allocation and payment to it of the Pledged Revenues including, without limitation, the timely filing of any necessary statements of indebtedness with appropriate officials of the County. The Agency further covenants and agrees that, except for the Statutory Pass-Throughs, it has not entered into any agreements with other taxing entities as of the date of this Indenture for the pass through of any Pledged Revenues to such entities and will not hereafter enter into any such agreement which requires payment to such taxing entities prior to deposit of Pledged Revenues in the Debt Service Fund.

Covenant 14. Compliance with Law. The Agency covenants that it will comply with the requirements of the Law. Without limiting the generality of the foregoing, the Agency covenants and agrees to file all required statements and hold all public hearings required under the Law to assure compliance by the Agency with its covenants hereunder. Without limiting the generality of the foregoing, the Agency covenants that it shall deposit or cause to be deposited in the Housing Fund, all amounts when, as and if required to be deposited therein pursuant to the Law and shall expend amounts deposited in the Housing Fund, solely in accordance with Sections 33334.2 and 33334.6 of the Law.

Covenant 15. Limitation on Indebtedness. The Agency covenants and agrees that it has not and will not incur any loans, obligations or indebtedness repayable from Tax Revenues such that the total aggregate debt service on said loans, obligations or indebtedness incurred from and after the date of adoption of the Redevelopment Plan, when added to any predecessor debt, and the total aggregate debt service on the Notes and any Parity Notes, would exceed the maximum amount of Tax Revenues to be divided and allocated to the Agency pursuant to the Redevelopment Plan. The Agency shall file annually with the Trustee on or prior to October I of each year a Written Certificate of the Agency certifying that Pledged Revenues received by the Agency through the date of the certificate combined with the amount remaining to be paid on all outstanding obligations of the Agency will not exceed the Plan Limit. To the extent it does, all Pledged Revenues will be applied to the payment of such outstanding obligations.

Covenant 16. Further Assurances. The Agency covenants and agrees to adopt, make, execute and deliver any and all such further resolutions, instruments and assurances as may be reasonably necessary or proper·to carry out the intention or to facilitate the performance of this Indenture, and for the better assuring and confirming unto the Owners of the Notes and any Parity Notes of the rights and benefits provided herein.

Covenant 17. Continuing Disclosure. The Agency hereby covenants and agrees that it will comply with and carry out all of the provisions of the Continuing Disclosure Agreement dated the date of issuance of the Notes. Notwithstanding any other provision of this Indenture, failure of the Agency to comply with the Continuing Disclosure Agreement shall not be considered an Event of Default; however, any participating underwriter, holder or beneficial owner of the Notes may take such actions as may be necessary and appropriate to compel performance, including seeking mandate or specific performance by court order.

Compliance with Indenture, Contracts. Laws and Regulations. The Agency shall faithfully observe and perform all the covenants, conditions and requirements of this Indenture, shall not issue any Notes in any manner other than in accordance with this Indenture, and shall not exercise its discretion in any way that might materially weaken, diminish or impair the security intended to be given pursuant to this Indenture. Subject to the limitations and consistent with the covenants, conditions and requirements contained in this Indenture, the

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Agency shall comply with the terms, covenants and provisions, express or implied, of all contracts concerning or affecting fhe application of proceeds of the Notes or the Revenues. The Agency shall comply promptly, fully and faithfully with and abide by any statute, law, ordinance, order, rule or regulation, judgment, decree, direction or requirement now in force or hereafter enacted, adopted, prescribed, imposed or entered by any competent governmental aufhority or agency applicable to or affecting the Redevelopment Project.

Default Provisions and Remedies of Trustee and Noteowners

Defaults.

Events of Default. Each of the following shall constitute an event of default hereunder:

• if default shall be made in the due and punctual payment of the principal of or interest or redemption premium (if any) on any Note when and as the same shall become due and payable, whether at maturity as therein expressed, by declaration or otherwise; if default shall be made by the Agency in the observance of any of fhe covenants, agreements or conditions on its part in this Indenture or in the Notes contained, other than a default described in the preceding clause (i), and such default shall have continued for a period of 60 days following receipt by the Agency of written notice from the Trustee or any Owner of the occurrence of such default; or

• if the Agency shall commence a voluntary action under Title ll of the United States Code or any substitute or successor statute.

I fan Event of Default has occurred as defined in the Indenture and is continuing, then and in each and every such case during the continuance of such Event of Default, unless fhe principal of the Notes shall have already become due and payable, fhe Trustee shall declare the principal of the Notes, together with the interest accrued thereon, to be due and payable immediately, and upon any such declaration the same shall become and shall be immediately due and payable, anything in this Indenture or in fhe Notes to the contrary notwithstanding.

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 Notes shall have been declared to be or have immediately become due and payable. The Trustee shall also give such notice to the Owners of the Notes by first class mail, postage prepaid, which shall include the statement that interest on the Notes shall cease to accrue from and after the date of acceleration specified in such notice.

These provisions, however, are subject to the condition that if, at any time after fhe principal of the Notes shall have been so declared due and payable because of an Event of Default under the Indenture, and before any judgment or decree for fhe payment of the moneys due shall have been obtained or entered, fhe Agency shall deposit with fhe Trustee a sum sufficient to pay all principal on the Notes matured prior to such declaration and all matured installments of interest (if any) upon all the Notes, with interest at the rate of twelve percent (12%) per annum on such overdue installments of principal and fhe reasonable fees and expenses of the Trustee (including attorney fees and expenses), and any and all other defaults known to the Trustee (ofher than in the payment of principal of and interest on fhe Notes due and payable solely by reason of such declaration) shall have been made good or cured or provision shall have been made therefor, then, and in every such case, the Owners of at least a majority in aggregate principal amount of the Notes fhen Outstanding, with written notice to the Agency and the Trustee, may, on behalf of the Owners of all of the Notes, 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.

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Certain Remedies of Noteowners. In each Event of Default described in the Indenture, the Trustee (upon receipt of indemnification to so act), shall have the right, for the equal benefit and protection of all Noteowners similarly situated:

• By mandamus, suit, action or proceeding, to compel the Agency and its members, officers, agents or employees to perform each and every term, provision and covenant contained in this Indenture and in the Notes, and to require the carrying out of any or all covenants and agreements of the Agency and the fulfillment of all duties imposed upon it by the Law;

• By suit, action or proceeding in equity, to enjoin any acts or things which are unlawful, or the violation of any of the Noteowners' rights hereunder; or

• Upon the happening of any Event of Default (as defined in the Indenture), by suit, action or proceeding in any court of competent jurisdiction, to require the Agency and its members and employees to account as if it and they were the trustees of an express trust.

Non Waiver. Nothing in the Indenture or in the Notes, shall affect or impair the obligation of the Agency, which is absolute and unconditional, to pay the principal of and interest on the Notes to the respective Owners of the Notes at the date of maturity, as herein provided, or affect or impair the right, which is also absolute and unconditional, of the Owners to institute suit to enforce the payment by virtue of the contract embodied in the Notes.

No remedy conferred upon any Noteowner or Trustee by the Indenture is intended to be exclusive of any other remedy, but each remedy is cumulative and in addition to every other remedy and may be exercised without exhausting and without regard to any other remedy conferred by the Law or any other law of the State of California. No waiver of any default or breach of any duty or contract by any Noteowner or Trustee shall affect any subsequent default or breach of any duty or contract or shall impair any rights or remedies on the subsequent default or breach. No delay or omission of any Noteowner or Trustee to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed as a waiver of any default or acquiescence therein. Every substantive right and every remedy conferred upon the Noteowners or Trustee may be enforced and exercised as often as may be deemed expedient. In case any suit, action or proceeding to enforce any right, or exercise any remedy, shall be brought and should said suit, action or proceeding be abandoned, or be determined adversely to the Noteowners or Trustee, then, and in every such case, the Agency or Trustee and the Noteowners shall be restored to their former positions, rights and remedies as if the suit, action or proceeding had not been brought or taken.

Actions by Trustee as Attomey in Fact. Any suit, action or proceeding which any Noteowner of Notes shall have the right to bring to enforce any right or remedy hereunder may be brought by the Trustee for the equal benefit and protection of all Owners of Notes similarly situated and the Trustee is hereby appointed (and the successive respective Owners of the Notes issued hereunder, by taking and holding the same, shall be conclusively deemed so to have appointed it) the true and lawful attorney in fact of the respective Owners of the Notes for the purpose of bringing any suit, action or proceeding and to do and perform any and all acts and things for and on behalf of the respective Owners of the Notes as a class or classes, as may be necessary or advisable in the opinion of the Trustee as attorney in fact; provided, however, the Trustee shall not be required to act hereunder pursuant to the Indenture unless and until it shall receive indemnification satisfactory to it (l) for the reimbursement of all fees and expenses (including its reasonable attorneys fees and expenses) to which it may be put and (2) to protect it against all liability, except liability which is to be adjudicated to have resulted from its negligence or willful misconduct in connection with any action so taken.

General. After the issuance and delivery of the Notes, this Indenture, and any supplemental resolutions hereto, shall be irrepealable, but shall be subject to modification or amendment to the extent and in the manner provided in this Indenture, but to no greater extent and in no other manner.

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Application of Funds Upon Acceleration. All of the amounts in the Debt Service Fund and the Accounts therein upon the date of the declaration of acceleration as provided in the Indenture, and all sums thereafter received by the Trustee hereunder, shall be applied by the Trustee after deducting (I) its own fees and expenses (including fees and expenses of its attorneys) in declaring such Event of Default and any outstanding fees and expenses of the Agency, (2) the costs and expenses of the Noteowners, including reasonable compensation to its or their agents, attorneys and counsel, upon presentation of the Notes (and the stamping thereon of the payment if only partially paid, or upon the surrender thereof if fully paid) to the payment of the whole amount then owing and unpaid on the Notes on the date on which amounts are applied to pay principal of the Outstanding Notes, together with interest on the overdue principal and overdue installments of interest at the rate of twelve percent (12%) per annum (to the extent permitted by law and to the extent that such interest on overdue installments of principal and interest shall have been collected) and, in case such moneys will be insufficient to pay in full the whole amount so owing and unpaid upon the Notes, then to the payment of such principal and interest without preference or priority of principal over interest, or interest over principal, or of any installment of interest over any other installment of interest, or any Note over any other Note, ratably to the aggregate of such principal and interest.

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

Limitation on Owner's Right to Sue. No Owner of any Note issued hereunder shall have the right to institute any suit, action or proceeding at law or in equity, for any remedy under or upon this Indenture, unless (a) such Owner shall have previously given to the Trustee written notice of the occurrence of an Event of Default; (b) the Owners of a majority in aggregate principal amount of all the Notes 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 indenmity 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 60 days after such written request shall have been received by, and said tender of indenmity shall have been made to, the Trustee.

Such notification, request, tender of indenmity and refusal or omission are hereby declared, in every case, to be conditions precedent to the exercise by any Owner of any remedy hereunder; 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 this Indenture, except in the manner herein provided, and that all proceedings at law or in equity to enforce any provisions of this Indenture shall be instituted, had and maintained in the manner herein provided and for the equal benefit of all Owners of the Outstanding Notes.

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

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The Trustee and the Paying Agent

Appointment. Duties. Inununities and Liabilities of Trustee.

The Agency hereby appoints U.S. Bank National Association as Trustee and Paying Agent, such appointment to remain in effect until notice of change is filed with the Trustee. The Trustee shall, prior to an Event of Default, and after the curing or waiving of all Events of Default which may have occurred, perform such duties and only such duties as are specifically set forth in this Indenture. The Trustee shall, during the existence of any Event of Default (which bas not been cured or waived), exercise such of the rights and powers vested in it by this Indenture and use the same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in the conduct of his own affairs. All references to the Trustee in this Article IX include references to the Trustee when it is acting as Paying Agent and note registrar.

The Agency may remove the Trustee at any time unless an Event of Default shall have occurred and then be continuing, and shall remove the Trustee if at any time requested to do so by an instrument or concurrent instruments in writing signed by the Noteowners of not less than a majority in aggregate principal amount of the Notes then Outstanding (or their attorneys duly authorized in writing) or if at any time the Trustee shall cease to be eligible in accordance with the Indenture, or shall become incapable of acting, or shall be adjudged bankrupt or insolvent, or a receiver of the Trustee or its property shall be appointed, or any public officer shall take control or charge of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation; in each case by giving written notice of such removal to the Trustee, and thereupon shall appoint a successor Trustee by an instrument in writing.

