HomeMy WebLinkAboutAgenda Packet - Finance & Human Resources Committee - 08/11/2020FINANCE AND HUMAN RESOURCES COMMITTEE
August 11, 2020 - 3:30 PM
In an effort to prevent the spread of COVID-19 and in accordance with Governor
Newsom's Executive Order N-25-20 and N-29-20, this meeting
is being conducted via teleconference.
There will be no public location for attending this meeting in person. Members of the
public may listen and provide public comment telephonically.
Anyone wishing to join the meeting may do so using the following information:
DIAL: 1-209-425-5876 and enter CONFERENCE ID: 212 096 821#
You may also join by clicking HERE to connect and participate
in the Microsoft Team Meeting
31111 Greenspot Road, Highland, CA 92346
AGENDA
CALL TO ORDER
PLEDGE OF ALLEGIANCE
PUBLIC COMMENTS
NEW BUSINESS
1.Approve the January 24, 2020 Finance and Human Resources Committee Meeting
Minutes
2.Review Revision to the District's Debt Management Policy 7.3
3.Review EVWD Resolution 2020.20 Authorizing and Approving the Issuance of
2020 Refunding Revenue Bonds, Series A and B
4.Review EVWD Financing Authority Resolution 2020.01 Authorizing and Approving
Refunding of the 2010 and 2013 Revenue Bonds
AD JOURN
PLEASE NO TE:
Pursuant to Government Code Section 54954.2(a), any request for a disability-related modification or
accommodation, including auxiliary aids or services, that is sought in order to participate in the above-
agendized public meeting should be directed to the District Clerk at (909) 885-4900 at least 72 hours
prior to said meeting.
Page 1 of 2
Minutes 1/24/20 cmk
Subject to Approval
EAST VALLEY WATER DISTRICT January 24, 2020
FINANCE AND HUMAN RESOURCES COMMITTEE MEETING
MINUTES
Ms. Koide called the meeting to order at 3:30 p.m. and Ms. Hendricksen led the flag
salute.
PRESENT: Directors: Coats, Morales
ABSENT: None
STAFF: Justine Hendricksen, District Clerk; Christi Koide, Senior
Administrative Assistant
GUEST(s): Members of the public
PUBLIC COMMENTS
The Senior Administrative Assistant declared the public participation section of the
meeting open at 3:32 p.m.
There being no written or verbal comments, the public participation section was closed.
REVIEW BOARD OF DIRECTORS HANDBOOK AND POLICIES
The District Clerk reviewed the following updates discussed during the last Committee
meeting: Roles of the Chair and Vice Chair of the Board of Directors–selected for a 2-
year term; Representing an Official District Position-outside agency/organization
meetings; Enforcement–reassignment of committee positions and disciplinary action for
Board members; Board Meeting Protocol–Board of Directors Report; and compensation
for Board of Directors-Meeting stipend.
Directors Coats and Morales recommended that the revised Board of Directors Handbook
and Policies be taken to the full Board for approval.
Information only.
Page 2 of 2
Minutes 1/24/20 cmk
APPROVE THE MARCH 12, JUNE 18, JULY 9, OCTOBER 1, NOVEMBER 4, AND
DECEMEBER 2, 2019 FINANCE AND HUMAN RESOURCES COMMITTEE MEETING
MINUTES
M/S/C (Coats-Morales) to approve the March 12, June 18, July 9, October 1,
November 4, and December 2, 2019 Finance and Human Resources Committee meeting
minutes, by means of necessity as submitted.
ADJOURN
The meeting adjourned at 3:46 p.m.
James Morales, Jr. Phillip R. Goodrich
Governing Board Member Governing Board Member
S TAF F R E P ORT
Agenda Item #2.
Meeting Date: August 11, 2020
Disc ussion Item
To: F I NANC E AND HUMAN R ES O UR C ES C O MMI T T EE
F rom: C hief F inancial O ffic er
Subject: R eview R evis ion to the District's Debt Management P olic y 7.3
R E C OMME N D AT ION:
S taff recommend s that the F inance and Human R es o urc es C ommittee (C ommittee) review revis io n to the
District’s Debt Management P olic y 7.3.
B AC KG R OUN D / AN ALYS IS:
In preparatio n fo r the potential refunding of the Dis tric t’s 2010 and 2013 R evenue Bo nds, our financial
cons ultants and bond c o uns el have rec o mmended revisions to the Dis tric t’s Debt Management P olic y in order
to inc orporate recent amendments to R ule 15c2-12 of the S ec urities and Exchange Act of 1934.
T he S EC amend ments ad d two events , to the exis ting list o f 14 events , for whic h municipal sec urities is s uers
(s uc h as EVW D) mus t notify inves tors within 10 busines s days if the events oc cur:
Event 15 – incurrenc e of a new financ ial o b ligatio n, agreement to covenants, or events of default,
remedies , priority rights or other events whic h could affec t s ecurities, holders ;
Event 16 – d efault, events of ac celeratio n, terminatio n, mo d ificatio n o f terms or o ther s imilar events
which may reflec t financial difficulties.
Us ing EVW D to give an example of the imp ac t o f thes e changes , the District’s bond holders no w have the
right to b e no tified if there are material trans actio ns or events related to the District’s d eb t that is no t public ly
traded inc luding, but not limited to, s tate loans , bank loans , and inter-agency loans .
P rior to the rule changes , if the Dis tric t signed a new bank loan, o r d efaulted o n one o f its S R F loans , Dis tric t
bondholders wo uld most likely have found out when the Dis tric t’s audited financial statements were is s ued
after the end o f the fisc al year. Under the amend ed rules , bond holders will have to b e notified of s uc h events
within 10 b usines s days , b y posting the event o n the Munic ip al S ec urities R ulemaking Board’s EMMA
website.
It is imp o rtant that the Dis tric t adopt the rec ommended revis io ns to the Debt Management P o licy to as s ure
potential inves tors in the Dis tric t’s b o nds that the Dis tric t is aware of, and intends to comply with, the
additional notific ation requirements under R ule 15c2-12.
AG E N C Y G O ALS AN D O B J E C T IVE S :
G oal and O bjectives I I - Maintain a C ommitment to S ustainability, Transparency, and Acc ountability
a) P rac tic e Trans parent and Acc ountable F is cal Management
R E VIE W B Y O T HE R S :
T his agenda item has been reviewed b y the District’s F inancial Advisors, Bond C ounsel, and the District’s
G eneral C ouns el.
F IS C AL IMPAC T
T here is no fisc al impac t as s ociated with this agenda item.
ATTAC H M EN TS:
Description Type
Debt Management P olicy 7.3 Backup Material
EAST VALLEY WATER DISTRICT
Administrative Policies & Programs
Policy Title: Debt Management Policy
Original Approval Date:
August 10, 2010
Last Revised:
August 26, 2020
Policy No:
7.3
Page
1 of 13
Purpose
The purpose of this Debt Management Policy is to establish guidelines for the issuance and
management of District debt, and to provide guidance for decision makers with respect to
options available for financing infrastructure, and other capital projects, so that the most
prudent, equitable, and cost effective financing can be chosen.
This policy documents the objectives to be achieved by staff both prior to, and subsequent
to, issuance of debt, and is designed to promote objectivity in the decision making process,
and to facilitate the financing process by establishing important policy decisions in
advance.
Goals
It is a goal of the District to provide for the infrastructure and capital project needs of its
ratepayers, financing those capital project needs from a combination of current revenues,
available reserves, and prudently issued debt.
Debt is an equitable means of financing projects and represents an important means of
providing for the infrastructure and project needs of the District's customers. Debt will be
used to finance projects if:
Debt is issued and managed prudently;
Debt enables the District to maintains a sound fiscal position;
Issuing the debt will not negatively impact the District’s credit rating;
The District's goal of equitable treatment of all customers, both current and future,
would be met;
It is the most cost-effective means available to the District; and
It is fiscally responsible under the prevailing economic conditions.
EAST VALLEY WATER DISTRICT
Administrative Policies & Programs
Policy Title: Debt Management Policy
Original Approval Date:
August 10, 2010
Last Revised:
August 26, 2020
Policy No:
7.3
Page
2 of 13
Budget Integration
Issuance of debt may only be utilized to finance a capital project(s). Debt proceeds are
not to be used to fund operating expenses. The decision to incur new indebtedness should
be integrated with the Board-adopted annual Operating Budget and Capital Improvement
Program (CIP) Budget. Issuance of debt for a capital project will not be considered unless
such project has been incorporated into the District’s CIP, or is otherwise approved by the
Board of Directors (Board).
Annual debt service payments shall be included in the Operating Budget.
Standards for Use of Debt Financing
When appropriate, the District will use long-term debt financing to:
Achieve an equitable allocation of capital costs / charges between current and
future system users
Provide more manageable rates in the near and medium term
Minimize rate volatility
For growth-related projects, debt financing will be utilized, as needed, to better match
the cost of anticipated facility needs with timing of expected new connections to the
system and spread the costs evenly over time. Capacity / Connection Fees will be
maintained at a level sufficient to finance a portion of growth-related capital costs and
cover related annual debt service requirements.
The District shall not construct or acquire a facility if it is unable to adequately provide
for the subsequent annual operation and maintenance costs of the facility throughout its
expected life.
Capital projects financed through debt issuance will not be financed for a term longer than
the expected useful life of the project.
EAST VALLEY WATER DISTRICT
Administrative Policies & Programs
Policy Title: Debt Management Policy
Original Approval Date:
August 10, 2010
Last Revised:
August 26, 2020
Policy No:
7.3
Page
3 of 13
Methods of Financing
The Finance Department will investigate all possible project financing alternatives
including, but not limited to, annual operating revenue, reserves, bonds, loans, and grants.
When applicable, capacity fees collected from developers will be used to pay for increased
capital costs resulting from new development.
The District may legally issue both short term and long termlong-term financing using the
debt instruments described below.
1. Cash Funding – The District funds a significant portion of capital improvements on
a pay-as-you-go basis. Sources for pay-as-you-go may include appropriations from
annual operating revenue, reserves, and grants.
2. Inter-fund Borrowing - The District may borrow internally from other funds with
temporarily surplus cash to meet short term needs in lieu of issuing debt. Purposes
for such could include short term cash flow imbalances due to grant terms (i.e., the
need to incur costs prior to reimbursement) and interim financing pending the
issuance of long termlong-term debt. The District funds from which the money is
borrowed shall be repaid with interest, accruing quarterly based upon the
apportionment rate set by the State of California Local Agency Investment Fund
(LAIF). To the extent any inter-fund borrowing is undertaken in anticipation of long-
term financing, the District shall adopt a Resolution of its intention to repay such
funds out of tax-exempt debt proceeds so as to meet the requirement of federal tax
law for such borrowing.
3. Line of Credit – The District may consider a line of credit as a short-term borrowing
option. The Chief Financial Officer (CFO) shall determine when it is prudent to
recommend that the District enter into an agreement with a commercial bank or
other financial institution, for the purpose of acquiring a line of letter of credit.
4. Capital Lease Debt – A lease purchase obligation placed with a lender without the
issuance of securities may be used to finance certain equipment purchases if the
aggregate cost of the equipment exceeds $50,000 and the terms of financing are
cost-effective. The term of a capital lease must be at least five years, and shall not
exceed the useful life of the equipment or ten years, whichever is shorter.
EAST VALLEY WATER DISTRICT
Administrative Policies & Programs
Policy Title: Debt Management Policy
Original Approval Date:
August 10, 2010
Last Revised:
August 26, 2020
Policy No:
7.3
Page
4 of 13
5. State Revolving Fund Loans - The State Revolving Fund (SRF) is a low or zero
interest loan program generally for the construction of water and wastewater
infrastructure projects. The SRF loan interest rate is typically calculated by taking
half of the True Interest Cost (TIC) of the most recent State of California General
Obligation Bonds sale. The repayment term of the loans ranges from 20 to 30 years.
6. Certificates of Participation – The District may issue Certificates of Participation
(COP) which provide financing through a lease, installment sale agreement, or
contract of indebtedness and typically do not require voter approval. Board action
is legally sufficient to authorize a COP issue, and District revenues are pledged for
repayment of COPs under terms specified in the indenture.
7. JPA Revenue Bonds – The District may obtain financing through the issuance of debt
under a joint exercise of powers agreement (East Valley Water District Financing
Authority) with such debt payable from amounts paid by the District under a lease,
installment sale agreement, or contract of indebtedness.
8. Refunding Revenue Bonds – The District may issue refunding revenue bonds to
refund District indebtedness pursuant to the State of California local agency
refunding revenue bond law (Title 5 of the California Government Code)
Financing Team – Roles and Responsibilities
The primary responsibility for developing debt financing recommendations rests with the
CFO. In developing such recommendations, the CFO shall consider the need for debt
financing and assess progress on the current capital improvement program (CIP). The CFO
will present all proposed debt financings to the Board, which has sole authority to approve
the issuance of debt.
1. Bond Counsel - The District will retain external bond counsel for all debt issues.
Bond counsel will prepare the necessary authorizing resolutions, agreements and
other documents necessary to execute the financing. All debt issued by the District
will include a written opinion by bond counsel affirming that the District is
authorized to issue the debt, stating that the District has met all state constitutional
and statutory requirements necessary for issuance, and determining the debt's
federal income tax status.
EAST VALLEY WATER DISTRICT
Administrative Policies & Programs
Policy Title: Debt Management Policy
Original Approval Date:
August 10, 2010
Last Revised:
August 26, 2020
Policy No:
7.3
Page
5 of 13
2. Financial Advisors - The District will utilize the services of independent financial
advisors when deemed prudent by the CFO. Services and compensation caps shall
be defined by contract. The primary responsibilities of the financial advisor are to
advise and assist on bond document negotiations, transaction structuring including
advising on call provision options and timing of issuance, running debt service cash
flow analysis’, assistance in obtaining ratings on the proposed issuance, and
generally acting as an independent financial consultant and economic market
expert.
3. Underwriters - For negotiated sales, the District will generally select or pre-qualify
underwriters through a competitive process. This process may include a request for
proposal or qualifications to firms considered appropriate for the underwriting of a
particular issue or type of bonds. The Chief Financial Officer, with the concurrence
of the General Manager/CEO, will determine the appropriate method to evaluate
the underwriter submittals and then select or qualify firms on that basis. The District
will not be bound by the terms and conditions of any underwriting agreements; oral
or written, to which it was not a party.
Structure and Term
1. Term of Debt – Debt will be structured for the shortest period possible, consistent
with a fair allocation of costs to current and future users. The standard term of long-
term debt borrowing is 10 to 30 years. Consistent with its philosophy of keeping
capital facilities and infrastructure systems in good condition and maximizing a
capital assets useful life, the District will budget to set aside operating revenue to
finance ongoing maintenance and to provide reserves for rehabilitation and
replacement. No debt will be issued for periods exceeding the useful life of projects
to be financed.
2. Debt Repayment – In structuring a bond issue, the District will manage the
amortization of the debt and, to the extent possible, match its cash flow to the
anticipated debt service payments. In addition, the District will seek to structure
debt with aggregate level debt service payment over the life of the debt.
A non-level debt service structure will be considered if it is beneficial to the
District’s overall debt payment schedule, or if such structuring will allow debt
service to more closely match project revenues during the early years of a project’s
operation.
EAST VALLEY WATER DISTRICT
Administrative Policies & Programs
Policy Title: Debt Management Policy
Original Approval Date:
August 10, 2010
Last Revised:
August 26, 2020
Policy No:
7.3
Page
6 of 13
3. Interest Rate Structure – The District currently issues long-term debt on a fixed
interest rate basis only. Fixed rate securities ensure budget certainty through the
life of the issue and avoid the volatility of variable rates.
4. Credit Enhancement - The District will consider the use of credit enhancement on
a case-by-case basis. Types of credit enhancement include letters of credit, bond
insurance, and surety policies. Only when clearly demonstrable savings can be
realized shall credit enhancement be utilized.
5. Debt Service Reserve Funds – Debt service reserve funds are held by the Trustee
to make principal and interest payments to bondholders in the event that pledged
revenues are insufficient to do so. The District will fund debt service reserve funds
when it is in the District’s overall best financial interest.
In lieu of holding a cash funded reserve, the District may substitute a surety bond
or other credit instrument in its place. Additionally, the District may decide not to
utilize a reserve fund if the District’s financing team determines there would be no
adverse impact to the District credit rating or interest rates.
6. Call Provisions - In general, the District's securities should include optional call
provisions. The District will avoid the sale of non-callable, long-term fixed rate
bonds, absent careful evaluation of the value of the call option.
7. Debt Limits - There is no specific provision within the California Government Code
that limits the amount of debt that may be issued by the District. The District’s
borrowing capability is limited by the additional bonds test and debt coverage ratio
required by the existing bond covenants. The District will be mindful of its overall
debt burden in the context of its revenues, expenses, reserves, and overall financial
health.
8. Refunding - Current and advance refunding are important debt management tools
for the District. They are commonly used to achieve debt service (interest cost)
savings, remove or change bond covenants, or restructure debt service obligations.
Since the Federal Tax law allows only one advance refunding after the initial
issuance, With consideration of the Federal Tax Law, careful planning and timing
must be used when reviewing an advance refunding.
EAST VALLEY WATER DISTRICT
Administrative Policies & Programs
Policy Title: Debt Management Policy
Original Approval Date:
August 10, 2010
Last Revised:
August 26, 2020
Policy No:
7.3
Page
7 of 13
To the extent that debt having fixed interest rates originally structured with a long-
term amortization structure (ten years or greater) is refunded with fixed rate debt,
the District will not generally issue refunding debt which extends beyond the final
maturity of the refinanced debt. Extending the final maturity may occur when
warranted, such as restructuring of debt to match debt amortization with the useful
life of the financed assets.
Method of Issuance and Sale
The District will select the method of sale, which best fits the type of bonds being sold,
market conditions, and the desire to structure bond maturities to enhance the overall
performance of the entire debt portfolio. Three general methods exist for the sale of
municipal bonds:
1. Competitive Sale - Bonds will be marketed to a wide audience of investment
banking (underwriting) firms. The underwriter is selected based on its best bid for
its securities. The District will award the sale of the competitively sold bonds on a
true interest cost (TIC) basis. Pursuant to this policy, the General Manager/CEO, is
hereby authorized to sign the bid form on behalf of the District, fixing the interest
rates on bonds sold on a competitive basis.
2. Negotiated Sale – In a negotiated sale, the underwriter or underwriting syndicate is
selected through a Request for Proposal (RFP) process. The interest rate and the
underwriter’s fee are negotiated prior to the sale, based on market conditions. The
underwriter will actively assist the District in structuring the financing and
marketing of bonds including providing assistance in preparing the bond offering
circular.
3. Private Placement - The District may elect to issue debt on a private placement
basis. Such method may be considered if it is demonstrated to result in cost savings
or provide other advantages relative to other methods of debt issuance, or if it is
determined that access to the public market is unavailable and timing
considerations require that financing be completed.
EAST VALLEY WATER DISTRICT
Administrative Policies & Programs
Policy Title: Debt Management Policy
Original Approval Date:
August 10, 2010
Last Revised:
August 26, 2020
Policy No:
7.3
Page
8 of 13
Creditworthiness Objectives
Ratings are a reflection of the fiscal soundness of the District and the capabilities of its
management. Typically, the higher the credit ratings are, the lower the interest cost on
the District’s debt issues. To enhance creditworthiness, the District is committed to
prudent financial management, systematic capital planning, and long-term financial
planning. The District recognizes that external economic, natural, and other events may
affect the creditworthiness of its debt.
The District’s most recent bond issues have been assessed by the nationally recognized
rating agencies Standard and Poor’s, and Fitch Ratings. When issuing a credit rating, rating
agencies consider various factors including but not limited to:
District’s fiscal status
District management capabilities
Economic conditions that may impact the stability and reliability of debt repayment
sources
District reserve levels
District debt history and current debt structure
Projects being financed
Post Issuance Administration / Internal Control
1. Investment of Proceeds - The proceeds of bond sales will be invested until used for
the intended project(s) in order to maximize utilization of the public funds. The
investments will be made to obtain the highest level of 1) safety, 2) liquidity, and
3) yield, and may be held as cash. The District’s investment guidelines and bond
indentures will govern objectives and criteria for investment of bond proceeds. The
Finance Department will oversee the investment of bond proceeds in a manner to
avoid, if possible, and minimize any potential negative arbitrage over the life of the
bond issuance, while complying with arbitrage and tax provisions.
2. Use of Proceeds - Bond proceeds will be deposited and recorded in separate
accounts to ensure funds are not comingled with other District funds. The District’s
EAST VALLEY WATER DISTRICT
Administrative Policies & Programs
Policy Title: Debt Management Policy
Original Approval Date:
August 10, 2010
Last Revised:
August 26, 2020
Policy No:
7.3
Page
9 of 13
Trustee will administer the disbursement of bond proceeds pursuant to each certain
Indenture of Trust or Fiscal Agent Agreement, respectively. To ensure proceeds from
bond sales are used in accordance with legal and tax requirements, invoices are
submitted by the Engineering Department and approved by the Finance Department
and General Manager/CEO for payment. Requisition for the disbursement of bond
funds will be approved by the District’s CFO.
The Finance Department will be tasked with monitoring the expenditure of bond
proceeds to ensure they are used only for the purpose and authority for which the
bonds were issued and exercising best efforts to spend bond proceeds in such a
manner that the District will meet one of the spend-down exemptions from arbitrage
rebate. Tax-exempt bonds will not be issued unless it can be demonstrated that 85%
of the proceeds can reasonably be expected to be expended within the three-year
temporary period.
3. Arbitrage Compliance - The use of bond proceeds and their investments must be
monitored to ensure compliance with all Internal Revenue Code Arbitrage Rebate
Requirements. The CFO shall ensure that all bond proceeds and investments are
tracked in a manner which facilitates accurate calculation; and, if a rebate payment
is due, such payment is made in a timely manner.
4. Compliance with Bond Covenants – The District is responsible for verifying
compliance with all undertakings, covenants, and agreements of each debt issue on
an ongoing basis. This typically includes ensuring:
Annual appropriations of revenues to meet debt service payments
Timely transfer of debt service payments to the Trustee
Compliance with insurance requirements
Compliance with rate covenants
The District shall comply with all covenants and conditions contained in the
governing law and any legal documents entered into at the time of the bond offering
or signing of agreements. The CFO or designee will coordinate verification and
monitoring of covenant compliance.
EAST VALLEY WATER DISTRICT
Administrative Policies & Programs
Policy Title: Debt Management Policy
Original Approval Date:
August 10, 2010
Last Revised:
August 26, 2020
Policy No:
7.3
Page
10 of 13
5. Rating Agency Communication - The CFO shall be responsible for maintaining the
District's relationships with S&P Global Ratings Standard & Poor's Ratings Services,
Fitch Ratings and/or Moody's Investment Service. In addition to general
communication, the CFO shall meet with credit analysts prior to each competitive
sale and offer conference calls with the District financing team in connection with
the planned sale.
6. Board Communication - The CFO will report to the Board of Directors any feedback
from rating agencies and/or investors regarding the District's financial strengths and
weaknesses and recommendations for addressing any weaknesses.
7. Continuing Disclosure - The District shall remain in compliance with Rule 15c2-12
by filing its annual financial statements and other financial and operating data for
the benefit of its bondholders by December 31st of each year. The CFO will ensure
the District's timely filing with each Nationally Recognized Municipal Securities
Information Repository.
The CFO and/or the District’s general counsel, with the assistance of Bond Counsel,
will provide written notice to the Board of any receipt by the District of any default,
event of acceleration, termination event, modification of terms (only if material or
may reflect financial difficulties), or other similar events (collectively, a
“Potentially Reportable Event”) under any agreement or obligation to which the
District is a party and which may be a “financial obligation” as discussed below.
Such written notice should be provided by the CFO and/or the District’s general
counsel to the Board as soon as the CFO is placed on written notice by District staff,
consultants, or external parties of such event or receives written notice of such
event. The CFO, with the assistance of bond and disclosure counsel, will determine
and notify the Board whether notice of such Potentially Reportable Event is required
to be filed on EMMA pursuant to the disclosure requirements of SEC Rule 15c2-12
(the “Rule”). If filing on EMMA is required, the filing is due within 10 business days
of such Potentially Reportable Event to comply with the continuing disclosure
undertaking for the various debt obligations of the District.
The CFO and/or the District’s general counsel, with the assistance of Bond Counsel,
will report to the Board regarding the execution by the District of any agreement or
other obligation which might constitute a “financial obligation” for purposes of Rule
15c2-12. Amendments to existing District agreements or obligations with “financial
EAST VALLEY WATER DISTRICT
Administrative Policies & Programs
Policy Title: Debt Management Policy
Original Approval Date:
August 10, 2010
Last Revised:
August 26, 2020
Policy No:
7.3
Page
11 of 13
obligation” which relate to covenants, events of default, remedies, priority rights,
or other similar terms should be reported to the Board as well as soon as the CFO is
placed on written notice by District staff, consultants, or external parties of such
event or receives a written notice of such amendment requests. The CFO will
determine, with the assistance of bond and disclosure counsel, whether such
agreement or other obligation constitutes a material “financial obligation” for
purposes of Rule 15c2-12. If such agreement or other obligation is determined to be
a material “financial obligation” or a material amendment to a “financial obligation”
described above, notice thereof would be required to be filed on EMMA within 10
business days of execution or incurrence. The types of agreements or other
obligations which could constitute “financial obligations” and which could need to
be reported on EMMA include:
1. Bank loans or other obligations which are privately placed;
2. State or federal loans;
3. Commercial paper or other short-term indebtedness for which no offering
document has been filed on EMMA;
4. Letters of credit, surety policies or other credit enhancement with respect to
the District’s publicly offered Debt;
5. Letters of credit, including letters of credit which are provided to third parties
to secure the District’s obligation to pay or perform (an example of this is a
standby letter of credit delivered to secure the District’s obligations for
performance under a mitigation agreement);
6. Capital leases for property, facilities, fleet or equipment; and
7. Agreements which guarantee the payment or performance obligations of a
third party (regardless of whether the agreements constitute guarantees
under California law);
8. License agreements.
Types of agreements which could be a “financial obligation” under the Rule
include:
1. Payment agreements which obligate the District to pay a share of another
public agency’s debt service (for example, an agreement with a joint
powers agency whereby the District agrees to pay a share of the joint
powers agency’s bonds, notes or other obligations); and
2. Service contracts with a public agency or a private party pursuant to which
the District is obligated to pay a share of such public agency or private
EAST VALLEY WATER DISTRICT
Administrative Policies & Programs
Policy Title: Debt Management Policy
Original Approval Date:
August 10, 2010
Last Revised:
August 26, 2020
Policy No:
7.3
Page
12 of 13
party’s debt service obligation (for example, certain types of P3
arrangements).
Types of agreements which may be a “financial obligation” subject to the Rule
include:
Any agreement the payments under which are not characterized as an
operation and maintenance expenses for accounting purposes if such
agreement could be characterized as the borrowing of money.
The CFO will continue to work with bond and disclosure counsel to refine the
definition of financial obligation going forward based on future SEC guidance.
7.8. Record Retention - A copy of all debt-related records shall be retained at the
District's offices. At minimum, these records shall include all official statements,
bid documents, bond documents / transcripts, resolutions, trustee statements,
leases, and title reports for each District financing (to the extent available).
Electronic copies - preferably in pdf or CD-ROM format – shall also be retained.
9. State Reporting Requirements - Pursuant to Government Code section 8855(k), the
District will submit annual debt transparency reports for any debt for which it has
submitted a report of final sale on or after January 21, 2017 every year until the
later date on which the debt is no longer outstanding and the proceeds have been
fully spent.
The District shall also comply with Government Code Section 5852.1 by disclosing
specified good faith estimates in a public meeting prior to the authorization of the
issuance of debt.
Board Discretion
This policy was drafted with the intent of providing East Valley Water District’s Board-
approved guidelines to management and staff for decisions and recommendations related
to capital financing by the District, and to support the District’s debt obligations to present
and future generations of ratepayers.
This policy is ultimately intended to serve as a guide and it in no way restricts the ability
of the East Valley Water District Board to review proposed rate actions, debt issuances, or
other actions of substance to the District. The Board maintains authorization to waive
EAST VALLEY WATER DISTRICT
Administrative Policies & Programs
Policy Title: Debt Management Policy
Original Approval Date:
August 10, 2010
Last Revised:
August 26, 2020
Policy No:
7.3
Page
13 of 13
elements of the policy in connection with individual financings at its discretion. This policy
shall be reviewed during the third quarter of each odd fiscal year.
Revised: March 8, 2017
S TAF F R E P ORT
Agenda Item #3.
Meeting Date: August 11, 2020
Disc ussion Item
To: F I NANC E AND HUMAN R ES O UR C ES C O MMI T T EE
F rom: C hief F inancial O ffic er
Subject: R eview EVW D R esolution 2020.20 Authorizing and Approving the Issuanc e of 2020 R efunding
R evenue Bonds , S eries A and B
R E C OMME N D AT ION:
S taff rec o mmends that the F inance and Human R es ourc es C ommittee (C o mmittee) review R esolution
2020.20, inc luding Exhibits A through G , Authorizing and Ap p ro ving the Is s uance o f 2020 R efunding
R evenue Bonds, and Authorizing Agreements that will fac ilitate the S ale of the 2020 Bonds .
B AC KG R OUN D / AN ALYS IS:
At the Marc h 11, 2020 regular b o ard meeting, R obert P o rr from F ieldman, R olapp & As s o ciates financial
advisors gave a p res entation about the opportunity for the District to realize s ignificant interes t savings by
refinancing the 2010 and 2013 R evenue Bonds is s ued by the East Valley Water Dis tric t F inancing Authority.
T he numbers p res ented by Mr. P o rr were fro m late F ebruary and sho wed that annual savings c o uld exceed
$300,000. However, in Marc h the impending C O VI D pandemic was starting to have a negative impact on the
municipal bond markets . In s p ite o f the downturn, the Board direc ted s taff to work with the Dis tric t’s financing
team to c reate the bond doc uments need ed for a refinanc ing given the likelihood that confid enc e in the
municipal bond markets would return in the s ummer. T hat has hap p ened, with potential annual interes t s avings
again exc eeding $300,000, and the Dis tric t is now prepared to move forward with refinanc ing of the 2010 and
2013 bonds .
Attached for the C ommittee’s review are:
Resolution 2020.20 – A R es o lutio n of EVW D Board Autho rizing and Approving the Is s uance o f R efunding
R evenue Bonds and the F ollowing S upporting Doc uments and Agreements :
Exhibit A - G ood F aith Estimate – this es timate p rep ared by s taff at F ieldman R o lap p , alo ng with s taff
form the Und erwriter, J P Mo rgan, s hows the ap p ro ximate c as h flows related to the b o nd refinancing
under c urrent market c onditions.
Exhibit B - Indenture of Trust - this Agreement is between MUF G Union Bank (Trustee) and EVW D.
Under the Indenture of Trust:
T he Trus tee will apply 2020 Bond P roc eed s to an Es c row Acc o unt and C o s t o f Is s uance
Acc ount.
T he Trus tee will Estab lis h ac counts to receive semi-annual payments fro m the District (R evenue
F und), and ac c o unts to pay semi-annual interes t (Interest Ac count), and annual principal
(P rinc ipal Acc ount) payments to the 2020 R efunding R evenue Bond holders.
T he District P ledges Net R evenue of the Water and Was tewater S ys tems and C ovenants to Take
C ertain Actions to Ensure R epayment to the 2020 Bond Holders .
Exhibit C - C ontrac t of P urchas e - this Agreement between EVW D and J P Morgan S ecurities, LLC
(Underwriter) d etermines the Terms and C ond itions fo r P urc hase of the 2020 R efund ing Bond s in a
Negotiated S ale.
Exhibit D - P reliminary O fficial S tatement - this d o c ument gives p o tential investo rs in the District bonds
a c omprehens ive exp lanatio n o f the Dis tric t’s activities and financ ial c ond ition s o the investo rs c an make
an informed decision.
Exhibit E - C ontinuing Disc los ure C ertificate - a C ertific ation Delivered by the Dis trict to the bond
holder that an annual report, includ ing audited financ ial s tatements and other financial data, will be
delivered by January 1st for the preceding fis cal year.
Exhibit F - Es c ro w Agreement 2010 R evenue Bonds - this Agreement b etween EVW D, the EVW D
F inancing Autho rity, and MUF G Unio n Bank d es ignates MUF G Union Bank as Esc ro w Agent to call
and pay off the 2010 bonds when appropriate.
Exhibit G - Esc row Agreement 2013 R evenue Bonds - this Agreement between EVW D, the EVW D
F inancing Autho rity, and MUF G Unio n Bank d es ignates MUF G Union Bank as Esc ro w Agent to call
and pay off the 2013 bonds when appropriate.
S taff rec o mmends ad o p tion of attached R esolution 2020.20, inc luding Exhibits A thro ugh G authorizing s taff
to proc eed with is s uance of 2020 R efunding R evenue Bonds for the p urpose of retiring the E VW D F inancing
Authority’s 2010 and 2013 R evenue Bonds on their res pective firs t available call dates.
AG E N C Y G O ALS AN D O B J E C T IVE S :
G oal and O bjectives I V - P romote P lanning, Maintenance and P res ervation of District R esources
b) Enhance P lanning Efforts that R espond to F uture Demands
R E VIE W B Y O T HE R S :
T his agenda item has been reviewed b y the District’s F inancial Advisors, Bond C ounsel, and the District’s
G eneral C ouns el.
F IS C AL IMPAC T
T he issuanc e o f 2020 R efund ing Bond s , S eries A and B, to R etire the EVW D F inanc ing Autho rity 2010 and
2013 R evenue Bo nds will likely s ave the District at least $300,000 annually in interest expens e, with the
potential to s ave mo re than $400,000 annually if market c o nditio ns and bond ratings are favorable when the
new bonds are sold.
ATTAC H M EN TS:
Description Type
P resentation P resentation
Res 2020.20 Resolution Letter
Exh A - Good Faith Estimate Exhibit
Exh B - 2020 Bond Indenture of Trust Exhibit
Exh C - P urchase Contract Series 2020 AB Exhibit
Exh D - P reliminary Official Statement Exhibit
Exh E - Continuing Disclosure Certificate Exhibit
Exh F - Escrow Agreement (2010 Bonds)Exhibit
Exh G - Escrow Agreement (2013 Bonds)Exhibit
EAST VALLEY WATER DISTRICT
FINANCE AND HR COMMITTEE MEETING
Refunding Revenue Bonds,
Series 2020A&B
August 11, 2020
BACKGROUND
Historically low interest rate environment provides the District with the opportunity to generate
savings through the refinancing of its existing debt
EVWD has the following senior debt outstanding payable from water and wastewater revenues:
–Series 2010 Bonds and Series 2013A Bonds
–DWR Loan Plant 134
–Repayment of the 2018 SRF Loan Agreement anticipated to commence in FY 2024
$0.00
$2.00
$4.00
$6.00
$8.00
$10.00
$12.00
20
2
0
20
2
1
20
2
2
20
2
3
20
2
4
20
2
5
20
2
6
20
2
7
20
2
8
20
2
9
20
3
0
20
3
1
20
3
2
20
3
3
20
3
4
20
3
5
20
3
6
20
3
7
20
3
8
20
3
9
20
4
0
20
4
1
20
4
2
20
4
3
20
4
4
20
4
5
20
4
6
20
4
7
20
4
8
20
4
9
20
5
0
20
5
1
20
5
2
20
5
3
Mi
l
l
i
o
n
s
Fiscal Year
Existing Debt Profile
Series 2010A Series 2013A DWR Loan Plant 134 Estimated SWRCB SRF Loan
2
2010 REFUNDING OPPORTUNITY*
Series 2010 Refunding Revenue Bonds
–Bonds are callable on October 1, 2020
–Final maturity date of 10/1/2040 and
approximately $21.6 million currently
outstanding
Date Prior Debt
Service
Refunding
Debt Service Savings Present Value
to 9/15/2020
06/30/2021 446,931 410,511 36,420 35,964
06/30/2022 1,903,263 1,596,175 307,088 299,046
06/30/2023 1,906,163 1,600,550 305,613 290,830
06/30/2024 1,907,263 1,599,500 307,763 286,163
06/30/2025 1,893,875 1,587,125 306,750 278,706
06/30/2026 1,398,888 1,090,375 308,513 273,904
06/30/2027 1,400,288 1,094,375 305,913 265,382
06/30/2028 1,400,488 1,092,000 308,488 261,503
06/30/2029 1,399,488 1,093,250 306,238 253,655
06/30/2030 1,397,288 1,088,125 309,163 250,227
06/30/2031 1,398,788 1,091,500 307,288 243,017
06/30/2032 1,392,881 1,088,250 304,631 235,411
06/30/2033 1,394,419 1,088,375 306,044 231,103
06/30/2034 1,394,256 1,086,750 307,506 226,905
06/30/2035 1,388,625 1,083,375 305,250 220,124
06/30/2036 1,387,125 1,078,250 308,875 217,688
06/30/2037 1,383,125 1,076,250 306,875 211,371
06/30/2038 1,386,375 1,077,125 309,250 208,180
06/30/2039 1,381,750 1,075,750 306,000 201,323
06/30/2040 1,379,250 1,072,125 307,125 197,488
06/30/2041 1,378,625 1,071,125 307,500 193,255
Total $30,319,150 $24,140,861 $6,178,289 $4,881,244
Financial Data 2010 Refunding
Bonds
Escrow Total $22,114,931
All-in True Interest Cost 2.02%
Maximum Annual DS $1,600,550
Total Debt Service $24,140,861
Annual Savings ~$305,000
NPV Savings $4,884,868 (22.6%)
Term 20
*Note: Preliminary, subject to change. Based on market conditions as of July 27, 2020 assuming “AA-” rating.
3
2013 REFUNDING OPPORTUNITY*
Series 2013A Revenue Bonds
–Callable on any date on or after April 1, 2023
–Taxable debt must be used to refund the Bonds prior to January 2023
–Final maturity of 10/1/2043 and approximately $12 million currently outstanding
Date Prior Debt
Service
Refunding Debt
Service Savings Present Value to
9/15/2020
06/30/2021 292,563 183,309 109,253 107,884
06/30/2022 687,500 605,606 81,894 78,556
06/30/2023 687,125 603,303 83,822 78,613
06/30/2024 686,500 600,692 85,808 78,679
06/30/2025 685,625 602,598 83,027 74,358
06/30/2026 782,000 698,293 83,707 73,291
06/30/2027 785,375 702,501 82,874 70,916
06/30/2028 783,125 700,885 82,240 68,781
06/30/2029 780,375 693,740 86,635 70,879
06/30/2030 782,000 701,059 80,941 64,666
06/30/2031 779,425 697,981 81,444 63,597
06/30/2032 787,625 704,390 83,235 63,542
06/30/2033 785,225 700,167 85,058 63,479
06/30/2034 782,425 695,404 87,021 63,488
06/30/2035 794,808 714,907 79,901 56,914
06/30/2036 793,198 708,770 84,427 58,828
06/30/2037 800,588 716,006 84,581 57,602
06/30/2038 796,978 711,646 85,331 56,805
06/30/2039 797,493 716,851 80,641 52,436
06/30/2040 799,250 716,549 82,701 52,586
06/30/2041 801,125 720,738 80,387 49,954
06/30/2042 2,181,375 1,798,287 383,088 234,857
06/30/2043 2,183,125 1,798,753 384,372 230,423
06/30/2044 2,413,875 2,029,310 384,565 225,458
Total $22,448,700 $19,521,747 $2,926,953 $2,096,591
Financial Data 2013 Refunding
Bonds
Escrow Total $13,784,171
All-in True Interest Cost 2.78%
Maximum Annual DS $2,029,310
Total Debt Service $19,521,747
Annual Savings ~$80,000 –$384,000
NPV Savings $2,101,339 (17.4%)
Term 23
*Note: Preliminary, subject to change. Based on market conditions as of July 27, 2020 assuming “AA-” rating.
4
AGGREGATE REFUNDING SAVINGS*
*Note: Preliminary, subject to change. Based on market conditions as of July 27, 2020 assuming “AA-” rating.
Date Prior Debt
Service
Refunding
Debt Service Savings Present Value
to 9/15/2020
06/30/2021 739,494 593,820 145,674 143,847
06/30/2022 2,590,763 2,201,781 388,981 377,602
06/30/2023 2,593,288 2,203,853 389,435 369,443
06/30/2024 2,593,763 2,200,192 393,570 364,842
06/30/2025 2,579,500 2,189,723 389,777 353,064
06/30/2026 2,180,888 1,788,668 392,219 347,195
06/30/2027 2,185,663 1,796,876 388,787 336,298
06/30/2028 2,183,613 1,792,885 390,727 330,283
06/30/2029 2,179,863 1,786,990 392,872 324,535
06/30/2030 2,179,288 1,789,184 390,104 314,893
06/30/2031 2,178,213 1,789,481 388,731 306,615
06/30/2032 2,180,506 1,792,640 387,867 298,953
06/30/2033 2,179,644 1,788,542 391,101 294,581
06/30/2034 2,176,681 1,782,154 394,527 290,393
06/30/2035 2,183,433 1,798,282 385,151 277,038
06/30/2036 2,180,323 1,787,020 393,302 276,515
06/30/2037 2,183,713 1,792,256 391,456 268,973
06/30/2038 2,183,353 1,788,771 394,581 264,986
06/30/2039 2,179,243 1,792,601 386,641 253,759
06/30/2040 2,178,500 1,788,674 389,826 250,074
06/30/2041 2,179,750 1,791,863 387,887 243,209
06/30/2042 2,181,375 1,798,287 383,088 234,857
06/30/2043 2,183,125 1,798,753 384,372 230,423
06/30/2044 2,413,875 2,029,310 384,565 225,458
Total $52,767,850 $43,662,608 $9,105,242 $6,977,835
Financial Data Total
Escrow Total $35,899,103
All-in True Interest Cost 2.40%
Maximum Annual DS $2,203,852
Total Debt Service $43,662,608
Annual Savings ~$388,000
NPV Savings $6,986,207 (20.7%)
Term 23
5
AGGREGATE DEBT PROFILE *
*Note: Preliminary, subject to change.
$0
$2
$4
$6
$8
$10
$12
20
2
0
20
2
1
20
2
2
20
2
3
20
2
4
20
2
5
20
2
6
20
2
7
20
2
8
20
2
9
20
3
0
20
3
1
20
3
2
20
3
3
20
3
4
20
3
5
20
3
6
20
3
7
20
3
8
20
3
9
20
4
0
20
4
1
20
4
2
20
4
3
20
4
4
20
4
5
20
4
6
20
4
7
20
4
8
20
4
9
20
5
0
20
5
1
20
5
2
Mi
l
l
i
o
n
s
DWR Loan Plant 134 (Water)Refunding of 2010 Bonds Refunding of 2013A Bonds
Estimated SWRCB SRF Loan Total Prior Debt Service
6
MARKET CONDITIONS
As of July 31, 2020
7
ECONOMIC IMPACTS FROM COVID-19 ARE EVIDENT ACROSS LABOR,
RETAIL AND MANUFACTURING DATA
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Sep-18 Dec-18 Apr-19 Aug-19 Dec-19 Apr-20 Aug-20
Based on economic data
Based on S&P 500 and BBB spreads
Last week’s economic data increased the chance of recession, in spite of market performance J.P.Morgan Forecasts 2Q 2020
Actual
3Q 2020
Forecast
4Q 2020
Forecast
1Q 2021
Forecast
U.S.GDP -32.9%20.0%4.5%4.0%
U.S. Unemployment
Rate 13.0%10.0%9.6%9.3%
Consumer Price Index
(CPI)-3.5%4.2%1.3%1.4%
Domestic Final Sales -29.3%15.3%4.5%3.3%
Industrial Production –
Manufacturing -47.0%45.0%4.0%3.0%
4%4%4%
15%13%11%
0.8%
-0.4%
-8.2%
-14.7%
17.7%
7.5%
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
January February March April May June
Unemployment Rate
Retail Sales % Change
Despite sustained double-digit unemployment since March, retail & food sales stayed strong
in June following May’s 17.7% growth
$2,000
$2,250
$2,500
$2,750
$3,000
$3,250
$3,500
-6.00%
-4.00%
-2.00%
0.00%
2.00%
4.00%
6.00%
5-May 18-May 31-May 13-Jun 26-Jun 9-Jul 22-Jul 4-Aug
S&P 500 Daily Return S&P 500 Closing Price
Markets continue to grind higher on daily price volatility since early May
Source: J.P. Morgan Research, US Weekly Prospects, 7/31/2020, jpmm.com; Bloomberg, J.P. Morgan as of 8/4/2020
Note: The forecasts above assume a $1 trillion aid package is passed 8
TAXABLE AND TAX -EXEMPT YIELDS HAVE DECLINED OVER THE PAST MONTH
AND REMAIN WELL BELOW LEVELS AT THE BEGINNING OF THE YEAR
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%2-year UST 2-year MMD
0.75%
1.25%
1.75%
2.25%
2.75%
3.25%
3.75%30-year UST 30-year MMD
8/4/2020 7/28-8/04 7/06-8/04 12/31-8/04
Current Weekly ∆Monthly ∆YTD ∆
2-year UST 0.11%-3 bps -5 bps -144.9 bps
10-year UST 0.51%-7 bps -17 bps -139.69 bps
30-year UST 1.19%-3 bps -25 bps -118.54 bps
2-year MMD 0.13%-2 bps -14 bps -91 bps
10-year MMD 0.64%-6 bps -26 bps -80 bps
30-year MMD 1.34%-8 bps -29 bps -75 bps
2-year MMD / UST 117.93%12.03%-51.26%51.23%
10-year MMD / UST 125.05%4.32%-6.83%49.60%
30-year MMD / UST 112.55%-3.59%-0.51%24.58%
100%
0%
150%
300%
450%
600%
750%
900%30-year MMD/UST
2-year MMD/UST
2Y MMD and UST yields
30Y MMD and UST yields 2Y and 30Y MMD/UST ratios have tightened from the March highs
Market Moves
Source: Thomson Reuters Municipal Market Data, J.P. Morgan; as of 8/4/2020 9
THE MACROECONOMIC PICTURE AHEAD
8/4/2020 8/24/2020 9/30/2020 12/31/2020
Current 1mo ahead 3Q20 Forecast 4Q20 Forecast
Fed Funds 0.10%0.05%0.05%0.05%
3M LIBOR 0.25%0.23%0.20%0.25%
2Y UST 0.11%0.15%0.15%0.20%
5Y UST 0.19%0.30%0.30%0.35%
10Y UST 0.51%0.65%0.70%0.80%
30Y UST 1.19%1.40%1.75%1.85%
8/4/2020 8/24/2020 9/30/2020 12/31/2020
Current 1mo ahead 3Q20 Forecast 4Q20 Forecast
2Y MMD 0.13%0.15%0.20%0.25%
5Y MMD 0.22%0.30%0.30%0.30%
10Y MMD 0.64%0.75%0.80%0.80%
30Y MMD 1.34%1.50%1.60%1.65%
2Y MMD/UST 117.93%100%133%125%
5Y MMD/UST 113.35%120%120%100%
10Y MMD/UST 125.05%115%114%100%
30Y MMD/UST 112.55%103%107%103%
Monday Tuesday Wednesday Thursday Friday
August 3 4 5 6 7
U.S.
Manufacturing
PMI (8:30am)
Durable Goods
Orders (10:00am)
Fed Purchase of
$1.225 billion 7.5
–30 year
securities
Mortgage
Applications
(7:00am)
Fed Purchase of
$6.025 billion 4.5 –
7 year securities
Initial Claims
(8:30am)
Fed Purchase of
$1.750 billion 20 –
30 year securities
Unemployment
Rate (10:00am)
Non-Farm
Payrolls
(10:00am)
10 11 12 13 14
PPI MoM
(8:30am)
Mortgage
Applications
(7:00am)
CPI MoM (8:30am)
Initial Claims
(8:30am)
Retail Sales
MoM (8:30am)
Industrial
Production
MoM (9:15am)
Consumer
Sentiment
(10:00am)
17 18 19 20 21
Empire
Manufacturing
(8:30am)
Housing Starts
(8:30am)
Mortgage
Applications
(7:00am)
Initial Claims
(8:30am)
Preliminary
Manufacturing
PMI (9:45am)
Existing Home
Sales
(10:00am)
24 25 26 27 28
New Home Sales
(10:00am)
Consumer
Confidence
(10:00am)
Mortgage
Applications
(7:00am)
Durable Goods
Orders (8:30am)
Initial Claims
(8:30am)
GDP QoQ
(8:30am)
Personal
Income
(8:30am)
MNI Chicago
PMI (9:45am)
31 September 1 2 3 4
U.S.
Manufacturing
PMI (9:45am)
Mortgage
Applications
(7:00am)
Durable Goods
Orders (10:00am)
Initial Claims
(8:30am)
Nonfarm
Payrolls
(8:30am)
Unemployment
Rate (8:30am)
J.P. Morgan U.S. Treasury Interest Rate Forecast (%)
J.P. Morgan MMD and Ratio forecasts
Catalysts for the month ahead
Source: Federal Reserve, newyorkfed.gov as of 7/31/2020; J.P. Morgan as of 8/4/2020, J.P. Morgan Research, U.S.
Fixed Income Weekly –Treasuries,7/31/2020, jpmm.com,
Note: The forecasts above assume a $1 trillion aid package is passed
10
LEGAL DOCUMENTS
11
EVWD RESOLUTION
Resolution authorizes the following:
1.Approves the Indenture of Trust, which governs the actual issuance by the District of
the Bonds
2.Approves the Continuing Disclosure Certificate which is substantially similar to other Continuing Disclosure Certificates entered into by the District
3.Approves Escrow Agreements (2010 and 2013)
4.Approves Purchase Contract with J.P. Morgan Securities
5.Approves the Preliminary Official Statement (POS), which is the District’s disclosure document to the market and is subject to federal securities law
1.The POS describes the 2020A&B Bonds, sources of repayment, risk factors and other material information on the District (such as cash flow projections and water supply)
6.Authorizes the District to take the required steps to execute and deliver all documents necessary to consummate the sale and delivery of bonds
12
ESTIMATED FINANCING SCHEDULE
Financing Date Description
Tuesday, August 18, 2020 Rating Agency Presentation
Tuesday, August 25, 2020 Receive Credit Ratings
Wednesday, August 26, 2020 Board Meeting to Approve Legal Documents,
POS and Revised Debt Management Policy
Thursday, August 27, 2020 Post POS
Thursday, September 3, 2020 Bond Pricing
Thursday, September 10, 2020 Closing
13
RECOMMENDATION
Recommend the Board consider approval of the District Resolution authorizing the
execution and delivery of the Refunding Revenue Bonds and approving the
execution and delivery of certain documents in connection therewith
14
FRA DISCLAIMER
These materials include an assessment of current market conditions,and include assumptions about interest
rates,execution costs,and other matters related to municipal securities issuance or municipal financial
products.These assumptions may change at any time subsequent to the date these materials were provided.
The refinancing and refunding scenarios presented herein are not intended to be inclusive of every feasible
or suitable refinancing alternative.
Fieldman,Rolapp &Associates,Inc.is an SEC-registered Municipal Advisor,undertaking a fiduciary duty in
providing financial advice to public agencies.Compensation contingent on the completion of a financing or
project is customary for municipal financial advisors.To the extent that our compensation for a transaction
is contingent on successful completion of the transaction,a potential conflict of interest exists as we would
have a potential incentive to recommend the completion of a transaction that might not be optimal for the
public agency.However,Fieldman,Rolapp &Associates,Inc.undertakes a fiduciary duty in advising public
agencies regardless
15
JP MORGAN DISCLAIMER
This presentation was prepared exclusively for the benefit and internal use of the J.P.Morgan client to whom it is directly addressed and delivered (including such client’s affiliates,the “Client”)in order to assist the Client in evaluating,on a preliminary
basis,the feasibility of possible transactions referenced herein.The materials have been provided to the Client for informational purposes only and may not be relied upon by the Client in evaluating the merits of pursuing transactions described herein.
No assurance can be given that any transaction mentioned herein could in fact be executed.
Information has been obtained from sources believed to be reliable but J.P.Morgan does not warrant its completeness or accuracy.Opinions and estimates constitute our judgment as of the date of this material and are subject to change without notice.
Past performance is not indicative of future results.Any financial products discussed may fluctuate in price or value.This presentation does not constitute a commitment by any J.P.Morgan entity to underwrite,subscribe for or place any securities or to
extend or arrange credit or to provide any other services.
J.P.Morgan's presentation is delivered to you for the purpose of being engaged as an underwriter,not as an advisor,(including,without limitation,a Municipal Advisor (as such term is defined in Section 975(e)of the Dodd-Frank Wall Street Reform and
Consumer Protection Act)).The role of an underwriter and its relationship to an issuer of debt is not equivalent to the role of an independent financial advisor.The primary role of an underwriter is to purchase,or arrange for the purchase of,securities
in an arm’s-length commercial transaction between the issuer and the underwriter.An underwriter has financial and other interests that differ from those of the issuer.If selected as your underwriter,J.P.Morgan will be acting as a principal and not as
your agent or your fiduciary with respect to the offering of the securities or the process leading to issuance (whether or not J.P.Morgan or any affiliate has advised or is currently advising the Client on other matters).Any portion of this presentation
which provides information on municipal financial products or the issuance of municipal securities is given in response to your questions or to demonstrate our experience in the municipal markets and does not constitute “advice”within the meaning of
Section 975 of the Dodd-Frank Wall Street Reform and Consumer Protection Act.We encourage you to consult with your own legal and financial advisors to the extent you deem appropriate in connection with the offering of the securities.If you have
any questions concerning our intended role and relationship with you,we would be happy to discuss this with you further.
This communication shall not constitute an offer to sell or the solicitation of an offer to buy,nor shall there be any sale of the securities in any state or jurisdiction in which such an offer,solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such state or jurisdiction.
This material is not a product of the Research Departments of J.P.Morgan Securities LLC ("JPMS")and is not a research report.Unless otherwise specifically stated,any views or opinions expressed herein are solely those of the authors listed,and may
differ from the views and opinions expressed by JPMS's Research Departments or other departments or divisions of JPMS and its affiliates.Research reports and notes produced by the Research Departments of JPMS are available from your Registered
Representative or at http://www.jpmm.com JPMS’s policies prohibit employees from offering,directly or indirectly,a favorable research rating or specific price target,or offering to change a rating or price target,to a subject Client as consideration or
inducement for the receipt of business or for compensation.JPMS also prohibits its research analysts from being compensated for involvement in investment banking transactions except to the extent that such participation is intended to benefit
investors.
Changes to Interbank Offered Rates (IBORs)and other benchmark rates:Certain interest rate benchmarks are,or may in the future become,subject to ongoing international,national and other regulatory guidance,reform and proposals for
reform.For more information,please consult:https://www.jpmorgan.com/global/disclosures/interbank_offered_rates
J.P.Morgan makes no representations as to the legal,tax,credit,or accounting treatment of any transactions mentioned herein,or any other effects such transactions may have on you and your affiliates or any other parties to such transactions and their
respective affiliates.You should consult with your own advisors as to such matters.
JPMorgan Chase &Co.and its affiliates do not provide tax,legal or accounting advice.This material has been prepared for informational purposes only,and is not intended to provide,and should not be relied on as the basis for making an investment
decision nor as tax,legal or accounting advice.You should consult your own advisors in respect of any tax,legal or accounting matter.
This presentation does not carry any right of publication or disclosure,in whole or in part,to any other party,without the prior consent of J.P.Morgan.Additional information is available upon request.
J.P.Morgan is the marketing name for the investment banking activities of JPMorgan Chase Bank,N.A.,J.P.Morgan Securities LLC (member,NYSE),J.P.Morgan Securities plc (authorized by the FSA and member,LSE)and their investment banking
affiliates.
This material is delivered in reliance on our engagement as an Underwriter under the Municipal Advisor Rule’s Underwriter Exclusion
a)This material is provided to you in reliance on our engagement as an underwriter on a specific transaction pursuant to Section 15B of the Securities Exchange Act of 1934,as amended;(b)J.P.Morgan is not acting as an advisor to you and does not owe
a fiduciary duty pursuant to Section 15B of the Securities Exchange Act of 1934,as amended,to you with respect to the information and material contained in this communication;(c)J.P.Morgan is acting for its own interests;(d)You should discuss any
information and material contained in this communication with any and all internal or external advisors and experts that you deem appropriate before acting on this information or material;and (e)J.P.Morgan has been engaged for purposes of the
Municipal Advisor Rule as an underwriter on this transaction and not as a financial advisor or municipal advisor.The primary role of an underwriter is to purchase securities with a view to distribution in an arm’s-length commercial transaction.The
underwriter has financial and other interests that differ from yours.
16
East Valley Water District Financing Authority
Resolution 2020.20
Page 1 of 6
RESOLUTION NO. 2020.20
A RESOLUTION OF THE EAST VALLEY WATER DISTRICT AUTHORIZING AND
APPROVING THE ISSUANCE OF REFUNDING REVENUE BONDS; APPROVING
THE INDENTURE OF TRUST PURSUANT TO WHICH SUCH BONDS ARE TO BE
ISSUED, A DISCLOSURE DOCUMENT, A BOND PURCHASE CONTRACT, ESCROW
AGREEMENTS, A CONTINUING DISCLOSURE CERTIFICATE AND OTHER
DOCUMENTS IN CONNECTION WITH SUCH BONDS; AND AUTHORIZING
CERTAIN OTHER MATTERS RELATING THERETO
WHEREAS, the East Valley Water District (the “District”) is a county water district that
is duly organized and existing under and by virtue of the laws of the State of California (the
“State”);
WHEREAS, the District has previously entered into an Installment Purchase Agreement,
dated as of October 1, 2010 (the “2010 IPA”), by and between the District and the East Valley
Water District Financing Authority (the “Authority”), which supports the payment of debt service
on the Authority’s Refunding Revenue Bonds, Series 2010 (the “2010 Bonds”);
WHEREAS, the District has previously entered into an Installment Purchase Agreement,
dated as of June 1, 2013 (the “2013 IPA”), by and between the District and the Authority, which
supports the payment of debt service on the Authority’s Revenue Bonds, Series 2013A (the “2013
Bonds”);
WHEREAS, the District is authorized by Articles 10 and 11 of Chapter 3 of Part 1 of
Division 2 of Title 5 (commencing with Section 53570) of the Government Code of the State of
California to issue bonds to refund outstanding indebtedness of the District;
WHEREAS, the District desires to provide for the issuance of refunding revenue bonds in
one or more series, on a taxable or tax-exempt basis (the “Bonds”), which will be payable from
the Net Revenues of the District’s Water System and Wastewater System, for the purposes of
prepaying the 2010 IPA and refunding the 2010 Bonds, prepaying the 2013 IPA and refunding the
2013 Bonds, paying costs of issuance of the Bonds and, if necessary, funding a deposit to (or
procuring a letter of credit, insurance policy or other facility (each, a “reserve surety”) to provide
for the funding of) a reserve fund for the Bonds;
WHEREAS, the Bonds are to be issued under and pursuant to an Indenture of Trust, by
and between the District and the trustee named therein (such Indenture of Trust in the form attached
hereto as Exhibit B with such changes, insertions and deletions as are made pursuant to this
Resolution, the “Indenture”);
WHEREAS, the Bonds are to be secured by Revenues of the Water System and
Wastewater System to the extent set forth in the Indenture;
WHEREAS, J.P. Morgan Securities LLC as underwriter (the “Underwriter”), has
submitted a proposal to purchase the Bonds in the form of a Contract of Purchase (such Contract
of Purchase, in the form attached hereto as Exhibit C with such changes, insertions and deletions
as are made pursuant to this Resolution, being referred to herein as the “Purchase Contract”);
East Valley Water District Financing Authority
Resolution 2020.20
Page 2 of 6
WHEREAS, in connection with the offering and sale of the Bonds there has been prepared
a disclosure document in the form of a Preliminary Official Statement (such Preliminary Official
Statement in the form attached hereto as Exhibit D with such changes, insertions and deletions as
are made pursuant to this Resolution, being referred to herein as the “Preliminary Official
Statement”);
WHEREAS, Rule 15c2-12 requires that, in order to be able to purchase or sell the Bonds,
the Underwriter must have reasonably determined that an obligated person has undertaken in a
written agreement or contract for the benefit of the owners of the Bonds to provide disclosure of
certain financial information and operating data and certain enumerated events on an ongoing
basis; and
WHEREAS, in order to cause such requirement of Rule 15c2-12 to be satisfied, the
District desires to enter into a Continuing Disclosure Certificate (such Continuing Disclosure
Certificate, in the form appended to the form of the Preliminary Official Statement attached hereto
as Exhibit E, with such changes, insertions and deletions as are made pursuant to this Resolution,
being referred to herein as the “Continuing Disclosure Certificate”);
WHEREAS, in connection with the prepayment of the 2010 IPA and the refunding of the
2010 Bonds, the District desires to enter into an Escrow Agreement (2010 Bonds) with the
Authority and the trustee for the 2010 Bonds, as escrow agent (such Escrow Agreement (2010
Bonds), in the form attached hereto as Exhibit F with such changes, insertions and deletions as are
made pursuant to this Resolution, being referred to herein as the “2010 Escrow Agreement”);
WHEREAS, in connection with the prepayment of the 2013 IPA and the refunding of the
2013 Bonds, the District desires to enter into an Escrow Agreement (2013A Bonds) with the
Authority and the trustee for the 2013 Bonds, as escrow agent (such Escrow Agreement (2013A
Bonds), in the form attached hereto as Exhibit G with such changes, insertions and deletions as are
made pursuant to this Resolution, being referred to herein as the “2013 Escrow Agreement”);
WHEREAS, in compliance with Senate Bill 450 (Chapter 625 of the 2017-2018 Session
of the California Legislature), which added Section 5852.1 to the California Government Code,
the District has obtained from the Underwriter or the District’s financial advisor required good
faith estimates relating to the Bonds, and such estimates are disclosed and set forth in Exhibit A
hereto;
WHEREAS, there have been submitted to this meeting drafts of the following:
(1)the Indenture;
(2)the Purchase Contract;
(3)the Preliminary Official Statement;
(4)the Continuing Disclosure Certificate;
(5)the 2010 Escrow Agreement; and
(6) the 2013 Escrow Agreement; and
East Valley Water District Financing Authority
Resolution 2020.20
Page 3 of 6
WHEREAS, after having reviewed and considered the proposal of the Underwriter to
purchase the Bonds on the terms and conditions contained in the Purchase Contract, this Board
now desires to authorize the issuance and sale of the Bonds, including the execution of such
documents and the performance of such acts as may be necessary or desirable to effect such
issuance and sale, and the other actions contemplated by this Resolution.
NOW, THEREFORE, BE IT RESOLVED AND ORDERED:
SECTION 1. Findings and Definitions. The Board hereby specifically finds and declares
that each of the statements, findings and determinations of the District set forth in the above recitals
and in the preambles of the documents approved herein are true and correct. Capitalized terms
that are used herein and not defined have the meanings that are set forth in the Indenture.
SECTION 2. Indenture. The Indenture, in substantially the form attached hereto as
Exhibit B, and made a part hereof as though set forth in full herein, be and the same is hereby
approved. Each of the President or Vice President of the Board or the General Manager or Chief
Financial Officer of the District or the designee thereof (each an “Authorized Officer”), acting
singly, is hereby authorized to execute and deliver the Indenture, in the name of and on behalf of
the District, in substantially the form attached hereto with such changes, insertions and deletions
as may be approved by the Authorized Officer executing the Indenture, said execution being
conclusive evidence of such approval, and the Secretary is hereby authorized to attest thereto.
SECTION 3. Issuance of Bonds. Subject to the limitations specified in this Resolution,
the issuance of the Bonds in one or more series, on a taxable or tax-exempt basis, on the terms and
conditions set forth in the Indenture is hereby authorized and approved. The aggregate principal
amount of the Bonds shall not exceed $34,000,000. The Bonds will be dated as provided in, will
bear interest at the rates provided in, will mature on the date or dates provided in, will be issued in
the form provided in, will have the sinking fund installments specified in, will be subject to
redemption as provided in, and will have such other terms as shall be provided in, the Indenture as
the same is completed as provided in this Resolution. The Authorized Officer executing the
Indenture is hereby authorized, subject to the limitations set forth in this Section 3 and in Section
5, to determine the following: (i) the maturity date or dates of the Bonds; (ii) the principal amount
of the Bonds maturing on each maturity date; (iii) the interest rate or rates for the Bonds maturing
on each maturity date; (iv) the maturity or maturities, if any, of the Bonds to be redeemed or paid
at maturity from sinking fund installments (the “Term Bonds”); (v) the sinking fund installments
for the Term Bonds; and (vi) the redemption provisions for the Bonds.
SECTION 4. Use of Bond Proceeds. The net proceeds received from the sale of the
Bonds shall be applied to such purposes as are set forth in the recitals to this Resolution in the
manner provided in the Indenture.
SECTION 5. Purchase Contract. The Purchase Contract, in substantially the form
attached hereto as Exhibit C, and made a part hereof as though set forth in full herein, be and the
same is hereby approved. Each Authorized Officer, acting singly, is hereby authorized to execute
and deliver the Purchase Contract, in the name of and on behalf of the District, in substantially the
form attached hereto with such changes, insertions and deletions as may be approved by the
East Valley Water District Financing Authority
Resolution 2020.20
Page 4 of 6
Authorized Officer executing the Purchase Contract, said execution being conclusive evidence of
such approval, and the Secretary is hereby authorized to attest thereto.
The Authorized Officer executing the Purchase Contract is hereby authorized to determine
the purchase price to be paid for the Bonds under the Purchase Contract; provided, however, that
the aggregate Underwriter’s discount (not including original issue discount) for the Bonds shall be
not more than 0.35% of the aggregate principal amount of the Bonds, the true interest cost of the
Bonds issued on a tax-exempt basis shall be not more than 2.85%, the true interest cost of the
Bonds issued on a taxable basis shall be not more than 3.50%, the present value of the savings to
be achieved by refunding the 2010 Bonds shall be not less than 3% and the present value of the
savings to be achieved by refunding the 2013 Bonds shall be not less than 4%. The sale of the
Bonds to the Underwriter on the terms and conditions contained in the Purchase Contract, as the
same may be completed in accordance with the provisions of this Resolution, with such changes,
insertions and deletions as are authorized hereby, is hereby approved and authorized.
SECTION 6. Official Statement. The Preliminary Official Statement, in substantially the
form attached hereto as Exhibit D, and made a part hereof as though set forth in full herein, be and
the same is hereby approved. Each of the Authorized Officers, acting singly, is hereby authorized
to cause the Preliminary Official Statement to be delivered to the Underwriter, in substantially the
form attached hereto as Exhibit D with such changes, insertions and deletions as may be approved
by the Authorized Officer delivering the Preliminary Official Statement (including without
limitation the insertion of the proposed terms of the Bonds), said delivery being conclusive
evidence of such approval. The use of the Preliminary Official Statement in connection with the
offering and sale of the Bonds by the Underwriter, including delivery of the Preliminary Official
Statement in electronic form, is hereby authorized and approved. Each of the Authorized Officers,
acting singly, is hereby authorized to determine that the Preliminary Official Statement is deemed
final for purposes of Rule 15c2-12.
The preparation and delivery to the Underwriter of a final Official Statement (the “Official
Statement”) relating to the Bonds, and its use by the Underwriter in connection with the offering
and sale of the Bonds, including delivery of the Official Statement in electronic form, be and the
same is hereby approved. The Official Statement shall be in substantially the form of the
Preliminary Official Statement with such changes, insertions and deletions as may be approved by
the Authorized Officer executing the Official Statement (including without limitation the insertion
of the final terms of the Bonds), said execution being conclusive evidence of such approval. Each
of the Authorized Officers, acting singly, is hereby authorized to execute the Official Statement,
in the name and on behalf of the District, and thereupon to cause the Official Statement to be
delivered to the Underwriter. Each of the Authorized Officers, acting singly, is hereby authorized
to approve and execute any amendment or supplement to the Official Statement contemplated by
the Purchase Contract, in the name and on behalf of the District, and thereupon to cause such
amendment or supplement, to be delivered to the Underwriter.
SECTION 7. Continuing Disclosure Certificate. The Continuing Disclosure Certificate,
in substantially the form attached hereto as Exhibit E, and made a part hereof as though set forth
in full herein, be and the same is hereby approved. Each Authorized Officer, acting singly, is
hereby authorized to execute and deliver the Continuing Disclosure Certificate, in the name of and
on behalf of the District, in substantially the form attached hereto with such changes, insertions
East Valley Water District Financing Authority
Resolution 2020.20
Page 5 of 6
and deletions as may be approved by the Authorized Officer executing the Continuing Disclosure
Certificate, said execution being conclusive evidence of such approval, and the Secretary is hereby
authorized to attest thereto.
SECTION 8. 2010 Escrow Agreement. The 2010 Escrow Agreement, in substantially the
form attached hereto as Exhibit F, and made a part hereof as though set forth in full herein, be and
the same is hereby approved. Each Authorized Officer, acting singly, is hereby authorized to
execute and deliver the 2010 Escrow Agreement, in the name of and on behalf of the District, in
substantially the form attached hereto with such changes, insertions and deletions as may be
approved by the Authorized Officer executing the 2010 Escrow Agreement, said execution being
conclusive evidence of such approval, and the Secretary is hereby authorized to attest thereto.
SECTION 9. 2013 Escrow Agreement. The 2013 Escrow Agreement, in substantially the
form attached hereto as Exhibit G, and made a part hereof as though set forth in full herein, be and
the same is hereby approved. Each Authorized Officer, acting singly, is hereby authorized to
execute and deliver the 2013 Escrow Agreement, in the name of and on behalf of the District, in
substantially the form attached hereto with such changes, insertions and deletions as may be
approved by the Authorized Officer executing the 2013 Escrow Agreement, said execution being
conclusive evidence of such approval, and the Secretary is hereby authorized to attest thereto.
SECTION 10. Bond Insurance. The Board hereby authorizes the Authorized
Officers: (i) to solicit bids on a municipal bond insurance policy and/or reserve surety for the
benefit of the Bonds; (ii) to negotiate the terms of such policy or policies; (iii) to finalize, if
appropriate, the form of such policy or policies with a municipal bond insurer; and (iv) if it is
determined that the policy or policies will result in net savings for the District, to pay the insurance
premium of such policy or policies from the proceeds of the issuance and sale of the Bonds.
