3 - RECOGNIZED OBLIGATION PAYMENT SCHEDULE

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Response to DOF May 3, 2012 Letter May 18, 2012 Page 4 unless the purposes can no longer be achieved, in which case, the proceeds may be used to defease the bonds. The use of the bond proceeds in question is governed by an enforceable obligation and the bond proceeds can be used for the purposes for which the bonds were sold as evidenced by the Official Statement, Certificate of Use of Proceeds, and other documentation (excerpts of documents attached as Attachment 3) and other documents presented to the City Council and Agency Board at the tune the bonds were issued. Specifically, bond proceeds described in item #86 on the BOPS are being used to finance improvements (repairs and security) to the public parking structures in the city's Downtown area as specified in the bond documents. Additionally, bond proceeds described in items #98 & 99 on the ROPS were and will continue to be used for improvements to the Santa Ana Auto Mall, other public improvements and infrastructure, and other redevelopment purposes as specified in the bond documents. The Successor Agency has a continuing obligation to ensure compliance with the bond documents and their intended purpose, which will also require project costs for project management, etc. as intended by ABX1 26 and permitted by the DOF directive (set forth in "Exhibit 4" on the DOF webpage devoted to ABX1 26 issues) which treats such costs as "specific project implementation activities such as construction inspection, project management or actual construction [which] would not he viewed by Finance as `administrative.' Additionally, there are other third party contractual obligations utilizing bond proceeds that constitute enforceable obligations in their own right. These EOs include items, such as: item #10 (Erickson Lease Agreement Honda) and item #21 (Penske DDA), for which project costs are an eligible use of the South Main bond proceeds and are required for project management, and legal, design review, and/or financial services to ensure compliance with the financial and performance obligations of the agreements; as well as project costs (design, project management, etc.) associated with development of improvements to the Downtown parking structures (item #86) which are an eligible use of the Downtown bond proceeds, and were contracted for and underway prior to the June 28, 2011 date (See AECOM contract, Attachment 4). Pursuant to I-tSC Section 34167(f), "...nothing 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." Further, I ISC: Section 34177(x), (c), and (f) require the Successor Agency to make payments required by enforceable obligations, perform obligations required by enforceable obligations, and enforce rights of the former Agency and covenants imposed by the Agency . DOF's own guidance acknowledges and reiterates IISC Section 34174(x) (set forth in "Exhibit 3" on the DOF webpage devoted to ABX1 26 issues) which states "....nothing herein is intended to absolve the successor agency of payment or other obligations due or imposed pursuant to the enforccable 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." Additionally, 13OF's guidance cites HSC Section 341 77 (set forth in "Exhibit 3" on the DOF vvbpage devoted to ABX1 26 issues) stating successor FlgenciCS arc required to 3-37