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the purchase of any Bonds and the order in which such matters appear does not necessarily reflect the relative
<br />importance of the various risks. Potential investors in the Bonds are advised to consider the following special
<br />factors along with all other information in this Official Statement in evaluating the Bonds. There can be no
<br />assurance that other considerations will not materialize in the future.
<br />Limited Obligations
<br />The obligation of the City to make debt service payments on the Bonds is a special obligation and does
<br />not constitute a debt of the City, the County, the State, or any political subdivision of the State within the meaning
<br />of any constitutional or statutory debt limitation or restriction, and does not constitute an obligation for which the
<br />City, the County, the State, or any political subdivision of the State is obligated to levy or pledge any form of
<br />taxation or for which the City, the County, the State, or any political subdivision of the State has levied or pledged
<br />any form of taxation.
<br />Passive Revenue Source
<br />The payment of debt service on the Bonds is secured solely by a pledge of the Gas Tax Revenues and
<br />certain funds under the Indenture. The City has no control over the amount of Gas Tax Revenues to be received
<br />by the City because (1) the amount of Gas Tax Revenues received by the City is based on Statewide fuel
<br />consumption and the City has no ability to control such consumption or to increase the rate at which such fuel is
<br />taxed within the State, and (2) the City has no control over the collection or distribution procedures related to any
<br />State taxes, including taxes levied in connection with fuel consumption.
<br />There can be no assurance that Gas Tax Revenues will be available in the amounts estimated in this
<br />Official Statement. A decrease in fuel consumption in the State, which would adversely affect the amount and/or
<br />availability of Gas Tax Revenues, could result from a variety of circumstances, including, without limitation, oil
<br />shortages or embargos, increased use of alternative fuel sources, or natural disasters. See also " Gasoline Sales
<br />Subject to Fluctuation" below.
<br />Economic, Political, Social, and Environmental Conditions
<br />Prospective investors are encouraged to evaluate current and prospective economic, political, social, and
<br />environmental conditions as part of an informed investment decision. Changes in economic, political, social, or
<br />environmental conditions on a local, state, federal, or international level may adversely affect investment risk
<br />generally. Such conditional changes may include (but are not limited to) the reduction or elimination of previously
<br />available State or federal revenues, fluctuations in business production, consumer prices, or financial markets,
<br />unemployment rates, technological advancements, shortages or surpluses in natural resources or energy supplies,
<br />changes in law, social unrest, fluctuations in the crime rate, political conflict, acts of war or terrorism,
<br />environmental damage and natural disasters.
<br />Initiative to Repeal Gas Tax
<br />At the November 6, 2018 General Election, the California electorate defeated Proposition 6, the Voter
<br />Approval for Future Gas and Vehicle Taxes and 2017 Repeal Initiative ("Proposition 6"), an initiative amendment
<br />to the California Constitution. Proposition 6 proposed the repeal of Gas Tax increases and vehicles fees that were
<br />enacted in 2017, including the Road Repair and Accountability Act of 2017 ("RRAA"), and adding voter approval
<br />as a requirement for the Legislature to impose, increase or extend Gas Taxes or vehicle fees in the future. If
<br />approved, Proposition 6 would have reduced, but not eliminated, the amount of Gas Tax Revenues available for
<br />apportionment to local agencies. Although Proposition 6 was defeated, there can be no assurances that future
<br />similar initiatives will not threaten the imposition and collection of Gas Tax Revenues.
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