6414 / 65.30% Yes votes ...... 3408 / 34.70% No votes

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The City of National City proposes to issue up to $12,330,000 in general obligation bonds to pay for the costs of acquisition and construction of new public safety facilities, as well as the modernization of existing public safety facilities. The proceeds of the bonds are planned to be used to build a combined fire and police public safety facility in the eastern part of the City, build a third fire station, remodel an existing fire station, and establish store front police facilities.

General obligation bonds are typically the most cost effective bonds a city can issue. The City Council has determined that the highest rate of interest shall not exceed 8% per year. In the present market, the interest rate for 30-year bonds is averaging approximately 5%. The actual interest rate on the bonds will depend upon the bond market at the time of sale.

The City expects to issue the bonds in three series beginning in mid-2005. When the first series of bonds is issued, according to the estimates set forth in the tax rate statement provided by the City Treasurer, the average cost for a property owner would be $13.30 annually for every $100,000 of assessed value for the 30-year life of the bond. After the second series of bonds are issued, the annual impact would be an additional $11.50 for every $100,000 of assessed value. After the third and final series of bonds are issued, the annual impact would be an additional $9.50 for every $100,000 of assessed value. The foregoing information is based on estimates. The actual future assessed values will depend upon the then amounts of taxable property within the City and the value thereof as determined by the County Assessor. Therefore, the actual tax rates and the years in which the same are applicable may vary from those currently estimated.

The City expects to issue the bonds in three issuances beginning in mid-2005. When the first series of bonds are issued, the estimated marginal tax rate that would be required in the first fiscal year after the sale of the bonds is estimated at $0.0133 per $100 of assessed valuation and is expected to occur in 2005/06. On $100,000 assessed valuation, the impact would be $13.30 annually.

After the second series of bonds are issued, the highest tax rate that would be required to fund the bond issue is $0.0115, and is expected to occur in 2007/08. On $100,000 assessed valuation, the impact would be $11.50 annually.

After the third series and all the bonds are issued, the total estimated interest paid over the life of the loan would be $12,174,728.00. The marginal tax rate to support debt service for the first year following the last sale of the bonds is estimated to be $0.0095 per $100 of assessed valuation. The impact on $100,000 of assessed valuation would be $9.50 annually.

The foregoing information is based on projections and estimates only, which are not binding on the City. The actual timing of the sale of said bonds and the amount sold at any given time will be governed by the needs of the City, the then applicable state of the bond market, and other factors. The actual interest rate on the bonds will depend upon the bond market at the time of sale. The actual future assessed values will depend upon the then amounts of taxable property within the City and the value thereof as determined by the County Assessor. Hence, the actual tax rates and the years in which the same are applicable may vary from those currently estimated.

The foregoing statement has been approved by and is submitted by order of the City Council of the City of National City.