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8.B. - Page 41 a delay in payments to owners of the Bonds pending prosecution of the foreclosure proceedings and receipt by the City of the proceeds of the foreclosure sale. Section 53356.6 of the Act requires that property sold pursuant to foreclosure under the Act be sold for not less than the amount of judgment in the foreclosure action, plus post- judgment interest and authorized costs, unless the consent of the owners of 75% of the outstanding Bonds is obtained. However, under Section 53356.6 of the Act, the City, as judgment creditor, is entitled to purchase any property sold at foreclosure using a "credit bid," where the City could submit a bid crediting all or part of the amount required to satisfy the judgment for the delinquent amount of the Special Tax. If the City becomes the purchaser under a credit bid, the City must pay the amount of its credit bid into the redemption fund established for the Bonds, but this payment may be made up to 24 months after the date of the foreclosure sale. Neither the Act nor the Fiscal Agent Agreement requires the City to purchase or otherwise acquire any Taxable Parcel foreclosed upon if there is no other purchaser at such sale, and the City has no intent to be such a purchaser. The City will levy the Special Tax to pay the current year's debt service and related administrative expenses and to replenish the Reserve Fund to the Reserve Requirement, subject to the Maximum Annual Special Tax Rate. However, in the event such superior court foreclosure proceedings are necessary, and if the Reserve Fund is depleted, there could be a delay in payments of principal of and interest on the Bonds pending prosecution of the foreclosure proceedings and receipt by the City of the proceeds of the foreclosure sale. See "SPECIAL RISK FACTORS—Bankruptcy Delays" and "—Proceeds of Foreclosure Sales." Investment of Moneys Except as otherwise provided in the Fiscal Agent Agreement, all moneys in any of the funds or accounts established pursuant to the Fiscal Agent Agreement will be invested by the Fiscal Agent solely in Permitted Investments, as directed by the City. See Appendix C - "Summary of the Fiscal Agent Agreement" for a definition of "Permitted Investments" and for additional provisions regarding the investment of funds held under the Fiscal Agent Agreement. No Parity Bonds The City has covenanted in the Fiscal Agent Agreement not to issue any additional obligations payable from Special Taxes on a parity with the Bonds. However, nothing in the Fiscal Agent Agreement prohibits the City from issuing bonds or otherwise incurring debt secured by a pledge of any of the Special Tax Revenues subordinate to the pledge thereof under the Fiscal Agent Agreement. Also, other public agencies could, without the consent or knowledge of the City or the District, levy special taxes or assessments on the Taxable Parcels secured by statutory liens coequal with the lien securing the payment of the Special Taxes (see "SPECIAL RISK FACTORS—Parity Taxes and Special Assessments"). THE DISTRICT Location and Description of the District Redwood Shores is a master-planned community located in the northeastern portion of the City. It comprises approximately 1,500 acres, and is surrounded by Highway 101 on the west, San Francisco Bay on the east, Belmont Slough on the north, and Steinberger Slough on -19-