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Jones Hall 4/3/07 PRELIMINARY OFFICIAL STATEMENT DATED ,2007 NEW ISSUE - BOOK-ENTRY ONLY RATINGS: Standard & Poor's: " Moody's: "_" Insured) See "RATINGS" In the opinion of Jones Hall, A Profassional Law Corporation, San Francisco, California, Special Counsel, subject, however to certain qualifications described herein, under existing law, the portion of lease payments designated as and comprising interest and received by the owners of the Certificates is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations, although for the purpose of computing the alternative minimum tax imposed on certain corporations, such interest is taken into account in determining certain income and earnings. In the further opinion of Special Counsel, such interest is exempt from California personal income taxes. See 'TAX MA TTERS. n $ CITY OF SAN LEANDRO 2007 CERTIFICATES OF PARTICIPATION (Library and Fire Stations Refunding Project) * Dated: Date of Delivery Due: November 1, as shown below The captioned certificates of participation (the "Certificates") are being executed and delivered to (i) provide funds to refund the $26,000,000 1999 Certificates of Participation (Library and Fire Stations Project) of the City of San Leandro (the "City") and the San Leandro Public Financin9 Authority (the "Authority"), (ii) fund a reserve fund for the Certificates, and (iii) pay costs of issuing the Certificates, as further described in this Official Statement. See "ESTIMATED SOURCES AND USES OF FUNDS." The Certificates evidence direct. undivided fractional interests of the owners thereof in Lease Payments to be made by the City for the use and occupancy of certain real property and improvements, consisting of the main Library of the City (the "Leased Premises"), under a Lease Agreement dated as of May 1, 2007 (the "Lease Agreement") between the City and the Authority. Interest represented by the Certificates will be payable on May 1 and November 1 of each year commencing November 1, 2007. See "THE CERTIFICATES." When executed and delivered, the Certificates 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 securities depository of the Certificates. Ownership interests in the Certificates may be purchased in book-entry form only. Ownership interests in the Certificates will be in denominations of $5,000 and integral multiples thereof. Beneficial owners of Certificates will not receive physical certificates representing the Certificates purchased, but will receive a credit balance on the books of the nominees of such purchasers who are participants of DTC. The Certificates will not be transferable or exchangeable, except for transfer to another nominee of DTC as described in this Official Statement. Principal. premium, if any, and interest due with respect to the Certificates will be paid by U.S. Bank National Association, as Trustee, to DTC, which will in turn remit such principal, premium, if any, and interest to its participants for subsequent disbursement to the beneficial owners of the Certificates as described in this Official Statement. See "THE CERTIFICATES - Book-Entry Only System" and "APPENDIX H - Book-Entry Only System." The Certificates are subject to optional and mandatory prepayment prior to their maturity, as described in this OfficIal Statement. See "THE CERTIFICA TES - Prepayment of the Certificates. n The payment of principal of and interest represented by the Certificates when due will be insured by an Insurance Policy to be issued by simultaneously with the deliverY of the Certificates. [Insurer's Logo] The City is required under the Lease Agreement to make semiannual Lease Payments. which comprise the interest and principal represented by the Certificates. The City has agreed in the Lease Agreement to include the Lease Payments due in each fiscal year in its budget for that fiscal year and to make the necessary appropriations for the Lease Payments. Neither the Certificates nor the obligation of the City to make Lease Payments constitute an indebtedness of the City, the Authority, the State of California or any political subdivision thereof, within the meaning of the Constitution of the State of Califomia or otherwise, or an obligation for which the City is obligated to levy or pledge any form of taxation or for which the City has levied or pledged any form of taxation. See "SECURITY AND SOURCES OF PAYMENT FOR THE CERTIFICATES: See "RISK FACTORS" for a discussion of faclors that should be considered, in addition to the other matters set forth in this Official Statement, in evaluating the investment quality of the Certificates.