Standard & Poor's: "AAA"/"BBB"

Transcription

1 Standard & Poor's: "AAA"/"BBB" NEW ISSUE BOOK-ENTRY (Ambac Insured See "Ratings" Herein) In the opinion of Bond Counsel, under existing laws, regulations, rulings and judicial decisions, and assuming continuing compliance with covenants of the Dinuba Redevelopment Agency (the "Agency") intended to preserve the exclusion from gross income for federal income tax purposes of interest on the Bonds, interest on the Bonds is excludable from gross income for federal income tax purposes and is not an item of tax preference for purposes of calculating the federal alternative minimum tax imposed on individuals and corporations. In the further opinion of Bond Counsel, such interest is also exempt from present State of California personal income taxes. The difference between the issue price of a Bond (the first price at which a substantial amount of the Bonds of a maturity is to be sold to the public) and the stated redemption price at maturity is original issue discount. See "TAX EXEMPTION" herein for a discussion of the effect of certain provisions of the Code on Owners of the Bonds. $17,270,000 DINUBA REDEVELOPMENT AGENCY MERGED CITY OF DINUBA REDEVELOPMENT PROJECT AND DINUBA REDEVELOPMENT PROJECT NO. 2, AS AMENDED TAX ALLOCATION REFUNDING BONDS ISSUE OF 2006 Dated: Delivery Date Due: September 1, as shown below The Bonds will be delivered as fully registered bonds, registered in the name of Cede & Co. as nominee of The Depository Trust Company, New York, New York ("DTC"), and will be available to ultimate purchasers ("Beneficial Owners") in the denomination of $5,000 or any integral multiple thereof, under the book-entry system maintained by DTC. Beneficial Owners will not be entitled to receive delivery of bonds representing their ownership interest in the Bonds. The principal of, premium if any, and semiannual interest (due March 1 and September 1 of each year, commencing March 1, 2007) on the Bonds will be payable by U.S. Bank National Association, as Trustee, to DTC for subsequent disbursement to DTC participants, so long as DTC or its nominee remains the registered owner of the Bonds (see "THE BONDS Book-Entry System" herein). The Bonds are subject to optional redemption prior to maturity, in whole or in part, on September 1, 2016 and on any date thereafter, as described herein. The Bonds are being issued on a parity basis with the Agency's previously issued $13,000,000 Merged City of Dinuba Redevelopment Project and Dinuba Redevelopment Project No. 2, As Amended, Tax Allocation Refunding Bonds, Issue of 2001 of which $11,655,000 are currently outstanding (the "2001 Bonds"), the Agency's previously issued $7,500,000 Merged City of Dinuba Redevelopment Project and Dinuba Redevelopment Project No. 2, As Amended, Tax Allocation Bonds, Issue of 2003 of which $7,180,000 are currently outstanding (the "2003 Bonds") and the Agency's previously issued $5,670,000 Merged City of Dinuba Redevelopment Project and Dinuba Redevelopment Project No. 2, As Amended, Tax Allocation Refunding Bonds, Issue of 2005 of which $5,490,000 are currently outstanding (the "2005 Bonds"). The 2001 Bonds, the 2003 Bonds and the 2005 Bonds are collectively referred to herein as the Existing Bonds. The Bonds are being issued to refinance the Agency's previously issued $3,600,000 Merged City of Dinuba Redevelopment Project and Dinuba Redevelopment Project No. 2, As Amended, Tax Allocation Refunding Bonds, Issue of 1997A of which $3,320,000 are currently outstanding (the "1997A Bonds") and to finance a portion of the costs of the Redevelopment Project. The 1997A Bonds are referred to herein as the "Refunded Bonds." The Bonds and the Existing Bonds are payable from and secured by the Pledged Tax Revenues as defined herein to be derived from the Project Area. Taxes levied on the property within the Project Area on that portion of the taxable valuation over and above the taxable valuation of the base year property tax roll to the extent they constitute Pledged Tax Revenues, shall be deposited in the Special Fund and administered by the Trustee in accordance with the Indenture. In addition, payment of the principal of and interest on the Bonds when due will be insured by a financial guaranty insurance policy (the "Financial Guaranty Insurance Policy") to be issued by Ambac Assurance Corporation ("Ambac Assurance" or the "Bond Insurer") simultaneously with the delivery of the Bonds. This cover page of the Official Statement contains information for quick reference only. It is not a complete summary of the Bonds. Investors should read the entire Official Statement to obtain information essential to the making of an informed investment decision. Attention is hereby directed to certain Risk Factors more fully described herein. The Bonds are being issued for sale to the Dinuba Financing Authority (the "Authority"). The Authority will resell the Bonds to the Underwriter. The Bonds are not a debt of the City of Dinuba, the State of California or any of its political subdivisions (except the Agency) and neither said City, said State or any of its political subdivisions (except the Agency) is liable therefor. The principal of and interest on the Bonds are payable solely from the Pledged Tax Revenues allocated to the Agency from the Project Area (all as defined herein and in the Indenture) and other funds as set forth in the Indenture. The Bonds do not constitute an indebtedness within the meaning of any constitutional or statutory debt limitation or restriction. The Bonds are offered, when, as and if issued, subject to the approval of Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California, Bond Counsel. Certain legal matters will be passed on for the Agency by Richards, Watson & Gershon, A Professional Corporation, Los Angeles, California, Disclosure Counsel. It is anticipated that the Bonds will be available for delivery to DTC in New York, New York, on or about October 18, The date of this Official Statement is October 5, 2006.

