MOUNTAINS RECREATION AND CONSERVATION AUTHORITY

1 MOUNTAINS RECREATION AND CONSERVATION AUTHORITY SANTA MONICA MOUNTAINS OPEN SPACE PRESERVATION ASSESSMENT DISTRICT (COUNTY OF LOS ANGELES, CALIFORNIA) ANNUAL REPORT FOR LIMITED OBLIGATION IMPROVEMENT BONDS ASSESSMENT DISTRICT LOS ANGELES, SERIES 2004 (AS DIRECTED BY THE OFFICIAL STATEMENT DATED FEBRUARY 26, 2004) FOR FISCAL YEAR ENDED JUNE 30, 2013 PREPARED FOR: MOUNTAINS RECREATION AND CONSERVATION AUTHORITY PREPARED BY: SCIC onsultingGroup 4745 MANGELS BLVD FAIRFIELD, CALIFORNIA 94534 PH: FAX: MOUNTAINS RECREATION AND CONSERVATION AUTHORITY ANNUAL REPORT FOR THE ASSESSMENT DISTRICT NO. 2 LOS ANGELES BONDS, SERIES 2004 PAGE IITABLE OF CONTENTS EXECUTIVE SUMMARY .. 1 INTRODUCTION .. 1 MOUNTAINS RECREATION AND CONSERVATION AUTHORITY BOND INFORMATION .. 3 PRINCIPAL 3 BONDS MATURITY SCHEDULE .. 4 DEBT SERVICE SCHEDULE .. 5 FINANCIAL INFORMATION.

2 6 BALANCE IN IMPROVEMENT FUND OR CONSTRUCTION ACCOUNT .. 9 DEBT SERVICE RESERVE FUND .. 9 BALANCE IN OTHER FUNDS AND ACCOUNTS RELATED TO BONDS .. 9 ADDITIONAL DEBT AUTHORIZED AND PAYABLE FROM OR SECURED BY THE ASSESSMENTS FOR ASSESSMENT DISTRICT NO. 2 .. 9 TAXPAYERS RESPONSIBLE FOR 5% OR MORE OF THE ASSESSMENT .. 9 ASSESSMENT DELINQUENCY INFORMATION .. 9 TOTAL ASSESSED 9 REPORTING OF SIGNIFICANT EVENTS .. 10 SECTION 5 OF CONTINUING DISCLOSURE CERTIFICATE .. 10 SIGNIFICANT EVENTS .. 10 SIGNATURE .. 11 MOUNTAINS RECREATION AND CONSERVATION AUTHORITY ANNUAL REPORT FOR THE ASSESSMENT DISTRICT NO. 2 LOS ANGELES BONDS, SERIES 2004 PAGE IIILIST OF TABLES TABLE 1 - BONDS MATURITY SCHEDULE .. 4 TABLE 2 - DEBT SERVICE SCHEDULE .. 5 TABLE 3 STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE .. 7 TABLE 4 BALANCE SHEET .. 8 MOUNTAINS RECREATION AND CONSERVATION AUTHORITY ANNUAL REPORT FOR THE ASSESSMENT DISTRICT NO.

3 2 LOS ANGELES BONDS, SERIES 2004 PAGE 1 EXECUTIVE SUMMARY INTRODUCTION The MOUNTAINS RECREATION and CONSERVATION AUTHORITY ( MRCA or the AUTHORITY ) is a joint exercise of powers AUTHORITY created by three public agencies in 1985 whose mission is to create and maintain parkland and preserve open space within the Santa Monica MOUNTAINS , the MOUNTAINS surrounding the San Fernando, La Crescenta, Simi and Conejo Valleys, and the Los Angeles River and its tributaries. The MOUNTAINS RECREATION and CONSERVATION AUTHORITY Santa Monica MOUNTAINS Open Space Preservation Assessment District No. 2 Los Angeles (the District ) was created by the AUTHORITY through proceedings held in 2002 under the Municipal Improvement Act of 1913 and encompasses approximately 26,880 acres (or approximately 42 square miles) in the City of Los Angeles (the City ). The District, which is primarily residential and built out, is comprised of 28,008 parcels originally subject to the assessment, of which 27,102 parcels have unpaid Assessments securing the Bonds.