The Trustee may at any time resign by giving written notice of such resignation to the Agency and the Noteowners, by first class mail. Upon receiving such notice of resignation, the Agency shall promptly appoint a successor Trustee by an instrument in writing.

Any removal or resignation of the Trustee and appointment of a successor Trustee shall become effective upon acceptance of appointment by the successor Trustee. Promptly upon such acceptance, the Agency shall notifY the Noteowners in writing. If no successor Trustee shall have been appointed and have accepted appointment within 45 days of giving notice of removal or notice of resignation as aforesaid, the resigning Trustee or any Noteowner (on behalf of himself and all other Noteowners) may petition any court of competent jurisdiction for the appointment of a successor Trustee, and such court may thereupon, after such notice (if any) as it may deem proper, appoint such successor Trustee. Any successor Trustee appointed under this Indenture shall signifY its acceptance of such appointment by executing and delivering to the Agency and to its predecessor Trustee a written acceptance thereof, and thereupon such successor Trustee, without any further act, deed or conveyance, shall become vested with all the moneys, estates, properties, rights, powers, trusts, duties and obligations of such predecessor Trustee, with like effect as if originally named Trustee herein; but, nevertheless at the request of the Agency or the request of the successor Trustee, such predecessor Trustee shall execute and deliver any and all instruments of conveyance or further assurance and do such other things as may reasonably be required for more fully and certainly vesting in and confirming to such successor Trustee all the right, title and interest of such predecessor Trustee in and to any property held by it under this Indenture and shall pay over, transfer, assign and deliver to the successor Trustee any money or other property subject to the trusts and conditions herein set forth. Upon request of the successor Trustee, the Agency shall execute and deliver any and all instruments as may be reasonably required for more fully and certainly vesting in and confirming to such successor Trustee all such moneys, estates, properties, rights, powers, trusts, duties and obligations. The Trustee's rights to indemnification hereunder and to payment of its fees and expenses shall survive its resignation or removal and the final payment or defeasance of the Notes.

Any Trustee appointed under the provisions in the Indenture in succession to the Trustee shall be a trust company or bank having trust powers having a combined capital and surplus of at least seventy-five million dollars ($75,000,000), and subject to supervision or examination by federal or state authority. If such bank or trust company publishes a report of condition at least annually, pursuant to law or to the requirements

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of any supervtsmg or exammmg authority above referred to, then for the purpose of the Indenture the combined capital and surplus of such bank or trust company shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. In case at any time the Trustee shall cease to be eligible in accordance with the provisions of the Indenture, the Trustee shall resign immediately in the manner and with the effect specified in the Indenture.

Any company into which the Trustee may be merged or converted or with which it may be consolidated or any company resulting from any merger, conversion or consolidation to which it shall be a party or any company to which the Trustee may sell or transfer all or substantially all of its corporate trust business, provided such company shall be eligible under the Indenture, shall be the successor to such Trustee without the execution or filing of any paper or any further act, anything herein to the contrary notwithstanding.

The permissive right of the Trustee to do things enumerated or contemplated by this Indenture shall not be construed as a duty and the Trustee shall not be liable in the performance of its obligations hereunder except for its negligence or willful misconduct.

The Trustee shall not be required to take notice or be deemed to have notice of any Event of Default hereunder except failure by the Agency to cause to be made any of the payments to the Noteowners required to be made by Article IV or XI hereof, unless the Trustee shall be specifically notified in writing of such Event of Default by the Agency, by the Registered Owners of at least twenty five percent (25%) in aggregate principal amount of all Notes then Outstanding.

The Trustee shall not be required to give any bond or surety in respect of the execution of its trusts and powers hereunder.

Before taking any action under the Indenture at the request of the Noteowners, the Trustee may require that a satisfactory indemnity bond be furnished by the Noteowners for the reimbursement of all expenses to which it may be put and to protect it against all liability, except liability which is adjudicated to have resulted from its negligence or willful misconduct in connection with any action so taken.

All moneys received by the Trustee or any Paying Agent shall, until used or applied or invested as herein provided, be held in trust for the purposes for which they were received and shall not be commingled with the general funds of the Trustee or any Paying Agent, but need not be segregated from other funds except to the extent required by law.

No provision of this Indenture shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that:

• This subsection shall not be construed to limit the effect of this section;

• The Trustee shall not be liable hereunder for any error of judgment made in good faith by an officer of the Trustee, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts;

• The Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the owners of a majority in aggregate principal amount of the Notes Outstanding relating to the time, method and place of conducting any proceeding or any remedy available to the Trustee, or the exercise of any trust or power conferred upon the Trustee, under this Indenture; and

• No provision of this Indenture shall require the Trustee to expend or risk its own fimds or otherwise incur any financial liability in the performance of any of its duties hereunder or in the exercise of any of its rights or powers.

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• The Agency shall pay to the Trustee from time to time compensation for all services rendered under this Indenture in accordance with a fee schedule delivered to the Agency from time to time and also all reasonable expenses, charges, legal and consulting fees and other disbursements and those of its attorneys, agents and employees, incurred in and about the performance of its powers and duties under this Indenture.

Liability of Trustee. The recitals, statements and representations by the Agency contained in this Indenture or in the Notes shall be taken and construed as made by and on the part of the Agency, and not the Trustee, and the Trustee does not assume, and shall not have, any responsibility or obligations for the correctness of any thereof. The Trustee shall, however, be responsible for its representations contained in its certificate of authentication on the Notes. The Trustee shall have no responsibility or liability with respect to any information, statement or recital in any offering memorandum or other disclosure material prepared or distributed with respect to the issuance of the Notes.

The Trustee undertakes to perform such duties, and only such duties as are specifically set forth in this Indenture and no implied duties or obligations shall be read into this Indenture against the Trustee.

In accepting the trust hereby created, the Trustee acts solely as Trustee for the Noteowners and not in its individual capacity and all persons including, without limitation, the Noteowners and the City or the Agency having any claim against the Trustee arising from this Indenture shall look only to the funds and accounts held by the Trustee hereunder for payment except as otherwise provided herein. Under no circumstances shall the Trustee be liable in its individual capacity for the obligations evidenced by the Notes.

The Trustee shall not be deemed to have knowledge of any Event of Default hereunder unless and until it shall have actual knowledge thereof.

The Trustee shall not be accountable for the use or application by the Agency or any other party of any funds which the Trustee has released under this Indenture.

The Agency covenants to the extent permitted by law to indemnifY the Trustee and to hold it harmless against any loss, liability, expenses or advances, including, but not limited to fees and expenses of counsel and other experts, incurred or made without negligence or willful misconduct on the part of the Trustee: (i) in the exercise and performance of any of the powers and duties hereunder by the Trustee; (ii) relating to or arising out of the Redevelopment Project, or the conditions, occupancy, use, possession, conduct or management of, or work done in or about, or from the planning, design, acquisition, installation or construction of the Redevelopment Project or any part thereof; or (iii) arising out of material fact or omission or alleged omission to state a material fact necessary to make the statements made, in light of the circwnstances under which they were made, not misleading in any official statement or other offering circular utilized in connection with the sale of the Notes, including the costs and expenses of defending itself against any claim of liability arising under this Indenture.

The Trustee may become the owner of Notes with the same rights it would have if it were not Trustee, and, to the extent permitted by law, may act as depository for and permit any of its officers or directors to act as a member of, or in any other capacity with respect to, any committee formed to protect the rights of Noteowners, whether or not such committee shall represent the Noteowners of a majority in principal amount of the Notes then Outstanding.

All indemnifications and releases from liability granted in this Indenture to the Trustee shall extend to its directors, officers, employees and agents. The obligations of the Agency to pay or indemnifY the Trustee under this Indenture shall survive the termination or discharge of this Indenture and the resignation or removal of the Trustee.

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Right of Trustee to Rely on Documents. The Trustee shall be protected hereunder in acting upon any notice, resolution, request, consent, order, certificate, report, opinion, note or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties, including, without limitation, all funding and disbursement requisitions and notices. The Trustee may consult with counsel, who may be counsel of or to the Agency, with regard to legal questions, and the opinion of such counsel shall be full and complete authorization and protection in respect of any action taken or suffered by it hereunder in good faith and in accordance therewith. The Trustee may employ attorneys, agents or receivers in the performance of any of its duties hereunder and shall not be answerable for the misconduct of such attorney, agent or receiver selected by it with reasonable care.

The Trustee shall not be bound to recognize any person as the Owner of a Note unless and until such Note is submitted for inspection, if required, and his title thereto satisfactorily established, if disputed.

Whenever in the administration of the trusts imposed upon it by this Indenture, the Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering any action hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively proved and established by a certificate of the Agency, and such certificate shall be full warrant to the Trustee for any action taken or suffered in good faith under the provisions of this Indenture in reliance upon such certificate, but in its discretion the Trustee may, in lieu thereof, accept other evidence of such matter or may require such additional evidence as to it may seem reasonable.

Intervention by Trustee. In any judicial proceedings to which the Agency is a party and which in the opinion of the Trustee and its Counsel has a substantial bearing on the interest of owners of the Notes, the Trustee may in its discretion intervene on behalf ofNoteowners and, upon being indemnified to its satisfaction therefor, shall do so if requested in writing by the owners of a majority in aggregate principal amount of all Notes then Outstanding.

Designation and Successor of Paying Agent; Agreement with Paying Agent. The Trustee shall be the Paying Agent for the Notes. The Trustee may appoint an additional Paying Agent to act as Co Paying Agent with the consent of the Agency. Any Paying Agent appointed under the provisions of the Indenture shall be a commercial bank or trust company eligible to act as Trustee hereunder. The Trustee may remove or replace any Co Paying Agent by written instrument, which removal or replacement shall not require any consents or approvals. The Trustee shall notify all Noteowners by first class mail of and upon appointment, removal or replacement of the Co Paying Agent, such notice to include the name and address of the then appointed Co Paying Agent, if any.

Any commercial bank or trust company with or into which any Paying Agent may be merged or consolidated, or to which the assets and business of such Paying Agent may be sold, shall be deemed the successor of such Paying Agent for the purposes of this Indenture. If the position of Paying Agent shall become vacant for any reason, the Agency may appoint a bank or trust company as such Paying Agent to fill such vacancy. The Paying Agent shall enjoy the same protective provisions in the per.formance of its duties hereunder as are specified in the Indenture thereof with respect to the Trustee insofar as such provisions may be applicable.

Supplemental Indentures

Amendments: Suoolemental Indentures. This Indenture, and the rights and obligations of the Agency and of the Owners of the Notes issued hereunder, may be modified or amended at any time by Supplemental Indenture adopted by the Agency: (a) without the consent ofNoteowners, if the modification or amendment is for the purpose of adding covenants and agreements further to secure Note payment, to prescribe further limitations and restrictions on Note issuance, to surrender rights or privileges of the Agency, to make modifications not affecting any Outstanding series of Notes only with the consent of the Trustee, for the purpose of curing any ambiguities, defects or inconsistent provisions in this Indenture, to preserve the

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exclusion from federal income tax with respect to interest on the Notes, or to insert such provisions clarifying matters or questions arising under this Indenture as are necessary and desirable to accomplish the same, provided that the modifications or amendments do not adversely affect the rights of the Owners of any Outstanding Notes; or (b) for any purpose with the consent of the Noteowners holding not less than sixty percent (60%) in aggregate principal amount of the Outstanding Notes, exclusive of Notes, if any, owned by the Agency or the City, and obtained as hereinafter set forth; provided, however, that no modification or amendment shall, without the express consent of the Noteowner or registered owner of the Note affected, reduce the principal amount of any Note, reduce the interest rate payable on it, extend its maturity or the times for paying interest, change the monetary medium in which principal and interest is payable, or create a mortgage pledge or lien upon the revenues superior to or on a parity (except as provided in the Indenture) with the pledge and lien created for the Notes and any Parity Notes or reduce the percentage of consent required for amendment or modification and provided further, that no amendments affecting the duties, obligations or rights of the Trustee shall take affect without the consent of the Trustee.