2 MATURITY SCHEDULE CUSIP* Prefix: Maturity Date Principal Interest CUSIP September 1 of Amount Rate Yield Suffix $295, , % % DM 1 DN , DP , DQ , DR , DS , DT , DU , DV , DW , DX , DY , DZ , EA 6 $4,415, % Term Bonds due September 1, 2026 Yield % - CUSIP Suffix: ED 0 $2,605, % Term Bonds due September 1, 2031 Yield % - CUSIP Suffix: EB 4 $5,070, % Term Bonds due September 1, 2036 Yield % - CUSIP Suffix: EC 2 * CUSIP is a registered trademark of the American Bankers Association. Copyright Standard U Poor's, a Division of the McGraw Hill Companies, Inc. CUSIP data herein is provided by Standard U Poor's CUSIP Service Bureau. This data is not intended to create a database and does not serve in any way as a substitute for the CUSIP Service Bureau. CUSIP numbers are provided for convenience of reference only. Neither the Agency nor the Underwriter takes any responsibility for the accuracy of such numbers.

3 DINUBA REDEVELOPMENT AGENCY DINUBA, CALIFORNIA AGENCY GOVERNING BOARD Mike Smith, Chairman Terry McKittrick, Vice Chairman Emilio Morales, Member Mark Wallace, Member Thomas Payan, Member CITY COUNCIL Mike Smith, Mayor Terry McKittrick, Vice-Mayor Emilio Morales, Councilmember Mark Wallace, Councilmember Thomas Payan, Councilmember CITY AND AGENCY STAFF J. Edward Todd, Executive Director of the Agency and City Manager Linda Barkley, Agency Secretary and Deputy City Clerk Kenneth L. Grover, Financial Services Manager Dan Meinert, Deputy City Manager and Development Services Director Dan McCloskey, City Attorney SPECIAL SERVICES Bond Counsel Stradling Yocca Carlson & Rauth a Professional Corporation Newport Beach, California Trustee and Escrow Bank U.S. Bank National Association Los Angeles, California Financial and Redevelopment Consultant Urban Futures, Inc. Orange, California Underwriter Wedbush Morgan Securities Solana Beach, California Disclosure Counsel Richards, Watson & Gershon A Professional Corporation Los Angeles, California

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5 TABLE OF CONTENTS Page INTRODUCTORY STATEMENT... 1 Authority and Purpose... 1 The City and the Agency... 1 The Redevelopment Plan... 2 Tax Allocation Financing... 2 Outstanding Parity Bonds... 2 Security for the Bonds... 3 Reserve Account... 3 Bond Insurance... 3 Further Information... 3 SOURCES AND USES OF FUNDS... 4 THE BONDS... 4 Authority for Issuance... 4 Description of the Bonds... 4 Book-Entry System... 5 Redemption and Purchase of Bonds... 7 SECURITY FOR THE BONDS... 9 Tax Increment Financing Housing Set-Aside Existing Bonds Issuance of Parity Bonds THE INDENTURE Allocation of Bond Proceeds Pledged Tax Revenues - Application Investment of Moneys in Funds and Accounts Issuance of Parity Bonds Covenants of the Agency Events of Default and Remedies Application of Funds Upon Acceleration Amendments THE AUTHORITY THE DINUBA REDEVELOPMENT AGENCY Members and Officers Agency Powers Financial and Redevelopment Consultant Factors Affecting Redevelopment Agencies Generally RISK FACTORS Bonds Are Limited Obligations and Not General Obligations Reduction in Taxable Value Risks to Real Estate Market Changes in the Redevelopment Law Reduction in Inflationary Rate Development Risks Levy and Collection of Taxes State Budget Litigation Regarding 2% Limitation State Board of Equalization and Property Assessment Practices Property Assessment Appeals Enforceability of Remedies Statement of Indebtedness Bankruptcy and Foreclosure Estimated Revenues Hazardous Substances Page Seismic Factors Changes in the Law Federal Tax-Exempt Status of the Bonds Investment Risk Additional Obligations Secondary Market PROPERTY TAXATION IN CALIFORNIA Property Tax Collection Procedures Unitary Property Article XIIIA of the State Constitution Appropriations Limitation - Article XIIIB Articles XIIIC and XIIID of the State Constitution Proposition Redevelopment Time Limits Appeals of Assessed Values THE PROJECT AREA Limitations and Requirements of the Redevelopment Plan Agreements With Various Taxing Agencies Largest Local Secured Taxpayers PLEDGED TAX REVENUES Schedule of Historical Pledged Tax Revenues Projected Taxable Valuation and Pledged Tax Revenues Combined Annual Debt Service Debt Service Coverage BOND INSURANCE Payment Pursuant to Financial Guaranty Insurance Policy Ambac Assurance Corporation Available Information Incorporation of Certain Documents by Reference CONCLUDING INFORMATION Underwriting Legal Opinion Tax Exemption No Litigation Legality for Investment in California Ratings Continuing Disclosure VERIFICATION OF MATHEMATICAL ACCURACY Miscellaneous SUPPLEMENTAL INFORMATION - THE CITY OF DINUBA APPENDIX A - Definitions... A-1 APPENDIX B - Specimen Financial Guaranty Insurance Policy... B-1 APPENDIX C - Form of Bond Counsel Opinion.. C-1 APPENDIX D - Agency Audited Financial Statements for Fiscal year Ended June 30, D-1 APPENDIX E - Form of Continuing Disclosure Agreement... E-1