4 The purpose of this Annual Report is to provide updated Bond information to the holders and beneficial owners of the Bonds and other interested parties by dissemination through the Electronic Municipal Market Access ( EMMA ) in order to comply with the provisions contained in the Continuing Disclosure Certificate (the Disclosure Certificate ), and in order to assist the Participating Underwriters in complying with Rule 15-c2-12(b)(5). The net proceeds of the Bonds, along with other available funds, will be used to: Finance the acquisition by the AUTHORITY of certain open space lands, hillsides, viewsheds and watersheds, riparian corridors, wildlife corridors and parklands (collectively, the Improvements. ); Contribute toward the full prepayment of that certain Promissory Note issued by the AUTHORITY in December 2002 in the original principal amount of $8,410,000, the proceeds of which were used to acquire a portion of the Improvements; Make a deposit into a debt service reserve fund for the Bonds; Pay certain costs of issuing the Bonds as described in the Official Statement dated February 26, 2004.

5 The Bonds are issued under the Improvement Bond Act of 1915, Division 10 of the Streets and Highways Code of California (the Act ), resolution of the AUTHORITY adopted on January 29, 2004, and a Fiscal Agent Agreement dated as of March 1, 2004, between the AUTHORITY and Union Bank of California, , a fiscal agent (the Fiscal Agent ). The Bonds are issued upon and secured by certain unpaid assessments (the Assessments ) against 27,102 parcels in the District (the Assessment Parcels ), together with interest thereon, which constitute a trust fund for the redemption and payment of the principal of and interest on the Bonds. The Bonds are also secured by the monies in the Redemption Fund and the Reserve Fund created under the assessment proceedings. MOUNTAINS RECREATION AND CONSERVATION AUTHORITY ANNUAL REPORT FOR THE ASSESSMENT DISTRICT NO. 2 LOS ANGELES BONDS, SERIES 2004 PAGE 2 Simultaneously with the issuance of the Bonds, the AUTHORITY issued bonds with respect to an adjoining assessment district known as MOUNTAINS RECREATION and CONSERVATION AUTHORITY Santa Monica MOUNTAINS Open Space Preservation Assessment District No.

6 1 Los Angeles ( Assessment District No. 1 ), the proceeds of which are to be used to acquire open space lands and other property similar to the Improvements, and to contribute funds toward the full prepayment of the 2002 Note. For further information and a more complete description of the AUTHORITY and the Bonds, reference is made to the Official Statement. MOUNTAINS RECREATION AND CONSERVATION AUTHORITY ANNUAL REPORT FOR THE ASSESSMENT DISTRICT NO. 2 LOS ANGELES BONDS, SERIES 2004 PAGE 3 MOUNTAINS RECREATION AND CONSERVATION AUTHORITY BOND INFORMATION PRINCIPAL OUTSTANDING The MOUNTAINS RECREATION and CONSERVATION AUTHORITY Assessment District No. 2 Los Angeles, Series 2004, outstanding balance as of June 30, 2013 is $10,340,000. MOUNTAINS RECREATION AND CONSERVATION AUTHORITY ANNUAL REPORT FOR THE ASSESSMENT DISTRICT NO. 2 LOS ANGELES BONDS, SERIES 2004 PAGE 4 BONDS MATURITY SCHEDULE MOUNTAINS RECREATION AND CONSERVATION AUTHORITY - ASSESSMENT DISTRICT NO.

7 2 TABLE 1 - BONDS MATURITY SCHEDULE MaturityPrincipal AmountInterest RatePrice 2013$325, $340, $350, $360, $375, $390, $405, $420, $435, $455, $475, $495, $515, $535, $560, $585, $610, $2,710, Bonds MOUNTAINS RECREATION AND CONSERVATION AUTHORITY ANNUAL REPORT FOR THE ASSESSMENT DISTRICT NO. 2 LOS ANGELES BONDS, SERIES 2004 PAGE 5 DEBT SERVICE SCHEDULE MOUNTAINS RECREATION AND CONSERVATION AUTHORITY - ASSESSMENT DISTRICT NO. 2 TABLE 2 - DEBT SERVICE SCHEDULE Year EndingPrincipalInterestTotal September 2 PaymentPaymentPayments2013$325, $426, $751, $340, $416, $756, $350, $405, $755, $360, $392, $752, $375, $379, $754, $390, $366, $756, $405, $351, $756, $420, $335, $755, $435, $318, $753, $455, $300, $755, $475, $281, $756, $495, $261, $756, $515, $240, $755, $535, $218, $753, $560, $195, $755, $585, $171, $756, $610, $145, $755, $635, $119, $754, $665, $91, $756, $690, $62, $752, $720, $31, $751, MOUNTAINS RECREATION AND CONSERVATION AUTHORITY ANNUAL REPORT FOR THE ASSESSMENT DISTRICT NO.

