RES 2024025 - Laserfiche WebLink

14 Rate Covenants under Indenture Sum Sufficient. Under the Installment Sale Agreement, the City will fix, prescribe, revise and collect rates and charges for the Water System during each Fiscal Year that are at least sufficient, after making allowances for contingencies and error in the estimates, to produce Gross Revenues which will be sufficient to pay the following amounts: (a) all Maintenance and Operation Costs of the Water System estimated by the City to become due and payable in such Fiscal Year; (b) the Installment Payments and Debt Service on any Parity Debt; (c) all other payments required for compliance with the Installment Sale Agreement, the Indenture and the Parity Debt Instruments; and (d) all payments required to meet any other obligations of the City that are charges, liens, encumbrances upon or payable from the Gross Revenues of the Water System or the Net Revenues of the Water System. Debt Service Coverage. In addition, under the Installment Sale Agreement, the City will fix, prescribe, revise and collect rates and charges for the Water System during each Fiscal Year which are sufficient to yield Net Revenues at least equal to 120% of the Installment Payments and Debt Service on Parity Debt in such Fiscal Year. For purposes of this paragraph, the amount of Net Revenues for a Fiscal Year will be computed on the basis that any transfers into the Water Fund in such Fiscal Year from the Rate Stabilization Fund are included in the calculation of Net Revenues (except to the extent of amounts transferred into the Rate Stabilization Fund from Gross Revenues received by the City in such Fiscal Year). Parity Debt The City has one existing outstanding long-term debt related to its Water System: a State Revolving Fund loan from the California State Water Resources Control Board for Water System improvements, originally in the amount of $19,875,720, with an outstanding principal balance as of June 30, 2023 of $9,238,640. See “THE WATER SYSTEM – Outstanding Indebtedness.” Water Revenue Bonds issued in 2017 in the original principal amount of $7,100,000, with an outstanding principal balance as of June 30, 2023 of $1,900,000, were recently paid off with an internal fund borrowing. In addition to the Installment Payments, the City may, by a Parity Debt Instrument, issue or incur other loans, advances or indebtedness payable from Net Revenues to be derived from the Water System, to provide financing for the Water System, in such principal amount as may be determined by the City. The City may issue or incur any such Parity Debt subject to the following specific conditions that are made conditions precedent to the issuance and delivery of such Parity Debt: (a) The City will be in compliance with all covenants set forth in the Installment Sale Agreement and in the Indenture. (b) The Net Revenues of the Water System, calculated on generally accepted accounting principles, as shown by the books of the City for the latest Fiscal Year or any more recent 12-month period selected by the City ending not more than 60