new issue—book-entry only

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28JUN200619105346

19JUN200623105310

NEW ISSUEBOOK-ENTRY ONLY RATING: S&P: AA-/A-1+(See RATING herein)

In the opinion of Fulbright & Jaworski L.L.P., Los Angeles, California, Bond Counsel, under existing law interest on the Bonds is exempt from personalincome taxes of the State of California and, assuming compliance with the tax covenants described herein, interest on the Bonds is excluded pursuant tosection 103(a) of the Internal Revenue Code of 1986 (the Code) from the gross income of the owners thereof for federal income tax purposes and is not anitem of tax preference under section 57(a) of the Code for purposes of the federal alternative minimum tax. See, however, TAX EXEMPTION hereinregarding certain other tax considerations.

$83,770,000VICTORVILLE JOINT POWERS FINANCING AUTHORITY

VARIABLE RATE LEASE REVENUE BONDS, 2007 SERIES A(COGENERATION FACILITY PROJECT)

Dated: Date of Delivery Due: May 1, 2040

The Victorville Joint Powers Financing Authority Variable Rate Lease Revenue Bonds, 2007 Series A (Cogeneration Facility Project) (theBonds) will be issued by the Victorville Joint Powers Financing Authority (the Authority) under an Indenture, dated as of May 1, 2007 (theIndenture), by and between the Authority and The Bank of New York Trust Company, N.A., as trustee (the Trustee). The proceeds of the Bondswill be used (i) to refund the Authoritys Variable Rate Lease Revenue Bonds, 2005 Series A (Cogeneration Facility Project) and Variable Rate LeaseRevenue Bonds, 2006 Series A (Cogeneration Facility Expansion Project), (ii) to finance certain improvements to the Citys electric system, (iii) tofund capitalized interest on the Bonds, (iv) to fund a reserve fund for the Bonds, and (v) to pay costs of issuance of the Bonds. See PLAN OFREFUNDING, THE PROJECT and ESTIMATED SOURCES AND USES OF FUNDS herein.

The Bonds are being issued as fully registered bonds, registered in the name of Cede & Co. as nominee of The Depository Trust Company, NewYork, New York (DTC), and will be available to ultimate purchasers in Authorized Denominations as described herein, under the book-entrysystem maintained by DTC. Ultimate purchasers of Bonds will not receive physical certificates representing their interest in the Bonds. Interest on theBonds will be payable on the first Business Day of each month, commencing June 1, 2007, so long as the Bonds bear interest at a Weekly Rate orDaily Rate and, after conversion to a fixed interest rate, interest will be payable on each May 1 and November 1, commencing May 1 or November 1that is at least 75 days after the Fixed Rate Conversion Date (as defined herein). The Trustee will make payments of the principal of, premium, if any,and interest on the Bonds directly to DTC, or its nominee, Cede & Co., so long as DTC or Cede & Co. is the registered owner of the Bonds.Disbursements of such payments to the Beneficial Owners of the Bonds is the responsibility of DTCs Participants and Indirect Participants, as morefully described herein. See APPENDIX DBOOK-ENTRY ONLY SYSTEM.

The Bonds are subject to optional redemption, mandatory sinking fund redemption and mandatory redemption from net proceeds as describedherein. The Bonds are also subject to mandatory tender and optional tender as described herein.

The Authority has leased certain real property and improvements thereon (the Leased Property) from the City of Victorville (the City)pursuant to a Site Lease, dated as of May 1, 2007, by and between the Authority and the City, and has leased the Leased Property back to the Citypursuant to a Lease Agreement, dated as of May 1, 2007 (the Lease), by and between the Authority and the City. Under the Lease, the City will payto the Authority certain base rental payments (the Base Rental Payments) in amounts equal to the scheduled debt service on the Bonds. Pursuant tothe Indenture and an Assignment Agreement, dated as of May 1, 2007 (the Assignment Agreement), by and between the Authority and the Trustee,the Authority will assign its right to receive the Base Rental Payments to the Trustee for the benefit of the Owners of the Bonds.

The Bonds are special limited obligations of the Authority secured by and payable solely from Revenues, consisting primarily of (i) all BaseRental Payments payable by the City under the Lease (including prepayments), (ii) any proceeds of Bonds originally deposited with the Trustee and allmoneys on deposit in the funds and accounts established under the Indenture, (iii) investment income with respect to such moneys held by the Trusteeand (iv) any insurance proceeds or condemnation awards received by or payable to the Trustee with respect to the Leased Property, including rentalinterruption insurance. See SECURITY FOR THE BONDS herein.

Payments of principal and interest (but not any premium) on the Bonds will be initially supported by an irrevocable letter of credit (the Letter ofCredit or Credit Facility) to be issued to the Trustee, the drawings under which will be used to pay the principal of and interest on the Bonds whendue. The Letter of Credit will also be drawn on, if other funds are not available, to purchase Bonds tendered by Owners at the purchase price of suchBonds. The Letter of Credit will be issued by

FORTIS BANK S.A./N.V., acting through its New York Branch

(the Credit Entity). The Letter of Credit will expire on May 8, 2012 unless extended or unless a substitute letter of credit or substitute or otherreplacement securities meeting the requirements of the Indenture is provided.

The City is required under the Lease to make Base Rental Payments in each year in consideration for the use and occupancy of the LeasedProperty from any source of legally available funds, and in an amount sufficient to pay the annual principal of and interest on the Bonds. The Citysobligation to make Base Rental Payments is subject to abatement in the event of substantial interference with the use and possession of all or a part ofthe Leased Property. See RISK FACTORSAbatement herein. The City has covenanted under the Lease to take such action as may be necessary toinclude and maintain all Base Rental Payments in its annual budget and to make the necessary appropriations therefor, subject to such abatement.

THE BONDS ARE NOT A DEBT OF THE CITY, THE STATE OF CALIFORNIA OR ANY OF ITS POLITICAL SUBDIVISIONS(OTHER THAN THE AUTHORITY), AND NONE OF THE CITY, THE STATE OF CALIFORNIA OR ANY OF ITS POLITICALSUBDIVISIONS (OTHER THAN THE AUTHORITY) IS LIABLE THEREFOR. THE BONDS ARE SPECIAL LIMITED OBLIGATIONS OFTHE AUTHORITY PAYABLE SOLELY FROM REVENUES, CONSISTING PRIMARILY OF BASE RENTAL PAYMENTS PAID BY THECITY PURSUANT TO THE LEASE AND AMOUNTS HELD IN THE FUNDS AND ACCOUNTS ESTABLISHED UNDER THE

INDENTURE. THE OBLIGATION OF THE CITY TO MAKE BASE RENTAL PAYMENTS DOES NOT CONSTITUTE AN OBLIGATIONFOR WHICH THE CITY IS OBLIGATED TO LEVY OR PLEDGE ANY FORM OF TAXATION OR FOR WHICH THE CITY HAS LEVIEDOR PLEDGED ANY FORM OF TAXATION. THE OBLIGATION OF THE CITY TO MAKE BASE RENTAL PAYMENTS DOES NOTCONSTITUTE AN INDEBTEDNESS OF THE CITY, THE STATE OF CALIFORNIA OR ANY OF ITS POLITICAL SUBDIVISIONS WITHINTHE MEANING OF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMITATION OR RESTRICTION.

This cover page contains certain information for quick reference only. It is not a summary of this issue. Investors must read the entire OfficialStatement to obtain information essential to make an informed investment decision.

The Bonds are offered when, as and if issued and accepted by the Underwriter, subject to the approval as to legality by Fulbright & Jaworski L.L.P., LosAngeles, California, Bond Counsel. Certain legal matters will be passed on for the Authority and the City by Fulbright & Jaworski L.L.P., Los Angeles,California and by Green, de Bortnowsky & Quintanilla, LLP, Calabasas, California, Co-Disclosure Counsel, for the Authority and the City by the CityAttorney of the City of Victorville, and for the Credit Entity by Sidley Austin LLP, Los Angeles, California. It is anticipated that the Bonds will be available fordelivery through the facilities of DTC on or about May 8, 2007.

Dated: May 7, 2007.


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VICTORVILLE JOINT POWERS FINANCING AUTHORITYCITY OF VICTORVILLE

AUTHORITY GOVERNING BOARD

Terry E. Caldwell, PresidentJoAnn Almond, Vice PresidentRudy Cabriales,Member

Mike Rothschild,MemberBob Hunter,Member

CITY COUNCIL

Terry E. Caldwell,MayorJoAnn Almond,Mayor Pro-TemRudy Cabriales, CouncilmemberMike Rothschild Councilmember

Bob Hunter, Councilmember

ADMINISTRATIVE OFFICERS

Jon Roberts,Executive Director/City ManagerDoug Robertson,Deputy City Manager

Adair M. Patterson,Authority Treasurer/Finance DirectorCarolee Bates, Secretary/City Clerk

SPECIAL SERVICES

City Attorney and Co-Disclosure Counsel

Green, de Bortnowsky & Quintanilla, LLPCalabasas, California

Bond Counsel and Co-Disclosure CounselFulbright & Jaworski L.L.P.

Los Angeles, California

Counsel to Credit EntitySidley Austin LLP


Remarketing Agent

Gates Capital CorporationNew York, New York

TrusteeThe Bank of New York Trust Company, N.A.