SECTION 11. Other Actions. The Authorized Officers, the Secretary, the
District’s General Counsel and any other proper official, officer or employee of the District, acting
singly, be and each of them hereby is authorized to execute and deliver any and all documents and
instruments and to do and cause to be done any and all acts and things necessary or convenient in
carrying out the actions authorized by this Resolution and the transactions contemplated by the
documents and instruments approved or authorized by this Resolution, including, without
limitation, making any determinations or submission of any documents or reports which are
required by any rule or regulation of any governmental entity, the giving of any notices and
directions or the seeking of any consents or acknowledgements in connection with the issuance
and sale of the Bonds, the execution and delivery of any redemption or escrow instructions related
to the 2010 Bonds or the 2013 Bonds, the execution of any agreement related to municipal bond
insurance or a reserve surety for the Bonds and the authorization, execution, delivery of, and the
performance by the District of its obligations under, the documents and instruments approved or
authorized by this Resolution.
SECTION 12. Ratification of Prior Actions. All actions heretofore taken by any
committee of the Board, or any official, officer, employee, representative or agent of the District,
in connection with the issuance and sale of the Bonds or the authorization, execution, delivery, or
performance of the District’s obligations under the documents and instruments that are approved
East Valley Water District Financing Authority
Resolution 2020.20
Page 6 of 6
or authorized by this Resolution, and the other actions contemplated by this Resolution, are hereby
ratified, approved and confirmed.
SECTION 13. Effect. This Resolution shall take effect immediately.
Passed and adopted by the East Valley Water District Board of Directors on August 26,
2020, by the following vote:
ROLL CALL:
Ayes:
Noes:
Abstain:
Absent:
David E. Smith
Board President
ATTEST:
_____________________________
John Mura
Secretary, Board of Directors
August 26, 2020
I HEREBY CERTIFY that the foregoing is a full, true and correct copy of Resolution 2020.20
adopted by the Board of Directors of East Valley Water District at its Regular Meeting held August
26, 2020.
_____________________________
John Mura
Secretary, Board of Directors
A-1
EXHIBIT A
GOVERNMENT CODE SECTION 5852.1 DISCLOSURE
The following information consists of estimates that have been provided by the Underwriter
and/or the District’s financial advisor and has been represented by such party to have been provided in
good faith:
(A) True Interest Cost of the Bonds: 2.33%
(B) Finance Charge of the Bonds (Sum of all fees/charges paid to third parties): $318,580
(C) Net Proceeds of the Bonds to be Received (net of finance charges, reserves and
capitalized interest, if any, plus premium and contributions from the District): $35,907,475
(D) Total Payment Amount through Maturity of the Bonds: $43,662,608
The foregoing constitute good faith estimates only. The principal amount of the Bonds, the
true interest cost of the Bonds, the finance charges thereof, the amount of proceeds received therefrom
and total payment amount with respect thereto may differ from such good faith estimates due to: (a)
the actual date of the sale of the Bonds being different than the date assumed for purposes of such
estimates; (b) the actual principal amount of Bonds sold being different from the estimated amount
used for purposes of such estimates; (c) the actual amortization of the Bonds being different than the
amortization assumed for purposes of such estimates; (d) the actual market interest rates at the time of
sale of the Bonds being different than those estimated for purposes of such estimates; (e) other market
conditions; or (f) alterations in the District’s financing plan, or a combination of such factors.
The actual date of sale of the Bonds and the actual principal amount of Bonds sold will be
determined by the District based on a variety of factors. The actual interest rates borne by the Bonds
will depend on market interest rates at the time of sale thereof. The actual amortization of the Bonds
will also depend, in part, on market interest rates at the time of sale thereof. Market interest rates are
affected by economic and other factors beyond the control of the District.
EXHIBIT B
INDENTURE OF TRUST
Dated as of _____ 1, 2020
By and between
MUFG UNION BANK, N.A.,
as Trustee
and the
EAST VALLEY WATER DISTRICT
Relating to
$_____
EAST VALLEY WATER DISTRICT
REFUNDING REVENUE BONDS,
SERIES 2020A
$_____
EAST VALLEY WATER DISTRICT
REFUNDING REVENUE BONDS,
SERIES 2020B (FEDERALLY TAXABLE)
TABLE OF CONTENTS
Page
i
ARTICLE I
DEFINITIONS; CONTENT OF CERTIFICATES AND OPINIONS
Section 1.01. Definitions .............................................................................................................. 3
Section 1.02. Content of Certificates and Opinions.................................................................... 14
Section 1.03. Interpretation......................................................................................................... 14
ARTICLE II
THE 2020 BONDS
Section 2.01. Authorization of 2020 Bonds ................................................................................ 15
Section 2.02. Terms of the 2020 Bonds ...................................................................................... 15
Section 2.03. Transfer of 2020 Bonds ........................................................................................ 16
Section 2.04. Exchange of 2020 Bonds ...................................................................................... 17
Section 2.05. Registration Books ................................................................................................ 17
Section 2.06. Form and Execution of 2020 Bonds ..................................................................... 17
Section 2.07. 2020 Bonds Mutilated, Lost, Destroyed or Stolen................................................ 18
Section 2.08. Book Entry System ............................................................................................... 18
ARTICLE III
ISSUANCE OF 2020 BONDS; APPLICATION OF PROCEEDS
Section 3.01. Issuance of the 2020 Bonds .................................................................................. 21
Section 3.02. Application of Proceeds of the 2020 Bonds ......................................................... 21
Section 3.03. Establishment and Application of Costs of Issuance Fund ................................... 22
Section 3.04. Validity of 2020 Bonds ......................................................................................... 22
ARTICLE IV
REDEMPTION OF 2020 BONDS
Section 4.01. Terms of Redemption ........................................................................................... 22
Section 4.02. Selection of 2020 Bonds for Redemption ............................................................. 24
Section 4.03. Notice of Redemption ........................................................................................... 25
Section 4.04. Partial Redemption of 2020 Bonds ....................................................................... 25
Section 4.05. Effect of Redemption ............................................................................................ 25
ARTICLE V
REVENUES, FUNDS AND ACCOUNTS; PAYMENT OF PRINCIPAL AND INTEREST
Section 5.01. Pledge and Assignment; Revenue Fund ............................................................... 26
Section 5.02. Allocation of Revenues ......................................................................................... 27
Section 5.03. Application of Interest Account ............................................................................ 28
Section 5.04. Application of Principal Account ......................................................................... 28
TABLE OF CONTENTS
(continued)
Page
ii
Section 5.05. Application of Redemption Fund ......................................................................... 28
Section 5.06. Investments ........................................................................................................... 28
Section 5.07. Rebate Fund .......................................................................................................... 29
Section 5.08. Application of Funds and Accounts When No 2020 Bonds are Outstanding....... 31
ARTICLE VI
PARTICULAR COVENANTS
Section 6.01. Punctual Payment ................................................................................................. 31
Section 6.02. Extension of Payment of 2020 Bonds .................................................................. 31
Section 6.03. Against Encumbrances ......................................................................................... 31
Section 6.04. Power to Issue 2020 Bonds and Make Pledge and Assignment ........................... 31
Section 6.05. Accounting Records and Financial Statements .................................................... 31
Section 6.06. Tax Covenants ...................................................................................................... 32
Section 6.07. Waiver of Laws ..................................................................................................... 33
Section 6.08. Further Assurances ............................................................................................... 33
Section 6.09. Budgets ................................................................................................................. 33
Section 6.10. Observance of Laws and Regulations ................................................................... 33
Section 6.11. Compliance with Contracts ................................................................................... 33
Section 6.12. Prosecution and Defense of Suits ......................................................................... 34
Section 6.13. Continuing Disclosure .......................................................................................... 34
Section 6.14. Additional Contracts and Bonds ........................................................................... 34
Section 6.15. Against Sale or Other Disposition of Property ..................................................... 35
Section 6.16. Against Competitive Facilities ............................................................................. 35
Section 6.17. Maintenance and Operation of the Water System and the Wastewater System ... 35
Section 6.18. Payment of Claims ................................................................................................ 36
Section 6.19. Insurance ............................................................................................................... 36
Section 6.20. Payment of Taxes and Compliance with Governmental Regulations .................. 37
Section 6.21. Amount of Rates and Charges .............................................................................. 37
Section 6.22. Collection of Rates and Charges ........................................................................... 37
Section 6.23. Eminent Domain Proceeds ................................................................................... 38
Section 6.24. Enforcement of Contracts ..................................................................................... 38
ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES OF 2020 BOND OWNERS
Section 7.01. Events of Default .................................................................................................. 38
Section 7.02. Remedies Upon Event of Default ......................................................................... 39
Section 7.03. Application of Revenues and Other Funds After Default ..................................... 40
Section 7.04. Trustee to Represent 2020 Bond Owners ............................................................. 40
Section 7.05. 2020 Bond Owners’ Direction of Proceedings ..................................................... 41
Section 7.06. Suit by Owners ..................................................................................................... 41
Section 7.07. Absolute Obligation of the District ....................................................................... 42
Section 7.08. Remedies Not Exclusive ....................................................................................... 42
Section 7.09. No Waiver of Default ........................................................................................... 42
TABLE OF CONTENTS
(continued)
Page
iii
ARTICLE VIII
THE TRUSTEE
Section 8.01. Duties, Immunities and Liabilities of Trustee ...................................................... 42
Section 8.02. Merger or Consolidation ....................................................................................... 44
Section 8.03. Liability of Trustee ............................................................................................... 44
Section 8.04. Right to Rely on Documents ................................................................................. 46
Section 8.05. Preservation and Inspection of Documents .......................................................... 47
Section 8.06. Compensation and Indemnification ...................................................................... 47
ARTICLE IX
MODIFICATION OR AMENDMENT OF THE INDENTURE
Section 9.01. Amendments Permitted ........................................................................................ 47
Section 9.02. Effect of Supplemental Indenture ......................................................................... 49
Section 9.03. Endorsement of 2020 Bonds; Preparation of New 2020 Bonds ........................... 49
Section 9.04. Amendment of Particular 2020 Bonds ................................................................. 49
ARTICLE X
DEFEASANCE
Section 10.01. Discharge of Indenture ......................................................................................... 49
Section 10.02. Discharge of Liability on 2020 Bonds .................................................................. 50
Section 10.03. Deposit of Money or Securities with Trustee ....................................................... 50
Section 10.04. Payment of 2020 Bonds After Discharge of Indenture......................................... 51
ARTICLE XI
MISCELLANEOUS
Section 11.01. Liability of District Limited to Revenues ............................................................. 51
Section 11.02. Successor Is Deemed Included in All References to Predecessor ........................ 52
Section 11.03. Limitation of Rights to Parties and 2020 Bond Owners ....................................... 52
Section 11.04. Waiver of Notice; Requirement of Mailed Notice ................................................ 52
Section 11.05. Disposal of 2020 Bonds ........................................................................................ 52
Section 11.06. Severability of Invalid Provisions ........................................................................ 52
Section 11.07. Notices; Electronic Signatures .............................................................................. 52
Section 11.08. Evidence of Rights of 2020 Bond Owners ........................................................... 53
Section 11.09. Disqualified 2020 Bonds ...................................................................................... 53
Section 11.10. Money Held for Particular 2020 Bonds ................................................................ 54
Section 11.11. Funds and Accounts .............................................................................................. 54
Section 11.12. Waiver of Personal Liability ................................................................................. 54
Section 11.13. Execution in Several Counterparts ....................................................................... 54
Section 11.14. CUSIP Numbers ................................................................................................... 54
Section 11.15. Choice of Law....................................................................................................... 54
TABLE OF CONTENTS
(continued)
Page
iv
Section 11.16. Paired Obligation Provider Guidelines ................................................................. 54
Section 11.17. U.S.A. Patriot Act ................................................................................................. 55
Signatures ............................................................................................................................ S-1
Exhibit A Form of 2020 Bond ............................................................................................. A-1
Exhibit B Description of 2010 Project, Prior Projects and 2013 Project ............................ B-1
1
INDENTURE OF TRUST
THIS INDENTURE OF TRUST is made and entered into and dated as of _____ 1, 2020 (the
“Indenture”), by and between the EAST VALLEY WATER DISTRICT, a county water district that
is duly organized and existing under and by virtue of the laws of the State of California (the “District”),
and MUFG UNION BANK, N.A., a national banking association that is duly organized and existing
under the laws of the United States of America, as trustee hereunder (the “Trustee”).
RECITALS
A. In 2010, the District entered into an Installment Purchase Agreement, dated as of
October 1, 2010 (the “2010 Installment Purchase Agreement”), with the East Valley Water District
Financing Authority (the “Authority”): (i) to finance certain capital improvements to the District’s
Water System and Wastewater System (the “2010 Project”); and (ii) to refinance certain previously
constructed capital improvements to the District’s Water System and Wastewater System (the “Prior
Projects”).
B. The District’s payments to the Authority under the 2010 Installment Purchase
Agreement support the payment of debt service on the Authority’s Refunding Revenue Bonds, Series
2010 (the “2010 Bonds”).
C. In 2013, the District entered into an Installment Purchase Agreement, dated as of June
1, 2013 (the “2013 Installment Purchase Agreement”), with the Authority to finance certain capital
improvements to the District’s Water System and Wastewater System (the “2013 Project”).
D. The District’s payments to the Authority under the 2013 Installment Purchase
Agreement support the payment of debt service on the Authority’s Revenue Bonds, Series 2013A (the
“2013 Bonds”).
E. The District is authorized by Articles 10 and 11 of Chapter 3 of Part 1 of Division 2 of
Title 5 (commencing with Section 53570) of the Government Code of the State of California to issue
bonds to refund outstanding indebtedness of the District.
F. Pursuant to such authority, the District desires: (i) to issue tax-exempt refunding
revenue bonds (the “2020A Bonds”) to prepay the 2010 Installment Purchase Agreement and cause
the refunding of the 2010 Bonds; and (ii) to issue federally taxable refunding revenue bonds (the
“2020B Bonds”) to prepay the 2013 Installment Purchase Agreement and cause the refunding of the
2013 Bonds, in each case in order to achieve debt service savings.
G. In order to provide for the authentication and delivery of the 2020A Bonds and the
2020B Bonds (collectively, the “2020 Bonds”), to establish and declare the terms and conditions upon
which such 2020 Bonds are to be issued and secured and to secure the payment of the principal thereof
and interest and premium, if any, thereon, the District has authorized the execution and delivery of this
Indenture.
H. The District has determined that all acts and proceedings which are required by law
and necessary to make the 2020 Bonds, when executed by the District, authenticated and delivered by
the Trustee, and duly issued, the valid, binding and legal special obligations of the District, and to
constitute the Indenture a valid and binding agreement for the uses and purposes herein set forth in
2
accordance with its terms, have been done and taken, and the execution and delivery of the Indenture
have been in all respects duly authorized;
GRANTING CLAUSES
The District, in consideration of the premises and the acceptance by the Trustee of the trusts
hereby created and of the mutual covenants herein contained and of the purchase and acceptance of the
2020 Bonds by the owners thereof, and for other valuable consideration, the receipt whereof is hereby
acknowledged, in order to secure the payment of the principal of and the interest and premium (if any)
on all 2020 Bonds at any time issued and Outstanding under the Indenture, according to their tenor,
and to secure the performance and observance of all the covenants and conditions therein and herein
set forth, does hereby assign and pledge unto, and grant a security interest in, the following (the “Trust
Estate”) to the Trustee, and its successors in trust and assigns forever, for the securing of the
performance of the obligations of the District to the 2020 Bond Owners hereinafter set forth:
FIRST
All right, title and interest of the District in and to the Revenues (as such term is defined herein),
including, but without limiting the generality of the foregoing, the present and continuing right to make
claim for, collect, receive and receipt for any Revenues payable to or receivable by the District under
the Constitution of the State, the Government Code of the State, the Indenture, the charter of the District
and any other applicable laws of the State or otherwise, to bring actions and proceedings thereunder
for the enforcement thereof, and to do any and all things which the District is or may become entitled
to do thereunder, subject to the terms hereof.
SECOND
All moneys and securities held in funds and accounts of this Indenture, except amounts which
are held in the Rebate Fund, and all other rights of every name and nature from time to time herein or
hereafter by delivery or by writing of any kind pledged, assigned or transferred as and for additional
security hereunder to the Trustee by the District or by anyone on its behalf, or with its written consent,
and to hold and apply the same, subject to the terms hereof.
TO HAVE AND TO HOLD all and singular the Trust Estate, whether now owned or hereafter
acquired, unto the Trustee and its respective successors in trust and assigns forever for the benefit of
the Owners, and such pledge shall constitute a lien on and security interest in such Trust Estate;
IN TRUST, upon the terms and trusts herein set forth for the equal and proportionate benefit,
security and protection of all present and future owners of the 2020 Bonds issued under and secured
by the Indenture without privilege, priority or distinction as to the lien or otherwise of any of the 2020
Bonds over any of the other 2020 Bonds;
PROVIDED, HOWEVER, that if the District, its successors or assigns shall well and truly pay,
or cause to be paid, the principal of and interest and any redemption premium on the 2020 Bonds due
or to become due thereon, at the times and in the manner provided in the 2020 Bonds according to the
true intent and meaning thereof, and shall well and truly keep, perform and observe all of the covenants
and conditions pursuant to the terms of the Indenture to be kept, performed and observed by it, and
shall pay or cause to be paid to the Trustee all sums of money due or to become due in accordance with
the terms and provisions hereof, then upon such final payments or deposits as herein provided, the
3
Indenture and the rights hereby granted shall cease, terminate and be void; otherwise the Indenture
shall remain in full force and effect.
It is expressly declared that all 2020 Bonds which are issued and secured hereunder are to be
issued, authenticated and delivered, and all sold property, rights and interests, including, without
limitation, the Revenues, which are hereby assigned and pledged, are to be dealt with and disposed of,
under, upon and subject to the terms, conditions, stipulations, covenants, agreements, trusts, uses and
purposes hereinafter expressed, and the District has agreed and covenanted and does hereby covenant
and agree with the Trustee, for the benefit of the respective Owners from time to time of the 2020
Bonds, as follows:
ARTICLE I
DEFINITIONS; CONTENT OF CERTIFICATES AND OPINIONS
Section 1.01. Definitions. Unless the context otherwise requires, the terms defined in this
Section 1.01 shall, for all purposes of the Indenture and of any indenture supplemental hereto and of
any certificate, opinion or other document herein mentioned, have the meanings herein specified, to be
equally applicable to both the singular and plural forms of any of the terms herein defined.
Accountant’s Report. The term “Accountant’s Report” means a report signed by an
Independent Certified Public Accountant.
Authority. The term “Authority” means the East Valley Water District Financing Authority, a
joint exercise of powers authority that is duly organized and existing under the Joint Exercise of Powers
Agreement and the Constitution and laws of the State.
Authorized Officer. The term “Authorized Officer” means, with respect to the District, the
President or Vice President of the Board of Directors of the District or the General Manager or Chief
Financial Officer of the District or any other person designated as an Authorized Officer of the District
by a Certificate of the District signed by the President or Vice President of the Board of Directors of
the District or the General Manager or Chief Financial Officer of the District and filed with the Trustee.
Bond Counsel. The term “Bond Counsel” means Stradling Yocca Carlson & Rauth, a
Professional Corporation, or another firm of nationally recognized attorneys experienced in the
issuance of obligations the interest on which is excludable from gross income under Section 103 of the
Code.
Bonds. The term “Bonds” means all revenue bonds or notes of the District authorized,
executed, issued and delivered by the District, the payments of which are payable from Net Revenues
on a parity with the 2020 Bonds and which are secured by a pledge of and lien on Revenues as described
in Section 5.01 hereof.
Bond Year. The term “Bond Year” has the meaning that is set forth in the Tax Certificate.
Business Day. The term “Business Day” means: (1) a day which is not a Saturday, Sunday or
legal holiday on which banking institutions in the State, or in any other state in which the Designated
Corporate Trust Office of the Trustee is located, are closed; or (2) a day on which the New York Stock
Exchange is not closed.
4
Certificate; Direction; Request; Requisition. The terms “Certificate,” “Direction,” “Request”
and “Requisition” of the District mean a written certificate, direction, request or requisition signed in
the name of the District by an Authorized Officer of the District. Any such instrument and supporting
opinions or representations, if any, may, but need not, be combined in a single instrument with any
other instrument, opinion or representation, and the two or more so combined shall be read and
construed as a single instrument. If and to the extent required by Section 1.02, each such instrument
shall include the statements provided for in Section 1.02.
Closing Date. The term “Closing Date” means the date on which the 2020 Bonds are delivered
to the original purchaser thereof.
Code. The term “Code” means the Internal Revenue Code of 1986, as amended.
Continuing Disclosure Certificate. The term “Continuing Disclosure Certificate” means the
Continuing Disclosure Certificate of the District dated the Closing Date relating to the 2020 Bonds, as
originally executed or as it may be from time to time amended or supplemented in accordance with its
terms.
Contracts. The term “Contracts” means the 2010 State Contract, the 2018 State Contract and
all other contracts of the District previously or hereafter authorized and executed by the District, the
payments under which are payable from Net Revenues on a parity with the 2020 Bonds and which are
secured by a pledge and lien on Revenues as described in Section 5.01 hereof; but excluding contracts
entered into for operation and maintenance of the Water System or the Wastewater System.
Costs of Issuance. The term “Costs of Issuance” means all items of expense directly or
indirectly payable by or reimbursable to the District and related to the authorization, issuance, sale and
delivery of the 2020 Bonds, including but not limited to costs of preparation and reproduction of
documents, printing expenses, filing and recording fees, initial fees and charges of the Trustee and
counsel to the Trustee, legal fees and charges, fees and disbursements of consultants and professionals,
rating agency fees, title insurance premiums, letter of credit fees and bond insurance premiums (if any),
fees and charges for preparation, execution and safekeeping of the 2020 Bonds and any other cost,
charge or fee in connection with the original issuance of the 2020 Bonds.
Costs of Issuance Fund. The term “Costs of Issuance Fund” means the fund by that name
established pursuant to Section 3.03.
Debt Service. The term “Debt Service” means, for any period of calculation, the sum of:
(1) the interest accruing during such period on all outstanding Bonds, assuming that all
outstanding serial Bonds are retired as scheduled and that all outstanding term Bonds are prepaid or
paid from sinking fund payments as scheduled (except to the extent that such interest is capitalized or
is reasonably anticipated to be reimbursed to the District by the United States of America pursuant to
Section 54AA of the Code (Section 1531 of Title I of Division B of the American Recovery and
5
Reinvestment Act of 2009 (Pub. L. No. 111-5, 23 Stat. 115 (2009), enacted February 17, 2009)), or
any future similar program);
(2) those portions of the principal amount of all outstanding serial Bonds maturing in such
period;
(3) those portions of the principal amount of all outstanding term Bonds required to be
prepaid or paid in such period; and
(4) those portions of the Contracts required to be paid during such period (except to the
extent that the interest evidenced and represented thereby is capitalized or is reasonably anticipated to
be reimbursed to the District by the United States of America pursuant to Section 54AA of the Code
(Section 1531 of Title I of Division B of the American Recovery and Reinvestment Act of 2009 (Pub.
L. No. 111-5, 23 Stat. 115 (2009), enacted February 17, 2009)), or any future similar program);
but less the earnings to be derived from the investment of moneys on deposit in debt service
reserve funds established for Bonds or Contracts;
provided that, as to any such Bonds or Contracts bearing or comprising interest at other than a
fixed rate, the rate of interest used to calculate Debt Service shall, for all purposes, be assumed to bear
interest at a fixed rate equal to the higher of: (i) the then current variable interest rate borne by such
Bonds or Contracts plus 1%; and (ii) the highest variable rate borne over the preceding twenty-four
(24) months by outstanding variable rate debt issued by the District or, if no such variable rate debt is
at the time outstanding, by variable rate debt of which the interest rate is computed by reference to an
index comparable to that to be utilized in determining the interest rate for the debt then proposed to be
issued;
provided further that if any series or issue of such Bonds or Contracts have twenty-five percent
(25%) or more of the aggregate principal amount of such series or issue due in any one year, Debt
Service shall be determined for the period of determination as if the principal of and interest on such
series or issue of such Bonds or Contracts were being paid from the date of incurrence thereof in
substantially equal annual amounts over a period of twenty-five (25) years from the date of calculation;
and
provided further that, as to any such Bonds or Contracts or portions thereof bearing no interest
but which are sold at a discount and which discount accretes with respect to such Bonds or Contracts
or portions thereof, such accreted discount shall be treated as interest in the calculation of Debt Service;
and
provided further that if the Bonds or Contracts constitute Paired Obligations, the interest rate
on such Bonds or Contracts shall be the resulting linked rate or the effective fixed interest rate to be
paid by the District with respect to such Paired Obligations; and
provided further that the amount on deposit in a debt service reserve fund on any date of
calculation of Debt Service shall be deducted from the amount of principal due at the final maturity of
the Bonds and Contracts for which such debt service reserve fund was established and to the extent the
amount in such debt service reserve fund is in excess of such amount of principal, such excess shall be
6
applied to the full amount of principal due, in each preceding year, in descending order, until such
amount is exhausted.
Depository; DTC. The term “Depository” or “DTC” means The Depository Trust Company,
New York, New York, a limited purpose trust company organized under the laws of the State of New
York, in its capacity as securities depository for the 2020 Bonds.
Designated Corporate Trust Office. The term “Designated Corporate Trust Office” means with
respect to the Trustee, the corporate trust office of the Trustee at 445 South Figueroa Street, Suite 401,
Los Angeles, California 90071, Attention: Corporate Trust, Reference: East Valley Water District,
Series 2020, Fax: 213-972-5694, Email: LACT@unionbank.com, or such other or additional offices
as may be specified in writing by the Trustee to the District, except that with respect to presentation of
2020 Bonds for payment or for registration of transfer and exchange, such term means the office or
agency of the Trustee at which, at any particular time, its corporate trust agency business shall be
conducted.
District. The term “District” means the East Valley Water District, a county water district that
is duly organized and existing under and by virtue of the laws of the State.
Escrow Agent. The term “Escrow Agent” means MUFG Union Bank, N.A., as escrow agent
and 2010 Bond trustee under the 2010 Escrow Agreement and as escrow agent and 2013 Bond trustee
under the 2013 Escrow Agreement.
Event of Default. The term “Event of Default” means any of the events specified in Section
7.01.
Federal Securities. The term “Federal Securities” means any direct, noncallable general
obligations of the United States of America (including obligations issued or held in book entry form
on the books of the Department of the Treasury of the United States of America), or noncallable
obligations the timely payment of principal of and interest on which are fully and unconditionally
guaranteed by the United States of America.
Fiscal Year. The term “Fiscal Year” means the twelve month period beginning on July 1 of
each year and ending on the next succeeding June 30, both dates inclusive, or any other twelve month
period hereafter selected and designated as the official fiscal year period of the District.
Fitch. The term “Fitch” means Fitch Ratings, Inc., or any successor thereto.
Generally Accepted Accounting Principles. The term “Generally Accepted Accounting
Principles” means the uniform accounting and reporting procedures set forth in publications of the
American Institute of Certified Public Accountants or its successor, or by any other generally accepted
authority on such procedures, and includes, as applicable, the standards set forth by the Governmental
Accounting Standards Board or its successor.
Indenture. The term “Indenture” means the Indenture of Trust, dated as of _____ 1, 2020, by
and between the District and the Trustee, as originally executed or as it may from time to time be
supplemented, modified or amended by any Supplemental Indenture.
Independent Certified Public Accountant. The term “Independent Certified Public
Accountant” means any firm of certified public accountants appointed by the District, each of whom
7
is independent of the District pursuant to the Statement on Auditing Standards No. 1 of the American
Institute of Certified Public Accountants.
Independent Financial Consultant. The term “Independent Financial Consultant” means a
financial consultant or firm of such consultants appointed by the District, who, or each of whom: (1)
is in fact independent and not under domination of the District; (2) does not have any substantial
interest, direct or indirect, with the District; (3) is not connected with the District as an officer or
employee thereof, but who may be regularly retained to make reports thereto; and (4) is registered as
a “municipal advisor,” as defined in Section 15B of the Securities Exchange Act of 1934, as amended.
Information Services. The term “Information Services” means the Municipal Securities
Rulemaking Board; or, in accordance with then-current guidelines of the Securities and Exchange
Commission, such other services providing information with respect to called bonds as the District
may specify in a certificate to the Trustee.
Initial Rating Requirement. The term “Initial Rating Requirement” means the rating
requirement described in Section 11.16(a).
Interest Account. The term “Interest Account” means the account by that name in the Payment
Fund established pursuant to Section 5.02.
Interest Payment Date. The term “Interest Payment Date” means [October 1, 2020] and each
April 1 and October 1 thereafter.
Investment Agreement. The term “Investment Agreement” means an investment agreement
supported by appropriate opinions of counsel, provided that the guarantor thereof is rated, at the time
of issuance, at least “AA” and “Aa” by S&P and Moody’s, respectively, and as further described in
the definition of “Permitted Investments.”
Joint Exercise of Powers Agreement. The term “Joint Exercise of Powers Agreement” means
that certain Joint Exercise of Powers Agreement, dated as of August 20, 2010, by and between the
District and California Municipal Finance Authority, a public body, corporate and politic, duly
organized and existing under the laws of the State, as amended from time to time.
Letter of Representations. The term “Letter of Representations” means the letter of the District
delivered to and accepted by the Depository on or prior to delivery of the 2020 Bonds as book entry
bonds setting forth the basis on which the Depository serves as depository for such book entry bonds,
as originally executed or as it may be supplemented or revised or replaced by a letter from the District
delivered to and accepted by the Depository.
Minimum Rating Requirement. The term “Minimum Rating Requirement” means the rating
requirement described in Section 11.16(b).
Moody’s. The term “Moody’s” means Moody’s Investors Service, Inc. or any successor
thereto.
Net Proceeds. The term “Net Proceeds” means, when used with respect to any casualty
insurance or condemnation award, the proceeds from such insurance or condemnation award remaining
after payment of all expenses (including attorneys’ fees) incurred in the collection of such proceeds.
8
Net Revenues. The term “Net Revenues” means, for any period, the Revenues for such period
less the Operation and Maintenance Costs for such period. When held by the Trustee in any funds or
accounts established hereunder, Net Revenues shall include all interest or realized gain derived from
the investment of amounts in any of such funds or accounts.
Net Wastewater System Revenues. The term “Net Wastewater System Revenues” means for
any Fiscal Year or other period, the Wastewater System Revenues for such Fiscal Year or other period
less the Operation and Maintenance Costs allocable to the Wastewater System for such Fiscal Year or
other period.
Net Water System Revenues. The term “Net Water System Revenues” means for any Fiscal
Year or other period, the Water System Revenues for such Fiscal Year or other period less the
Operation and Maintenance Costs allocable to the Water System for such Fiscal Year or other period.
Nominee. The term “Nominee” means the nominee of the Depository, which may be the
Depository, as determined from time to time pursuant to Section 2.08 hereof.
Operation and Maintenance Costs. The term “Operation and Maintenance Costs” means:
(i) costs spent or incurred for maintenance and operation of the Water System and Wastewater System
calculated in accordance with Generally Accepted Accounting Principles, including (among other
things) the reasonable expenses of management and repair and other expenses necessary to maintain
and preserve the Water System and Wastewater System in good repair and working order, and
including administrative costs of the District that are charged directly or apportioned to the Water
System and Wastewater System, including but not limited to salaries and wages of employees,
payments to the Public Employees Retirement System, overhead, insurance, taxes (if any), fees of
auditors, accountants, attorneys, consultants or engineers and insurance premiums, and including all
other reasonable and necessary costs of the District or charges (other than Debt Service) required to be
paid by it to comply with the terms of the Indenture or any Contract or of any resolution or indenture
authorizing the issuance of any Bonds or of such Bonds; and (ii) all costs of water purchased or
otherwise acquired for delivery by the Water System (including any interim or renewed arrangement
therefor), and all costs of wastewater treatment; but excluding in all cases depreciation, replacement
and obsolescence charges or reserves therefor and amortization of intangibles or other bookkeeping
entries of a similar nature.
Opinion of Counsel. The term “Opinion of Counsel” means a written opinion of counsel
(including but not limited to counsel to the District) selected by the District. If and to the extent
required by the provisions of Section 1.02, each Opinion of Counsel shall include the statements
provided for in Section 1.02.
Outstanding. The term “Outstanding,” when used as of any particular time with reference to
2020 Bonds, means (subject to the provisions of Section 11.09) all 2020 Bonds theretofore or thereupon
being authenticated and delivered by the Trustee under the Indenture except: (i) 2020 Bonds theretofore
canceled by the Trustee or surrendered to the Trustee for cancellation; (ii) 2020 Bonds with respect to
which all liability of the District shall have been discharged in accordance with Section 10.02,
including 2020 Bonds (or portions thereof) described in Section 11.09; (iii) 2020 Bonds for the transfer
or exchange of or in lieu of or in substitution for which other 2020 Bonds shall have been authenticated
9
and delivered by the Trustee pursuant to the Indenture; and (iv) Bonds paid in accordance with Section
2.07.
Owner; 2020 Bond Owner. The term “Owner” or “2020 Bond Owner,” whenever used herein
with respect to a 2020 Bond, means the person in whose name the ownership of such 2020 Bond is
registered on the Registration Books.
Paired Obligation Provider. The term “Paired Obligation Provider” means a party to a Paired
Obligation other than the District.
Paired Obligations. The term “Paired Obligations” means any Bond or Contract (or portion
thereof) designated as Paired Obligations in the resolution, indenture or other document authorizing
the issuance or execution and delivery thereof, which are simultaneously issued or executed and
delivered: (i) the principal of which is of equal amount maturing and to be redeemed or prepaid (or
cancelled after acquisition thereof) on the same dates and in the same amounts; and (ii) the interest
rates which, taken together, are reasonably expected to result in a fixed interest rate obligation of the
District for the term of such Bond or Contract, as certified by an Independent Financial Consultant in
writing, and which comply with the provisions of Section 11.16 hereof.
Participants. The term “Participants” means those broker-dealers, banks and other financial
institutions from time to time for which the Depository holds book entry certificates as securities
depository.
Payment Fund. The term “Payment Fund” means the fund by that name established pursuant
to Section 5.02.
Permitted Investments. The term “Permitted Investments” means any of the following which
at the time of investment are legal investments under the laws of the State for the moneys proposed to
be invested therein:
(A) for all purposes, including: (i) as defeasance investments in refunding escrow accounts;
and (ii) for the purpose of investing (and receiving premium credit for) accrued and capitalized interest:
(1) cash; or (2) Federal Securities; and
(B) for all purposes other than: (i) defeasance investments in refunding escrow accounts;
and (ii) investing (and receiving credit for) accrued and capitalized interest: (1) obligations of any of
the following federal agencies which obligations represent full faith and credit of the United States of
America, including the Export Import Bank; Farmers Home Administration; General Services
Administration; U.S. Maritime Administration; Small Business Administration; Government National
Mortgage Association (GNMA); U.S. Department of Housing & Urban Development (PHAs); and
Federal Housing Administration; (2) bonds, notes or other evidences of indebtedness rated “AAA” and
“Aaa” by the applicable Rating Agency issued by the Federal National Mortgage Association or the
Federal Home Loan Mortgage Corporation with remaining maturities not exceeding three years; (3)
U.S. dollar denominated deposit accounts, certificates of deposit, federal funds and banker’s
acceptances with domestic commercial banks, which may include the Trustee and its affiliates, which:
(I) have a rating on their short term certificates of deposit on the date of purchase of “A-1” or “A-1+”
by S&P and “P-1” by Moody’s; or (II) deposits insured by the Federal Deposit Insurance Corporation
maturing no more than 360 days after the date of purchase (ratings on holding companies are not
considered as the rating of the bank); (4) commercial paper which is rated at the time of purchase in
10
the single highest classification, “A-1+” by S&P and “P-1” by Moody’s and which matures not more
than 270 days after the date of purchase; (5) investments in a money market fund rated “AAm” or
“AAm-G” or better by S&P, including funds for which the Trustee or its affiliates provide investment
advisory or other management services, but excluding funds with a floating net asset value; (6) pre-
refunded municipal obligations defined as follows: any bonds or other obligations of any state of the
United States of America or of any agency, instrumentality or local governmental unit of any such state
which are not callable at the option of the obligor prior to maturity or as to which irrevocable
instructions have been given by the obligor to call on the date specified in the notice and which are
rated, based on the escrow, in the highest rating category of S&P and Moody’s, or any successor
thereto; (7) any Investment Agreement; (8) the Local Agency Investment Fund of the State of
California; and (9) any other investment permitted by law.
Principal Account. The term “Principal Account” means the account by that name in the
Payment Fund established pursuant to Section 5.02.
Prior Projects. The term “Prior Projects” means those Water System and Wastewater System
capital improvements that are described as such in Exhibit B.
Proceeds Fund. The term “Proceeds Fund” means the fund by that name established pursuant
to Section 3.02.
Rating. The term “Rating” means any currently effective rating on the 2020 Bonds issued by
a Rating Agency.
Rating Agencies. The term “Rating Agencies” means S&P, Moody’s or Fitch, as the context
dictates.
Rebate Fund. The term “Rebate Fund” means the fund by that name established pursuant to
Section 5.07.
Record Date. The term “Record Date” means, with respect to any Interest Payment Date, the
fifteenth (15th) day of the calendar month preceding such Interest Payment Date, whether or not such
day is a Business Day.
Redemption Date. The term “Redemption Date” means the date fixed for a redemption prior
to maturity of the 2020 Bonds.
Redemption Fund. The term “Redemption Fund” means the fund by that name established
pursuant to Section 5.05.
Redemption Price. The term “Redemption Price” means, with respect to any 2020 Bond (or
portion thereof), the principal amount of such 2020 Bond (or portion) plus the interest accrued to the
applicable Redemption Date and the applicable premium, if any, payable upon redemption thereof
pursuant to the provisions of such 2020 Bond and the Indenture.
Registration Books. The term “Registration Books” means the records maintained by the
Trustee for the registration of ownership and registration of transfer of the 2020 Bonds pursuant to
Section 2.05.
11
Responsible Officer of the Trustee. The term “Responsible Officer of the Trustee” means any
officer within the corporate trust services division (or any successor group or department of the
Trustee) including any vice president, assistant vice president, assistant secretary or any other officer
or assistant officer of the Trustee within the Designated Corporate Trust Office (or any successor
corporate trust office) customarily performing functions similar to those performed by the persons who
at the time shall be such officers, respectively, or to whom any corporate trust matter is referred at the
Designated Corporate Trust Office because of such person’s knowledge of and familiarity with the
particular subject and having direct responsibility for the administration of this Indenture.
Revenue Fund. The term “Revenue Fund” means, collectively, the Sewer Fund and the Water
Fund of the District, together with other accounts created in the future and designated by action of the
Board of Directors of the District as a part of the Revenue Fund.
Revenues. The term “Revenues” means: (i) Water System Revenues; (ii) Wastewater System
Revenues; and (iii) other revenues received by the District including, without limiting the generality
of the foregoing: (1) all amounts received by the District as its share of the 1% ad valorem property
tax not allocated to the Water System Revenues or the Wastewater System Revenues, if any; plus (2)
the earnings on and income derived from the investment of the amounts described in clause (1) hereof.
S&P. The term “S&P” means S&P Global Ratings, a Standard & Poor’s Financial Services
LLC business, or any successor thereto.
Securities Depositories. The term “Securities Depositories” means The Depository Trust
Company; and, in accordance with then current guidelines of the Securities and Exchange
Commission, such other addresses and/or such other securities depositories as the District may
designate in a Written Request of the District delivered to the Trustee.
State. The term “State” means the State of California.
Supplemental Indenture. The term “Supplemental Indenture” means any indenture hereafter
duly authorized and entered into between the District and the Trustee, supplementing, modifying or
amending the Indenture; but only if and to the extent that such Supplemental Indenture is specifically
authorized hereunder.
SWRCB. The term “SWRCB” means the State of California Water Resources Control Board.
Tax Certificate. The term “Tax Certificate” means the Tax Certificate dated the Closing Date,
concerning certain matters pertaining to the use and investment of proceeds of the 2020A Bonds issued
by the District on the date of issuance of the 2020A Bonds, including any and all exhibits attached
thereto.
Term Bond. The term “Term Bond” means the 2020A Bonds maturing on October 1, 20__
and the 2020B Bonds maturing on October 1, 20__.
Trustee. The term “Trustee” means MUFG Union Bank, N.A., a national banking association
duly organized and existing under the laws of the United States of America, or its successor as Trustee
hereunder as provided in Section 8.01.
2010 Bonds. The term “2010 Bonds” means the Authority’s Refunding Revenue Bonds, Series
2010, the proceeds of which financed the 2010 Project and refinanced the Prior Projects.
12
2010 Escrow Agreement. The term “2010 Escrow Agreement” means the Escrow Agreement
(2010 Bonds), by and among the District, the Authority and the Escrow Agent, relating to the 2010
Bonds.
2010 Escrow Fund. The term “2010 Escrow Fund” means the escrow fund established under
the 2010 Escrow Agreement.
2010 Project. The term “2010 Project” means those Water System and Wastewater System
capital improvements that are described as such in Exhibit B.
2010 State Contract. The term “2010 State Contract” means the Funding Agreement (Contract
No. 10CX110), by and between the District and the SWRCB, as successor to the State Department of
Public Health.
2013 Bonds. The term “2013 Bonds” means the Authority’s Revenue Bonds, Series 2013A,
the proceeds of which financed the 2013 Project.
2013 Escrow Agreement. The term “2013 Escrow Agreement” means the Escrow Agreement
(2013A Bonds), by and among the District, the Authority and the Escrow Agent, relating to the 2013
Bonds.
2013 Escrow Fund. The term “2013 Escrow Fund” means the escrow fund established under
the 2013 Escrow Agreement.
2013 Project. The term “2013 Project” means those Water System and Wastewater System
capital improvements that are described as such in Exhibit B.
2018 State Contract. The term “2018 State Contract” means the Construction Installment Sale
Agreement and Grant (Project No. C-06-8106-110; Agreement No. D17-01042), dated June 26, 2018,
by and between the District and the SWRCB.
2020 Bonds. The term “2020 Bonds” means, collectively, the 2020A Bonds and the 2020B
Bonds.
2020A Bonds. The term “2020A Bonds” means the East Valley Water District Refunding
Revenue Bonds, Series 2020A issued by the District and at any time Outstanding pursuant to the
Indenture.
2020B Bonds. The term “2020B Bonds” means the East Valley Water District Refunding
Revenue Bonds, Series 2020B (Federally Taxable) issued by the District and at any time Outstanding
pursuant to the Indenture.
Wastewater Service. The term “Wastewater Service” means the wastewater treatment service
made available or provided by the Wastewater System.
Wastewater System. The term “Wastewater System” means the whole and each and every part
of the wastewater collection and treatment [CONFIRM NO LAFCO ISSUES] system of the District,
including the portion thereof existing on the date hereof, and including all additions, betterments,
extensions and improvements to such wastewater treatment system or any part thereof hereafter
acquired or constructed.
13
Wastewater System Revenues. The term “Wastewater System Revenues” means all income,
rents, rates, fees, charges and other moneys derived from the ownership or operation of the Wastewater
System, including, without limiting the generality of the foregoing:
(i) all income, rents, rates, fees, charges, business interruption insurance proceeds
or other moneys derived by the District from the furnishing of wastewater collection and treatment and
the provision of other services, facilities and commodities sold, furnished or supplied through the
facilities of or in the conduct or operation of the business of the Wastewater System; plus
(ii) the facility capacity charges or similar charges related to the Wastewater
System; plus
(iii) the earnings on and income derived from the investment of the amounts
described in clauses (i) and (ii) hereof;
but excluding in all cases customer deposits or any other deposits or advances subject to refund until
such deposits or advances have become the property of the District, and excluding any proceeds of
taxes or benefit assessments restricted by law to be used by the District to pay obligations of the District
other than Bonds or Contracts.
Water Service. The term “Water Service” means the water distribution service and, if
applicable, recycled water distribution service made available or provided by the Water System.
Water System. The term “Water System” means the whole and each and every part of the
water system of the District, including any recycled water system, and including all additions,
betterments, extensions and improvements to such water system, any recycled water system or any part
thereof hereafter acquired or constructed.
Water System Revenues. The term “Water System Revenues” means all income, rents, rates,
fees, charges and other moneys derived from the ownership or operation of the Water System,
including, without limiting the generality of the foregoing:
(i) all income, rents, rates, fees, charges, business interruption insurance proceeds
or other moneys derived by the District from the sale, furnishing and supplying of water, recycled
water or other services, facilities, and commodities sold, furnished or supplied through the facilities of
or in the conduct or operation of the business of the Water System; plus
(ii) the proceeds of any stand-by or water availability charges; plus
(iii) the facility capacity charges or similar charges related to the Water System;
plus
(iv) the earnings on and income derived from the investment of the amounts
described in clauses (i), (ii) and (iii) hereof;
but excluding in all cases customer deposits or any other deposits or advances subject to refund until
such deposits or advances have become the property of the District, and excluding any proceeds of
taxes or benefit assessments restricted by law to be used by the District to pay obligations of the District
other than Bonds or Contracts.
14
Written Consent of the District; Written Order of the District; Written Request of the District;
Written Requisition of the District. The terms “Written Consent of the District,” “Written Order of the
District,” “Written Request of the District” and “Written Requisition of the District” mean,
respectively, a written consent, order, request or requisition signed by or on behalf of the District by
an Authorized Officer of the District or by any two persons who are specifically authorized by
resolution of the District to sign or execute such a document on its behalf.
Section 1.02. Content of Certificates and Opinions. Every certificate or opinion provided for
in the Indenture except the certificate of destruction provided for in Section 11.05 hereof, with respect
to compliance with any provision hereof shall include: (a) a statement that the person making or giving
such certificate or opinion has read such provision and the definitions herein relating thereto; (b) a brief
statement as to the nature and scope of the examination or investigation upon which the certificate or
opinion is based; (c) a statement that, in the opinion of such person he or she has made or caused to be
made such examination or investigation as is necessary to enable him or her to express an informed
opinion with respect to the subject matter referred to in the instrument to which his or her signature is
affixed; (d) a statement of the assumptions upon which such certificate or opinion is based, and that
such assumptions are reasonable; and (e) a statement as to whether, in the opinion of such person, such
provision has been complied with.
Any such certificate or opinion made or given by an officer of the District may be based, insofar
as it relates to legal or accounting matters, upon a certificate or opinion of or representation by counsel
or an Independent Certified Public Accountant or Independent Financial Consultant, unless such
officer knows, or in the exercise of reasonable care should have known, that the certificate, opinion or
representation with respect to the matters upon which such certificate or statement may be based, as
aforesaid, is erroneous. Any such certificate or opinion made or given by counsel or an Independent
Certified Public Accountant or Independent Financial Consultant may be based, insofar as it relates to
factual matters (with respect to which information is in the possession of the District) upon a certificate
or opinion of or representation by an officer of the District, unless such counsel or Independent
Certified Public Accountant or Independent Financial Consultant knows, or in the exercise of
reasonable care should have known, that the certificate or opinion or representation with respect to the
matters upon which such person’s certificate or opinion or representation may be based, as aforesaid,
is erroneous. The same officer of the District, or the same counsel or Independent Certified Public
Accountant or Independent Financial Consultant, as the case may be, need not certify to all of the
matters required to be certified under any provision of the Indenture, but different officers, counsel or
Independent Certified Public Accountants or Independent Financial Consultants may certify to
different matters, respectively.
Section 1.03. Interpretation.
(a) Unless the context otherwise indicates, words expressed in the singular shall
include the plural and vice versa and the use of the neuter, masculine, or feminine gender is for
convenience only and shall be deemed to include the neuter, masculine or feminine gender, as
appropriate.
(b) Headings of articles and sections herein and the table of contents hereof are
solely for convenience of reference, do not constitute a part hereof and shall not affect the meaning,
construction or effect hereof.
15
(c) All references herein to “Articles,” “Sections” and other subdivisions are to the
corresponding Articles, Sections or subdivisions of the Indenture; the words “herein,” “hereof,”
“hereby,” “hereunder” and other words of similar import refer to the Indenture as a whole and not to
any particular Article, Section or subdivision hereof.
ARTICLE II
THE 2020 BONDS
Section 2.01. Authorization of 2020 Bonds.
(a) The District hereby authorizes the issuance hereunder from time to time of the
2020A Bonds, which shall constitute special obligations of the District, for the purposes of refinancing
the 2010 Project and the Prior Projects. The 2020A Bonds are hereby designated the “East Valley
Water District Refunding Revenue Bonds, Series 2020A” in the aggregate principal amount of $_____.
The Indenture constitutes a continuing agreement with the Owners from time to time of the 2020A
Bonds to secure the full payment of the principal of and interest and premium (if any) on all of the
2020A Bonds, subject to the covenants, provisions and conditions contained herein.
(b) The District hereby authorizes the issuance hereunder from time to time of the
2020B Bonds, which shall constitute special obligations of the District, for the purposes of refinancing
the 2013 Project. The 2020B Bonds are hereby designated the “East Valley Water District Refunding
Revenue Bonds, Series 2020B (Federally Taxable)” in the aggregate principal amount of $_____. The
Indenture constitutes a continuing agreement with the Owners from time to time of the 2020B Bonds
to secure the full payment of the principal of and interest and premium (if any) on all of the 2020B
Bonds, subject to the covenants, provisions and conditions contained herein.
Section 2.02. Terms of the 2020 Bonds. The 2020 Bonds shall be issued in fully registered
form without coupons in denominations of $5,000 or any integral multiple thereof.
The 2020A Bonds shall mature on October 1 in each of the years and in the amounts set forth
below and shall bear interest on each Interest Payment Date at the rates set forth below:
Maturity Date
(October 1) Principal Amount Interest Rate
20__ $ %
16
The 2020B Bonds shall mature on October 1 in each of the years and in the amounts set forth
below and shall bear interest on each Interest Payment Date at the rates set forth below:
Maturity Date
(October 1) Principal Amount Interest Rate
20__ $ %
Interest on the 2020 Bonds shall be payable on each Interest Payment Date to the person whose
name appears on the Registration Books as the Owner thereof as of the Record Date immediately
preceding each such Interest Payment Date, such interest to be paid by check of the Trustee sent by
first class mail on the applicable Interest Payment Date to the Owner at the address of such Owner as
it appears on the Registration Books (except that in the case of an Owner of one million dollars
($1,000,000) or more in principal amount, such payment may, at such Owner’s option, be made by
wire transfer of immediately available funds to an account in the United States in accordance with
written instructions provided to the Trustee by such Owner prior to the Record Date. Principal of and
premium (if any) on any 2020 Bond shall be paid by check of the Trustee upon presentation and
surrender thereof at maturity or upon the prior redemption thereof, at the Designated Corporate Trust
Office of the Trustee. Both the principal of and interest and premium (if any) on the 2020 Bonds shall
be payable in lawful money of the United States of America.
Each 2020 Bond shall be dated the date of initial delivery, and shall bear interest from the
Interest Payment Date next preceding the date of authentication thereof unless: (a) it is authenticated
after a Record Date and on or before the following Interest Payment Date, in which event it shall bear
interest from such Interest Payment Date; or (b) unless it is authenticated on or before [September 15,
2020], in which event it shall bear interest from the date of initial delivery; provided, however, that if,
as of the date of authentication of any 2020 Bond, interest thereon is in default, such 2020 Bond shall
bear interest from the Interest Payment Date to which interest has previously been paid or made
available for payment thereon. Interest on the 2020 Bonds shall be calculated on the basis of a 360-day
year composed of twelve 30-day months.
Section 2.03. Transfer of 2020 Bonds. Any 2020 Bond may, in accordance with its terms,
be transferred on the Registration Books by the person in whose name it is registered, in person or by
17
his or her duly authorized attorney, upon surrender of such 2020 Bond at the Designated Corporate
Trust Office of the Trustee for cancellation, accompanied by delivery of a written instrument of
transfer, duly executed in a form acceptable to the Trustee. The Trustee shall not be required to register
the transfer of any 2020 Bond during the period in which the Trustee is selecting 2020 Bonds for
redemption or any 2020 Bond that has been selected for redemption.
Whenever any 2020 Bond or 2020 Bonds shall be surrendered for transfer, the District shall
execute and the Trustee shall authenticate and shall deliver a new 2020 Bond or 2020 Bonds of
authorized denomination or denominations for a like aggregate principal amount of the same series
and maturity. The Trustee shall require the 2020 Bond Owner requesting such transfer to pay any tax
or other governmental charge required to be paid with respect to such transfer. Following any transfer
of 2020 Bonds, the Trustee will cancel and dispose of the 2020 Bonds that it has received in accordance
with its then customary practices, and shall deliver a certificate of such disposal to the District.
Prior to any transfer of the 2020 Bonds outside the book-entry system (including, but not
limited to, the initial transfer outside the book-entry system) the transferor shall provide or cause to be
provided to the Trustee all information necessary to allow the Trustee to comply with any applicable
tax reporting obligations, including without limitation any cost basis reporting obligations under Code
Section 6045, as amended. The Trustee shall conclusively rely on the information provided to it and
shall have no responsibility to verify or ensure the accuracy of such information.
Section 2.04. Exchange of 2020 Bonds. 2020 Bonds may be exchanged at the Designated
Corporate Trust Office of the Trustee for a like aggregate principal amount of other authorized
denominations of the same series and maturity. The Trustee shall not be required to exchange any
2020 Bond during the period in which the Trustee is selecting 2020 Bonds for redemption or any 2020
Bond that has been selected for redemption. The Trustee shall require the 2020 Bond Owner requesting
such exchange to pay any tax or other governmental charge required to be paid with respect to such
exchange. Following any exchange of 2020 Bonds, the Trustee will cancel and dispose of the 2020
Bonds that it has received in accordance with its then customary practices, and shall deliver a certificate
of such disposal to the District.
Section 2.05. Registration Books. The Trustee will keep or cause to be kept, at the
Designated Corporate Trust Office of the Trustee, sufficient records for the registration and transfer of
ownership of the 2020 Bonds, which shall upon reasonable prior written notice and at reasonable times
be open to inspection during regular business hours by the District and the Owners; and, upon
presentation for such purpose, the Trustee shall, under such reasonable regulations as shall then be
customary and standard, register or transfer or cause to be registered or transferred, on such records,
the ownership of the 2020 Bonds as hereinbefore provided.
The person in whose name any 2020 Bond shall be registered shall be deemed the Owner
thereof for all purposes hereof, and payment of or on account of the interest on and principal and
Redemption Price of by such 2020 Bonds shall be made only to or upon the order in writing of such
registered Owner, which payments shall be valid and effectual to satisfy and discharge liability upon
such 2020 Bond to the extent of the sum or sums so paid.
Section 2.06. Form and Execution of 2020 Bonds. The 2020 Bonds shall be in substantially
the form set forth in Exhibit A hereto. The 2020 Bonds shall be executed in the name and on behalf
of the District with the manual or facsimile signature of its President. The 2020 Bonds may carry a
seal, and such seal may be in the form of a facsimile of the District’s seal and may be reproduced,
18
imprinted or impressed on the 2020 Bonds. The 2020 Bonds shall then be delivered to the Trustee for
authentication by it. In case any of the officers who shall have signed or attested any of the 2020 Bonds
shall cease to be such officer or officers of the District before the 2020 Bonds so signed or attested
shall have been authenticated or delivered by the Trustee, or issued by the District, such 2020 Bonds
may nevertheless be authenticated, delivered and issued and, upon such authentication, delivery and
issue, shall be as binding upon the District as though those who signed and attested the same had
continued to be such officers of the District, and also any 2020 Bonds may be signed and attested on
behalf of the District by such persons as at the actual date of execution of such 2020 Bonds shall be
the proper officers of the District although at the nominal date of such 2020 Bonds any such person
shall not have been such officer of the District.
Only such of the 2020 Bonds as shall bear thereon a certificate of authentication substantially
in the form set forth in Exhibit A hereto, manually executed by the Trustee, shall be valid or obligatory
for any purpose or entitled to the benefits of the Indenture, and such certificate of or on behalf of the
Trustee shall be conclusive evidence that the 2020 Bonds so authenticated have been duly executed,
authenticated and delivered hereunder and are entitled to the benefits of the Indenture.
Section 2.07. 2020 Bonds Mutilated, Lost, Destroyed or Stolen. If any 2020 Bond shall
become mutilated, the District, at the expense of the Owner of said 2020 Bond, shall execute, and the
Trustee shall thereupon authenticate and deliver, a new 2020 Bond of like tenor and authorized
denomination in exchange and substitution for the 2020 Bonds so mutilated, but only upon surrender
to the Trustee of the 2020 Bond so mutilated. Every mutilated 2020 Bond so surrendered to the Trustee
shall be canceled by it and upon the Written Request of the District delivered to, or upon the order of,
the District. If any 2020 Bond shall be lost, destroyed or stolen, evidence of such loss, destruction or
theft shall be submitted to the Trustee and, if such evidence be satisfactory to the Trustee and indemnity
satisfactory to the Trustee shall be given, the District, at the expense of the Owner, shall execute, and
the Trustee shall thereupon authenticate and deliver, a new 2020 Bond of like tenor, series and
authorized denomination in lieu of and in substitution for the 2020 Bond so lost, destroyed or stolen
(or if any such 2020 Bond shall have matured or shall be about to mature, instead of issuing a substitute
2020 Bond, the Trustee shall, at the written direction of the District, pay the same without surrender
thereof). The District may require payment by the Owner of a sum not exceeding the actual cost of
preparing each new 2020 Bond issued under this Section and of the expenses which may be incurred
by the District and the Trustee in the premises. Any 2020 Bond issued under the provisions of this
Section in lieu of any 2020 Bond alleged to be lost, destroyed or stolen shall constitute an original
additional contractual obligation on the part of the District whether or not the 2020 Bond so alleged to
be lost, destroyed, or stolen be at any time enforceable by anyone, and shall be entitled to the benefits
of the Indenture with all other 2020 Bonds secured by the Indenture. Notwithstanding any other
provision of this Section, in lieu of delivering a new 2020 Bond for a 2020 Bond which has been
mutilated, lost, destroyed or stolen and which has matured or has been selected for redemption, the
Trustee may make payment of such 2020 Bond upon receipt of indemnity satisfactory to the Trustee.
Section 2.08. Book Entry System.
(a) Election of Book Entry System. Prior to the issuance of the 2020 Bonds, the
District may provide that such 2020 Bonds shall be initially issued as book entry 2020 Bonds. If the
District shall elect to deliver any 2020 Bonds in book entry form, then the District shall cause the
delivery of a separate single fully registered bond (which may be typewritten) for each maturity date
of such 2020 Bonds in an authorized denomination corresponding to that total principal amount of the
2020 Bonds designated to mature on such date. Upon initial issuance, the ownership of each such 2020
19
Bond shall be registered in the 2020 Bond Registration Books in the name of the Nominee, as nominee
of the Depository, and ownership of the 2020 Bonds, or any portion thereof may not thereafter be
transferred except as provided in Section 2.08(e).
With respect to book entry 2020 Bonds, the District and the Trustee shall have no responsibility
or obligation to any Participant or to any person on behalf of which such a Participant holds an interest
in such book entry 2020 Bonds. Without limiting the immediately preceding sentence, the District and
the Trustee shall have no responsibility or obligation with respect to: (i) the accuracy of the records of
the Depository, the Nominee, or any Participant with respect to any ownership interest in book entry
2020 Bonds; (ii) the delivery to any Participant or any other person, other than an Owner as shown in
the 2020 Bond Registration Books, of any notice with respect to book entry 2020 Bonds, including any
notice of redemption; (iii) the selection by the Depository and its Participants of the beneficial interests
in book entry 2020 Bonds to be redeemed in the event that the District redeems the 2020 Bonds in part;
or (iv) the payment by the Depository or any Participant or any other person, of any amount of principal
of, premium, if any, or interest on book entry 2020 Bonds. The District and the Trustee may treat and
consider the person in whose name each book entry 2020 Bond is registered in the 2020 Bond
Registration Books as the absolute Owner of such book entry 2020 Bond for the purpose of payment
of principal of, premium and interest on such 2020 Bond, for the purpose of giving notices of
redemption and other matters with respect to such 2020 Bond, for the purpose of registering transfers
with respect to such 2020 Bond, and for all other purposes whatsoever. The Trustee shall pay all
principal of, premium, if any, and interest on the 2020 Bonds only to or upon the order of the respective
Owner, as shown in the 2020 Bond Registration Books, or his or her respective attorney duly
authorized in writing, and all such payments shall be valid and effective to fully satisfy and discharge
the District’s obligations with respect to payment of principal of, premium, if any, and interest on the
2020 Bonds to the extent of the sum or sums so paid. No person other than an Owner, as shown in the
2020 Bond Registration Books, shall receive a 2020 Bond evidencing the obligation to make payments
of principal of, premium, if any, and interest on the 2020 Bonds. Upon delivery by the Depository to
the District and the Trustee, of written notice to the effect that the Depository has determined to
substitute a new nominee in place of the Nominee, and subject to the provisions herein with respect to
Record Dates, the word Nominee in the Indenture shall refer to such nominee of the Depository.
(b) Delivery of Letter of Representations. In order to qualify the book entry 2020
Bonds for the Depository’s book entry system, the District shall execute and deliver to the Depository
a Letter of Representations. The execution and delivery of a Letter of Representations shall not in any
way impose upon the District any obligation whatsoever with respect to persons having interests in
such book entry 2020 Bonds other than the Owners, as shown on the 2020 Bond Registration Books.
In addition to the execution and delivery of a Letter of Representations, the District shall take such
other actions, not inconsistent with the Indenture, as are reasonably necessary to qualify book entry
2020 Bonds for the Depository’s book entry program.
(c) Selection of Depository. In the event that: (i) the Depository determines not to
continue to act as securities depository for book entry 2020 Bonds; or (ii) the District determines that
continuation of the book entry system is not in the best interest of the beneficial owners of the 2020
Bonds or the District, then the District will discontinue the book entry system with the Depository. If
the District determines to replace the Depository with another qualified securities depository, the
District shall prepare or direct the preparation of a new single, separate, fully registered 2020 Bond for
each of the maturity dates of such book entry 2020 Bonds, registered in the name of such successor or
substitute qualified securities depository or its Nominee as provided in subsection (e) hereof. If the
District fails to identify another qualified securities depository to replace the Depository, then the 2020
20
Bonds shall no longer be restricted to being registered in such 2020 Bond Registration Books in the
name of the Nominee, but shall be registered in whatever name or names the Owners transferring or
exchanging such 2020 Bonds shall designate, in accordance with the provisions of Sections 2.03 and
2.04 hereof.
(d) Payments To Depository. Notwithstanding any other provision of the
Indenture to the contrary, so long as all Outstanding 2020 Bonds are held in book entry form and
registered in the name of the Nominee, all payments of principal of, redemption premium, if any, and
interest on such 2020 Bond and all notices with respect to such 2020 Bond shall be made and given,
respectively to the Nominee, as provided in the Letter of Representations or as otherwise instructed by
the Depository and agreed to by the Trustee notwithstanding any inconsistent provisions herein.
(e) Transfer of 2020 Bonds to Substitute Depository.
(i) The 2020 Bonds shall be initially issued as provided in Section 2.01
hereof. Registered ownership of such 2020 Bonds, or any portions thereof, may not thereafter be
transferred except:
(A) to any successor of DTC or its nominee, or of any substitute
depository designated pursuant to clause (B) of subsection (i) of this Section 2.08(e) (a “Substitute
Depository”); provided that any successor of DTC or Substitute Depository shall be qualified under
any applicable laws to provide the service proposed to be provided by it;
(B) to any Substitute Depository, upon: (1) the resignation of DTC
or its successor (or any Substitute Depository or its successor) from its functions as depository; or (2)
a determination by the District that DTC (or its successor) is no longer able to carry out its functions
as depository; provided that any such Substitute Depository shall be qualified under any applicable
laws to provide the services proposed to be provided by it; or
(C) to any person as provided below, upon: (1) the resignation of
DTC or its successor (or any Substitute Depository or its successor) from its functions as depository;
or (2) a determination by the District that DTC or its successor (or Substitute Depository or its
successor) is no longer able to carry out its functions as depository.
(ii) In the case of any transfer pursuant to clauses (A) or (B) of subsection
(i) of this Section 2.08(e), upon receipt of all Outstanding 2020 Bonds by the Trustee, together with a
Written Request of the District to the Trustee designating the Substitute Depository, a single new 2020
Bond, which the District shall prepare or cause to be prepared, shall be issued for each maturity of
2020 Bonds then Outstanding, registered in the name of such successor or such Substitute Depository
or their Nominees, as the case may be, all as specified in such Written Request of the District. In the
case of any transfer pursuant to clause (C) of subsection (i) of this Section 2.08(e), upon receipt of all
Outstanding 2020 Bonds by the Trustee, together with a Written Request of the District to the Trustee,
new 2020 Bonds, which the District shall prepare or cause to be prepared, shall be issued in such
denominations and registered in the names of such persons as are requested in such Written Request
of the District, subject to the limitations of Section 2.01 hereof, provided that the Trustee shall not be
required to deliver such new 2020 Bonds within a period of less than sixty (60) days from the date of
receipt of such Written Request from the District.
21
(iii) In the case of a partial redemption or an advance refunding of any 2020
Bonds evidencing a portion of the principal maturing in a particular year, DTC or its successor (or any
Substitute Depository or its successor) shall make an appropriate notation on such 2020 Bonds
indicating the date and amounts of such reduction in principal, in form acceptable to the Trustee, all in
accordance with the Letter of Representations. The Trustee shall not be liable for such Depository’s
failure to make such notations or errors in making such notations and the records of the Trustee as to
the Outstanding principal amount of such 2020 Bonds shall be controlling.
(iv) The District and the Trustee shall be entitled to treat the person in
whose name any 2020 Bond is registered as the Owner thereof for all purposes of the Indenture and
any applicable laws, notwithstanding any notice to the contrary received by the Trustee or the District;
and the District and the Trustee shall not have responsibility for transmitting payments to,
communicating with, notifying, or otherwise dealing with any beneficial owners of the 2020 Bonds.
Neither the District nor the Trustee shall have any responsibility or obligation, legal or otherwise, to
any such beneficial owners or to any other party, including DTC or its successor (or Substitute
Depository or its successor), except to the Owner of any 2020 Bonds, and the Trustee may rely
conclusively on its records as to the identity of the Owners of the 2020 Bonds.
ARTICLE III
ISSUANCE OF 2020 BONDS; APPLICATION OF PROCEEDS
Section 3.01. Issuance of the 2020 Bonds. At any time after the execution of the Indenture,
the District may execute and the Trustee shall authenticate and, upon Written Request of the District,
deliver the 2020A Bonds in the aggregate principal amount of $_____ and the 2020B Bonds in the
aggregate principal amount of $_____.
Section 3.02. Application of Proceeds of the 2020 Bonds.
(a) The proceeds of the sale of the 2020A Bonds in the amount of $_____ shall be
delivered to the Trustee, who shall deposit such proceeds in a temporary account called the “Proceeds
Fund,” which the Trustee shall establish, maintain and hold in trust, and shall forthwith set aside or
transfer such amounts as follows:
(i) transfer $____ to the Escrow Agent for deposit in the 2010 Escrow
Fund; and
(ii) deposit $_____ into the 2020A Account of the Costs of Issuance Fund.
(b) The proceeds of the sale of the 2020B Bonds in the amount of $_____ shall be
delivered to the Trustee, who shall deposit such proceeds in the Proceeds Fund, and shall forthwith set
aside or transfer such amounts as follows:
(i) transfer $____ to the Escrow Agent for deposit in the 2013 Escrow
Fund; and
(ii) deposit $_____ into the 2020B Account of the Costs of Issuance Fund.
(c) Upon the transfer of moneys out of the Proceeds Fund as described in clauses
(a) and (b), the Proceeds Fund shall be closed.
22
Section 3.03. Establishment and Application of Costs of Issuance Fund. The Trustee shall
establish, maintain and hold in trust a separate fund designated as the “Costs of Issuance Fund” and
within such fund, the “2020A Account” and the “2020B Account.” The moneys in the 2020A Account
of the Costs of Issuance Fund shall be used and withdrawn by the Trustee to pay the Costs of Issuance
of the 2020A Bonds upon submission of Written Requisitions of the District stating the person to whom
payment is to be made, the amount to be paid, the purpose for which the obligation was incurred, that
such payment is a proper charge against said fund and that payment for such charge has not previously
been made. The moneys in the 2020B Account of the Costs of Issuance Fund shall be used and
withdrawn by the Trustee to pay the Costs of Issuance of the 2020B Bonds upon submission of Written
Requisitions of the District stating the person to whom payment is to be made, the amount to be paid,
the purpose for which the obligation was incurred, that such payment is a proper charge against said
fund and that payment for such charge has not previously been made. Each such Written Requisition of
the District shall be sufficient evidence to the Trustee of the facts stated therein and the Trustee shall have
no duty to confirm the accuracy of such facts. On the six month anniversary of the issuance of the 2020
Bonds, or upon the earlier Written Request of the District, all amounts remaining in the Costs of
Issuance Fund shall be transferred by the Trustee to the Interest Account and the Costs of Issuance
Fund, and each account therein, shall be closed. Investment earnings on amounts on deposit in the
Costs of Issuance Fund shall be applied in accordance with Section 5.06 hereof.
Section 3.04. Validity of 2020 Bonds. The validity of the authorization and issuance of the
2020 Bonds is not dependent on and shall not be affected in any way by any proceedings taken by the
District or the Trustee with respect to any other agreement. The recital contained in the 2020 Bonds
that the same are issued pursuant to the Constitution and laws of the State shall be conclusive evidence
of the validity and of compliance with the provisions of law in their issuance.
ARTICLE IV
REDEMPTION OF 2020 BONDS
Section 4.01. Terms of Redemption.
(a) The 2020A Bonds with stated maturities on or after October 1, 20__, shall be
subject to redemption prior to their respective stated maturities, as a whole or in part on ____ 1, 20__,
or any date thereafter, as directed by the District in a Written Request provided to the Trustee at least
35 days prior to such date and by lot within each maturity in integral multiples of $5,000, at a
Redemption Price equal to the principal amount thereof plus accrued interest thereon to the
Redemption Date, without premium.
(b) The 2020B Bonds with stated maturities on or after October 1, 20__, shall be
subject to redemption prior to their respective stated maturities, as a whole or in part on ____ 1, 20__,
or any date thereafter, as directed by the District in a Written Request provided to the Trustee at least
35 days prior to such date and by lot within each maturity in integral multiples of $5,000, at a
Redemption Price equal to the principal amount thereof plus accrued interest thereon to the
Redemption Date, without premium.
