3 - RECOGNIZED OBLIGATION PAYMENT SCHEDULE

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Response to DOF May 3, 2012 Letter May 18, 2012 Page 2 the contract as it occurs, creating an enforceable obligation ("EO") of the Agency. Please note that we previously provided DOF with a copy of said agreement and amendment. As a general principal, DOF's own guidance (set forth in "Exhibit 3" on the DOF webpage devoted to ABX1 26 issues) states that "ABXI 26 specifically states that revenue pledges are to be honored," and reiterates HSC Section 34175(x) which states "it is the intent of this part that pledges of revenues associated with enforceable obligations of the former redevelopment agencies are to be honored. It is intended that the cessation of any redevelopment agency shall not affect either the pledge, the legal existence of that pledge, or the stream of revenues available to meet the requirements of the pledge." Pursuant to 1ISC Section 34167(4)(5), this agreement as amended is an enforccable obligation of the Agency; and pursuant to HSC Section 34167(f), nothing in ABXI 26 shall be construed to interfere with the Agency's authority with respect to enforceable obligations to make payments due, enforce existing covenants and obligations or perform its obligations. Furthermore, DOF's own guidance reiterates I-ISC Section 34174(a) which states nothing herein is intended to absolve the successor agency of payment or other obligations due or imposed pursuant to the enforceable obligations; and provided further, that nothing in the act adding this part is intended to be construed as an action or circumstance that may give rise to an event of default under any of the documents governing the enforceable obligations." The challenged Santa Ana Venture contract is an enforceable third party agreement entered into long before the effective date of ABXI 26, and is therefore an EO pursuant to I-ISC Section 34171(d)(1)(E) with which the Agency is required to comply pursuant to HSC Section 34177, subdivisions (a) and (c). The Successor Agency is therefore obligated to not only pay the permit fees, but to ensure compliance with performance obligations, which will require project costs for project management, etc. as intended by ABXI 26 [as set forth in IISC Section 34174(a)] and permitted according to the DOF directive (set forth in "Exhibit 4" on the DOF webpage devoted to ABXI 26 issues) which treats such costs as "specific. project implementation activities such as construction inspection, project management or actual construction [which] would not be viewed by Finance as `administrative."' Pursuant to 1ISC: Section 34172(c), the Redevelopment Property Tax Trust Fund (12PTTF) is a "special f rind of the dissolved redevelopment agency to pay the principal of and interest on loans, moneys advanced to, or indebtedness, whether funded, refunded, assumed, or otherwise incurred by the redevelopment agency to finance or refinance, in whole or in part, the redevelopment projects of each redevelopment agency dissolved pursuant to this part." The subject obligation is an enforceable obligation and indebtedness of the Agency; therefore, the RPTTF is required to fund this obligation. • Page 3, items 24, 27 and 28; Page 4, items 29-32 (notes payable for various housing projects, including all associated project management and enforcement costs totaling $21.5 million). The DOF Letter states that these items are previously funded by the Agency and do not represent continuing obligations; therefore they are not considered EOs. Response: DOF is correct that the promissory notes for these enforceable obligations were landed; accordingly, the note aniounts have been removed from the BOPS. 1lo%vCVCr, aS 3-35