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No dealer, broker, salesperson or other person has been authorized by the Authority, the City, theCredit Entity or the Underwriter to give any information or to make any representations other than thosecontained in this Official Statement, and, if given or made, such other information or representations mustnot be relied upon as having been authorized by any of the foregoing. The Official Statement does notconstitute an offer to sell or the solicitation of an offer to buy by any person in any jurisdiction in which itis unlawful for such person to make such offer, solicitation or sale.

The information set forth herein has been obtained from the Authority, the City and other sourceswhich are believed to be reliable, but it is not guaranteed as to accuracy or completeness and is not to beconstrued as a representation by the Underwriter. The information and expressions of opinion herein aresubject to change without notice, and neither the delivery of this Official Statement nor any sale madehereunder, under any circumstances, shall create any implication that there has been no change in theaffairs of the Authority, the City, the Credit Entity or any other party described herein subsequent to thedate as of which such information is presented.

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 itsresponsibilities 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 suchinformation.

THE BONDS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,AS AMENDED, IN RELIANCE UPON AN EXEMPTION CONTAINED IN SUCH ACT. THEBONDS HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES LAW OFANY STATE.

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVERALLOT OREFFECT TRANSACTIONS WHICH STABILIZE THE MARKET PRICE OF THE BONDS AT ALEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCHSTABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.


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TABLE OF CONTENTS

Page Page

45898975.6 i

INTRODUCTORY STATEMENT................................ 1Authorization ............................................................ 1Use of Proceeds ........................................................ 1Security for the Bonds .............................................. 1Further Information................................................... 2

THE BONDS ................................................................. 2General Provisions.................................................... 2Interest Rate Determination Methods ....................... 4Conversion of Interest to Fixed Rate ........................ 5Swap Agreements ..................................................... 7Trustee and Tender Agent......................................... 7Remarketing Agent................................................... 8Redemption............................................................... 8Mandatory Tender of Bonds Fixed Rate

Conversion Date............................................. 11Mandatory Tender of Bonds Other than on

Fixed Rate Conversion Date .......................... 11Mechanics of Mandatory Tender............................ 12Option to Tender Prior to Fixed Rate Conversion

Date................................................................ 12Purchase of Bonds Delivered On a Tender Date .... 13Remarketing of Bonds by Remarketing Agent....... 14Delivery of Bonds................................................... 14Payment of Bonds After Discharge of Indenture.... 15Book-Entry Only System........................................ 15

SECURITY FOR THE BONDS .................................. 15Revenues................................................................. 15Base Rental Payments............................................. 16Reserve Fund .......................................................... 16Insurance................................................................. 16

Additional Obligations............................................ 17THE LETTER OF CREDIT AND THEREIMBURSEMENT AGREEMENT .......................... 18

Letter of Credit ....................................................... 18Reimbursement Agreement .................................... 18

THE CREDIT ENTITY............................................... 21

ESTIMATED SOURCES AND USES OFFUNDS......................................................................... 23

PLAN OF REFUNDING............................................. 23

THE PROJECT ............................................................ 24

LEASED PROPERTY................................................. 25

CITY FINANCIAL INFORMATION ......................... 25General.................................................................... 25Budgetary Process .................................................. 25Financial Statements............................................... 26Revenues and Expenditures .................................... 26General Fund .......................................................... 27Sales Tax................................................................. 31

Commercial Activity...............................................31State of California Motor Vehicle In-Lieu

Payments.........................................................32Impact of State Budget ............................................32Budgets for Fiscal Years 2006-07 and 2007-08......32

City Investment Policy............................................33Long-Term General Fund Obligations ......... .......... .34Direct and Overlapping Bonded Debt ......... .......... ..35Employees and Labor Relations..............................36Defined Benefit Pension Plan..................................36Other Post-Employment Benefits............................36Insurance .................................................................36

RISK FACTORS..........................................................37Substitution of Property...........................................37Base Rental Payments Not Debt..............................37Abatement ...............................................................38Risk of Uninsured Loss ...........................................38Seismic Risks ..........................................................39Bankruptcy ..............................................................39Enforcement of Remedies Under the Lease .......... ..40No Liability of Authority to the Owners .......... .......40Risks Related to Taxation in California ........... .......40Future Initiatives .....................................................42

THE AUTHORITY ......................................................42

UNDERWRITING .......................................................43

CERTAIN LEGAL MATTERS ...................................43

TAX EXEMPTION......................................................43

LITIGATION ...............................................................44

RATING.......................................................................45

NO CONTINUING DISCLOSURE.............................45

MISCELLANEOUS.....................................................46

APPENDIX A CERTAIN ECONOMIC ANDDEMOGRAPHIC INFORMATION CONCERNINGTHE CITY OF VICTORVILLE ................................A-1

APPENDIX B AUDITED FINANCIALSTATEMENTS OF THE CITY FOR THE FISCALYEAR ENDED JUNE 30, 2006..................................B-1

APPENDIX C SUMMARY OF PRINCIPAL

LEGAL DOCUMENTS..............................................C-1APPENDIX D BOOK-ENTRY ONLY

SYSTEM...............................................................D-1

APPENDIX E FORM OF BOND COUNSELOPINION ..............................................................E-1


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OFFICIAL STATEMENT

$83,770,000VICTORVILLE JOINT POWERS FINANCING AUTHORITYVARIABLE RATE LEASE REVENUE BONDS, 2007 SERIES A

(COGENERATION FACILITY PROJECT)

INTRODUCTORY STATEMENT

Authorization

This Official Statement, including the cover page and appendices, is provided to furnishinformation in connection with the sale by the Victorville Joint Powers Financing Authority (theAuthority) of $83,770,000 aggregate principal amount of Victorville Joint Powers Financing AuthorityVariable Rate Lease Revenue Bonds, 2007 Series A (Cogeneration Facility Project) (the Bonds). ThisIntroductory Statement is not a summary of this Official Statement. It is only a brief description of andguide to, and is qualified by, more complete and detailed information contained in the entire Official

Statement, including the appendices hereto, and the documents summarized or described herein. A fullreview should be made of the entire Official Statement. The offering of Bonds to potential investors ismade only by means of the entire Official Statement.

The Bonds will be issued under the provisions of the Marks-Roos Local Bond Pooling Act of1985, constituting Article 4 of Chapter 5 of Division 7 of Title 1 (commencing with Section 6584) of theCalifornia Government Code (the Bond Law). The Bonds will be issued pursuant to an Indenture,dated as of May 1, 2007 (the Indenture), by and between the Authority and The Bank of New YorkTrust Company, N.A., as trustee (the Trustee).

Use of Proceeds

The proceeds of the Bonds will be used (i) to refund the Authoritys Variable Rate LeaseRevenue Bonds, 2005 Series A (Cogeneration Facility Project) and Variable Rate Lease Revenue Bonds,2006 Series A (Cogeneration Facility Expansion Project), (ii) to finance certain improvements to theCitys electric system, (iii) to fund capitalized interest on the Bonds, (iv) to fund a reserve fund for theBonds, and (v) to pay costs of issuance of the Bonds. See PLAN OF REFUNDING, THE PROJECTand ESTIMATED SOURCES AND USES OF FUNDS herein.

Security for the Bonds

The Authority has leased certain real property and improvements thereon (the Leased Property)from the City of Victorville (the City) pursuant to a Site Lease, dated as of May 1, 2007, by andbetween the Authority and the City, and has leased the Leased Property back to the City pursuant to aLease Agreement, dated as of May 1, 2007 (the Lease), by and between the Authority and the City.Under the Lease, the City will pay to the Authority certain base rental payments (the Base RentalPayments) in amounts equal to the scheduled debt service on the Bonds. A portion of the LeasedProperty has been leased to the City by the Victorville Recreation and Park District and the VictorvilleFire Protection District pursuant to separate Site Leases, each dated as of May 1, 2007 (collectively, theDistrict Site Leases).

The Bonds are special obligations of the Authority secured by and payable solely from Revenues,defined in the Indenture as (i) all Base Rental Payments payable by the City under the Lease (includingprepayments), (ii) any proceeds of Bonds originally deposited with the Trustee and all moneys on deposit


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in the funds and accounts established under the Indenture, (iii) investment income with respect to suchmoneys held by the Trustee and (iv) any insurance proceeds or condemnation awards received by orpayable to the Trustee with respect to the Leased Property, including rental interruption insurance. Underthe Lease, the City is obligated to budget and appropriate from its General Fund amounts sufficient tomake Base Rental Payments. See SECURITY FOR THE BONDS.

Pursuant to an Assignment Agreement, dated as of May 1, 2007 (the Assignment Agreement),by and between the Authority and the Trustee, the Authority will assign to the Trustee certain of its rightsunder the Lease, as additional security for the performance of its obligations under the Bonds and theIndenture, including its right to receive Base Rental Payments and Additional Rental Payments under theLease. The Base Rental Payments and the Additional Rental Payments are to be applied, and the rights soassigned are to be exercised, by the Trustee as provided in the Indenture.

The obligation of the City to make Base Rental Payments under the Lease is an unsecuredobligation of the City, payable from its general fund. See SECURITY FOR THE BONDS herein.Under the Lease, the City has covenanted to budget and appropriate sufficient funds to make all paymentsrequired to be made under the Lease, subject only to abatement as provided therein. See RISKFACTORS Base Rental Payments Not Debt and Abatement.

