10B Action 2009 1221 - Laserfiche WebLink

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RISK FACTORS The following information should be considered by prospective investors in evaluating the 2010 Bonds. However, the following does not purport to be an exhaustive listing of risks and other considerations which maybe relevant to investing in the 2010 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 Housing Tax Revenues available to pay debt service on the 2010 Bonds, the Agency has made certain assumptions with regard to the assessed valuation in the Project Areas, 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 Housing Tax Revenues available to pay debt service on the 2010 Bonds will, in all likelihood, be less than those projected. Reduction in Taxable Value Housing Tax Revenues allocated to the Agency are determined by the amount of incremental taxable value in the Project Areas allocable to the Project Areas and the current rate or rates at which property in the Project Areas 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 Areas 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 Areas by a person displaced by eminent domain or similar proceedings, or the discovery of hazardous substances on a property within a Project Area (see "Hazardous 5ubstances," 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 Housing Tax Revenues securing the 2010 Bonds. Property owners may also appeal to the County Assessor for a reduction of their assessed valuations or the County Assessor could order a blanket reduction in assessed valuations based on then current economic conditions. Such a reduction of assessed valuations and the resulting decline in Housing Tax Revenues or the resulting property tax refunds could have an adverse effect on the Agency's ability to make timely payments of principal of and interest on the 2010 Bonds. See "THE AGENCY AND THE PROJECT AREAS -Appeals of Assessed Values." Reduction in Inflationary Rate As described in greater detail below, Article XIIIA of the California Constitution provides that the full cash value base of real property used in determining taxable value may be adjusted from year to year to reflect the inflationary rate, not to exceed a 2% increase for any given year, or may be reduced to reflect a reduction in the consumer price index or comparable local data. Such measure is computed on a calendar year basis. Because Article XIIIA limits inflationary assessed value adjustments to the lesser of the actual inflationary rate or 2°l0, there have been years in which the assessed values were adjusted by actual inflationary rates, which were less than 2%. The Agency is unable to predict if any adjustments to the full cash value base of real property within the Project Areas, whether an increase or a reduction, will be realized in the future. -44-