MACIAS GINI & O'CONNELL, LLP 3d -2010

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Mr. Francisco Gutierrez Executive Director of Finance and Management City of Santa Ana January 26, 2010 Page 6 under the supervision of Macias Gini & O'Connell LLP personnel. Furthermore, upon request, we may provide copies of selected audit documentation to the aforementioned parties. These parties may intend, or decide, to distribute the copies or information contained therein to others, including other governmental agencies. The audit documentation for this engagement will be retained for a minimum of seven years after the report release or for any additional period requested by the granting agency or required by law or regulation. If we are aware that a federal awarding agency, pass-through entity, or auditee is contesting an audit finding, we will contact the party(ies) contesting the audit finding for guidance prior to destroying the audit documentation. We expect to issue our reports no later than December 31 following the fiscal year end. We will discuss and agree to the timeline for deliverables with management on an annual basis. The City and Agency State Controller's Reports will be prepared by us and provided to the City prior to their applicable due dates. We agree that our fees for these services including expenses will not exceed the amounts specified in the table below. These fees do not include preparation of the City's financial statements. These fees reflect increased audit fees due to the Risk Assessment Suite of Standards (Statement on Auditing Standards Nos. 104-111) and the audit requirements for the funds received under the Recovery and Reinvestment Act and a 3% CPI increase for each year. city Redevleopment Agency Single Audit (includes 5 major programs) Treasury Compliance Review Air Quality Management District State Controller Reports - City and RDA Maximum Fee For the Fiscal Year Ended June 30, 2010 2011 2012 $ 92,000 $ 94,600 $ 97,200 54,800 56,400 58,000 14,000 14,400 14,800 3,400 3,500 3,600 3,100 3,200 3,300 8,100 8,300 8,500 $ 175,400 $ 180,400 $ 185,400 Our invoices for these fees will be rendered each month as work progresses in accordance with the hourly rates specified below and are payable on presentation. In accordance with our firm policies, work may be suspended if your account becomes 45 days or more overdue and may not be resumed until your account is paid in full. If we elect to terminate our services for nonpayment, our engagement will be deemed to have been completed upon written notification of termination, even if we have not completed our report(s). You will be obligated to compensate us for all time expended and to reimburse us for all out-of-pocket costs through the date of termination. The above fee is based on anticipated cooperation from your personnel and the assumption that unexpected circumstances will not be encountered during the audit. The issuance of new accounting and audit standards during our period of service may also require additional audit time. If significant additional time is necessary, we will discuss it with you and arrive at a new fee estimate before we incur the additional costs.