Letter of Credit. Payments of principal, redemption amount (but not any premium) and intereston the Bonds will be initially supported by an irrevocable letter of credit (the Letter of Credit or CreditFacility) to be issued by Fortis Bank S.A./N.V., acting through its New York Branch (the CreditEntity). Drawings under the Letter of Credit will be used to pay the principal of and interest on theBonds when due. The Letter of Credit will also be drawn on, if other funds are not available, to purchaseBonds tendered by Owners. See THE LETTER OF CREDIT AND THE REIMBURSEMENTAGREEMENT and THE CREDIT ENTITY herein.

Further Information

Brief descriptions of the Bonds, the Indenture, the Site Lease, the Lease, the Assignment

Agreement, the Letter of Credit, the Reimbursement Agreement, the Authority and the City, the CreditEntity, and other information are included in this Official Statement. Such descriptions and informationdo not purport to be comprehensive or definitive. The descriptions herein of the Bonds, the Indenture, theLease, the Letter of Credit, the Reimbursement Agreement and other documents are qualified in theirentirety by reference to the forms thereof. For definitions of certain capitalized terms used herein and nototherwise defined, and a description of certain terms relating to the Bonds, see APPENDIX C SUMMARY OF PRINCIPAL LEGAL DOCUMENTS.

THE BONDS

General Provisions

The Bonds will be dated the Closing Date thereof and will bear interest until their maturity,payable on each Bond Payment Date, except that interest due with respect to any Bonds purchased by theTrustee by means of a drawing on the Letter of Credit pursuant to the tender of Bonds on a Tender Dateand which Bonds are registered in the name of and owned by the Credit Entity and held by the TenderAgent (Credit Facility Bonds), will accrue from the date such Bonds become Credit Facility Bonds atthe rate set forth in the Reimbursement Agreement and shall be payable as set forth therein.

Each Bond will bear interest from the Bond Payment Date next preceding the date on which it isauthenticated unless it is (a) authenticated after a Record Date and on or before the next Bond PaymentDate, in which event it will bear interest from such Bond Payment Date or (b) authenticated on or before


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received by the parties. The Trustee shall give notice to the registered owners of the bonds, in the samemanner that notices of redemption are given, not less than fifteen (15) days before the Interest RateConversion Date specifying the Interest Rate Conversion Date, and that the interest rate on the Bonds willbe established at a Daily Rate on the Interest Rate Conversion Date, that all outstanding Bonds nottendered for purchase at least seven (7) days before the Interest Rate Conversion Date will be deemed tohave been so tendered and shall, unless remarketed, be purchased on the Interest Rate Conversion Date at

a price equal to the principal amount thereof plus interest accrued on such date and that all Bonds must besurrendered to the Tender Agent for purchase not later than 11:00 a.m., New York time, on the InterestRate Conversion Date.

If for any reason the Remarketing Agent does not set a Daily Rate on any Business Day, then theDaily Rate most recently determined shall remain in effect until such time as the Remarketing Agentdetermines the new Daily Rate.

Fixed Rate. The Remarketing Agent will set the Fixed Rate on a date (the Determination Date)no fewer than two nor more than fifteen (15) Business Days before the Fixed Rate Conversion Date. TheFixed Rate will be the rate determined by the Remarketing Agent to be the rate per annum equal to theminimum interest rate which would be necessary for the Remarketing Agent to sell the Bonds on the

Determination Date at 100% of the principal amount thereof plus accrued interest; provided, however,that in no event will the interest rate borne by the Bonds on and after the Fixed Rate Conversion Dateexceed the Maximum Rate. A conversion of all or any sinking fund redemptions to serial maturity dateswill be required to the extent, in the opinion of the Remarketing Agent, such a conversion will reduce thetotal interest to be paid by the City as Base Rental. In such case, all references to a Fixed Rate will referto the interest rates applicable to each maturity.

Conversion of Interest to Fixed Rate

Notice and Opinion of Bond Counsel. The City may initiate action to convert the interest borneby all of the Bonds from the Weekly Rate or Daily Rate to the Fixed Rate by notifying the Authority, theTrustee, the Tender Agent, the Credit Entity and the Remarketing Agent of the proposed Fixed Rate

Conversion Date at least 60 days prior to such proposed date. The notice will be accompanied by (i) anopinion of Bond Counsel stating that the conversion is not prohibited by the law of the State or theIndenture and that the conversion will not cause the interest on the Bonds to fail to be exempt frompersonal income taxes of the State, or to fail to be excluded pursuant to section 103(a) of the Code fromthe gross income of the owners thereof for federal income tax purposes, and (ii) written evidence ofsatisfaction of the limitations specified in the Indenture. The Trustee will have no obligation to providenotice to the Owners of a change to a Fixed Rate unless the Trustee has received the notice from the Cityand the opinion of Bond Counsel in accordance with the provisions set forth under this heading. The Citymay not request a conversion from the Weekly Rate or Daily Rate to the Fixed Rate during the existenceof an Event of Default and the notice from the City will certify as to the absence thereof. If the Citysnotice complies with the provisions of this paragraph, the Fixed Rate will be applicable from the effectivedate specified in the notice until maturity of the Bonds. Upon conversion from the Weekly Rate or Daily

Rate to the Fixed Rate, the Trustee promptly will surrender the Letter of Credit to the Credit Entityrequired by the terms of the Letter of Credit.

Limitation. A conversion from the Weekly Rate or Daily Rate to the Fixed Rate pursuant to theparagraph above will comply with the following: (i) the effective date of the conversion will be a BondPayment Date; and (ii) the Remarketing Agent will have agreed to remarket the Bonds on the Fixed RateConversion Date.

Notice to Owners of Change to Fixed Rate. When a conversion from the Weekly Rate or DailyRate to the Fixed Rate is to be made, the Trustee will notify the Owners and the Credit Entity by first


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(2) on or before 10:30 a.m., New York time, on each Business Day of each week in whichinterest on the Bonds is payable at a Daily Rate, of the Daily Rate for such Business Day; and

(3) on the first Business Day after the Determination Date, the Fixed Rate set on suchDetermination Date.

Using the rates supplied by such notices, the Trustee will calculate the interest payable withrespect to the Bonds for the applicable period. During the Weekly Rate Period or the Daily Rate Period,the Trustee will send the City at least five (5) days prior to each Bond Payment Date as set forth in theIndenture written notice of the interest that will have accrued with respect to the Bonds for the periodfrom the preceding Bond Payment Date to the upcoming Bond Payment Date. The Remarketing Agentwill inform the Trustee, the City, the Tender Agent and the Credit Entity orally at the oral request of anyof them of any interest rate established by the Remarketing Agent. The Trustee will confirm the effectiveinterest rate by telephone or in writing to any Owner (at such Owners cost) who requests it in anymanner.

The setting of the rates and the calculation of interest payable with respect to the Bonds asprovided in the Indenture will be conclusive and binding on all parties.

Rescission of Opinion of Bond Counsel. Notwithstanding any provision in the Indenture to thecontrary, no conversion will be made from the Weekly Rate or Daily Rate to the Fixed Rate if the Trusteeand the Tender Agent receive written notice from Bond Counsel prior to such conversion that the opinionof Bond Counsel required as described under the heading Notice and Opinion of Bond Counsel abovehas been rescinded. If the Trustee has sent any notice to the Owners and the Credit Entity regarding theconversion to the Fixed Rate pursuant to Indenture, then in the event of rescission of the opinion of BondCounsel, the Trustee will promptly notify all Owners and the Credit Entity of such rescission and that therate will not be converted to the Fixed Rate.

Swap Agreements

The Authority may, with the prior consent of the Credit Entity, at any time that the Bonds areOutstanding enter into one or more additional contracts (each a Swap Agreement) in order to place theBonds, or any portion thereof, on the interest rate, currency, cash-flow, or other basis desired by the Cityand the Authority, including, without limitation, interest rate swap agreements, currency swapagreements, forward payment conversion agreements, futures contracts, contracts providing for paymentsbased on levels of or changes in interest rates, currency exchange rates, stock or other indices, or contractsto exchange cash flows or a series of payments, and contracts including, without limitation, interest ratefloors or caps, options, puts or calls to hedge payments, currency rate, spread or similar exposure;provided, however, the Authority will enter into such a contract only if either (i) the counterpart to anysuch contract or the guarantor of the obligations of such counterpart has an unsecured, uninsured andunguaranteed long-term obligation rated by Moodys or S&P in one of its two highest long-term ratingcategories (without reference to gradations such as plus or minus) or, (ii) each rating agency which

then has a rating assigned by any Bond that would be secured on a parity with the Authoritys obligationunder said contract confirms in writing to the Trustee that the Citys execution and delivery of such SwapAgreement will not result in a reduction or withdrawal of such rating.

Trustee and Tender Agent

The Bank of New York Trust Company, N.A., Los Angeles, California has been appointedTrustee for all of the Bonds under the Indenture. The Trustee may be removed or replaced by theAuthority as provided in the Indenture.


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The Bank of New York Trust Company, N.A., Los Angeles, California, has been appointedTender Agent under the Indenture. The Tender Agent may be removed or replaced by the Authority asprovided in the Indenture.

