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City of Santa Ana June 12, 2014 Page 2 3. The obligation of the City to make Lease Payments pursuant to the Lease Agreement does not constitute a debt of the City or of the State of California or of any political subdivision thereof within the meaning of any constitutional or statutory debt limitation or restriction and does not constitute an obligation for which the City is obligated to levy or pledge any form of taxation or for which the City has levied or pledged any form of taxation. 4. The assignment of the Lease Payments and certain other rights by the Authority to the Assignees under the Assignment Agreements constitutes the valid and binding obligation of the Authority enforceable in accordance with its terms. 5. Subject to the City's compliance with certain covenants, the interest component of the Lease Payments is excludable from gross income of the owners thereof for federal income tax purposes and is not included as an item of tax preference in computing the alternative minimum tax for individuals and corporations under the Internal Revenue Code of 1986, as amended (the "Code "), but is taken into account in computing an adjustment used in determining the federal alternative minimum tax for certain corporations. Failure to comply with certain of such covenants could cause the interest component of the Lease Payments to be includable in gross income for federal income tax purposes retroactively to the date of delivery of the Lease Agreement. 6. The interest component of the Lease Payments is exempt from personal income taxation imposed by the State of California. We express no opinion regarding any collateral tax consequences arising with respect to the Lease Agreement. The rights of the Assignees and the enforceability of the Site and Facility Lease, the Lease Agreement and the Assignment Agreements may be subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors' rights heretofore or hereafter enacted and may also be subject to the exercise of judicial discretion in accordance with principles of equity or otherwise in appropriate cases. Our opinion represents our legal judgment based upon such review of the law and the facts that we deem relevant to render our opinion and is not a guarantee of a result. This opinion is given as of the date hereof and we assume no obligation to revise or supplement this opinion to reflect any facts or circumstances that may hereafter come to our attention or any changes in law that may hereafter occur. Very truly yours, 4 -168