Any act done pursuant to a modification or amendment permitted by the Indenture shall be binding upon the Owners of all of the Notes, and shall not be deemed an infringement of any of the provisions of this Indenture or of the Law, whatever the character of the act may be, and may be done and performed as fully and freely as if expressly permitted by the original terms of this Indenture, no Noteowner shall have any right or interest to object to the action, to question its propriety or to enjoin or restrain the Agency or its officers from taking any action pursuant to such modification or amendment. The Trustee may obtain an opinion of counsel that any such Supplemental Indenture complies with the provisions of this Article X and the Trustee may conclusively rely upon such opinion.

Defeasance

Defeasance. If the Agency shall pay or cause to be paid, or there shall be otherwise paid or provisions for payment made to or for the owners and owners of the Notes, the principal, premium, if any, and interest due or to become due thereon at the time and in the manner stipulated therein, and if the Agency shall keep, perform and observe all and singular the covenants and promises in the Notes and in this Indenture expressed as to be kept, performed and observed by it or on its part, and shall pay or cause to be paid to the Trustee all sums of money due or to become due according to the provisions hereof including fees and expenses of the Trustee, then this Indenture and the lien, rights and interest created hereby shall cease, determine and become null and void (except as to any surviving rights of registration, transfer or exchange of Notes herein provided for and except for the rights of the Trustee to receive compensation and indemnification in accordance with Article IX hereof), whereupon the Trustee shall cancel and discharge this Indenture, and execute and deliver to the Agency such instruments in writing as shall be requested by the Agency and requisite to discharge this Indenture, and release, assign and deliver unto the Agency any and all the estate, right, title and interest in and to any and all right assigned or pledged to the Trustee or otherwise subject to this Indenture, except moneys or securities held by the Trustee for the payment of the principal of, premium, if any, and interest on the Notes.

The lien of the Indenture shall be discharged, if the Agency shall pay and discharge the entire indebtedness on all Notes Outstanding in any one or more of the following ways:

• By well and truly paying or causing to be paid the principal of and interest on all Notes Outstanding, together with all amounts due the Trustee as and when the same become due and payable;

• By depositing with the Trustee, in a special trust fund created for such purpose, at or before maturity, moneys which, together with the other moneys then on deposit in the Debt Service Fund and Accounts therein, is fully sufficient to pay all Notes Outstanding, including all principal, premium, if any, and interest together with all amounts due the Trustee; or

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• By depositing with the Trustee, in a special trust created for such purpose, moneys invested in Federal Securities in such amount as an Independent Financial Consultant shall determine will, together with the interest to accrue thereon without reinvestment and moneys then on deposit in the Debt Service Fund, be fully sufficient to pay and discharge any indebtedness on all Notes (including all principal, premium, if any, and interest together with all amounts due the Trustee) at or before maturity; then, at the option of the Agency, and notwithstanding that all Notes shall not have been surrendered for payment, the pledge of the Pledged Revenues and other funds provided for in this Indenture and all other obligations of the Agency under this Indenture with respect to all Notes Outstanding shall cease and terminate, except only the obligation of the Agency to pay or cause to be paid to the Owners of the Notes not so surrendered and paid all sums due thereon and the rights of the Trustee to indemnification and payment of fees and expenses under Article IX hereof. Notice of the exercise of such option shall be filed with the Trustee.

Any funds held by the Trustee after discharge of the lien of the Indenture including any funds which have not been claimed by the person entitled thereto within two (2) years of the date upon which such funds were scheduled to be paid, or which are not required for said purpose, shall be paid over to the Agency and thereafter Note Owners shall look only to the Agency for payment.

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APPENDIXD

FORM OF BOND COUNSEL OPINION

Upon issuance and delivery of the Notes, Stradling Yocca Carlson & Rauth, a Professional Corporation, Bond Counsel, proposes to render its final approving opinion in substantially the following form.

Lindsay Redevelopment Agency Lindsay, California

____ _,2009

Re: $1,000,000.00 Lindsay Redevelopment Agency, Lindsay Redevelopment Project No. One, Subordinate Tax Allocation Notes, Issue of 2009

Ladies and Gentlemen:

We have examined certified copies of proceedings of the Lindsay Redevelopment Agency (the "Agency"), and other information and documents submitted to us relative to the issuance and sale by the Agency of its Lindsay Redevelopment Project No. One, Subordinate Tax Allocation Notes, Issue of 2009 in the original aggregate principal amount of $1,000,000.00 (the "Notes") and such other information and documents as we consider necessary to render this opinion. In rendering this opinion, we also have relied upon certain representations of fact and certifications made by the Agency, the Trustee, the purchasers of the Notes and others. We have not undertaken to verifY through independent investigation the accuracy of the representations and certifications relied upon by us.

The Notes have been issued pursuant to the authority contained in Part 1 of Division 24 of the Health and Safety Code of the State of California (the "Act") and an Indenture of Trust dated as ofNovember 1, 2009 between the Agency and U.S. Bank National Association, as Trustee (the "Indenture") which was approved by Resolution No. LRA 09-04 of the Agency adopted on October 30, 2009 (the "Resolution").

The Notes are initially dated as of the Delivery Date, and mature on the dates and bear interest payable on the dates and at the rates per annum set forth in the Indenture. The Notes are registered Notes issued in the form set forth in the Indenture, redeemable in the amounts, at the times and in the manner provided for in the Indenture. All terms not defined herein, have the meanings ascribed to those terms in the Indenture.

Based upon our examination of all of the foregoing, and in reliance thereon and on all matters of fact as we deem relevant under the circumstances, and upon consideration of applicable laws, we are of the opinion that:

(l) The Notes have been duly and validly authorized by the Agency and are legal, valid and binding special obligations of the Agency, secured and payable solely from Pledged Revenues (as defined in the Indenture) and other sources as and to the extent provided for in the Indenture. The Notes are enforceable in accordance with their terms and the terms of the Indenture, except to the extent that enforceability may be limited by moratorium, bankruptcy, reorganization, insolvency or other similar laws affecting creditors' rights generally or by the exercise of judicial discretion in accordance with general principles of equity. The Notes are special obligations of the Agency but are not a debt of the City of Lindsay, the State of California or any other political subdivisions thereof within the meaning of any constitutional or statutory limitation, and neither the City of Lindsay, the State of California, or any other of its political subdivisions is liable for the payment thereof.

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(2) The Indenture has been duly authorized by the Agency, is valid and binding upon the Agency and is enforceable in accordance with its terms, except to the extent that enforceability may be limited by moratorium, bankruptcy, reorganization, insolvency or other laws affecting creditors' rights generally or by the exercise of judicial discretion in accordance with general principles of equity.

(3) The Indenture creates a valid pledge of that which the Indenture purports to pledge, subject to the provisions of the Indenture, except to the extent that the enforceability of the Indenture may be limited by moratorium, bankruptcy, reorganization, insolvency or other laws affecting creditors' rights generally or by the exercise of judicial discretion in accordance with general principles of equity.

(4) Under existing statutes, regulations, rulings and judicial decisions, interest on the Notes is excluded from gross income for federal income tax purposes, and such interest is not an item of tax preference for purposes of calculating the federal alternative minimum tax imposed on individuals and corporations; however, we note that, with respect to corporations, interest on the Notes may be included as an adjustment in the calculation of alternative minimum taxable income which may affect such corporation's alternative minimum tax liability.

(5) Interest on the Notes is exempt from State of California personal income tax.

(6) The difference between the issue price of a Note (the first price at which a substantial amount of the Notes of a maturity are to be sold to the public) and the stated redemption price at maturity with respect to such Note constitutes original issue discount. Original issue discount accrues under a constant yield method, and original issue discount will accrue to a Noteowner before receipt of cash attributable to such excludable income. The amount of original issue discount deemed received by a Noteowner will increase the Noteowner's basis in the applicable Note. Original issue discount that accrues to the Noteowner is excluded from the gross income of such owner for federal income tax purposes, is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations (as described in paragraph 4 above), and is exempt from State of California personal income tax.

The opinion set forth in paragraph (4) and (6) above as to the exclusion from gross income of interest on the Notes is based upon certain representations of fact and certifications made by the Agency and others and are subject to the condition that the Agency comply with certain covenants and the applicable requirements of the Internal Revenue Code of 1986, as amended, that must be satisfied subsequent to the issuance of the Notes to assure that interest (and original issue discount) on the Notes will remain excludable from gross income for federal income tax purposes. Failure to comply with such covenants and requirements may cause interest (and original issue discount) on the Notes to be included in gross income for federal income tax purposes retroactive to the date of issuance of the Notes. The Agency has covenanted to comply with all such requirements. We express no opinion regarding other tax consequences with respect to the Notes.

Certain requirements and procedures contained or referred to in the Indenture, the Purchase Agreement, dated as of November 17,2009, by and among the Agency, the Lindsay Financing Authority and Southwest Securities and the Tax Certificate may be changed, and certain actions may be taken, under the circumstances and subject to the terms and conditions set forth in such documents, upon the advice or with the approving opinion of counsel nationally recognized in the area of tax-exempt obligations. We express no opinion as to the exclusion of interest on the Notes from gross income for federal income tax purposes on and after the date on which any such change occurs or action is taken upon the advice or approval of counsel other than Stradling Y occa Carlson & Rauth, a Professional Corporation.

The opinions expressed herein are based on an analysis of existing statutes, regulations, rulings and judicial decisions and cover certain matters not directly addressed by such authorities. Such opinions may be affected by actions taken (or not taken) or events occurring (or not occurring) after the date hereof. We have

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not undertaken to determine, or to inform any person, whether any such actions or events are taken or do occur. Such actions or events may adversely affect the value or tax treatment of the Notes and we express no opinion with respect thereto.

We express no opinion herein as to the accuracy, completeness or sufficiency of the Official Statement relating to the Notes or other offering material relating to the Notes and purchasers of the Notes should not assume that we have reviewed the Official Statement.

Respectfully submitted,

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APPENDIXE

FORM OF CONTINUING DISCLOSURE AGREEMENT

This Continuing Disclosure Agreement (the "Disclosure Agreement") is executed and delivered by the Lindsay Redevelopment Agency (the "Agency") and Urban Futures, Inc., a California corporation (the "Dissemination Agent") in connection with the issuance of the Agency's $1,000,000.00 Lindsay Redevelopment Agency, Lindsay Redevelopment Project No. One, Subordinate Tax Allocation Notes, Issue of 2009 (the ''Notes"). The Notes are being issued pursuant to an Indenture of Trust, dated as of November I, 2009 (the "Indenture"), by and between the Agency and U.S. Bank National Association, as trustee (the "Trustee"). The Agency covenants and agrees as follows:

Section I. Purpose of the Disclosure Agreement. This Disclosure Agreement is being executed and delivered by the Agency and the Dissemination Agent for the benefit of the holders and beneficial owners of the Notes 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 Indenture, which apply to any capitalized term used in the Disclosure Agreement, unless otherwise defined, 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 Section 3 and 4 of this Disclosure Agreement.

"Dissemination Agent" shall mean Urban Futures, Inc., or any successor Dissemination Agent designated in writing by the Agency and which bas filed with the Agency and the Trustee a written acceptance of such designation.

"EMMA" shall mean the Electronic Municipal Market Access system located at http://www.emrna.msrb.org, which is the centralized on-line repository for municipal disclosure docnrnents to be filed with the MSRB pursuant to the Rule.

"Listed Events" shall mean any of the events listed in Section 5(a) of this Disclosure Agreement.

"MSRB" shall mean the Municipal Securities Rulemaking Board.

"Participating Underwriter" shall mean any of the original underwriters of the Notes required to comply with the Rule in connection with offering of the Notes.

"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. Provisions of Annual Reports.

