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Under the Code, original issue premium is amortized on an annual basis over the term of <br />the Bond (said term being the shorter of the Bond's maturity date or its call date). The amount <br />of original issue premium amortized each year reduces the adjusted basis of the owner of the <br />Bond for purposes of determining taxable gain or loss upon disposition. The amount of original <br />issue premium on a Bond is amortized each year over the term to maturity of the Bond on the <br />basis of a constant interest rate compounded on each interest or principal payment date (with <br />straightline interpolations between compounding dates). Amortized Bond premium is not <br />deductible for federal income tax purposes. Owners of Premium Bonds, including purchasers <br />who do not purchase in the original offering, should consult their own tax advisors with respect <br />to State of California personal income tax and federal income tax consequences of owning such <br />Bonds. <br />California Tax Status. In the further opinion of Bond Counsel, interest on the Bonds is <br />exempt from California personal income taxes. <br />Form of Bond Counsel Opinion. Bond Counsel expects to deliver an opinion at the time <br />of issuance of the Bonds in substantially the same form set forth in Appendix E hereto <br />Other Tax Considerations. Owners of the Bonds should also be aware that the <br />ownership or disposition of, or the accrual or receipt of interest on, the Bonds may have federal <br />or state tax consequences other than as described above. Bond Counsel expresses no opinion <br />regarding any federal or state tax consequences arising with respect to the Bonds other than as <br />expressly described above. <br />CERTAIN LEGAL MATTERS <br />The legal opinion of Bond Counsel, approving the validity of the Bonds, in substantially <br />the form attached hereto as Appendix E, will be made available to purchasers at the time of <br />original delivery of the Bonds, and a copy thereof will be printed on each Bond. Bond Counsel <br />will, as Disclosure Counsel, also deliver a disclosure letter to the Agency and the Underwriter <br />regarding the contents of this Official Statement. Certain matters will be passed upon for the <br />Agency by the City Attorney, as Agency Counsel. <br />UNDERWRITING <br />The Bonds were sold under competitive sale, and were awarded to <br />,whose proposal represented the lowest true interest rate for the <br />Bonds. The Bonds are being purchased by _____ ___ at a purchase price of <br />$, ,which represents the aggregate principal amount of the Bonds, less an <br />underwriter's discount of $____________ and plus an original issue premium of <br />$ .The Underwriter is committed to purchase all of the Bonds if any are <br />purchased. <br />The Bonds are offered for sale at the initial prices stated on the cover page of this <br />Official Statement, which may be changed from time to time by the Underwriter. The Bonds <br />maybe offered and sold to certain dealers at prices lower than the public offering prices. <br />BANK QUALIFIED <br />The Code generally prohibits the deduction of interest on indebtedness incurred or <br />continued to purchase or carry tax-exempt obligations, such as the Bonds. Banks and financial <br />-35- <br />