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12/03/2012 Factors Affecting Economic Performance and Value of Comrnercial Properties. The economic performance and value of the Taxable Parcels in the District will be affected by a number of factors, including national economic conditions, regional economic conditions (which may be adversely effected by plant closings, industry slow -downs and other factors), local real estate conditions such as an oversupply of commercial (i.e., office and retail) space or a reduction in the demand for commercial space in the area, the attractiveness of the commercial space to tenants, competition from other commercial centers, the quality of maintenance, the cost of insurance and management services, and increased operating costs. Other factors which may adversely affect the economic performance and value of the Taxable Parcels in the District include changes in government regulations and other laws, rules and regulations governing real estate, zoning or taxes, increases in interest rates, the availability of financing and potential liability under environmental and other laws. Due to these factors and other risks, there can be no assurance that the developments on the Taxable Parcels within the District will remain economically viable throughout the term of the Bonds, or that the owners of the Taxable Parcels will continue to have the ability throughout the term of the Bonds to pay the Special Taxes which will be levied on their property. Parity Taxes and Special Assessments The Special Taxes and any penalties thereon will constitute liens against the Taxable Parcels in the District until they are paid. Such lien is on a parity with all special taxes and special assessments levied by other agencies and is coequal to and independent of the lien for general property taxes regardless of when they are imposed upon the Taxable Parcel. The Special Taxes have priority over all existing and future private lies imposed on the property. The City, however, has no control over the ability of other entities and districts to issue indebtedness secured by special taxes or assessments payable from all or a portion of the Taxable Parcels within the District subject to the levy of Special Taxes. In addition, the landowners within the District may, without the consent or knowledge of the District, petition other public agencies to issue public indebtedness secured by special taxes or assessments, and any such special taxes or assessments may have a lien on a Taxable Parcel on a parity with the Special Taxes. The imposition of additional indebtedness could reduce the willingness and the ability of the owners of the Taxable Parcels in the District to pay the Special Taxes when due. Insufficiency of Special Taxes In order to pay debt service on the Bonds, it is necessary that the Special Taxes levied against Taxable Parcels within the District be paid in a timely manner (see, however, "SECURITY FOR THE BONDS—County Teeter Plan"). The City has established the Reserve Fund in an amount equal to the Reserve Requirement to pay debt service on the Bonds to the extent Special Taxes are not paid on time and. other funds are not available. See "SECURITY FOR THE BONDS—Reserve Fund" and Appendix C – "Summary of the Fiscal Agent Agreement." Under the Fiscal Agent Agreement, the City has covenanted to maintain in the Reserve Fund an amount equal to the Reserve Requirement; subject, however, to the limitation that the City may not levy the Special Tax in any fiscal year at a rate in excess of the Maximum Annual Special Tax Rate permitted under the Rate and Method. See "SECURITY FOR THE BONDS—Special Taxes" and "—Summary of Rate and Method." Consequently, if a delinquency occurs, the City may be unable to replenish the Reserve Fund to the Reserve Requirement due to the limitation of the Maximum Annual Special Tax Rate. If such defaults were to continue in successive years, the Reserve Fund could be depleted and a default on the -33- 41 RESO. # 15237 MUFF # 505