In addition, the 2020B Bonds are subject to redemption prior to their respective maturity dates,
at the option of the District, in whole or in part, at any time, from any source of available funds, at a
redemption price equal to the greater of:
23
(i) 100% of the principal amount of the 2020B Bonds to be redeemed; and
(ii) the sum of the present values of the remaining scheduled payments of principal and
interest on the 2020B Bonds to be redeemed discounted to the date of redemption on a semiannual
basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate, plus __ basis
points, plus accrued and unpaid interest on the 2020B Bonds being redeemed to the date fixed for
redemption.
“Treasury Rate” means, with respect to any redemption date for a particular 2020B Bond, the
yield to maturity as of such redemption date of United States Treasury securities with a constant
maturity (as compiled and published in the most recent Federal Reserve Statistical Release H.15 that
has become publicly available at least two Business Days but not more than 45 calendar days prior to
the redemption date (excluding inflation indexed securities), or, if such statistical release is no longer
published, any publicly available source of similar market data) most nearly equal to the period from
the redemption date to the maturity date of the 2020B Bond to be redeemed; provided, however, that
if the period from the redemption date to such maturity date is less than one year, the weekly average
yield on actually traded United States Treasury securities adjusted to a constant maturity of one year
will be used.
The 2020B Bonds that are subject to optional redemption may be selected for such redemption
in such amounts and order of maturity of Outstanding 2020B Bonds as will be selected by the District.
If less than all of the 2020B Bonds of any maturity are to be redeemed prior to maturity, and if the
2020B Bonds are in book-entry form at the time of such redemption, the Trustee will provide written
notice to DTC in accordance with the Indenture and the pro rata reduction in principal provision
included in the Blanket Letter of Representations of the District on file with DTC. The particular
2020B Bonds to be redeemed will be redeemed on a “Pro-Rata Pass-Through Distribution of Principal”
basis in accordance with DTC procedures, provided that such redemption is made in accordance with
the operational arrangements of DTC then in effect. The Trustee will send notice to DTC in accordance
with such rules and procedures to effect a pro rata reduction of principal of all affected outstanding
2020B Bonds to accomplish any optional and mandatory sinking account redemption using a pass-
through distribution of principal. In connection with each such redemption, the Trustee will include
in the written notice of redemption the dollar amount per $5,000 principal amount payable on account
of principal and accrued interest to effect a pro rata reduction through a pass-through distribution of
principal on the related redemption date. Any failure of the Trustee to provide such notice, or of DTC
or its participants or any other intermediary to make such selection or proportional allocation, for
whatever reason, will not affect the sufficiency or the validity of the redemption of the 2020B Bonds.
If DTC’s prevailing operational arrangements do not allow for allocation of a redemption on a pro rata
pass-through distribution of principal basis, the portion of the 2020B Bonds to be redeemed on such
dates will be selected in accordance with DTC’s then existing rules and procedures.
Notwithstanding the foregoing, if less than all of the 2020B Bonds of any maturity are to be
redeemed prior to maturity and if the 2020B Bonds are not then in book-entry form at the time of such
redemption, on each redemption date, the Trustee will select the specific 2020B Bonds for redemption
on a pro rata basis from such maturity or mandatory sinking account payment within such maturity of
Outstanding 2020B Bonds. The portion of any 2020B Bond of a denomination of more than $5,000
to be redeemed will be in the principal amount of $5,000 or any integral multiple thereof. The Trustee
will select such portions of 2020B Bonds to be redeemed on a pro rata basis from each maturity or
mandatory sinking account payment of Outstanding 2020B Bonds, as the Trustee in its discretion may
deem to be fair and appropriate.
24
(c) The 2020 Bonds shall be subject to extraordinary redemption prior to their
respective stated maturities, as a whole or in part on any date in the order of maturity and within
maturities as directed by the District in a Written Request provided to the Trustee at least 35 days prior
to such date in integral multiples of $5,000 from Net Proceeds, upon the terms and conditions of, and
as provided for in, Sections 6.19 and 6.23, at a Redemption Price equal to the principal amount thereof
plus accrued interest thereon to the date fixed for redemption, without premium.
(d) The Term Bonds which are 2020A Bonds with stated maturities on October 1,
20__ are subject to mandatory sinking fund redemption in part (by lot) on October 1, 20__ and each
October 1 thereafter, in integral multiples of $5,000 at a Redemption Price of the principal amount
thereof plus accrued interest to the date fixed for redemption, without premium, in accordance with the
following schedule:
Redemption Date
(October 1)
Principal
Amount
20__ $
*
* Maturity.
(a) The Term Bonds which are 2020B Bonds with stated maturities on October 1,
20__ are subject to mandatory sinking fund redemption in part (by lot) on October 1, 20__ and each
October 1 thereafter, in integral multiples of $5,000 at a Redemption Price of the principal amount
thereof plus accrued interest to the date fixed for redemption, without premium, in accordance with
the following schedule:
Redemption Date
(October 1)
Principal
Amount
20__ $
*
* Maturity.
If some but not all of the Term Bonds are redeemed pursuant to subsections (a) or (b) above,
the principal amount of the applicable Term Bonds to be redeemed pursuant to this subsection (c) on
any subsequent October 1 will be reduced, by $5,000 or an integral multiple thereof, as designated by
the District in a Written Order of the District filed with the Trustee (which Written Order will include
a revised sinking fund schedule); provided, however, that the aggregate amount of such reductions
shall not exceed the aggregate amount of the applicable Term Bonds redeemed pursuant to subsections
(a) or (b) above.
Section 4.02. Selection of 2020 Bonds for Redemption. Whenever provision is made in the
Indenture for the redemption of less than all of the 2020 Bonds, the Trustee shall select the 2020 Bonds
25
for redemption as a whole or in part on any date as directed by the District and by lot within each
maturity in integral multiples of $5,000 in accordance with Section 4.01 hereof. The Trustee will
promptly notify the District in writing of the numbers of the 2020 Bonds or portions thereof so selected
for redemption.
Section 4.03. Notice of Redemption. Notice of redemption shall be mailed by first class mail
at least twenty (20) days but not more than sixty (60) days before any Redemption Date, to the
respective Owners of any 2020 Bonds designated for redemption at their addresses appearing on the
Registration Books, to the Securities Depositories and to the Information Services. Each notice of
redemption shall state the date of the notice, the Redemption Date, the place or places of redemption,
the Redemption Price, the maturities, CUSIP numbers, if any, and, in the case of 2020 Bonds to be
redeemed in part only, the respective portions of the principal amount thereof to be redeemed. Each
such notice shall also state that on the Redemption Date there will become due and payable on each of
said 2020 Bonds or parts thereof designated for redemption the Redemption Price thereof or of said
specified portion of the principal thereof in the case of a 2020 Bond to be redeemed in part only,
together with interest accrued thereon to the Redemption Date, and that (provided that moneys for
redemption have been deposited with the Trustee) from and after such Redemption Date interest
thereon shall cease to accrue, and shall require that such 2020 Bonds be then surrendered to the Trustee.
Neither the failure to receive such notice nor any defect in the notice or the mailing thereof will affect
the validity of the redemption of any 2020 Bond. Notice of redemption of 2020 Bonds shall be given
by the Trustee, at the expense of the District, for and on behalf of the District.
With respect to any notice of optional redemption of 2020 Bonds, such notice may state that
such redemption shall be conditional upon the receipt by the Trustee on or prior to the date fixed for
such redemption of moneys sufficient to pay the principal of, premium, if any, and interest on such
2020 Bonds to be redeemed and that, if such moneys shall not have been so received, said notice shall
be of no force and effect and the Trustee shall not be required to redeem such 2020 Bonds. In the event
that such notice of redemption contains such a condition and such moneys are not so received, the
redemption shall not be made, and the Trustee shall within a reasonable time thereafter give notice, in
the manner in which the notice of redemption was given, that such moneys were not so received and
that such notice of redemption has been rescinded.
Section 4.04. Partial Redemption of 2020 Bonds. Upon surrender of any 2020 Bond
redeemed in part only, the District shall execute and the Trustee shall authenticate and deliver to the
Owner thereof, at the expense of the District, a new 2020 Bond or 2020 Bonds of authorized
denominations equal in aggregate principal amount to the unredeemed portion of the 2020 Bonds
surrendered and of the same interest rate and maturity.
Section 4.05. Effect of Redemption. Notice of redemption having been duly given as
aforesaid, and moneys for payment of the Redemption Price of, together with interest accrued to the
date fixed for redemption on, the 2020 Bonds (or portions thereof) so called for redemption being held
by the Trustee, on the Redemption Date designated in such notice, the 2020 Bonds (or portions thereof)
so called for redemption shall become due and payable, interest on the 2020 Bonds so called for
redemption shall cease to accrue, said 2020 Bonds (or portions thereof) shall cease to be entitled to any
benefit or security under the Indenture, and the Owners of said 2020 Bonds shall have no rights in
respect thereof except to receive payment of the Redemption Price thereof. The Trustee shall, upon
surrender for payment of any of the 2020 Bonds to be redeemed on their Redemption Dates, pay such
2020 Bonds at the Redemption Price.
26
All 2020 Bonds redeemed pursuant to the provisions of this Article shall be canceled and
disposed of upon surrender thereof to the Trustee in accordance with its then customary practices, and
the Trustee shall deliver a certificate of such disposal to the District.
ARTICLE V
REVENUES, FUNDS AND ACCOUNTS; PAYMENT OF PRINCIPAL AND INTEREST
Section 5.01. Pledge and Assignment; Revenue Fund.
(a) All of the Revenues, all amounts held in the Revenue Fund described in
subsection (b) below and any other amounts (including proceeds of the sale of the 2020 Bonds) held
in any fund or account established pursuant to the Indenture (except the Rebate Fund) are hereby
irrevocably pledged to secure the payment of the principal of and interest, and the premium, if any, on
the 2020 Bonds in accordance with their terms and the provisions of the Indenture, and the Revenues
shall not be used for any other purpose while the 2020 Bonds remain Outstanding; provided that out
of the Revenues there may be apportioned such sums for such purposes as are expressly permitted
herein. Said pledge, together with the pledge created by all other Contracts and Bonds, shall constitute
a first lien on and security interest on Revenues and, subject to application of Revenues and all amounts
on deposit therein as permitted herein, the Revenue Fund and other funds and accounts created
hereunder for the payment of the principal of and interest, and the premium, if any, on the 2020 Bonds
and all Contracts and Debt Service on Bonds in accordance with the terms hereof, and shall attach, be
perfected and be valid and binding from and after the Closing Date, without any physical delivery
thereof or further act and shall be valid and binding against all parties having claims of any kind in
tort, contract or otherwise against the District, irrespective of whether such parties have notice hereof.
(b) In order to carry out and effectuate the pledge and lien contained herein, the
District agrees and covenants that all Revenues shall be received by the District in trust hereunder and
shall be deposited when and as received in the Revenue Fund, which fund the District agrees and
covenants to maintain and to hold separate and apart from other funds so long as the 2020 Bonds and
any Contracts or Debt Service on Bonds remain unpaid. Moneys in the Revenue Fund shall be used
and applied by the District as provided herein. All moneys in the Revenue Fund shall be held in trust
and shall be applied, used and withdrawn for the purposes set forth in this Section.
The District shall, from the moneys in the Revenue Fund, pay all Operation and Maintenance
Costs (including amounts reasonably required to be set aside in contingency reserves for Operation
and Maintenance Costs, the payment of which is not then immediately required) as such Operation and
Maintenance Costs become due and payable. All remaining moneys in the Revenue Fund shall be set
aside by the District at the following times for the transfer to the following respective special funds in
the following order of priority:
(i) Interest and Principal Payments. Not later than the Business Day prior
to each Interest Payment Date, the District shall, from the moneys in the Revenue Fund, transfer to the
Trustee for deposit in the Payment Fund or the Redemption Fund the payments of interest and principal
or mandatory sinking fund payments, as applicable, on the 2020 Bonds due and payable on such
Interest Payment Date. The District shall also, from the moneys in the Revenue Fund, transfer to the
applicable trustee for deposit in the respective payment fund, without preference or priority, and in the
event of any insufficiency of such moneys ratably without any discrimination or preference, any other
Debt Service in accordance with the provisions of any Bond or Contract.
27
(ii) Reserve Funds. After making the payments, allocations or transfers
provided for in subsection (i) above, the District shall, from the remaining moneys in the Revenue
Fund, thereafter, without preference or priority and in the event of any insufficiency of such moneys
ratably without any discrimination or preference, transfer to the applicable trustee for such other
reserve funds and/or accounts, if any, as may have been established in connection with Bonds or
Contracts, that sum, if any, necessary to restore such funds or accounts to an amount equal to the
reserve requirement applicable to such Bonds or Contracts, as applicable.
(iii) Subordinate Obligations. After making the payments, allocations or
transfers provided for in subsections (i) and (ii) above, the District shall, from the remaining moneys
in the Revenue Fund, thereafter, without preference or priority and in the event of any insufficiency of
such moneys ratably without any discrimination or preference, transfer to the applicable trustee for
deposit in the respective payment fund, without preference or priority, and in the event of any
insufficiency of such moneys ratably without any discrimination or preference, any debt service on
obligations which are payable from Net Revenues on a subordinate basis to Bonds and Contracts.
(iv) Surplus. Moneys on deposit in the Revenue Fund on any date when
the District reasonably expects such moneys will not be needed for the payment of Operation and
Maintenance Costs or any of the purposes described in clauses (b)(i), (b)(ii) or (b)(iii) may be expended
by the District at any time for any purpose permitted by law.
(v) Investments. All moneys held by the District in the Revenue Fund shall
be invested in Permitted Investments and the investment earnings thereon shall remain on deposit in
such fund, except as otherwise provided herein.
Section 5.02. Allocation of Revenues. There is hereby established with the Trustee the
Payment Fund, which the Trustee covenants to maintain and hold in trust separate and apart from other
funds held by it so long as any principal of and interest on the 2020 Bonds remain unpaid. Except as
directed herein, all payments of interest and principal on the 2020 Bonds received by the Trustee
pursuant to Section 5.01(b) shall be promptly deposited by the Trustee upon receipt thereof into the
Payment Fund; except that all moneys received by the Trustee and required hereunder to be deposited
in the Redemption Fund shall be promptly deposited therein. All payments of interest and principal
on the 2020 Bonds deposited with the Trustee shall be held, disbursed, allocated and applied by the
Trustee only as provided in the Indenture. The Trustee shall also establish and hold an Interest Account
and a Principal Account within the Payment Fund.
The Trustee shall transfer from the Payment Fund and deposit into the following respective
accounts, the following amounts in the following order of priority and at the following times, the
requirements of each such account (including the making up of any deficiencies in any such account
resulting from lack of Revenues sufficient to make any earlier required deposit) at the time of deposit
to be satisfied before any transfer is made to any account subsequent in priority:
(a) Not later than the Business Day preceding each Interest Payment Date, the
Trustee shall deposit in the Interest Account that sum, if any, required to cause the aggregate amount
on deposit in the Interest Account to be at least equal to the amount of interest becoming due and
payable on such date on all 2020 Bonds then Outstanding. No deposit need be made into the Interest
Account so long as there shall be in such fund moneys sufficient to pay the interest becoming due and
payable on such date on all 2020 Bonds then Outstanding.
28
(b) Not later than the Business Day preceding each date on which the principal of
the 2020 Bonds shall become due and payable hereunder, the Trustee shall deposit in the Principal
Account that sum, if any, required to cause the aggregate amount on deposit in the Principal Account
to equal the principal amount of the 2020 Bonds coming due and payable on such date. No deposit
need be made into the Principal Account so long as there shall be in such fund moneys sufficient to
pay the principal becoming due and payable on such date on all 2020 Bonds then Outstanding.
Section 5.03. Application of Interest Account. All amounts in the Interest Account shall be
used and withdrawn by the Trustee solely for the purpose of paying interest on the 2020 Bonds as it
shall become due and payable (including accrued interest on any 2020 Bonds purchased or accelerated
prior to maturity pursuant to the Indenture).
Section 5.04. Application of Principal Account. All amounts in the Principal Account shall
be used and withdrawn by the Trustee solely to pay the principal amount of the 2020 Bonds at maturity,
purchase or acceleration; provided, however, that at any time prior to selection for redemption of any
such 2020 Bonds, upon written direction of the District, the Trustee shall apply such amounts to the
purchase of 2020 Bonds at public or private sale, as and when and at such prices (including brokerage
and other charges, but excluding accrued interest, which is payable from the Interest Account) as shall
be directed pursuant to a Written Request of the District, except that the purchase price (exclusive of
accrued interest) may not exceed the Redemption Price then applicable to the 2020 Bonds.
Section 5.05. Application of Redemption Fund. There shall be established with the Trustee
when needed a special fund designated as the “Redemption Fund.” All amounts in the Redemption
Fund shall be used and withdrawn by the Trustee solely for the purpose of paying the Redemption
Price of the 2020 Bonds to be redeemed on any Redemption Date pursuant to Section 4.01; provided,
however, that at any time prior to selection for redemption of any such 2020 Bonds, upon written
direction of the District, the Trustee shall apply such amounts to the purchase of 2020 Bonds at public
or private sale, as and when and at such prices (including brokerage and other charges, but excluding
accrued interest, which is payable from the Interest Account) as shall be directed pursuant to a Written
Request of the District, except that the purchase price (exclusive of accrued interest) may not exceed
the Redemption Price then applicable to the 2020 Bonds.
Section 5.06. Investments. All moneys in any of the funds or accounts established with the
Trustee pursuant to the Indenture shall be invested by the Trustee solely in Permitted Investments.
Such investments shall be directed by the District pursuant to a Written Request of the District filed
with the Trustee at least three (3) Business Days in advance of the making of such investments. In the
absence of any such directions from the District, the Trustee shall invest any such moneys in Permitted
Investments described in clause (5) of the definition thereof; provided, however, that any such
investment shall be made by the Trustee only if, prior to the date on which such investment is to be
made, the Trustee shall have received a written direction from the District specifying a specific money
market fund and, if no such written direction from the District is so received, the Trustee shall hold
such moneys uninvested. Obligations purchased as an investment of moneys in any fund shall be
deemed to be part of such fund or account.
All interest or gain derived from the investment of amounts in any of the funds or accounts
established hereunder shall be deposited in the Interest Account unless otherwise provided in the
Indenture. For purposes of acquiring any investments hereunder, the Trustee may commingle funds
(other than the Rebate Fund) held by it hereunder upon the Written Request of the District. The Trustee
may act as principal or agent in the acquisition or disposition of any investment and may impose its
29
customary charges therefor. The Trustee shall incur no liability for any losses, taxes, fees or other
charges arising from any investments, reinvestments or liquidations of investments made pursuant to
this Section 5.06.
The District acknowledges that to the extent that regulations of the Comptroller of the Currency
or other applicable regulatory entity grant the District the right to receive brokerage confirmations of
security transactions as they occur, the District specifically waives receipt of such confirmations to the
extent permitted by law. The District further understands that trade confirmations for securities
transactions effected by the Trustee will be available upon request at no additional cost and other trade
confirmations may be obtained from the applicable broker. The Trustee will furnish the District with
cash transaction statements which shall include detail for all investment transactions effected by the
Trustee hereunder. Upon the District’s election, such statements will be delivered via the Trustee’s
online service and upon electing such service, paper statements will be provided only upon request.
The Trustee or any of its affiliates may act as sponsor, advisor or manager in connection with
any investments made by the Trustee under the Indenture.
The District shall invest, or cause to be invested, all moneys in any fund or accounts established
with the Trustee as provided in the Tax Certificate.
For investment purposes, the Trustee may commingle the funds and accounts established
hereunder, but shall account for each separately. In making any valuations of investments hereunder,
the Trustee may utilize and rely on generally recognized pricing information services (including
brokers and dealers in securities) that may be available to the Trustee, including those available through
the Trustee accounting system.
Section 5.07. Rebate Fund.
(a) Establishment. The Trustee shall establish a fund for the 2020A Bonds
designated the “Rebate Fund” when required in accordance herewith. Absent an opinion of Bond
Counsel that the exclusion from gross income for federal income tax purposes of interest on the 2020A
Bonds will not be adversely affected, the District shall cause to be deposited in the Rebate Fund such
amounts as are required to be deposited therein pursuant to this Section and the Tax Certificate. All
money at any time deposited in the Rebate Fund shall be held by the Trustee in trust for payment to
the United States Treasury. All amounts on deposit in the Rebate Fund for the 2020A Bonds shall be
governed by this Section and the Tax Certificate, unless and to the extent that the District delivers to
the Trustee an opinion of Bond Counsel that the exclusion from gross income for federal income tax
purposes of interest on the 2020A Bonds will not be adversely affected if such requirements are not
satisfied. Notwithstanding anything to the contrary contained herein or in the Tax Certificate, the
Trustee: (i) shall be deemed conclusively to have complied with the provisions thereof if it follows all
Requests of the District; (ii) shall have no liability or responsibility to enforce compliance by the
District with the terms of the Tax Certificate; (iii) may rely conclusively on the District’s calculations
and determinations and certifications relating to rebate matters; and (iv) shall have no responsibility to
independently make any calculations or determinations or to review the District’s calculations or
determinations thereunder.
(i) Computation. Within 55 days of the end of each fifth Bond Year (as
such term is defined in the Tax Certificate), the District shall calculate or cause to be calculated the
amount of rebatable arbitrage, in accordance with Section 148(f)(2) of the Code and Section 1.148-3
30
of the Treasury Regulations (taking into account any applicable exceptions with respect to the
computation of the rebatable arbitrage, described, if applicable, in the Tax Certificate (e.g., the
temporary investments exceptions of Section 148(f)(4)(B) and the construction expenditures exception
of Section 148(f)(4)(C) of the Code), and taking into account whether the election pursuant to
Section 148(f)(4)(C)(vii) of the Code (the “1½% Penalty”) has been made), for this purpose treating
the last day of the applicable Bond Year as a computation date, within the meaning of
Section 1.148-1(b) of the Treasury Regulations (the “Rebatable Arbitrage”). The District shall obtain
expert advice as to the amount of the Rebatable Arbitrage to comply with this Section.
(ii) Transfer. Within 55 days of the end of each fifth Bond Year, upon the
Written Request of the District, an amount shall be deposited to the Rebate Fund by the Trustee from
any Net Revenues legally available for such purpose (as specified by the District in the aforesaid
Written Request), if and to the extent required so that the balance in the Rebate Fund shall equal the
amount of Rebatable Arbitrage so calculated in accordance with clause (i) of this subsection (a). In
the event that immediately following the transfer required by the previous sentence, the amount then
on deposit to the credit of the Rebate Fund exceeds the amount required to be on deposit therein, upon
Written Request of the District, the Trustee shall withdraw the excess from the Rebate Fund and then
credit the excess to the Payment Fund.
(iii) Payment to the Treasury. The Trustee shall pay, as directed by Written
Request of the District, to the United States Treasury, out of amounts in the Rebate Fund:
(A) Not later than 60 days after the end of: (X) the fifth Bond Year;
and (Y) each applicable fifth Bond Year thereafter, an amount equal to at least 90% of the Rebatable
Arbitrage calculated as of the end of such Bond Year; and
(B) Not later than 60 days after the payment of all of the 2020A
Bonds, an amount equal to 100% of the Rebatable Arbitrage calculated as of the end of such applicable
Bond Year, and any income attributable to the Rebatable Arbitrage, computed in accordance with
Section 148(f) of the Code and Section 1.148-3 of the Treasury Regulations.
In the event that, prior to the time of any payment required to be made from the Rebate Fund,
the amount in the Rebate Fund is not sufficient to make such payment when such payment is due, the
District shall calculate or cause to be calculated the amount of such deficiency and deposit an amount
received from any legally available source equal to such deficiency prior to the time such payment is
due. Each payment required to be made pursuant to this subsection (a) shall be made to the Internal
Revenue Service Center, Ogden, Utah 84201 on or before the date on which such payment is due, and
shall be accompanied by Internal Revenue Service Form 8038-T (prepared by the District), or shall be
made in such other manner as provided under the Code.
(b) Disposition of Unexpended Funds. Any funds remaining in the Rebate Fund
after redemption and payment of the 2020A Bonds and the payments described in subsection (a) above
being made may be withdrawn by the District and utilized in any manner by the District.
(c) Survival of Defeasance. Notwithstanding anything in this Section to the
contrary, the obligation to comply with the requirements of this Section shall survive the defeasance
or payment in full of the 2020A Bonds.
31
Section 5.08. Application of Funds and Accounts When No 2020 Bonds are Outstanding.
On the date on which all 2020 Bonds shall be retired hereunder or provision made therefor pursuant to
Article X and after payment of all amounts due the Trustee hereunder, all moneys then on deposit in
any of the funds or accounts (other than the Rebate Fund) established with the Trustee pursuant to the
Indenture shall be withdrawn by the Trustee and paid to the District for use by the District at any time
for any purpose permitted by law.
ARTICLE VI
PARTICULAR COVENANTS
Section 6.01. Punctual Payment. The District shall punctually pay or cause to be paid the
principal and interest to become due in respect of all of the 2020 Bonds, in strict conformity with the
terms of the 2020 Bonds and of the Indenture, according to the true intent and meaning thereof, but
only out of Net Revenues and other assets pledged for such payment as provided in the Indenture.
Section 6.02. Extension of Payment of 2020 Bonds. The District shall not directly or
indirectly extend or assent to the extension of the maturity of any of the 2020 Bonds or the time of
payment of any claims for interest by the purchase of such 2020 Bonds or by any other arrangement,
and in case the maturity of any of the 2020 Bonds or the time of payment of any such claims for interest
shall be extended, such 2020 Bonds or claims for interest shall not be entitled, in case of any default
hereunder, to the benefits of the Indenture, except subject to the prior payment in full of the principal
of all of the 2020 Bonds then Outstanding and of all claims for interest thereon which shall not have
been so extended. Nothing in this Section shall be deemed to limit the right of the District to issue
Bonds for the purpose of refunding any Outstanding 2020 Bonds, and such issuance shall not be
deemed to constitute an extension of maturity of 2020 Bonds.
Section 6.03. Against Encumbrances. The District will not make any pledge of or place any
lien on Revenues or the moneys in the Revenue Fund except as provided herein. The District may at
any time, or from time to time, execute Contracts or issue Bonds as permitted herein. The District may
also at any time, or from time to time, incur evidences of indebtedness or incur other obligations for
any lawful purpose which are payable from and secured by a pledge of lien on Revenues on any moneys
in the Revenue Fund as may from time to time be deposited therein, provided that such pledge and lien
shall be subordinate in all respects to the pledge of and lien thereon provided herein.
Section 6.04. Power to Issue 2020 Bonds and Make Pledge and Assignment. The District is
duly authorized pursuant to law to issue the 2020 Bonds, to enter into the Indenture and to pledge and
assign the Revenues and other assets purported to be pledged and assigned under the Indenture in the
manner and to the extent provided in the Indenture. The 2020 Bonds and the provisions of the
Indenture are and will be the legal, valid and binding special obligations of the District in accordance
with their terms, and the District shall and the Trustee may, without obligation, at all times, subject to
the provisions of Article VIII and to the extent permitted by law, defend, preserve and protect said
pledge and assignment of Revenues and other assets and all the rights of the 2020 Bond Owners under
the Indenture against all claims and demands of all persons whomsoever.
Section 6.05. Accounting Records and Financial Statements.
(a) The Trustee shall at all times keep, or cause to be kept, proper books of record
and account, prepared in accordance with corporate trust industry standards, in which complete and
32
accurate entries shall be made of all transactions made by it relating to the proceeds of 2020 Bonds and
all funds and accounts established by it pursuant to the Indenture. Such books of record and account
shall be available for inspection by the District upon reasonable prior written notice during business
hours and under reasonable circumstances.
(b) The District will keep appropriate accounting records in which complete and
correct entries shall be made of all transactions relating to the Water System and the Wastewater
System, which records shall be available for inspection by the Trustee (which shall have no duty to
inspect such records) at reasonable hours and under reasonable conditions.
(c) The District will prepare and file with the Trustee annually within two hundred
seventy (270) days of each Fiscal Year (commencing with the Fiscal Year ended June 30, 2020)
financial statements of the District for the preceding Fiscal Year prepared in accordance with Generally
Accepted Accounting Principles, together with an Accountant’s Report thereon. The Trustee shall
have no duty to review, verify or analyze such financial statements, and shall hold such financial
statements solely as a repository for the benefit of the 2020 Bond Owners. The Trustee shall not be
deemed to have notice or knowledge (in each case either actual or constructive) of any information
contained therein, or default or Event of Default which may be disclosed therein in any manner.
Section 6.06. Tax Covenants. Notwithstanding any other provision of the Indenture, absent
an opinion of Bond Counsel that the exclusion from gross income of the portion of interest on the
2020A Bonds will not be adversely affected for federal income tax purposes, the District covenants to
comply with all applicable requirements of the Code necessary to preserve such exclusion from gross
income with respect to the 2020A Bonds and specifically covenants, without limiting the generality of
the foregoing, as follows:
(a) Private Activity. The District will take no action, refrain from taking any action
and make no use of the proceeds of the 2020A Bonds or of any other moneys or property which would
cause the 2020A Bonds to be “private activity bonds” within the meaning of Section 141 of the Code;
(b) Arbitrage. The District will make no use of the proceeds of the 2020A Bonds
or of any other amounts or property, regardless of the source, and will take no action and refrain from
taking any action which will cause the 2020A Bonds to be “arbitrage bonds” within the meaning of
Section 148 of the Code;
(c) Federal Guarantee. The District will make no use of the proceeds of the 2020A
Bonds and will not take or omit to take any action that would cause the 2020A Bonds to be “federally
guaranteed” within the meaning of Section 149(b) of the Code;
(d) Information Reporting. The District will take or cause to be taken all necessary
action to comply with the informational reporting requirement of Section 149(e) of the Code necessary
to preserve the exclusion of interest on the 2020A Bonds pursuant to Section 103(a) of the Code;
(e) Hedge Bonds. The District will make no use of the proceeds of the 2020A
Bonds or any other amounts or property, regardless of the source, and will not take any action or refrain
from taking any action that would cause the 2020A Bonds to be considered “hedge bonds” within the
meaning of Section 149(g) of the Code unless the District takes all necessary action to assure
compliance with the requirements of Section 149(g) of the Code to maintain the exclusion from gross
income of interest on the 2020A Bonds for federal income tax purposes; and
33
(f) Miscellaneous. The District will take no action and refrain from taking any
action inconsistent with its expectations stated in the Tax Certificate executed by the District in
connection with the issuance of the 2020A Bonds and will comply with the covenants and requirements
stated therein and incorporated by reference herein.
This Section and the covenants set forth herein shall not be applicable to, and nothing contained
herein shall be deemed to prevent the District issuing revenue bonds or causing the Trustee to execute
and deliver contracts payable on a parity with the 2020A Bonds, the interest with respect to which has
been determined by Bond Counsel to be subject to federal income taxation, including but not limited
to the 2020B Bonds.
Section 6.07. Waiver of Laws. The District shall not at any time insist upon or plead in any
manner whatsoever, or claim or take the benefit or advantage of, any stay or extension law now or at
any time hereafter in force that may affect the covenants and agreements contained in the Indenture or
in the 2020 Bonds, and all benefit or advantage of any such law or laws is hereby expressly waived by
the District to the extent permitted by law.
Section 6.08. Further Assurances. The District will make, execute and deliver any and all
such further indentures, instruments and assurances as may be reasonably necessary or proper to carry
out the intention or to facilitate the performance of the Indenture and for the better assuring and
confirming unto the Owners of the 2020 Bonds of the rights and benefits provided in the Indenture.
Section 6.09. Budgets. On or prior to the fifteenth day of each Fiscal Year, the District shall
certify to the Trustee that the amounts budgeted for payment of the principal of and interest on the
2020 Bonds are fully adequate for the payment of all such payments for such Fiscal Year. If the
amounts so budgeted are not adequate for the payment of the principal of and interest on the 2020
Bonds due under the Indenture, the District will take such action as may be necessary to cause such
annual budget to be amended, corrected or augmented so as to include therein the amounts required to
be raised by the District in the then ensuing Fiscal Year for the payment of the principal of and interest
on the 2020 Bonds due under the Indenture and will notify the Trustee in writing of the proceedings
then taken or proposed to be taken by the District.
Section 6.10. Observance of Laws and Regulations. To the extent necessary to assure its
performance hereunder, the District will well and truly keep, observe and perform all valid and lawful
obligations or regulations now or hereafter imposed on the District by contract, or prescribed by any
law of the United States of America, or of the State, or by any officer, board or commission having
jurisdiction or control, as a condition of the continued enjoyment of any and every right, privilege or
franchise now owned or hereafter acquired by the District, respectively, including its right to exist and
carry on its business, to the end that such contracts, rights and franchises shall be maintained and
preserved, and shall not become abandoned, forfeited or in any manner impaired.
Section 6.11. Compliance with Contracts. The District will neither take nor omit to take any
action under any contract if the effect of such act or failure to act would in any manner impair or
adversely affect the ability of the District to pay principal of or interest on the 2020 Bonds; and the
District will comply with, keep, observe and perform all agreements, conditions, covenants and terms,
express or implied, required to be performed by it contained in all other contracts affecting or involving
the Water System and the Wastewater System, to the extent that the District is a party thereto.
34
Section 6.12. Prosecution and Defense of Suits. The District shall promptly, upon request of
the Trustee or any 2020 Bond Owner, from time to time take such action as may be necessary or proper
to remedy or cure any defect in or cloud upon the title to the Water System or the Wastewater System
or any part thereof, whether now existing or hereafter developing, shall prosecute all such suits, actions
and other proceedings as may be appropriate for such purpose and shall indemnify and save the Trustee
(including all of its employees, officers and directors), the Trustee and every 2020 Bond Owner
harmless from all loss, cost, damage and expense, including attorneys’ fees, which they or any of them
may incur by reason of any such defect, cloud, suit, action or proceeding.
The District shall defend against every suit, action or proceeding at any time brought against
the Trustee (including all of its employees, officers and directors) or any 2020 Bond Owner upon any
claim arising out of the receipt, application or disbursement of any of the payments of principal of or
interest on the 2020 Bonds or involving the rights of the Trustee or any 2020 Bond Owner under the
Indenture; provided that the Trustee or any 2020 Bond Owner at such party’s election may appear in
and defend any such suit, action or proceeding. The District shall indemnify and hold harmless the
Trustee and the 2020 Bond Owners against any and all liability claimed or asserted by any person,
arising out of such receipt, application or disbursement, and shall indemnify and hold harmless the
2020 Bond Owners against any attorneys’ fees or other expenses which any of them may incur in
connection with any litigation (including pre-litigation activities) to which any of them may become a
party by reason of ownership of 2020 Bonds. The District shall promptly reimburse any 2020 Bond
Owner in the full amount of any attorneys’ fees or other expenses which such Owner may incur in
litigation or otherwise in order to enforce such party’s rights under the Indenture or the 2020 Bonds.
Section 6.13. Continuing Disclosure. The District hereby covenants and agrees that it will
comply with and carry out all of its obligations under the Continuing Disclosure Certificate to be
executed and delivered by the District in connection with the issuance of the 2020 Bonds.
Notwithstanding any other provision of the Indenture, failure of the District to comply with the
Continuing Disclosure Certificate shall not be considered an Event of Default; however, any Owner or
Beneficial Owner may take such actions as may be necessary and appropriate, including seeking
mandate or specific performance by court order, to cause the District to comply with its obligations
under this Section. For purposes of this Section, “Beneficial Owner” means any person which has or
shares the power, directly or indirectly, to make investment decisions concerning ownership of any
2020 Bonds (including persons holding 2020 Bonds through nominees, depositories or other
intermediaries).
Section 6.14. Additional Contracts and Bonds. The District may at any time execute any
Contract or issue any Bonds, as the case may be, in accordance herewith; provided that:
(a) The Net Water System Revenues and Net Wastewater System Revenues,
respectively, for the most recent audited Fiscal Year preceding the date of adoption by the Board of
Directors of the District of the resolution authorizing the issuance of such Bonds or the date of the
execution of such Contract, as the case may be, as evidenced by both a calculation prepared by the
District and a special report prepared by an Independent Certified Public Accountant or an Independent
Financial Consultant on such calculation on file with the District, shall have produced a sum equal to
at least one hundred twenty percent (120%) of the Debt Service allocable to the Water System and
Wastewater System, respectively, for such Fiscal Year; and
(b) The Net Water System Revenues and Net Wastewater System Revenues,
respectively, for the most recent audited Fiscal Year preceding the date of adoption by the Board of
35
Directors of the District of the resolution authorizing the issuance of such Bonds or the date of the
execution of such Contract, as the case may be, including adjustments to give effect as of the first day
of such Fiscal Year to increases in rates and charges for the Water Service and Wastewater Service
approved and in effect as of the date of calculation, as evidenced by a calculation prepared by the
District, shall have produced a sum equal to at least one hundred twenty percent (120%) of the Debt
Service for such Fiscal Year allocable to the Water System and Wastewater System, respectively, plus
the Debt Service allocable to the Water System and Wastewater System, respectively, which would
have accrued on any Contracts executed or Bonds issued since the end of such Fiscal Year, assuming
that such Contracts had been executed or Bonds had been issued at the beginning of such Fiscal Year,
plus the Debt Service allocable to the Water System and Wastewater System, respectively, which
would have accrued had such proposed additional Contract been executed or such proposed additional
Bonds been issued at the beginning of such Fiscal Year.
Notwithstanding the foregoing, Bonds or Contracts may be issued or incurred to refund
outstanding Bonds or Contracts if, after giving effect to the application of the proceeds thereof, total
Debt Service will not be increased in any Fiscal Year in which Bonds or Contracts (outstanding on the
date of issuance or incurrence of such refunding Bonds or Contracts, but excluding such refunding
Bonds or Contracts) not being refunded are outstanding.
Section 6.15. Against Sale or Other Disposition of Property. The District will not enter into
any agreement or lease which impairs the operation of the Water System or the Wastewater System or
any part thereof necessary to secure adequate Revenues for the payment of the principal of and interest
on the 2020 Bonds, or which would otherwise impair the operation of the Water System or the
Wastewater System. Any real or personal property which has become nonoperative or which is not
needed for the efficient and proper operation of the Water System or the Wastewater System, or any
material or equipment which has become worn out, may be sold if such sale will not impair the ability
of the District to pay the principal of and interest on the 2020 Bonds and if the proceeds of such sale
are deposited in the Revenue Fund.
Nothing herein shall restrict the ability of the District to sell any portion of the Water System
or the Wastewater System if such portion is immediately repurchased by the District and if such
arrangement cannot by its terms result in the purchaser of such portion of the Water System or the
Wastewater System exercising any remedy which would deprive the District of or otherwise interfere
with its right to own and operate such portion of the Water System or the Wastewater System, as
applicable.
Section 6.16. Against Competitive Facilities. To the extent that it can so legally obligate
itself, the District covenants that it will not acquire, construct, maintain or operate and will not, to the
extent permitted by law and within the scope of its powers, permit any other public or private agency,
corporation, district or political subdivision or any person whomsoever to acquire, construct, maintain
or operate within the District any municipal water system competitive with the Water System or any
municipal wastewater system competitive with the Wastewater System.
Section 6.17. Maintenance and Operation of the Water System and the Wastewater System.
The District will maintain and preserve the Water System and the Wastewater System in good repair
and working order at all times and will operate the Water System and the Wastewater System in an
efficient and economical manner and will pay all Operation and Maintenance Costs as they become
due and payable.
36
Section 6.18. Payment of Claims. The District will pay and discharge any and all lawful
claims for labor, materials or supplies which, if unpaid, might become a lien on the Revenues or the
funds or accounts created hereunder or on any funds in the hands of the District pledged to pay the
principal of or interest on the 2020 Bonds or to the Owners prior or superior to the lien under the
Indenture.
Section 6.19. Insurance.
(a) The District will procure and maintain or cause to be procured and maintained
insurance on the Water System and Wastewater System with responsible insurers in such amounts and
against such risks (including damage to or destruction of the Water System and Wastewater System)
as are usually covered in connection with water and wastewater systems similar to the Water System
and Wastewater System, respectively, so long as such insurance is available from reputable insurance
companies.
In the event of any damage to or destruction of the Water System or Wastewater System caused
by the perils covered by such insurance, the Net Proceeds thereof shall be applied to the reconstruction,
repair or replacement of the damaged or destroyed portion of the Water System or Wastewater System,
respectively. The District shall begin such reconstruction, repair or replacement promptly after such
damage or destruction shall occur, and shall continue and properly complete such reconstruction, repair
or replacement as expeditiously as possible, and shall pay out of such Net Proceeds all costs and
expenses in connection with such reconstruction, repair or replacement so that the same shall be
completed and the Water System and Wastewater System shall be free and clear of all claims and liens.
If such Net Proceeds exceed the costs of such reconstruction, repair or replacement of the
damaged or destroyed portion of the Water System or Wastewater System, respectively, and/or the
cost of the construction of additions, betterments, extensions or improvements to the Water System or
Wastewater System, respectively, then the excess Net Proceeds shall be applied in part to the
redemption of the 2020 Bonds as provided in Section 4.01(c) and in part to such other fund or account
as may be appropriate and used for the retirement of Bonds and Contracts in the same proportion which
the aggregate unpaid principal balance of 2020 Bonds then bears to the aggregate unpaid principal
amount of such Bonds and Contracts. If such Net Proceeds are sufficient to enable the District to retire
the entire obligation evidenced hereby prior to the final due date of the Installment Payments as well
as the entire obligations evidenced by Bonds and Contracts then remaining unpaid prior to their final
respective due dates, the District may elect not to reconstruct, repair or replace the damaged or
destroyed portion of the Water System or Wastewater System, and/or not to construct other additions,
betterments, extensions or improvements to the Water System or Wastewater System; and thereupon
such Net Proceeds shall be applied to the redemption of Installment Payments as provided in Section
4.01(c) and to the retirement of such Bonds and Contracts.
(b) The District will procure and maintain such other insurance as it shall deem
advisable or necessary to protect its interests, which insurance shall afford protection in such amounts
and against such risks as are usually covered in connection with water and wastewater systems similar
to the Water System and Wastewater System, respectively.
(c) Any insurance required to be maintained by paragraph (a) above and, if the
District determines to procure and maintain insurance pursuant to paragraph (b) above, such insurance,
may be maintained under a self-insurance program so long as such self-insurance is maintained in the
amounts and manner usually maintained in connection with water and wastewater systems similar to
37
the Water System and Wastewater System, respectively, and is, in the opinion of an accredited actuary,
actuarially sound.
All policies of insurance required to be maintained herein shall provide that the Trustee shall
be given thirty (30) days written notice of any intended cancellation thereof or reduction of coverage
provided thereby.
Section 6.20. Payment of Taxes and Compliance with Governmental Regulations. The
District will pay and discharge all taxes, assessments and other governmental charges which may
hereafter be lawfully imposed upon the Water System and the Wastewater System, or any part thereof,
or upon the Revenues when the same shall become due. The District will duly observe and conform
with all valid regulations and requirements of any governmental authority relative to the operation of
the Water System and the Wastewater System, or any part thereof, but the District shall not be required
to comply with any regulations or requirements so long as the validity or application thereof shall be
contested in good faith.
Section 6.21. Amount of Rates and Charges.
(a) To the fullest extent permitted by law, the District shall fix and prescribe, at
the commencement of each Fiscal Year, rates and charges for the Water Service provided by the Water
System which are reasonably expected to be at least sufficient to yield during each Fiscal Year Net
Water System Revenues equal to one hundred twenty percent (120%) of Debt Service for such Fiscal
Year allocable to the Water System.
(b) To the fullest extent permitted by law, the District shall fix and prescribe, at
the commencement of each Fiscal Year, rates and charges for the Wastewater Service provided by the
Wastewater System which are reasonably expected to be at least sufficient to yield during each Fiscal
Year Net Wastewater System Revenues equal to one hundred twenty percent (120%) of Debt Service
for such Fiscal Year allocable to the Wastewater System.
(c) The District may make adjustments from time to time in such rates and charges
and may make such classification thereof as it deems necessary, but shall not reduce the rates and
charges then in effect unless the Net Water System Revenues or Net Wastewater System Revenues, as
applicable, from such reduced rates and charges will at all times be sufficient to meet the requirements
of this Section.
(d) For the avoidance of doubt, so long as the District has complied with its
obligations set forth in clauses (a) and (b) above, the failure of Net Water System Revenues or Net
Wastewater System Revenues to meet the thresholds set forth in clauses (a) or (b) above, respectively,
at the end of a Fiscal Year shall not constitute a default or an Event of Default so long as the District
has complied with clauses (a) and (b) at the commencement of the succeeding Fiscal Year.
Section 6.22. Collection of Rates and Charges. The District will have in effect at all times
by-laws, rules and regulations requiring each customer to pay the rates and charges applicable to the
Water Service and Wastewater Service and providing for the billing thereof and for a due date and a
delinquency date for each bill.
38
Section 6.23. Eminent Domain Proceeds. If all or any part of the Water System or
Wastewater System shall be taken by eminent domain proceedings, the Net Proceeds thereof shall be
applied as follows:
(a) If: (1) the District files with the Trustee a certificate showing: (i) the estimated
loss of annual Net Revenues, if any, suffered or to be suffered by the District by reason of such eminent
domain proceedings; (ii) a general description of the additions, betterments, extensions or
improvements to the Water System or Wastewater System proposed to be acquired and constructed by
the District from such Net Proceeds; and (iii) an estimate of the additional annual Net Revenues to be
derived from such additions, betterments, extensions or improvements; and (2) the District, on the basis
of such certificate filed with the Trustee, determines that the estimated additional annual Net Revenues
will sufficiently offset the estimated loss of annual Net Revenues resulting from such eminent domain
proceedings so that the ability of the District to meet its obligations hereunder will not be substantially
impaired (which determination shall be final and conclusive), then the District shall promptly proceed
with the acquisition and construction of such additions, betterments, extensions or improvements
substantially in accordance with such certificate and such Net Proceeds shall be applied for the payment
of the costs of such acquisition and construction, and any balance of such Net Proceeds not required
by the District for such purpose shall be deposited in the Revenue Fund.
(b) If the foregoing conditions are not met, then such Net Proceeds shall be applied
by the District in part to the redemption of 2020 Bonds as provided in Section 4.01(c) and in part to
such other fund or account as may be appropriate and used for the retirement of Bonds and Contracts
in the same proportion which the aggregate unpaid principal balance of 2020 Bonds then bears to the
aggregate unpaid principal amount of such Bonds and Contracts.
Section 6.24. Enforcement of Contracts. The District will not voluntarily consent to or
permit any rescission of, nor will it consent to any amendment to or otherwise take any action under
or in connection with any contracts previously or hereafter entered into if such rescission or amendment
would in any manner impair or adversely affect the ability of the District to pay principal of and interest
on the 2020 Bonds.
ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES OF 2020 BOND OWNERS
Section 7.01. Events of Default. The following events shall be Events of Default hereunder:
(a) Default by the District in the due and punctual payment of the principal of any
2020 Bonds, the principal of any Bonds or the principal with respect to any Contract, when and as the
same shall become due and payable, whether at maturity as therein expressed, by proceedings for
redemption, by acceleration, or otherwise.
(b) Default by the District in the due and punctual payment of any installment of
interest on any 2020 Bonds, any installment of interest on any Bond or any installment of interest with
respect to any Contract, when and as the same shall become due and payable.
(c) Default by the District in the observance of any of the other covenants,
agreements or conditions on its part in the Indenture or in the 2020 Bonds, or required by any Bond or
indenture relating thereto or by any Contract, if such default shall have continued for a period of sixty
39
(60) days after written notice thereof, specifying such default and requiring the same to be remedied,
shall have been given to the District by the Trustee or by the Owners of not less than a majority in
aggregate principal amount of 2020 Bonds Outstanding, a majority in principal amount of such Bond
outstanding, or a majority in principal amount outstanding with respect to such Contract, as applicable;
provided, however, that if in the reasonable opinion of the District the default stated in the notice can
be corrected, but not within such sixty (60) day period, and corrective action is instituted by the District
within such sixty (60) day period and diligently pursued in good faith until the default is corrected,
such default shall not be an Event of Default hereunder; provided, however, that such extended cure
period shall not be longer than 180 days from the delivery date of such default notice.
(d) The District shall file a petition or answer seeking arrangement or
reorganization under the federal bankruptcy laws or any other applicable law of the United States of
America or any state therein, or a court of competent jurisdiction shall approve a petition filed with or
without the consent of the District seeking arrangement or reorganization under the federal bankruptcy
laws or any other applicable law of the United States of America or any state therein, or if under the
provisions of any other law for the relief or aid of debtors any court of competent jurisdiction shall
assume custody or control of the District or of the whole or any substantial part of its property.
(e) Payment of the principal of any Bond or with respect to any Contract is
accelerated in accordance with its terms.
Section 7.02. Remedies Upon Event of Default. If any Event of Default specified in Section
7.01(d) or (e) shall occur and be continuing, the Trustee shall, and for any other Event of Default, the
Trustee may, and, at the written direction of the Owners of not less than a majority in aggregate
principal amount of the 2020 Bonds at the time Outstanding, shall, in each case, upon notice in writing
to the District, declare the principal of all of the 2020 Bonds then Outstanding, and the interest accrued
thereon, to be due and payable immediately, and upon any such declaration, the same shall become
and shall be immediately due and payable, anything in the Indenture or in the 2020 Bonds contained
to the contrary notwithstanding.
Nothing contained herein shall permit or require the Trustee to accelerate payments due under
the Indenture if the District is not in default of its obligation hereunder.
Any such declaration is subject to the condition that if, at any time after such declaration and
before any judgment or decree for the payment of the moneys due shall have been obtained or entered,
the District shall deposit with the Trustee a sum sufficient to pay all the principal of and installments
of interest on the 2020 Bonds payment of which is overdue, with interest on such overdue principal at
the rate borne by the respective 2020 Bonds to the extent permitted by law, and the reasonable fees,
disbursements and expenses of the Trustee, or shall deposit with the applicable trustee with respect to
any Contract a sum sufficient to pay all the principal and installments of interest with respect to such
Contract payment of which is overdue, with interest on such overdue principal at the rate borne by
such Contract to the extent permitted by law, and the reasonable charges and expenses of the applicable
trustee with respect to such Contract, or shall deposit with the applicable trustee with respect to any
Bond a sum sufficient to pay all the principal of and installment of interest on such Bond payment of
which is overdue, with interest on such overdue principal at the rate borne by such Bonds to the extent
permitted by law, and the reasonable charges and expenses of the applicable trustee with respect to
such Bonds, and any and all other Events of Default actually known to a Responsible Officer of the
Trustee or the applicable trustee with respect to such Contract or Bonds (other than in the payment of
principal of and interest on the 2020 Bonds, payment of principal and interest with respect to such
40
Contract or payment of principal and interest on such Bond, as applicable, due and payable solely by
reason of such declaration) shall have been made good or cured to the satisfaction of the Trustee or
adequate provision shall have been made therefor, then and in every such case the Trustee shall on
behalf of the Owners of all of the 2020 Bonds, rescind and annul such declaration and its consequences
and waive such Event of Default; but no such rescission and annulment shall extend to or shall affect
any subsequent Event of Default, or shall impair or exhaust any right or power consequent thereon.
Section 7.03. Application of Revenues and Other Funds After Default. If an Event of Default
shall occur and be continuing, all Revenues held or thereafter received by the Trustee and any other
funds then held or thereafter received by the Trustee under any of the provisions of the Indenture (other
than amounts held in the Rebate Fund) shall be applied in the following order:
(a) To the payment of any expenses necessary to protect the interests of the Owners
of the 2020 Bonds, Contracts or Bonds and payment of reasonable fees and expenses of the Trustee
(including reasonable fees and disbursements of its counsel) incurred in and about the performance of
its powers and duties under the Indenture;
(b) To the payment of Operation and Maintenance Costs; and
(c) To the payment of the principal of and interest then due on the 2020 Bonds
(upon presentation of the 2020 Bonds to be paid, and stamping or otherwise noting thereon of the
payment if only partially paid, or surrender thereof if fully paid), in accordance with the provisions of
the Indenture, and to the payment of the principal and interest then due with respect to such Contract
in accordance with the provisions thereof and the payment of the principal of and interest then due on
such Bonds in accordance with the provisions thereof and of any indenture related thereto, in the
following order of priority:
First: To the payment to the persons entitled thereto of all installments of
interest then due on the 2020 Bonds, with respect to such Contract or on such Bonds, as applicable, in
the order of the maturity of such installments, and, if the amount available shall not be sufficient to pay
in full any installment or installments maturing on the same date, then to the payment thereof ratably,
according to the amounts due thereon, to the persons entitled thereto, without any discrimination or
preference; and
Second: To the payment to the persons entitled thereto of the unpaid principal
of any 2020 Bonds, principal with respect to such Contract or principal of any Bonds, as applicable,
which shall have become due, whether at maturity or by acceleration or redemption, with interest on
the overdue principal at the rate of eight percent (8%) per annum, and, if the amount available shall
not be sufficient to pay in full all the 2020 Bonds, all amounts due under such Contract or all the Bonds,
as applicable, together with such interest, then to the payment thereof ratably, according to the amounts
of principal due on such date to the persons entitled thereto, without any discrimination or preference;
and
Third: If there shall exist any remainder after the foregoing payments, such
remainder shall be paid to the District.
Section 7.04. Trustee to Represent 2020 Bond Owners. The Trustee is hereby irrevocably
appointed (and the successive respective Owners of the 2020 Bonds, by taking and holding the same,
shall be conclusively deemed to have so appointed the Trustee) as trustee and true and lawful attorney
41
in fact of the Owners of the 2020 Bonds for the purpose of exercising and prosecuting on their behalf
such rights and remedies as may be available to such Owners under the provisions of the 2020 Bonds
or the Indenture and applicable provisions of law. Upon the occurrence and continuance of an Event
of Default or other occasion giving rise to a right in the Trustee to represent the 2020 Bond Owners,
the Trustee in its reasonable judgment may, and upon the written request of the Owners of a majority
in aggregate principal amount of the 2020 Bonds then Outstanding, and upon being indemnified to its
satisfaction therefor, shall proceed to protect or enforce its rights or the rights of such Owners by such
appropriate action, suit, mandamus or other proceedings as shall be most effectual to protect and
enforce any such right, at law or in equity, either for the specific performance of any covenant or
agreement contained herein, or in aid of the execution of any power herein granted, or for the
enforcement of any other appropriate legal or equitable right or remedy vested in the Trustee or in such
Owners under the 2020 Bonds or the Indenture or any law; and upon instituting such proceeding, the
Trustee shall be entitled, as a matter of right, to the appointment of a receiver of the Revenues and
other assets pledged under the Indenture, pending such proceedings. All rights of action under the
Indenture or the 2020 Bonds or otherwise may be prosecuted and enforced by the Trustee without the
possession of any of the 2020 Bonds or the production thereof in any proceeding relating thereto, and
any such suit, action or proceeding instituted by the Trustee shall be brought in the name of the Trustee
for the benefit and protection of all the Owners of such 2020 Bonds, subject to the provisions of the
Indenture.
Nothing herein shall be deemed to authorize the Trustee to authorize or consent to or accept or
adopt on behalf of any 2020 Bond Owner any plan of reorganization, arrangement, adjustment, or
composition affecting the Bonds or the rights of any 2020 Bond Owner thereof, or to authorize the
Trustee to vote in respect of the claim of any 2020 Bond Owner in any such proceeding without the
approval of the 2020 Bond Owners so affected.
Section 7.05. 2020 Bond Owners’ Direction of Proceedings. Anything in the Indenture to
the contrary notwithstanding, the Owners of a majority in aggregate principal amount of the 2020
Bonds then Outstanding shall have the right, by an instrument or concurrent instruments in writing
executed and delivered to the Trustee, and upon indemnification of the Trustee to its satisfaction to
direct the method of conduct in all remedial proceedings taken by the Trustee hereunder, provided that
such direction shall not be otherwise than in accordance with law and the provisions of the Indenture,
and that the Trustee shall have the right to decline to follow any such direction which would be unjustly
prejudicial to 2020 Bond Owners not parties to such direction.
Section 7.06. Suit by Owners. No Owner of any 2020 Bonds shall have the right to institute
any suit, action or proceeding at law or in equity, for the protection or enforcement of any right or
remedy under the Indenture with respect to such 2020 Bonds, unless: (a) such Owners shall have given
to the Trustee written notice of the occurrence of an Event of Default; (b) the Owners of not less than
fifty percent (50%) in aggregate principal amount of the 2020 Bonds then Outstanding shall have made
written request upon the Trustee to exercise the powers hereinbefore granted or to institute such suit,
action or proceeding in its own name; (c) such Owner or Owners shall have tendered to the Trustee
indemnity satisfactory to it against the costs, expenses and liabilities to be incurred in compliance with
such request; (d) the Trustee shall have failed to comply with such request for a period of sixty (60)
days after such written request shall have been received by, and said tender of indemnity shall have
been made to, the Trustee; and (e) no direction inconsistent with such written request shall have been
given to the Trustee during such sixty (60) day period by the Owners of a majority in aggregate
principal amount of the 2020 Bonds then Outstanding.
42
Such notification, request, tender of indemnity and refusal or omission are hereby declared, in
every case, to be conditions precedent to the exercise by any Owner of 2020 Bonds of any remedy
hereunder or under law; it being understood and intended that no one or more Owners of 2020 Bonds
shall have any right in any manner whatever by their action to affect, disturb or prejudice the security
of the Indenture or the rights of any other Owners of 2020 Bonds, or to enforce any right under the
2020 Bonds, the Indenture, or applicable law with respect to the 2020 Bonds, except in the manner
herein provided, and that all proceedings at law or in equity to enforce any such right shall be instituted,
had and maintained in the manner herein provided and for the benefit and protection of all Owners of
the Outstanding 2020 Bonds, subject to the provisions of the Indenture, it being understood that the
Trustee shall not have an affirmative duty to ascertain whether or not such action is prejudicial to the
Owners.
Section 7.07. Absolute Obligation of the District. Nothing in this Section 7.07 or in any other
provision of the Indenture or in the 2020 Bonds shall affect or impair the obligation of the District,
which is absolute and unconditional, to pay the principal of and interest on the 2020 Bonds to the
respective Owners of the 2020 Bonds at their respective dates of maturity, or upon call for redemption,
as herein provided, but only out of the Revenues and other assets herein pledged therefor, or affect or
impair the right of such Owners, which is also absolute and unconditional, to enforce such payment by
virtue of the contract embodied in the 2020 Bonds.
Section 7.08. Remedies Not Exclusive. No remedy herein conferred upon or reserved to the
Trustee or to the Owners of the 2020 Bonds is intended to be exclusive of any other remedy or
remedies, and each and every such remedy, to the extent permitted by law, shall be cumulative and in
addition to any other remedy given hereunder or now or hereafter existing at law or in equity or
otherwise.
Section 7.09. No Waiver of Default. No delay or omission of the Trustee or of any Owner
of the 2020 Bonds to exercise any right or power arising upon the occurrence of any Event of Default
shall impair any such right or power or shall be construed to be a waiver of any such Event of Default
or an acquiescence therein.
ARTICLE VIII
THE TRUSTEE
Section 8.01. Duties, Immunities and Liabilities of Trustee.
(a) The Trustee shall, prior to an Event of Default, and after the curing or waiving
of all Events of Default which may have occurred, perform such duties and only such duties as are
expressly and specifically set forth in the Indenture, and no implied covenants or duties shall be read
into the Indenture against the Trustee. The Trustee shall, during the existence of any Event of Default
(which has not been cured or waived), exercise such of the rights and powers vested in it by the
Indenture, and use the same degree of care and skill in their exercise, as a prudent person would
exercise or use under the circumstances in the conduct of such person’s own affairs.
(b) The District may remove the Trustee at any time upon thirty (30) days’ prior
notice, unless an Event of Default shall have occurred and then be continuing, and shall remove the
Trustee if at any time requested to do so by an instrument or concurrent instruments in writing signed
by the Owners of not less than a majority in aggregate principal amount of the 2020 Bonds then
43
Outstanding (or their attorneys duly authorized in writing) or if at any time the Trustee shall cease to
be eligible in accordance with subsection (e) of this Section, or shall become incapable of acting, or
shall be adjudged a bankrupt or insolvent, or a receiver of the Trustee or its property shall be appointed,
or any public officer shall take control or charge of the Trustee or of its property or affairs for the
purpose of rehabilitation, conservation or liquidation, in each case by giving written notice of such
removal to the Trustee and thereupon shall promptly appoint a successor Trustee by an instrument in
writing.
(c) The Trustee may at any time resign by giving written notice of such resignation
to the District and by giving the 2020 Bond Owners notice of such resignation by mail at the addresses
shown on the Registration Books. Upon receiving such notice of resignation, the District shall
promptly appoint a successor Trustee by an instrument in writing.
(d) Any removal or resignation of the Trustee and appointment of a successor
Trustee shall become effective upon acceptance of appointment by the successor Trustee. If no
successor Trustee shall have been appointed and have accepted appointment within forty-five (45) days
of giving notice of removal or notice of resignation as aforesaid, the retiring Trustee or any 2020 Bond
Owner (on behalf of such 2020 Bond Owner and all other 2020 Bond Owners) may, at the sole cost
and expense of the District, petition any court of competent jurisdiction for the appointment of a
successor Trustee, and such court may thereupon, after such notice (if any) as it may deem proper,
appoint such successor Trustee. Any successor Trustee appointed under the Indenture shall signify its
acceptance of such appointment by executing and delivering to the District and to its predecessor
Trustee a written acceptance thereof, and thereupon such successor Trustee, without any further act,
deed or conveyance, shall become vested with all of the moneys, estates, properties, rights, powers,
trusts, duties and obligations of such predecessor Trustee, with like effect as if originally named Trustee
herein; but, nevertheless at the Written Request of the District or the request of the successor Trustee,
such predecessor Trustee shall execute and deliver any and all instruments of conveyance or further
assurance and do such other things as may reasonably be required for more fully and certainly vesting
in and confirming to such successor Trustee all of the right, title and interest of such predecessor
Trustee in and to any property held by it under the Indenture and shall pay over, transfer, assign and
deliver to the successor Trustee any money or other property subject to the trusts and conditions herein
set forth. Upon request of the successor Trustee, the District shall execute and deliver any and all
instruments as may be reasonably required for more fully and certainly vesting in and confirming to
such successor Trustee all such moneys, estates, properties, rights, powers, trusts, duties and
obligations. Upon acceptance of appointment by a successor Trustee as provided in this subsection,
the District shall mail or cause the successor trustee to mail a notice of the succession of such Trustee
to the trusts hereunder to each rating agency which is then rating the 2020 Bonds and to the 2020 Bond
Owners at the addresses shown on the Registration Books. If the District fails to mail such notice
within fifteen (15) days after acceptance of appointment by the successor Trustee, the successor Trustee
shall cause such notice to be mailed at the expense of the District.
(e) Any Trustee appointed under the provisions of this Section in succession to the
Trustee shall be a trust company, banking association or bank having the powers of a trust company,
having a combined capital and surplus of at least Fifty Million Dollars ($50,000,000), and subject to
supervision or examination for federal or state authority. If such bank, banking association or trust
company publishes a report of condition at least annually, pursuant to law or to the requirements of
any supervising or examining authority above referred to, then for the purpose of this subsection the
combined capital and surplus of such trust company, banking association or bank shall be deemed to
be its combined capital and surplus as set forth in its most recent report of condition so published. In
44
case at any time the Trustee shall cease to be eligible in accordance with the provisions of this
subsection (e), the Trustee shall resign promptly in the manner and with the effect specified in this
Section.
Section 8.02. Merger or Consolidation. Any trust company, banking association or bank into
which the Trustee may be merged or converted or with which it may be consolidated or any trust
company, banking association or bank resulting from any merger, conversion or consolidation to which
it shall be a party or any trust company, banking association or bank to which the Trustee may sell or
transfer all or substantially all of its corporate trust business, provided that such trust company, banking
association or bank shall be eligible under subsection (e) of Section 8.01, shall be the successor to such
Trustee, without the execution or filing of any paper or any further act, anything herein to the contrary
notwithstanding.
Section 8.03. Liability of Trustee.
(a) The recitals of facts herein and in the 2020 Bonds shall be taken as statements
of the District, and the Trustee shall not assume responsibility for the correctness of the same, or make
any representations as to the validity or sufficiency of the Indenture or the 2020 Bonds, nor shall the
Trustee incur any responsibility in respect thereof, other than as expressly stated herein in connection
with the respective duties or obligations herein or in the 2020 Bonds assigned to or imposed upon it.
The Trustee shall, however, be responsible for its representations contained in its certificate of
authentication on the 2020 Bonds. The Trustee shall not be liable in connection with the performance
of its duties hereunder, except for its own negligence or willful misconduct. The Trustee may become
the Owner of 2020 Bonds with the same rights it would have if it were not Trustee, and, to the extent
permitted by law, may act as depository for and permit any of its officers or directors to act as a member
of, or in any other capacity with respect to, any committee formed to protect the rights of 2020 Bond
Owners, whether or not such committee shall represent the Owners of a majority in principal amount
of the 2020 Bonds then Outstanding.
(b) The Trustee shall not be liable for any error of judgment made in good faith,
unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts.
(c) The Trustee shall not be liable with respect to any action taken or omitted to be
taken by it in good faith in accordance with the direction of the Owners of not less than a majority (or
such other percentage provided for herein) in aggregate principal amount of the 2020 Bonds at the time
Outstanding relating to the time, method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power conferred upon the Trustee under the
Indenture.
(d) The Trustee shall not be liable for any action taken by it in good faith and
believed by it to be authorized or within the rights or powers conferred upon it by the Indenture.
(e) The Trustee shall not be deemed to have knowledge or notice (in each case
either actual or constructive) of any default or Event of Default hereunder or any other event which,
with the passage of time, the giving of notice, or both, would constitute an Event of Default hereunder
unless and until a Responsible Officer of the Trustee shall have actual knowledge of such event or a
Responsible Officer of the Trustee shall have been notified in writing, in accordance with Section
11.07, of such event by the District or the Owners of not less than fifty percent (50%) of the 2020
Bonds then Outstanding. Except as otherwise expressly provided herein, the Trustee shall not be bound
45
to ascertain or inquire as to the performance or observance by the District of any of the terms,
conditions, covenants or agreements herein or any of the documents executed in connection with the
2020 Bonds, or as to the existence of an Event of Default thereunder or an event which would, with
the giving of notice, the passage of time, or both, constitute an Event of Default thereunder. The
Trustee shall not be responsible for the validity, effectiveness or priority of any collateral given to or
held by it.
(f) No provision of the Indenture shall require the Trustee to expend or risk its own
funds or otherwise incur any financial liability in the performance of its duties hereunder, or in the
exercise of any of its rights or powers.
(g) The Trustee shall be under no obligation to exercise any of the rights or powers
vested in it by the Indenture, including at the request, order or direction of any of the Owners pursuant
to the Indenture, unless such Owners shall have offered to the Trustee security or indemnity satisfactory
to the Trustee against the costs, expenses and liabilities which might be incurred by it in compliance
with such request or direction. No permissive power, right or remedy conferred upon the Trustee
hereunder shall be construed to impose a duty to exercise such power, right or remedy.
(h) Whether or not herein expressly so provided, every provision of the Indenture
relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject
to the provisions of this Article VIII.
(i) The Trustee shall have no responsibility or liability with respect to any
information, statement, or recital in any official statement, offering memorandum or any other
disclosure material prepared or distributed with respect to the 2020 Bonds.
(j) The immunities extended to the Trustee also extend to its directors, officers,
employees and agents.
(k) The Trustee may execute any of the trusts or powers of the Indenture and
perform any of its duties through attorneys, agents and receivers and shall not be answerable for the
conduct of the same if appointed by it with reasonable care.
(l) The Trustee shall not be considered in breach of or in default in its obligations
hereunder or progress in respect thereto in the event of delay in the performance of such obligations
due to unforeseeable causes beyond its control and without its fault or negligence, including, but not
limited to, acts of God or of the public enemy or terrorists, acts of a government, acts of the other party,
fires, floods, recognized public emergencies, pandemics, epidemics, quarantine restrictions, strikes,
freight embargoes, earthquakes, explosion, mob violence, riot, inability to procure or general sabotage
or rationing of labor, equipment, facilities, sources of energy, material or supplies in the open market,
litigation or arbitration involving a party or others relating to zoning or other governmental action or
inaction pertaining to the Water System or the Wastewater System, malicious mischief, condemnation,
and unusually severe weather or delays of suppliers or subcontractors due to such causes or any similar
event and/or occurrences beyond the control of the Trustee.
(m) The Trustee shall have the right to accept and act upon instructions, including
funds transfer instructions (“Instructions”) given pursuant to this Indenture and delivered using
Electronic Means (“Electronic Means” shall mean the following communications methods: e-mail,
facsimile transmission, secure electronic transmission containing applicable authorization codes,
46
passwords and/or authentication keys issued by the Trustee, or another method or system specified by
the Trustee as available for use in connection with its services hereunder); provided, however, that the
District shall provide to the Trustee an incumbency certificate listing Authorized Officers with the
authority to provide such Instructions and containing specimen signatures of such Authorized Officers,
which incumbency certificate shall be amended by the District whenever a person is to be added or
deleted from the listing. If the District elects to give the Trustee Instructions using Electronic Means
and the Trustee in its reasonable judgment elects to act upon such Instructions, the Trustee’s
understanding of such Instructions shall be deemed controlling. The District understands and agrees
that the Trustee cannot determine the identity of the actual sender of such Instructions and that the
Trustee shall conclusively presume that directions that purport to have been sent by an Authorized
Officer listed on the incumbency certificate provided to the Trustee have been sent by such Authorized
Officer. The District shall be responsible for ensuring that only Authorized Officers transmit such
Instructions to the Trustee and that the District and all Authorized Officers are solely responsible to
safeguard the use and confidentiality of applicable user and authorization codes, passwords and/or
authentication keys upon receipt by the District. The Trustee shall not be liable for any losses, costs or
expenses arising directly or indirectly from the Trustee’s reliance upon and compliance with such
Instructions notwithstanding the fact that such directions conflict or are inconsistent with a subsequent
written instruction. The District agrees: (i) to assume all risks arising out of the use of Electronic
Means to submit Instructions to the Trustee, including without limitation the risk of the Trustee acting
on unauthorized Instructions, and the risk of interception and misuse by third parties; (ii) that it is fully
informed of the protections and risks associated with the various methods of transmitting Instructions
to the Trustee and that there may be more secure methods of transmitting Instructions than the
method(s) selected by the District; (iii) that the security procedures (if any) to be followed in
connection with its transmission of Instructions provide to it a commercially reasonable degree of
protection in light of its particular needs and circumstances; and (iv) to notify the Trustee in writing
immediately upon learning of any compromise or unauthorized use of the security procedures.
