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<br />72 <br />Hazardous Substances <br />Discovery of hazardous substances on parcels within the City could impact the City’s <br />ability to pay Lease Payments under the Lease when due. <br /> <br />In general, the owners and operators of a property may be required by law to remedy <br />conditions of the property relating to releases or threatened releases of hazardous substances. <br />The Federal Comprehensive Environmental Response, Compensation and Liability Act of 1980, <br />sometimes referred to as “CERCLA” or the “Superfund Act” is the most well known and widely <br />applicable of these laws, but California laws with regard to hazardous substances are also <br />stringent and similar. Under many of these laws, the owner (or operator) is obligated to remedy <br />a hazardous substance condition of property whether or not the owner or operator has any thing <br />to do with creating or handling the hazardous substance. <br /> <br />The effect, therefore, should any substantial amount of property within the City be <br />affected by a hazardous substance, would be to reduce the marketability and value of the <br />property by the costs of, and any liability incurred by, remedying the condition, since the <br />purchaser, upon becoming an owner, will become obligated to remedy the condition just as is <br />the seller. Reduction in the value of property in the City as a whole could reduce property tax <br />revenues received by the City and deposited in the General Fund, which could significantly and <br />adversely affect the ability of the City to pay Lease Payments under the Lease when due. <br />Proposition 218 <br />See “CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND <br />APPROPRIATIONS – Article XIIIC and Article XIIID of the State Constitution,” for information <br />about certain risks to the City’s General Fund revenues under Articles XIIIC and Article XIIID of <br />the California Constitution. <br /> <br />Limitations on Remedies Available to Bond Owners; Bankruptcy <br />The ability of the City to comply with its covenants under the Lease may be adversely <br />affected by actions and events outside of the control of the City, and may be adversely affected <br />by actions taken (or not taken) by voters, property owners, taxpayers or payers of assessments, <br />fees and charges. See “CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES <br />AND APPROPRIATIONS” above. Furthermore, any remedies available to the owners of the <br />Bonds upon the occurrence of an event of default under the Lease or the Indenture are in many <br />respects dependent upon judicial actions, which are often subject to discretion and delay and <br />could prove both expensive and time consuming to obtain. <br />In addition to the limitations on Bondholder remedies contained in the Lease and the <br />Indenture, the rights and obligations under the Bonds, the Lease and the Indenture may be <br />subject to the following: the United States Bankruptcy Code and applicable bankruptcy, <br />insolvency, reorganization, moratorium, or similar laws relating to or affecting the enforcement <br />of creditors’ rights generally, now or hereafter in effect; usual equity principles which may limit <br />the specific enforcement under State law of certain remedies; the exercise by the United States <br />of America of the powers delegated to it by the Federal Constitution; and the reasonable and <br />necessary exercise, in certain exceptional situations, of the police power inherent in the <br />sovereignty of the State of California and its governmental bodies in the interest of serving a <br />significant and legitimate public purpose.