Remarketing Agent

Gates Capital Corporation, New York, New York, has been appointed Remarketing Agent for theBonds. The Remarketing Agent may be removed or replaced by the Authority and may resign, all asprovided in the Remarketing Agreement, dated as of May 1, 2007, by and among the Authority, theTrustee, and the Remarketing Agent.

Redemption

Mandatory Redemption from Net Proceeds. The Bonds are subject to mandatory redemption onany Bond Payment Date, in whole or in part, from moneys drawn under the Credit Facility, which shall bereimbursed from Net Proceeds following the deposit by the Trustee in the Lease Prepayment Account ofthe Redemption Fund of Net Proceeds deposited by the City under the Indenture, at least 45 days prior toa Bond Payment Date which have been credited towards the Prepayment made by the City pursuant to the

Lease Agreement, at a redemption price equal to the principal amount of the Bonds to be redeemed,together with accrued interest to the date fixed for redemption, without premium; provided, however, thatif there shall no longer be available a Credit Facility to secure the payment of principal and interestrepresented by the Bonds or if the Credit Facility does not permit a draw with respect to Prepayments, theBonds are subject to redemption from Net Proceeds which the Trustee shall deposit in the LeasePrepayment Account of the Redemption Fund, to be used to redeem the Bonds by the Trustee as providedherein.

In the event that amounts remain in the Lease Prepayment Account because such amounts did notconstitute an Authorized Denomination of a Bond, then such amounts shall be transferred to the LeasePayment Account of the Debt Service Fund.

Optional Redemption. During the Weekly Rate Period or the Daily Rate Period and on the FixedRate Conversion Date, the Bonds are subject to optional redemption in whole or in part (in an amount of$100,000 or any integral multiple of $5,000 in excess thereof) on any Business Day, at the option of theAuthority at a redemption price equal to the principal amount thereof together with accrued interest to thedate fixed for redemption, without premium.


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After the Fixed Rate Conversion Date and subject to modification pursuant to the Indenture, theBonds are subject to optional redemption in whole or in part (in integral multiples of $5,000) on anyBusiness Day, at the option of the Authority at a redemption price equal to the principal amount thereoftogether with accrued interest to the date fixed for redemption and following premium expressed as apercentage of the redeemed principal amount:

Prepayment Date Premium

Ninth anniversary of the Fixed Rate Conversion Date to the day beforethe tenth anniversary date of the Fixed Rate Conversion Date 2%

Tenth anniversary of the Fixed Rate Conversion Date to the day beforethe eleventh anniversary date of the Fixed Rate Conversion Date 1%

Eleventh anniversary of the Fixed Rate Conversion Date and thereafter 0%

During the term of any Credit Facility no notice of any optional redemption shall be sent unless

either (1) the Authority has deposited with the Trustee moneys in an amount sufficient to cover theprincipal of, premium, if any, and interest due on such redemption date (exclusive of anticipatedinvestment earnings thereon), or (2) the Authority delivers to the Trustee the written consent of the CreditEntity.

Sinking Fund Redemption. The Bonds are subject to mandatory redemption in part on the datesin the following years in the following amounts at a redemption price equal to the principal amountthereof together with accrued interest to the date fixed for redemption, without premium:

Redemption Date(May 1) Principal Amount

Redemption Date(May 1) Principal Amount

2011 $300,000 2026 $2,720,0002012 400,000 2027 2,865,0002013 500,000 2028 3,020,0002014 750,000 2029 3,180,0002015 1,000,000 2030 3,345,0002016 1,620,000 2031 3,525,0002017 1,705,000 2032 3,715,0002018 1,795,000 2033 3,910,0002019 1,895,000 2034 4,120,0002020 1,995,000 2035 4,335,0002021 2,100,000 2036 4,565,0002022 2,210,000 2037 4,810,000

2023 2,330,000 2038 5,065,0002024 2,455,000 2039 5,335,0002025 2,585,000 2040* 5,620,000_______________________

*Final Maturity

At the Fixed Rate Conversion Date, any annual sinking fund redemption which has not yetbecome due may be treated as a serial maturity of principal bearing interest at the Fixed Rate payable onMay 1 and November 1 thereafter to maturity.


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In the event of a partial redemption of Bonds pursuant to mandatory redemption from NetProceeds or optional redemption as described in the Indenture, the foregoing annual sinking fundpayments shall be reduced in equal percentages, as nearly as practicable, provided that the reductionsshall be made in multiples of $5,000. The City shall provide the Trustee with the amended sinking fundpayments schedule calculated as set forth above.

Selection of Bonds for Redemption. Whenever provision is made in the Indenture for theredemption of Bonds and less than all Outstanding Bonds are called for redemption, the Trustee shallselect Bonds for redemption, from the Outstanding Bonds not previously called for redemption, inAuthorized Denominations, first from Credit Facility Bonds, then with respect to a mandatory redemptionfrom Net Proceeds on a pro rata basis among maturities and by lot within a maturity, and in the case of anoptional redemption from such maturities as are designated in a City Certificate. The Trustee shallpromptly notify the City and the Authority in writing of the Bonds so selected for redemption.

Partial Redemption of Bonds. Upon surrender by the Owner of a Bond for partial redemption atthe Principal Office, payment of such partial redemption of the principal amount of a Bond will be madeto such Owner by check mailed by first class mail to the Owner at his address as it appears on theregistration books of the Trustee, or prior to the Fixed Rate Conversion Date by wire transfer to any

Owner who has exercised its option for payment by wire transfer pursuant to the Indenture. Uponsurrender of any Bond redeemed in part only, the Trustee or the Tender Agent shall execute and deliver tothe Owner thereof, at the expense of the City, a new Bond or Bonds which shall be of AuthorizedDenominations equal in aggregate principal amount to the unredeemed portion of the Bond surrenderedand of the same interest rate and the same maturity. Such partial redemption shall be valid upon paymentof the amount thereby required to be paid to such Owner, and the City, the Authority and the Trustee shallbe released and discharged from all liability to the extent of such payment.

Notice of Redemption. When redemption is authorized or required pursuant to the Indenture, theTrustee shall give notice of the redemption of the Bonds. Such notice shall specify: (a) that the Bonds ora designated portion thereof are to be redeemed, (b) the CUSIP numbers and, if less than all of the Bondsof a maturity are to be redeemed, the serial numbers of the Bonds to be redeemed, (c) the date of

redemption, (d) the place or places where the redemption will be made, (e) the following descriptiveinformation regarding the Bonds: date, interest rates and stated maturity dates, and (f) that a new Bond inan amount equal to that portion not so redeemed will be executed by the Trustee and delivered to theOwner in the event of a partial redemption. Such notice shall further state that on the specified date thereshall become due and payable upon each Bond to be redeemed, the portion of the principal amount ofsuch Bond to be redeemed, together with interest accrued to said date, and that from and after such date,provided that moneys therefore have been deposited with the Trustee, interest with respect to such Bondsto be redeemed shall cease to accrue and be payable.

Notice of such redemption shall be mailed by first-class mail, postage prepaid, to the City, to allmunicipal Securities Depositories and to at least one national Information Service which the City shalldesignate to the Trustee, and to the respective Owners of any Bonds designated for redemption at their

addresses appearing on the Bond registration books, at least 30 days, but not more than 60 days, prior tothe redemption date; provided that neither failure to receive such notice nor any defect in any notice somailed shall affect the sufficiency of the proceedings for the redemption of such Bonds, and provided,further, however, that the Trustee shall, on the day it receives notice of redemption by the City, providetelephonic, telegraphic or telex notice of such notice of redemption to the Remarketing Agent and theCredit Entity.

Effect of Notice of Redemption. Notice having been given as described above, and the moneysfor the redemption (including the interest to the applicable date of redemption), having been set aside inthe Redemption Fund, the Bonds shall become due and payable on said date of redemption, and, upon


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presentation and surrender thereof at the Principal Office, said Bonds shall be paid at the unpaid principalprice with respect thereto, plus interest accrued and unpaid to said date of redemption.

If, on said date of redemption, moneys for the redemption of all the Bonds to be redeemed,together with interest to said date of redemption, shall be held by the Trustee so as to be available thereforon such date of redemption, and, if notice of redemption thereof shall have been given as aforesaid, then,

from and after said date of redemption, interest with respect to the Bonds shall cease to accrue andbecome payable. All moneys held by or on behalf of the Trustee for the redemption of Bonds shall beheld in trust for the account of the Owners of the Bonds so to be redeemed.

All Bonds paid at maturity or redeemed prior to maturity pursuant to the provisions of theIndenture shall be canceled upon surrender thereof and delivered to or upon the order of the City.

Mandatory Tender of Bonds Fixed Rate Conversion Date

In the event the City has complied with the requirements of the Indenture to change the interestrate represented by the Bonds to a Fixed Rate, all Bonds will be subject to mandatory tender and purchaseon the Fixed Rate Conversion Date in accordance with the provisions of the Indenture and as described

herein under the heading Mechanics of Mandatory Tender.

