090704 Jt PH Adotpion Amend Merger SA Redvlp Proj Areas EXHIBIT 2

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Agency Bond Debt Service The Agency will continue to make principal and interest payments on the 1989 Tax Allocation Refunding Bonds (Central City, Inter City and South Harbor Project Areas) and the 2003 Tax Allocation Bonds (South Main Project Area). While the Agency may elect to incur additional bonded indebtedness in the future, for purposes of this financial feasibility analysis no additional future bond issues are assumed in the feasibility projection. 2. Transfers In (Credit) The Santa Ana Financing Authority issued 1998 Refunding Revenue Bonds, Series A, B C and D for the purpose of using the net proceeds to purchase the Agency's 1989 Tax Allocation Refunding Bonds, Series A, B, C and E referenced above. This enabled the Agency to realize significant savings in annual debt service payments by utilizing the leverage of pooling funds permitted by Marks Roos bonds. The rebate of the net savings is annually reflected in the Transfers In line item of the cash flow projection. 3. Educational Revenue Augmentation Fund Chapter 260, Statutes of 2003, (SB 1045) requires redevelopment agencies to shift $135 million in property tax revenues to K -12 schools and community colleges during the 2003 -04 fiscal year. The shift of tax increment revenues will be placed into the Educational Revenue Augmentation Fund (ERAF). SB 1045 provides that one -half of the ERAF obligation of the Agency is calculated based on the gross tax increment apportioned to the Agency and the other one -half of the ERAF obligation is calculated based on net tax increment revenues retained by the Agency (net of any pass- through payments to other taxing entities), as such tax increment revenues are reported in the Community Redevelopment Agencies Annual Report of the California State Controller for FY 2001 -02. The Agency allocated an ERAF payment to the County Auditor - Controller totaling approximately $1,831,000 on May 10, 2004. It is uncertain at the present time as to whether or not future ERAF payments will be required by the State. It is also not known whether the ERAF amounts will increase in future years. Therefore, for purposes of the feasibility projection, it is assumed that commencing in FY 2004 -05, ERAF payments will continue to be required by the respective Project Areas in subsequent fiscal years and reflect the current year requirement. Page 22 of 190 Report to the City Council for the Merger of the Keyser Marston Associates, Inc. Santa Ana Redevelopment Projects Page 17 PA0403012.SNTA:CK:gbd 19090.003,004/00 /20/04