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in the case of bonds, like the Premium Bonds, the interest on which is excluded from gross income for federal
<br />income tax purposes. However, the amount of tax-exempt interest received, and a Beneficial Owner's basis in a
<br />Premium Bond, will be reduced by the amount of amortizable bond premium properly allocable to such
<br />Beneficial Owner. Beneficial Owners of Premium Bonds should consult their own tax advisors with respect to
<br />the proper treatment of amortizable bond premium in their particular circumstances.
<br />The Code imposes various restrictions, conditions and requirements relating to the exclusion from gross
<br />income for federal income tax purposes of interest on obligations such as the Series 2018A Bonds. The
<br />Successor Agency has made certain representations and covenanted to comply with certain restrictions,
<br />conditions and requirements designed to ensure that interest on the Series 2018A Bonds will not be included in
<br />federal gross income. Inaccuracy of these representations or failure to comply with these covenants may result
<br />in interest on the Series 2018A Bonds being included in gross income for federal income tax purposes, possibly
<br />from the date of original issuance of the Series 2018A Bonds. The opinion of Bond Counsel assumes the
<br />accuracy of these representations and compliance with these covenants. Bond Counsel has not undertaken to
<br />determine (or to inform any person) whether any actions taken (or not taken), or events occurring (or not
<br />occurring), or any other matters coming to Bond Counsel's attention after the date of issuance of the Bonds may
<br />adversely affect the value of, or the tax status of interest on, the Series 2018A Bonds. Accordingly, the opinion
<br />of Bond Counsel is not intended to, and may not, be relied upon in connection with any such actions, events or
<br />matters.
<br />Although Bond Counsel is of the opinion that interest on the Series 2018A Bonds is excluded from
<br />gross income for federal income tax purposes and is exempt from State of California personal income taxes, the
<br />ownership or disposition of, or the accrual or receipt of amounts treated as interest on, the Series 2018A Bonds
<br />may otherwise affect a Beneficial Owner's federal, state or local tax liability. The nature and extent of these
<br />other tax consequences depends upon the particular tax status of the Beneficial Owner or the Beneficial Owner's
<br />other items of income or deduction. Bond Counsel expresses no opinion regarding any such other tax
<br />consequences.
<br />Current and future legislative proposals, if enacted into law, clarification of the Code or court decisions
<br />may cause interest on the Series 2018A Bonds to be subject, directly or indirectly, in whole or in part, to federal
<br />income taxation or to be subject to or exempted from state income taxation, or otherwise prevent Beneficial
<br />Owners from realizing the full current benefit of the tax status of such interest. The introduction or enactment of
<br />any such legislative proposals or clarification of the Code or court decisions may also affect, perhaps
<br />significantly, the market price for, or marketability of, the Series 2018A Bonds. Prospective purchasers of the
<br />Series 2018A Bonds should consult their own tax advisors regarding the potential impact of any pending or
<br />proposed federal or state tax legislation, regulations or litigation, as to which Bond Counsel is expected to
<br />express no opinion.
<br />The opinion of Bond Counsel is based on current legal authority, covers certain matters not directly
<br />addressed by such authorities, and represents Bond Counsel's judgment as to the proper treatment of the Series
<br />2018A Bonds for federal income tax purposes. It is not binding on the Internal Revenue Service ("IRS") or the
<br />courts. Furthermore, Bond Counsel cannot give and has not given any opinion or assurance about the future
<br />activities of the Successor Agency, or about the effect of future changes in the Code, the applicable regulations,
<br />the interpretation thereof or the enforcement thereof by the IRS. The Successor Agency has covenanted,
<br />however, to comply with the requirements of the Code.
<br />Bond Counsel's engagement with respect to the Series 2018A Bonds ends with the issuance of the
<br />Series 2018A Bonds, and, unless separately engaged, Bond Counsel is not obligated to defend the Successor
<br />Agency or the Beneficial Owners regarding the tax-exempt status of the Series 20t8A Bonds in the event of an
<br />audit examination by the IRS. Under current procedures, parties other than the Successor Agency and their
<br />appointed counsel, including the Beneficial Owners, would have little, if any, right to participate in the audit
<br />examination process. Moreover, because achieving judicial review in connection with an audit examination of
<br />tax-exempt bonds is difficult, obtaining an independent review of IRS positions with which the Successor
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<br />SA -3-63
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