6 No dealer, broker, salesperson or other person has been authorized by the Agency or the Underwriter to give any information or to make any representations, other than those contained in this Official Statement, and, if given or made, such other information or representations must not be relied upon as having been authorized by the Agency or the Underwriter. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the Bonds by a person in any jurisdiction in which it is unlawful for such person to make such an offer, solicitation or sale. This Official Statement is not to be construed as a contract with the purchasers of the Bonds. Statements contained in this Official Statement which involve estimates, forecasts or matters of opinion, whether or not expressly so described herein, are intended solely as such and are not to be construed as a representation of facts. The information set forth herein has been obtained from the Agency and other sources believed to be reliable, but the accuracy or completeness of such information is not guaranteed by, and should not be construed as a representation by, the Underwriter. This Official Statement has been deemed final, as of its date, by the Agency for the purpose of Rule 15c2-12 under the Securities Exchange Act of 1934, as amended. The information and expressions of opinions herein are subject to change without notice and neither delivery of the Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the Authority or the Agency since the date hereof. All summaries contained herein of the Indenture or other documents are made subject to the provisions of such documents and do not purport to be complete statements of any or all of such provisions. All statements made herein are made as of the date of this document by the Agency except statistical information or other statements where some other date is indicated in the text. The Underwriter has provided the following sentence for inclusion in this Official Statement. The Underwriter has reviewed the information in this Official Statement in accordance with its responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness of such information. The Bonds are exempt from registration with the Securities and Exchange Commission pursuant to the Securities Act of 1933, as amended. The Bonds have not been registered or qualified under the securities laws of any state. The Bonds will not be listed on any stock or securities exchange. Neither the Securities and Exchange Commission nor any other federal, state or other governmental entity or agency will have passed upon the accuracy or adequacy of the Official Statement or approved the Bonds for sale. IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVERALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL ON THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. THE UNDERWRITER MAY OFFER AND SELL THE BONDS TO CERTAIN DEALERS AND DEALER BANKS AND BANKS ACTING AS AGENT AND OTHERS AT PRICES LOWER THAN THE PUBLIC OFFERING PRICES STATED ON THE INSIDE FRONT COVER PAGE HEREOF AND SUCH PUBLIC OFFERING PRICES MAY BE CHANGED FROM TIME TO TIME BY THE UNDERWRITER. Certain statements included or incorporated by reference in this Official Statement constitute "forward-looking statements." Such statements are generally identifiable by the terminology used such as "plan," "expect," "estimate," "budget," or other similar words. The achievement of certain results or other expectations contained in such forward-looking statements involves known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements described to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. While the Agency has agreed to provide certain on-going financial and other data for a limited period of time (see "CONCLUDING INFORMATION Continuing Disclosure"), the Agency does not plan to issue any updates or revisions to those forward-looking statements if or when the expectations or events, conditions or circumstances on which such statements are based change.