Mandatory Tender of Bonds Other than on Fixed Rate Conversion Date

The Bonds are subject to mandatory tender on the last Bond Payment Date occurring on or priorto the date at least five days prior to the date on which the Credit Facility is scheduled to expire orterminate in accordance with its respective terms and if the Trustee has not received notice at least 40days prior to such Bond Payment Date that an Alternate Credit Facility is to be provided. Not less thanthirty days before each such Mandatory Tender Date under this paragraph, the Trustee shall send a noticeto all Owners by first class mail, postage prepaid, which notice shall contain the following information:(1) that the Credit Facility is scheduled to expire or terminate and no Alternate Credit Facility will beprovided, (2) that each Owners Bond is subject to mandatory tender as provided in such notice, and (3) if

any of the nationally recognized rating agencies which has a credit rating outstanding on the Bonds hasindicated to the Trustee in writing that it will lower or withdraw its rating on the Bonds as of suchMandatory Tender Date, notice of such new rating, or if no new rating is available, notice that any of suchrating agencies may lower or withdraw such rating as of such Mandatory Tender Date.

The Bonds are subject to mandatory tender on an Interest Rate Conversion Date for which anotice can be given.

The Bonds are subject to mandatory tender under this paragraph on the first Business Day tooccur on or after the seventh day following receipt by the Trustee of notice from the Credit Entity of theoccurrence of an event of default under the Reimbursement Agreement, or that the Credit Entity will notreinstate the interest portion of the Credit Facility. Not later than the third Business Day after receipt bythe Trustee of such notice, the Trustee shall send to all Owners by first class mail, postage prepaid, and tothe Depository also by facsimile, a notice which shall contain the following information: (1) that an eventof default has been declared under the Reimbursement Agreement, or that the Credit Entity will notreinstate the interest portion of the Credit Facility, and (2) that each Owners Bond is subject tomandatory tender on the first Business Day to occur on the seventh day following the receipt by theTrustee of such notice from the Credit Entity. See THE LETTER OF CREDIT AND THEREIMBURSEMENT AGREEMENT for a description of the Events of Default which could cause amandatory tender under the Letter of Credit and the Reimbursement Agreement.


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The Bonds are subject to mandatory tender on the last Business Day prior to the effective date ofany Alternate Credit Facility in accordance with the provisions of the Indenture.

All notices of a Mandatory Tender Date will also be mailed by the Trustee to the Credit Entity,the Remarketing Agent and the Tender Agent.

Mechanics of Mandatory Tender

Owners of Bonds will be required to tender the Bonds to the Tender Agent by 11:00 a.m., NewYork time, on the Mandatory Tender Date for purchase at a purchase price equal to the principal amountthereof plus accrued interest thereon to and including the Mandatory Tender Date. So long as the Bondsare registered in the name of the Nominee, such tenders shall be made through the book-entry system.Any Untendered Bonds will be deemed to have been tendered. In the event of a failure by Owners ofBonds to tender Bonds on the Mandatory Tender Date, said Owners of Untendered Bonds will not beentitled to any payment (including any interest to accrue subsequent to the Mandatory Tender Date) otherthan the purchase price for such Untendered Bonds, and any Untendered Bonds will no longer be entitledto the benefits of the Indenture, except for the purpose of payment of the purchase price thereof. SuchUntendered Bonds will be deemed purchased, canceled and no longer Outstanding under the Indenture.

However, the purchase price will be paid only upon presentation of the Bonds to the Tender Agent.

In the case of the Fixed Rate Conversion Date only, if the Remarketing Agent notifies the Trusteenot less than fifteen days before the Fixed Rate Conversion Date that it cannot remarket all of the Bondsor if the requirements for the effectiveness of a Fixed Rate Conversion Date are not satisfied before theFixed Rate Conversion Date, the Trustee will give notice thereof by first-class mail, postage prepaid, toall Owners, the Remarketing Agent, the Credit Entity and the City and each of such parties will berestored to their respective positions as if notice of the Fixed Rate Conversion Date had not been givenand no mandatory tender will occur. In addition to the mailed notice required by the preceding sentence,the Trustee will deliver a duplicate copy of such notice to the Depository and the Credit Entity bytelecommunications or overnight delivery.

Option to Tender Prior to Fixed Rate Conversion Date

Prior to the Fixed Rate Conversion Date, any Owner of the Bonds may give irrevocable writtennotice to the Tender Agent at its Principal Office and request that the Tender Agent purchase all or anypart (in Authorized Denominations) of the Bonds then outstanding and registered in the name of suchOwner at an amount or price equal to the unpaid principal amount thereof plus accrued and unpaidinterest thereon to, but not including, the Business Day on which the Bonds are to be tendered to theTender Agent (the Optional Tender Date) and without premium. Such notice (the Optional TenderNotice) will specify the Optional Tender Date (which, during a Weekly Rate Period, shall not be lessthan seven (7) days after the date of receipt by the Tender Agent of such Optional Tender Notice, andduring a Daily Rate Period, shall be the date of receipt of the Optional Tender Notice by the TenderAgent, provided with respect to a tender during a Daily Rate Period, the Optional Tender Notice shall be

received by the Tender Agency prior to 9:30 a.m., New York time, on the Optional Tender Date), theCUSIP number, the principal amount being tendered in integral multiples of Authorized Denominationsand, so long as the Bonds are registered in the name of the Nominee, such notice shall also specify theParticipant number and the contact person of the Participant. Upon receipt of an Optional Tender Notice,the Tender Agent will, as soon as is practicable but in no event later than the close of business on theBusiness Day following the day of receipt of such Optional Tender Notice, give notice to the Trustee, theAuthority, the Credit Entity and the Remarketing Agent of the Optional Tender Notice, the OptionalTender Date specified therein and the principal amount of Bonds to be purchased on such OptionalTender Date.


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Owners providing an Optional Tender Notice will be required to tender the Bonds to the TenderAgent for purchase by 11:00 a.m., New York time, on the Optional Tender Date. In the event of a failureby Owners of Bonds to tender Bonds on the Optional Tender Date, said Owners of Bonds will not beentitled to any payment (including any interest to accrue subsequent to the Optional Tender Date) otherthan the purchase price for such Untendered Bonds, and any Untendered Bonds will no longer be entitledto the benefits of the Indenture, except for the purpose of payment of the purchase price thereof.

However, the purchase price will be paid only upon presentment of the Bonds to the Tender Agent. Uponthe cancellation of Untendered Bonds, the Trustee will execute new Bonds in the same aggregateprincipal amount as, and in substitution for, the Bonds not so tendered by such Owner and will hold,deliver and make available such new Bonds to the new Owner thereof in accordance with the provisionsof the Indenture which will be fully applicable notwithstanding that such new Bonds are executed insubstitution for the Bonds not so tendered.

From and after the Fixed Rate Conversion Date, the Tender Agent will not be required topurchase such Bonds on demand and optional tender by the Owners thereof in accordance with theprovisions set forth under this heading.

Purchase of Bonds Delivered On a Tender Date

Bonds purchased from Owners on any Tender Date will be purchased at a price equal to theprincipal amount thereof plus accrued interest, if any, to the Tender Date in immediately available funds,but solely from the following sources of funds in the following order of priority:

(1) moneys deposited into the Remarketing Proceeds Account, other than moneysrepresenting remarketing proceeds from the sale of Bonds to the Authority or the City, inaccordance with the Indenture;

(2) moneys deposited into the Liquidity Account in accordance with the Indenture;(3) other Available Moneys (as described in the Indenture) furnished to the Trustee; and(4) other moneys made available to the Trustee for such purpose from the Authority or theCity.

The Tender Agent or Trustee, as applicable, will promptly give notice to the Credit Entity, theRemarketing Agent, the Tender Agent, the Trustee and the City of any notice given by or to an Ownerpursuant to certain provisions of the Indenture.

No later than 11:00 a.m. New York time on the Business Day next preceding each Tender Date,the Remarketing Agent will give telex or telephonic notice, promptly confirmed in writing, to the TenderAgent and the Trustee and specifying the amount of the proceeds of the sale of such Bonds, if any, soldby the Remarketing Agent pursuant to the Indenture and the name, address and tax identification numberof the purchasers thereof as well as the denominations of such remarketed Bonds.

The purchase price of any Bonds tendered for purchase will be payable by check mailed to theOwners of record as of the close of business on the day next preceding the Tender Date; provided,however, that the purchase price of such tendered Bonds for purchase may, at the option of any Owner, betransferred to such Owner by wire transfer on the Tender Date if prior to such Tender Date such Ownerhas delivered to the Tender Agent a request in writing for such wire transfer specifying the bank accountnumber to which such transfer is to be made.


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On the Business Day next preceding each Tender Date, the Trustee shall draw on the CreditFacility and shall deposit the amount of such draw in the Liquidity Account to pay for the purchase priceof any Bonds that cannot be paid from remarketing proceeds in the Remarketing Proceeds Account. Inthe event that the Trustee has not received notice from the Remarketing Agent as to the availability ofremarketing proceeds prior to the time of its draw on the Credit Facility on the Business Day nextpreceding each Tender Date, the Trustee shall draw on the Credit Facility to pay the purchase price of all

Bonds tendered for purchase on such Tender Date. The Tender Agent shall pay, to the extent that it hasreceived funds therefor, the purchase price of such tendered Bonds, plus accrued interest, if any, no laterthan 5:00 p.m., New York time, on any Optional Tender Date or Mandatory Tender Date.

