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Proposition lA Securitization Program 2 October 19, 2009 Communities expects that to occur prior to funding the Program. If for any reason SB 67 is not enacted and the bonds cannot be sold by December 31, 2009, all approved documents placed in escrow with Transaction counsel will be of no force and effect and will be destroyed. Proposition lA Securitization Pro am: Authorized under ABX4 14 and ABX4 15, the Proposition lA Securitization Program was instituted by California Communities to enable Local Agencies to sell their respective Proposition lA Receivables to California Communities. Currently, SB67 is being considered to clarify specific aspects of ABX4 14 and ABX4 15. Under the Securitization Program, California Communities will simultaneously purchase the Proposition lA Receivables, issue bonds ("Prop lA Bonds") and provide each local agency with the cash proceeds in two equal installments, on January 15, 2010 and May 3, 2010 (to coincide with the dates that the State will be shifting property tax from local agencies). The purchase price paid to the local agencies will equal 100% of the amount of the property tax reduction. All transaction costs of issuance and interest will be paid by the State of California. Participating local agencies will have no obligation on the bonds and no credit exposure to the State. If the City of San Leandro sells its Proposition lA Receivable under the Proposition lA Securitization Program, California Communities will pledge the City of San Leandro's Proposition lA Receivable to secure the repayment of a corresponding amount of the Prop lA Bonds. The City of San Leandro's sale of its Proposition lA Receivable will be irrevocable. Bondholders will have no recourse to the City of San Leandro if the State does not make the Proposition lA Repayment. Proposition lA Program Sponsor: California Statewide Communities Development Authority ("California Communities") is a joint powers authority sponsored by the California State Association of Counties and the League of California Cities. The member agencies of California Communities include approximately 230 cities and 54 counties throughout California. Benefits of Participation in the Proposition lA Securitization Program: The benefits to the City of San Leandro of participation in the Proposition lA Securitization Program include: •Immediate cash relief -the sale of the City of San Leandro's Proposition lA Receivable will provide the City of San Leandro with 100% of its Proposition lA Receivable in two equal installments, on January 15, 2010 and May 3, 2010. •Mitigates impact of $% property tax withholding in January and Maw-Per ABX4 14 and ABX4 15 and the proposed clean-up legislation SB 67, the State will withhold 8% of property tax receivables due to Cities, Counties, and Special Districts under Proposition lA. The financing outlines bond proceeds to be distributed to coincide with the dates that the State will be shifting property tax from local agencies. •All costs of financing borne by the State of California. The City of San Leandro will not have to pay any interest cost or costs of issuance in connection with its participation. •No obligation on Bonds. The City of San Leandro has no obligation with respect to the payment of the bonds, nor any reporting, disclosure or other compliance obligations associated with the bonds. G:ACounci1~2009-10 Resolutions & Staff Reports~Proposition IA Securitization Program.docx