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IRS Audit of Tax -Exempt Bond Issues The Internal Revenue Service has initiated an expanded program for the auditing of tax-exempt bond issues, including both random and targeted audits. It is possible that the Series 20t8A Bonds will be selected for audit by the Internal Revenue Service. It is also possible that the market value of the Series 2018A Bonds might be affected as a result of such an audit of the Series 2018A Bonds (or by an audit of similar bonds). Secondary Market There can be no guarantee that there will be a secondary market for the Bonds or, if a secondary market exists, that such Bonds can be sold for any particular price. Occasionally, because of general market conditions or because of adverse history or economic prospects connected with a particular issue, secondary marketing practices in connection with a particular issue are suspended or terminated. Additionally, prices of issues for which a market is being made will depend upon then prevailing circumstances. Such prices could be substantially different from the original purchase price. Bankruptcy of Landowners The bankruptcy of a major assessee in the Project Area could delay and/or impair the collection of property taxes by the County with respect to properties in the bankruptcy estate. Although the Successor Agency is not aware of any major property owners in the Project Area that are in bankruptcy or threatening to declare bankruptcy, the Successor Agency cannot predict the effects on the collections of Tax Revenues if such an event were to occur. Concentration of Property Ownership Concentration of ownership presents a risk in that, if one or more of the largest property owners in the Project Area were to default on their taxes (and if the County were to change its current practice of distributing Tax Revenues to the Successor Agency regardless of delinquencies) or were to successfully appeal the tax assessments on property within the Project Area, a substantial decline in Tax Revenues could occur. The top ten taxpayers in all Project Areas represent 17.83% of the total incremental assessed value of all Project Areas combined. See "PROJECTED COVERAGE ON THE BONDS" for a description of the debt service coverage on the Bonds. Change in Law In addition to the other limitations on Tax Revenues, the State electorate or legislature could adopt a constitutional or legislative property tax decrease with the effect of reducing Tax Revenues payable to the Successor Agency. There is no assurance that the State electorate or legislature will not at some future time approve additional limitations that could reduce the Tax Revenues and adversely affect the security of the 2018 Bonds. LEGAL MATTERS Enforceability of Remedies The remedies available to the Trustee and the Owners of the Bonds upon an event of default under the Indenture or any other document described in the Official Statement are in many respects dependent upon regulatory and judicial actions which are often subject to discretion and delay. Under existing law and judicial decisions, the remedies provided for under such documents may not be readily available or may be limited. The various legal opinions to be delivered concurrently with the delivery of the Bonds will be qualified to the extent that the enforceability of certain legal rights related to the Bonds and the Indenture are subject to limitations imposed by bankruptcy, reorganization, insolvency or other similar laws affecting the rights of creditors generally and by equitable remedies and proceedings generally. 47 SA -3-61