Remarketing of Bonds by Remarketing Agent

Subject to the terms of the Remarketing Agreement, the Remarketing Agent will use its bestefforts to remarket Bonds subject to purchase on a Tender Date and to remarket Bonds registered in thename of the Credit Entity. The proceeds of any sale with respect to a Tender Date will be delivered to theTender Agent for deposit into the Remarketing Proceeds Account by no later than 11:00 a.m., New Yorktime, on the Business Day prior to each Tender Date. The proceeds of the sale of any Bonds registered toor on behalf of the Credit Entity will be delivered to the Tender Agent for deposit in the Remarketing

Proceeds Account by 11:00 a.m., New York time, on the date of sale and the Tender Agent will remitsuch amounts to the Credit Entity no later than 4:00 p.m., New York time, on such date.

In the event that any Bonds are purchased for the benefit of the Credit Entity pursuant to theIndenture, the Remarketing Agent will continue to offer for sale and use its best efforts to sell suchBonds. So long as the Credit Facility is in effect, prior to the release of any Credit Facility Bonds or theremarketing of any Bonds purchased following the mandatory tender thereof pursuant to the Indenture,the Tender Agent shall have received written notice from the Credit Entity that the Letter of Credit hasbeen reinstated or an Alternate Credit Facility has been delivered in an amount equal to the principalamount of the Credit Facility Bonds and interest thereon in accordance with its terms.

Delivery of Bonds

Bonds remarketed by the Remarketing Agent pursuant to the Indenture will be delivered to theRemarketing Agent, and registered in the name, or at the direction, of the respective purchasers.

Bonds purchased with moneys drawn under the Letter of Credit will be registered in the name, orat the direction, of the Credit Entity or its nominee and delivered to and held by the Tender Agent for theaccount of such Credit Entity, as secured party, unless the Credit Entity will make other arrangementswith the Tender Agent. The Tender Agent will notify the Remarketing Agent when Bonds are registeredto or on behalf of the Credit Entity and the Remarketing Agent will remarket such Bonds in accordancewith the Indenture.

Bonds purchased with Available Moneys will be delivered to the Trustee for cancellation.

Moneys in the Liquidity Account and the Remarketing Proceeds Account will be held in trust forthe persons who delivered such Bonds for purchase. Following payment to persons who delivered suchBonds for purchase, to the extent that any fees or obligations are owed to the Trustee or the Credit Entity,moneys remaining in the Remarketing Proceeds Account and the Liquidity Account will be paid by theTender Agent first to the Credit Entity for the repayment of amounts owing under the ReimbursementAgreement as certified to the Tender Agent in writing by the Credit Entity and then to the Trustee to theextent of fees and obligations owing thereto. Money remaining in such Accounts following suchpayments will be paid to the City.


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Payment of Bonds After Discharge of Indenture

In any event any Bond shall not be presented for payment when the principal with respect thereofbecomes due, either at maturity, or at the date fixed for redemption thereof, if moneys sufficient to paysuch Bond shall have been deposited in the Credit Facility Account or if Available Moneys sufficient topay such Bond shall have been deposited in the Lease Payment Account, all liability of the Authority to

the Owner thereof for payment of such Bond shall forthwith cease, terminate and be completelydischarged, and thereupon it shall be the duty of the Trustee to hold such moneys, without liability forinterest thereon, for the benefit of the Owner of such Bond who shall thereafter be restricted exclusivelyto such moneys, for any claim of whatever nature on his or her part under this Indenture or on, or withrespect to, said Bond.

Any moneys so deposited with and held by the Trustee not so applied to the payment of Bondswithin two (2) years after the date on which the same were deposited with the Trustee due shall be paid bythe Trustee to the City. Thereafter, Owners shall be entitled to look only to the City for payment, andthen only to the extent of the amount so disbursed by the Trustee. The City shall not be liable for anyinterest on the sums paid to it pursuant to this section and shall not be regarded as a trustee or trustees ofsuch money. Any such moneys held shall be held uninvested.

Book-Entry Only System

The Depository Trust Company, New York, New York (DTC), will act as securities depositoryfor the Bonds. The Bonds will be registered in the name of Cede & Co. (DTCs partnership nominee),and will be available to ultimate purchasers in the denomination of $5,000 or any integral multiplethereof, under the book-entry system maintained by DTC. Ultimate purchasers of Bonds will not receivephysical certificates representing their interest in the Bonds. So long as the Bonds are registered in thename of Cede & Co., as nominee of DTC, references herein to the Owners shall mean Cede & Co., andshall not mean the ultimate purchasers of the Bonds. Payments of the principal of, premium, if any, andinterest on the Bonds will be made directly to DTC, or its nominee, Cede & Co., by the Trustee, so longas DTC or Cede & Co. is the registered owner of the Bonds. Disbursements of such payments to DTCs

Participants is the responsibility of DTC and disbursements of such payments to the Beneficial Owners isthe responsibility of DTCs Participants and Indirect Participants. See APPENDIX D BOOK-ENTRYONLY SYSTEM.

SECURITY FOR THE BONDS

Revenues

THE BONDS ARE SPECIAL LIMITED OBLIGATIONS OF THE AUTHORITY PAYABLESOLELY FROM REVENUES, CONSISTING PRIMARILY OF BASE RENTAL PAYMENTS PAIDBY THE CITY PURSUANT TO THE LEASE AND AMOUNTS HELD IN THE FUNDS ANDACCOUNTS ESTABLISHED UNDER THE INDENTURE. THE OBLIGATION OF THE CITY TOMAKE BASE RENTAL PAYMENTS DOES NOT CONSTITUTE AN OBLIGATION FOR WHICHTHE CITY IS OBLIGATED TO LEVY OR PLEDGE ANY FORM OF TAXATION OR FOR WHICHTHE CITY HAS LEVIED OR PLEDGED ANY FORM OF TAXATION. THE OBLIGATION OF THECITY TO MAKE BASE RENTAL PAYMENTS DOES NOT CONSTITUTE AN INDEBTEDNESS OFTHE CITY, THE STATE OF CALIFORNIA OR ANY OF ITS POLITICAL SUBDIVISIONS WITHINTHE MEANING OF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMITATION ORRESTRICTION.

The Indenture provides that, subject to certain rights of the Trustee, the Bonds are secured by afirst lien on and pledge of all of the Revenues and a pledge of moneys in all Funds and Accounts


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established and held by the Trustee under the Indenture including the investments thereof and theproceeds of such investments. Revenues are defined in the Indenture to mean: (i) all Base RentalPayments payable by the City pursuant to the Lease (including prepayments), (ii) any proceeds of Bondsoriginally deposited with the Trustee and all moneys on deposit in the funds and accounts establishedunder the Indenture, (iii) investment income with respect to such moneys held by the Trustee and (iv) anyinsurance proceeds or condemnation awards received by or payable to the Trustee relating to the Base

Rental Payments, including rental interruption insurance.

Base Rental Payments

As security for the Bonds, the Authority will assign to the Trustee for the payment of the Bondscertain rights of the Authority in the Lease, including the right to receive the Base Rental Payments to bemade by the City. Under the Lease, the City agrees to make Base Rental Payments for the beneficial useand occupancy of the Leased Property, and to take such action as is necessary to budget for and toappropriate such amounts. See APPENDIX C SUMMARY OF PRINCIPAL LEGAL DOCUMENTS The Lease.

The Base Rental Payments are equal to the principal of and interest on the Bonds, and are payable

on the twenty-fifth day of the month immediately preceding each Bond Payment Date. The Base RentalPayments will be paid by the City to the Trustee for the benefit of the Owners of the Bonds.

The Citys obligation to make Base Rental Payments is subject to abatement in the event ofsubstantial interference with the use and possession of all or a part of the Leased Property. See RISKFACTORS Abatement.

Reserve Fund

In order to further secure the payment of principal of and interest on the Bonds, the Trustee isrequired to set aside under the Indenture and deposit in the Reserve Fund for the Bonds (the ReserveFund) an amount sufficient to maintain the Reserve Requirement on deposit in the Reserve Fund. The

Reserve Requirement means, as of the date of calculation thereof, the least of (i) the maximum aggregateannual Base Rental payments payable during the then-current or any remaining Bond Year during whichthe Bonds are to remain Outstanding by their terms, (ii) 125% of the average annual aggregate BaseRental payments payable for the then-current and any remaining Bond Years during which the Bonds areto remain Outstanding by their terms, or (iii) ten percent (10%) of the proceeds derived from the sale ofthe Bonds, with all such calculations assuming, during any period while the Bonds bear interest at aWeekly Rate or a Daily Rate, the greater of (a) the average interest rate per annum borne by the Bondsduring the preceding twelve-month period, or (b) an average 4.5% per annum interest rate borne by theBonds; and provided, however, that during any period when the Bonds bear interest at a Fixed Rate, suchcalculation shall be based on the actual rate or rates of interest. Following the date of delivery of theBonds, and at the instruction of the Authority, the Trustee shall recalculate the Reserve Requirementunder clauses (i) or (ii) above, whichever is less, and shall transfer any amounts in excess of the Reserve

Requirement in accordance with the Indenture.