(a) The Agency shall, or shall cause the Dissemination Agent to, not later than seven (7) months after the end of the Agency's fiscal year (which date currently would be January 31, based upon the June 30 end of the Agency's fiscal year), commencing with the report for the 2009-2010 fiscal year, provide to the MSRB, via EMMA, in an electronic format accompanied by identifying information as prescribed by the MSRB, an Annual Report which is consistent with the requirements of Section 4 of this Disclosure Agreement. Not later than fifteen (15) Business Days prior to said date, the Agency shall provide the Annual Report to the Dissemination Agent (if other than the Agency). The Annual Report may be submitted as a single document or as separate docnrnents comprising a package, and may include by reference other information as provided in Section 4 of this Disclosure Agreement; provided that the audited financial statements of the Agency may be submitted separately from the balance of the Annual Report, and later than the date required above for the

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filing of the Annual Report 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).

(b) If the Agency is unable to provide to the MSRB an Annual Report by the date required in subsection (a), the Agency shall send a notice to the MSRB, via EMMA in substantially the form attached as Exhibit A.

(c) The Dissemination Agent shall, if and to the extent, the Agency has provided an Annual Report in final form to the Dissemination Agent for dissemination, file a report with the Agency certifYing that the Annual Report has been provided to the MSRB, via EMMA, pursuant to this Disclosure Agreement, 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 the Agency's, audited financial statements are not available by the time the Annual Report is required 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) The following financial information and operating data set forth in the final Official Statement shall be updated for the most recent Fiscal Year:

(i) To the extent not contained in the audited financial statements filed pursuant to the preceding subsection (a) by the date required by Section 3 hereof, updates of Tables 3, 4, 5, and 6 set forth in the Official Statement.

Any or all of the items listed above may be included by specific reference to other documents, including official statements of debt issues of the Agency or related public entities, which have been submitted to each of the Repositories or the Securities and Exchange Commission. If the document included by reference is a final official statement, it must be available from the Municipal Securities Rulemaking Board. The Agency shall clearly identifY each such other document so included by reference.

Section 5. Reporting of Significant Events.

(a) Pursuant to the provisions of this Section S, the Agency shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Notes, if material:

(i) Principal and interest payment delinquencies.

(ii) Non-payment related defaults.

(iii) Unscheduled draws on debt service reserves reflecting financial difficulties.

(iv) Unscheduled draws on credit enhancements reflecting financial difficulties.

(v) Substitution of credit or liquidity providers, or their failure to perform.

(vi) Adverse tax opinions or events affecting the tax-exempt status of the security.

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(vii) Modifications to rights of security holders.

(viii) Contingent or unscheduled bond calls.

(ix) Defeasances.

(x) Release, substitution, or sale of property securing repayment of the securities.

(xi) Rating changes

(b) Whenever the Agency obtains knowledge of the occurrence of a Listed Event, the Agency shall as soon as possible determine if such event would be material under applicable Federal securities law. The Dissemination Agent shall have no responsibility for such determination and shall be entitled to conclusively rely on the Agency's determination.

(c) If the Agency determines that knowledge of the occurrence of a Listed Event would be material under applicable Federal securities law, the Agency shall promptly file a notice of such occurrence with the MSRB, via EMMA. Notwithstanding the foregoing, notice of Listed Events described in subsections (a)(viii) and (ix) need not be given under this subsection any earlier than the notice (if any) of the underlying event is given to holders of affected Notes pursuant to the Indenture.

Section 6. Termination of Reporting Obligation. The Agency's obligations under this Disclosure Agreement shall terminate upon the legal defeasance, prior redemption or payment in full of all the Notes. If such termination occurs prior to the final maturity of the Notes, the Agency shall give notice of such termination in the same manner as for a Listed Event under Section 5( c).

Section 7. Dissemination Agent.

(a) The Agency hereby appoints and engages Urban Futures, Incorporated as the Dissemination Agent to assist it in carrying out is obligations under this Disclosure Agreement. The Dissemination Agent shall not be responsible in any manner for the content of any notice or report prepared by the Agency pursuant to this Disclosure Agreement. The Agency may replace the Dissemination Agent with or without cause. If at the time there is no designated Dissemination Agent appointed by the Agency, the Agency shall be the Dissemination Agent and undertake or assume its obligations hereunder.

Any company succeeding to all or substantially all of the Dissemination Agent's corporate trust business shall be the successor to the Dissemination Agent hereunder without the execution or filing of any paper or any further act. The Dissemination Agent may resign its duties hereunder at any time upon written notice to the Agency.

(b) The Dissemination Agent shall be paid compensation by the Agency for its services provided hereunder in accordance with its schedule of fees agreed to between the Dissemination Agent and the Agency from time to time and for all expenses, legal fees and advances made or incurred by the Dissemination Agent in the performance of its duties hereunder. The Dissemination Agent shall have not duty or obligation to review any information provided to it by the Agency hereunder and shall not be deemed to be acting in any fiduciary capacity for the Agency, holders or beneficial owners or any other party. The Dissemination Agent may rely and shall be protected in acting or refraining from acting upon any direction from the Agency or an opinion of nationally recognized bond counsel.

Section 8. Amendment; Waiver. Notwithstanding any other prov1s10n of this Disclosure Agreement, the Agency may amend this Disclosure Agreement, and any provision of this Disclosure Agreement may be waived, provided that the following conditions are satisfied:

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(a) if the amendment or waiver relates to the provisions of Sections 3(a), 4 or 5(a), it may only be made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature, or status of an obligated person with respect to the Notes, 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 compiled with the requirements of the Rule at the time of the primary offering of the Notes, 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 Notes in the manner provided in the Indenture for amendments to the Indenture with the consent of holders, or (ii) does not, in the opinion of nationally recognized bond counsel, materially impair the interests of the holders or beneficial owners of the Notes.

If the annual financial information or operating data to be provided in the Annual Report is amended pursuant to the provisions hereof, the first annual financial information filed pursuant hereto containing the amended operating data or financial information shall explain, in narrative form, the reasons for the amendment and the impact of the change in the type of operating data or financial information being provided.

If an amendment is made to the undertaking specifying the accounting principles to be followed in preparing financial statements, the annual financial information for the year in which the change is made shall present a comparison between the financial statements or information prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. The comparison shall include a qualitative discussion of the differences in the accounting principles and the impact of the change in the accounting principles on the presentation of the financial information, in order to provide information to investors to enable them to evaluate the ability of the Agency to meet its obligations. To the extent reasonably feasible, the comparison shall be quantitative. A notice of the change in the accounting principles shall be sent to the Repositories in the same manner as for a Listed Event under Section 5( c).

No amendment to this Agreement which modifies the duties or rights of the Dissemination Agent shall be made without the prior written consent of the Dissemination Agent.

Section 9. Additional Information. Nothing in this Disclosure Agreement shall be deemed to prevent the Agency from disseminating any other information, using the means of dissemination set forth in the Disclosure Agreement or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Agreement. If the 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 equipped by this Disclosure Agreement, the Agency shall have no obligation under this Disclosure Agreement to update such information or include it in any future Annual Report or notice of occurrence of a Listed Event.

Section l 0. Default. In the event of a failure of the Agency to comply with any provision of this Disclosure Agreement, any Participating Underwriter or any holder or beneficial owner of the Notes 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 Agreement. A default under this Disclosure Agreement shall not be deemed an Event of Default under the Indenture, and the sole remedy under this Disclosure Agreement in the event of any failure of the Agency to comply with this Disclosure Agreement shall be an action to compel performance.

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Section II. Duties, Immunities and Liabilities of Dissemination Agent. The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Agreement, and the 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 Dissemination Agent may rely and shall be protected in acting or refraining from acting upon any direction from the Agency or an opinion of nationally recognized bond counsel. The obligations of the Agency under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Notes. No person shall have any right to commence any action against the Trustee or Dissemination Agent seeking any remedy other than to compel specific performance of this Disclosure Agreement.

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Section 12. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit of the Agency, the Dissemination Agent, the Participating Underwriters and holders and beneficial owners from time to time of the Notes, and shall create no rights in any other person or entity.

Dated: November I, 2009 LINDSAY REDEVELOPMENT AGENCY

Executive Director

URBAN FUTURES, INC., as Dissemination Agent

Authorized Officer

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EXHIBIT A

NOTICE OF MUNICIPAL SECURITIES RULEMAKING BOARD OF FAILURE TO FILE ANNUAL REPORT

Name oflssuer: Lindsay Redevelopment Agency

Name of Bond Issue:

Date oflssuance:

$ Lindsay Redevelopment Agency, Lindsay Redevelopment Project No. One, Subordinate Tax Allocation Notes, Issue of2009

November_, 2009

NOTICE IS HEREBY GIVEN that the Lindsay Redevelopment Agency (the "Issuer") has not provided an Annual Report with respect to the above-named Notes as required by the Indenture, dated as of November I, 2009, by and between the Issuer and U.S. Bank National Association, as trustee. The Issuer anticipates that the Annual Report will be filed by _______ _

Date: _______ _ LINDSAY REDEVELOPMENT AGENCY

By: Its:

cc:

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APPENDIXF

AUDITED FINANCIAL STATEMENTS OF THE AGENCY FOR FISCAL YEAR ENDED JUNE 30, 2008

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LINDSAY REDEVELOPMENT AGENCY A COMPONENT UNIT OF THE CITY OF LINDSAY

BASIC FINANCIAL STATEMENTS

FOR THE YEAR ENDED JUNE 30, 2008

LINDSAY REDEVELOPMENT AGENCY A COMPONENT UNIT OF THE CITY OF LINDSAY

Table of Contents

For the Year Ended June 30, 2008

Independent Auditor's Report

Management's Discussion and Analysis

Basic Financial Statements:

Government-wide Financial Statements:

Statement of Net Assets

Statement of Activities

Fund Financial Statements:

Balance Sheet- Governmental Funds

Statement of Revenues, Expenditures and Changes in Fund Balance - Governmental Funds

Notes to the Financial Statements

Required Supplementary Information:

Low and Moderate Income Housing Special Revenue Fund -Statement of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual

Capital Projects Fund -Statement of Revenues, Expenditures and Changes in Fund Balance- Budget and Actual

Other Report:

Independent Auditor's 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

Schedule of Findings and Responses

1

2

8

9

10

11

13

25

26

27

29

PRESSLEY & AssoCIATES, INC. ACCOUNTANCY CORPORATION

INDEPENDENT AUDITOR'S REPORT

To the Board of Directors Lindsay Redevelopment Agency Lindsay, California

We have audited the accompanying financial statements of the governmental activities and each major fund of the Lindsay Redevelopment Agency (Agency), a component unit of the City of Lindsay, California, as of and for the year ended June 30, 2008, which collectively comprise the Agency's basic financial statements as listed in the table of contents. These financial statements are the responsibility of Agency's, management. Our responsibility is to express opinions on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the 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.

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 Agency, as of June 30, 2008, 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.

In accordance with Governmental Auditing Standards, we have also issued our report dated August 20, 2009, on our consideration of the Agency's internal control over financial reporting and 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 controls 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 Governmental Auditing Standards and should be considered in assessing the results of our audit.

The management's discussion and analysis and budgetary comparison information as listed in the accompanying table of contents, are not a required part of the basic financial statements but are 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 the required supplementary information. However, we did not audit the information and express no opinion on it.

(J~cj.-~)~' Accountancy Corporation August 20, 2009

5001 CALIFORNIA AVE., SUITE 140 • BAKERSFIELD, CA 93309 • PHONE: (661) 2B3·6565 • FAX: (661) 283-6567 MAILING: P.O. BOX 21360 • BAKERSFIELD, CA 93390-1360 • EMAIL: steve@infinitycpa.com

1

REDEVELOPMENT AGENCY OF THE CITY OF LINDSAY

Management's Discussion and Analysis

As management of the Redevelopment Agency of the City of Lindsay (the Agency), we offer readers of the Agency's basic financial statements this nanative overview and analysis of the financial activities of the Agency for the fiscal year ended June 30, 2008.

FINANCIAL HIGHLIGHTS Liabilities of the Agency exceeded its assets in governmental activities at the close of fiscal year 2008 by $5,699,3SO. Of this amount, $1,046,391 represents resources restricted for debt service payment. The remaining amount, a negative $6,745,741 represents the accumulated unrestr·icted fund balance at the close of fiscal year 2008.

Total revenues in the govenm1ental activities amounted to $1,743,472. Total expenses in governmental activities were $2,223,488, which was $480,016 more than the total revenues generated during the cunent year. A total of$7,751,789 was transfened-out to the City's general fund.

