Full Book Entry on Countywide Public Financing Authority (1996)

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actual collections of unsecured taxes. A one-time adjustment for changes in the tax roll is made in the following year. The County's cash position is protected by a special fund, known as the Tax Losses Reserve Fund, which is generated from the collection of penalties, interest and other charges on County-wide delinquent taxes and special assessments, as well as other cash reserves. In the event proceeds from the sale of tax- deeded property are insufficient to pay the full amount of delinquent taxes, the County Treasurer may draw on its Tax Losses Reserve Fund to make up the deficiency. Section 4703 of the California Revenue and Taxation Code allows any county to draw down the Tax Losses Reserve Fund to a balance equal to 3% of the total of all taxes and assessments levied on its secured roll for that year if the secured tax delinquency has been 3% of the total or less for the preceding three consecutive years. After utilizing this procedure, if the county incurs a rate of secured tax delinquency that excess 3% of the total of all taxes and assessments levied on its secured roll, the Tax Losses Reserve Fund must accumulate to a balance equal to 5% of the total of all taxes and assessments levied on the secured roll for that fiscal year and remain at that level until the county experiences three consecutive years in which the secured tax delinquency rate is under 3%. Other Tax Revenues In general, cities may adopt measures imposing taxes on certain local activities, such as hotel occupancy and utility consumption taxes. See "RISK FACTORS - Constitutional and Statutory Limits on Taxes and Appropriations - Proposition 62" for a discussion of certain limitations imposed upon the imposition of such taxes. THE PROJECT The Project is comprised of (i) various capital improvements to be financed by certain Members within their geographic boundaries, and (iii) all or a portion of each Member's share of a County-wide coordinated communications system (the "Communications System") designed to support and facilitate all public safety and public works radio communications throughout the County. Construction of the Communications System is currently estimated to cost approximately $70,000,000, and will be directed by Motorola Communications and Electronics, Inc. ("Motorola"). The Communications System has been planned as an 81-channel, 800 MHz radio communications system enabling mutual cross-communications among 100 city and County law, public works and fire operations. Once installed and implemented, the Communication System is expected to be the largest multi-user, multi-owned radio system in the world. TAX MATTERS In the opinion of Jones Hall Hill & White, A Professional Law Corporation, San Francisco, California, Bond Counsel, subject, however, to the qualifications set forth below, under existing law, the interest on the Bonds is excluded from gross income for federal income tax purposes and such interest is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations, provided, however, that, for the purpose of computing the alternative minimum tax imposed on corporations (as defined for federal income tax purposes), such interest is taken into account in determining certain income and earnings. The opinions set forth in the preceding paragraph are subject to the condition that the Authority and the Members comply with all requirements of the Internal Revenue Code of 1986 (the "Code") that must be satisfied subsequent to the issuance of the Bonds in order that such interest be, or continue to be, 19