Insurance

The Lease requires the City to maintain insurance coverage on the Leased Property, consisting ofthe following:

(1) insurance against loss or damage to the Leased Property or such structure or itemof furniture or equipment caused by fire or lightning, with an extended coverage endorsement andvandalism and malicious mischief insurance, which such extended coverage insurance shall, as


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nearly as practicable, cover loss or damage by explosion, windstorm, riot, aircraft, vehicledamage, smoke and such other hazards as are normally covered by such insurance. The insurancerequired by this paragraph shall be in an amount equal to the replacement cost (without deductionfor depreciation) of improvements located or to be located on the Leased Property but shall be notless than the principal amount of the Outstanding Bonds (except that such insurance may besubject to deductible clauses of not to exceed ten percent (10%) of the amount of any one loss);

(2) rental interruption insurance against the Authoritys loss of income due to eventsgiving rise to the right of abatement on the part of the City under the Lease in an amountsufficient to pay the total Base Rental payments attributable to the Leased Property for a 24month period (measured by the Base Rental payments for the 24 months following the month inwhich the insurance commences and assuming for such purpose that Interest Components will bepayable at a fixed rate of 12% per annum or such lesser amount as may be agreed upon by theCredit Entity); provided, that the amount of such insurance need not exceed the total remainingBase Rental payments attributable to the Leased Property;

(3) workers compensation insurance covering all employees working in or on theLeased Property, in the same amount and type as other workers compensation insurance

maintained by the City for similar employees doing similar work; and the City shall also requireany other person or entity working in or on the Leased Property to carry the foregoing amount ofworkers compensation insurance;

(4) a standard comprehensive public entity liability insurance policy or policies inprotection of the City, the Authority, and their respective directors, officers and employees andthe Trustee, indemnifying and defending such parties against all direct or contingent loss orliability for damages for personal injury, death or property damage occasioned by reason of thepossession, operation or use of the Leased Property. Such public liability and property damageinsurance shall be in the form of a single limit policy in the amount of not less than three milliondollars ($3,000,000), subject to a deductible clause of not to exceed $250,000, covering all suchrisks; and

(5) a CLTA standard coverage leasehold policy of title insurance on the LeasedProperty in an amount at least equal to the initial aggregate amount of the principal amount ofBase Rental payments issued by a company of recognized standing duly authorized to issue thesame. The title policy or policies shall insure the Citys leasehold estate hereunder with respectto the Leased Property, subject only to Permitted Encumbrances.

Notwithstanding the foregoing, the Lease does not require the City to maintain more insurancethan is specifically referred to above or any policies of insurance other than standard policies of insurancewith standard deductibles offered by reputable insurers at a reasonable cost on the open market.Furthermore, as an alternative to providing the insurance required by paragraphs (1), (3) and (4) above,with the prior written consent of the Credit Entity, the City may provide a self-insurance method or plan

or protection. See APPENDIX C SUMMARY OF PRINCIPAL LEGAL DOCUMENTS The LeaseInsurance.

Additional Obligations

Other than refunding bonds, the Authority may not issue bonds, notes or indebtedness that arepayable out of Revenues in whole or in part. See APPENDIX C SUMMARY OF PRINCIPALLEGAL DOCUMENTS The Indenture Additional Obligations .


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However, the City may incur additional lease or other obligations payable from the Citys generalfund without the consent of or notice to the Owners of the Bonds. See RISK FACTORS Base RentalPayments Not Debt.

THE LETTER OF CREDIT AND THE REIMBURSEMENT AGREEMENT

The following are brief outlines of certain provisions contained in the Letter of Credit establishedin favor of the Trustee and the Reimbursement Agreement between the City and the Credit Entity and are

not to be considered a full statement pertaining thereto. Reference is made to the Letter of Credit and the

Reimbursement Agreement on file with the Authority for the complete text thereof.

Letter of Credit

Concurrently with the issuance of the Bonds, and at the request and for the account of the City,the Credit Entity will issue the Letter of Credit in favor of the Trustee. The Letter of Credit willirrevocably authorize the Trustee to draw on the Credit Entity by sight drafts in an aggregate amount notexceeding $84,706,388 (as increased, reduced or reinstated from time to time in accordance with theprovisions thereof, the Stated Amount) of which an amount not exceeding $83,770,000 (as reduced or

reinstated from time to time in accordance with the terms thereof, the Principal Portion), may be drawnwith respect to payment of the unpaid principal of or the portion of the purchase price corresponding tothe unpaid principal of the Bonds and an initial amount not exceeding $936,388 (as increased, reduced orreinstated from time to time in accordance with the terms thereof, the Interest Portion) may be drawnupon with respect to payment of interest actually accrued and unpaid on, or the portion of the purchaseprice corresponding to interest actually accrued and unpaid on, the Bonds on or prior to their statedmaturity date, but in no event more than interest accrued and unpaid on the Bonds calculated at amaximum interest rate of 12% per annum (based on a year of 365 days) for the 34 days immediatelypreceding any drawing. The Stated Amount is comprised of the Principal Portion and the InterestPortion, as they may vary from time to time. The Letter of Credit is only available to be drawn upon withrespect to Bonds bearing interest at a rate other than a fixed rate pursuant to the Indenture. Funds underthe Letter of Credit will be paid with the Credit Entitys own funds.

The Letter of Credit shall expire at 4:00 p.m. (New York time) on the date (the ExpirationDate) which is the earliest of: (i) May 8, 2012, unless extended by the Credit Entity in its sole discretionby delivery of a specified certificate (the Stated Termination Date), (ii) the date on which the CreditEntity honors a drawing which when added to all other drawings honored under thereunder and notsubject to reinstatement in the aggregate equals the Stated Amount, (iii) the first (1st) Business Day whichis five (5) days after the date of the Credit Entitys receipt of a specified certificate signed by onepurporting to be the Trustees duly authorized officer appropriately completed stating that either (x) theTrustee has accepted an Alternate Credit Facility, (y) no Bonds remain outstanding under the Indenture,or (z) all Bonds remaining outstanding under the Indenture have been converted to bear interest at a fixedrate until maturity, (iv) the day the Credit Entity delivers to the Trustee a specified certificate stating thatan Event of Default under the Reimbursement Agreement has occurred and that the Letter of Credit has

expired, or (v) the date when the Trustee surrenders the Letter of Credit to the Credit Entity forcancellation. The Trustee agrees to surrender the Letter of Credit to the Credit Entity, and not to makeany drawing, after (a) the Expiration Date, or (b) the date on which there are no Bonds outstanding underthe Indenture.

Reimbursement Agreement

General. The City and the Credit Entity have entered into the Reimbursement Agreement,pursuant to which the Letter of Credit will be issued. Among other things, the ReimbursementAgreement provides for (a) the repayment to the Credit Entity of all draws made under the Letter of


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Credit, together with specified interest thereon; (b) the payment or reimbursement to the Credit Entity ofcertain specified fees, costs and expenses; (c) affirmative and negative covenants to be observed on thepart of the City; and (d) certain indemnification obligations on the part of the City.

Default shall mean an event, act or occurrence which, with the giving of notice or the lapse oftime (or both), would become an Event of Default.

Financing Documents shall mean the Reimbursement Agreement, the Letter of Credit, theBonds, the Indenture, the City authorizing resolution, the Authority authorizing resolution, the Lease, theDistrict Site Leases, the Site Lease, the Assignment Agreement, the purchase contract for the Bonds, theremarketing agreement for the Bonds, this Official Statement and any other document or instrumentrequired or stated to be delivered under those documents, all in form and substance satisfactory to theCredit Entity, as the same may be amended or supplemented from time to time in compliance with theReimbursement Agreement.

Events of Default. Each of the following events, acts or occurrences shall constitute an Event ofDefault under the Reimbursement Agreement:

(a) default in the payment when due of (i) any Base Rental, (ii) reimbursement to the CreditEntity of any drawings, or (iii) principal of or interest on any Credit Facility Bonds or default in thepayment within three (3) days following the due date of any other amount owing by the City under theReimbursement Agreement; or

(b) the City shall default in the performance or observance of (i) any term, covenant,condition or agreement on its part to be performed or observed under certain of the affirmative covenantsor any of the negative covenants contained in the Reimbursement Agreement or (ii) any other term,covenant, other condition or agreement on its part to be performed or observed and such Default shallcontinue unremedied for thirty (30) days after written notice thereof shall have been given to the City bythe Credit Entity, unless, in the case of any Default, the City shall have notified the Credit Entity withinsuch ten day period that the City has commenced curing such Default within such 30-day period,

provided that no Event of Default shall occur under this clause (ii) only so long as the City is diligentlyprosecuting such cure to completion in a manner satisfactory to the Credit Entity, and, if so requested bythe Credit Entity not less than thirty (30) days after the occurrence of such Default, the City shall deliverto the Credit Entity evidence satisfactory to the Credit Entity that such Default is curable and that the Cityis diligently prosecuting such cure; or

(c) any of the Citys representations or warranties made in the Reimbursement Agreement orin any statement or certificate at any time made or deemed made by or on behalf of the City pursuantthereto or in connection therewith, and/or in any of the other Financing Documents, is false or misleadingin any material respect when made or deemed made; or

