City Manager Mayor David Cavazos Miguel A. Pulido City Attorney*

redevelopment agency that no longer exists. The Grand Jury determined that these Joint Power Authorities serve no benefit to the public or taxpayer and have the potential for misuse or obfuscation of public funds. City Response: City of Santa Ana, Mayor & City Council / Santa Ana Financing Authority: The City of Santa Ana ("Respondent") disagrees partially with the finding due to the fact information regarding any Joint Power Authority ("JPA") is referenced in the City's Comprehensive Annual Financial Report ("CAFR"). The information included within the CAFR includes but is not limited to the following: debt issued by the entity; debt service payments owed; related footnote disclosures. Findings of the Grand Jury

Vertical Joint Power Authorities with a single controlling entity, such as a city council, have the potential to use this organizational structure as a shell company to avoid other legal constraints on the controlling entity and to obfuscate taxpayer visibility. City Response: Santa Ana Financing Authority: The respondent disagrees with this finding. The establishment of the JPA allows for the issuance of debt; however all reporting requirements are required to be completed including but not limited to CAFR, State Controller Reports and continuing bond disclosure requirements as outlined by each debts bond covenants. The preparation and/or filing of these reports on annual basis allows both investors and taxpayers to obtain current information related to JPA and/or related City. Orange County Grand Jury Orange County Joint Power Authorities Findings [continued] Findings of the Grand Jury

Vertical Joint Powers Authorities in which the controlling entity transfers from itself to a Joint Powers Authority for the purpose of obtaining additional funding or signs a long-term lease to a Joint Powers Authority to obtain assets, are avoiding transparency and are not acting in the best financial interest of the taxpayers. Santa Ana Financing Authority: The respondent disagrees with this finding. The establishment of the JPA allows for the issuance of debt; however all reporting requirements are required to be completed including but not limited to CAFR, State Controller Reports and continuing bond disclosure requirements as outlined by each debts bond covenants. The preparation and/or filing of these reports on annual basis allows both investors and taxpayers to obtain current information related to JPA and/or related City. Findings of the Grand Jury 32 of the Joint Powers Authorities identified in Orange County are not complying with the

California State reporting requirements in code Section 6500 and SB 282 according to the latest information available from the year 2013. City Response: Santa Ana Financing Authority: The respondent disagrees with the finding partially. The City is believes it has complied with the requirements set forth in government code section 6500 and SB 282 however it will compare to existing information already prepared by the City to determine its compliance with the regulation(s). The respondent will provide a response to the Orange County Grand Jury at a future date (within six months from this correspondence) outlining its own analysis related to this finding. Recommendations [ ] All Vertical Joint Powers Authorities created by a city along with its redevelopment agency