10A Action 2014 0902 - Laserfiche WebLink

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58 As described in greater detail under the heading “PROPERTY TAXATION IN CALIFORNIA – Article XIIIA of the State Constitution,” Article XIIIA 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 inflation rate, not to exceed a two percent increase for any given year, or may be reduced to reflect a reduction in the consumer price index, comparable local data or any reduction in the event of declining property value caused by damage, destruction or other factors (as described above). Such measure is computed on a calendar year basis. Any resulting reduction in the full cash value base over the term of the 2014 Bonds could reduce tax increment available to pay debt service on the 2014 Bonds. In addition to the other limitations on, and required application under the Dissolution Act of Tax Revenues on deposit in the Redevelopment Property Tax Trust Fund, the State electorate or Legislature could adopt a constitutional or legislative property tax reduction with the effect of reducing Tax Revenues allocated to the Redevelopment Property Tax Trust Fund and available to the Successor Agency. Although the federal and State Constitutions include clauses generally prohibiting the Legislature’s impairment of contracts, there are also recognized exceptions to these prohibitions. There is no assurance that the State electorate or Legislature will not at some future time approve additional limitations that could reduce the tax increment available to pay debt service on the 2014 Bonds and adversely affect the source of repayment and security of the 2014 Bonds. Risks to Real Estate Market The Successor Agency’s ability to make payments on the 2014 Bonds will be dependent upon the economic strength of the Project Areas. The general economy of the Project Areas will be subject to all of the risks generally associated with urban real estate markets. Real estate prices and development may be adversely affected by changes in general economic conditions, fluctuations in the real estate market and interest rates, unexpected increases in development costs and by other similar factors. Further, real estate development within the Project Areas could be adversely affected by limitations of infrastructure or future governmental policies, including governmental policies to restrict or control development. In addition, if there is a significant decline in the general economy of the Project Areas, the owners of property within the Project Areas may be less able or less willing to make timely payments of property taxes or may petition for reduced assessed valuation causing a delay or interruption in the receipt of Tax Revenues by the Successor Agency from the Project Areas. See “THE PROJECT AREAS - Projected Available Net Tax Increment and Estimated Debt Service Coverage” for a description of the debt service coverage on the 2014 Bonds. Plan Limits The final maturity date of the 2014 Bonds is September 1, 20__, although approximately __% of the aggregate principal amount of the 2014 Bonds is scheduled to be paid on or before September 1, 20__. The Fiscal Consultant projects that the Plaza 1 Project Area and Plaza 2 Project Area will reach their respective cumulative tax increment limits in fiscal year 2016-17 and 2026-27, respectively (assuming a 2% annual growth in assessed property values). Consequently, and assuming the projections summarized in the previous paragraph are accurate, there will be a period prior to the final maturity date of the 2014 Bonds during which the Successor Agency will be able to pay debt service on the 2014 Bonds only from property tax revenues allocated to the Successor Agency from the West San Leandro/MacArthur Boulevard Project Area. In addition, it is possible that the Plaza 1 Project Area and Plaza 2 Project Area