(n) The Trustee shall not be concerned with or accountable to anyone for the
subsequent use or application of any moneys which shall be released or withdrawn in accordance with
the provisions hereof.
(o) The permissive right of the Trustee to do things enumerated herein shall not be
construed as a duty and it shall not be answerable for other than its negligence or willful misconduct.
(p) In no event shall the Trustee be liable for special, indirect, punitive or
consequential loss or damage of any kind whatsoever (including, but not limited to, loss of profit)
hereunder, irrespective of whether the Trustee has been advised of the likelihood of such loss or
damage and regardless of the form of action.
Section 8.04. Right to Rely on Documents. The Trustee shall be protected in acting upon
any notice, resolution, requisition, request, consent, order, certificate, report, opinion, notes, direction,
facsimile transmission, electronic mail or other paper or document believed by it to be genuine and to
have been signed or presented by the proper party or parties. The Trustee may consult with counsel of
its selection, who may be counsel of or to the District, with regard to legal questions, and the opinion
of such counsel shall be full and complete authorization and protection in respect of any action taken
or suffered by it hereunder in good faith and in accordance therewith.
47
The Trustee may treat the Owners of the 2020 Bonds appearing in the Trustee’s Registration
Books as the absolute owners of the 2020 Bonds for all purposes and the Trustee shall not be affected
by any notice to the contrary.
Whenever in the administration of the trusts imposed upon it by the Indenture the Trustee shall
deem it necessary or desirable that a matter be proved or established prior to taking or suffering any
action hereunder, such matter (unless other evidence in respect thereof be herein specifically
prescribed) may be deemed to be conclusively proved and established by a Certificate, Request or
Requisition of the District, and such Certificate, Request or Requisition shall be full warrant to the
Trustee for any action taken or suffered in good faith under the provisions of the Indenture in reliance
upon such Certificate, Request or Requisition, but in its reasonable judgment the Trustee may, in lieu
thereof, accept other evidence of such matter or may require such additional evidence as it may deem
reasonable.
Section 8.05. Preservation and Inspection of Documents. All documents that are received by
the Trustee under the provisions of the Indenture shall be retained in its possession during the term
hereof in accordance with applicable document retention policies and shall be subject at all reasonable
times to the inspection of the District and any 2020 Bond Owner, and their agents and representatives
duly authorized in writing, at reasonable hours and under reasonable conditions.
Section 8.06. Compensation and Indemnification. The District shall pay to the Trustee from
time to time all reasonable compensation as previously agreed upon in writing for all services rendered
under the Indenture, and also all reasonable expenses, charges, legal and consulting fees and other
disbursements and those of their attorneys, agents and employees, incurred in and about the
performance of their powers and duties under the Indenture.
The District shall indemnify, defend and hold harmless the Trustee, its officers, employees,
directors and agents from and against any loss, costs, claims, liability or expense (including fees and
expenses of its attorneys and advisors) incurred without negligence or willful misconduct on its part,
arising out of or in connection with the execution of the Indenture, acceptance or administration of this
trust or any other document or transaction executed in connection herewith, including costs and
expenses of defending itself against any claim or liability in connection with the exercise or
performance of any of its powers hereunder. The rights of the Trustee and the obligations of the District
under this Section 8.06 shall survive removal or resignation of the Trustee hereunder or the discharge
of the 2020 Bonds and the Indenture.
When the Trustee incurs expenses or renders services after the occurrence of an Event of
Default, such expenses and the compensation for such services are intended to constitute expenses of
administration under any federal or state bankruptcy, insolvency, arrangement, moratorium,
reorganization or other debtor relief law. Upon an Event of Default, and only upon an Event of Default,
the Trustee shall have a first lien with right of payment prior to payment on account of principal of and
premium, if any, and interest on any 2020 Bond, upon the trust estate for the foregoing fees, charges
and expenses incurred by it.
ARTICLE IX
MODIFICATION OR AMENDMENT OF THE INDENTURE
Section 9.01. Amendments Permitted.
48
(a) The Indenture and the rights and obligations of the District and of the Owners
of the 2020 Bonds and of the Trustee may be modified or amended from time to time and at any time
by an indenture or indentures supplemental thereto, which the District and the Trustee may enter into
when the written consent of the Owners of a majority in aggregate principal amount of all 2020 Bonds
then Outstanding, exclusive of 2020 Bonds disqualified as provided in Section 11.09 hereof, shall have
been filed with the Trustee. No such modification or amendment shall: (1) extend the fixed maturity
of any 2020 Bonds, or reduce the amount of principal thereof or premium (if any) thereon, or extend
the time of payment, or change the rate of interest or the method of computing the rate of interest
thereon, or extend the time of payment of interest thereon, without the consent of the Owner of each
2020 Bond so affected; or (2) reduce the aforesaid percentage of 2020 Bonds the consent of the Owners
of which is required to affect any such modification or amendment, or permit the creation of any lien
on the Revenues and other assets pledged under the Indenture prior to or on a parity with the lien
created by the Indenture except as permitted herein, or deprive the Owners of the 2020 Bonds of the
lien created by the Indenture on such Revenues and other assets except as permitted herein, without
the consent of the Owners of all of the 2020 Bonds then Outstanding. It shall not be necessary for the
consent of the 2020 Bond Owners to approve the particular form of any Supplemental Indenture, but
it shall be sufficient if such consent shall approve the substance thereof. Promptly after the execution
by the District and the Trustee of any Supplemental Indenture pursuant to this subsection (a), the
Trustee shall mail a notice, setting forth in general terms the substance of such Supplemental Indenture,
to each Rating Agency and the Owners of the 2020 Bonds at the respective addresses shown on the
Registration Books. Any failure to give such notice, or any defect therein, shall not, however, in any
way impair or affect the validity of any such Supplemental Indenture.
(b) The Indenture and the rights and obligations of the District, the Trustee and the
Owners of the 2020 Bonds may also be modified or amended from time to time and at any time by a
Supplemental Indenture, which the District and the Trustee may enter into without the consent of any
2020 Bond Owners, if the Trustee shall receive an opinion of Bond Counsel to the effect that the
provisions of such Supplemental Indenture shall not materially adversely affect the interests of the
Owners of the Outstanding 2020 Bonds, including, without limitation, for any one or more of the
following purposes:
(1) to add to the covenants and agreements of the District contained in the
Indenture other covenants and agreements thereafter to be observed, to pledge or assign additional
security for the 2020 Bonds (or any portion thereof), or to surrender any right or power herein reserved
to or conferred upon the District;
(2) to make such provisions for the purpose of curing any ambiguity,
inconsistency or omission, or of curing or correcting any defective provision, contained in the
Indenture, or in regard to matters or questions arising under the Indenture, as the District may deem
necessary or desirable;
(3) to modify, amend or supplement the Indenture in such manner as to
permit the qualification hereof under the Trust Indenture Act of 1939, as amended, or any similar
federal statute hereunder in effect, and to add such other terms conditions and provisions as may be
permitted by said act or similar federal statute; and
(4) to modify, amend or supplement the Indenture in such manner as to
cause interest on the 2020A Bonds to remain excludable from gross income under the Code.
49
(c) The Trustee may in its reasonable judgment, but shall not be obligated to, enter
into any such Supplemental Indenture authorized by subsections (a) or (b) of this Section which
materially adversely affects the Trustee’s own rights, duties or immunities under the Indenture or
otherwise.
(d) Prior to the Trustee entering into any Supplemental Indenture hereunder, there
shall be delivered to the Trustee an opinion of Bond Counsel stating, in substance, that such
Supplemental Indenture has been adopted in compliance with the requirements of the Indenture and
(as applicable) that the adoption of such Supplemental Indenture will not, in and of itself, adversely
affect the exclusion of interest on the 2020A Bonds from federal income taxation or the exemption of
interest on the 2020 Bonds from state income taxation.
Section 9.02. Effect of Supplemental Indenture. Upon the execution of any Supplemental
Indenture pursuant to this Article, the Indenture shall be deemed to be modified and amended in
accordance therewith, and the respective rights, duties and obligations under the Indenture of the
District, the Trustee and all Owners of 2020 Bonds Outstanding shall thereafter be determined,
exercised and enforced thereunder subject in all respects to such modification and amendment, and all
the terms and conditions of any such Supplemental Indenture shall be deemed to be part of the terms
and conditions of the Indenture for any and all purposes.
Section 9.03. Endorsement of 2020 Bonds; Preparation of New 2020 Bonds. 2020 Bonds
delivered after the execution of any Supplemental Indenture pursuant to this Article may, and if the
Trustee so determines shall, bear a notation by endorsement or otherwise in form approved by the
District and the Trustee as to any modification or amendment provided for in such Supplemental
Indenture, and, in that case, upon demand on the Owner of any 2020 Bonds Outstanding at the time of
such execution and presentation of his or her 2020 Bonds for the purpose at the Designated Corporate
Trust Office of the Trustee or at such additional offices as the Trustee may select and designate for that
purpose, a suitable notation shall be made on such 2020 Bonds. If the Supplemental Indenture shall
so provide, new 2020 Bonds so modified as to conform, in the opinion of the District and the Trustee,
to any modification or amendment contained in such Supplemental Indenture, shall be prepared and
executed by the District and authenticated by the Trustee, and upon demand on the Owners of any
2020 Bonds then Outstanding shall be exchanged at the Designated Corporate Trust Office of the
Trustee, without cost to any 2020 Bond Owner, for 2020 Bonds then Outstanding, upon surrender for
cancellation of such 2020 Bonds, in equal aggregate principal amount of the same maturity.
Section 9.04. Amendment of Particular 2020 Bonds. The provisions of this Article shall not
prevent any 2020 Bond Owner from accepting any amendment as to the particular 2020 Bonds held
by such Owner.
ARTICLE X
DEFEASANCE
Section 10.01. Discharge of Indenture. The 2020 Bonds may be paid by the District in any of
the following ways, provided that the District also pays or causes to be paid any other sums payable
hereunder by the District:
(a) by paying or causing to be paid the principal of and interest and redemption
premiums (if any) on the 2020 Bonds, as and when the same become due and payable;
50
(b) by depositing with the Trustee, in trust, at or before maturity, money or
securities in the necessary amount (as provided in Section 10.03) to pay or redeem all 2020 Bonds then
Outstanding; or
(c) by delivering to the Trustee, for cancellation by it, all of the 2020 Bonds then
Outstanding.
If the District shall also pay or cause to be paid all other sums payable hereunder by the District,
then and in that case, at the election of the District (as evidenced by a Certificate of the District, filed
with the Trustee, signifying the intention of the District to discharge all such indebtedness and the
Indenture), and notwithstanding the fact that any 2020 Bonds shall not have been surrendered for
payment, the Indenture and the pledge of Revenues and other assets made under the Indenture and all
covenants, agreements and other obligations of the District under the Indenture shall cease, terminate,
become void and be completely discharged and satisfied, except for the District’s obligations under
Section 8.06. In such event, upon the Written Request of the District, the Trustee shall execute and
deliver to the District all such instruments as may be necessary or desirable to evidence such discharge
and satisfaction, and the Trustee shall pay over, transfer, assign or deliver all moneys or securities or
other property held by it pursuant to the Indenture which are not required for the payment or redemption
of 2020 Bonds not theretofore surrendered for such payment or redemption to the District.
Section 10.02. Discharge of Liability on 2020 Bonds. Upon the deposit with the Trustee, in
trust, at or before maturity, of money or securities in the necessary amount (as provided in Section
10.03) to pay or redeem any Outstanding 2020 Bonds (whether upon or prior to the maturity or the
Redemption Date of such 2020 Bonds), provided that, if such Outstanding 2020 Bonds are to be
redeemed prior to maturity, notice of such redemption shall have been given as provided in Article IV
or provisions satisfactory to the Trustee shall have been made for the giving of such notice, then all
liability of the District in respect of such 2020 Bonds shall cease, terminate and be completely
discharged, and the Owners thereof shall thereafter be entitled only to payment out of such money or
securities deposited with the Trustee as aforesaid for their payment, subject however, to the provisions
of Section 10.04.
The District may at any time surrender to the Trustee for cancellation by it any 2020 Bonds
previously issued and delivered, which the District may have acquired in any manner whatsoever, and
such 2020 Bonds, upon such surrender and cancellation, shall be deemed to be paid and retired.
Section 10.03. Deposit of Money or Securities with Trustee. Whenever in the Indenture it is
provided or permitted that there be deposited with or held in trust by the Trustee money or securities
in the necessary amount to pay or redeem any 2020 Bonds, the money or securities so to be deposited
or held may include money or securities held by the Trustee in the funds and accounts established
pursuant to the Indenture and shall be:
(a) lawful money of the United States of America in an amount equal to the
principal amount of such 2020 Bonds and all unpaid interest thereon to maturity, except that, in the
case of 2020 Bonds which are to be redeemed prior to maturity and in respect of which notice of such
redemption shall have been given as provided in Article IV or provisions satisfactory to the Trustee
shall have been made for the giving of such notice, the amount to be deposited or held shall be the
principal amount of such 2020 Bonds and all unpaid interest and premium, if any, thereon to the
Redemption Date; or
51
(b) Federal Securities the principal of and interest on which when due will, in the
written opinion of an Independent Certified Public Accountant or Independent Financial Consultant
filed with the District and the Trustee, provide money sufficient to pay the principal of and all unpaid
interest to maturity, or to the Redemption Date (with premium, if any), as the case may be, on the 2020
Bonds to be paid or redeemed, as such principal, interest and premium, if any, become due, provided
that in the case of 2020 Bonds which are to be redeemed prior to the maturity thereof, notice of such
redemption shall have been given as provided in Article IV or provision satisfactory to the Trustee
shall have been made for the giving of such notice;
provided, in each case, that: (i) the Trustee shall have been irrevocably instructed (by the terms of the
Indenture or by Written Request of the District) to apply such money to the payment of such principal,
interest and premium, if any, with respect to such 2020 Bonds; and (ii) the District shall have delivered
to the Trustee an opinion of Bond Counsel addressed to the District and the Trustee to the effect that
such 2020 Bonds have been discharged in accordance with the Indenture (which opinion may rely upon
and assume the accuracy of the Independent Certified Public Accountant’s or Independent Financial
Consultant’s opinion referred to above).
Section 10.04. Payment of 2020 Bonds After Discharge of Indenture. Notwithstanding any
provisions of the Indenture, any moneys held by the Trustee in trust for the payment of the principal
of, or interest on, any 2020 Bonds and remaining unclaimed for two (2) years after the principal of all
of the 2020 Bonds has become due and payable (whether at maturity or upon call for redemption or by
acceleration as provided in the Indenture), if such moneys were so held at such date, or two (2) years
after the date of deposit of such moneys if deposited after said date when all of the 2020 Bonds became
due and payable, shall be repaid to the District (without liability for interest) free from the trusts created
by the Indenture upon receipt of an indemnification agreement acceptable to the District and the
Trustee indemnifying the Trustee with respect to claims of Owners of 2020 Bonds which have not yet
been paid, and all liability of the Trustee with respect to such moneys shall thereupon cease; provided,
however, that before the repayment of such moneys to the District as aforesaid, the Trustee shall at the
written direction of the District (at the cost of the District) first mail to the Owners of 2020 Bonds
which have not yet been paid, at the addresses shown on the Registration Books, a notice with respect
to the 2020 Bonds so payable and not presented and with respect to the provisions relating to the
repayment to the District of the moneys held for the payment thereof.
ARTICLE XI
MISCELLANEOUS
Section 11.01. Liability of District Limited to Revenues. Notwithstanding anything in the
Indenture or the 2020 Bonds, but subject to the priority of payment with respect to Operation and
Maintenance Costs, the District shall not be required to advance any moneys derived from any source
other than the Revenues, the Revenue Fund and other moneys pledged under the Indenture for any of
the purposes mentioned in the Indenture, whether for the payment of the principal of or interest on the
2020 Bonds or for any other purpose of the Indenture. Nevertheless, the District may, but shall not be
required to, advance for any of the purposes hereof any funds of the District which may be made
available to it for such purposes.
The obligation of the District to pay interest and principal on the 2020 Bonds is a special
obligation of the District payable solely from the Net Revenues, and does not constitute a debt of the
52
District or of the State of California or of any political subdivision thereof (other than the District) in
contravention of any constitutional or statutory debt limitation or restriction.
Section 11.02. Successor Is Deemed Included in All References to Predecessor. Whenever in
the Indenture either the District or the Trustee is named or referred to, such reference shall be deemed
to include the successors or assigns thereof, and all the covenants and agreements in the Indenture
contained by or on behalf of the District or the Trustee shall bind and inure to the benefit of the
respective successors and assigns thereof whether so expressed or not.
Section 11.03. Limitation of Rights to Parties and 2020 Bond Owners. Nothing in the
Indenture or in the 2020 Bonds expressed or implied is intended or shall be construed to give to any
person other than the District, the Trustee and the Owners of the 2020 Bonds, any legal or equitable
right, remedy or claim under or in respect of the Indenture or any covenant, condition or provision
therein or herein contained; and all such covenants, conditions and provisions are and shall be held to
be for the sole and exclusive benefit of the District, the Trustee and the Owners of the 2020 Bonds.
Section 11.04. Waiver of Notice; Requirement of Mailed Notice. Whenever in the Indenture
the giving of notice by mail or otherwise is required, the giving of such notice may be waived in writing
by the person entitled to receive such notice and in any such case the giving or receipt of such notice
shall not be a condition precedent to the validity of any action taken in reliance upon such waiver.
Whenever in the Indenture any notice shall be required to be given by mail, such requirement shall be
satisfied by the deposit of such notice in the United States mail, postage prepaid, by first class mail.
Section 11.05. Disposal of 2020 Bonds. Whenever in the Indenture provision is made for the
cancellation by the Trustee and the delivery to the District of any 2020 Bonds, the Trustee shall dispose
such 2020 Bonds in accordance with its then customary procedures, and, upon the District’s request,
deliver a certificate of such disposal to the District.
Section 11.06. Severability of Invalid Provisions. If any one or more of the provisions
contained in the Indenture or in the 2020 Bonds shall for any reason be held to be invalid, illegal or
unenforceable in any respect, then such provision or provisions shall be deemed severable from the
remaining provisions contained in the Indenture and such invalidity, illegality or unenforceability shall
not affect any other provision of the Indenture, and the Indenture shall be construed as if such invalid
or illegal or unenforceable provision had never been contained herein. The District hereby declares
that it would have entered into the Indenture and each and every other Section, paragraph, sentence,
clause or phrase hereof and authorized the issuance of the 2020 Bonds pursuant thereto irrespective of
the fact that any one or more Sections, paragraphs, sentences, clauses or phrases of the Indenture may
be held illegal, invalid or unenforceable.
Section 11.07. Notices; Electronic Signatures. Any notice to or demand upon the District or
the Trustee shall be deemed to have been sufficiently given or served for all purposes by being sent by
facsimile, electronic mail, overnight mail or courier, or by being deposited, first class mail, postage
prepaid, in a post office letter box, addressed, as the case may be, to the District at East Valley Water
District, 31111 Greenspot Road, Highland, California 92346, email: btompkins@eastvalley.org,
Facsimile (909) 888-6741 (or such other address as may have been filed in writing by the District with
the Trustee), or to the Trustee at its Designated Corporate Trust Office at the contact information set
forth in the definition of such term in Section 1.01. Notwithstanding the foregoing provisions of this
Section 11.07, the Trustee shall not be deemed to have received, and shall not be liable for failing to
act upon the contents of, any notice unless and until the Trustee actually receives such notice.
53
The words “execution,” “signed,” “signature,” “delivery” and words of like import in or
relating to the Indenture or any document to be signed in connection with the Indenture shall be deemed
to include electronic signatures, deliveries or the keeping of records in electronic form, each of which
shall be of the same legal effect, validity or enforceability as a manually executed signature, physical
delivery thereof or the use of a paper-based recordkeeping system, as the case may be, and the parties
hereto consent to conduct the transactions contemplated hereunder by electronic means. “Electronic
signature” means any electronic sound, symbol or process attached to or logically associated with a
record and executed and adopted by a party with the intent to sign such record, including facsimile or
email electronic signatures.
Section 11.08. Evidence of Rights of 2020 Bond Owners. Any request, consent or other
instrument required or permitted by the Indenture to be signed and executed by 2020 Bond Owners
may be in any number of concurrent instruments of substantially similar tenor and shall be signed or
executed by such 2020 Bond Owners in person or by an agent or agents duly appointed in writing.
Proof of the execution of any such request, consent or other instrument or of a writing appointing any
such agent, or of the holding by any person of 2020 Bonds transferable by delivery, shall be sufficient
for any purpose of the Indenture and shall be conclusive in favor of the Trustee and the District if made
in the manner provided in this Section.
The fact and date of the execution by any person of any such request, consent or other
instrument or writing may be proved by the certificate of any notary public or other officer of any
jurisdiction, authorized by the laws thereof to take acknowledgments of deeds, certifying that the
person signing such request, consent or other instrument acknowledged to him the execution thereof,
or by an affidavit of a witness of such execution duly sworn to before such notary public or other
officer.
The Ownership of 2020 Bonds shall be proved by the Registration Books.
Any request, consent, or other instrument or writing of the Owner of any 2020 Bond shall bind
every future Owner of the same 2020 Bond and the Owner of every 2020 Bond issued in exchange
therefor or in lieu thereof, in respect of anything done or suffered to be done by the Trustee or the
District in accordance therewith or reliance thereon.
Section 11.09. Disqualified 2020 Bonds. In determining whether the Owners of the requisite
aggregate principal amount of 2020 Bonds have concurred in any demand, request, direction, consent
or waiver under the Indenture, 2020 Bonds which are actually known by a Responsible Officer of the
Trustee to be owned or held by or for the account of the District, or by any other obligor on the 2020
Bonds, or by any person directly or indirectly controlling or controlled by, or under direct or indirect
common control with, the District or any other obligor on the 2020 Bonds, shall be disregarded and
deemed not to be Outstanding for the purpose of any such determination, unless all 2020 Bonds are so
owned or held, in which case such 2020 Bonds shall not be disregarded and shall be deemed to be
Outstanding. 2020 Bonds so owned which have been pledged in good faith may be regarded as
Outstanding for the purposes of this Section if the pledgee shall establish to the satisfaction of the
Trustee the pledgee’s right to vote such 2020 Bonds and that the pledgee is not a person directly or
indirectly controlling or controlled by, or under direct or indirect common control with, the District or
any other obligor on the 2020 Bonds. In case of a dispute as to such right, any decision by the Trustee
taken upon the advice of counsel shall be full protection to the Trustee. Upon request, the District shall
certify to the Trustee those 2020 Bonds that are disqualified pursuant to this Section 11.09 and the
Trustee may conclusively rely on such certificate.
54
Section 11.10. Money Held for Particular 2020 Bonds. The money held by the Trustee for the
payment of the interest, principal or premium due on any date with respect to particular 2020 Bonds
(or portions of 2020 Bonds in the case of registered 2020 Bonds redeemed in part only) shall, on and
after such date and pending such payment, be set aside on its books and held in trust by it for the
Owners of the 2020 Bonds entitled thereto, subject, however, to the provisions of Section 10.04 hereof
but without any liability for interest thereon.
Section 11.11. Funds and Accounts. Any fund or account required by the Indenture to be
established and maintained by the Trustee may be established and maintained in the accounting records
of the Trustee, either as a fund or an account, and may, for the purposes of such records, any audits
thereof and any reports or statements with respect thereto, be treated either as a fund or as an account;
but all such records with respect to all such funds and accounts shall at all times be maintained in
accordance with corporate trust industry standards to the extent practicable, and with due regard for
the requirements of Section 6.05(a) and for the protection of the security of the 2020 Bonds and the
rights of every Owner thereof.
Section 11.12. Waiver of Personal Liability. No member, officer, agent, employee, consultant
or attorney of the District shall be individually or personally liable for the payment of the principal of
or premium or interest on the 2020 Bonds or be subject to any personal liability or accountability by
reason of the issuance thereof; but nothing herein contained shall relieve any such member, officer,
agent, employee, consultant or attorney from the performance of any official duty provided by law or
by the Indenture.
Section 11.13. Execution in Several Counterparts. The Indenture may be executed in any
number of counterparts and each of such counterparts shall for all purposes be deemed to be an original;
and all such counterparts, or as many of them as the District and the Trustee shall preserve undestroyed,
shall together constitute but one and the same instrument. The exchange of copies of the Indenture
and of signature pages by facsimile or PDF transmission shall constitute effective execution and
delivery of the Indenture as to the parties hereto and may be used in lieu of the original Indenture and
signature pages for all purposes.
Section 11.14. CUSIP Numbers. Neither the Trustee nor the District shall be liable for any
defect or inaccuracy in the CUSIP number that appears on any 2020 Bond or in any redemption notice.
The Trustee may, in its reasonable judgment, include in any redemption notice a statement to the effect
that the CUSIP numbers on the 2020 Bonds have been assigned by an independent service and are
included in such notice solely for the convenience of the 2020 Bondholders and that neither the District
nor the Trustee shall be liable for any inaccuracies in such numbers.
Section 11.15. Choice of Law. THE INDENTURE SHALL BE GOVERNED BY THE
LAWS OF THE STATE OF CALIFORNIA.
Section 11.16. Paired Obligation Provider Guidelines. For purposes of Sections 6.14 and 6.21,
Paired Obligations shall comply with the following conditions:
(a) A Paired Obligation Provider shall initially have a long-term rating of A- or
better by S&P and A3 or better by Moody’s.
(b) So long as the long-term rating of the Paired Obligation Provider is not reduced
below BBB by S&P or Baa2 by Moody’s, the interest rate of such Paired Obligation shall be deemed
55
to be equal to the irrevocable fixed interest rate attributable thereto for purposes of Sections 6.14 and
6.21.
In the event that a Paired Obligation Provider does not maintain the Minimum Rating
Requirement and the District does not replace such Paired Obligation Provider with another Paired
Obligation Provider which maintains the Initial Rating Requirement within ten (10) Business Days of
notice that the Paired Obligation Provider has not maintained the Minimum Rating Requirement,
interest with respect to such Paired Obligations shall be computed for purposes of Sections 6.14 and
6.21 without regard to payments to be received from the Paired Obligation Provider. The Trustee has
no obligation to monitor the ratings of any Paired Obligation Providers.
Section 11.17. U.S.A. Patriot Act. The parties hereto acknowledge that in accordance with
Section 326 of the U.S.A. Patriot Act, the Trustee, like all financial institutions and in order to help
fight the funding of terrorism and money laundering, is required to obtain, verify, and record
information that identifies each person or legal entity that establishes a relationship or opens an account
with the Trustee. The parties to the Indenture agree that they will provide the Trustee with such
information as it may request in order for the Trustee to satisfy the requirements of the U.S.A. Patriot
Act.
S-1
IN WITNESS WHEREOF, the District has caused the Indenture to be signed in its name by its
Authorized Officer, and the Trustee, in token of its acceptance of the duties and obligations of the
Trustee created hereunder, has caused the Indenture to be signed in its corporate name by its officer
thereunto duly authorized, all as of the day and year first above written.
EAST VALLEY WATER DISTRICT
By:
Board President
ATTEST:
Secretary, Board of Directors
MUFG UNION BANK, N.A., as Trustee
By:
Its: Authorized Officer
A-1
EXHIBIT A
FORM OF 2020 BOND
UNLESS THIS BOND IS PRESENTED BY AN AUTHORIZED OFFICER OF THE
DEPOSITORY (AS DEFINED IN THE INDENTURE) TO THE TRUSTEE FOR
REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY BOND ISSUED
IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED OFFICER OF THE DEPOSITORY (AND ANY
PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED
BY AN AUTHORIZED OFFICER OF THE DEPOSITORY), ANY TRANSFER, PLEDGE, OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS
AN INTEREST HEREIN.
No. ____ $__________
UNITED STATES OF AMERICA
STATE OF CALIFORNIA
EAST VALLEY WATER DISTRICT
REFUNDING REVENUE BONDS, SERIES 2020[A][B (FEDERALLY TAXABLE)]
INTEREST RATE MATURITY DATE ORIGINAL ISSUE DATE CUSIP
____% October 1, 20__ _____ __, 2020 _____ ___
REGISTERED OWNER CEDE & CO.
PRINCIPAL AMOUNT: _________________________________________ DOLLARS
The EAST VALLEY WATER DISTRICT, a county water district that is duly organized and
existing under and by virtue of the laws of the State of California (the “District”), for value received,
hereby promises to pay to the Registered Owner specified above or registered assigns (the “Registered
Owner”), on the Maturity Date specified above (subject to any right of prior redemption hereinafter
provided for), the Principal Amount specified above, in lawful money of the United States of America,
and to pay interest thereon in like lawful money from the interest payment date next preceding the date
of authentication of this Bond (unless: (i) this Bond is authenticated after the fifteenth day of the
calendar month preceding an interest payment date, whether or not such day is a Business Day, and on
or before the following interest payment date, in which event it shall bear interest from such interest
payment date; or (ii) this Bond is authenticated on or before [September 15, 2020], in which event it
shall bear interest from the Original Issue Date identified above; provided, however, that if as of the
date of authentication of this Bond, interest is in default on this Bond, this Bond shall bear interest
from the interest payment date to which interest has previously been paid or made available for
payment on this Bond), at the Interest Rate per annum specified above, payable on [October 1, 2020]
and each April 1 and October 1 thereafter, calculated on the basis of a 360-day year composed of
twelve 30-day months. Principal hereof and premium, if any, upon early redemption hereof are payable
by check of the Trustee upon presentation and surrender hereof at the Designated Corporate Trust
Office (as defined in the hereinafter described Indenture) of MUFG Union Bank, N.A., as trustee (the
“Trustee”). Interest hereon is payable by check of the Trustee sent by first class mail on the applicable
A-2
interest payment date to the Registered Owner hereof at the Registered Owner’s address as it appears
on the registration books of the Trustee as of the close of business on the fifteenth day of the month
preceding each interest payment date (except that in the case of a Registered Owner of one million
dollars ($1,000,000) or more in principal amount, such payment may, at such Registered Owner’s
option, be made by wire transfer of immediately available funds to an account in the United States in
accordance with written instructions provided to the Trustee by such Registered Owner prior to the
fifteenth (15th) day of the month preceding such interest payment date).
This Bond is not a debt of the State of California, or any of its political subdivisions (other than
the District), and neither the State, nor any of its political subdivisions (other than the District), is liable
hereon, nor in any event shall this Bond be payable out of any funds or properties of the District other
than the Net Revenues (as such term is defined in the Indenture of Trust, dated as of _____ 1, 2020
(the “Indenture”), by and between the District and the Trustee) and other moneys pledged therefor
under the Indenture. The obligation of the District to make payments in accordance with the Indenture
is a limited obligation of the District as set forth in the Indenture and the District shall have no liability
or obligation in connection herewith except with respect to such payments to be made pursuant to the
Indenture. This Bond does not constitute an indebtedness of the District in contravention of any
constitutional or statutory debt limitation or restriction.
This Bond is one of a duly authorized issue of bonds of the District designated as the “East
Valley Water District Refunding Revenue Bonds, Series 2020[A][B (Federally Taxable)]” (the “2020
Bonds”), of an aggregate principal amount of ____ Million ____ Thousand Dollars ($____), all of like
tenor and date (except for such variation, if any, as may be required to designate varying numbers or
interest rates) and all issued pursuant to Articles 10 and 11 of Chapter 3 of Part 1 of Division 2 of Title
5 (commencing with Section 53570) of the Government Code of the State of California, and pursuant
to the Indenture and the resolution authorizing the issuance of the 2020 Bonds. Reference is hereby
made to the Indenture (copies of which are on file at the office of the District) and all supplements
thereto for a description of the terms on which the 2020 Bonds are issued, the provisions with regard
to the nature and extent of the Net Revenues, and the rights thereunder of the Owners of the 2020
Bonds and the rights, duties and immunities of the Trustee and the rights and obligations of the District
hereunder, to all of the provisions of which the Registered Owner of this Bond, by acceptance hereof,
assents and agrees. The 2020 Bonds have been issued in fully registered form without coupons in
denominations of $5,000 or any integral multiple thereof.
The 2020 Bonds have been issued by the District for the purpose of refinancing certain capital
improvements to the Water System and the Wastewater System of the District.
This Bond and the interest, premium, if any, hereon and all other 2020 Bonds and the interest
and premium, if any, thereon (to the extent set forth in the Indenture) are special obligations of the
District, secured by a pledge and lien on the Revenues and any other amounts on deposit in certain
funds and accounts created under the Indenture, and payable from the Net Revenues. As and to the
extent set forth in the Indenture, all of the Revenues are exclusively and irrevocably pledged in
accordance with the terms hereof and the provisions of the Indenture, to the payment of the principal
of and interest and premium (if any) on this Bond.
The Indenture and the rights and obligations of the District and the Owners of the 2020 Bonds
and the Trustee may be modified or amended from time to time and at any time with the written consent
of the Owners of a majority in aggregate principal amount of all 2020 Bonds then Outstanding,
exclusive of Bonds disqualified as set forth in the Indenture, in the manner, to the extent and upon the
A-3
terms provided in the Indenture, but no such modification or amendment shall: (i) extend the fixed
maturity of any 2020 Bonds, or reduce the amount of principal thereof or premium (if any) thereon, or
extend the time of payment, or change the method of computing the rate of interest thereon, or extend
the time of payment of interest thereon, without the consent of the owner of each 2020 Bond so
affected; or (ii) reduce the aforesaid percentage of 2020 Bonds the consent of the Owners of which is
required to affect any such modification or amendment, or permit the creation of any lien on the
Revenues and other assets pledged under the Indenture prior to or on a parity with the lien created by
the Indenture except as permitted in the Indenture, or deprive the Owners of the 2020 Bonds of the lien
created by the Indenture on such Revenues and other assets, except as expressly provided in the
Indenture, without the consent of the Owners of all of the 2020 Bonds then Outstanding.
The Indenture and the rights and obligations of the District, of the Trustee and the Owners of
the 2020 Bonds may also be modified or amended for certain purposes described more fully in the
Indenture at any time in the manner, to the extent and upon the terms provided in the Indenture by a
supplemental indenture, which the District and the Trustee may enter into without the consent of any
2020 Bond Owners, if the Trustee shall receive an opinion of Bond Counsel to the effect that the
provisions of such supplemental indenture will not materially adversely affect the interests of the
Owners of the Outstanding 2020 Bonds.
[The 2020 Bonds with stated maturities on or after October 1, 20__, are subject to redemption
prior to their respective stated maturities, as a whole or in part on ____ 1, 20__, or any date thereafter,
as directed by the District in a Written Request provided to the Trustee at least 35 days prior to such
date and by lot within each maturity in integral multiples of $5,000, at a Redemption Price equal to the
principal amount thereof plus accrued interest thereon to the Redemption Date, without premium.]
[MAKE-WHOLE CALL?]
The 2020 Bonds are subject to extraordinary redemption prior to their respective stated
maturities, as a whole or in part on any date in the order of maturity and within maturities as directed
by the District in a Written Request provided to the Trustee at least 35 days prior to such date in integral
multiples of $5,000 from Net Proceeds, upon the terms and conditions of, and as provided for in, the
Indenture, at a Redemption Price equal to the principal amount thereof plus accrued interest thereon to
the date fixed for redemption, without premium.
The Term Bonds with stated maturities on October 1, 20__ are subject to mandatory sinking
fund redemption in part (by lot) on October 1, 20__ and each October 1 thereafter, in integral multiples
of $5,000 at a Redemption Price of the principal amount thereof plus accrued interest to the date fixed
for redemption, without premium, in accordance with the following schedule:
Redemption Date
(October 1)
Principal
Amount
20__ $
*
* Maturity.
A-4
If some but not all of the Term Bonds are redeemed pursuant to the optional redemption
provisions of the Indenture, as described above, the principal amount of the applicable Term Bonds to
be redeemed on any subsequent October 1 will be reduced, by $5,000 or an integral multiple thereof,
as designated by the District in a Written Order of the District filed with the Trustee; provided,
however, that the aggregate amount of such reductions shall not exceed the aggregate amount of the
applicable Term Bonds redeemed pursuant to the optional redemption provisions of the Indenture.
As provided in the Indenture, notice of redemption shall be mailed by the Trustee by first class
mail at least 20 days but not more than 60 days prior to the date fixed for redemption to the respective
Owners of any 2020 Bonds designated for redemption at their addresses appearing on the registration
books of the Trustee, but neither the failure to receive such notice nor any defect in the notice or the
mailing thereof shall affect the validity of the redemption.
If this Bond is called for redemption and payment is duly provided therefor as specified in the
Indenture, interest shall cease to accrue hereon from and after the date fixed for redemption.
If an Event of Default, as defined in the Indenture, shall occur, the principal of all of the 2020
Bonds and the interest accrued thereon may be declared due and payable upon the conditions, in the
manner and with the effect provided in the Indenture, but such declaration and its consequences may
be rescinded and annulled as further provided in the Indenture.
This Bond is transferable by the Registered Owner hereof, in person or by his or her duly
authorized attorney in writing, at the Designated Corporate Trust Office of the Trustee but only in the
manner, subject to the limitations and upon payment of the taxes and charges provided in the Indenture
and upon surrender and cancellation of this Bond. Upon registration of such transfer, a new 2020 Bond
or 2020 Bonds, of authorized denomination or denominations, for the same aggregate principal amount
of the same series and maturity will be issued to the transferee in exchange therefor.
This Bond may be exchanged at the Designated Corporate Trust Office of the Trustee for a like
aggregate principal amount of Bonds of other authorized denominations of the same series and
maturity, but only in the manner, subject to the limitations and upon payment of the taxes and charges
provided in the Indenture.
The Trustee shall not be required to register the transfer or exchange of this Bond during the
period in which the Trustee is selecting 2020 Bonds for redemption or if this Bond has been selected
for redemption.
The District and the Trustee may treat the Registered Owner hereof as the absolute owner
hereof for all purposes, and the District and the Trustee shall not be affected by any notice to the
contrary.
It is hereby certified that all of the things, conditions and acts required to exist, to have
happened or to have been performed precedent to and in the issuance of this Bond do exist, have
happened or have been performed in due and regular time, form and manner as required by the
Indenture and the laws of the State of California and that the amount of this Bond, together with all
other indebtedness of the District, does not exceed any limit under any laws of the State of California,
and is not in excess of the amount of 2020 Bonds permitted to be issued under the Indenture.
A-5
This Bond shall not be entitled to any benefit under the Indenture or become valid or obligatory
for any purpose until the certificate of authentication hereon endorsed shall have been manually signed
by the Trustee.
IN WITNESS WHEREOF, the District has caused this Bond to be executed in its name and on
its behalf with the manual or facsimile signature of its President as of this ___ day of _____, 2020.
EAST VALLEY WATER DISTRICT
By:
Its: Board President
A-6
[FORM OF TRUSTEE’S CERTIFICATE OF AUTHENTICATION
TO APPEAR ON BONDS]
This is one of the Bonds described in the within-mentioned Indenture.
Dated: _____ __, 2020
MUFG UNION BANK, N.A., as Trustee
By:
Its: Authorized Signatory
A-7
[FORM OF ASSIGNMENT]
For value received the undersigned hereby sells, assigns and transfers unto
(Name, Address and Tax Identification or
Social Security Number of Assignee)
the within registered Bond and hereby irrevocably constitute(s) and appoint(s) __________________
_________________________ attorney, to transfer the same on the registration books of the Trustee
with full power of substitution in the premises.
Dated:
Note: The signature(s) on this Assignment must
correspond with the name(s) as written on the
face of the within Bond in every particular
without alteration or enlargement or any
change whatsoever.
Signature Guaranteed:
Note: The signature to this Assignment must
be guaranteed by an eligible guarantor
that is a member of the Securities
Transfer Agents Medallion Program
(“STAMP”), the Stock Exchange
Medallion Program (“SEMP”) or the
New York Stock Exchange, Inc.
Medallion Signature Program (“MSP”).
B-1
EXHIBIT B
DESCRIPTION OF 2010 PROJECT, PRIOR PROJECTS AND 2013 PROJECT
[DISTRICT TO CONFIRM THAT PROCEEDS WERE ACTUALLY EXPENDED ON THESE
PROJECTS]
2010 Project
Water System Components
Plant 134 Upgrade/Expansion
Plant 143 Blending and Air Reduction Tank
Plant 150 Design
Plant 150 Construction—Local Share
Sixth Street Pipeline—Plant 151 to Plant 40
Sixth Street Pipeline—Plant 150 to Plant 12
Vine/Union/Live Oak Main Replacements
Bruce Street Main Replacement
Plant 40 Boosters
Wastewater System Components
Replacement of approximately 2,630 linear feet of a 6 inch and 8 inch diameter vitrified clay pipe
sewer main
Prior Projects
Financing Component
2001 Installment Purchase Agreement
Water System Improvements
Miscellaneous Water System Improvements Financed
with 1994 Certificates and new money proceeds
2004 Installment Purchase Agreement Sterling Avenue Pipeline Materials
New Administration Offices
Plant 134 Design
Plant 150 Design
Rogers Lane Main Replacement
2006 Installment Purchase Agreement
Water System Improvements
Sterling Ave 36” Water Pipeline Installation
Sterling Avenue Pipeline Materials
Land Purchase and Preliminary Design—Lower Zone
Blending Plant 150
New Well Plant 132
2013 Project
B-2
Construction of a new 8.5 acre administrative office and corporate yard campus for the District
located in the City of Highland, County of San Bernardino on the south side of Greenspot Road
approximately three miles east of Church Street.
The 2013 Project includes: (i) an approximately 28,300 square foot administrative office building
with a boardroom, employee offices and customer service facilities; (ii) an operations yard with an
approximately 5,800 square foot operations building housing vehicle mechanics bays, storage,
stockrooms, a covered wash bay, a covered exterior work bay and covered space for compressed
natural gas fueling equipment that is expected to be installed in the future; (iii) a 2,000 gallon
underground storage tank and clarifier to handle runoff from the wash and mechanics bays: (iv)
parking bays covered with solar panels; (v) an electrical transformer enclosure; (vi) an emergency
generator with a 500-gallon fuel tank; (vii) the construction of water and wastewater lines to serve
the administrative office building and the operations yard; and (viii) other facilities and
improvements. The operations yard will be fenced and secured by gates.
The District has determined that approximately 65% of the costs of the 2013 Project are allocable to
the Water System and that approximately 35% of the costs of the 2013 Project are allocable to the
Wastewater System.
1
EXHIBIT C
$_____
EAST VALLEY WATER DISTRICT
REFUNDING REVENUE BONDS,
SERIES 2020A
$_____
EAST VALLEY WATER DISTRICT
REFUNDING REVENUE BONDS,
SERIES 2020B
(FEDERALLY TAXABLE)
________, 2020
CONTRACT OF PURCHASE
East Valley Water District
31111 Greenspot Road
Highland, California 92346
Attention: General Manager
Ladies and Gentlemen:
The undersigned, J.P. Morgan Securities LLC (the “Underwriter”), hereby offers to enter into
this Contract of Purchase (the “Contract of Purchase”) with East Valley Water District (the “District”)
which, upon the District’s acceptance hereof, will be binding upon the District and upon the
Underwriter. This offer is made subject to the written acceptance of this Contract of Purchase by the
District and the delivery of such acceptance to the Underwriter at or prior to 6:00 P.M., California time,
on the date hereof.
1. Upon the terms and conditions and upon the basis of the representations and warranties
hereinafter set forth, the Underwriter hereby agrees to purchase from the District for reoffering to the
public, and the District hereby agrees to sell to the Underwriter for such purpose, all (but not less than
all) of $___________ aggregate principal amount of the District’s Refunding Revenue Bonds, Series
2020A (the “2020A Bonds”) and Refunding Revenue Bonds, Series 2020B (Federally Taxable) (the
“2020B Bonds,” and, together with the 2020A Bonds, the “Bonds”). The aggregate purchase price of
the Bonds shall be $___________ (representing the principal amount of the Bonds, less an
underwriting fee of $________, plus an original issue premium of $_________).
2. The Bonds are being issued by the District pursuant to Articles 10 and 11 of Chapter 3
of Part 1 of Division 2 of Title 5 (commencing with Section 53570) of the Government Code of the
State of California (the “Bond Law”), a resolution adopted by the Board of Directors of the District
(the “Board”) approving the Bonds and other matters in connection therewith (the “Resolution”), and
the Indenture of Trust, dated as of _______, 2020 (the “Indenture”) by and between the District and
MUFG Union Bank, N.A., as Trustee (the “Trustee”). Capitalized terms used but not defined herein
shall have the respective meanings ascribed thereto in the Indenture.
The Bonds are limited obligations of the District payable solely from Net Revenues, which
consist of Revenues of the District’s municipal water system (the “Water System”) and municipal
wastewater system (the Wastewater System”) remaining after the payment of Operation and
Maintenance Costs of the Water System and the Wastewater System, and from amounts on deposit in
certain funds and accounts created under the Indenture.
2
The Preliminary Official Statement with respect to the Bonds, dated ______, 2020 (together
with the cover page, Appendices thereto, any documents incorporated therein by reference and any
supplements or amendments thereto, the “Preliminary Official Statement”), as amended to conform to
the terms of this Contract of Purchase, and with such changes and amendments as are mutually agreed
to by the District and the Underwriter, is herein referred to as the “Official Statement.” The District
hereby ratifies, confirms and approves the use by the Underwriter of the Preliminary Official
Statement. The District hereby deems the Preliminary Official Statement to be final as of its date,
except for either revisions to or additions of the initial public offering prices, interest rates, yields,
selling compensation, aggregate principal amount, principal amount per maturity, delivery date,
ratings, credit enhancement, redemption terms, if any, other terms of the Bonds which depend upon
the foregoing and other permitted omissions as provided in and pursuant to Rule 15c2-12 of the
Securities and Exchange Commission under the Securities and Exchange Act of 1934, as amended
(“Rule 15c2-12”).
The Bonds shall be dated the date of their delivery. The 2020A Bonds are being issued to
provide moneys: (i) to refund the East Valley Water District Financing Authority Refunding Revenue
Bonds, Series 2010 (the “2010 Bonds”) in full; and (ii) to pay costs of issuance of the 2020A Bonds.
The 2020B Bonds are being issued to provide moneys: (i) to refund the East Valley Water District
Financing Authority Revenue Bonds, Series 2013A (the “2013A Bonds”) in full; and (ii) to pay costs
of issuance of the 2020B Bonds.
In order to effect the refunding of the 2010 Bonds, the District will enter into an Escrow
Agreement dated as of _________, 2020 (the “2010 Bonds Escrow Agreement”) by and among the
District, the East Valley Water District Financing Authority (the “Authority”) and MUFG Union Bank,
N.A., as escrow agent (the “2010 Bonds Escrow Agent”). In order to effect the refunding of the 2013A
Bonds, the District will enter into an Escrow Agreement dated as of _________, 2020 (the “2013A
Bonds Escrow Agreement,” and together with the 2010 Bonds Escrow Agreement, the “Escrow
Agreements”) by and among the District, the Authority and MUFG Union Bank, N.A., as escrow agent
(the “2013A Bonds Escrow Agent,” and, together with the 2010 Bonds Escrow Agent, the “Escrow
Agent”).
The Bonds shall be substantially in the form described in, and shall be issued and secured under
and pursuant to the Indenture, substantially in the form previously submitted to the Underwriter with
only such changes therein as shall be mutually agreed upon by the District and the Underwriter. The
Bonds shall bear interest and mature as provided in Exhibit A hereto and in the Official Statement.
3. Offering by the Underwriter; Establishment of Issue Price. The Underwriter agrees to
assist the District in establishing the issue price of the 2020A Bonds and shall execute and deliver to
the district at closing an “issue price” certificate, together with supporting pricing wires or equivalent
communications, substantially in the form attached hereto as Exhibit B, with such modifications as
may be appropriate or necessary, in the reasonable judgment of the Underwriter, the District and Bond
Counsel, to accurately reflect, as applicable, the sales price or prices or the initial offering price or
prices to the public of the 2020A Bonds.
[Except as otherwise set forth in Exhibit A attached hereto,] [t]he District will treat the first
price at which 10% of each maturity of 2020A Bonds (the “10% test”) is sold to the public as the issue
price of that maturity. At or promptly after the execution of this Purchase Contract, the Underwriter
shall report to the District the price or prices at which the Underwriter has sold to the public each
maturity of 2020A Bonds. For purposes of this Section, if the 2020A Bonds mature on the same date
3
but have different interest rates, each separate CUSIP number within that maturity will be treated as a
separate maturity of the 2020A Bonds.
The Underwriter confirms that it has offered the 2020A Bonds to the public on or before the
date of this Purchase Contract at the offering price or prices (the “initial offering price”), or at the
corresponding yield or yields, set forth in Exhibit A attached hereto, except as otherwise set forth
therein. Exhibit A sets forth, as of the date of this Purchase Contract, the maturities, if any, of the
2020A Bonds for which the 10% test has been satisfied (the “10% Test Maturities”). [Exhibit A also
sets forth, as of the date of this Purchase Contract, the maturities, if any, of the Certificates for which
the 10% test has not been satisfied (the “Hold-the-Price Maturities”) and for which the District and the
Underwriter, agrees that the restrictions set forth in the next sentence shall apply, which will allow the
District to treat the initial offering price to the public of each such Hold-the-Price Maturities as of the
sale date as the issue price of that maturity (the “hold-the-offering-price rule”). So long as the hold-
the-offering-price rule remains applicable to any maturity of the 2020A Bonds, the Underwriter will
neither offer nor sell unsold Hold-the-Price Maturities of that maturity to any person at a price that is
higher than the initial offering price to the public during the period starting on the sale date and ending
on the earlier of the following:
(i) the close of the fifth (5th) business day after the sale date; or
(ii) the date on which the Underwriter has sold at least 10% of such Hold-the-Price
Maturities to the public at a price that is no higher than the initial offering price to the public.]
The Underwriter will advise the District promptly after the close of the fifth (5th) business day
after the sale date whether it has sold 10% of that Hold-the-Price Maturities to the public at a price that
is no higher than the initial offering price to the public.
The Underwriter confirms that: (i) any selling group agreement and any third-party distribution
agreement relating to the initial sale of the 2020A Bonds to the public, together with the related pricing
wires, contains or will contain language obligating each dealer who is a member of the selling group
and each broker-dealer that is a party to such third-party distribution agreement, as applicable: (A)(i)
to report the prices at which it sells to the public the unsold 2020A Bonds of each maturity allotted to
it, whether or not the Closing Date has occurred until either all the 2020A Bonds of that maturity
allocated to it have been sold or it is notified by the Underwriter that the 10% Test has been satisfied
as to the applicable 2020A Bonds of that maturity, provided that, the reporting obligation after the
Closing Date may be at reasonable periodic intervals or otherwise upon request of the Underwriter,
and (ii) comply with the hold-the-offering-price rule, if applicable, in each case if and for so long as
directed by the Underwriter.; and (B) to promptly notify the Underwriter of any sales of 2020A Bonds
that, to its knowledge, are made to a purchaser who is a related party to an underwriter participating in
the initial sale of the 2020A Bonds to the public (each such term being used as defined below); and (C)
to acknowledge that, unless otherwise advised by the dealer or broker-dealer, the Underwriter shall
assume that each order submitted by the dealer or broker-dealer is a sale to the public; (ii) any selling
group agreement relating to the initial sale of the 2020A Bonds to the public, together with the related
pricing wires, contains or will contain language obligating each dealer that is a party to a third-party
distribution agreement to be employed in connection with the initial sale of the 2020A Bonds to the
public to require each broker-dealer that is a party to such third-party distribution agreement to (A)
report the prices at which it sells to the public the unsold 2020A Bonds of each maturity allocated to
it, whether or not the Closing Date has occurred, until either all 2020A Bonds of that maturity allocated
to it have been sold or it is notified by the Underwriter or dealer that the 10% test has been satisfied as
4
to the 2020A Bonds of that maturity, provided that, the reporting obligation after the Closing Date may
be at reasonable periodic intervals or otherwise upon request of the Underwriter or dealer, and (B)
comply with the hold-the-offering-price rule, if applicable, if and for so long as directed by the
Underwriter or the dealer and as set forth in the related pricing wires. The District acknowledges that,
in making the representations set forth in this section, the Underwriter will rely on (i) in the event a
selling group has been created in connection with the initial sale of the 2020A Bonds to the public, the
agreement of each dealer who is a member of the selling group to comply with the requirements for
establishing issue price of the 2020A Bonds, including but not limited to, its agreement to comply with
the hold-the-offering-price rule, if applicable, as set forth in a selling group agreement and the related
pricing wires, and (ii) in the event that a third-party distribution agreement was employed in connection
with the initial sale of the 2020A Bonds to the public, the agreement of each broker-dealer that is a
party to such agreement to comply with the requirements for establishing issue price of the 2020A
Bonds, including but not limited to, its agreement to comply with the hold-the-offering-price rule, if
applicable, as set forth in the third-party distribution agreement and the related pricing wires. The
District further acknowledges that the Underwriter shall be solely liable for its failure to comply with
its agreement regarding the requirements for establishing issue price of the 2020A Bonds, including,
but not limited to, its agreement to comply with the hold-the-offering-price rule, if applicable to the
2020A Bonds.
Further, for purposes of this Section:
(i) “public” means any person other than an underwriter or a related party,
(ii) “underwriter” means (A) any person that agrees pursuant to a written contract with the
Authority (or with the lead underwriter to form an underwriting syndicate) to participate in the initial
sale of the 2020A Bonds to the public and (B) any person that agrees pursuant to a written contract
directly or indirectly with a person described in clause (A) to participate in the initial sale of the 2020A
Bonds to the public (including a member of a selling group or a party to a third-party distribution
agreement participating in the initial sale of the 2020A Bonds to the public),
(iii) a purchaser of any of the 2020A Bonds is a “related party” to an underwriter if the
underwriter and the purchaser are subject, directly or indirectly, to (i) more than 50% common
ownership of the voting power or the total value of their stock, if both entities are corporations
(including direct ownership by one corporation of another), (ii) more than 50% common ownership of
their capital interests or profits interests, if both entities are partnerships (including direct ownership
by one partnership of another), or (iii) more than 50% common ownership of the value of the
outstanding stock of the corporation or the capital interests or profit interests of the partnership, as
applicable, if one entity is a corporation and the other entity is a partnership (including direct ownership
of the applicable stock or interests by one entity of the other), and
(iv) “sale date” means the date of execution of this Purchase Contract by all parties.
4. The District hereby authorizes the use by the Underwriter of the Resolution, the
Continuing Disclosure Certificate dated the Closing Date (as defined in Section 7 below) (the
“Continuing Disclosure Certificate”) of the District, the Indenture, the Preliminary Official Statement,
the Official Statement, and any supplements or amendments thereto, and the information contained in
each of such documents, in connection with the public offering and sale of the Bonds.
5
5. Within seven (7) business days from the date hereof, and in any event not later than
one (1) business day prior to the Closing Date, the District hereby agrees to deliver, or to cause to be
delivered, the Official Statement (including the financial statements in Appendix A as included or
incorporated by reference therein) in “designated electronic format” (as defined in Rule G-32 of the
Municipal Securities Rulemaking Board (the “MSRB”)) to such addresses as the Underwriter shall
specify, in order to enable the Underwriter to comply with the obligations of the Underwriter pursuant
to Rule 15c2-12(b)(4) under the Securities and Exchange Act of 1934, as amended, Rule G-32 and all
other applicable rules of the MSRB. The Underwriter agrees to file the Official Statement (including
the Official Statement as it may be amended or supplemented) with the MSRB through its Electronic
Municipal Market Access system within one Business Day after receipt from the District, but in no
event later than the Closing Date (as defined in Section 7 below).
6. The District will undertake, pursuant to the Continuing Disclosure Certificate, to
provide certain annual financial information and notices of certain events, as described in the Official
Statement.
7. At 8:00 A.M., Los Angeles time, on ______, 2020, or at such other time or on such
other Business Day as shall have been mutually agreed upon by the District and the Underwriter (the
“Closing Date”), the District, subject to the terms and conditions hereof, will cause the delivery of the
Bonds to the Underwriter through the facilities of The Depository Trust Company, New York, New
York (“DTC”), or at such other place as the District and the Underwriter may mutually agree upon,
such Bonds to be in fully registered book-entry form, duly executed and registered in the name of Cede
& Co., as nominee of DTC; and, subject to the terms and conditions hereof, the Underwriter will accept
such delivery and pay the purchase price of the Bonds by wire transfer in immediately available funds
to, or in care of, the Trustee as directed in a certificate of an Authorized Representative as shall have
been mutually agreed upon by the District and the Underwriter; such delivery of and payment for the
Bonds is referred to herein as the “Closing.” The proceedings for Closing shall occur at the offices of
Stradling Yocca Carlson & Rauth, a Professional Corporation in Newport Beach, California or such
other place as shall have been mutually agreed upon by the District and the Underwriter. The Bonds
shall be made available for inspection by the Underwriter and DTC at least one Business Day before
the Closing.
8. The District represents, warrants and covenants to the Underwriter that:
a. Due Organization, Existence and Authority. The District is a county water
district duly organized and existing under and by virtue of the laws of the State of California (the
“State”), with full right, power and authority to execute, deliver and perform its obligations under this
Purchase Contract, the Indenture, the Escrow Agreements and the Continuing Disclosure Certificate
(collectively, the “Legal Documents”) and to carry out and consummate the transactions contemplated
by the Legal Documents and the Official Statement.
b. Due Authorization and Approval. By all necessary official action of the
District, the District has duly authorized and approved the execution and delivery of, and the
performance by the District of the obligations contained or described in the Preliminary Official
Statement, the Official Statement and the Legal Documents and as of the date hereof, such
authorizations and approvals are in full force and effect and have not been amended, modified or
rescinded. When executed and delivered, each Legal Document will constitute the legally valid and
binding obligation of the District enforceable in accordance with its terms, except as enforcement may
be limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or similar
6
laws or equitable principles relating to or affecting creditors’ rights generally or by the exercise of
judicial discretion in appropriate cases or by limitations on legal remedies against public agencies in
the State.
c. No Material Change in Finances. Except as otherwise described in the Official
Statement, there shall not have been any material adverse changes in the financial condition of the
District since the end of the fiscal year of its most recent audited financial report.
d. No Breach or Default. As of the time of acceptance hereof, (A) the District is
not in default, nor has it been in default, as to principal or interest with respect to an obligation issued
by the District, and (B) the District is not and will not be, in any manner which would materially
adversely affect the transactions contemplated by the Legal Documents, in breach of or in default under
any applicable constitutional provision, law or administrative rule or regulation of the State or the
United States, or any applicable judgment or decree or any trust agreement, loan agreement, bond,
note, resolution, ordinance, agreement or other instrument to which the District is a party or is
otherwise subject, and no event has occurred and is continuing which, with the passage of time or the
giving of notice, or both, would constitute, in any manner which would materially adversely affect the
transactions contemplated by the Legal Documents, a default or event of default under any such
instrument; and, as of such time, the authorization, execution and delivery of the Legal Documents and
compliance with the provisions of each of such agreements or instruments do not and will not, in any
manner which would materially adversely affect the transactions contemplated by the Legal
Documents, conflict with or constitute a breach of or default under any applicable constitutional
provision, law or administrative rule or regulation of the State or the United States, or any applicable
judgment, decree, license, permit, trust agreement, loan agreement, bond, note, resolution, ordinance,
agreement or other instrument to which the District (or any of its officers in their respective capacities
as such) is subject, or by which it or any of its properties is bound, nor will any such authorization,
execution, delivery or compliance result in the creation or imposition of any lien, charge or other
security interest or encumbrance of any nature whatsoever upon any of its assets or properties or under
the terms of any such law, regulation or instrument, except as may be provided by the Legal
Documents.
e. No Litigation. As of the time of acceptance hereof and as of the date of
Closing, no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court,
government agency, public board or body, is pending or, to the best knowledge of the District after due
investigation, threatened (A) in any way questioning the corporate existence of the District or the titles
of the officers of the District to their respective offices; (B) affecting, contesting or seeking to prohibit,
restrain or enjoin the execution or delivery of any of the Bonds, or in any way contesting or affecting
the validity of the Bonds or the Legal Documents or the consummation of the transactions
contemplated thereby, or contesting the exclusion of the interest component of Bonds from gross
income for federal income tax purposes or contesting the powers of the District to enter into the Legal
Documents; (C) which, except as described in the Official Statement, may result in any material
adverse change to the financial condition of the District or to its ability to pay principal of and interest
on the Bonds when due; or (D) contesting the completeness or accuracy of the Preliminary Official
Statement or the Official Statement or any supplement or amendment thereto or asserting that the
Preliminary Official Statement or the Official Statement contained any untrue statement of a material
fact or omitted to state any material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were made, not misleading, and
there is no basis for any action, suit, proceeding, inquiry or investigation of the nature described in
clauses (A) through (D) of this sentence.
7
f. Further Cooperation: Blue Sky. The District will furnish such information,
execute such instruments and take such other action in cooperation with the Underwriter as the
Underwriter may reasonably request in order (A) to qualify the Bonds for offer and sale under the Blue
Sky or other securities laws and regulations of such states and other jurisdictions of the United States
as the Underwriter may designate and (B) to determine the eligibility of the Bonds for investment under
the laws of such states and other jurisdictions, and will use its best efforts to continue such
qualifications in effect so long as required for the distribution of the Bonds; provided, however, that
the District shall not be required to execute a general or special consent to service of process or qualify
to do business in connection with any such qualification or determination in any jurisdiction.
g. Consents and Approvals. All authorizations, approvals, licenses, permits,
consents and orders of or filings with any governmental authority, legislative body, board, agency or
commission having jurisdiction in the matters which are required for the due authorization of, which
would constitute a condition precedent to or the absence of which would materially adversely affect
the due performance by the District of its obligations in connection with, the Legal Documents have
been duly obtained or made, except as may be required under the Blue Sky or securities laws of any
state in connection with the offering and sale of the Bonds.
h. Official Statement Accurate and Complete. The Preliminary Official
Statement was as of its date, the Official Statement is, and at all times subsequent to the date of the
Official Statement up to and including the Closing will be, true and correct in all material respects, and
the Preliminary Official Statement and the Official Statement contain, and up to and including the
Closing, will contain no misstatement of any material fact and do not, and up to and including the
Closing, will not omit any statement necessary to make the statements contained therein, in the light
of the circumstances in which such statements were made, not misleading (except no representation is
made with respect to information relating to DTC or DTC’s book-entry system).
i. No Prior Liens on Revenues. Other than as disclosed in the Official Statement,
the District does not and will not, as of the date of Closing, have outstanding any other indebtedness
which indebtedness is secured by a lien on the Revenues superior to or on a parity with the lien on the
Net Revenues.
j. Underwriter’s Consent to Amendments and Supplements to the Official
Statement. The District will advise the Underwriter promptly of any proposal to amend or supplement
the Official Statement and will not effect or consent to any such amendment or supplement without
the consent of the Underwriter, which consent will not be unreasonably withheld. The District will
advise the Underwriter promptly of the institution of any proceedings known to it by any governmental
agency prohibiting or otherwise affecting the use of the Official Statement in connection with the
offering, sale or distribution of the Bonds.
k. District Agreement to Amend or Supplement the Official Statement. If after
the date of this Purchase Contract and until 25 days after the end of the “underwriting period” (as
defined in Section 240 15c2-12 in Chapter II of Title 17 of the Code of Federal Regulations (“Rule
15c2-12”)), any event occurs as a result of which the Official Statement as then amended or
supplemented would include an untrue statement of a material fact, or omit to state any material fact
necessary in order to make the statements contained therein, in the light of the circumstances under
which they were made, not misleading, and, in the reasonable opinion of the Underwriter, an amended
or supplemented Official Statement should be delivered in connection with the offers or sales of the
Bonds to reflect such event, the District promptly will prepare at its expense an amendment or
8
supplement which will correct such statement or omission and the District shall promptly furnish to
the Underwriter a reasonable number of copies of such amendment or supplement. The Underwriter
hereby agrees to deposit the Official Statement with the Municipal Securities Rulemaking Board (the
“MSRB”). The Underwriter acknowledges that the end of the “underwriting period” will be as set
forth in Section 15 hereof.
l. No Other Obligations. Between the date of this Purchase Contract and the date
of Closing and except as otherwise disclosed in the Official Statement, the District will not, without
the prior written consent of the Underwriter, offer or issue any bonds, notes or other obligations for
borrowed money, or incur any material liabilities, directly or contingently payable from the District’s
Revenues.
m. The Bonds. Any certificate signed by any official of the District and delivered
to the Underwriter shall be deemed to be a representation and warranty by the District to the
Underwriter as to the statements made therein.
n. Compliance with Rule 15c2-12. The Preliminary Official Statement heretofore
delivered to the Underwriter has been deemed final by the District as of the date of the Preliminary
Official Statement, except for the omission of such information as is permitted to be omitted in
accordance with paragraph (b)(i) of Rule 15c2-12. The District hereby covenants and agrees that,
within seven business days from the date hereof, it shall cause a final printed form of the Official
Statement to be delivered to the Underwriter in sufficient quantity to comply with paragraph (b)(4) of
Rule 15c2-12 and Rules of the MSRB.
o. Continuing Disclosure. During the past five years, [except as disclosed in the
Official Statement, the District has not failed to comply in any material respect with any continuing
disclosure undertaking previously entered into by the District pursuant to Rule 15c2-12 of the
Securities and Exchange Commission.] The District will undertake, pursuant to a Continuing
Disclosure Certificate (the “Continuing Disclosure Certificate”), to provide annual reports and notices
of certain events in accordance with the requirements of Rule 15c2-12. A form of the Continuing
Disclosure Certificate is set forth in Appendix E to the Official Statement.
p. [Add subheading for conformity?] The financial statements of, and other
financial information regarding, the District contained in the Official Statement fairly present the
financial position and results of the operations of the District as of the dates and for the periods therein
set forth, and, to the best of the District’s knowledge, (i) the annual audited financial statements have
been prepared in accordance with generally accepted accounting principles consistently applied;
(ii) the other historical financial information has been determined on a basis substantially consistent
with that of the District’s audited financial statements included in the Official Statement; (iii) there has
not been any material increase in long-term debt or commitments or any material decrease in fund
equity of the District, other than through the normal course of operations of the District as compared
to the audited financial statements of the District for the year ended June 30, 2019 included in the
Preliminary Official Statement and the Official Statement; (iv) no events have occurred which would
require adjustments of or disclosures in the audited financial statements of the District as of and for the
year ended June 30, 2019, included in the Preliminary Official Statement and the Official Statement,
in order for them to be in conformity with generally accepted accounting principles; and (v) the audited
financial statements of the District as of and for the year ended June 30, 2019, included in the
Preliminary Official Statement and the Official Statement, do not require adjustments or additional
disclosures essential to a fair presentation in conformity with generally accepted accounting principles;
9
q. [subheading?] The consent of CliftonLarsonAllen LLP, independent certified
public accountants to the District, is not required for inclusion of their report on the District’s financial
statements for the fiscal year ended June 30, 2019 and reference to such firm included in the
Preliminary Official Statement and the Official Statement;
r. [subheading?] The District has not been notified of any listing or proposed
listing by the Internal Revenue Service to the effect that the District is a bond issuer whose arbitrage
certificates may not be relied upon.
All representations, warranties and agreements of the District shall remain operative and in full
force and effect, regardless of any investigations made by the Underwriter or on the Underwriter’s
behalf, and shall survive delivery of the Bonds.