7 OFFICIAL STATEMENT $17,270,000 DINUBA REDEVELOPMENT AGENCY MERGED CITY OF DINUBA REDEVELOPMENT PROJECT AND DINUBA REDEVELOPMENT PROJECT NO. 2, AS AMENDED TAX ALLOCATION REFUNDING BONDS ISSUE OF 2006 INTRODUCTORY STATEMENT This Official Statement, including the cover page, is provided to furnish information in connection with the sale by the Dinuba Redevelopment Agency (the "Agency") of $17,270,000 aggregate principal amount of the Agency's Merged City of Dinuba Redevelopment Project and Dinuba Redevelopment Project No. 2, As Amended, Tax Allocation Refunding Bonds, Issue of 2006 (the "2006 Bonds"). Authority and Purpose The Bonds are being issued pursuant to the Constitution and laws of the State of California (the "State"), including the Community Redevelopment Law (Part 1, Division 24, commencing with Section of the Health and Safety Code of the State) (the "Law") and an Indenture of Trust dated as of October 1, 2006 (the "Indenture") by and between the Agency and U.S. Bank National Association, as trustee (the "Trustee") approved by Resolution No adopted by the Agency on September 26, 2006 (the "Resolution") and in conformity with the Indenture of Trust dated as of December 1, 2001 (the "2001 Indenture") by and between the Agency and the Trustee for the 2001 Bonds, the Indenture of Trust dated as of October 1, 2003 (the "2003 Indenture") by and between the Agency and the Trustee for the 2003 Bonds and the Indenture of Trust dated as of November 1, 2005 (the "2005 Indenture") by and between the Agency and the Trustee for the 2005 Bonds. The 2001 Indenture, the 2003 Indenture and the 2005 Indenture are referred to herein as the "Existing Indentures." The Bonds are being issued to refinance the Agency's previously issued $3,600,000 Merged City of Dinuba Redevelopment Project and Dinuba Redevelopment Project No. 2, As Amended, Tax Allocation Refunding Bonds, Issue of 1997A of which $3,320,000 are currently outstanding (the "1997A Bonds") and to finance a portion of the costs of the Redevelopment Project. The 1997A Bonds are referred to herein as the "Refunded Bonds." The Bonds are being issued for sale to the Dinuba Financing Authority (the "Authority"). The Authority will resell the Bonds to the Underwriter. The City and the Agency The City of Dinuba (the "City") is located in Tulare County (the "County") and is situated approximately 12 miles north of Visalia and 12 miles east of State Highway 99. The City was initially formed as a general law city incorporated in 1906 and on July 7, 1994, became a charter city with a Council-Manager form of government. The population of the City is estimated to be 19,600 as of January 1, The Agency was established by the City Council of the City with the adoption of Ordinance No. 654 on April 26, 1983, pursuant to the Law. The five members of the City 1

8 Council serve as the governing body of the Agency and exercise all the rights, powers, duties and privileges of the Agency. The Redevelopment Plan The redevelopment plan for the City of Dinuba Redevelopment Project was approved by Ordinance No. 668 adopted by the City Council on July 6, The redevelopment plan for Dinuba Redevelopment Project No. 2 was approved by Ordinance No. 724 adopted by the City Council on June 27, 1989 and was amended by Ordinance No adopted by the City Council on July 10, The Merged City of Dinuba Redevelopment Project and Dinuba Redevelopment Project No. 2, As Amended (the "Redevelopment Project") was created by merging the above projects areas pursuant to Ordinance No adopted by the City Council on December 10, 1991 and was amended by Ordinance No adopted by the City Council on November 23, 1993, by Ordinance No adopted by the City Council on July 18, 1995, by Ordinance No adopted by the City Council on July 10, 2001 and by Ordinance No adopted by the City Council on July 12, 2005 (the "Redevelopment Plan"). The Redevelopment Project Area (the "Project Area") contains approximately 2,750 acres, most of which are located in the original urban core of the City, and includes residential, commercial, industrial and public uses. Tax Allocation Financing The Law authorizes the financing of redevelopment projects through the use of tax increment revenues. This method provides that the taxable valuation of the property within a project area on the property tax roll last equalized prior to the effective date of the ordinance which adopts the redevelopment plan becomes the "base year" valuation. Assuming the taxable valuation never drops below the base year level, the taxing agencies thereafter receive that portion of the taxes produced by applying then current tax rates to the base year valuation, and the redevelopment agency is allocated the remaining portion produced by applying then current tax rates to the increase in valuation over the base year. All or part of such incremental tax revenues allocated to a redevelopment agency may be pledged to the payment of agency obligations. Generally, tax increment revenues from one project area may not be used to repay indebtedness incurred for another project area. Redevelopment agencies have no power to levy property taxes and must look specifically to the allocation of taxes as described above. See "RISK FACTORS." Outstanding Parity Bonds The Bonds are being issued on a parity basis with the Agency's previously issued $13,000,000 Merged City of Dinuba Redevelopment Project and Dinuba Redevelopment Project No. 2, As Amended, Tax Allocation Refunding Bonds, Issue of 2001 of which $11,655,000 are currently outstanding (the "2001 Bonds"), the Agency's previously issued $7,500,000 Merged City of Dinuba Redevelopment Project and Dinuba Redevelopment Project No. 2, As Amended, Tax Allocation Bonds, Issue of 2003 of which $7,180,000 are currently outstanding (the "2003 Bonds") and the Agency's previously issued $5,670,000 Merged City of Dinuba Redevelopment Project and Dinuba Redevelopment Project No. 2, As Amended, Tax Allocation Refunding Bonds, Issue of 2005 of which $5,490,000 are currently outstanding (the "2005 Bonds"). The 2001 Bonds, the 2003 Bonds and the 2005 Bonds are collectively referred to herein as the Existing Bonds. 2

