RES 2024025 - Laserfiche WebLink

2 Security for the 2024 Bonds. The 2024 Bonds are special obligations of the Authority, payable from the “Revenues” pledged under the Indenture, which consist primarily of installment payments (the “Installment Payments”) payable by the City to the Authority under an Installment Sale Agreement, dated as of June 1, 2024 (the “Installment Sale Agreement”) pursuant to which the City is purchasing the Water System improvements being financed. Repayment of the Installment Payments is secured by a pledge of the “Net Revenues” of the Water System. “Net Revenues” are generally defined as the “Gross Revenues” received from the Water System, less the amount of “Maintenance and Operation Costs” of the Water System (as those terms are defined in the Indenture). See “SECURITY FOR THE 2024 BONDS.” Parity Debt. The City has an outstanding State Revolving Fund loan from the California State Water Resources Control Board for Water System improvements, with an outstanding principal balance as of June 30, 2023 of $9,238,640, payable from Net Revenues on parity with the Installment Payments. See “THE WATER SYSTEM – Outstanding Indebtedness.” The City’s outstanding Water Revenue Bonds, Series 2017, with an outstanding principal balance as of June 30, 2023 of $1,900,000, were recently paid off with internal funds borrowed from an internal fund. Additional series of bonds or other debt may be issued in the future that are payable from Net Revenues on a parity with the Installment Payments, subject to the conditions contained in the Installment Sale Agreement. See “SECURITY FOR THE 2024 BONDS – Parity Debt.” Rate Covenants. Under the Installment Sale Agreement, the City is obligated to fix, prescribe, revise, and collect rates and charges for the Water System during each Fiscal Year that are sufficient to yield Net Revenues of at least 120% of Debt Service on the Bonds and Parity Debt (if any) in that Fiscal Year (as such capitalized terms are defined in the Indenture). Under the Installment Sale Agreement, the City must also fix, prescribe, revise, and collect charges for the Water System during each Fiscal Year to pay all Maintenance and Operation Costs of the Water System estimated by the City to become due and payable in such Fiscal Year, the Debt Service on the Bonds, all other payments required for compliance with the Indenture and the Parity Debt Instruments, and all payments required to meet any other obligations of the City which are charges, liens, encumbrances upon or payable from the Gross Revenues or the Net Revenues of the Water System (as such capitalized terms are defined in the Indenture). Debt Service includes amounts due with respect to the 2024 Bonds, plus any Parity Debt that may be issued or incurred in the future. See APPENDIX A. See “SECURITY FOR THE 2024 BONDS – Rate Covenants.” No Reserve Fund. Neither the Authority nor the City will fund a debt service reserve fund for the 2024 Bonds. Risks of Investment. The 2024 Bonds are repayable from the Revenues, which are primarily secured by the Installment Payments payable by the City from the Net Revenues of the Water System. For a discussion of some of the risks associated with the purchase of the 2024 Bonds, see “BOND OWNERS’ RISKS.” THE 2024 BONDS ARE LIMITED OBLIGATIONS OF THE AUTHORITY PAYABLE SOLELY FROM AND SECURED BY THE REVENUES, WHICH CONSIST PRIMARILY OF THE INSTALLMENT PAYMENTS. NEITHER THE FULL FAITH AND CREDIT NOR THE TAXING POWER OF THE CITY IS PLEDGED TO THE PAYMENT OF THE INSTALLMENT PAYMENTS. THE 2024 BONDS ARE NOT SECURED BY A LEGAL OR EQUITABLE PLEDGE OF, OR CHARGE, OR LIEN, OR ENCUMBRANCE UPON, ANY OF THE