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following six-month period (see APPENDIX A — "SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE"). The Dissolution Act also contains certain penalties in the event the Successor Agency does not timely submit a ROPS for a fiscal year. Specifically, a ROPS must be submitted by the Successor Agency, after approval by the Oversight Board to the County Auditor -Controller, the State Department of Finance, and the State Controller no later than February 1 of each year. If the Successor Agency does not submit an Oversight Board -approved ROPS by such deadlines, the City will be subject to a civil penalty equal to $10,000 per day for every day the schedule is not submitted to the State Department of Finance. Additionally, the Successor Agency's administrative cost allowance is reduced by 25% if the Successor Agency does not submit an Oversight Board -approved ROPS by the 10th day after the February 1 deadline with respect to a ROPS for the subsequent annual period. The Successor Agency has submitted all Recognized Obligation Payment Schedule, duly approved by the Oversight Board, in a timely manner. Commencing on February 1, 2016, pursuant to SB 107, successor agencies were transitioned to an annual ROPS process pursuant to which successor agencies will be required to file ROPS with the Department of Finance and the County Auditor -Controller for approval each February 1 for the July 1 through June 30 period immediately following such February 1 commencing with the July 1, 2016 through June 30, 2017 period. Commencing September 22, 2015, successor agencies which received a Finding of Completion and the concurrence of the Department of Finance as to the items that qualify for payment, among other conditions, may at their option, file a Last and Final ROPS. If approved by the Department of Finance, the Last and Final BOPS will be binding on all parties, and the Successor Agency will no longer submit a Recognized Obligation Payment Schedule to the Department of Finance or the Oversight Board. The County Auditor -Controller will remit the authorized funds to the Successor Agency in accordance with the approved Last and Final Recognized Obligation Payment Schedule until each remaining enforceable obligation has been fully paid. A Last and Final ROPS may only be amended twice, and only with approval of the Department of Finance and the County Auditor -Controller. The Successor Agency has not submitted a Last and Final Recognized Obligation Payment Schedule nor has it yet determined when it plans to file a Last and Final ROPS. Series 2018A Bonds Loss of Tax Exemption As discussed under the caption "LEGAL MATTERS - Tax Matters," interest on the Series 2018A Bonds could become includable in gross income for purposes of federal income taxation retroactive to the date the Series 2018A Bonds were executed and delivered as a result of future acts or omissions of the Successor Agency in violation of its covenants contained in the Indenture. Should such an event of taxability occur, the Series 2018A Bonds are not subject to special redemption or any increase in interest rate and will remain outstanding until maturity. In addition, Congress has considered in the past, is currently considering and may consider in the future, legislative proposals, including some that carry retroactive effective dates, that, if enacted, would alter or eliminate the exclusion from gross income for federal income tax purposes of interest on municipal bonds, such as the Series 2018A Bonds. Prospective purchasers of the Series 2018A Bonds should consult their own tax advisors regarding any pending or proposed federal tax legislation. The Successor Agency can provide no assurance that federal tax law will not change while the Series 2018A Bonds are outstanding or that any such changes will not adversely affect the exclusion of the interest on the Series 2018A Bonds from gross income for federal income tax purposes. If the exclusion of the interest on the Series 2018A Bonds from gross income for federal income tax purposes were amended or eliminated, it is likely that the market price for the Series 2018A Bonds would be adversely impacted. 46 SA -3-60