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<br />. <br /> <br />. <br /> <br />. <br /> <br />!', <br /> <br />Covenant 9. Protection of Security and Rights of <br />Bondholders; No Arbitrage. The Agency covenants and agrees to <br />preserve and protect the security of the Bonds and the rights <br />of the Bondholders and to contest by court action or otherwise <br />(a) the assertion by any officer of any government unit or any <br />other person whatsoever against the Agency that (i) the Law is <br />unconstitutional or (ii) that the Pledged Tax Revenues pledged <br />hereunder cannot be paid to the Agency for the debt service on <br />the Bonds, or (b) any other action affecting the validity of <br />the Bonds or diluting the security therefor, or (c) any <br />assertion by the United States of America or any department or <br />agency thereof or any other person that the interest received <br />by the Bondholders is taxable under federal income tax laws by <br />reason of any action of the Agency. The Agency covenants and <br />agrees to take no action which, in the Opinion of Counsel would <br />result in (a) the Pledged Tax Revenues being withheld unless <br />the withholding is being contested in good faith, and (b) the <br />interest received by the Bondholders becoming taxable under <br />federal income tax laws. The Agency covenants and agrees that <br />it will make no use of the proceeds of the Bonds at any time <br />during the term thereof which will cause the Bonds to be <br />"arbitrage bonds" within the meaning of Section 103(c) of the <br />United States Internal Revenue Code of 1954, as amended, and <br />applicable regulations adopted thereunder by the Internal <br />Revenue Service, and the Agency hereby assumes the obligation <br />to comply with Section l03(c) and the regulations throughout <br />the term of the Bonds. <br /> <br />Section 19. Taxation of Leased Property. Whenever any <br />property in the Redevelopment Project Area has been redeveloped <br />and thereafter is leased by the Agency to any person or persons <br />(other than a public agency), or whenever the Agency leases <br />real property in the Redevelopment Project Area to any person <br />or persons (other than a public agency) for redevelopment, the <br />property shall be assessed and taxed in the same manner as <br />privately owned property, as required by Section 33673 of the <br />Law, and the lease or contract shall provide (a) that the <br />lessee shall pay taxes upon the assessed value of the entire <br />property and not merely upon the assessed value of his or its <br />leasehold interest, and (b) that if for any reason the taxes <br />levied on the property in any year during the term of the lease <br />or contract are less than the taxes which would have been <br />levied if the entire property had been assessed and taxed in <br />the same manner as privately owned property, the lessee shall <br />pay such difference to the Agency within thirty (30) days after <br />the taxes for the year become payable to the taxing agencies <br />and in no event later than the delinquency date of such taxes <br />established by law. All such payments shall be treated as <br />Pledged Tax Revenues, and when received by the Agency shall be <br />used as provided herein. <br /> <br />11-30-84 <br />1282p/228l/04 <br /> <br />-23- <br />