9 Security for the Bonds The Bonds and the Existing Bonds are payable from and secured by the Pledged Tax Revenues as defined herein to be derived from the Project Area. Taxes levied on the property within the Project Area on that portion of the taxable valuation over and above the taxable valuation of the base year property tax roll ( for the City of Dinuba Redevelopment Project, for Dinuba Redevelopment Project No. 2, 1989 for Amendment No. 1 to Dinuba Redevelopment Project No. 2, for Amendment No. 1 to the Redevelopment Plan for the Merged City of Dinuba Redevelopment Project and Dinuba Redevelopment Project No. 2, for Amendment No. 2 to the Redevelopment Plan for the Merged City of Dinuba Redevelopment Project and Dinuba Redevelopment Project No. 2 and for Amendment No. 3 to the Redevelopment Plan for the Merged City of Dinuba Redevelopment Project and Dinuba Redevelopment Project No. 2) to the extent they constitute Pledged Tax Revenues, as described herein, shall be deposited in the Special Fund and administered by the Trustee in accordance with the Indenture and are payable from and are secured by a pledge of the Pledged Tax Revenues (described herein under the section entitled "SECURITY FOR THE BONDS"). Reserve Account In order to further secure the payment of the principal of and interest on the Bonds, a Reserve Account within the Debt Service Fund is created pursuant to the Indenture in an amount equal to the Reserve Requirement. "Reserve Requirement" means, as of the date of computation, an amount equal to the lesser of (i) Maximum Annual Debt Service on the Bonds, and any Parity Bonds, (ii) 10% of the net proceeds of the Bonds and any Parity Bonds, or (iii) 125% of the Annual Debt Service on all Bonds and Parity Bonds Outstanding. See "SECURITY FOR THE BONDS Reserve Account" herein. Bond Insurance Payment of the principal of and interest on the Bonds when due will be insured by a financial guaranty insurance policy (the "Financial Guaranty Insurance Policy") to be issued by Ambac Assurance Corporation ("Ambac Assurance" or the "Bond Insurer") simultaneously with the delivery of the Bonds. Further Information Brief descriptions of the Bonds, the Indenture, the Agency and the City are included in this Official Statement. Such descriptions and information do not purport to be comprehensive or definitive. All references herein to the Indenture, the Law, the Constitution and the laws of the State as well as the proceedings of the Agency and the City are qualified in their entirety by reference to such documents. References herein to the Bonds are qualified in their entirety by the form thereof included in the Indenture and the information with respect thereto included herein, copies of which are all available for inspection at the offices of the Agency. During the period of the offering of the Bonds, copies of the forms of all documents are available at the offices of Wedbush Morgan Securities, 201 Lomas Santa Fe Drive, Suite 500, Solana Beach, California and thereafter from the City Clerk's office, City of Dinuba, 405 East El Monte Way, Dinuba, California

10 SOURCES AND USES OF FUNDS The estimated sources and uses of funds is summarized as follows: Sources Principal Amount of Bonds... $17,270, Net Reoffering Premium , Refunded Bonds Funds and Accounts , Total Sources... $17,669, Uses Underwriter's Discount , Reserve Account (1)... 1,066, Costs of Issuance Fund (2) , Redevelopment Fund (3)... 12,390, Refunded Bonds Escrow Fund (4)... 3,429, Total Uses... $17,669, (1) An amount, which when added to the Reserve Account for the Existing Bonds, will be equal to the Reserve Requirement for the Bonds and the Existing Bonds. (2) Includes the Bond insurance premium. (3) Moneys deposited in the Redevelopment Fund will be used by the Agency to finance redevelopment projects benefiting the Project Area. Not less than thirty percent (30%) of the net proceeds of the Bonds will be used for projects benefiting low and moderate income housing. (4) An amount of moneys sufficient to provide for the purchase of Federal Securities and/or cash necessary for the payment of the principal, redemption premium and interest on the Refunded Bonds through and including September 1, Authority for Issuance THE BONDS The Dinuba Redevelopment Agency, Merged City of Dinuba Redevelopment Project and Dinuba Redevelopment Project No. 2, As Amended, Tax Allocation Refunding Bonds, Issue of 2006, in an aggregate principal amount of $17,270,000 (the "Bonds") were authorized for issuance in conformity with the Existing Indentures and pursuant to the Indenture. Pursuant to the Indenture and the Existing Indentures, if at any time the Agency determines it needs to do so, the Agency may provide for the issuance of, and sell, Parity Bonds in such principal amounts as it estimates will be needed. Prior to the delivery of the Bonds, the Agency will certify its compliance with the requirements of the Existing Indentures. Description of the Bonds The Bonds will be executed and delivered as one fully-registered Bond in the denomination of $5,000 or any integral multiple thereof for each maturity, in the name of Cede & Co., as nominee for The Depository Trust Company, New York, New York ("DTC"), as registered owner of all Bonds. See "Book-Entry System" below. The initially executed and delivered Bonds will be dated the Delivery Date and mature on September 1 in the years and in the amounts shown on the cover page of this Official Statement. Interest on the Bonds will be calculated at the rates shown on the cover page of this Official Statement, payable semiannually 4