9. The Underwriter has entered into this Contract of Purchase in reliance upon the
representations and warranties of the District contained herein, the covenants of the District contained
in the Resolution, the Bonds, the Legal Documents, and the performance by the District of its
obligations hereunder, both as of the date hereof and as of the Closing Date. The Underwriter’s
obligations under this Contract of Purchase are and shall be subject to the following further conditions:
a. The representations and warranties of the District contained herein shall be
true, complete and correct in all material respects on the date hereof and at and as of the Closing, as if
made at and as of the Closing, except that all representations in respect of the Preliminary Official
Statement shall be deemed to have been made as of the date of this Contract of Purchase, and the
statements made in all certificates and other documents delivered to the Underwriter at the Closing
pursuant hereto shall be true, complete and correct in all material respects at the Closing; the District
shall be in compliance with each of the agreements made by it in this Contract of Purchase (unless
such agreements are waived by the Underwriter); and there shall not have occurred an adverse change
in the financial position, results of operations or financial condition of the District which may result in
any material adverse change in the business, properties, assets or the financial condition of the District
or which may have a material adverse effect on the ability of the District to meet its obligations under
the Resolution, the Bonds, the Escrow Agreements and the Indenture;
b. At the time of the Closing, the Official Statement, the Resolution, the
Continuing Disclosure Certificate, the Bonds, the Indenture, the Escrow Agreements and this Contract
of Purchase shall be in full force and effect, and shall not have been amended, modified or
supplemented (except as may be agreed to in writing by the Underwriter and the District); all actions
which, in the opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation, Bond Counsel
to the District (“Bond Counsel”), shall be necessary in connection with the transactions contemplated
hereby, shall have been duly taken and shall be in full force and effect; and the District shall perform
or have performed its obligations required under or specified in this Contract of Purchase, the Official
Statement, the Resolution, the Continuing Disclosure Certificate, the Bonds, the Indenture and the
Escrow Agreements to be performed at or prior to the Closing;
c. At the time of the Closing, the Official Statement (as amended and
supplemented) shall be true and correct in all material respects, and shall not omit any statement or
information necessary to make the statements therein, in light of the circumstances under which they
were made, not misleading;
10
d. At the time of the Closing, except as disclosed in the Official Statement, (i) no
default by the District shall have occurred and be continuing in the payment of the principal and
redemption premium, if any, of or interest on any bond, note or other evidence of indebtedness issued
by the District and (ii) no bankruptcy, insolvency or other similar proceeding in respect of the District
shall be pending or to the knowledge of the District contemplated;
e. At or prior to the Closing, the Underwriter shall receive the following
documents:
(1) A copy of the Resolution, certified by the Secretary of the District as
having been duly adopted by the District and as being in full force and effect on the
date of Closing, with such changes or amendments as may have been agreed to by the
Underwriter;
(2) The opinion of Bond Counsel, dated the Closing Date, in substantially
the form included in the Official Statement as Appendix C, addressed to the District
and the Underwriter (or accompanied by a reliance letter to the Underwriter);
(3) A supplemental opinion or opinions of Bond Counsel, dated the
Closing Date, in form and substance satisfactory to the Underwriter and Counsel to the
Underwriter, addressed to the District and the Underwriter, to the effect that (i) the
Legal Documents [this is OK, but the Indenture will be covered in the BC opinion]
have each been duly authorized, executed and delivered by the District and, assuming
the due authorization, execution and delivery thereof by the other respective parties, if
any, thereto, constitute the respective legal, valid and binding obligations of the District
enforceable against the District in accordance with their respective terms, except to the
extent that the enforceability thereof may be subject to applicable bankruptcy,
insolvency, reorganization, moratorium and other laws now or hereafter enacted
affecting the enforcement of creditors’ rights and the unavailability of equitable
remedies or the application thereto of general principles of equity (regardless of
whether enforcement is sought in a proceeding in equity or at law); (ii) the Bonds are
not subject to the registration requirements of the Securities Act of 1933, as amended,
and the Indenture is exempt from qualification pursuant to the Trust Indenture Act of
1939, as amended; (iii) the statements set forth in the Preliminary Official Statement
and the Official Statement (or if either shall be amended or supplemented, the
statements in the Preliminary Official Statement or Official Statement as so amended
or supplemented addressing the matters addressed in the statements) contained in the
front portion of the Preliminary Official Statement and the Official Statement under
the headings “INTRODUCTION,” “THE 2020 BONDS,” “SECURITY FOR THE
2020 BONDS,” and “TAX MATTERS,” and in Appendix B thereto, are accurate
insofar as such statements purport to summarize certain provisions of the Bonds, the
Indenture and Bond Counsel’s final approving opinion; (iv) [THIS SHOULD GO IN
GENERAL COUNSEL OPINION] the Resolution has been duly adopted by the
District and constitutes the legal, valid and binding obligation of the District
enforceable in accordance with its terms, except to the extent that the enforceability
thereof may be subject to applicable bankruptcy, insolvency, reorganization,
moratorium, and other laws now or hereafter enacted affecting the enforcement of
creditors’ rights and the unavailability of equitable remedies or other application
thereto of general principles of equity (regardless of whether enforcement is sought in
11
a proceeding in equity or at law; and (v) the 2010 Bonds and the 2013A Bonds have
been paid within the meaning of the respective indenture under which they were issued;
(4) An opinion of JC Law Firm, General Counsel to the District, in form
and substance satisfactory to the Underwriter dated the Closing Date, addressed to the
Underwriter, to the effect that: (i) the District is duly existing as a county water district
organized under and by virtue of the laws of the State of California, with full legal
right, power and authority to undertake the activities described in and contemplated by
the Preliminary Official Statement, the Official Statement and the Contract of Purchase
and to execute and deliver the documents and agreements described in the Preliminary
Official Statement and the Official Statement as documents and agreements to which
the District is a party; (ii) the Resolution was duly adopted at a meeting of the Board
of the District, which was called and held pursuant to law and with all public notice
required by law and at which a quorum was present and acting throughout; (iii) the
Legal Documents have each been duly authorized, executed and delivered by the
District; (iv) to the best of its actual knowledge, the execution and delivery of the Legal
Documents and the Official Statement and compliance with the provisions thereof, do
not and will not conflict with or constitute on the part of the District a breach or default
under any existing law, regulation, court order or consent decree to which the District
is subject; (v) to the best of its actual knowledge, the execution and delivery of the
Legal Documents and the Official Statement and compliance with the provisions
thereof, do not and will not conflict with or constitute on the part of the District a breach
or default under any agreement or instrument to which the District is a party or by
which the District is bound; (vi) all actions on the part of the District necessary for the
making and performance of the Legal Documents, and the actions on the part of the
District contemplated thereby, including causing the execution and delivery of the
Bonds, have been duly and effectively taken; (vii) to its knowledge, no consent,
authorization or approval of, or filing or registration with, any governmental or
regulatory officer or body not already obtained is required to be obtained by the District
for the making and performance of the Legal Documents or the actions on the part of
the District contemplated thereby, including causing the execution and delivery of the
Bonds; (ix) after due inquiry of the United States District Court located in the City of
Riverside, California, and the Superior Court of the State of California, located in the
City of San Bernardino, there is no action, proceeding or investigation at law or in
equity before or by any court, public board or body; pending or, to its current actual
knowledge, threatened to restrain or enjoin the execution or delivery of any of the
Bonds, or the application of the proceeds of sale of the Bonds, or the collection of the
revenues or other income or moneys pledged or to be pledged to pay the principal or
interest or other amounts due with respect to the Indenture or the Bonds, or in any way
contesting or affecting the execution, delivery or validity of the Legal Documents or
the Bonds or the security therefor or the Resolution; and (x) after due inquiry of the
United States District Court located in the City of Riverside, California, and the
Superior Court of the State of California, located in the City of San Bernardino, there
is no action, proceeding or investigation at law or in equity before or by any court,
public board or body, pending or, to its current actual knowledge, threatened against
the District or involving any of the property or assets under the control of the District
wherein an unfavorable decision, ruling or finding would materially adversely affect
the ability of the District to perform its obligations under the Legal Documents or the
transactions contemplated thereby or the security for the Bonds, the Resolution or the
12
federal, state or local tax-exemption of interest or other amounts due with respect to
the Bonds. In addition, Counsel shall state that, although they have not verified, are
not passing upon and assume no responsibility for the accuracy, completeness or
fairness of the statements contained in the Preliminary Official Statement and the
Official Statement, to their actual knowledge, they have no reason to believe that
insofar as each relates to the District (a) the Preliminary Official Statement as of its
date and as of the date of the Contract of Purchase contained any untrue statement of a
material fact or omitted to state any material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not misleading
and (b) the Official Statement as of its date contained, and as of the Closing Date
contains, an untrue statement of a material fact or omits to state a material fact
necessary to make the statements therein, in light of the circumstances under which
they were made, not misleading; provided that in expressing the foregoing opinion,
Counsel to the District may advise that it had limited participation in the preparation
of the Preliminary Official Statement and the Official Statement and have undertaken
no responsibility to undertake any due diligence to investigate the accuracy (or lack
thereof) of any of the statements (or lack thereof) contained in the Preliminary Official
Statement and the Official Statement, including, without limitation, financial
statements, financial data or operational or historical information concerning the
District;
(5) The opinion of Nixon Peabody LLP, Los Angeles, California, Counsel
to the Underwriter dated the Closing Date addressed to the Underwriter, in form and
substance satisfactory to the Underwriter;
(6) A certificate signed by the General Manager of the District or another
duly authorized official of the District in form and substance satisfactory to the
Underwriter dated the Closing Date to the effect that each and all of the representations
and warranties of the District contained in this Contract of Purchase are true and correct
in all material respects on and as of the Closing Date with the same effect as if made
on the Closing Date, except that all representations in respect of the Preliminary
Official Statement shall be deemed to have been made as of the date of this Contract
of Purchase, and no event affecting the District has occurred since the date of the
Official Statement which either makes untrue or incorrect in any material respect as of
the Closing Date any statement or information contained in the Official Statement or
is not reflected in the Official Statement but should be reflected therein in order to
make the statements and information therein, in light of the circumstances under which
they were or are made, not misleading in any material respect;
(7) A certificate signed by the General Manager of the District or another
duly authorized official of the District in form and substance satisfactory to the
Underwriter dated the Closing Date to the effect that (i) other than as set forth in the
Preliminary Official Statement and the Official Statement, no litigation is pending or,
to his knowledge, threatened in any court to restrain or enjoin the execution or delivery
of any of the Bonds, or the application of the proceeds of sale of the Bonds, or the
collection of the revenues or other income or moneys pledged or to be pledged to pay
the principal or interest or other amounts due with respect to the Indenture or the Bonds,
or in any way contesting or affecting the adoption of the Resolution or the execution,
delivery or validity or the Indenture or the Bonds or the security therefor or the
13
Indenture; and (ii) other than as set forth in the Preliminary Official Statement and the
Official Statement, there is no litigation pending, or, to his knowledge, threatened
against the District or involving any of the property or assets under the control of the
District wherein an unfavorable decision, ruling or finding would materially adversely
affect the ability of the District to perform its obligations under the Resolution, the
Legal Documents or the Bonds or the security for the Bonds or the exclusion of interest
due with respect to the Bonds from gross income for purposes of federal, state or local
income taxation;
(8) A certificate signed by an authorized official of MUFG Union Bank,
N.A. (“MUFG Bank”), in its capacity as Trustee, addressed to the Underwriter, in form
and substance satisfactory to the Underwriter dated the Closing Date to the effect that
(i) MUFG Bank is a duly organized and validly existing national banking association
and has full power and authority to carry out its activities under the Indenture, (ii) the
Bonds have been duly authenticated by MUFG Bank in accordance with the Indenture,
(iii) the Indenture has been duly authorized, executed and delivered by MUFG Bank
and, assuming due authorization, execution and delivery by the other party thereto, the
Indenture is the valid, legal and binding agreement of MUFG Bank, enforceable in
accordance with its terms, and (iv) the execution and delivery of the Indenture and the
Bonds, and compliance with the provisions thereof, will not conflict with, or constitute
a breach of or default under, any law, administrative regulation, court decree,
resolution, charter, by-law or agreement to which MUFG Bank is subject or by which
it is bound;
(9) An opinion of counsel to MUFG Bank, addressed to the Underwriter,
in form and substance satisfactory to the Underwriter dated the Closing Date to the
effect that (i) the Indenture has been duly authorized, executed and delivered by MUFG
Bank and constitutes the valid and legally binding agreement of MUFG Bank
enforceable in accordance with its terms, except as the same may be limited by
bankruptcy, insolvency, reorganization, moratorium or other laws relating to or
affecting generally the enforcement of creditor’s rights, (ii) MUFG Bank has lawful
authority for the execution and delivery of the Bonds, (iii) the Bonds have been duly
authenticated by MUFG Bank and delivered in accordance with the Indenture and are
entitled to the benefits of the Indenture; (iv) MUFG Bank is a national banking
association duly organized, validly existing and in good standing under the laws of the
United States having full power and authority and being qualified to enter into, accept
and administer the trust created under the Indenture to which it is a party and to enter
into such Indenture; (v) the execution, delivery and performance of the Indenture will
not conflict with or cause a default under any law, ruling, agreement, administrative
regulation or other instrument by which MUFG Bank is bound; and (vi) no action, suit,
proceeding, inquiry or investigation, at law or in equity, before or by any court,
regulatory agency, public board or body, is pending or threatened in any way affecting
the existence of MUFG Bank or the titles of its directors or officers to their respective
offices, or seeking to restrain or enjoin the issuance, sale or delivery of the Bonds or
the application of proceeds thereof in accordance with the Indenture, or in any way
contesting or affecting the Bonds or the Indenture;
(10) A certificate signed by an authorized official of MUFG Union Bank
N.A. in its capacity as escrow agent (the “Escrow Agent” or “MUFG Bank”) under the
14
Escrow Agreements, addressed to the Underwriter, in form and substance satisfactory
to the Underwriter dated the Closing Date to the effect that (i) MUFG Bank is a duly
organized and validly existing national banking association and has full power and
authority to carry out its activities under the Escrow Agreements, (ii) the Escrow
Agreements have been duly authorized, executed and delivered by MUFG Bank and,
assuming due authorization, execution and delivery by the other parties thereto, the
Escrow Agreements are valid, legal and binding agreements of MUFG Bank,
enforceable in accordance with their terms, and (iii) the execution and delivery of the
Escrow Agreements, and compliance with the provisions thereof, will not conflict with,
or constitute a breach of or default under, any law, administrative regulation, court
decree, resolution, charter, by-law or agreement to which MUFG Bank is subject or by
which it is bound;
(11) An opinion of counsel to MUFG Bank, in its capacity as Escrow Agent
under the Escrow Agreements, addressed to the Underwriter, in form and substance
satisfactory to the Underwriter dated the Closing Date to the effect that (i) the Escrow
Agreements have been duly authorized, executed and delivered by MUFG Bank and
constitute valid and legally binding agreements of MUFG Bank enforceable in
accordance with their terms, except as the same may be limited by bankruptcy,
insolvency, reorganization, moratorium or other laws relating to or affecting generally
the enforcement of creditor’s rights, (ii) MUFG Bank is a national banking association
duly organized, validly existing and in good standing under the laws of the United
States having full power and authority and being qualified to enter into the Escrow
Agreements; (iii) the execution, delivery and performance of the Escrow Agreements
will not conflict with or cause a default under any law, ruling, agreement,
administrative regulation or other instrument by which MUFG Bank is bound; and (iv)
no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by
any court, regulatory agency, public board or body, is pending or threatened in any way
affecting the existence of MUFG Bank or the titles of its directors or officers to their
respective offices, or in any way contesting or affecting the Escrow Agreements;
(12) Executed copies of this Contract of Purchase, the Indenture, the Escrow
Agreements, the Continuing Disclosure Certificate and the Official Statement, together
with a copy of the record of proceedings for the Bonds;
(13) A Tax Certificate of the District signed by an authorized officer of the
District;
(14) Evidence that the long-term credit ratings on the Bonds set forth in the
Official Statement have been assigned by S&P and Fitch, respectively, and that each is
in full force and effect on the Closing Date;
(15) A copy of the Blue Sky Survey, prepared by Nixon Peabody LLP, with
respect to the Bonds;
(16) A copy of the District’s executed Blanket Letter of Representation to
The Depository Trust Company; and
15
(17) Such additional legal opinions, certificates, proceedings, instruments
and other documents as the Underwriter or Bond Counsel may reasonably request to
evidence compliance by the District with legal requirements, the accuracy, as of the
time of Closing, of the District’s representations herein contained and the due
performance or satisfaction by the District at or prior to such time of all agreements
then to be performed and all conditions then to be satisfied by the District.
If the District shall be unable to satisfy the conditions to the Underwriter’s obligations
contained in this Contract of Purchase or if the Underwriter’s obligations shall be terminated for any
reason permitted by this Contract of Purchase, this Contract of Purchase shall terminate and neither
the District nor the Underwriter shall have any further obligation hereunder, nor any liability to any
other party with respect to such termination.
10. The Underwriter may terminate this Contract of Purchase by notification to the District
if at any time after the date hereof and prior to the Closing any of the following events shall occur in
the sole and reasonable judgment of the Underwriter:
a. Legislation shall have been introduced in or favorably reported for passage by
the State of California, in either house of the Congress of the United States of America by any
committee of such house to which legislation has been referred for consideration or has been enacted
(or resolution passed) by the Congress of the United States of America or recommended to the
Congress by the President of the United States, the Department of the Treasury, the Internal Revenue
Service, or any member of Congress, or favorably reported for passage to either House of Congress by
any committee of such House to which such legislation had been referred for consideration, or a
decision rendered by a court established under Article III of the Constitution of the United States of
America or by the Tax Court of the United States of America, or an order, ruling, regulation (final,
temporary or proposed), press release or other form of notice issued or made by or on behalf of the
Treasury Department of the United States of America or the Internal Revenue Service, affecting
(directly or indirectly) the federal or state taxation of interest received on obligations of the general
character of the Bonds which, in the judgment of the Underwriter, materially adversely affects the
market price or the marketability of the Bonds, or the ability of the Underwriter to enforce contracts
for the sale, at the contemplated offering prices (or yields), of the Bonds;
b. Legislation shall have been introduced in or favorably reported for passage by
either house of the United States Congress by any committee of such house to which such legislation
has been referred for consideration, or has been enacted (or resolution passed) by the Congress or an
order, decree or injunction issued by any court of competent jurisdiction, or an order, ruling, regulation
(final, temporary or proposed), press release or other form of notice issued or made by or on behalf of
the Securities and Exchange Commission, or any other governmental agency having jurisdiction of the
subject matter, to the effect that obligations of the general character of the Bonds, including any or all
underlying arrangements, are not exempt from registration under or other requirements of the
Securities Act of 1933, as amended, or that the Indenture is not exempt from qualification under or
other requirements of the Trust Indenture Act of 1939, as amended, or that the issuance, offering or
sale of obligations of the general character of the Bonds, including any or all underlying arrangements,
as contemplated hereby or by the Official Statement or otherwise is or would be in violation of the
federal securities laws as amended and then in effect;
c. A general suspension of trading in securities on the New York Stock Exchange,
or the imposition by the New York Stock Exchange or other national securities exchange, or any
16
governmental authority, of any material restrictions not now in force with respect to the Bonds, or the
material increase of any such restrictions now in force, including those relating to the extension of
credit by, or the charge to the net capital requirements of, the Underwriter, or a general banking
moratorium or limits on loans or the amounts of loans to investment banking firms in general shall
have been declared by federal, State of New York or State of California officials authorized to do so,
which in the judgment of the Underwriter materially adversely affects the market price or the
marketability of the Bonds, or the ability of the Underwriter to enforce contracts for the sale, at the
contemplated offering prices (or yields), of the Bonds;
d. The introduction, proposal or enactment of any amendment to the United States
Constitution or California Constitution or any action by any federal or California court, legislative
body, regulatory body or other authority materially adversely affecting the tax status of the District, its
property, income, securities (or interest thereon), the validity or enforceability of the Resolution, the
Indenture or the Bonds;
e. Any event occurring, or information becoming known which, in the judgment
of the Underwriter, makes untrue in any material respect any statement or information contained in the
Preliminary Official Statement or in the Official Statement, or has the effect that the Preliminary
Official Statement or the Official Statement contains any untrue statement of a material fact or omits
to state a material fact required to be stated therein or necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
f. There shall have occurred (1) any outbreak or increase of hostilities or terrorism
or other local, national or international event, act, or occurrence (or the escalation thereof); or (2) any
calamity or crisis in the financial markets in the United States; or (3) a default with respect to the debt
obligations of, or the institution of proceedings under the federal or applicable state bankruptcy laws
by or against, any agency or instrumentality of the State of California, any state of the United States or
agency thereof, or any city located in the United States having a population of over one million the
effect of which on the financial markets of the United States of America, which in the reasonable
judgment of the Underwriter, is such as to materially and adversely affect the market price or the
marketability of the Bonds, or the ability of the Underwriter to enforce contracts for the sale of the
Bonds;
g. There shall have been any material change in the affairs of the District and the
District refuses to permit the Official Statement to be supplemented in a manner satisfactory to the
Underwriter, or the Official Statement shall have been supplemented pursuant to Section 8(k) hereof,
and in the reasonable judgment of the Underwriter, such change or supplement materially affects the
marketability of the Bonds or the market price of the Bonds or the ability of the Underwriter to enforce
contracts for the sale, at the contemplated offering prices (or yields), of the Bonds;
h. (i) Any rating of the Bonds shall have been downgraded, suspended or
withdrawn by a national rating service, which, in the Underwriter’s reasonable opinion, materially
adversely affects the marketability or market price of the Bonds, or (ii) there shall have been any
official statement as to a possible downgrading (such as being placed on “credit watch” or “negative
outlook” or any similar qualification) of any rating of any debt securities issued by the District,
including the Bonds;
i. An order, decree or injunction of any court of competent jurisdiction, issued or
made to the effect that the issuance, offering or sale of obligations of the general character of the Bonds,
17
or the issuance, offering or sale of the Bonds, including any or all underlying obligations, as
contemplated hereby or by the Preliminary Official Statement of the Official Statement, is or would be
in violation of any applicable law, rule or regulation, including (without limitation) any provision of
applicable federal securities law as amended and then in effect;
j. A stop order, ruling, regulation or official statement by the Securities and
Exchange Commission or any other governmental agency having jurisdiction of the subject matter
shall have been made or any other event occurs, the effect of which is that the issuance, offering or
sale of the Bonds, or the execution and delivery of the Legal Documents as contemplated hereby or by
the Preliminary Official Statement or the Official Statement, is or would be in violation of any
applicable law, rule or regulation, including (without limitation) any provision of applicable federal
securities laws, including the Securities Act of 1933, as amended, the Securities and Exchange Act of
1934, as amended, or the Trust Indenture Act, each as amended and as then in effect; or
k. Any litigation shall be instituted or be pending at the time of the Closing to
restrain or enjoin the issuance, sale or delivery of the Bonds, or in any way contesting or affecting any
authority for or the validity of the proceedings, authorizing and approving the Bonds, the Act, the
Resolution, the Legal Documents or the existence or powers of the District with respect to its
obligations under the Legal Documents or the Bonds.
11. The District shall, except as set forth in the next succeeding paragraph, pay any
expenses incident to the performance of the District’s obligations hereunder, including but not limited
to the following: (i) the cost of the preparation, printing and delivery of the Bonds, (ii) the fees for
bond ratings, (iii) the cost of printing and distribution of the Indenture, the Continuing Disclosure
Certificate, the Preliminary Official Statement and the Official Statement, (iv) the fees and
disbursements of Stradling Yocca Carlson & Rauth, a Professional Corporation, as Bond Counsel,
(v) any fees and disbursements of the District’s accountants, (vi) the fees and disbursements of JC Law
Firm, General Counsel to the District, (vii) the fees and disbursements of the Trustee and its counsel,
(viii) the fees and expenses of Fieldman, Rolapp & Associates, Inc., municipal advisor to the District,
(ix) the fees and disbursements of any other engineers, accountants, attorneys, auditors and other
experts or consultants or advisors retained by the District, and (x) any other costs and disbursements
incurred by the District in connection with the transaction. To the extent that the Underwriter, in order
to facilitate the transactions hereunder, has advanced funds to pay any expenses of the District
incidental to this Contract of Purchase and the transactions hereunder (including, but not limited to,
transportation, lodging, meals and other ancillary costs of District representatives associated with the
financing), the District shall reimburse the Underwriter for such advances as part of the expense
component of the Underwriter’s compensation hereunder.
The Underwriter shall pay (i) the fees and disbursements of Nixon Peabody LLP, retained by
the Underwriter in connection with the purchase and sale of the Bonds pursuant hereto as Underwriter’s
counsel, (ii) the fee payable to the California Debt and Investment Advisory Commission with respect
to the sale of the Bonds, (iii) advertising expenses and all other expenses incurred by the Underwriter
in connection with the public offering and distribution of the Bonds, (iv) fees and expenses related to
obtaining CUSIP numbers, and (v) expenses to qualify the Bonds for sale under any Blue Sky laws.
Notwithstanding that the fees payable to the California Debt and Investment Advisory Commission
are solely the legal obligation of the Underwriter, the District agrees to reimburse the Underwriter for
such fees.
18
12. The District will furnish such information, execute such instruments and take such
other action in cooperation with the Underwriter as the Underwriter may reasonably request to qualify
the Bonds for offer and sale under the Blue Sky or other securities laws and regulations of such states
and other jurisdictions of the United States as the Underwriter may designate and to provide for the
continuance of such qualification; provided, however, that the District will not be required to qualify
as a foreign corporation or to file any general or special consents to service of process under the laws
of any state.
13. Any notice or other communication to be given to the District under this Contract of
Purchase may be given by delivering the same in writing to East Valley Water District, 3654 31111
Greenspot Road, Highland, California 92346, Attention: General Manager, or to such other person as
he may designate in writing, and any notice or other communication to be given to the Underwriter
under this Contract of Purchase (other than the acceptance hereof as specified in the first
Paragraph hereof) may be given by delivering the same in writing to J.P. Morgan Securities LLC, 2029
Century Park East, Suite 4140, Los Angeles California 90067, Attention: Tyler Old.
14. The validity, interpretation and performance of this Contract of Purchase shall be
governed by the laws of the State of California.
15. The term “end of the underwriting period” means the later of such time as (i) the
District delivers the Bonds to the Underwriter or (ii) the Underwriter does not retain directly an unsold
balance of the Bonds for sale to the public. Unless the Underwriter gives notice to the contrary, the
“end of the underwriting period” shall be deemed the Closing Date. Any notice delivered pursuant to
this Section shall be written notice, delivered to the District at or prior to the Closing, and shall specify
a date, other than the Closing Date (or other date specified by notice delivered pursuant to this Section),
to be deemed the “end of the underwriting period.”
16. This Contract of Purchase may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall be an original, but all such
counterparts shall together constitute but one and the same instrument.
17. The District acknowledges and agrees that: (i) the transaction contemplated by this
Contract of Purchase is an arm’s length, commercial transaction between the District and the
Underwriter in which the Underwriter are acting solely as a principal and is not acting as a municipal
advisor, financial advisor or fiduciary to the District; (ii) the Underwriter has not assumed any advisory
or fiduciary responsibility to the District with respect to the transaction contemplated hereby and the
discussions, undertakings and procedures leading thereto (irrespective of whether the Underwriter has
provided other services or is currently providing other services to the District on other matters); (iii) the
only obligations the Underwriter has to the District with respect to the transaction contemplated hereby
expressly are set forth in this Contract of Purchase; and (iv) the District has consulted its own legal,
accounting, tax, financial and other advisors, as applicable, to the extent it has deemed appropriate.
[Signature Page Follows]
S-1
18. This Contract of Purchase when accepted by the District in writing as heretofore
specified shall constitute the entire agreement between the District and the Underwriter and is made
solely for the benefit of the District and the Underwriter (including the successors or assigns of the
Underwriter or any members of the syndicate, if any). No other person shall acquire or have any right
hereunder or by virtue hereof.
Very truly yours,
J.P. MORGAN SECURITIES LLC, as Underwriter
By:
Agreed and Accepted:
EAST VALLEY WATER DISTRICT
By:
General Manager
A-1
EXHIBIT A
$___________
EAST VALLEY WATER DISTRICT
Refunding Revenue Bonds, Series 2020A
Maturity
Date
(October 1)
Principal
Amount
Interest
Rate Yield Price
CUSIP
Number
(________)
[ADD 10% SOLD AND HTOP COLUMNS? OR DO YOU DO THAT BY FOOTNOTE?]
$___________
EAST VALLEY WATER DISTRICT
Refunding Revenue Bonds, Series 2020B
(Federally Taxable)
Maturity
Date
(October 1)
Principal
Amount
Interest
Rate Yield Price
CUSIP
Number
(________)
B-1
EXHIBIT B
$_____
EAST VALLEY WATER DISTRICT
REFUNDING REVENUE BONDS,
SERIES 2020A
FORM OF ISSUE PRICE CERTIFICATE
The undersigned, J.P. Morgan Securities LLC (the “Underwriter”), having acted as the Underwriter in
connection with the sale and issuance by East Valley Water District (the “Issuer”) of $___________
aggregate initial principal amount of its Refunding Revenue Bonds, Series 2020A (the “Bonds”), being
executed and delivered on the date hereof, hereby certifies and represents the following:
Issue Price.
[NOT USING HOLD THE PRICE]
1. [10% OF EACH MATURITY SOLD BY CLOSING] As of the date hereof, the first
price or yield at which at least 10% of each Maturity of the Bonds was sold by the Underwriter to the
Public was the [Initial Offering Price/OR IF ACTUAL SALES AT OTHER THAN IOP price or
yield set forth on Schedule 1 hereto.]
[USING HOLD THE PRICE]
1. As of [SALE DATE], 2020 (the “Sale Date”), all of the Bonds were the subject of a
bona fide offering to the Public at the Initial Offering Price.
[2. [USING HOLD THE PRICE FOR A PORTION OF THE ISSUE] As of the date
hereof, other than the Bonds listed on Exhibit A to the Purchase Contract, dated [SALE DATE], 2020,
by and between the Underwriter and the Issuer, as Subject-to-Hold-The-Offering-Price Rule (the
“Undersold Maturities”), the first price or yield at which at least 10% of each Maturity of the Bonds
was sold by the Underwriter to the Public was the respective [Initial Offering Price OR IF ACTUAL
SALES AT OTHER THAN IOP price set forth on Schedule 1 hereto]. Attached hereto as Schedule
2 is a copy of the final pricing wire for each Undersold Maturity or an equivalent communication.
With respect to the Undersold Maturities, as agreed to in writing by the Underwriter in the Purchase
Contract between the Issuer and the Underwriter dated [SALE DATE], 2020, the Underwriter has not
offered or sold any unsold Bonds of the Undersold Maturities to any person at a price higher than or a
yield lower than the respective Initial Offering Price for a period of time starting on the Sale Date and
ending on the earlier of (a) the date on which 10% of the respective Undersold Maturity was sold at
one or more prices no higher than or yields no lower than the Initial Offering Price by the Underwriter
or (b) the close of the fifth business day following the Sale Date.
2. [USING HOLD THE PRICE FOR 100% OF THE ISSUE]. As agreed to in writing
by the Underwriter in the Purchase Contract between the Issuer and the Underwriter dated [SALE
B-2
DATE], 2020, the Underwriter has not offered or sold any unsold Bond to any person at a price higher
than or a yield lower than the respective Initial Offering Price for a period of time starting on the Sale
Date and ending on the earlier of (a) the date on which 10% of the respective Undersold Maturity was
sold at one or more prices no higher than or yields no lower than the Initial Offering Price by the
Underwriter or (b) the close of the fifth business day following the Sale Date. Attached hereto as
Schedule 1 is a copy of the final pricing wire for the Bonds or an equivalent communication.]
[ADD SECTION ON QUALIFIED GUARANTEE IF APPLICABLE]
2. Defined Terms.
(a) “Initial Offering Price” means the prices or yields set forth on the inside cover page of
the Issuer’s Official Statement in respect of such Bonds dated ____________, 2020.
(b) “Maturity” means Bonds with the same credit and payment terms. Bonds with different
maturity dates, or Bonds with the same maturity date but different stated interest rates, are treated as
separate Maturities.
(c) “Public” means any person (including an individual, trust, estate, partnership,
association, company, or corporation) other than an Underwriter or a related party to an Underwriter.
(d) “Related Party” means any entity if an Underwriter and such entity are subject, directly
or indirectly, to (i) at least 50% common ownership of the voting power or the total value of their stock,
if both entities are corporations (including direct ownership by one corporation of another), (ii) more
than 50% common ownership of their capital interests or profit interests, if both entities are
partnerships (including direct ownership by one partnership of another), or (iii) more than 50%
common ownership of the value of the outstanding stock of the corporation or the capital interests or
profit interests of the partnership, as applicable, if one entity is a corporation and the other entity is a
partnership (including direct ownership of the applicable stock or interests by one entity of the other).
(e) “Underwriter” means (i) any person that agrees pursuant to a written contract with the
Issuer (or with the lead underwriter to form an underwriting syndicate) to participate in the initial sale
of the Bonds to the Public, and (ii) any person that agrees pursuant to a written contract directly or
indirectly with a person described in clause (i) of this paragraph to participate in the initial sale of the
Bonds to the Public (including a member of a selling group or a party to a retail distribution agreement
participating in the initial sale of the Bonds to the Public).
The representations set forth in this certificate are limited to factual matters only. Nothing in
this certificate represents the Underwriter’s interpretation of any laws, including specifically Sections
103 and 148 of the Internal Revenue Code of 1986, as amended, and the Treasury Regulations
thereunder. The undersigned understands that the foregoing information will be relied upon by the
Issuer with respect to certain of the representations set forth in the Tax Certificate and with respect to
compliance with the federal income tax rules affecting the Bonds, and by Stradling Yocca Carlson &
Rauth, a Professional Corporation in connection with rendering its opinion that the interest with respect
to the Bonds is excluded from gross income for federal income tax purposes, the preparation of the
Internal Revenue Service Form 8038-G, and other federal income tax advice that it may give to the
Issuer from time to time relating to the Bonds.
B-3
J.P. MORGAN SECURITIES LLC
By:__________________________________
Name:_______________________________
B-4
SCHEDULE 1
ISSUE PRICES
[IF USING ACTUAL SALES AND THE IOP IS NOT THE ISSUE PRICE FOR EACH
MATURITY]
First Price of At Least 10% (ONLY APPLICABLE IF PRICE IS NOT THE IOP)
Undersold Maturities
[IF USING HOLD THE PRICE FOR A PORTION]
First Price of At Least 10% (Only Applicable if Not IOP)
Initial Offering Prices of Undersold Maturities
1
EXHIBIT D
THE DISTRICT
General
The Board of Supervisors of the County of San Bernardino (the “County”) approved a petition for the
formation of the District (which was formerly called East San Bernardino County Water District) under Division
12 of the State Water Code and ordered an election held on January 12, 1954. The formation of the District was
approved by the electors and the County Board of Supervisors and incorporation of the District was approved
by the State on February 1, 1954.
The District has broad general powers over the use of water and wastewater collection and treatment
within District boundaries, including the right of eminent domain and the authority to acquire, control, distribute,
store, spread, sink, treat, purify, reclaim, process and salvage any water for beneficial use, to provide wastewater
service, to sell treated or untreated water, to contract with the United States, other political subdivisions, public
utilities and other persons, and, subject to certain State Constitutional limits, to levy certain taxes.
Encompassing an area of approximately 30 square miles, the District was originally formed to provide
domestic water service to the then-unincorporated and agriculturally-based communities of Highland and East
Highland. The District’s service area is now largely urbanized and includes all of the City of Highland and
portions of the City of San Bernardino (the “City”), with such areas representing approximately 85% of the
District’s service area. The remaining 15% of the District’s service area is located in unincorporated areas of
the County. The service area has a population of approximately 102,000.
The District supplies potable water to approximately 19,898 single family residential, 475 multi-family
residential, 694 commercial (including industrial and governmental) and 588 irrigation and fireline connections.
The District has three sources of water: (i) groundwater extracted from the Bunker Hill Groundwater Basin (the
“Basin”); (ii) Santa Ana River flows; and (iii) State Water Project (“SWP”) water purchased from San
Bernardino Valley Municipal Water District (“SBVMWD”). The Water System includes 15 active wells, 18
water tanks and reservoirs with a combined storage capacity of approximately 28,977,000 gallons, 23 booster
pump stations, which pump water from lower elevations to various higher pressure zones, 3,025 fire hydrants
and approximately 300 miles of pipelines, including distribution lines ranging in size from 4 inches to 36 inches
in diameter. See the caption “THE WATER SYSTEM OF THE DISTRICT.”
The District provides wastewater service to approximately 18,598 single family residential connections,
465 multi-family residential connections, and 616 non-residential connections within the District’s service area.
Since commencing wastewater services in 1964, the District has operated a wastewater collection and
transmission system but has not owned or operated a wastewater treatment plant. Instead, the District contracts
with the City for the treatment of wastewater flows.
The District is constructing a wastewater treatment plant called the Sterling Natural Resource Center
(the “SNRC”) which is expected to commence operations in November 2021. When completed, the SNRC will
enable the District to treat wastewater from the District’s Wastewater System customers without reliance on the
City’s treatment facilities. Treated wastewater flow will be recharged into the Basin for later extraction,
treatment to potable water standards and delivery to Water System customers. See the caption “THE
WASTEWATER SYSTEM OF THE DISTRICT.”
Land Use and Service Area
Land use within the District is primarily residential, with some commercial/industrial, park/landscape
and agricultural uses. According to the District, approximately 93.7% of the District’s metered customers are
residential (91.5% single-family and 2.2% multi-family). The District’s commercial customers and
2
park/landscape customers account for approximately 4.9% and 1.5%, respectively, of total metered services.
Agricultural users receive irrigation water from the Santa Ana River via the North Fork Canal and therefore
account for 0% of the current metered services.
The District currently serves a population of approximately 102,000 people within its service area.
Large areas within the District’s boundaries remain undeveloped, portions of which are expected to be developed
in the future, including a housing development called Highland Hills which is expected to add several hundred
homes to the District’s service area in the next decade. The District’s Water Master Plan update completed in
January 2019 currently projects that it the District will have a population of 142,000 people at ultimate buildout
in 2040.
Governance and Management
General. The District is governed by a five member Board of Directors (the “Board”). Board members
are elected at large by the registered voters of the District and serve staggered four-year terms. The current
Board members, their occupations and the expiration dates of their terms are set forth below.
[HAS DISTRICT RECEIVED LETTER THREATENING LAWSUIT UNLESS BY-DISTRICT
ELECTIONS ARE HELD?]
Board Member Expiration of Term Occupation
David E. Smith, Chair December 2020 Securities Compliance Officer
Phillip R. Goodrich, Vice Chair December 2022 Business Owner
Chris Carrillo December 2020 Attorney
Ronald L. Coats December 2022 Retired
James Morales, Jr. December 2022 Public Administration
Day-to-day management of the District is delegated to the General Manager/Chief Executive Officer
(the “General Manager”), John Mura. Mr. Mura has served as the District’s General Manager since January
2012. In his role as General Manager, Mr. Mura oversees the daily operations of the District based on the
Board’s direction through the District’s adopted Strategic Plan. Prior to joining the District, Mr. Mura served as
the Public Works Director for the City of Chino Hills, California. Having worked at various levels of
government, he brings over 23 years of government experience in utility management, the successful operation
of various infrastructure projects and the implementation of essential programs. Mr. Mura holds a Bachelor’s
Degree in Management and Business from Pepperdine University and a Master’s Degree in Public
Administration from California State University, Fullerton.
Brian W. Tompkins serves as Chief Financial Officer of the District. Mr. Tompkins has been with the
District since January 2002. Prior to joining the District, Mr. Tompkins was employed by Rogers, Anderson,
Malody and Scott, LLP, Certified Public Accountants. Mr. Tompkins holds a Bachelor’s of Science Degree in
Business Administration and is a Certified Public Accountant.
Jeff Noelte serves as the Director of Engineering and Operations for the District. Mr. Noelte has served
in this role since joining the District in December 2017. Prior to joining the District, Mr. Noelte served as a
principal engineer at a consulting firm and as the Manager of Technical Services at the Inland Empire Utilities
Agency. With 25 years of experience in the water and wastewater industries, he has garnered the unique
experience of serving as an engineer and operator in both the public and private sectors. Mr. Noelte holds a
Bachelor of Science in Environmental Science from the University of California, Riverside and Master’s and
Ph.D. Degrees in Environmental Engineering from the California Institute of Technology. He is a licensed
Professional Civil Engineer, a Board-Certified Environmental Engineer and certified as a Grade V Wastewater
Treatment Operator and T2 Water Treatment Operator.
3
Management Policies. The District has adopted several policies which are designed to ensure the
prudent and effective management of District operations, including an investment policy, a reserve funds policy,
a debt management policy and an operating and capital budget policy. Further information about each such
policy is set forth below.
Investment Policy. The District invests its funds in accordance with the District’s investment
policy (the “Investment Policy”), which was last revised by the District on April 24, 2019. The Investment
Policy sets forth the policies and procedures that are applicable to the investment of District funds and designates
eligible investments. The Investment Policy also sets forth stated objectives, including the assurance of the
safety of invested funds, the maintenance of sufficient liquidity, compliance with law and the attainment of the
best yield or returns on investments. Funds are invested in the following order of priority:
• Safety of Principal;
• Liquidity; and
• Yield.
The Board has delegated the authority to invest funds of the District to the Chief Financial Officer. The
Chief Financial Officer must invest District funds in accordance with the prudent person standard under
California Civil Code § 2261 et seq.
The Investment Policy provides a number of permitted investment categories, including: (i) the State of
California Local Agency Investment Fund (“LAIF”); (ii) United States Treasury Securities (limited to maximum
maturities of 5 years); (iii) State of California and other municipal obligations which are rated “AA” or higher
(limited to 20% of the District’s portfolio and maximum maturities of 5 years); (iv) federal agency obligations
(limited to maximum maturities of 5 years); (v) money market mutual funds in the highest rating category
(limited to 15% of the District’s portfolio); and (vi) commercial paper which is rated “A” or higher (limited to
15% of the District’s portfolio and maximum maturities of 270 days).
[UPDATE TO JUNE 30, 2020] As of June 30, 2019, the District had total moneys invested in the
amount of $26,877,376 (of which $8,171,966 was restricted) in permitted investments under the Investment
Policy.
The District’s investments are reported quarterly to the Board. For additional information relating to
the Investment Policy, see Note 2 to the District’s audited financial statements for the fiscal year of the District
ended June 30 (each, a “Fiscal Year”), 2019 set forth in Appendix A.
Reserve Funds Policy. Under the District’s reserve funds policy, the District maintains the
following reserves:
(i) Capital replacement funds, which have a target level of $10 million, will be applied to the
replacement of capitalized assets when they reach the end of their useful lives. This reserve will be funded from
user fee revenue from the Water System and Wastewater System. The maximum balance in the capital
replacement funds may not exceed the projected needs for seven years under the District’s Capital Improvement
Plan. Expenditures of capital replacement fund moneys will be approved as part of the District’s capital budget
approval.
(ii) An emergency fund, which has a target level of 2% of the total value of District assets and
equipment, will be applied to begin repair of the water and wastewater infrastructure after a catastrophic event,
such as a severe earthquake or fire, while long-term financing is being arranged or insurance claims are being
processed. Expenditures of emergency fund moneys will be approved by the Board.
(iii) A rate stabilization fund, which has a target level of 45-60 days of budgeted operating expenses,
will be applied to provide flexibility to the Board when setting rates in order to allow for temporary rate
4
fluctuations or one-time expenditures. Expenditures of rate stabilization fund moneys will be approved by the
Board.
(iv) An operating fund, which has a target level of 90-120 days of operating expenses, will be
applied to maintain working capital for current operations and to meet routine cash flow needs. Expenditures of
operating fund moneys will be approved by the Board.
[UPDATE TO JUNE 30, 2020] As of June 30, 2019, the District’s Water Fund operating reserve was
fully funded at $6.2 million and the District’s Sewer fund operating reserve was 95% funded at $3.9 million.
The Water Fund also had an accumulated capital replacement reserve of $8.6 million. The Water and Sewer
reserves for restricted capacity fees held $2.0 million and $1.3 million, respectively.
Debt Management Policy. The District’s debt management policy addresses the matters that
are required by California Government Code § 8855(i), including: (i) the purposes for which debt proceeds may
be used; (ii) the types of debt that may be issued; (iii) the relationship of the debt to, and integration with, the
District’s capital improvement program or budget; (iv) policy goals related to the District’s planning goals and
objectives; and (v) the internal control procedures which ensure that the proceeds of each debt issuance are
directed to their intended use.
Operating and Capital Budget Policy. The District’s operating and capital budget policy is
described under the caption “—Budget Process.”
Employees and Employee Benefits
General. [UPDATE TO JUNE 30, 2020] As of June 30, 2019, the District had 70.5 full-time equivalent
employees, of whom 27.5 work in District administration, 32 work in engineering and maintenance and 11 work
in operations. Certain non-management employees are represented by the East Valley Water District Employee
Partnership (the “EVWDEP”) under a Memorandum of Understanding which extends through June 30, 2020.
The District is currently negotiating a new memorandum of understanding with the EVWDEP. The current
Memorandum of Understanding will continue in force on a month-to-month basis until a new memorandum of
understanding is signed. The District has never experienced a strike, slowdown or work stoppage.
Pension Obligations. Accounting and financial reporting by state and local government employers for
defined benefit pension plans is governed by Governmental Accounting Standards Board (“GASB”) Statement
No. 68 (“GASB 68”). GASB 68 governs the accounting treatment of defined benefit pension plans, including
how expenses and liabilities are calculated and reported by state and local government employers in their
financial statements. GASB 68 includes the following components: (i) unfunded pension liabilities are included
on the employer’s balance sheet; (ii) pension expense incorporates rapid recognition of actuarial experience and
investment returns and is not based on the employer’s actual contribution amounts; (iii) lower actuarial discount
rates are required to be used for underfunded plans in certain cases for purposes of the financial statements;
(iv) closed amortization periods for unfunded liabilities are required to be used for certain purposes of the
financial statements; and (v) the difference between expected and actual investment returns will be recognized
over a closed five-year smoothing period. GASB 68 changed the District’s accounting reporting and disclosure
requirements, but it did not change the District’s pension plan funding obligations.
The District participates in a Miscellaneous plan to fund pension benefits for its employees. The
District’s Miscellaneous plan is administered by the California Public Employees Retirement System
(“CalPERS”). CalPERS administers an agent multiple-employer public employee defined benefit pension plan
for all of the District’s permanent employees, with benefits vesting after five years of service. CalPERS provides
retirement, disability and death benefits to plan members and beneficiaries and acts as a common investment
and administrative agent for participating public entities within the State, including the District. CalPERS plan
benefit provisions and all other requirements are established by State statute and the Board.
5
District employees who were hired before January 1, 2013 are subject to different benefit levels than
employees who were hired on or after January 1, 2013 and who were not previously CalPERS members. Benefit
provisions for District employees are set forth below.
EAST VALLEY WATER DISTRICT
CalPERS Miscellaneous Pension Plan – Summary of Benefit Provisions
Employees Hired Before
January 1, 2013
Employees Hired On or
After January 1, 2013
(AB 340)
Benefit Formula 2.7% @ age 55 2.0% @ age 62
Benefit Vesting 5 years of service 5 years of service
Benefit Payments Monthly for life Monthly for life
Retirement Age 50-55 52-67
Monthly Benefits as % of
Salary
2.0% - 2.7% 1.0% - 2.5%
Employee Contribution Rate 8.0%(1) 6.5%(2)
(1) Employees who were hired before January 1, 2013 are required to make the full employee contribution themselves.
(2) Employees who were hired on or after January 1, 2013 are required to make the full employee contribution themselves.
Source: District.
District employees who were hired on or after January 1, 2013 and who were not previously CalPERS
members receive benefits based on a 2.0% at age 62 formula; such employees are required to make the full
amount of required employee contributions themselves under the California Public Employees’ Pension Reform
Act of 2013 (“AB 340”), which was signed by the State Governor on September 12, 2012. AB 340 established
a new pension tier – 2.0% at age 62 formula, with a maximum benefit formula of 2.5% at age 67. Benefits for
such participants are calculated on the highest average annual compensation over a consecutive 36 month period.
Employees are required to pay at least 50% of the total normal cost rate. AB 340 also caps pensionable income
as noted below. Amounts are set annually, subject to Consumer Price Index increases, and retroactive benefits
increases are prohibited, as are contribution holidays and purchases of additional non-qualified service credit.
EAST VALLEY WATER DISTRICT
Pensionable Income Caps for 2019 (AB 340 and Non-AB 340 Employees)
Before January 1, 2013
(Non-AB 340 Employees)
After January 1, 2013
(AB 340 Employees)
Maximum Pensionable Income $275,000 $146,666
Maximum Pensionable Income if
also Participating in Social Security N/A $121,388
Source: District.
Additional employee contributions, limits on pensionable compensation and higher retirement ages for
new members as a result of the passage of AB 340 are expected to reduce the District’s unfunded pension lability
and potentially reduce District contribution levels in the long term.
The District is also required to contribute the actuarially determined remaining amounts necessary to
fund benefits for its members. Employer contribution rates for all public employers are determined on an annual
basis by the CalPERS actuary and are effective on the July 1 following notice of a change in the rate. Total plan
contributions are determined through the CalPERS annual actuarial valuation process. The total minimum
required employer contribution is the sum of the plan’s employer normal cost rate (expressed as a percentage of
6
payroll) plus the employer unfunded accrued liability contribution amount (billed monthly). The normal cost
rate is the annual cost of service accrual for the upcoming Fiscal Year of active employees.
Beginning in Fiscal Year 2016, CalPERS began collecting employer contributions toward a pension
plan’s unfunded accrued liability, or “UAL,” as dollar amounts instead of the prior method of a percentage of
payroll. According to CalPERS, this change was intended to address potential funding issues that could arise
from a declining payroll or a reduction in the number of active members in the plan. Funding the unfunded
liability as a percentage of payroll could lead to underfunding of pension plans. Due to stakeholder feedback
regarding internal needs for total contributions expressed as an estimated percentage of payroll, the CalPERS
reports include such results in the contribution projection for informational purposes only. Contributions toward
a pension plan’s unfunded liability will continue to be collected as set dollar amounts.
The total required employer contribution rates for Fiscal Years 2018 and 2019 were as follows:
EAST VALLEY WATER DISTRICT
Employer Contribution Rates
Benefit Plan Fiscal Year 2018 Fiscal Year 2019
2.7% @ age 55
(non-AB 340 Employees)
11.388% of payroll
plus $525,670 UAL
contribution (12.177%)
11.913% of payroll
plus $646,278 UAL
contribution (13.650%)
2.0% @ age 62
(AB 340 Employees)
6.625% of payroll plus
$511 UAL
contribution (.0058%)
6.939% of payroll
plus $3,230 UAL
contribution (0.306%)
Source: District.
The District’s required contributions to CalPERS fluctuate each year and, as noted, include a normal
cost component and a component equal to an amortized amount of the UAL. Many assumptions are used to
estimate the ultimate liability of pensions and the contributions that will be required to meet those obligations.
The CalPERS Board of Administration has adjusted and may in the future further adjust certain assumptions
used in the CalPERS actuarial valuations, which adjustments may increase the District’s required contributions
to CalPERS in future years. Accordingly, the District cannot provide any assurances that the District’s required
contributions to CalPERS in future years will not significantly increase (or otherwise vary) from any past or
current projected levels of contributions.
CalPERS earnings reports for Fiscal Years 2015 through 2019 report investment gains of approximately
2.4%, 0.6%, 11.2%, 8.6%, 6.7%, respectively. In July 2020, CalPERS reported a preliminary 4.7% investment
return in Fiscal Year 2020. The District expects that CalPERS’ earnings may be reduced in Fiscal Year 2021 as
a result of stock market declines in the wake of the COVID-19 outbreak, which could increase future contribution
rates for plan participants, including the District. See the caption “—COVID-19 Outbreak.”
On December 21, 2016, the CalPERS Board of Administration voted to lower its discount rate from the
current rate of 7.50% to 7.00% over a three-year period. For public agencies such as the District, the first
discount rate reduction took effect July 1, 2018. Lowering the discount rate means that employers that contract
with CalPERS to administer their pension plans will see increases in their normal costs and unfunded actuarial
liabilities. Active members hired after January 1, 2013 who were not previously CalPERS members will also
see their contribution rates rise under AB 340. The reduction in the discount rate will result in average employer
rate increases of approximately 1% to 3% of normal cost as a percentage of payroll for most Miscellaneous
retirement plans such as the District’s plan. Additionally, many employers will see a 30% to 40% increase in
their current unfunded accrued liability payments. These payments are made to amortize unfunded liabilities
over 20 years to bring pension funds to a fully funded status over the long term.
7
For Fiscal Years 2018 and 2019, the District made total required Miscellaneous plan contributions of
$1,228,277 and $1,035,102, respectively. Total contributions for Fiscal Year 2018 include a supplemental,
voluntary payment of $450,000 towards the District’s UAL.
In order to continue making supplemental payments using a calculated approach, in August 2018 the
District asked CalPERS actuaries to calculate a level-pay amount that would amortize the District’s UAL over
a period of 15 years. The actuaries calculated the amount to be $1,165,981.
In November 2018, the District Board approved using the 15 year level-pay approach for amortizing the
District’s UAL. Accordingly, each year the proposed District budget will include a UAL payment of $1,165,981
in addition to normal cost payments which are a percentage of payroll. The District made its first level-pay
payment in July 2019, resulting in total contributions of $2,105,895 during Fiscal Year 2020. The District
expects total pension contributions for Fiscal Year 2021 to be approximately $2,178,380. The District notes that
contributions in future years may increase as a result of losses in CalPERS’ portfolio resulting from stock market
declines in the wake of the COVID-19 outbreak. See the caption “—COVID-19 Outbreak.”
Portions of the above information are primarily derived from information that has been produced by
CalPERS, its independent accountants and its actuaries. The District has not independently verified such
information and neither makes any representations nor expresses any opinion as to the accuracy of the
information that has been provided by CalPERS.
The comprehensive annual financial reports of CalPERS are available on CalPERS’ Internet website
at www.calpers.ca.gov. The CalPERS website also contains CalPERS’ most recent actuarial valuation reports
and other information that concerns benefits and other matters. The textual reference to such Internet website
is provided for convenience only. None of the information on such Internet website is incorporated by reference
herein. The District cannot guarantee the accuracy of such information. Actuarial assessments are
“forward-looking” statements that reflect the judgment of the fiduciaries of the pension plans, and are based
upon a variety of assumptions, one or more of which may not materialize or be changed in the future.
The District’s Miscellaneous plan had a total net pension liability of approximately $11,601,798 for the
Fiscal Year ended June 30, 2018 and approximately $10,846,955 for the Fiscal Year ended June 30, 2019. The
net pension liability is the difference between the total pension liability and the fair market value of pension
assets. The District’s total pension assets include funds that are held by CalPERS, and its net pension asset or
liability is based on such amounts. The District notes that its net pension liability may increase in the future as
a result of losses in CalPERS’ portfolio resulting from stock market declines in the wake of the COVID-19
outbreak. See the caption “—COVID-19 Outbreak.”
A summary of principal assumptions and methods used to determine the total pension liability for Fiscal
Year 2019 is shown below.
8
EAST VALLEY WATER DISTRICT
Actuarial Assumptions for CalPERS Miscellaneous Pension Plan
Actuarial Cost Method Entry Age Normal in accordance with the requirements of GASB 68
Asset Valuation Method Market Value of Assets
Actuarial Assumptions:
Discount Rate 7.15%
Inflation 2.50%
Salary Increases 2.50%
Investment Rate of Return 7.15% net of pension plan investment and administrative expenses; includes
projected inflation rate of 2.50%
Mortality Rate Table(1) Derived using CalPERS’ membership data for all funds
(1) The mortality table used was developed based on CalPERS-specific data. The table was based on the results of an actuarial
experience study for the period from 1997 to 2011.
Source: District.
Changes in the net pension liability for the District’s Miscellaneous plan were as follows:
EAST VALLEY WATER DISTRICT
Changes in CalPERS Miscellaneous Pension Plan Net Pension Liability
Increase / (Decrease)
Total
Pension Liability
Plan Fiduciary
Net Position
Net Pension
Liability / (Asset)
Balance at June 30, 2017 $39,308,545 $27,706,747 $11,601,798
Balance at June 30, 2018 44,410,220 33,563,265 10,846,955
Net Changes for period
from July 1, 2017 through
June 30, 2018
$ 5,101,675 $
5,856,518
$ (754,843)
Source: District.
The following table presents the net pension liability of the District’s Miscellaneous plan, calculated
using the discount rate as of June 30, 2018 (which was applicable to Fiscal Year 2019 (7.15%)), as well as what
the net pension liability would be if it were calculated using a discount rate that is 1 percentage point lower
(6.15%) or 1 percentage point higher (8.15%) than the current rate:
EAST VALLEY WATER DISTRICT
Sensitivity of the Miscellaneous Plan Net Pension Liability to Changes in the Discount Rate
Discount Rate – 1%
(6.15%)
Current Discount
Rate (7.15%)
Discount Rate +
1% (8.15%)
Plan’s Net Pension Liability/(Asset) $16,862,265 $10,846,955 $5,887,926
Source: District.
The District’s projections of Operation and Maintenance Costs under the caption “FINANCIAL
INFORMATION—Projected Operating Results and Debt Service Coverage” assume moderate increases in
CalPERS normal cost contributions in the future as a result of the COVID-19 outbreak. See the caption “—
COVID-19 Outbreak.” The District does not expect that any increased funding of pension benefits will have a
material adverse effect on the ability of the District to pay the 2020 Bonds.
9
For additional information relating to the District’s CalPERS Miscellaneous pension plan, see Note 8
to the District’s audited financial statements set forth in Appendix A.
Other Post-Employment Benefits. In addition to the pension benefits that are described under the
subcaption “—Pension Obligations,” the District provides certain health care benefits for retired employees and
eligible dependents (“OPEB”). Substantially all of the District’s full-time employees who are eligible for
pension benefits may become eligible for such OPEB. As of Fiscal Year 2020, 66 employees meet these
eligibility requirements and 19 retirees or their beneficiaries participate in the plan. Actuarially determined
contributions of $149,548 and $183,404, respectively, were recognized for OPEB in Fiscal Years 2018 and 2019.
On June 7, 2011, the District elected to fund its OPEB contributions through the California Employers’
Retiree Benefit Trust Fund (“CERBT”), an agent, multiple-employer plan administered by CalPERS, which
acts as a common investment and administrative agent for participating public employers.
GASB Statement No. 75 (“GASB 75”) requires governmental agencies to account for and report
outstanding obligations and commitments related to OPEB in essentially the same manner as for pensions. For
the District, the reporting obligation began in Fiscal Year 2018.
The District retained Nyhart (the “Actuarial Consultant”) to calculate the District’s OPEB funding
status. In a report dated December 31, 2019 (the “Report”), the Actuarial Consultant concluded that, as of June
30, 2019, the District’s net liability for OPEB was $2,096,677, and that the District’s actuarially determined
contribution for Fiscal Year 2020 (the actuarial value of benefits earned during Fiscal Year 2020 plus costs to
amortize the unfunded actuarial accrued liability, or “ADC”) was $[___]
Changes in the net liability for the District’s OPEB plan were as follows.
EAST VALLEY WATER DISTRICT
Changes in OPEB Plan Liability
Increase / (Decrease)
Total
OPEB Plan Liability
Plan Fiduciary
Net Position
Net OPEB Plan
Liability / (Asset)
Balance at June 30, 2018 $2,537,882 $605,512 $1,932,370
Balance at June 30, 2019 2,658,612 642,194 2,016,418
Net Changes for period
from July 1, 2018 through
June 30, 2019
$ 120,730 $ 36,682 $ 84,048
Source: District.
The following table presents the net liability of the District’s OPEB plan, calculated using the discount
rate applicable to Fiscal Year 2019 (6.50%), as well as what the net OPEB liability would be if it were calculated
using a discount rate that is 1 percentage point lower (5.50%) or 1 percentage point higher (7.50%) than the
Fiscal Year 2019 rate:
10
EAST VALLEY WATER DISTRICT
Sensitivity of the OPEB Plan Net Liability to Changes in the Discount Rate
Discount Rate – 1%
(5.50%)
Applicable Discount
Rate (6.50%)
Discount Rate +
1% (7.50%)
Plan’s Net Liability/(Asset) $2,301,125 $2,106,418 $1,772,914
Source: District.
The District’s projections of Operation and Maintenance Costs under the caption “FINANCIAL
INFORMATION—Projected Operating Results and Debt Service Coverage” do not assume unusual increases
in OPEB funding expenses in the future. However, future changes in funding policies and assumptions,
including those related to assumed rates of investment return and healthcare cost inflation, could trigger increases
in the District’s annual required contributions, and such increases could be material to the finances of the District.
No assurance can be provided that such expenses will not increase significantly in the future. The District does
not expect that any increased funding of OPEB will have a material adverse effect on the ability of the District
to pay the 2020 Bonds.
For additional information relating to the OPEB plan, see Note 11 to the District’s audited financial
statements set forth in Appendix A.
Budget Process
Under the District’s budget policy, the District’s proprietary funds are budgeted on the full accrual basis
of accounting with the following exceptions: (i) changes in the fair value of investments are not treated as
adjustments to revenue; (ii) compensated absence liabilities are expensed when paid; (iii) pension expense is
budgeted based on employer contribution rates; (iv) principal payments on long-term debt are treated as
expenses; (v) depreciation expense is not recognized; and (vi) capital purchases are recognized as an expense.
The Chief Financial Officer must present the proposed budget to the Board at a public meeting in June
of each year. The Board must then adopt a balanced budget before June 30 of each year for the following Fiscal
Year. A balanced budget means that operating revenues and other financing sources must fully cover operating
expenses, including debt service and Capital Improvement Plan contributions, and other financing uses. In
addition one-time revenue sources and development fees may not be used to fund operational costs.
The District adopted its Fiscal Year 2021 budget on June 24, 2020.
District Insurance
The District’s insurance coverage for general liability, automobile liability, public officials liability,
property damage and fidelity is provided through a self-insurance program under the Special District Risk
Management Authority (the “SDRMA”). The SDRMA is a risk-pooling self-insurance authority created under
the provisions of State Government Code Section 6500 et seq. The SDRMA is governed by a board consisting
of a representative from each member agency. The board controls the operations of the SDRMA, including
selection of management and approval of operating budgets.
The purpose of the SDRMA is to arrange and administer programs of insurance for the pooling of self-
insured losses and to purchase excess insurance coverage. The District maintains the following coverages
through the SDRMA, inter alia: (i) personal injury and property damage coverage of up to $10,000,000 per
occurrence, with a $500 deductible; (ii) automobile personal injury and property liability coverage of up to
$10,000,000 per accident, with no deductible; (iii) public officials errors and omissions coverage of up to
$10,000,000, with no deductible; (iv) boiler and machinery coverage of up to $100,000,000, with a $1,000
11
deductible; (v) employee dishonesty coverage of up to $1,000,000, with no deductible; and (vi) workers
compensation coverage up to statutory limits. The District does not maintain earthquake insurance.
The District’s property damage insurance covers all Water System and Wastewater System treatment
facilities and pipelines within 1,000 feet of treatment plants and other insured facilities. Except as described in
the preceding sentence, the District’s Water System and Wastewater System pipelines are not insured.
There can be no assurance that incurred losses of the District will be covered up to the amount of loss,
if at all. See the caption “CERTAIN RISKS TO BONDHOLDERS—Natural Disasters.” Claims have not
exceeded the District’s insurance coverage in any of the last three years.
The District can also provide no assurance that it will maintain the above insurance coverage amounts
while the Bonds are outstanding. See Appendix B under the caption “PARTICULAR COVENANTS—
Insurance” for a description of insurance coverages that are required to be maintained while the Bonds are
outstanding
For additional information relating to the District’s insurance coverages, see Note 10 to the District’s
financial statements set forth in Appendix A.
Outstanding Parity Obligations
The following District obligations are payable from all or a portion of Net Revenues on a parity with
the 2020 Bonds.
2010 State Contract. In 2010, the District entered into a funding agreement (the “2010 State
Contract”) with the State Department of Public Health (administration of which was later transferred to the
State of California Water Resources Control Board (the “SWRCB”)) to finance certain improvements to the
Water System. As of June 30, 2020, the 2010 State Contract was outstanding in the principal amount of
$[6,301,767]. The 2010 State Contract is payable in semiannual installments of $116,700 and bears no interest.
The final payment under the 2010 State Contract is due in 2045. The obligation of the District to make payments
on the 2010 State Contract is payable from Net Water System Revenues on a parity with the obligation of the
District to pay the 2020 Bonds from Net Water System Revenues.
2018 State Contract. In 2018, the District entered into a Construction Installment Sale Agreement and
Grant (as amended by Amendment No. 1 dated December 2, 2019, the “2018 State Contract”) with the SWRCB
to finance the SNRC. See the caption “THE WASTEWATER SYSTEM—General” for a description of the
SNRC. The District is entitled to borrow up to $157 million under the 2018 State Contract (excluding grant
amounts) and currently expects to borrow up to $150,257,875 to complete the SNRC. The 2018 State Contract
is payable in annual installments of $3,412,139 commencing in 2023 and bears interest at the rate of 1.8% per
annum. The final payment under the 2018 State Contract is expected to be due in 2052. The obligation of the
District to make payments on the 2018 State Contract is payable from Net Revenues on a parity with the
obligation of the District to pay the 2020 Bonds.
Other Obligations
Arroyo Verde Loan. The County, as part of an agreement to provide a combination of grants and loans
to the Arroyo Verde Water Company (“AVWC”) to finance capital improvements to its distribution system,
required that the AVWC dissolve and transfer its customers to the District. In 2004, the District entered into the
Arroyo Verde Assessment District Construction Loan (the “Arroyo Verde Loan”) to finance the installation of
a new water distribution system serving AVWC’s former customers. The Arroyo Verde Loan, which matures
in 2031, was outstanding in the principal amount of $[84,526] as of June 30, 2020 and does not bear interest.
The Arroyo Verde Loan is payable from assessments levied by the District. No Revenues of the Water System
or Wastewater System are pledged to repayment of the Arroyo Verde Loan.
12
Eastwood Farms Loan. In 2009, the County Department of Public Health offered funding to assist the
District in absorbing the Eastwood Farms Water Users Association (“EFWUA”), a group of 120 property owners
located on the District’s southwestern boundary whose water distribution system was in disrepair. On September
15, 2010, EFWUA property owners voted to approve the formation of an assessment district to facilitate the
replacement of EFWUA’s distribution system and add EFWUA property owners as District customers. The
District authorized the formation of an assessment district (the Eastwood Farms Assessment District (the
“Assessment District”)) on September 15, 2010.
In 2011, the District and the State of California Department of Water Resources (“DWR”) entered into
a funding agreement (the “Eastwood Farms Loan”) to finance capital improvements within the Assessment
District. The Eastwood Farms Loan, which matures in 2043, was outstanding in the principal amount of
$[325,402] as of June 30, 2020 and bears no interest. The Eastwood Farms Loan is payable from assessments
levied by the District. No Revenues of the Water System or Wastewater System are pledged to repayment of
the Eastwood Farms Loan.
U.S. Bank Lease/Purchase Agreement. In 2013, the District and U.S. Bancorp Government Leasing
and Finance, Inc. entered into a Master Tax Exempt Lease/Purchase Agreement (the “U.S. Bank
Lease/Purchase Agreement”) in order to finance certain energy efficiency projects to District infrastructure.
The U.S. Bank Lease/Purchase Agreement, which matures in 2024, was outstanding in the principal amount of
$[2,522,306] as of June 30, 2020 and bears interest at the rate of 2.38% per annum. The U.S. Bank
Lease/Purchase Agreement is payable from any available District revenues but is not entitled to a priority claim
on Revenues of the Water System or Wastewater System.
SBVMWD Loan. In 2015, the District and SBVMWD entered into an Agreement for the Construction,
Operation and Maintenance of the City Creek Turnout and the Plant 134 Hydroelectric Station (the “SBVMWD
Loan”) to finance certain improvements to the District’s water system. The SBVMWD Loan, which matures in
2025, was outstanding in the principal amount of $[3,870,002] as of June 30, 2020 and bears interest at the LAIF
investment rate. The SBVMWD Loan is payable from any available District revenues but is not entitled to a
priority claim on Revenues of the Water System or Wastewater System.
Seismic Considerations
The District is located in a seismically active region in Southern California. Significant fault zones in
the region include the Elsinore, San Jacinto, Wildomar and San Andreas Fault Zones. There is significant
potential for destructive ground shaking during the occurrence of a major seismic event. In addition, land along
the aforementioned fault lines may be subject to liquefaction during the occurrence of such an event. In the
event of a severe earthquake, there may be significant damage to both property and infrastructure within the
District.
Newer District facilities are designed to withstand earthquakes with minimal damage, as earthquake
loads are taken into consideration in the design of project structures. The impact of lesser magnitude events is
expected by the District to be temporary, localized and repairable. To date, no District facilities have suffered
any significant earthquake damage.
The District does not maintain earthquake insurance. See the captions “—District Insurance” and
“CERTAIN RISKS TO BONDHOLDERS—Natural Disasters.”
COVID-19 Outbreak
The spread of a novel strain of coronavirus, and the resultant disease called COVID-19 (“COVID-19”),
is having significant negative impacts throughout the world, including within the City. The World Health
Organization has declared the COVID-19 outbreak to be a pandemic, and states of emergency have been declared
by the County, the State and the United States. The purpose of these declarations is to coordinate and formalize
13
emergency actions across federal, State and local governmental agencies and to proactively prepare for a wider
spread of COVID-19.
To date there have been a number of confirmed cases of COVID-19 in the County and health officials
are expecting the number of confirmed cases to grow. The outbreak has resulted in the imposition of restrictions
on mass gatherings and widespread temporary closings of businesses, universities and schools (including schools
within the District’s service area). The United States is also restricting certain non-citizens and permanent
residents from entering the country. In addition, financial markets in the United States and globally have been
volatile, with significant declines attributed to COVID-19 concerns.
Potential impacts to the District associated with the COVID-19 outbreak include, but are not limited to,
increasing costs and challenges to the public health system in and around the District’s service area, cancellations
of public events and disruption of the regional and local economy with corresponding decreases in water use.
[In response to the COVID-19 outbreak, has staggered employee shifts, enabled certain employees to
telecommute and moved employees to multiple locations in order to prevent large gatherings of personnel at any
one time. The City does not foresee an impact on Water System or Wastewater System operations at this time
as a result of the COVID-19 outbreak.
In addition, the State Governor has suspended utility service shutoffs (including for the Water System
and the Wastewater System) for the duration of the state of emergency declared by the State, and the District
will not seek to collect late fees or penalties. Although no service charges are being forgiven, the District expects
its accounts receivable amount to increase as a result of the foregoing policy. See the caption “THE WATER
SYSTEM—Collection Procedures” and “THE WASTEWATER SYSTEM—Collection Procedures.”
The COVID-19 outbreak is ongoing, and the duration and severity of the outbreak and the economic
and other actions that may be taken by governmental authorities to contain the outbreak or to treat its impact are
uncertain. The ultimate impact of COVID-19 on the operations and finances of the District is unknown at this
time. The projected operating results which are set forth under the caption “FINANCIAL INFORMATION OF
THE DISTRICT—Projected Operating Results and Debt Service Coverage” include the following assumptions
based on the trends that the District has seen since the beginning of the outbreak: [TO COME]. The District
continues to actively monitor customer usage, revenues and delinquencies so that any further impacts can be
anticipated.
The District also expects that CalPERS’ earnings will be reduced in Fiscal Year 2020 as a result of stock
market declines in the wake of the COVID-19 outbreak, which could increase future contribution rates for plan
participants, including the District, although the District is unable to estimate the magnitude of any such
increases, or the proportion of such increases that will be attributable to the Water System, at this time. See the
caption “—Employees and Employee Benefits—Pension Obligations.”
The District does not currently expect that the COVID-19 outbreak will have a material adverse effect
on the District’s ability to pay the 2020 Bonds. The District notes its customer base is primarily residential and
that both water and wastewater charges include a monthly fixed rate component which partially mitigates the
effect of reduced consumption by commercial customers during the pandemic. See the captions “THE WATER
SYSTEM OF THE DISTRICT—Water System Rates and Charges—Adopted Rates and Charges” and “THE
WASTEWATER SYSTEM OF THE DISTRICT—Wastewater System Rates and Charges—Adopted Rates and
Charges.”
Financial Statements
A copy of the most recent audited financial statements of the District prepared by CliftonLarsenAllen
LLP, Glendora, California (the “Auditor”) are attached as Appendix A hereto (the “Financial Statements”).
The Auditor’s letter dated October 1, 2019 is set forth at the beginning of the Financial Section of the Financial
14
Statements. The Financial Statements should be read in their entirety. The Auditor has not been engaged to
review this Official Statement, has not performed any procedures on the numbers herein and has no responsibility
for the contents hereof.
The summary operating results that are contained under the caption “FINANCIAL INFORMATION
OF THE DISTRICT—Historical Operating Results and Debt Service Coverage” are derived from the Financial
Statements and audited financial statements for prior Fiscal Years (excluding certain non-cash items and after
certain other adjustments), and are qualified in their entirety by reference to such statements, including the notes
thereto.
