21 ATTACHMENT 3 - Laserfiche WebLink

4 OF TAXATION OR FOR WHICH ANY SUCH ENTITY HAS LEVIED OR PLEDGED ANY FORM OF TAXATION. LAVWMA HAS NO TAXING POWER. Security for the Payments Security for the Obligation to Make the Payments. Pursuant to the Sewer Service Contract, the Members pledge and create, in favor of LAVWMA and the Trustee for the 2021 Bonds, a lien on the Net Revenues of their respective Sewer Systems, to pay to LAVWMA the Payments owed under the Sewer Service Contract in order for LAVWMA to pay debt service on the 2021 Bonds. See “SECURITY FOR THE 2021 BONDS – Sewer Service Contract” for the definition of Net Revenues. There are three important limitations with respect to this pledge of Net Revenues: First, this lien on Net Revenues is subordinate to the Members’ existing “Obligations” that are secured by a pledge of Net Revenues (as defined in “SECURITY FOR THE 2021 BONDS – Sewer Service Contract” below) as well as Obligations secured by a pledge of Net Revenues to be issued in the future by the Members to finance or refinance improvements to their respective Sewer Systems. For avoidance of doubt, the Net Revenues of the District do not include District Local Charges and the Net Revenues of Pleasanton do not include Pleasanton Local Charges or Pleasanton Local Maintenance and Operation Costs. Second, for DSRSD and Pleasanton, “Net Revenues” are not defined in the Sewer Service Contract to include all of the fees, rates and charges collected by DSRSD and Pleasanton in connection with their respective Sewer Systems; DSRSD and Pleasanton have only pledged regional service charges as security for their obligation to make the Payments. . See Table 2 for historical Net Revenues and historical debt service coverage. Third, Pleasanton, in its capacity as the largest customer of DSRSD’s Sewer System, is only obligated to levy regional charges and fees established by DSRSD (Regional Service Charges, Regional Capacity Reserve Fees and Regional Capacity Reserve Buy-In Fees) and to transfer the amount collected to DSRSD. Rates Covenant by the Members. Pursuant to the Sewer Service Contract, the Members have covenanted to undertake certain actions with respect to rates and charges and their respective Sewer System. See “SECURITY FOR THE 2021 BONDS – Rate Covenants” below. No Joint Obligation. The obligation of the Members to pay the Payments is a several, but not joint obligation, and there is no cross-collateralization of the Payment obligation among the Members. See “SECURITY FOR THE 2021 BONDS.” Limited Abatement. The obligation of the Members to make Payments for Fixed LAVWMA Maintenance and Operation Costs is subject to abatement in the discretion of the Members during any period in which there is a material interruption in the Sewer Service to the Members. The Members’ Payments for their Fixed Cost Allocation for Debt Service are not subject to abatement.