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Be Page 16 OFFICIAL STATEMENT $ CITY OF REDWOOD CITY PUBLIC FINANCING AUTHORITY WATER REVENUE BONDS, SERIES 2007 A INTRODUCTION This Official Statement, which includes the cover page and appendices hereto, provides certain information concerning the sale and delivery of the bonds captioned above (the "Bonds") being issued by the City of Redwood City Public Financing Authority (the "Authority"), a joint exercise of powers authority organized under the laws of the State of California. Capitalized terms used but not defined herein have the meanings set forth in the Indenture and the Installment Purchase Contract. See "APPENDIX C - SUMMARY OF THE INDENTURE AND THE INSTALLMENT PURCHASE CONTRACT." Authority for Issuance The Bonds are being issued pursuant to (0 the laws of the State of California (the "State"), including the Marks-Roos Local Bond Pooling Act of 1985, constituting Article 4, Chapter 5, Division 7, Title 1 (commencing with Section 6584) of the California Government Code, as amended (the "Bond Law"), (ii) an Indenture of Trust, dated as of May 1, 2007 (the "Indenture"), by and between the City of Redwood City (the "City") and The Bank of New York Trust Company, N.A., San Francisco, California, as trustee (the "Trustee"), (Hi) a resolution adopted by the Governing Board of the Authority on April _, 2007, and (iv) a resolution adopted by the City Council of the City on April_, 2007. Financing Purpose The proceeds of the sale of the Bonds will be used to (i) finance a portion of the City's recycled water project (the "Recycled Water Project") for the City's water system (the "Enterprise") and to finance other improvements to the Enterprise, (ii) fund a reserve fund for the Bonds, and (iii) pay certain costs incurred in connection with issuing the Bonds, See "FINANCING PLAN," The portion of the Recycled Water Project being financed through the issuance of the Bonds is referred to herein as the "Project". Security for the Bonds The Bonds are payable from and secured by the Authority's pledge of "Revenues" under the Indenture, consisting generally of all payments ("Installment Payments") required to be paid by the City under the Installment Purchase Contract dated as of May 1, 2007, between the City and the Authority (the "Installment Purchase Contract"). The City will secure its obligation to pay Installment Payments with its pledge of all of the "Net Revenues" of the Enterprise, defined generally as all gross income and receipts derived by the City from the ownership and operation of the Enterprise, less operation and maintenance costs. The Bonds are also secured by 1