At the close of the cunent fiscal year, the Agency's govemmental funds reported combined ending fund balances of $6,898,355. The 2008 Bond Series of bonded debt has provided $3,448,153 and loan proceeds have provided of$2,339,837 in funds available for redevelopment projects at the discretion of the Agency Board!( Council).

OVERVIEW OF THE FINANCIAL STATEMENTS This discussion and analysis is intended to serve as an introduction to the Agency's basic financial statements. The Agency's basic financial statements comprise three components:

1) govemment-wide financial statements, 2) fund financial statements, and 3) notes to the basic financial statements. This report also contains required and other supplementary infonnation in addition to the basic financial statements themselves.

Government-wide Financial Statements The Government-wide Financial Statements are designed to provide readers with a broad overview of the Agency's finances, in a manner similar to a private-sector business. The statement of net assets reports all financial and capital resources of the Agency. The Agency presents the statement in a fom1at that displays assets less liabilities equal net assets/( deficit). Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position of the Agency is improving or deteriorating.

2

REDEVELOPMENT AGENCY OF THE CITY OF LINDSAY

Management's Discussion and Analysis (continued) June 30, 2008

The statement of activities presents information showing how the Agency's net assets changed during the most recent fiscal year. All changes in net assets are repmted as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will result in cash flows in future fiscal periods such as revenues pertaining to uncollected taxes and earned but unused vacation and sick leave. The governmental activities of the Agency include general govenunent, connnunity development, housing, and debt service. The govenunent-wide financial statements can be found on pages 8 and 9 of this repmt.

Fund Financial Statements Fund Financial Statements are designed to repmt infonnation about groupings (fimds) of related accounts, which are used to maintain control over resources that have been segregated for specific activities or objectives. The Agency, like other state and local govemments, uses jimd accounting to ensure and demonstrate finance-related legal compliance. Alljimds of the Agency are categorized as governmental jimds. Governmental jimds are used to account for essentially the same functions repmted as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, govemmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such infonnation may be useful in detennining what financial resources are available in the near future to finance the Agency's redevelopment programs. Because the focus of governmental funds is narrower than that of the govenunent-wide financial statements, it is useful to compare the inforn1ation presented for governmental fimds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government's near-tenn financing decisions. Both the governmental fund balance sheet and the govenunental fund statement of revenues, expenditures and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The Agency maintains several individual governmental funds created according to their purpose. The individual fund infonnation is presented separately in the govenunental fund balance sheet and in the govemmental fund statement of revenues, expenditures and changes in fund balances for all the Agency's governmental funds.

Notes to the Basic Financial Statements Notes to the Basic Financial Statements provide additional information that is essential to a full understanding of the data provided in the goverrm1ent-wide and fi.tnd fmancial statements.

3

REDEVELOPMENT AGENCY OF THE CITY OF LINDSAY

Management's Discussion and Analysis (continued) June 30, 2008

Other Information In addition to the basic financial statements and accompanying notes, this report also presents required supplementary inf01mation concerning the Agency's budgetary comparison for certain governmental funds - general fund and special revenue fund.

GOVERNMENT-WIDE FINANCIAL ANALYSIS As noted earlier, net assets may serve over time as a useful indicator of a government's financial position. In the case of the Agency, it is also an important detern1inant of its ability to finance current and future redevelopment projects.

The Agency uses debt proceeds to finance its redevelopment projects which include land, commercial and retail buildings, housing, public parking, street improvements, park improvements, transportation improvements, cultural facilities, and community centers.

Shown below is a comparative schedule that summarizes the Agency's net assets;

Lindsay Redevelopment Agency's Net Assets

Current and other assets Capital assets

Total assets Long-term liabilities outstanding Other liabilities

Total liabilities Net assets; Invested in capital assets, net of related debt Restricted Unrestricted

Total net assets

4

Governmental Activities 2008 2007

$ 10,120,318 $ 10,181,860 6,428,992 5,772,282

16,549,310 15,954,142 19,778,477 13,121,935 2,470,183 278,577

22,248,660 13,400,512

1,046,391 {6,745,741)

$ {5,699,350)

813,663 1,739,967

$ 2,553,630

REDEVELOPMENT AGENCY OF THE CITY OF LINDSAY

Management's Discussion and Analysis (continued) June 30, 2008

Govemmental activities. Overall the Agency's financial position decreased from the prior year. Key elements of the changes in net assets of the governmental activities are presented below:

For the Fiscal Year Ended June 30,2008 and 2007:

lindsay Redevelopment Agency's Changes in Net Assets

Governmental Governmental Activities Activities

Revenues: 2008 2007 General revenues:

Property taxes $ 1,567,553 $ 1 '171 ,235 Interest 173,057 204,214 Other 2,862

Total revenues 1,743,472 1,375,449 Expenses:

Community Development 709,548 399,490 General Government 107,818 108,630 Interest on long-term debt 551,642 328,752 Transfers to City geneneral fund 7,751,789

Total expenses and transfers 9,120,797 836,872 Increase (decrease) in net assets (7,377,325) 538,577 Net assets -July 1 2,553,630 1,176,978

Prior period adjustments (875,655) 838,075 Net assets- July 1 (Restated) 1,677,975 2,015,053 Net assets -June 30 $ (5,699,350) $ 2,553,630

FINANCIAL ANALYSIS OF THE AGENCY'S FUNDS As noted earlier, the Agency uses fund accounting to ensure and demonstrate compliance with fmance-related legal requirements. Govemmental funds. The focus of the Agency's governmental fimds is to provide information on near-term inflows, outflows, and balances of resources that are available for spending. Such information is useful in assessing the Agency's financial requirements. In particular, unreserved fimd balance may serve as a useful measure of a government's net resources available for spending at the end of the fiscal year.

5

REDEVELOPMENT AGENCY OF THE CITY OF LINDSAY

Management's Discussion and Analysis (continued) June 30, 2008

At the end of the current fiscal year, the Agency's governmental funds reported combined fund balances of $6,898,355. Of this total amount, $5,851,964 constitutes unreservedjimd balance, which is available for redevelopment spending at the discretion of the Agency Board. The remainder of the fi.md balance is reserved to indicate that it is not available for new spending because it has been committed to pay debt service ($1,046,391).

Capital Project fund. The Agency's main fund is used to account for the general and administrative expenditures. This fund also is used to account for enterprise zone expenditures, as well as major economic development projects such as the McDermont Field House. At the end of this fiscal year, the unreserved fund balance of the capital project fund was $2,580,595 while total fund balance was $3,417,708. Fund transfers from the capital projects fund are made to the general fund as general and administrative expenditures are incurred and deemed necessary.

Special revenue ftmd. The special revenue fund is used to account for the portion of tax increment revenue designated for low and moderate-income housing. As required by the California Community Redevelopment Law, the Agency allocated 20 percent ($310,845) of the tax increment received during the year for low and moderate-income housing projects. At the end of the current year, the fund balance of the special revenue fund was $3,480,647.

Accumulated Redevelopment Project Costs Major events during the cun·ent fiscal year included the following:

Construction of the McDern1ont Field House. This was a major expenditure of Agency fi.mds, and is expected to be completed in 2009.

Debt Administration At June 30, 2008, the Agency had long-tenn bonds and notes outstanding aggregating to $19,778,477. This includes the 2008 Series Tax Allocation bond issue in the amount of $3,710,000 and notes issued in the amount of $3,230,000, which include $890,163 of note balances not recorded as of July I, 2007.

ECONOMIC FACTORS AND NEXT YEAR'S BUDGET The Agency Board (Council) considers many factors when setting redevelopment project priorities and the budget for the ensuing year. Below are significant factors in consideting the Agency's budget for the fiscal year 2008-2009:

6

REDEVELOPMENT AGENCY OF THE CITY OF LINDSAY

Management's Discussion and Analysis (continued) June 30, 2008

• The unemployment rate for the City of Lindsay is currently 10 percent, which is an increase over previous years.

• The opening of McDerrnont Field House is a focus for the City. All departments recognize the vital economic development role that McDerrnont will play in the City's future. It is planned for a total opening in 2009.

• Property values have seen a decrease in the last twelve months. This results in slower turnover of the existing housing inventory. New developments have been slow to build­out. This trend will result in reductions in general property tax revenues and a decrease in building pemlit fees. These decreases will result in lower tax increment revenue for the Agency. Future budgets will be reduced to account for the reduction in revenues.

o The occupancy rate of the government's central business district has decreased to approximately 80 percent in the last year.

The Agency will loan the City of Lindsay funds to cover startup cost for the operation of McDermont Field House. This loan is a deferred payment loan, with payments triggered based upon positive cash flows fi·om the project. For the two year period of proposed starh1p, the maximum loan amount will not exceed $460,325.

REQUEST FOR INFORMATION This financial repo1i is designed to provide our citizens, taxpayers, customers, investors and creditors with a general overview of the Agency's finances. Questions concerning any of the information provided in this report or requests for additional financial infonnation should be addressed to the Director of Finance.

Director of Finance 251 East Honolulu Lindsay, CA 93247.

7

LINDSAY REDEVELOPMENT AGENCY (A Component Unit of the City of Lindsay)

STATEMENT OF NET ASSETS June 30, 2008

ASSETS Cash and investments Receivables:

Accounts receivable Interest Intergovernmental Due from other city funds

Restricted cash and investments with fiscal agent Deferred bond issuance charge, net of amortization Property held for redevelopment Capital assets - not being depreciated

Land & Parks Construction in progress

Capital assets, other, net of accumulated depreciation Total assets

LIABILITIES Accounts payable and other current liabilities Accrued payroll Unearned revenue Accrued interest Due to other city funds Long-term liabilities:

Due within one year Due after one year Total liabilities

NET ASSETS Invested in capital assets, net of related debt Restricted:

Debt service Unrestricted

Total net assets

The accompanying notes are an integral part of this financial statement

8

$

$

Governmental Activities

501,736

1,242,065 23,784 17,493

4,223,024 1,046,391

751,780 2,314,045

1,663,262 4,228,001

537,729 16,549,310

326,303 25,049 15,117

206,530 1,897,184

397,712 19,380,765 22,248,660

1,046,391 (6,745,741) (5,699,350)

Functions/Pro9rams Governmental activities:

Community development $ General government Interest and fiscal charges

on long-term debt Total government $

LINDSAY REDEVELOPMENT AGENCY (A Component Unit of the City of Lindsay)

Exeenses

709,548 107,818

551,642 1 369 008

STATEMENT OF ACTIVITIES For the Year Ended June 30, 2008

Program Revenues Operating Capital

Charges Grants and Grants and for Services Contributions Contributions

$ $ $

$ $ $

General revenues: Tax increment Investment earnings Other revenue Transfer to City general fund Total general revenues and transfers

Change in net assets

Net assets - beginning Prior period adjustment Net assets -beginning - restated

Net assets - ending

The accompanying notes are an integral part of this financial statement.

9

Net (Expense) Revenue and Changes in Net Assets

Governmental Activities

$ (709,!'48) (107,818)

(551 ,642) (1 ,369,008)

1,567,553 173,057

2,862 (7,751 ,789) (6,008,317)

(7,377,2·25)

2,553,€·30 (875,655)

1,677,975

$ (5,699,3~

LINDSAY REDEVELOPMENT AGENCY (A Component Unit of the City of Lindsay)

Balance Sheet ·Governmental Funds June 30, 2008

Sf:!ecial Revenue Capital Projects Total ASSETS

Cash and investments $ 501,736 $ $ 501,736 Receivables

Accounts receivable 1,242,065 1,242,065 Interest 942 22,842 23,784 Intergovernmental 17,493 17,493 Due from other city funds 2,092,501 2,130,523 4,223,024

Restricted cash and investments with fiscal agent 209,278 837,113 1,046,391 Property held for redevelopment 2,314,045 2,314,045

Total assets $ 4,046,522 $ 5,322,016 $ 9,368,538

LIABILITIES AND FUND BALANCES LIABILITIES

Accounts payable and other current liabilities $ 319,141 $ 7,162 $ 326,303 Accrued payroll 25,049 25,049 Unearned revenue 15,117 15,117 Accrued interest payable 41,306 165,224 206,530 Due to other funds 190,311 1,706,873 1 ,897,184

Total liabilities 565,875 1,904,308 2,470,183

FUND BALANCES Reserved for debt service 209,278 837,113 1,046,391 Unreserved, designated for low and

moderate income housing programs 3,271,369 3,271,369 Unreserved, undesignated 2,580,595 2,580,595

Total fund balances 3,480,647 3,417,708 6,898,355

Total liabilities and fund balances $ 4,046,522 $ 5,322,016 $ 9,368,538

Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Assets

Fund balances of governmental funds $ 6,898,355 Amounts reported for gov~rnmental activities in the statement of activities are different because:

Capital assets have not been included as financial resources in governmental fund activity 6,547,667

Accumulated depreciation has not been included in the fund financial statements (118,675)

Notes payable have not been included in the governmental fund activity (3,607,237)

Bonds and loans payable has not been included in the governmental fund activity (15,940,000) Add: Deferred charge for issuance costs {to be amortized over life of debt) 751,780 Less: Issuance premiums {to be amortized as interest expense) (231 ,240)

Net assets of governmental activities $ (5,699,350)

The accompanying notes are an integral part of this financial statement.