The District accounts for moneys received and expenses paid in accordance with generally accepted
accounting principles applicable to public entities (“GAAP”). Generally, the District recognizes revenues and
expenses on the full accrual basis of accounting, meaning that revenues are recognized in the accounting period
in which they are earned and expenses are recognized in the period incurred, regardless of when the related cash
flows take place. However, in certain cases, GAAP requires or permits moneys that are collected in one Fiscal
Year to be recognized as revenue in a subsequent Fiscal Year and requires or permits expenses that are paid or
incurred in one Fiscal Year to be recognized as expenses in a subsequent Fiscal Year. See Note 1 to the financial
statements that are set forth in Appendix A. Except as otherwise expressly noted herein, all financial information
that has been derived from the District’s audited financial statements reflects the application of GAAP.
The Water Fund and the Sewer Fund of the District are accounted for as proprietary fund types
(enterprise funds) using the economic resources measurement focus. In governmental accounting, enterprise
funds are used to account for operations that are financed and operated in a manner similar to private business
enterprises, where the intent is that the costs (expenses, including depreciation) of providing goods or services
to the general public on a continuing basis are to be financed or recovered primarily through user charges, or
where periodic determination of revenues earned, expenses incurred and/or net income is deemed appropriate
for capital maintenance, public policy, management control, accountability or other purposes.
The Financial Statements are public documents and the District has not sought the approval of the
Auditor to append the Financial Statements to this Official Statement. The Auditor has neither performed any
post-audit review of the financial condition of the District nor reviewed or audited this Official Statement.
THE WATER SYSTEM OF THE DISTRICT
The following is a description of the Water System of the District. The District expects that
approximately 95.6% of the payments on the 2020 Bonds will be attributable to the Water System and payable
from Net Water System Revenues, unless Parity Bonds or Contracts are issued or delivered, as applicable; the
District notes that payments under certain parity obligations are payable from Net Water System Revenues in a
different proportion than the 2020 Bonds, as described under the caption “THE DISTRICT—Outstanding Parity
Obligations.” The District does not anticipate that Net Water System Revenues will serve as a significant source
of moneys used to pay 2020 Bonds beyond the allocated percentage described in the preceding sentence.
General
In Fiscal Year 2020, the District supplied potable water to approximately 19,898 single family
residential, 475 multi-family residential, 694 commercial (including industrial and governmental) and 588
irrigation and fire line connections. See the caption “—Historical Water System Connections.”
The District has three sources of water: (i) groundwater from 15 District-owned wells in the Basin; (ii)
Santa Ana River flows; and (iii) SWP water purchased from SBVMWD. The District holds a majority of the
voting stock of two mutual water companies in the City of Highland, the North Fork Water Company (“North
Fork”) and the City Creek Water Company (“City Creek”). The District’s ownership interests allow it to take
certain quantities of Santa Ana River flows and to use the mutual water companies’ existing distribution systems.
15
In Fiscal Year 2020, the District paid an annual assessment of $91,433 to North Fork. See the caption “—Water
Supply.”
The Water System includes 15 active wells, 18 water tanks and reservoirs with a combined storage
capacity of approximately 28,977,000 gallons, 23 booster pump stations, which pump water from lower
elevations to various higher pressure zones, 3,025 fire hydrants and approximately 300 miles of pipelines,
including transmission lines ranging in size from 4 inches to 36 inches in diameter.
The District also operates the Philip A. Disch Surface Water Treatment Plant (“Plant 134”) to treat
Santa Ana River flows and SWP water purchased from SBVMWD. See the caption “—Water Treatment Plant.”
Water Treatment Plant
Plant 134 is a submerged membrane filtration water treatment plant with a total treatment capacity of
up to 8 million gallons per day (“mgd”). Plant 134 treats untreated surface water from the Santa Ana River and
the SWP to potable water standards. Plant 134 includes 5 trains with the capacity to treat up to 2 mgd each.
Treated water is stored in a 3 million gallon reservoir. Plant 134 includes a booster station which enables the
District to boost treated water to higher elevation zones within the Water System.
Water Quality
General. The District’s primary water source is groundwater from District-owned wells in the Basin.
Such water is generally of high quality and is disinfected with chlorine prior to delivery to customers.
The District has access to Santa Ana River flows. The source of the Santa Ana River is snowmelt from
nearby mountains. The District also purchases untreated SWP water from SBVMWD. Santa Ana River and
SWP supplies are treated to potable water standards at Plant 134 prior to delivery to customers. See the caption
“—Water Treatment Plant.”
In 2016 and early 2017, routine water sampling by the District revealed levels of total trihalomethanes
(“TTHMs”) at levels that were slightly above maximum contaminant levels established under the federal Safe
Drinking Water Act. TTHMs are a group of chemicals that are formed during the water treatment process when
chlorine reacts with organic materials such as leaves, plants and soil in untreated water. A rise in TTHMs can
result from increased chlorination during the treatment process, high organics in source water, drought conditions
or limited water circulation within the pipeline system. After a range of measures, including pipeline
replacements, installing tank mixers, hydrant flushing and blending of the District’s various water sources,
additional sampling since 2017 has not revealed the presence of TTHMs at levels that exceed regulatory
requirements. The District will also seek funding from the State Water Resources Control Board to install
additional treatment processes at Plant 134, most likely Granular Activated Carbon filters.
PFAS. In 2019, the SWRCB’s Division of Drinking Water (the “Division”) lowered the Notification
Levels for Perfluorooctanoic acid (“PFOA”) and Perfluorooctanesulfonic acid (“PFOS”) to 5.1 and 6.5 parts
per trillion (“PPT”), respectively. Notification Levels are non-regulatory, precautionary health-based measures
for concentrations of chemicals in drinking water that warrant notification and further monitoring and
assessment. In 2020, the Division lowered the Response Level for PFOA and PFOS from 70 PPT, combined,
to 10 to 40 PPT, each. Response Levels are non-regulatory, precautionary health-based measures that are set at
higher levels than Notification Levels and represent thresholds at which the Division recommends that water
systems remove a water source from use or treat it.
PFOA and PFOS are fluorinated organic chemicals which are part of a family of synthetic compounds
referred to as per- and polyfluoroalkyl substances (“PFAS”). PFAS are water and lipid resistant substances that
are useful for a variety of manufacturing processes and industrial applications. The District understands that
16
recent technological advances have enabled water agencies to detect PFAS compounds at very low
concentrations.
[Confirmed-no detects] The District has not detected PFOA or PFOS to date in the District’s
groundwater sources in the Basin or in the water produced at Plant 134. The District has tested the water within
its distribution system served to customers for PFAS under the UCMR3 (Unregulated Contaminant Monitoring
Rule), resulting in a “non-detect” determination.
The District does not anticipate that implementation of the lowered PFAS Response Level by the
Division will have a material adverse effect on the operation of the Water System or the costs thereof. The
projected operating results which are set forth under the caption “FINANCIAL INFORMATION OF THE
DISTRICT—Projected Operating Results and Debt Service Coverage” do not assume significant increases in
water treatment costs to meet State regulations relating to PFAS.
Water Supply
The District currently has three sources of water: (i) groundwater extracted from [15] District-owned
wells in the Basin; (ii) Santa Ana River flows; and (iii) SWP water purchased from SBVMWD. Each of such
sources is discussed below.
See the captions “—Historical Water Production” and “—Projected Water Production” for historical
and projected information with respect to the District’s sources of water supply.
Groundwater. In Fiscal Year 2020, groundwater extracted from the Basin comprised approximately
[__]% of the District’s total water supply. The District’s groundwater supply is obtained from [15] active deep
groundwater wells in the Basin. The District also owns [__] additional wells in the Basin which are currently
offline for [maintenance]. The District’s wells provide a combined capacity of approximately 36 mgd of water.
Average daily production from the District wells was approximately [__] mgd in Fiscal Year 2020. The natural
safe yield of the Basin, which was determined by court order in the 1969 Stipulations discussed below based on
a 40-year hydrologic cycle, is 232,100 acre feet per year (or over 207 mgd). Water extracted from the District’s
wells is of high quality and does not require extensive treatment prior to delivery to customers. See the caption
“—Water Quality—General.”
Water used for agricultural and domestic use within the present boundaries of the District was
historically derived exclusively from the Santa Ana River watershed, an area embracing approximately 2,000
square miles in the Counties of Orange, Riverside and San Bernardino. The Santa Ana River originates in the
San Bernardino Mountains northeast of the District and flows to the southwest through the County to Riverside
County and Orange County. Except during periods of storm flows, the Santa Ana River flows underground for
most of its length.
In 1941, the United States Army Corps of Engineers (the “Corps”) constructed a flood control dam on
the Santa Ana River just north of the river’s entrance into Santa Ana Canyon (“Prado Dam”), near the Orange
County/Riverside County boundary. Since Prado Dam was completed, the Corps has operated it primarily as a
flood control facility, with certain incidental water conservation activities.
Prior to 1969, Santa Ana River water users above Prado Dam in the Counties of Riverside and San
Bernardino (the “Upper Basin”) and in the Orange County groundwater basin came increasingly into conflict
over water flows in the Santa Ana River. These conflicts led to a series of lawsuits between various Upper Basin
and Orange County groundwater basin water users. SBVMWD, on behalf of many Upper Basin water users,
including the District, became involved in these lawsuits.
Litigation between Upper Basin and Orange County groundwater basin water users culminated in two
stipulated judgments, one entered by the Superior Court for the County of Orange and the other entered by the
17
Superior Court for the County of Riverside in 1969 (the “1969 Stipulations”), affirming a negotiated settlement
of Santa Ana River water rights disputes between the Upper Basin and the Orange County groundwater basin,
involving over 4,000 parties.
The 1969 Stipulations by their terms superseded a number of previous water rights determinations
relating to the Santa Ana River and created a watermaster for the Santa Ana River (the “Watermaster”). The
Watermaster is a committee of five court-appointed members, one each nominated by SBVMWD, Inland Empire
Utilities Agency and Western Municipal Water District and two nominated by Orange County Water District.
The Watermaster is charged with administration and reporting with respect to the 1969 Stipulations. If the
Watermaster, which can act only upon the unanimous vote of its five members, fails to or is unable to make
necessary findings or determinations, such questions must be certified by the Watermaster to the Superior Court
for the County of Orange for determination.
The 1969 Stipulations did not adjudicate the water rights of individual water users within the Orange
County groundwater basin or the Upper Basin. Accordingly, there are no limitations on the amount of
groundwater that the District may extract from the Basin, nor is the District required to obtain a permit for
groundwater production. The 1969 Stipulations also did not affect the District’s rights to take Santa Ana River
surface water pursuant to the District’s ownership of a majority of the stock of North Fork. See the subcaption
“—Santa Ana River Flows.”
The parties to the 1969 Stipulations have been operating in accordance with the 1969 Stipulations since
they were approved. As an adjudicated groundwater basin within the Upper Basin, the Basin (from which the
District extracts groundwater) is not subject to the provisions of the Sustainable Groundwater Management Act,
a Statewide effort to management groundwater.
Santa Ana River Flows. In Fiscal Year 2020, Santa Ana River flows comprised approximately [__]%
of the District’s total water supply. The District diverts surface water from four tributaries of the Santa Ana
River through the North Fork Canal east of the Seven Oaks Dam in the City of Highland. The District’s Santa
Ana River water rights arise from its ownership of approximately 92% of the outstanding stock in North Fork
and its ownership of stock in City Creek. The District currently has Santa Ana River surface water rights of 4
mgd per year (or approximately 4,500 acre feet per year); such rights can be increased to over 6.5 mgd per year
upon the conversion of remaining agricultural properties to urbanized development, which causes North Fork to
transfer the shares of stock associated with such properties to the District. Santa Ana River flows are conveyed
to Plant 134 for treatment. See the caption “—Water Treatment Plant.”
On April 22, 2020, the Board voted to condemn the remaining 8% (44 shares) of outstanding stock in
North Fork that are not currently owned by the District. There can be no assurance as to the ultimate outcome
of the condemnation proceeding, or the timing thereof.
SWP Water. During dry hydrological years, the District also has the option of obtaining supplemental
SWP water from SBVMWD when available. Such purchases enable the District to preserve water in the Basin
rather than extracting it. In Fiscal Year 2020, SWP purchases comprised approximately [__]% of the District’s
total water supply.
SBVMWD makes untreated SWP water available at wholesale to the District and other retail water
purveyors. Such sales are not made pursuant to water service contracts and SBVMWD is not obligated to make
such water available, nor is the District obligated to purchase any quantities of such water when available.
Supplemental water from SBVMWD is treated at Plant 134 prior to delivery to customers. See the caption “—
Water Treatment Plant.” Supplemental water is currently delivered to the District [via the North Fork Canal
and] through a turnout feeder line that was constructed in 2014.
SBVMWD and DWR, which operates the SWP, face various challenges in the continued supply of
water to the District. A description of these challenges as well as a variety of other operating information with
18
respect to SBVMWD and DWR is included in certain disclosure documents prepared by SBVMWD and DWR,
respectively. SBVMWD and DWR have prepared certain publicly available documents and have entered into
certain continuing disclosure agreements pursuant to which they are contractually obligated for the benefit of
owners of certain of their outstanding obligations to file annual reports, notices of enumerated events as defined
under Rule 15c2-12 and annual audited financial statements with EMMA. None of such information is
incorporated into this Official Statement by reference thereto, and the District makes no representation as to the
accuracy or completeness of such information. NEITHER SBVMWD NOR DWR HAVE ENTERED INTO
ANY CONTRACTUAL COMMITMENT WITH THE DISTRICT, THE TRUSTEE OR THE OWNERS OF
THE 2020 BONDS TO PROVIDE ANY INFORMATION TO THE DISTRICT OR THE OWNERS OF THE
2020 BONDS.
NEITHER SBVMWD NOR DWR HAVE REVIEWED THIS OFFICIAL STATEMENT OR
MADE REPRESENTATIONS OR WARRANTIES WITH RESPECT TO THE ACCURACY OR
COMPLETENESS OF THE INFORMATION CONTAINED OR INCORPORATED HEREIN,
INCLUDING INFORMATION WITH REGARD TO SBVMWD OR DWR, RESPECTIVELY.
NEITHER SBVMWD NOR DWR IS CONTRACTUALLY OBLIGATED, AND NEITHER SBVMWD
NOR DWR HAVE UNDERTAKEN, TO UPDATE SUCH INFORMATION FOR THE BENEFIT OF
THE DISTRICT, OR THE OWNERS OF THE 2020 BONDS UNDER RULE 15c2-12.
Basin Recharge Activities. During wet years, when there is excess SWP water available, the District
works with the San Bernardino Valley Water Conservation District to transport surplus water to man-made
spreading grounds, areas with porous soil where surface water can easily percolate into the Basin and be stored
for future use.
In addition, the construction of the SNRC, which is described under the caption “THE WASTEWATER
SYSTEM—Sterling Natural Resource Center,” will increase the District’s ability to recharge the Basin. The
SNRC, which is expected to commence operations in 20[__], will treat wastewater from customers of the
District’s Wastewater System to recycled water standards. Treated wastewater flow will be recharged into the
Basin for later extraction, treatment to potable water standards and delivery to Water System customers. When
completed, the District expects the SNRC to produce up to 6 mgd of treated wastewater flow for recharge into
the Basin. Future phases could increase production capacity to up to 10 mgd. Such recharged water constitutes
a drought-proof means of ensuring the long-term viability of the Basin while providing a locally controlled water
supply and reducing the District’s dependence on more costly mported water.
Recent Drought
State Actions. On January 17, 2014, after several years of below-average precipitation in the State, the
State Governor declared a drought state of emergency (the “Declaration”) with immediate effect. The
Declaration encouraged local urban water suppliers, including the District, to implement their local water
shortage contingency plans; the District’s plan is discussed under the caption “—Water Shortage Contingency
Plan.” The Declaration also required DWR and the SWRCB to craft and enforce numerous emergency
regulations that were designed to reduce water usage and increase water supplies.
For instance, a May 2015 SWRCB regulation required the District to effect a [__]% reduction from its
2013 potable water usage. On May 18, 2016, the SWRCB adopted a revised regulation that gave water agencies
the ability to establish their own conservation standards based on a “stress test” of supply reliability. By June
22, 2016, water agencies were required to submit self-certifications to the SWRCB demonstrating that they had
sufficient supplies to withstand three additional years of severe drought. Any identified percentage gap between
supplies and demands became the water agency’s updated mandatory conservation target.
[CONFIRM] The District’s self-certification demonstrated that it had sufficient supplies to meet its
projected demands, even if the State were to have endured three more years of drought. Consequently, the
District’s mandatory conservation target was eliminated retroactive to June 1, 2016.
19
On April 7, 2017, after significant improvement in water supply conditions across the State, the
Governor issued Executive Order B-40-17, which rescinded mandatory conservation measures for most
California counties (including the County).
In 2018, the California Governor signed Senate Bill 606 and Assembly Bill 1668 into law. These bills
relate to water conservation and drought planning and empower DWR and the SWRCB to adopt long-term
standards on water use. The District is unable to predict the substance, timing of adoption or effect on the Water
System of the implementation of Senate Bill 606 and Assembly Bill 1668 or any future legislation with respect
to water conservation. District staff is actively participating in all applicable working groups in order to ensure
the effective implementation of Senate Bill 606 and Assembly Bill 1668.
To improve water conservation and drought planning, the California Legislature adopted and the
Governor signed Senate Bill 606 (Hertzberg) and Assembly Bill 1668 (Friedman) into law in 2018. This
legislation lays out a new long-term water conservation framework for the State and mandates that DWR and
the SWRCB develop new standards for indoor residential water use, outdoor residential water use, commercial,
industrial and institutional water use for landscape irrigation and water loss.
The indoor water use standard has been defined as 55 gallons per person per day (“GPCD”) until
January 2025; the standard will decrease over time to 50 GPCD in January 2030. Standards for outdoor
residential water use, commercial, industrial and institutional water use for landscape irrigation are still being
developed. Urban water suppliers will be required to stay within annual water budgets, based on these standards,
for their service areas.
[CONFIRM/EDIT] The District is monitoring regulations promulgated pursuant to Senate Bill 606 and
Assembly Bill 1668. The District has a tiered rate structure, where water budgets for Tier 1 (lowest price) are
based on usage of 60 GPCD. The Tier 1 budget calculation will be adjusted downward to 55 GPCD on January
1, 2021. See the caption “—Water System Rates and Charges—Adopted Rates and Charges.” Accordingly, the
District does not believe the implementation of the new conservation standards will have a significant effect on
the District’s ability to generate sufficient Net Revenues to pay the 2020 Bonds when due.
Water Shortage Contingency Plan. The District’s water shortage contingency plan is set forth in
Ordinance 397, Section 15 adopted by the Board. Under the District’s plan, the District responds to a water
shortage in stages as follows:
• Stage 1 (Normal Conditions; Voluntary Conservation Measures) applies during normal supply
conditions and is intended to foster responsible water use. Under Stage 1, irrigation times are between the hours
of 6:00 p.m. and 6:00 a.m., irrigation is prohibited for 2 days after measurable rainfall, vehicle washing is to be
done with an automatic shut-off nozzle and washing down of hard surfaces is prohibited.
• Stage 2 (Threatened Water Supply Shortage) can be declared by the Board when a water supply
shortage is threatened. Under Stage 2, exterior landscape plans for new commercial and industrial development
must provide for timed irrigation and consider the use of drought-resistant flora, the District may request and
commercial and industrial customers prepare a water conservation plan, swimming pools must be covered when
not in use and restaurants may not provide drinking water except upon request.
• Stage 3 (Water Shortage Emergency; Mandatory Conservation Measures) can be declared by
the Board when the District may not be able to meet customer demands for water. Under Stage 3, watering of
parks, school grounds, golf courses, lawns and landscaping, washing of vehicles at a commercial car wash, filling
or adding water to swimming pools or ornamental pools are all prohibited with potable water, the District will
not issue any new construction meters and commercial nurseries must discontinue watering.
The District is empowered to enforce its water shortage contingency plan with successively increasing
fines and water shutoffs.
20
The projected Water System operating results that are set forth under the caption “FINANCIAL
INFORMATION—Projected Operating Results and Debt Service Coverage” reflect continued normal supply
conditions. The District does not currently expect that the implementation of its water shortage contingency
plan in the future will have a material adverse effect on its ability to pay the 2020 Bonds from Net Revenues.
As discussed under the caption “—Water System Rates and Charges,” the District’s rate structure consists of
variable and fixed rate components. Decreased water consumption is partially offset by a decrease in related
variable costs, while fixed water charges largely cover the District’s fixed operating and maintenance costs. In
addition, the District has covenanted to set Water System rates and charges in amounts that it expects to be
sufficient to pay the portion of the 2020 Bonds which are attributable to the Water System from Net Water
System Revenues. See the caption “SECURITY FOR THE 2020 BONDS—Rate Covenant.”
If a water shortage should arise again in the future, legal issues exist as to whether different California
Water Code provisions or State regulations will be invoked to manage the allocation of water. Any curtailment
pursuant to State orders could necessitate an increase in the District’s water rates to Water System customers.
See the caption “CONSTITUTIONAL LIMITATIONS ON APPROPRIATIONS AND CHARGES—
Proposition 218” for a discussion of certain restrictions on the District’s ability to raise water rates.
Historical Water Production
The following table shows historical water production of the District for the five most recent Fiscal
Years:
EAST VALLEY WATER DISTRICT
Historical Water Production in Acre Feet
Fiscal
Year
Groundwater and
Surface Water
% Increase/
(Decrease)
SBVMWD
Purchases
% Increase/
(Decrease) Total
2016 16,614 N/A% 562 N/A% 17,176
2017 17,922 7.9 848 51.1 18,770
2018 18,997 6.0 1,033 21.8 20,030
2019 17,397 (8.4) 2,934 183.9 20,331
2020 17,596 1.1 800
Source: District.
21
Historical Water Sales
The following table shows historical water sales of the District for the five most recent Fiscal Years.
EAST VALLEY WATER DISTRICT
Historical Water Sales in Acre Feet(1)
Fiscal Year Water Sales
2016 14,999
2017 16,223
2018 18,361
2019 16,167
2020
(1) Differences between water sales and water production set forth under the caption “—Historical Water Production” reflect
Water System losses, evaporation, internal water use for District purposes, fire hydrant testing and fire hydrant use in
emergencies.
Source: District.
Historical Water System Connections
The following table shows historical billed connections to the Water System for the five most recent
Fiscal Years:
EAST VALLEY WATER DISTRICT
Historical Water System Connections
Fiscal Year
Single Family
Residential
Multi-Family
Residential Commercial(2) Irrigation
Fire
Services Total
2016 19,780 463 669 305 1,330 22,547
2017 19,826 466 672 315 1,339 22,618
2018(1) 19,856 469 675 318 251 21,569
2019(1) 19,883 474 688 322 252 21,619
2020 19,898 475 694 330 258 21,655
(1) Fluctuations in Fiscal Years 2018 and 2019 reflect change in District policy to not bill monthly charges for residential fire
services.
(2) Excludes industrial and governmental accounts, of which there were approximately 30 in Fiscal Year 2020.
Source: District.
22
Historical Water Sales Revenues
The following table shows historical sales revenues of the Water System for the five most recent Fiscal
Years:
EAST VALLEY WATER DISTRICT
Historical Water Sales Revenues(1)
Fiscal
Year
Water Sales
Revenues
% Increase/
(Decrease)
2016 $19,990,600 N/A%
2017 23,500,991 17.6
2018 26,063,647 10.9
2019 24,756,535 (5.0)
2020(1) [__]
(1) Includes water sales revenues and meter charges for all water connections. The above numbers differ from the historic Water
System operating revenues set forth under the caption “—Historical Water System Operating Results and Debt Service
Coverage” because the above numbers do not include penalties and other revenues treated as operating revenues by the
Auditor.
(2) Reflects estimated actual Fiscal Year 2020 results. Unaudited and subject to change.
Source: District.
Largest Water System Customers
The following table sets forth the ten largest customers of the Water System of the District as of June 30,
[2019], as determined by the amount of their respective payments.
EAST VALLEY WATER DISTRICT
Largest Water System Customers
Customer
Water Sales
Revenues % of Total
San Bernardino City USD $ 720,441 %
Patton State Hospital 429,417
City of Highland 370,556
East Highlands Ranch 357,833
San Manuel Mission Indians 318,035
Village Lakes HOA 187,383
San Manuel Indian/Bingo Casino 184,887
Tuscany Apartments 175,834
Stubblefield Construction Company 128,522
Woodman Realty Inc 125,095
TOP TEN TOTAL $ 2,998,003 %
TOTAL SYSTEM $ 100.0%
Source: District.
These ten customers accounted for approximately 12.2% of total Water System Revenues from water
sales to customers for Fiscal Year 2019. See the caption “THE WASTEWATER SYSTEM OF THE
DISTRICT—Largest Wastewater System Customers” for information with respect to the largest Wastewater
System customers of the District.
23
Water System Rates and Charges
General. The Board has rate setting authority as provided under the State Water Code and the District’s
rates are not subject to review or approval by the California Public Utilities Commission or any other agency.
See the caption “CONSTITUTIONAL LIMITATIONS ON APPROPRIATIONS AND CHARGES” for certain
limitations of the rate setting authority of the Board. The District annually determines the adequacy of the Water
System rate structure after full consideration of expected operations, maintenance and capital costs. The Board
sets water rates and charges at a level that it determines is sufficient to pay all Operation and Maintenance Costs
of the Water System, to make debt service payments and to maintain appropriate reserves for the Water System.
The Board is expected to consider a comprehensive rate plan for the Water System and the Wastewater
System (the “Rate Plan”), including Water System rate increases effective April 1, 2021 (4%), January 1, 2022
(3%), and January 1, 2023 (3%). As these rate increases will not be considered at a public hearing until March
of 2021, a more conservative approach of 1% revenue growth per year was used for developing projected
operating results which are set forth under the caption “FINANCIAL INFORMATION—Projected Operating
Results and Debt Service Coverage”. There can be no assurance that Water System rates will be increased in
accordance with the Rate Plan, but in the event the Board does adopt such rate increases as proposed, Water
System operating results could be significantly different from the projections in this Official Statement.
The District is subject to certain covenants with respect to the 2020 Bonds which require that, to the
fullest extent permitted by law, the District will fix and prescribe, at the commencement of each Fiscal Year,
rates and charges for the Water Service provided by the Water System which will be at least sufficient to yield
during each Fiscal Year Net Water System Revenues equal to 120% of Debt Service for such Fiscal Year
allocable to the Water System. See the caption “SECURITY FOR THE 2020 BONDS—Rate Covenant.”
Adopted Rates and Charges. Water System Revenues of the District are derived from three sources:
(a) water sales (consumption charges); (b) system charges (meter availability charges); and (c) connection fees.
(a) Consumption Charges. The District imposes consumption charges based on individualized
water budgets for each customer. A “water budget” refers to the allocation of a reasonable amount of water
for a customer’s monthly water usage based on such customer’s needs. Water budgets are appropriate for
most classes of customers because irrigable area can be measured and an appropriate allocation can be
determined.
Water rates for single family residential customers include an indoor and an outdoor water budget
Indoor water budgets are based on: (1) the number of persons in a household (assumed to be 4 persons, with
variances available for larger households); (2) a standard consumption rate of 55 GPCD in accordance with
recent State legislation that is discussed under the caption “—Recent Drought—State Actions;” and (3) the
number of days in the billing cycle (generally between 28 and 31 days). The outdoor water budget is
calculated based on: (1) the size of the irrigable landscape area per parcel; and (2) an adjusted
evapotranspiration factor.
Customers are billed on a tiered basis per hundred cubic feet of water (“HCF”) used in each billing
cycle. Tiers 1 (55 GPCD for indoor use) and 2 (outdoor use) reflect indoor and outdoor use within the water
budget, while Tier 3 reflects inefficient, wasteful and unsustainable use and is subject to a higher rate. Current
consumption charges are set forth below.
The standard consumption rate of 55 GPCD was temporarily raised to 75 GPCD through June 30, 2020
in light of the COVID-19 outbreak and related stay-at-home orders. See the caption “THE DISTRICT—
COVID-19 Outbreak.”]
EAST VALLEY WATER DISTRICT
Consumption Charges per HCF of Water Used
24
Tier Current Rate
Projected Rate
as of February 1,
2021(1)
Projected Rate as
of January 1,
2022(1)
Projected Rate
as of January 1,
2023(1)
1 $1.83 $1.98 $2.06 $2.13
2 2.61 2.55 2.66 2.74
3 3.54 4.02 4.19 4.32
(1) The above-described rates are set forth in the Rate Plan and are scheduled to be considered by the Board in March 2021.
Although the projected operating results that are set forth herein assume the adoption of the above-described rates, can be no
assurance that the Board will approve such rates.
Source: District.
(b) System Charges. The District imposes the following fixed monthly water service charges based
on water meter size:
EAST VALLEY WATER DISTRICT
Fixed Monthly Water Service Charges
Meter Size Current Rate
Projected Rate as of
April 1, 2021(1)
Projected Rate as of
January 1, 2022(1)
Projected Rate as of
January 1, 2023(1)
5/8” $ 23.06 $ 23.95 $ 24.91 $ 25.66
3/4” 29.27 30.44 31.66 32.61
1” 41.71 43.41 45.15 46.51
1½” 72.81 75.83 78.87 81.24
2” 110.13 114.74 119.33 122.91
3” 228.30 237.96 247.48 254.91
4” 402.44 419.54 436.32 449.41
6” 819.14 854.03 888.20 914.85
8” 1,503.28 1,826.78 1,899.86 1,956.86
(1) The above-described rates are set forth in the Rate Plan and are scheduled to be considered by the Board in March 2021. The
projected operating results that are set forth herein do not assume the adoption of the above-described rates. Their adoption is
likely, but there can be no assurance that the Board will approve such rates.
Source: District.
(3) Connection Fees. Set forth below is a table of connection fees for residential, commercial and
landscape connections to the Water System. Additional charges apply in certain areas of the District’s service
area.
25
EAST VALLEY WATER DISTRICT
Water System Connection Fees
[DISTRICT TO UPDATE]
Meter Size
Installation
Charge(1) Capacity Charge
5/8” $ $ 4,819
3⁄4 7,228
1” 12,047
1/1⁄2” 24,094
2” 38,550
3” 77,100
4” 120,469
6” 240,939
8” 674,629
(1) Installation charges are estimated based on site specific construction conditions and requirements
Source: District Schedule of Rates and Charges.
The District currently expects that Water System connection fee revenues will continue at a modest
rate due to infill development. Two large projects being discussed with developers are not likely to complete
construction on new homes until 2025. See the captions “—Projected Water System Connections” and “—
Projected Water System Operating Results and Debt Service Coverage.”
Comparative Water Rates. Set forth below is a schedule of comparative water rates for the District and
water service providers located near the District. Information for agencies other than the District and Western
Municipal Water District is as of calendar year 2019, while information for the District and Western Municipal
Water District is as of the date of this Official Statement.
EAST VALLEY WATER DISTRICT
Comparative Water Rates
Water Service Provider
1” Meter Monthly
Fixed Charge Rate per HCF
City of Norco $64.26 $2.44
Western Municipal Water District 62.99 1.313(1)
Elsinore Valley Municipal Water District 46.08 2.34(2)
East Valley Water District 41.71 1.83(1)
City of Corona 36.09 2.10(2)
City of Riverside 28.69 1.19(3)
(1) Tier 1 rate.
(2) Block 1 indoor use rate.
(3) Summer rate in Tier 1 for first 9 units.
Source: District.
Collection Procedures
All charges for Water Service and Wastewater Service are billed on a consolidated basis each month.
If payment is not received 20 days after billing, a late charge of 1.5% of the unpaid balance will be assessed each
month until the unpaid balance has been paid in full. A shut-off notice is mailed out after 75 days for unpaid
balances that exceed $25.00. If payment is not received within 15 days of the mailed shut-off notice, service is
26
normally shut off as of the date specified on the notice, and service is not restored until all charges, including a
restoration charge, have been paid in full. The District notifies the County of unpaid amounts for inclusion on
property tax assessment rolls.
Write-offs for monthly Water Service and Wastewater Service occur once a year. As of June 30, 2020,
write-offs totaled approximately $5,213, reflecting both water and wastewater charges.
See the caption “THE DISTRICT—COVID-19 Outbreak” for a discussion of the suspension of water
shutoffs for the duration of the State-declared public health emergency.
Future Water System Improvements
The District projects capital improvements to the Water System of approximately $36,490,000 over the
current and next four Fiscal Years, including approximately $3,500,000 on Plant 134 treatment process
improvements and approximately $18,175,000 on a new surface water treatment plant at the east end of the
District. Applications for grants and low-interest financing from the State Revolving Fund are being prepared
for both of these projects. Other capital improvements are expected to be financed by Water System Revenues
remaining after payment of Parity Bonds and Contracts.
Projected Water Production
The following table shows water production of the District for the current and next four Fiscal Years,
as projected by the District.
EAST VALLEY WATER DISTRICT
Projected Water Production in Acre Feet
Fiscal
Year
Groundwater and
Surface Water
% Increase/
(Decrease) SBVMWD
% Increase/
(Decrease) Total
2021 16,539 800 17,339
2022
2023
2024
2025
Source: District.
27
Projected Water Sales
The following table shows water sales of the District for the current and next four Fiscal Years, as
projected by the District.
EAST VALLEY WATER DISTRICT
Projected Water Sales in Acre Feet(1)
Fiscal Year Water Sales
2021
2022
2023
2024
2025
(1) Differences between projected water sales and projected water production set forth under the caption “—Projected Water
Production” reflect projected Water System losses, evaporation, internal water use for District purposes, fire hydrant testing
and fire hydrant use in emergencies.
Source: District.
Projected Water System Connections
The following table shows billed connections to the Water System for the current and next four Fiscal
Years as projected by the District.
EAST VALLEY WATER DISTRICT
Projected Water System Connections
Fiscal Year
Single Family
Residential
Multi-Family
Residential Commercial Irrigation
Fire
Services Total
2021 19,905 475 696 332 258 21,666
2022 19,912 476 698 334 259 21,679
2023 19,919 476 700 336 259 21,690
2024 19,926 477 702 338 260 21,703
2025 19,933 477 704 340 260 21,714
Source: District.
Projected increases in connections reflect infill development activity within the District’s service area,
including the projected construction of new housing. In June 2020 the District completed the formation of a
community facilities district in connection with Highland Hills, a proposed 586 residential unit development.
The District does not project the completion of any of the Highland Hills units until 2025.
28
Projected Water Sales Revenues
The following table shows water sales and meter charge revenues of the Water System for the current
and next four Fiscal Years, as projected by the District.
EAST VALLEY WATER DISTRICT
Projected Water Sales Revenues
Fiscal
Year
Water Sales
Revenues
% Increase/
(Decrease)
2021 $26,139,000 2.3%
2022 26,942,000 3.1
2023 27,460,000 1.9
2024 27,627,000 0.6
2025 27,797,000 0.6
Source: District.
Projected water sales revenues assume average precipitation, projected development activity within the
District’s service area, including the projected construction of new housing, the projected Water System
connections set forth under the caption “—Projected Water System Connections” and adoption of a projected
rate increase in calendar year 2024 as described under the caption “—Water System Rates and Charges—
General.” See the caption “CERTAIN RISKS TO BONDHOLDERS—Accuracy of Assumptions.”
Historical Water System Operating Results and Debt Service Coverage
The following table is a summary of operating results of the Water System of the District for the last
five Fiscal Years. These results have been derived from the Financial Statements and audited financial
statements of the District for prior Fiscal Years but exclude certain non-cash items and include certain other
adjustments. The table has not been reviewed or audited by the Auditor.
29
EAST VALLEY WATER DISTRICT
Historical Water System Operating Results and Debt Service Coverage
Fiscal Year Ended June 30
2016 2017 2018 2019 2020(6)
OPERATING REVENUES:
Water department(1) $ 21,426,136 $ 24,514,461 $ 26,872,033 $ 25,549,956 __
OPERATING EXPENSES:
Water department 15,048,582 14,717,219 16,134,461 16,614,399
OPERATING INCOME: $ 6,377,554 $ 9,797,242 $ 10,737,572 $ 8,935,557
NON-OPERATING REVENUES:
Interest Income $ 106,755 $ 115,944 $ 220,093 $ 446,734
Capacity Charges(2) 184,387 302,874 241,043 310,946
Miscellaneous(3) 825,829 2,340,013 245,462 763,446
TOTAL NON-OPERATING REVENUES: $ 1,116,971 $ 2,758,831 $ 706,598 $ 1,521,126
NET REVENUES: $ 7,494,525 $ 12,556,073 $ 11,444,170 $ 10,456,683
DEBT SERVICE:
2010 Installment Purchase Agreement(4) $ 2,473,238 $ 2,476,913 $ 2,472,713 $ 2,464,213
2010 State Contract(5) 253,400 273,177 253,399 253,177
2013 Installment Purchase Agreement(4) 384,800 384,800 384,800 384,800
TOTAL DEBT SERVICE: $ 3,111,438 $ 3,134,890 $ 3,110,912 $ 3,102,190
NET REVENUES AVAILABLE AFTER
DEBT SERVICE:
$ 4,383,087
$ 9,421,184
$ 8,333,258
$ 7,354,493
COVERAGE: 2.41 4.01 3.68 3.37
(1) These numbers differ from the historical water sales revenues set forth under the caption “—Historical Water Sales Revenues”
because the above numbers include penalties and other revenues treated as operating revenues by the Auditor.
(2) Includes connection fees.
(3) Includes income from sale of assets, grants, settlement moneys and other miscellaneous revenues. Fiscal Year 2017 amount
reflects [___].
(4) Reflects payments on portion of obligation that is attributable to the Water System.
(5) Also includes debt service on other contracts with the SWRCB which matured prior to the date of this Official Statement.
(6) Reflects estimated actual Fiscal Year 2020 results. Unaudited and subject to change.
Source: District.
Projected Water System Operating Results and Debt Service Coverage
The estimated projected operating results of the Water System for the current and next four Fiscal Years
are set forth below, reflecting certain significant assumptions concerning future events and circumstances. The
financial forecast represents the estimate of projected financial results of the District based upon its judgment of
the most probable occurrence of certain future events. The projections of Water System Revenues reflect District
estimates of development within the District and the water rate increases set forth under the caption “—Water
System Rates and Charges—General.” All rate increases are subject to the notice, hearing and protest provisions
of Proposition 218 described under the caption “CONSTITUTIONAL LIMITATIONS ON APPROPRIATIONS
AND CHARGES—Proposition 218.” There can be no assurance that the Board will adopt additional rate
increases as currently projected.
The assumptions set forth herein, including in the footnotes to the chart below, are material in the
development of the financial projections of the District, and variations in the assumptions may produce
substantially different financial results. Actual operating results achieved during the projection period may vary
from those presented in the forecast and such variations may be material. See the caption “CERTAIN RISKS
TO BONDHOLDERS—Accuracy of Assumptions.”
30
EAST VALLEY WATER DISTRICT
Projected Water System Operating Results and Debt Service Coverage
Fiscal Year Ending June 30
2021(1) 2022 2023 2024 2025
OPERATING REVENUES:
Water department(2) $ 26,139,000 $ 26,942,000 $ 27,460,000 $ 27,627,000 $ 27,797,000
OPERATING EXPENSES:
Water department(3) 18,067,000 18,455,000 18,674,000 18,802,000 18,931,000
OPERATING INCOME: $ 8,0720,00 $ 8,487,000 $ 8,786,000 $ 8,825,000 $ 8,866,000
NON-OPERATING REVENUES:
Interest Income(4) $ 225,000 $ 211,997 $ 226,797 $ 243,435 $ 258,210
Capacity Charges(5)
Miscellaneous(6) 34,000 50,000 50,000 50,000 50,000
TOTAL NON-OPERATING REVENUES: $ 259,000 $ 261,997 $ 276,797 $ 293,435 $ 308,210
NET REVENUES: $ 8,331,000 $ 8,748,997 $ 9,062,797 $ 9,118,435 $ 9,174,210
DEBT SERVICE:
2010 Installment Purchase Agreement(7) $ 2,073,831 $ $ $ $
2010 State Contract 233,400 233,400 233,400 233,400 233,400
2013 Installment Purchase Agreement(8) 192,400
2018 State Contract(9)
2020A Bonds(9)* 32,280 1,553,261 1,557,133 1,556,368 1,550,154
2020B Bonds(9)* 9,455 370,415 369,463 368,353 370,332
TOTAL DEBT SERVICE*: $ 2,541,366 $ 2,157,076 $ 2,159,995 $ 2,158,121 $ 2,153,886
NET REVENUES AVAILABLE AFTER
DEBT SERVICE*:
$ 5,789,634
$ 6,591,921
$ 6,902,802
$ 6,960,314
$ 7,020,324
COVERAGE*: 3.28 4.06 4.20 4.23 4.26
(1) Reflects Fiscal Year 2021 adopted budget. See the caption “THE DISTRICT—Budget Process.”
(2) Reflects District estimates of development within the District and adopted and projected water rate increases described under
the caption “—Water System Rates and Charges—General.” All water rate increases are subject to the notice, hearing and
protest provisions of Proposition 218 described under the caption “CONSTITUTIONAL LIMITATIONS ON
APPROPRIATIONS AND CHARGES—Proposition 218.” There can be no assurance that the Board will adopt additional
rate increases as currently projected.
(3) Projected to increase by approximately [__]% per annum.
(4) Reflects projected earnings of 1.0% per annum on District investments.
(5) Does not include capacity charges, development impact fees and connection fees. Reflects District projections of development
within the District. See the caption “—Projected Water System Connections.”
(6) No projected to increase .
(7) This obligation is expected to be refunded from proceeds of the 2020A Bonds. See the caption “PLAN OF FINANCE—The
Refunding Plan—2010 Bonds.”
(8) This obligation is expected to be refunded from proceeds of the 2020B Bonds. See the caption “PLAN OF FINANCE—The
Refunding Plan—2013 Bonds.”
(9) Reflects payments on portion of obligation that is attributable to the Water System.
Source: District.
* Preliminary; subject to change.
31
THE WASTEWATER SYSTEM OF THE DISTRICT
The following is a description of the Wastewater System of the District. The District expects that
approximately 4.4% of the payments on the 2020 Bonds will be attributable to the Wastewater System and
payable from Net Wastewater System Revenues, unless Parity Bonds or Contracts are issued or delivered, as
applicable. The District does not anticipate that Net Wastewater System Revenues will serve as a significant
source of moneys used to pay the 2020 Bonds beyond the allocated percentage described in the preceding
sentence.
General
In Fiscal Year 2020, the District provided Wastewater Service to approximately 18,598 residential
connections, 465 multi-family residential connections and 616 non-residential connections within the District’s
service area. The District’s Wastewater System consists of approximately 214 miles of sewer mains. Since
commencing wastewater services in 1964, the District has operated a wastewater collection and transmission
system but has not owned or operated a wastewater treatment plant. Instead, the District’s Wastewater System
is served by a network of gravity mains that collect raw sewage and deliver it to main lines leading to the San
Bernardino Regional Wastewater Treatment Plant (the “Regional Plant”), which is located in the City of San
Bernardino. See the caption “—Wastewater Treatment Facilities.”
The District is currently constructing the SNRC, a District-owned wastewater treatment plant that is
expected to commence operations in November 2021. When completed, the SNRC will enable the District to
treat wastewater from the District’s Wastewater System customers without reliance on the City’s Regional Plant.
See the caption “—Sterling Natural Resource Center.”
Wastewater Treatment Facilities
The Regional Plant is operated by the City of San Bernardino Municipal Water Department
(“SBMWD”). SBMWD was created as a municipal utility by Article 9 of the City Charter on January 6, 1905.
SBMWD is governed by a Board of Water Commissioners that is separate from the City Council of the City and
appointed by the Mayor, subject to confirmation by the City Council of the City. SBMWD maintains separate
accounts from the City.
Wastewater collected by the District is treated at the Regional Plant pursuant to the agreement that is
described under the caption “—JPA Agreement.”
The Regional Plant, at which primary and secondary wastewater treatment is undertaken, has a capacity
of 33 mgd and is operated pursuant to the terms of a National Pollutant Discharge Elimination System
(“NPDES”) permit issued by the State Department of Environmental Protection, Santa Ana Regional Water
Quality Control Board (the “Regional Board”). The Regional Board administers NPDES regulations
promulgated by the United States Environmental Protection Agency and Division 7 of the State Water Code and
regulations thereunder. The City’s present NPDES permit for the Regional Plant, Waste Discharge Order No.
R8-2017-0049 and NPDES Permit No. CA 0105392, became effective on December 15, 2017 and expires on
December 31, 2022.
In Fiscal Year 2020 the District delivered an average of 5.73 mgd of wastewater to the Regional Plant
for treatment and disposal.
SBMWD and the City face various challenges in the continued treatment of wastewater. A description
of these challenges as well as a variety of other operating information with respect to SBMWD and the City is
included in certain disclosure documents prepared by the City. The City has prepared certain publicly available
documents and entered into certain continuing disclosure agreements pursuant to which it is contractually
obligated for the benefit of owners of certain of its outstanding obligations to file annual reports, notices of
32
enumerated events as defined under Rule 15c2-12 and annual audited financial statements with EMMA. None
of such information is incorporated into this Official Statement by reference thereto, and the District makes no
representation as to the accuracy or completeness of such information. NEITHER SBMWD NOR THE CITY
HAVE ENTERED INTO ANY CONTRACTUAL COMMITMENT WITH THE DISTRICT, THE TRUSTEE
OR THE OWNERS OF THE 2020 BONDS TO PROVIDE ANY INFORMATION TO THE DISTRICT OR
THE OWNERS OF THE 2020 BONDS.
NEITHER SBMWD NOR THE CITY HAVE REVIEWED THIS OFFICIAL STATEMENT OR
MADE REPRESENTATIONS OR WARRANTIES WITH RESPECT TO THE ACCURACY OR
COMPLETENESS OF THE INFORMATION CONTAINED OR INCORPORATED HEREIN,
INCLUDING INFORMATION WITH REGARD TO SBMWD OR THE CITY. NEITHER SBMWD
NOR THE CITY IS CONTRACTUALLY OBLIGATED, AND NEITHER SBVMWD NOR DWR HAVE
UNDERTAKEN, TO UPDATE SUCH INFORMATION FOR THE BENEFIT OF THE DISTRICT, OR
THE OWNERS OF THE 2020 BONDS UNDER RULE 15c2-12.
Wastewater System Revenues consist of system charges and treatment charges. The Wastewater
System Revenues collected by the District which are attributable to wastewater treatment are generally offset by
payments made by the District to SBMWD for treating wastewater produced by the District’s customers. See
the caption “—Wastewater System Rates and Charges—Collection Procedures.” The District’s practice has
been to cause any changes in SBMWD’s wastewater treatment rates to the District to be passed through to
District’s customers, although the timing and amount of rate changes by the two entities may vary. The District
is required to comply with the notice, hearing and majority protest provisions of Proposition 218 of the State
Constitution in raising Wastewater System rates and charges. At the District’s most recent hearing to consider
wastewater rates, the District adopted a pass-through provision with respect to City treatment rates, whereby the
District can automatically adopt City rates without having to hold a public hearing. See the captions “—
Wastewater System Rates and Charges” and “CONSTITUTIONAL LIMITATIONS ON APPROPRIATIONS
AND CHARGES—Proposition 218.”
JPA Agreement
In January 1958, the District, the City, and the City of Loma Linda entered into a Joint Powers
Agreement (as amended, the “JPA Agreement”) for the operation and expansion of the Regional Plant and other
facilities. Under the JPA Agreement, SBMWD is responsible for setting wastewater treatment rates at levels
that are sufficient to operate and maintain the Regional Plant and the District agrees to adopt specified rates and
collection fees charged to District customers in amounts that are sufficient to discharge District obligations to
the City under the JPA Agreement. See the caption “—Wastewater System Rates and Charges—General” for a
discussion of the District’s pass-through to customers of fees charged by SBMWD under the JPA Agreement.
The District will continue to make monthly payments to SBMWD under the JPA Agreement until the
Sterling Natural Resource Center is completed. Payments to SBMWD are currently made on a monthly basis
and constitute Operation and Maintenance Costs of the Wastewater System.
Sterling Natural Resource Center
The District is currently constructing the SNRC, a tertiary wastewater treatment plant that is expected
to commence operations in November 2021. The SNRC will be located on North Del Rosa Drive between East
5th Street and East 6th Street in the City of Highland near the San Bernardino International Airport. When
completed, the SNRC will enable the District to treat up to 6 mgd of wastewater from the District’s Wastewater
System customers without reliance on the Regional Plant. Future phases of the project are expected to increase
the treatment capacity of the SNRC to up to 10 mgd, which can accommodate anticipated future development
within the District’s service area. Expansion of the SNRC will occur when necessitated by large development
projects and Capacity Fees are available to pay for the expansion.
33
The SNRC includes new interceptor mains to divert wastewater flows, tertiary wastewater treatment
facilities (including advanced membrane bio-reactor technology), administration facilities, anaerobic solid waste
digesters and a recycled water pipeline to deliver treated effluent. Treated wastewater flow which meets recycled
water standards under Title 22 of the California Code of Regulations will be recharged into existing recharge
ponds overlying the Basin pursuant to agreements between the District and the owners of the recharge ponds.
Water that is recharged into the Basin can later be extracted from District wells, and, after treatment to potable
water standards, delivered to Water System customers, a procedure known as indirect potable reuse.
The District currently estimates that the total construction cost of the SNRC (not including future
phases) will be approximately $181 million. The SNRC is primarily being funded from proceeds of the 2018
State Contract. See the caption “THE DISTRICT—Outstanding Parity Obligations—2018 State Contract.”
Other funding sources include a contribution from the Watermaster (as described under the caption “THE
WATER SYSTEM OF THE DISTRICT—Water Supply—Groundwater”) toward the costs of the recycled water
pipeline that is described in the prior paragraph, certain sales tax exclusions and rebates from the District’s
electric service provider and District contributions of development impact fees and reserves.
As discussed under the caption “THE WATER SYSTEM OF THE DISTRICT—Water Supply—Basin
Recharge Activities,” the SNRC’s recharge process constitutes a drought-proof means of ensuring the long-term
viability of the Basin while providing a locally controlled water supply and reducing the District’s dependence
on more costly imported water.
In addition, the District believes that the SNRC will provide a long-term benefit to the Wastewater
System by reducing (and eventually eliminating) the District’s reliance on the Regional Plant. In particular, the
District believes that the costs of continuing to pay SBMWD to treat all Wastewater System flows would exceed
the costs of operating the SNRC. According to an October 2014 feasibility study related to the SNRC,
SBMWD’s costs of operating the Regional Plant is expected to increase by approximately 24% over the 20 years
following 2014, while the District’s costs of operating the SNRC are expected to increase by approximately 7%
over such period.
[FOR JEAN C – DISCUSSION OF SNRC LITIGATION NEEDED REMOVE]
[Language is fine] [The projections of Wastewater System Operation and Maintenance Costs set forth
under the caption “—Projected Wastewater System Operating Results and Debt Service Coverage” reflect the
commencement of operations at the SNRC and a reduction in payments to SBMWD for wastewater treatment
costs beginning in Fiscal Year 2022.]
34
Historical Wastewater System Connections
The following table shows historical billed connections to the Wastewater System for the five most
recent Fiscal Years:
EAST VALLEY WATER DISTRICT
Historical Wastewater System Connections
Fiscal Year
Single Family
Residential
Multi-Family
Residential Commercial Total
% Increase/
(Decrease)
2016 18,480 453 591 19,524 N/A%
2017 18,526 456 594 19,576 (0.2)
2018 18,556 459 597 19,612 0.0
2019 18,583 464 610 19,657 0.0
2020 18,598 465 616 19,679 0.0
Source: District.
Historical Wastewater System Daily Average Flow
The following table shows the District’s historical share of the volume of wastewater treated by
SBMWD for the five most recent Fiscal Years.
EAST VALLEY WATER DISTRICT
Historical Wastewater System Usage
Fiscal Year Daily Average Flow (mgd) % Increase/(Decrease)
2016 5.94 N/A%
2017 5.96 0.3
2018 5.89 (1.2)
2019 5.73 (2.7)
2020
Source: District.
Wastewater System usage is affected by a number of factors, including but not limited to the number of
connections to the Wastewater System and water conservation efforts.
Historical Wastewater System Service Charge Revenues
The following table shows historical service charge revenues of the Wastewater System for the five
most recent Fiscal Years.
35
EAST VALLEY WATER DISTRICT
Historical Wastewater System Service Charge Revenues(1)
Fiscal Year
Wastewater System Service
Charge Revenues
% Increase/
(Decrease)
2016 $11,452,249 N/A%
2017 12,831,469 12.0
2018 13,366,594 4.2
2019 13,236,682 (1.0)
2020(2)
(1) The amounts in the table differ from historical operating revenues set forth under the caption “—Historical Wastewater System
Operating Results and Debt Service Coverage” because the above amounts exclude gain on disposal of assets, miscellaneous
revenues and other operating revenues.
(2) Reflects estimated actual Fiscal Year 2020 results. Unaudited and subject to change.
Source: District.
Largest Wastewater System Customers
The following table sets forth the ten largest customers of the Wastewater System of the District as of
June 30, 2020, as determined by the amount of their respective payments.
EAST VALLEY WATER DISTRICT
Largest Wastewater System Customers
Customer Wastewater Service
Charge Revenues % of Total
San Manuel Indian/Bingo Casino $ 352,130 %
Patton State Hospital 335,045
San Bernardino City USD 236,774
Village Lakes HOA 146,810
Tuscany Apartments 131,693
Woodman Realty Inc. 97,262
Victoria Village Apartments 88,895
Safety Investment 76,488
Highland Palms HOA 67,950
Valencia Lea MHP 67,071
TOP TEN TOTAL $ 1,600,118 %
TOTAL SYSTEM $ 100.0%
Source: District.
These customers accounted for approximately 12.6% of Wastewater System Revenues from wastewater
service charges for Fiscal Year 2020. See the caption “THE WATER SYSTEM OF THE DISTRICT—Largest
Water System Customers” for information with respect to the largest Water System customers of the District.
Wastewater System Rates and Charges
General. The Board has rate setting authority as provided under the State Water Code and the District’s
rates are not subject to review or approval by the California Public Utilities Commission or any other agency.
See the caption “CONSTITUTIONAL LIMITATIONS ON APPROPRIATIONS AND CHARGES” for certain
36
limitations of the rate setting authority of the Board. The District annually determines the adequacy of the
Wastewater System rate structure after full consideration of expected operations, maintenance and capital costs.
Prior to 1981, the District paid SBMWD an amount equal to 92% of SBMWD’s established wastewater
service rate for treatment of the District’s wastewater flows, In 1981, the JPA Agreement was amended to
provide that the District and SBMWD will adopt a uniform regional wastewater service rate. Pursuant to State
Government Code Section 53756, since December 2012, the District may automatically pass through to District
customers increases in wastewater service charges imposed by SBMWD. The Board has adopted a policy with
respect to such pass-throughs under which the pass-throughs can be adopted without further public hearings.
See the caption “—JPA Agreement.”
The Board is expected to consider the Rate Plan, including Wastewater System rate increases effective
February 1, 2021, in January 2021. The projected operating results which are set forth under the caption
“FINANCIAL INFORMATION—Projected Operating Results and Debt Service Coverage” assume Wastewater
System rate increases of approximately [__]% above adopted calendar year 2020 rates in accordance with the
Rate Plan, and additional rate increases of approximately [__]% per annum in 2022 through 2025, which have
not yet been adopted by the Board. There can be no assurance that Wastewater System rates will be increased
as projected herein. In the event that the Board does not adopt such rate increases as currently contemplated,
Wastewater System operating results could be materially different from the projections in this Official Statement.
The District is subject to certain covenants with respect to the 2020 Bonds which require that, to the
fullest extent permitted by law, the District will fix and prescribe, at the commencement of each Fiscal Year,
rates and charges for the Wastewater Service provided by the Wastewater System which will be at least sufficient
to yield during each Fiscal Year Net Wastewater System Revenues equal to 120% of Debt Service for such
Fiscal Year allocable to the Wastewater System. See the caption “SECURITY FOR THE 2020 BONDS—Rate
Covenant.”
Adopted Rates and Charges. Wastewater System Revenues of the District are derived from three
sources: (a) wastewater service charges (consumption charges), which are applicable to commercial and multi-
family residential customers only; (b) system charges (fixed charges); and (c) connection fees.
(a) Consumption Charges. Current consumption charges are set forth below. Single family
residential customers do not pay consumption charges.
37
EAST VALLEY WATER DISTRICT
Volumetric Charges Per Hundred Cubic Feet of Water Usage
Customer Type Current Rate Projected Rate as of
April 1, 2021(1)
Multi-Family Residential $2.08 $2.14
Commercial/Retail 3.10 3.16
Restaurants/Lounges 3.83 3.89
Laundromats 2.38 2.44
Dry Cleaners 3.10 3.16
Schools/Churches 1.88 1.94
Governments/Municipal 2.38 2.44
Convalescent Homes 2.18 2.24
Hotels 3.83 3.89
Office Buildings/Motels 2.38 2.44
Auto Repair/Service Station 2.13 2.19
Car Wash 2.13 ]2.19
(1) The above-described rates are set forth in the Rate Plan and are scheduled to be considered by the Board in March 2021. The
projected operating results that are set forth herein do not assume the adoption of the above-described rates. Though
likely,,there can be no assurance that the Board will approve such rates.
Source: District.
(b) System Charges. The District imposes the following fixed monthly wastewater service charges
based on customer type.
Customer Type Current Rate Projected Rate
as of April 1, 2021(2)
Single Family Residential $36.91(1) $38.45
Multi-Family Residential 5.87 6.26
Commercial 7.42 7.81
(1) Rate is per Equivalent Dwelling Unit, an approximation of wastewater flow for each single family residence.
(2) The above-described rates are set forth in the Rate Plan and are scheduled to be considered by the Board in March 2021. The
projected operating results that are set forth herein do not assume the adoption of the above-described rates. Though
likely,,there can be no assurance that the Board will approve such rates..
Source: District.
(3) Connection Fees. Since the activation of the District’s Wastewater treatment authority by the
Local Agency Formation Commission (LAFCO) in June 2018, new Wastewater System customers no longer are
required to pay separate connection fees to the District (collection system) and SBMWD (treatment). Instead,
new customers now pay combined connection fees for both wastewater collection and treatment services to the
District. Set forth below is a table of connection fees payable to the District.
38
EAST VALLEY WATER DISTRICT
Wastewater System Connection Fees
[DISTRICT TO UPDATE] - DONE
Fee Type Description Fee per Equivalent
Dwelling Unit
Permit Fee Cost to review, approve and process
connection requests
25
Inspection Fee Cost to inspect construction of lateral
pipeline and connection to system
100
Sewer Capacity Fee Cost of connection to system and
incremental portion of capacity that will be
used by the new connection
7,560
Total 7,685]
Source: District.
The District currently expects that Wastewater System connection fee revenues will increase as a result
of projected development within the District. See the captions “—Projected Wastewater System Connections”
and “—Projected Wastewater System Operating Results and Debt Service Coverage.”
Comparative Wastewater Rates. Set forth below is a schedule of comparative wastewater service rates
for a single family residential customer of the District and water service providers located near the District.
Information for agencies other than the District and Western Municipal Water District is as of calendar year
2019, while information for the District and Western Municipal Water District is as of the date of this Official
Statement.
EAST VALLEY WATER DISTRICT
Comparative Wastewater Rates
Wastewater Service Provider Average Monthly Charge
Western Municipal Water District $71.03(1)
City of Norco 51.00
Western Municipal Water District 50.40(2)
City of Lake Elsinore 45.87(3)
City of Corona 45.60
Western Municipal Water District 42.58(4)
East Valley Water District 36.91
City of Perris 34.50(5)
(1) March Air Reserve Base area.
(2) La Sierra area.
(3) Estimated based on $1.15 daily rate.
(4) Murrieta area.
(5) Estimated based on $1.15 daily rate.
Source: City.
Collection Procedures
See the caption “THE WATER SYSTEM OF THE DISTRICT—Collection Procedures” for a
description of consolidated Water System and Wastewater System billing and collection procedures.
39
A portion of the wastewater charges collected by the District is attributable to the costs of wastewater
treatment at the Regional Plant owned by SBMWD (the “SBMWD Portion”). The District remits the SBMWD
portion to SBMWD monthly. The SBMWD Portion is reflected in Wastewater System Revenues set forth in
this Official Statement both as an operating revenue and as an operating expense in equal amounts.
See the caption “THE DISTRICT—COVID-19 Outbreak” for a discussion of the suspension of
wastewater service shutoffs for the duration of the State-declared public health emergency.
Future Wastewater System Improvements
The District projects capital improvements to the Wastewater System of approximately $[___] over the
current and next four Fiscal Year, excluding the SNRC (as described under the caption “—Sterling Natural
Resource Center”) and [___]. The District currently projects funding such capital improvements through a
combination of grants and Revenues remaining after payment of debt service on District obligations. [The
District does not anticipate entering into any additional Parity Bonds or Contracts in the current or next four
Fiscal Years to finance such capital improvements.]
Projected Wastewater System Connections
The following table shows billed connections to the Wastewater System for the current and next four
Fiscal Years, as projected by the District.
EAST VALLEY WATER DISTRICT
Projected Wastewater System Connections
Fiscal Year Residential Commercial Total
% Increase/
(Decrease)
2021 %
2022
2023
2024
2025 __
Source: District.
Projected increases in connections reflect development activity within the District’s service area,
including the projected construction of new housing.
Projected Wastewater System Daily Average Flow
The following table shows the District’s projected share of the volume of wastewater treated by
SBMWD [and, beginning in Fiscal Year 2022, the projected volume of wastewater treated at the SNRC] for the
current and next four Fiscal Years.
40
EAST VALLEY WATER DISTRICT
Projected Wastewater System Usage
Fiscal Year Daily Average Flow (mgd) % Increase/(Decrease)
2021 5.76 0.1%
2022 5.77 0.1
2023 5.78 0.1
2024 5.79 0.1
2025 5.80 0.1
Source: District.
Wastewater System usage will be affected by a number of factors, including connections to the
Wastewater System and water conservation efforts by Wastewater System customers. See the caption “—
Projected Wastewater System Connections.”
Projected Wastewater System Service Charge Revenues
The following table shows service charge revenues, i.e., charges to customers, of the Wastewater System
for the current and next four Fiscal Years, as projected by the District. These amounts do not include other new
operating revenue streams that will be collected from outside agencies and / or companies when the SNRC is
brought online in November 2021. Those additional revenue streams are discussed under “Projected Wastewater
System Operating Results and Debt Service Coverage”.
EAST VALLEY WATER DISTRICT
Projected Wastewater System Service Charge Revenues
Fiscal Year
Wastewater System Service
Charge Revenues
% Increase/
(Decrease)
2021 $13,467,000 -0.7%
2022 13,684,000 1.6
2023 14,266,000 4.3
2024 14,355,000 0.6
2025 __14,459,000 0.7
Source: District.
Wastewater System service charge revenues are affected by a number of factors, including projected
development activity within the District’s service area, including the projected construction of new housing, the
projected connections to the Wastewater System set forth under the caption “—Projected Wastewater System
Connections” and adoption of projected rate increases in calendar year 2022 through 2024 as described under
the caption “—Wastewater System Rates and Charges—General.” See the caption “CERTAIN RISKS TO
BONDHOLDERS—Accuracy of Assumptions.”
Historical Wastewater System Operating Results and Debt Service Coverage
The following table is a summary of operating results of the Wastewater System of the District for the
last five Fiscal Years. These results have been derived from the Financial Statements and audited financial
statements of the District for prior Fiscal Years but exclude certain non-cash items and include certain other
adjustments. The table has not been reviewed or audited by the Auditor.
41
SBMWD’s charges to the District for the treatment of wastewater at the Regional Plant have typically
accounted for between [60% and 68]% of the Wastewater System’s Operation and Maintenance Costs. See the
caption “CERTAIN RISKS TO BONDHOLDERS—System Expenses.”
EAST VALLEY WATER DISTRICT
Historical Wastewater System Operating Results and Debt Service Coverage
Fiscal Year Ended June 30
2016 2017 2018 2019 2020(5)
OPERATING REVENUES:
Wastewater department(1) $ 11,597,946 $ 12,934,088 $ 13,419,092 $ 13,759,342 $13,565,000
OPERATING EXPENSES:
Wastewater department 10,463,081 11,064,894 12,817,762 12,603,440 0
OPERATING INCOME: $ 1,134,865 $ 1,869,194 $ 601,330 $ 1,155,902
NON-OPERATING REVENUES:
Interest Income $ 40,119 $ 19,966 $ 42,825 $ 124,815 0
Capacity Charges(2) 452,330 170,290 283,961 300,727 0
Miscellaneous(3) 4,977 34,264 13,098 249,086 0
TOTAL NON-OPERATING REVENUES $ 497,426 $ 224,520 $ 339,884 $ 674,628 0
NET REVENUES: $ 1,632,291 $ 2,093,714 $ 941,214 $ 1,830,530 0
DEBT SERVICE:
2010 Installment Purchase Agreement(4) $ 115,450 $ 116,300 $ 112,025 $ 112,150 0
2013 Installment Purchase Agreement(4) 200,325 200,325 200,325 200,325 0
TOTAL DEBT SERVICE: $ 315,775 $ 316,625 $ 312,350 $ 312,475 0
NET REVENUES AVAILABLE AFTER
DEBT SERVICE:
$ 1,316,516
$ 1,777,089
$ 628,864
$ 1,518,055
0
COVERAGE: 5.17 6.61 3.01 5.86
(1) The above amounts differ from historical Wastewater System service charge revenues set forth under the caption “—Historical
Wastewater System Service Charge Revenues” because the above amounts include gain on disposal of assets, miscellaneous
revenues and other operating revenues.
(2) Includes connection fees.
(3) Includes income from sale of assets, grants, settlement moneys and other miscellaneous revenues.
(4) Reflects payments on portion of obligation that is attributable to the Wastewater System.
(5) Reflects estimated actual Fiscal Year 2020 results. Unaudited and subject to change.
Source: District.
Projected Wastewater System Operating Results and Debt Service Coverage
The estimated projected operating results for the Wastewater System for the current and next four Fiscal
Years are set forth below, reflecting certain significant assumptions concerning future events and circumstances,
in particular the commencement of operations of the SNRC in fiscal year 2022. The financial forecast represents
the estimate of projected financial results of the District based upon its judgment of the most probable occurrence
of certain important future events. The projections of Wastewater System Revenues reflect District estimates of
development within the District, the wastewater service charge increases set forth under the caption “—
Wastewater System Rates and Charges—General”, and new revenue streams that will become available to the
District with the SNRC’s anaerobic digestors and their capacity for power generation. The new revenue streams
included in the projections beginning with the first full year of SNRC operations include:
• Local Resource Investment Program – the sale of recycled water to the groundwater basin
watermaster at $173 per acre foot - $1,038,000 annually
42
• Tipping Fees – charged to food waste haulers for discharging waste into SNRC digesters –
33.8 million gallons at $.08 per gallon for $2,704,000 annually
• SB 1122 Power Sales – after using power generated by SNRC digesters to power all operations
at the SNRC, the District anticipates being able to sell 750 kwh back to the Edison grid at $.127
per kwh for annual revenue of $834,390. A two-way interconnection with Edison is being
installed for this purpose.
Rate increases mentioned above are subject to the notice, hearing and protest provisions of Proposition
218 described under the caption “CONSTITUTIONAL LIMITATIONS ON APPROPRIATIONS AND
CHARGES—Proposition 218.” There can be no assurance that the Board will adopt additional rate increases
as currently projected.
The assumptions set forth herein, including in the footnotes to the chart below, are material in the
development of the financial projections of the District, and variations in the assumptions may produce
substantially different financial results. Actual operating results achieved during the projection period may vary
from those presented in the forecast and such variations may be material. See the caption “CERTAIN RISKS
TO BONDHOLDERS—Accuracy of Assumptions.”
EAST VALLEY WATER DISTRICT
Projected Wastewater System Operating Results and Debt Service Coverage
Fiscal Year Ending June 30
2021(1) 2022 2023 2024 2025
OPERATING REVENUES:
Wastewater department(2) $13,437,000 $15,829,000 $ 21,831,000 $21,935,000 $21,959,000
OPERATING EXPENSES:
Wastewater department(3) 12,324,000 11,524,000 12,338,000 12,509,700 12,688,000
OPERATING INCOME: $ 1,113,000 $4,305,000 $9,493,000 $9,425,300 $9,271,000
NON-OPERATING REVENUES:
Interest Income(4) $ 30,000 $ 61,389 $ 167,543 $ 184,719 $ 219,653
Capacity Charges(5) 0 0
Miscellaneous(6) 0 0
TOTAL NON-OPERATING REVENUES $ 30,000 $ 61,389 $ 167,543 $ 184,719 $ 219,653
NET REVENUES: $ 1,143,000 $ 4,366,389 $ 9,660,543 $ 9,610,019 $ 9,490,653
DEBT SERVICE:
2010 Installment Purchase Agreement(7) $ 56,100 $ $ $ $
2013 Installment Purchase Agreement(8) 100,163
2018 State Contract(9) 0 6,819,000 6,819,000
2020A Bonds(9)* 1,486 71,489 71,667 71,632 71,346
2020B Bonds(9)* 4,936 193,383 192,885 192,306 192,339
TOTAL DEBT SERVICE*: $ 162,684 $ 264,872 $ 264,553 $ 7,082,938 $ 7,083,685
NET REVENUES AVAILABLE AFTER
DEBT SERVICE*:
$ 980,316
$ 4,101,517
$ 9,395,990
$ 2,527,081
$ 2,406,968
COVERAGE*: 7.03 16,.48 36,.52 1,36 1.34
(1) Reflects Fiscal Year 2021 adopted budget. See the caption “THE DISTRICT—Budget Process.”
(2) Reflects District estimates of development within the District and adopted and projected wastewater service rate increases
described under the caption “—Wastewater System Rates and Charges—General.” All wastewater service rate increases are
subject to the notice, hearing and protest provisions of Proposition 218 described under the caption “CONSTITUTIONAL
* Preliminary; subject to change.
43
LIMITATIONS ON APPROPRIATIONS AND CHARGES—Proposition 218.” There can be no assurance that the Board
will adopt additional rate increases as currently projected.
(3) Reflects commencement of operations at the SNRC in Fiscal Year 20[22]. See the caption “—Sterling Natural Resource
Center.”
(4) Reflects projected earnings of 1.0% per annum on District investments.
(5) Includes capacity charges, development impact fees and connection fees. Reflects District projections of development within
the District. See the caption “—Projected Wastewater System Connections.”
(6) Projected to increase approximately [__]% per annum.
(7) This obligation is expected to be refunded from proceeds of the 2020A Bonds. See the caption “PLAN OF FINANCE—The
Refunding Plan—2010 Bonds.”
