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Page 1 of 5 Santa Ana Successor Agency Dispute on ROPS #35 & 36 (SA Venture Agmnts.): The ROPS includes the outstanding obligation of the Former Agency (and therefore the Successor Agency) under the S.A. Venture Agreement to pay certain transportation impact fees ("Fees") in the event Santa Ana Venture (the third party oblige under the S.A. Venture Agreement referred to in this letter as the "Developer") constructs additional retail and/or office improvements pursuant to the agreement. Specifically, in the event the Successor Agency's obligation to pay the Fees is triggered, the Successor Agency will be required to pay one percent (1%) of the estimated cost of construction of the development for which the Fees are charged directly to the City and the Developer will make a loan to the Successor Agency equal to the remaining amount of the Fees ("Fee Loan"). The Fee Loan is required to be paid from and is secured by a pledge of former tax increment accruing from the Site (defined in the S.A. Venture Agreement). Although the specific development to which the Fees and the Fee Loan relate has not yet commenced, the Successor Agency's obligation to pay the Fees and to borrow and repay the Fee Loan constitute one component of a broader, multifaceted contractual arrangement between the Former Agency (now the Successor Agency) and the Developer. The Developer has expended significant moneys and taken substantial actions in reliance on the Former Agency's/Successor Agency's obligation to perform its obligations under the S.A. Venture Agreement, including payment of the Fees and repayment of the Fee Loan. The DOF has taken the position that "Section 34163 (b) prohibits a redevelopment agency from incurring any obligations or making commitments after June 27, 2011." The DOF further states, in the May 24 Letter, that the DOF believes "that commitments have not been made for the $1.6 million [Fees/Fee Loan] and that this is an estimated amount for possible future projects." As an initial matter, Section 34163 is not applicable to the Successor Agency. Section 34163, cited by the DOF, does not mention successor agencies at all; instead, this section lists actions that former redevelopment agencies were prohibited from taking during the period between the passage of AB 1x 26 and February 1, 2012, the date all redevelopment agencies were dissolved.' More fundamentally, the S.A. Venture Agreement and the Former Agency's obligation to pay the Fees in connection with specified future development pursuant to that agreement do not constitute new obligations or commitments of the Former Agency or the Successor Agency. This obligation was set forth in the original Participation Agreement, executed in 1984, and was amended in the Third Amendment to the Participation Agreement, executed in 1992-Long before the passage of the Dissolution Act and AB 1484. Even if Part 1.8 governed the obligations and authority of successor agencies, Section 34167, subdivisions (d)(5) and (f) clarify the California legislature's intent that obligations such as the S.A. Venture Agreement were intended to be honored in the dissolution process. Section 34167(d)(5) defines "enforceable obligation" to include `[a]ny legally binding and enforceable agreement or contract that is not otherwise void as violating the debt limit or public policy." Section 34167(f) Specifically, Section 34163 states "Notwithstanding Part 1 (commencing with Section 33000), Part 1.5 (commencing with Section 34000), Part 1.6 (commencing with Section 34050), and Part 1.7 (commencing with Section 34100), or any other law, commencing on the effective date of [Part 1.8], an agency shall not have the authority to, and shall not, do any of the following: ... (b) Enter into contracts with, incur obligations, or make commitments to, any entity ... for any purpose...." Emphasis added. SA Resolution No. 2012-007 Page 15 of 24