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<br />7 <br />Permitted Encumbrances (as defined in the Lease), in an amount at least equal <br />to the estimated value thereof. <br />• The City has certified in writing to the Authority and the Trustee that the <br />Substitute Property serves the municipal purposes of the City and constitutes <br />property which the City is permitted to lease under the laws of the State of <br />California, and has been determined to be essential to the proper, efficient and <br />economic operation of the City and to serve an essential governmental function <br />of the City. <br />• The Substitute Property does not cause the City to violate any of its covenants, <br />representations and warranties made in the Lease. <br />• The City has filed with the Authority and the Trustee a written certificate of the <br />City or other written evidencing stating that the useful life of the Substitute <br />Property at least extends to November 1, 2029, that the estimated value of the <br />Leased Property, after substitution of the Substitute Property and release of the <br />Former Property, is at least equal to the aggregate Outstanding principal amount <br />of the Bonds, and the fair rental value of the Leased Property, after substitution <br />of the Substitute Property and release of the Former Property, is at least equal to <br />the Lease Payments thereafter coming due and payable under the Lease. <br />• The City has mailed written notice of the substitution to each rating agency that <br />then maintains a rating on the Bonds. <br />• The City has furnished to the Authority and the Trustee a written opinion of Bond <br />Counsel stating that such substitution does not cause the interest on the Bonds <br />to become included in gross income for purposes of federal income taxation or to <br />become subject to personal income taxation by the State of California. <br />After a substitution, the Former Property will be released from the leasehold, as <br />appropriate. The Authority and the City will also make any amendments needed to be made to <br />the Lease, and will enter into any necessary site or ground leases in connection with such <br />substitution. Such amendments may be made without the consent of Bondowners. The City is <br />not entitled to any reduction, diminution, extension or other modification of the Lease Payments <br />as a result of a substitution. See “APPENDIX B – SUMMARY OF PRINCIPAL LEGAL <br />DOCUMENTS.” <br />Release of Leased Property <br />Under the Lease, the City has the option at any time and from time to time during the <br />term of the Lease to release from the Lease any portion of the Leased Property; provided that <br />the City satisfies all of the requirements under the Lease that are conditions precedent to such <br />removal, which include (among others) the following: <br />• No Event of Default under the Lease has occurred and is continuing. <br />• The City has certified in writing to the Authority and the Trustee that the value of <br />the property which remains subject to the Lease following such release is at least <br />equal to the aggregate outstanding principal amount of the Bonds, and the fair <br />rental value of the property which remains subject to the Lease following such