10A Action 2008 0602 Attach - Preliminary Official Statement

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Project Area Bonded Indebtedness The Agency currently has no outstanding bonded indebtedness payable from tax increment from the Project Area on a basis senior to the 2008 Bonds. For information on indebtedness of the Agency generally, see the Agency financial statements contained in Appendix A hereto. In 2001, the City of San Leandro 2001 Certificates of Participation (Joint Project Area Financing) (the "Certificates") were executed and delivered. As additional security for the Certificates, the Agency agreed to pay to the City reimbursement payments (the "Reimbursement Payments") to reimburse the City for the Lease Payments from Tax Increment Revenues from property within the City's portion of the Project Area, pursuant to the terms of a Reimbursement Agreement dated as of December 1, 2001. The Agency's pledge of such tax increment to the payment of this reimbursement obligation is subordinate to the pledge of Tax Revenues for the payment of debt service on the 2008 Bonds. RISK FACTORS The following information should be considered by prospective investors in evaluating the 2008 Bonds. However, the following does not purport to be an exhaustive listing of risks and other considerations which maybe relevant to investing in the 2008 Bonds. In addition, the order in which the following information is presented is not intended to reflect the relative importance of any such risks. The following information should be considered by prospective investors in evaluating the 2008 Bonds. However, the following does not purport to be an exhaustive listing of risks and other considerations which may be relevant to investing in the 2008 Bonds. In addition, the order in which the following information is presented is not intended to reflect the relative importance of any such risks. To estimate the Tax Revenues available to pay debt service on the 2008 Bonds, the Agency has made certain assumptions with regard to the assessed valuation in the Project Area, future tax rates and percentage of taxes collected. The Agency believes these assumptions to be reasonable, but to the extent that the assessed valuation, the tax rates or the percentage of taxes collected are less than the Agency's assumptions, the Tax Revenues available to pay debt service on the 2008 Bonds will, in all likelihood, be less than those projected. Reduction in Taxable Value lax Revenues allocated to the Agency are determined by the amount of incremental taxable value in the Project Area allocable to the Project Area and the current rate or rates at which property in the Project Area is taxed. The reduction of taxable values of property caused by economic factors beyond the Agency's control, such as a relocation out of the Project Area by one or more major property owners, or the transfer, pursuant to California Revenue and Taxation Code Section 68, of a lower assessed valuation to property within the Project Area by a person displaced by eminent domain or similar proceedings, or the discovery of hazardous substances on a property within the Project Area (see "Hazardous Substances," below) or the complete or partial destruction of such property caused by, among other eventualities, an earthquake, flood or other natural disaster (see "Natural and Man-made Disasters" below), could cause a reduction in the Tax Revenues securing the 2008 Bonds. Property owners may also appeal to the County Assessor for a reduction of their assessed valuations or the County -30-