(8) This obligation is expected to be refunded from proceeds of the 2020B Bonds. See the caption “PLAN OF FINANCE—The
Refunding Plan—2013 Bonds.”
(9) Reflects payments on portion of obligation that is attributable to the Wastewater System.
Source: District.
FINANCIAL INFORMATION OF THE DISTRICT
Historical Operating Results and Debt Service Coverage
The following table is a summary of operating results of the District for the last five Fiscal Years. These
results have been derived from the Financial Statements and audited financial statements of the District for prior
Fiscal Years but exclude certain non-cash items and include certain other adjustments. The table has not been
reviewed or audited by the Auditor.
44
EAST VALLEY WATER DISTRICT
Historical Operating Results and Debt Service Coverage
Fiscal Year Ended June 30
2016 2017 2018 2019 2020(5)
OPERATING REVENUES:
Water department(1) $ 21,426,136 $ 24,514,461 $ 26,872,033 $ 25,549,956
Wastewater department(2) 11,597,946 12,934,088 13,419,092 13,759,342
TOTAL OPERATING REVENUES: $ 33,024,082 $ 37,448,549 $ 40,291,125 $ 39,309,298
OPERATING EXPENSES:
Water department $ 15,048,582 $ 14,717,219 $ 16,134,461 $ 16,614,399
Wastewater department 10,463,081 11,064,894 12,817,762 12,603,440
TOTAL OPERATING EXPENSES: $ 25,511,663 $ 25,782,113 $ 28,952,223 $ 29,217,839
OPERATING INCOME: $ 7,512,419 $ 11,666,436 $ 11,338,902 $ 10,091,459
NON-OPERATING REVENUES:
Water department(3) $ 1,116,971 $ 2,758,831 $ 706,598 $ 1,521,126
Wastewater department(3) 497,426 224,520 339,884 674,628
TOTAL NON-OPERATING REVENUES: $ 1,614,397 $ 2,983,351 $ 1,046,482 $ 2,195,754
NET REVENUES: $ 9,126,816 $ 14,649,787 $ 12,385,384 $ 12,287,213
DEBT SERVICE:
2010 Installment Purchase Agreement $ 2,588,688 $ 2,593,213 $ 2,584,738 $ 2,576,363
2010 State Contract(4) 253,400 273,177 253,399 253,177
2013 Installment Purchase Agreement 585,125 585,125 585,125 585,125
TOTAL DEBT SERVICE: $ 3,427,213 $ 3,451,515 $ 3,423,262 $ 3,414,665
NET REVENUES AVAILABLE AFTER
DEBT SERVICE:
$ 5,699,603
$ 11,198,272
$ 8,962,122
$ 8,872,548
COVERAGE: 2.66 4.24 3.62 3.60
(1) These numbers differ from the historical water sales revenues set forth under the caption “THE WATER SYSTEM OF THE
DISTRICT—Historical Water Sales Revenues” because the above numbers include penalties and other revenues treated as
operating revenues by the Auditor.
(2) The above amounts differ from historical Wastewater System service charge revenues set forth under the caption “THE
WASTEWATER SYSTEM OF THE DISTRICT—Historical Wastewater System Service Charge Revenues” because the
above amounts include gain on disposal of assets, miscellaneous revenues and other operating revenues.
(3) Includes connection fees, income from sale of assets, grants, settlement moneys and other miscellaneous revenues. Fiscal
Year 2017 amount reflects [___].
(4) Also includes debt service on other contracts with the SWRCB which matured prior to the date of this Official Statement.
(5) Reflects estimated actual Fiscal Year 2020 results. Unaudited and subject to change.
Source: District.
Projected Operating Results and Debt Service Coverage
The estimated projected operating results for the District for current and next four Fiscal Years are set
forth below, reflecting certain significant assumptions concerning future events and circumstances. The
financial forecast represents the District’s estimate of projected financial results based on a variety of
assumptions, including the assumptions set forth in the footnotes to the chart set forth below. See the captions
“THE WATER SYSTEM OF THE DISTRICT—Projected Water System Operating Results and Debt Service
Coverage” and “THE WASTEWATER SYSTEM OF THE DISTRICT—Projected Wastewater System
Operating Results and Debt Service Coverage.” All of such assumptions are material in the development of the
District’s financial projections, and variations in the assumptions may produce substantially different financial
45
results. Actual operating results achieved during the projection period may vary from those presented in the
forecast and such variations may be material. See the caption “CERTAIN RISKS TO BONDHOLDERS—
Accuracy of Assumptions.”
EAST VALLEY WATER DISTRICT
Projected Operating Results and Debt Service Coverage
Fiscal Year Ending June 30
2021(1) 2022 2023 2024 2025
OPERATING REVENUES:
Water department(2) $__ $ $ $ $
Wastewater department(3)
TOTAL OPERATING REVENUES: $ $ $ $ $
OPERATING EXPENSES:
Water department(4) $ $ $ $ $
Wastewater department(5)
TOTAL OPERATING EXPENSES: $ $ $ $ $
OPERATING INCOME: $ $ $ $ $
NON-OPERATING REVENUES:
Water department $ $ $ $ $
Wastewater department
TOTAL NON-OPERATING REVENUES: $ $ $ $ $
NET REVENUES: $ $ $ $ $
DEBT SERVICE:
2010 Installment Purchase Agreement(6) $ $ $ $ $
2010 State Contract(7)
2013 Installment Purchase Agreement(8)
2018 State Contract(7)
2020A Bonds*
2020B Bonds*
TOTAL DEBT SERVICE*: $ $ $ $ $
NET REVENUES AVAILABLE AFTER
DEBT SERVICE*:
$
$
$
$
$
COVERAGE*: _
(1) Reflects Fiscal Year 2021 [adopted] budget. See the caption “THE DISTRICT—Budget Process.”
(2) Reflects District estimates of development within the District and adopted and projected water rate increases described under
the caption “THE WATER SYSTEM OF THE DISTRICT—Water System Rates and Charges—General.” All water rate
increases are subject to the notice, hearing and protest provisions of Proposition 218 described under the caption
“CONSTITUTIONAL LIMITATIONS ON APPROPRIATIONS AND CHARGES—Proposition 218.” There can be no
assurance that the Board will adopt additional rate increases as currently projected.
(3) Reflects District estimates of development within the District and adopted and projected wastewater service rate increases
described under the caption “THE WASTEWATER SYSTEM OF THE DISTRICT—Wastewater System Rates and
Charges—General.” All water rate increases are subject to the notice, hearing and protest provisions of Proposition 218
described under the caption “CONSTITUTIONAL LIMITATIONS ON APPROPRIATIONS AND CHARGES—Proposition
218.” There can be no assurance that the Board will adopt additional rate increases as currently projected.
(4) Projected to increase by approximately [__]% per annum.
(5) Reflects commencement of operations at the SNRC in Fiscal Year 20[22]. See the caption “THE WASTEWATER SYSTEM
OF THE DISTRICT—Sterling Natural Resource Center.”
(6) This obligation is expected to be refunded from proceeds of the 2020A Bonds. See the caption “PLAN OF FINANCE—The
Refunding Plan—2010 Bonds.”
(7) Reflects scheduled payments. See the caption “THE DISTRICT—Outstanding Parity Obligations.”
* Preliminary; subject to change.
46
(8) This obligation is expected to be refunded from proceeds of the 2020B Bonds. See the caption “PLAN OF FINANCE—The
Refunding Plan—2013 Bonds.”
Source: District.
E-1
EXHIBIT E
FORM OF CONTINUING DISCLOSURE CERTIFICATE
Upon issuance of the 2020 Bonds, the District proposes to enter into a Continuing Disclosure Certificate
in substantially the following form:
This Continuing Disclosure Certificate (the “Disclosure Certificate”) is executed and delivered by the East
Valley Water District (the “District”) in connection with the issuance of its $____ Refunding Revenue Bonds, Series
2020A and Series 2020B (Federally Taxable) (collectively, the “Bonds”). The Bonds are being issued pursuant to an
Indenture of Trust, dated as of ____ 1, 2020 (the “Indenture”), by and between MUFG Union Bank, N.A., as trustee,
and the District. The District covenants and agrees as follows:
1. Purpose of this Disclosure Certificate. This Disclosure Certificate is being executed and delivered
by the District for the benefit of the Holders and Beneficial Owners of the Bonds and in order to assist the Participating
Underwriter in complying with the Rule.
2. Definitions. In addition to the definitions set forth in the Indenture, which apply to any capitalized
term used in this Disclosure Certificate unless otherwise defined in this Section, the following capitalized terms shall
have the following meanings:
Annual Report. The term “Annual Report” means any Annual Report provided by the District pursuant to,
and as described in, Sections 3 and 4 of this Disclosure Certificate.
Beneficial Owner. The term “Beneficial Owner” means any person which: (a) has the power, directly or
indirectly, to vote or consent with respect to, or to dispose of ownership of, any Bonds (including persons holding
Bonds through nominees, depositories or other intermediaries); or (b) is treated as the owner of any Bonds for federal
income tax purposes.
EMMA. The term “EMMA” means the Municipal Securities Rulemaking Board’s Electronic Municipal
Market Access System for municipal securities disclosures, maintained on the Internet at http://emma.msrb.org/.
Financial Obligation. The term “Financial Obligation” means a: (A) debt obligation; (B) derivative
instrument entered into in connection with, or pledged as security or a source of payment for, an existing or planned
debt obligation; or (C) guarantee of (A) or (B). The term “Financial Obligation” does not include municipal securities
as to which a final official statement has been provided to the Municipal Securities Rulemaking Board consistent with
the Rule.
Fiscal Year. The term “Fiscal Year” means the one-year period ending on the last day of June of each year.
Holder. The term “Holder” means a registered owner of the Bonds.
Listed Events. The term “Listed Events” means any of the events listed in Sections 5(a) and (b) of this
Disclosure Certificate.
Official Statement. The term “Official Statement” means the Official Statement dated _____ __, 2020
relating to the Bonds.
Participating Underwriter. The term “Participating Underwriter” means any of the original underwriters of
the Bonds required to comply with the Rule in connection with offering of the Bonds.
Rule. The term “Rule” means Rule 15c2-12 adopted by the Securities and Exchange Commission under the
Securities Exchange Act of 1934, as the same may be amended from time to time.
E-2
3. Provision of Annual Reports.
(a) The District shall provide not later than January 1 following the end of its Fiscal Year
(commencing with Fiscal Year 2020) to EMMA an Annual Report relating to the immediately preceding Fiscal Year
which is consistent with the requirements of Section 4 of this Disclosure Certificate, which Annual Report may be
submitted as a single document or as separate documents comprising a package, and may cross-reference other
information as provided in Section 4 of this Disclosure Certificate.
(b) If the District is unable to provide to EMMA an Annual Report by the date required in
subsection (a), the District shall send to EMMA a notice in the manner prescribed by the Municipal Securities
Rulemaking Board.
4. Content of Annual Reports. The Annual Report shall contain or incorporate by reference the
following:
(a) The audited financial statements of the District and the Authority for the prior Fiscal Year,
prepared in accordance with generally accepted accounting principles as promulgated to apply to governmental entities
from time to time by the Governmental Accounting Standards Board. If the District’s audited financial statements are
not available by the time the Annual Report is required to be filed pursuant to Section 3(a), the Annual Report shall
contain unaudited financial statements in a format similar to the financial statements contained in the final Official
Statement, and the audited financial statements shall be filed in the same manner as the Annual Report when they
come available.
(b) The principal amount of the Bonds outstanding.
(c) Balance in the reserve fund, if any, and a statement of the reserve requirement with respect
thereto.
(d) An update of the information in the following tables under the caption “THE WATER
SYSTEM OF THE DISTRICT”:
(1) Historical Water Production in Acre Feet;
(2) Historical Water Sales Revenues;
(3) Largest Water System Customers; and
(4) Historical Water System Operating Results and Debt Service Coverage.
(e) An update of the information in the following tables under the caption “THE
WASTEWATER SYSTEM OF THE DISTRICT”:
(1) Historical Wastewater System Connections;
(2) Historical Wastewater System Service Charge Revenues;
(3) Largest Wastewater System Customers; and
(4) Historical Wastewater System Operating Results and Debt Service Coverage.
Any or all of the items described above may be included by specific reference to other documents, including
official statements of debt issues of the District or related public entities, which have been submitted to EMMA;
provided, that if any document included by reference is a final official statement, it must be available from the
Municipal Securities Rulemaking Board; and provided further, that the District shall clearly identify each such
document so included by reference.
E-3
5. Reporting of Significant Events.
(a) Pursuant to the provisions of this Section 5, the District shall give, or cause to be given,
notice of the occurrence of any of the following events with respect to the Bonds in a timely manner not more than
ten (10) Business Days after the event:
1. principal and interest payment delinquencies;
2. unscheduled draws on debt service reserves reflecting financial difficulties;
3. unscheduled draws on credit enhancements reflecting financial difficulties;
4. substitution of credit or liquidity providers, or their failure to perform;
5. adverse tax opinions, the issuance by the Internal Revenue Service of proposed or
final determinations of taxability or Notices of Proposed Issue (IRS Form 5701 TEB);
6. tender offers;
7. defeasances;
8. ratings changes;
9. bankruptcy, insolvency, receivership or similar proceedings;
Note: For the purposes of the event identified in subparagraph (9), the event is considered to occur when
any of the following occur: the appointment of a receiver, fiscal agent or similar officer for an obligated person in a
proceeding under the U.S. Bankruptcy Code or in any other proceeding under state or federal law in which a court or
governmental authority has assumed jurisdiction over substantially all of the assets or business of the obligated person,
or if such jurisdiction has been assumed by leaving the existing governmental body and officials or officers in
possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order
confirming a plan of reorganization, arrangement or liquidation by a court or governmental authority having
supervision or jurisdiction over substantially all of the assets or business of the obligated person; and
10. default, event of acceleration, termination event, modification of terms or other
similar events under the terms of a Financial Obligation of the District, any of which reflect financial difficulties.
(b) Pursuant to the provisions of this Section 5, the District shall give, or cause to be given,
notice of the occurrence of any of the following events with respect to the Bonds, if material:
1. unless described in Section 5(a)(5), other notices or determinations by the Internal
Revenue Service with respect to the tax status of the Bonds or other events affecting the tax status of the Bonds;
2. modifications to the rights of Bond holders;
3. optional, unscheduled or contingent Bond redemptions;
4. release, substitution or sale of property securing repayment of the Bonds;
5. non-payment related defaults;
6. the consummation of a merger, consolidation, or acquisition involving the District
or the sale of all or substantially all of the assets of the District, other than in the ordinary course of business, the entry
into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any
such actions, other than pursuant to its terms;
E-4
7. appointment of a successor or additional trustee or the change of the name of a
trustee; and
8. incurrence of a Financial Obligation of the District, or agreement to covenants,
events of default, remedies, priority rights, or other similar terms of a Financial Obligation of the District, any of
which affect security holders.
(c) If the District determines that knowledge of the occurrence of a Listed Event under Section
5(b) would be material under applicable federal securities laws, the District shall file a notice of such occurrence with
EMMA in a timely manner not more than ten (10) Business Days after the event.
6. Customarily Prepared and Public Information. Upon request, the District shall provide to any person
financial information and operating data regarding the District which is customarily prepared by the District and is
publicly available.
7. Termination of Obligation. The District’s obligations under this Disclosure Certificate shall
terminate upon the legal defeasance, prior redemption or payment in full of all of the Bonds. If such termination occurs
prior to the final maturity of the Bonds, the District shall give notice of such termination in the same manner as for a
Listed Event under Section 5(c).
8. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Certificate, the
District may amend this Disclosure Certificate, and any provision of this Disclosure Certificate may be waived,
provided that, in the opinion of nationally recognized bond counsel, such amendment or waiver is permitted by the
Rule.
9. Additional Information. Nothing in this Disclosure Certificate shall be deemed to prevent the
District from disseminating any other information, using the means of dissemination set forth in this Disclosure
Certificate or any other means of communication, or including any other information in any notice of occurrence of a
Listed Event, in addition to that which is required by this Disclosure Certificate. If the District chooses to include any
information in any notice of occurrence of a Listed Event in addition to that which is specifically required by this
Disclosure Certificate, the District shall not thereby have any obligation under this Disclosure Certificate to update
such information or include it in any future notice of occurrence of a Listed Event.
10. Default. In the event of a failure of the District to comply with any provision of this Disclosure
Certificate, any Holders or Beneficial Owners of at least 50% aggregate principal amount of the Bonds may take such
actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to
cause the District to comply with its obligations under this Disclosure Certificate. A default under this Disclosure
Certificate shall not be deemed an Event of Default under the Indenture, and the sole remedy under this Disclosure
Certificate in the event of any failure of the District to comply with this Disclosure Certificate shall be an action to
compel performance.
No Holder or Beneficial Owner of the Bonds may institute such action, suit or proceeding to compel
performance unless they shall have first delivered to the District satisfactory written evidence of their status as such,
and a written notice of and request to cure such failure, and the District shall have refused to comply therewith within
a reasonable time.
11. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the District, the
Participating Underwriter and Holders and Beneficial Owners from time to time of the Bonds, and shall create no
rights in any other person or entity.
Dated: ____ __, 2020 EAST VALLEY WATER DISTRICT
By:
Its: General Manager
1
EXHIBIT F
ESCROW AGREEMENT (2010 BONDS)
THIS ESCROW AGREEMENT (2010 BONDS), dated as of _____ 1, 2020 (the
“Agreement”), by and among the East Valley Water District (the “District”), the East Valley Water
District Financing Authority (the “Authority”) and MUFG Union Bank, N.A., as escrow agent (the
“Escrow Agent”) and as 2010 Trustee (as such term is defined herein), is entered into in accordance
with a resolution of the District adopted on ____ __, 2020, an Indenture of Trust, dated as of October
1, 2010 (the “2010 Indenture”), by and between the Authority and MUFG Union Bank, N.A., as
trustee (the “2010 Trustee”), and an Installment Purchase Agreement, dated as of October 1, 2010 (the
“2010 IPA”), by and between the District and the Authority. This Agreement is entered into to refund
all of the outstanding East Valley Water District Financing Authority Refunding Revenue Bonds,
Series 2010 (the “2010 Bonds”).
RECITALS
A. Pursuant to the 2010 Indenture, the Authority has previously issued the 2010 Bonds in
the aggregate principal amount of $33,545,000, of which $21,635,000 is currently outstanding.
B. The 2010 Bonds are payable from installment payments made by the District to the
Authority under the 2010 IPA.
C. The District has determined to issue its East Valley Water District Refunding Revenue
Bonds, Series 2020A (the “2020A Bonds”), a portion of the proceeds of which will be applied to pay,
on October 1, 2020 (the “Redemption Date”), the principal of the outstanding 2010 Bonds maturing
on and after the Redemption Date, together with accrued interest thereon, without premium (the
“Redemption Price”).
D. The District will irrevocably deposit moneys with the Escrow Agent, which moneys
will be used to purchase the securities that are described on Schedule A (the “Federal Securities”) (as
permitted by, in the manner prescribed by and all in accordance with the 2010 Indenture). Such Federal
Securities satisfy the criteria set forth in Section 10.03 of the 2010 Indenture, and the principal of and
interest on such Federal Securities when paid, together with other moneys contributed by the District,
will provide funds which will be fully sufficient to pay and discharge the 2010 Bonds on the
Redemption Date.
AGREEMENT
SECTION 1. Deposit of Moneys. The District will cause MUFG Union Bank, N.A., as
trustee for the 2020A Bonds, to transfer a portion of the proceeds of the 2020A Bonds in the amount
of $_____ on the date of issuance of the 2020A Bonds to the Escrow Agent for deposit in the Escrow
Fund established hereunder. The Authority instructs the 2010 Trustee to transfer $_____ held in the
Revenue Fund relating to the 2010 Bonds to the Escrow Agent for deposit in the below-defined Escrow
Fund.
The Escrow Agent will hold such amounts in an irrevocable escrow separate and apart from
other funds of the Authority, the District and the Escrow Agent in a fund hereby created and established
2
to be known as the “Escrow Fund” and to be applied solely as provided in this Agreement. The
District represents that the sum of the amounts set forth above are at least equal to an amount that is
sufficient to purchase the Federal Securities listed on Schedule A, and to hold $__ uninvested as cash.
SECTION 2. Investment of Moneys. The Escrow Agent acknowledges receipt of the
moneys described in Section 1 and agrees immediately to invest $_____ of such moneys in the Federal
Securities listed on Schedule A and to deposit such Federal Securities in the Escrow Fund. The Escrow
Agent shall be entitled to rely conclusively upon the conclusion of Robert Thomas CPA, LLC,
Overland Park, Kansas, that the Federal Securities listed on Schedule A mature and bear interest
payable in such amounts and at such times as, together with cash on deposit in the Escrow Fund, will
be sufficient to pay on the Redemption Date the Redemption Price of the outstanding 2010 Bonds
maturing on and after the Redemption Date.
SECTION 3. Payment of 2010 Bonds.
(a) Payment. From the maturing principal of the Federal Securities and the
investment income and other earnings thereon and other moneys on deposit in the Escrow Fund, the
Escrow Agent shall pay, on the Redemption Date, the Redemption Price of the 2010 Bonds maturing
on and after the Redemption Date, all as indicated on Schedule A.
(b) Irrevocable Instructions to Provide Notice. The notices that are required to be
mailed pursuant to Section 4.03 and Article X of the 2010 Indenture are substantially in the forms
attached hereto as Exhibits A and B. The District and the Authority hereby irrevocably instruct the
2010 Trustee to mail a notice of redemption and (on the date of issuance of the 2020A Bonds) a notice
of defeasance of the 2010 Bonds to the parties that are described in and otherwise in accordance with
Section 4.03 and Article X of the 2010 Indenture (and to file such notices with the Municipal Securities
Rulemaking Board’s Electronic Municipal Market Access website), respectively, as required to
provide for the redemption and defeasance of the 2010 Bonds in accordance with this Section 3.
(c) Unclaimed Moneys. Any moneys in the Escrow Fund which remain unclaimed
after the Redemption Date shall be repaid by the Escrow Agent to the District.
(d) Priority of Payments. The owners of the 2010 Bonds shall have a first and
exclusive lien on all moneys and securities in the Escrow Fund until such moneys and such securities
are used and applied as provided in this Agreement.
(e) Termination of Obligation. As provided in the 2010 IPA and the 2010
Indenture, upon the deposit of moneys with the Escrow Agent in the Escrow Fund as set forth in
Section 1: (i) interest on the 2010 Bonds shall cease to accrue, the 2010 Bonds shall cease to be entitled
to any benefit or security under the 2010 Indenture and the owners of the 2010 Bonds shall have no
rights in respect thereof except to receive payment of the redemption price thereof; (ii) the 2010
Indenture, the pledge of Authority Revenues and other assets made under the 2010 Indenture and all
liability, covenants, agreements and other obligations of the Authority under the 2010 Indenture shall
cease, terminate, become void and be completely discharged and satisfied; (iii) the owners of the 2010
Bonds shall thereafter be entitled only to payment out of money or securities deposited with the Escrow
Agent; and (iv) the right, title and interest of the Authority in the 2010 IPA and the obligations of the
District thereunder shall, with respect to all or such portion of the Installment Payments payable
thereunder as have been so provided for, thereupon cease, terminate, become void and be completely
discharged and satisfied (except as set forth in the 2010 IPA).
3
SECTION 4. Application of Certain Terms of the 2010 Indenture. All of the terms of the
2010 Indenture relating to the making of payments of principal of and interest with respect to the 2010
Bonds and relating to the exchange or transfer of the 2010 Bonds are incorporated into this Agreement
by reference as if set forth in full herein. The procedures set forth in Article VIII of the 2010 Indenture
relating to the resignation and removal and merger of the 2010 Trustee are also incorporated into this
Agreement by reference as if set forth in full herein and shall be the procedures to be followed with
respect to any resignation or removal of the Escrow Agent hereunder.
SECTION 5. Performance of Duties. The Escrow Agent agrees to perform only the duties
that are set forth herein and shall have no responsibility to take any action or omit to take any action
that is not set forth herein.
SECTION 6. Escrow Agent’s Authority to Make Investments. Except as provided in
Section 2 hereof, the Escrow Agent shall have no power or duty to invest any funds that are held
hereunder or to sell, transfer or otherwise dispose of the moneys or securities that are held hereunder.
SECTION 7. Indemnity. The District hereby assumes liability for, and hereby agrees
(whether or not any of the transactions contemplated hereby are consummated) to indemnify, protect,
save and keep harmless the Escrow Agent and its respective successors, assigns, agents, employees
and servants, from and against any and all liabilities, obligations, losses, damages, penalties, claims,
actions, suits, costs, expenses and disbursements (including reasonable legal fees and disbursements)
of whatsoever kind and nature which may be imposed on, incurred by or asserted against the Escrow
Agent at any time (whether or not also indemnified against the same by the District or any other person
under any other agreement or instrument, but without double indemnity) in any way relating to or
arising out of the execution, delivery and performance of this Agreement, the establishment hereunder
of the Escrow Fund, the acceptance of the funds and securities deposited therein, the retention of the
proceeds thereof and any payment, transfer or other application of moneys or securities by the Escrow
Agent in accordance with the provisions of this Agreement; provided, however, that the District shall
not be required to indemnify the Escrow Agent against the Escrow Agent’s own negligence or willful
misconduct. In no event shall the District or the Escrow Agent be liable to any person by reason of the
transactions that are contemplated hereby other than to each other as set forth in this Section. The
indemnities that are contained in this Section shall survive the termination of this Agreement and the
resignation or removal of the Escrow Agent.
SECTION 8. Responsibilities of Escrow Agent. The Escrow Agent and its agents and
servants shall not be held to any personal liability whatsoever, in tort, contract or otherwise, in
connection with the execution and delivery of this Agreement, the establishment of the Escrow Fund,
the acceptance of the moneys or securities deposited therein, the sufficiency of the moneys held in the
Escrow Fund to pay the 2010 Bonds or any payment, transfer or other application of moneys or
obligations by the Escrow Agent in accordance with the provisions of this Agreement or by reason of
any non-negligent act, non-negligent omission or non-negligent error of the Escrow Agent that is made
in good faith in the conduct of its duties. The recitals of fact that are contained herein shall be taken
as the statements of the District, and the Escrow Agent assumes no responsibility for the correctness
thereof. The Escrow Agent makes no representation as to the sufficiency of the proceeds to accomplish
the refunding of the 2010 Bonds or to the validity of this Agreement as to the District or the Authority
and, except as otherwise provided herein, the Escrow Agent shall incur no liability in respect thereof.
The Escrow Agent shall not be liable in connection with the performance of its duties under this
Agreement except for its own negligence or willful misconduct, and the duties and obligations of the
Escrow Agent shall be determined by the express provisions of this Agreement. In no event shall the
4
Escrow Agent be liable for any special, punitive, indirect or consequential damages. The Escrow Agent
may consult with counsel of its selection, and in reliance upon the opinion of such counsel shall have
full and complete authorization and protection in respect of any action taken, suffered or omitted by it
in good faith in accordance therewith. Whenever the Escrow Agent shall deem it necessary or desirable
that a matter be proved or established prior to taking, suffering, or omitting any action under this
Agreement, such matter may be deemed to be conclusively established by a certificate signed by an
officer of the District.
No provision of this Agreement shall require the Escrow Agent to expend or risk its own funds
or otherwise incur any financial liability in the performance or exercise of any of its duties hereunder,
or in the exercise of its rights or powers.
The Escrow Agent shall have the right to accept and act upon instructions, including funds
transfer instructions (“Instructions”) given pursuant to this Agreement and delivered using Electronic
Means (“Electronic Means” shall mean the following communications methods: e-mail, facsimile
transmission, secure electronic transmission containing applicable authorization codes, passwords
and/or authentication keys issued by the Escrow Agent, or another method or system specified by the
Escrow Agent as available for use in connection with its services hereunder); provided, however, that
the District shall provide to the Escrow Agent an incumbency certificate listing officers with the
authority to provide such Instructions (“Authorized Officers”) and containing specimen signatures of
such Authorized Officers, which incumbency certificate shall be amended by the District whenever a
person is to be added or deleted from the listing. If the District elects to give the Escrow Agent
Instructions using Electronic Means and the Escrow Agent in its reasonable judgment elects to act
upon such Instructions, the Escrow Agent’s understanding of such Instructions shall be deemed
controlling. The District understands and agrees that the Escrow Agent cannot determine the identity
of the actual sender of such Instructions and that the Escrow Agent shall conclusively presume that
directions that purport to have been sent by an Authorized Officer listed on the incumbency certificate
provided to the Escrow Agent have been sent by such Authorized Officer. The District shall be
responsible for ensuring that only Authorized Officers transmit such Instructions to the Escrow Agent
and that the District and all Authorized Officers are solely responsible to safeguard the use and
confidentiality of applicable user and authorization codes, passwords and/or authentication keys upon
receipt by the District. The Escrow Agent shall not be liable for any losses, costs or expenses arising
directly or indirectly from the Escrow Agent’s reliance upon and compliance with such Instructions
notwithstanding such directions conflict or are inconsistent with a subsequent written instruction. The
District agrees: (i) to assume all risks arising out of the use of Electronic Means to submit Instructions
to the Escrow Agent, including without limitation the risk of the Escrow Agent acting on unauthorized
Instructions, and the risk of interception and misuse by third parties; (ii) that they are fully informed
of the protections and risks associated with the various methods of transmitting Instructions to the
Escrow Agent and that there may be more secure methods of transmitting Instructions than the
method(s) selected by the District; (iii) that the security procedures (if any) to be followed in
connection with its transmission of Instructions provide to it a commercially reasonable degree of
protection in light of its particular needs and circumstances; and (iv) to notify the Escrow Agent in
writing immediately upon learning of any compromise or unauthorized use of the security procedures.
The Escrow Agent shall furnish the District with cash transaction statements which include
detail for all investment transactions effected by the Escrow Agent or brokers selected by the District,
provided that the Escrow Agent is not obligated to provide an accounting for any fund or account that:
(a) has a balance of $0.00; and (b) has not had any activity since the last reporting date. Upon the
District’s election, such statements will be delivered via the Escrow Agent’s online service and upon
5
electing such service, paper statements will be provided only upon request. The District waives the
right to receive brokerage confirmations of security transactions effected by the Escrow Agent as they
occur, to the extent permitted by law. The District further understands that trade confirmations for
securities transactions effected by the Escrow Agent will be available upon request and at no additional
cost and other trade confirmations may be obtained from the applicable broker.
If the Escrow Agent learns that the Department of the Treasury or the Bureau of Public Debt
will not, for any reason, accept a subscription of Federal Securities that is to be submitted pursuant to
this Agreement, the Escrow Agent shall promptly request alternative written investment instructions
from the District with respect to escrowed funds which were to be invested in securities. The Escrow
Agent shall follow such instructions and, upon the maturity of any such alternative investment, the
Escrow Agent shall hold such funds uninvested and without liability for interest until receipt of further
written instructions from the District. In the absence of written investment instructions from the
District, the Escrow Agent shall hold funds uninvested. The Escrow Agent may conclusively rely upon
the District’s selection of an alternative investment as a determination of the alternative investment’s
legality and suitability and shall not be liable for any losses, fees, taxes or other charges related to the
alternative investments, reinvestments or liquidation of investments or for compliance with any yield
restriction applicable thereto.
The Escrow Agent may execute any of the powers hereunder or perform any duties hereunder
either directly or by or through agents, attorneys, custodians or nominees appointed with due care, and
shall not be responsible for any willful misconduct or negligence on the part of any agent, attorney,
custodian or nominee so appointed.
The Escrow Agent may conclusively rely, as to the trust and accuracy of the statements and
correctness of the opinions and the calculations provided to it in connection with this Agreement, and
shall be protected in acting, or refraining from acting, upon any written notice, instruction, request,
certificate, document or opinion furnished to the Escrow Agent in accordance with this Agreement and
reasonably believed by the Escrow Agent to have been signed or presented by the proper party, and it
need not investigate any facts or matter stated in such notice, instruction, request, certificate or opinion.
The liability of the Escrow Agent to make any payments under the Agreement shall be limited
to the funds in the Escrow Fund.
SECTION 9. Amendments. This Agreement is made for the benefit of the District, the
Authority and the owners from time to time of the 2010 Bonds and it shall not be repealed, revoked,
altered or amended without the written consent of all such owners, the Escrow Agent, the Authority
and the District; provided, however, that the District, the Authority and the Escrow Agent may, without
the consent of, or notice to, such owners, amend this Agreement or enter into such agreements
supplemental to this Agreement as shall not adversely affect the rights of such owners and as shall not
be inconsistent with the terms and provisions of this Agreement or the 2010 Indenture, for any one or
more of the following purposes: (i) to cure any ambiguity or formal defect or omission in this
Agreement; (ii) to grant to, or confer upon, the Escrow Agent for the benefit of the owners of the 2010
Bonds any additional rights, remedies, powers or authority that may lawfully be granted to, or
conferred upon, such owners or the Escrow Agent; and (iii) to include under this Agreement additional
funds. The Escrow Agent shall be entitled to rely conclusively upon an unqualified opinion of
Stradling Yocca Carlson & Rauth, a Professional Authority, with respect to compliance with this
Agreement, including the extent, if any, to which any change, modification, addition or elimination
6
affects the rights of the owners of the various 2010 Bonds or that any instrument that is executed
hereunder complies with the conditions and provisions of this Agreement.
SECTION 10. Notice to Rating Agencies. In the event that this agreement or any provision
thereof is severed, amended or revoked, the Escrow Agent shall provide written notice of such
severance, amendment or revocation to the rating agencies then rating the 2010 Bonds. The Escrow
Agent makes this covenant as a matter of courtesy and accommodation only and shall not be liable to
any person for any failure to comply therewith.
SECTION 11. Term. This Agreement shall commence upon its execution and delivery and
shall terminate on the later to occur of either: (i) the date upon which the 2010 Bonds have been paid
in accordance with this Agreement; or (ii) the date upon which no unclaimed moneys remain on deposit
with the Escrow Agent pursuant to Section 3(c) of this Agreement. Funds remaining in the Escrow
Fund after payment in full of the 2010 Bonds shall be transferred to the District.
SECTION 12. Compensation. The Escrow Agent shall receive its fees and expenses as
previously agreed to in writing by the Escrow Agent and the District and any other reasonable fees and
expenses of the Escrow Agent (including legal fees and expenses); provided, however, that under no
circumstances shall the Escrow Agent be entitled to any lien or assert any lien whatsoever on any
moneys or obligations in the Escrow Fund for the payment of fees and expenses for services that are
rendered or expenses incurred by the Escrow Agent under this Agreement. The provisions of this
Section shall survive the termination of this Agreement and the resignation or removal of the Escrow
Agent.
SECTION 13. Severability. If any one or more of the covenants or agreements provided in
this Agreement on the part of the District, the Authority or the Escrow Agent to be performed should
be determined by a court of competent jurisdiction to be contrary to law, such covenants or agreements
shall be null and void, shall be deemed separate from the remaining covenants and agreements
contained herein and shall in no way affect the validity of the remaining provisions of this Agreement.
SECTION 14. Counterparts. This Agreement may be executed in several counterparts, all or
any of which shall be regarded for all purposes as an original but all of which shall constitute and be
but one and the same instrument. The exchange of copies of this Agreement and of signature pages by
facsimile or PDF transmission shall constitute effective execution and delivery of this Agreement as
to the parties hereto and may be used in lieu of the original Agreement and signature pages for all
purposes.
SECTION 15. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED UNDER
THE LAWS OF THE STATE OF CALIFORNIA.
SECTION 16. Holidays. If the date for making any payment or the last date for performance
of any act or the exercising of any right, as provided in this Agreement, shall be a legal holiday or a
day on which banking institutions in the city in which is located the office of the Escrow Agent are
authorized by law to remain closed, such payment may be made or act performed or right exercised on
the next succeeding day which is not a legal holiday or a day on which such banking institutions are
authorized by law to remain closed, with the same force and effect as if done on the nominal date
provided in this Agreement, and no interest shall accrue for the period from and after such nominal
date.
7
SECTION 17. Assignment. This Agreement shall not be assigned by the Escrow Agent or
any successor thereto without the prior written consent of the District and the Authority.
SECTION 18. Reorganization of Escrow Agent. Notwithstanding anything to the contrary
contained in this Agreement, any company into which the Escrow Agent may be merged or converted
or with which it may be consolidated or any company resulting from any merger, conversion or
consolidation to which the Escrow Agent is a party, or any company to which the Escrow Agent may
sell or transfer all or substantially all of its corporate trust business, shall be the successor to the Escrow
Agent without execution or filing of any paper or any paper or further act, if such company is eligible
to serve as Escrow Agent.
SECTION 19. Insufficient Funds. If at any time the Escrow Agent has actual knowledge that
the moneys and investments in the Escrow Fund, including the anticipated proceeds thereof and
earnings thereon, will not be sufficient to make all payments required by this Agreement, the Escrow
Agent shall notify the District in writing of the amount thereof and the reason therefor to the extent
known to it. The Escrow Agent shall have no responsibility regarding any such deficiency.
SECTION 20. Notices. Any notice to or demand upon the Escrow Agent may be served or
presented, and such demand may be made, at the principal corporate trust office of the Escrow Agent
at 445 South Figueroa Street, Suite 401, Los Angeles, California 90071, Attention: Corporate Trust,
Reference: East Valley Water District, Series 2010, Fax: 213-972-5694, Email:
LACT@unionbank.com. Any notice to or demand upon the District or the Authority shall be deemed
to have been sufficiently given or served for all purposes by being sent by facsimile or other electronic
transmission, overnight mail or courier or mailed by first class mail, and deposited, postage prepaid,
in a post office letter box, addressed to the District or the Authority at 31111 Greenspot Road,
Highland, California 92346, email: btompkins@eastvalley.org, Facsimile: (909) 888-6741 (or such
other address as may have been filed in writing by the District or the Authority with the Escrow Agent).
SECTION 21. Electronic Signatures. The words “execution,” “signed,” “signature,”
“delivery,” and words of like import in or relating to this Agreement or any document to be signed in
connection with this Agreement shall be deemed to include electronic signatures, deliveries or the
keeping of records in electronic form, each of which shall be of the same legal effect, validity or
enforceability as a manually executed signature, physical delivery thereof or the use of a paper-based
recordkeeping system, as the case may be, and the parties hereto consent to conduct the transactions
contemplated hereunder by electronic means. “Electronic signature” means any electronic sound,
symbol or process attached to or logically associated with a record and executed and adopted by a party
with the intent to sign such record, including facsimile or email electronic signatures.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
S-1
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by
their duly authorized officers as of the date first above written.
EAST VALLEY WATER DISTRICT
By:
Board President
ATTEST:
Secretary, Board of Directors
EAST VALLEY WATER DISTRICT
FINANCING AUTHORITY
By:
Board President
ATTEST:
Secretary, Board of Directors
MUFG UNION BANK, N.A.,
as Escrow Agent and 2010 Trustee
By:
Authorized Officer
Schedule A-1
SCHEDULE A
ESCROW REQUIREMENTS
Moneys deposited in the Escrow Fund shall be invested as follows:
Security Maturity
Principal
Amount
Interest
Rate
[__] October 1, 2020 $ %
The escrow requirements for the 2010 Bonds are as follows:
Period
Ending Principal Paid
Principal
Redeemed Interest Total
October 1, 2020 $ [__] $ $ $
Exhibit A-1
EXHIBIT A
NOTICE OF FULL OPTIONAL REDEMPTION
EAST VALLEY WATER DISTRICT FINANCING AUTHORITY
REFUNDING REVENUE BONDS, SERIES 2010
BASE CUSIP 275736
NOTICE IS HEREBY GIVEN to the owners of the above-captioned obligations (the “2010
Bonds”), which were issued pursuant to the Indenture of Trust, dated as of October 1, 2010 (the “2010
Indenture”), by and between the East Valley Water District Financing Authority (the “Authority”) and
MUFG Union Bank, N.A., as trustee (the “2010 Trustee”), that 2010 Bonds in the amount of
$19,985,000 have been called for redemption on October 1, 2020 (the “Redemption Date”). The 2010
Bonds were originally issued on October 28, 2010 and are described in the following table.
CUSIP
Maturity
(October 1)
Principal
Amount Rate Redemption Price
AK2 2020 $1,650,000 4.00% 100%
AL0 2021 1,030,000 4.00 100
AM8 2022 1,075,000 4.00 100
AN6 2023 1,120,000 4.00 100
AP1 2024 1,155,000 4.50 100
AU0 2025 700,000 4.00 100
AQ9 2026 730,000 4.00 100
AR7 2028 1,550,000 4.00 100
AS5 2030 1,675,000 4.00 100
AV8 2033 2,775,000 4.25 100
AT3 2040 8,175,000 5.00 100
The 2010 Bonds will be payable on the Redemption Date at a redemption price of 100% of the
principal amount thereof, plus interest accrued through the Redemption Date, without premium (the
“Redemption Price”). The Redemption Price of the 2010 Bonds will become due and payable on the
Redemption Date. Interest with respect to the 2010 Bonds will cease to accrue and be payable from
and after the Redemption Date, and such 2010 Bonds will be surrendered to the 2010 Trustee.
To receive payment on the Redemption Date, owners of the 2010 Bonds should present and to
surrender said 2010 Bonds on the Redemption Date at the address of the 2010 Trustee set forth below:
MUFG Union Bank, N.A.
445 S. Figueroa Street, Suite 401
Los Angeles, CA 90071
Attention: Bond Redemptions
A form W-9 must be submitted with the 2010 Bonds. Failure to provide a completed form W-
9 will result in 31% backup withholding pursuant to the Interest and Dividend Tax Compliance Act of
1983. Under the Jobs and Growth Tax Relief Reconciliation Act of 2003, 28% will be withheld if the
tax identification number is not properly certified.
Exhibit A-2
If the owner of any 2010 Bond fails to deliver such 2010 Bond to the 2010 Trustee on the
Redemption Date, such 2010 Bond shall nevertheless be deemed redeemed on the Redemption Date
and the owner of such 2010 Bond shall have no rights in respect thereof except to receive payment of
the Redemption Price from funds held by the 2010 Trustee for such payment.
Note: The Authority and the 2010 Trustee shall not be responsible for the selection or use of
the CUSIP numbers selected, nor is any representation made as to their correctness in the notice or
as printed on any 2010 Bond. They are included solely for the convenience of the holders.
MUFG UNION BANK, N.A., as 2010 Trustee
September 1, 2020
Exhibit B-1
EXHIBIT B
NOTICE OF DEFEASANCE
EAST VALLEY WATER DISTRICT FINANCING AUTHORITY
REFUNDING REVENUE BONDS, SERIES 2010
BASE CUSIP 275736
NOTICE IS HEREBY GIVEN to the owners of the above-captioned obligations (the “2010
Bonds”) which were issued pursuant to the Indenture of Trust, dated as of October 1, 2010 (the “2010
Indenture”), by and between the East Valley Water District Financing Authority (the “Authority”) and
MUFG Union Bank, N.A., as trustee (the “2010 Trustee”), that the East Valley Water District (the
“District”) has deposited with MUFG Union Bank, N.A., as escrow agent (the “Escrow Agent”), cash
and federal securities, the principal of and interest on which when paid will provide moneys sufficient
to pay on October 1, 2020 the principal of all outstanding 2010 Bonds maturing on and after such date,
plus accrued interest thereon, without premium. The 2010 Bonds were originally issued on October
28, 2010 and are described in the following table.
CUSIP
Maturity
(October 1)
Principal
Amount Rate
AK2 2020 $1,650,000 4.00%
AL0 2021 1,030,000 4.00
AM8 2022 1,075,000 4.00
AN6 2023 1,120,000 4.00
AP1 2024 1,155,000 4.50
AU0 2025 700,000 4.00
AQ9 2026 730,000 4.00
AR7 2028 1,550,000 4.00
AS5 2030 1,675,000 4.00
AV8 2033 2,775,000 4.25
AT3 2040 8,175,000 5.00
In accordance with the 2010 Indenture and the Installment Purchase Agreement, dated as of
October 1, 2010 (the “2010 IPA”), by and between the Authority and the District: (i) interest on the
2010 Bonds has ceased to accrue, the 2010 Bonds have ceased to be entitled to any benefit or security
under the 2010 Indenture and the owners of the 2010 Bonds have no rights in respect thereof except to
receive payment of the redemption price thereof; (ii) the 2010 Indenture, the pledge of Authority
Revenues and other assets made under the 2010 Indenture and all liability, covenants, agreements and
other obligations of the Authority under the 2010 Indenture have ceased, terminated, become void and
been completely discharged and satisfied; (iii) the owners of the 2010 Bonds are entitled only to
payment out of money or securities deposited with the Escrow Agent; (iv) the right, title and interest
of the Authority in the 2010 IPA and the obligations of the District thereunder have, with respect to all
or such portion of the Installment Payments payable thereunder as have been so provided for, thereupon
ceased, terminated, become void and been completely discharged and satisfied (except as set forth in
the 2010 IPA); and (v) all obligations of the District under the Continuing Disclosure Certificate of the
District, dated October 28, 2010, relating to the 2010 Bonds have terminated.
Exhibit B-2
No representation is made as to the correctness of the CUSIP number either as printed on any
2010 Bond or as contained herein and any error in the CUSIP number shall not affect the validity of
the proceedings for redemption of the 2010 Bonds.
MUFG UNION BANK, N.A., as 2010 Trustee
____ __, 2020
1
EXHIBIT G
ESCROW AGREEMENT (2013A BONDS)
THIS ESCROW AGREEMENT (2013A BONDS), dated as of _____ 1, 2020 (the
“Agreement”), by and among the East Valley Water District (the “District”), the East Valley Water
District Financing Authority (the “Authority”) and MUFG Union Bank, N.A., as escrow agent (the
“Escrow Agent”) and as 2013A Trustee (as such term is defined herein), is entered into in accordance
with a resolution of the District adopted on ____ __, 2020, an Indenture of Trust, dated as of June 1,
2013 (the “2013A Indenture”), by and between the Authority and MUFG Union Bank, N.A., as trustee
(the “2013A Trustee”), and an Installment Purchase Agreement, dated as of June 1, 2013 (the “2013A
IPA”), by and between the District and the Authority. This Agreement is entered into to refund all of
the outstanding East Valley Water District Financing Authority Revenue Bonds, Series 2013A (the
“2013A Bonds”).
RECITALS
A. Pursuant to the 2013A Indenture, the Authority has previously issued the 2013A Bonds
in the aggregate principal amount of $12,085,000, all of which is currently outstanding.
B. The 2013A Bonds are payable from installment payments made by the District to the
Authority under the 2013A IPA.
C. The District has determined to issue its East Valley Water District Refunding Revenue
Bonds, Series 2020B (Federally Taxable) (the “2020B Bonds”), a portion of the proceeds of which
will be applied to pay: (i) the regularly scheduled payments of principal of and interest on the 2013A
Bonds through April 1, 2023 (the “Redemption Date”); and (ii) on the Redemption Date, the principal
of the 2013A Bonds maturing after the Redemption Date, together with accrued interest thereon to the
Redemption Date, without premium (the “Redemption Price”).
D. The District will irrevocably deposit moneys with the Escrow Agent, which moneys
will be used to purchase the securities that are described on Schedule A (the “Federal Securities”) (as
permitted by, in the manner prescribed by and all in accordance with the 2013A Indenture). Such
Federal Securities satisfy the criteria set forth in Section 10.03 of the 2013A Indenture, and the
principal of and interest on such Federal Securities when paid, together with other moneys contributed
by the District, will provide funds which will be fully sufficient to pay the principal of and interest on
the 2013A Bonds prior to the Redemption Date and to pay and discharge the 2013A Bonds on the
Redemption Date.
AGREEMENT
SECTION 1. Deposit of Moneys. The District will cause MUFG Union Bank, N.A., as
trustee for the 2020B Bonds, to transfer a portion of the proceeds of the 2020B Bonds in the amount
of $_____ on the date of issuance of the 2020B Bonds to the Escrow Agent for deposit in the Escrow
Fund established hereunder. The Authority instructs the 2013A Trustee to transfer $_____ held in the
Revenue Fund relating to the 2013A Bonds to the Escrow Agent for deposit in the below-defined
Escrow Fund.
2
The Escrow Agent will hold such amounts in an irrevocable escrow separate and apart from
other funds of the Authority, the District and the Escrow Agent in a fund hereby created and established
to be known as the “Escrow Fund” and to be applied solely as provided in this Agreement. The
District represents that the sum of the amounts set forth above are at least equal to an amount that is
sufficient to purchase the Federal Securities listed on Schedule A, and to hold $__ uninvested as cash.
SECTION 2. Investment of Moneys. The Escrow Agent acknowledges receipt of the
moneys described in Section 1 and agrees immediately to invest $_____ of such moneys in the Federal
Securities listed on Schedule A and to deposit such Federal Securities in the Escrow Fund. The Escrow
Agent shall be entitled to rely conclusively upon the conclusion of Robert Thomas CPA, LLC,
Overland Park, Kansas, that the Federal Securities listed on Schedule A mature and bear interest
payable in such amounts and at such times as, together with cash on deposit in the Escrow Fund, will
be sufficient to pay: (i) the regularly scheduled payments of principal of and interest on the 2013A
Bonds through the Redemption Date; and (ii) on the Redemption Date, the Redemption Price of the
2013A Bonds maturing after the Redemption Date.
SECTION 3. Payment of 2013A Bonds.
(a) Payment. From the maturing principal of the Federal Securities and the
investment income and other earnings thereon and other moneys on deposit in the Escrow Fund, the
Escrow Agent shall pay: (i) the regularly scheduled payments of principal of and interest on the 2013A
Bonds through the Redemption Date; and (ii) on the Redemption Date, the Redemption Price of the
2013A Bonds maturing after the Redemption Date, all as indicated on Schedule A.
(b) Irrevocable Instructions to Provide Notice. The notices that are required to be
mailed pursuant to Section 4.03 and Article X of the 2013A Indenture are substantially in the forms
attached hereto as Exhibits A and B. The District and the Authority hereby irrevocably instruct the
2013A Trustee to mail a notice of redemption and (on the date of issuance of the 2020B Bonds) a
notice of defeasance of the 2013A Bonds to the parties that are described in and otherwise in
accordance with Section 4.03 and Article X of the 2013A Indenture (and to file such notices with the
Municipal Securities Rulemaking Board’s Electronic Municipal Market Access website), respectively,
as required to provide for the redemption and defeasance of the 2013A Bonds in accordance with this
Section 3.
(c) Unclaimed Moneys. Any moneys in the Escrow Fund which remain unclaimed
after the Redemption Date shall be repaid by the Escrow Agent to the District.
(d) Priority of Payments. The owners of the 2013A Bonds shall have a first and
exclusive lien on all moneys and securities in the Escrow Fund until such moneys and such securities
are used and applied as provided in this Agreement.
(e) Termination of Obligation. As provided in the 2013A IPA and the 2013A
Indenture, upon the deposit of moneys with the Escrow Agent in the Escrow Fund as set forth in
Section 1: (i) the 2013A Bonds shall cease to be entitled to any benefit or security under the 2013A
Indenture; (ii) the 2013A Indenture, the pledge of Authority Revenues and other assets made under the
2013A Indenture and all liability, covenants, agreements and other obligations of the Authority under
the 2013A Indenture shall cease, terminate, become void and be completely discharged and satisfied;
(iii) the owners of the 2013A Bonds shall thereafter be entitled only to payment out of money or
securities deposited with the Escrow Agent; and (iv) the right, title and interest of the Authority in the
3
2013A IPA and the obligations of the District thereunder shall, with respect to all or such portion of
the Installment Payments payable thereunder as have been so provided for, thereupon cease, terminate,
become void and be completely discharged and satisfied (except as set forth in the 2013A IPA).
SECTION 4. Application of Certain Terms of the 2013A Indenture. All of the terms of the
2013A Indenture relating to the making of payments of principal of and interest with respect to the
2013A Bonds and relating to the exchange or transfer of the 2013A Bonds are incorporated into this
Agreement by reference as if set forth in full herein. The procedures set forth in Article VIII of the
2013A Indenture relating to the resignation and removal and merger of the 2013A Trustee are also
incorporated into this Agreement by reference as if set forth in full herein and shall be the procedures
to be followed with respect to any resignation or removal of the Escrow Agent hereunder.
SECTION 5. Performance of Duties. The Escrow Agent agrees to perform only the duties
that are set forth herein and shall have no responsibility to take any action or omit to take any action
that is not set forth herein.
SECTION 6. Escrow Agent’s Authority to Make Investments. Except as provided in
Section 2 hereof, the Escrow Agent shall have no power or duty to invest any funds that are held
hereunder or to sell, transfer or otherwise dispose of the moneys or securities that are held hereunder.
SECTION 7. Indemnity. The District hereby assumes liability for, and hereby agrees
(whether or not any of the transactions contemplated hereby are consummated) to indemnify, protect,
save and keep harmless the Escrow Agent and its respective successors, assigns, agents, employees
and servants, from and against any and all liabilities, obligations, losses, damages, penalties, claims,
actions, suits, costs, expenses and disbursements (including reasonable legal fees and disbursements)
of whatsoever kind and nature which may be imposed on, incurred by or asserted against the Escrow
Agent at any time (whether or not also indemnified against the same by the District or any other person
under any other agreement or instrument, but without double indemnity) in any way relating to or
arising out of the execution, delivery and performance of this Agreement, the establishment hereunder
of the Escrow Fund, the acceptance of the funds and securities deposited therein, the retention of the
proceeds thereof and any payment, transfer or other application of moneys or securities by the Escrow
Agent in accordance with the provisions of this Agreement; provided, however, that the District shall
not be required to indemnify the Escrow Agent against the Escrow Agent’s own negligence or willful
misconduct. In no event shall the District or the Escrow Agent be liable to any person by reason of the
transactions that are contemplated hereby other than to each other as set forth in this Section. The
indemnities that are contained in this Section shall survive the termination of this Agreement and the
resignation or removal of the Escrow Agent.
SECTION 8. Responsibilities of Escrow Agent. The Escrow Agent and its agents and
servants shall not be held to any personal liability whatsoever, in tort, contract or otherwise, in
connection with the execution and delivery of this Agreement, the establishment of the Escrow Fund,
the acceptance of the moneys or securities deposited therein, the sufficiency of the moneys held in the
Escrow Fund to pay the 2013A Bonds or any payment, transfer or other application of moneys or
obligations by the Escrow Agent in accordance with the provisions of this Agreement or by reason of
any non-negligent act, non-negligent omission or non-negligent error of the Escrow Agent that is made
in good faith in the conduct of its duties. The recitals of fact that are contained herein shall be taken
as the statements of the District, and the Escrow Agent assumes no responsibility for the correctness
thereof. The Escrow Agent makes no representation as to the sufficiency of the proceeds to accomplish
the refunding of the 2013A Bonds or to the validity of this Agreement as to the District or the Authority
4
and, except as otherwise provided herein, the Escrow Agent shall incur no liability in respect thereof.
The Escrow Agent shall not be liable in connection with the performance of its duties under this
Agreement except for its own negligence or willful misconduct, and the duties and obligations of the
Escrow Agent shall be determined by the express provisions of this Agreement. In no event shall the
Escrow Agent be liable for any special, punitive, indirect or consequential damages. The Escrow Agent
may consult with counsel of its selection, and in reliance upon the opinion of such counsel shall have
full and complete authorization and protection in respect of any action taken, suffered or omitted by it
in good faith in accordance therewith. Whenever the Escrow Agent shall deem it necessary or desirable
that a matter be proved or established prior to taking, suffering, or omitting any action under this
Agreement, such matter may be deemed to be conclusively established by a certificate signed by an
officer of the District.
No provision of this Agreement shall require the Escrow Agent to expend or risk its own funds
or otherwise incur any financial liability in the performance or exercise of any of its duties hereunder,
or in the exercise of its rights or powers.
The Escrow Agent shall have the right to accept and act upon instructions, including funds
transfer instructions (“Instructions”) given pursuant to this Agreement and delivered using Electronic
Means (“Electronic Means” shall mean the following communications methods: e-mail, facsimile
transmission, secure electronic transmission containing applicable authorization codes, passwords
and/or authentication keys issued by the Escrow Agent, or another method or system specified by the
Escrow Agent as available for use in connection with its services hereunder); provided, however, that
the District shall provide to the Escrow Agent an incumbency certificate listing officers with the
authority to provide such Instructions (“Authorized Officers”) and containing specimen signatures of
such Authorized Officers, which incumbency certificate shall be amended by the District whenever a
person is to be added or deleted from the listing. If the District elects to give the Escrow Agent
Instructions using Electronic Means and the Escrow Agent in its reasonable judgment elects to act
upon such Instructions, the Escrow Agent’s understanding of such Instructions shall be deemed
controlling. The District understands and agrees that the Escrow Agent cannot determine the identity
of the actual sender of such Instructions and that the Escrow Agent shall conclusively presume that
directions that purport to have been sent by an Authorized Officer listed on the incumbency certificate
provided to the Escrow Agent have been sent by such Authorized Officer. The District shall be
responsible for ensuring that only Authorized Officers transmit such Instructions to the Escrow Agent
and that the District and all Authorized Officers are solely responsible to safeguard the use and
confidentiality of applicable user and authorization codes, passwords and/or authentication keys upon
receipt by the District. The Escrow Agent shall not be liable for any losses, costs or expenses arising
directly or indirectly from the Escrow Agent’s reliance upon and compliance with such Instructions
notwithstanding such directions conflict or are inconsistent with a subsequent written instruction. The
District agrees: (i) to assume all risks arising out of the use of Electronic Means to submit Instructions
to the Escrow Agent, including without limitation the risk of the Escrow Agent acting on unauthorized
Instructions, and the risk of interception and misuse by third parties; (ii) that they are fully informed
of the protections and risks associated with the various methods of transmitting Instructions to the
Escrow Agent and that there may be more secure methods of transmitting Instructions than the
method(s) selected by the District; (iii) that the security procedures (if any) to be followed in
connection with its transmission of Instructions provide to it a commercially reasonable degree of
protection in light of its particular needs and circumstances; and (iv) to notify the Escrow Agent in
writing immediately upon learning of any compromise or unauthorized use of the security procedures.
5
The Escrow Agent shall furnish the District with cash transaction statements which include
detail for all investment transactions effected by the Escrow Agent or brokers selected by the District,
provided that the Escrow Agent is not obligated to provide an accounting for any fund or account that:
(a) has a balance of $0.00; and (b) has not had any activity since the last reporting date. Upon the
District’s election, such statements will be delivered via the Escrow Agent’s online service and upon
electing such service, paper statements will be provided only upon request. The District waives the
right to receive brokerage confirmations of security transactions effected by the Escrow Agent as they
occur, to the extent permitted by law. The District further understands that trade confirmations for
securities transactions effected by the Escrow Agent will be available upon request and at no additional
cost and other trade confirmations may be obtained from the applicable broker.
If the Escrow Agent learns that the Department of the Treasury or the Bureau of Public Debt
will not, for any reason, accept a subscription of Federal Securities that is to be submitted pursuant to
this Agreement, the Escrow Agent shall promptly request alternative written investment instructions
from the District with respect to escrowed funds which were to be invested in securities. The Escrow
Agent shall follow such instructions and, upon the maturity of any such alternative investment, the
Escrow Agent shall hold such funds uninvested and without liability for interest until receipt of further
written instructions from the District. In the absence of written investment instructions from the
District, the Escrow Agent shall hold funds uninvested. The Escrow Agent may conclusively rely upon
the District’s selection of an alternative investment as a determination of the alternative investment’s
legality and suitability and shall not be liable for any losses, fees, taxes or other charges related to the
alternative investments, reinvestments or liquidation of investments or for compliance with any yield
restriction applicable thereto.
The Escrow Agent may execute any of the powers hereunder or perform any duties hereunder
either directly or by or through agents, attorneys, custodians or nominees appointed with due care, and
shall not be responsible for any willful misconduct or negligence on the part of any agent, attorney,
custodian or nominee so appointed.
The Escrow Agent may conclusively rely, as to the trust and accuracy of the statements and
correctness of the opinions and the calculations provided to it in connection with this Agreement, and
shall be protected in acting, or refraining from acting, upon any written notice, instruction, request,
certificate, document or opinion furnished to the Escrow Agent in accordance with this Agreement and
reasonably believed by the Escrow Agent to have been signed or presented by the proper party, and it
need not investigate any facts or matter stated in such notice, instruction, request, certificate or opinion.
The liability of the Escrow Agent to make any payments under the Agreement shall be limited
to the funds in the Escrow Fund.
SECTION 9. Amendments. This Agreement is made for the benefit of the District, the
Authority and the owners from time to time of the 2013A Bonds and it shall not be repealed, revoked,
altered or amended without the written consent of all such owners, the Escrow Agent, the Authority
and the District; provided, however, that the District, the Authority and the Escrow Agent may, without
the consent of, or notice to, such owners, amend this Agreement or enter into such agreements
supplemental to this Agreement as shall not adversely affect the rights of such owners and as shall not
be inconsistent with the terms and provisions of this Agreement or the 2013A Indenture, for any one
or more of the following purposes: (i) to cure any ambiguity or formal defect or omission in this
Agreement; (ii) to grant to, or confer upon, the Escrow Agent for the benefit of the owners of the
2013A Bonds any additional rights, remedies, powers or authority that may lawfully be granted to, or
6
conferred upon, such owners or the Escrow Agent; and (iii) to include under this Agreement additional
funds. The Escrow Agent shall be entitled to rely conclusively upon an unqualified opinion of
Stradling Yocca Carlson & Rauth, a Professional Authority, with respect to compliance with this
Agreement, including the extent, if any, to which any change, modification, addition or elimination
affects the rights of the owners of the various 2013A Bonds or that any instrument that is executed
hereunder complies with the conditions and provisions of this Agreement.
SECTION 10. Notice to Rating Agencies. In the event that this agreement or any provision
thereof is severed, amended or revoked, the Escrow Agent shall provide written notice of such
severance, amendment or revocation to the rating agencies then rating the 2013A Bonds. The Escrow
Agent makes this covenant as a matter of courtesy and accommodation only and shall not be liable to
any person for any failure to comply therewith.
SECTION 11. Term. This Agreement shall commence upon its execution and delivery and
shall terminate on the later to occur of either: (i) the date upon which the 2013A Bonds have been paid
in accordance with this Agreement; or (ii) the date upon which no unclaimed moneys remain on deposit
with the Escrow Agent pursuant to Section 3(c) of this Agreement. Funds remaining in the Escrow
Fund after payment in full of the 2013A Bonds shall be transferred to the District.
SECTION 12. Compensation. The Escrow Agent shall receive its fees and expenses as
previously agreed to in writing by the Escrow Agent and the District and any other reasonable fees and
expenses of the Escrow Agent (including legal fees and expenses); provided, however, that under no
circumstances shall the Escrow Agent be entitled to any lien or assert any lien whatsoever on any
moneys or obligations in the Escrow Fund for the payment of fees and expenses for services that are
rendered or expenses incurred by the Escrow Agent under this Agreement. The provisions of this
Section shall survive the termination of this Agreement and the resignation or removal of the Escrow
Agent.
SECTION 13. Severability. If any one or more of the covenants or agreements provided in
this Agreement on the part of the District, the Authority or the Escrow Agent to be performed should
be determined by a court of competent jurisdiction to be contrary to law, such covenants or agreements
shall be null and void, shall be deemed separate from the remaining covenants and agreements
contained herein and shall in no way affect the validity of the remaining provisions of this Agreement.
SECTION 14. Counterparts. This Agreement may be executed in several counterparts, all or
any of which shall be regarded for all purposes as an original but all of which shall constitute and be
but one and the same instrument. The exchange of copies of this Agreement and of signature pages by
facsimile or PDF transmission shall constitute effective execution and delivery of this Agreement as
to the parties hereto and may be used in lieu of the original Agreement and signature pages for all
purposes.
SECTION 15. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED UNDER
THE LAWS OF THE STATE OF CALIFORNIA.
SECTION 16. Holidays. If the date for making any payment or the last date for performance
of any act or the exercising of any right, as provided in this Agreement, shall be a legal holiday or a
day on which banking institutions in the city in which is located the office of the Escrow Agent are
authorized by law to remain closed, such payment may be made or act performed or right exercised on
the next succeeding day which is not a legal holiday or a day on which such banking institutions are
7
authorized by law to remain closed, with the same force and effect as if done on the nominal date
provided in this Agreement, and no interest shall accrue for the period from and after such nominal
date.
SECTION 17. Assignment. This Agreement shall not be assigned by the Escrow Agent or
any successor thereto without the prior written consent of the District and the Authority.
SECTION 18. Reorganization of Escrow Agent. Notwithstanding anything to the contrary
contained in this Agreement, any company into which the Escrow Agent may be merged or converted
or with which it may be consolidated or any company resulting from any merger, conversion or
consolidation to which the Escrow Agent is a party, or any company to which the Escrow Agent may
sell or transfer all or substantially all of its corporate trust business, shall be the successor to the Escrow
Agent without execution or filing of any paper or any paper or further act, if such company is eligible
to serve as Escrow Agent.
SECTION 19. Insufficient Funds. If at any time the Escrow Agent has actual knowledge that
the moneys and investments in the Escrow Fund, including the anticipated proceeds thereof and
earnings thereon, will not be sufficient to make all payments required by this Agreement, the Escrow
Agent shall notify the District in writing of the amount thereof and the reason therefor to the extent
known to it. The Escrow Agent shall have no responsibility regarding any such deficiency.
SECTION 20. Notices. Any notice to or demand upon the Escrow Agent may be served or
presented, and such demand may be made, at the principal corporate trust office of the Escrow Agent
at 445 South Figueroa Street, Suite 401, Los Angeles, California 90071, Attention: Corporate Trust,
Reference: East Valley Water District, Series 2013A, Fax: 213-972-5694, Email:
LACT@unionbank.com. Any notice to or demand upon the District or the Authority shall be deemed
to have been sufficiently given or served for all purposes by being sent by facsimile or other electronic
transmission, overnight mail or courier or mailed by first class mail, and deposited, postage prepaid,
in a post office letter box, addressed to the District or the Authority at 31111 Greenspot Road,
Highland, California 92346, email: btompkins@eastvalley.org, Facsimile: (909) 888-6741 (or such
other address as may have been filed in writing by the District or the Authority with the Escrow Agent).
SECTION 21. Electronic Signatures. The words “execution,” “signed,” “signature,”
“delivery,” and words of like import in or relating to this Agreement or any document to be signed in
connection with this Agreement shall be deemed to include electronic signatures, deliveries or the
keeping of records in electronic form, each of which shall be of the same legal effect, validity or
enforceability as a manually executed signature, physical delivery thereof or the use of a paper-based
recordkeeping system, as the case may be, and the parties hereto consent to conduct the transactions
contemplated hereunder by electronic means. “Electronic signature” means any electronic sound,
symbol or process attached to or logically associated with a record and executed and adopted by a party
with the intent to sign such record, including facsimile or email electronic signatures.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
S-1
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by
their duly authorized officers as of the date first above written.
EAST VALLEY WATER DISTRICT
By:
Board President
ATTEST:
Secretary, Board of Directors
EAST VALLEY WATER DISTRICT
FINANCING AUTHORITY
By:
Board President
ATTEST:
Secretary, Board of Directors
MUFG UNION BANK, N.A.,
as Escrow Agent and 2013 Trustee
By:
Authorized Officer
Schedule A-1
SCHEDULE A
ESCROW REQUIREMENTS
Moneys deposited in the Escrow Fund shall be invested as follows:
Security Maturity
Principal
Amount
Interest
Rate
[__] October 1, 2020 $ %
April 1, 2021
October 1, 2021
April 1, 2022
October 1, 2022
April 1, 2023
The escrow requirements for the 2013A Bonds are as follows:
Period
Ending Principal Paid
Principal
Redeemed Interest Total
October 1, 2020 $ [__] $ $ $
April 1, 2021
October 1, 2021
April 1, 2022
October 1, 2022
April 1, 2023
Exhibit A-1
EXHIBIT A
NOTICE OF FULL OPTIONAL REDEMPTION
EAST VALLEY WATER DISTRICT FINANCING AUTHORITY
REVENUE BONDS, SERIES 2013A
BASE CUSIP 275736
NOTICE IS HEREBY GIVEN to the owners of the above-captioned obligations (the “2013A
Bonds”), which were issued pursuant to the Indenture of Trust, dated as of June 1, 2013 (the “2013A
Indenture”), by and between the East Valley Water District Financing Authority (the “Authority”) and
MUFG Union Bank, N.A., as trustee (the “2013A Trustee”), that 2013A Bonds in the amount of
$11,870,000 have been called for redemption on April 1, 2023 (the “Redemption Date”). The 2013A
Bonds were originally issued on June 19, 2013 and are described in the following table.
CUSIP
Maturity
(October 1)
Principal
Amount Rate Redemption Price
AY2 2023 $ 115,000 5.000% 100%
AZ9 2024 120,000 5.000 100
BA3 2025 225,000 5.000 100
BB1 2026 240,000 5.000 100
BC9 2027 250,000 5.000 100
BD7 2028 260,000 5.000 100
BE5 2029 275,000 5.000 100
BH8 2033 1,230,000 4.000 100
BF2 2038 1,035,000 5.000 100
BJ4 2038 910,000 4.250 100
BG0 2043 7,210,000 5.000 100
The 2013A Bonds will be payable on the Redemption Date at a redemption price of 100% of
the principal amount thereof, plus interest accrued through the Redemption Date, without premium
(the “Redemption Price”). The Redemption Price of the 2013A Bonds will become due and payable
on the Redemption Date. Interest with respect to the 2013A Bonds will cease to accrue and be payable
from and after the Redemption Date, and such 2013A Bonds will be surrendered to the 2013A Trustee.
To receive payment on the Redemption Date, owners of the 2013A Bonds should present and
to surrender said 2013A Bonds on the Redemption Date at the address of the 2013A Trustee set forth
below:
MUFG Union Bank, N.A.
445 S. Figueroa Street, Suite 401
Los Angeles, CA 90071
Attention: Bond Redemptions
A form W-9 must be submitted with the 2013A Bonds. Failure to provide a completed form
W-9 will result in 31% backup withholding pursuant to the Interest and Dividend Tax Compliance Act
of 1983. Under the Jobs and Growth Tax Relief Reconciliation Act of 2003, 28% will be withheld if
the tax identification number is not properly certified.
Exhibit A-2
If the owner of any 2013A Bond fails to deliver such 2013A Bond to the 2013A Trustee on the
Redemption Date, such 2013A Bond shall nevertheless be deemed redeemed on the Redemption Date
and the owner of such 2013A Bond shall have no rights in respect thereof except to receive payment
of the Redemption Price from funds held by the 2013A Trustee for such payment.