11 on March 1 and September 1 in each year, commencing on March 1, 2007, by check mailed to the registered owners thereof or upon the request of the Owners of $1,000,000 or more in principal amount of Bonds, by wire transfer to an account in the United States which shall be designated in written instructions by such Owner to the Trustee on or before the Record Date preceding the Interest Payment Date. Book-Entry System The Depository Trust Company ("DTC"), New York, NY, will act as securities depository for the Bonds (the "Bonds"). The Bonds will be issued as fully-registered securities registered in the name of Cede & Co. (DTC's partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered bond will be issued for each maturity of the Bonds, each in the aggregate principal amount of such maturity, and will be deposited with DTC. DTC, the world's largest depository, is a limited-purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of DTC holds and provides asset servicing for over 2 million issues of U.S. and non-u.s. equity issues, corporate and municipal debt issues, and money market instruments from over 85 countries that DTC's participants ("Direct Participants") deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants' accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-u.s. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation ("DTCC"). DTCC, in turn, is owned by a number of Direct Participants of DTC and Members of the National Securities Clearing Corporation, Government Securities Clearing Corporation, MBS Clearing Corporation, and Emerging Markets Clearing Corporation, (NSCC, GSCC, MBSCC, and EMCC, also subsidiaries of DTCC), as well as by the New York Stock Exchange, Inc., the American Stock Exchange LLC, and the National Association of Securities Dealers, Inc. Access to the DTC system is also available to others such as both U.S. and non-u.s. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ("Indirect Participants"). DTC has Standard & Poor's highest rating: AAA. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. Purchases of Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Bonds on DTC's records. The ownership interest of each actual purchaser of each Bond ("Beneficial Owner") is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive bonds representing their ownership interests in Bonds, except in the event that use of the book-entry system for the Bonds is discontinued. To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co., or such other name as 5

12 may be requested by an authorized representative of DTC. The deposit of Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC's records reflect only the identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Bonds, such as redemptions, tenders, defaults, and proposed amendments to the Bond documents. For example, Beneficial Owners of Bonds may wish to ascertain that the nominee holding the Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them. Redemption notices shall be sent to DTC. If less than all of the Bonds within a maturity are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such maturity to be redeemed. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Bonds unless authorized by a Direct Participant in accordance with DTC's Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the Agency as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). Redemption proceeds, distributions, and dividend payments on the Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC's practice is to credit Direct Participants' accounts upon DTC's receipt of funds and corresponding detail information from the Agency or the Trustee, on payment date in accordance with their respective holdings shown on DTC's records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Participant and not of DTC nor its nominee, the Trustee, or the Agency, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Trustee, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. A Beneficial Owner shall give notice to elect to have its Bonds purchased or tendered, through its Participant, to the Trustee, and shall effect delivery of such Bonds by causing the Direct Participant to transfer the Participant's interest in the Bonds, on DTC's records, to the Trustee. The requirement for physical delivery of Bonds in connection with an optional tender or a mandatory purchase will be deemed satisfied when the ownership rights in the Bonds are transferred by Direct Participants on DTC's records and followed by a book-entry credit of tendered Bonds to the Trustee's DTC account. 6

13 DTC may discontinue providing its services as depository with respect to the Bonds at any time by giving reasonable notice to the Agency or the Trustee. Under such circumstances, in the event that a successor depository is not obtained, physical Bonds are required to be printed and delivered. The Agency may decide to discontinue use of the system of book-entry transfers through DTC (or a successor securities depository). In that event, physical Bonds will be printed and delivered. The Agency cannot and does not give any assurances that DTC, DTC Participants or others will distribute payments of principal, interest or premium with respect to the Bonds paid to DTC or its nominee as the registered owner, or any redemption or other notices, to the Beneficial Owners, or that they will do so on a timely basis or will serve and act in the manner described in this Official Statement. The Agency is not responsible or liable for the failure of DTC or any DTC Participant to make any payment or give any notice to Beneficial Owners with respect to the Bonds or an error or delay relating thereto. The foregoing description of the procedures and record-keeping with respect to beneficial ownership interests in the Bonds, payment of principal, interest and other payments on the Bonds to DTC Participants or Beneficial Owners, confirmation and transfer of beneficial ownership interests in such Bonds and other related transactions by and between DTC, the DTC Participants and the Beneficial Owners is based solely on information provided by DTC. Accordingly, no representations can be made concerning these matters and neither the DTC Participants nor the Beneficial Owners should rely on the foregoing information with respect to such matters, but should instead confirm the same with DTC or the DTC Participants, as the case may be. Discontinuance of Book-Entry. DTC may discontinue providing its services with respect to the Bonds at any time by giving notice to the Trustee and discharging its responsibilities with respect thereto under applicable law or the Agency may terminate participation in the system of book-entry transfers through DTC or any other securities depository at any time. In the event that the book-entry system is discontinued, the Agency will execute, and the Trustee will authenticate and make available for delivery, replacement Bonds in the form of registered Bonds. In addition, the following provisions would apply: the principal of and redemption premium, if any, on the Bonds will be payable at the principal corporate trust office of the Trustee, and interest on the Bonds will be payable by check mailed on each Interest Payment Date to the Owners thereof as shown on the registration books of the Trustee as of the close of business on the fifteenth day of the calendar month immediately preceding the applicable Interest Payment Date, or by wire transfer to an account in the United States to Owners of $1,000,000 or more in aggregate principal amount of Bonds, upon request, as provided in the Indenture. The Bonds will be transferable and exchangeable on the terms and conditions provided in the Indenture. Transfer Fees. For every transfer and exchange of Bonds, Owners may be charged a sum sufficient to cover any tax, governmental charge or transfer fees that may be imposed in relation thereto, which charge may include transfer fees imposed by the Trustee, DTC or the DTC Participant in connection with such transfers or exchanges. Redemption and Purchase of Bonds Optional Redemption. The Bonds maturing on or before September 1, 2015 are not subject to redemption prior to maturity. The Bonds maturing on or after September 1, 2016 are subject to redemption prior to maturity in whole, or in part in the manner determined by the Agency, provided that all amounts due to the Bond Insurer under the Financial Guaranty Insurance Policy have been paid in full, on any date on or after September 1, 2016, from any 7

