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west, 3rd Street on the north, Birch Street on the east and 1st Street on the south (the "Excluded Territory"). The boundaries of the Excluded Territory are set forth in Exhibit A to this Resolution. All of the properties in the Excluded Territory are used exclusively for residential purposes (with the exception of City-owned Birch Park). A number of residential property owners within the Excluded Territory raised concerns about the specific benefits they would receive should the District be established. While the engineer's report contained in the Management District Plan establishes that the Excluded Territory would benefit from the proposed programs and activities within the district, the Committee found it more prudent to focus its attention and funds on the core of the commercial downtown. The District engineer has opined that so long as the Management District Plan is modified to limit any programs under the Plan only to properties that are assessed, there is no specific benefit to the Excluded Territories. E. A public hearing concerning the establishment of the Downtown CMD the proposed levy of assessments within such district was held on December 1, 2008 at the hour of 6:00 pm in the City Council Chambers at 22 Civic Center Plaza, Santa Ana, California. F. At the public hearing, City Staff presented to the City Council the Management District Plan as described in the Resolution of Intent along with the proposal for the Excluded Territory. G. At the public hearing, the testimony of all interested persons for or against the establishment of the District, the levy of assessments within such District, and the type or types of improvements and activities to be funded with the revenues from the assessments was heard and considered, and a full, fair and complete hearing was held. H. Article XIIID of the California Constitution and Sections 54750 through 53756 of the California Government Code impose certain procedural and substantive requirements relating to the levy of new or increased assessments, including mailing of a notice to each affected property owner regarding the proposed assessment, conducting a ballot procedure, and holding a public hearing. Section 2. The Council, pursuant to the Law, may exclude territory from the District prior to adoption of the final resolution. The City Council hereby approves the recommended exclusion of the Excluded Territories for the Downtown CMD. The Management District Plan shall be amended as necessary to eliminate any programs, services or activities of benefit to the Excluded Territory. Hereafter, all references to the Management District Plan, shall be to the plan as amended. Resolution No. 2008-XXX 55A-4 Page 2 of 7