10

LINDSAY REDEVELOPMENT AGENCY (A Component Unit of the City of Lindsay)

Statements of Revenues, Expenditures and Changes in Fund Balances -Governmental Funds

For the Year Ended June 30, 2008

Special Revenue Capital Projects Total REVENUES

Property taxes $ 310,845 $ 1,256,708 $ 1,567,553 Interest income 23,681 149,376 173,057 Other revenue 2,862 2,862

Total revenues 334,526 1,408,946 1,743,472

EXPENDITURES Current:

Wages and benefits 93,355 93,355 Enterprise Zone 147,572 147,572 Service and supply 14,463 14,463 Professional fees 32,204 32,204 Facade renovation 21,438 21,438 Grant matching funds 176,284 176,284 McDennont Fieldhouse 678,866 678,866 Housing program costs 303,294 303,294 Downtown improvements 6,600 6,600

Debt service: Principal 42,000 168,000 210,000 Interest 107,882 431,530 539,412

Total expenditures 326,166 1,897,322 2,223,488 Excess (deficiency) of revenues

over (under} expenditures 8,360 (488,376) (480,016)

OTHER FINANCING SOURCES (USES) Tax bands issued 742,000 2,968,000 3,710,000 Tax bonds discounts and issuance costs (52,369) (209,478) (261 ,847) Loan proceeds 359,837 1,980,000 2,339,837 Operating transfers~in Operating transfers-out (359,837) (7,391 ,952) (7,751,789)

Total other financing sources (uses) 689,631 (2,653,430) (1 ,963,799)

Net change in fund balances 697,991 (3, 141 ,806) (2,443,815)

Fund balances ~ July 1 2,782,656 6,545,006 9,327,662 Prior period adjustment 14,508 14,508

Fund balances -July 1 - restated 2,782,656 6,559,514 9,342,170 Fund balance- ending $ 3,480,647 $ 3,417,708 $ 6,898,355

The accompanying notes are an integral part of this financial statement.

11

LINDSAY REDEVELOPMENT AGENCY (A Component Unit of the City of Lindsay)

Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities:

For the Year Ended June 30, 2007

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

Net change in fund balances- total governmental funds

Governmental funds report capital outlays as expenditures. However, in the statement of activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which capital outlays exceeded depreciation in the current period: $678,866 ($22, 156) =

Governmental funds report bond proceeds and costs as other financing sources/uses. While net bond proceeds provide current financial resources to governmental funds, the transactions have no effect on net assets and therefore are not reported in government-wide presentation

Governmental funds report loan proceeds as other financing sources/uses. While loan proceeds provide current financial resources to governmental funds, the transactions have no effect on net assets and therefore are not reported in government-wide presentation

Principal payments on debt service not reported in government-wide presentation

Annual amortization of bond issuance costs reported in government-wide presentation

Annual amortization of bond premiums reported in government-wide presentation

Changes in net assets of governmental activities

The accompanying notes are an integral part of this financial statement.

12

$

$

(2,443,815)

656,710

(3,448,153)

(2,339,837)

210,000

(21,419)

9,189

(7,377,325)

LINDSAY REDEVELOPMENT AGENCY (A Component Unit of the City of Lindsay)

NOTES TO THE FINANCIAL STATEMENTS June 30, 2008

NOTE 1 -Summary of Significant Accounting Policies

The financial statements of the Lindsay Redevelopment Agency (Agency) have been prepared in conformity with generally accepted accounting principles (GAAP) as applied to government units.

A. Reporting Entity

The reporting entity "Lindsay Redevelopment Agency" includes the accounts of the Agency alone. The financial statements presented are prepared only from the accounts and financial transactions of the Agency. Accordingly, they do not present the financial position or results of operations of the City of Lindsay.

Lindsay Redevelopment Agency was established on September 15, 1986 and its first meeting was on November 3, 1986. The Agency has made three amendments to the original Redevelopment Plan. Amendment No.1 was approved on July 19, 1993, on July 17, 1995, the Agency approved Amendment No. 2, and Amendment No. 3 was approved on July 12, 2005. Each plan amendment changed the geographical boundaries of the Agency. The Agency's directors are the City of Lindsay council members with one being selected as chairman. In addition to the directors, the officers of the Agency are as follows:

Executive Director is the City manager Secretary is the City Clerk Finance Officer is the City Finance Director General Counsel is Stradling, Yocca, Carlson & Routh attorneys

B. Government-wide and fund financial statements

The government-wide financial statements (e.g., the statement of net assets and the statement of changes in net assets) report information on all of the activities of the Agency. All funds of the Agency participate in governmental activities, which normally are supported by taxes and intergovernmental revenues.

The statement of activities demonstrates the degree to which the direct expenses of a given function or segment are offset by program revenues. Direct expenses are those that are clearly Identifiable with a specific function or segment. Program revenues include:

1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment; and

2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment.

Taxes and other items not properly included among program revenues are reported instead as general revenues.

Separate financial statements are provided for all governmental funds of the Agency. Individual governmental funds are reported as separate columns in the fund financial statements with the major fund reported first.

13

LINDSAY REDEVELOPMENT AGENCY (A Component Unit of the City of Lindsay)

NOTES TO THE FINANCIAL STATEMENTS June 30, 2008

C. Measurement focus, basis of accounting, and financial statement presentation

The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenues as soon as all eligibility requirements imposed by the provider have been met.

Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the government considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting.

Property taxes and interest associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. All other revenue items are considered to be measurable and available only when cash is received by the government.

The Agency reports the following major governmental funds:

The special revenue funds are used to account for the proceeds of specific revenue sources that are restricted by law or administrative action for specified purposes.

The capital projects fund is used to account for financial resources to be used for the acquisition and/or construction of all major capital facilities.

Amounts reported as program revenues include:

1) charges for goods, services, or privileges provided; 2) operating grants and contributions; and 3) capital grants and contributions.

Internally dedicated resources are reported as general revenues rather than as program revenues. Likewise, general revenues include all taxes.

When both restricted and unrestricted resources are available for use, it is the Agency's policy to use restricted resources first, than unrestricted resources as they are needed.

D. Assets, liabilities, and net assets or equity

Cash and cash equivalents are considered to be cash on hand, demand deposits, and short-term investments with original maturities of three months or less from the date of acquisition.

The Agency's policy is to hold investments until maturity. However, if the liquidity needs of the Agency were to require that investments be sold at a loss subsequent to year-end, the decline in value would be recorded as a loss at year-end and is included in operating revenues.

14

E. Significant Receivables

LINDSAY REDEVELOPMENT AGENCY (A Component Unit of the City of Lindsay)

NOTES TO THE FINANCIAL STATEMENTS June 30, 2008

Property taxes related to the current fiscal year are accrued as revenue and accounts receivable if received within 60 days of year-end.

F. Restricted Assets

Certain proceeds of debt issued, 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 debt covenants.

G. Capital Assets

Capital assets, which include real property and improvements, are reported in the governmental columns in the government-wide financial statements. Capital assets are defined by the government as assets with an initial, individual cost of more than $5,000 (amount not rounded) and an estimated useful life in excess of two years. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at estimated fair market value at the date of donation.

The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets lives are not capitalized. Major outlays for capital assets and improvements are capitalized as projects as constructed.

Property, plant, and equipment of the primary government is depreciated using the straight line method over the following estimated useful lives:

Assets

Buildings and improvements

Public domain infrastructure

System infrastructure

Office equipment

Computer equipment

H. lnterfund Transactions

Years

50

50

30

5

5

All interfund transactions, except quasi-external transactions and reimbursements, are reported as transfers. Nonrecurring or nonroutine permanent transfers of equity are reported as residual equity transfers. All other interfund transfers are reported as operating transfers.

15

I. Property Taxes

LINDSAY REDEVELOPMENT AGENCY (A Component Unit of the City of Lindsay)

NOTES TO THE FINANCIAL STATEMENTS June 30, 2008

Tulare County is responsible for the assessment, collection and apportionment of property taxes for all taxing jurisdictions. The property tax calendar for the Agency is as follows:

Lien date Levy dates Due dates Collection dates

January 1 July 1 through June 30 November 1 and February 1 December 1 0 and April 1 0

Property taxes are accounted for in the special revenue and capital projects funds. Property tax revenues are recognized when they become measurable and available to finance current liabilities. Property taxes on the unsecured roll are due on the March 1 lien date and become delinquent if unpaid on August 31.

The Agency participates in an alternative method of distribution of property tax levies and assessments known as the "Teeter Plan." The State Revenue and Taxation Code allows counties to distribute secured real property, assessment and supplemental property taxes on an accrual basis resulting in full payment to agencies each fiscal year. Any subsequent delinquent payments and related penalties and interest during a fiscal year will revert to Tulare County. The Teeter Plan payment, which includes 95 percent of the outstanding accumulated delinquency, is included in property tax revenue. Under the Teeter Plan code, 5 percent of the delinquency must remain with the County as a reserve for Teeter Plan funding.

J. Long-term obligations

In the government-wide financial statements, long-term debt and other long-term obligations are reported as liabilities in the statement of net assets. Bonds payable are reported net of the applicable bond premium or discount.

K. Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates.

L. Fund equity

In the fund financial statements, governmental funds 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.

NOTE 2 -Reconciliation of government-wide and fund financial statements

A. Explanation of differences between the governmental fund balance sheet and the government­wide 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 components of that reconciliation detail the inclusion of capital assets, depreciation and long-term debt formerly reported in the general fixed assets account group and general long-term debt account group, respectively.

16

LINDSAY REDEVELOPMENT AGENCY (A Component Unit of the City of Lindsay)

NOTES TO THE FINANCIAL STATEMENTS June 30, 2008

B. Explanation of certain differences between the governmental funds 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 government-wide statement of activities. The reconciliation discusses the inclusion of financing proceeds in the governmental statements that are not included in the government-wide presentation. Another element of that reconciliation is the treatment of long-term debt principal payments made in the current fiscal year, previously recorded in the long-term debt account group.

NOTE 3 -Stewardship, compliance, and accountability

A. Budgetary information

Annual budgets are adopted based on the following procedure:

Prior to June 1, a proposed operating budget for the fiscal year commencing the following July 1 is submitted to the Redevelopment Agency Board. The operating budget includes proposed expenditures and the means of financing them. Public hearings are conducted to obtain taxpayer comments. Prior to July 1, the budget is legally enacted through passage of a resolution.

Formal budgetary integration is employed as a management control device. The appropriated budget is prepared by fund, department, and function. The legal level of budgetary control is the department level. Therefore, total expenditures may not exceed total appropriations at the department level. Supplementary appropriations that alter the total expenditures of any fund require Redevelopment Agency Board approval.

Budgets for the Special Revenue and Capital Projects Funds are presented in the accompanying statements on a basis consistent with generally accepted accounting principles.

B. Excess of expenditures over appropriations

For the year ended June 30, 2008, expenditures exceeded appropriations only in the capital projects fund. Existing net assets or equity funded these over expenditures.

