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12/03/2012 "SECURITY FOR THE BONDS—Summary of Rate and Method") in order to cover delinquencies in the payment of Special Taxes on other Taxable Parcels, there could be a delay in collections of Special Taxes or an unwillingness by property owners to pay Special Taxes when due. See "THE DISTRICT -M ---Development in the District." Payment of the Special Tax is not a Personal Obligation The owners of the Taxable Parcels in the District are not personally obligated to pay the Special Tax. Rather, the Special Tax is an obligation that is secured only by a lien against the Taxable Parcels on which it is levied. If the value of the Taxable Parcels is not sufficient to secure fully the payment of the Special Tax, the City has no recourse against the landowners. A property owner may be less willing to pay Special Taxes levied on a Taxable Parcel if the total liabilities associated with that property exceed the value of the property. No General Obligation of the City or the District The City's obligations under the Bonds and under the Fiscal Agent Agreement are limited obligation.-, of the City on behalf of the District and are payable solely from and secured solely by the Special Tax Revenues (other than the Annual Administrative Expense Deposit) and amounts in the Special Tax Fund, the Bond Fund and the Reserve Fund. The Bonds are neither general or special obligations of the City nor general obligations of the District, but are limited obligations of the City for the District payable solely from the revenues and funds pledged therefor under the Fiscal Agent Agreement. None of the faith and credit of the District, the City or the State of California or of any of their respective political subdivisions is pledged to the payment of the Bonds. Property Value If a landowner defaults in the payment of the Special Tax, the only legal remedy is the institution of a superior court action to foreclose on the delinquent taxable parcel in an attempt to obtain funds with which to pay the Special Tax. The value of the Taxable Parcels in the District could be adversely affected by economic factors beyond the City's control, including, without limitation, (i) adverse changes in local market conditions, such as changes in the market value of real property in the vicinity of the District, the supply of or demand for competitive properties in such area, and the market value of retail and commercial property in the event of sale or foreclosure; (ii) changes in real estate tax rates and other operating expenses, governmental rules (including, without limitation, zoning laws and laws relating to endangered species and. hazardous materials) and fiscal policies; and (iii) natural disasters (including, without limitation, wildfire, earthquakes, tsunamis and floods), which may result in uninsured losses. See "SPECIAL RISK FACTORS—Natural Disasters." No assurances can be given that the real property subject to a judicial foreclosure sale will be sold or, if sold, that the proceeds of such sale will be sufficient to pay the delinquent Special Tax installment. No appraisal of the Taxable Parcels in the District has been conducted (see, however, "THE DISTRICT—Value-to-Burden Ratio" for a description of the County Assessor's valuation of the parcels in the District). Although the Act authorizes the City to cause such an action to be commenced and diligently pursued to completion, the Act does not specify any obligation of the City with regard to purchasing or otherwise acquiring any lot or parcel of property sold at the foreclosure sale in any such action if there is no other purchaser at such sale. The City is not obligated and does not expect to be a bidder at any such foreclosure sale. See "SPECIAL. RISK FACTORS -Proceeds of Foreclosure Sale." -31- 39 RESO. # 15237 MUFF # 505