Note: The Authority and the 2013A Trustee shall not be responsible for the selection or use of
the CUSIP numbers selected, nor is any representation made as to their correctness in the notice or
as printed on any 2013A Bond. They are included solely for the convenience of the holders.
MUFG UNION BANK, N.A., as 2013A Trustee
March 1, 2023
Exhibit B-1
EXHIBIT B
NOTICE OF DEFEASANCE
EAST VALLEY WATER DISTRICT FINANCING AUTHORITY
REVENUE BONDS, SERIES 2013A
BASE CUSIP 275736
NOTICE IS HEREBY GIVEN to the owners of the above-captioned obligations (the “2013A
Bonds”) which were issued pursuant to the Indenture of Trust, dated as of June 1, 2013 (the “2013A
Indenture”), by and between the East Valley Water District Financing Authority (the “Authority”) and
MUFG Union Bank, N.A., as trustee (the “2013A Trustee”), that the East Valley Water District (the
“District”) has deposited with MUFG Union Bank, N.A., as escrow agent (the “Escrow Agent”), cash
and federal securities, the principal of and interest on which when paid will provide moneys sufficient
to pay: (i) the regularly scheduled payments of principal of and interest on the 2013A Bonds through
April 1, 2023 (the “Redemption Date”); and (ii) on the Redemption Date, the principal of the 2013A
Bonds maturing after the Redemption Date, plus accrued interest thereon to the Redemption Date,
without premium. The 2013A Bonds were originally issued on June 19, 2013 and are described in the
following table.
CUSIP
Maturity
(October 1)
Principal
Amount Rate
AW6 2021 $ 105,000 5.000%
AX4 2022 110,000 5.000
AY2 2023 115,000 5.000
AZ9 2024 120,000 5.000
BA3 2025 225,000 5.000
BB1 2026 240,000 5.000
BC9 2027 250,000 5.000
BD7 2028 260,000 5.000
BE5 2029 275,000 5.000
BH8 2033 1,230,000 4.000
BF2 2038 1,035,000 5.000
BJ4 2038 910,000 4.250
BG0 2043 7,210,000 5.000
In accordance with the 2013A Indenture and the Installment Purchase Agreement, dated as of
June 1, 2013 (the “2013A IPA”), by and between the Authority and the District: (i) the 2013A Bonds
have ceased to be entitled to any benefit or security under the 2013A Indenture; (ii) the 2013A
Indenture, the pledge of Authority Revenues and other assets made under the 2013A Indenture and all
liability, covenants, agreements and other obligations of the Authority under the 2013A Indenture have
ceased, terminated, become void and been completely discharged and satisfied; (iii) the owners of the
2013A Bonds are entitled only to payment out of money or securities deposited with the Escrow Agent;
(iv) the right, title and interest of the Authority in the 2013A IPA and the obligations of the District
thereunder have, with respect to all or such portion of the Installment Payments payable thereunder as
have been so provided for, thereupon ceased, terminated, become void and been completely discharged
and satisfied (except as set forth in the 2013A IPA); and (v) all obligations of the District under the
Continuing Disclosure Certificate of the District, dated June 19, 2013, relating to the 2013A Bonds
have terminated.
Exhibit B-2
No representation is made as to the correctness of the CUSIP number either as printed on any
2013A Bond or as contained herein and any error in the CUSIP number shall not affect the validity of
the proceedings for redemption of the 2013A Bonds.
MUFG UNION BANK, N.A., as 2013A Trustee
____ __, 2020
S TAF F R E P ORT
Agenda Item #4.
Meeting Date: August 11, 2020
Disc ussion Item
To: F I NANC E AND HUMAN R ES O UR C ES C O MMI T T EE
F rom: C hief F inancial O ffic er
Subject: R eview EVW D F inanc ing Authority R es olution 2020.01 Authorizing and Approving R efunding of
the 2010 and 2013 R evenue Bonds
R E C OMME N D AT ION:
S taff recommend s that the F inanc e and Human R es o urc es C o mmittee (C ommittee) review the East Valley
Water District F inancing Authority (Authority or EVW DFA) R esolution 2020.01 Authorizing and Approving
the R efunding of the 2010 and 2013 R evenue Bonds.
B AC KG R OUN D / AN ALYS IS:
F or many years , East Valley Water Dis tric t has b een making timely Ins tallment P ayments on the 2010 and 2013
R evenue Bo nds issued b y the EVW D F inanc ing Autho rity in ac cordance with agreed-up o n amortization
s chedules. T his year, as explained in a p res entation made b y F ield man, R olapp & Assoc iates, the Dis tric t has
the opportunity to realize s ignificant interest s avings b y issuing R efund ing R evenue Bond s to p ay off the
Authority’s bonds.
O c tober 1, 2020 will mark the end o f the 10 year no -call provis io n o n the 2010 b o nds, so those b o nds c an
eas ily b e refinanced in a C urrent R efunding trans ac tio n. T he 2013 bond s will o nly have matured for seven
years as of O c tober 1st, and therefo re s till have three years left o n their 10 year no-c all p ro vision. Even s o , the
2013 bond s c an still be refinanced and removed from the Dis tric t’s b o o ks through an Ad vance R efunding
trans action, explained below.
A 2020 R efund ing R evenue bond issue will have two s eries – S eries A and B. T he proc eed s from the 2020
S eries A bonds will be p laced into an es crow acc o unt for the 2010 bond s until O c tober 1, 2020, at whic h time
the trus tee fo r the acc o unt will us e the p ro ceeds to c all all o f the o uts tand ing 2010 bond s . T he proc eed s from
the 2020 S eries B bond s will b e plac ed into an es c row ac count for the 2013 b o nds , where they will be
inves ted, and will b e us ed to c o ntinue making semi-annual p ayments on the bond s fo r three mo re years until the
no-c all p ro vision exp ires o n O c tober 1, 2023. O n that d ate, the funds remaining in the esc ro w ac c ount will be
used to call all of the 2013 bonds outs tanding.
T he Authority c an fac ilitate the refunding trans actio ns by approving Es crow Agreements between the Eas t
Valley Water Dis tric t, the Eas t Valley Water Dis tric t F inanc ing Autho rity, and MUF G Unio n Bank. MUF G
Union Bank, whic h c urrently s erves as trus tee for the 2010 and 2013 bond s , will s erve as the Es crow Agent
res ponsible fo r managing the funds in the es crow ac c ount. Ad o p tion of EVW DFA R es o lutio n 2020.01,
approves the Es crow Agreements and designates MUF G Unio n Bank as Es crow Agent to call and p ay off the
2010 and 2013 bonds.
AG E N C Y G O ALS AN D O B J E C T IVE S :
G oal and O bjectives I V - P romote P lanning, Maintenance and P res ervation of District R esources
b) Enhance P lanning Efforts that R espond to F uture Demands
R E VIE W B Y O T HE R S :
T his agenda item has been reviewed b y the District’s F inancial Advisors, Bond C ounsel, and the District’s
G eneral C ouns el.
F IS C AL IMPAC T
R efunding o f the F inanc ing Authority’s bond s will end all trans actio ns c urrently flo wing through the Authority,
c ausing the Authority to go dormant, exc ep t for standard rec o rd keeping and s tate filing o b ligatio ns, until such
time as it is us ed for a future bond issue, or it is dis s olved/terminated.
ATTAC H M EN TS:
Description Type
Res 2020.01 Resolution Letter
Exh A - Escrow Agreement (2010 Bonds)Exhibit
Exh B - Escrow Agreement (2013 A Bonds)Exhibit
East Valley Water District Financing Authority
Resolution 2020.01
Page 1 of 3
RESOLUTION NO. 2020.01
A RESOLUTION OF THE EAST VALLEY WATER DISTRICT FINANCING
AUTHORITY AUTHORIZING AND APPROVING ESCROW AGREEMENTS IN
CONNECTION WITH THE ISSUANCE OF REFUNDING REVENUE BONDS; AND
AUTHORIZING CERTAIN OTHER MATTERS RELATING THERETO
WHEREAS, the East Valley Water District Financing Authority (the “Authority”), a
public entity duly organized and existing under a joint exercise of powers agreement and under
the Constitution and laws of the State of California (the “State”), has the powers, among others, to
issue bonds and to finance water and wastewater facilities on behalf of its members;
WHEREAS, the East Valley Water District (the “District”), a county water district duly
organized and existing under and by virtue of the laws of the State, is a member of the Authority;
WHEREAS, the District and the Authority have previously entered into an Installment
Purchase Agreement, dated as of October 1, 2010 (the “2010 IPA”), to finance and refinance
certain water and wastewater facilities of the District;
WHEREAS, the District’s payments to the Authority under the 2010 IPA support the
payment of debt service on the Authority’s Refunding Revenue Bonds, Series 2010 (the “2010
Bonds”);
WHEREAS, the District and the Authority have previously entered into an Installment
Purchase Agreement, dated as of June 1, 2013 (the “2013 IPA”), to finance certain water and
wastewater facilities of the District;
WHEREAS, the District’s payments to the Authority under the 2013 IPA support the
payment of debt service on the Authority’s Revenue Bonds, Series 2013A (the “2013 Bonds”);
WHEREAS, the District is authorized by Articles 10 and 11 of Chapter 3 of Part 1 of
Division 2 of Title 5 (commencing with Section 53570) of the Government Code of the State of
California to issue bonds to refund outstanding indebtedness of the District;
WHEREAS, the District desires to provide for the issuance of refunding revenue bonds in
one or more series, on a taxable or tax-exempt basis, for the purpose, among others, of prepaying
the 2010 IPA and refunding the 2010 Bonds and prepaying the 2013 IPA and refunding the 2013
Bonds;
WHEREAS, in connection with the prepayment of the 2010 IPA and the refunding of the
2010 Bonds, the Authority desires to enter into an Escrow Agreement (2010 Bonds) with the
District and the trustee for the 2010 Bonds, as escrow agent (such Escrow Agreement (2010
Bonds), in the form attached hereto as Exhibit A with such changes, insertions and deletions as are
made pursuant to this Resolution, being referred to herein as the “2010 Escrow Agreement”); and
WHEREAS, in connection with the prepayment of the 2013 IPA and the refunding of the
2013 Bonds, the Authority desires to enter into an Escrow Agreement (2013A Bonds) with the
District and the trustee for the 2013 Bonds, as escrow agent (such Escrow Agreement (2013A
East Valley Water District Financing Authority
Resolution 2020.01
Page 2 of 3
Bonds), in the form attached hereto as Exhibit B with such changes, insertions and deletions as are
made pursuant to this Resolution, being referred to herein as the “2013 Escrow Agreement”).
NOW, THEREFORE, BE IT RESOLVED AND ORDERED:
SECTION 1. Findings and Definitions. The Board hereby specifically finds and declares
that each of the statements, findings and determinations of the Authority set forth in the above
recitals and in the preambles of the documents approved herein are true and correct.
SECTION 2. 2010 Escrow Agreement. The 2010 Escrow Agreement, in substantially the
form attached hereto as Exhibit A, and made a part hereof as though set forth in full herein, be and
the same is hereby approved. Each of the President or Vice President of the Board or the Executive
Director or Director of Finance of the Authority or the designee thereof (each an “Authorized
Officer”), acting singly, is hereby authorized to execute and deliver the 2010 Escrow Agreement,
in the name of and on behalf of the Authority, in substantially the form attached hereto with such
changes, insertions and deletions as may be approved by the Authorized Officer executing the
2010 Escrow Agreement, said execution being conclusive evidence of such approval, and the
Secretary is hereby authorized to attest thereto.
SECTION 3. 2013 Escrow Agreement. The 2013 Escrow Agreement, in substantially the
form attached hereto as Exhibit B, and made a part hereof as though set forth in full herein, be and
the same is hereby approved. Each Authorized Officer, acting singly, is hereby authorized to
execute and deliver the 2013 Escrow Agreement, in the name of and on behalf of the Authority, in
substantially the form attached hereto with such changes, insertions and deletions as may be
approved by the Authorized Officer executing the 2013 Escrow Agreement, said execution being
conclusive evidence of such approval, and the Secretary is hereby authorized to attest thereto.
SECTION 4. Other Actions. The Authorized Officers, the Secretary, the Authority’s
General Counsel and any other proper official, officer or employee of the Authority, acting singly,
be and each of them hereby is authorized to execute and deliver any and all documents and
instruments and to do and cause to be done any and all acts and things necessary or convenient in
carrying out the actions authorized by this Resolution and the transactions contemplated by the
documents and instruments approved or authorized by this Resolution, including, without
limitation, the preparation, execution and delivery of escrow or redemption instructions and the
authorization, execution, delivery of, and the performance by the Authority of its obligations
under, the documents and instruments approved or authorized by this Resolution.
SECTION 5. Ratification of Prior Actions. All actions heretofore taken by any
committee of the Board, or any official, officer, employee, representative or agent of the Authority,
in connection with the authorization, execution, delivery, or performance of the Authority’s
obligations under the documents and instruments that are approved or authorized by this
Resolution, and the other actions contemplated by this Resolution, are hereby ratified, approved
and confirmed.
SECTION 6. Effect. This Resolution shall take effect immediately.
East Valley Water District Financing Authority
Resolution 2020.01
Page 3 of 3
Passed and adopted by the East Valley Water District Financing Authority Board of
Directors on August 26, 2020, by the following vote:
ROLL CALL:
Ayes:
Noes:
Abstain:
Absent:
David E. Smith
Board President
ATTEST:
_____________________________
John Mura
Secretary, Board of Directors
August 26, 2020
I HEREBY CERTIFY that the foregoing is a full, true and correct copy of Resolution 2020.01
adopted by the Board of Directors of East Valley Water District Financing Authority at its Regular
Meeting held August 26, 2020.
_____________________________
John Mura
Secretary, Board of Directors
1
EXHIBIT A
ESCROW AGREEMENT (2010 BONDS)
THIS ESCROW AGREEMENT (2010 BONDS), dated as of _____ 1, 2020 (the
“Agreement”), by and among the East Valley Water District (the “District”), the East Valley Water
District Financing Authority (the “Authority”) and MUFG Union Bank, N.A., as escrow agent (the
“Escrow Agent”) and as 2010 Trustee (as such term is defined herein), is entered into in accordance
with a resolution of the District adopted on ____ __, 2020, an Indenture of Trust, dated as of October
1, 2010 (the “2010 Indenture”), by and between the Authority and MUFG Union Bank, N.A., as
trustee (the “2010 Trustee”), and an Installment Purchase Agreement, dated as of October 1, 2010
(the “2010 IPA”), by and between the District and the Authority. This Agreement is entered into to
refund all of the outstanding East Valley Water District Financing Authority Refunding Revenue
Bonds, Series 2010 (the “2010 Bonds”).
RECITALS
A. Pursuant to the 2010 Indenture, the Authority has previously issued the 2010 Bonds
in the aggregate principal amount of $33,545,000, of which $21,635,000 is currently outstanding.
B. The 2010 Bonds are payable from installment payments made by the District to the
Authority under the 2010 IPA.
C. The District has determined to issue its East Valley Water District Refunding
Revenue Bonds, Series 2020A (the “2020A Bonds”), a portion of the proceeds of which will be
applied to pay, on October 1, 2020 (the “Redemption Date”), the principal of the outstanding 2010
Bonds maturing on and after the Redemption Date, together with accrued interest thereon, without
premium (the “Redemption Price”).
D. The District will irrevocably deposit moneys with the Escrow Agent, which moneys
will be used to purchase the securities that are described on Schedule A (the “Federal Securities”)
(as permitted by, in the manner prescribed by and all in accordance with the 2010 Indenture). Such
Federal Securities satisfy the criteria set forth in Section 10.03 of the 2010 Indenture, and the
principal of and interest on such Federal Securities when paid, together with other moneys
contributed by the District, will provide funds which will be fully sufficient to pay and discharge the
2010 Bonds on the Redemption Date.
AGREEMENT
SECTION 1. Deposit of Moneys. The District will cause MUFG Union Bank, N.A., as
trustee for the 2020A Bonds, to transfer a portion of the proceeds of the 2020A Bonds in the amount
of $_____ on the date of issuance of the 2020A Bonds to the Escrow Agent for deposit in the Escrow
Fund established hereunder. The Authority instructs the 2010 Trustee to transfer $_____ held in the
Revenue Fund relating to the 2010 Bonds to the Escrow Agent for deposit in the below-defined
Escrow Fund.
The Escrow Agent will hold such amounts in an irrevocable escrow separate and apart from
other funds of the Authority, the District and the Escrow Agent in a fund hereby created and
2
established to be known as the “Escrow Fund” and to be applied solely as provided in this
Agreement. The District represents that the sum of the amounts set forth above are at least equal to
an amount that is sufficient to purchase the Federal Securities listed on Schedule A, and to hold $__
uninvested as cash.
SECTION 2. Investment of Moneys. The Escrow Agent acknowledges receipt of the
moneys described in Section 1 and agrees immediately to invest $_____ of such moneys in the
Federal Securities listed on Schedule A and to deposit such Federal Securities in the Escrow Fund.
The Escrow Agent shall be entitled to rely conclusively upon the conclusion of Robert Thomas CPA,
LLC, Overland Park, Kansas, that the Federal Securities listed on Schedule A mature and bear
interest payable in such amounts and at such times as, together with cash on deposit in the Escrow
Fund, will be sufficient to pay on the Redemption Date the Redemption Price of the outstanding 2010
Bonds maturing on and after the Redemption Date.
SECTION 3. Payment of 2010 Bonds.
(a) Payment. From the maturing principal of the Federal Securities and the
investment income and other earnings thereon and other moneys on deposit in the Escrow Fund, the
Escrow Agent shall pay, on the Redemption Date, the Redemption Price of the 2010 Bonds maturing
on and after the Redemption Date, all as indicated on Schedule A.
(b) Irrevocable Instructions to Provide Notice. The notices that are required to be
mailed pursuant to Section 4.03 and Article X of the 2010 Indenture are substantially in the forms
attached hereto as Exhibits A and B. The District and the Authority hereby irrevocably instruct the
2010 Trustee to mail a notice of redemption and (on the date of issuance of the 2020A Bonds) a
notice of defeasance of the 2010 Bonds to the parties that are described in and otherwise in
accordance with Section 4.03 and Article X of the 2010 Indenture (and to file such notices with the
Municipal Securities Rulemaking Board’s Electronic Municipal Market Access website),
respectively, as required to provide for the redemption and defeasance of the 2010 Bonds in
accordance with this Section 3.
(c) Unclaimed Moneys. Any moneys in the Escrow Fund which remain
unclaimed after the Redemption Date shall be repaid by the Escrow Agent to the District.
(d) Priority of Payments. The owners of the 2010 Bonds shall have a first and
exclusive lien on all moneys and securities in the Escrow Fund until such moneys and such securities
are used and applied as provided in this Agreement.
(e) Termination of Obligation. As provided in the 2010 IPA and the 2010
Indenture, upon the deposit of moneys with the Escrow Agent in the Escrow Fund as set forth in
Section 1: (i) interest on the 2010 Bonds shall cease to accrue, the 2010 Bonds shall cease to be
entitled to any benefit or security under the 2010 Indenture and the owners of the 2010 Bonds shall
have no rights in respect thereof except to receive payment of the redemption price thereof; (ii) the
2010 Indenture, the pledge of Authority Revenues and other assets made under the 2010 Indenture
and all liability, covenants, agreements and other obligations of the Authority under the 2010
Indenture shall cease, terminate, become void and be completely discharged and satisfied; (iii) the
owners of the 2010 Bonds shall thereafter be entitled only to payment out of money or securities
deposited with the Escrow Agent; and (iv) the right, title and interest of the Authority in the 2010
IPA and the obligations of the District thereunder shall, with respect to all or such portion of the
3
Installment Payments payable thereunder as have been so provided for, thereupon cease, terminate,
become void and be completely discharged and satisfied (except as set forth in the 2010 IPA).
SECTION 4. Application of Certain Terms of the 2010 Indenture. All of the terms of the
2010 Indenture relating to the making of payments of principal of and interest with respect to the
2010 Bonds and relating to the exchange or transfer of the 2010 Bonds are incorporated into this
Agreement by reference as if set forth in full herein. The procedures set forth in Article VIII of the
2010 Indenture relating to the resignation and removal and merger of the 2010 Trustee are also
incorporated into this Agreement by reference as if set forth in full herein and shall be the procedures
to be followed with respect to any resignation or removal of the Escrow Agent hereunder.
SECTION 5. Performance of Duties. The Escrow Agent agrees to perform only the duties
that are set forth herein and shall have no responsibility to take any action or omit to take any action
that is not set forth herein.
SECTION 6. Escrow Agent’s Authority to Make Investments. Except as provided in
Section 2 hereof, the Escrow Agent shall have no power or duty to invest any funds that are held
hereunder or to sell, transfer or otherwise dispose of the moneys or securities that are held hereunder.
SECTION 7. Indemnity. The District hereby assumes liability for, and hereby agrees
(whether or not any of the transactions contemplated hereby are consummated) to indemnify, protect,
save and keep harmless the Escrow Agent and its respective successors, assigns, agents, employees
and servants, from and against any and all liabilities, obligations, losses, damages, penalties, claims,
actions, suits, costs, expenses and disbursements (including reasonable legal fees and disbursements)
of whatsoever kind and nature which may be imposed on, incurred by or asserted against the Escrow
Agent at any time (whether or not also indemnified against the same by the District or any other
person under any other agreement or instrument, but without double indemnity) in any way relating
to or arising out of the execution, delivery and performance of this Agreement, the establishment
hereunder of the Escrow Fund, the acceptance of the funds and securities deposited therein, the
retention of the proceeds thereof and any payment, transfer or other application of moneys or
securities by the Escrow Agent in accordance with the provisions of this Agreement; provided,
however, that the District shall not be required to indemnify the Escrow Agent against the Escrow
Agent’s own negligence or willful misconduct. In no event shall the District or the Escrow Agent be
liable to any person by reason of the transactions that are contemplated hereby other than to each
other as set forth in this Section. The indemnities that are contained in this Section shall survive the
termination of this Agreement and the resignation or removal of the Escrow Agent.
SECTION 8. Responsibilities of Escrow Agent. The Escrow Agent and its agents and
servants shall not be held to any personal liability whatsoever, in tort, contract or otherwise, in
connection with the execution and delivery of this Agreement, the establishment of the Escrow Fund,
the acceptance of the moneys or securities deposited therein, the sufficiency of the moneys held in
the Escrow Fund to pay the 2010 Bonds or any payment, transfer or other application of moneys or
obligations by the Escrow Agent in accordance with the provisions of this Agreement or by reason of
any non-negligent act, non-negligent omission or non-negligent error of the Escrow Agent that is
made in good faith in the conduct of its duties. The recitals of fact that are contained herein shall be
taken as the statements of the District, and the Escrow Agent assumes no responsibility for the
correctness thereof. The Escrow Agent makes no representation as to the sufficiency of the proceeds
to accomplish the refunding of the 2010 Bonds or to the validity of this Agreement as to the District
or the Authority and, except as otherwise provided herein, the Escrow Agent shall incur no liability
4
in respect thereof. The Escrow Agent shall not be liable in connection with the performance of its
duties under this Agreement except for its own negligence or willful misconduct, and the duties and
obligations of the Escrow Agent shall be determined by the express provisions of this Agreement. In
no event shall the Escrow Agent be liable for any special, punitive, indirect or consequential damages.
The Escrow Agent may consult with counsel of its selection, and in reliance upon the opinion of such
counsel shall have full and complete authorization and protection in respect of any action taken,
suffered or omitted by it in good faith in accordance therewith. Whenever the Escrow Agent shall
deem it necessary or desirable that a matter be proved or established prior to taking, suffering, or
omitting any action under this Agreement, such matter may be deemed to be conclusively established
by a certificate signed by an officer of the District.
No provision of this Agreement shall require the Escrow Agent to expend or risk its own
funds or otherwise incur any financial liability in the performance or exercise of any of its duties
hereunder, or in the exercise of its rights or powers.
The Escrow Agent shall have the right to accept and act upon instructions, including funds
transfer instructions (“Instructions”) given pursuant to this Agreement and delivered using
Electronic Means (“Electronic Means” shall mean the following communications methods: e-mail,
facsimile transmission, secure electronic transmission containing applicable authorization codes,
passwords and/or authentication keys issued by the Escrow Agent, or another method or system
specified by the Escrow Agent as available for use in connection with its services hereunder);
provided, however, that the District shall provide to the Escrow Agent an incumbency certificate
listing officers with the authority to provide such Instructions (“Authorized Officers”) and
containing specimen signatures of such Authorized Officers, which incumbency certificate shall be
amended by the District whenever a person is to be added or deleted from the listing. If the District
elects to give the Escrow Agent Instructions using Electronic Means and the Escrow Agent in its
reasonable judgment elects to act upon such Instructions, the Escrow Agent’s understanding of such
Instructions shall be deemed controlling. The District understands and agrees that the Escrow Agent
cannot determine the identity of the actual sender of such Instructions and that the Escrow Agent
shall conclusively presume that directions that purport to have been sent by an Authorized Officer
listed on the incumbency certificate provided to the Escrow Agent have been sent by such
Authorized Officer. The District shall be responsible for ensuring that only Authorized Officers
transmit such Instructions to the Escrow Agent and that the District and all Authorized Officers are
solely responsible to safeguard the use and confidentiality of applicable user and authorization codes,
passwords and/or authentication keys upon receipt by the District. The Escrow Agent shall not be
liable for any losses, costs or expenses arising directly or indirectly from the Escrow Agent’s reliance
upon and compliance with such Instructions notwithstanding such directions conflict or are
inconsistent with a subsequent written instruction. The District agrees: (i) to assume all risks arising
out of the use of Electronic Means to submit Instructions to the Escrow Agent, including without
limitation the risk of the Escrow Agent acting on unauthorized Instructions, and the risk of
interception and misuse by third parties; (ii) that they are fully informed of the protections and risks
associated with the various methods of transmitting Instructions to the Escrow Agent and that there
may be more secure methods of transmitting Instructions than the method(s) selected by the District;
(iii) that the security procedures (if any) to be followed in connection with its transmission of
Instructions provide to it a commercially reasonable degree of protection in light of its particular
needs and circumstances; and (iv) to notify the Escrow Agent in writing immediately upon learning
of any compromise or unauthorized use of the security procedures.
5
The Escrow Agent shall furnish the District with cash transaction statements which include
detail for all investment transactions effected by the Escrow Agent or brokers selected by the
District, provided that the Escrow Agent is not obligated to provide an accounting for any fund or
account that: (a) has a balance of $0.00; and (b) has not had any activity since the last reporting date.
Upon the District’s election, such statements will be delivered via the Escrow Agent’s online service
and upon electing such service, paper statements will be provided only upon request. The District
waives the right to receive brokerage confirmations of security transactions effected by the Escrow
Agent as they occur, to the extent permitted by law. The District further understands that trade
confirmations for securities transactions effected by the Escrow Agent will be available upon request
and at no additional cost and other trade confirmations may be obtained from the applicable broker.
If the Escrow Agent learns that the Department of the Treasury or the Bureau of Public
Debt will not, for any reason, accept a subscription of Federal Securities that is to be submitted
pursuant to this Agreement, the Escrow Agent shall promptly request alternative written investment
instructions from the District with respect to escrowed funds which were to be invested in securities.
The Escrow Agent shall follow such instructions and, upon the maturity of any such alternative
investment, the Escrow Agent shall hold such funds uninvested and without liability for interest until
receipt of further written instructions from the District. In the absence of written investment
instructions from the District, the Escrow Agent shall hold funds uninvested. The Escrow Agent may
conclusively rely upon the District’s selection of an alternative investment as a determination of the
alternative investment’s legality and suitability and shall not be liable for any losses, fees, taxes or
other charges related to the alternative investments, reinvestments or liquidation of investments or for
compliance with any yield restriction applicable thereto.
The Escrow Agent may execute any of the powers hereunder or perform any duties hereunder
either directly or by or through agents, attorneys, custodians or nominees appointed with due care,
and shall not be responsible for any willful misconduct or negligence on the part of any agent,
attorney, custodian or nominee so appointed.
The Escrow Agent may conclusively rely, as to the trust and accuracy of the statements and
correctness of the opinions and the calculations provided to it in connection with this Agreement, and
shall be protected in acting, or refraining from acting, upon any written notice, instruction, request,
certificate, document or opinion furnished to the Escrow Agent in accordance with this Agreement
and reasonably believed by the Escrow Agent to have been signed or presented by the proper party,
and it need not investigate any facts or matter stated in such notice, instruction, request, certificate or
opinion.
The liability of the Escrow Agent to make any payments under the Agreement shall be
limited to the funds in the Escrow Fund.
SECTION 9. Amendments. This Agreement is made for the benefit of the District, the
Authority and the owners from time to time of the 2010 Bonds and it shall not be repealed, revoked,
altered or amended without the written consent of all such owners, the Escrow Agent, the Authority
and the District; provided, however, that the District, the Authority and the Escrow Agent may,
without the consent of, or notice to, such owners, amend this Agreement or enter into such
agreements supplemental to this Agreement as shall not adversely affect the rights of such owners
and as shall not be inconsistent with the terms and provisions of this Agreement or the 2010
Indenture, for any one or more of the following purposes: (i) to cure any ambiguity or formal defect
or omission in this Agreement; (ii) to grant to, or confer upon, the Escrow Agent for the benefit of
6
the owners of the 2010 Bonds any additional rights, remedies, powers or authority that may lawfully
be granted to, or conferred upon, such owners or the Escrow Agent; and (iii) to include under this
Agreement additional funds. The Escrow Agent shall be entitled to rely conclusively upon an
unqualified opinion of Stradling Yocca Carlson & Rauth, a Professional Authority, with respect to
compliance with this Agreement, including the extent, if any, to which any change, modification,
addition or elimination affects the rights of the owners of the various 2010 Bonds or that any
instrument that is executed hereunder complies with the conditions and provisions of this Agreement.
SECTION 10. Notice to Rating Agencies. In the event that this agreement or any provision
thereof is severed, amended or revoked, the Escrow Agent shall provide written notice of such
severance, amendment or revocation to the rating agencies then rating the 2010 Bonds. The Escrow
Agent makes this covenant as a matter of courtesy and accommodation only and shall not be liable to
any person for any failure to comply therewith.
SECTION 11. Term. This Agreement shall commence upon its execution and delivery and
shall terminate on the later to occur of either: (i) the date upon which the 2010 Bonds have been paid
in accordance with this Agreement; or (ii) the date upon which no unclaimed moneys remain on
deposit with the Escrow Agent pursuant to Section 3(c) of this Agreement. Funds remaining in the
Escrow Fund after payment in full of the 2010 Bonds shall be transferred to the District.
SECTION 12. Compensation. The Escrow Agent shall receive its fees and expenses as
previously agreed to in writing by the Escrow Agent and the District and any other reasonable fees
and expenses of the Escrow Agent (including legal fees and expenses); provided, however, that under
no circumstances shall the Escrow Agent be entitled to any lien or assert any lien whatsoever on any
moneys or obligations in the Escrow Fund for the payment of fees and expenses for services that are
rendered or expenses incurred by the Escrow Agent under this Agreement. The provisions of this
Section shall survive the termination of this Agreement and the resignation or removal of the Escrow
Agent.
SECTION 13. Severability. If any one or more of the covenants or agreements provided in
this Agreement on the part of the District, the Authority or the Escrow Agent to be performed should
be determined by a court of competent jurisdiction to be contrary to law, such covenants or
agreements shall be null and void, shall be deemed separate from the remaining covenants and
agreements contained herein and shall in no way affect the validity of the remaining provisions of
this Agreement.
SECTION 14. Counterparts. This Agreement may be executed in several counterparts, all or
any of which shall be regarded for all purposes as an original but all of which shall constitute and be
but one and the same instrument. The exchange of copies of this Agreement and of signature pages
by facsimile or PDF transmission shall constitute effective execution and delivery of this Agreement
as to the parties hereto and may be used in lieu of the original Agreement and signature pages for all
purposes.
SECTION 15. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED UNDER
THE LAWS OF THE STATE OF CALIFORNIA.
SECTION 16. Holidays. If the date for making any payment or the last date for performance
of any act or the exercising of any right, as provided in this Agreement, shall be a legal holiday or a
day on which banking institutions in the city in which is located the office of the Escrow Agent are
7
authorized by law to remain closed, such payment may be made or act performed or right exercised
on the next succeeding day which is not a legal holiday or a day on which such banking institutions
are authorized by law to remain closed, with the same force and effect as if done on the nominal date
provided in this Agreement, and no interest shall accrue for the period from and after such nominal
date.
SECTION 17. Assignment. This Agreement shall not be assigned by the Escrow Agent or
any successor thereto without the prior written consent of the District and the Authority.
SECTION 18. Reorganization of Escrow Agent. Notwithstanding anything to the contrary
contained in this Agreement, any company into which the Escrow Agent may be merged or
converted or with which it may be consolidated or any company resulting from any merger,
conversion or consolidation to which the Escrow Agent is a party, or any company to which the
Escrow Agent may sell or transfer all or substantially all of its corporate trust business, shall be the
successor to the Escrow Agent without execution or filing of any paper or any paper or further act, if
such company is eligible to serve as Escrow Agent.
SECTION 19. Insufficient Funds. If at any time the Escrow Agent has actual knowledge
that the moneys and investments in the Escrow Fund, including the anticipated proceeds thereof and
earnings thereon, will not be sufficient to make all payments required by this Agreement, the Escrow
Agent shall notify the District in writing of the amount thereof and the reason therefor to the extent
known to it. The Escrow Agent shall have no responsibility regarding any such deficiency.
SECTION 20. Notices. Any notice to or demand upon the Escrow Agent may be served or
presented, and such demand may be made, at the principal corporate trust office of the Escrow Agent
at 445 South Figueroa Street, Suite 401, Los Angeles, California 90071, Attention: Corporate Trust,
Reference: East Valley Water District, Series 2010, Fax: 213-972-5694, Email:
LACT@unionbank.com. Any notice to or demand upon the District or the Authority shall be
deemed to have been sufficiently given or served for all purposes by being sent by facsimile or other
electronic transmission, overnight mail or courier or mailed by first class mail, and deposited,
postage prepaid, in a post office letter box, addressed to the District or the Authority at 31111
Greenspot Road, Highland, California 92346, email: btompkins@eastvalley.org, Facsimile: (909)
888-6741 (or such other address as may have been filed in writing by the District or the Authority
with the Escrow Agent).
SECTION 21. Electronic Signatures. The words “execution,” “signed,” “signature,”
“delivery,” and words of like import in or relating to this Agreement or any document to be signed in
connection with this Agreement shall be deemed to include electronic signatures, deliveries or the
keeping of records in electronic form, each of which shall be of the same legal effect, validity or
enforceability as a manually executed signature, physical delivery thereof or the use of a paper-based
recordkeeping system, as the case may be, and the parties hereto consent to conduct the transactions
contemplated hereunder by electronic means. “Electronic signature” means any electronic sound,
symbol or process attached to or logically associated with a record and executed and adopted by a
party with the intent to sign such record, including facsimile or email electronic signatures.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
S-1
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by
their duly authorized officers as of the date first above written.
EAST VALLEY WATER DISTRICT
By:
Board President
ATTEST:
Secretary, Board of Directors
EAST VALLEY WATER DISTRICT
FINANCING AUTHORITY
By:
Board President
ATTEST:
Secretary, Board of Directors
MUFG UNION BANK, N.A.,
as Escrow Agent and 2010 Trustee
By:
Authorized Officer
Schedule A-1
SCHEDULE A
ESCROW REQUIREMENTS
Moneys deposited in the Escrow Fund shall be invested as follows:
Security Maturity
Principal
Amount
Interest
Rate
[__] October 1, 2020 $ %
The escrow requirements for the 2010 Bonds are as follows:
Period
Ending Principal Paid
Principal
Redeemed Interest Total
October 1, 2020 $ [__] $ $ $
Exhibit A-1
EXHIBIT A
NOTICE OF FULL OPTIONAL REDEMPTION
EAST VALLEY WATER DISTRICT FINANCING AUTHORITY
REFUNDING REVENUE BONDS, SERIES 2010
BASE CUSIP 275736
NOTICE IS HEREBY GIVEN to the owners of the above-captioned obligations (the “2010
Bonds”), which were issued pursuant to the Indenture of Trust, dated as of October 1, 2010 (the
“2010 Indenture”), by and between the East Valley Water District Financing Authority (the
“Authority”) and MUFG Union Bank, N.A., as trustee (the “2010 Trustee”), that 2010 Bonds in the
amount of $19,985,000 have been called for redemption on October 1, 2020 (the “Redemption
Date”). The 2010 Bonds were originally issued on October 28, 2010 and are described in the
following table.
CUSIP
Maturity
(October 1)
Principal
Amount Rate Redemption Price
AK2 2020 $1,650,000 4.00% 100%
AL0 2021 1,030,000 4.00 100
AM8 2022 1,075,000 4.00 100
AN6 2023 1,120,000 4.00 100
AP1 2024 1,155,000 4.50 100
AU0 2025 700,000 4.00 100
AQ9 2026 730,000 4.00 100
AR7 2028 1,550,000 4.00 100
AS5 2030 1,675,000 4.00 100
AV8 2033 2,775,000 4.25 100
AT3 2040 8,175,000 5.00 100
The 2010 Bonds will be payable on the Redemption Date at a redemption price of 100% of
the principal amount thereof, plus interest accrued through the Redemption Date, without premium
(the “Redemption Price”). The Redemption Price of the 2010 Bonds will become due and payable
on the Redemption Date. Interest with respect to the 2010 Bonds will cease to accrue and be payable
from and after the Redemption Date, and such 2010 Bonds will be surrendered to the 2010 Trustee.
To receive payment on the Redemption Date, owners of the 2010 Bonds should present and
to surrender said 2010 Bonds on the Redemption Date at the address of the 2010 Trustee set forth
below:
MUFG Union Bank, N.A.
445 S. Figueroa Street, Suite 401
Los Angeles, CA 90071
Attention: Bond Redemptions
A form W-9 must be submitted with the 2010 Bonds. Failure to provide a completed form
W-9 will result in 31% backup withholding pursuant to the Interest and Dividend Tax Compliance
Act of 1983. Under the Jobs and Growth Tax Relief Reconciliation Act of 2003, 28% will be
withheld if the tax identification number is not properly certified.
Exhibit A-2
If the owner of any 2010 Bond fails to deliver such 2010 Bond to the 2010 Trustee on the
Redemption Date, such 2010 Bond shall nevertheless be deemed redeemed on the Redemption Date
and the owner of such 2010 Bond shall have no rights in respect thereof except to receive payment of
the Redemption Price from funds held by the 2010 Trustee for such payment.
Note: The Authority and the 2010 Trustee shall not be responsible for the selection or use of
the CUSIP numbers selected, nor is any representation made as to their correctness in the notice or
as printed on any 2010 Bond. They are included solely for the convenience of the holders.
MUFG UNION BANK, N.A., as 2010 Trustee
September 1, 2020
Exhibit B-1
EXHIBIT B
NOTICE OF DEFEASANCE
EAST VALLEY WATER DISTRICT FINANCING AUTHORITY
REFUNDING REVENUE BONDS, SERIES 2010
BASE CUSIP 275736
NOTICE IS HEREBY GIVEN to the owners of the above-captioned obligations (the “2010
Bonds”) which were issued pursuant to the Indenture of Trust, dated as of October 1, 2010 (the
“2010 Indenture”), by and between the East Valley Water District Financing Authority (the
“Authority”) and MUFG Union Bank, N.A., as trustee (the “2010 Trustee”), that the East Valley
Water District (the “District”) has deposited with MUFG Union Bank, N.A., as escrow agent (the
“Escrow Agent”), cash and federal securities, the principal of and interest on which when paid will
provide moneys sufficient to pay on October 1, 2020 the principal of all outstanding 2010 Bonds
maturing on and after such date, plus accrued interest thereon, without premium. The 2010 Bonds
were originally issued on October 28, 2010 and are described in the following table.
CUSIP
Maturity
(October 1)
Principal
Amount Rate
AK2 2020 $1,650,000 4.00%
AL0 2021 1,030,000 4.00
AM8 2022 1,075,000 4.00
AN6 2023 1,120,000 4.00
AP1 2024 1,155,000 4.50
AU0 2025 700,000 4.00
AQ9 2026 730,000 4.00
AR7 2028 1,550,000 4.00
AS5 2030 1,675,000 4.00
AV8 2033 2,775,000 4.25
AT3 2040 8,175,000 5.00
In accordance with the 2010 Indenture and the Installment Purchase Agreement, dated as of
October 1, 2010 (the “2010 IPA”), by and between the Authority and the District: (i) interest on the
2010 Bonds has ceased to accrue, the 2010 Bonds have ceased to be entitled to any benefit or
security under the 2010 Indenture and the owners of the 2010 Bonds have no rights in respect thereof
except to receive payment of the redemption price thereof; (ii) the 2010 Indenture, the pledge of
Authority Revenues and other assets made under the 2010 Indenture and all liability, covenants,
agreements and other obligations of the Authority under the 2010 Indenture have ceased, terminated,
become void and been completely discharged and satisfied; (iii) the owners of the 2010 Bonds are
entitled only to payment out of money or securities deposited with the Escrow Agent; (iv) the right,
title and interest of the Authority in the 2010 IPA and the obligations of the District thereunder have,
with respect to all or such portion of the Installment Payments payable thereunder as have been so
provided for, thereupon ceased, terminated, become void and been completely discharged and
satisfied (except as set forth in the 2010 IPA); and (v) all obligations of the District under the
Continuing Disclosure Certificate of the District, dated October 28, 2010, relating to the 2010 Bonds
have terminated.
Exhibit B-2
No representation is made as to the correctness of the CUSIP number either as printed on any
2010 Bond or as contained herein and any error in the CUSIP number shall not affect the validity of
the proceedings for redemption of the 2010 Bonds.
MUFG UNION BANK, N.A., as 2010 Trustee
____ __, 2020
1
EXHIBIT B
ESCROW AGREEMENT (2013A BONDS)
THIS ESCROW AGREEMENT (2013A BONDS), dated as of _____ 1, 2020 (the
“Agreement”), by and among the East Valley Water District (the “District”), the East Valley Water
District Financing Authority (the “Authority”) and MUFG Union Bank, N.A., as escrow agent (the
“Escrow Agent”) and as 2013A Trustee (as such term is defined herein), is entered into in
accordance with a resolution of the District adopted on ____ __, 2020, an Indenture of Trust, dated as
of June 1, 2013 (the “2013A Indenture”), by and between the Authority and MUFG Union Bank,
N.A., as trustee (the “2013A Trustee”), and an Installment Purchase Agreement, dated as of June 1,
2013 (the “2013A IPA”), by and between the District and the Authority. This Agreement is entered
into to refund all of the outstanding East Valley Water District Financing Authority Revenue Bonds,
Series 2013A (the “2013A Bonds”).
RECITALS
A. Pursuant to the 2013A Indenture, the Authority has previously issued the 2013A
Bonds in the aggregate principal amount of $12,085,000, all of which is currently outstanding.
B. The 2013A Bonds are payable from installment payments made by the District to the
Authority under the 2013A IPA.
C. The District has determined to issue its East Valley Water District Refunding
Revenue Bonds, Series 2020B (Federally Taxable) (the “2020B Bonds”), a portion of the proceeds
of which will be applied to pay: (i) the regularly scheduled payments of principal of and interest on
the 2013A Bonds through April 1, 2023 (the “Redemption Date”); and (ii) on the Redemption Date,
the principal of the 2013A Bonds maturing after the Redemption Date, together with accrued interest
thereon to the Redemption Date, without premium (the “Redemption Price”).
D. The District will irrevocably deposit moneys with the Escrow Agent, which moneys
will be used to purchase the securities that are described on Schedule A (the “Federal Securities”)
(as permitted by, in the manner prescribed by and all in accordance with the 2013A Indenture). Such
Federal Securities satisfy the criteria set forth in Section 10.03 of the 2013A Indenture, and the
principal of and interest on such Federal Securities when paid, together with other moneys
contributed by the District, will provide funds which will be fully sufficient to pay the principal of
and interest on the 2013A Bonds prior to the Redemption Date and to pay and discharge the 2013A
Bonds on the Redemption Date.
AGREEMENT
SECTION 1. Deposit of Moneys. The District will cause MUFG Union Bank, N.A., as
trustee for the 2020B Bonds, to transfer a portion of the proceeds of the 2020B Bonds in the amount
of $_____ on the date of issuance of the 2020B Bonds to the Escrow Agent for deposit in the Escrow
Fund established hereunder. The Authority instructs the 2013A Trustee to transfer $_____ held in
the Revenue Fund relating to the 2013A Bonds to the Escrow Agent for deposit in the below-defined
Escrow Fund.
2
The Escrow Agent will hold such amounts in an irrevocable escrow separate and apart from
other funds of the Authority, the District and the Escrow Agent in a fund hereby created and
established to be known as the “Escrow Fund” and to be applied solely as provided in this
Agreement. The District represents that the sum of the amounts set forth above are at least equal to
an amount that is sufficient to purchase the Federal Securities listed on Schedule A, and to hold $__
uninvested as cash.
SECTION 2. Investment of Moneys. The Escrow Agent acknowledges receipt of the
moneys described in Section 1 and agrees immediately to invest $_____ of such moneys in the
Federal Securities listed on Schedule A and to deposit such Federal Securities in the Escrow Fund.
The Escrow Agent shall be entitled to rely conclusively upon the conclusion of Robert Thomas CPA,
LLC, Overland Park, Kansas, that the Federal Securities listed on Schedule A mature and bear
interest payable in such amounts and at such times as, together with cash on deposit in the Escrow
Fund, will be sufficient to pay: (i) the regularly scheduled payments of principal of and interest on
the 2013A Bonds through the Redemption Date; and (ii) on the Redemption Date, the Redemption
Price of the 2013A Bonds maturing after the Redemption Date.
SECTION 3. Payment of 2013A Bonds.
(a) Payment. From the maturing principal of the Federal Securities and the
investment income and other earnings thereon and other moneys on deposit in the Escrow Fund, the
Escrow Agent shall pay: (i) the regularly scheduled payments of principal of and interest on the
2013A Bonds through the Redemption Date; and (ii) on the Redemption Date, the Redemption Price
of the 2013A Bonds maturing after the Redemption Date, all as indicated on Schedule A.
(b) Irrevocable Instructions to Provide Notice. The notices that are required to be
mailed pursuant to Section 4.03 and Article X of the 2013A Indenture are substantially in the forms
attached hereto as Exhibits A and B. The District and the Authority hereby irrevocably instruct the
2013A Trustee to mail a notice of redemption and (on the date of issuance of the 2020B Bonds) a
notice of defeasance of the 2013A Bonds to the parties that are described in and otherwise in
accordance with Section 4.03 and Article X of the 2013A Indenture (and to file such notices with the
Municipal Securities Rulemaking Board’s Electronic Municipal Market Access website),
respectively, as required to provide for the redemption and defeasance of the 2013A Bonds in
accordance with this Section 3.
(c) Unclaimed Moneys. Any moneys in the Escrow Fund which remain
unclaimed after the Redemption Date shall be repaid by the Escrow Agent to the District.
(d) Priority of Payments. The owners of the 2013A Bonds shall have a first and
exclusive lien on all moneys and securities in the Escrow Fund until such moneys and such securities
are used and applied as provided in this Agreement.
(e) Termination of Obligation. As provided in the 2013A IPA and the 2013A
Indenture, upon the deposit of moneys with the Escrow Agent in the Escrow Fund as set forth in
Section 1: (i) the 2013A Bonds shall cease to be entitled to any benefit or security under the 2013A
Indenture; (ii) the 2013A Indenture, the pledge of Authority Revenues and other assets made under
the 2013A Indenture and all liability, covenants, agreements and other obligations of the Authority
under the 2013A Indenture shall cease, terminate, become void and be completely discharged and
satisfied; (iii) the owners of the 2013A Bonds shall thereafter be entitled only to payment out of
3
money or securities deposited with the Escrow Agent; and (iv) the right, title and interest of the
Authority in the 2013A IPA and the obligations of the District thereunder shall, with respect to all or
such portion of the Installment Payments payable thereunder as have been so provided for, thereupon
cease, terminate, become void and be completely discharged and satisfied (except as set forth in the
2013A IPA).
SECTION 4. Application of Certain Terms of the 2013A Indenture. All of the terms of the
2013A Indenture relating to the making of payments of principal of and interest with respect to the
2013A Bonds and relating to the exchange or transfer of the 2013A Bonds are incorporated into this
Agreement by reference as if set forth in full herein. The procedures set forth in Article VIII of the
2013A Indenture relating to the resignation and removal and merger of the 2013A Trustee are also
incorporated into this Agreement by reference as if set forth in full herein and shall be the procedures
to be followed with respect to any resignation or removal of the Escrow Agent hereunder.
SECTION 5. Performance of Duties. The Escrow Agent agrees to perform only the duties
that are set forth herein and shall have no responsibility to take any action or omit to take any action
that is not set forth herein.
SECTION 6. Escrow Agent’s Authority to Make Investments. Except as provided in
Section 2 hereof, the Escrow Agent shall have no power or duty to invest any funds that are held
hereunder or to sell, transfer or otherwise dispose of the moneys or securities that are held hereunder.
SECTION 7. Indemnity. The District hereby assumes liability for, and hereby agrees
(whether or not any of the transactions contemplated hereby are consummated) to indemnify, protect,
save and keep harmless the Escrow Agent and its respective successors, assigns, agents, employees
and servants, from and against any and all liabilities, obligations, losses, damages, penalties, claims,
actions, suits, costs, expenses and disbursements (including reasonable legal fees and disbursements)
of whatsoever kind and nature which may be imposed on, incurred by or asserted against the Escrow
Agent at any time (whether or not also indemnified against the same by the District or any other
person under any other agreement or instrument, but without double indemnity) in any way relating
to or arising out of the execution, delivery and performance of this Agreement, the establishment
hereunder of the Escrow Fund, the acceptance of the funds and securities deposited therein, the
retention of the proceeds thereof and any payment, transfer or other application of moneys or
securities by the Escrow Agent in accordance with the provisions of this Agreement; provided,
however, that the District shall not be required to indemnify the Escrow Agent against the Escrow
Agent’s own negligence or willful misconduct. In no event shall the District or the Escrow Agent be
liable to any person by reason of the transactions that are contemplated hereby other than to each
other as set forth in this Section. The indemnities that are contained in this Section shall survive the
termination of this Agreement and the resignation or removal of the Escrow Agent.
SECTION 8. Responsibilities of Escrow Agent. The Escrow Agent and its agents and
servants shall not be held to any personal liability whatsoever, in tort, contract or otherwise, in
connection with the execution and delivery of this Agreement, the establishment of the Escrow Fund,
the acceptance of the moneys or securities deposited therein, the sufficiency of the moneys held in
the Escrow Fund to pay the 2013A Bonds or any payment, transfer or other application of moneys or
obligations by the Escrow Agent in accordance with the provisions of this Agreement or by reason of
any non-negligent act, non-negligent omission or non-negligent error of the Escrow Agent that is
made in good faith in the conduct of its duties. The recitals of fact that are contained herein shall be
taken as the statements of the District, and the Escrow Agent assumes no responsibility for the
4
correctness thereof. The Escrow Agent makes no representation as to the sufficiency of the proceeds
to accomplish the refunding of the 2013A Bonds or to the validity of this Agreement as to the
District or the Authority and, except as otherwise provided herein, the Escrow Agent shall incur no
liability in respect thereof. The Escrow Agent shall not be liable in connection with the performance
of its duties under this Agreement except for its own negligence or willful misconduct, and the duties
and obligations of the Escrow Agent shall be determined by the express provisions of this
Agreement. In no event shall the Escrow Agent be liable for any special, punitive, indirect or
consequential damages. The Escrow Agent may consult with counsel of its selection, and in reliance
upon the opinion of such counsel shall have full and complete authorization and protection in respect
of any action taken, suffered or omitted by it in good faith in accordance therewith. Whenever the
Escrow Agent shall deem it necessary or desirable that a matter be proved or established prior to
taking, suffering, or omitting any action under this Agreement, such matter may be deemed to be
conclusively established by a certificate signed by an officer of the District.
No provision of this Agreement shall require the Escrow Agent to expend or risk its own
funds or otherwise incur any financial liability in the performance or exercise of any of its duties
hereunder, or in the exercise of its rights or powers.
The Escrow Agent shall have the right to accept and act upon instructions, including funds
transfer instructions (“Instructions”) given pursuant to this Agreement and delivered using
Electronic Means (“Electronic Means” shall mean the following communications methods: e-mail,
facsimile transmission, secure electronic transmission containing applicable authorization codes,
passwords and/or authentication keys issued by the Escrow Agent, or another method or system
specified by the Escrow Agent as available for use in connection with its services hereunder);
provided, however, that the District shall provide to the Escrow Agent an incumbency certificate
listing officers with the authority to provide such Instructions (“Authorized Officers”) and
containing specimen signatures of such Authorized Officers, which incumbency certificate shall be
amended by the District whenever a person is to be added or deleted from the listing. If the District
elects to give the Escrow Agent Instructions using Electronic Means and the Escrow Agent in its
reasonable judgment elects to act upon such Instructions, the Escrow Agent’s understanding of such
Instructions shall be deemed controlling. The District understands and agrees that the Escrow Agent
cannot determine the identity of the actual sender of such Instructions and that the Escrow Agent
shall conclusively presume that directions that purport to have been sent by an Authorized Officer
listed on the incumbency certificate provided to the Escrow Agent have been sent by such
Authorized Officer. The District shall be responsible for ensuring that only Authorized Officers
transmit such Instructions to the Escrow Agent and that the District and all Authorized Officers are
solely responsible to safeguard the use and confidentiality of applicable user and authorization codes,
passwords and/or authentication keys upon receipt by the District. The Escrow Agent shall not be
liable for any losses, costs or expenses arising directly or indirectly from the Escrow Agent’s reliance
upon and compliance with such Instructions notwithstanding such directions conflict or are
inconsistent with a subsequent written instruction. The District agrees: (i) to assume all risks arising
out of the use of Electronic Means to submit Instructions to the Escrow Agent, including without
limitation the risk of the Escrow Agent acting on unauthorized Instructions, and the risk of
interception and misuse by third parties; (ii) that they are fully informed of the protections and risks
associated with the various methods of transmitting Instructions to the Escrow Agent and that there
may be more secure methods of transmitting Instructions than the method(s) selected by the District;
(iii) that the security procedures (if any) to be followed in connection with its transmission of
Instructions provide to it a commercially reasonable degree of protection in light of its particular
5
needs and circumstances; and (iv) to notify the Escrow Agent in writing immediately upon learning
of any compromise or unauthorized use of the security procedures.
The Escrow Agent shall furnish the District with cash transaction statements which include
detail for all investment transactions effected by the Escrow Agent or brokers selected by the
District, provided that the Escrow Agent is not obligated to provide an accounting for any fund or
account that: (a) has a balance of $0.00; and (b) has not had any activity since the last reporting date.
Upon the District’s election, such statements will be delivered via the Escrow Agent’s online service
and upon electing such service, paper statements will be provided only upon request. The District
waives the right to receive brokerage confirmations of security transactions effected by the Escrow
Agent as they occur, to the extent permitted by law. The District further understands that trade
confirmations for securities transactions effected by the Escrow Agent will be available upon request
and at no additional cost and other trade confirmations may be obtained from the applicable broker.
If the Escrow Agent learns that the Department of the Treasury or the Bureau of Public
Debt will not, for any reason, accept a subscription of Federal Securities that is to be submitted
pursuant to this Agreement, the Escrow Agent shall promptly request alternative written investment
instructions from the District with respect to escrowed funds which were to be invested in securities.
The Escrow Agent shall follow such instructions and, upon the maturity of any such alternative
investment, the Escrow Agent shall hold such funds uninvested and without liability for interest until
receipt of further written instructions from the District. In the absence of written investment
instructions from the District, the Escrow Agent shall hold funds uninvested. The Escrow Agent may
conclusively rely upon the District’s selection of an alternative investment as a determination of the
alternative investment’s legality and suitability and shall not be liable for any losses, fees, taxes or
other charges related to the alternative investments, reinvestments or liquidation of investments or for
compliance with any yield restriction applicable thereto.
The Escrow Agent may execute any of the powers hereunder or perform any duties hereunder
either directly or by or through agents, attorneys, custodians or nominees appointed with due care,
and shall not be responsible for any willful misconduct or negligence on the part of any agent,
attorney, custodian or nominee so appointed.
The Escrow Agent may conclusively rely, as to the trust and accuracy of the statements and
correctness of the opinions and the calculations provided to it in connection with this Agreement, and
shall be protected in acting, or refraining from acting, upon any written notice, instruction, request,
certificate, document or opinion furnished to the Escrow Agent in accordance with this Agreement
and reasonably believed by the Escrow Agent to have been signed or presented by the proper party,
and it need not investigate any facts or matter stated in such notice, instruction, request, certificate or
opinion.
The liability of the Escrow Agent to make any payments under the Agreement shall be
limited to the funds in the Escrow Fund.
SECTION 9. Amendments. This Agreement is made for the benefit of the District, the
Authority and the owners from time to time of the 2013A Bonds and it shall not be repealed,
revoked, altered or amended without the written consent of all such owners, the Escrow Agent, the
Authority and the District; provided, however, that the District, the Authority and the Escrow Agent
may, without the consent of, or notice to, such owners, amend this Agreement or enter into such
agreements supplemental to this Agreement as shall not adversely affect the rights of such owners
6
and as shall not be inconsistent with the terms and provisions of this Agreement or the 2013A
Indenture, for any one or more of the following purposes: (i) to cure any ambiguity or formal defect
or omission in this Agreement; (ii) to grant to, or confer upon, the Escrow Agent for the benefit of
the owners of the 2013A Bonds any additional rights, remedies, powers or authority that may
lawfully be granted to, or conferred upon, such owners or the Escrow Agent; and (iii) to include
under this Agreement additional funds. The Escrow Agent shall be entitled to rely conclusively upon
an unqualified opinion of Stradling Yocca Carlson & Rauth, a Professional Authority, with respect to
compliance with this Agreement, including the extent, if any, to which any change, modification,
addition or elimination affects the rights of the owners of the various 2013A Bonds or that any
instrument that is executed hereunder complies with the conditions and provisions of this Agreement.
SECTION 10. Notice to Rating Agencies. In the event that this agreement or any provision
thereof is severed, amended or revoked, the Escrow Agent shall provide written notice of such
severance, amendment or revocation to the rating agencies then rating the 2013A Bonds. The
Escrow Agent makes this covenant as a matter of courtesy and accommodation only and shall not be
liable to any person for any failure to comply therewith.
SECTION 11. Term. This Agreement shall commence upon its execution and delivery and
shall terminate on the later to occur of either: (i) the date upon which the 2013A Bonds have been
paid in accordance with this Agreement; or (ii) the date upon which no unclaimed moneys remain on
deposit with the Escrow Agent pursuant to Section 3(c) of this Agreement. Funds remaining in the
Escrow Fund after payment in full of the 2013A Bonds shall be transferred to the District.
SECTION 12. Compensation. The Escrow Agent shall receive its fees and expenses as
previously agreed to in writing by the Escrow Agent and the District and any other reasonable fees
and expenses of the Escrow Agent (including legal fees and expenses); provided, however, that under
no circumstances shall the Escrow Agent be entitled to any lien or assert any lien whatsoever on any
moneys or obligations in the Escrow Fund for the payment of fees and expenses for services that are
rendered or expenses incurred by the Escrow Agent under this Agreement. The provisions of this
Section shall survive the termination of this Agreement and the resignation or removal of the Escrow
Agent.
SECTION 13. Severability. If any one or more of the covenants or agreements provided in
this Agreement on the part of the District, the Authority or the Escrow Agent to be performed should
be determined by a court of competent jurisdiction to be contrary to law, such covenants or
agreements shall be null and void, shall be deemed separate from the remaining covenants and
agreements contained herein and shall in no way affect the validity of the remaining provisions of
this Agreement.
SECTION 14. Counterparts. This Agreement may be executed in several counterparts, all or
any of which shall be regarded for all purposes as an original but all of which shall constitute and be
but one and the same instrument. The exchange of copies of this Agreement and of signature pages
by facsimile or PDF transmission shall constitute effective execution and delivery of this Agreement
as to the parties hereto and may be used in lieu of the original Agreement and signature pages for all
purposes.
SECTION 15. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED UNDER
THE LAWS OF THE STATE OF CALIFORNIA.
7
SECTION 16. Holidays. If the date for making any payment or the last date for performance
of any act or the exercising of any right, as provided in this Agreement, shall be a legal holiday or a
day on which banking institutions in the city in which is located the office of the Escrow Agent are
authorized by law to remain closed, such payment may be made or act performed or right exercised
on the next succeeding day which is not a legal holiday or a day on which such banking institutions
are authorized by law to remain closed, with the same force and effect as if done on the nominal date
provided in this Agreement, and no interest shall accrue for the period from and after such nominal
date.
SECTION 17. Assignment. This Agreement shall not be assigned by the Escrow Agent or
any successor thereto without the prior written consent of the District and the Authority.
SECTION 18. Reorganization of Escrow Agent. Notwithstanding anything to the contrary
contained in this Agreement, any company into which the Escrow Agent may be merged or
converted or with which it may be consolidated or any company resulting from any merger,
conversion or consolidation to which the Escrow Agent is a party, or any company to which the
Escrow Agent may sell or transfer all or substantially all of its corporate trust business, shall be the
successor to the Escrow Agent without execution or filing of any paper or any paper or further act, if
such company is eligible to serve as Escrow Agent.
SECTION 19. Insufficient Funds. If at any time the Escrow Agent has actual knowledge
that the moneys and investments in the Escrow Fund, including the anticipated proceeds thereof and
earnings thereon, will not be sufficient to make all payments required by this Agreement, the Escrow
Agent shall notify the District in writing of the amount thereof and the reason therefor to the extent
known to it. The Escrow Agent shall have no responsibility regarding any such deficiency.
SECTION 20. Notices. Any notice to or demand upon the Escrow Agent may be served or
presented, and such demand may be made, at the principal corporate trust office of the Escrow Agent
at 445 South Figueroa Street, Suite 401, Los Angeles, California 90071, Attention: Corporate Trust,
Reference: East Valley Water District, Series 2013A, Fax: 213-972-5694, Email:
LACT@unionbank.com. Any notice to or demand upon the District or the Authority shall be
deemed to have been sufficiently given or served for all purposes by being sent by facsimile or other
electronic transmission, overnight mail or courier or mailed by first class mail, and deposited,
postage prepaid, in a post office letter box, addressed to the District or the Authority at 31111
Greenspot Road, Highland, California 92346, email: btompkins@eastvalley.org, Facsimile: (909)
888-6741 (or such other address as may have been filed in writing by the District or the Authority
with the Escrow Agent).
SECTION 21. Electronic Signatures. The words “execution,” “signed,” “signature,”
“delivery,” and words of like import in or relating to this Agreement or any document to be signed in
connection with this Agreement shall be deemed to include electronic signatures, deliveries or the
keeping of records in electronic form, each of which shall be of the same legal effect, validity or
enforceability as a manually executed signature, physical delivery thereof or the use of a paper-based
recordkeeping system, as the case may be, and the parties hereto consent to conduct the transactions
contemplated hereunder by electronic means. “Electronic signature” means any electronic sound,
symbol or process attached to or logically associated with a record and executed and adopted by a
party with the intent to sign such record, including facsimile or email electronic signatures.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
S-1
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by
their duly authorized officers as of the date first above written.
EAST VALLEY WATER DISTRICT
By:
Board President
ATTEST:
Secretary, Board of Directors
EAST VALLEY WATER DISTRICT
FINANCING AUTHORITY
By:
Board President
ATTEST:
Secretary, Board of Directors
MUFG UNION BANK, N.A.,
as Escrow Agent and 2013 Trustee
By:
Authorized Officer
Schedule A-1
SCHEDULE A
ESCROW REQUIREMENTS
Moneys deposited in the Escrow Fund shall be invested as follows:
Security Maturity
Principal
Amount
Interest
Rate
[__] October 1, 2020 $ %
April 1, 2021
October 1, 2021
April 1, 2022
October 1, 2022
April 1, 2023
The escrow requirements for the 2013A Bonds are as follows:
Period
Ending Principal Paid
Principal
Redeemed Interest Total
October 1, 2020 $ [__] $ $ $
April 1, 2021
October 1, 2021
April 1, 2022
October 1, 2022
April 1, 2023
Exhibit A-1
EXHIBIT A
NOTICE OF FULL OPTIONAL REDEMPTION
EAST VALLEY WATER DISTRICT FINANCING AUTHORITY
REVENUE BONDS, SERIES 2013A
BASE CUSIP 275736
NOTICE IS HEREBY GIVEN to the owners of the above-captioned obligations (the “2013A
Bonds”), which were issued pursuant to the Indenture of Trust, dated as of June 1, 2013 (the “2013A
Indenture”), by and between the East Valley Water District Financing Authority (the “Authority”)
and MUFG Union Bank, N.A., as trustee (the “2013A Trustee”), that 2013A Bonds in the amount of
$11,870,000 have been called for redemption on April 1, 2023 (the “Redemption Date”). The 2013A
Bonds were originally issued on June 19, 2013 and are described in the following table.
CUSIP
Maturity
(October 1)
Principal
Amount Rate Redemption Price
AY2 2023 $ 115,000 5.000% 100%
AZ9 2024 120,000 5.000 100
BA3 2025 225,000 5.000 100
BB1 2026 240,000 5.000 100
BC9 2027 250,000 5.000 100
BD7 2028 260,000 5.000 100
BE5 2029 275,000 5.000 100
BH8 2033 1,230,000 4.000 100
BF2 2038 1,035,000 5.000 100
BJ4 2038 910,000 4.250 100
BG0 2043 7,210,000 5.000 100
The 2013A Bonds will be payable on the Redemption Date at a redemption price of 100% of
the principal amount thereof, plus interest accrued through the Redemption Date, without premium
(the “Redemption Price”). The Redemption Price of the 2013A Bonds will become due and payable
on the Redemption Date. Interest with respect to the 2013A Bonds will cease to accrue and be
payable from and after the Redemption Date, and such 2013A Bonds will be surrendered to the
2013A Trustee.
To receive payment on the Redemption Date, owners of the 2013A Bonds should present and
to surrender said 2013A Bonds on the Redemption Date at the address of the 2013A Trustee set forth
below:
MUFG Union Bank, N.A.
445 S. Figueroa Street, Suite 401
Los Angeles, CA 90071
Attention: Bond Redemptions
A form W-9 must be submitted with the 2013A Bonds. Failure to provide a completed form
W-9 will result in 31% backup withholding pursuant to the Interest and Dividend Tax Compliance
Act of 1983. Under the Jobs and Growth Tax Relief Reconciliation Act of 2003, 28% will be
withheld if the tax identification number is not properly certified.
Exhibit A-2
If the owner of any 2013A Bond fails to deliver such 2013A Bond to the 2013A Trustee on
the Redemption Date, such 2013A Bond shall nevertheless be deemed redeemed on the Redemption
Date and the owner of such 2013A Bond shall have no rights in respect thereof except to receive
payment of the Redemption Price from funds held by the 2013A Trustee for such payment.
Note: The Authority and the 2013A Trustee shall not be responsible for the selection or use
of the CUSIP numbers selected, nor is any representation made as to their correctness in the notice
or as printed on any 2013A Bond. They are included solely for the convenience of the holders.
MUFG UNION BANK, N.A., as 2013A Trustee
March 1, 2023
Exhibit B-1
EXHIBIT B
NOTICE OF DEFEASANCE
EAST VALLEY WATER DISTRICT FINANCING AUTHORITY
REVENUE BONDS, SERIES 2013A
BASE CUSIP 275736
NOTICE IS HEREBY GIVEN to the owners of the above-captioned obligations (the “2013A
Bonds”) which were issued pursuant to the Indenture of Trust, dated as of June 1, 2013 (the “2013A
Indenture”), by and between the East Valley Water District Financing Authority (the “Authority”)
and MUFG Union Bank, N.A., as trustee (the “2013A Trustee”), that the East Valley Water District
(the “District”) has deposited with MUFG Union Bank, N.A., as escrow agent (the “Escrow Agent”),
cash and federal securities, the principal of and interest on which when paid will provide moneys
sufficient to pay: (i) the regularly scheduled payments of principal of and interest on the 2013A
Bonds through April 1, 2023 (the “Redemption Date”); and (ii) on the Redemption Date, the
principal of the 2013A Bonds maturing after the Redemption Date, plus accrued interest thereon to
the Redemption Date, without premium. The 2013A Bonds were originally issued on June 19, 2013
and are described in the following table.
CUSIP
Maturity
(October 1)
Principal
Amount Rate
AW6 2021 $ 105,000 5.000%
AX4 2022 110,000 5.000
AY2 2023 115,000 5.000
AZ9 2024 120,000 5.000
BA3 2025 225,000 5.000
BB1 2026 240,000 5.000
BC9 2027 250,000 5.000
BD7 2028 260,000 5.000
BE5 2029 275,000 5.000
BH8 2033 1,230,000 4.000
BF2 2038 1,035,000 5.000
BJ4 2038 910,000 4.250
BG0 2043 7,210,000 5.000
In accordance with the 2013A Indenture and the Installment Purchase Agreement, dated as of
June 1, 2013 (the “2013A IPA”), by and between the Authority and the District: (i) the 2013A Bonds
have ceased to be entitled to any benefit or security under the 2013A Indenture; (ii) the 2013A
Indenture, the pledge of Authority Revenues and other assets made under the 2013A Indenture and
all liability, covenants, agreements and other obligations of the Authority under the 2013A Indenture
have ceased, terminated, become void and been completely discharged and satisfied; (iii) the owners
of the 2013A Bonds are entitled only to payment out of money or securities deposited with the
Escrow Agent; (iv) the right, title and interest of the Authority in the 2013A IPA and the obligations
of the District thereunder have, with respect to all or such portion of the Installment Payments
payable thereunder as have been so provided for, thereupon ceased, terminated, become void and
been completely discharged and satisfied (except as set forth in the 2013A IPA); and (v) all
obligations of the District under the Continuing Disclosure Certificate of the District, dated June 19,
2013, relating to the 2013A Bonds have terminated.
Exhibit B-2
No representation is made as to the correctness of the CUSIP number either as printed on any
2013A Bond or as contained herein and any error in the CUSIP number shall not affect the validity
of the proceedings for redemption of the 2013A Bonds.
MUFG UNION BANK, N.A., as 2013A Trustee
____ __, 2020