14 available source of funds, at a redemption price (expressed as a percentage of the principal amount of the Bonds to be redeemed) as follows, together with accrued interest thereon to the redemption date: Redemption Date Redemption Price September 1, 2016 and thereafter 100% Sinking Account Redemption. The Term Bonds maturing on September 1, 2026, September 1, 2031 and September 1, 2036 are subject to redemption in part by lot on September 1, 2021, September 1, 2027 and September 1, 2032, respectively, and on September 1 in each year shown below until maturity, from sinking account payments made by the Agency, at a redemption price equal to the principal amount thereof to be redeemed with accrued interest thereon to the redemption date, without premium, in the aggregate respective principal amounts and on the respective dates as set forth in the following table; provided, however, that if some but not all of the Bonds have been redeemed the total amount of all future sinking account payments will be reduced by an amount corresponding to the aggregate principal amount of Bonds so redeemed, to be allocated among such sinking account payments on a pro rata basis in integral multiples of $5,000 as determined by the Agency (notice of which determination will be given by the Agency to the Trustee) Term Bonds 2031 Term Bonds 2036 Term Bonds Year Year Year (September 1) Amount (September 1) Amount (September 1) Amount 2021 $660, $850, $ 240, , , , , , , , , ,120, , (maturity) 225, (maturity) 2,200, (maturity) 815,000 Purchase in Lieu of Redemption. In lieu of optional or sinking account redemption of Bonds, amounts on deposit in the Special Fund (to the extent not required to be transferred to the Trustee during the current Bond Year) may also be used and withdrawn by the Agency at any time for the purchase of the Bonds at public or private sale as and when and at such prices (including brokerage and other charges and including accrued interest) as the Agency may in its discretion determine. The par amount of any of the Bonds so purchased by the Agency and surrendered to the Trustee for cancellation in any twelve-month period ending on July 1 in any year will be credited towards and will reduce the principal amount of the Bonds otherwise required to be redeemed on the following September 1 pursuant to the Indenture. Notice of Redemption. The Trustee on behalf of and at the expense of the Agency will mail (by first class mail, postage prepaid) notice of any redemption at least thirty (30) but not more than sixty (60) days prior to the redemption date, to (i) the Owners of any Bonds designated for redemption at their respective addresses appearing on the Registration Books, and (ii) to the Securities Depositories and to the Information Services designated in a Written Request of the Agency filed with the Trustee at the time the Agency notifies the Trustee of its intention to redeem Bonds; but such mailing will not be a condition precedent to such redemption and neither failure to receive any such notice nor any defect therein will affect the validity of the proceedings for the redemption of such Bonds or the cessation of the accrual of interest thereon. Such notice will state the redemption date and the redemption price, will designate the CUSIP number of the Bonds to be redeemed, state the individual number of each Bond to be redeemed or state that all Bonds between two stated numbers (both inclusive) or all of the Bonds Outstanding (or all Bonds of a maturity) are to be redeemed, and will require that 8