(d) the City or the Authority shall either (i) become insolvent or generally fail to pay, oradmit in writing its inability to pay, its debts as they become due; or (ii) voluntarily commence anyproceeding or file any petition under bankruptcy law or similar law seeking dissolution or reorganizationor the appointment of a receiver, trustee, custodian or liquidator for itself or a substantial portion of itsproperty, assets or business or to effect a plan or other arrangement with its creditors, or shall file anyanswer admitting the jurisdiction of the court and the material allegations of an involuntary petition filedagainst it in any bankruptcy, insolvency or similar proceeding, or shall be adjudicated bankrupt, or shallmake a general assignment for the benefit of creditors, or shall consent to, or acquiesce in theappointment of, a receiver, trustee, custodian or liquidator for itself or a substantial portion of its property,assets or business; or (iii) take any action for the purpose of effectuating any of the foregoing; or


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(e) involuntary proceedings or an involuntary petition shall be commenced or filed againstthe City or the Authority under bankruptcy law or similar law seeking the dissolution or reorganization ofthe City or the Authority or the appointment of a receiver, trustee, custodian or liquidator for the City orthe Authority or of a substantial part of the property, assets or business of the City or the Authority, orany writ, judgment, warrant of attachment, execution or similar process shall be issued or levied against asubstantial part of the property, assets or business of the City or the Authority, and such proceedings or

petition shall not be dismissed, or such writ, judgment, warrant of attachment, execution or similarprocess shall not be released, vacated or fully bonded, within sixty (60) days after commencement, filingor levy, as the case may be; or

(f) an event of default on the part of the City or the Authority under any of the FinancingDocuments to which it is a party shall have occurred and be continuing; or

(g) the City shall fail to make any payment when due (whether by scheduled maturity,required prepayment, acceleration, demand or otherwise) in respect of any debt payable from or securedby the Citys general fund outstanding in a principal amount of $1,000,000 or more, and such failure shallcontinue after the applicable grace period, if any, specified in the agreement or instrument relatingthereto; or any other default under any agreement or instrument relating thereto, or any other event, shall

occur and shall continue after the applicable grace period, if any, specified in such agreement orinstrument, if the effect of such default or event is to accelerate, or to permit the acceleration of, thematurity thereof; or any such debt shall be properly declared to be due and payable, or required to beprepaid (other than by a regularly scheduled required prepayment), prior to the stated maturity thereof; or

(h) a final judgment or order for the payment of money in excess of $3,000,000 shall berendered against the City and not satisfied by the City and either (i) enforcement proceedings shall havebeen commenced by any creditor upon such judgment or order or (ii) there shall be any period of sixty(60) consecutive days during which a stay of enforcement of such judgment or order, by reason of apending appeal or otherwise, shall not be in effect; or

(i) any material provision of the Reimbursement Agreement or any other FinancingDocument to which the City or the Authority is a party shall at any time for any reason cease to be validand binding on the City or the Authority, or shall be declared to be null and void, or the validity orenforceability thereof shall be contested by the City or the Authority, or a proceeding shall be commencedby any governmental agency or authority having jurisdiction over the City or the Authority seeking toestablish the invalidity or unenforceability thereof, or the City or the Authority shall deny that it has anyor further liability or obligation under the Reimbursement Agreement or any other Financing Documentto which it is a party; or

(j) any of the funds or accounts established pursuant to the Indenture or any funds oraccounts on deposit, or otherwise to the credit of, such funds or accounts shall become subject to any stay,writ, judgment, warrant of attachment, execution or similar process by any of the creditors of the City andsuch stay, writ, judgment, warrant of attachment, execution or similar process shall not be released,

vacated or stayed within fifteen (15) days after its issue or levy; or

(k) any pledge or security interest created by the Indenture, the Lease, the AssignmentAgreement or the Reimbursement Agreement to secure any Base Rental or Additional Rental or anyamount due by the City under the Reimbursement Agreement or with respect to the Bonds shall fail to befully enforceable with the priority required thereunder; or

(l) S&P, Moodys or Fitch or any other nationally recognized securities rating agency shallhave assigned a rating to any long-term debt of the City below BBB- or Baa-3(or its equivalent), or toany short-term debt of the City below SP-3, MIG 4 or Prime 3 (or its equivalent); or


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(m) a change occurs in the financial or operating conditions of the City, that, in the CreditEntitys reasonable judgment, will have a materially adverse impact on the ability of the City to pay theBase Rental and the Additional Rental and its obligations under the Reimbursement Agreement or itsother obligations, and the City fails to cure such condition within six (6) months after receipt by the Cityof written notice thereof from the Credit Entity; or

(n) any change in the Code or any final ruling, assessment, notice of deficiency or technicaladvice by the Internal Revenue Service is made which results, or would result in interest on any Bondsbeing included in gross income to the holders thereof; provided, however, it shall not be considered anEvent of Default under the Reimbursement Agreement if the Bonds are remarketed, reissued as, orrefunded with, obligations the interest on which is included in gross income for federal income taxpurposes, so long as any such remarketing, reissuance or refunding does not result in any amounts owingto the Credit Entity under the Reimbursement Agreement and such interest is includable in gross incomeonly from the date of remarketing, reissuance or refunding, and not retroactively; or

(o) the Citys accountant fails or refuses to deliver an unqualified opinion with respect to thefinancial statements of the City.

Remedies. Upon the occurrence and during the continuance of any Event of Default, the CreditEntity at its option, may, upon notice to the Trustee and the City, do any one or more of the following:

(i) require, in accordance with the Indenture, the Trustee to give notice of mandatory tenderof Bonds in an amount equal to the Base Rental remaining unpaid under the Lease and topurchase all such Bonds at a price equal to the principal amount thereof and interest accrued withrespect thereto and to register the Bonds in the name or on behalf of the Credit Entity or itsnominee pursuant to the Indenture; or

(ii) exercise any or all rights provided or permitted by law or granted pursuant to any of theFinancing Documents in such order and in such manner as the Credit Entity may, in its solejudgment, determine.

No Waiver of Remedies. No waiver of any breach of or default under any provision of any of theFinancing Documents shall constitute or be construed as a waiver by the Credit Entity of any subsequentbreach of or default under that or any other provision of any of the Financing Documents.

Remedies Not Exclusive. No remedy conferred upon the Credit Entity in the ReimbursementAgreement is intended to be exclusive of any other remedy therein or in any other agreement between theparties thereto or by law provided or permitted, but each is cumulative and is in addition to every otherremedy given thereunder or now or hereafter existing at law, in equity or by statute.

THE CREDIT ENTITY

The following information concerning the Credit Entity has been provided by representatives of

the Credit Entity and has not been confirmed or verified by any of the Authority, the City, the Underwriter

or the Remarketing Agent. No representation is made herein to the accuracy or adequacy of such

information or as to the absence of material adverse changes to such information subsequent to the date

hereof, or that the information contained or incorporated herein by reference is correct as of any time

subsequent to its date.

Fortis Bank S.A./N.V. (Fortis Bank) conducts the banking activities of Fortis, an internationalfinancial services provider active in the fields of banking, insurance and investment.


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Fortis Bank is a wholly-owned indirect subsidiary of Fortis SA/NV and Fortis N.V., whoseprincipal offices are located in Brussels (Belgium) and Utrecht (the Netherlands) respectively.

Fortis Bank is a commercial bank offering a full range of banking and insurance products andservices to a wide range of customers. In its home market, the Benelux countries, Fortis Bank occupies aleading position. Fortis is the largest bank in Belgium, the second-largest in Luxembourg, and the fourth-

largest in the Netherlands. The bank had full-time staff of over 43,000 in 2006. Outside its home market,Fortis Bank concentrates on selected market segments. Its business is subject to examination andregulation by the Belgian Banking, Finance and Insurance Commission (CBFA).

As of December 31, 2006 Fortis Bank had total assets of EUR 674.7 billion.

Fortis Bank's Connecticut branch (the Connecticut Branch) has been licensed by theConnecticut Department of Banking (the CT Banking Department) to conduct a wholesale bankingbusiness since October 9, 2002. Fortis Banks New York branch (the New York Branch) has beenlicensed by the New York State Banking Department (the NY Banking Department) to carry on thebusiness of a branch as of November 15, 2002. Both the Connecticut Branch and the New York Branchare subject to examination by their respective Banking Departments and the Federal Reserve Bank of

New York. In addition, both branches are required to file periodic and other reports containing financialinformation with their respective Banking Departments and the Federal Reserve Bank of New York.

Additional information, including the Fortis Annual Report for 2006, may be obtained withoutcharge by each person to whom this Official Statement is delivered upon the written request of any suchperson to Fortis Bank, 520 Madison Avenue, New York, New York 10022. This information is alsoavailable at www.Fortis.com.

The financial statements appearing in the Fortis Annual Report for 2006 were prepared inaccordance with International Financial Reporting Standards as adopted by the European Union, whichdiffer from generally accepted accounting principles in use in the United States.

The information in this Appendix has been obtained from Fortis Bank, which is solelyresponsible for its content. The delivery of the Official Statement shall not create any implication thatthere has been no change in the affairs of Fortis Bank since the date hereof, or that the informationcontained or referred to in this Appendix is correct as of any time subsequent to its date.

The information in this Section has been obtained from Fortis Bank, which is solely responsiblefor its content. The delivery of the Official Statement shall not create any implication that there has beenno change in the affairs of Fortis Bank since the date hereof, or that t