NOTE 4- Cash and investments (GASB 40- Segmented Time Distribution)

The Agency follows the practice of pooling cash and investments of all the funds except for funds required to be held by outside fiscal agents under the provisions of bond indentures and funds. Interest income earned on the pooled cash and investments is allocated quarterly to the various funds based on the monthly cash balances. Interest income from cash and investments with fiscal agents is credited directly to the related fund. Investments for the Agency are reported at fair value as determined by quoted market prices. Changes in the fair value of investments are included with all other investment income.

17

LINDSAY REDEVELOPMENT AGENCY (A Component Unit of the City of Lindsay)

NOTES TO THE FINANCIAL STATEMENTS June 30, 2008

Cash and investments are reported in the accompanying financial statements as follows:

Statement of net assets: Cash and investments Cash and investments held by bond trustees

Total cash and investments

Cash and investments as of June 30, 2007 consist of the following:

Deposits with financial institutions Investments

Total cash and investments

$ 501,736 1,046,391

$ 1,548,127

$ 183,217 1,364,910

$ 1,548,127

Investments authorized by the California Government Code and the Agency's Investment Policy

The table below identifies the investment types that are authorized for the Agency by the California Government Code and/or the Agency's investment policy (where more restrictive). The table also identifies certain provisions of the California Government Code and/or the City'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 Authorized investment type Maximum percentage investment

maturit)l of ~ortfolio 1 in one issuer Local Agency Bonds 5 years None None U.S. Treasury Obligations 5 years None None U.S. Agency Securities 5 years None None Banker's Acceptances 180 days 40% 30% Commercial Paper 270 days 25% 10% Negotiable Certificates of Deposit 5 years 30% None Repurchase Agreements' N/A None None Reverse Repurchase Agreements' N/A None None Medium-Term Notes 5 years 30% None Mutual Funds N/A 20% 10% Money Market Mutual Funds N/A 20% 10% Mortgage Pass-Through Securities 5 years 20% None County Pooled Investment Funds N/A None None Local Agency Investment Fund (LAIF) N/A None None JPA or other Investment Pools N/A None None

1 Excluding amounts held by bond trustee that are not subject to California Government Code restrictions. 2 The Agency's investment policy does not permit investments in repurchase or reverse repurchase agreements.

18

LINDSAY REDEVELOPMENT AGENCY (A Component Unit of the City of Lindsay)

NOTES TO THE FINANCIAL STATEMENTS June 30, 2008

Investments authorized by debt agreements

Investment of debt proceeds held by bond trustees is 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 trustees. The table also identifies certain provisions of these debt agreement that address interest rate risk, credit risk, and concentration of credit risk.

Authorized investment type U.S. Treasury Obligations Money Market Mutual Funds

Disclosures relating to interest rate risk

Maximum maturity

None N/A

Maximum Maximum percentage investment of portfolio in one issuer

None None None None

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 change$ 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's investment policy states that investment decisions are made with the intention of retaining the investment until maturity, thereby negating the ill effects of market interest rate fluctuations.

Information about the sensitivity of the fair values of the Agency's investments (including investments held by bond trustees) to market interest rate fluctuations is provided by the following table that shows the distribution of the Agency's investments by maturity:

Remaining maturity (in months) 12 months 13-24 25-60 Over 60

Investment type Total or less months months months LA IF $ 318,519 $ 318,519 $ $ $ Held by bond trustees:

Money Market- US Treasury 1,046,391 1,046,391

Total $ 1,364,910 $ 1,364,910 $ $ $

Investments with fair values highly sensitive to interest rate fluctuations

The Agency held no investments that were highly sensitive to interest rate fluctuations at any time during the fiscal year ended June 30, 2008.

Disclosures relating to credit risk

Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization.

19

LINDSAY REDEVELOPMENT AGENCY (A Component Unit of the City of Lindsay)

NOTES TO THE FINANCIAL STATEMENTS June 30, 2008

Presented below is the mrmmum rating required by the California Government Code, the Agency's investment policy, or debt agreements, and the actual rating as of June 30, 2007, for each investment type:

Minimum legal

Investment T:t~e Amount rating AAA Aa Not rated LAIF $ 318,519 N/A $ $ $ 318,519 Held by bond trustees:

Money Market- US Treasury 1,046,391 A 1,046,391

Total $ 1,364,910 $ $ 1,046,391 $ 318,519

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. Investments in any one issuer (other than U.S. Treasuries, mutual funds, and external investment pools) that represent 5 percent or more of the total Agency investments are as follows:

Issuer Investment type Reported amount

None None $

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 11 0% of the total amount deposited by the public agencies. California law also allows financial institutions to secure Agency deposits by pledging first trust deed mortgage notes having a value of 150% of the secured public deposits.

With respect to investments, custodial credit risk generally applies only to direct investments in marketable securities. Custodial credit risk does not apply to a local government's indirect investment in securities through the use of mutual funds or government investment pools (such as LAIF).

20

LINDSAY REDEVELOPMENT AGENCY (A Component Unit of the City of Lindsay)

NOTES TO THE FINANCIAL STATEMENTS June 30, 2008

As of June 30, 2007, the Agency's deposits with financial institutions did not exceed federal depository insurance limits was held in uncollateralized accounts. The Agency's deposits held by bond trustees are not federally insured and are held in uncollateralized accounts. As of June 30, 2007, the Agency's investments in the following investment types were held by its bond trustees:

Investment type Reported amount

Money Market - US Treasury Fund $ 318,519

Investment in the State Investment Pool

The Agency is a voluntary participant in the Local Agency Investment Fund (LAIF} that is regulated by the California Government Code under the oversight of the Treasurer of the State of California. The fair value of the Agency's investment in this pool is reported at amounts based upon the Agency's pro-rata share of the fair value provided by LAIF for the entire LAIF portfolio (in relation to the amortized cost of that portfolio). The balance available for withdrawal is based on the accounting records maintained by LAIF, which are recorded on an amortized cost basis.

NOTE 5 - Capital Assets

Capital asset activity for the year ended June 30, 2008, was as follows:

Beginning Ending Balance Adiustments Additions Deletions Balance

Capital asset, not being depreciated: Land $ 172,418 $ $ $ $ 172,418 Sweet Brier Park & Plaza 1,490,844 1,490,844 McDermont Fieldhouse (CIP) 3,549,135 678,866 4,228,001

Total capital assets, not being depreciated 5,212,397 678,866 5,891,263

Capital assets, being depreciated: Building & Improvements 571,270 571,270 Equipment 85,134 85,134 Less accumulated depreciation (96,519) (22, 155) (118,674)

Total capital assets, being depreciated, net 559,885 (22, 155) 537,730

Governmental capital assets, net $ 5,772,282 $ 678,866 $ (22, 155) $ $ 6,428,993

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NOTE 6 - Long-term Debt

Tax Allocation Bonds Payable

LINDSAY REDEVELOPMENT AGENCY (A Component Unit of the City of Lindsay)

NOTES TO THE FINANCIAL STATEMENTS June 30, 2008

The Lindsay Redevelopment Agency refunded 1994 tax allocation bonds in the amount of $1,655,000, with the refunding issue of 2005. The bonds have principal payments each August 1 through 2035 and accrue interest at 2.25 - 5.0%, which is payable semi-annually. The bonds are payable solely from pledged tax revenues allocated and paid to the Agency from properties in the project area.

The Agency issued a 2007 tax allocation bond series on March 29, 2007. These bonds also have principal payments each August 1 through 2037 and accrue interest at 3.50% - 5.0%, which is payable semi­annually. The bonds are payable solely from pledged tax revenues allocated and paid to the Agency from properties in the project area.

The Lindsay Redevelopment Agency issued a 2008 tax allocation bond series in the amount of $3,710,000 on April 3, 2008. These bonds also have principal payments each August 1 through 2037 and accrue interest at 5.7351%, which is payable semi-annually. The bonds are payable solely from pledged tax revenues allocated and paid to the Agency from properties in the project area.

Notes Payable

On March 30, 2004, the Lindsay Redevelopment Agency entered into a loan agreement with the California Housing Finance Agency (CHFA) for the purpose of assisting the Agency in operating a local housing program. The loan is in the amount of $1,250,000, bears a simple annual interest rate of 3.0%, and repayment of principal and interest is deferred for a term of 10 years from date of the note.

On August 7, 2007, the Lindsay Redevelopment Agency entered into a loan agreement with the California Housing Finance Agency (CHFA) for the purpose of assisting the Agency in operating a local housing program. The loan is in the amount of $3,690,000, bears a simple annual interest rate of 3.0%, and repayment of principal and interest is deferred for a term of 10 years from date of the note. As of June 30, 2008 the amount drawn down on this loan was $1,980,000.

The Agency has entered into a Deferred Payment Loan Agreement with the City of Lindsay's Housing Program, which provided funding to purchase the Ashland Apartments. There is a 15 year restriction on the rental income conditions to make affordable rental housing available to low and very low income families. The note is due in 2035 and accrues interest at a rate of 0% per annum.

22

LINDSAY REDEVELOPMENT AGENCY (A Component Unit of the City of Lindsay)

NOTES TO THE FINANCIAL STATEMENTS June 30, 2008

The annual debt service requirements to maturity for long-term debt are as follows:

Governmental activities Tax Allocation Notes

Year Revenue Bonds Payable

2009 $ 1,031,712 $ 2010 1,033,451 2011 1,029,398 2012 1,029,744 2013 1,029,401 2014-2018 5,162,468 3,230,000 2019-2023 5,156,270 2024-2028 5,159,158 2029-2033 5,157,539 2034-2038 5,156,688 377,237 2039-2041

30,945,829 3,607,237 Less interest (15,005,829)

$ 15,940,000 $ 3,607,237

Changes in long-term liabilities

Long-term liability activity for the year ended June 30, 2008, was as follows:

Beginning Additions/ Ending Balance Adiustments Reductions Balance

Bonds payable $ 12 ,440,000 $ 3,710,000 $ (210,000} $15,940,000

Add: Bond Premiums 304,698 (64,269) (9, 189) 231,240

Total bonds payable 12,744,698 3,645,731 (219,189) 16,171,240

Notes payable 377,237 3,230,000 0 3,607,237

Governmental activity Long-term liabilities $ 13,121,935 $ 6,875,731 $ ( 219,189) $19,778,477

NOTE 7 ·Compensated absences

Due Within One Year

$ 390,000

7,712

397,712

$ 397,712

The accompanying financial statements do include any accrual for vacation and sick pay benefits due employees at June 30, 2008.

NOTE 8 ·Contingencies

As of June 30, 2008, in the opinion of Agency officials, there are no outstanding matters which would materially affect the financial position of the Agency.

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LINDSAY REDEVELOPMENT AGENCY (A Component Unit of the City of Lindsay)

NOTES TO THE FINANCIAL STATEMENTS June 30, 2008

NOTE 9- Property held for redevelopment

The Agency purchases and sells certain properties for redevelopment within the Redevelopment Project Area to fulfill its purpose of eliminating blight and increasing the availability of low and moderate income housing units. At June 30, 2008, the Agency held 8 separate parcels of property for a total value of $334,045.

NOTE 10- Prior period adjustment

Accounts payable and accrued payroll were overstated by $723 and $13,785 at June 30, 2007.

A Cal HFA HELP note was not included in notes payable at June 30, 2007, resulting in an understatement of $890,163.

The following adjustments are reported as of July 1, 2007:

As originally reported: Net assets beginning

Prior period adjustments: Overstatement of accounts payable Overstatement of accrued payroll Understatement of notes payable

Net assets beginning - restated

$

$

24

Governmental activities

2,553,630

723 13,785

(890,163)

1,677,975

LINDSAY REDEVELOPMENT AGENCY (A Component Unit of the City of Lindsay)

LOW AND MODERATE INCOME HOUSING SPECIAL REVENUE FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES- BUDGET AND ACTUAL

For the Year Ended June 30, 2008

Budgeted Amounts Variance with Actual Final Budget

Original Final Amounts Positive( Negative) REVENUES

Property Taxes $ 224,540 $ 224,540 $ 310,845 $ 86,305 interest 9,800 9,800 23,681 13,881 Other

Total revenues 234,340 234,340 334,526 100,186

EXPENDITURES Current:

Grant matching funds 80,000 176,284 (96,284) Housing program costs Professional fees

Debt service: Principal 42,000 42,000 42,000 Interest 116,809 116,809 8,927 Total expenditures 158,809 238,809 (87,357)

Excess (deficiency) of revenues over (under} expenditures 75,531 (4,469) 8,360 12,829

OTHER FINANCING SOURCES (USES) Tax bonds issued 880,000 742,000 (138,000) Tax bonds premium Tax bonds discounts and issuance costs (52,443) (52,369) 74 Loan proceeds 359,837 359,837

Transfers-out (359,837) (359,837) Total other financing sources (uses) 827,557 689,631 (137,926)

Net change in fund balances $ 75,531 $ 823,088 697,991 $ \125,097)

Fund balances -July 1 2,782,656

Fund balance -ending $ 3,480,647

The accompanying notes are an integral part of this financial statement.