8 2 LOS ANGELES BONDS, SERIES 2004 PAGE 6 FINANCIAL INFORMATION The audited financial statements for the MOUNTAINS RECREATION and CONSERVATION AUTHORITY for fiscal year ending June 30, 2013, are not available as of January 31, 2014. The Annual Report containing the final audited statements will be filed separately with the Municipal Securities Rulemaking Board ( MSRB ) through EMMA when the final audited statements become available. THE ANNUAL FINANCIAL STATEMENT OF THE MOUNTAINS RECREATION AND CONSERVATION AUTHORITY IS PROVIDED SOLELY TO COMPLY WITH THE SECURITIES EXCHANGE COMMISSION STAFF S INTERPRETATION OF RULE 15C2-12. NO FUNDS OR ASSETS OF THE MOUNTAINS RECREATION AND CONSERVATION AUTHORITY (OTHER THAN THE PROCEEDS OF THE ASSESSMENTS LEVIED FOR THE DISTRICT AND SECURING THE BONDS) ARE REQUIRED TO BE USED TO PAY DEBT SERVICE ON THE BONDS AND THE MOUNTAINS RECREATION AND CONSERVATION AUTHORITY IS NOT OBLIGATED TO ADVANCE AVAILABLE FUNDS TO COVER DELINQUENCIES.

9 INVESTORS SHOULD NOT RELY ON THE FINANCIAL CONDITION OF THE MOUNTAINS RECREATION AND CONSERVATION AUTHORITY IN EVALUATING WHETHER TO BUY, HOLD OR SELL THE BONDS. MOUNTAINS RECREATION AND CONSERVATION AUTHORITY ANNUAL REPORT FOR THE ASSESSMENT DISTRICT NO. 2 LOS ANGELES BONDS, SERIES 2004 PAGE 7 TABLE 3 STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE Revenues:Intergovernmental revenues11,182,843 Fees, permits, and leases5,495,105 Assessment districts reimbursements274,722 Contributions3,014,649 Interest revenue21,282 Other250,202 Total Revenues20,238,803 Expenditures:Salary and employee benefits7,824,652 Services and supplies5,360,694 Grants1,602,954 Capital outlay3,964,267 Debt service: Principal170,061 Debt service: Interest55,125 Total Expenditures18,977,753 Excess of Revenues Over (Under) Expenditures1,261,050 Other Financing Sources:Proceeds from sale of easements1,241,000 Proceeds from sale of assets119,000 Issuance of capital lease80,488 Total Other Financing Sources1,440,488 Net Changes in Fund Balance2,701,538 Fund BalancesBeginning of year, as restated3,639,528 End of year6,341,066 Statement of Revenues, Expenditures and Changes in Fund BalancesMountains RECREATION and CONSERVATION AuthorityFiscal Year 2011-12**The audited financial statements for the MOUNTAINS RECREATION and CONSERVATION AUTHORITY for fiscal year ending June 30, 2013, are not available as of January 31, 2014.

10 The balance sheet for fiscal year 2011-12 is the most current and accurate reflection of the AUTHORITY 's revenues, expenditures, and fund balances until the audited report is available. MOUNTAINS RECREATION AND CONSERVATION AUTHORITY ANNUAL REPORT FOR THE ASSESSMENT DISTRICT NO. 2 LOS ANGELES BONDS, SERIES 2004 PAGE 8 TABLE 4 BALANCE SHEET Assets:Cash and investments4,007,037 Restricted cash 177,325 Accounts receivable6,353,109 Interest receivable3,389 Due from fiduciary funds157,341 Prepaid Items341,847 Total Assets11,040,048 Liabilities and Fund Balances:Liabilities:Accounts Payable1,693,848 Accrued liabilities177,005 Retention payable349,729 Deposits payable295,005 Deferred revenue839,644 Line of credit payable1,343,751 Total Liabilities4,698,982 Fund Balances:Nonspendable341,847 Restricted:Mitigation projects5,044,314 Endowments417,625 Donations206,211 Assigned310,808 Unassigned20,261 Total Fund Balances6,341,066 Total Liabilities and Fund Balances11,040,048 MOUNTAINS RECREATION and CONSERVATION AuthorityBalance SheetFiscal Year 2011-12**The audited financial statements for the MOUNTAINS RECREATION and CONSERVATION AUTHORITY for fiscal year ending June 30, 2013, are not available as of January 31, 2014.