1. This Housing Fund Deficit Reduction Plan (the "Deficit Reduction Plan") has been adopted by the Redevelopment Agency of the City of Sunnyvale (the "Agency") to set forth a plan for retiring and repaying any deficits incurred by the Agency with respect to the Central Core Redevelopment Project (the "Project") and the deposit required to be made into the Agency’s Low and Moderate Income Housing fund (the "Housing Fund") in accordance with the requirements of Health & Safety Code Section 33334.6. All capitalized items used by, but not defined, in this Deficit Reduction Plan shall have the meaning set forth in the Resolution adopting this Deficit Reduction Plan.
   
2. For each Fiscal Year in which the Agency deposits less than 20% of its Tax Increments into the Housing Fund, it shall list in Attachment 1 the amount of such deficit.
   
3. Any deficit incurred by the Agency with respect to the Project in the deposits required to be made into the Housing Fund shall be retired in equal annual installments, without interest, over the period commencing in the Fiscal Year after the final maturity of the Existing Obligations giving rise to such deficit, and ending with the Fiscal Year in which the redevelopment Plan with respect to the Project is then scheduled to expire. If there is insufficient time for the fact amount of such deficit to be eliminated as aforesaid prior to the scheduled expiration date of the Redevelopment Plan, the Agency shall take any and all steps within its power necessary or appropriate to extend such expiration date for a period which in its judgment will permit full elimination of such deficit.
   
4. Installment payments on such deficit shall be made solely from Tax increments, if any, available after:
   
1. all required payments have been made into any funds or accounts, including the special funds and the accounts therein, now existing or hereafter created, with respect to the payment of the principal of, or interest on any Existing Obligations; and
2. the required deposit to the Housing Fund had been made for such Fiscal Year.
   
5. If for any reason Tax Increments in any Fiscal Year are insufficient to make the payments set forth in Section 4 of this Deficit Reduction Plan and to make all or any part of a required installment payment on such deficit pursuant hereto, such installment payment or the portion thereof not made shall be carried forward, without interest, and shall be made from the Tax Increments first available after the payments set forth in Section 4 of this Deficit Reduction Plan and any required installment payments on such deficit for any Fiscal Year have been made.
   
6. The Agency hereby determines and declares that any indebtedness of the Agency with respect to the Project created pursuant to Section 33334.6 of the Redevelopment Law as a result of a deficit in the deposits otherwise required to be made into the Housing Fund shall be junior and subordinate to obligations incurred in connection with any Existing Obligations.
   
7. The Agency hereby reserves the right to prepay at any time all or any portion of a deficit created in the Housing Fund from Tax Increments or other moneys available therefore; provided, that the Agency shall have no obligation to do so. Any such pre-payments shall be applied against installments last coming due.
   
8. This Deficit Reduction Plan set forth herein may hereafter be amended by Resolution of the Agency. Any such Amendment shall be consistent with the provisions of the Redevelopment Law.

Dated: June 18, 2002

ATTACHMENT TO EXHIBIT 1
HOUSING FUND DEFICIT REDUCTION PLAN

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