15 such Bonds be then surrendered at the Trust Office of the Trustee for redemption at the said redemption price, giving notice also that further interest on such Bonds will not accrue from and after the redemption date. SECURITY FOR THE BONDS As provided in the Redevelopment Plan, pursuant to Article 6 of the Law and Section 16 of Article XVI of the Constitution of the State, taxes levied upon taxable property in the Project Area each year by or for the benefit of the State, any city, county, city and county, district, or other public corporation (herein sometimes collectively called "taxing agencies") after the effective date of the ordinances approving the Redevelopment Plan (being Ordinance No. 668 of the City of Dinuba, which became effective on August 5, 1984, Ordinance No. 724 of the City of Dinuba, which became effective on July 27, 1989, Ordinance No of the City of Dinuba, which became effective on August 9, 1990, Ordinance No of the City of Dinuba, which became effective on January 10, 1992, Ordinance No of the City of Dinuba, which became effective on December 23, 1993, Ordinance No of the City of Dinuba, which became effective on August 17, 1995, Ordinance No of the City of Dinuba, which became effective on August 9, 2001 and Ordinance No of the City of Dinuba, which became effective on August 11, 2005) will be divided as follows: (a) To Taxing Agencies: That portion of the taxes which would be produced by the rate upon which the tax is levied each year by or for each of the taxing agencies upon the total sum of the assessed value of the taxable property in the Project Area as shown upon the assessment roll used in connection with the taxation of such property by such taxing agency last equalized prior to the effective date of the ordinances adopting the Redevelopment Plan will be allocated to, and when collected will be paid into, the funds of the respective taxing agencies as taxes by or for the taxing agencies on all other property are paid; and (b) To the Agency: Except for that portion of the taxes in excess of the amount identified in (a) above which are attributable to a tax rate levied by a taxing agency for the purpose of producing revenues in an amount sufficient to make annual repayments of the principal of, and the interest on, any bonded indebtedness approved by the voters of the taxing agency on or after January 1, 1989 for the acquisition or improvement of real property, which portion shall be allocated to, and when collected shall be paid into, the fund of that taxing agency, that portion of the levied taxes each year in excess of such amount, annually allocated within the Plan Limit following the Delivery Date, when collected will be paid into the Special Fund of the Agency. That portion of the levied taxes and, to the extent permitted by law, all payments, subventions and reimbursements, if any, to the Agency specifically attributable to ad valorem taxes lost by reason of tax exemptions and tax rate limitations payable to the Agency including that portion of such taxes otherwise required by Sections and of the Law to be deposited in the Low and Moderate Income Housing Fund, but only to the extent necessary to repay that portion of the Bonds, the Existing Bonds and any Parity Bonds (including applicable reserves and financing costs) which were issued or which will be issued to finance amounts deposited in the Low and Moderate Income Housing Fund for use pursuant to Section of the Law; but excluding all other amounts of such taxes (if any) required to be deposited into the Low and Moderate Income Housing Fund of the Agency pursuant to Section of the Law and amounts required to be paid to taxing agencies pursuant to the Pass-Through Agreements are herein referred to as "Pledged Tax Revenues." The Bonds, together with the Existing Bonds and any additional Parity Bonds, are payable from and are specifically secured by an irrevocable pledge of the Pledged Tax Revenues 9

16 derived from the Project Area, and funds held on deposit in trust for the Bondowners by the Trustee. The Agency has no power to levy and collect taxes, and various factors beyond its control could affect the amount of Pledged Tax Revenues available in any year to pay the principal of and interest on the Bonds and the Existing Bonds (see "RISK FACTORS"). The Bonds are not a debt of the City, the State or any of its political subdivisions (except the Agency), and none of the City, the State or any of its political subdivisions (except the Agency) is liable therefor. The Bonds do not constitute an indebtedness within the meaning of any constitutional or statutory debt limitation or restriction. Tax Increment Financing The Law authorizes the financing of redevelopment projects through the use of tax increment revenues. This method provides that the taxable valuation of the property within a redevelopment project area on the property tax roll last equalized prior to the effective date of the ordinance which adopts the redevelopment plan becomes the base year valuation. Assuming the taxable valuation never drops below the base year level, the taxing agencies thereafter receive that portion of the taxes produced by applying then current tax rates to the base year valuation, and the redevelopment agency is allocated the remaining portion produced by applying then current tax rates to the increase in valuation over the base year. Such incremental tax revenues allocated to a redevelopment agency may be pledged to the payment of agency obligations. Pledged Tax Revenues consist of a portion of such incremental tax revenues. Generally, tax increment revenues from one project area may not be used to repay indebtedness incurred for another project area. Redevelopment agencies have no power to levy property taxes and must look specifically to the allocation of taxes as described above. See "RISK FACTORS." The Law authorizes redevelopment agencies to make payments to school districts and other taxing agencies to alleviate any financial burden or detriments to such taxing agencies caused by a redevelopment project. The Agency has entered into a number of agreements for this purpose. See "THE PROJECT AREA Agreements with Various Taxing Agencies." Housing Set-Aside In accordance with Section of the Law, not less than twenty percent (20%) of all taxes which are allocated to the Agency will be used by the Agency for purposes of improving, increasing and preserving the City's supply of housing for persons and families of low or moderate income (including the payment of indebtedness, such as the Bonds, issued or incurred for such purposes). This requirement is applicable unless the Agency makes the finding that: 1. No need for such housing exists in the City; 2. Less than twenty percent (20%) is sufficient to meet such housing needs of the City; or 3. A substantial effort is presently being carried out with other funds (either local, State or federal) and that such efforts are equivalent in impact to twenty percent (20%) of all taxes which are allocated to the Agency. Both the "no need" finding (item 1 above) and the "less than 20% finding" (item 2 above) must apply to very low income as well as low and moderate income households, must be consistent with the housing element of the community's general plan and the annual report of its planning agency, and do not become effective until after certain filings have been made with the State Department of Housing and Community Development ("HCD"). Neither finding can be made unless the housing element is in proper form and up to date and has been filed with HCD. 10