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8.A. - Page 27 the Taxable Parcels (as defined under the heading "INTRODUCTION—The District° below) within the District pursuant to the Rate and Method and the Fiscal Agent Agreement. Limitations. The Improvements are not pledged to pay the debt service on the Bonds. The proceeds of condemnation or destruction of any of the Improvements are not pledged to pay the debt service on the Bonds. In the event that the Special Taxes are not paid when due, the only sources of funds available to repay the Bonds are lmounts held by the Fiscal Agent in the Bond Fund, the Special Tax Fund and the Reserve Fund established under the Fiscal Agent Agreement, and tlle proceeds, if any, from foreclosure sales of the specific Taxable Parcels with delinquent Special Taxes. Reserve Fund The Fiscal Agent Agreement establishes a Reserve Fund as a reserve for the payment of principal of and interest on the Bonds. The Reserve Fund is required to be funded in an amount equal to the lesser of (i) Maximum Annual Debt Service on the Outstanding Bonds, (ii) 125% of average Annual Debt Service for any Bond Year, or (iii) 10% of the original aggregate principal amount of the Bonds (the "Reserve Requirement"). The Reserve Fund will be lvailable to pay the debt service on the Bonds in the event of a shortfall in the amount in the Bond Fund for such purpose, and amounts in the Reserve Fund may also be withdrawn to pay any rebate liability due to the federal government, to pay a portion of the redemption price of Bonds to be redeemed with Special Tax Prepayments, and to transfer to the Bond Fund of lmounts therein in excess of the then Reserve Requirement The Reserve Requirement as of the date of issuance of the Bonds will be $634,000". See " SECURITY FOR THE BONDS—Reserve Fund." The District The District was formed by the City Council pursuant to proceedings conducted under the Act on April 24, 2000. The District includes 11 separate San Mateo County Assessor's parcels subject to the levy of Specill T1xes (collectively, the "Taxable Parcels") located within the Pacific Shores Center, a 106-acre waterfront corporate campus located in the City. The 11 buildings located on the Taxable Parcels have approximately 1,588,000 commercial square feet, and the Pacific Shores Center includes a 50-acre public access park, a full-featured fitness center, a cafe and other on-site amenities. See "THE DISTRICT—Development in the District." The land and improvements comprising the Taxable Parcels were valued by the San Mateo County Assessor for ad valorem property tax purposes on the Fiscal Year 2011-12 property tax roll at 1n aggregate value of $597,536,244. Based on the County's Fiscal Year 2011-12 property valuation, all but one of the 11 Taxable Parcels in the District have assessed value to estimated share of Bond principal ratios in excess of 89:1, with one Taxable Parcel havi�zg an assessed value to estimated share of Bond principal ratio in excess of 62:1. See "THE DISTIZICT—Value-to-Burden Ratios." The value of individual parcels vary significantly. In addition, County assessed values may not reflect current market values. No recent independent appraisal of the Taxable Parcels has been conducted in connection with the Bonds, and no assurance can be given that should Special Taxes levied on one or more of the Taxable Parcels become deli�lquent, and should the delinquent Taxable Parcels be offered for sale at a judicial foreclosure sale, that any bid would be received for the property or, if a bid is received, that such bid would be sufficient to pay such parcel's delinquent Special Taxes. For the current and historical County Assessor's valuation of each of the Taxable Parcels in the District, see "THE DISTIZICT—Land Ownership �� Preliminary, subject to change. -3-