25

LINDSAY REDEVELOPMENT AGENCY (A Component Unit of the City of Lindsay)

CAPITAL PROJECTS FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES- BUDGET AND ACTUAL

For the Year Ended June 30, 2008

Budgeted Amounts Variance with Actual Final Budget

Original Final Amounts Positive~Negative)

REVENUES Property Taxes $ 869,100 $ 896,100 $ 1,256,708 $ 360,608 Interest 101,010 101,010 149,376 48,366 Other 2,862 2,862

Total revenues 970,110 997,110 1,408,946 411,836

EXPENDITURES Current: Wages and benefits 81,927 81,927 93,355 (11 ,428) Enterprise Zone 175,767 175,767 147,572 28,195 Service and supply 18,650 18,650 14,463 4,187 Professional fees 65,000 65,000 32,204 32,796 Fagade renovation 30,000 30,000 21,438 8,562 McDermont Fieldhouse 6,499,821 6,499,821 678,866 5,820,955 Downtown improvements 15,000 15,000 6,600 8,400 Business assistance 15,000 15,000 15,000 Housing program costs 303,294 (303,294)

Debt service: Principal 168,000 168,000 168,000 Interest 467,234 431,530 35,704 Total expenditures 7,536,399 1,897,322 5,639,077

Excess (deficiency) of revenues over (under) expenditures ~6,566,289) ~6,539,289) ~488,376) 6,050,913

OTHER FINANCING SOURCES (USES) Tax bonds issued 3,520,000 2,968,000 (552,000) Tax bonds discounts & issuance costs (209,774) (209,478) 296 Loan proceeds 1,980,000 1,980,000

Operating transfers-out {7 ,391 ,952) ~7,391 ,952) Total other financing sources (uses) 3,310,226 (2,653,430) ~5,963,656)

Net change in fund balances $ (6,566,289) $ (3,229,063) (3, 141 ,806) $ 87,257

Fund balances- July 1 6,559,517

Fund balance -ending $ 3,417,711

The accompanying notes are an integral part of this financial statement.

26

PRESSLEY & AssociATES, INC. ACCOUNTANCY CORPORATION

INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON A

AUDIT OF FINANCIAL STATEMENTS PERFORMED [N ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS

Board of Directors Lindsay Redevelopment Agency Lindsay, California

We have audited the financial statements of the governmental activities, each major fund of the Lindsay Redevelopment Agency (Agency), a component unit of the City of Lindsay, California, for the year ended June 30, 2008, which collectively comprise the Agency's basic financial statements and have issued our report thereon dated August 20, 2009. 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 performing our audit, we considered the Agency's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Agency's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the Agency's internal control over financial reporting.

Our consideration of internal control over financial reporting was for the limited purpose described in the preceding paragraph and would not necessarily identify all deficiencies in internal control over financial reporting that might be significant deficiencies or material weaknesses. However, as discussed below, we identified certain deficiencies in internal control over financial reporting that we consider to be significant deficiencies.

A control deficiency exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affects the Agency's ability to initiate, authorize, record, process, or report financial data reliably in accordance with generally accepted accounting principles such that there is more than a remote likelihood that a misstatement of the Agency's financial statements that is more than inconsequential will not be prevented or detected by the Agency's internal control. We consider the deficiencies described in the accompanying schedule of findings and responses to be significant deficiencies in internal control over financial reporting. [2008-FS1 and 2008-FS2.]

A material weakness is a significant deficiency, or a combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of the financial statements will not be prevented or detected by the Agency's internal control.

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5001 CALIFORNIA AVE., SUITE 140 • BAKERSFIELD, CA 93309 • PHONE: (661) 283·6565 • FAX: (661) 283·6567 MAILING: P.O. BOX 21360 • BAKERSFIELD, CA 93390·1360 • EMAIL: steve@infinitycpa.com

Board of Directors Lindsay Redevelopment Agency Lindsay, California Page two

Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and would not necessarily identify all deficiencies in internal control that might be significant deficiencies and, accordingly, would not necessarily disclose all significant deficiencies that are also considered to be material weaknesses. However, of the significant deficiencies described above, we consider item [2008-FS3) to be a material weakness.

Compliance and Other Matters

As part of obtaining reasonable assurance about whether the Agency's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. Our audit was further made to determine that provisions of laws and regulations identified in the Guidelines for Compliance Audits of California Redevelopment Agencies, issued by the State Controller, Division of Accounting and Reporting. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards or the California State Controller's Office.

The Agency's response to the findings identified in our audit is described in the accompanying schedule of findings and responses. We did not audit the Agency's response and, accordingly, we express no opinion on it.

This report is intended solely for the information and use of the Agency's management, others within the organization, Board of Directors, and federal awarding agencies, pass­through entities and the State Controller's Office and is not intended to be and should not be used by anyone other than these specified parties.

Accountancy Corporation Bakersfield, California August20,2009

28

Lindsay Redevelopment Agency Schedule of Findings and Responses

For Year Ended June 30, 2008

Significant Deficiencies:

2008-FS1: Recording Budget Amendments- Accounting and Administrative Controls

Condition: Management is responsible for establishing and maintaining internal controls, including monitoring, that allow for the fair presentation of the Agency's required supplementary information, which presents the results of actual operations compared to the Agency's final adopted budget. Currently, the Agency adopts a two-year budget. During this two-year period, the Agency's Board adopts various amendments to the original adopted budget; however, these amendments are not recorded to the Agency's financial accounting system

Cause: Currently, management has not recorded budget expenditure appropriation adjustments, revised revenue estimates, or other financing sources and uses budget items authorized by the Agency's Board to its financial accounting system.

Effect: The absence of the internal accounting and administrative control to ensure the budget amendments are recorded to the financial accounting system is considered a significant deficiency because the potential exists that a more than inconsequential but less than material misstatement of the financial statements could occur and not be prevented or detected by the Agency's internal control.

Recommendation: We recommend all budget amendments approved and authorized by the Agency's Board be recorded to the financial accounting system to ensure proper preparation and presentation of the Statement of Revenues, Expenditures and Changes in Fund Balance- Budget and Actual. This statement is required supplementary information when reporting the Agency results of operation in conformity with U.S. generally accepted accounting principles.

Response:

)> Management will record all future budget amendments approved and authorized by the Agency's Board.

2008-FS2: Pooled Investment Earnings Allocations -Accounting Controls

Condition: The Agency follows the practice of pooling cash and investments of all the funds except for monies required to be held by outside fiscal agents under the provisions of bond indentures. Interest income earned on the pooled cash and investments is allocated quarterly to the various funds based on the monthly cash balances. During our audit, we identified that the Agency's assets known as "Due from Other Funds" were not reimbursed to the Agency within one year. Generally, "Due from Other Funds" are considered short-term lending arrangements to cover cash flow requirements in other funds; however, these funds should be repaid within no later than 1 year.

29

Lindsay Redevelopment Agency Schedule of Findings and Responses

For Year Ended June 30, 2008

2008-FS2: Pooled Investment Earnings Allocations- Accounting Controls (cont.)

Cause: Management has not reviewed its internal accounting controls to ensure that monies due from other funds are repaid within one year, which will ensure that monthly cash balances in each of the Agency's fund are accurate when computing the quarterly interest income allocations.

Effect: Since the balances in the "Due from Other Funds" held by the Agency were not repaid on a timely basis, monthly cash balances were understated during the fiscal year, which resulted in an understatement of interest earnings. The estimated understatement of pool investment earnings in the Low and Moderating Income Housing Special Revenue Fund is $23,474, while the understatement of interest earnings in the Agency's Capital Projects Fund is estimated to be $55,448.

Recommendations: It is recommended that management review it policies and procedures to ensure interest earned from deposits, especially in the Low and Moderating Income Housing Special Revenue Fund, are deposited or accrued to each fund in a manner that is equitable and accurate insofar as each fund earns its proportionate share of the pooled investment earnings. Because the Agency is a separate legal entity, we also recommend the any monies loaned and/or transferred to/from the City of Lindsay be approved and authorized by the Board.

Response:

J;> Management will review its policies and procedures to ensure that interest earned from deposits accrue to each fund in a manner that is equitable and accurate insofar as each fund earns its proportionate share of the pooled investment earnings.

Material Weaknesses:

2008-FS3: Reconciling Accounts to Supporting Documentation -Accounting Controls

Condition: The Agency does not reconcile its general ledger accounts to supporting documents. In order to make the interim and annual financial statements meaningful, we recommend the Agency reconcile the general ledger accounts for cash with fiscal agent, property held for resale, and bond issuance proceeds, premiums and issuance costs to supporting documentation on a monthly or routine basis. During our audit, we identified certain adjustments to general ledger assets and liabilities that impacted the operating results of the Agency.

Cause: Management has not reviewed its policies and procedures to ensure that that general ledger accounts are supported by adequate documentation on a monthly or routine basis. Management is responsible for establishing and maintaining internal controls, including reconciling general ledger accounts to supporting documents.

30

Lindsay Redevelopment Agency Schedule of Findings and Responses

For Year Ended June 30, 2008

2008-FS3: Reconciling Accounts to Supporting Documentation -Accounting Controls (continued)

We are responsible to communicate significant deficiencies and material weaknesses in accordance with professional standards regardless of management's decisions to establish and monitor its own internal controls.

Effect: The absence of performing monthly and/or routine reconciliations provides an opportunity that errors can accumulate and these errors may go undetected. The benefit of monthly reconciliations is that errors do not accumulate but can be identified and attributed to a particular period (month}, which makes it easier to perform future reconciliations. Because the procedures recommended below were not in place during the year ended June 30, 2007, these are considered a material weaknesses because a material misstatement of the financial statements would have occurred and not been prevented or detected by the Agency's existing internal controls.

Recommendations: We recommend management establish monthly and/or routine reconciliation policies and procedures, including the performance of the following functions:

• Cash and investments held with the Agency's fiscal agent should be reconciled from the bond trustee statement balance to the general ledger balance on a monthly basis to determine that all cash transactions, including investment earnings, have been recorded properly and to discover trustee errors. The proper recordation of fiscal agent transactions will provide for the fair presentation of the financial statements.

• Upon the issuance of long-term debt, such as bonds, the recording of bond proceeds, premiums/discounts and bond issuance costs should be recorded to the appropriate general ledger accounts based on supporting information found in the Official Bond Statement. Typically, the Official Bond Statement will report the sources and uses of the bond issuance. The proper recordation of the bond issuance to the general ledger will provide for the fair presentation of the financial statements, which is the responsibility of management.

• Upon the purchase and/or sale of Agency real property, the inventory adjustment to property held for resale and the corresponding gain/loss on the sale of real property should be recorded to the general ledger accounts, and reconciled to supporting documentation provided by the title company. The recording of real property transactions should be performed shortly after the transactions have closed escrow. These reconciliations and adjustments to the general ledger accounts will ensure meaningful and accurate interim and annual financial statements.

31

Lindsay Redevelopment Agency Schedule of Findings and Responses

For Year Ended June 30, 2008

2008-FS3: Reconciling Accounts to Supporting Documentation -Accounting Controls (continued)

Response:

~ Management will perform a monthly reconciliation of cash and investments held with the Agency's fiscal agent. The reconciliation from the bond trustee statement balance will be made to the general ledger on a monthly basis to ensure that all cash transactions are properly recorded.

~ For future bond issuances, management will obtain, if necessary, professional consultation services to ensure that transactions are recorded properly.

~ Management will record the gain or loss from all future property transactions immediately after the sale is recorded.

32